Opinion
Opinion filed January 4, 1934.
Partnership — Sharing in Profits and Losses as Essential, but Not Conclusive — Furnishing Share of Capital or Property Not Essential to Relationship — Distinction between Agreements Constituting Partnership and Those Where Portion of Profits are Paid for Services — Consideration of Evidence as Whole Rather than Piecemeal — Jury Question — Trial — Inconsistent Instructions — Estoppel — General Exception.
1. An agreement to share in profits and losses of an adventure is essential element of partnership, and, ordinarily, is sufficient to constitute parties to such agreement partners, but such agreement is not always decisive of existence of partnership, as between parties.
2. To constitute partnership it is not necessary that each party furnish share of capital or property which is to become stock or subject-matter of business, or be joint owner of it, since capital of association may vest and remain in one of members, but indispensable constituent is that parties shall be jointly interested in profits and affected by loses of venture.
3. Agreement whereby parties have specific interest in profits as profits constitutes partnership, but agreement which gives person sought to be charged as partner stipulated proportion of proceeds as compensation for his labor and services does not constitute partnership.
4. Testimony is not to be considered piecemeal, and apart from context, but as whole, together with reasonable inferences to be drawn therefrom.
5. In action of contract, where defendants were, respectively, owner of farm and person operating farm under verbal agreement that each should receive half proceeds therefrom and pay half expenses, and evidence showed that during continuance of arrangement plaintiff had supplied grain for use on farm on order of defendant operating farm, which was charged to both defendants, one-half thereof having been paid by owner of farm and suit being for balance of account, held that question whether terms of contract made defendants partners, or merely provided that operator of farm was to receive as compensation for his labor and skill one-half income from farm, and to pay one half of expenses, should have been left to jury under proper instructions.
6. Error of court in giving binding instruction to jury that partnership existed, held not cured by subsequent portion of charge asking jury to find whether there was partnership, nor by instruction that sharing profits and loses were two of principal elements of partnership.
7. Where two inconsistent instructions are given by court it will be assumed that jury felt at liberty to follow either of them.
8. Under facts in case, persons sought to be charged as partners held not to have so held themselves out as partners to plaintiffs as to estop themselves from proving true nature of contract.
9. Exception to failure of court to charge as requested in each of several requests, where a series of requests to charge had been presented, held too general to require attention.
ACTION OF CONTRACT. Plea, general issue. Trial by jury in Franklin municipal court, Albert W. Butler, Municipal Judge, presiding. Verdict for plaintiff, and judgment thereon. Defendant J.D. Brown excepted. The opinion states the case. Reversed and remanded.
Webster Webster for the excepting defendant.
P.C. Warner for the plaintiff.
Present: POWERS, C.J., SLACK, MOULTON, THOMPSON, and GRAHAM, JJ.
Brown and Pelkey entered into a verbal agreement whereby Pelkey was to operate Brown's farm "to halves." The only testimony concerning this agreement was given by Brown, on examination by plaintiff's counsel, as follows:
"Q. And did you, during the years 1925-1926 have a farm in Franklin which was carried on by a man named Henry Pelkey? A. Yes, sir.
Q. What arrangement did you have with Mr. Pelkey with respect to carrying on this farm? A. We took it to halves.
Q. When you say `took it to halves,' do you mean that you received half the milk checks? A. Yes, sir.
Q. Half of all the produce raised on the farm? A. Yes, sir.
Q. And how about the expenses? A. He was to pay half, of course.
Q. That is, he was to participate equally in losses and profits? A. Yes, sir."
During the continuance of this arrangement, Pelkey purchased from the plaintiffs, on credit, certain quantities of grain for use on the farm. The purchases were charged to Brown and Pelkey. Brown paid half of the account, and this action was brought against both parties to recover the balance. The verdict and judgment were for the plaintiffs, and the case is here on Brown's exceptions.
The court instructed the jury that the agreement, as given in the testimony above quoted, constituted a partnership between the defendants. This instruction is challenged by an exception.
An agreement to share in the profits and losses of an adventure is an essential element of a partnership, and, ordinarily, is sufficient to constitute the parties to such agreement partners. Brigham v. Dana, 29 Vt. 1; Noyes v. Cushman, 25 Vt. 390, 396; Duryea v. Whitcomb, 31 Vt. 395, 398; Chapman v. Devereux, 32 Vt. 616, 619; Styles v. Shanks, 46 Vt. 612, 616. It is not necessary that each party shall furnish a share of the capital or property which is to become the stock or subject-matter of the business, or be a joint owner of it. The capital of the association may vest and remain in one of the members. The indispensable constituent is that the parties shall be jointly interested in the profits and affected by the losses of the venture. One may furnish the capital or stock and another contribute his labor and skill. Brigham v. Dana, supra, page 10; Griffith v. Buffum, 22 Vt. 181, 184, 54 A.D. 64; Duryea v. Whitcomb, supra; Styles v. Shanks, supra.
