Court Opinion

ID: 8655187
Source: CourtListenerOpinion
Date Created: 2022-11-24 21:15:13.533776+00
Date Added: 2024-06-11T16:56:40.493530
License: Public Domain

MeCARTY, O. I.
(dissenting).
Plaintiff' brought this' action to recover from defendants the sum of $212 alleged to be due for labor performed on certain mining claims situated near Tuscarora, Nevada, known as the “Wakefield Group.” It is alleged in the complaint that the defendants, on or about March 11, 1903, at Logan City, Utah, entered into a contract in writing whereby they associated themselves together as mining partners for the purpose of developing and opei*ating the group, of mining claims mentioned, and that the defendants thereupon jointly entered upon the work of developing and operating said mining property under said contract of partnership; that plaintiff was employed by the defendants as an engineer to work upon said mining claims; and that he performed work thereon between August 1, 1903, and September 23, 1903, and that there is due him *418the sum of $2i2. Tbe defendants who were served with process answered and denied the existence of the partnership-.
It appears from the record that in October or November, 1902, at Tuscarora, one L. Fannof, who was the owner of said group of claims, agreed to lease them to A. Brossard, one of the defendants in this action. A draft of the lease was drawn up at that time, but not signed by the parties until December 13, 1902. The lease, which was for an indefinite period, provided, among other things, that Brossard should employ and keep at work six men a specified number of hours each day developing the property. It was further provided that the money, if any, derived from the sale of ore extracted from the mines during the life of the lease, should be deposited with the First National Bank at Logan, Utah, subject to the draft or check of Brossard as manager of the “Wakefield Aline.” It was also stipulated that this money should first be expended by Brossard in defraying the expenses of the mine, and the balance, if any, should be allowed to remain and accumulate in said bank, and that when the money thus accumulated, after paying all expenses, amounted to $20,000, it should be equally, divided between A. Brossard and L. Fannof. It was further agreed that Fannof would then convey to Brossard, by a good and sufficient deed, an undivided one-half interest in the group of mines in question. It was also agreed that Brossard should have an option to purchase said one-half interest in the property at any time during the life of the lease by paying therefor “the sum of $10,000 of his- own individual funds, . . . and that in such event any moneys that may have accumulated in said bank over and above the expenditures . . . shall be equally divided between the parties.” It was further provided in the lease that Brossard should neither sublet nor assign the lease without first obtaining Fannof’s consent in writing. It was also provided that when steam power was used to operate the machinery of the mine Fannof should be ‘ ’'employed as first engineer at the current wages paid for such work in Tuscarora mining district. ” (The record shows that steam power was used, and that Fannof was employed as an engineer.) It was further provided in the lease that if *419Brossard desired at any time to stop wort on the property and to terminate tbe lease be could do so, and the money on deposit in the bank, if any, derived from the sale of ores taken from the mines, after the payment of all expenses of development, should be divided equally between the parties.
This leasee, which was written out, but, as stated, not signed, was taken by Brossard to Logan City, Utah, where most of the other defendants resided, and there presented to them with the proposition from Brossard that, if each of them would contribute a certain sum of money to be used by Bros-sard in the development of the mining claims covered by his lease, he, in return for the money so contributed, would, at some future, time convey to each of the parties contributing an interest in the property, provided he should, with the funds thus furnished him, succeed in making of the adventure a paying concern. This proposition was accepted by the other defendants, who immediately paid to Brossard $5,000. Brossard soon thereafter returned to Tuscarora, and he and Fannof signed the lease, a draft of which he had, as stated, shown to the other defendants. Brossard immediately thereafter took possession of the leased property, and, with the money he had received from his co-defendants, put up machinery, employed men, and began active operations thereon. The work consisted of sinking shafts, running tunnels, and making crosscuts in search for ore. About March 1, 1903, thé funds which Bros-sard had received under the contract became exhausted, and he called upon the parties who had paid him the $5,000 for more money, and they again paid him $2,000. On March 11, 1903, an agreement containing the terms and conditions upon which the money was paid Brossard was drawn up and signed by him and the other defendants. The agreement so far as material here, is set out in the prevailing opinion in this case. Contributions other than those mentioned in the agreement were made by the parties, the last of which was made about June 30, 1903. Brossard called on the parties for more money in July, 1903, but they failed to make any further payments. The entire amount contributed under the agreement was about $10,000. Brossard kept men at work on the prop*420erty until September 23, 1903, but failed to find any ore, and was compelled, for the want of funds, to abandon the work and to throw up his lease. It appears that the expenses of working and operating the mines during the months of August and September were not paid.
