"The Kelley Island Lime & Transport Company sued H. Masterson as a member of the partnership doing business under the firm name of H. W. Downey & Co. The purpose of the suit was to recover the value of certain goods purchased by the firm. On allegations that H. W. Downey was dead, and that George B. Kelley, the third member of the alleged partnership, was insolvent, Masterson alone was made defendant. From a judgment by the court below in favor of Masterson the cause is pending before us on appeal. The main question was and is whether Masterson was a partner as to appellants.
"The facts are as follows: The city of Beaumont advertised for bids for the paving of certain of its streets and the construction of a sewer system. H. W. Downey and George B. Kelley, composing the firm of H. W. Downey & Co., were the successful bidders and to them the contract was awarded. As a condition to the final acceptance of their bid, the city required that they should execute a bond with a surety company as surety for the faithful performance of their undertaking. The surety company, as a condition precedent to its becoming a party to the required bond, demanded personal indemnity, and Downey & Co., being unable otherwise to furnish it, applied to Masterson to furnish the indemnity. It was also necessary that the firm should have as much as $10,000 to begin operations, and $17,000 to turn over to the city to make the city bonds bring par value. Masterson consented to furnish the required cash and the indemnity upon the terms evidenced by the following contract in writing, which was duly signed by the firm as party of the first part and Masterson as party of the second part:
"`The State of Texas, County of Jefferson. Memorandum of contract and agreement this day entered into by and between H. W. Downey & Company, a partnership composed of H. W. Downey and George B. Kelley, parties of the first part, and H. Masterson of Harris county, Texas, party of the second part, witnesseth: Whereas, said parties of the first part have made and entered into a contract with the city of Beaumont, through its duly authorized and empowered officers, relative to the constructing and laying certain sewerage work and certain brick pavement work, the two contracts amounting in the aggregate to two hundred and sixty-six thousand, one hundred and three and 55/100 (266,103 55/100) dollars, and both of said contracts for the purpose of this agreement being treated as one; and whereas, said Downey & Company were required by the terms of said contract to make and enter into bonds in large amounts for the performance of said contracts; and whereas, the surety companies require indemnity bonds to them before they will go on the bonds of said Downey & Company for the performance of said work; and whereas, said Downey & Company are unable to meet such requirement, and have applied to party of the second part to go on their bond of indemnity to such surety companies as may go on their bonds in said contracts; and whereas, said Downey & Company have figured out an estimate of their profits in the two contracts aforesaid, treated herein as one, of approximately fifty-three thousand dollars; and whereas, said party of the second part knows nothing personally of the correctness and accuracy of the figures and calculation of said Downey & Company made on said work, but relying full faith and confidence on the declarations and assertions and the accuracy of the said Downey & Company in the premises, has consented to go on said indemnity bond to such surety companies and to furnish or secure the sum of ten thousand (10,000) dollars in cash, or as much more as may be necessary, to be applied to the prosecution of said work, and the further sum of about seventeen thousand (17,000) dollars necessary to pay the city of Beaumont to enable her to obtain par for her pavement and sewerage bonds:
"`Now, therefore, in consideration of the premises aforesaid, and ten dollars to us in cash in hand paid by the party of the second part, the receipt whereof is hereby acknowledged, have granted, bargained, sold, transferred, set over, conveyed and assigned, and do by these presents grant, bargain, sell, transfer, assign, set over and convey unto the party of the second part, his heirs and assigns, the two contracts aforesaid (one for sewerage work and the other for paving work) with the city of Beaumont, together with all and singular all rights, remedies and privileges thereunder or thereto in any wise belonging or appertaining; and we, the parties hereto, hereby authorize, request, and instruct that any and all drafts, orders and checks given in payment of said work, or any of it, be made payable to the Gulf National Bank of Beaumont, trustee, and by said bank collected and receipted for the proper officer of said city of Beaumont. It is mutually agreed to by and between the said parties of the first part and the party of the second part that when and after the two contracts, aforesaid, treated herein as one, shall have been completed and finished and the work thereunder accepted and paid for, and after paying all costs and the expenses of said work and material, and all liabilities incident to or growing out of said contracts, including eight (8%) per cent. interest on all money put into said contracts, work or material advanced by said party of the second part for account of said contracts, work or material, that, as a further consideration for this transfer, the said parties of the first part are to have and receive out of the net profits of said two contracts, treated herein as one, twenty-five thousand (25,000) dollars, after the party of the second part hereto has first had and received twelve thousand five hundred (12,500) dollars for himself out
of such net profits. That in the event that only twelve thousand five hundred (12,500) dollars or less, net profits shall be realized out of said two contracts, treated herein as one, such amount shall go to and belong to said party of the second part, and the said parties of the first part shall not have any claim to or interest therein. And said party of the second part is, under no circumstance, to be or become liable to said parties of the first part for any sum or amount of money whatever, except as aforesaid, viz., twenty-five thousand (25,000) dollars out of the net profits...
