Burnett v. Snyder

Headnote

I. Partnership.

1. What will not bender one liable as a partner.

(a) SUB-PARTNERSHIP. An agreement entered into between one partner in a firm and a third person, whereby the third person is to receive a certain proportion of such partner’s share in the profits of the firm, and pay to such partner a corresponding proportion of the losses of the firm, constitutes a sub-partnership, and does not make the third person a partner in the firm either inter sese or quoad other parties.

1. Olause that third party is a copartner in firm. The insertion in such an agreement of a clause “that it. is hereby agreed, by and between the parties hereto, that A. B. (the third party) is a copartner in the firm of -, this day formed,” will not, if the agreement is entered into without the knowledge and consent of the other partners, make the third party a partner in the firm, either inter sese. or quoad other parties..

2. What will render one liable as a partner.

1. JOINT OWNERSHIP. One who becomes a joint owner with a partner of his share in a partnership standing in his name alone, with the knowledge and consent of all the members of the firm, is liable as a partner.

There were three successive partnerships having the firm name of Strang, Platt & Co. ; the first commencing in April, 1863, and terminating in the last of December, 1869; the second firm of Strang, Platt & Co., spoken of as firm No. 2, and being the partnership in question in this action, commencing on the first day of January, 1870, and terminating in April of the same year by the death of Mr. Ammon Platt, one of the partners; the third firm, sometimes spoken of as the Chapman firm, commencing in the spring of 1870, and terminating on the first day of January, 1871, or the last day of December, 1870.

This action is brought to recover moneys deposited with Strang, Platt & Co., No. 2, by plaintiff. Defendant Snyder alone defends.

The question presented in the case is, whether defendant Snyder is liable as a partner in the firm of Strang, Platt & Co., No. 2.

Plaintiff claims that he is. The facts on which the claim is based are in substance as follows.

On December 31, 1869, written articles of copartnership were entered into between all the defendants except Snyder, whereby a copartnership was formed under the firm name of Strang, Platt & Co.

About the same time a written instrument, dated December 31, 1869, was made and executed between defendants Strang, Ammon Platt, and Snyder. This instrument is set forth in the opinion. There is no

evidence that either of the other defendants had any knowledge or notice of this agreement. It appears that plaintiff had been in the employ of each of these firms during the period of their respective existences.

The defendant Snyder took no part in the conduct of the business of the firm of Strang, Platt & Co., No. 2 (or in any of the firms of that name), paid no money into it, and received nothing out of it. He was never held out to the public or to the plaintiff as a member of the firm of Strang, Platt & Co., No. 2, or of any'of the firms of that name.

The plaintiff dealt with the said firm of Strang, Platt & Co., No. 2, and the other firms of that name, without any belief or idea that the defendant Snyder was a member of such firms or any of them.

The referee before whom the issue was tried held that defendant Strang was not liable to plaintiff; and delivered the following opinion upon the question of his liability as partner:

J. S. Bosworth, Beferee.—The principal question in this case is this,—was C. Brown Snyder a member of the firm of “Strang, Platt & Co.,” which was formed December 31,1869, by articles of copartnership, signed by each of the above-named defendants, except C. Brown Snyder. If he is to be deemed to have been a member of that firm, or to be liable as such to its creditors, this must result from written articles of agreement, dated the same day as the said copartnership agreement entered into by and between C. Brown Snyder, and the above-named Peter O. Strang & Ammon Platt. This last said agreement recites the fact, that all of the aboved-named defendants except C. Brown Snyder had that day formed a copartnership, “under the firm name of Strang, Platt & Co., for the purpose of doing a wool brokerage and commission business in the cities of New York and Boston, and

