Case v. Fish

• Decision Date: 14 January 1885
• Citation: 22 N.W. 322,63 Wis. 475
• Parties: CASE v. FISH AND OTHERS.
• Court: Wisconsin Supreme Court

63 Wis. 475

22 N.W. 322

CASE

v.FISH AND OTHERS.

Supreme Court of Wisconsin.

Filed January 14, 1885.

Appeal from circuit court, Racine county.Chas. H. Lee, Wm. F. Vilas, and J. G. Jenkins, for respondent.

J. V. Quarles and Fish & Dodge, for appellants.

TAYLOR, J.

This case has been before this court upon a former appeal by the present respondent, from a judgment entered therein by the circuit court, and upon such appeal the judgment appealed from was reversed and cause remanded for further proceedings. The opinion of this court upon that appeal will be found in 58 Wis. 56et seq.;S. C. 15 N.W. REP. 808. The facts of the case are fully set out in that opinion, which renders it unnecessary to repeat them again here except in a very general way. It is sufficient to say that in 1868 Fish Bros. transferred what personal property they then had in the wagon-making business at Racine to the present respondent, Jerome I. Case, for a valuable consideration, and upon the agreement that the business of wagon-making, at Racine, should be thereafter carried on by the said respondent, the Fish Bros. acting in said business as his agents, they to be permitted to draw out of said business $1,200 each per year for the support of their respective families, and to devote all their time and attention to said business; Mr. Case to advance what money was required for the transaction of the business, pay the debts contracted in carrying on the same, and to receive an agreed-upon rate of interest for the money so advanced, and certain other sums for his care, trouble, and for use of his credit in the business; and whenever the Fish Bros. should return to Mr. Case all the money he should so advance, together with the interest and other sums agreed to be paid to him, and pay all the debts incurred by Mr. Case in carrying on the business, then he was to convey to the said Fish Bros. all the property and assets belonging to said business. The time the business should be carried on in this way was left entirely indefinite. Under this agreement the business was carried on by Fish Bros., as agents for Mr. Case, until the commencement of this action, in 1880. The business, with the consent, or at least the acquiescence, of Mr. Case, had grown from small beginnings in 1868, so that in 1880, when this action was commenced, they were manufacturing and selling nearly or quite 15,000 wagons and other vehicles annually. The value of the materials, machinery, and real estate belonging to the business was estimated to be over $500,000.

Shortly before this action was commenced, a disagreement arose between Mr. Case and the Fish Bros. as to the relations they sustained to each other in respect to the business so carried on by them. On the part of the Fish Bros. it was claimed that the business was in fact their business, and that Mr. Case was their creditor for the amount of money advanced by him, and they were his debtors for the same; and that the transfer which had been made to Mr. Case in 1868 of their personal property, though in form a sale was in fact intended as a security in the nature of a mortgage. On the part of Mr. Case it was claimed that he was the real owner of the business, and that the Fish Bros. carried the same on as his agents, he taking all the risks of the business, and assuming and being responsible for all the debts contracted by them in carrying it on. There was also a disagreement between the parties as to the amount of interest which should be allowed to Mr. Case for the money advanced by him, as well as to the amount of other charges claimed by Mr. Case for the use of his name and credit in the business, and for clerk hire in looking after the same. Being unable to agree between themselves as to their respective rights, Mr. Case commenced this action to have the rights of the parties determined, and to close up the business.

