McDonald v. Fleming ( 1913 )

Ostrander, J.

It is pointed out by Mr. Meehem (Elements of Partnership, § 42) that the question whether a partnership has in fact been created may and often does arise, as in the case at bar, between the alleged partners themselves, when an enterprise has proved disastrous, and one or more, alleging partnership, seek to enforce contribution as partners from the others, who deny that any such relation existed. Complainant claims to have put into an enterprise $1,500 of his own money, and that he is entitled to commissions of 10 per cent, upon the amount of goods which, as manager of the enterprise, he sold. Besides this, and as an indirect result of the enterprise, the bank at Merrill holds some $2,000 of paper indorsed, some or all of it, by members of a committee. Complainant names some 69 persons who, with himself, embarked in the enterprise, and he seeks contributions from them. Forty-one of the defendants answered, denying that any partnership relation existed. As to some of the others, the bill was taken as confessed, while some were not served with process, and were brought in by publication. The circuit judge who heard the case, in an exhaustive opinion which appears in the record, analyzes the testimony, and concludes that there is no evidence of an express contract of partnership, and little or none supporting the claim that conduct of the parties was such as to create a partnership.

“I can find,” he says, “no testimony in this case which indicated that any of the parties subscribing $10 contemplated or intended that there should be a partnership, and that each individual should be responsible- for the entire indebtedness created by Mr. McDonald, or this so-called committee, without their individual sanction.”

An examination of the record and briefs has led me to the conclusion that the circuit court was right in •dismissing the bill. I shall attempt no analysis of the testimony, but shall briefly state the reasons for my conclusion.

It must be kept in mind that complainant is not a creditor, to whom the concern has held itself out as a partnership, but that he was one of the adventurers and the manager of the business. The so-called contract of May 24, 1902, cannot, upon any theory, be held to bind, as a body, the local union of the International Farmers’ Union of North America, or to bind any person not directly contracting, and those who should thereafter, upon the terms stated, join with the promoters. The writing itself is not a contract of partnership. On the contrary, it contemplates that some of the members of the union will furnish money to buy goods, and that some will not. Read with the resolution and bond, which are set out in the opinion of Mr. Justice McAlvay, the so-called contract, unless every member of the union is bound by it, binds no particular member, unless it be those signing it, and contemplates a change of membership from time to time. It cannot be learned from the writings who the associates were. The resolution, bond, and contract, read together, contemplate only a stated contribution to the enterprise by those who should conclude to make a contribution. The construction here indicated is the practical one, adopted by those who had occasion to consider the matter at all. And if merely contributing to the fund and buying goods at the store constituted a contributor a partner, then one who came in late would be equally liable with the first contributor, and any contributor had the right to withdraw from the enterprise.

If there was no express contract for a partnership, how was a partnership created? There could be but one way, if indeed there could be, as to complainant, any way. That would be by the acts of the parties— by the joint acts of all of them, or by the acts of some of them, known and assented to by the others. I do not find in the record evidence of any joint, or of any individual, action, the true purport and meaning of which complainant had the right to rely upon, or did rely upon, as creating a partnership. The evidence that each contributor understood that his contribution limited his liability is overwhelming. Some, a very few, of those at all interested raised money, from time to time, to carry on the business. Complainant managed the business, with some direction it is true, and himself, he says, contributed money from time to time. He must all of the time have known that, except as they made themselves personally liable, no one connected with the association intended to become, or supposed he had become, personally liable for any of its debts. It is idle to suppose that these defendants supposed, and that complainant understood, that the credit of these defendants was involved in the business.

“If parties intend no partnership, the courts should give effect to their intent, unless somebody has been deceived by their acting or assuming to act as partners; and any such case must stand upon its peculiar facts, and upon special equities.” Beecher v. Bush, 45 Mich. 188, 193 (7 N. W. 785 [40 Am. Rep. 465]).

And in the same case it is said:

“Except when one allows the public or individual dealers to be deceived by the appearances of partnership when none exists, he is never to be charged as a partner unless by contract and with intent he has formed a relation in which the elements of partnership are to be found.”

The case of Carter v. McClure, 98 Tenn. 109 (28 S. W. 585, 36 L. R. A. 282, 60 Am. St. Rep. 842), cited by my Brother McAlvay, is not in point because in that case the question of partnership did not arise between associates, but between an association and creditors who were not members. My dissent from the conclusion he has reached is based upon the fact that this suit is between one who claims to be a partner and his associates who deny the relation; that there is no express contract • of partnership; that it was not the intention of contributing members to be associated as partners; and that complainant knew he was not dealing with a partnership.

The decree dismissing the bill must be affirmed, with costs to appellees.

Steere, C. J., and Moore, Brooke, Stone, and Bird, JJ., concurred with Ostrander, J.