Hunter v. Conrad , 18 Mont. 177 ( 1896 )

Pemberton, C. J.

The appellant assigns as error the giving of the instructions of the court, contending that they are not supported by the evidence. The instructions are as follows:

“(1) If you believe from the evidence in the case, that the $5,000, mentioned in the first cause of action of plaintiff’s complaint, were a loan made by L. R. Hunter to J. H. Conrad and S. C. Hunter, and were not a contribution to the capital stock of said firm; that said L. R. Hunter was to receive 10 per cent, on said sum in case he so elected to take said sum in lieu of profits, and that said L. R. Hunter did, on the first day of January, 1893, elect to take 10 per cent, on said sum, — then you will find for the plaintiff upon the first cause of action.

“(2) The jury are instructed, that if you find, from the evidence, that the $5,000, as evidenced by the note in suit, were advanced by L. R. Hunter, as a loan to the defendants, and that said note was conditioned upon the election of L. R. Hunter to become a partner, and that such election was to be made by L. R. Hunter January 1, 1893; and if you find that he did elect, on or about the said -date, not to become a member of said firm and a partner therein, but on the contrary he elected to waive his right to profits in the said business, and to claim the 10 per cent, interest on the said advance, and in pursuance of said election, charged up the interest of the said advance upon the books of the bank,— such election and such entry would be sufficient notice to the defendants of such election.

“(3) The jury are instructed that if you find, from the evidence, that the §5,000, as evidenced by the note in suit, were advanced to the defendants as a loan, and that L. R. Hunter elected, under the contract attached to the note, on or about January 1, 1893, to take interest on the sum so advanced at 10 per cent, per annum instead and in lieu of one-third of the profits of the banking business of J. H. Conrad & Co., then the charging in the books of the bank of the said interest by L. R. Hunter, the cashier, would be sufficient notice to the defendánts of such election on the part of the said L. R. Hunter. ’ ’

The jury found, in effect, that L. R. Hunter was never a partner in the banking business of J. H. Conrad & Co., and that the §5,000 put into the business by L. R. Hunter was -a loan.

The contract designates the §5,000, the amount of the note, as a loan, in consideration of which J. H. Conrad and S. C. Hunter were to allow L. R. Hunter one-third of the profits of the banking business of J. H. Conrad & Co., during the existence of the contract, and, in the event of the one-third of the profits not equaling 10 per cent, per annum on the §5,000, then L. R. Hunter waives his right to profits, and is to be paid 10 per cent, per annum for the loan of said sum.

The evidence is practically undisputed that, about the 1st of January, 1893, L. R. Hunter elected to take 10 per cent, interest on said loan. It seems the one-third of the profits of the business fell short of equaling 10 per cent, on the §5,000. L. R. Hunter testified that he informed S. C. Hunter, about January 1, 1893, of the condition of the business, and that he had taken his 10 per cent, interest, instead of one-third of the profits, as it is conceded he had a right to do under the contract. S. C. Hunter does not dispute this evidence. He says he will not testify that L. R. Hunter did not so inform him about the 1st of January, 1893. It is shown also that about’ the 1st day of January, 1893, L. R. Hunter, who was the cashier, and in charge of the banking business of J. H. Conrad & Co., made -the proper entries in the books of the concern, showing his election to take the 10 per cent, interest, instead of the one-third of the profits of the business. From this consideration of the testimony, we think there was sufficient evidence to support the findings of the jury and the instructions of the court.

Under the contract, L. It. Hunter had the option of electing, on the 1st of January, 1893, to take 10 per cent, interest on the §5,000, or one-third of the profits, and continue the contract with J. H. Conrad & Co. He made his election to take the 10 per cent, and thereby made the §5,000 a loan to the defendants. Had he not made this election, it is immaterial to consider what his relations would have then been.

There are many circumstances in the case which would constitute L. R. Hunter a partner and member of the firm of J. H. Conrad & Co., as to the public ¡dealing with him and the firm; but between the parties to the contract and arrangement these circumstances cannot avail the defendants. The question here is, not whether L. R. Hunter held himself out to the world as a partner, but was he, in fact, a partner ? We think the court rightly instructed the jury as to the law of the case, and that the evidence supports the findings that, as between the parties to this suit, L. R. Hunter was not a partner, and that the §5,000, the amount of the note sued on, was a loan.

Whether L. R. Hunter became a partner and member of the firm of J. H. Conrad & Co., as between the parties, by entering into the contract attached to the note, is principally a matter of intention. (Lindley on Partnership, 8, 9.) This intention may be shown by the contract, and the circumstances attending its execution. A very strong circumstance in the case going to show that the parties to the contract considered the §5,000 in controversy a loan, and so construed it, is the fact that J. H. Conrad and S. C. Hunter executed to L. R. Hunter their note therefor. If the §5,000 were contributed to the capital of the firm, by L. R. Hunter, as his share thereof, why the necessity or the reason for Conrad and" S. C. Hunter executing their note to him for the amount % If it was a contribution to the capital, no note was necessary to be given for any conceivable purpose.

We think loaning J. H. Conrad & Co. the §5,000 in consideration of one-third of the profits of the business did not necessarily constitute L. R. Hunter a partner as between the parties to the suit. (Gill v. Ferris, 82 Mo. 156; Legett v. Hyde, 58 N. Y. 272.)

Another circumstance going to show that the parties considered the §5,000 a loan, and not a contribution to the capital of the firm, is the provision in the contract that L. R. Hunter should not be liable for losses.

We think the case was fairly tried, and the proper result reached. The judgment and order appealed from are affirmed.

Affirmed.

De Witt and Hunt, JJ., concur.