Bostwick v. Champion — 11 N.Y. 571

Majority

p. 572

*Bostwick vs. Champion, Bissell, Ewers and Dodge.

Headnote

Where A., B. and C. run a line of stage coaches from Utica to Rochester, and the route was divided between them .into sections, the occupant of each section furnishing his own carriages and horses, hiring drivers and paying the expenses of his own section; and the money received as the fare of passengers, deducting therefrom only the tolls paid at turnpike gates, was divided among the parties in proportion to the number of miles of the route run by each ; and an injury happened to a third person through the negligence of the driver of the coach of A.; it was held , that a joint action on the case at the suit of the party injured lay against B. and 0. as well as A.

This was an action on the case, tried at the Oneida circuit in October, 1831, before the Hon. Nathan Williams, one of the circuit judges, brought against the defendants as the owners of a stage coach, for an injury sustained by the wife of the plaintiff in being thrown from a wagon in which she was riding, in consequence of a stage coach belonging to the defendants, through the negligence of the driver thereof, coming in contact with the wagon. The defendants pleaded the general issue. On the trial, the following facts appeared : The defendants run a line of stage coaches from Utica to Rochester; the route was divided into sections ; a section extending from Utica to Vernon was occupied by Dodge, one of the defendants; another section, extending west, was occupied by Ewers and others ; and the remainder of the route by Champion and Bissell. The business was conducted and the proceeds of the concern divided as follows : The occupants of each section provided their own carriages and horses, employed their own drivers, and paid the expenses of their separate sections of the route, except the tolls at turnpike gates ; and the moneys received as the fare of passengers, after deducting such tolls, were divided among the occupants of the several sections, in proportion to the number of miles of the route run by each. The injury complained of happened on the section of the route occupied by Dodge, the stage coach which was driven against the wagon was owned by him, and the driver of it employed by him. The judge charged *the jury that, upon the above facts, the defendants must be considered partners, and that they were all responsible for any injury occasioned by the negligence of either of the drivers of the stage coaches on either section of the route, as each driver was the servant of all the individuals connected in the business ; that the fact that the occupants of each section employed their own drivers and paid the expenses of their own section did not discharge them from liability; that a right to a division of the fare received from passengers, after paying the tolls, in proportion to the distance run by the occupants of the respective sections, was an interest in the profits, constituting them partners, and rendering them liable in this action. The jury found a verdict against all the defendants, with $800 damages. The defendants, on a bill of exceptions to the charge of the judge, moved for a new trial.

H. Denio, for the defendants.

The judge erred in charging that a division of the fare, after paying tolls, rendered the defendants partners, and that the driver by whose negligence the injury was occasioned was the servant of all the defendants. He contended that there was no joint interest, communion or participation in the profits of the business, and consequently that there was no partnership. To constitute a partnership, the parties must have a mutual interest in the profits and loss of the business carried on, or they must hold themselves out to the world as partners, 3 Kent’s Comm. 5. There must be

p. 574

an agreement to unite their stock, and to share in all risks of profit and loss, 2 Johns. Cas. 329 . A partner is one who has an interest in the profits, Gow on Part. 15, and the interest must be in the net profits, and not in the gross receipts, 4 Esp. N. P. R. 182. Where the agreement is, that a party shall have half the gross earnings, and not that he shall share in the profits, he is not a partner, 1 Campb. 329. The case of Cooper v. Eyre, 1 H. Black. 37, proceeds upon the same principle, and Post v. Kimberly, 9 Johns. R. 470, settles that though the whole subject matter of an adventure be divided, there is no partnership unless the parties share in the profits. In the case now before the court, there was no agreement to divide profits, and no division in fact. Each party *took what he earned, and in doing so did not diminish the fund.

