Carter v. McClure

• Citation: 38 S.W. 585,98 Tenn. 109
• Parties: CARTER et al. v. McCLURE et al.
• Decision Date: 09 January 1897
• Court: Supreme Court of Tennessee

38 S.W. 585

98 Tenn. 109

CARTER et al. v. McCLURE et al.

Supreme Court of Tennessee.

January 9, 1897

Appeal from chancery court, Franklin county; T. M. McConnell Chancellor.

Creditors' bill by Carter, Dunbar, & Co., and others, against McClure Lucas & Co., and others. From a decree in favor of complainants, defendants appeal. Affirmed.

J. H Holman and Martin & Littleton, for appellants.

Banks & Embrey and Estill & Lynch, for appellees.

BEARD J.

The bill in this cause was filed by complainants, as creditors of McClure, Lucas & Co., seeking to hold the defendants liable for the debts of that concern, upon the theory that it was a commercial firm, of which defendants were members, at the time of the creation of these debts. The facts, so far as they are important in the decision of this case, and as they have been found by the court of chancery appeals, are: That these defendants, with others who are not sued, all members of an alliance lodge in the town of Huntland, in this state entered into an agreement among themselves to raise to sum of money which, it was assumed, would be sufficient to establish a co-operative store in that place. This agreement was reduced to writing, and the names of the parties in interest were by them affixed to it, and over against his signature was placed the amount which each subscriber obligated himself to contribute to this joint enterprise. This agreement is in words and figures following, to wit: "Huntland, Tenn Dec. 21, 1888. We, the undersigned, agree to pay to the directors, to be elected, the sum annexed to our respective names, by the first of January, 1889, for the purpose of establishing a co-operative store at Huntland, Tennessee. We further agree that the said money remain in the business for at least five years from beginning, unless two-thirds of the stockholders agree to discontinue the business in a shorter time. We further agree that three of the stockholders be elected annually as directors, to have full control of the stock hereunto subscribed. It is further agreed that the directors act in conjunction with R. W. McClure, who is a stockholder to the amount of $2,050, and who is to be the principal salesman, and in the transaction of all business between the said McClure and directors, the directors are to be regarded collectively or as a unit, and the said McClure as a unit." After the execution of this paper, the three directors provided for in it were duly chosen, and into their hands the subscribers paid the several sums they had agreed to contribute. These sums, aggregating $590, were turned over by the directors to Mr. McClure, who, adding the amount of $2,050, which he had agreed to place in the venture, purchased a stock of goods, and opened up a co-operative store in the name of R. W. McClure & Co., this being the business name agreed upon by McClure and the three directors. No incorporation ever took place, nor was such ever intended by these parties. The main purpose of the defendants, in entering into this business, was to avoid what they deemed to be the extortion theretofore practiced upon them in the sale of goods by the merchants of the country. While not embodied in their writing, yet one of the terms of the contract, and the one which chiefly, if not altogether, induced all the subscribers (save, no doubt, McClure) to become interested in this enterprise, was that they were to purchase such goods as they might require from the stock in this store at a profit not exceeding 10 per cent. above cost; and these directors were chosen as their representatives, especially, to look after McClure, who was the largest shareholder, as well as manager, and see that he kept faith with the subscribers in this matter. While the defendants, styling themselves in their written agreement as "stockholders," took no active personal control of the concern, yet they manifested a lively interest in its success. In addition to giving it the benefit of their own patronage, they were zealous in commending it to their neighbors. At the end of the first year one Mosely desired to purchase an interest in the business. He, however, was not a member of the "alliance," and, organized as this enterprise was, in line with or under the inspiration of that movement, it was necessary that he become such before he could be allowed to make such purchase. In order to qualify him to this end, the rules of the "lodge" to which these defendants belonged were suspended, and at one meeting he was admitted to the privilege of full fellowship with them. He contributed $2,000 to the capital of the concern, and its name was changed to McClure, Mosely & Co. At the end of another term of 12 months Mosely sold out his interest to one Lucas and thereafter the enterprise was conducted in the name of McClure, Lucas & Co., until insolvency overwhelmed it with disaster. The claims of complainants accrued during the existence of and against this latter concern. In addition to these changes in the organization of and style of the business, two deaths occurred among the original subscribers,-one of them before, and the other after, the creation of these debts. This latter death, however, can in no way affect this controversy, and will, therefore, not be further noticed. Upon this state of facts it is insisted for the defendants-First, that this undertaking was in no sense a partnership, and that they did not sustain the relation of partners to either R. W. McClure & Co., Mosely, McClure & Co., or McClure, Lucas & Co; secondly, if, however, they are mistaken in this broad proposition, then that they were only partners in the firm of R. W. McClure & Co., and that all partnership relation and liability, on their part, were terminated or dissolved by the various changes already adverted to, and long prior to the creation of complainants' debts. The chancellor and the...