First National Bank v. Gitt & Delone

Opinion by Mr. Justice Potter, This is an appeal from the refusal of the court below to take off a judgment of compulsory nonsuit. The action was assumpsit brought to recover from the defendants, as partners, the amount of two certain promissory notes made by L. M. Long & Co. to .the order of S. L. Johns Cigar Company, and endorsed in that name by H. N. Gitt, and by H. N. Gitt personally. In plaintiff’s statement of claim it was averred that, on the dates of the notes in question, “H. N. Gitt and Charles J. Delone were copartners, trading and doing business under the name of S. L. Johns Cigar Company,” and that the notes [87] “were taken, endorsed and delivered to the plaintiff in and about tbe business of tbe said copartnership of H. N. Gitt and Charles J. Delone, trading and doing business as S. L. Johns Cigar Company, and for the benefit and in the business of the said copartnership.” The defendant Gitt made no defense to plaintiff’s demand, but Charles J. Delone filed an affidavit of defense, in which he denied that he was a copartner with Gitt, or had traded as S. L. Johns Cigar Company, or was in any way liable on the notes in suit. Upon the trial, at the close of plaintiff’s evidence, the court entered judgment of compulsory nonsuit, upon the ground that no partnership had been made out, and no liability upon the part of Delone had been established. Plaintiff’ has appealed, and its counsel contend that the evidence offered was sufficient to establish the fact that the defendants purchased property which they employed for their mutual profit, and that the obligations, upon which this action was brought, were incurred in the management of a business from which they were jointly entitled to the net profits, and in which, it is argued, they were, therefore, partners. In an article of agreement which was offered in evidence, it was set forth that, being desirous of relief from the cares growing out of the involved condition of his business affairs, S. L. Johns, upon the conditions named, turned over his entire estate to Gitt and Delone for the purpose of administration. They were to convert the property into cash as in their judgment should be advisable. The proceeds were to be applied, first in payment of the claims of creditors, then in payment of an annuity to Johns for ten years, and after that the fixed sum of $40,000 was to be paid to him. In addition they were to pay to Johns or his heirs such sum as should be necessary to acquire a clear title to his residence and contents, and to a certain farm property with stock and implements. Provision for the payment of certain other sums was also made, and if Gitt and Delone succeeded in [88] these undertakings, they were to retain for their own use “all the proceeds and property remaining after the above provisions have been complied with.” It thus appears that, while Johns made an absolute conveyance of his property to Gitt and Delone, they took it only for the purpose of liquidation, and subject to the payment of all the indebtedness of Johns, and of the various other sums specified. They were to have for themselves only the residue which might be left after those payments were made. A division of the product between tenants in common does not make them partners, although they may have contributed labor of money to raise it. No-presumption of partnership arises from the mere fact of cotenancy : Taylor v. Fried, 161 Pa. 53. The defendants in this case were clearly trustees of the property and were liable to account as such: Ahl’s App., 129 Pa. 26. We find nothing in the agreement which expressly constitutes the defendants actual partners, and the record is bare of evidence tending to show that they ever held themselves out to the public as such, nor does it appear that the plaintiff in this case extended .credit to them as partners. The testimony shows that the notes in question represented old indebtedness of L. M. Long & Co. to the cigar company. All the negotiations with the bank were conducted by H. N. Gitt, who endorsed the notes, signing the name of S. L. Johns Cigar Company, and also endorsing as an individual. The defendant Delone had nothing to do with the negotiation of the notes. The agreement discloses no intention that the business should be carried on for-the purpose of making profits nor does it appear that any were realized. It was only after the indebtedness of Johns had been discharged, and the various sums specified had been paid, and the plan had been successfully carried out by Gitt and Delone, that they were to retain whatever money remained in their hands, as compensation for their services. Such a sum could not fairly be regarded as the profits of a business venture. More properly speaking, it [89] would be residue derived from the corpus of the assigned estate, as the entire transaction was in the nature of an assignment for the benefit of creditors, with the compensation of the assignees dependent upon the skill and ability displayed in settling the affairs of the estate. In their argument, counsel for appellant make specific complaint of the action of defendant Delone in retaining certain shares of telephone company stock which were obtained as partial security upon the indebtedness of L. M. Long, evidenced in part by the notes in question. We do not see, however, that this has anything to do with the question of partnership. Under the agreement, it was the duty of Gitt and Delone to collect this indebtedness, as well as all other sums due to Johns, and as trustees they are liable to account to Johns, and perhaps to his creditors, for the moneys they received. But in the present suit the effort is to hold them as partners, and not as trustees.' Our examination of the record leads us to agree with the conclusion of the court below that the evidence does not show that there was any understanding between Gitt and Delone as to any sharing of profits, nor does it appear that Delone in any way gave plaintiff reason to believe that any partnership existed between Gitt and himself. The nonsuit was properly entered, and the refusal to take it off was justified. The judgment is affirmed.