It cannot be said that the inequality of the profits does not aifect the question ; for had that ground been assumed, the question should have been submitted to the jury. The agreement that the fare of the passengers should be divided among the whole concern does not prove a partnership, because the fair presumption is, that in this respect as much was received by the owners of one section of the road as by the owners of the other sections. Nor does the joint payment of the tolls constitute them partners, as was expressly adjudged in Wetmore v. Baker, 9 Johns. R. 307. The owners of one section of the route would not be liable for provender furnished the horses of the owners of another section, 2 Taunt. 48. Secondly, he contended that even if the other defendants could be considered as partners with Dodge in respect to third persons dealing with them, and not conusant of the facts, or in respect to any particular branch of the business, they were not so far partners as to constitute the relation of masters and servant between them jointly and the driver of the stage coach by whom the injury was done. The driver of the coach he said, was the servant of Dodge alone, and not of the others ; he hired the driver and paid him for his services. The others had no agency in emEloying him, had not invested him with any authority, and had no control over im ; he was not entrusted with their property, nor engaged in their service, nor was he accountable to them for his conduct. The relation of master and servant does not exist, unless the apportionment proceeds either immediately or mediately from the master, and unless the servant, at the time when the injury is done for which the master is sought to be charged, is engaged in the proper business of his employment. Thus, where the owner of a carriage hired of a stable keeper a pair of horses to draw it for a day, and the owner of the horses provided a driver through whose negligent driving an injury was done to the horse of a third person, it was held by Abbott, C. J. and Mr. Justice Littledale that the owner of the carriage was not liable to be sued for such injury, because he had not the government or direction of the.horses, or the control of the driver, who was not his servant, but the servant of the stable keeper. Laugher *v. Pointer, 5 Barn. & Cres. 547. Justices Bayley and Holroyd dissented from the opinion of the chief justice and Mr. Justice Littledale, but in the subsequent case of Smith v. Lawrence, 2 Mann. & Ryl. 1, in which the same question substantially arose, the dissenting judges yielded their opinions. So in Nicholson v. Mounsey, 15 East. 383, it was held that the defendant, a captain of a sloop of war, was not answerable for running down another vessel, the mischief having been done while the captain was below, and the lieutenant had the direction and management of the sloop of war, for the reason that the captain had no voice in the appointment of the lieutenant. So it has been held that a postmaster is not answerable for money lost by the default of a clerk in his office, 12 Mod. 488, Ld. Raym. 650, S. C. If the

p. 576

defendants are partners in the broad sense laid down by the circuit judge, they are liable for carriages and horses purchased by either of the concern, for the wages of the servants, and the keeping of the horses. This doctrine, it is believed, will not be ratified by this court; but if in favor of creditors it should receive its sanction, it is confidently hoped that it will not be adjudged that one partner is liable for the torts of the servant of his copartner. A passenger, suffering an injury from the negligence of a driver, might have a right of action against all the owners of the line, on account of the confidence reposed in such owners; but a stranger who receives an injury, having reposed no such confidence, can look for redress only to the person who inflicted the injury or to his immediate employer.

P. G-ridley & J. A. Spencer, for the plaintiff,

The judge correctly charged the jury that the defendants were partners. They engaged in the business of running stages for their mutual benefit, each contributing to the common stock; and a mutual contribution to a joint concern of that which has value and can be appreciated, is of the essence of the contract of partnership. The owners of each section of the road furnished carriages and horses, employed drivers and defrayed the expenses of carrying on the business, upon their particular sections; and they divided the fare received from passengers travelling in their coaches, in proportion to the number*of miles of the route occupied by each, without reference to the amount of moneys received upon each particular section—thus reaping an advantage from the partnership, which, although not precisely in the shape of profits, was as beneficial as profits. In answer to the argument that there was no interest in the net profits, but only in the gross receipts, it is asked what difference is there in principle between carrying the whole expenses into a general account, striking a balance, and dividing the profits, if any, and the mode pursued by the defendants of each paying the expenses upon his particular section, and receiving his proportion of the whole receipts ? The profits of the several proprietors may or may not have been equal, but whether so or not is not material, for it is not essential to a partnership that the profits of the partners should be equal. Being engaged in a joint enterprize, in which all are actors, and from which all receive benefit, they are partners; and so it was held in Fromont v. Coupland, 2 Bingham, 170. In that case, the parties were engaged in running a coach from Bath to London, the plaintiff finding horses for one part of the road, and the defendant for another, and the profits of each party were calculated according to the number of miles covered by his own horses.

