Schneider v. Schneider

• Decision Date: 04 January 1941
• Docket Number: 37151
• Citation: 146 S.W.2d 584,347 Mo. 102
• Parties: J. C. Schneider v. Elmer Schneider, Schneider Sales & Service, Inc., a Corporation, and Elmer Schneider, Executor under the last Will of Emma Schneider, Appellants
• Court: Missouri Supreme Court

146 S.W.2d 584

347 Mo. 102

J. C. Schneider v. Elmer Schneider, Schneider Sales & Service, Inc., a Corporation, and Elmer Schneider, Executor under the last Will of Emma Schneider, Appellants

No. 37151

Supreme Court of Missouri

January 4, 1941

Appeal from Circuit Court of City of St. Louis; Hon. John W Joynt, Judge.

Reversed and remanded (with directions).

Noah Weinstein and Fred J. Hoffmeister for appellants.

(1) In order to constitute a partnership there must be community of interest, a sharing in the profits and losses as such, the existence of mutual relationship of principal and agent, and an intention on the part of the persons interested and uniting in the prosecution of the common enterprise, to become and act as partners. Hughes v. Ewing, 162 Mo 295; Prasse v. Prasse, 77 S.W.2d 1005; Massa v Union E. L. & P. Co., 50 S.W.2d 719. (a) There must be an agreement between the members that each shall share in the profits and be personally liable for his share of the losses. Taussig Co. v. Poindexter, 30 S.W.2d 638; Natl. Bank of Commerce v. Francis, 296 Mo. 192, 246 S.W. 332; Thompson v. Holden, 117 Mo. 128; Gill v. Ferris, 82 Mo. 167; Massa v. Union E. L. & P. Co., 50 S.W.2d 719. (b) The intention of the parties, deducible from their acts, rather than specific intent to create or not to create partnership, is controlling, and may be manifested by terms of agreement, conduct of parties to each other under it, or circumstances surrounding transactions. Prasse v. Prasse, 77 S.W.2d 1005; Mackie v. Matt, 146 Mo. 254; Thompson v. Holden, 117 Mo. 128. (c) And to establish a partnership, its existence must be proved by evidence which is cogent, clear and convincing, and its terms must be unequivocally and unconditionally agreed to by the parties. Prasse v. Prasse, 77 S.W.2d 1005; Chapin v. Cherry, 243 Mo. 408. (2) The court should not appoint a receiver of partnership property unless it is shown that such appointment is necessary for the protection of property rights or interests of the parties and that there is danger of loss unless a receiver is appointed. The mere fact that the partners are unable to agree upon an adjustment of the affairs is not a sufficient reason for the appointment of a receiver. Ingram v. Clover Leaf Lbr. Co., 55 S.W.2d 298; 47 C. J. 1218, sec. 930. (3) In an equitable action the appellate court will review the evidence adduced before a referee or special master and make its own findings and reach its own conclusions. State ex rel. Raleigh Inv. Co. v. Allen, 294 Mo. 220; Mack v. Wurmser, 135 Mo. 67; Small v. Hatch, 151 Mo. 307.

Harry Gershenson for respondent.

(1) Existence of partnership depends on intention of parties, and may be shown from the facts and circumstances in evidence and by the conduct of the parties in the event the partnership rests on parol agreement. Myers v. St. Louis Structural Steel Co., 65 S.W.2d 931; Burroughs v. Lasswell, 108 S.W.2d 711; Stone v. Guth, 102 S.W.2d 741. (2) Deference should be given by this court to the findings of the chancellor, as well as the referee, where there is an irreconcilable conflict in the testimony. Neville v. D'Oench, 34 S.W.2d 506. (3) The rights and duties of partners as between themselves are to be governed by the rules applicable to trustees and agents and the trust relation is not terminated with the dissolution of the partnership, but continues until a final adjustment and settlement of the partnership affairs. Filbrun v. Ivers, 92 Mo. 388. (4) A community of profits implies a community of losses. Strickland v. Chenot, 45 S.W.2d 939. (5) It is a well-settled principle of law where one party contributes the capital and the other the labor and skill for carrying on a joint enterprise, such combination constitutes a partnership, unless something appears to indicate the absence of a joint ownership of the business and profits. State ex rel. v. Daues, 13 S.W.2d 539.

OPINION

Hays, J.

