Lape v. Parvin

2 Disney (Ohio) 560

• Court: Ohio Superior Court, Cincinnati
• Decided: June 15, 1859
• Docket: No. 10,797
• Status: Published

Opinion

Hoadly, J.

The only question I have considered is, whether the admitted facts require the conclusion as a matter of law, that while Holmes was building the boat, Parvin, Brown & Anschutz were interested with him as partners or part owners.

Ordinarily owners of vessels are part owners, not partners. They are not’agents of each, and one can not bind another by expenditures for the joint benefit, without express authority. But they may hold their vessel in strict partnership, and where they employ her in transporting goods and passengers for their mutual profit, they are partners in the business so transacted. Collyer on Partnership, section 1186. And where by agreement a ship is to be built by several persons, through the agency of one of them, and to be subsequently run for their mutual benefit, the debts contracted by the agent within the scope of his authority are the debts of all.

The test of partnership is communion of net profits as such. It matters not that the dividends of the profits payable in money are not to be declared. If they are to be re-invested in the enterprise, or expended in improvements upon the subject of the adventure, or in enhancing its value, the parties are still partners. If the profits are in any way applied to the benefit of the parties, there is a communion of profits, and a partnership as to third persons.

In this case, Holmes, Parvin, Brown & Anschutz, each contributed two thousand dollars to the building of the Crescent. She was to be run until the profits of her business paid her debts, and then each of these parties was to become the owner of one-fourth, Holmes meanwhile retaining the legal title in his own name.

It is obvious that they were engaged in a joint adventure, the profits of which they were to share — not in money, but in the addition to the value of the vessel, created by the payment of her debts, and the removal of the incumbrance upon her.

The case becomes clearer by resorting to the hypothesis of success in that enterprise. Suppose that the Crescent cost $16,000, one-half advanced by Holmes and the defendants, the other half being credits furnished by the plaintiff' and others. After one year she has earned $8,000 net, and her debts are paid, and Holmes conveys to each of the defendants one-fourth. It is obvious that for a capital of $2,000 advanced, each of the defendants has become the owner in consequence, and as the result of the enterprise, of an unincumbered interest worth $4,000, less the diminution in value caused by a year’s use of the joint property. It can not therefore be denied, that he has received a share of the net profits of this use, and that in the business of the boat, at least, each defendant was interested equally with Holmes.

There are two principal indicia of partnership, community of profits, and community of capital stock. Both of these exist here. Each contributed an equal sum in money, each was to share equally in the profits.

But it may be said that although it may result that the defendants were partners in the running of the Crescent, by virtue of their interest in her profits, they are not necessarily such in the boat herself. I can not make the distinction. The transaction is not divisible. The boat was to be built and paid for, in part with the money of the defendants advanced by them, in part with the money earned in running her, and then they were to own her. The enterprise included the building as well as the use of the boat. It seems to have been an adventure in which the ownership of the boat herself unincumbered was to have been the very profit'expected. And the defendants must be held to have been interested throughout in law, as they evidently were in fact.

The defendants seem to have thought that in this way they could secure the advantages of an act of incorporation, without resort to legislative authority, and without subjecting themselves to liabilities beyond the loss of their original advance. I know of no power competent to sanction such a plan, as even under the forms of a corporation, the stockholders in Ohio are now individually liable in case of insolvency, in a sum equal to their stock.

I think, therefore, that there was a partnership from ■ the beginning, that the defendants, equally with Holmes, contributed to the capital stock, that they were to have shared in the profits, and of which they must bear the losses.

Judgment for plaintiff.