Batson v. Drummond

• Decision Date: 26 March 1923
• Docket Number: 258
• Citation: 249 S.W. 547,158 Ark. 29
• Parties: BATSON v. DRUMMOND
• Court: Arkansas Supreme Court

249 S.W. 547

158 Ark. 29

BATSON v. DRUMMOND

No. 258

Supreme Court of Arkansas

March 26, 1923

Appeal from Union Chancery Court; J. Y. Stevens, Chancellor reversed.

Decree reversed and cause remanded.

McKay & Smith, Mahony & Yocum, and Saye & Saye, for appellant.

The evidence showed a partnership existed between the parties. Roach v. Rector, 93 Ark. 521; Meehan v. Valentine, 145 U.S. 611; LaCotts v. Pike, 91 Ark. 26; Wilson v. Todhunter, 137 Ark. 80; First National Bank v. Stokes, 134 Ark. 368; Kent v. State, 143 Ark. 439; Wescott v. Gilmore, Ann. Cas. 1916-E, 437; 150 P. 777, 20 R. C. L. 830, par. 30, 35; Miller v Hughes, 10 Am. Dec. 719; Richards v Grinnell, 50 Am. Rep. 727. The court erred in division of the profits. 20 R. C. L. 877, par. 90; Underwood v. Overstreet, 188 Ky. 562, 223 S.W. 152; 20 R. C. L. 1023, par. 265; 1 Jones, Blue Book on Evidence, 268; Raines v. Weiler, 101 Kan 294, L. R. A. 1917-F, 571, and note; Maynard v. Maynard, 147 Ga. 178, L. R. A. 1918-A 81; Pearce v. Scott, 37 Ark. 308; Haller v. Willamowicz, 23 Ark. 566; Cole v. Cole, 119 Ark. 48; Johnson v. Jackson, 114 S.W. 260. Parol agreements and prior conversations merged in written contract, which can not be contradicted or varied by parol evidence. 3 Jones, Blue Book on Evidence, § 434; Clark on Contracts, 490; 2 Elliott on Contracts, sec. 1620; Morris v. S. W. Supply Co., 136 Ark. 507, 206 S.W. 894; Barfield Mercantile Co. v. Connery, 150 Ark 428, 234 S.W. 481; Sims v. Best, 140 Ark. 384, 215 S.W. 519. None of the indebtedness and bills made prior to formation of partnership should have been charged to it, nor should appellee's testimony as to profits have been regarded conclusive. Carter v. Road Imp. Dist., 238 S.W. (Ark). 71; Harris v. Bush, 129 Ark. 369. 196 S.W. 471. Appellee's conduct was not in good faith as a partner, nor could he dissolve the partnership. Property ordered sold not identified by decree. Partnership should have been dissolved and business wound up by court. 20 R. C. L. 953, sec. 177; Johnson v. Jackson, 114 S.W. 260, 20 R. C. L. 958, sec. 182, note; A. S. R. 423, 60 A. S. R. 424; Howell v. Harvey, 5 Ark. 270, 69 Am. Dec. 376, 20 R. C. L. 956, sec. 180. Receiver should have been appointed. 20 R. C. L. 966, sec. 188; Reddlin v. Whitehill, 135 U.S. 621, 23 R. C. L. 30; Jones v. Weir, 66 A. 550; Childers v. Neeley, 34 S.E. 828; 5 Pomeroy's Equity Jurisprudence, 145, sec. 81. Appellant is entitled to an accounting, regardless of whether a partnership existed.

E. W. McGough and W. J. Goodwin, for appellee.

No partnership existed between the parties. Buford v. Lewis, 87 Ark. 412; Roach v. Rector, 93 Ark. 521, lays down the true test as recognized in this State. Johnson v. Rothchilds, 63 Ark. 518, 41 S.W. 996; Recker v. Robbins, 74 Ark. 437, 86 S.W. 667; Paris Mercantile Co. v. Hunter, 74 Ark. 615, 86 S.W. 808; Culley v. Edwards, 44 Ark. 423; 30 Cyc. 366; Herman Kahn Co. v. Bowden, 80 Ark. 23, 96 S.W. 126; Oliver v. Gray, 4 Ark. 425; Haycock v. Williams, 54 Ark. 384, 16 S.W. 3; Harris v. Umstead, 79 Ark. 499, 96 S.W. 146; Neill v. Shamburg, 158 Pa. 263, 27 A. 992; St. John v. Cooks, 63 Hun. 460, 18 N.Y.S. 419. Appellee had a right to foreclose his lien. Findings of chancellor are not disturbed unless against the preponderance of the testimony. Irvin v. Dugger, 142 Ark. 102. Forfeiture occurred on May 1, instead of June 1, 1922.

