Sheehan v. Fleetham — 34 N.Y. St. Rep. 665

Majority

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John H. Sheehan, Survivor, App’lt, v. David W. Fleetham, Impl’d, Resp’t.

(Supreme Court, General Term, Third Department,

Filed November 28, 1890.)

Headnote

Partnership—Facts authorizing inference of.

When one carrying on a business of buying and selling assigns half of the property, including accounts, to another, and goes on with the buying and selling as before with the knowledge of the assignee, there is strong evidence from which a jury may infer that the assignee is a partner.

(Mayham, J., dissents.)

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Appeal from judgment in favor of defendant, entered on verdict directed by the court.

This action was brought by John H. Sheehan and Philip Sweeney, as partners, to recover the amount' of an account alleged in the complaint to be due from the defendants as copartners.

The defendant Hutchins failed to answer, and the defendant Fleetham answered denying the existence of any copartnership with Hutchins, and Hutchins had no right or authority to bind him as such or to create any liability on his part to the plaintiff.

Pending the action, Sweeney, one of the plaintiffs, died, and the action was prosecuted by Sheehan, as survivor.

The case discloses that in 1886 the defendant Hutchins, in partnership with one Aldrich, opened a drug store and continued the business until June, 1888, when Aldrich sold out his interest, talcing Hutchins’ note for the same, and soon thereafter the defendant Fleetham gave his check to take up the note.

The case does does not disclose who negotiated the purchase of Aldrich's interest, nor to whom it was transferred, except as the same may be inferred from the fact that Hutchins gave his note, which was, however, paid -by Fleetham by his check. After the purchase of Aldrich’s interest Hutchins continued the business in his own name.

On the 27th of October, 1888, Hutchins informed defendant Fleetham, who was his brother-in-law, that he was about to be sued, and proposed to turn his interest in the drug store over to Fleetham, to protect the creditors of the store, and on that day a “ bill of sale ” was executed by Hutchins to Fleetham of all the right, title and interest of Hutchins in the store, goods, furniture, fixtures, accounts and' interest of Hutchins in the drug business, in which property he asserts, in said bill, that he is the one-half owner.

The consideration expressed was $1,800, the receipt of which was acknowledged by the assuming and payment of Hutchins’ one-half indebtedness for drugs, goods and all property connected with the drug business carried on by vendor, in Canton.

The case does not show that this paper was personally delivered to Fleetham, but the same seems to have been brought to his knowledge by Hutchins.

On the 28th of February, 1889, the defendant, Fleetham, executed a “ bill of sale ” of the property mentioned in the bill of sale to him, and upon a like consideration, to Helen Hutch-ins, wife of defendant Hutchins, which was filed in the St. Lawrence county clerk’s office on the 13th day of March, 1889.

This “ bill of sale ” was never delivered personally to the vendee named in it, but was executed by Fleetham and filed by him without the knowledge either of Hutchins or his wife.

There is a sharp conflict in the evidence as to whether or not Fleetham ever treated Hutchins- as a partner or in any manner recognized the existence of that relation with him.

The plaintiff gave evidence tending to establish that relation, and defendant Fleetham positively denied the existence of that relation in his testimony, and gave evidence that Hutchins,

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after .the dissolution of the partnership with Aldrich, conducted all the business in bis own name, and that plaintiff charged the account in suit to him solely.

At the conclusion of the evidence the defendant moved for a dismissal of the complaint.

The plaintiff at the same time asked the court to direct a verdict for the amount of the plaintiff’s claim.

The trial judge held and decided that the plaintiff was not entitled to recover, and directed a verdict for the defendant.

The plaintiff thereupon asked the court to submit to the jury or find that the plaintiff relied upon the statement made in the “ bill of sale.”

Also asked the court to submit to the jury the proposition, that the fact that Hutchins made this bill of sale to Fleetham, who permitted the business to go on in Hutchins’ name, Fleetham having knowledge of the fact, rendered him liable to any person who sold goods to Hutchins knowing that he was a half owner.

Also to send to the jury the question whether the parties were actual partners.

Also requested the court to give the jury the question that the parties being engaged in committing a fraud were liable to persons injured thereby.

Each of the plaintiff’s requests were refused by the court and the plaintiff duly excepted.

Nelson L. Robinson, for app’lt; George G. Sawyer, for resp’t.

This is aá action for goods sold and delivered. The learned trial justice directed a verdict for defendant and plaintiff appeals.

Hutchins, one of the defendants, had carried on a drug business. He also had a half interest in the furniture business carried on by defendant Fleetham, brother of Hutchins wife.

