Manhattan Brass & Manufacturing Co. v. Sears

45 N.Y. 797

• Court: New York Court of Appeals
• Decided: June 5, 1871
• Status: Published

Opinion

Peokham, J.

To constitute one a partner, as to third persons, it is not necessary that he should agree to share in the losses of the business. Sharing in the profits is sufficient. The reason is, that sharing in the profits deprives creditors of part of the means of payment. (Pott v. Eyton, 3 Man. Gr. & S., 32; 54 C. L. R, 31; Col. on Part., 5, 4th Am. ed., and cases cited; Story on Part., Gray’s ed., § 2, where definitions of partnership are given by different writers.) More generally no allusion is made to sharing losses. (And see section 68; 3 Kent, 8th ed., 26; Grace v. Smith 2 W. Bl., 998).

Here seem to be all the elements of a partnership, as claimed by any writer.:

1st. Sharing in the profits.

2d. Sharing in the losses, at least, to the extent of $4,000, the repayment of the whole of which depended upon the profits.

3d. The right to inspect the books. (Story on Part., § 69, note 1.)

4th. A common interest in the stock of the company. (3 Kent, 24.)

It is not the less a partnership, that Judson was “ to transact all business, and make all grants in his own name.” A secret or dormant partner is always intended to be unknown. He is not thereby the less a partner. '

It is urged that the respondent expressly refused, in the contract, to enter into any “business or manufacture or partnership.” There is no such refusal. But the contract says simply that such was not the “ object of the parties,” but only to make the parties joint owners of the patent. Yet the contract carefully provides for the business, and for the disposition of its profits. It continues Judson as the sole agent of the whole of the patent right at an agreed salary, payable from the profits, subject to an increase thereafter to be agreed upon “ whenever the $15,000 shall be realized, and the profits of the business shall authorize it.”

What the precise business is as to the patent is nowhere stated, except incidentally, viz., that “the profits arising from the sale of rights under the patent ” are to be applied in a share for the defendant’s benefit toward paying for an interest in the patent.

Hor is the business to cease when the one-third interest in the patent is paid for, as provision is expressly reserved for an increase of the agent’s salary at that time.

Here, then, is express and particular provision for carrying on this business for the joint benefit of the parties, defendants, for sharing in the profits, and in a degree in the losses; and the mere statement that its “ object is not for a partnership,” will not change the legal effect of the contract.

It is plainly a partnership as to third persons, even though expressly agreed that it should not be so between themselves. The best position that can be claimed by defendant Sears, is that this is a special or limited partnership, as between the parties thereto. In such case, it is general as to the public, or our statute on that subject would be superfluous. (Story on Part., § 63, and cases cited.)

Judson, therefore, was the agent of the defendants in all matters touching the business of the patent. It cannot be held, as matter of law, that the hiring of this store by Judson was not within, and for the purpose of the partnership business. If it were ft>r manufacturing and exhibiting specimens of the patent’s work, with a view of selling the rights, and it was pertinent to that end, then it was within the partnership business, though it may not have been a wise mode of attaining the end.

It may be possible that the steam power was outside of the business; and yet it would not then be proper to nonsuit, if the renting was appropriate as to the building or room, but if the general agent of the company thought it appropriate, and acted in good faith, it should be a plain case of excess of authority, or the company should be bound by his contract.

It may be observed that the defendant, Sears, loaned this $4,000, “ to be used for the benefit of the patent,” and yet he paid a draft which he thought, as he testified, went for a payment on this same rent. He then, obviously, regarded this renting as appropriate to the business, or he would not, or should not, have consented to the misappropriation of his money.

The court erred in dismissing the complaint. Judgment reversed, new trial granted, costs to abide event.

All concur, except Church, Oh. J., and Allen, J., not voting.

Judgment reversed.