Smith v. Putnam

• Decision Date: 15 May 1900
• Citation: 107 Wis. 155,82 N.W. 1077
• Parties: SMITH v. PUTNAM ET AL.
• Court: Wisconsin Supreme Court

107 Wis. 155

82 N.W. 1077

SMITH

v.PUTNAM ET AL.

Supreme Court of Wisconsin.

May 15, 1900.

Appeal from circuit court, Eau Claire county; James O'Neill, Judge.

Action by Absolom Smith against H. C. Putnam and others to recover profits under a partnership arrangement, and for salary for driving logs. From a judgment in favor of plaintiff, defendants appeal. Reversed and remanded, with directions.

The complaint, unverified, alleged that the defendants were co-partners under the name of H. C. Putnam & Co., and as such entered into an agreement with the plaintiff in the year 1888 to the effect that if he would investigate, examine, and bring to their attention desirable timber lands, which they approved, they would purchase and either sell or log the same (the plaintiff acting in conjunction with them), and would pay him for his labor in so doing one-fourth of the net profits realized by them; also, that they would employ him, at proper prices, to do the logging, and that under such agreement the three parcels known as the “Log Creek Lands,” the “Thornapple Lands,” and the “Main Creek Lands,” were purchased, and profits realized. The details of the complaint need not be further stated. The answer, also unverified, in terms denied the partnership of the three defendants, but in legal effect admitted it. It, however, denied that they entered into the arrangements alleged in the complaint, but alleged that they individually entered into an arrangement with the plaintiff in 1888 whereby he was to find timber and timber lands; H. C. Putnam should advance the necessary funds, and from the proceeds should be repaid such advances, with 7 per cent. interest; that Thompson and E. B. Putnam should take charge of the purchase, logging, and sale of the logs; that plaintiff should cut and log the timber, and drive the logs, at prices specified, and that one-fourth of the net profits that should be derived from said premises should belong to each of the parties; and that each of the parties should own an undivided one-fourth interest in the lands after the timber had been cut therefrom and sold. The answer admitted that the Log Creek lands and the Main Creek lands were purchased under this arrangement, and that the plaintiff had been paid in full all sums due him thereon; that the Thornapple lands were not purchased in pursuance of said agreement, or any agreement with the plaintiff; and that he had no interest therein. The answer further set up that the arrangement was verbal, and therefore void, under section 2307, Rev. St. The court made an order of compulsory reference, and on the trial before the referee the plaintiff testified to the arrangement, which was that such lands as he might find, and, after investigation, bring to the attention of the defendants, who did in fact constitute a partnership engaged in various kinds of business, should be considered, and, if approved, would be purchased, H. C. Putnam advancing any money necessary for the purchase or for the handling of the lands, Mr. Thompson keeping the accounts, and the plaintiff superintending any logging operations that might be deemed advisable; that from the proceeds Mr. Putnam should be repaid all the advances made by him, with 7 per cent. interest; that the profits upon each deal or enterprise that might be undertaken by them should, immediately on its completion, be divided equally among the four parties; and that any losses should be shared in the same proportion. The trial then proceeded, and a large amount of detail evidence was taken as to the purchase, handling, and disposal of the three different enterprises, which were claimed to have been undertaken at different times under the general arrangement above stated, with no express suggestion from the defendants' attorney that he claimed the relationship between plaintiff and defendants to be a partnership, or that he made any objections to the plaintiff's claims, other than those set forth in the answer. The referee found as a fact that no partnership existed. and reports in his conclusion of law that no question of partnership was litigated on the trial. He states the accounts of the three several enterprises or real-estate purchases, and also the accounts of services rendered by and payments made to the plaintiff for cutting and driving logs, and finds an amount due from the defendants to the plaintiff of some $5,200. These findings were in all respects confirmed by the court, whereupon, before judgment, defendants moved to amend their answer--First, by correcting a clerical error; and, secondly, by setting up distinctly, as an objection to recovery, the fact that a partnership existed between plaintiff and the defendants, and that the sums claimed were for profits of a yet unsettled partnership. The latter portion of the application was denied, and judgment rendered. Other facts. so far as material, will appear in the opinion. Defendants appeal.

