Bestor v. Barker , 106 Ala. 240 ( 1894 )

BRIOKELL, C. J.

— It is not of importance to the decision of the case, in any of the aspects in which it is now presented, to determine whether the agreement into which the parties entered, forming the “Cotton Press Association of Mobile,” as between the parties, created a partnei’ship, or an enterprise to promote a common purpose and the mutual benefit of the parties, not having the essential elements and characteristics of a partnership. The bill denominates the association a partnership, and treats the relations between the parties as that of partners. But this is immaterial; the agreement is exhibited and forms part of the bill; and whether thereby a partnership was or was not created, is a question of law, dependent on the construction of the agreement, which the conclusion of the pleader can not affect or control. Where a controversy arises between the parties to an agreement, the rights of third persons not being involved, the intention of the parties, as it may be deduced from the agreement, governs. — Pollard v. Stanton, 7 Ala. 761; Randle v. State, 49 Ala. 14;. Couch v. Woodruff, 63 Ala. 466 ; Tayloe v. Bush, 75 Ala. 432 ; 1 Bates Partnership, § 17. And the intention is ascertained from the whole of the contract, from the actual relations it creates, and not from the fact that the parties denominate it a partnership, or may declare that a partnership is not intended.

Partners, in all the scope of the partnership business, in all dealings with each other as to partnership affairs or property, stand in a fiduciary relation, the one to the other, and are bound to the uberrima fides of such relation. The essential idea was well expressed by Stone, C. J., in Goldsmith v. Eichold, 94 Ala. 119 : “Each partner is, in one sense, a trustee ; a trustee for the newly created entity, the partnership, and for each member of the firm, who thus becomes a beneficiary under the trust. He is more ; he is a trustee, and a cestui qu.e trust. A trustee, so far as his own duties bind him ; a cestui que trust, so far as his duties rest on his co-partners. And it is sometimes said that each partner is both a principal and an agent; a principal, to the extent he represents his own interest, but an agent so far as he represents his co-partners.” The principles on which a court of equity proceeds, in passing upon transactions or dealings of persons standing in a fiduciary relation, are not applied only when some well defined legal relation may exist, but extend to all the varied relations in which confidence and trust is reposed and accepted, and is abused or betrayed. Kerr on Fraud & Mistake, 182. . The parties associated for a common purpose, for the promotion of their mutual benefit on a footing -of equality. The association itself, whether they be true partners or not, so far as their purposes are concerned, necessarily includes a relation of trust and confidence reposed and accepted by its several members, binding each to the same scrupulous good faith, to which they would be bound, if standing in the relation of partners. Assuming, as must on demurrer be assumed, the truth of the allegations of the bill, Parker and Bai'ker, unmindful of the relations they bore to their associates, and of the confidence and trust reposed in them, originated the scheme of the renting of the Brown warehouse and press from Thames, concealing the fact of their interest, misrepresenting the value of the property, and the necessity for its renting, and that Thames was a mere nominal lessor, while they were the real lessors. A breach of the trust and confidence arising from a fiduciary relation, to which the doctrine of a court of equity is applied, often occurs when there are sales to a purchaser of property from persons standing in the relation. As in the present case, the seller may induce his associates into a purchase of particular property for the common benefit, concealing the fact that he is the real vendor, misrepresenting the necessity or advantages of the purchase, or the value of the property; at the election of his betrayed associates the sale will be vacated, and the seller compelled to account for whatever loss the associates may have sustained. — Simons v. Vulcan O. & M. Co., 61 Penn. St. 202, s. c. 100 Am. Dec. 628; Pittsburg Mining Co. v. Spooner, 74 Wis. 307, s. c. 17 Am. St. Rep. 149, and notes ; Getty v. Devlin, 54 N. Y. 403.