Upon the trial in the circuit court it was determined that Mr. Case was not in fact the owner of the business, but that he held the relation of creditor of Fish Bros. for the amount of money advanced in the business; that Fish Bros. were the owners of the business, and were the debtors of Mr. Case for the money so advanced; and also adjudged that Mr. Case had a lien in the nature of a mortgage upon the business and property of Fish Bros. for the amount found due him. From this judgment of the circuit court both parties appealed to this court; the Fish Bros. claiming that the amount found due to Mr. Case by the circuit court was too large, and Mr. Case claiming that the amount was too small, and claiming also that the court erred in finding that he was not the owner of the property and business as claimed by him. After a most thorough and exhaustive argument of those appeals by the learned counsel for the respective parties, this court reversed the judgment of the circuit court, holding that the evidence sustained the claim of Mr. Case that he was the owner of the business and property, subject, however, to the right of the Fish Bros. to carry on the business as agents for him, and to have a transfer of the business and property to them upon the payment to Mr. Case of the money advanced by him, with certain amounts of interest and other sums which had been claimed by him and allowed by the defendants for the use of his name in the business, and for other expenses and clerk hire. It will be seen by an examination of the whole evidence on the former appeal, as well as from the opinion written by the chief justice, that the rights of the parties were not free from doubt, and that one of the most convincing and probably the controlling argument in favor of adopting the plaintiff's statement of the agreement between the parties was the fact, which seemed to be conceded upon all sides, that Mr. Case was personally liable for all the debts contracted by Fish Bros. in carrying on the business. This fact was so insistent with the claim of the Fish Bros. that he was a mere creditor loaning them money for the conduct of their business, and for which he was only entitled to receive the rate of interest established by law, as to render it highly improbable that their claim as to the nature of the contract between them was the true one. In determining the question as to the rights of the respective parties, the chief justice uses the following language:

“Accepting as substantially correct--as we are disposed to do--the agreement as claimed by the plaintiff, there was much discussion as to its legal effect, and the rights of the parties under it. On the part of the plaintiff, it was said the engagement entered into was in the nature of an agency, coupled with an interest, or a quasi partnership, where the title and ownership were in the plaintiff as principal, until the defendants should be entitled to have the property and business as their own, by the extinguishment of plaintiff's claims and liabilities. It is not denied that the defendants had rights in the business which the plaintiff could not ignore, and which a court of equity would protect. The plaintiff could not, by reason of his superior interest, take advantage of the defendants, or dismiss them at will from the management of the business. But it is not easy to define the real relation of the parties under the agreement. It would not essentially aid us in the solution of the questions involved, if we should attempt to do so, and try to properly classify the engagement. The parties' rights rest upon the contract which they have made. It is peculiar in many of its features. In some aspects it is much like a partnership, though there was to be no communion of profit. But it is a grave question, if the business had turned out unprofitable, whether the plaintiff would not have lost all advances which he had made on its faith and credit. Our present impression is that he would; that he trusted the business alone for the return of such advances. If there was an obligation on the part of the defendants to pay these advances, such liability was ‘anomalous' and ‘peculiar.’ But it clearly appears that the plaintiff held himself out to the world as the responsible party in the business. All debts were contracted with him as principal. He retained the entire control of the finances. The defendants, not ostensibly but really, acted as his agents in its management. These are features which distinguish the engagement from an ordinary partnership, where each partner has power to bind the firm by simple contracts relating to the business, to receive debts due the firm, and to share in the profits and losses. But whether the engagement in question created an agency coupled with an interest, or a quasi partnership, or a quasi trust, certain it is the parties could fix their obligations and duties under it. It was a lawful contract to carry on a lawful business in a lawful way, and the parties should abide by the terms of the agreement which they have made.

The plaintiff did not agree to continue the business for any length of time; but he did agree to furnish whatever money should be necessary to carry it on, no amount being specified. The expectation seems to have been that, by good management, the business would pay the plaintiff's claim within two or three years, when the Fish Bros. would be entitled to have and own it, with whatever had been saved or made out of it. But that expectation, it seems, was not realized. The business was conducted in the manner as indicated, the plaintiff furnishing all necessary means for the purpose, or using his credit at the banks to procure discounts as needed. The volume of business was largely increased. In January, 1869, the plaintiff claimed, and charged in account, as compensation for his personal services and clerk hire for 1868, $2,000; for 1869, $1,500; for 1870, $1,250; and for 1871, $1,250. These charges were over and above ten per cent. interest on all advances which he had made to the business, on all...