Opinion
July Term, 1898.
Thomas F. Conway and John N. Blair, for the appellant.
L.L. Shedden, for the respondent.
The contract of March 5, 1890, created no partnership between the defendant Barnes and Brown and Brenan. It was simply a contract by which Brown and Brenan were to harvest and house upon the shores of Lake Champlain large quantities of ice for Barnes Co., at the latter's expense, and were to receive "therefor" from Barnes Co. one-fourth of the net profits which the latter should realize upon the sale thereof after the latter had deducted all expenses. Brown and Brenan used the firm name of John Brown Co. in carrying out their part of the transaction, both in their dealings with Barnes Co. and with others. The contract does not mention such firm name.
Barnes Co. employed Brown and Brenan to use the former's money, tools, articles and materials so far as the latter could reasonably employ the same for harvesting and housing the ice. Thereupon the stored ice would belong to Barnes Co., who agreed to sell it and pay one-fourth of the net profits to Brown and Brenan for their services. Brown and Brenan reserved no interest in the ice. They were not required to advance any money. When the ice was housed it would belong to Barnes Co., and Brown and Brenan would have to wait for the pay for their services until Barnes Co. should sell the ice.
The agreement as made was carried out. Brown and Brenan did gather and house the ice and Barnes Co. paid all the expenses. It does not appear that any profits were realized upon the sale of the ice, and we assume there were none.
It is plain that, as between themselves, no partnership was created between Barnes or Barnes Co. and the other defendants.
The creation of any debt by Brown and Brenan against Barnes Co. to the plaintiff for advances was not authorized, and was not necessary since Barnes Co. were not remiss in supplying to Brown and Brenan the necessary funds upon their request or drafts.
As between the parties to the agreement the debt to the plaintiff was not a partnership one, but the separate debt of Brown and Brenan, which, if incurred in anticipation of Barnes Co.'s advances, should have been paid therefrom.
But Brown and Brenan were to receive "therefor," that is, for their services, "one-fourth of the net profits realized on sale and settlement after the ice is disposed of," and Barnes Co. agreed "to pay to said Brown Brenan one-fourth of the net profits of such ventures."
It is, therefore, urged that they were partners as to third persons, and, hence, as to the plaintiff. This would be so if Brown and Brenan had retained an interest in the profits as such, as distinguished from the measure of the amount of compensation Barnes Co. agreed to pay them for their services, or as distinguished from the one-fourth share of Barnes Co.'s profits which the latter agreed to pay them.
As pointed out in Leggett v. Hyde ( 58 N.Y. 272, 278), "the specific interest in profits which is to make a person a partner must be a proprietary interest in them existing before the division of them into shares," quoting with approval 3 Kent's Commentaries (*25, note b), where it is said, "the test of partnership is a community of profit; a specific interest in the profits as profits, in contradistinction to a stipulated portion of the profits as a compensation for services." This test is well established in this State. ( Hackett v. Stanley, 115 N.Y. 625; McLewee v. Hall, 103 id. 639; Cassidy v. Hall, 97 id. 159; Richardson v. Hughitt, 76 id. 55; Smith v. Bodine, 74 id. 33; Leggett v. Hyde, 58 id. 272; First National Bank of Meriden v. Gallaudet, 122 id. 655.)
Barnes Co. were not partners of the other defendants as to third persons. Barnes Co. did not hold themselves out to the plaintiff or to the public as partners with the other defendants, and, therefore, they did not become liable upon that ground. ( McLewee v. Hall, supra.)
In July, 1896, the defendant Barnes verified an answer in which it was alleged that he "has now, and at all times mentioned in said amended complaint, had an interest as copartner in the business of said John Brown Co."
Brown and Brenan had brought an action against F.W. Myers Co., claiming to recover for ice which they as partners under the firm name of John Brown Co. had sold them between March 1 and May 31, 1890. Barnes had been interested with Myers Co. in buying this ice, and if any sum was unpaid thereon, he supposed it was payable to Barnes Co. Myers Co. consulted with counsel in Plattsburgh, and they interposed an answer alleging that Barnes was a member of the firm of Brown Co., and also alleged payment. Myers Co.'s counsel desired Barnes to interpose an answer, and wrote to him inclosing a copy of Myers Co.'s answer. Barnes answered the letter, saying, "Mr. Myers is right in his allegation that I was interested in the firms of F.W. Myers Co. and John Brown Co. I can give no additional facts for the defense of plaintiff's complaint, and wish you would kindly attend to this matter and advise me of any steps necessary for me to take to protect the interests of F.W. Myers Co., as well as my own." Counsel at Plattsburgh thereupon mailed him the answer containing the above allegation, and Barnes verified it. Afterwards being in doubt as to the correctness of his answer in this respect, he consulted his home counsel in New York, and stated to them the facts in full, and was advised by them that the answer was not correct. He thereupon procured leave to withdraw the same, and then served an amended answer in which such allegation did not appear.
This answer thus withdrawn and the letter constitute the only evidence of the defendant's membership of the firm of John Brown Co. As explained, they are mere scintillæ, and insufficient in the face of the uncontradicted and unmodified contract to support a finding of the existence of Barnes' partnership with Brown and Brenan.
Whether a person is a partner with others is often an embarrassing question, and a mistaken admission of the fact seasonably corrected, both admission and correction being made after the transactions upon which the rights of the parties depend, should not be permitted to change such rights. (1 Lindley Part. *87, 88; Ridgway v. Philip, 1 Cromp. M. R. 415; Vice v. Anson, 7 Barn. C. 409.)
Here the test of the partnership is the written agreement of March 5, 1890, and by that test the defendant Barnes never became a member of the firm of John Brown Co.
The judgment should be reversed, new trial granted, costs to abide the event.
All concurred, MERWIN, J., in result.
Judgment reversed and a new trial granted, costs to abide the event.