Fetherstonhaugh v. Moore

D.C. Circuit

Fetherstonhaugh v. Moore

48 App. D.C. 35, 1918 U.S. App. LEXIS 2349

CourtCourt of Appeals for the D.C. Circuit

DecidedMay 6, 1918

DocketNo. 3119

StatusPublished

This text of 48 App. D.C. 35 (Fetherstonhaugh v. Moore) is published on Counsel Stack Legal Research, covering Court of Appeals for the D.C. Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook

Fetherstonhaugh v. Moore, 48 App. D.C. 35, 1918 U.S. App. LEXIS 2349 (D.C. Cir. 1918).

Pincite

Opinion

Mr. Justice Van Orsdel

delivered the opinion of the Court í

The sole question to be considered is wdietlier this is a contract of partnership. It may be suggested at the outset that we are not concerned with the presumptions and implications which may be indulged in favor of third parties in construing a contract like the one before us, since the construction here is limited to the contractual relations and mutual obligations of the parties to the agreement. Turning to the contract, we find no express declaration of an intention to form a partnership. A firm name was adopted, but this furnishes an uncertain index to the existence of a partnership inter sese. Smith v. Lancaster, 37 App. D. C. 25. The parties to a partnership must be associated in an enterprise, ,to the establishment of which they have contributed property or services, with a community interest in the profits as profits. Partnership depends not only upon community of interest in property and the conducting of the business for the common benefit of the partners, but in the joint ownership and division of profits as profits. Ward v. Thompson, 22 How. 330, 16 L. ed. 249; Meehan v. Valentine, 145 U. S. 611, 36 L. ed. 835, 12 Sup. Ct. Rep. 972; Wilkinson v. Lincoln, 46 App. D. C. 193, L.R.A. —, —.

[41]*41Does the present contract meet these requirements ? It specifically provides that the share of Moore in the net profits shall be “in lieu of a fixed remuneration for his services,” with a guaranteed minimum salary for the first year and a weekly allowance to be thereafter agreed upon of, “say, $30 per week.” A contract for the remuneration of a person by a share of the profits of the business in which he is engaged does not of itself make such person a partner in the business as between the parties. In such a case there is no community of interest in the profits as profits. Such person is but an agent or servant, and not a principal trader. He is not clothed with the usual powers, rights, or duties of a partner, but is subject to the orders of the owner of the business; and he has nothing to do with the losses, except as they may affect the amount of his remuneration. Grapel v. Hodges, 112 N. Y. 419, 20 N. E. 542; Smith v. Bodine, 74 N. Y. 30.

So far as the contract discloses, defendant put nothing into the enterprise but his services. Plaintiffs furnished the money with which to establish the business. The title to all the property of the concern was to remain in the plaintiffs, and the firm name of Fetherstonhaugh & Company was retained solely by plaintiff Fetherstonhaugh. The contract also provides that defendant shall not practise his profession in the States of New York and New Jersey, “except as taking charge of a business for the parties of the first part, as set forth in this agreement.” If a partnership, Why place a limitation upon the exercise of defendant’s skill in accumulating business, which, of necessity, must accrue to the benefit of the firm? If a partnership was intended, Why speak of defendant “as taking charge of a business for the parties of the first part ? ” This was the interpretation placed upon the contract by the parties to the agreement. If they were partners, defendant was taking charge of the business of the partnership, and not plaintiff’s business. Whatever the evidence in a trial of this case may disclose as to the real relation of the parties, any reasonable interpretation of the contract forbids the conclusion that it was their intention to form a partnership between themselves, but rather to make [42]*42defendant the agent of plaintiffs and place him in charge of their New York office.

Some question has been raised as to the sufficiency of the declaration in an action for breach of contract. But this was not ruled upon by the court below, and is not, therefore, properly before us. It may be suggested, however, that, if the contention. of counsel for defendant is sound, the defect can be cured' by amendment, since it would not involve the stating of a new cause of action. Washington R. & Electric Co. v. Scala, 45 App. D. C. 484, 496.

