GRIFFIN, P. J.
P1aintiffs-appe11ants, Harry Moulin and Roxana Giragossiants, brought this action for money had and received against defendant-respondent Aram G. Der Zakarian, each seeking a judgment for $5,000 based on a certain written agreement.
The primary question at the trial and on this appeal, as set forth in the pretrial conference order, is whether the
payments made under the so-ealled partnership agreement constituted investments in a security which could not he lawfully sold by the defendant without a permit from the Commissioner of Corporations of this state. (Citing such authority as Corporations Code, section 25008, providing that a security shall include, among other things, any stock, any certificate of interest or participation, any certificate of interest in a profit-sharing agreement, any transferable share, investment contract, or beneficial interest in title to property,
profits or earnings; and section 26100 thereof, requiring a permit; and section 25003 thereof providing that the act applies to individuals selling, offering for sale, or taking subscriptions for, any security of their own issue.) Also cited are
Smith
v.
Grove,
47 Cal.App.2d 456, 461 [118 P.2d 324];
People
v.
Woolson,
181 Cal.App.2d 657, 669 [5 Cal.Rptr. 766];
Oil Lease Service, Inc.
v.
Stephenson,
162 Cal.App.2d 100, 109 [327 P.2d 628];
People
v.
Syde,
37 Cal.2d 765 [235 P.2d 601];
Austin
v.
Hallmark Oil Co.,
21 Cal.2d 718, 727
[134 P.2d 777];
Domestic & Foreign Petr. Co., Ltd.
v.
Long,
4 Cal.2d 547, 557 [51 P.2d 73];
People
v.
Hoshor,
92 Cal.App.2d 250 [206 P.2d 882].
Defendant’s position is that the instrument speaks for itself; that it is clearly intended to be, and was, a general partnership, as designated therein; that the contributions constituted contributions to the capital of the partnership; that no interests therein were sold or offered to the public; that such partnership was exempt from the requirements of the provisions of the Corporate Securities Law; and that no permit was required in connection with such contributions. Citing Corporations Code, section 25100, which reads:
“Except as otherwise expressly provided in this division, the Corporate Securities Law does not apply to any of the following classes of securities:
“(l) Any partnership interest in a general partnership, or in a limited partnership where certificates are executed, filed, and recorded as provided by Sections 15502 and 15525 of the Corporations Code of the State of California, except partnership interests when offered to the public.
“ (m) Any bona fide joint adventure interest, except such interests when offered to the public.”
After hearing testimony and interpreting the agreement, the court found generally in favor of defendant and against plaintiffs’ contentions. It specifically found that, by virtue of the agreement here under consideration, a bona fide general partnership was formed as authorized by the laws of this state; that defendant at no time ever solicited, by advertising or otherwise, plaintiffs, or either of them, or any of the other parties to said partnership, to enter into said agreement, nor did he ever, in any manner whatsoever, offer to the public an interest in the partnership formed thereunder; that defendant at no time received from the Commissioner of Corporations a permit to enter into said agreement; and that it was not necessary for defendant to obtain such a permit on the part of the partnership or defendant in order to legally accept from plaintiffs contributions to the capital of the partnership formed under the agreement. Judgment was entered for defendant.
Plaintiffs claim that the instrument did not constitute a partnership regardless of its designation as a partnership agreement, since the sole power to manage the business and incur liabilities was in defendant and not in the other parties;
that there is no provision for the sharing of losses between the parties; that plaintiffs, in the event of loss, lose only their investment and any losses in excess of that amount are to be borne by defendant; that in the event of the death of defendant, the right of dissolution is not in the other parties to the agreement, but the power is given to a committee of three, two of whom are not parties to the agreement, and that there is not a community of interest between the parties and the agreement shows on its face that it is an investment contract. (Citing such authority as
O. Krenz C. & B. Works, Inc.
v.
England,
109 Cal.App. 747, 752 [293 P. 689];
Spier
v.
Lang,
4 Cal.2d 711, 716 [53 P.2d 138].)
In
Smith
v.
