Maynard v. Jackson

159 Ga. 20 | Ga. | 1924

Lead Opinion

Hines, J.

What is the true relationship of the parties to ‘ each other under the contract involved in this case ? In his petition the plaintiff alleges that the defendant took charge of his farm under said contract as his agent, thus implying that the relation between plaintiff and defendant was that of principal and agent. There is a suggestion that plaintiff is bound by this classification by him of the contract. The defendant is not in position to hold the plaintiff to this classification, unless he is willing to be bound thereby. Instead of accepting the statement of the plaintiff, implying that the relationship was that of principal and agent, the defendant expressly repudiates this contention, and in his answer asserts that the relationship was that of partners under this contract. It would clearly be unfair to hold the plaintiff to his classification of the contract, and at the same time permit the defendant to repudiate such classification and insist upon a different classification.

As the rights of the parties under this contract depend upon the relation or relations thereby created between them, it becomes necessary at the outset for us to determine the true meaning of the instrument as to such relation or relations. We have'to look to the terms of the contract. First, Maynard “agrees to place in charge E. P. Jackson, and to place in his care and keeping,” his farm of 5500 acres. This stipulation is equally applicable to the relation of principal and agent, landlord and tenant, partners, or employer and employee. The contract further provides that Jackson “shall have full and complete charge of the aforesaid” farm “as tenant of same; and that the said Thomas A. Maynard is to receive as rental from the said R. P. Jackson the sum of $6600 per annum; then, after the payment of rental aforesaid, the sum total of all the expenses of the said farm shall be paid from the proceeds of the same; and after all expenses shall have been paid, the net remainder of profits of said farm shall be equally divided between the said Maynard and the said Jackson.” The stipulation as to the payment of rent clearly creates the relation of landlord and tenant between the parties, unless there is something else in the contract requiring a different conclusion. The other language last quoted refers to the operation of the farm, payment of the expenses thereof, and division of net profits between them. This language is appropriate to the relation of partners, although in the absence of other language it might be applicable to the relation of landlord and tenant. But it is insisted by counsel for Jackson that the language, “then, after the payment of rental aforesaid, the sum total of all the expenses of the said farm shall be paid from the proceeds of the same,” means that the rental which Maynard is to receive from Jackson is to be paid from the proceeds of the farm, and in effect puts upon Maynard and Jackson, and not upon -Jackson alone, the obligation of paying this rental, which is wholly inconsistent with the relation of landlord and tenant between the parties, but establishes the relationship of partners between them. There is force in this contention; but when we give effect to all portions of the contract, we do not think that this position is tenable. It is inconsistent with the terms of the contract which provide that Jackson is to have full and complete charge of the farm “as tenant,” and that Maynard is to receive from Jackson $6600 per annum as rental of the farm.

The contract then contains this stipulation: “It is further covenanted and agreed that the' said farm shall be considered to bear a present valuation of $110,000; and that in the event of the said lands increasing in value during the period of life of this contract, then the said Maynard and said Jackson shall share equally in the increased value of said farm, and all over the present valuation named, after the said Maynard, his heirs and assigns, and estate have been paid the present agreed value of said farm. It is further covenanted and agreed that the said R. P. Jackson is to run the said farm, machinery (requisite upon the same), but further agrees that he will only use the credit of tlie Pinetucky Development Company, except in the interest of the said farm, in erecting, altering, and repairing of all buildings, and that he shall have full and complete charge of any and all busi-. ness connected with the property aforesaid that may prove of profit and value to the partnership created by this contract.” It is further “agreed that all taxes shall be . . paid as a part of the general expenses of said farm before.any division of net profit is made between said parties.” It is further agreed that “R. P. Jackson is to render his services and earnest efforts in the management of said farm, without compensation except the equal division of the net profits of said farm as aforesaid, and that he is to sign all checks, notes, and documents, and is to prepare an annual itemized statement in duplicate, which shall be ready upon the first day of each January during the life of this contract, and that a copy of the same shall be furnished by said R. P. Jackson to the said Thomas A. Maynard, on or before the date named.” It is further “covenanted that this contract is binding upon the heirs, assigns, and estate of the said parties, . . and is to run for a period of 20 years beginning March 4, 1919, and terminating January 1, 1940; and that neither party shall have the right to transfer or assign his rights and equities in this contract, except by the written consent of the other party hereto. This contract is based upon the mutual confidence of a faithful and complete performance of all terms and agreements contained therein, and shall, be terminated only by a failure on the part of either to live up to same, or in case of grave and serious calamities or misfortune, such as the act of God, desolation wrought by war, curse of the boll-weevil, etc.” This instrument further provides that “said Jackson and Maynard is [are] to have all notes, accounts, and improvements made by Bridges and Maynard made in 1918, consisting of completed gin outfit, sawmill, three mules, wagons, and all other effects belonging to Pinetucky Development Company, and are only to resume [assume ?] three notes given to T. A. Maynard in 1918, aggregating $5000, and $700 owing to Rawlins Company for boiler. . . Said Maynard is to take care of all claims that is made against Pinetucky Development Company while J. J. Bridges was in charge.”