But while such a transaction is voidable at the election of the parties injured, there must be a restoration, or compensation for whatever of benefits they may have derived from it. Whatever of profit the uft faithful agent or associate may have derived he is compelled to yield. It is not for him to say the property was worth all he received, and that all the advantages contemplated from its purchase have accrued. Profit from the abuse or betrayal of the confidence reposed, he is not permitted to reap. “Fraud without damage, gives no cause of action,but when these two do concur and meet together, then an action lieth,” is a maxim of law, of very general application. Bestor and Huger, two of the complainants, each received from the funds, of the association, after they and Parker and Barker, had become purchasers of the Brown warehouse and press, one-third of the rents the association had contracted to pay, and it is these rents it is the purpose of the bill to reclaim, without an offer of compensation or restoration. The purchase was voidable at their election, for it was tainted with the same breach of confidence and fraud which infected the contract of renting; but it has not been avoided, and avoidance is not within the scope or purposes of the bill. It is true, if the funds of the association had not been applied to the payment of the rents, one-fourth thereof would have been paid to Bestor and Huger, respectively. The application to the payment of the rents, was their voluntary act, and cannot change the fact that they have received more than the full share of the funds of the association, to which they were entitled. If they could now reclaim them, the fact is self-evident, that each of them would receive more than double the amount of the funds of the association which their co-plaintiff Taylor can recover. In the form of rents, they have received of the funds of the association the full share to which they were entitled. Taylor seeks a recovery of a like share, because his share of the funds were illegally diverted to the payment of the rents. If each recovers, Taylor will receive only the equivalent of that which Bestor and Huger, respectively, have received and retain, and the three recover, not jointly, but as a separate, several demand, the sum to which Taylor is entitled. As a general rule, to enable two or more to unite in a bill as plaintiffs, there must be a community of interest between them, and all must be entitled to relief; if one or more of them is without right to relief, the bill cannot be entertained. — 1 Brick. Dig. 750, § 1634 ; 3 Brick. Dig. 373, § 88. There are exceptional cases, to which this case does not belong, in which the rule does not prevail; they are well known, and particluar reference to them is not necessary.

As the case is laid in the bill, each plaintiff has a separate, distinct demand, and to support the bill, each must prove a distinct wrong done to himself. The act of the defendants, the breach of confidence and fraud committed, sprang from the joint or associated relations of the parties, but it operates on the plaintiffs separately and. severally, working to each a separate and distinct injury, as if they were standing alone, no connection or relation having existed between them. It was of no wrong or injury to Bestor, or Huger, that Taylor’s share of the funds of the association were wrongfully applied to the payment of the rents. . Such application would have furnished neither a cause of action at law or in equity ; and it is as true, that the wrongful application of the share of the funds to which either of them was entitled, would not have furnished Taylor a cause of action. As there is a want of a common interest, the rule which forbids the union of their several and distinct demands, is elementary. — Story Eq. Plead.. § 279 ; 1 Dan. C’h. Pr. (6th ed.), 303; Yeaton v. Lenox, 8 Peters, 123; Chester v. Halliard, 36 N. J. Eq. 313. As we are constrained to conclude, Bestor and Huger are without right to relief, their want of right to relief must operate to defeat the right of Taylor to relief. If a decree could be pronounced, there must be a dissociation of the plaintiffs ; a decree providing relief to Taylor, and a decree denying relief to his co-plaintiffs ; two decrees, essentially variant, and not in accordance with the prayer of the bill.

There are other questions of much'importance and interest which have been elaborately argued, upon which it is not necessary to express an opinion. We are not' now inclined to the opinion that the agreement into which the parties entered is offensive to public policy. And we are inclined to the opinion, that if Bestor and Huger be not estopped, each of the plaintiffs have a remedy by action at law for the recovery of whatever damages he may have sustained from the fraud which was practiced by Paidcer and Barker in the transaction of renting. These are questions, however, which are not decided, but left open for future.consideration, until a necessity for their decision may arise.

We find no error in the decree of the chancellor, and it must he affirmed.