Demarest v. Koch

between Mrs. Spaulding and Koch necessarily created a partnership between the parties and show an error of law. It, therefore, becomes necessary to consider the provisions of that contract As by the terms of a contract made by her with Koch, Mrs. Spaulding became bound to the performance of a previous contract in relation to the same matter between her husband and Koch, and made that contract her contract, it will be convenient hereafter to avoid reference to the husband and speak of the contracts between Koch and Mrs. Spaulding as being contained in one instrument executed by them respectively. By these contracts Mrs. Spaulding agreed to secure the title to a certain piece of land seventy-five feet front and one hundred feet and five inches deep, on Fifteenth street, in New York, subject to a purchase money mortgage of $72,000; and also to procure a builder’s loan of $50,000 on such property and erect two houses thereon, to be finished by a specified day. Koch agreed to furnish one-half of all the money, in excess of the $50,000, which was necessary to construct and finish the buildings, and all of such moneys were to be devoted, unconditionally, to the construction of such buildings. In consideration of this undertaking, Mrs. Spaulding agreed to complete the buildings at the time specified and after their completion to convey to Koch that one of such houses that he should elect to take, by warranty deed, subject to the lien of an equal half of the two mortgages; or, in case the parties should elect to sell the land and buildings, that she would pay Koch one-half of the net price received on such sale; “it being (as is stated in said contract) the intent of the parties to equally divide any profits which may be realized by the sale of said buildings.”

The performance of this agreement by Mrs. Spaulding was secured to Koch by a mortgage on the property executed by her. The plaintiff, under a contract with Mrs. Spaulding, did some work on the buildings, for the payment of which services he now seeks to hold Koch responsible as a partner. No sale of the houses was ever made. The claim that they were partners is sought to be inferred from the effect of the clause in the agreement relating to a division of profits alone. If this agreement had stopped with the provision that, in consideration of the money to be advanced by Koch, Mrs. Spaulding was, on the completion of the buildings, to convey to him one of the houses, I do not think any one would claim that Koch had been made a partner. Is this agreement, when analytically considered, anything more than the one supposed, and does Koch secure anything under one that he would not get under the other?

It will be observed that the only binding obligations resting upon the parties were that Koch should advance half the money necessary to build the houses, and that Mrs. Spaulding should» erect and complete them at her own expense and convey one of them to Koch. Beyond this no obligation is assumed by either party. All that is said in relation to a sale of the property, or a division of the price received, is conditional upon the further agreement of the parties. If they both thereafter agreed, a sale of the houses might be made and a division had of the price received.

The right to make this disposition they had independently of the provisions in the contract, and its insertion therein added nothing to the force or effect of the agreement. It is obvious, therefore, that the whole scope and effect of the agreement is to secure to Koch the right to a conveyance of one of the houses, upon making the stipulated advances. He can acquire nothing more from the force of the contract, and Mrs. Spaulding is discharged from all her legal obligations under the contract by conveying to Koch a completed house and lot.

In a certain sense the transaction may be considered a loan of money to enable Mrs. Spaulding to complete the erection of two houses; but in a strict sense it is the purchase by Koch of a house, under an executory contract of sale. We can see in such a contract none of the elements of a partnership. Koch certainly had no idea of forming a partnership to build houses, for, by the express terms of the contract, Mrs. Spaulding was to build and complete the houses at her own expense and convey one of them to Koch by warranty deed. There was no community of property or profits provided for by this agreement, except such as would follow any executory agreement to purchase a house for a specified price of a builder which was yet to be built.

But, even if this should be considered an agreement to build the houses and divide the profits, we think it does not of itself establish a partnership within the case of Curry v. Fowler, 87 N. Y., 33 . The circumstance that in that case there was a contract to repay the money loaned does not make any difference in the jirinciple which is to govern the transaction. Here, the lender of the money was to look to the property alone for the reimbursement of his advances, and in that case he had not only a lien on the property, but also the personal security of the borrowers. In that case the lenders were to have one-half of the profits of the business, but were also secured by the personal guaranty of the borrowers that they should amount to a certain sum. The differences in the case do not, we think, create any distinction in principle, and both cases should be governed by the same rule. The judgment should be affirmed.

Judgment affirmed, with costs.

All concur.