This is a suit in equity, brought by the present respondent against his brother the appellant Elmer Schneider, his mother Emma Schneider who died before the entering of the interlocutory decree, and the appellant Schneider Sales and Service, Inc., a Missouri corporation. After the death of Emma Schneider the executors under her will were made defendants and later, after the filing of a will contest suit, an administrator pendente lite was appointed and made a party. The original bill in equity alleged that Elmer Schneider, Emma Schneider and the plaintiff entered into a partnership in the year 1929 and, as partners, operated a business enterprise known as the Schneider Nash Sales and Service. The principal place of business of the partnership was in St. Louis, Missouri, and it was engaged in the sale and servicing of automobiles, motor boats and gasoline engines and their parts and appliances. The bill further alleged that the plaintiff devoted all of his time to the business of the partnership, but that in the year 1934 the other two partners, to whom we shall refer as the original defendants, wrongfully excluded plaintiff from further participation in the business and refused to account to him for his share therein; that they squandered and dissipated partnership assets and paid to themselves unreasonably large salaries and commissions; that after the ouster of the plaintiff from participation in the business the two original individual defendants formed a corporation, which is the corporate defendant herein, and transferred to said corporation, which they owned and controlled, the assets of the old partnership. The bill prays for a dissolution of the partnership and an accounting and injunction against further transfer of the assets and for general equitable relief.

The answer denies the existence of a partnership and alleges that on the contrary the business carried on under the name of Schneider Nash Sales and Service was in fact wholly owned and managed by Emma Schneider as a sole trader, plaintiff being one of her employees. The answer also contained a counterclaim. It prayed for a dismissal of plaintiff's bill and for judgment on the counterclaim in the sum of $ 9000.

The cause was heard by the chancellor on bill, answer and proofs and an interlocutory decree rendered based upon a finding of the existence of a partnership and the wrongful ouster of the plaintiff by the individual defendants, his copartners. There was a finding that the plaintiff owed to the defendants the sum of $ 100 on their counterclaim. The interlocutory decree appointed a receiver to take charge of the business and property of the corporate defendant, and also a referee or special master for the purpose of taking an accounting between the plaintiff and the defendants, and retained jurisdiction for further proceedings.

The cause thereupon proceeded before the referee who, in due course, reported to the court, recommending that a decree be entered in favor of the plaintiff and against the defendants in the sum of $ 10,000, that defendants be allowed credit in the sum of $ 100 on their counterclaim; and that plaintiff have judgment for interest on such net sum of $ 9900 at six per cent per annum from January 26, 1935, making a total judgment of $ 12,721.50. The court, overruling exceptions to the special master's report, entered a final decree in accordance therewith, making the judgment in favor of the plaintiff a lien upon all of the assets of the corporate defendant prior and superior to all claims, except certain particular items of corporate liability amounting to $ 1837.97 particularly scheduled in the referee's report.

The decree further provided for the continuance of the receivership of the corporate defendant; and that, unless the amount of the judgment above set out should be paid within thirty days after its rendition, the receiver should sell all of the property of the defendant corporation, together with its business and goodwill, at public sale, and should pay out of the amount received at such sale the costs, including the expenses of receivership, special master's fees, and all court costs, and the items aggregating $ 1837.97 given priority, as aforesaid, and then pay the principal and accrued interest on the judgment to plaintiff, paying over any surplus to the defendants.

The defendants, having unsuccessfully filed motions for a new trial and for the dissolution of the receivership, appealed to this court. Appellants contend, in the first place, that an interlocutory decree ordering a dissolution of the alleged partnership and the taking of an accounting between the partners was improper for the reason that no partnership ever existed. A partnership is a status; that is, it is a factual relationship between two or more persons who are conducting a business enterprise together. The central fact of that relation is community of ownership of the business. Certain legal consequences follow necessarily from the existence of partnership status. Each of the partners becomes the agent of the others and of the partnership in all matters connected with its business. Each partner is entitled to a voice in the management of the business enterprise, and, except in the case of statutory limited partnerships, each becomes liable to the full extent of his property to the creditors of the partnership; each is entitled to a share in the profits, the amount of such share being determined by the agreement between the parties.

The status of partnership is created by a contract between the persons who become partners. But such agreement may be either oral or written, verbally expressed or implied from the acts and conduct of the parties themselves. The primary criterion to be applied in determining the issue of partnership vel non is that of the intention of the parties....