Willoughby v. Hildreth

167 S.W. 639, 182 Mo. App. 80, 1914 Mo. App. LEXIS 392

• Court: Missouri Court of Appeals
• Decided: June 16, 1914
• Status: Published

Opinion

FARRINGTON, J.

Suit by three partners doing business under a firm name to recover for certain flour, feed and meal alleged to have been sold to sixteen residents of Jasper county on the theory that the defendants were partners in the Carthage Cash Store. Plaintiffs were successful at the trial. Defendants each denied the existence of a partnership among them under oath. Because of dismissals and failure to join in the appeal, but four of the defendants remain in the contest to support the contention that there was no partnership existing among the defendants, — namely, Hildreth, Hill, Hoofnagle and Givler. A jury was waived in the circuit court, and the trial proceeded. No declarations of law were asked or given. Hence, the finding in favor of plaintiffs will not be interfered with if there is any substantial evidence of the existence of a partnership among the defendants. To make the issue plain, the defendants (appellants) contend, in effect, that the evidence was such that, if requested, the trial court would have been obliged to declare as a matter of law that no partnership existed among the defendants.

There is involved the sum of $64.60, and, to be sure, a principle. Indeed, this law suit is all that remains of the life and death of a collossal idea — a perfectly legitimate scheme that was put to work in Jasper county in the year 1909', which was designed to organize the farmers of the United States of America as a fraternal order, with all the proper dignitaries, a farm products sales agency and brokerage concern, and a purchasing agency which might operate a grain elevator, a storage warehouse or a cold storage plant. The name of the organization was ‘ ‘ The Farmers ’ Cooperative League.” There was no incorporation. There is no evidence as to how the organization was perfected, but the constitution of the order is in evidence, and it appears that one Whittaker was president and one Noble was “organizer” of the national league. The scheme contemplated a lodge of four grand divisions — national, state, county, and local, each having a full quota of officers. There might be many local lodges in a county, each having a president, vice-president, secretary, treasurer, inside watchman, outside watchman, chaplain, and an executive board of three members elected annually; and the representatives of the combined local lodges in a county constituted the county league, having similar elective officers, and an executive board, and a “county business manager.” Noble filled the last-mentioned office at the time the Carthage Cash Store was started. Only two local lodges are referred to in the evidence, and if there were others they are not mentioned. There is no way of knowing from the record whether a state league was ever organized, or whether the so-called national league ever set foot out of Jasper county. 'The constitution provided that it should he the duty •of the county league immediately after its organization “to take such steps as may he necessary to establish at the most convenient and available point in the county, a storage warehouse, grain elevator, cold storage plant, or such other buildings as may be, in their judgment necessary for the successful and economical handling of such products of the farm and general merchandise as the circumstances and general surroundings will justify.” Accordingly, a warehouse was established in a part of a building occupied by a firm •conducting a general store, which was put in charge of the “county business manager” who received orders from the local lodges in the county and bought for cash from this general store in jobbing quantities .at wholesale prices the goods ordered. Practically all the witnesses say that Noble was the first county business manager. This warehouse was continued for several months. In February, 1910, however, the Carthage Cash Store opened for business in another building .and the warehouse was discontinued.

Now the evidence shows without dispute that money was advanced by certain members of the “Pearl Hill” and “Pleasant Grove” local lodges for the purpose of starting the Carthage Cash Store. There is ■some evidence that the matter of establishing the warehouse was discussed to some extent at the meeting of the county lodge, but no action seems to have been taken with reference to the establishment of the Carthage Cash Store. The defendants testified that Ihe money was merely loaned by individual members and that they expected to get it back. Noble, who received and invested it, so testified. He also testified that a note was given for part of the money so advanced; that he put no money in the venture; that there was no agreement that any member of the organization should have any certain interest in the stock that he knew of; that the stock was not divided into shares; that he was under the direction of the executive board of the league; that when he was ready to turn the store over to some, one else he consulted the executive board; that the board employed Downs; that the store was run for the benefit of the Farmers’ Cooperative League; that the board audited his accounts; that his salary as business agent of the league was thirty dollars per month which was paid to him by the county secretary; and that they sold to members cheaper than to others, and also handled their produce to the best advantage.

