Bivins v. Proctor

• Decision Date: 27 March 1935
• Docket Number: No. 1823-6305.,1823-6305.
• Citation: 80 S.W.2d 307
• Parties: BIVINS et al. v. PROCTOR et al.
• Court: Texas Supreme Court

80 S.W.2d 307

BIVINS et al. v.PROCTOR et al.

No. 1823-6305.

Commission of Appeals of Texas, Section A.

March 27, 1935.

Error to Court of Civil Appeals of Eighth Supreme Judicial District.

Suit by Mary E. Bivins and others, as legal representatives of the estate of Lee Bivins, deceased, against Foy Proctor and another. Judgment for defendants was affirmed [49 S. W.(2d) 824], and plaintiffs bring error.

Reversed and remanded, with directions.

W. R. Smith, of Anson, and Underwood, Johnson, Dooley & Simpson, James R. Tolbert, Jr., and Vance Huff, all of Amarillo, for plaintiffs in error.

Haag & Stubbeman and J. M. Caldwell, all of Midland, Whitaker & Peticolas, of El Paso, and Goree, Odell & Allen, of Fort Worth, for defendants in error.

GERMAN, Commissioner.

Plaintiffs in error, Mary Bivins and others, legal representatives of the estate of Lee Bivins, deceased, were plaintiffs in the trial court, and will be so designated here.Leon Goodman and Foy Proctor were defendants in the trial court, and will be so referred to in this opinion.Suit was brought by plaintiffs to recover of defendants two-thirds of the losses sustained in a partnership venture between Lee Bivins, Goodman, and Proctor.The enterprise was one involving the buying, handling, and selling of cattle.It began about October 1, 1928, and terminated with the death of Bivins on January 17, 1929.On account of the death of Bivins, the testimony with reference to the agreement between the parties consists almost entirely of letters, book entries, and various circumstances.Briefly, the enterprise involved the furnishing of certain cattle by Bivins, the acquisition of other cattle, for which Bivins advanced a part or all of the purchase money, the pasturing, handling, and sale of the cattle, Goodman and Proctor giving their time and service thereto, with a division of net profits after a sale of the cattle.The opinion of the Court of Civil Appeals reported in 49 S.W.(2d) 824, furnishes an additional statement.

The trial court, in submitting the case to the jury, apparently proceeded upon the theory that the relation between the parties was a partnership.The Court of Civil Appeals held: "The evidence leaves no doubt the partnership relation existed.The firm name was Bivins, Proctor & Goodman."As we are convinced that the evidence as a whole leads to the conclusion reached by the Court of Civil Appeals, we shall proceed upon the theory that there was a partnership.

The contention of plaintiffs is that, although Bivins furnished cattle to the partnership and advanced money for the purpose of buying cattle by the partnership, for all of which he was to be repaid, his contribution became assets or property of the partnership itself; and, although Goodman and Proctor furnished only their labor and services (and in some instances their credit also) in buying, caring for, and selling the cattle, the loss sustained in the venture was a partnership loss which should be borne equally by the partners; that, as Bivins had borne the loss, his estate was entitled to recover of the other two partners their proportionate share of same.

It is the contention of defendants that the cattle furnished by Bivins and those acquired by the partnership for which he advanced the purchase money did not become the property of the partnership, but that the partnership only had the use of same; and as their contributions to the venture, consisting of time, labor, and services, were lost, they are not required to make good any portion of the loss sustained by Bivins.They also contended that the facts and circumstances raised an issue of fact as to a special agreement that they were not to share losses of the venture.

Beginning with the premise that there was a partnership, we think it clear that the trial court submitted the case upon a wrong theory, and the Court of Civil Appeals erred in affirming the judgment on that theory.

It appears to be almost universally recognized that, if a partnership exists, whether formed by a contribution of money capital on the part of the constituent members or by the contribution of money or property on the part of one and the contribution of labor or service on the part of another, with an agreement to share profits, in the absence of some special agreement to the contrary, it will be implied that all of the parties were to share the losses.In other words, if a partnership is shown, and nothing more, it is presumed that the partners are equal as to both profits and losses.This has been specially provided by statute in many states, which statutes have been held to be but a statutory recognition of the common-law rule.

