Manville v. Parks

7 Colo. 128, 4 Colo. L. Rep. 412

Opinion

Stone, J.

The plaintiff Manville sued the defendants to recover the price of certain goods sold and delivered, for which the complaint alleged a joint and several promise to pay on the part of defendants. Two of the defendants, Parks and Yates, answered on their own behalf, denying the sale and delivery to them, and denying any promise to pay by them or either of them. The defendant Smith filed a separate answer, denying the sale and delivery, and denying a promise to pay by all or any of the defendants of the sum alleged to be due. The other two defendants, Bush and Henderson, filed no answer.

The testimony brought up by the record discloses the following facts: Bush proposed to Parks and Yates that they go into a mining operation together to make some money. Parks and Yates knew that one Brandon had a mine, one-half interest in which could be secured to develop and purchase, whereby money could be made if it turned out well, and it was proposed that Parks and- Yates make the necessary arrangement with Brandon for this purpose. Accordingly, Parks and Yates made a preliminary arrangement with Brandon, and afterwards a meeting was had at the office of Parks and Yates, in Leadville, where were present Brandon, Parks and Yates, Bush, and Smith, and Henderson, at which meeting an agreement was made, and a bond for a deed of a one-half interest in the mine in question— called the Tip Top mine — was executed, giving the defendants the privilege of working the mine for ninety days, with the option of purchase within that time. The several interests which the parties were to have in the mine were agreed upon and mentioned in the bond. A day or two afterwards, this bond was taken up by agreement of the parties, and a deed in lieu thereof was executed by Brandon, which was deposited in escrow, conditioned, like the bond, for payment of the agreed price of the half interest in the mine within ninety days, during which time the grantees were to have possession for the purpose of working and development, for taking out ore which should be found therein. The grantees named in the deed were Bush, Smith, Henderson, and Parks and Yates, and the interest of each respectively was expressed as in the bond previously.

This matter being arranged, it was proposed by Bush that Henderson take charge of the mine as manager or foreman and prosecute work thereon, and no one objecting to such proposition, it was assented to, and accordingly Henderson immediately employed men, purchased the necessary supplies of tools, etc., and prosecuted work on the mine for two or three months.

Parks and Yates both testified that, by an understanding between them and Bush, they were to pay no money for their interest in the mine, nor for working the same, but that such interest was paid for by their legal services in procuring the contract with Brandon, drawing up the papers, etc., and that they had not paid nor been called on to pay a dollar in money for such interest, or for working the mine.

Henderson testified that he was to be allowed $5 per day for his services in superintending the work, and that these wages were to apply in payment of his share in the mine. He also testified that Smith furnished $120 towards the expenses of the work, and that Bush furnished all the rest of the money that was paid on account of such expenses.

In pursuance of his authority as manager or foreman of the working of the mine, Henderson purchased of the plaintiff certain supplies, consisting of tools, powder and fuse for blasting, etc., necessary for working the mine, which goods were so purchased by Henderson on behalf of the parties interested, and were sold by the plaintiff, as testified to by him, on the credit of said parties, Henderson informing him, at the time of the purchase, who the .parties in interest were, and naming each of the defendants as partners in the enterprise. Plaintiff knew the defendants personally, and Bush was present with Henderson when some of the purchases were made in the store of plaintiff. Henderson testified that he knew nothing of any understanding that Parks and Tates were to pay no part of the expenses, as testified to by them, and the plaintiff had no knowledge or notice of such fact or condition until after the controversy arose respecting payment for the goods purchased from him by Henderson on behalf of all the defendants.

The county court, which tried the case without the intervention of a jury, found as follows: First, that from the evidence it is not shown that the said defendants ever entered into a mining copartnership for the purpose of working, carrying on or developing the said Tip Top mine; second, that the defendants never gave the said Henderson any authority to purchase the said goods from the plaintiff in their names, and that in fact said Henderson never had any authority in law or fact to purchase said goods or any part of the same, or to hind them in any way or manner for the price and value of said goods, or any part of the same; and third, that the said defendants are entitled, under the facts piwen and the law, to a judgment against the plaintiff for their costs in this action by them paid, laid out and expended, and that the plaintiff take nothing by this action.”

Judgment was rendered in accordance with these findings, and the principal question to be determined upon the errors assigned is a mixed question of law and fact. Were the findings and judgment in accordance with law, under the state of facts disclosed by the evidence ?