The jury were also correctly instructed that the driver of the coach, by whose negligence the injury happened, was the servant of all the defendants. Can there be a doubt, that when one of two partners advances a capital in money, and the other contributes his time and services, hiring and employing servants, and taking the general superintendence of the concern, that both are liable for an injury suffered by a third person, through the negligence of the servant in the prosecution of the business of the concern ; and yet, in such case, there is no personal delinquency in the partner furnishing the capital. Upon this question, also, we are not without an authority directly in point. Thus, in Waland v. Elkins, 1 Starkie’s R. 272, where the parties were jointly interested in the profits of a common stage wagon, each undertaking the conducting and management of the wagon with his own driver and horses for specified distances, it was held, notwithstanding the private agreement between ^themselves, that they were jointly responsible to third persons for the negligence of their drivers throughout the whole distance ; and that an averment that the injury was occasioned by the negligence of the dri

p. 577

ver of Elkins, against whom alone the action was brought, was supported by proof that the driver was actually employed by Dyson, the other partner, in conducting the wagon for his own stages. So in Moreton v. Harnden, 4 Barn & Cres. 223, several proprietors of a stage coach were held liable in an action on the case for an injury to a third person, occasioned by the negligent driving of one of the proprietors, the coachman sitting by his side. The judges who dissented in Laugher v. Pointer, did not, as supposed by the counsel for the defendants, yield their opinion in Smith v. Lawrence, but placed their concurrence upon the ground that the cases are distinguishable, differing in their facts, and consequently calling for the application of different rules of law. The concession on the other side that a passenger, in the line of coaches maintained by the defendants, suffering an injury through the negligence of a driver upon any section of the road, might sustain an action against all the defendants, appears to us to yield the whole question ; for if a passenger, who voluntarily places himself under the care, and reposes confidence in the prudence and discretion of the defendants and their servants, may bring his action,, much more so should a stranger, who has received an injury by the negligence of the defendants or their servant, be allowed his action; and the same principle which must necessarily be adopted to maintain the action by the passenger, viz. that the defendants are partners, will support the action by the stranger, on the gound that the defendants, being jointly interested in the concern, are liable for all injuries occasioned by their servants in the conduct of the business of the concern.

B. F. Butler, in reply.

The true question in this case, is, were the defendants partners ? for, unless they shall be so considered, this action cannot be sustained. To establish a partnership, a communion of profit must be shown ; it is not necessary there should be an actual receipt of profits, but *a right to them must exist. Nor is it necessary that the partners should participate equally in the division of the profits, but they must partake of them ; and if they do, they are answerable as partners for losses, on the principle that by taking a part of the profits, they take from creditors and from the public a part of the fund, on which they have a lien to satisfy their demands.

The agreement between the defendants in this case did not give to each proprietor a right to participate in the profits of each section ; he was entitled to a share of the gross receipts, in proportion to the number of miles of the route occupied by him with his horses and carriages ; and it not having been shown to the contrary, the presumption is that the receipts of each proprietor upon his own section were equal to those of the others upon their several sections, and the court therefore will presume an equality of benefits and burdens. Can an arrangement of this kind, by which the interests of all the defendants were promoted, be considered a partnership ? The gross earnings may be considered a general fund, but does a claim upon such fund constitute a partnership of any kind, and especially a general partnership ? The receipts are not profits. In the agreement between the parties, there was no provision for the allowance of interest upon capital invested or for expenses advanced ; how then can the receipts, subject only to the turnpike tools, be called profits 1 If one proprietor realized profits upon his section, and another suffered losses, the latter could not recover of the former a portion of the profits. The defendants, therefore, are not responsible on the ground of participation in profits. The distinction between sharing in the earnings of an enterprize, and participating in the profits of a concern, is sound and well established ; and it is undeniable, that a right to share in the former does not constitute a party a part

