Allison v. Campbell , 117 Tex. 277 ( 1928 )

The Court of Civil Appeals of the Second District has duly certified to the Supreme Court the following question with the accompanying explanatory statement, to-wit:

"The appellee, J. I. Campbell, instituted this suit in the District Court of Tarrant County against Dr. Wilmer L. Allison and J. J. Oxford to recover the sum of $1,250, the amount of principal, interest and attorney's fees alleged to be due on a certain promissory note, dated April 15, 1924, in favor of J. I. Campbell, and signed as follows: 'West Texas Land Co., by J. J. Oxford, manager.'

"The plaintiff alleged that the defendants Allison and Oxford were partners doing business in the name of West Texas Land Company, and that the note declared upon was a partnership obligation.

"The defendant Oxford was duly cited but presented no answer. The defendant W. L. Allison answered by a verified plea, denying that he was a partner of J. J. Oxford, as alleged in plaintiff's petition, and alleged that he had loaned J. J. Oxford $250, and agreed to loan the further sum of $750 as soon as Oxford could obtain a contract for the exclusive sale of some 40,000 acres of West Texas land. That, in accordance with this contract, Allison was to receive one-fourth of the net profits derived from the sale of the land in lieu of interest; that the contract did not get beyond its initial stage because Oxford failed to secure the selling contract on the land; that the contract was executory and never consummated as intended, and that he had received no profits from the enterprise. This defendant further alleged that if a partnership did exist, that the note declared upon did not bind the partnership because executed without his consent, not within the scope of the partnership business, and in violation of Oxford's obligation to him; that Oxford knew that he, Allison, did not approve or agree to be bound on the note, all of which the plaintiff Campbell had knowledge before accepting the note.

"The cause came on for trial before a jury on the 19th day of February, 1925, and upon the conclusion of the evidence the trial court peremptorily instructed the jury to render a verdict for the plaintiff against both defendants, which the jury did, and upon which verdict the court entered a joint and several judgment against said defendants for the sum of $1,180, together with 10 per cent attorney's fees and interest from February 19, 1926, and the court costs, from which judgment the defendant Allison has duly prosecuted this appeal.

"Error is assigned to the action of the court in giving the peremptory instruction. The following contract was offered in evidence, in behalf of plaintiff, to-wit:

" 'State of Texas, County of Tarrant: This agreement entered into this day by and between J. J. Oxford of Stephenville, Texas, first party, and Wilmer L. Allison of Fort Worth, second party, witnesseth:

" 'That whereas the said first party has under contract twenty men to purchase land on the South Plains of West Texas, under what is termed the Colonization Plan of J. J. Oxford, which is represented by separate contract, and the said first party now has pending negotiations to obtain the exclusive sale of a tract of land of approximately forty thousand (40,000) acres, which selling contract is not yet consummated, and said first party is unable to finance same without assistance.

" 'Therefore, in consideration of the premises and one thousand dollars ($1,000.00) in money to be furnished by said second party, the said first party accepts said second party as a partner in above undertaking on a basis of a one-fourth interest. For such assistance said second party is to receive one-fourth of all net profits made or to be made out of the sale of above land and Colonization project.

" 'Said amount of money to be paid two hundred and fifty ($250.00) dollars at the present time, receipt of which is hereby acknowledged by said first party, and the balance seven hundred and fifty dollars ($750.00) is to be paid as soon as said first party obtains the exclusive selling contract from the owners of above referred to land or an exclusive selling contract on some other tract of land in the South Plains of West Texas suitable for such Colonization purposes.

" 'It is understood that the firm name of such partnership is to be the West Texas Land Company, providing no other land company is doing business under this name in that section. Changing the name of said firm does not affect the validity of this agreement.

" 'It is understood that the said second party is not to devote any of his time in selling said land or in the operation of said company in any way, any more than he voluntarily wishes to do. But it is understood that the said first party is to devote his entire time and attention to the execution of said company's operations.

" 'It is further understood that the said one thousand dollars ($1,000.00) furnished and to be furnished by said second party is to be returned and paid back to said second party from the funds of said West Texas Land Company as soon as said company can do so, without hampering the operations of said company. The purpose and object of said money is to finance the operations of said concern until it gets on a paying basis.

" 'Witness our hands this the 14th day of March, 1924, A.D. at Fort Worth, Texas.

" 'J. J. OXFORD, First Party, " 'WILMER L. ALLISON, Second Party'."

"The evidence was to the effect that at the time of the execution of the foregoing instrument, Oxford in fact had under contract 20 men who had agreed to severally purchase tracts of land at specified prices upon the 40,000 acres on the South Plains of West Texas, but being without financial means to carry out the plan, Oxford approached the appellant Allison, presented the proposition to him with the result that the contract copied above was executed. Thereafter, and in the effort to secure the land in West Texas, Oxford purchased of the plaintiff Campbell a Winton Six automobile, giving therefor the note declared upon, which automobile he used and which it was reasonably necessary for him to use in his efforts to secure the colonization tract of land. Oxford, however, failed to secure the tract and the enterprise seems to have failed.

"On original hearing, we held that the contract between Oxford and Allison constituted a partnership, but upon evidence recited in our opinion, which will be forwarded together with this certificate, we further conclude that the evidence at least tended to show that Oxford's authority to make the purchase of the automobile was wanting, and that Campbell, under the circumstances shown, was at least put upon inquiry as to such want of authority in Oxford. We accordingly held that the court erred in giving the peremptory instruction; that the issue of a want of authority was for the determination of the jury; and reversed and remanded the cause.