We are of the opinion that this contract creates the dual relation of landlord.and tenant and of partners between -the parties. In the first place, Jackson rents tlie farm from Maynard, and is to pay the latter an annual rental of $6600, whether the farming operations are profitable or unprofitable. Then Maynard and Jackson are to conduct farming operations on said farm so leased-by Jackson from Maynard, and operate the machinery on said place. Jackson is to operate said farm and machinery and use the credit of the Pinetucky Development Company, the name under which Maynard and one Bridges had conducted these farming operations, only in the interest of the farm, and in erecting, altering, and repairing all buildings thereon. He is to have full and complete charge of- all business connected with said property that may “prove of profit and value to the partnership created by this contract.” All taxes are to be paid ás part of the general expenses of said farm, before any division of the net profits. Jackson is to render his services in the management of the farm without compensation, except an equal division of net profits from said farm. He is to sign all checks, notes and documents, and prepare an annual itemized statement in duplicate, showing the expenses of the operation of said business, which is to be ready on the first day of each January, and a copy thereof furnished by Jackson to Maynard .on or before said date. The relation between these parties was not that of employer and employee. It is not a case where one conducting a business in his own name and on-his own account agrees with another that the latter shall attend personally to the business and receive for his services a given portion of the net profits, in which case the relation of employer and employee, and not that of a partnership, would exist. Thornton v. McDonald, 108 Ga. 3 (33 S. E. 680); Dawson National Bank v. Ward, 120 Ga. 861 (48 S. E. 313). In this case Jackson was to do much more than merely render his personal services in a business conducted by Maynard in his own name, for which he was to receive as his compensation only a share of the net profits. The business was not conducted in the name of Maynard alone. But Jackson and Maynard were to be liable for the expenses of operation and for any losses which anight accrue in the conduct of the business. The credit of the Pinetucky Development Company was to be used in said farming operations, and in erecting, altering, and repairing buildings on said farm. Thus both parties were made responsible for debts incurred in conducting the farming operations. Tbe contract expressly declares that a partnership is thereby created. So, looking to the whole instrument, and giving effect to all its parts, we reach the conclusion that the relations both of landlord and tenant and of partners were created by this contract. In other words, Jackson rented the farm from Maynard and was to pay an annual rental of $6600. Then Maynard and Jackson were to operate the farm and machinery thereon, Jackson being the active partner in the conduct of the partnership business, both being liable for the expenses of operation and any losses in the conduct of the business, and both to share equally in the net profits of the business. We can not agree to the contention that the partnership rented these lands from Maynard and that the partners were to pay the rent. This would be in the teeth of the written contract. We can see good reason why Maynard, under the literal terms of this contract, would want to rent the land to Jackson, and to have Jackson pay the rent. It would spur Jackson to make the farming venture profitable.

In his third finding of law, the auditor found that under the contract the relation between the parties was that of partners. To this finding of law the plaintiff excepted; and the trial judge overruled this exception. In his thirteenth finding of fact, the auditor found that Jackson should be charged with only $3300 of the rental which Maynard was to receive for his farm. To this finding the plaintiff excepted on the ground that under the contract Jackson should be chargeable with the whole rental of $6600. The judge overruled this exception, and to this ruling the plaintiff excepted. The auditor further found that the rental of $6600 was to be paid by the company, that the rental for 1920 was not paid, and that Jackson be charged with one half thereof. To the finding charging Jackson with only one half of this rent the plaintiff excepted on the ground that under the contract Jackson should be charged with all the rent due the plaintiff. The trial judge overruled this exception, and to this ruling plaintiff excepted. Under the ruling made in the first division of this opinion, these exceptions of plaintiff should have been sustained. Jackson should be charged with $6600 as rental of this plantation for the year 1920. An accounting should be had between plaintiff and defendant as to the farming operations; and after deducting all the expenses of the farm, including taxes thereon, the net profits, if any, should be equally divided between the parties; and in case of loss, one half thereof should be borne by each of the'parties.

