Chase v. Barrett

The Chancellor. As this cause was heard on bill and answer, all the allegations in the answer of the defendants are admitted to be true, for the purposes of this suit. The facts there stated show that the complainant has no legal or equitable claim against any of the defendants, unless the agreement of April, 1828, constituted the parties thereto co-partners. If they were copartners, the complainant probably has a legal right to an account, and to a portion of the partnership fund ; notwithstanding it appears by the answer that the intestate actually received in his support and maintenance, and other equitable claims against him, the whole amount which he contributed towards the partnership fund. Although the complainant agreed with the defendant A. Barrett to relinquish his claim upon the estate of his son if Barrett would pay the debts, I infer from the pleadings that the complainant had not then taken out letters of administration on the estate. And he was not legally bound in his character of administrator for the performance of an agreement made previous to that time, although he might be considered as bound in honor to perform the same. The vice chancellor was right, however, in allowing to A. Barrett all sums actually paid by him under that agreement, even if the complainant was entitled to a share of the whole property as the representative of a deceased partner. I shall therefore proceed to inquire whether the agreement of April, 1828, constituted the parties thereto copartners as between themselves, so as to entitle the representative of the son-in-law to one eighth of the property, although, by the act of God, it has become impossible for the intestate to perform his part of the agreement, and to carry into effect the original intention of the parties. If the question to be determined was, whether this was such an agreement to share in the profits of a joint concern as to render all the parties to the same liable for debts contracted in the regular prosecution of their business, it might perhaps admit of a ready solution. A person who contracts for a share of the profits of a particular trade or business, as profits, has, upon principles of public policy as applied to commercial contracts, been holden to be a partner as to third persons. Upon the principle, I presume, that ho who contracts for and relies [160] upon a part of the profits of the business as a compensation for his services, or for the use of his capital, is in natural justice bound to pay the creditors who have, upon the ordinary terms of credit, furnished the merchandize or other means oüt of which those profits were to arise, or by which they might be increased for his benefit. Whether this principle has not been carried too far, in extending it to the case of a mere servant, or agent of the trader, who contracts for a share of the actual profits of the business as a reward for his services, and who is not holden out to the world as a partner, is a question not necessary to be discussed in this case. It is certain, however, that such a partnership in relation to the rights of third parties, founded upon commercial policy, cannot be construed a contract of partnership between the trader and his servant, so as to give any rights to either contrary to their own intentions. To constitute a partnership as between the parties themselves, there must be a joint ownership of the partnership funds, according to the intention of the parties; and an agreement, either express or implied, to participate in the profits and losses of the business, either rateably or in some other proportion to be fixed upon by the copartners. When, by the agreement of the parties, they are to participate in the profit and loss, and the legal title to the property is in the parties jointly, a dissolution of the company, by the death of one of the parties, leaves the title to the property in the survivors and the personal representative of the decedent; and there must be an account and distribution of the partnership effects, unless the parties had previously provided for the continuance of the partnership by the survivors, or otherwise. What then was the nature of the agreement into which the parties entered in this case, according to the manifest intent as apparent from the agreement when taken in connection with the situation and relationship of the several parties thereto 1 The father, a man of considerable wealth, consisting principally of real estate, agrees with his three sons and his son-in-law, who appear to have had but little property of their own, that they shall work such farms as he then owns, or as he may afterwards purchase, for the term of five years, and shall put in all their property for his benefit, except their [161] household furniture; that he would put on to the farms all the teams, tools and implements of husbandry he then owned ; that his younger sons should also work on the farms; and that at the expiration of the five years, the three sons and the son-in-law who were parties to the agreement, should have the one half of the chattels which the father owned at the time of making the agreement, and one half of the property produced by carrying on the farms, deducting the expenses, and also one half of the real estate he then owned, or which he should own at the expiration of the agreement. In the mean time, the several parties were to have their living and expenses out of the products of the farms; and the teams and other implements of husbandry, which might be wanting during the five years, were to be paid for out of the produce of the farms. I think it is evident, from the provisions of this agreement, that it was the intention of the father to keep the legal title to the whole real and personal property in his own hands during the five years; and that the performance of the services by the sons and son-in-law was a condition precedent to the conveyance to them of a share of the property. It was in fact a family arrangement, with a view to the future distribution of the one half of all his property among this portion of his family, reserving the other half for himself and his other children. The real estate was as much a portion of partnership property, under this agreement, as the personalty; and if the complainant is entitled to have an account and distribution of the latter, on the principles of a copartnership, he is also entitled to a conveyance of a portion of the real estate. Although a contingency has happened which neither party anticipated, that cannot authorize the parties to make a disposition of the property which none of them ever contemplated, and which it is impossible to believe would have been agreed to by them, if this contingency had been foreseen as one which would probably happen. The most that a court of equity can do in a case where an agreement cannot be carried into effect, according to the intention of the parties thereto, in consequence of the act of God, or something over [162] which the parties could have no control, is to adopt such an equitable arrangement as the parties probably would have inserted in the agreement, on that subject, if they had foreseen the probability of such an event and provided for the same. (Newton v. Rowse, 1 Vern. Rep. 460. Quick v. Stuyvesant, 2 Paige’s Rep. 84.) if these parties, at the time of making this agreement, had anticipated that the son-in-law might be taken sick immediately afterwards, so as to render it impossi- ' ble for him to labor as contemplated by the agreement, and that he might die within a few months thereafter, intestate and without issue, leaving the whole of his real estate and one half of the personalty to go to his own relatives, is it probable that the parties would have made any stipulation except such an one as was entered into between the complainants and A. Barrett, immediately after the death of the intestate ? As that agreement was fulfilled in good faith on the part of A. Barrett, so far at least as the complainant had any interest in the performance thereof, there was no foundation for this suit on that ground. As I am satisfied the vice chancellor erred in supposing the defendants were liable to account upon the footing of a partnership, his decree must be revered, with costs. The complainant’s bill must also be dismissed. But as the complainant was prosecuting his suit in his character of administrator, and has no funds of the estate in his bands, I shall not charge him with the costs of the proceedings before the vice chancellor.