Opinion
8 Div. 460.
October 26, 1926. Rehearing Denied December 14, 1926.
Appeal from Circuit Court, Marshall County; W. W. Haralson, Judge.
Action by C. A. Inman against Joe Johnson. From a judgment for plaintiff, defendant appeals. Reversed and remanded on rehearing.
Certiorari denied by Supreme Court, 215 Ala. 645, 112 So. 188.
The complaint is as follows:
Count 1. The plaintiff claims of the defendant the sum of five hundred ($500.00) dollars, for this: That heretofore, on, to wit, on or about the 1st day of November, 1923, the plaintiff and defendant entered into the following agreement, to wit, the plaintiff was to buy and the defendant to pay for dimension hickory stock in carload lots when inspected on delivery in Marshall and Morgan counties, Ala., and the profits received from a sale of said dimension hickory was to be divided between the plaintiff and the defendant in equal portions. And the plaintiff avers that the plaintiff desiring to, and as a part of the above agreement, did deliver to the defendant the sum of $500 in money to reimburse the defendant for any and all loss up to and including said sum of $500 that the defendant might sustain by reason and by virtue of the performances of the said agreement above set out and described, and the plaintiff avers that the defendant, on his part executed to the plaintiff the following instrument, to wit:
"$500.00 Meltonsville, Ala. Nov. 1, 1923.
"Received of C. A. Inman five hundred dollars as surety against any loss to myself in regard to any contract or trade involving loss up to that amount or less. In case of no loss the above amount to be returned at time of general settlement or death.
Joe Johnson."
And the plaintiff further avers that after said above agreement was entered into by and between the plaintiff and the defendant that the plaintiff and defendant did nothing whatever toward buying said dimension hickory in carload lots or otherwise, and that said defendant and plaintiff have long since treated said contract as terminated in so far as carrying on said business, and defendant has not lost anything in or on any contract or trade with or on account of the defendant or the contract above entered into, and that the defendant and plaintiff did not carry said contract into execution further than the execution of the above contract and the payment of said money by the said plaintiff to the defendant, and that the plaintiff has demanded time and again the payment to him of said sum of money, but that the defendant has failed and refused and still fails and refuses to pay said sum of money back to the plaintiff, hence this suit, in the full amount above claimed.
The plaintiff admits that the defendant has repaid to him the sum of $245 of the money above paid to the defendant, and there is only claimed in this suit the sum of $255 with interest.
Count 2 is substantially the same as count 1 down to and including the quoted instrument or receipt, and adds the following:
And the plaintiff further avers that after said above agreement was entered into by and between the plaintiff and defendant that the plaintiff breached his agreement in this, that he failed and refused on demand to so furnish said money to pay for dimension hickory stock which the defendant had purchased and that nothing whatever was further done in regard to buying and selling and paying for said dimension hickory stock in carload lots or otherwise and that defendant has furnished no money to pay for any dimension hickory stock bought by the plaintiff and has not lost anything and is not liable on any outstanding contract for pay for dimension hickory stock or timber or on any contract or trade with or on account of the defendant or the contract above entered into.
And the said contract has been, as between the plaintiff and the defendant, long since treated as ended or terminated in so far as carrying on said business under its terms, and the plaintiff further avers that although he was able, willing and ready to comply with the above agreement, the defendant did so breach the same and that the defendant has failed and refused on demand and still fails and refuses to pay said sum of money back to this plaintiff, hence this suit in the full agreement above claimed.
Defendant demurred to the complaint upon these grounds: (1) Because no breach of the agreement by defendant is shown. (2) Because no liability is shown to repay the money at the time this action was brought. (3) Because it is not shown that the contract had ended when the action was commenced. (4) Because it is not shown that the indemnity provided by the agreement had performed its function fully when the action was commenced. (5) Because it is not shown that said contract had been rescinded by mutual agreement when the action was commenced. (6) Because it is not averred that contract has ended by its own terms prior to the commencement of this action. (7) Because the averment that plaintiff and defendant had treated the contract as terminated is indefinite and uncertain. (8) Because no general settlement or death is averred. (9) Because the complaint shows that the contract has not ended. (10) Because the complaint shows that the contract has not been rescinded by mutual agreement.
