Crow v. Green

Mr. Justice Green delivered the opinion of the court April 26th, 1886. Conceding that although some of the defendants except Boyd signed the agreement in suit, they are nevertheless to be treated as partners, because they were members of a proposed corporation which never organized, vet they were partners, if at all, jointly with the plaintiff. He was one of the largest subscribers to the stock of the company, and represented a much larger proportion of the capital of the concern than many of the defendants. The contract was for the purchase of property to be used for the purposes of the company or partnership. The business to be carried on upon the premises was a joint or partnership business. Upon the theory of a partnership the plaintiff was certainly liable to contribute in proportion to the extent of his interest to whatever funds were required for the uses of the partnership. If the firm owed debts, we know of no reason why he should not ratably contribute to their liquidation. On the other hand, if they realized profits, it is equally certain he wo.uld be entitled to his proportionate share. The theory upon which the action is based is that there was an actual partnership in legal effect, and without that theory of course there eould be no recovery. But if there was a partnership, we find nothing in this record-to show that the ordinary law of partnership is inapplicable to the relations of these parties to each other. The obligation to share losses, as well as gains, to contribute jointly with the others to the funds requisite to meet the liabilities of the partnership, is one of the most important and fundamental duties of the relation. This being so, we cannot understand.-, why, if a recovery is had in this action, the plaintiff should not be required to contribute to the payment of the money recovered. We are not informed of any fact which relieves him of that duty. No authority has been cited to show that in such a case that duty does not arise. The decisions cited by the learned counsel for the plaintiff do not touch this question. The citation from Lindley expressly excepts the ease of -a recovery of damages which must be paid out of a fund to which the plaintiff must contribute. It is entirely undisputed that there has never been any settlement of partnership accounts between the plaintiff and defendants.. The latter, if liable at all, are only liable because they are members of a partnership known as “The Gallatin Mining and Furnace Com-, pany.” It is that company only that is- named in the contract upon which the suit is brought. None of the defendants are, [642] named in that contract, and none of them signed it or purported to sign it. But if the defendants are liable because they -were subscribers to the stock of that company, the plaintiff is liable for the same reason. Suppose then a right of recovery be conceded in this case, for what amount shall the verdict be rendered ? If for the whole amount of the contract price, most certainly the defendants could file a bill against the plaintiff to compel him to contribute his proportion. But why, should these defendants who are a part only of the members of the partnership pay to the plaintiff who is also a member, the whole of a debt, for the payment of which he is jointly liable with them ? Such a result, would certainly be inequitable and contrary to every principle and precedent in the law of partnership. If, on the other hand, the verdict should be rendered only for such proportion of the whole amount of the purchase money as the defendants ought to pay, what is the amount of that proportion ? That of course would depend upon the adjustment of partnership accounts. It is alleged that the plaintiff contributed nothing to the partnership. Mr. W. Franks testified : “The money had been collected off the stockholders. I don’t know that Judge Crow ever paid any of his subscription. I don’t think he ever paid the extra thousand. I would have known if he had. Judge was present at the meetings and was recognized as a stockholder.” It appeared from other testimony that a considerable amount of the subscriptions had been collected from the stockholders other than the plaintiff. How much then of the present liability should be paid by the defendants, and how much by the plaintiff? Who can tell, or how can that matter be determined? Of course it can only be determined by a bill in equity for the settlement of the partnership affairs and the adjustment of the accounts between the partners. But there is no pretence that anything of that kind has ever taken place between these parties. We find it impossible to conceive of any reason why that course should not be adopted in the present case. There neVer was a contract by which these particular defendants agreed to pay to this particular plaintiff any sum of money whatever for any purpose. Their liability as individuals to make any such payment is a derivative liability resulting from a joint relation with the plaintiff, which imposes the same liability upon him. It is not necessary to enlarge upon this subject. The case comes within the perfectly familiar rule that one partner cannot sue another partner for a partnership transaction except by bill in equity or action of account render. Some of the Pennsylvania authorities are the following: Ozeas v. Foulke, 1 Binn., 191; Hall v. Logan, 10 Cas. 881; McFadden v. Hunt, 5 W. &. S., 468; [643] Leidy v. Messinger, 21 P. F. S., 177; Schnatterly v. Crow, decided in November, 1876, by this court, and reported in 2 Lan. Law Rev., 127. Judgment affirmed.