Court Opinion

ID: 5468989
Source: CourtListenerOpinion
Date Created: 2022-01-09 20:18:01.192104+00
Date Added: 2024-06-11T08:33:13.791617
License: Public Domain

By the court—Davies, Justice.
The plaintiff in this action seeks to charge the defendant Hall, as partner with defendants Wardwell & Bardwell, in a sale of hay, made by one Akin, and whose claim has been assigned to plaintiff.
The referee has found as a question of fact, that the purchase originally was made by the defendants Wardwell & *185Bardwell, and that Hall was not a party to this purchase, although there is some evidence authorizing a different conclusion ; there is, we think, evidence sufficient to sustain the finding of the referee on this point. We do not think it necessary, therefore, to interfere with the conclusion on this question, to which he has arrived.
The question of law submitted for our consideration, we think, was clearly and well stated, by the counsel for the defendant Hall, and is, did Hall, under the arrangement to sell the hay on joint account and divide the profits with Ward well & Bardwell, constitute himself a partner so far as the plaintiff or his assignee is concerned ?
It is quite true, as between the defendants themselves, they were not partners. But it has long been settled, that although they might not be partners as between themselves, yet as to third persons, they might be liable as such. The rule is, that a participation in the profits, when such profits are not specifically fixed as a compensation for services, and paid to a subordinate, under the direction and control of principals, renders all such participants liable to third persons as partners. The case of Waugh agt. Carver, (2 H. Black. 235,) decided on the authority of Grace agt. Smith, (2 W. Black. 998,) fully sustains this position.
By an agreement entered into between the defendants, Carver and Carver & Geisler, it was arranged between them, that they should respectively share in the profits of each other’s business, in certain proportions, and it was also provided, that each should bear his own losses, and not be responsible for the defaults and losses of the other. The counsel for the plaintiff in that case, cited several authorities, which certainly sustain the position that a participation of profits is sufficient to constitute a partnership.
Chief Justice Eyre,
in delivering the opinion of the court, says that it is plain upon the construction of the agreement, if it be construed only between the Carvers and Greisler, that they were not and never meant to be partners. They meant each house to carry on trade without risk of each other, and to be *186at their own losses. And on the authority of Grace agt. Smith, (supra,) he holds that he who takes a moiety of all the profits, shall by operation of law be made liable to losses, if losses arise, upon the principle that by taking part of the profits, he takes from the creditors a part of that fund which is the proper sesurity to them for the payment of their debts; and he adds: “for though with respect to'each other, these persons were not to be considered as partners, yet they have made themselves such with regard to their transactions with the rest of the world.”
The superior court in Smith agt. Wright, (5 Sand. 113,) held in a case where two mercantile firms agree to share profits and loss upon contracts for the purchase or sale of merchandise,, to be made by each firm in its own name, and to be executed with its separate funds, they are not hable as copartners either as between themselves or to third persons. In that case, the arrangement between the parties was very like that, as testified to by defendant Hall, existed between him and defendants Wardwell and Bardwell. But the court of appeals reversed that judgment and held that the defendants though as between themselves were not copartners, the arrangement made between them to share the profits, constitutes them partners as to third persons. (1 Abbott's Pr. Rep. 243.)
Edwards Justice,
in delivering the opinion of the court, says, “ all interest which is necessary to constitute a partnership, is an interest in the profits, and such an interest necessarily constitutes a partnership, unless, as has been stated, the interest in the profits is given as a compensation for services.” The learned judge refers with approbation to the case of Everett agt. Chapman, (6 Conn. Rep. 347,) where the parties had agreed that each one should purchase hides on his own credit, and should manufacture and sell the portion so manufactured by him, each party to participate in the profits. It was held that all the parties were liable as copartners to a third person, who sold hides to one of the parties in ignorance of the partnership, and charged the same to him.
The reasoning of the learned Judge Daggett, in the ease *187last cited, and the authorities cited by him, seem, to me conclusively to dispose of this case.
The judgment entered on the report of the referee must be reversed, and a new trial ordered, with costs to abide the event, and the case may be referred to a referee residing in the city of Hew-York.