This is a controversy between Curtis H. Kimball and Ella M. Williams, assignees of Eldred C. Williams, and Isaac D. Fletcher, arising on the intervening petition of the latter filed in the superior court of Cook county, in an action by Horace Fletcher and another against the Japanese Development Company and others. The facts appear in the opinion of the appellate court delivered by Judge GARY, as follows:
‘In 1883, Horace P. Fletcher was a merchant in San Francisco, dealing in Japanese goods, under the business name of Ichi Ban. He then owed his brother, Isaac D. Fletcher, upwards of $30,000, which was invested in that business. In July of that year, Eldred C. Williams, under whom appellants claim, and to whose rights it is admitted they have succeeded, was in San Francisco, went into the Ichi Ban store, and from that began an acquaintance which resulted in the investment by Williams of $20,000 upon the terms shown by the following agreement: ‘This agreement made on this eighteenth day of October, eighteen hundred and eighty-three, by and between Horace P. Fletcher, of the city and county of San Francisco, state of California, and Eldred C. Williams, of the city of Boston, county of Suffolk, state of Massachusetts, witnesseth, that whereas, the said Williams is possessed of the sum of twenty thousand dollars. United States lawful money, which he is anxious to invest in commercial business; and whereas, he is inspired with confidence in the business ability and methods of the said Fletcher; said Williams has, on this day and date, delivered to said Fletcher the said sum of twenty thousand dollars in trust, for the investment of the said sum to the best advantage, and to allow the same to remain in the hands of said Fletcher for the term of five years from the 1st day of January, eighteen hundred and eighty-four. The said Fletcher, in accepting the trust, agrees to invest the said twenty thousand dollars in his business in San Francisco, called ‘Ichi Ban,’ with his own capital, and to use it all to the best advantage for the purpose of earning profit on the investment for the advantage of said Williams, the same as if for himself. The said Fletcher agrees to credit to the account of said Williams the earnings of the said twenty thousand dollars, in proportion to the whole earnings as the said twenty thousand is in proportion to the whole amount of money in vested in the business. The proportion of the capital of said Fletcher shall be determined by an inventory of the stock and other assets of the business, which it is agreed shall be taken at some time during the months of January, February, or March, eighteen hundred and eighty-four. It is also agreed that the said Williams shall be entitled to draw against his prospective earnings the sum not exceeding ten per cent. per annum of his investment, in quarterly installments, payable on the first of April, July, October, and January of each year, allowing the balance of the earnings, if there be any, to accumulate in the business for its benefit. It is agreed that the rate of interest which capital shall draw from expenses shall not exceed seven per cent. per annum, and the compensation for services of the said Fletcher shall not exceed the sum of six thousand dollars per annum. ELDRED C. WILLIAMS. HORACE P. FLETCHER.' [Signed in the presence of A. E. Dennison.]
‘Williams testifies that before he made the investment Horace told him that he had $100,000 of his own invested in the business; that there were no liabilities of any kind outside of some $2,000 or $3,000, being unpaid rent and salaries due employés; that he did not see the books, and did not know, and had no reason to suppose, that Horace was indebted to Isaac D. Fletcher. Horace testifies that Williams did know of such indebtedness to some amount; that he told him before he gave him the money; but when pressed for details he cannot remember any conversation. The testimony of Williams as to what occurred between himself and Horace, before the investment, is so far corroborated that, if the decision turned upon that, the version of Williams ought to be accepted. There is, however, nothing in the whole case indicating that Isaac had any notice of the negotiations or inducements that preceded the investment.
‘The next step was the following agreement: ‘Whereas, Horace Fletcher is doing business in San Francisco, California, and also at Chicago, Illinois, in articles of Japanese manufacture, and others of a kindred nature; and whereas, one Eldred C. Williams, of Boston, Massachusetts, has advanced to said Horace Fletcher certain capital for use in said business, for which use the said Williams receives certain of the profits thereof; and whereas, Isaac D. Fletcher, of the city of New York, has advanced and loaned to said Horace Fletcher certain moneys and credits, and has agreed with said Horace Fletcher to loan him still other and further money and credit in said business; and whereas, it is the design and intention of each of the parties hereto that the said Isaac D. Fletcher, as between the parties, shall be entitled to and have priority of payment of and for any and all said summs of money or credits so loaned, or which shall hereafter be loaned, by him to said Horace Fletcher, over said Eldred C. Williams, for payment of sum or sums advanced by him, or which shall hereafter be advanced by him (said Williams) to said Horace Fletcher: now, this agreement, made this twelfth day of June, one thousand eight hundred and eighty-four, between Horace Fletcher, of San Francisco, California, party of the first part, Eldred C. Williams, of Boston, Massachusetts, party of the second part, and Isaac D. Fletcher, of the city of New York, party of the third part, in consideration of one dollar, lawful money, each to the other in hand paid, at or before the ensealing and delivery of these presents, the receipt whereof is hereby severally acknowledged, witnesseth, that the said parties of the first and second parts hereto, for themselves, their executors, administrators, or assigns, covenant and agree to and with the said party of the third part hereto, his executors, administrators, or assigns, that the said party of the third part for any and all sums of money, credits, or things in action which now have been, or hereafter may or shall be by him, the said party of the third part, loaned or advanced to the said party of the first part, during his (said party of the first part's) continuance in the business aforesaid, rightfully claim and have, as between the parties hereto, priority of payment thereof over the said party of the second part, for any sums of money, credit, or things in action by him, the second party of the second part, loaned or advanced, or hereafter to be loaned or advanced, to the said party of the first part. The intent of this instrument being to render any claim of the party of the second part, for all moneys or credits advanced, or to be hereafter advanced as aforesaid, subordinate and subject to the payments of all money or credits, or either of them, loaned or advanced by the said party of the third part to the party of the first part, as aforesaid. In witness whereof the parties hereto have hereunto set their hands and affixed their seal the day and year first above written. HORACE FLETCHER. ELDRED C. WILLIAMS. ISAAC D. FLETCHER.’
‘The effect of this agreement the appellants seek to limit by the testimony of Williams, before stated; by some letters of Horace, in which he stated to Williams that he had made arrangements with his brother for some credits for the benefit of the business, and that the paper was simply an acknowledgement of partnership to avoid any possibility of complication in case of the death of Horace; and by the further testimony of Williams that Horace told him that he had within a month, on the strength of it, borrowed $12,000 or $20,000 from Isaac, and he knew of no other indebtedness. There is still the same absence of any evidence of notice to Isaac of these letters and further conversation between Horace and Williams, as has been alluded to before, with reference to what preceded the original investment. Upon the agreement itself the argument of the appellants that it should be limited to money advanced by Isaac to the joint business of Horace and Williams lacks the foundation of any joint business to which it could apply. There was no partnership between them. 1 Lindl. Partn. 23 et seq. By the agreement of October 18, 1883, between Horace and Williams, the latter had, under an affluence of language that Micawber and his wife would have disdained, become a creditor of the former for $20,000 on a credit of five years, without interest, but to be paid for the use of his money such per cent. as the profit of the business of Ichi Ban might be, reckoning interest upon capital not more than seven per cent., and the services of Horace not more than $6,000 per annum. In anticipation of the profits, Williams might draw $500 every three months; the residue of his share of the profits remain, for the benefit of the business to the end of the five years. What knowledge Isaac had of the relations of Horace and Williams is left to inference. There is no evidence upon the subject. Whatever Horace said or wrote to Williams in no evidence per se against Isaac. And the testimony of neither Horace nor Williams, as to what they...