On the 27th of October, 1888, Hutchins being in danger of a suit executed to Fleetham an assignment of all the drugs, fixtures, furniture and accounts, etc. “ of which said property I am the one-half owner.” The assignment was in consideration of Fleetham’s assuming and paying off “ my one-half indebtedness for drugs, goods and all property connected with the drug business of which I am the half owner.” The business continued in the same name.

On the 13th of March, 1889, Fleetham executed an assignment to Hutchins’ wife. This recited the assuming and paying “ of my one-half indebtedness for drugs, goods and all property connected with the drug business,’’ etc., “ of which I am one-half owner ” and conveyed to Mrs. Hutchins all of Fleetham’s right in the drugs, etc., and accounts “ of which I am one-half owner.”

The plaintiff’s firm from June 2, 1888, to March 8, 1889, sold goods for this drug store amounting to $644.84. There was paid to them October 3, 1888, $120; February 5, 1889, $100.

About the 1st of November they learned through a commercial agency of the sale by Hutchins to Fleetham. In reliance on that information they made the subsequent sales.

Their account was still kept in the name of Hutchins. About

Dissent

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April 16, 1889, plaintiff saw Fleetham, and asked him if he was a half owner of Hutchins’ drug store, and he said he was.

Mr. Bookstaver, a witness, testified that about that time he saw Fleetham, and asked him if he was not a partner in the Hutchins concern; he replied that he was a half owner; had been a half owner from June previous till October (as the witness thought), then that he bought out the other half and owned the whole; that he had sold out the business or was about to sell out the business that day. Being asked why he was not going to pay the claim represented by Mr. Bookstaver, he said that while he was a partner, he wás not liable, because he had not ordered Hutchins to buy these particular goods, and had not ordered them himself.

The witness says that Fleetham told him distinctly that he was a partner from J une previous till a certain period; the witness thought October; then that he purchased the balance and became sole owner. Mr. Kenyon testifies to the same effect.

Thus we have the testimony of these witnesses that Fleetham admitted that he was a partner in the business from June, 1888, and that in October (as the witness thinks) he bought out the balance and became the sole owner.

With these statements the assignment from Hutchins harmon-' izes, inasmuch as Hutchins calls himself the half owner and speaks of Fleetbam’s securing and paying Hutchins’ “ one half indebtedness.” Who was the other half owner and whose the other half indebtedness ?

It is true that Fleetham denies that he said what these three witnesses state; but that made a question for the jury.

It is undoubted that from October 27, Fleetham was either half owner, or whole owner, of 'the business and property, including the accounts and account book.

Of course it is possible for two persons to be joint owners of property, and yet not partners. But when one carrying on a business of "buying and selling, assigns half of the property, including accounts, to another, and goes on with the buying and selling as before with the knowledge of the assignee, there is quite strong evidence from which the jury may infer that the assignee consents to share in the business as a partner. Still more if the assignee himself had previously been a half owner of the business.

It is not necessary to decide whether or not the learned justice should have directed a verdict for the plaintiff. There was certainly evidence to go to the jury on the question of partnership.

The judgment should be reversed, and a new trial granted, costs to abide the event

Landon, J., concurs.

(dissenting).—The evidence in this case did not establish a partnership in fact between the defendant Fleetham and Hutchins. To constitute such relations there must be reciprocal agreement between the parties, not only to unite their stock, but to share in the risks of profit or loss upon the disposition thereof. Baldwin et al., v. Burrows et al., 47 N. Y., 206 .

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The most that can be claimed from the evidence in this case is that Fleetham, if he accepted the bill of sale of October 27, 1888, became one-half owner of the stock at that time in the store, and of the accounts, and assumed the payment of one-half of the debts then existing, which he subsequently, on the 28th of February, 1889, transferred to Hutchins’ wife.

If by the first bill of sale the title vested in him of one-half of this stock, he under this agreement became but a tenant in common of the property, and not a partner in the business, and that would be so until a partnership in fact was formed, even if at the time of the purchase the parties intended at some future time to form a partnership; until that was done, they would continue to hold in severalty. In Baldwin v. Burrows, supra, the court says: “ Though goods be bought by several under an agreement to hold in aliquot shares, but with the intention of subsequently forming a copartnership in respect to them, yet until the partnership agreement is actually made, the purchasers are not copartners, but only 1 tenants in common.’ There is still a locus penitentiaz.

“ The partnership may never be formed; either party may withdraw before the arrangement is consummated.

“ Neither of them before that time has power to bind the other by his contracts.”

Applying this rule to the case at bar we do not see how the defendant Fleetham can be bound by the contract of Hutchins, made in his own name with the plaintiff, who charged the goods to him upon the assumption that Fleetham’s purchase of half of the stock made him a partner, in fact, with Hutchins.

The plaintiff claims to have been led to the belief of the formation of a partnership between Fleetham and Hutchins by the report of the “ bill of sale ” by E. Gr. Dun & Oo. commercial agency to the plaintiff.

