Morgan v. Farrei

• Decision Date: 03 March 1890
• Citation: 20 A. 614,58 Conn. 413
• Parties: MORGAN v. FARREI, et al.
• Court: Connecticut Supreme Court

20 A. 614

58 Conn. 413

MORGAN

v. FARREI, et al.

Supreme Court of Errors of Connecticut.

March 3, 1890.

Appeal from superior court, New Haven county; FENN, Judge.

C. S. Hamilton, for appellant. J. W. Alling and W. H. Williams, for appellee.

ANDREWS, C. J. On the 1st day of March, 1880, William M. Babbott made and delivered to the firm of Morgan & Herrick, merchants, then doing business in New York, a note for the sum of $1,004.56, expressed to be for value received, and payable in 30 days; and on the 8th day of the same month another note for the sum of $2,205.60, payable in 30 days at the Ansonia National Bank, Ansonia, Conn. These notes were signed by Babbott in the name of "Franklin Farrel & Company," and were delivered to Morgan & Herrick in payment for certain goods sold and delivered by them to Babbott on his order therefor. The plaintiff is now the owner of the notes, and brings this suit to recover their amount. The complaint alleges that at the time the notes bear date Franklin Farrel and the said William M. Babbott were partners in business under the firm name of Franklin Farrel & Co. Farrel alone makes defense. No service of the complaint was made on Babbott. The answer is a general denial. Upon the trial evidence was offered from which the plaintiff claimed to have proved that Farrell and Babbott were partners as between themselves, or at least hat they were partners as to all third persons, or that Farrel was liable as a partner to Morgan & Herrick, for the reason that he had permitted Babbott to hold out that Farrel and himself were partners under such circumstances that he was estopped to deny that he was a partner. Farrel denied that he was a partner in either way. The superior court rendered judgment for the defendant, and the plaintiff has appealed.

An exhaustive definition of partnership is not easy. So far as the facts in the case present the question of partnership, it is sufficiently accurate to say that there is a partnership between two or more persons whenever such a relation exists between them that each is as to all the others, in respect to some business, both principal and agent. If such a relation exists, they are partners; otherwise not. They are partners in that business in respect to which there is this relation, and as to any other business they are not partners. Partnership is but a name for this reciprocal relation. Story, Partn. § 1; Lord WENSLEYDALE in Cox v. Hickman, 8 H. L. Cas. 311; Bullen v. Sharp, L. R. 1 C. P. 86; Holme v. Hammond, L. B. 7 Exch. 230; Harvey v. Childs, 28 Ohio St. 319; Eastman v. Clark, 53 N. H. 276; Colly. Partn. §§ 139, 412; Stillman v. Harvey, 47 Conn. 26. Between the parties themselves this relation of principal and agent cannot exist, except by their voluntary agreement. Hazard v. Hazard, 1 Story, 371; Colly. Partn. § 2. In the present case, the finding is as explicit as language can make it that Farrel and Babbott did not intend to become partners. It says: "No paper was ever signed by or between Farrel and Babbott alone. No conversation ever took place in which it was stated in words that Farrel and Babbott were partners, or were to form a partnership. No firm name was ever mentioned. No suggestion that either had used, or could use, the name or the credit of the other. Neither ever understood, intended, or thought that a partnership existed, or should exist." And, in addition to this, there is the express declaration of Babbott to his counsel—apparently after Farrel had written to him that he, Farrel, had stopped all work on the machine—that he did not believe there was any partnership between them. This part of the case is not pressed, and we need not pursue it. A partnership as to third persons sometimes arises by operation of law even against the intention of the parties; and this happens either because the contract which the parties have entered into in law makes each the principal and agent of the other, or because by a course of dealing they have shown that such was the real relation between them. Such were the cases of Parker v. Canfield, 37 Conn. 250, and Bank v. Hine, 49 Conn. 236. It is laid down in Everitt v. Chapman, 6 Conn. 347, that, where the terms of the agreement and the facts are all admitted, whether or not a partnership existed is a question of law for the court to decide. The plaintiff claims that from the facts found by the superior court it does appear that Farrel and Babbott were partners quoad third persons, no with standing their intent not to be partners. The facts from which the partnership is claimed to arise are mainly the Exhibits 1, 2, and 3; and of these Exhibit 2 is the only one important. All the other facts derive their significance solely from the construction that is to be put on this exhibit.

Exhibit 2 purports to be no more than an agreement between the Cook Ice & Refrigerating Company, party of the first part, and Franklin Farrel and William M. Babbott, party of the second part, by which the party of the first part, being the owner of patents therefor, grants to the party of the second part the exclusive right to manufacture and sell refrigerating machines and apparatus for refrigerating, as described in the patents, throughout the United States for the full term for which the patents were granted. And, in consideration of that grant, the party of the second part undertakes and agrees, with all diligence and dispatch, and without expense or charge to the party of the first part, to manufacture a refrigerating machine under the patents, and, for the purpose of aiding and benefiting the business intended in the agreement, to run the machine for at least two months subsequent to its completion. The party of the second part also agrees to use its best endeavors to create a public demand for the machines, and to manufacture machines to supply any bona fide order therefor; and agrees to pay to the party of the first part an amount equal to one-half of the gross profits accruing therefrom. There are other provisions in the agreement, but all having reference to the duties and obligations of the parties thereto. That such a contract as this does not make the parties—that is, the party of the first part and the party of the second part—partners, is settled by abundant authority. It only provides a way in which the party doing the work is to be paid for its services. Chase v. Barrett, 4 Paige, 148. The only relation of Farrell and Babbott that appears by this agreement is that of joint contractors to manufacture refrigerating machines for the Cook Company. There is no suggestion in it that either is, or is to be, the agent of the other. It does not attempt to provide in what way Farrel and Babbott, as between themselves, are to carry out their joint undertaking. A community of interest does not make a partnership. Loomis v. Marshall, 12 Conn. 77; Porter v. McClure, 15 Wend. 187. Thus tenants in common of land are not partners. Calvert v. Aldrich, 99 Mass. 74. In Oliver v. Gray, 4 Ark. 425, it was holden that two persons, joint owners of a horse, were not partners in respect to a contract for its keeping. French v. Styring, 2 C. B. (N. S.) 357, was a case where two men owned a race-horse, which they entered in a race and won a prize. It was held that they were not partners as to that money. In Hawkins v. McIntyre, 45 Vt. 496, the defendant contracted to finish off a church for the sum of $4,500. Afterwards, he agreed with the plaintiff that they should work together in doing the job, each working himself, the work of each to offset that of the other, and the expense of materials and of other work to be deducted from the amount, and the balance to be divided between them. It was held that they were not partners. In the case above cited, (Loomis v. Marshall, 12 Conn. 77,) B. was the owner of a satinet factory. A. agreed with B. to furnish all the wool that should be needed at the factory for two years, which B. agreed to manufacture into cloth, the net proceeds of the cloth, after deducting the incidental charges of sale, to be divided, so that A. should have 55 per cent. and B. 45 per cent. It was held that there was not a partnership as to third persons. It probably could be inferred that Farrel and Babbott were to divide between themselves whatever was left, if anything, after paying the Cook Company. But a partnership, even as to third persons, is not constituted by the mere fact that two or more persons participate or are interested in the net proceeds of a business. 1 Lindl. Partn. 24; Holme v. Hammond, L. B. 7 Exch. 230; Loomis v. Marshall, supra; Ex parte Tennant, 6 Ch. Div. 303; Bullen T. Sharp, L. R. 1 C. P. 86.

Mr. Farrel was a manufacturer of machinery, of long and wide...