Spaulding v. Stubbings , 86 Wis. 255 ( 1893 )

If defendant Stubbings is liable in this action, he is so liable because he was a partner with John O'Connor, during his lifetime, in the Eagle River business, and allowed the business to be continued on the same basis by the administrators of John O'Connor's estate after his death. We have no case here for the application of the doctrine of estoppel against Stubbings because he held himself out to plaintiff as a partner in the business. The plaintiff testified he was told by John O'Connor, just before his death, that Stubbings had an interest in the business, and that was all. If plaintiff was a competent witness to give this testimony (which counsel for Stubbings deny) it fails to prove thatStubbings held himself out to plaintiff as a partner with O'Connor in the Eagle River business. It does not appear that plaintiff took the trouble to inquire of Stubbings or any other person what that interest was, if it existed, or to ascertain whether the business was continued on the same basis after the death of John O'Connor; and there is no satisfactory proof that plaintiff relied upon the fact thatStubbings was a partner in the business when he gave credit to John O'Connor, and, after his death, to his administrators. Hence the first and principal question is, Were John O'Connor and Stubbings partnersinter se in the Eagle River business before and at the time of the death of John O'Connor?

Among the numerous definitions of a "partnership" to be found in the treatises on that subject, many of which definitions are collected in 1 Lindl. Partn. 2, and in 17 Am. Eng. Ency. of Law, 828, we think the definition formulated by Mr. Bates in his late work on that subject is as accurate and satisfactory as any we have seen. This definition seems to be preferred by the learned writer of the article entitled "Partnership" in such encyclopaedia. It is as follows:" A partnership is the contract relation subsisting between persons who have combined their property, labor, and skill in an enterprise or business, as principals, for the purpose of joint profit." 1 Bates, Partn. § 1. It is said by Mr. Lindley that" partnership, although often called a contract, is in truth the result of a contract; the relations which subsist between persons who have agreed to share the profits of some business, rather than theagreement to share such profits." 1 Lindl. Partn. 2. Hence it is not essential to the existence of a partnership that it be so denominated in the contract of the parties; nor is it necessarily fatal thereto if the parties declare in such contract that they do not intend to become partners. The real inquiry always is, Have the parties by their contract combined their property, labor, or skill in an enterprise or business, as principals, for the purpose of joint profit?' If they have done so, they are partners in that business or enterprise, no matter how earnestly they may protest they are not, or how distant the formation of a partnership was from their minds. The terms of their contract given, the law steps in and declares what their relations are to the enterprise or business and to each other.

The learned counsel for Stubbings contends that only the agreement of April 10, 1889, can be considered in determining the question of partnership. This alone of the two agreements above mentioned is set out and relied upon in the complaint to establish a partnership betweenStubbings, and John O'Connor. While we think the same effect should be given to both contracts, construed together, that should be given to the contract of April 10, 1889, excluding the other, we are willing to adopt the view of counsel, and confine ourselves to giving construction to the latest contract. That instrument in form fixes the amount of money loaned by Stubbings to John O'Connor at the sum of $14,611.50, and binds the latter to repay it in five years, with ten per cent. interest, payable annually. The instrument recites that O'Connor is engaged in carrying on a general merchandise business in Eagle River, and provides that he shall pay Stubbings one half of the net profits of such business; that O'Connor shall keep correct account books of the business, which shall be open at all times to the inspection ofStubbings or his agent; and that during five years the stock of goods in the business shall not be sold in bulk without the consent of both parties thereto. It will be observed that this agreement does not specify what O'Connor had done or should do with the $14,611,50, nor the consideration for the stipulation to give Stubbings one half of the net profits of the business. Such share of the profits could not have been given as additional interest, because the agreement provided for paying him the highest legal rate of interest in this state, independently of the profits. Neither was it for services in the business, forStubbings, did not stipulate to perform services therein. The conclusion is almost irresistible that it was inserted to fix the proportionate share of Stubbings in the business.

It will also be observed that in the contract of April 10thStubbings did not agree to make any further loans or advances to O'Connor; neither does it contain any provision that O'Connor should be responsible therefor should any further advances be made.Stubbings made further advances, however, for the benefit of the business, and it does not appear that any time was fixed for repayment thereof, or that he demanded any voucher or security therefor. It is not reasonable to believe that he would thus have parted with his money if he was not interested with O'Connor in the business as a principal.

Moreover, the letters of Stubbings in evidence show that the proposition to start the business at Eagle River was first made by him; that he purchased much stock for the store; that he advised, if he did not dictate, of whom O'Connor should make purchases, as well as prices and terms; that he arranged for credits; and that he carefully watched and freely interfered with all the details of the business, so far as he could obtain knowledge of those details by persistent requests to the O'Connors to furnish him detailed information thereof. In short, he exercised an influence in, and assumed a control over, the management of the business (which was acquiesced in by the O'Connors) entirely incompatible with the idea that he was merely a creditor of O'Connor for the amount of his advances and interest thereon, which can only be satisfactorily accounted for on the theory that he was handling and directing his own business.

The foregoing considerations impel our minds to the conclusion that, under the contract of April 10th, Stubbings, and John O'Connor combined their property, labor, and skill in the Eagle River business as principals, and of course they did so for their joint profit, for the contract gives each one half the net profits. This makes them partners in the business, within the rule above stated. The contract is strikingly like that under consideration in Rosenfield v. Haight, 53 Wis. 260, which this court held created a partnership relation between the parties to it.

The fact that the business was conducted in the name of John O'Connor, and, after his death, in the name of the administrator of his estate, and the further fact that in Stubbings' letters to each of them the business was usually referred to as "your business," are not significant, for it appears that, for reasons satisfactory to himself,Stubbings, desired that his connection with the business should be kept secret.

The finding that the business was continued after the death of John O'Connor in the name of his administrators, or one of them, with full knowledge and permission of Stubbings, and was conducted in all respects as before, without any notice to the contrary or adjustment of the partnership business, and that Stubbings continued to make advances to carry it on, are fully sustained by the proofs. It requires no argument to show that in such case the liability of Stubbings as a partner is continued.

The findings of the court are criticised because they ignore the note sued upon and go upon the open account of plaintiff alone. The note was given for a part of such account, but it is not a payment thereof. The note was brought into court, and the defendants are not prejudiced because the findings and judgment rest upon the original account rather than upon the note. A computation shows that no interest was allowed on the account; hence the judgment is more favorable to defendants than it would have been had it been upon the note.

By the Court. — The judgment of the circuit court is affirmed.