"Appellee, however, in a motion for rehearing, points out the fact that the evidence fails to show that it was expressly agreed at the time of the execution of the note by Oxford payable to the plaintiff Campbell, that the firm of Allison and Oxford was not to be held liable for such indebtedness, and the evidence fails to show that chapter 1, of title 105, Rev. Statutes of 1925, relating to limited partnerships was complied with by filing and having recorded a certificate containing:

"1. The name or firm under which the partnership was to be conducted.

"2. The general nature of the business intended to be transacted.

"3. The names of all the general and special partners interested therein.

"4. The amount of capital which each partner shall have contributed.

"5. The period at which the partnership is to commence, and the period at which it is to terminate.

"Appellee insists that in the absence of such compliance with the chapter and title appellant could not show that his liability for the act of Oxford in purchasing the automobile was limited as he pleaded.

"We are not entirely agreed and have concluded, on consideration of the motion for rehearing, that it is advisable to certify to your Honors for determination the following question:

"Whether or not the written agreement between appellant Allison and Oxford constituted, under the facts stated, a partnership within the purview of chapter 1, title 105 of the statutes. In other words, whether, in the absence of a compliance with the provisions of the chapter and title referred to relating to limited partnerships, was appellant Allison liable as a matter of law on the note in question, regardless of the evidence tending to show that Oxford was without authority to execute the note declared upon and that appellee Campbell, at the time he took the note, had knowledge of such want of authority, or of such circumstances as put him on notice thereof."

"To authorize the court to take the question from the jury, the evidence must be of such a character that there is no room for ordinary minds to differ as to the conclusion to be drawn from it." Lee v. Railway Co., 89 Tex. 588, 36 S.W. 65; Joske v. Irvine, 91 Tex. 575, 44 S.W. 1059; Griggs v. Houston,104 U.S. 553, 26 L.Ed., 840. One of the issues made by the pleadings of the parties in this case was whether the appellant at the time Oxford executed the promissory note described in the petition of appellee occupied the relation of partner to Oxford. Bearing on this issue the written agreement quoted in the statement was the chief, though not the entire, testimony. It appears that the "negotiations to obtain the exclusive sale of a tract of land of approximately forty thousand acres," as stated in the agreement, were never completed. It also appears that the enterprise which Oxford and appellant had in mind when the agreement was executed was to sell portions of the body of land to actual settlers to begin the operation of which it was obviously necessary that such negotiations should be completed. It further appears that Oxford was charged with the duty of completing these negotiations and that "the purpose and object of said money (the money which appellant was to furnish) is to finance the operations of said concern until it gets on a paying basis." If the action of the trial court was correct in directing the jury to return a verdict for the appellee, then under this testimony a partnership was proven conclusively between the parties to the agreement to have been in existence at the time the note was executed and delivered to appellee by Oxford. In Spencer v. Jones, 92 Tex. 516, 50 S.W. 118, 71 Am. St., 870, it is said, "authorities are abundant to the effect that a partnership may, according to the intention of the parties, be formed for the purpose of one transaction alone in real estate; that is, the buying of one tract or more of land at the same time and selling them for a profit * * *" "As a matter of law such partnerships may be formed, but whether they exist is a question of fact to be determined from the evidence." A fundamental rule in the construction of written instruments is to ascertain therefrom and to give effect to the intentions of the parties thereto. In arriving at the intentions of the parties on the issue of partnership as they affect third parties it is permissible in interpreting the written agreement introduced to consider any circumstances surrounding its execution legitimately tending to show such intentions, including the subsequent acts and statements of the parties, even though the written agreement introduced is on its face unambiguous. Rush v. Bank,160 S.W. 323.

The issue of fact made by the pleadings was whether a partnership, either general or limited, existed between Oxford and appellant, when the former gave the note. If such partnership existed then appellant was prima facie liable to appellee as alleged in the petition. But if no partnership, either general or limited, existed, he would not be. A partnership, general or limited, is a relation or status between two or more competent persons uniting their labor or property or both in any lawful business or enterprise. It is the result of a contract, written or oral or both, evidencing the fact of partnership. The relation or status of partnership arises out of the contract between the parties and where it is an issue is provable or disprovable, like any other fact according to the legal rules of evidence. Under the pleadings and the testimony as stated in the certificate, supplemented by what is said in the opinion of the Court of Civil Appeals accompanying the certificate, there was an issue of fact presented whether the parties intended the negotiations with reference to the forty thousand acres of land should be completed as a prerequisite to the formation of the partnership. Had such an issue been presented in the charge of the trial court to the jury in an appropriate manner and had the verdict on this issue been in favor of the appellant, no new trial could properly have been granted on the ground that the verdict in this particular was not supported by sufficient legal evidence.

It is our opinion that under the conditions shown by the statement presented for our consideration, the written agreement between appellant Allison and Oxford did not, of itself, necessarily constitute a partnership, either general or limited. We are also of the opinion that under the conditions presented by the certificate, the articles of the statutes quoted could have no application. That law has reference to the method of informing the public of the fact that a partnership existed and of the facts limiting the liability of certain partners for the acts of other partners. In this case the issue presented is whether any partnership of any character in fact existed.

We recommend that a negative answer be given to the question certified.

The opinion of the Commission of Appeals answering the certified question is adopted, and ordered certified to the Court of Civil Appeals.

C. M. Cureton, Chief Justice.

ON MOTION FOR REHEARING. The appellee's motion for rehearing being referred to the Commission of Appeals for its opinion thereon, the following opinion was then delivered, and the motion was overruled in accordance therewith.