We need not say that such a report could not bind Fleetham as a partner when that relation did not exist in fact

That proposition is self evident.

If therefore the evidence was insufficient to establsh the existence of the relation of partners in fact between the defendant Fleetham and Hutchins, the court committed no error in withholding that question from the jury, as the court would have been bound to set aside the verdict if found against the evidence or unsirpported by it. Herr v. Hoppock, 15 N. Y., 409 , 415.

But the plaintiff insists that even assuming that Hutchins and Fleetham were not partners in fact, still the court should have •submitted to the jury the question whether the defendant Fleet-ham had not so held himself out to the world and to this plaintiff, having given credit to Hutchins upon the faith of the existence -of that relation founded upon the acts of Fleetham, that he is now as to the plaintiff estopped from denying the existence of that relation.

It is quite true that when an individual, though not a member -of a firm, holds himself out to another as such, so that the plaintiff had reason to believe, and did believe, he was a member, and

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on the faith of his representation trusted the firm, he will be estopped from denying that he was a partner and liable on that grouhd. Vibbard v. Roderick, 51 Barb., 616 .

But the principle invoked by the plaintiff, we think, is not applicable to this case.

There is no proof that the plaintiff ever had any business intercourse or relation with the defendant Fleetham, or that he ever, in any way, led them to believe that he was a partner, except they inferred that fact from the execution - to him of the bill of sale, as communicated to plaintiff by the mercantile agency.

As we have seen, the purchase of one half interest in the stock did not make Fleetham a partner in fact, and the plaintiff had no-warrant from that fact for coming to the conclusion that a partnership in fact existed, as Fleetham did not, by that act, hold himself out to the world, or the plaintiff, as a partner of Hutchins.

To establish a liability against Fleetham, as a partner, for the acts of Hutchins, it must be made to appear that a copartnershipwas formed by express agreement, or that there was an authorization in advance and consent to be bound by such act as a partner, or a ratification of the act after performance with the full knowledge of all circumstances, or some act by which an equitableestoppel has been created. Central Savings Bank v. Walker et al., 66 N. Y., 424 .

None of these conditions exist in this case unless the acceptance- and making of the bill of sale constituted an equitable estoppel. “To give rise to an equitable estoppel, there must be a willful representation by one party made with an intent that it should be acted upon by the other.” Herman’s Law of Estoppel, § 327, p. 340.

True, it is not necessary to an equitable estoppel that a party should intend willfully to mislead; but whatever may be the intent, if he make such a representation as a sensible man would take to be true and believe that it was meant that he should act upon it, and he does so act, the party making the representation is precluded from testing its truth. Continental National Bank v. The National Bank of Commonwealth, 50 N. Y., 575 .

Tested by these rules, it cannot be said that the defendant Fleetham is estopped in this case from denying his liability to the plaintiffs for credit given by them to Hutchins. The credit was given to Hutchins on plaintiffs’ accounts.

Fleetham made no representation to them before the credit was given. He made no representation to the mercantile agency, on whose'report plaintiffs claim to have acted, that he was a partner of Hutchins, and as to plaintiffs he is not estopped from denying the existence of a partnership.

We see no error in excluding the evidence offered by plaintiff' that Fleetham obtained a note of Mrs. Hutchins, and that she did not know that she had signed it, or that the bill of sale was-filed. It is difficult to see how such evidence, if received, was pertinent or material to the issue.

The remaining question is, did the court err in refusing to submit the questions to the jury as requested by plaintiff ?

We think not. These requests were made after the court had:

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denied plaintiff’s request that the court direct a verdict for the plaintiff, and after the court had directed a verdict for the defendant.

The action was not tried by the plaintiff upon the theory that the defendant Fleetham had assumed and agreed to pay one-half of plaintiff's accounts against Hutchins existing at the time of the execution of the first “ bill of sale ” or chattel mortgage, but upon the ground that the defendant Fleetham was liable as partner, and the court was not asked to submit that question.

Nor do we think the plaintiff was in a situation in this action, under the issue as it stood, to insist that the recital in that bill of sale that the consideration was paid “by the assuming and payment of my one-half indebtedness for drugs, goods and all property connected with the drug business ” would inure to the benefit of the plaintiff, so that in this action they could recover of Fleetham one-lialf of their claim, or any other amount .

It was not an agreement to answer for the debt of the defendant Hutchins, which could make Fleetham liable to be prosecuted in an action at law by any one who might have a debt for that class of goods against Hutchins.

On the whole case we think it was properly disposed of by the learned trial judge and the judgment should be affirmed, judgment affirmed, with costs.

Judgment reversed and new trial granted, costs to abide event.