Herman Kahn Co. v. Bowden

• Decision Date: 23 July 1906
• Citation: 96 S.W. 126,80 Ark. 23
• Parties: HERMAN KAHN CO. v. BOWDEN
• Court: Arkansas Supreme Court

96 S.W. 126

80 Ark. 23

HERMAN KAHN CO. v. BOWDEN

Supreme Court of Arkansas

July 23, 1906

Appeal fro Chicot Circuit Court; Zachariah T. Wood, Judge; reversed.

STATEMENT BY THE COURT.

The facts in this case are sufficiently stated in the opinion.

The court gave the following instructions at the request of plaintiff:

"1. The jury are instructed that a person can be a partner whether the plaintiff knew of it or not; and if the jury believe from the evidence that the defendant W. S. Jennings held himself out to be a member of the firm of A. T. Bowden & Company, that the plaintiff sold goods to said firm, and that said firm is now indebted to the plaintiff therefor, then the plaintiff is entitled to a verdict against said defendant Jennings for said indebtedness.

"2. If the jury believe from the evidence that the defendant W S. Jennings made statements to the plaintiff, or its agent that he was a member of A. T. Bowden & Company, and a partner of said Bowden in said firm, and that it sold goods to said firm upon the faith of said statement, and that said firm is now indebted to said plaintiff therefor, then the jury will find for the plaintiff."

The court also gave the following instructions at the request of the defendant:

"1. That you are instructed that the burden of proof is upon the plaintiff to show that W. S. Jennings was a partner in the business of A. T. Bowden & Company; and, before you can find that he is actually a partner, you must find that he was interested in the business, sharing in the profits and losses, and had some money in it. He can not be a partner without having money in the business, without sharing in the profits and being responsible for the losses; and this the plaintiff must show to you by a fair preponderance of the testimony. You can not hold W. S. Jennings as a partner unless plaintiff has shown by a fair preponderance of the testimony that he owns a part of the business, shared in the profits, and must stand the losses.

"2. The court instructs the jury that, while it is true that one may hold himself out to the world as a partner by inducing third parties to believe that he owned an interest in the business, and was a partner, yet, before you can find upon this theory that W. S. Jennings was liable as a partner, you must find that he so represented himself to the Herman Kahn Company, and they relied upon his representation, and sold him the goods upon the faith of his being a partner; and the burden of proof is upon the plaintiff to show that he so held himself out, and that the goods were sold to A. T. Bowden & Company upon the faith that Jennings was a partner before he can be held, unless you believe that he actually owned an interest in the business."

To the giving of each of these instructions the plaintiff objected at the time, and, his objections being overruled, he saved his exceptions.

There was a verdict in favor of the defendants, and judgment accordingly, from which plaintiff appealed.

Judgment reversed.

Morris M. Cohn, for appellant; E. A. Bolton, of counsel.

1. The language of the attorney for the defendant, used in argument to the jury concerning the plaintiff and its witnesses, was necessarily prejudicial. 70 Ark. 179; Ib. 305; 65 Ark. 619; 63 Ark. 174; 72 Ark. 461.

2. The first instruction for the defendant was erroneous, in that it required the jury, notwithstanding that they might believe that Jennings had admitted being a partner, to find also that he was to share in the profits and the losses, and that he put money into the business. 5 Ark. 61; 2 Ark. 346; 2 Bates Partnership, § 1154; 2 Greenleaf, Ev. (Redfield's Ed.), § 484; Abbott, Trial, Ev. 204, 209. Jennings's statements alone were sufficient to prove his partnership.

Appellees, pro se.

OPINION

RIDDICK, J., (after stating the facts.)

