Vill. of Westby v. Bekkedal

• Decision Date: 23 June 1920
• Citation: 178 N.W. 451,172 Wis. 114
• Parties: VILLAGE OF WESTBY v. BEKKEDAL ET AL.
• Court: Wisconsin Supreme Court

172 Wis. 114

178 N.W. 451

VILLAGE OF WESTBY

v.BEKKEDAL ET AL.

Supreme Court of Wisconsin.

June 23, 1920.

Appeal from Circuit Court, Vernon County; E. C. Higbee, Judge.

Action by the Village of Westby against M. H. Bekkedal and others. Judgment for plaintiff and defendants appeal. Modified and affirmed.

M. H. Bekkedal & Son are a partnership located at Westby, Wis., engaged in the business of buying, storing, handling, and shipping of tobacco. E. Rosenwald & Bro. are a partnership having its principal office and place of business in the city of New York, and engaged in the selling, handling, and merchandising of tobacco. On March 6, 1917, the two partnerships entered into a contract by the terms of which the Bekkedals (party of the second part) were to buy tobacco of 1916 crop, raised in the state of Wisconsin, in joint account with the party of the first part (the Rosenwalds), and attend to the packing and handling of the same. The Rosenwalds agreed to attend to the marketing of the tobacco so purchased and packed, and apply all the net proceeds of any sales made to the credit of the joint account, as kept on their books.

The contract contained a provision as to the manner in which advances were to be made by each of the parties to the contract, the Rosenwalds to advance 60 per cent. and the Bekkedals 40 per cent. The Rosenwalds agreed to use every effort to dispose of the tobacco to the best advantage, and the Bekkedals agreed to give their sole attention to the buying, packing, and handling of the joint account holding. It was agreed that the net profits or net losses should be shared, 60 per cent. to the Rosenwalds and 40 per cent. to the Bekkedals. The contract required that the name of E. Rosenwald & Bro. should show distinctly on each warehouse used for the packing or handling of joint account tobacco. While the contract covered the crop of 1916, it was to continue unless terminated by three months' notice. It appeared without dispute that under the contract a large amount of tobacco was bought and stored, packed and prepared for shipment, and sold under the contract, and the net proceeds for the year 1917 was the sum of $345,296.11; that all of the business transactions relating to the sale and marketing of said tobacco were conducted, managed, and directed by the Rosenwalds, including the procuring of purchasers, collection of purchase price, the shipping, invoicing, insuring, and the fixing of prices, without participation therein by the Bekkedals, and that such sales were made to purchasers without the state of Wisconsin; that when sales were made the tobacco was loaded on board cars by the Bekkedals and shipped to purchasers directly from Westby and other warehouses located in Wisconsin, upon order of the Rosenwalds; that all the proceeds of the sales were collected by the Rosenwalds at their office without the state of Wisconsin, and that at the time the proceeds of such sales were received no part of the tobacco sold was located within the state of Wisconsin.

It further appeared that M. H. Bekkedal, on April 30, 1918, at the request of the income tax assessor, and without the actual knowledge or express authority of the Rosenwalds, made, signed, and filed, as was required by law, a joint return with the income tax assessor, and that upon the return so made there was assessed jointly against the partnerships an income tax for the year 1917 of $20,352.76, which amount was duly certified and placed upon the tax roll of the plaintiff village for the year 1918. It further appears that on May 1, 1918, there was assessed and levied against the personal property belonging to the joint accountants a tax amounting to $8,657.39, which taxes were afterward paid; that out of the amount of taxes so paid the Rosenwalds claim the right to offset $5,194.44, and the Bekkedals $3,462.95, against any tax which the court might find and determine in this action is justly due from the defendants; that the Rosenwalds had no information as to the assessment of the taxes upon the return made and filed, before the same had been certified by the county clerk of Vernon county to the clerk of the village of Westby.

The case was tried by the court, and the court found upon the facts as stated that the contract between the two partnerships amounted to a partnership contract creating a partnership, that the income derived from the business of the joint account was income derived from property and business transacted within the state of Wisconsin, and that the defendants made no appearance before the county board of review for income tax assessment; allowed an offset of $8,657.29 personal property tax. The plaintiff had judgment for the remainder, from which judgment the defendants appeal.C. W. Graves, of Viroqua, and R. B. Graves, of Sparta, for appellants.

C. J. Smith, Dist. Atty., of Viroqua, J. J. Blaine, Atty. Gen., and E. E. Brossard, Asst. Atty. Gen., for respondent.

ROSENBERRY, J. (after stating the facts as above).

The principal contention of the defendants here is that the court erred in holding that the income in question was derived from property located or business transactedwithin the state of Wisconsin, within the meaning of the income tax act. It is further contended that the court erred in holding that the contract of March 6, 1917, entered into by the partnerships, created a partnership.

There was a motion on the part of the plaintiff under the provisions of section 3049a, Wis. Stats., to review the judgment on the ground that the trial court was in error in denying 2 per cent. penalty and interest at the rate of 12 per cent. per annum from January 1, 1919, to the date of the entry of judgment, together with taxable costs.

[1] On the part of the defendants it is argued that the relationship between the defendant partnerships was that of a joint adventure rather than a partnership, and this argument is placed upon the ground that, although there is admittedly a sharing of profits and losses, and community of interest, the agreement does not contemplate that each of the parties shall be the agent for the other. Jackson v. Hooper, 76 N. J. Eq. 185, 74 Atl. 130; Cocks v. Hickman, 8 H. L. Cas. 268. This argument is based upon that provision of the contract which provides that the purchasing, storing, handling, and shipping of the tobacco shall be exclusively within the control of the Bekkedals, and that the sale and disposition of the tobacco shall be exclusively in the hands of the Rosenwalds. It would seem to require no argument to show that, considering the business as a whole, the Bekkedals were to act as agents for the Rosenwalds in the purchasing, storing, handling, and shipping, because the Rosenwalds had a 60 per cent. interest in the tobacco when purchased, and that as to the sales the Rosenwalds were to act as agents of the Bekkedals, the Bekkedals having a 40 per cent. interest in the proceeds of the sales when made. We think the contract in question created a partnership as defined by the Uniform Partnership Act (St. 1919, §§ 1724m--1 to 1724m--38).

[2][3] Upon the other branch of the case it is argued that, because the sales are made and the proceeds collected entirely without the state of Wisconsin, all of the income of the...