Priest v. Chouteau
| Decision Date | 23 May 1882 |
| Citation | 12 Mo.App. 252 |
| Parties | FREDERICK R. PRIEST, Appellant, v. CHARLES P. CHOUTEAU, Respondent. |
| Court | Missouri Court of Appeals |
1. A contract creates a partnership when it provides for a sharing of profits and losses in a business, and imposes the duty of accounting between the parties.
2. A theatre building and its appurtenances owned by partners are partnership property where the partnership business consists in the uses to be made thereof.
3. The title acquired under a sale by a surviving partner, as administrator, is superior to that acquired at a prior foreclosure sale, under a deed of trust executed by one of the partners upon his interest in the property.
4. Where the establishment of a contract does not oppose any interest of the estate of one of the parties thereto who has since died, the other party is a competent witness.
APPEAL from the St. Louis Circuit Court, THAYER, J.
Affirmed.
A. J. P. GARESCHÉ, for the appellant: An agreement for a division of profits does not constitute a partnership.-- McCauley v. Able, 21 Mo. 439; Gwinn v. Rooker, 24 Mo. 292; Campbell v. Dent, 54 Mo. 325. The property, though bought for the partnership, was held by the partners as tenants in common.-- McDermott v. Lawrence, 7 Serg. & R. 442; Frink v. Branch, 16 Conn. 270; Webb v. Leggitt, 6 Mo. App. 347; Coles v. Coles, 15 Johns. 160. And where, as in this case, the conveyances are to individual members, the property cannot by parol be converted into partnership property.-- Lancaster v. Higley, 13 Pa. St. --; Ridgway's Appeal, 15 Pa. St. 181; Otis v. Sill, 8 Barb. 122; Bird v. Morrisson, 12 Wis. 155.
HERMANN & ROBERTSON, for the respondent: Where persons agree to share profits and are silent as to losses, they become partners.-- Long v. Smith, 48 Mo. 277; Meyers v. Field, 37 Mo. 440; Maclay v. Freeman, 48 Mo. 234. A further test is a right to an accounting.-- Pleasant v. Fant, 22 Wall. 120. The leasehold in controversy was partnership property.-- Clagett v. Kilbourne, 1 Black, 346. And could not be used by one partner in payment of his individual debt.-- Dupont v. McLaren, 61 Mo. 508; Acley v. Stahlien, 56 Mo. 560.
On May 13, 1873, Benedict DeBar acquired by purchase, from Truman Martin and wife, an existing leasehold of the Grand Opera House, in St. Louis, which was to expire on January 1, 1882. Ten days afterwards, he entered into an agreement with Mrs. Alice L. Wakefield's trustee, in the following terms:--
“This memoranda of agreement, made and entered into this twenty-third day of May, A. D. 1873, by and between Benedict DeBar and Daniel G. Taylor, trustee for Mrs. Alice L. Wakefield, witnesseth: That in consideration of $3,333.33 in cash paid, and the payment of the additional sum of $10,000, for which a promissory note has this day been given, it is agreed by Ben DeBar that said Daniel G. Taylor, as such trustee, shall have one-third of all the profits derived from the Grand Opera House property on Market Street, the same to be managed and controlled by said Ben DeBar as exclusively as though owned by him, during the continuance of the leasehold estate purchased by said Ben DeBar from Truman Martin and wife; all profits to be accounted for by said Ben DeBar on the first day of each month; and the one-third of the profits of the previous month, less twenty-five per cent, to be reserved to meet any losses that may occur, to be paid to said Taylor, as such trustee; such twenty-five per cent so reserved to be carried to the account of the next month following; and when the said note o $10,000 is paid according to the tenor thereof, then a one-third of the building and property mentioned and referred to shall be by deed conveyed to said Daniel G. Taylor, as such trustee; but the management of said premises shall continue in like manner as herein set forth, and in the event that said note for $10,000 is not paid when due, the title to said property to fully remain in said DeBar, released from all claim and interest of said Taylor, as such trustee, and until the payment of said note the profits to be retained by said DeBar to be applied upon said note; and in the event of a failure to pay said note when due, one-half of the $3,333.33 1/3 this day paid shall be repaid to said Taylor, as such trustee, and the balance shall be, with all interest of said Taylor as such trustee, hereunder forfeited to said Ben DeBar and forever terminated.”
