Majority
p. 426THE MANHATTAN BRASS MANUFACTURING COMPANY, Plaintiffs and Appellants, v. HERMAN B. SEARS, impleaded, &c., Defendant and Respondent. Before Barbour, C.J., McCunn and Fithian, JJ. [Decided May 2, 1869.]
Headnote
Persons may be joint owners of a patent right and not be partners in the business of selling interests in the same.Whether persons interested in a business are partners or not, as between themselves, depends upon the terms of the agreement under which the business is being carried on.
Where a person has not in any manner been held out to the community as a partner in business, and a plaintiff, seeking nevertheless to charge him as such a partner, produces a written agreement between the parties to prove such partnership, the whole of the agreement must be read together. The plaintiff cannot be permitted to use such parts of the agreement as tend to establish a partnership, and reject such parts as tend to show the contrary.
This case was tried before Chief-Justice Barbour and a jury.
The action was to recover rent reserved in a lease of land and premises in the City of New York, executed by the plaintiff, as lessor, to The Judson Horseshoe Company, lessee. The action was brought against the defendant Sears, and also Frederick Judson, and John Doe and Richard Roe (names unknown). The complaint alleged that the defendants were co-partners in trade, doing business under the name and style of “ The Judson Horseshoe Company and that on or about the first day of November,.one thousand eight hundred and sixty-six, the plaintiff, by an indenture made between it and the defendants, demised and leased to the defendants certain premises therein mentioned, at the yearly rent or sum of thirteen hundred and fifty dollars, from said first day of November Until the first day of January thereafter, and from the said first day of January until the first day of January, one thousand eight
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hundred and sixty-eight, at the yearly rent or sum of fifteen hundred dollars, payable monthly in advance.
Complaint also alleged default in the payment of the rent to the amount of $733.13, and prayed judgment for that amount. The defendant Sears alone answered, by a general denial of all the allegations in the complaint. On the trial the plaintiff proved the execution and delivery of the lease and premises in the complaint referred to by plaintiff, in its corporate name, signed by “ J. H. Crane, President,” to “ The Judson Horseshoe Company,” lessee, executed on the part of the latter by “ F. Judson, President,” demising certain premises on the First avenue, in the City of New York, from November, 1866, to the first of January, 1868, at a stipulated rent; and that the amount of rent claimed by the plaintiff was in arrears and unpaid. It was proved that the defendant Judson alone negotiated with plaintiff for the lease, and on its execution and delivery Judson entered into possession of the demised premises, and used them for the exhibition and selling of patent rights or interests in a patent “ calk ” for horseshoes; that he, Judson, had upon the premises a blacksmith’s forge and tools for making these patent “ calks,” and putting them upon horseshoes for purposes of exhibition ; that a horse was kept travelling through the city with a sign of horseshoes on each side; and that there was a sign on the premises with the words “ The Judson Horseshoe Patent ” thereon, and facsimiles of horseshoes and calks.
To establish the alleged partnership between the defendants Judson and Sears, so as to charge the latter as a partner, the plaintiff then caused to be produced and read in evidence a written agreement between the defendants Judson & Sears, in the words and figures following:
“ This agreement, made at the City of New York, this twenty-second day of June, 1866, between Frederick Judson, of Jersey City, in the State of New Jersey, and Herman B. Sears, of the City of New York, witnesseth, that the said Frederick Judson, being the sole owner in his own right of the patent right for the improvement in horseshoe calks, for which a patent was granted
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by the United States May 22, 1866, and the same being free and clear from all liens and encumbrances, hereby agrees to sell, and does sell and convey, to Herman B. Sears, a one undivided quarter interest in said patent right, for the loan of $4,000 in cash, for the purposes of the patent, and at the risk of its success, and the sum of $15,000 purchase-money.
“ The said $4,000 loan to be paid at any time within one year, to be used for the benefit of the patent, and returned out of the first profits of the business, after paying the salary of the agent and other necessary expenses.
“ The said $15,000 purchase-money is tobe paid as follows, viz.: to be realized and retained by the said Frederick Judson out of Herman B. Sears’ share in the profits arising from the sale of rights under the patent, and one half of all dividends payable to the said Herman B. Sears, are to be retained by said Frederick Judson until they amount to said $15,000.
“ The said Frederick Judson is to continue to be the solé agent of the whole of said patent right at a salary of $1,500 a year, payable only from the profits of the whole of said patent right, subject to an increase hereafter to be agreed upon, whenever the said $15,000 shall be realized, and the profits of the business shall authorize it.
“ The obj ect of this agreement is not for any purpose of business, or manufacture, or partnership, but only to make the parties joint owners of said patent right.
“ The said Frederick Judson is to transact all business, and make all grants in his own name, and to keep books of account showing all moneys received and expended in said matters, which are to be always open to the inspection of either of the parties to this contract.
“ FREDERICK JUDSOH, “ HERMAR B. SEARS.”
Other evidence was given, showing manner of conducting business, &c. The proofs being closed, the justice at the Circuit, on the application of defendant’s counsel, dismissed the com
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plaint as to the defendant Sears, on the ground that there was no evidence to charge him either as a partner or joint contractor. From this decision the plaintiffs appeal.
Mr. S. B. Brownell for appellants.
By the agreement entered into between the parties, a partnership was formed between the defendants for the purpose of introducing and selling a patent right.
