26 A.2d 400 | Md. | 1942
The declaration filed in this case in the Circuit Court for Dorchester County contained the common counts and a special count alleging that the plaintiffs, Ernest C. McBriety, Roy J. Rhodes and Marion F. Kent, trading as R.J. Rhodes Distributing Company, delivered certain beer and ale to the defendants, Hubert Phillips and Norman Willey, trading as Cozy Spot, from August, 1939, to July, 1940.
Willey was adjudicated bankrupt on August 24, 1940. Phillips filed general issue pleas and a plea denying that he had ever been associated in partnership with Willey. The case was removed to the Circuit Court for Wicomico County, and later to the Circuit Court for Worcester County, where Phillips was given permission to withdraw his pleas and demur. The plaintiffs thereupon withdrew all their counts except the seventh common count, to which Phillips again filed general issue pleas and a plea denying partnership.
The plaintiffs filed a motion to strike out the special plea on the ground that general issue pleas had been filed previously. At common law, whenever a declaration alleged a partnership or a corporation or a written instrument material under the pleadings, and issue was joined on the general issue pleas, the burden was on the plaintiff to prove the existence of the partnership or the corporation or the genuineness of the instrument. In the great majority of cases it was impossible to refute the allegation, yet the plaintiff was obliged to produce the evidence, however troublesome or expensive. 9 Wigmore on Evidence, 3rd Ed., Sec. 2596. In order to obviate this useless procedure, the Legislature in 1888 enacted the rule that whenever the pleadings in an action at law allege the partnership of any parties, or a corporation, or the execution of any written instrument filed in the case, the same shall be taken as admitted *572
unless denied by the next succeeding pleading of the opposite party. Acts of 1888, Chap. 248, Code, 1939, Art.
The main issue in this case is whether there was any evidence legally sufficient to show that Phillips was engaged in business as a partner of Willey. The trial court directed a verdict in favor of Phillips, and from the judgment *573 on that verdict the appeal was taken. The plaintiffs are wholesalers of beer and ale on the Eastern Shore. Harvey Wilson, an employee of Gunther Brewing Company, testified that, while acting as an agent for the plaintiffs in August, 1939, he conferred with Phillips concerning his plan to open the Cozy Spot in Cambridge; discussed the different kinds of beer he intended to sell, and suggested the plan of erecting a sign outside the store. At that time Phillips had not yet decided in whose name the application would be made for the beer license. The sales agent reported the conversation to Roy J. Rhodes, of Salisbury, one of the plaintiffs, and about ten days later the plaintiffs began shipping beer and ale on credit to the Cozy Spot.
Dr. Frederick B. Easton, of Cambridge, testified that Phillips told him on several occasions in the summer of 1939 that he was planning to open the Cozy Spot and operate it in another man's name. Dr. Easton recalled that soon after the place was opened Phillips said that Norman Willey was managing it for him, and early in 1940 he again said that he owned the place and "everything was going along fine down there and he was making money." It is an accepted rule that the declarations of an alleged partner are admissible against him to prove the existence of a partnership, even though they are made to some one other than the plaintiff. Fleming v. Stearns,
Willey was not allowed by the trial court to answer whether Phillips had bought the equipment which was used in the Cozy Spot. Inasmuch as evidence of the purchase of store equipment is relevant to the issue, such evidence should have been submitted to the jury for their consideration along with other evidence in determining whether Phillips was actually interested in the business. The issue of partnership as between the parties themselves may be proved by express agreement, or may be gathered from the intention of the parties as implied from their acts. If parties enter into a contract *574
such as the law considers to be a partnership, they become partners whether they call themselves such or not. Accordingly, when two persons agree to carry on a business for their mutual benefit, one to furnish the capital and the other to perform the services, and to share any profits that might be derived from the business, they are both liable to creditors of the firm. Waringv. National Marine Bank of Baltimore,
It was testified by Rhodes that Willey told him by telephone in August, 1940, that he would instruct him how to make out his bill when he came to Cambridge. Rhodes went to the store on August 6, 1940, with an itemized statement of account showing the amount of indebtedness to be $893.18. The court refused to allow Rhodes to tell how Willey had instructed him to make up the heading of the bill, and also excluded the statement, which was approved by Willey. This statement was made out against "Cozy Spot, Hubert Phillips, Norman Willey, Mgr." The rule has been adopted in this State that entries made by a clerk in the regular routine of business are admissible in evidence, on the theory that he has no interest in stating an untruth; but entries made by a party to a transaction, having a direct interest in the subject matter, are not admissible to charge another. Romer v. Jaecksch,
Rhodes was not permitted to testify as to the report of the sales agent concerning his conference with Phillips in August, 1939. Under the rule of res gestae, conversations of parties in the course of a transaction are admissible when the words are spontaneous and so closely related to the principal transaction as to explain its character. 1 Jones on Evidence in CivilCases, 4th Ed., Sec. 358; 6 Wigmore on Evidence, 3rd Ed., Sec. 1776; 20 Am. Jur., Evidence, Secs. 662, 680. Such utterances, irrespective of their trustworthiness as assertions, are received as verbal parts of the entire act. In upholding this rule, Justice Swayne said: "In the complexity of human affairs, what is done and what is said are often so related that neither can be detached without leaving the residue fragmentary and distorted. There may be fraud and falsehood as to both; but there is no ground of objection to one that does not exist equally as to the other. * * * The tendency of recent adjudications is to extend rather than to narrow the scope of the doctrine. Rightly guarded in its practical application, there is no principle in the law of evidence more safe in its results." Travellers' Insurance Co. v.Mosley, 8 Wall. 397, 408, 19 L.Ed. 437, 441. In order to be admissible, such statements need not have been made simultaneously with the conclusion of the contract, but they must have been made during the negotiations leading to the contract and must have influenced the parties in making it and thus entered into it as a part of it. Grout Bros. v. Moulton,
The principle of law is firmly established that a person, even though not a partner in fact, is liable as a partner to those persons who deal in good faith with the firm or with him as a member of it with the reasonable belief that he is a member of the firm, provided that he so holds himself out to such persons or the public, or is so held out by his authority or with his knowledge and assent, and credit is to some extent induced by this belief. The doctrine of partnership by estoppel is founded upon principles of justice for the purpose of preventing fraud. When a person has induced others to believe that he is a partner and to extend credit to the partnership by reason of such belief, he should not be permitted to deny that participation which he has asserted or permitted to appear to exist, even though not existing in fact. Thomas v. Green,
The question whether a partnership existed in fact or by estoppel is a question of fact for the consideration of the jury.West v. Driscoll,
Since the withdrawal of the case from the jury was improper, the judgment in favor of Phillips must be reversed.
Judgment reversed and new trial awarded, with costs. *579