Rocky Mountain Stud Farm Co. v. Lunt

151 P. 521, 46 Utah 299, 1915 Utah LEXIS 17

• Court: Utah Supreme Court
• Decided: June 24, 1915
• Docket: No. 2612.
• Status: Published

Opinion

McCARTY, J.

(after stating the facts as above).

We know of no rule or principle of law applicable to the facs of this case upon which the judgments or either of them, can be upheld. The case was tried by plaintiff on the theory 'that the defendants and other parties owning an interest in the horse Buffet were co-partners and that the French Coach Horse Company was a partnership concern. The agreement on which the action is based was executed by the several defendants, each one acting for himself, and not in any sense acting for or representing any of the others, in the transaction; and the action was brought against them in their individual capacity, and not as a company. It is not alleged in the complaint, nor does the complaint contain any matter from which it may be inferred, that the defendants were co-partners, or that plaintiff so regarded them at the time of the execution of the agreement. The defendants framed their answers on the theory that they were a joint stock company, but tried the cause to the court and jury on the theory that they were neither a company nor a partnership. The court submitted the issues to the jury on the theory that the defendants were partners in the transactions mentioned. In its charge the court told the jury that:

“The company referred to in this action as the French Coach Horse Company must be considered only as a partnership, so far as the dealings of its members with third parties or the plaintiff herein are concerned. ’ ’

The court, however, made findings of fact and rendered judgment thereon .against 14 of the defendants in their individual capacity, and not as a company or as a partnership, and judgment was also entered on the verdict returned by the jury in favor of ‘ ‘ all the defendants ’ ’ as individuals, and not as a partnership.

The French Coach Horse Company was not a partnership. Parsons on Partnership, Section 76. Neither was it a joint stock company. 23 Cyc. 467, 469; 17 A. & E. Ency. L. (2d Ed.) 636, 639. The defendants were co-tenants in the ownership of the horse. Freeman, Co-tenancy and Partition, Section 245. Each member of the company could, without obtaining the consent of or consulting the other members, sell or otherwise dispose of his interest in the horse; but 1-5 he could not exercise any control or supervision over the interest owned by the other members unless authorized by them to do so. Neither could either of the parties owning an interest in the horse sell or incumber the animal — the joint property, without the authority or consent of all. 23 Cyc. 494. The contractual relation of the defendants in that regard differed from that existing between members of a partnership, because co-tenants are not. partners. Neither does the relationship of principal and agent exist between them, in the absence of an express or implied agreement to that effect. Wright v. Kaynor, 150 Mich. 7, 113 N. W. 779; 38 Cyc. 101. And in that regard a co-tenancy lacks some of the elements necessary to a creation of a joint stock company. 17 A. & E. Ency. L. (2d Ed.) 636, 637. The rule is elementary that in ordinary partnerships each partner is an agent for the firm, and has power to bind his co-partners by any act or transaction pertaining to the pártnership dealings or that is within the scope of the business carried on by the firm. In Parsons on Partnership, Section 83, the author says that:

“Every partner lias full and complete authority to hind all the partners hy 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.”

i

See 30 Cyc. 477; Story on Partnership, Section 101.

A co-tenant, as stated, has no such power. He cannot sell or incumber the joint property without authority from his co-tenant. Nor can he, unless authorized so to do, exercise any supervision over the interest of - any other co-tenant. In 17 A. & E. Ency. L. (2d Ed.) 672, the distinction between a co-tenancy and a partnership is illustrated as follows:

“There is no relationship existing between cotenants, as between partners, which will render the acts of one cotenant respecting the common property binding on the others. No action of one or more of several tenants in common can impair the rights of the other cotenants. Either cotenant may charge his separate interest, or may convey or mortgage it, or become personally liable upon an undertaking respecting it.”

And again:

“One tenant in common cannot bind his cotenant personally, nor by any unauthorized agreement or act, in respect to the common property.”

In 7 R. C. L. 810, it is said:

“Partnership is distinguished from both species of cotenancy by the means and by the result of its creation. The means of its creation necessarily include an agreement between the parties; whereas, neither a joint tenancy nor a tenancy in common need rest upon any agreement. The ordinary incidents of the partnership relation, whereby each partner becomes the agent of the other, with authority to manage and dispose of the firm property, and to make all contracts within the scope of the business in which the firm was designed to engage, do not arise from a joint tenancy, nor from a tenancy in common. Partnership and tenancy in common also differ from each other in other important particulars. Each cotenant buys in, or sells out, or incumbers his interest at pleasure, regardless of the knowledge or consent or wishes of his co-owners, and without affecting the legal relation between them beyond the going out of one and the coming in of another. One cannot buy in or sell out of a partnership at pleasure, for such an act would of itself work a dissolution of the partnership, and necessitate its final settlement.”