The testimony of Williams (one of the defendants, originally) is that the note referred to by Noble was made payable to the “Pearl Hill” local, and that most of the members of that lodge put up money. Moss, a member of that local, and a defendant originally, didn’t know whether the money was raised at a meeting night or not; he testified that the money he loaned to Noble was loaned when the note was given, that the different amounts were subscribed at different times, and that it was the money of individual members. Hoofnagle, ap appellant, another membor of that local, said he loaned some money and sent Moss to town with it, and thought he would get it back. Noble testified that appellants Hoofnagle and Givler were among those who advanced the money, and appellant Hill admits in his testimony that he loaned part of it: Appellant Hildreth, a member of the “Pleasant Grove” local, said that as an individual he never invested any money in the store.

There is evidence that at first the members of the league bought their goods for less than was charged nonmembers who patronized the Carthage Cash Store. Defendants said that later on this practice was discontinued and that members paid the same as nonmembers. Plaintiffs’ witness Downs, who had charge of the Carthage Cash Store for a while, testified that Noble employed him, and that he knew nothing about the other parties; that the store aimed to make a profit on the goods sold to those who were not members of the league; that when he quit, he turned the store over to one Pritshau and to Noble in the presence of a committee composed of three men of whom Hoofnagle was one, and that this committee asked Pritshau if he was satisfied he was getting what the invoice stated, to which Pritshau replied that he was, and that the committee then said: “So that relieves you, Downs, and holds you, Pritshau. ’ ’

Appellant Hildreth, secretary of the “Pleasant Grove” local, and secretary of the county league, testified that Noble “simply ran the whole league;” that Noble made two reports- to the county league as to his management of the Carthage Cash Store, and that he (the witness) was present most of the time and thought appellants Hill, Hoofnagle and Givler. were also; that this report was supposed to be a general report of the business, that went through his hands as manager of that store. He testified that£ £ the store was started by Noble and run for the league;” that it was never said in his presence that any member would ever derive any benefit from the store or own any interest in it; that “they first started at Wells & Wiggins store. The firm presently moved over to the Carthage Cash Store on Grant.” He testified that Hoofnagle was a member of the executive board of the county league; that he did not know of his own knowledge who owned the store.

Wells, who conducted the store where the first warehouse was maintained, and who was not a member, testified that during that time committees were calling frequently with reference to the business and that among them were appellants Hill, Hoofnagle and Givler; that after the Carthage Cash Store had been running for some time, it run behind in payments for goods purchased of witness on credit and that a committee of three men (Hoofnagle, Dodson and Boggs) purporting to represent the farmers’ league came and guaranteed the account to the amount of $175; “that is, they authorized us to sell up to the amount of $175 and they would stand back of it;” that when the store collapsed, it was owing them more than $175 and that Boggs and Hoofnagle came in and paid their one-third each. Appellant Hill testified, as to this notification, that the county league informed him as chairman of the executive board to notify Wells not to sell above a certain amount to the Carthage Cash Store. Hill was vice-president and then president of the county league. He testified that Noble made a written report which was approved by the county league. As to the money advanced, he was asked: “You were to get it back, if the store made good? A. Yes, sir; we were to get it back if the store came out all right.” Again: “Did the store make a profit?” “A. I do not know that they did. We were to pay dues to keep up the business and pay the trade agent. ’ ’ He testified that the county league elected a committee to investigate the running of the store; that after Noble turned over the store to Downs, the former made no more reports relative to the store, and that Downs run it, taking his salary out of the store. Further: “I never gave him (the business manager) authority to buy goods on credit. He started out on a cash basis to do business strictly for cash. That was the way we started. We put up money to that effect.”

It may be stated at this place that there is no evidence of any activity of the league other than in the running of the warehouse and then taking such an interest in the Carthage Cash Store as the evidence hereinbefore detailed tends to prove.