On December 13, 1873, DeBar and wife executed a deed conveying to the same trustee for Mrs. Wakefield, one-third part of the leasehold estate above described. This conveyance was expressed to be subject to the terms of the agreement of May 23rd, above copied. By deed dated December 15, 1873, DeBar and wife conveyed to the defendant in this suit, one-sixth part of the same leasehold. This deed contained the following proviso:--
“This conveyance, however, being subject to the terms and conditions of a certain contract made between the parties hereto on the twenty-third day of May, 1873, which contract is in its terms and provisions similar to a certain other contract of same date between Benedict DeBar and Daniel G. Taylor, trustee of Alice Wakefield.”
On April 26, 1875, DeBar and wife executed a deed to Mrs. Wakefield's trustee, reciting the payment by her of the $10,000 note, and conveying absolutely the one-third part of the Grand Opera House, “with all its appurtenances, furniture, scenery, fixtures, properties, hereditaments, leaseholds, and effects whatsoever, thereto belonging.” This conveyance repeated the stipulations contained in the agreement of May 23, 1873, with regard to the control and management of the division of profits, with the reservations, etc.
On June 15, 1877, DeBar and wife executed a deed of trust, conveying the one undivided half of the leasehold and its appurtenances, including the furniture, decorations, paraphernalia, etc., to secure John G. Priest, as accommodation indorser for DeBar on two promissory notes, one for $5,000, and the other for $1,000. About August 26, 1877, DeBar died, and, soon afterwards, John G. Priest became administrator of his individual estate.
On September 25, 1877, the defendant herein was appointed and qualified in the St. Louis Probate Court, as surviving partner of the alleged late partnership firm composed of DeBar, deceased, Mrs. Wakefield, by her trustee, and the defendant. On April 10, 1879, there was a sale in foreclosure under the deed of trust given by DeBar on June 15, 1877, when the plaintiff in this suit became the purchaser. On June 3, 1879, an order was made by the probate court directing the defendant, as surviving partner of the late firm, to sell, for payment of the debts of the partnership estate, the leasehold, and personal property belonging to said estate. Sale was made accordingly, in due course of law, as prescribed, on June 16, 1879, when John W. Norton became the purchaser of the property, and the defendant put him in possession. This is a suit in ejectment, for one undivided half of the leasehold. The circuit court, sitting as a jury, upon a hearing of the facts, gave judgment for the defendant.
It is conceded that if the business association of DeBar, Wakefield, and Chouteau constituted a partnership, and the leasehold in the Opera House was part of the partnership property, then the lien in behalf of creditors of the firm and the sale by the surviving partner to make this effectual, must prevail over the title acquired from the deed of trust given by DeBar, and the plaintiff cannot recover, unless the defendant is estopped from making such a defence.
It is insisted for the plaintiff that there was no partnership, but only a case of advances made by Wakefield and Chouteau to DeBar, to aid him in his business, for which they received, as compensation, certain interests in the leasehold and in the profits of the business. It seems to be argued in this connection that, while there was a sharing of profits in certain proportions, there was no such community of losses as is essential to every partnership. As to everything except the amounts of their respective interests, the basis of association among the three parties was set out in the written agreement between DeBar and Mrs. Wakefield's trustee, of May 23, 1873. This instrument was referred to and readopted in the deeds subsequently made by DeBar to the same trustee, and its terms were virtually adopted in the deed from DeBar to Chouteau. Mr. Chouteau testified that his agreement with DeBar was oral only, but that, except in the extent of interest, there was no difference between his co-partnership relation and that of Mrs. Wakefield, through her trustee. It was part of these agreements that twenty-five per cent of the share of profits falling to either party should be reserved monthly, “to meet any losses that may occur.” This clearly shows the intention of the parties that losses were to be shared, as well as profits. In addition to this, it is a generally accepted rule, that a community of profits implies a community of losses, and this seems to follow naturally from the consideration that losses are, in a certain sense,...
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