“ Partnership is a contract of two or more competent persons to place their money, effects, labor, and skill, or some or all of them, in lawful commerce or business, and to divide the profit and bear the loss in certain proportions” (3 Kent; 5th ed., 24; Story on Part., sec. 2).
Even if this agreement did not constitute Judson and Sears partners in the Judson Horseshoe Company, inter se, still, as to third parties, they were partners.
A party who participates in the profits and losses, i. e., in the net profits, is a partner (Story on Part., sec. 34).
Sharing the losses and profits constitutes such a communion and mutuality of interest therein as creates a clear partnership as to third persons (ib., secs. 59, 60).
If the Court below was right in holding that the defendants, by the agreement, were not partners, either inter se or as to third parties, still there was evidence that the defendant Sears had held himself out to the plaintiffs as a partner, and therefore liable as such.
There was evidence that he stated to the plaintiffs, in answer to an application as to this lease, that he owned a quarter of the interest in that patent, in the concern of The Judson Horseshoe Company.
He was many times at the shop leased.
He received'part of the sales of the patent.
He had agreed to buy a* quarter interest in the patent, and had agreed to advance four thousand dollars.
Here was evidence from which the jury were entitled to find
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that Scars had held himself out as a partner. That ought to have been submitted to the jury, and,the Justice erred in withholding the case from them.
Mr. Charles E. Whitehead, for respondent.
There was no dispute as to facts, and the construction of the written agreement was the province of the Court, and not of the jury (Schuchardt v. Allen, 1 Wallace, 370).
The defendant Sears was not made a partner by lending $4,000 at the risk of the success of the patent, as such a loan did not make him. interested in any profits.
Even the usual profits of a loan, viz., the interest, was not dependent upon the business, as the loan was without interest; neither was the defendant Sears' made a partner by the purchase bf a one-quarter interest in the patent owned by Judson.
The joint ownership of a patent right creates no partnership (Parkhurst v. Kinsman, 1 Blatchford, 488; Pitts v. Hall, 3 Blatchford, 201).
■ It cannot be urged that the defendant is estopped from/denying a partnership, as the plaintiffs proved that the defendant Sears was not interested in the horseshoeing business; and the" plaintiffs also proved the written agreement of the defendant, by which all partnership was repudiated.
By the Court:
The tenor and effect of the contract above set' forth between the defendants Sears and Judson, giving effect to all its provisions, is that, in consideration of the defendant Sears’ loaning to defendant Judson four thousand dollars, to be used hr the business of selling rights in the patent, and put at the risk of the business, and to be paid out of proceeds of whole patent sales, defendant Judson agrees to and does sell- to Sears one ' quarter interest in the patent for fifteen thousand dollars, to be paid only out of the net proceeds of such quarter interest; and' that the .defendant Judson should proceed, as agent of the whole
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patent, to transact business of selling rights and interests in the patent in his own name, and upon a salary payable out of the profits alone; and, further, expressly stipulating that the agreement should not operate to authorize a joint “ business, or manufacture, or partnership,” but solely to constitute the parties “joint owners of the patent right.” I regard it as immaterial to speculate whether this agreement did or not, in some respects, make the parties thereto partners in the business. For, however that may be, if I am right in my construction of the agreement, the defendant Sears is to bear no losses or expenses on account of the business, other or in addition to the four thousand dollars which he put at the risk of the business; while all other loss, if any, is to be borne by the defendant Judson. It is clearly competent for partners even, as between themselves, to enter into any stipulations they please as to how and in whose name the business shall be conducted, and what shall be the proportion of loss or profit to be borne or received by either respectively; and the courts will uphold and enforce such agreements as against the parties thereto, and all other persons dealing with either partner, with full knowledge of all the facts in respect to the rights and responsibilities of others with whom he does not deal.
The plaintiff cannot, therefore, rely upon this contract alone to charge Sears; because, if he use it at all, he must take it as a whole. He cannot avail himself of such provisions in the agreement as, standing by themselves, would tend to establish a partnership between Sears and Judson, for the purpose of charging Sears, while he rejects other clauses that discharge him. The agreement is evidence as well for Sears as against him, and by it he is exempt from liability.
The only remaining question is whether Sears has in any manner held himself out to plaintiff, or other persons, or knowingly permitted Judson, so to hold him out as an ostensible partner in this business % I do not find any evidence in the case of any such fact. The agreement, and the lease itself, were made (on the part of the lessee) by Judson alone. By no agreement, verbal or written, not even by tacit consent, did the defendant Sears
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"ever authorize Judson to use the name of the “ Horseshoe Co.,” or connect him (Seal’s) with any such company, or any company. Judson was “to transact all business” and make all grants in his own name ; and defendant Sears swears positively (and there is no evidence to the contrary) that he never was consulted about the making the lease; and “ never heard or dreamed of any company,” until demand made on him for rent. This is not like a case of a “ dormant ” or secret partner, having an interest in the capital and profits of a business authorized to be carried on by his co-partners in a certain firm name. For in such case the firm name would be his name. Here there was no firm or company whatever created or authorized to exist. In no way, directly or indirectly, either as principal or by any authorized agent, was there any privity of contract, between plaintiff and tiie defendant Sears.
The judgment should be affirmed, with costs.