whereas it is deemed expedient and for the interest of said firm that the aforesaid C. B. Snyder, party of the first part, should have an interest, and become a co-partner in the said firm of Strang, Platt & Co.,” and then proceeds and concludes thus, viz.: “Now therefore know all men by these presents, that it is hereby agreed by and between the parties to this contract, that the said C. B. Snyder is a copartner in the said firm of Strang, Platt & Co., this day formed, and in consideration of this agreement and for other valuable considerations, the said C. B. Snyder shall and he is hereby entitled to receive from the said Peter 0. Strang & Ammon Platt, one-third of the profits earned and received by each of the aforesaid parties of the second part from their interest in said firm of Strang, Platt & Co., and it is further agreed by the said C. B. Snyder, that he will become liable for and pay to the said Strang & Platt, an amount equal to one-third of any and all loss, that the said Strang & Platt, or either of them may sustain or be charged with by reason of their connection as copartners or otherwise with Strang, Platt & Co. It is further agreed by all the parties to this contract, that they will each and all of them do all that they can, and to the extent of their ability, to sustain, further and protect the interest of the said firm of Strang, Platt & Co., and that they shall at all proper times during the continuance of this copartnership and agreement give each other true and exact statements of the affairs and accounts of the firm. This agreement to commence with the said copartnership of Strang, Platt & Co., and to continue until the same is dissolved as provided for in the said articles of agreement, and it is further understood and agreed by the parties to these presents that they hereunto bind themselves, their heirs, executors, administrators and assigns. In witness whereof, &c.”

There is no evidence that either of the other de

fendants had any knowledge or notice of the existence of this agreement. The plaintiff was employed by this firm from its commencement until it was dissolved by the death of Ammon Platt, on or about April 24, 1870. He was also employed by a firm of Strang, Platt & Co., which preceded the firm of that name, formed December 31, 1869, and he was also employed by a firm of that name formed shortly after the death of Ammon Platt, and about May 1, 1870, and continued in such employment until last said firm was dissolved. He loaned to, or deposited moneys with each of said firms from time to time, aggregating many thousands of dollars, and did not believe, until some time in 1875, that C. B. Snyder was a member of the firm now sued, or of any firm of that name. Instead of C. B. Snyder being held out to the plaintiff, or to others dealing with the firm, either by Snyder himself or by P. 0 Strang or by Ammon Platt, as being a member of this firm of Strang, Platt & Co., or in any way interested in its business, or the results thereof, there seems to have been care and caution used not to do or say anything to induce or lead any one to suspect that he was in any way interested in the firm or in the profits of its business. Hence the practical question is, what is the legal effect of the agreement between Snyder of the one part, and P. O. Strang and Ammon Platt, of the other part, of the date of December 31,1869. Omitting for the present any consideration of the words, “it is agreed . . that the said C. B. Snyder is a copartner in the said firm,” the agreement provides that Snyder shall receive and be entitled to receive from P. O. Strang and A. Platt, one-third of the profits ‘ earned and received” by each of them “from their interest” in the firm; and that he shall pay to them “an amount equal to one-third of any and all losses that they or either of them may sustain or be charged with” as such copartners.

This is not an agreement, even if full effect be given to it according to its terms, as against everybody, that Snyder shall share generally in the profits of the firm, as profits, but only that he shall share with P. O. Strang and Ammon Platt, the profits which they may derive and receive from their interest in the firm. This does not give, or attempt to give, to Snyder any special lien on the profits of the concern. It does not give, or attempt to give to Snyder, a certain share of the whole profits, but only a specified part of a share thereof.

“He does not receive this part of a share, nor is he entitled to interfere with it all, to say whether it shall be more or less in amount, until it has been actually set out, and the time has come for a division between him only and the partners with whom he has contracted. Of course he has nothing to do with the general firm or its creditors, or they with him; nothing with the general firm, because they have not assented to his being a partner; nothing with the creditors thereof, because he is not in fact a partner; and on the case supposed” (which is strictly true of this case) “he has npt held himself out as such, nor does he draw out of the general concern any of its profits” (Collyer on Partnership, note 1). This extract from Mr. Perkins’ note on the cases reported up to the time it was written expresses, as I think, the rule which they establish; and subsequent decisions have not modified it. Pitch -t). Harrington ( 13 Gray, 468 ), relied on by plaintiff’s counsel as a case in point in his favor, does not, in any thing decided by the court, conflict with it. The court in that case granted a new, trial, not so much because the judge erred in his charge to the jury by stat-i ng as law what was not law, as because the court thought that the statement of the rule should be accompanied with explanations which wduld more fully instruct the jury as to its correct application. Reynolds v. Hicks ( 19 Ind. 113 ), is in point, and in favor of the defendant.

