Appeal of McIntire , 118 Pa. 421 ( 1888 )

Opinion,

Mr. Justice Stebbett:

The main contention in this case is, that the court below erred in construing the agreement of February 10,1882, and charging appellant with $8,653.33, the difference between Shriver’s share of profits actually earned and the nominal profits, of twenty per cent, per annum, claimed by him under the Nellis guaranty. That guaranty, embodied in the tripartite agreement of November 4,1878, between Nellis of the first, Shriver of the second and Stokes of the third part, is as follows: “As a guarantee by the party of the first part to the party of the second part, on account of his not being familiar with the business, and as an inducement by the party of the first part, he guarantees that the profits of the business shall be made to the party of the second part equal to twenty (20) per cent, per annum on his capital of $20,000.”

It is claimed by Shriver that this personal obligation of Nellis was assumed by appellant in that clause of the agreement of February 10,1882, wherein the latter undertakes to indemnify Shriver and Stokes “ from any and all loss, liability, damages and costs on account of or by reason of a certain action then pending, and also pay to Shriver any amount of money, if any, which may be necessary upon final settlement of the affairs of Nellis, Shriver & Co., to make said Shriver whole upon his capital of $10,000, and profits according to the terms of the articles of copartnership; and to Stokes, whatever amount of money, if any, is necessary to give Stokes the amount which upon such final settlement may be due him.” The court appears to have regarded this as an undertaking on the part of appellant to make Shriver whole not only as to his $10,000 capital invested in the business, and his full share of the profits actually earned according to the articles of copartnership, but also to make him whole as to the nominal profits of 20 per cent, per annum on $20,000, according to the personal guaranty of Nellis j and he was accordingly charged with the difference of $8,653.33, above mentioned.

We cannot regard this as the correct construction of the contract in question. The items specified therein are Shriyer’s “ capital of $10,000, and profits according to the terms of the articles of copartnership.” Referring to those articles, we find Shriver’s paid in capital is $10,000, about which there is no dispute, and we further find this provision: “ The capital stock being $100,000, the profits of the business shall be divided into tenths, A. J. Nellis of the first part to receive six tenths, S. P. Shriver of the second part to receive three tenths and James H. Stokes of the third part to receive one tenth.” This is the only agreement between the partners, as to profits. Shriver’s share, therefore, “according to the terms of the articles of copartnership,” is three tenths of $14,488.89, ascertained net profits of the business, or $4,346.67, and no more. Although incorporated in the articles of copartnership, the individual guaranty of Nellis to Shriver cannot be regarded as one of the terms of the copartnership agreement. It is strictly a matter between Nellis and Shriver, individually, with which the other partner, Stokes, never had nor could have any concern. The guaranty clause might be stricken out of the instrument and its integrity as articles of copartnership would be unaffected thereby.

It has also been suggested that Shriver’s transfer to Mr. Nellis of the interest which he acquired by purchase at sheriff’s sale was “ subject to his (Shriver’s) rights under the articles of association of Nellis, Shriver & Co.,” and therefore Shriver has a claim on that interest, now represented by appellant, for the nominal profits guaranteed by Nellis. There would be some force in this suggestion if the Nellis guaranty were in any proper sense an integral part of the articles of association entered into by the three persons who composed the firm of Nellis, Shriver & Co. But, as we have seen, the guaranty was a matter that concerned two of the partners only, as individuals, and not as members of the firm. It does not appear that anything was ever done to change its character from an individual transaction to that of a copartnership transaction. Shriver’s claim against Nellis, individually, under the guaranty still remains in full force.

In so far, therefore, as the specifications of error involve the-liability of appellant for nominal profits under the personal guaranty of Nellis, they are sustained. There is nothing in the remaining specifications that requires special notice. They are not sustained.

Decree reversed at costs of appellee and record remitted with instructions to enter decree in accordance with the foregoing opinion.