Rains v. Weiler

• Decision Date: 07 July 1917
• Docket Number: 20,878
• Citation: 101 Kan. 294,166 P. 235
• Parties: GEORGE RAINS et al., Appellees, v. HERMAN WEILER, Appellant, et al
• Court: Kansas Supreme Court

166 P. 235

101 Kan. 294

GEORGE RAINS et al., Appellees, v. HERMAN WEILER, Appellant, et al

No. 20,878

Supreme Court of Kansas

July 7, 1917

Decided July, 1917.

Appeal from Cherokee district court; JAMES N. DUNBAR, judge.

Judgment affirmed.

SYLLABUS

SYLLABUS BY THE COURT.

1. CONTRACT--Binding Force of Implied Contracts. Parties may be as firmly bound by implied contracts as by those expressed in words, oral or written; they may arrive at agreements by acts and conduct which evince a mutual intention to contract and from which the law implies a contract.

2. PARTNERSHIP--When Manager is Entitled to Compensation for Services. The general rule is that in the absence of an agreement one partner is not entitled to compensation for his services while employed in the partnership business, but where one partner is intrusted with the management of the partnership business and at the instance of his copartner devotes his whole time and attention to it while the copartners are attending to their individual business, the case is taken out of the general rule and from the acts and conduct of the parties the law implies an agreement to pay the active managing partner compensation for his exceptional services.

3. SAME--Payment of Manager--Proof of Custom. Ordinarily where a party relies upon a custom or usage it should be specially pleaded, but in an action for a partnership accounting embracing many items, where the defendants answered with a general denial and did not challenge any item because of the absence of authority or an agreement to charge the firm with the item, the admission of evidence of a uniform, reasonable and well-settled custom with respect to the item was not error.

4. TRIAL--Order of Proof. The order in which proof is received is largely within the discretion of the trial court and is not a matter of much consequence where the case is tried by the court without a jury.

5. PARTNERSHIP--Conduct of Business--Borrowing Money. A manager of a partnership business acting in good faith may borrow money necessary for the conduct of the business instead of making an assessment upon the partners to obtain the necessary money.

6. SAME--Extending Partnership Business--Acts of Manager Approved. Likewise, such partner in carrying on a mining enterprise may extend the operations of the firm to land in proximity to that previously mined and the partnership will be bound by the operation if there is an absence of fraud or bad faith.

Edward E. Sapp, and S. C. Westcott, both of Galena, for the appellant.

E. B Morgan, and Don H. Elleman, both of Galena, for the appellees.

OPINION

JOHNSTON, C. J.:

This was an action by George Rains, Charles Moore, and Don H. Elleman as administrator of the estate of Charles Rains, deceased, against Herman Weiler, Charles Sheets and Fred Gerster to obtain a partnership accounting. Findings of fact and conclusions of law were made by a referee, upon whose report the court rendered judgment against the defendants in favor of plaintiff George Rains. Weiler appeals.

The partnership was known as Rains, Moore & Company, and for a little over a year and a half operated a mine called the Red Lion Mine, in Joplin, Mo. George and Charles Rains each had a three-twentieths interest in the partnership; Moore four-tenths; and the defendants each one-tenth. The Red Lion mill was destroyed by fire, and thereafter no mining operations were carried on by the firm. At the end of the partnership business there was a deficit, of which each of the plaintiffs paid his share in proportion to his interest, leaving a balance which was met by George Rains, and the recovery of which is sought from the defendants. There is a dispute as to the amount due from the defendants on the ground that some of the items for which Rains claims credit were not properly chargeable against the partnership. The management of the enterprise was left to George Rains, Moore kept the books of the company and Sheets worked as a laborer in the mine. The business was financed by Rains and Moore, who also borrowed money at the bank upon their own notes when the partnership was in need of further funds. The other members contributed neither time nor money for the benefit of the partnership, but did accept profits arising from the conduct of the enterprise. During the continuance of the business dividends in the sum of $ 6500 were paid to the partners.

Among the items disputed by the defendants were the sum of $ 2125 paid out as salary to Rains as manager, $ 510 paid to Moore as bookkeeper and $ 1521 paid to Sheets in wages for ordinary labor. While there was testimony that Rains told Weiler that he would charge the firm $ 25 per week for his services as manager, the referee found that what was said did not amount to an express agreement, but that the evidence did show an implied agreement to pay him the reasonable value of his services. Testimony was introduced over the objection of the defendants to the effect that there was a custom among miners in that district that where some of the partners in a project of this character devote their time and effort to the conduct of the business while others take no part in it, the ones performing the services are to be paid therefor.

Another item complained of was the expenditure of $ 135.40 by Rains in prospecting the Ward mine, which was located near the Red Lion. After the Red Lion mill was burned and was not rebuilt the chance to work the Ward mine was offered to Rains. Thinking that he might thereby make a profit for the partnership, Rains undertook to operate this mine, but after testing it for a few days he abandoned the scheme, seeing that it would not pay. Out of this venture $ 46.54 was realized, making a net loss of $ 88.86.

The items mentioned were all held by the court to be properly chargeable to the partnership.

The principal controversy on this appeal arises over the allowance of compensation to the partners Rains, Moore and Sheets for their services rendered in the partnership business. Defendant contends that these partners were not entitled to compensation from other members of the firm because there was no special agreement to that effect. The general rule is that in the absence of an agreement a partner is not entitled to compensation for his services while employed in the partnership business. If there is no agreement to the contrary it is the duty of each partner to contribute his time, skill and ability so far as the same is reasonably necessary to the conduct of the business without other compensation than a share of the profits. (Insley v. Shire, 54 Kan. 793, 39 P. 713; Painter v. Hines, 86 Kan. 832, 122 P. 1036.) This rule was recognized by the referee and the trial court; but it was held that the acts and the conduct of the partners and the circumstances surrounding them implied an agreement that compensation was to be paid. In his well-reasoned opinion the referee states that such a contract may be express or it may be implied from the conduct of the parties and the circumstances of the particular partnership, and he found that "the evidence conclusively shows that it was the understanding between all the partners that Mr. Rains was to be the manager of the business of the Red Lion Mining Company . . . that he was to be the responsible partner and there was no expectation that the other partners would devote their time to the business." Apart from this consideration it was found from the evidence that there was a custom or usage in that mining district to pay for the services of the managing partner, and it follows that such usage entered into and became a part of the partnership agreement. Defendant appears to contend that a partner is not entitled to compensation for services rendered unless there is an express agreement to that effect, and there are authorities that go to that extent. (Note, 17 L. R. A., n. s., 385.) Parties may be as firmly bound by implied contracts as by those expressed in formal language. In some cases parties arrive at agreements by words, either oral or written; and in other cases they arrive at an agreement by acts and conduct, showing a mutual intention to contract, and from which the law implies a contract. (6 R. C. L. 587.)

In 1 Addison on Contracts, 8th ed., p. 54, it is said:

"The intention of the parties to any particular transaction may, however, be...