All elementary works to which my attention has been called, hold, on the facts of this case, that Snyder was not a member of the firm, bnt a sub-partner of P. O. Strang and Ammon Platt. Such an agreement as the one under consideration constitutes what is called in the books a sub-partnership. It makes the parties to it, partners inter sese; but it in no way affects the other members of the principal firm. There does not seem to be any authority for saying that, because a stranger to the firm shares in that way, and in that sense, the profits of the firm, he can be made liable to parties dealing with it, as if he were a partner therein (1 Lind. Part. 53). The clause in the agreement, viz : "it is hereby agreed by and between the parties to this contract that the said C. B. Snyder is a copartner in the said firm of Strang, Platt & Co.,” did not and could not make him such a partner. That result could not be effected without the consent of the other members of that firm. It made the three, as between themselves, members of that firm, in such sense and to such extent as the clauses of the contract in relation to sharing in the realized profits of P. O. Strang, and Ammon Platt, and paying to them an amount equal to one-third of their losses, made them all members of that firm. That made them partners as between themselves, but did not make Snyder a partner in the firm of Strang, Platt & Co.

If this agreement had been shown to the plaintiff before he made the loan on which a recovery is sought a question might arise which the case does not now present.

Having reached on this branch of the case the conclusion expressed, a very careful consideration of the other grounds of defense is rendered unnecessary.

After the delivery of this opinion, a re-argument of the case was had and the referee subsequently delivered another opinion.

J. S. Bos worth, Referee.—This action involves the question whether there can be an agreement between one of several members of a firm and a third person, when made without the knowledge or consent of the other parties, by which that one partner is to pay a specified part of the profits, which he may earn and receive as such partner, to such stranger, without such stranger being thereby made liable for all the debts of such firm to its creditors.

Collyer, section 194, states the rule thus :

“A stranger may share the profits of a particular partner with whom he contracts, and, not being engaged in the general partnership, will, of course, not be liable for their debts, and, upon the bankruptcy of the particular partner, may prove against his separate estate” (Vide Lindley Partn. vol. 1, p. 53, 55).

I am not referred to any adjudged case which holds to the contrary.

There is a class of cases which hold that a third person who receives a sum equal to a specified part of the profits, as a compensation for his services, is not liable as a partner to third persons, notwithstanding that it is intended that such third person is to be paid, and is in fact paid, this specified part out of the profits. And the rule, in its application, includes cases where, in addition to a salary, the third person is to receive a specified part of the profits, if any are made, he having nothing to do with the losses (Vanderburgh v. Hull, 20 Wend. 70 ).

The reason for extending exemption from liability as partners to the creditors of the firm in the class of cases last stated, is said to be that it is an arrangement made simply in reference to the measure of compensation (I d.). Burckle v. Eckhart (Coms. 132, 138), Shackland, J. (dissenting), argued that “ the person who receives of the profits, as profits, of a concern, any amount, although in the name of wages, or compensa

tion for services, should not be exempt from liability as partner to the creditors of the firm.”

It is essential, to make a person liable as a partner who is not in fact a partner, that he has a right to a share of the profits of the business, as such.

In Heimstreet v. Howland ( 5 Denio, 68 ), this rule was carried to the length of holding that the lessor of a ferry for a year, upon an agreement that the lessee should take charge of the business, pay all the expenses, and pay over to the lessor one-half of the gross receipts of the ferriage, did not thereby make himself liable to third persons as a partner of the lessee.

In that case the lessor took half of the gross proceeds, and, of course, more than one-half of the net profits, but what he received was as a compensation for the lease of his ferry. The court held: “There must, to constitute a partnership, be a vested interest in the profits in the person sought to be charged as partner, such as would, for that reason alone, entitle him to an account in equity, against the other persons concerned in the business.” I understand the court to be here speaking of cases where a third person is sought to be charged solely on the ground of Ms right to participate in the profits. It is in the same sense, as I suppose, that the court say, in Fitch v. Harrington ( 13 Gray, 474 ), that, “An agreement between one copartner and a third person, that he shall participate in the profits of the firm, as profits, renders him liable, as a partner, to the creditors of the firm, . . but if such third person, by his agreement with one member of the firm, is to secure compensation for his labor, services, &c., in proportion to the profits of the business of the firm, without having any specific lien on the profits, to the exclusion of other creditors,” he is not liable for the debts of the firm.”

