Mackie-Clemens Fuel Company v. Brady

• Decision Date: 18 January 1919
• Citation: 208 S.W. 151,202 Mo.App. 551
• Parties: MACKIE-CLEMENS FUEL COMPANY, Respondent, v. M. G. BRADY et al., Appellants
• Court: Missouri Court of Appeals

208 S.W. 151

202 Mo.App. 551

MACKIE-CLEMENS FUEL COMPANY, Respondent, v. M. G. BRADY et al., Appellants

Court of Appeals of Missouri, Springfield

January 18, 1919

Appeal from Jasper County Circuit Court.--Hon. R. A. Pearson, Judge.

AFFIRMED IN PART AND REVERSED IN PART.

J. D Harris for appellants.

George J. Grayson for respondent.

BRADLEY J. Sturgis, P. J., and Farrington, J., concur.

OPINION

BRADLEY, J.--

Plaintiff, respondent here, brought suit against Brady and Mitchell on Account for coal seeking to recover a balance of $ 425.10. The cause was tried below before the court without a jury and judgment went for the plaintiff and defendant Mitchell has appealed.

The only question for determination here is whether or not there was a partnership existing between Brady and Mitchell during the time the coal was bought and used. Brady, on December 5, 1916, leased from the Hebaa Mining Company certain mining lands in Newton county on which there was a concentrating plant and some machinery, and upon which a shaft had been sunk and some drifts had been run. It appears that Mitchell and Brady in March, 1917, entered into a contract by which under certain conditions Brady was to convey to Mitchell a one-half interest in the entire mining property. The entire account for coal which was used in the mine was made after this contract was executed. The contract is as follows: "This agreement, made and entered into on this the 7th day of March, 1917, by and between M. G. Brady of Joplin, Missouri, hereinafter designated as first party, and L. D. Mitchell of Van Buren, Arkansas, hereinafter designated as second party, is as follows: For and in consideration of the sum of one ($ 1) dollar cash in hand paid and for the further consideration of twelve hundred ($ 1200) dollars to be paid by second party to first party as hereinafter provided, first party has agreed, and does, by these presents sell, assign, transfer and set over to second party an undivided one-half interest in and to a certain mining lease made and entered into on December 5, 1916, by and between Hebaa Mining Company as lessor, and M. G. Brady (first party herein) as lessee, covering the following described real estate in Newton county, Missouri, to-wit: (Here follows description) Second party shall pay to first party the sum of five hundred ($ 500) dollars upon the execution of this agreement, and the balance of seven hundred ($ 700) dollars shall be due and payable after second party shall inspect the said mining property after the water shall be dumped therefrom by first party, as hereinafter provided, and the said property shall be found satisfactory to second party. Second party agrees to make an inspection and examination of the mine and underground drifts of said property immediately after the water shall be pumped therefrom sufficient for making such inspection and examination after being notified that the property is ready for such inspection. Said notice shall be sent or given to first party at his place of business or residence at Van Buren, Arkansas.

First party agrees to immediately commence the work of pumping and dewatering said mine and underground so that the inspection above provided for may be made, and to continue such work until the inspection shall be made by second party. This agreement and assignment together with the mining lease above mentioned and described shall be placed in escrow in some bank in the city of Joplin agreed upon by the parties hereto with instructions to deliver this agreement and assignment to second party upon the payment by him to first party of the said sum of $ 700, and with further instructions, that in the event second party shall fail or refuse to accept said property after making an inspection of same, then in that event this agreement and assignment and the lease shall be returned to first party. First party shall have the right to mill the tailings upon said property and to sell the ore produced therefrom during the time that he is dewatering said mine for the purpose of preparing it for an inspection with the understanding, however, that in the event second party shall pay the balance due on purchase price, as above provided, first party shall account and pay to second party one-half of the net profits derived from such operations."

