Zabriskie v. Coates

The plaintiff brings this action to recover for work, labor, and material, claimed to have been furnished by him under a contract with the defendants as co-partners, for the erection of a club house upon the property of the defendants, and also to recover upon certain assigned claims for work, labor, and services performed upon the same property by the assignors. The referee held that the defendants were not, at the time of the rendition of the work and the furnishing of the materials, either by the plaintiff or the other persons, co-partners, and, consequently, that no liability existed against them as such on account of any claim held by the plaintiff; and, based upon this finding, dismissed the plaintiff’s complaint, with costs. The undisputed proof in this case, furnished by the defendants themselves, clearly established the existence of such relations as charge them with liability as partners, if the facts upon which the plaintiff’s claim is based, and that of his assignors, have sufficient proof to establish the performance of the work and labor and the furnishing of the materials, as claimed by him. It appears from the testimony of both defendants, who are brothers, that they had inherited some property from their father, and also from a cousin; that the defendant Arthur B. Coates was the trustee of the latter estate, with authority to hold and disburse the funds thereof; that at the time of the making of the contract with the plaintiff, Arthur R. Coates held in his own name two certain tracts of land, in which his brother had an interest, and for the purchase and improvement of which the funds of both have been jointly used. While the property was so held in the name of Arthur, he caused to be constructed upon the same certain fences, buildings, and a race track; it being the evident contemplation of the defendants at that time to construct a fair ground, with a race track and suitable structures thereon for the purpose of making use of the same as a place for holding agricultural fairs and horse races. This scheme was carried out by the organization of a corporation known as the Northern New Jersey Fair Association of Paterson, N. J., the incorporators being the two defendants and one Thomas S. Hoxey. The certificate organizing this corporation, and the amendment thereof, were duly filed in the proper office on the 12th day of August, 1889, and the articles provided that it commence business on the 10th day of September of that year. Subsequently, upon the election of officers, Arthur R. Coates was elected president and treasurer, and Joseph S. Coates secretary, and both of them, with T. S. Hoxey, were elected directors. 4,980 shares of the stock of the corporation were issued to Joseph S. Coates, 5,000 shares to Arthur R. Coates, and 20 shares to T. S. Hoxey; and between August 9 and October 20, 1890, shares of stock were issued to various other persons in amounts varying from 2 to 50 shares each. Prior to the issuing of the stock to the defendants, they figured up approximately how much cash each had put into the venture, and the stock was issued

It is clearly evident that the defendants were jointly interested in the property held in the name of Arthur, and subsequently conveyed by him to the corporation, and the improvements which were made thereon were understood by each to be for the purpose of creating a suitable place for the holding of agricultural fairs and horse races thereon. The whole venture, if profitable, was to inure to the benefit of both, and, if unprofitable, each was to suffer a loss in proportion to his interest. The division of the stock of the corporation was based upon the interest which each held in the property which was subsequently conveyed to it, and it is there-' fore clearly beyond dispute that this was a joint enterprise, in which each was to share the profits and losses. Under such circumstances, as to third parties who should contract with them in respect thereto, they became liable as partners; and this whether there was any agreement of partnership or not (Magovern v. Robertson, 116 N. Y. 61 , 22 N. E. 398 ), and each, in the enterprise, became the agent of the other, and liability attached equally (Stroher v. Elting, 97 N. Y. 102 ; Meehan v. Valentine, 145 U. S. 611 , 623, 12 Sup. Ct. 972 ). While it is true that mere community of interest would not suffice to constitute a partnership (Bank v. Gallaudet, 122 N. Y. 655 , 25 N. E. 909 ), yet it is equally true that, where the enterprise is joint, and for the mutual benefit of both, and each is to share in the profits and losses, they become liable as partners, and their rights and liabilities are to be determined upon the same principles as would apply to a partnership (Wilcox v. Pratt, 125 N. Y. 688 , 25 N. E. 1091 ; Bank v. Walker, 66 N. Y. 424 ; Sage v. Sherman, 2 N. Y. 417 , 427). This being the status of these defendants, we are to see what their relations with the plaintiff were, and when such relations were established. The contract for the erection of the club house, and probably the work which was performed upon the property by the assignors of the plaintiff, were prior to the transfer of the property to the corporation; the contract having been made in March, 1890, while the transfer was not until August of that year. Consequently, when the contract was made with the plaintiff to erect a club house, the only parties then holding legal title in the property were the defendants, and it is quite doubtful if any legal liability at that time could have keen created against the corporation for improvements upon this property. Certainly there is no proof in this case which is legally sufficient for such purpose. In the deed which was made by Ar

For these reasons we think the judgment should be reversed, and a new trial granted. All concur.