Nowell v. Oswald

[1] The sole question presented on appeal is the correctness of the trial court's decision that appellant Oswald was a joint adventurer with others in the production of a theatrical exhibition and therefore liable to employees for claims for labor. We are satisfied that the ruling of the trial court was correct. (Westcott v. Gilman, 170 Cal. 562 [Ann. Cas. 1916E, 437, 150 P. 777]; Chapman v. Hughes, 104 Cal. 302 [37 P. 1048, 38 P. 109]; Leake v. City of Venice, 50 Cal.App. 462 [190 P. 440].)

There is an all-important difference in construing relationships of this kind as between the parties themselves upon the one hand and as between the parties themselves and those who have dealt with them upon the other hand. In the instant case the rights of third parties are involved; and as stated in Westcott v. Gilman, supra: "When, however, the rights of third parties are involved, the basis of the inquiry shifts materially, and the fundamental questions are, what had those third parties the right to believe from the language of the contract and from the conduct of the parties to it as affecting them, and not as affecting each other. Each case, therefore, is adjudicated upon its own facts, and very little value will be found from any extended review of the authorities."

Oswald, Mrs. Small, and Castle entered into a contract under the terms of which Oswald, in consideration of a loan of $2,000 to Mrs. Small, was given an undivided one-half interest in the net proceeds to be derived from a show to be staged by Mrs. Small, known as "Mlle. Magnificent." No provision was made for the return of the money except that it was to be paid back from the gross proceeds derived from the show before a division of the profits. It was further agreed that in no way was Oswald to be held responsible for any debts incurred in said production. No mention is made of Castle in the contract except that he also was not to be held responsible for any debts and that he "is acting solely as trustee" for Oswald. We must go to another contract made at the same time to ascertain how Castle is to "act" as trustee. In this contract, entered into between Mrs. Small and Castle, it is agreed that Castle is to be known at all times as director of the production and is to dictate policies and performances at all times without interference from Mrs. Small; also that he shall act as treasurer and that he shall have sole and exclusive charge of all matters relating to advertising and exploitation. Disbursement of all moneys is to be done only by signature of D. Castle, trustee, and all moneys accruing from the production will be deposited in the name of D. Castle, trustee. The net profits were to be divided as follows: fifty per cent to Oswald, fifteen per cent to an actor named Ricker for services in lieu of salary, ten per cent to publicity, fifteen per cent to Castle, and only ten per cent to Mrs. Small. It was stipulated in an agreed statement of facts that each of the defendants Oswald, Mrs. Small, and Castle knew that plaintiff's assigns were rendering the services of actor, pay for which the action is brought, at all times during the said performance. They could only know this fact at all times by being on hand at all times when the services were rendered.

This was not a loan, in the ordinary sense, for the money was to be paid back, not by Mrs. Small, but from the gross proceeds of the venture. It is apparent also that while Castle was called "Trustee," he was in fact the agent of Oswald. Except as to the moneys which were deposited in the bank, he had none of the attributes of a trustee, but was the general agent of Oswald in putting on the production. Oswald was in charge of the show at all times, through his agent, who was director of production, dictator of policies and performances, as well as sole and exclusive manager of all advertising and exploitation. Furthermore, appellant was given the option for a period of ninety days "to stage the show elsewhere" and, since the terms upon which he was to stage it elsewhere were not stated, it is a fair inference that in the event he exercised the option he was to stage it on the same terms as those of the original contract under which he staged it at the Mason Opera House.

The cases relied upon by appellant may be readily distinguished from the instant case. The contracts in those cases showed clearly a bona fide effort to lend money without any right whatever to conduct the business. In the instant case the contracts are so peculiar in phraseology and so unusual in their terms that third persons with rights involved manifestly see in them a deliberate attempt by one partner to evade his legal liability for the partnership debts — debts which were incurred during the performances in the personal presence of that partner at all times.

Section 2395 of the Civil Code defines a partnership to be "the association of two or more persons, for the purpose of carrying on business together, and dividing the profits between them." Appellant had power under the arrangement through his agent to make contracts, incur liability and manage the whole business. He enjoyed for a brief season the pleasures and distinction of being the angel of the show. Now that the show has flopped and eighty-six members of the cast are pressing for collection their claims for labor, he seeks to hide behind the skirts of the partner who was to receive only ten per cent of the net profits. We have said before that we believe the ruling of the trial court was correct.

Judgments affirmed.

York, J., concurred.