18 F. 886 | U.S. Circuit Court for the District of Western North Carolina | 1883
{charging jury.) With the aid of the full and learned arguments of counsel, I hope that I may he able to instruct you correctly upon the questions of law involved in this action. I will, in the first place, call to your attention certain matters of fact which are admitted in the pleadings, and others about which there is no conflict in 'the evidence. In 1876 the defendant was the owner of a large
It is insisted on the part of the defendant that he never was either an ostensible or dormant partner. That the business was carried on under the name of J. W. Bailey, and all purchases of stock in trade were made on his individual credit or with his funds, and that the profits which were to be received by the defendant were by way of compensation for the lease of the bar-room. Partnerships are generally carried on in the names of the partners, and when only one name is used, the words “and company” are usually annexed to indicate that other persons are interested in the business. Partnerships are sometimes carried on under the names of persons who are dead, but who, in their life-time, had established an extensive business and a high reputation for integrity and fidelity in trade. Any name assumed and used by persons doing business together in the relation of partners, becomes a legitimate name and style of the firm, although it may not contain the individual name of any of the part
This general rule has been materially departed from in the case of a servant or an agent who has no interest in the capital stock, and has no power or control in the general management of a business, but agrees that the amount of his compensation shall be regulated by the profits realized by his employer. As long as the relationship of employer and employé exists, there is no partnership between them, but under some circumstances the employe may become liable to third persons. If a merchant employs a clerk, who agrees that the amount of his compensation for services shall be fixed by an estimation of the monthly or annual earnings of the business, or the gross profits on sales, he will not be a partner, and it seems that he would be entitled to his compensation, although no net profits should be realized by his employer. In construing contracts for services where the term “profits” is alone used as a standard for determining the amounts of compensation, I am inclined to the ojnnion that gross profits or earnings should be regarded as intended by the parties. Such contracts usually contemplate the payment of wages periodically during the continuance of the employment, and before the net profits are ascertained by the payment of debts and adjusting the ultimate losses. The employe acquires no specific interest in the profits as profits, and is not entitled to an account to determine the-
There are many nice discriminations and considerable conflicts in decided eases upon the question of how far or when a participation in profits as compensation for definite services will render an employe liable as a partner to creditors. I' have briefly expressed my opinion on the subject, as the principles of law involved in such cases are applicable to an analogous case like the one which we are considering, where it is insisted that tho profits to be received by the defendant were to be by way of compensation for the rent of the barroom, and not as profits of the business carried on by Bailey. I believe that the rule is almost without exception, that every person who by definite agreement participates in the profits of a business, as profits, is also liable to share the incidental losses. In this case the defendant rented his bar-room for $25 per month and one-half of the profits of the bar. He furnished no part of the stock of spirituous liquors, and he had no control of the business; and it does not appear in evidence whether the profits were to be annually estimated on tho sales, or to bo half of tho surplus after the debts and losses were discharged. To ascertain whether such profits were to be received as profits, or by way of a reasonable rent for the room, you will consider the evidence upon this point. In this connection you can consider the relation which the defendant occupied towards the firm of Weddin & Bailey, as tho evidence shows that after that firm -was formed the parties interested in its business agreed to share equally in the profits of the. said bar-room. If you find that $25 per month was a fair rent for the bar-room, then I am of opinion that the profits to be received in addition were to be received as profits, and would render tho defendant liable as a partner for all debts contracted by Bailey during the continuance of the partnership.
There are several kinds of partners known to the law, but it is only necessary for me to refer to two kinds in this case — ostensible and dormant partners. An ostensible partner is one who exhibits himself to the public as a person connected with a partnership and interested in the business of tho firm. He is clearly liable to creditors for debts of the partnership contracted while he continues a
There is no evidence to show that the defendant was publicly known as a partner in any of the transactions developed in this case. There is evidence tending to show that when the arbitrators were selected to settle the business of J. W. Bailey and of Weddin & Bailey, the defendant claimed that he was entitled to one-third of the profits arising from all the business conducted by said parties. If you find that under the lease made in 1876, and continued until April, 1882, the defendant received, or was entitled to receive, a part of the receipts from the bar-room as profits, then he was a dormant partner during that period. If his relation as dormant partner ceased in April, 1882, then he is not liable for the price of the goods purchased from the plaintiffs by Bailey in July afterwards, unless the plaintiffs in their former dealings with Bailey had acquired information as to his relation as a dormant partner in the business. If you find that the plaintiffs had such information, then they are entitled to recover in this action, as it is admitted that they had no notice of the retirement of the defendant in April.
It is further insisted that the defendant was á partner with Bailey at the time that the spirituous liquors were purchased, as Bailey then occupied the bar-room, and the defendant was to Receive a part of the profits of the business. Upon this point there is some conflict in the evidence, and you must determine the matter according to the preponderance of the testimony. As the existence of this alleged partnership is in dispute, the declaration made by Bailey at the time he purchased the spirituous liquors from the plaintiffs, that the defendant was a partner in the business, is no evidence of the existence of a partnership. The fact of a partnership must be admitted or otherwise proved before the declarations of a person can bind other parties, and subject them to 'liability as partners. I have already instructed you as to what facts are necessary to be proved to con