But sharing in the profits and loss of the business is not always decisive of the existence of a partnership, as between the parties, because it may be merely an arrangement with a view to compensation for services rendered by one to the other, the amount of which is to be dependent upon the success of the business. Morgan v. Stearns, 41 Vt. 398, 405.
There is a clear distinction between agreements whereby the parties have a specific interest in the profits qua profits, and agreements which give to the person sought to be charged as partner, not a specific interest in the business or profits, but a stipulated proportion of the proceeds as compensation for his labor and services. The former constitute a partnership; the latter do not. Clark v. Smith, 52 Vt. 529, 532; Beach v. Boynton, 26 Vt. 725; Tobias v. Blin, 21 Vt. 544, 548; Bowman v. Bailey, 10 Vt. 170, 172.
It is said in Walworth v. Jenness, 58 Vt. 670, 673, 5 A. 887, that the cases involving contracts for carrying on a farm on halves may conveniently be divided into three classes: (1) Those in which the contract is held to make the owner and occupant tenants in common of the crops and to give the occupant no interest in the land itself but only a right to enter upon it for the purpose of carrying out his contract; (2) those in which the contract is held to be a lease and so to vest the entire interest in the crops of the occupants; and (3) those in which the contract is held to make the parties tenants in common of the crops and also to give the occupant an interest in the land. The first of these classes is regarded as in the nature of a contract to perform labor on the land.
The evidence did not necessarily import such a contract as would make Brown and Pelkey partners. The witness testified that Pelkey carried on the farm "to the halves," under an arrangement that each party should have half of the milk checks and produce, and pay half of the expenses. The last question, as framed, might reasonably be construed as calling for his construction of the agreement and not for the terms of it. The phrase "that is," by which it was prefaced, showed that it had reference to the answers to the preceding questions, and the reply of the witness might reasonably be taken as a statement of his understanding of the purport of his previous testimony, and not as a recital of a specific agreement that all profits and loses should be shared. If the question and answer stood alone, the charge might have been justified, but the testimony is not to be considered piecemeal, and apart from the context, but as a whole, together with reasonable inferences to be drawn therefrom. People's Nat. Bank v. Brunelle, 101 Vt. 42, 46, 140 A. 160; Woodhouse v. Woodhouse, 99 Vt. 91, 109, 130 A. 758. From the evidence, taken as a whole, it would be possible reasonably to infer that the agreement was one for carrying on the farm on shares, of such a nature as to constitute a contract for labor and services. The construction of the testimony and the meaning of the witness were for the consideration of the jury, and they should have been required to decide under proper instructions, whether the terms of the contract were such as made the parties to it partners, or merely provided that Pelkey was to receive, as compensation for his labor and skill, one-half the income from the farm, and should pay one-half the expenses.
It is true that at the close of the charge the court asked the jury to find whether there was a partnership. But since it had previously given what amounted to a binding instruction that a partnership existed, the error was not cured. Where there are two inconsistent instructions it will be taken that the jury have felt that they are at liberty to follow either of them. Ide v. B. M.R.R. Co., 83 Vt. 66, 85, 74 A. 401; Garfield v. Passumpsic Tel. Co., 91 Vt. 315, 325, 326, 100 A. 762. Neither did the instruction that sharing profits and losses "are two of the principal elements of a partnership" set the matter right. Nothing more was said concerning the qualifications of the rule, and the jury were left in the dark as to the distinction between a contract for a partnership, and one providing for compensation for labor and services.
There is nothing in the record to show that the two defendants held themselves out as partners in their dealings with the plaintiffs, so as to estop themselves from proving the true nature of their contract.
The defendant presented a series of requests to charge and excepted "to the failure of the court to charge as requested in each of his several requests." This exception is too general to require attention, as we have many times decided. It is necessary to cite only a few of the cases. Temple v. Duffy, 96 Vt. 114, 118, 117 A. 101; McAllister v. Benjamin, 96 Vt. 475, 491, 121 A. 263; Town of Bristol v. Bristol R.R. Co., 91 Vt. 223, 100 A. 37; Goodwin v. Barre Savings Bank Trust Co., 91 Vt. 228, 234, 100 A. 34; Usher v. Severance, 86 Vt. 523, 528, 86 A. 741; In re Bean's Will, 85 Vt. 452, 459-467, 82 A. 734.
Judgment reversed, and cause remanded.