The most important question in this case and the one which has given us the most trouble is the right of Jackson to recover from Maynard the increased value of this farm .arising during the life of the contract. Under the contract it was “agreed that the said farm should be considered to bear a present valuation of $110,000; and that in the event of the said lands increasing in value during the period of life of this contract, then said Maynard and said Jackson shall share equally in the increased value of said farm, and all over the present valuation named, after the said Maynard, his heirs and assigns, and estate have been paid the present agreed value of said farm.” The auditor found that Maynard breached this contract in August, 1920, that at the time the farm had largely increased in value, and that Jackson was entitled to a judgment against Maynard for one half of said increased value, less certain items of indebtedness due by Jackson to Maynard. The auditor further found that the proper time for the division of such profits, in the absence of a breach of the contract, would be at the termination of the contract period of 20 years; but that if the plaintiff breached the contract, or terminated it over objection of the defendant before the end of that period, the defendant still being willing to perform and performing his obligations under the contract, then the defendant would be entitled to such profits arising from the increased value of the land which accrued up to the time of such breach or termination. To the above rulings of the auditor the plaintiff excepted. The trial judge overruled his exception, and rendered judgment in favor of Jackson against Maynard for his half of this increased value of the farm. To this ruling and judgment plaintiff excepted. Are these rulings correct? This depends upon the proper construction of the above provision of this contract. Under this provision the parties were to share equally in the enhanced value of the land over its agreed value. If the land advanced in value, each was the owner of half of such increase. Under the contract Maynard did not agree to take and pay for Jackson’s half of this enhanced value. Jackson could no more compel Maynard to take and pay for Jackson’s half thereof than Maynard could'compel Jackson to take and pay for Maynard’s half of this enhanced value. Maynard was to be first paid the agreed value of $110,000 for his farm. After this was paid, he and Jackson were to share equally any value accruing above the agreed value. Each became the owner of one half of such enhanced value, without obligation on the part of either to take and pay for the share of the other in such increased value. Therefore the auditor erred in finding that Maynard was chargeable with one half of this increased value, and that Jackson was entitled to a judgment against him therefor. If Jackson had tendered or offered to pay Ma3'nard his $110,000 and his half of the enhanced value, or if he had procured some one ready, willing, and able to pay Maynard said sum and his share in such increased value at the time of the alleged breach of the contract by Maynard, and Maynard had refused to receive the same, then, upon the breach of the contract by Maynard, Jackson might have been entitled to recover from Maynard as damages his half of such enhanced value. The facts do not make such case. Or if the value of the land had increased above such agreed valuation at the time of the alleged breach of the contract by Maynard, then Jackson would be entitled, upon such breach, to have the land sold, Maynard paid his $110,000, and the balance, of the proceeds, if any, after paying the expenses of the proceeding, equally divided between them. In view of the above ruling, the trial judge erred in overruling the plaintiff’s fourth and sixth exceptions of fact, and his third, fourth, and eighth exceptions of 'law to the report of the auditor, the report of the auditor being based upon an erroneous construction of the contract between the parties.

Judgment reversed.

All the Justices concur, except Russell, O. J., disqualified.

