Sankey & Shorter v. Columbus Iron Works

McCay, Judge.

1. The important question in this case, the construction we are to put upon section 1880 of our Revised Code. That section is as follows: “A joint interest in the partnership property or a joint interest in the profits and losses of the business constitutes a partnership as to third persons. A common interest in profits alone does not.”

Under the testimony of Sankey in these cases, he and Shorter were clearly partners, since, according to his statements, he was to furnish the hands and Shorter the mill, and the profits to be divided equally. According to this there was a joint interest in the stock, since that was made up of the mill and the hands to work it; and the case falls within the terms of the first line of the section.

But Mr. Shorter’s testimony states directly the contrary of this. He furnished, as he says, the mill and the hands; Sankey was a mere superintendent, and had no interest at all in the stock. He says further, that Sankey did not have “a joint interest in the profits and losses, but only a common interest in the profits.”

The language of this witness is in the express words of the statute, and, if it is to be taken literally, it comes exactly within the last sentence, which declares in terms that a common “ interest in profits alone,” does not make a partnership as to third persons.

It is contended, however, and, we think, rightly, that it is not for the witness to settle the rights of these parties by the particular language he uses. His whole testimony must be taken together, and the Court is to judge what he means, when he says that Sankey had not “a joint interest in the profits and losses, but only a common interest in the profits.”

It is clear that he means that Sankey was to have an interest in the net profits. JSTow it is contended, that as the “net profits” are only what is left after paying expenses and losses, an interest in the net profits necessarily involves an in the losses.

The real question, therefore, is, what is meant by the words “a common interest in profits alone,” in this section of the statute ? Does it mean “ gross profits,” or may it also include the case of “net profits?” And if so, under what circumstances ? There is some confusion in the authorities on this subject, and it is hard to reconcile them. In a very fair sense, it may be said that one whose interest is in the “net profits,” is also interested in the losses, since the net profits can only be what is left after paying the losses, and there are many cases to the effect that one who is thus interested is a partner. On the other hand, it is true that the words “net profits” do not necessarily cover all losses, since it may be that there are no profits, and that the concern is in debt; and it is very reasonable that one should contract that he is not to be liable for losses, meaning that if the losses exceed the profits he shall not be liable for any part of the excess, and there are cases which clearly make this distinction. There are many eases, also, to the effect that one who is employed as an agent or clerk, and to be paid for his services in a share of the profits, is not a partner, even if the profits meant be the “ net profits.” The ground of the decisions is that he has no interest in the profits as a partner, but that the profits are merely the measure of his losses. We think the Code, section 1880, uses language evidently intended to convey this idea. The language is, that a joint interest in the profits and losses makes a partnership, but a common interest in the profits does not. If the interest is the interest of an owner, if there be a joint seizure, if the person whose interest is in question, has a right, as such owner, to dispose of the profits, then there is a partnership, if the parties be seized per mi et per tout. If one may disapprove of or control the profits as much as the other, then there is a joint interest. But if the party whose interest is in question have only a “ common interest ” in the profits with the other; that is, if he have no title jointly with the other; if his position be that of a mere employee, with no right of control as owner over the profits, but with only a common interest in them, that is, interested in common with the other, in their increase or decrease, because they measure the amount of his wages, then he is not a partner. Story on Partnership; Lee vs. Buckner, 285; Dalton City Council vs. Dalton Manufacturing Company, 33 Georgia, 243, Same case affirmed, 37 Georgia, 115.

We take it for granted that it was not intended by the Code to change the well settled rule upon this subject,to-wit: that if parties go into an adventure, one furnishing money or stock and the other skill or labor, and to share the net profits, they are partners, since it follows that in such a case they have a joint interest in the profits. It is significant that the language used is “ a joint interest in the losses and profits constitutes a partnership as to third persons. A common interest in profits alone does not.” The change of the word “joint,” in the first sentence, into “common,” in the last, indicates, as we think, the meaning to be as we have said. Now, in this case, Mr. Shorter swore that Sankey was only an employee, that he “engaged” him to superintend, that his interest was not that of a partner, but that he had a common interest in the profits. Now we think the Court ought to have charged the jury, pointing out this distinction, to-wit: that if San key’s interest was only in the net profits as a measure of what Shorter was to pay him, if he had no joint interest with Shorter in them as their mutual ¡property, then there was no partnership. Shorter’s evidence would justify and require such a charge. ■ The charge, as given, assumed that Sankey was to furnish the hands and Shorter the mill. If what Shorter says be true this was not fair to him. As he tells it, there was no furnishing in the matter. He engaged or employed Sankey. Sankey was not to furnish the hands. We think Shorter had a right to have the law of the case put to the jury in the light of the evidence which he presented.

2. As a matter of course, whatever be the agreement, whether there be in truth a copartnership or only a hiring with the employee, interested in the profits so far only as that their net amount is to determine what his employer shall pay him for his labor, whatever be the truth, if the owner of the property permit his employee, with his knowledge, to hold himself out to the world as a partner, he is such as to third persons. This is nothing but plain common sense and honesty. To allow the contrary doctrine would be to countenance fraud.

3. It is sometimes difficult to say what is a fact and what is a conclusion. Half of what every man tells as facts is nothing but very certain conclusions. We think partnership or no partnership, ordinarily, may be stated as a fact. Son or no son, father or no father, stand on pretty much the same footing. Ordinarily, such things are stated as facts. A witness who states them is open to cross-examination, in which the ground of the statement can be inquired into. We think it would be restricting the range of statement too much to say that a witness cannot be permitted to state, as a fact, that one man was a partner in a firm.

4. The 37th Rule of Court positively requires that objections to interrogatories, on the ground that they are leading, must be filed before issuing the commission: New Rules, page 16.

5. After a partnership is established, the sayings of one in reference to the business binds the others; but on the question of partnership or no partnership, to make the sayings of one bind the others they must be made under such circumstances as would charge other persons on matters in dispute. They must, by implication, at least, be quasi admissions of the party to be charged.

Until the partnership is established, there is no relation between the parties that should make the sayings of one bind the other, more than there is to make any other sayings of one man to bind another. As the issue was here partnership or no partnership, the sayings of one, to bind the other, ought only to be such as would amount to quasi admissions of the party to be charged: that is, said under circumstances where the failure to deny them amounts to an admission.

1. We have some doubt as to our duty in this case, but upon the whole, we reverse the judgment, on the ground that the charge does not fairly present the law, in view of the evidence of Mr. Shorter.

Judgment reversed in both cases.