The case was tried below, and is argued here, upon the theory that the liability of the defendants depends upon whether the relation existing between them, in respect to the mine and its working, constituted a partnership. In Charles v. Eschelman, 5 Col. 106, it is said that “A mining partnership is held to exist where the sevei-al owners of a mine co-operate in the working of the mine,” and the court then proceeds to point out some of the differences between a mining partnership and an ordinary trading partnership; but we apprehend that this language of the court, while applicable to the case before it, was not intended to restrict the definition of such partnerships solely to cases where a mine is owned by the parties working it, for it is evident that a mining partnership may exist as well where the parties have an interest. merely in the working of a mine, or in carrying on mining operations, as where they own the mine itself. Indeed, in the cases where the question of mining partnership first arose in the English courts, it was doubted whether the joint, or joint and several, owners of mines, who combined to realize and enjoy the profits of the estate under a general system of management, should be considered other than joint tenants, or tenants in common of the land, not subject to the laws of partnership; while, on the other hand, a combination for the working of mines merely, or as a paramount object, and trading and dealing in the products, would constitute a partnership for such purpose. But these views were subsequently modified, so that for many years both English and American authorities have held that oo-tenant owners, as well as lessees or parties having only equitable interests in the property, or holding under license to work or develop, or where the owner furnishes the mine and another the capital and labor under an agreement to share the profits of the mine jointly, in all such cases there may be a partnership for mining purposes.

Eor a concise review of rules and decisions upon this subject, see Rockwell on Mines, chapter Y, and the case of Skilman v. Lachman, 23 Cal. 290, and where, as also in the case of Charles v. Eschelman, 5 Col., the distinguishing differences between mining and ordinary partnerships are pointed out. Whether a partnership exists, is a question of fact; what a partnership is, is a question of law. Parsons on Part. p. 1. We think the facts in this case fairly establish the relation of partnership between the defendants, with respect to the mining operations for the carrying on of which the debt here sued for was contracted. It was one of those mining partnerships, so common in this country, formed for the purpose of carrying on mining operations in a particular adventure, combining some of the incidents of an ordinary partnership, and some of the incidents of a tenancy in common. Settembre v. Putnam, 30 Cal. 493. To the extent of their interest in the property they were tenants in common, and in the working of the mine they are to be considered as partners. Dougherty v. Creary, 30 Cal. 300; Duryea v. Burt, 28 Cal. 569; Skillman v. Lachman, 23 Cal. 200. Upon the contract with the owner of the mine, the defendants had an option of the property in which the respective interests of each were defined and understood, while the working of the mine was for their joint benefit and profit, establishing such a community of interest in the adventure as constitutes a mining partnership. Parsons on Partnership, § 67; Duryea v. Burt, supra. Mr. Parks himself testifies that the bond was to purchase the property, and contained a condition “that Mr. Bush and his party desired to purchase the property, and were purchasing it to take out mineral, and it run for sixty or ninety days or more for working the property, and pay money for the mine.” Mr. Yates, in his testimony, says: “Mr. Bush inquired of Mr. Brandon about the working of the mine, and Mr. Brandon explained to Bush exactly how the mine ought to be worked; that there ought to be a tunnel run to connect with a certain shaft on the hill, and Bush and Brandon settled the thing finally.” Yates further stated, on cross-examination, “that the matter of working the mine was perfectly understood; that Bush and Henderson made the office of Parks and Yates their headquarters; that he, Yates, frequently inquired of Henderson how the mine was getting along; that he made such inquiries on account of his interest in the mine.” We think this and the other testimony in the case upon this point fully establishes the fact that there was a joint interest and co-operation of all the defendants in the working of the mine, and such interest and co-operation constitutes a mining partnership.

“ A partnership may be implied from the acts of the parties, as well as by express intent and agreement. It is not necessary that the intention of being partners should be expressed in words, for the law supplies the want of these words.” Parsons on Part. 87. And even though parties may not intend to become partners, yet, if they enter into such business relations and carry on such acts as in law constitutes a partnership, they are no less partners than if they had fully intended to become such. Id. 86. In seeking to establish a partnership relation, it is a rule of evidence that less, strictness of evidence is required where partners are sued than where they themselves sue as such. Greenleaf’s Ev. § 483.

And while the members of these mining partnerships may not possess implied authority to bind the company or firm by a promissory note, or for money borrowed to carry on the business, yet, as an incident of such partnership, they have authority to bind each other by dealings on credit for the purpose of working the mines, if it appears to be necessary or usual in the management and course of working the mines. Skillman v. Lachman, supra.

In this case the articles purchased of the plaintiff were essential to the carrying on of the business and the accomplishment of the purpose of defendants in working the mine, and the debt being created in the necessary and usual course of the business, and within the scope of the partnership adventure, the individual member who made the purchase had lawful authority to contract the debt and to bind his copartners thereby.