Bardeen, J., dissenting.

Frawley, Bundy & Wilcox, for appellants.

Wickham & Farr, for respondent.

DODGE, J. (after stating the facts).

We are all fully satisfied that the evidence, by a clear preponderance thereof, establishes the existence of a partnership between the plaintiff, Smith, on one side, and H. C. Putnam, E. B. Putnam, and G. T. Thompson, on the other, whereby they were to engage in the purchase either of timber lands or standing timber from time to time, as the plaintiff should find, and bring to the notice of the others, favorable opportunities; that H. C. Putnam was to furnish such money as was necessary for the purchase of land or timber, and for handling the same; that the plaintiff, Smith, was to superintend any logging that might be decided on, and that Thompson was to keep the accounts, and handle the finances, and make sales; that Putnam was to be first repaid moneys advanced by him, with 7 per cent. interest to the time of their repayment; and that the profits or losses were to be shared equally between the four individuals, which division was to be made as soon as each of the transactions was finished up. That such was the arrangement, plaintiff testifies, and therein is confirmed by the defendants. That this constituted a partnership, as a necessary result of the terms agreed on, seems entirely clear under the authorities. They all shared in the conduct and the risks of the business, and the ultimate division was to be of the profits, as such. George, Partn. § 17; Miller v. Price, 20 Wis. 117;Upham v. Hewitt, 42 Wis. 85;Treat v. Hiles, 68 Wis. 344, 32 N. W. 517;Clinton Bridge & Iron Works v. First Nat. Bank, 103 Wis. 117, 79 N. W. 47.

Appellants' first principal contention is that an action to close up a partnership, settle accounts between the partners, and divide the property, can only be maintained in equity; that courts of law have not at their command the methods of procedure nor the adjustable forms of decree necessary to accomplish the result. While it is an undoubted general rule that courts at law have not the machinery at their command often necessary to properly settle and close up partnerships, and that such actions must be in equity, yet, where the reason fails because of the fact that all of the transactions are so completed as to make nothing necessary but the ascertainment of a money balance due from certain of the partners to another,--a function which a court at law can perform,--the objection to the entertainment of a suit by such a court is one which may be waived. The objection resulting from the inability of the court to do the things necessary to complete relief no longer exists, and, if the parties consent, the court may act though in a common-law action, and may ascertain what amount is due, and may render judgment therefor, as in any other case of a money demand. Tolford v. Tolford, 44 Wis. 547;McCormick v. Ketchum, 48 Wis. 643, 644, 4 N. W. 798;Kunneke v. Mapel (Ohio Sup.) 53 N. E. 259;Whetstone v. Shaw, 70 Mo. 575, 580;Trowbridge v. Wetherbee, 11 Allen, 361, 365. By the answer in this case some facts tending to create a partnership are suggested, but defendants' contention that such relation was created was not at all clearly stated therein. It is ambiguous, and did not fairly notify the plaintiff that the defendants made any objection to his action at law by reason of the fact that the indebtedness claimed by him arose out of partnership transactions. The fact of the partnership was, however, clearly disclosed early in the trial of the case by the plaintiff's own testimony; but both parties proceeded without objection to introduce all evidence necessary to establish the state of the accounts between them, and not until after the referee's report had been made and judgment was about to be entered did defendants clearly object to the adjudication of the amount due in this legal action. It seems clear that defendants' conduct has been such as to waive any objection, which they might have made by reason of the fact that the claim grows out of a partnership, to the ascertainment of whether or not there exists a debt presently due from the defendants to the plaintiff, and the rendition of a judgment therefor, provided, at least, that nothing is necessary to accomplish that result which transcends the powers of a court of law, such as the ascertainment and adjustments of debts of the firm, or the appointment of a receiver to dispose of assets yet on hand.

The next objection made by appellants to any recovery is that the arrangement, whether constituting a partnership or not, involved a dealing in lands, and is therefore denied enforcement in court by the statute of frauds. That such dealings were involved, as an essential element of the contract, cannot be denied, whether the purchases to be made thereunder were of the title to lands, or only of the timber standing thereon. Nor does the fact that the contract was for partnership dealing meet the objection. This court, at an early day (Bird v....