Oldham v. Memphis Stone Gravel Co. , 145 Miss. 851 ( 1927 )

^* Corpus Juris-Cyc. References: Partnership, 30Cyc, p. 620, n. 17 New. This is a suit by L.E. Oldham to recover from the Memphis Stone Gravel Company et al., about seven thousand dollars, which Oldham was required to pay to Johnnie Archer under a decree of the chancery court of Tishomingo county. This amount was adjudged as a debt against Oldham for the operation of a gravel pit during the years 1913 to 1916, the said Johnnie Archer being an owner of a one-third interest in the land from which the gravel was taken.

The basis of the suit by Mr. Oldham is that, since he was required to pay Johnnie Archer for the gravel on account of her one-third interest in the lands from which the gravel was taken while Oldham was in copartnership with the appellees in mining and selling the gravel, he is entitled to recover the amount from the partnership (appellees), because it was a liability of the partnership from which he was released when he sold his interest to the other partners.

The record discloses that, in forming the partnership, Oldham and the other partners contributed to the capital of the concern, Oldham putting into the business the land, and the other partners contributing funds necessary for operating a gravel pit; that, when Oldham sold out his interest in the partnership to the appellees, the contract of sale included a provision by which Oldham was "relieved from all existing firm liabilities and not to be held on any hereafter created" in the operation of the gravel mine. And it is contended that the amount which Oldham had to pay to Johnnie Archer for the gravel taken from her one-third interest in the land operated by the partnership was a liability which he was freed from by the terms of the contract of sale of his interest in the concern, and that, therefore, the appellees should pay back to Oldham, and make him whole therein, the amount that he was required to pay to Johnnie Archer as a liability of the partnership carried on by Oldham and the appellees.

The record shows that Mr. Oldham contributed the land and other property to the partnership in payment for his interest therein, and that he represented to the other partners (the appellees) that he was the sole owner of the entire amount of land put into the partnership from which the gravel was taken; but Oldham contends, nevertheless, that the provision in the contract of sale relieved him of any and all liability of the partnership, and for that reason he should be allowed to recover in the case at bar. The lower court denied relief to Oldham, hence this appeal.

The question presented for our decision, then, is whether or not Oldham is entitled to recover from the partnership (the appellees) the amount he was compelled to pay to Johnnie Archer for her interest in the gravel taken by the partnership from the land in which she owned a one-third interest.

In view of the fact that he represented to the partnership that the land he was putting into the business was owned entirely by him, when, as a matter of fact, he only owned two-thirds of it and Johnnie Archer the other one-third, and thereby causing the liability to Johnnie Archer for the gravel taken from the land, we think the position of Mr. Oldham is untenable. When he represented to the partnership that he was the sole owner of the land, he put into the business as his part of the contribution to the assets of the concern, he deceived the other partners as to the extent of his interest in the land; and whether the deception was innocent or not (it being honest and unintentional in this case) can make no difference, because the other partners contributed their funds to the partnership on the basis that Oldham was the sole owner of the land which he put into the business. It is as damaging to be injured accidently as intentionally, so far as the results are concerned. Furthermore, Mr. Oldham was charged with knowledge of the extent of his interest in the land when he represented that he was the owner of it.

So it will be seen that Oldham failed to put in the amount of capital, as represented by the land, that he represented to the other partners that he was putting into the partnership; and it is clear that his failure in that regard amounted to a deception and was the cause or basis of the liability incurred and paid to Johnnie Archer by him.

We do not think that Mr. Oldham can be heard now to say that the amount he paid to Johnnie Archer, due to his own misrepresentation, can be recovered against the partnership, because his own wrongful act brought about the situation of which he now complains. In our opinion, it would be inequitable to require the other members of the partnership to stand the loss caused by the failure of Oldham's title to one-third of the land from which the gravel was taken.

If Johnnie Archer had recovered against the partnership, which she doubtless could have done, instead of Oldham, the other partners could have recovered against Oldham for the loss to them on account of his deception as to the extent of his ownership in the land. Therefore Oldham was indebted to the partnership for the amount due Johnnie Archer, and, as he has paid her, the matter is ended.

If it be conceded that the contract between Oldham and the partnership, in which Oldham was freed of all liabilities, was broad enough to cover the kind of liability claimed here, still we do not think the contract, relieving Oldham of liabilities of the partnership, contemplated any liability incurred on account of the misrepresentation of Oldham as to the amount of land which he put into the partnership. To so hold would be to relieve Oldham of the consequences of his deception and to punish the other members of the partnership for an act of Oldham for which they were in no way responsible.

While the liability in question to Archer was technically one by the firm, yet, in truth, it was a liability of Oldham, because it was created by his own wrongful conduct in representing that he owned all of the land, whereas he only owned two-thirds of it. We do not think, in equity and good conscience, the claim of Mr. Oldham is maintainable. Memphis Stone Gravel Co. v. Archer,137 Miss. 570, 102 So. 390; Medford v. Frazier, 58 Miss. 241; and Burns v. Dreyfus, 69 Miss. at pages 213, 214, 11 So. 107, 30 Am. St. Rep. 539.

The judgment of the lower court will be affirmed.

Affirmed.