OPINION

SMITH, J.

On November 26, 1921, appellee and two other gentlemen leased the Garrett Hotel in the city of El Dorado, and appellee later acquired the interests of his associates in the lease, and on April 1, 1922, he sold a half interest therein to appellant. The sale was evidenced by a contract in writing, and both parties agree there was a contemporaneous parol agreement governing the operation of the hotel, although they differ as to the terms of this parol agreement.

The relevant portions of the written contract are as follows: "* * * In consideration of the sum of $ 7,500, $ 2,500 cash in hand paid, receipt whereof is hereby acknowledged, and $ 5,000 represented by equal monthly notes in the amount of $ 1,000 each, payable on the first day of May, June, July, August, and September, 1922, respectively, the said party of the first part does hereby bargain, grant, sell, assign and convey unto the said S. H. Batson a one-half (1/2) interest in and to all the goods, chattels and effects in and about or used in connection with the Garrett Hotel, El Dorado, Arkansas, together with a one-half (1/2) interest in said lease aforesaid. To have and to hold the said goods, chattels and effects unto the party of the second part, his executors, administrators, and assigns, and to his own use, for the remainder of said term of said lease, and to have and to hold all personal property unto the said S. H. Batson, forever.

"And the said N.W. Drummond, party of the first part, does hereby covenant with and to the said party of the second part, that he is the lawful owner of said goods, chattels, and effects; that they are free and clear from all incumbrances; that he has a good right to sell the same; that he will warrant and defend the same against the lawful claims and demands of all persons. The said S. H. Batson undertakes and agrees with the said N.W. Drummond that, in consideration of the lease aforesaid, he will devote his full time and undivided attention to the business of said hotel. It is further agreed and understood that the said S. H. Batson hereby gives a lien on all of said personal property to the said N.W. Drummond to secure the full payment of the purchase money hereinbefore mentioned."

Each of the five notes referred to the others, and contained an accelerating clause, whereby all matured upon failure to pay any one of them. Appellant Batson did not pay the notes falling due in May and June, and on June 7th appellee brought suit for a judgment on the notes and to foreclose the lien reserved to secure their payment.

Appellant answered and alleged, in effect, that he and appellee had formed a copartnership to operate the hotel, but appellee had excluded him from the business, and had appropriated the profits of the business. It was alleged in the answer that appellant's share of the profits would more than have paid the notes which had matured at the time the suit was brought, and there was a prayer that a master be appointed to state an account between the parties, and that a receiver take charge of the business. The court did not appoint either a receiver or a master, but did undertake to state the account between the parties, and, after doing so, credited the sum found due to appellant on the notes, rendered judgment for the balance due on them, and ordered sale of appellant's interest in the property in satisfaction thereof. Appellant executed a supersedeas bond and duly perfected his appeal.

The first question in the case is whether a partnership existed between the parties, and we answer that question affirmatively. In the case of Roach v. Rector, 93 Ark. 521, 123 S.W. 399, the court laid down the following test of the existence of a partnership (quoting syllabus): "As between the parties to an alleged partnership, the true test of a partnership is whether the parties actually joined together to carry on a trade or adventure for their common benefit, each contributing property or services and having a community of ownership in the property and of interest in the profits of the business."

The written contract set out above lacks but little, if anything, of creating a partnership, although it does not so designate the relationship of the parties thereunder. But it was not essential that this should be done.

In explanation of the parol contemporaneous agreement, appellee testified that it was understood that no partnership was being formed; on the other hand, appellant testified that it was expressly agreed that a partnership was being formed; and we accept his version as correct. The parties testified about and agreed as to what their respective duties were to be, as defined by the parol contract, and this testimony confirms our conclusion that a partnership existed. Both parties were to devote their entire time to the hotel, each bearing an undivided one-half of the expenses incident to its operation and sharing equally the profits. Appellee was to be the day man, and appellant was to come on duty at 11 o'clock at night, relieving a clerk who had come on duty at 1 o'clock in the day.

On one occasion appellant did not show up to relieve the clerk, who went off at 11 p. m. After waiting until 1 a. m. appellee told the clerk on duty to stay on all night, and to tell the appellant, if he came on during the night, that he (the night clerk) had orders to stay on all night, thus virtually dismissing appellant. But a partner could not be thus discharged. Appellant testified that thereafter, although he continued to perform his duties, he was furnished no information about the finances of the business. Appellee testified that appellant had access to the safe...