And again, on page 809:

“The partners have a joint interest in the assets of the partnership, and are required to sue and be sued jointly in,reference thereto.”

As pointed out in the foregoing statement of facts, Buffet was valued at $2,600, which amount was divided into fifty-two shares or interests, of the par value of fifty dollars each. These shares or interests were held by twenty-eight persons, each of whom was the owner of from one to four shares. As stated, these people were co-tenants in the ownership of the horse. Therefore, to entitle plaintiff to the exclusive possession of the animal, it was necessary for it to purchase the interests held by each of the twenty-eight co-tenants. ' It is a'well-recognized rule of law that, where inseverable personal property is held by several persons as joint tenants or tenants in common, the tenant in actual possession of the chattel may retain possession against his co-tenants. In 23 Cyc. 490, the rule is tersely, and, as we think, correctly stated as follows:

“Joint tenants’ possession is in common, and each has a right to the enjoyment of the whole property to the extent of his interest. If only one of them is in the occupancy (possession) of the'property, he must he considered as possessing, not only for himself, but also for the others and although it is competent for the joint tenants to make a subdivision of time for the exclusive occupancy (possession) of the whole of the joint property, one^joint tenant cannot recover for exclusive possession of the premises (property) against his co-tenant.”

See, also, Freeman on Co-tenancy and Partition, Section 245; 17 A. & E. Ency. L. (2d Ed.) 669, 670.

Patrick, for the purpose of disposing of Sir Charles Lynn, endeavored to deal with the members of the Horse Company collectively, but failed. He then sought to deal with the different members singly, and in their individual capacity, and succeeded in obtaining signatures of twenty-three of them to the agreement. Instead of relying on the terms of the agreement, and disposing of Sir Charles Lynn to the signers of the instrument collectively, and demanding of them the payment of the $1,250 as therein provided, he demanded of each defendant that’he transfer his individual interest in Buffet to plaintiff and pay his pro rata of the $1,250. It appears that each of the twenty-three defendants transferred his interest in the horse to plaintiff and sixteen or seventeen of the defendants paid their pro rata of the $1,250. David C. Bul-loch, one of the defendants, at the time he transferred his interest, gave Patrick an instrument in writing, of which the following is a copy:

“Cedar City, August, 1910.

“For a valuable consideration I hereby transfer, assign and dispose of all my right, title and interest in the coach stallion known as Buffet, the same being free from all incumbrances and liabilities, and I defend E. W. Patrick as being the owner of the same in the sum of one hundred dollars.

“ (Signed) David C. Bulloch.”

Bulloch received from Patrick an instrument in writing of which the following is a copy:

“ $130.60. Cedar City, August 19, 1910.

“Received from David C. Bulloch payment in full for one hundred and thirty 60/100 dollars, stock in the Clydesdale stallion Sir Charles Lynn. (Signed)

“The Rocky Mountain Stud Farm Co.,

“Per E. W. Patrick, Pres.”

A similar receipt was given to each of the other defendants who transferred their interest in Buffet to plaintiff and made the cash payment demanded by Patrick. These defendants thereby became co-tenants of plaintiff in the ownership of Sir Charles Lynn, and plaintiff became a co-tenant of the owners of Buffet who did not sign the agreement or otherwise dispose their interests in the horse. In other words, plaintiff sold sixteen or more separate and distinct interests in Sir Charles Lynn and purchased an interest in Buffet. The deal as to these defendants, therefore, became and was a completed transaction.

While plaintiff may have a separate cause of action against each of the defendants who signed the agreement, and who have made default in the payment of their portion of the $1,250, it cannot, under the facts as disclosed by the record, maintain an action against those who have paid.

Counsel for the defendants, in the discussion of the ease in their printed brief, lay much stress on the claim that each defendant signed the agreement with the understanding or on the express condition that all the members of the Horse Company should sign it before it would become a valid contract, and since Patrick failed to obtain the signatures of all of the members it never became a completed contract. 6, 7 Whatever defense the several defendants may have had to the enforcement of the agreement on that ground in the first instance, they, by transferring their interests in Buffet to plaintiff with full knowledge that some of the members had not and would not join in the exchange of horses, /will be deemed to have abandoned it, especially in view of the fact that Patrick, when he came to close the transaction, instead of relying on the terms of the agreement and dealing with them collectively, dealt with each individually; that is, the deal or trade he made with each defendant was a complete transaction in and of itself, separate and apart 'from the transactions he had with the other defendants, and none of the defendants' were required to pay any more for an interest in Sir Charles Lynn than he would have been required to pay if all the members of the company had signed the agreement. In other words, being in possession of the horse Sir Charles Lynn, they are in practically the same situation as they would be if all the members of the Horse Company had signed the agreement and each had paid his pro rata of the $1,250, except they have plaintiff for a co-tenant in the ownership of Sir Charles Lynn, instead of the six members of the company who retained their interest in Buffet. If all the members of the company had joined in the exchange of horses, they would have been jointly and severally liable to plaintiff under the agreement for the $1,250, and as between themselves each would have been required to pay twenty-four dollars in cash for each interest he owned in Buffet.