While there are cases tending to hold that, where one party furnishes the capital and another labor or services, there is no right of contribution in favor of the former against the latter for losses incurred in conducting the business, yet a careful consideration of such cases will show that they do not establish the general rule, or even qualify it, but are cases where the proof established a particular fact situation by which it was shown that there was in reality a specific agreement which fixed the rights and liabilities of the parties.In our opinion, the general rule is that, regardless of how the capital of the partnership is formed, if there in reality be a partnership, "it requires a special agreement to prevent the conclusion of a community of interests in the property as well as in the profit and loss."Most of the statements of text-writers on the question are quoted in the case of Johnston v. Ballard, 83 Tex. 486, 18 S. W. 686.Perhaps the best statement of the rule applicable under the facts of the present case is found in the case of Cameron v. Watson, 10 Rich. Eq.(S. C.) 64, 88, and is as follows:

"A participation in the profits and loss will make the partners liable as such to all persons dealing with the firm.And no stipulation to the contrary would exempt them from this liability which the law imposes upon them.Consistently with this rule, and as among themselves, they may modify and vary their rights in any manner they may think proper.The terms of the contract of copartnership, will become the law by which their rights and liabilities, as among themselves, will be determined.

"In this instance, whether Cameron, who put in no capital, but was to receive half the profits, is to contribute to Watson for the loss of the capital which he put in, and which has been sunk in the operations of the firm, the contract is silent, except in the way of an implication, which I will hereafter notice.I am, therefore, left to decide this question, not so much upon a construction of the contract, as upon the general law of the land applicable to the subject.The paucity of authorities bearing directly on this point has surprised me.Neither has the argument, nor have my own researches, furnished me with any thing authoritative or reliable.In the absence of any decision, or precedent, by which I might be guided, I must appeal to principles more general and comprehensive.

"A participation in profit and loss enters into the nature of a partnership.It is this which renders each member of the firm liable to creditors in respect to his individual estate, without reference to the amount of the capital which he contributes, or the share of the profits which he is to receive.The partners may stipulate among themselves, that one shall receive any given share or proportion of the profits, and sustain none of the loss.But I apprehend, that in the absence of any stipulation to this effect, the general idea of a partnership must prevail, namely, that each member is entitled to a share of the profits, and is liable to bear a share of the loss.And in the absence of any such stipulation, as would become the law of the contract upon the subject, the proportion which the partners were to receive of the profits (if profits were realized) would furnish the true and just criterion by which their respective proportions of the loss should be determined.And, inasmuch as the plaintiff was by the agreement to have received one-half of the profits, he is, in my judgment, liable to contribute to the defendant for one-half of his lost capital."

Proceeding upon the theory that there was a partnership, and evidently upon the further theory that the evidence raised the issue as to the existence of a special agreement by which Goodman and Proctor were exempt from the general rule as to sharing losses, the trial court submitted special issue No. 1 as follows: "Do you find from a preponderance of the evidence that Lee Bivins, Leon Goodman and Foy Proctor engaged in the cattle transactions in question with the intention, understanding and agreement that Leon Goodman and Foy Proctor should share in any losses, if any, as well as any profits, if any, that might result from said transactions?"

The dominant question in the case was whether or not there was a partnership.The burden resting upon the plaintiffs was met when such relationship was established, and the burden of proof necessarily rested upon defendants to establish by a preponderance of the evidence a special agreement qualifying or limiting the general rule that prima facie a loss of capital is to be equally borne by the partners, or borne in the proportion in which they share the profits.If, therefore, we consider that the trial court found as a matter of law that there was a partnership and intended to submit the further question of a special agreement as to sharing losses, it is obvious that there was error in placing the burden of proof upon the plaintiffs as to the foregoing issue.In addition to charging the jury to the effect that the issues would be answered from a preponderance of the evidence, the court instructed the jury as follows: "The burden of proof is upon the plaintiffs to establish by a preponderance of the evidence the affirmative to Special...