Opinion
No. 33268.
June 13, 1938.
1. PARTNERSHIP.
At common law, a partnership has no legal existence distinct from persons composing it.
2. PARTNERSHIP.
A partnership with identical partners under one partnership name is the same partnership when conducting some other portion of its business under another name, and separation of bookkeeping and of all operations and details thereof is immaterial, since ownership and ultimate control are still in partners who compose the firm.
3. INSURANCE.
Where two partners conducted a radio shop under one name and an automobile business as a motor company in same building, and a partner who was in active management of both businesses furnished a key to the building to an employee of radio shop who had no stated duties to perform for motor company, and such employee entered the building and stole automobile belonging to company, automobile was stolen by company's "employee," within theft policy excepting from its coverage theft by any person in company's employment.
APPEAL from the circuit court of Scott county; HON. D.M. ANDERSON, Judge.
Watkins Eager, of Jackson, for appellant.
We take the position that in Mississippi there is no such thing as a separate legal entity known as a partnership, which can be differentiated from its several members, for the reason that Mississippi is a common law state, and that unless the common law has been changed by statute, it still prevails.
Buckner v. Calcote, 28 Miss. 432; Blackwell v. John Reed Co., 41 Miss. 102.
Counsel for the appellee will ask the court to announce the rule that there is such a thing in Mississippi as a legal entity known as a partnership. We respectfully submit that all the common law states have adhered to the rule that there is no legal entity known as a partnership, and this rule in common law states is unanimous except where changed by statute. Certainly Mississippi will not at this time adopt a rule of the old civil law and discard a well fixed principle of common law where there is no statute to justify it.
Wisdon v. Guess Dry Cleaning Co., 5 F. Supp. 762.
Partners are equally and jointly liable for all debts lawfully contracted by the partnership, regardless of any contract or agreement they might have between themselves unknown to the party, with whom they are dealing.
Perry v. Randolph, 6 S. M. 335; Shonnard v. Price, 49 Fed. 2d 794; Rossmoore v. Commissioner of Internal Revenue, 76 Fed. 2d 520; U.S. v. Posner, 3 F. Supp. 252; Kent v. National Supply Co., 36 S.W.2d 811; Beggs v. Brooker, 79 S.W.2d 642; Angell v. White Eagle Oil Co., 210 N.W. 1004.
Although the same parties conduct two different lines of business under different partnership names, there is in law but one partnership.
47 C.J., secs. 174, 453; Campbell v. Colorado Coal Iron Co., 10 P. 248; Heinze v. Industrial Commission, 123 N.E. 598.
A court cannot legally adjudicate in bankruptcy and discharge the partnership as an entity apart from the members of the partnership.
Francis v. McNeal, 228 U.S. 695, 57 L.Ed. 1029, 33 Sup. Ct. 701, L.R.A. 1915E 706; Vaccaro v. Security Bank, 103 Fed. 436; Abbott v. Anderson, 106 N.E. 782, L.R.A. 1915F 668.
The party who committed this theft was an employee of George R. Howard and H.G. Hawkins, doing business as Forrest Motor Company, within the meaning of the terms and provisions of the policy sued on.
Marian Cloak Co. v. American Surety Co., 190 N.Y.S. 577; Hoffman Bros. v. Commercial Union Assurance Co., 222 N.Y.S. 641; Dairy Fertilizer Co. v. American Ins. Co., 138 So. 154; Bordelon v. Guaranty Fire Ins. Co., 135 So. 678.
O.B. Triplett, Jr., of Forest, for appellee.
The more recent and the best considered cases treat a partnership as a separate legal entity.
Lindley "Partnerships," page 150; Caswell v. Maplewood Garage, 149 A. 746, 73 A.L.R. 433; 20 R.C.L. 804, sec. 6; 47 C.J. 747, secs. 172-173; Arthur L. Corbin, Yale L.J. 771; Cardoza, "Nature of the Judicial Process," page 102.
Common law today is equity.
Y. M.V. Ry. v. Scott, 67 So. 491, 108 Miss. 871; Interstate Co. v. Garnett, 122 So. 376, 154 Miss. 325.
Those states which adhere strictly to the old common law rule make such exceptions thereto as become necessary in the determination of just results.
47 C.J., page 747, sec. 172, page 750, secs. 174-5, and page 848; Wood v. Am. F. Ins. Co., 149 N.Y. 382, 44 N.E. 80, 52 Am. St. Rep. 733; Goldman v. Rosenberg, 116 N.Y. 78, 22 N.E. 259; 26 C.J., page 35, sec. 20, and page 86, sec. 83; First National Trust Sav. Bk. v. Ind. Acc. Comm'n, 2 P.2d 347, 78 A.L.R. 1324.
Mississippi has never committed itself on the question.
Buckner Stanton v. Calcote, 28 Miss. 432, 20 R.C.L. page 804, sec. 6; 1 Story, Equity Jurisprudence, page 639.
The appellant by its own "insuring agreement" elected to treat Forest Motor Company as a separate entity by insuring "dealers and all other persons, firms `or' corporations liable upon security instructions."
Maryland Casualty Co. v. Beckham, 143 So. 886, 165 Miss. 836.
Argued orally by Mrs. Elizabeth Hulen and W.H. Watkins, Jr., for appellant, and by O.B. Triplett, Jr., for appellee.
Appellees, Geo. R. Howard and H.G. Hawkins, were partners. Under the firm name and style, Howard Radio Shop, they conducted a radio business, and in the same building they carried on an automobile business under the firm name and style, Forest Motor Company. Except for the fact that the two businesses were owned and operated by the same two persons as partners and in the same building, they were kept as much apart or separate as if each were owned by strangers to the other.
One Forbes was an employe of the Howard Radio Shop, with no stated duties to perform for the Forest Motor Company. On Saturday, March 6, 1937, Howard, who was the partner in the active management of both businesses, furnished Forbes with a key to the building and instructed him to open it on the following Monday morning. On Sunday afternoon, March 7, 1937, Forbes entered the building and stole therefrom an automobile belonging to Forest Motor Company.
This automobile was insured by appellant Company for the benefit of Forest Motor Company against theft, but the policy of insurance expressly excepted from its coverage theft "by any person or persons . . . in the assured's service or employment, whether the theft, robbery or pilferage occur during the hours of such service or not." This exception is common to policies of this particular kind and for at least four obvious reasons is proper to be contained therein.
The question for decision is whether Forbes who, as stated, was an employe of Howard Radio Shop was also, in law, an employe of Forest Motor Company. It is the rule of the common law that a partnership has no legal existence distinct from the persons who compose it. There is nothing of a sufficiently substantial nature to which its existence as a separate legal entity may be safely ascribed apart from the members of the partnership. To call one branch of a partnership business by one name and another branch by another name cannot alter the actual legal situation. A partnership with identical partners under one partnership name is the same partnership when conducting some other portion of its business under another name, — whatever the name, there is still the same partnership. And a separation of bookkeeping, and of all operations in the details thereof, does not alter the situation, for the ownership and ultimate control are still in the partners who compose the firm.
Forbes was an employe of the partnership, composed of the stated partners, and the automobile belonged to the same partners as partners, — to the same partnership. It follows that the automobile was stolen by an employe of the assured, and that the theft was not covered by the policy.
Reversed, and judgment here for appellant.