Court Opinion

ID: 6599455
Source: CourtListenerOpinion
Date Created: 2022-07-20 20:06:25.237344+00
Date Added: 2024-06-11T15:57:57.616900
License: Public Domain

Cole, J.
If indeed a partnership existed between Harris and Miller, then it seems to be well settled that both should join in the action. Eor in that case the money would belong to the firm, and be subject to the liabilities and incidents of the partnership until dissolution, and one partner coirld not sue and recover it at law. The question therefore arises, does the complaint show that a partnership existed between Harris and Miller ?
Prom the facts stated in the complaint it is obvious that there was to be a joint loss in the business, if the returns should fall short of the outlay, and a corresponding gain, if the speculation was successful; in other words, a community of profit and loss, which is one of the leading features of a partnership. The pork, under the arrangement, was purchased on joint account of Harris and Miller; Harris was to attend personally to the business; Miller was to make advances whenever the same should become necessary; the costs and expenses and disbursements were to be deducted from the sales; the advances made by Miller and others, with interest, were to be repaid; and the residue, being the net profits of the business, was to be divided between Harris and Miller. That Harris and *121Miller intended by the arrangement to create a partnership, and that they did in fact create one, may be determined by another test. Suppose Harris had himself collected the money of Dows & Co.: could the plaintiff have maintained an action at law against him for his share of it, or would he have been put to his suit in equity for an accounting and settlement of the affairs of the firm ? It appears to us most clearly that the latter would be his remedy, and that he would be entitled to an accounting ; because, after the specified deductions were made, he was to have one half the profits of the business, and of course a preference in payment over the individual creditors of Harris.
Unless, under the arrangement, Miller is held and deemed to be a partner in the business, and interested in the profits thereof, as profits, then it would seem to follow that he is a mere creditor of Harris, having made advances for buying and shipping the pork relying on his personal responsibility. In the latter case, he would certainly have no preference over other creditors of Harris ; for “ the general rule of law admits of no preference as between persons claiming in different rights against the estate of a bankrupt or insolvent debtor, on the ground that the property in question has resulted from the labor or sacrifices made by one claimant, and should therefore be appropriated to him, to the exclusion of the others. Thus, when goods are sold and delivered to an insolvent purchaser, they may be seized in execution by an antecedent creditor, and applied to the discharge of his debt, without any regard to the claim of the vendor for the purchase money. But a debt due for advances made in money or goods by one partner to another, in the course of the partnership business, is entitled to a preference, so far as the partnership assets are concerned, over all debts due by the debtor individually, and must be paid in full before they can be taken into consideration. In other words, each partner has a lien on the partnership property for the balance of accounts between himself and Ms co-partners, wMch *122be may enforce as against all persons claiming under tbem in tbeir individual capacity. Pierce v. Jackson, 6 Mass., 242; Christian v. Pilis, 1 Grattan, 396 ; Gibson v. Stevens, 7 N. H., 352; Garbett v. Veal, 5 Q. B., 408. But tbis advantage of having a specific security for tbe amount due on a business contract, as against tbe separate creditors of tbe other party to tbe contract, can only exist where tbe contract is one of partnership, and is necessarily and essentially coupled with tbe disadvantage of being personally liable for all debts contracted on account of tbe business to which tbe contract relates. ”
These remarks of tbe American annotator to Waugh v. Carver, 1 Smith’s Leading Cases, 968, 983, are quite applicable and pertinent to tbe point just suggested. If a partnership relation did not exist, then Miller has only a right of action for tbe amount due him on tbe contract, without having any specific lien on tbe proceeds of tbe business.
Further, it is said that there was but a single transaction in purchasing tbe pork. But we think it appears from the complaint that there was more than one transaction in buying pork; and tbe fair inference from its allegations is, that a partnership existed between the parties. If so, it is clear that the money sued for belongs to the firm.
By the Court. — The order overruling the demurrer to the complaint is reversed, and the cause remanded to the county court for farther proceedings.