The action was tried to a jury, who returned a verdict in favor of plaintiff and against A. Brossard, and against plaintiff and in favor of the defendants Jacob' West and B. A. Caldwell, “no cause of action.” The court directed a verdict in favor of Mattie B. Hanson and J. M. Blair. The defendants A. B. Caldwell and O. A. Caldwell were not served with summons, and.did not appear in the action. This appeal is prosecuted against the defendants, Jacob West and K. A. Caldwell only.
Appellant bases his right to recover from respondents on the ground that they were copartners with defendant Brossard in the said mining operations, and that the services in question were rendered for the copartnership. The court instructed the jury that the written agreement between A. Brossard and the other defendants did not create the relationship of copartners» between them. Appellant assigns the giving of this instruction as error. It might be well to observe that respondents concede that the services referred to were rendered, and that the sum sued for is justly due appellant. Bespondents, however, contend that Brossard alone was liable for the debt. The 'only question, therefore, presented by this appeal is, did the relationship of copartners exist between Brossard and the respondents at the time the labor in question was performed ? A partnership is defined to be
“A business relation between two or more persons arising out of a contract by which they agree to unite their property, credit, skill, or influence in some business so that they may have a community of interest in such business, and usually divide the profits and losses between themselves in fixed proportions.” (2 Page on Contracts, 937.)
In the case of Beecher v. Bush, 45 Mich. 188, 7 N. W. 785, 40 Am. Rep. 465, Judge Cooley, in the course of an able and elaborate opinion, says that a partnership is “a community of interests in some lawful commerce or business, for the conduct *421of wbicb tbe parties are mutually principals of, and agents for, eacb other.”
Some of the elements necessary to a. partnership are wanting in the agreement entered into' between Brossard and his oodefendants. . There was no evidence introduced that tended to show that it was the intention of the parties to the agreement to form a partnership', nor do I think such intention can be reasonably inferred from the terms of the contract, especially when read and construed in connection with the lease: The agreement when thus read shows conclusively that neither respondents nor any of Brossard’s other codefendants acquired' any interest whatever in the lease. The consideration, and the only consideration received by the parties for the money paid to Brossard under the contract, was his promise that he would, in case the venture proved a financial success, refund the money, deed to each of the parties a specified interest in the property, and pay to each a certain proportion of the fund provided for by the terms of his lease. Brossard was in no way subject to the control or dictation of respondents and the other defendants respecting the employment of laborers at the mine and the expenditure of the money in purchasing machinery and supplies necessary to the successful prosecution of the work under the lease. And neither respondents nor any of Brossard’s other codefendants had any authority to contract for or to purchase supplies to be used in operating the mines and to pay for the same by drawing against the funds which they had paid to Brossard. Their contract gave them no right whatever to direct how the money should be expended, or in what particular way the work should be prosecuted. They had no right to even go upon the property and enter the underground workings thereof without Brossard’s consent. Nor could they compel him to suspend operations when the money paid him was exhausted. And they could not have prevented him from incurring the indebtedness for which they are sought to be held liable in this action. In fact, they had no more legal right under the contract to direct how the money should be expended, or how the work under the lease should be performed or prosecuted, than if they were not parties to the *422agreement, but were strangers to tbe entire transaction. True it is said in tbe opinion written by Mr. Justice Straup tbat “plaintiff (appellant) also gave evidence tending to sbow tbat be was employed at tbe instance and request of Brossard and R. A. Caldwell.” I do not so construe plaintiff’s testimony -when read in its entirety on this point. He said: “I know A. Brossard. Became acquainted with him in 1902. He . . . asked if I was an engineer, and if I would go to work for him. I also know