That case is relied on by plaintiff’s counsel as directly adjudicating the rule for which he contends.

That case states that there was evidence tending to show “that the share in the concern standing in the name of Leonard Harrington (one of the members of the firm), was owned jointly by Leonard and Samuel P. Harrington,” who was sought to be charged as a partner (Id. 468).

It will be observed that in the statement of facts, in the charge of the judge, and in the opinion of the court, there is no allusion to the question whether this joint ownership of a share, if it existed, was with or without the knowledge and consent of the other partners. The judge charged (Id. 470), “ That if the share in the partnership concern, which stood in the name of Leonard Harrington only, was owned jointly by him and Samuel P. Harrington, then Samuel P. was liable in this action; but if there was a sub-partnership between Leonard and Samuel P., by which Samuel P. was to share in the profits of the firm to which Leonard was entitled, this alone would not make Samuel P. liable for the debts of the firm.” H the judge, in this part of the charge, and the court in its opinion, had in mind, as a fact, that the joint ownership by the two Harringtons of the share standing in the name of Leonard only, was created with the knowledge and consent of all the members of the firm, the rule that such joint ownership, with such knowledge and assent of all the members of the firm, would make Samuel P. ■ liable as a partner, no one, probably, would dispute. It would seem that such fact would make them partners inter sese. In such case each would be interested in the whole profits of the business, as profits, by consent of all the partners, and Samuel P. would have as much right to his share of the profits, as profits, to the exclusion of individual creditors of Leonard, as any

member of the firm would. The court concluded its opinion that “In order to enable the jury to decide whether Samuel P. Harrington was liable for the debts of the firm of Whittemore, Harrington & Co., by reason of a sub-partnership between him and Leonard Harrington, they should have received instructions more definite and discriminating than they could derive from the mere words of Mr. Collyer. The kind of agreement which would render Samuel P. liable for the debts of the firm, and the kind of agreement which would not render him liable therefor, should have been so explained to them that they might intelligently decide whether the agreement between the two (if any was proved), was such as did or did not render Samuel P. liable as a partner for the debts due from the firm to the plaintiffs. The other instructions given to the jury seem to us to have been unexceptionable.”

J ixdicial opinions should be read remembering that they are written in view of the facts of the case in which they are delivered.

There is nothing in this opinion that intimates that an agreement between Leonard and Samuel P. Harrington, made without the knowledge and consent of the other members of the firm, that Samuel P. should be paid by Leonard one-third of the profits, which the latter should earn and receive as a partner, would alone make Samuel P. liable for the debts of the firm.

That is the question in this case, whatever it may have been in that.

Snyder had no money or capital stock in the firm ' of Strang, Platt & Co. ; the agreement between him and P. 0. Strang and Ammon Platt was unknown to the other members of the firm, and Snyder was not expected to be able, or to be permitted, to take personally any part in the conduct of the affairs of the

firm, or in the transaction of its business. He was not to be, and he was not held out by himself or others as, a member of the firm. And the plaintiff, who was an employee of the firm during its continuance, had no belief or suspicion that he was a partner until over five years after its dissolution.

On principle the case seems to me to be as strong in favor of Snyder as the cases of Vanderburgh v. Hull, Burckle v. Erhart, and Heimstreet v. Howland (supra) are in favor of the persons they held exempt from liability.

Snyder had no property or interest in the profits of the firm of Strang, Platt & Go., as such. It is conceded that an action in his favor would not lie against the firm for an accounting. He had no power to compel an adjudication-between the members of the firm of the amount of profits earned by P. O. Strang and Ammon Platt, respectively, and as between himself and P. O. Strang and Ammon Platt he had no claims against them until they had received profits, or their right to them, as between them and their co-partners, was clear and indisputable, and then his right of action would be against P. O. Strang and Ammon Platt only. Anything which they might pay to him out of profits they had received from the firm, and after they had received it, he would not receive as profits of the firm, but'as a share of their realized profits, which, but for their agreement with Mm, they might pay to their individual creditors, or otherwise dispose of, as to them might seem meet.