It is clearly shown that appellants Hill, Hildreth, Hoofnagle and Givler took charge of the store at the end and sold the goods on hand and applied the proceeds toward the payment of the debts. Hill testified that he was chairman of the executive committee of the county league at the time the store was closed, and that the money in the county league’s treasury was upon action duly taken applied on the debts of the store. Further: “Some of us after he wound up the store made an effort to get the members of the organization to come in and pay their part of the debt. Each member pay a couple of dollars, and pay the debt. We thought that would be the way to pay the debt. No, we could not get the members to do that. Some of them did not think that the right way to do. Some did. We just had to let it come before the higher authorities. ’ ’ And defendants Hill, Hildreth, and Grivler, were plaintiffs ’ witnesses at the trial. Defendants testified that they took charge of the store simply because it was turned over to them and not because they had any interest in it.

Hildreth wrote this letter to plaintiffs’ attorney on October 21, 1911: “Tours of the 19th received last night. There are something like 150 of us that composed the ‘ Farmers ’ League. ’ The cash store belonged to the League we sold to the present owner. S. P. Hill was president. We are settling the accts. as fast as we can. This is our busy time. Now we are going to call a meeting within ten days if you wait a few days it will not be necessary to sue on the acct. ’ ’

On October 31,1911, Hill wrote this letter to plaintiffs’ attorney: “Tours of the 28 at hand. Will say we have a meeting next Saturday in Carthage and will come and see you we have some money on hand. I think enough to settle your account.”

On November 28, 1911, Hildreth wrote this letter to one of the plaintiffs: “In ordér to facilitate settling the accts of the Carthage Cash Store we would like to have the Reeds Milling Co’s (plaintiffs’) acct placed in the hands of H. L. Bright for collection, yours, Wells-Woodard, and Lamar Broom Co. are the three largest that are not settled. There are a hundred and fifty 1501 members men scattered over the county, we cannot get them together or get anything out of them, ourselves, so we have decided to let you fellows start suit against the whole league. We furnish Bright the names when they find they are in for a law suit we think they will show up and pay the assessment. Without going into court. I can’t see any other way to get at it can you?” As to this letter, Hildreth was asked: “You knew at that time, did you not, that you owned that store? A. Just as I told you before, I don’t know positively. I supposed we did. ’ ’

The foregoing is indeed a brief summary of the evidence adduced at the trial.

Plaintiffs were compelled to make their case by putting certain of the defendants on the witness stand.

The evidence fails entirely to establish a partnership by estoppel. (See Ellis v. Brand (Mo. App.), 158 S. W. 705, 706; Konta v. Stock Exchange, 189 Mo. l. c. 38, 39, 87 S. W. 969.) There is no evidence that defendants held themselves out to plaintiffs as being partners or that plaintiffs supposed they were partners. The record is blank as to this. The only one of the three plaintiffs who testified stated that he solicited trade from two different managers of the Carthage Cash Store, and that he had no conversation with any of the defendants with reference to this matter prior to the time the goods were sold.

Our Supreme Court in Chapin v. Cherry, 243 Mo. l. c. 402, 147 S. W. 1084, approves the following definition of a partnership contract given in 30 Cyc. 349 “A contract of two or more competent persons to place their money, effects, labor and skill, or some or all of them, in lawful commerce or business, and to divide the profits and bear the losses in certain proportions. ’ ’

