Armstrong v. Hollen, 115 P. 423

Armstrong v. Hollen

115 P. 423 | Or. | 1911

Mr. Justice Burnett

delivered the opinion of the court.

1. A contribution to the capital of a firm by a partner does not constitute a loan to the other partner. In such a transaction the title to the money or property so contributed passes to the firm from the partner advancing it, and he must look for reimbursement to the success of the partnership venture.

2. No indebtedness exists between the partners as to the partnership until it is wound up, the firm indebtedness discharged, and a balance ascertained between the partners. Not until then under such circumstances can an indebtedness arise. It is possible, indeed, for one partner to lend money to a firm. As applied to this case, a loan to the firm would not be a loan to the individual partner. The partnership is an entity distinct from either partner.

3. The fallacy of the plaintiff’s argument lies in the assumption that the affirmative matter of the answer is a plea in abatement which is waived when joined with the *536general issue. If as a matter of fact, as alleged in the new matter of the answer, the money, grain, materials, and services mentioned in the. complaint were contributions to the capital of the Condon Milling Company, they could not constitute a loan as charged in the complaint, and the establishment of the allegations of new matter in the answer would be a bar, not an abatement, of the action. A judgment in favor of the defendant in such a case would leave the plaintiff free to bring his suit in equity to wind up the partnership and state an account of its affairs. Such a suit might result in the declaration of a balance in favor of the plaintiff after the extinction of the indebtedness of the firm, but not until the balance was ascertained would there be any indebtedness from •the defendant to the plaintiff, and then it would be an indebtedness arising from the contract of record, to wit, the decree of the court declaring such a balance in favor of the plaintiff.

It was error to sustain the demurrer to the new matter in the answer.

The judgment of the court below is reversed, and the cause remanded for further proceedings not inconsistent with this opinion. Reversed.