Hayes v. Vogel — 15 N.Y. St. Rep. 351

Majority

p. 351

Thomas Hayes, App’lt, v. George F. Vogel, Resp’t.

(New York Court of Common Pleas, General Term,

Filed April 2, 1888.)

Headnote

1. Partnership—What will constitute.

The parties to this action entered into an agreement whereby the plaintiff agreed to superintend the building of four houses which the defendant was about to erect on land owned by him. The defendant on his part agreed to furnish all capital required therefor in addition to an amount to be advanced to him upon a certain mortgage for future advances then on the property. And upon the sale of the houses, when completed, to pay the plaintiff one-third of the net profits, if any, arising from the sale. In event of loss, the plaintiff agreed to pay the defendant one-third of the net loss, Further provisions bound the defendant to pay the plaintiff a sum weekly to be charged against the plaintiff’s share of the profits, and returned in case of loss. Held, that the agreement created a partnership between the parties.

3. Same—Rights of partners in firm property.

Held, that upon the completion of the houses, the plaintiff was entitled to maintain an action to have a sale of such portions of the property as remained unsold, to the end that the partnership accounts might be adjusted and closed.

p. 352

Appeal by plaintiff from judgment dismissing the complaint on the merits.

Roe & Macklin, for app’lt; Davenport, Smith & PerTcins, for resp’t.

I think the agreement between the plaintiff and defendant created a partnership between them. The defendant owned certain lots of land, and was about to erect four houses thereon. The plaintiff agrees to superintend the erection of the houses and give the necessary time- and attention thereto.

The defendant agrees to furnish all the capital required therefor in addition to the amount to be advanced to him upon a certain mortgage for future advances then upon the property; he agrees, upon the sale of the houses when completed, to pay plaintiff one-third of the net profits, if any, arising from the sale. Proper books of account shall be kept, to which each partner shall have access.

If the venture results in a loss, the plaintiff is to pay defendant one-third of the net loss. The defendant agrees to devote all the moneys advanced upon the said mortgage to-the construction of the houses, and will not further incumber the premises without the consent of plaintiff. Defendant is to provide plaintiff with office room in defendant’s factory until the completion of the houses; to allow him three dollars a week for incidental expenses, to be charged as expenses as accounted for by plaintiff; and to-allow him twenty dollars per week, to be charged against his share of the profits, or, if the venture results in a loss, it is to be repaid by plaintiff to defendant.

Without regarding the use of the words “ capital ” and “ venture,” which occur in the agreement, and are appropriate to a co-partnership, and the fact that the parties in the clause relating to the keeping of books describe themselves as “ partners,” as conclusive upon the question, yet they are evidence of intention, and if there is nothing in the agreement to evince a purpose to the contrary, they should be considered as controlling. The share of profits which plaintiff was to receive was clearly not intended as-compensation for services as servant nor as payment for services as contractor in superintending the buildings, for his obligations under the agreement to pay to defendant-the same proportion of the loss, if the venture result in a loss which he was to receive of the profits if profits were earned are conclusive upon that point.

He was to share in the profits as profits and in the losses. A community of interest was created in the profits. The provision in the contract upon which defendant lays much stress, that the defendant is to pay the plaintiff one-third

p. 353

of the profits upon the sale is not significant; that provision was rendered necessary by the fact that the defendant being of record the owner in fee of the land upon which the houses were to be erected would have to give title, and would necessarily receive the consideration money and the division of profits could only be made by his paying to the plaintiff the latter’s proportion. The only difficulty in this case seems to grow out of the circumstance that when the agreement was entered into the defendant was the owner of the land.

Had it been purchased under this agreement, and the title taken in his name, it would be hard to raise a question as to their being a partnership. What difference does it make that the defendant owned the land originally ? He, in effect, contributes it to the concern, for the profits of the sale of the land, as well as of the sale of the houses, are to be divided, and so is the loss, upon the sale of the land. There is a community of interest created in the property as well as in the profits and an agreement to share in the risks of profit or loss upon the disposition of the property and the parties undoubtedly became partners. Pattison v. Blanchard, 5 N. Y., 186 ; Baldwin v. Burrows, 47 id., 199 .

In this case it appears that all of the four houses have been completed, that two of the four have been sold, one contracted to be sold, and that one remains unsold and is occupied by defendant. All were completed on June 1, 1887, and this action was begun about November 1, 1887.

Upon this state of facts the plaintiff is entitled to maintain this action in order to have a sale of the remaining house to the end that the partnership accounts may be adjusted and closed. There is no right in defendant to resist a sale until he can find a purchaser on favorable terms. The contract between the parties evidently intends a sale of the houses as soon as completed. Besides, it is the right of the co-partner to have a sale.

In order to distribute the assets the only available means of division is generally to convert them first into money; and it has become a general rule that each partner, or his representatives, unless there is an agreement to the contrary, has the right to insist upon a sale of the assets whether they are real or personal in character, in order to ascertain their value. 2 Bates on Partnership, § 974.

Where one party is to furnish money to buy land in partnership with the other, and the title was taken in the name of the latter, and the latter being depreciated the former sought a sale, it was held that he had the right to a sale to ascertain whether the other was indebted to him. Where consent to sell the premises cannot be procured from

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the party the only regular course is to file a bill and ask for a sale. Olcott v. Wing, 4 McLean, 15 .

The judgment should be reversed and a new trial ordered with costs to plaintiff.

Van Hoesen, J., concurs.