TOULMIX, District Judge,
after stating the case as above, delivered the opinion of the court.
There are several assignments of error, the first of which is that the circuit court erred in deciding that there was a partnership between the complainant and the defendant. If this assignment is sustained, there can be no need for ns to consider the others. The controlling issue in the case is whether the relationship between the [410] complainant and Stevens was that of copartners. The parties, in their pleadings and in their testimony, agree that the contract between them, by which the complainant claims a partnership was formed, and under which he advanced his money, was made in October, 1890. They also agree that the brief partnership, for the purpose of doing a real-estate, stock, and brokerage business, formed in 1891 between Stevens, Graham, and the complainant, had nothing to do with the contract of 1890 referred to. It appears from the testimony that, at the time the agreement between the complainant and Stevens was made, the latter1 was, and for some time had been, engaged in buying and selling phosphate lands in the state of Florida, and had secured options on, and a control of, a large quantity of such lands, and that to complete the purchase of these lands it would require a large amount of money; that it was agreed between the parties that the complainant was to advance money to Stevens, to invest m phosphate lands, and was to have an interest in the profits realized therefrom, and it was also agreed that the complainant would accept Stevens’ receipts for any money he might contribute to the adventure. There were no definite terms of partnership employed or agreed on in the .contract. There was no estimate or valuation placed on the options and contracts already secured by Stevens, and there was no agreement as to the amount of money, time, or attention that was to be contributed to the business by either of the parties. The complainant was not bound to contribute any certain sum, but for such sums as he did contribute he was to accept Stevens’ receipts, and Stevens was to use the money in dealings in phosphate lands. There was no agreement as to the proportion of the profits he was to receive; and none as to his sharing the losses. Indeed, the complainant himself does not undertake to state, in his testimony, what was definitely said by him and by, Stevens about a copartnership. His testimony on the subject is indefinite and uncertain. He says that his intention was to form a copartnership, and his understanding was that they were entering into a copartnership, and states, as a reason for such understanding, the fact of his contributing funds to carry it on. He says that he agreed to accept Stevens’ receipts for any money he might contribute, and that he was to share in the profits, but that there was no definite agreement as to the proportion of the profits he was to receive. The contract between the parties .was entirely verbal, except so far as the same is expressed in the receipts given by Stevens to the complainant for the moneys contributed by him. Stevens testifies that the receipts were intended to express the contract between the complainant and himself, and he says that he guarantied to the complainant that his interest in the profits would not be less than double the amount of money he might contribute to the adventure, and that it was upon these terms the complainant advanced his money for investment, and that there was no partnership agreed on or intended. Other evidence in the case corroborates Stevens’ statement as to this, and that he guarantied the complainant against any loss in his investments. One Gardner testifies that he was present when the agreement was made between the [411] comp lain ;tní; and Stevens, and that the agreement was that the former was to furnish some money, which the latter was to invest in lands, and which he agreed to double, and that neither party said anything about a partnership.
Free access — add to your briefcase to read the full text and ask questions with AI
TOULMIX, District Judge,
after stating the case as above, delivered the opinion of the court.
There are several assignments of error, the first of which is that the circuit court erred in deciding that there was a partnership between the complainant and the defendant. If this assignment is sustained, there can be no need for ns to consider the others. The controlling issue in the case is whether the relationship between the [410] complainant and Stevens was that of copartners. The parties, in their pleadings and in their testimony, agree that the contract between them, by which the complainant claims a partnership was formed, and under which he advanced his money, was made in October, 1890. They also agree that the brief partnership, for the purpose of doing a real-estate, stock, and brokerage business, formed in 1891 between Stevens, Graham, and the complainant, had nothing to do with the contract of 1890 referred to. It appears from the testimony that, at the time the agreement between the complainant and Stevens was made, the latter1 was, and for some time had been, engaged in buying and selling phosphate lands in the state of Florida, and had secured options on, and a control of, a large quantity of such lands, and that to complete the purchase of these lands it would require a large amount of money; that it was agreed between the parties that the complainant was to advance money to Stevens, to invest m phosphate lands, and was to have an interest in the profits realized therefrom, and it was also agreed that the complainant would accept Stevens’ receipts for any money he might contribute to the adventure. There were no definite terms of partnership employed or agreed on in the .contract. There was no estimate or valuation placed on the options and contracts already