Grove, supra,
47 Cal.App.2d 456, 461, relied upon by plaintiffs as well as defendant, the court set forth certain rules applicable to the determination of a partnership and said:
“The legal effect of an instrument claimed to be a contract of partnership must be measured by the rules of law applicable thereto. The first rule is statutory. A partnership is ‘. . . an association of two or more persons to carry on as co-owners a business for profit.’ ... Another rule is that a partnership agreement between the parties must provide for the sharing of the profits and losses, or what is the same thing, of sharing the net profits. ... Finally, to constitute a partnership relation, in the agreement ‘there must be such community of interest as empowers each party to make contracts, incur liabilities, manage the whole business-a right which upon the dissolution of the partnership passes to the survivor and not to the representatives of the deceased .... The association must be one for the purpose of jointly carrying on the business. ’ ”
It fairly well appears from the instrument itself that the parties to the agreement were associated to carry on the business of trading in commodities for profit. They carried on the business as coowners because the evidence is uncontradicted that all trading was done in the partnership name. Thus, each partner had an interest in the commodities and commodity futures purchased because he or she owned a part of the partnership capital used to purchase the same. Paragraph 3(b) of the agreement provides that the contributed capital shall be used only to finance the trading in commodities and commodity futures.
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GRIFFIN, P. J.
P1aintiffs-appe11ants, Harry Moulin and Roxana Giragossiants, brought this action for money had and received against defendant-respondent Aram G. Der Zakarian, each seeking a judgment for $5,000 based on a certain written agreement.
The primary question at the trial and on this appeal, as set forth in the pretrial conference order, is whether the
payments made under the so-ealled partnership agreement constituted investments in a security which could not he lawfully sold by the defendant without a permit from the Commissioner of Corporations of this state. (Citing such authority as Corporations Code, section 25008, providing that a security shall include, among other things, any stock, any certificate of interest or participation, any certificate of interest in a profit-sharing agreement, any transferable share, investment contract, or beneficial interest in title to property,
profits or earnings; and section 26100 thereof, requiring a permit; and section 25003 thereof providing that the act applies to individuals selling, offering for sale, or taking subscriptions for, any security of their own issue.) Also cited are
Smith
v.
Grove,
47 Cal.App.2d 456, 461 [118 P.2d 324];
People
v.
Woolson,
181 Cal.App.2d 657, 669 [5 Cal.Rptr. 766];
Oil Lease Service, Inc.
v.
Stephenson,
162 Cal.App.2d 100, 109 [327 P.2d 628];
People
v.
Syde,
37 Cal.2d 765 [235 P.2d 601];
Austin
v.
Hallmark Oil Co.,
21 Cal.2d 718, 727
[134 P.2d 777];
Domestic & Foreign Petr. Co., Ltd.
v.
Long,
4 Cal.2d 547, 557 [51 P.2d 73];
People
v.
Hoshor,
92 Cal.App.2d 250 [206 P.2d 882].
Defendant’s position is that the instrument speaks for itself; that it is clearly intended to be, and was, a general partnership, as designated therein; that the contributions constituted contributions to the capital of the partnership; that no interests therein were sold or offered to the public; that such partnership was exempt from the requirements of the provisions of the Corporate Securities Law; and that no permit was required in connection with such contributions. Citing Corporations Code, section 25100, which reads:
“Except as otherwise expressly provided in this division, the Corporate Securities Law does not apply to any of the following classes of securities:
“(l) Any partnership interest in a general partnership, or in a limited partnership where certificates are executed, filed, and recorded as provided by Sections 15502 and 15525 of the Corporations Code of the State of California, except partnership interests when offered to the public.
“ (m) Any bona fide joint adventure interest, except such interests when offered to the public.”
After hearing testimony and interpreting the agreement, the court found generally in favor of defendant and against plaintiffs’ contentions. It specifically found that, by virtue of the agreement here under consideration, a bona fide general partnership was formed as authorized by the laws of this state; that defendant at no time ever solicited, by advertising or otherwise, plaintiffs, or either of them, or any of the other parties to said partnership, to enter into said agreement, nor did he ever, in any manner whatsoever, offer to the public an interest in the partnership formed thereunder; that defendant at no time received from the Commissioner of Corporations a permit to enter into said agreement; and that it was not necessary for defendant to obtain such a permit on the part of the partnership or defendant in order to legally accept from plaintiffs contributions to the capital of the partnership formed under the agreement. Judgment was entered for defendant.
Plaintiffs claim that the instrument did not constitute a partnership regardless of its designation as a partnership agreement, since the sole power to manage the business and incur liabilities was in defendant and not in the other parties;
that there is no provision for the sharing of losses between the parties; that plaintiffs, in the event of loss, lose only their investment and any losses in excess of that amount are to be borne by defendant; that in the event of the death of defendant, the right of dissolution is not in the other parties to the agreement, but the power is given to a committee of three, two of whom are not parties to the agreement, and that there is not a community of interest between the parties and the agreement shows on its face that it is an investment contract. (Citing such authority as
O. Krenz C. & B. Works, Inc.
v.