Newland v. Tate (3 Ired. Eq. N. C. 226), contains nothing in conflict with the views here expressed. In that case two persons were partners in a government contract for carrying the mails in stage coaches. After the contract was made, the defendant J. H. Tate agreed with his brother, Robert W. Tate, that the two brothers, as between themselves, became part-.

ners in the original share of J. H. Tate; the whole business was under the personal care and management of the two Tates jointly, though chiefly that of Robert W., who received the fare of passengers in the coaches in which the mail was carried, the pay from the government, and made the disbursements, and finally sold the stock and contract to one Wilson, and received the contract price. The court held that the three were not copartners inter se, and. that Robert H. Tate could not be compelled to account as a partner of the plaintiff, but could be compelled, as agent, to account.

The only passage in the opinion affecting the case in hand is this: “Thus accounting, it is true, he will not be directly liable to the plaintiff for any losses sustained, if any there be, unless by his own fault as agent; because, although he might be liable for the contracts of the firm to third persons as a partner, yet he was not a partner, as between themselves, to share the profit and loss.”

In that case, Robert H. Tate had become owner of one-half of his brother’s interest in the capital stock, * and was to have half of his brother’s share of the profits as such, and took an active control of the business as the agent of the firm, and of course in the protection and furtherance of his own interest, and with the knowledge and consent of all the partners. That is not this case.

Buckley v. Bramhall ( 24 How. Pr. 455 ), was decided on the ground that the statutes in relation to limited partnerships made Bramhall liable as a general partner, because he was interested in the partnership, and false statements were made in the certificate and affidavit by which the partnership was formed. They stated that Marks (the special partner) contributed $20,000 of the capital, whereas Bramhall contributed $8,000 of it.

The facts in that case are in no wise like the facts

of this case, and the question on which this case turns is not alluded to in the opinion in that case.

The eases cited by plaintiffs upon the question of the effect of the participation in the profits of a firm where such participation was held to make him liable as a partner, are cases where such third person became entitled to share in the whole profits of the firm as profits, and might probably be said to have a property in them as they.accrued and before they were divided.

Parsons on Partnerships, in his last edition (p. 89), after analyzing and commenting on all the cases, says (in a note): “We think the cases show that there are but two grounds upon which a man can be held liable as a partner to third persons ; . . . if he has not been held out as a partner he can be chargeable as such only when he holds that relation to profits which we believe to be the ultimate test of partnership, both inter se, and as to third persons ; that is, unless there is some ownership in or of the profits, as they accrue, and are not yet divided into portions:”

In Wheatcroft v, Hickman (House of Lords, 9 J. Scott, N. S; 9 Eng. Com. Law N. S. 94 [*95]), Lord Cranworth said:

“I can find no case in which a person has been made liable as a dormant or sleeping partner in which the trade might not fairly be said to have been carried on for him, together with those ostensibly conducting it, and when therefore he would stand in the position, of principal towards the ostensible members of the firm as his agents.”

The firm of Strang, Platt & Co. was composed of five members. There is nothing in this case indicating that three of them knew C. Brown Snyder—certainly nothing that they knew of the agreement between him and P. O. Strang and Ammon Platt. These three could not be his agents, nor he in any sense their principal

The business was not carried on for him, or for him together with the five. It was carried on for the firm, and by its members, and by them only. He had no property in, or ownership of, the profits as they might exist undivided. If he had a right to any part of the profits as profits, it was only to one-third of P. O, Strang’s and Ammon Platt’s realized profits, after they had received them, or they had been set apart for them.

Unless, therefore, clauses of the contract other than those relating to the payment by P. O. Strang and Ammon Platt of one-third of their realized profits to Snyder, and his agreement to pay to each of them a sum equal to one-third of the losses with which they should be charged, create a liability which these clauses would not create, Snyder is not liable for the debt owing by the firm to the plaintiff.

The whole contract, if practicable, should be so construed as to make its parts harmonious.

Upon the clause stating that the parties to the contract agree that “ C. B. Snyder is a copartner in the said firm,” I made such comment in my former opinion as seems to me to be appropriate. He certainly was not a partner in the firm notwithstanding, as the other three partners had not consented to it. He did not thereby become one as to third persons, unless the agreement as to sharing in Strang and Ammon Platt’s part of their profits, when realized, made him such.

An agreement between P. O. Strang, Ammon Platt and 0. B. Snyder, “that Snyder is a member of that firm,” and that only, he having no interest in the busi-' ness or profits, would not make himself liable as such to third persons dealing with the firm, without any suspicion or belief that he was a partner.