p. 579

ner, 1 H. Black. 37; 1 Campb. 329; nor does a union of funds, for any particular purpose, constitute parties general partners, making them responsible to third persons in that character. 2 Johnson’s Cases, 329. 1 Douglas, 371. 9 Johnson’s Reports, 470. The case of Wetmore v. Baker, 9 Jonnson’s Rep. 307, decided by this court, in 1812, presents the very question now under discussion, and *although not determined upon that express point, still, the opinion there expressed, that parties engaged in

the running of stages, and acting under an agreement like that in the present case, were not partners, is entitled to the highest consideration, inasmuch as it has never since been controverted in this state, but on the contrary acquiesced in by the public. At the date of that decision, and until 1816, there was no adjudication to the contrary in England ; then, however, in the case of Waland v. Elkins, 1 Starkie’s R. 272, it was held that parties conducting business in the manner that the business of the defendants was conducted, were jointly responsible to third persons for the negligence of their drivers throughout the whole distance : and the question is presented, which case shall prevail, Wetmore v. Baker, or Waland v. Elkins? In the latter case, it appeared that the defendant and one Dyson were carriers from London to Gosport, and that by an arrangement between them, Dj^son horsed the wagon from London to Farnham, and the defendant from Farnham to Gosport. While the wagon was drawn by Dyson’s horses, and driven by his servant, who had been hired by and received wages from him, and with whose employment the defendant had no concern whatsoever, the windows of the plaintiff were broken, in consequence of negligence on the part of the driver of the wagon, by means of which a cart was forced against the plaintiff’s house—the wagon itself was the property of the defendant. In the report of the case of Waland v. Elkins, in 1 Holt’s R. 227, the reporter speaks of Elkins and Dyson as partners, and C. J. Gibbs is made to say, that it is sufficient that Elkins is found to be a partner in a common concern, and jointly interested with Dyson in the profits; whilst here, the question is, are the defendants partners? Besides, Chief Justice Gibbs seems, in conformity to the old cases, to have founded his opinion, in part upon the fact that the wagon belonged to Elkins, and that he had the profit of the carriage. See also the note of the reporter attached to that case. The case of Fromont v. Coupland is likewise distinguishable from the present, on the same ground, viz. that the parties were partners, and divided the profits, whereas here the division was of the gross receipts. This court will *not readily give up the rule laid down in Wetmore v. Baker, when it is seen that the English courts have vacillated on the question, as in the cases of Laugher v. Pointer, where the judges were divided in opinion, and in Smith v. Lawrence where two of them, upon a state of facts scarcely distinguishable from the former case, yielded their opinions. The plaintiff, also, cannot insist upon a general partnership, from the fact that the defendants held themselves out to the public as partners, for such was not pretended on the trial; but were it otherwise, the plaintiff cannot claim any thing upon that ground, because he had no dealings with the defendants ; he parted with no property to them, and reposed no confidence in them as partners ; nor was the injury suffered by him in consequence of the connection in business existing between the defendants. The counsel insisted that he had thus shown that the defendants were not general partners, and said he would next inquire whether they were partners for any purpose, and to whom they are liable. They might be considered, he said, partners for the safe carriage of persons and their baggage, who paid their fare at one end of the route for the whole distance ; and that the fare thus paid by a passenger to one, would render all

p. 581

responsible, as such payment would create a contract between the passenger and all receiving benefit from it. So also they would be liable for the tolls at the turnpike gates, for the salaries of agents, and for the hire of offices; but he urged that the court would look to the object of the parties, and not extend their liabilities by construction, farther than what was necessary for the protection of the public; contending that although the defendants should be holden jointly responsible to all who dealt with them, or reposed confidence in them, in consequence of their association in business, that there was no reason why one should be answerable for the acts or omissions of the other, or of his servant, unless such acts or omissions were necessarily connected with the business of the joint concern. Upon this principle, he conceded that a passenger, who sustained an injury through the negligence of a driver would be entitled to bring an action, but he denied that a stranger suffering an injury in like manner could maintain a suit. The defendants could *not unite in an action against him for an injury to the coach of Dodge, nor can he sue them jointly for an injury in consequence of the negligence of the servant of Dodge. If such action would lie, the defendants necessarily would be liable as general partners.