The judgment is reversed, with costs, and the cause is re^ manded for a new trial. ' Reversed and remanded.

Mr. Chief Justice Smyth dissents.

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Mr. Justice Van Orsdel

delivered the opinion of the Court í

The sole question to be considered is wdietlier this is a contract of partnership. It may be suggested at the outset that we are not concerned with the presumptions and implications which may be indulged in favor of third parties in construing a contract like the one before us, since the construction here is limited to the contractual relations and mutual obligations of the parties to the agreement. Turning to the contract, we find no express declaration of an intention to form a partnership. A firm name was adopted, but this furnishes an uncertain index to the existence of a partnership inter sese. Smith v. Lancaster, 37 App. D. C. 25. The parties to a partnership must be associated in an enterprise, ,to the establishment of which they have contributed property or services, with a community interest in the profits as profits. Partnership depends not only upon community of interest in property and the conducting of the business for the common benefit of the partners, but in the joint ownership and division of profits as profits. Ward v. Thompson, 22 How. 330, 16 L. ed. 249; Meehan v. Valentine, 145 U. S. 611, 36 L. ed. 835, 12 Sup. Ct. Rep. 972; Wilkinson v. Lincoln, 46 App. D. C. 193, L.R.A. —, —.

[41]*41Does the present contract meet these requirements ? It specifically provides that the share of Moore in the net profits shall be “in lieu of a fixed remuneration for his services,” with a guaranteed minimum salary for the first year and a weekly allowance to be thereafter agreed upon of, “say, $30 per week.” A contract for the remuneration of a person by a share of the profits of the business in which he is engaged does not of itself make such person a partner in the business as between the parties. In such a case there is no community of interest in the profits as profits. Such person is but an agent or servant, and not a principal trader. He is not clothed with the usual powers, rights, or duties of a partner, but is subject to the orders of the owner of the business; and he has nothing to do with the losses, except as they may affect the amount of his remuneration. Grapel v. Hodges, 112 N. Y. 419, 20 N. E. 542; Smith v. Bodine, 74 N. Y. 30.

So far as the contract discloses, defendant put nothing into the enterprise but his services. Plaintiffs furnished the money with which to establish the business. The title to all the property of the concern was to remain in the plaintiffs, and the firm name of Fetherstonhaugh & Company was retained solely by plaintiff Fetherstonhaugh. The contract also provides that defendant shall not practise his profession in the States of New York and New Jersey, “except as taking charge of a business for the parties of the first part, as set forth in this agreement.” If a partnership, Why place a limitation upon the exercise of defendant’s skill in accumulating business, which, of necessity, must accrue to the benefit of the firm? If a partnership was intended, Why speak of defendant “as taking charge of a business for the parties of the first part ? ” This was the interpretation placed upon the contract by the parties to the agreement. If they were partners, defendant was taking charge of the business of the partnership, and not plaintiff’s business. Whatever the evidence in a trial of this case may disclose as to the real relation of the parties, any reasonable interpretation of the contract forbids the conclusion that it was their intention to form a partnership between themselves, but rather to make [42]*42defendant the agent of plaintiffs and place him in charge of their New York office.

Some question has been raised as to the sufficiency of the declaration in an action for breach of contract. But this was not ruled upon by the court below, and is not, therefore, properly before us. It may be suggested, however, that, if the contention. of counsel for defendant is sound, the defect can be cured' by amendment, since it would not involve the stating of a new cause of action. Washington R. & Electric Co. v. Scala, 45 App. D. C. 484, 496.

The judgment is reversed, with costs, and the cause is re^ manded for a new trial. ' Reversed and remanded.

Mr. Chief Justice Smyth dissents.

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48 App. D.C. 35, 1918 U.S. App. LEXIS 2349, Counsel Stack Legal Research, https://law.counselstack.com/opinion/fetherstonhaugh-v-moore-cadc-1918.

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