The general principie which lies at the foundation of a partner’s liability is that every partner has full and absolute authority to bind all the partners by his acts or contracts in relation to the business of the firm, in the same manner and to the same extent as if he held full powers of attorney from all the members. Parsons on Partnership, § 95.

This rule rests upon the doctrine of principal and agent, and indeed it may be said that partnerships are but modified forms of the relation of principal and agent.

Aside from the differences which exist between a mining partnership and an ordinary commercial partnership, none of which are involved in this case, the principles and rules of law applicable to the latter also govern the former. Hence, the defendant Henderson did not require special or express authority from the other partners in order to bind them in the purchase of the goods from the plaintiff. His authority, implied by the law of agency, arising out of the partnership relation between the defendants, was ample. True, this authority of each partner to bind the others is an implied one, and, as between the partners themselves, there may exist by express agreement a limitation upon the general implied authority; but third persons, dealing with the firm without notice of such restrictions, are not affected thereby with respect to dealings within the scope of the partnership business. Parsons on Partnership, § 95.

Hence, it is no defense, in this case, that it was agreed between the partners, if such be the fact, that the defendants, Parks and Yates, were not to be chargeable with the expenses of the business beyond their contribution of legal services as claimed,' for however binding this might operate upon the partners inter se, it could not affect the plaintiff, who dealt with them without any notice of restriction upon the individual liability of particular members. Parsons on Partnership, §§ 94, 130; Wood & Oliver v. Vellets et al. 7 O. St. 172; Burgam v. Lyall et al. 2 Mich. 102; Lyall & Taller v. Sanbourn, id. 109; Fisher v. Bowles, 20 Ill. 396; Greenleaf's Evidence, § 481, and cases cited.

As is said in Winship v. Bank of U. S. 5 Pet. 561, “It is usual to buy and sell on credit, and if this be so, the partner who purchases on credit in the name of the firm must bind the firm. This is a general authority held out to the world, to which the world has a right to trust. The articles of copartnership are perhaps never published. They are rarely, if ever, seen, except by the partners themselves. The stipulations they may contain are to regulate the conduct and rights of the parties as between themselves. The trading world, with whom the company is in perpetual intercourse, cannot individually examine these articles, but must trust,to the general powers contained in all partnerships. The acting partners are identified with the company, and have power to conduct the usual business in the usual way. This power is conferred by entering into the partnership, and is, perhaps, never to be found in the articles. If it is to be restrained, fair dealing requires that the restriction should be made known. These stipulations may bind the partners, but ought not to affect those to whom they are unknown, and who trust to the general and well established commercial law. None of the defendants, in their answers, set up a special partnership or averred any limitation of liability as partners, and hence evidence of any such restriction was inadmissible. To render such evidence admissible, it was essential to plead such limitation, and also aver notice thex'eof to the plaintiff px-evious to the purchase of the goods. G-reenleaf’s Evidence, § 485; Lomme v. Kintzig, 1 Mont. 295.

Upoxx the urxcontradicted evidexxce in the case, both the partnership of all the defendants and their liability, as such, to the plaintiff for the amouxit claixned, were established as conclusions of law, and the plaintiff was entitled to the judgment demanded.

Another questioxi presented relates to the subject of default. It is argued by couxisel for defendants that no judgment could have been properly rendered agaixxst those defendaxits who failed to answer, for the x-easoxx that a default was not first takexi agaixxst them for failure to answer. We do not regard this as a valid objection. The default could as well be recited and exxtered at the time of the rendition of final judgment as before. The taking of a defaxxlt against a defendant upon failure to plead is a privilege of the plaintiff, and if he chooses to waive it previous to trial, it is not a matter of which the party in default caxx complain. The only purpose of a default is to limit the time during which the defendant may file his answer, and that time never extexxds beyond a tx-ial axxd judgment. Drake v. Davenick, 45 Cal. 455.

There is no difference in principle betweexx a final judgment against a defexxdant in default for failure to answer and a judgment against a defendant nil elicit. And it has been held that, where a final judgment has been rendered against one who was in default, the taking of a default, “if it was essential to the orderly conduct of the proceedings,” will be presumed when the contrary does not appear. Miller v. Miller, 33 Cal. 353.

Under common law practice the summons first issued, and the declaration was not filed until the first day of the ensuing term, or, under our former practice, ten days before the term, and on appearance defendant answered only when he was ruled so to do by order of the court. Under the code practice, the conditions of the default are prescribed by statute. If the plaintiff fails to take a default before trial, this is a favor to defendant, of which he cannot complain or reap advantage. The validity of a judgment upon trial had cannot be made to rest upon a withholding by the plaintiff of a favor to defendant, or a waiver of a statutory privilege.

The judgment is reversed, and the cause remanded for further proceedings not inconsistent with this opinion.

Reversed.