R. A. Caldwell. Became acquainted with him about June or July, 1903. He (Caldwell) came over to tbe mine where I was at work (referring to tbe mine covered by tbe lease).” Again be says: “I was employed by A. Brossard to work on tbe Wakefield group of mines about January 10, 1903.” On cross-examination be stated: “I did not nor do I know now who are tbe owners of tbe Wakefield group of mining claims, but understood tbat I was employed by A. Brossard, R. A. Caldwell, and others furnishing tbe money for tbe same. From R. A. Caldwell I received my information at different times between tbe months of July and September, 1903 (this testimony was denied by Caldwell) ; from Mrs. A. Brossard in tbe month of July, 1903.” He named several other persons from whom be acquired this information, none of whom are parties to tbe suit. Therefore I think bis own evidence conclusively shows tbat be was not employed at tbe instance of R. A. Caldwell. He bad been at work for Brossard five or six months before be met or became acquainted with Caldwell. Tbe record further shows tbat tbe business was all done by Brossard in bis own name. Another significant fact is tbat respondent’s and Bros-sard’s other codefendants made their last payment June 30, 1903. Soon after this payment was made R. A. Caldwell came to Tuscarora and examined tbe property covered by tbe lease. He went into tbe mine twice and examined tbe underground workings. Tbe evidence introduced on behalf of appellant shows tbat Caldwell stated to one Hobson, who was employed at tbe mine as timekeeper and bookkeeper, tbat be (Caldwell) “bad put up money for tbe development of tbe Wakefield group of mines, . . . and tbat be bad put up *423his last dollar for such work.” This alleged conversation took •place long before the indebtedness involved in this case was incurred. Notwithstanding Caldwell remained continuously in Tuscarora until after Brossard had abandoned his work and left the camp, neither appellant nor any of the other employees at the mine suggested to him that they intended to hold him responsible for their wages. In fact the only demand ever made on respondents by appellants was the bringing of -this action.
The obligations created by the agreement were not joint, as appellant seems to contend, but several; that is, the amount that each of Brossard’s codefendants was to contribute, and the interest each party was to receive in the property, was fixed by the agreement. Neither of Brossard’s codefendants acquired any right or interest in the .contribution of any other defendant, nor in any of the benefits to be derived therefrom, as stated by counsel for respondents in their brief, “the relationship among the defendants was as separate and several in character as if each of the defendants, with the exception of, Bros-sard, had entered into a separate and distinct contract with him.” When one of the parties to the agreement paid the amount he had covenanted to pay, the contract on his part was fully performed, and neither Brossard nor any of the other defendants had any further claim against him. And on the other hand, when the money advanced by the parties was all spent, and they failed to further contribute, Brossard’s obligations to them under the agreement likewise terminated, and the contract gave him no authority to continue the work on the credit of his codefendants. That such was the legal effect of the agreement is plain, because, as stated, Brossard’s right to the possession of the property and to carry on the development woi'k was derived from his lease from Bannof, and in no way depended upon his agreement with respondents. This lease he could not assign, neither could he sublet the property covered by it without the written consent of Bannof. By the terms of the lease Brossard was bound to keep a certain number of men at ■work on the property during the life of the lease, and when steam power was used to run the machinery of the mines Ban-*424nof was to be employed as chief or head engineer. These terms and conditions were fully understood by the other defendants when they entered into the contract in question with Brossard. They knew that under the terms of the lease the voluntary suspension of the work for any appreciable length of time gave Fannof the right to terminate the lease, and to repossess the property. Therefore it necessarily follows that Brossard, in operating the mines under the lease, could not, in any sense, have been the representative or agent of the defendants, for as I have stated, they had no interest whatever in the lease. And furthermore Brossard could not, without the written consent of Fannof, which was not obtained, assign an interest to them.