By the Court,

This case is in some respects peculiar, and involves a principle of very general importance and application. An action on the case lies against a master for any injury done to another, through the negligence or unskilfulness of his servant, while acting in his employment. So partners are responsible in the same way for the conduct of their servants, as is exemplified by the actions in the books brought against them for driving against carriages or running down ships ; and in these cases, if the carriage or snip is the joint property of the partners, it is unimportant whether it was under the direction or guidance of one of the partners, or under the care or management of their servant, for qui facit peralium facit per se. 2 Selw. N. P. 841 and cases. 5 T. R. 649. 2 Bos. & Pul. 365. 1 id. 404 . 8 T. R. 186. 1 Vesey & Beame, 117. Gow on Part. 224. The material question then is, whether the defendants here, upon the facts disclosed, were partners in the business of running the line of stages from Utica .to Rochester, for if so, the driver, while engaged in that employment, was legally the servant of all the proprietors.

It may be laid down as an established principle of law, that whoever participates in the profits of a trade or business, or has a specific interest in the profits themselves, as such, becomes chargeable as a partner with respect to third persons ; and the chief reason is, that by the effect of the agreement for a share in the profits, the party takes from the creditors a part of the fund which is the proper security to them for the payment of their debts, and upon which they have a right to rely. 16 Johns. R. 40. A partnership is also defined to be a community of interest between two or more, and a sharing of profit and loss. To constitute a partnership in a single concern, there must be a joint understanding or agreement to share in the profit and loss. 9 Johns. R. 495, 6. 1 Wendell, 463. Selw. 859, 60. 17 Vesey, 412. Gow on Part. 14, 15. This *last author says, page 6, it may be laid down as a general and undeniable proposition, that persons having a mutual interest in the profits and loss of any business, or particular branch of business carried on by them, or persons appearing ostensibly to the world as joint traders, are to be recognized and treated as partners, whatever may be the nature of the agreement under which they act, or whatever motive or inducement may prompt them to such exhibition.

We will concede that the defendants should not be made liable solely on the

p. 582

ground that they have held themselves out to the public as joint partners, because the reason which sustains their joint liability under that aspect of the case does not exist. Here was no confidence reposed in the joint responsibility of the defendants, which of itself would give a claim upon them. The fact, however, would be some evidence of such partnership; and if the party injured had been a passenger, it would be conclusive, for then the reason of the rule of law would apply; having trusted to the responsibility of all who held themselves out as joint proprietors in the line, he would be entitled to exact it. So in respect to every other person who may have acted upon the faith of the character thus assumed by themselves. It would be otherwise if he acted under a full knowledge of the private arrangement existing between the proprietors. His claims then would be qualified accordingly.

The defendants, if liable at all, must be so on the ground that they have a community of interest, and are entitled to share in the profits of the business in proportion to the capital invested, or in this case, to the distance ran upon the line with their coaches. The arrangement between the proprietors is obviously founded upon the assumption that the expense of running upon any part of the line in a given distance is the same, because the receipt or fare is divided upon that basis ; each one receiving an equal amount of fare per mile, which would be inequitable if the expenses of running the stages were not equal. For all purposes of the partnership then, the agreement is the same in effect as if each had put in a capital equal to the value of their coaches and teams, at the commencement of the concern, and after deducting the expenses of running *them from the aggregate receipts, divided the profits. If this result would not be the same as that produced under the actual arrangement, it would be unequal. Each proprietor now pays his own expenses on his section, and receives for running it the same as any other for a like distance. All he receives over and above the expenses are profits. If the expenses of each are the same, the profits are the same per mile. It is quite immaterial how the fact may be, so far as the question of partnership is concerned, if the principle of the arrangement and the execution of it, according to its spirit, lead to an equal participation of the profits. The law assumes it will be thus executed. The qualification of the ordinary contract of partnership, in this case, grows out of the nature of the business and the opportunity afforded to each partner to superintend more exclusively than usual his interest in the concern. Instead of each disbursing the expenses out of the income for the benefit of the general concern, which would leave only the profits to be divided, he disburses only his own, and in proportion to the extent of his interest. Upon the theory of the arrangement, the division is, then, of the income or receipts, though in reality (assuming each to have taken his expenses out of it as received) it is only of the profits. These may be varied according to the economy or superior management of each proprietor in meeting his expenses ; but in either view of the case, there is a division of the profits of the concern, in the legal and strict sense of the term, for a division of the fare, includes a division of the profits, if any.

