Bird v. Hamilton , 1 Walk. Ch. 361 ( 1844 )

The Chancellor.

That part of the answer in which defendant says Bird relinquished to him all his interest in the business, is not responsive to the bill; and, as it has not been proved, must be thrown out of the case altogether.

It is insisted however, on the part of defendant, that the articles of agreement of May sixteenth, did not constitute a partnership, and should be regarded only as a contract for a copartnership to commence in futuro. That the furnishing of capital by the respective parties, in the proportion stipulated by the articles, was a prerequisite to the commencement of the partnership. That neither party was bound to furnish his proportion of stock, unless the other was ready and offered to furnish his ; and that Bird never furnished any part of the capital employed in the business, or was acknowledged by Hamilton as a partner.

The agreement of May sixteenth did not, of itself, create a partnership. It was a contract for a partnership to be formed between the parties on the first day of July following. The language, “It is therefore agreed to enter hereby into partnership,” imports a partnership in prmsenti, but no rule of construction is better settled, than that the intention of the parties to an instrument, when that intention is apparent from the whole instrument, and not repugnant to any rule of law, will control the meaning of a particular word, or phrase, unguardedly used, and seeming to indicate a different intention. Jackson v. Myers, 3 J. R. 388; Jackson v. Clark, Id. 424; Ives v. Ives, 13 J. R. 235. It is the intention of the parties, rather than the language employed to express their intention, that courts chiefly regard.

On the sixteenth day of May, 1840, the parties agreed to become partners, in a contract with the government for the transportation of the mail between Niles and Chicago, in four-horse post-coaches, for two years, commencing on the first day of July of that year, and in the transportation of passengers in connection with the mail. Bird was to furnish one-third of the capital or stock necessary for the business, and Hamilton two-thirds; and the profit and loss were to be divided between them in the same ratio. The business of the partnership could not be entered upon until the first of July. It was to commence on that day. It seems, therefore, but reasonable that the parties intended the partnership to commence on that day, and not before. The business required a large capital in horses, coaches, harness, &c. to be furnished by the parties; but when was this capital to be furnished? The articles of agreement do not, in express terms, fix any particular time, and yet there can be no doubt it was not to be furnished immediately, or before it was wanted for carrying into execution the contract with the government; neither was the partnership to commence until that time.

If this construction of the articles of agreement be correct, it follows, that either party had a right to require the other to furnish his portion of capital, as a sine qua non to the formation of the partnership. Did Bird furnish his part of the capital, or was it waived by Hamilton? The case must turn upon the answer to be given to these questions.

The contract with government for carrying the mail, and with Gilbert and Eaton for the two coaches, I do not consider partnership contracts, for there was no partnership then in existence. These contracts were entered into about the first of June, and must be regarded as joint contracts made by the parties, not as partners, but in their individual capacity, with a view to, and for the benefit of, the partnership subsequently to be formed. By them neither party contributed any thing as capital. Bird had no exclusive interest in the mail contract, which was not consummated until June first, and after Hamilton had agreed to become a joint contractor with him. Neither did he pay, or agree to pay, for the coaches purchased of Gilbert and Eaton, with his own money, but gave them a draft on moneys to be received by the future partnership for carrying the mail. He consequently contributed nothing as stock to the partnership, by the part he took in those contracts.

• If I am correct in the view I have taken of these contracts, Bird never furnished any capital whatever, unless the sixty dollars he handed to Hamilton are to be considered in that light, and of that I shall have occasion to speak hereafter. Hamilton furnished sixteen horses and one coach, worth together $1,280, and purchased the stock of Overton & Co. for $6,387, one quarter of which he paid in cash, and secured the balance in six, nine, and twelve months. The contract with Overton & Co. was made by Hamilton in his own name, but was intended at the time for the benefit of Bird as well as himself, on his paying his third of what was to be paid down, and securing his third of the payments on which credit was to be given. This Bird fails to do, and Hamilton had to make the first payment out of his 'own funds, and to get two friends to become his sureties for the future instalments.

Bird was at Niles on the first of July. He went there at the request of Hamilton, but he was not then, or at any other time, ready to perform his part of the contract between Overton & Co. and Hamilton; which was to be consummated on that day. He appears to have taken an •interest in the business at that time, and he undoubtedly then hoped soon to be able to perform on his part. Hamilton appears to have indulged a like hope, for he after-wards applied to him repeatedly for that purpose; and the books, for something like thirty days, until Hamilton lost all hopes of his ever performing, were kept in the name of Bird and Hamilton, but after that, in the name of Hamilton alone. This circumstance should not be used to the disadvantage of Hamilton. It should not be construed into a waiver of the agreement requiring Bird to furnish a third of the capital. To give such a construction to what was intended as a favor to Bird, and nothing more — that is, to permit him to reap the benefits of a contract, by performing on his part, after the time for that purpose had elapsed, — would be hard indeed, and saying to persons hereafter, in like circumstances, show no indulgence whatever to a defaulting party, or it will be construed into a waiver of your rights.

There is no evidence of a waiver, and it certainly should not be implied from slight circumstances. It is hardly reasonable to suppose Hamilton intended to give Bird the benefit of his services, and of the $8,000 capital invested by him in the business. The complainants seem to have been aware of this difficulty, for they state in their bill the parties were to borrow money on the credit of the firm, to stock the road, and to repay it from their receipts; and that money was actually borrowed by them for that purpose. The answer positively denies any such understanding, or that any money was borrowed by the firm. And this allegation of the bill is unsupported by testimony, except the evidence of Lorenzo Dow Bird, who says there was an understanding, or agreement, that the money necessary for the first payment should be borrowed on the credit of the firm; and he thinks some three hundred dollars were borrowed of a bank in Jackson. The witness is not positive any money was borrowed; he thinks it was borrowed ; and the agreement or understanding to which he testifies is not only denied by the answer, but is in direct contravention to the articles of agreement, which speak of capital or stock, and not of credit.

Hamilton gave receipts in the name of Bird and Hamilton, for the mail money, from time to time, as it became due, and they are adduced as evidence of a partnership. Hamilton and Bird, as already stated, were joint contractors for carrying the mail. Suppose Bird, after making the contract, had refused to have any thing to do with carrying the mail, and Hamilton, as he was equally liable with Bird for a non-performance of their contract, to save himself, had gone on and fulfilled the contract with the government; would he not have been entitled to the mail money ? And would he not have given receipts in the name of Bird and Hamilton? The case supposed is the one before the Court, if Bird, by reason of his failure to comply with the articles of agreement, was not a partner with Hamilton.

As to the sixty dollars, Hamilton did not receive it as performance of the articles -of agreement by Bird, who, at the time he paid it, promised to pay the balance of his share of the first payment, and to furnish his part of the securities. It was not intended by the parties to secure the rights of Bird under the articles, unless the promise made at the same time was afterwards performed.

The question is one of partnership between the parties themselves, and not as to third persons. Individuals, who are not partners in fact, are sometimes liable as partners to third persons, on account of holding themselves out to the world as partners. But that is not the question in the present case, which is one of partnership between the parties; and, when that is the case, the agreement out of which the supposed partnership arises, is to be construed as any other agreement between the same parties.

The present case is not, I confess, without its difficulties. It is peculiar in many of its features, but, after the best consideration I have been able to give it, I am of opinion that Bird and Hamilton were not partners under the articles of agreementof May sixteenth, by reason of Bird’s failure to furnish his share of the stock. McGraw v. Pulling, 1 Freeman R. 357.

Bill dismissed, but without costs, as complainants are executors, and appear to have acted in good faith in bringing their suit.