The doctrine is fundamental that in a partnership each partner is an agent of his copartners in all matters pertaining to the affairs of the partnership, and has implied authority to bind the firm in all matters within the scope of the business in which it was engaged. This principle is well illustrated by Mr. Parsons in his work on Partnership, section 83, in the following language:
“The principle which lies at the foundation of the partners’ liability is that every partner has full and absolute authority to bind all the partners by his acts or contracts, in relation to the business of the firm, in the same manner and to the same extent as if he held full, powers of attorney from all the members. No principle is better established' than this. It rests, not only on universal authority, but on obvious reason and necessity; because, if the rule were otherwise, a very large proportion of the advantages and facilities for which partnerships are formed would be lost.”
Tested by this doctrine, wbicb is undoubtedly founded upon correct principles, it is plain that the agreement entered into by Brossard and the other defendants did not create the relationship of partners between them. (Beecher v. Bush, supra; Loomis v. Marshall, 12 Conn. 69, 30 Am. Dec. 596.)
By an examination of the cases cited in the opinion written by Mr. Justice Straup it will be seen that they adhere to and declare this same doctrine. If, however, the construction contended for by appellant of the contract under consideration *425is to be adopted, and followed in tbis case, then we hays here a partnership in which five of the six members comprising the firm had no voice whatever in conducting and carrying on the business of the partnership'. They could not severally or collectively exercise any supervision over the other partner (Brossard) in his management of the business. In fact, as I have hereinbefore stated, they did not have the right to even go upon the property to inspect the work as it progressed except by consent of Brossard. In other words, they were only so many figureheads or dummies in the alleged partnership without any of the rights or privileges pertaining to the management and the carrying on of the partnership affairs with which the law clothes the several members of a partnership. In the opinion written by Mr. Justice Straup, it is said: “Furthermore, each party here had, not only an interest in the carrying on of the business or adventure, but also a common ownership in the business itself.” Now, if each party “had a common ownership in the business,” he acquired it by virtue of the lease and the contract entered into between himself, Brossard, and the other defendants. It could not have been by virtue of the lease, because the lease itself prohibited Brossard from parting with his interest or any part thereof without the written consent of Fannof, and this he did not obtain. The contract between Brossard, respondent, and the other defendants did not make them common owners in the business, because, as stated in the prevailing opinion, “it (the contract) must be read in connection with the lease,” It is further said in the opinion that, “though the lease was in the name of Brossard alone, nevertheless the contract of the defendants, as between themselves, had the effect of an equitable assignment of the lease, and gave each of the parties to the contract an equitable interest in the lease.” This, however, cannot be so. The contract between Brossard and his codefendants provided that in case he (Brossard) should acquire title to an interest in the property as provided in the lease, he would, in consideration for the money furnished him, convey to each of the other defendants a specified interest in the property, and then prorate between them the $10,000 *426he was to receive as his portion of the accumulations provided for in the lease. That neither Brossard nor respondents could have intended that they should acquire an interest in the Bannof lease is plain, because the provisions of the lease itself, as stated, precluded them from acquiring an interest therein. If Brossard at any time had quit work, neither respondents nor any of the other codefendants could have gone into possession of the property and continued the work of development and thereby prevented a forfeiture of the lease by Bannof. To illustrate: Suppose that after Brossard had taken possession of the property and commenced work thereon in conformity with the terms of the lease, Ban-nof had refused to permit him to continue in possession of the .property, and had ejected him therefrom, and Brossard had brought suit to recover possession of the mining claims, is it not plain that respondents would have been neither necessary nor proper parties to the action ? Why, certainly. All of which is incompatible with the theory advanced and claim made that respondents, by virtue of their contract with Bros-sard, acquired an equitable interest in the lease, and had a common ownership in the business.