The existence of a partnership is a question of intention and each case must be determined on its own facts. [McDonald v. Matney, 82 Mo. 358; Torbert v. Jeffrey, 161 Mo. 645, 61 S. W. 823; A. Graf Distilling Co. v. Wilson, 172 Mo. App. 612, 619, 156 S. W 23; Ellis v. Brand, supra, l. c. 708.] “If there be no specific ■contract of partnership between the parties, a court will look to the entire transaction and from that construed in the light of surrounding circumstances, determine what was the intention of the parties, and this intention will be the controlling factor in determining whether or not a partnership existed.” [Beller v. Murphy, 139 Mo. App. l. c. 668, 123 S. W. 1029; Diamond Creek C. G. & S. M. Co. v. Swope, 204 Mo. l. c. 58, 102 S. W. 561.] “An agreement to share profits is an essential element in every partnership and the absence of profit sharing is conclusive that a partnership does not exist.” [Sawyer v. Burris, 141 Mo. App. l. c. 117, 121 S. W. 321.] Hence it is held that participation in the profits of a business raises a presumption of the existence of a partnership. [Torbert v. Jeffrey, 161 Mo. 645, 61 S. W. 823.] It is primafacie evidence of partnership. [Goddard-Peck Grocer Co. v. Berry, 58 Mo. App. 665; Philips v. Samuel, 76 Mo. 657.] But this is not saying that the law ever presumes the existence of a partnership. [See Chapin v. Cherry, 243 Mo. 376, 147 S. W. 1084.] “If it is obvious as between the parties, that no partnership was intended, then the partnership relation does not obtain between them, whatever arrangements they may have had for conducting the business.” [Sawyer v. Burris, 141 Mo. App. l. c. 117, 121 S. W. 321.] In the case of A. Graf Distilling Co. v. Wilson, supra, l. c. 619, 620, the Missouri decisions are carefully reviewed, and attention is called to the fact that the following quotation from Story on Partnership (6 ed.), Sec. 49, was made in Kelly v. Gaines, 24 Mo. App. 506: “In short the true rule ex aequo et bono, would seem to be that the agreement, and the intention of the parties themselves, should govern all cases. If they intended a partnership in the capital stock, or in the profits, or in both, then that the same rule should apply in favor of third^ persons, even if the agreement were unknown to them. And, on the other hand, if no such partnership were intended between the parties, then that there should be none as to third persons, unless where the parties had held themselves out as partners to the public, or their conduct operated as a fraud or deceit, upon third persons . .

There was no attempt to hold the league, but only certain members thereof. The league was a voluntary unincorporated association. Its constitution must be looked to in order to ascertain the relationship between members, as that is the contract. [Konta v. Stock Exchange, 189 Mo. l. c. 38, 87 S. W. 969; Hammerstein v. Parsons, 38 Mo. App. l. c. 336.] Such an association may be a partnership, but such relation depends upon agreement between the members. [O’Rourke v. Kelly, 156 Mo. App. 91, 135 S. W. 1011.] We find nothing whatever in the constitution of the Farmers’ Cooperative League that contemplates the formation of a partnership. The evidence shows that no action was taken by the league concerning the starting of the Carthage Cash Store.

All that is shown here, giving plaintiffs ’ evidence the widest possible range, is that some of the original defendants and three of the four appellants loaned or furnished money to Noble to start the store; that committees from the county league at times appeared at the store and did things which, had plaintiffs been present or known of might have established a partnership by estoppel; and that at the collapse of the store the four appellants purporting to represent the league sold the stock of goods on hand and applied the proceeds to the payment of the store debts, and succeeded in getting for this purpose what money there was left in the treasury of the then dying county league, and made certain statements in letters that might tend to fasten liability upon the league. Until a prima-facie case is made out that a partnership exists, the fact whether a partnership exists cannot be proved by acts and declarations of an alleged ‘partner, being admissible at that time as corroborative evidence. [Oil Well Supply Co. v. Metcalf, 174 Mo. App. l. c. 560, 160 S. W. 897.] There is absolutely no evidence of an agreement among members of the league, or among those who advanced money to start the store, to share profits, and this, under the holding in Sawyer v. Burris, 141 Mo. App. l. c. 117, 121 S. W. 321 — that an agreement to share profits is an essential element of every partnership and that the absence of profit sharing is conclusive that a partnership does not exist — blasts the theory of the plaintiffs in this case. In joint ownership of personal property, community of interest does not necessarily evidence a partnership. Indeed, when such community of interest is held by members of a social or fraternal organization, the presumption is against the existence of a partnership. [30 Cyc. 368, 369.] There being no substantial evidence of the existence of a partnership in fact among the defendants, the appellate court will not make a contract for the parties, and the judgment is accordingly reversed.

Robertson, P. J., and Sturgis, J., concur.