The question of partnership or no partnership is one of law, since the essential facts are not disputed and the contract between the parties is in writing. [20 R. C. L., sec. 55, p. 849; Ellis v. Brand, 176 Mo.App. 383, 158 S.W. 705; Skinner v. Whitlow, 184 Mo.App. 229, 167 S.W. 463.] The contract is set out in full and its essential features are that defendant Brady, being the owner of a mining lease, contracted to sell and assign a half interest in same to defendant Mitchell for $ 1200, of which $ 500 was paid at once and the balance of $ 700 was to be paid, if at all, after the mine and underground drifts were freed of water so that an inspection could be made. Mitchell could then buy or not as he pleased. In order to carry out the purchase agreement, the contract and an assignment of a half interest in the lease were deposited in a bank with instructions that if Mitchell paid the $ 700, same were to be turned over to him, otherwise to be returned to Brady. As to the work and expenses of dewatering the mine, so that Mitchell could inspect same before determining whether he would take the half interest in the lease or not, the contract is explicit and provides: "First party (Brady) agrees to immediately commence the work of pumping and dewatering said mine and underground so that the inspection above provided for may be made and to continue such work until the inspection shall be made by second party."

This contract was made on March 7, 1917, and the coal bill sued for in this case and for which plaintiff seeks to hold defendant Mitchell liable as a partner of Brady was incurred by Brady alone in pumping the water from this mine; and the first car of such coal was purchased by him March 13, 1917, the second on March 20th, and thereafter at intervals, and used by Brady in pumping the water from Brady's mine, for Mitchell had as yet only contracted to purchase a half interest conditionally. Suppose Brady had pumped out the water, incurring therein unpaid bills for coal or other expense, and Mitchell had concluded to take the half interest in the lease and had paid the $ 700, balance of the purchase price, would Mitchell be liable as Brady's partner for the unpaid bills? Certainly not--no more than he would have been had he declined to take such half interest.

There is no question here of Mitchell being bound by way of estoppel, by reason of holding himself out as a partner, or his having induced plaintiff to sell the coal on that supposition. The case was not tried on that theory, and there is no evidence to support such a theory. Mitchell lived and was engaged in business in Arkansas and had no interest in the coal as purchaser, and paid no attention to the work of dewatering the mine. The plaintiff sold the coal to Brady, charging it to him on its books, though the account sued on is against the Mary E. Mining Company, an old name applied to the mine and of which defendant Mitchell never heard as a partnership name. The only theory on which plaintiff seeks to hold Mitchell is that he was in fact and in law a partner of Brady when the coal was sold to Brady. Except where the third party makes a case by reason of the alleged partner holding himself out as such, the question of partnership is the same as between the parties themselves. [Distilling Company v. Wilson, 172 Mo.App. 612, 156 S.W. 23; Nugent v. Armour Packing Company, 208 Mo. 480, 106 S.W. 648.]

Whatever may be the obligations and incidents resulting from a partnership such as sharing profits and losses, mutual agency, community of interests, etc., the formation of a partnership is by contract; and as in the case of all contracts, the cardinal rule for interpreting the contract and determining whether it constitutes a partnership or not is the intention of the parties. "In practically all definitions of partnership the element of contract is fundamental. It is one of the chief characteristics of the partnership relation that it is created only by the voluntary contract of the parties, and that it does not arise in any case by operation of law. Persons cannot become partners except by agreement, expressed or implied." [20 R. C. L., sec. 4, 802.] "The particular test as to the existence of the partnership relation which is most widely accepted today and which is applicable especially as between the parties themselves irrespective of the rights of third persons is that a partnership is formed and exists only when it was the intention of the parties that they should be partners. Partnership contracts, like other contracts, are governed by the intention of the parties. Every partnership rests on the mutual consent of the members. . . . On the other hand, if the terms of the contract existing between the parties do not constitute a partnership none will be declared, even though the parties in words call the arrangement one." [20 R. C. L., sec. 36, 831.] And again at section 52, 847, of this same work this is said: "The best evidence of the existence of a partnership consists of the agreement or contract between parties, but it may be proved by any competent evidence. As between the alleged partners themselves, the fact of partnership cannot be established by proof of independent facts from which the principal fact is inferable in the absence of direct evidence of a purpose to form a partnership." Such is the law in this State as shown by numerous decisions. [Chapin v. Cherry, 243 Mo. 375, 403, 147 S.W. 1084.] ...