Hart v. Kelley

• Decision Date: 29 January 1877
• Citation: 83 Pa. 286
• Parties: Hart <I>et al. versus</I> Kelley.
• Court: Pennsylvania Supreme Court

83 Pa. 286

Hart et al. versus Kelley.

Supreme Court of Pennsylvania.

January 16, 1877.

January 29, 1877.

January 16th 1877.

Before AGNEW, C. J., SHARSWOOD, MERCUR, GORDON, PAXSON and WOODWARD, JJ. WILLIAMS, J., absent

Error to the Court of Common Pleas of Philadelphia county: Of January Term 1877, No. 49.

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M. Sulzberger and B. H. Brewster, for the plaintiff in error.— The agreement in this case was but an agreement for the loan of money — not partnership articles; since the Act of 6th April 1870, it does not constitute C. A. Hart a partner.

Even if it constituted him a partner, it was rescinded before being acted upon. An inchoate partnership must be complete before any liability can attach: Howell v. Brodie, 6 Bing. N. C. 44; Irwin v. Bidwell, 22 P. F. Smith 244; Gabriell v. Evill, 9 M. & W. 297.

Hart was certainly not liable after the rescission.

Even if he became a partner, there is no presumption that he adopted the existing debts of the firm: Ex parte Fry, 1 Glyn. & J. 96; Pars. on Part. 148-9.

W. Ernst, for the defendant in error, argued upon the construction of the agreement.

Mr. Justice PAXSON delivered the opinion of the court, January 29th 1877.

The rule of law formerly prevailing, that participation in the net profits of a business made a participant liable to third parties as a partner, has been greatly modified in England and this country. Thus, in Dean v. Harris, and Harris v. Butterfield, Law Times Reports, N. S., vol. 33, p. 639, Butterfield, who was a person of small means, applied to Harris to advance him money for the purpose of developing certain mines. Harris consented to lend Butterfield 2000l., upon certain terms, viz.: That B. having entered into an agreement to take a lease of the Leycett mines, that the said mines be worked under the style or firm of the Leycett Mining Co.; that said H. find capital to work the mines to an extent not exceeding 2000l.; that the money so advanced shall be repaid with 20 per cent. interest; the said H. to be paid 3d. per ton on all coal and iron stone, by way of commission. The said B. to be paid 200l. per annum by way of salary, but not to take date until the sum or sums advanced by said H. be repaid; said B. to promote the interest of the concern and continue in receipt of salary so long as he should conduct the business to the satisfaction of H. After payment of the above, and costs of raising and preparing and delivering to market the product of said mines, said H. shall be entitled to three-fourths of the profits, and all the net proceeds of the concern to be disposed of in the like proportion; said H. to be free from all liability except in respect of the money advanced by him. The vice-chancellor held, that there was no partnership, saying: "All that H. did was consistent with his character as capitalist, assisting B. in carrying on business. All that is said to constitute a partnership. If it could, it would be most unsafe for any man to lend a tradesman any sum of money, and to look after the best means he could get for its repayment." Mollroo, March & Co. v. The Court of Wards, Law Rep. 4 P. C. 419, is perhaps a stronger case than Dean v. Harris. To the same point is Cox v. Hickman, House of Lords Cases, vol. 8, p. 268. In this state the Act of 6th April 1870, Purdon 1121, pl. 15 (Pamph. L. 56), expressly provides that, "it shall be lawful for any person or persons to loan money to any individual, firm, association or corporation, doing business in this Commonwealth, upon agreement to receive a share of the profits of such business as compensation for the use of the money so loaned, in lieu of interest, and such agreement, or the reception of profits under such agreement, shall not render the person or persons liable as a co-partner in such business to other creditors of such individual, firm, association, except as to the money loaned," &c., &c. It is by the light of the law thus modified by judicial decision and legislative enactment that we must examine and construe the agreement of December 13th 1875, which was attached to the supplemental affidavit of defence, and forms a part thereof. We assume that the court below held, that this agreement, as to the parties thereto, created a partnership inter se. In any other view of the case the supplemental affidavit of defence was ample to prevent judgment. The agreement was evidently drawn by a layman...