Merchants National Bank v. Barnes

52 N.Y.S. 786 | N.Y. App. Div. | 1898

Parker, P. J.:

The contract of March 6, 1890, created no partnership between the defendant Barnes and Brown and Brenan. It was simply a contract by which Brown and Brenan were to harvest and-house upon the shores of Lake Champlain large quantities of ice for Barnes & Co., at the latter’s expense, and were to receive “ therefor ” from Barnes & Co. one-fourth of the net profits which the latter should realize upon the sale thereof after the latter had deducted all expenses. Brown and Brenan used the firm name of John Brown & Co. in carrying out their part of the transaction, both in their dealings with Barnes & Co. and with others. The contract does not mention such firm name.

Barnes & Co. employed Brown and Brenan. to use the former’s ■ money, tools, articles and materials so far as the latter could reasonably employ the same for harvesting and housing the ice. Thereupon the stored ice would belong to Barnes & Co., who agreed to sell it and pay one-fourth of the net profits to Brown and Brenan for their services. Brown and Brenan reserved no interest in the ice. They were not required to advance any money. When the ice- was housed it would belong to Barnes & Co., and Brown and Brenan would have to wait for the pay for their services until Barnes & Co: should sell the ice.

The agreement as made was carried out. Brown and Brenan did gather and house the icé and Barnes & Co. paid all the . expenses. It does not appear that any profits were realized upon the sale of the ice, and we assume there were none.

It is plain that, as between themselves, no partnership was created between Barnes or Barnes & Co. and the other defendants.

The creation of any debt by Brown and Brenan against Barnes & Co. to the plaintiff for advances was not authorized, and was not necessary since Barnes & Go. were not remiss in supplying to Brown and Brenan the necessary funds upon their request or drafts.

As between the parties to the agreement the debt to the plaintiff was not.a partnership one, but the separate debt of Brown and Brenan, which, if incurred in anticipation of Barnes & Co.’s advances, should have been paid therefrom.

But Brown and Brenan were to receive “ therefor,” that is, for ' their services, “ one-fourth of ’ the net profits realized on sale and settlement after the ice is disposed of,” and Barnes & Co. agreed “ to pay to said Brown & Brenan one-fourth of the net profits of such" ventures.”

It is, therefore, urged that they were partners as to- third persons, and, hence, as to the plaintiff. This would be so if Brown and Brenan had retained an interest in the profits as such, as distinguished from the measure of the amount of compensation, Barnes & Co. agreed to. pay them for their services, or as distinguished from the one-fourth share of Barnes & Co.’s profits which the latter agreed to pay them.

As pointed out in Leggett v. Hyde (58 N. Y. 272, 278), “ the specific interest in profits which is to make a person- a partner must be a proprietary interest in them existing before the division of them into shares,” quoting with approval 3 Kent’s Commentaries (*25, note b), where it is said, “ the test of partnership is a community of profit; a specific interest in the profits as profits, in contradistinction, to a stipulated portion of the profits as a compensation for services.”' This test is well established in this State. (Hackett v. Stanley, 115 N. Y. 625 ; McLewee v. Hall, 103 id. 639 ; Cassidy v. Hall, 97 id.159 ; Richardson v. Hughitt, 76 id. 55; Smith v. Bodine, 74 id. 33 ; Leggett v. Hyde, 58 id. 272 ; First National Bank of Meriden v. Gallaudet, 122 id. 655.)

Barnes & Co. were not partners of the other defendants as to third persons. Barnes & Co. did not hold themselves out to the plaintiff or to the public as partners with the other defendants, and, therefore, they did not become liable upon that ground. (McLewee v. Hall, supra.)

In July, 1896, the defendant Barnes verified an answer in which it was alleged that he “ has now, and at all times mentioned in said, amended complaint, had an interest as copartner in the business of said John Brown & Co.”

Brown and Brenan had brought an action against F. W. Myers. & Co., claiming to recover for ice which they as partners under the firm name of John Brown & Co, had sold them between March 1. and May 31, 1890. Barnes had been interested with Myers & Coin buying this ice, and if any sum was unpaid thereon, he supjmsed it was payable to Barnes & Co. Myers & Co. consulted with counsel in Plattsburgh, and they interposed an answer alleging that Barnes was a member of the firm of Brown & Co., and also alleged, payment. Myers & Co.’s counsel desired Barnes to interpose an answer*, and wrote to him inclosing a copy of Myers & Co.’s answer.. Barnes answered the letter, saying, “ Mr. Myers is right in his.allegation that I was interested in the firms, of F. W. Myers & Co. and John Brown & Co. I can give no additional facts for the defense of plaintiff’s complaint, and wish, you would kindly attend to this matter and advise me of any steps necessary for me to take to protect the interests of F. W. Myers & Co., as well as my own.” Counsel at Plattsburgh thereupon mailed him the answer containing the above allegation, and Barnes verified it. Afterwards being in doubt as to the correctness of his answer in this respect, he con-■suited his home counsel in New York, and stated to them the facts ■in full, and was advised by them that the answer was not correct: He thereupon procured leave to withdraw the same, and then served :an amended answer in which such allegation did not appear.

This answer thus withdrawn and the letter constitute the only evidence of the defendant’s membership.of the firm of John Brown & Co. As explained, they are mere soinUllce, and insufficient in the face of the uncontradicted and unmodified contract to support a finding of the existence of Barnes’ partnership with Brown and Brenan.

Whether a person is a partner with others is often an embarrassing question, and a mistaken ¡admission of the fact seasonably corrected, both admission and correction being made after the transactions upon which the rights of the parties depend, should not be permitted to change such rights. (1 Lindley Part. *87, 88; Ridgway v. Philip, 1 Cromp. M. & R. 415; Vice v. Anson, 7 Barn. & C. 409.)

Here the test of the partnership is the written agreement of March 5, 189.0, and by that test the defendant Barnes never became .a member of the firm of John Brown & Co.

The judgment should be reversed, new trial granted, costs to abide the event.

All concurred, Mbrwin, J., in result.

Judgment reversed and a new trial granted, costs to abide the event.