Peoples Lbr. Co. v. McIntyre & Peters

Plaintiff recovered a judgment against McIntyre and Peters for material furnished to McIntyre, it being "alleged that Peters was a copartner of McIntyre, and the court so finding. Peters appealed from the judgment. At the time of the contract between the plaintiff and McIntyre the plaintiff had never heard of the alleged partnership, and its claim is therefore not based upon the theory of an ostensible partnership, but upon the character of the actual agreement between Peters and McIntyre. The finding that such partnership existed is -attacked for lack of evidence to sustain it. The

To understand the relations of the parties it will be necessary to consider the terms of the written agreement and the evidence of subsequent dealings between the defendants. The written contract provided for a tentative arrangement between defendants for the doing of certain street work under the Vrooman Act, by contract, in the city of Pomona, and for the subsequent formation of a partnership, at the option of appellant, if the profits of such contracting in Pomona were sufficiently persuasive. The agreement also provides that if no one of the street contracts at Pomona is awarded to McIntyre, that contract should terminate at once at the option of said Peters, or that “it may be continued in force until a contract other than the Pomona contract is secured by McIntyre, satisfactory to said Peters, in which case the agreement, and conditions of this contract in relation to the Pomona contracts shall be in force as to the new contracts as far as they can be made to apply.”

In pursuance of the agreement, McIntyre bid upon the Pomona contract and Peters advanced money in connection therewith, as required by said contract, one thousand four hundred dollars of which was in the form of certified check to be deposited with the bid as required by law. The agreement provided that Peters furnish three thousand five hundred dollars—two thousand one hundred dollars in addition to the certified check. This was done, and the two thousand dollars was used in Pomona. A part of it was used for the purchase of the equipment used at Pomona, and $450 was -taken as the monthly salary of McIntyre. McIntyre failed to secure the Pomona contract, and the certified check was returned to Peters October 31, 1911, and, as the contract provided, the relation between the parties thereto might have been terminated at the option of Peters, but McIntyre later showed an intention to try to secure other contract work. On February 6,

.McIntyre, called as a witness, testified: “I made profits on the contracts which I have had since I signed this agreement with Mr. Peters, but there was no division of profits made between Mr. Peters and myself, and no statement or statements of profits were made to Mr. Peters other than the statements introduced in evidence. Mr. Peters and I never had a settlement with reference to the contracts. I think that I had at times enough money to pay the debts incurred in the business carried on under my agreement with Mr. Peters. I believe at that time I had enough money in the bank to meet such indebtedness, but I am not positive.”

It is obvious from this correspondence that McIntyre never asked Peters to exercise his option to enter into the copartnership. Peters was unable during all this time to get any adequate statement from McIntyre as to the condition of his affairs. Under the contract Peters had a right to wait for the performance of some contract which, in substitution for the Pomona contracts, was to determine the question as to whether or not the business was profitable. McIntyre entered into a partnership agreement with Miller for the doing of the work and never made Peters any statement from which Peters could determine whether or not the business was profitable. The fact that Peters showed an interest in prospective contracts and apparently attempted to direct McIntyre’s attention to possible contracts, in view of the written agreement between the parties and the investments already made by Peters, is of no significance. McIntyre never referred to Peters as a partner. He was transacting his' business either in his own name or in the name of McIntyre & Miller. There is no evidence and no claim that Peters ever by any direct statement or agreement exercised the option given him to create a partnership. No partnership agreement was entered

In considering whether or not Peters ever exercised his option to enter into a partnership with McIntyre under the terms of the contract of October 9, 1911, other provisions of that contract must be noted. It was recited in that contract:

“Whereas McIntyre is desirous of engaging in the general contracting business, particularly that of street paving and cement contracting, and has not funds at his command to do so, and desires to interest Peters in said business with him, and said Peters wishes to engage in said business, if it is

proven to be profitable to him and the conditions of same áre proven satisfactory to him, and whereas said McIntyre represents himself as a person skilled in the estimation and execution in an economical and profitable manner of such contracting work, and whereas said McIntyre has estimated on two street paving jobs now being opened to bids at Pomona, Calif., and desires to submit bids on same, now therefore in order to determine whether the said contracting business is profitable enough and satisfactory so as to appeal to said Peters as a permanent investment, the said parties agree with each other as follows.” It was further agreed that the bids on the Pomona job should be made at a price that would net a profit of twenty per cent, namely, a profit of four thousand dollars. Peters was to advance three thousand five hundred dollars, three thousand one hundred dollars of which was to be used in the purchase .of tools, “said equipment to be bought in the name of and remain the property' of said Peters.” Arrangement was then made with reference to the disposition of the assets in the event that Peters did not desire to continue. But it was provided, among other things, that if Peters desired to continue in the contract business, he was to receive the entire net profits until half his investment had been repaid, whereupon the equipment was to belong to the copartnership. These profits were to be paid upon the completion of each contracting job. Books of accounts were to be kept. Peters was to have the deciding voice as to all matters- until he had re- 1 ceived sufficient profits to repay him half of his investment. McIntyre never called upon Peters to elect whether he should or should not go on with the business. No showing of sufficient profits was made to justify Peters in entering into a copartnership. No books were kept of the affairs of the alleged copartnership. In short, the situation seems to be simply this: Under’ "a preliminary contract Peters advanced, as he agreed to do, three thousand four hundred dollars, which was, under the contract, to be employed in the purchase of equipment which thereafter belonged to Peters. McIntyre thereafter continued to use Peters’ property, with meager and unsatisfactory reports of what he was doing, with no showing of profits and without requesting or suggesting or intimating to Peters that he should elect or had elected to be a partner. Peters in the meantime allowed McIntyre to continue to use his equipment, waiting with more or less patience the results

of McIntyre’s work. As between himself and the public, he had a right to rely upon the fact that he was not being held out as a partner, and as between McIntyre and himself he had a right to rely upon the fact that he never had elected to become a partner.

We therefore conclude that the finding that Peters was a partner of McIntyre is not sustained by the evidence.

The judgment against the defendant Peters is reversed

Sloss, J., Shaw, J., Lawlor, J., Lennon, J., and Angellotti, C. J., concurred.