Defendants having procured, in some respects, a more favorable settlement than they would have been entitled to if all the members of the company had joined in the deal, we fail to see wherein they were prejudiced because of Patrick’s failure to obtain the signatures of all the members to the agreement. None of the defendants were therefore entitled, under any rule or principle of law governing transactions of the character here involved, to a,judgment against the plaintiff. Moreover, as we have stated, when the several defendants transferred their interests in Buffet to plaintiff, and paid their proportion of the $1,250 mentioned in the agreement, and were given an interest in Sir Charles Lynn, the deal as to each of them became a completed transaction. This would be so, even though the defendants were, as plaintiff claims, and as tbe court at certain stages of the proceedings seemed to hold, partners in the transaction herein mentioned. In Story on Partnership, Section 155, the author says:

“When the liability has clearly attached, and become absolute and binding, subsequent transactions between such third persons and one of the partners may work an extinguishment of such liability, either wholly or partially. Thus, if. a partnership were originally liable to a creditor for a debt, and he should afterwards accept a security of one partner, at all events if it should be a security of a higher or negotiable nature for the whole debt, as a satisfaction thereof, wholly or in part, it will operate as an extinguishment of the debt of the partnership. Upon like ground, if the creditor should receive the separate security of each partner for his own share of the debt in satisfaction thereof, all joint liability of the partnership for the debt would henceforth be gone.” (Italics ours.)

In this case the evidence is all but conclusive that most of the defendants who paid their portion of the $1,250 mentioned in the agreement did so with the understanding 8, 9,10 and on the express condition that such payments should release them from all liability to plaintiff under the agreement. It is a well-recognized rule of law that, in ordinary partnership, a release by a creditor of one or more members from partnership liability operates as a. release of all the members from such liability. 22 A. & E. Ency. L. (2d Ed.) 182; Parsons on Partnership, section 116.

A joint-stock company is generally classified as a partnership possessing some of the characteristics of a corporation. Parsons on Part., sections 431-434; Story on Part., section 164; 2 Page on Contracts 162; 17 A. & E. Ency. L. (2d Ed.) 637, 638; 23 Cyc. 467-469. In 2 Cook on Corporations, section 504, it is said:

“A joint-stock company lies midway between a corporation and a copartnership.”

And again in section 508:

“A joint-stock company is, in regard to the liability of its members to creditors of the company, a partnership; its members are liable as partners; and the ordinary rules of partnership exist between the members themselves.”

See 4 Words and Phrases, 2817. See, also, volume 2, Second Series, 1234-1236.

The distinction is, so far as this case is concerned, unimportant. It may be contended, however, that since defendants have characterized themselves in their answers as a joint-stock company they are not entitled to have the ease considered and ruled on any other theory. Assuming, for the sake of argument, that defendants were, as the court charged the jury, partners in the transactions herein referred to, the court should have submitted to the jury the question of whether the payments made by the majority of the defendants of their portions of the $1,250 and the transfer of their respective interests in Buffet to plaintiff were intended as an accord and satisfaction of the claims, — discharge the obligation, — as to. them.

“The general rule that the discharge of one joint debtor discharges his co-joint debtor is applicable to a discharge of one joint debtor by way of accord and satisfaction.” 1 R. C. L. 201.

The court, instead of submitting this question to the jury, erroneously charged them that the defendants, in “making such payments, * * * affirmed and ratified such contract and would be liable to plaintiff thereunder,” and further erroneously charged that if the jury believed that certain defendants “made payment to plaintiff on the contract in question, * * * and the plaintiff then promised said defendants * * * that if they would make such payments plaintiff would take such payments in full for the amounts due from them, and that relying upon such promise said defendants did make such payments, * * * such promise on the part of plaintiff' was without consideration, and the plaintiff is not bound thereby.” We invite attention to this phase of the controversy for the purpose of emphasizing what we have already said, namply, that there is no rule of law applicable to the facts upon which the judgments, or either of them, can be affirmed, or the action entertained, regardless of whether defendants were cotenants, a joint-stock company or a partnership.

The cause is reversed, with directions to the trial court to set aside and vacate the decision and judgments rendered, and to dismiss the action as to all the defendants, but without prejudice as to any right of action plaintiff may have against the several defendants who have failed to pay their pro rata of the $1,250 “boot” money. Costs to the defendants.

STRAUP, C. J., and FRICK, J., concur.