secured by Stevens, and there was no agreement as to the amount of money, time, or attention that was to be contributed to the business by either of the parties. The complainant was not bound to contribute any certain sum, but for such sums as he did contribute he was to accept Stevens’ receipts, and Stevens was to use the money in dealings in phosphate lands. There was no agreement as to the proportion of the profits he was to receive; and none as to his sharing the losses. Indeed, the complainant himself does not undertake to state, in his testimony, what was definitely said by him and by, Stevens about a copartnership. His testimony on the subject is indefinite and uncertain. He says that his intention was to form a copartnership, and his understanding was that they were entering into a copartnership, and states, as a reason for such understanding, the fact of his contributing funds to carry it on. He says that he agreed to accept Stevens’ receipts for any money he might contribute, and that he was to share in the profits, but that there was no definite agreement as to the proportion of the profits he was to receive. The contract between the parties .was entirely verbal, except so far as the same is expressed in the receipts given by Stevens to the complainant for the moneys contributed by him. Stevens testifies that the receipts were intended to express the contract between the complainant and himself, and he says that he guarantied to the complainant that his interest in the profits would not be less than double the amount of money he might contribute to the adventure, and that it was upon these terms the complainant advanced his money for investment, and that there was no partnership agreed on or intended. Other evidence in the case corroborates Stevens’ statement as to this, and that he guarantied the complainant against any loss in his investments. One Gardner testifies that he was present when the agreement was made between the [411] comp lain ;tní; and Stevens, and that the agreement was that the former was to furnish some money, which the latter was to invest in lands, and which he agreed to double, and that neither party said anything about a partnership.
We think the character of the contract may be determined by the receipts exhibited in the testimony. They furnish the only written evidence which the parties themselves have made of their agreement. Two of the writings are more than receipts. They are contracts requiring Stevens to return the money advanced by the complainant to him when the lands in which the money was invested w'ere sold. One of the receipts expressly provides that the complainant shall have, as use for the money, an equitable interest in all profits from the sale of the lands. We think these receipts disclose a purpose and agreement; to repay the money at all events. It was to be paid when the lands to the purchase of which it was to be applied should be sold, and whether they were sold at a profit or a loss. The stipulation is not that the money advanced would be1 repaid out of the proceeds of the land when sold, but would be repaid when the lands were sold; the sale of the land fixing the time of the payment of the money. The testimony of the witnesses by whom it is sought to prove Stevens’ admission of a partnership with the complainant is indefinite and uncertain, both as to what was said b.v Stevens in regard to his business relations with the complainant, and as to the time when the statements were made. They doubtless referred to the partnership in the real-estate and brokerage business of 1891-92, which had no connection with the partnership sough^to he established in this suit, or to the particular land deals in which the complainant’s money was used. "A partnership is a voluntary contract between two or more persons to place their money, effects, labor, and skill, or some, or all of them, in lawful business, and to divide the profit and bear the loss in certain proportions.” 3 Kent, Comm. 20. If it be one of the terms of the contract that each shall share in the risks and losses, and also in the profits to he realized, this constitutes them partners inter scse. These risks or interests are not required to be equal, nor is it important that they shall agree in kind. The investment may be unequal, and the parties may agree to divide the profits unequally, hut there must be a mutuality of risks, — an interest both in the profits and losses. Smith v. Garth, 32 Ala. 368. In the case of Cassidy v. Hall, 97 N. Y. 165, it is said: “It is well settled that when a party is only interested in the profits of a business, as a. means of compensation for money advanced, lie is not a partner.’' The receiving of part of the profits of a commercial partnership in lieu of or in addition to interest, by way of compensation for a loan of money, does not make the lender a partner with the borrower. Meehan v. Valentine, 145 U. S. 611, 12 Sup. Ct. 972. Thus a party may by agreement receive, by way of interest, a portion of the profits of an adventure, on money loaned to he used in the adventure, without becoming a partner. Judge Story says that the true rule is that “the agreement and intention of the parties themselves should govern in all cases.” Story, Partn. §§ 1, 38, 49. [412] This certainly must be the rule, as between the parties themselves. In this case there are two of the essential requisites of a partnership wanting, — a joint fund and a common risk; and our opinion is that the testimony wholly fails to establish an agreement and intention of the parties to create the partnership alleged in the bill. The decree of the circuit court is reversed, and the cause remanded, with directions to dismiss the bill, but without prejudice to the complainant’s rights to proceed against the defendant at law oi“ in equity, as he may be advised his interests require.