Opinion
March Term, 1865
C.N. Black, for the appellant.
Joseph Neilson, for the respondents.
To entitle the plaintiff to have an account and distribution of the property, stock and money referred to in his complaint, the relation of partners must have existed between himself and the defendant Ham during the time therein stated. If he was not such partner, or a member of the firm of D.H. Ham Co., he had no right to an accounting in respect to the business and property of Ham or of such firm. The preliminary question then was, whether, from December, 1855, to January, 1862, the plaintiff and Ham were partners, inter sese, in the business of manufacturing and vending the drug or medicine called "Dr. Ham's Invigorating Spirit."
The facts found negative the existence of any partnership between the parties, unless it were constituted by the written instrument of December, 1855. Ham is found to have carried on the business himself during the period for which an accounting was claimed, except that for a part of the time the defendant Holmes was a copartner with him. The verbal agreement set up in the complaint as having been made in February, 1856, to the effect that the plaintiff was to have one-half, or any share, in the profits of the business, the referee finds, was not made, nor was there any agreement or understanding between the plaintiff and Ham that the former should become a member of the firm of D.H. Ham Co., or be a partner with the latter in the business, or have any interest therein as such; nor did he act as such copartner. The plaintiff is, therefore, driven to rely upon the writing of December, 1855, as constituting him a partner with Ham, not only whilst the agreement was acted under by the partners (which, it is alleged in the complaint, was about two months), but also down to January, 1862, when the fire occurred which destroyed the manufacturing establishment.
Whether two or more persons are partners, as between themselves, is determinable chiefly by a reference to their own intention. Now, what was intended by the agreement of December, 1855? Was it that the plaintiff, by loaning to Ham the sum of $500 to purchase materials for manufacturing his medicines, should become a partner indefinitely in the general or future business? Such intention, I think, cannot be inferred from the terms of the agreement, construed in the light of the surrounding circumstances and conceded facts. Ham was manufacturing his medicine, and had agents engaged in vending it in this and other States. The plaintiff agrees to loan him $500 for one year, and, as security therefor, he assigns bills and accounts against his agents for more than the amount of the loan, and at the same time stipulates to invest the sum in articles necessary to manufacture the medicine, and to manufacture and put the same on sale, and pay over to the plaintiff one-quarter of the net profits arising from such manufacture and sale. The plaintiff advanced the money about the 1st February, 1856, and it is admitted in the complaint that the parties acted under this contract from the execution thereof until about the 11th February, 1856 (a period of two months), when it seems to have been abandoned. There were other provisions of the writing, indicating that Ham was to solely carry on the business. He might sell it out any time during the year for which the credit was to run, upon paying the plaintiff his $500 and one-fourth of the profits, if any, arising from the sale of the medicine to be made from ingredients purchased with that money; and if he chose to sell out, he was to give the plaintiff the first privilege of purchasing, at as low a price and on as favorable terms as he would sell the same to any one else.
This agreement, I think, cannot be construed to create a partnership even in respect to the specific medicine manufactured from the ingredients to be purchased with the $500 advanced; and certainly it was not intended that the covenant should reach the general or future business, or the fruits of other money to be used or invested. It was a mere arrangement for a loan, upon security for a fixed period, with profits by way of interest. It did not impose upon the plaintiff the duties or clothe him with the powers of a partner. There was no joint ownership of the partnership funds according to the intention of the parties. The $500 loaned under the agreement was not a contribution to the capital of the firm as such; nor was it put into the business at the risk of the business. The plaintiff was, in no event, to participate in the losses of the adventure. With respect to third persons, Salter might be held to be a partner in the particular transaction, but as between himself and Ham the relation was that of creditor and debtor. Salter loans to Ham five hundred dollars for a term, upon security, and by way of indemnity for the use of the money it is agreed that it shall be invested in ingredients for manufacturing the Invigorating Spirit (a business which Ham was then carrying on), and upon the manufacture and sale of the article, if any profits accrued over and above the expenses of manufacturing and selling, Salter was to receive one-fourth of such profits. This seems to me to be the obvious intent and meaning of the agreement. Neither in terms or by implication is any partnership relation created as between themselves.
But if the agreement contemplated a partnership in respect to so much of the medicine as should be manufactured and sold from the investment of the $500, there would be no reason for holding that the judgment of the court below was erroneous. It was not claimed or suggested that there should be an accounting as to this stale transaction. Indeed, it is plain that there could have been no profits growing out of it, as the thing was abandoned eleven days after the money was advanced. But there is still another answer. The action was not in respect to the written agreement, but to obtain, upon a proper administration of the copartnership estate of D.H. Ham Co., the plaintiff's constituent portion of the assets, as a member of the firm, remaining after the fire in January, 1862. It was the ordinary action by a partner in reference to such estate; hence Holmes and the insurance companies were made parties. The action was tried and treated throughout upon that theory, the plaintiff seeking as preliminary to the relief sought to establish the partnership, and the written agreement was only used, or attempted to be used, as a piece of evidence on that issue. It was not founded upon the covenant of December, 1855, nor was any accounting claimed or proposed before the referee in respect to such covenant alone.
As, therefore, the plaintiff was not Ham's partner, or a member of the firm of D.H. Ham Co., or had any interest in the property which was the subject of the action, save possibly as a creditor, he had no right to an accounting, and his complaint was properly dismissed.
The judgment of the Supreme Court should be affirmed.
All the judges concurring,
Judgment affirmed.