15 Ga. App. 564 | Ga. Ct. App. | 1915
M. Falk brought suit upon an open account against the LaGrange Cigar Company, alleging it to be a partnership composed of F. R. Knight and LaGrange Grocery Company. There was no denial of the account by Knight, but the LaGrange Grocery Company filed a plea in abatement, denying any partnership with Knight in the business of LaGrange Cigar Company or otherwise, and denying any indebtedness whatever to the plaintiff. On the trial there was oral testimony for the plaintiff to the effect that Knight had admitted the correctness and justness of the account sued on, as against the LaGrange Cigar Company and himself, but stated that the LaGrange Grocery Company,' though it got a part of the profits of the LaGrange Cigar Company, was not a partner in the business of the cigar company. The plaintiff introduced also certain paid checks of the grocery company, identified as having been in payment of indebtedness contracted by the cigar
J. D. Faver, sworn in behalf of the LaGrange Grocery Company, testified: I am general manager of the grocery company, and was connected with it at the time this contract was made. Knight furnished all money and property for the cigar company. The grocery company did not furnish anything, but were only selling agents, purchasing cigars from him. When we ordered cigars we paid for them according to contract. This gave Knight a profit of 10 per cent., as he estimated. We credited them for him as cash. We gave him orders, the amount was credited at the end of each month as if cash, and he drew against it. We disbursed money for him
It is not contended that the LaGrange Grocery Company held itself out to the plaintiff as a partner in the LaGrange Cigar Company, and thus induced him to extend credit to the cigar company, but it is contended that Knight and the LaGrange Grocery Company were in fact partners inter se, and as such they were indebted to him the amount of the account sued on. Partnership is a fact. The oral testimony adduced in this case is of little consequence, as is all the other evidence save the contract, which is set out in full herein. The material question is whether this contract, by its terms, created a legal partnership between the parties thereto and bound them as such for the indebtedness even though it is expressly stipulated therein that they are not so to be bound. When a court is called upon to determine whether a particular contract constitutes a partnership, its controlling purpose is to ascertain the intention of the parties as disclosed by the entire transaction. But the' intention which controls in determining the existence or nonexistence of a partnership is the intention legally deducible from the terms of the contract and from the acts of the parties, and if they enter into an enterprise and conduct it in such a way that the law constitutes their relation a partnership, they are partners, although they express their intention not to be. Even an express statement in a contract that the agreement does not constitute a partnership is not conclusive. 30 Cyc. 361. After a careful study of the contract between the parties in the instant case, and of the law governing partnerships and their creation, we have come to the conclusion that the parties are not partners and are not bound as such.
The mode of determining what constitutes a partnership has undergone many changes. Under the very early English rule, mere participation in profits made one a partner. This rule was later abandoned in England; and the provisions of our code as well as the decisions of the Supreme Court make it clear that this rule does not apply in Georgia. Applying the tests there laid down, it is clear that no partnership liability was imposed upon the defendant in this case by the terms of the contract under consideration. Sections 3155 and 3158 of the Civil Code declare how a partnership
It is true, as contended by the plaintiff in error, that the contract was a'favorable one to the grocery company/ That companjr, however, perhaps was entitled to demand an advantageous contract. It was undertaking to perform for Knight a great service, and the mere fact that it sought to protect itself by reserving a right to purchase a controlling interest in the business in the future should the business prove successful would not constitute a present partnership. This was merely good business judgment. If the business had succeeded, through the efforts of the grocery company in placing its goods upon the market, it would have had the right, as a part of its compensation under the contract, to acquire an actual interest in the assets of a corporation to be formed. During the pendency of the original contract, however, its compensation was measured by a half interest in the net profits. It was to its interest to make the cigar company a successful enterprise. It evidently endeavored to make the cigar company succeed. It loaned money to the cigar company from time to time, and took a mortgage as security; and while this does not enter into the case except collaterally, the contention of the grocery company that it was not a partner is supported by the fact that the grocery company took such a mortgage from Knight, “ doing business as the LaGrange
While there are numerous conflicting decisions on the question as to what is necessary to show the creation of a partnership, it is clear to us that the parties to the contract in the present case intended merely to divide the net profits, and that the portion thereof which was to go to the grocery company was for its services as selling agent and as financial agent, and that it was not the intention of the parties, nor the legal import of the contract, to create a partnership between them. The judgment of the court was correct.
Judgment affirmed.