This is an action by the Herman Kahn Company, a corporation, against A. T. Bowden and W. S. Jennings, to recover the sum of $ 1,658.09, which the plaintiff alleges is due it for goods and merchandise sold to A. T. Bowden & Company, of Dermott, Arkansas. Jennings filed an answer, denying that he was a member of that firm; and whether he was a partner, or had held himself out as a partner in such a way as to make himself liable for the debt due plaintiff, were the only issues presented in the trial of the case. A number of witnesses testified that Jennings had on divers occasions stated to them that he was a member of the firm of A. T. Bowden & Company. Some of these witnesses were agents and salesmen of plaintiff, and they testified further that, relying on those statements, the plaintiff sold to the firm the goods and merchandise for the price of which suit was brought in this case. On the other hand, the defendants, A. T. Bowden and W. S. Jennings, both testified that Jennings was not a member of the firm, and Jennings testified that he had never at any time held himself out as such. There is a sharp conflict between the testimony of the witnesses for plaintiff and defendants as to the facts, and the case here turns on the question as to whether the instructions of the court properly presented the issues to the jury.

Before noticing these instructions, we will call attention to the meaning of the word "partnership," though, judging from the decisions, it would seem impracticable to give a single definition of that term that will cover all cases. It was said in Culley v. Edwards, 44 Ark. 423, that, so far as the liability to creditors was concerned, the test of partnership was "whether the business has been carried on in behalf of the person sought to be charged as a partner, i. e., did he stand in the relation of the principal towards the ostensible traders by whom the liabilities have been incurred, and under whose management the profits have been made?" This statement of the law by Judge SMITH was an attempt to formulate into a general rule a statement of Lord Cranworth made in the celebrated case of Cox v. Hickman, 8 H. L. C. 306. In that case a certain firm, becoming embarrassed, had under an agreement with its creditors turned over its business to trustees to be carried on, and the profits applied to the payment of the debts of these creditors. The trustees in the course of this business contracted an indebtedness with another person, and he sued the other creditors, claiming that, as they were to receive the profits of the business on their debts, they were liable for the debts of the business while carried on by the trustees. In repy to this argument Lord Cranworth said: "It is not strictly correct to say that his right to share in the profits makes him liable for the debts of the trade. The correct mode of stating the proposition is to say that the same thing which entitles him to the one makes him liable to the other, namely, the fact that the trade has been carried on on his behalf, i. e., that he stood in the relation of principal towards the persons acting ostensibly as the traders, by whom the liabilities have been incurred, and under whose management the profits have been made." Cox v. Hickman, 8 H. L. C. 306.

Now, it will be seen that Lord Cranworth was by this language not endeavoring to lay down a general test of partnership, but to show that it was illogical and incorrect to say that the right to share in the profits of a business rendered one liable for the debts of the business, for these things do not depend on each other, but both depend upon and result from the fact of partnership. Later English and American cases have pointed out that the question of agency is not a proper test of partnership, for the reason that the agency of the different partners follows from the partnership, and not the partnership from the agency. "To say that a person is liable as a partner who stands in the relation of principal to those by whom the business is carried on, adds nothing by way of precision, for the very idea of partnership includes the relation of principal and agent." Meehan v Valentine, 145 U.S. 611, 36 L.Ed. 835, 12 S.Ct. 972; Pooley v. Driver, 5 Ch. Div. 458; Johnson v. Rothschilds, 63 Ark. 518, 41 S.W. 996. But it is unnecessary to attempt a definition of partnership that will cover all cases. Sir George Jessel, M. R., in Pooley v. Driver, above cited, after quoting the definition of partnership given in the Civil Code of New York that a "partnership is the association of two or more persons for the purpose of carrying on business together and dividing its profits between them," said that this definition, though simple, was accurate as far as it went, and, as a general rule, was sufficient. We concur in this statement, and, taking a somewhat fuller definition, we will say that, so far as this case is concerned, a partnership may be defined as the relation existing between two or more persons who have agreed to carry on a business together and to share the profits thereof as joint owners of the business. 22 Am. & Eng. Enc. Law (2 Ed.), 2; Pooley v. Driver, 5 Ch. Div. (Eng.), 458; Meehan v. Valentine, 145 U.S....