The testimony of 0. Brown Snyder as to the circumstances under which he executed that agreement, and upon what solicitation he did it (and as to which he

is uncontradicted) if it may be considered in construing the paper and arriving thereby at the intent of the parties, would not lead to the conclusion that any other effect should be given to this clause than that first suggested.

The clause by which the three agreed to do all they could “ to sustain, further and protect the interest” of the “said firm,” and that each should give to the other “exact and true statements of the affairs and accounts of the firm,” seems to me unimportant. Snyder could not linow anything about the affairs of the firm, except what he might acquire from Strang and Ammon Platt, and he could not have any accounts of • the firm’s business, as such, to render, unless Strang and Ammon Platt should furnish them to him.

In what way it was contemplated that Snyder could protect the interest of the firm is not very obvious. He might possibly loan money to it, or get its paper discounted, or borrow paper for its accommodation.

If it had so happened that he had received anything from Ammon Platt and Strang as a part of their realized profits, or had paid anything to them to reimburse them for losses with which they had been charged, there might be accounts to be rendered by each of the three to the other; but these accounts would be accounts of those sub-partnership transactions and not statements of the affairs and accounts of the firm.

After a careful consideration of the able argument of plaintiff’s counsel, and of the authorities on which he principally relies, my conviction is, that C. Brown Snyder was not a partner in the firm-of Strang, Platt & Co., and is not liable to its creditors, by reason of having signed the agreement between him, P. 0. Strang and Ammon Platt, of December 31, 1869.

—I. The defendant Snyder must be held to be a partner, because he agreed to receive a portion of the profits, and to share the losses. The reason why sharing in the profits makes one a partner is, that he thereby deprives creditors of part of the means of payment. This is the well settled law of this State (See Manhattan Brass Co. v. Sears, 45 N. Y. 797 ; Leggett v. Hyde, 58 Id. 272). It is of no moment that the defendant Snyder did not agree to receive his share of the profits directly from all the partners, but only through the intervention of two of the partners.' The principle is the same. Snyder is just as much a sharer in the profits, although he obtains them through the machinery of two of" his partners, as if he received his share of the profits directly from the partnership fund.

II. The position taken by counsel for the defendant Snyder, to the effect that the defendant Snyder was a sub-partner, and that he is not liable to the creditors of Strang, Platt & Co. for the firm debts, is untenable. As matter of fact, it appears that Mr. Snyder was not a sub-partner, but that he expressly agreed to become a member of the copartnership of Strang, Platt & Co., and to take a share of the profits, and bear a share of the losses, with two of the members, and to act as a partner in the business of the firm. It is not a case where a.n agreement is made with one member of a partnership for a share of his profits ; it goes iarther, and is an agreement by Snyder to become a member of the copartnership. But assuming that Snyder could be called strictly a sub-partner, nevertheless, inasmuch as he was to take a share of another partner’s profits, and to bear a share of another partner’s losses, he is liable for the debts of the copartnership. The cases cited before the referee by counsel for defendant Snyder, to maintain his proposition (with the exception of the case in 19 Ind. 113 ), do not touch the question

whether a creditor can recover against a sub-partner, but extend only to the question of the right of a sub-partner to compel the other partners to account, and to similar questions. The precise question involved in this case has been very ably considered and decided, and the authorities quoted by the counsel for the defendant Snyder are explained and distinguished, in the case of Fitch v. Harrington ( 13 Gray, 468 ). It is there expressly held, that “ an agreement between one partner and a third person, that the latter shall participate in that partner’s share of the profits of the firm as profits, renders him liable as a partner to the creditors of the firm, although, as regards the other members of the firm, he is not their partner.” The opinion of Judge Metcalf, on pages 472, 473, and 474, is clear and thorough, is based upon principle, and would seem to be conclusive upon this question. In the case of Reynolds v. Hicks, 19 Ind. 113 (cited by defendant’s counsel), the facts will be found, on examination, to differ materially from the facts in this case. (1.) There was no agreement to become a partner. (2.) The defendant sought to be charged advanced money to a partner, who was bound to repay the money. See judge’s opinion, pp. 114 and 116, (bottom of page). (3.) The case seems to have been loosely considered. There is no argument, no reference to authorities on the turning point of the case, and the opinion of the judge does not seem to be based upon any controlling principle. In the opinion of the referee, Lindley on Partnership is cited as an authority for the defendant Snyder, but a subsequent edition of the same author states a contrary view (See Lindley on Partnership, vol. 1, 3rd London edition, p. 55). The only decision in this State touching the question is a strong authority for the plaintiff (Buckley v. Bramhall, 24 How. Pr. 455 ).