There was some evidence introduced at the trial which tended to show that during the time appellant was at work on the mining claims in question respondent B. A. Caldwell visited the property and on several occasions stated to appellant that the work was being performed for himself and the other parties who had put money into the enterprise. This testimony, as hereinbefore stated, was denied by Caldwell, and the jury, by their verdict, found against appellant on this point, and this court is concluded by the finding.
Beferenee is made to the fact that after Brossard had thrown up his lease and quit work Bannof met with respondents and others who had furnished funds with which to enable Brossard to carry on the work under his lease, and that there was some talk of organizing a corporation for the purpose of paying off the debts incurred by Brossard and to further develop the property. This, however, is no proof of the existence of a partnership, nor is it a circumstance tending to *427show-that there was any intent on the part of the parties to form a partnership. Fannof, no doubt, was anxious to.get what was due him from Brossard for work performed under the lease. At that time it had not, in effect, been judicially determined that notwithstanding respondents had nothing whatever to do with hiring Fannof, and were powerless to prevent his employment, nevertheless they are liable to him for the balance due on his wages; for it necessarily follows that, if respondents are liable to appellant for the balance due him for work on the mines covered by the lease, they are also liable to Fannof for the balance due him for his work.
■Council for appellant, in their brief, have assumed that by the terms of the agreement Brossard and the other defendants were to share in the profits should any be realized from the undertaking; and upon this premise they have based the major part of their argument in support of their contention that the parties intended to, and .did in fact, form a copartnership for the purpose of developing the mines in question, and ultimately acquiring an interest therein. I do not think the agreement is open to this construction. As I have hereinbefore pointed out, Brossard, in consideration of the money advanced by his codefendants, agreed to convey to each of them an- interest in the property covered by his lease, repay the money so advanced, and to pay to each a certain proportion of the $10,000 he expected to receive as his share of the fund provided for in his contract with Fan-nof. In other words, Brossard agreed to sell, and each of the other parties to the contract agreed to purchase, a specified part of his (Brossard’s) interest in the property when acquired by him under his agreement with Fannof. Suppose, for example, that the business had proved successful, and the hopes and anticipations of all the parties concerned respecting the productiveness of the property had been fully realized, and Brossard, on receipt of the title to a one-half interest in the property and the $10,000 mentioned, had refused to convey to each of the parties who had contributed to the fund and made it possible for him to- develop the property an interest in the property, and had refused to pay to each a *428part of tbe $10,000 as provided in tbe agreement, is it not apparent that an action for specific performance of tbe contract would lie against him and in favor of each of tbe parties with whom be refused to settle? Tbe agreement gave tbe respondents no interest whatever in tbe $20,000 accumulations provided for in tbe contract between Brossard and Fannof until after tbe distribution of this fund between Brossard and Fannof. Therefore, as I construe tbe agreement, no provision was made therein for tbe sharing of profits between Brossard and tbe other defendants, and tbe question of profits is in no' way involved in tbe case.
Tbe distinguishing features between mining and commercial partnerships are pointed out and elaborately discussed in the prevailing opinion. I recognize tbe difference between the two kinds or classes of partnerships as therein pointed out, but, as I view tbe case, these questions are not before us; that is, they are not involved in tbe case. No claim is made that because some of tbe parties to tbe agreement disposed of and assigned their interests therein to third parties tbe partnership', if one was created, was thereby dissolved. Tbe important question presented by this appeal is, did tbe contract, when read and construed in connection with tbe lease, create tbe relationship of partners between Brossard and respondents ? In tbe following cases the construction of contracts similar in character to tbe agreement under consideration was involved, and it was held in each case that a partnership was not created between tbe parties to tbe contract: Blair v. Schaeffer (C. C.), 33 Fed. 218; Seymour v. Freer, 8 Wall. (U. S.), 202, 19 L. Ed. 306; Adams v. Funk, 53 Ill. 219.