The question here presented has frequently arisen in England and been decided there, or an opinion expressed in conformity to the above principles. Waland v. Elkins, 1 Starkie’s R. 272, 2 Com. L. R. 387, was an action on the case to recover damages for breaking the plaintiff’s windows, in consequence of the negligence of the driver of the defendant’s wagon. The defendant and one Dyson were carriers from London to Gosport, and by an arrangement between them, Dyson horsed the wagon from London to Farnham, and to Gosport; and when the injury happened, the

p. 584

wagon was drawn by the horses and driven by the servant of Dyson, with whose employment the defendant had *no concern; the wagon was

the property of the defendant. The plaintiff recovered on the ground that the defendant and Dyson were jointly entitled to the profits; that the wagon was drawn for the benefit of the defendant as well as Dyson; and that the driver was legally the servant of the defendant, though, for some purposes and as between the parties themselves, he was the servant of Dyson alone. In Fromont v. Coupland, 9 Com. L. R. 300, the plaintiff and defendant ran a coach from Bath to London, the plaintiff finding horses for one part of the road and the defendant for another, and the profits of each party were calculated according to the distance ran by his own horses. It was held that they were partners in the concern. The same principle is strongly stated by Mr. Justice Bayley, in Laugher v. Pointer, 12 Com. L. R. 321. He says, in many instances one proprietor horses a coach for one stage, another for a second, and so on; and in some instances, the man who finds the horses, finds the coachman also. Shall this take away the liability of all the proprietors 1 Shall it be said, if the coach does an injury upon a given stage, that the proprietor who finds the horses and driver for that stage shall be alone answerable ? The horses and driver are found by one to do the work of all, and employed upon the work and for the benefit of all, and therefore all are responsible. Gow on Part. 36, 7. id. 181. Selw. N. P. 843.

It is clear in this case that all the proprietors have a community of interest in the profits, and share in them in proportion to the money, labor and skill brought into the business. The proceeds from the entire route are thrown into a common fund and divided. Each has the benefit of any peculiar or superior advantages which may appertain to one portion of it over another; and it was well said by Mr. Justice Bayley, that the “ horses and driver are found by one to do the work of all, and for the benefit of all” under such circumstances. Each sharing in the profits of the whole route, and of course of each section of it, it is not only just, but in accordance with well settled principles of law, to hold all responsible for the faithful discharge of their duty, and to respond in damages for any injury which happens from the negligence or unskilfulness of any of the proprietors or their servants. It is just to the *public and to themselves. The former have a right to claim the responsibility of all who profit directly by their patronage ; and as to the latter, the loss should be borne by all. The drivers themselves are generally irresponsible men, and so frequently are single proprietors. The public safety and convenience will depend essentially upon the application of the rule of joint responsibility of all the proprietors, who will then see to it that their co-partners and all who are employed in the concern are trust worthy.

The defendants, as among themselves, by the terms of their agreement, all the provisions of which are binding upon them in relation to one another, may not be partners, and may be liable to each other the same as if their interests were several. This private agreement or understanding, however, can in no way vary the rights of third persons or the public, legally flowing from the general arrangement under which they hold themselves out as jointly interested, and by which they participate in the profits of the concern.

New trial denied.

Cases cited

Holmes v. United Insurance 2 Johns. Cas. 329 N.Y. Sup. Ct. p. 574