England,
109 Cal.App. 747, 752 [293 P. 689];
Spier
v.
Lang,
4 Cal.2d 711, 716 [53 P.2d 138].)
In
Smith
v.
Grove, supra,
47 Cal.App.2d 456, 461, relied upon by plaintiffs as well as defendant, the court set forth certain rules applicable to the determination of a partnership and said:
“The legal effect of an instrument claimed to be a contract of partnership must be measured by the rules of law applicable thereto. The first rule is statutory. A partnership is ‘. . . an association of two or more persons to carry on as co-owners a business for profit.’ ... Another rule is that a partnership agreement between the parties must provide for the sharing of the profits and losses, or what is the same thing, of sharing the net profits. ... Finally, to constitute a partnership relation, in the agreement ‘there must be such community of interest as empowers each party to make contracts, incur liabilities, manage the whole business-a right which upon the dissolution of the partnership passes to the survivor and not to the representatives of the deceased .... The association must be one for the purpose of jointly carrying on the business. ’ ”
It fairly well appears from the instrument itself that the parties to the agreement were associated to carry on the business of trading in commodities for profit. They carried on the business as coowners because the evidence is uncontradicted that all trading was done in the partnership name. Thus, each partner had an interest in the commodities and commodity futures purchased because he or she owned a part of the partnership capital used to purchase the same. Paragraph 3(b) of the agreement provides that the contributed capital shall be used only to finance the trading in commodities and commodity futures. Similarly, paragraph 10 provides that no partner shall assign, mortgage or sell his share in the partnership or in its capital assets or property.
Moreover, paragraph 11 specifies the procedure for purchasing the interest of the deceased or terminating partner in partnership assets, including open trades or transactions. These provisions clearly establish that each of the partners was a eoowner in carrying on the commodity trading. The agreement is unequivocal in stating the basis under which the partners were to share the net profits of the partnership. The fact that it limited the required contributions of the partners does not detract from the fact that the partners participated in profits and losses on a predetermined basis. The necessary community of interest in the control of the partnership affairs exists under the agreement by reason of the fact that the partners elected to recognize in the agreement circumstances requiring immediate and decisive action in a fluctuating market, and to give almost complete managerial powers to defendant as one of the partners.
(Lyon
v.
MacQuarrie,
46 Cal.App.2d 119, 124 [115 P.2d 594]
; Associated Piping etc. Co., Ltd.
v.
Jones,
17 Cal.App.2d 107, 111 [61 P.2d 536].) The other partners were not completely without control in that they could terminate the agreement and defendant’s managerial powers on 30 days’ written notice. The courts have recognized that the execution of an agreement relinquishing control is itself an exercise of the requisite right of control over the conduct of the partnership business. See
Dills
v.
Delira Corp.,
145 Cal.App.2d 124, 132 [302 P.2d 397], where it is said:
“It is true that when persons jointly associated agree that management of the enterprise be entrusted to one of the group, there may nevertheless be a community of interest in view of the fact that the making of the agreement to relinquish control is itself an exercise of the requisite
right to control.”
(Citing cases.)
These same comments apply to plaintiffs’ contention that there was no partnership under the agreement because all of the remaining partners did not succeed to the right to wind up the partnership affairs in case of the death of the defendant. Paragraph 11(c) of the agreement provides for a committee with authority to “close all open transactions in which this partnership is interested. ’ ’ These persons were not necessarily representatives of the deceased in case of his death during the life of the partnership. They were the agents or representatives of all of the surviving partners and plaintiffs can hardly complain that they were deprived of this right as surviving partners, since they appointed in
advance these agents or representatives, including one of their number, to handle the winding up of the business. The cases relied upon by plaintiffs can thus be differentiated from the agreement here under consideration, and in many of these cases the partnership interest was offered to the public or it was a limited partnership and certificates were not issued under Corporations Code, sections 15502-15525.
We conclude that the evidence and instrument under consideration fully support the finding that a general partnership was formed, and that no partnership interest was ever offered to the public.
(Campbell
v.
Degenther
(D. C., W. D. Pa., 1951), 97 F.Supp. 975.) Accordingly, Corporations Code, section 25100, subdivision
(l),
pertaining to exemptions, would apply.
Judgment affirmed.
Shepard, J., and Coughlin, J., concurred.
Appellants’ petition for a hearing by the Supreme Court was denied June 6, 1961.