—I. The defendant Snyder was not a partner in the firm in question. It is abundantly shown that he took no part in the business, paid nothing into it, and received nothing out of it. It is also shown that he was not in any manner a party to the copartnership articles', although the firm was formed by a written agreement. The only ground then upon which he can be claimed to have become a partner is, that he was a party to Exhibit No. 1. If he is a partner at all, it is because this instrument makes him one. The plaintiff claims that the instrument has this effect: 1. Because it states that it is thereby agreed that Snyder is a partner; and, 2. Because of its provisions in regard to profits and losses. I. An agreement between Strang, Platt and Snyder, that the latter should be a partner in a firm already formed, and composed of Strang, Platt, Lockwood, Clark and A. B. Platt, could not be effectual to make Snyder such partner (Story on Partnership, §3, 5 ; Collyer on Partnership, § 194).

II. Neither are the provisions in regard to profits and losses of such a character as to make the defendant Snyder a partner in the firm, or liable for its debts, even if they had been made with the knowledge and consent of three remaining members of the firm. It is now well settled, that to establish a partnership, the sharing in profits must be such as to entitle the alleged partner to an account as partner, and to a lien for his share of the profits (Catskill Bank v. Gray, 14 Barb. 471 ; Holmes v. Old Colony R. R., 5 Gray, 58 ; In re English and Irish Church, &c. Society, 1 Heming & Miller, 85 ; Cox v. Hickman, 8 House of Lords Cases, 301 ; Mollwo v. Court of Wards, Law Rep., 4 P. Council, 419, overruling Grace v. Smith). Leggett v. Hyde, ( 58 N. Y. 276 ), and Manhattan Co. v. Sears (45 Id. 797), are not authorities against this position, for, in Leggett

y. Hyde it is found as matter of fact that the defendant had an interest in the profits as profits, that the agreement was that he should have an account of the business every six months, and a division was then to be made of he profits then appearing; and in Manhattan Co. v. Sears, it is said that there existed in fact—1, sharing the profits (i. e., in the profits as profits), 2, sharing in the losses (i. e., as losses of the business), 3, a right to inspect the books, and 4, a common interest in the stock (See also Vanderburgh v. Hall, 20 Wend. 70 ; Heinstreet v. Howland, 5 Denio, 68 ). But the contract which existed between this defendant and two of the members of the firm of Strang, Platt & Co. is one well known to the law by the name of sub-partnership, and it is well settled that the sub-partner has neither the rights nor the liabilities of a partner in the principal firm (Dig. Lib. 17, Tit. 2, § 20 ; Exp. Barrow, 2 Rose. 252 ; Bray v. Fromant, Madd. 5 ; Brain v. De Tastet, Jacob, 284 ; Frost v. Moulton, 21 Beav. 596). Fitch y. Harrington ( 13 Gray, 468 ), is claimed to be an authority against this doctrine, but is not so in fact. For the court distinctly recognize the contract of sub-partnership as one well known, and as one exempting the sub-partner from liability to creditors, and the decision goes upon the ground that the nature of a sub-partnership was not sufficiently explained to the jury. The court says: “In order to enable the jury to decide whether Samuel P. Harrington was liable for the debts of thé firm of Whitemore, Harrington & Co., by reason of a sub-partnership between him and Leonard Harrington, they should have received instructions more definite and discriminating than they could derive from the mere words of Mr. Collyer. The kind of agreement which would render Samuel P. liable for the debts of the firm, and the kind of agreement which would not render him liable therefor, should have been so explained to them, that they might intelligently decide,

whether the agreement between the two (if any was' proved) was such as did or did not render Samuel P. liable as a partner for the debts due from the firm to the plaintiffs.” Reynolds v. Hicks, 19 Ind. 113 , is exactly in point, and holds that a sub-partner is not liable to the creditors of the firm.