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Concurrence Opinion

Hill, J.,

concurring specially. I concur in the result reached by the majority of the court that a new trial should be granted, but for a different reason. I construe the contract to be one creating the sole relation of landlord and tenant, and not one creating two relations, as insisted by the majority, viz., landlord and tenant, and a partnership. The following reasons lead me to the above conclusion: There are many elements entering into partnerships, and various tests of determining whether a contract creates a partnership. In the contract here the question as to liability as to third parties need not be considered as one of the tests, because there are no creditors seeking to hold the parties to the contract liable as a partnership for the debts created under the contract. While the contract has some of the elements of a partnership, yet there staiid out strongly and prominently facts which constitute the contract as one between landlord and tenant. As clearly showing the relation of landlord and tenant, the following parts of the contract should be considered. It is expressly provided: “The said R. P. Jackson, party of the second part, shall have full and complete charge of the aforesaid Pinetucky plantation as tenant of same, and that the said Thomas A. Maynard is to receive as rental from the said R. P. Jackson the sum of $6600 per annum; then, after the payment of rental aforesaid, the sum total of all the expenses of the said farm shall be paid from the proceeds of the same; and after all expenses shall have, been paid, the net remainder of profits of said farm shall be equally divided between the said Maynard and said Jackson.” Here we have an express agreement and understanding that $6600 a year is to be paid and received “as rental.” Two expressions in the excerpt which are quoted from the contract reveal clearly the predominant purpose, which is to create a tenancy; and those are the expressions in which it is declared that Jackson is to take charge of the plantation in question “as tenant of the same,” and the amount of the rent that he is to pay is fixed'at $6600 a year. In placing Jackson in charge of the plantation as -tenant certain rights and privileges were conferred upon him that he would not have as a partner. A tenant so placed in possession of rented land has certain exclusive privileges that the owner of the lands can not interfere with, privileges of an exclusive nature which would not belong to one partner as against the other partner. In addition to this, without regard to the predominance of the 'fact that Jackson is liable in any one year for rental in the amount of $6600, because there is an unconditional agreement upon his part to pay this amount of rental, if at the end of the year when this $6600 became due he failed to pay the same, that amount being rent, the owner of the place would be entitled to sue out a distress warrant against this tenant; and the idea that the owner of the lands could sue out a distress warrant against the man in charge, and who claims to be a partner, is utterly inconsistent with the idea of a partnership. It is true that in the part of the contract which is set forth there is a provision that “after all the expenses of the said farm shall be paid from the proceeds of the same, and after all expenses shall have been paid, the net remainder of profits of said farm shall be equally divided between the said Maynard and said Jackson.” The expression “net remainder of profits” of course implies the idea of an interest in losses, and that is one of the features of a partnership contract; but standing out more prominently than this is the unconditional agreement to pay $6600 rental; and the further provision in this contract that the net remainder of the profits shall be divided has no other effect, in view of the controlling stipulation in the contract, than giving to the owner of the lands an additional rent if there are net profits. “The mere fact that one received a portion of the profits of a business as rent for premises used in the business does not therefore make him a partner in the business, where there is no mutual interest in the capital invested, and the share in the profits paid to the lessor is not given to him as proceeds of a joint venture by the parties, but piirely as rent to be paid for the use of the building.” 20 R. C. L. 843, § 48, citing Westcott v. Gilman, 170 Cal. 562 (150 Pac. 777, Ann. Cas. 1916E, 437); Thayer v. Augustine, 55 Mich. 187 (20 N. W. 898, 54 Am. R. 361).

It is true that we find in the contract the expression (after the stipulation that Jackson is to rent the farm)'that Jackson “will only use the credit of the Pinetucky Development Company except in the interest of the said farm, in erecting, altering, and repairing of all buildings, and that he shall have full and complete charge of all and all business connected with the property aforesaid that may prove of profit and value to the partnership created by this contract.” The fact that the contract between the parties is referred to in the document as a “partnership” does not tend to establish the claim that the entire contract creates a partnership. A partnership exists because of the relations created by the contract between the parties to the same, and not as a result of any name that is given to the enterprise. The use of the word “partnership” here has but little weight in determining whether or not such a relationship was actually created. Of course the stipulation that Jackson should “only use the credit of the Pinetucky Development Company except in the interest of 'the said farm, in erecting, altering, and repairing of all buildings,” and that he should “have full and complete charge of all business connected with the property aforesaid,” etc., is language that may be appropriate to a contract of partnership, but such language alone can no't give character to the contract under consideration. As we have pointed out above, the unconditional agreement to pay rent, and the vesting of Jackson with the rights of a tenant, are the clauses in the contract which stamp it indelibly with the features of a contract between landlord and tenant; and though it may be repeating, it is such a contract as between the parties to it, without regard to claims of third persons that may have arisen from engagements entered into with reference to the farm by Jackson, the tenant, under the authority with which he is vested in this contract. Jackson had no interest in the land involved, further than that “the said farm shall be considered to bear a present valuation of $110,000; and that in the event of the said lands increasing' in value during the period of life of this contract [twenty years], then the said Maynard and said Jackson shall share equally in the increased value of said farm, and all over the present valuation named, after the said Maynard, his heirs and assigns, and estate have been paid the present agreed value of said farm,” etc. This created merely a contingent interest in the enhanced value of the land at the expiration of twenty years; and in the event Jackson failed to pay the rent to Maynard, the latter still had the remedies in favor of a landlord against the tenant.

I am therefore of the opinion that the contract in the present case created the sole relationship of landlord and tenant as between the plaintiff and the defendant. Whether as to third parties there was a partnership existing under the contract need not be considered, as that question is not made in the case. Civil Code (1910), § 3158.