Fletcher Brothers v. Hawkins

Greene, C. J.,

delivered the opinion of the Court. (After stating the Covenant as above.) The defendant did send out in the Narragansett Trading and Mining Association one man, Asa A. Andrews, holding one share in said association, but in the voyage to San Francisco, the association was dissolved by the unanimous consent of the members, and, on their arrival at that port, the property of the association was sold and divided among the members according to their shares, but upon the understanding that each man would go on and mine for him who sent him out, in the same manner and on the same terms as if the association had not been dissolved. One member refused to accede to these terms and he received no part of his distributive share. Andrews received the share of the Company property which he represented, went to the mines and worked at mining and sent home to the defendant, as his share, eighteen ounces of dust worth about three hundred dollars, of which the plaintiffs claim one half, as profits, in the sense of the covenant. On the 7th of February, 1849, and before sailing from Providence, Andrews received from the defendant three hundred dollars, being the amount required to be advanced for each share towards the capital stock, and assigned to the defendant all his interest in the capital stock of the association, and one half of his proportion of the property, which might accrue to said association during the existence thereof, and to which he might be entitled agreeably to the constitution and by-laws of the association. These are the leading facts.

The counsel for the plaintiffs contended, that, in a mining company of this sort, the whole capital is contemplated by the parties to be expended in getting the miners to the. mines and supplying them with provisions and tools to mine with, and that profits, therefore, in such a Company means returns. But the constitution of the association declares, it is formed for the. purpose of buying or chartering a ship and freighting her, as the directors shall see fit, for the coast of California, and engaging in such trading and mining operations, as shall be deemed most advisable. And the eighth article of the constitution, provides for a division of the profits over and above the original capital invested. It is evident this article contemplates a division of profits, as distinguished from capital, and a division which shall leave the capital undiminished.

And we think the agreement uses the terms in the same sense, inasmuch as it declares the profits, guaranteed to the plaintiffs, are such as shall be made according to the form of the co-partnership, that is, shall be divided according to the provisions of the constitution of the association. And there is no provision in the constitution for making a division of profits except the article referred to. Besides, this is the ordinary mercantile and legal sense of the term, and the burthen is on the plaintiffs to show it was used in a different sense in this agreement. Under different circumstances, this term might very properly receive the construction contended for in the present case. But we must take the contract as the parties have made it. It may be a hard bargain on the plaintiffs, who, it seems, furnished the whole amount advanced to Andrews, and got in return no interest in the capital stock, and nothing, but a guaranty of one quarter of the profits on the share when declared. They did not require of the defendant any stipulation, that the company should continue to transact business for any definite period, or that they should make a dividend of profits, or that in the event of a dissolution they, the plaintiffs, should be entitled to a certain proportion of the Company property, or the property which the partner should make individually on the share he should receive of the company property, or that the defendant should, in any way, be responsible for the conduct of the company or of any of the members thereof; — all they have stipulated for is one quarter of such profits on the share, as shall be made according to the form of the co-partnership.

Again, there - could be no accruing of profits to the company out of company business, after the distribution of the company property among the partners. What was company property, during the existence of the co-partnership, became, by the dissolution of the one and distribution of the other, the private property of the partners, and the same of any' property thereafter' made upon it ? Nor is this aspect of the case changed, by the fact that each partner received his distributive share, upon the understanding that he was to use it for mining and account for it and the profits on it to the party at home, whom he represented. The property and profits were still private, and are not embraced by the language of the agreement.

The plaintiffs have taken the risk of what has happened, and they cannot now be permitted to construe their contract as if they had provided against it.

Neither do we think that the defendant is estojrped - from denying that any profits have accrued in the sense of the agreement, by the fact that he has received from Andrews more than half of all his earnings at the mines.

The defendant, under the assignment to him by Andrews, became the owner of the share represented by Andrews, but entitled only to one half of the profits which might accrue to the association, during the existence thereof and to which Andrews might be entitled agreeably to the constitution and by-laws of the association.

These profits, as already stated, for another purpose, are defined in the article of the constitution already referred to. No profits accrued during the existence of the association, and, therefore, there are none to divide between Andrews and the defendant under this agreement. But Andrews, having taken the proceeds of the share owned by Hawkins to his private account and used it in his private business without the the consent of the defendant, is liable in equity to account to the defendant both for the capital and profits upon equitable principles, and such accounting is quite irrespective of the agreement between the plaintiffs and the defendant, and is founded on property in Hawkins.

The understanding on which Andrews, in common with the other partners, received the share of the company property, which each represented, does not strengthen the obligation of Andrews to account. He would be equally liable without such understanding.