These further grounds of demurrer are assigned: Because the contract averred shows a partnership between plaintiff and the defendant and that plaintiff is seeking to maintain an action at law against defendant for a breach of the partnership agreement. Because, plaintiff and defendant being partners, neither can maintain an action against the other relating to partnership matters. Because the averments of said count show no more than that said partnership agreement has been ended by abandonment and that no settlement has followed said termination of said contract.
Street, Bradford Street, of Guntersville, for appellant.
Until the contract had expired according to its terms, or terminated by mutual consent, and a settlement had between the parties, no action at law arose; defendant's demurrer should have been sustained. Stafford v. Sibley, 113 Ala. 447, 21 So. 459; Couch v. Woodruff, 63 Ala. 466; Meaher v. Cox, 37 Ala. 201; 30 Cyc. 371; 20 R. C. L. 824. The agreement created a partnership. Smith v. Garth, 32 Ala. 368; 20 R. C. L. 826; Brandon v. Conner, 117 Ga. 759, 45 S.E. 371, 63 L.R.A. 260; Duryea v. Burt, 28 Cal. 569; Whitehill v. Shickle, 43 Mo. 537; Ingraham v. Foster, 31 Ala. 123; Cain Lbr. Co. v. Standard Co., 108 Ala. 351, 18 So. 882; Fred Gray C. G. Co. v. Smith, 214 Ala. 606, 108 So. 532. The affirmative charge requested by defendant was erroneously refused. 33 C. J. 866; Worms v. Lake, 120 Misc. Rep. 210, 198 N.Y.S. 861.
Isbell Scruggs, of Guntersville, for appellee.
The complaint does not show the existence of a partnership; to constitute a partnership, there must be a community of interest in both profits and losses. Mayrant v. Marston, 67 Ala. 453; Smith v. Garth, 32 Ala. 368; Gulf City S. M. Co. v. Boyles, 129 Ala. 192, 29 So. 800. Mere agreement to form a partnership does not create a partnership; and where time is to elapse, or some act is to be done before the right to share profits accrues, the parties are not partners until such time has elapsed, or such act has been performed. Savannah Rail Co. v. Sabel, 145 Ala. 681, 40 So. 88; Id., 135 Ala. 380, 33 So. 663; Cain Lbr. Co. v. Standard Co., 108 Ala. 346, 18 So. 882; Snodgrass v. Reynolds, 79 Ala. 452, 58 Am. Rep. 601; Huckabee v. Nelson, 54 Ala. 12; Hubbell v. Woolf, 15 Ind. 204; 150 U.S. 524, 14 S.Ct. 201, 37 L.Ed. 1169. An action at law will lie for the breach of an agreement to enter into a partnership, and one partner may sue the other for payment of his share of the capital stock. Stone v. Dennis, 3 Port. (Ala.) 231; Ellison v. Chapman, 7 Blackf. (Ind.) 224; Lyon v. Malone, 4 Port. (Ala.) 497; Robinson v. Bullock, 58 Ala. 618; Helme v. Smith, 7 Bing. Rep. 709; Grigsby v. Nance, 3 Ala. 348; 4 Mayfield's Dig. 412.
Upon reconsideration we have reached the conclusion that the two counts of the complaint in this case each show an executory contract of partnership to have existed between plaintiff and defendant. And this, despite the fact that plaintiff sought, by the turning over to the defendant of the money for the recovery of which this suit was brought, to partially indemnify defendant against any losses that might be sustained in the partnership venture.
However, since the said counts further aver that nothing was ever done in pursuance of the execution of the contract agreement, we can see no reason why, according to the strict terms of the said counts, it ought not to be held, as we do hold, that the same show that no necessity existed for a partnership settlement, and that the demurrers to the complaint were properly overruled. 4 Mayfield's Digest, 412, § 599.
The bill of exceptions shows that the evidence was without dispute that there was some operation, though, under the terms of the contract agreement, and that no settlement of the partnership affairs had been had. This being true, it is manifest that plaintiff was seeking to maintain an action that would not lie at law, and that the general affirmative charge, duly requested, should have been given in defendant's favor.
For the error in its refusal the application for rehearing is granted; the opinion in this case heretofore rendered is withdrawn; this opinion is substituted; the judgment appealed from reversed and the cause remanded.
Reversed and remanded.