Mallory v. Hananer Oil-Works

• Citation: 8 S.W. 396
• Parties: MALLORY <I>et al.</I> <I>v.</I> HANANER OIL-WORKS.
• Decision Date: 08 May 1888
• Court: Tennessee Supreme Court

8 S.W. 396

MALLORY et al.

v. HANANER OIL-WORKS.

Supreme Court of Tennessee.

May 8, 1888.

Appeal from circuit court, Shelby county; L. H. ESTES, Judge.

Metcalf & Walker, for appellants. L. & E. Lehman, and Turley & Wright, for appellee.

LURTON, J.

This is an action of unlawful detainer, brought by the Hananer Oil-Works, a corporation created under the general incorporation act of 1875, and engaged in the manufacture of cotton-seed oil at Memphis, Tenn. The facts which raise the question to be determined are these: In July, 1884, a contract was entered into by and between four corporations engaged in manufacturing cotton-seed oil at Memphis, for the formation of what is designated in the agreement as a "combination," "syndicate," and partnership. The contracting mills agreed to select a committee, composed of representatives from each corporation, and to turn over to this committee the properties and machinery of each mill, to be managed and operated by this committee, through officers, agents, and employes selected by them, for the common benefit; the profits and losses of such operation to be shared in proportions agreed upon. This arrangement was to last one year, but, with consent of all, might be renewed for two additional years; and, as appears, was at the end of the first year renewed for two other years, terminating August 1, 1887. The facts clearly establish that the possession of the several mills was turned over to this executive committee, and they were operated by these managers thenceforward under the name of the "Independent Cotton-Seed Association." There was a provision in the contract by which other mills were to be admitted by consent, and a fifth corporation was in fact subsequently admitted. The Hananer Oil-Works was one of these contracting corporations; the contract being authorized by both shareholders and directors. In July, 1886, the business of the second year having been about concluded, the board of directors of the Hananer Oil-Works passed a resolution declaring this contract void, as being an agreement ultra vires, and their president was instructed to take possession of their mill. There is some proof tending to show that, upon demand of the president of the defendant in error, the general superintendent of the "Independent Cotton-Seed Association" surrendered possession of the Hananer mill to him, and agreed to hold for him, and that he afterwards repudiated this agreement, by surrendering possession to Mr. Mallory, one of the executive committee, who thereupon locked up the mill, and gave instructions to a watchman, in employ of the committee, not to admit the Hananer officers. In the view we take of the case, it is not material to determine the legal effect of the evidence upon this question as to what passed between Mr. Camp, the superintendent, and Mr. Cochran, the president. The fact is that, at the time the writ of unlawful detainer was sued out, the mill of the Hananer Company was in the exclusive possession of the officers of the "Independent Cotton-Seed Association," and the officers of the Hananer Company were excluded therefrom. There was a judgment in favor of the Hananer Oil-Works, and from this an appeal has been prosecuted.

The argument here has largely turned upon the correctness of the charge of the circuit judge, who distinctly instructed the jury that the contract between the Hananer Company and the other four corporations was a contract for a partnership between corporations, and that, under the charter of the Hananer Oil-Works, it had no power to make such a contract, and that it was therefore void, and that it had a right to recover possession of its property, it being withheld solely under and by virtue of an agreement ultra vires. "A partnership," says Judge Story, "is usually defined to be a voluntary contract between two or more competent persons to place their money, effects, labor, and skill, or some or all of them, in lawful commerce or business, with the understanding that there shall be a communion of the profits thereof between them. Pothier says that a partnership is a contract whereby two or more persons put, or contract to put, something in common, to make a lawful profit in common, and reciprocally engage with each other to render an account thereof." Story, Partn. § 2.

A careful examination of this agreement discloses every essential element to a contract of partnership. The absolute ownership of the corporate property, the mills, machinery, etc., is not conveyed to the partnership, nor is this necessary. The beneficial use of all such property is surrendered to the common purpose. The provisions for the complete possession, control, and use of the properties of the several corporations by the partnership or syndicate is perfect. Nothing is left to the several copartners but the right to receive a share of the profits, and participate in the management and control of the consolidated interest as one of the new associations. The contract is both technically and in its essential character a partnership, in so far as it is possible for corporations to form such an association.

It is, however, argued by the learned counsel for appellants, that if it be a partnership, that it does not therefore follow that it is ultra vires; that such a contract, not being prohibited by law, or the charter of the defendant in error, or against public policy, is not void even if in excess of powers expressly conferred; that the business proposed by the contract being within the purposes of the charter, is therefore within the implied powers of the corporation, and not ultra vires. In other words, "that the question is not whether the corporation had, by virtue of the act of incorporation, authority to make the contract, but whether they are by those...