In the case of Blair v. Schaeffer tbe contract in part provided that: “Whereas, by virtue of a certain contract made by Samuel C. Schaeffer . . . with P. Cardenas . . . for tbe purchase of 36.47 acres of land in Jackson county, Missouri, . . . for which . . . Schaeffer was to pay tbe said Cardenas the sum of $21,882 . . . : Now¡ it is agreed as said contract is made by said Schaeffer for said land and for prudential purposes that tbe same shall be con*429veyed by warranty deed to said Schaeffer, and that John I. Blair . . . has paid for tbe same by giving to said Schae-ffer . . . the sum of $21,882 ... to enable him to pay for said land.” The contract further recited that Schaeffer had a contract for the purchase of other lands at the agreed price of $44,559, and that Blair had furnished the money with which to make the payments as they became due, “and for prudential reasons” a deed was obtained for the same in his (Schaeffer’s) own ñamé. It was further provided in the contract that: Within four months after Schae-ffer shall have obtained the title to said lands, or sooner, if desired by said Blair, said Schaeffer to make a warranty deed to said Blair for said lands. Now it is further agreed, for the mutual interest of said Blair and Schaeffer, it may be deemed advisable to obtain certain releases for pretended claims made by the Anthony heirs to said property, . . . which sum said Blair agrees t'o furnish,” etc. “It is deemed for the mutual benefit of said Blair and Schaeffer that Schae-ffer purchase 69 acres of land from John S. West adjoining the above-described lands at a price not to exceed . . . $27,600, and to obtain a warranty deed therefor. . . . All money necessary to stake off lots, grade streets, advertising, office furniture, fixtures, and rent, and stationery, taxes, and such other expenses as may become necessary for the improvement and sale of said property, . . . shall be furnished by said Blair; said Schaeffer to receive and deduct five per cent, commission upon gross sales of all lots sold at the agreed price or over made by said Blair and Schaeffer. . . . When said Blair shall have been paid in cash for all money advanced and furnished by him for'the purchase of said land and other moneys and the interest thereon as specified, then the remainder of the property shall belong sixty per cent, to said Blair and forty per cent. to> said Schaeffer. . . .” The contract further provided that, if the remainder of the property was converted into money, then Blair shoul receive sixty per cent, and Schaeffer forty per cent, of ■the proceeds. In an elaborate and well-considered opinion the court held that the contract did not create a partnership.
*430In that case Schaeffer bad a contract for the purchase of certain lands. So here Brossard had an option on certain mining property. In that case Blair was to furnish certain specified sums of money with which to purchase the lands covered by the contracts held by Schaeffer. So here each of the respondents was to pay Brossard a specified sum of money. In that case Blair was to be repaid the money advanced by him out of the proceeds of the sales of lands before Schaeffer could receive anything therefrom except the five per cent, commission provided for in the contract. So here the money paid by respondents and the other defendants was to be refunded out of the proceeds from the sale of ores, should any be extracted from the mine during the life of the contract, before there could be any division of profits between BroSsard and Fannof. In that case the court held, and rightly so, that the relation of principal and agent existed between Blair and Schaeffer whereas in this case no such relation was created between Brossard and respondents. Bros-sard went into possession of the mines under his lease, and, as I have hereinbefore observed, he was accountable to no one except Fannof as to the manner in which he prosecuted the work. His rights and obligations under the lease were in no way affected by his contract with respondents. During the life of his lease he could suspend and resume work at his pleasure, regardless of their wishes and demands All cf which is inconsistent with the theory that they were partners.
Counsel for respondents say in their brief: “Assuming that the relation of partners did exist, it had been terminated before the obligation sued on was incurred.” The pleadings do not present an issue of this kind. Nor was the case tried on the theory that a partnership had been formed, but was dissolved before the indebtedness in question was incurred. This court, therefore, cannot consider the question, notwithstanding there is some evidence in the record which tends to support counsel’s contention on this point. I am of the opinion, however, that, since the case is to be reversed on the ground that a partnership existed, the district court-*431lo which the ease is remánded should be directed to allow respondents to amend their answer, and permit them to plead as a defense this alleged dissolution of the partnership', should they so desire.
For the reasons herein stated, I am of the opinion that the judgment of the lower court should be affirmed.