Rush Centre Creamery Co. v. Hillis

Opinion by Smith, J., The principal matters for determination in this case were qlxéstions of fact. These have been found in favor of the •plaintiff, and in view of the evidence a different conclusion 'could not well have been reached. It was shown, without con — 533 — tradiction, that the plaintiff and twenty-eight of his neighbors made a written agreement to establish and conduct a creamery, and to borrow the money necessary to put it in operation; each party to contribute the milk of a specified number of cows, and to incur a liability for the loan, and acquire an interest in the property, proportioned to the quantity of milk furnished. Pursuant to this agreement a loan was made, and the creamery built. This action is brought to recover the proportion of this loan due at the time of its commencement for which, it is contended, the defendant became responsible under the agreement. The defense set up is purely technical. There is no denial that the indebtedness was incurred in good faith by the company and the money honestly and economically expended for the purposes set out in the agreement. The defendant neither alleges nor intimates that any of his cosubscribers had acted fraudulently or unfairly toward him. He never sought to withdraw from the association or notified the trustees or any of his associates in the enterprise that he would.not live up to his agreement. He remained silent on this vital point, and allowed contracts to be made and liabilities incurred, in good faith, upon the credit of his written promise. He now seeks to avoid liability, on the ground that he was not notified of the meetings of the company or the appointment of the trustees. Curiously enough, he adds as a further reason the fact that he also violated his agreement by failing to furnish milk as he had agreed to do; thus pleading one default as justification for another. It does not appear that any person was authorized to call or give notice of the meetings or that anything was done to his prejudice. It is not alleged in his behalf that he. would have opposed what was done, either in selecting trustees, in effecting the loan, or in constructing- the plant; nor is it alleged that he was not permitted to attend the meetings or had not opportm nity to do so equally with his associates. No written notice was sent to any one; the secretary “ just sent word around; ” and whether the defendant received word was not shown. He does not deny that he received word or had knowledge of the time of meeting. But whether-he did or not is not material. The agreement fixed the time for the first meeting, and it was his duty to take notice of this. Had he done so he would probably have learned of the time and place fixed for subse — 534 — quent meetings. Under these circumstances his defense on legal technicalities has little to commend it. The principal contention on behalf of the appellant here is that the written agreement created a partnership between the parties, and that, as transactions between copartners are not the subject of suit in assumpsit until after settlement of the partnership accounts, this action cannot be maintained. If the subject-matter in suit grew out of obligations incurred in a prosecution of the partnership business, the objection would be well taken; for it is familiar law that before one partner can sue another in assumpsit for matters growing out of the partnership business, the partnership accounts must be settled. But this rule is confined to transactions in the business of the partnership or growing out of its accounts, and has no application to matters distinct from its business and accounts, though connected with the partnership. Thus, contracts for the creation of a partnership are enforceable at law, and agreements for contributions may be sued for directly on the contract. So an action will lie for the breach of an agreement to form a partnership, or for the exclusion of a partner from participation in the copartnership business : 17 Am. & Eng. Ency., 1262. The distinction would seem to be this, that an action will lie upon the partnership agreement, for the violation of all its stipulations for which damages can be assessed, without requiring an accounting of the partnership business proper or involving its transactions. In our own state we have cases where actions were brought directly upon the articles, to recover damages for the wrongful dissolution of the partnership : Hunter v. Land, 81* Pa. 296, as well as for acts wrongfully embarrassing its operations, in violation of a covenant in the articles: Addams v. Tutton, 39 Pa. 447. In the case of Canfield v. Johnson, 144 Pa. 61, a contract was entered into whereby it was agreed that the parties should accept a contract for the erection of a soldiers’ monument, the work to be done on shares, and the profits to be divided equally between them. The defendants secured the contract,, and, with the exception of furnishing the designs and photographs, the plaintiffs did nothing toward the construction of the monument, the defendants in disregard of the agreement having sublet to others the part of the work which was to have been done by the plain — 535 — tiffs. In an action of assumpsit brought by the plaintiffs for the recovery of one half of the profits realized on the contract, the court below directed a verdict for the defendants on the ground that there could be no recovery in that form of action. In reversing the ease the Supreme Court, speaking through Mr. Justice Green, said: “ We do not agree with the learned court below in holding that there could be no recovery in the action of assumpsit. The allegations and proofs of the plaintiffs were that the defendants had not carried out the contract with them. They had not engaged in the execution of a contract of partnership, or any contract for their mutual advantage or profit. On the contrary, they had proceeded to have the monument and pedestal built and placed exclusively .on their own account, and for their own benefit and advantage, and had thus violated' the contract which the plaintiffs claimed and gave evidence to prove. In other words, they had broken the contract of part-' •nership or joint interest, and therefore no such contract was performed or executed. In such circumstances, the injury or breach which gives a legal remedy is a violation of the contract of partnership, and not its execution and a consequent partnership liability. Hence a partnership bill which lies between persons who actually are partners, and for the settlement of the partnership accounts, is not the proper remedy, simply because, although the defendants agreed to become partners with the plaintiffs in this transaction, in point of fact they did not, and hence the relation did not exist. The action, therefore, must be regarded as an action to recover damages for the breach of a contract to become partners, and for that purpose thdS proper remedy would be an action of assumpsit on the undertaking. But, of course, while all this is true, the measure of damages would be in accordance with the terms of the contract, to wit, one half of the profits which the defendants did make, or ought to have made, in doing the work in question. Hence it was quite legitimate for the plaintiffs to claim in the narr and to prove on the trial, that they were entitled to have the one half of those profits from the defendants, and to give evidence as to what those profits were of should have been. Moreover, as this was a single transaction, without any-complicated accounts to adjust, we would incline to hold, were it necessary to do so, that the case came properly within the. — 536 — somewhat numerous decisions of this court, in which it is held that, where the transaction is single, without complicated accounts, and there are no debts to be adjusted, a bill in equity is not necessary for the settlement of the accounts, but an action of assumpsit will lie. Instances of this are to be found in Wright v. Cumpsty, 41 Pa. 103; Cleveland v. Farrar, 4 Brewst. 27; Galbreath v. Moore, 2 W. 86; Meason v. Kaine, 63 Pa. 336. It is not necessary to rest the decision of the present case upon this principle, however, as we regard the proceedings as an action to recover damages for the breach of a contract to enter into a partnership or joint relation, and not as á proceeding to settle partnership accounts.” Under the authority of this case and the principles of law stated, the right to maintain the present action cannot be doubted. The remaining question to be noticed is whether the agreement can be enforced. It is contended that because no specific sum is subscribed or promised by the parties, it is not binding; that there being no obligation for a specific contribution, the contract is too indefinite to create any liability. We are referred to no authorities in support of this view. In all the cases cited, it is true, a definite sum was subscribed, yet it does not follow that an agreement to ascertain the amount of the subscriptions upon a certain basis would not be equally binding. When the cost of a new enterprise is not definitely known by its promoters, there can be no objection to an agreement to bear it ratably, according to their respective interests in the project; and that was what was done in the present case. The case of Troy Iron & Nail Co. v. Corning, 45 Barb. 231, resembles the one before us in its leading features. There, by articles of association, the associates severally bound themselves to pay a ratable proportion, (based upon interest and benefit) of all expenditures made or to be made in the promotion of the work undertaken, when assessed and apportioned among them. This was held to be a sufficiently definite specification of their respective liabilities ; and the liability to pay the assessments was held to arise on the promise by each to the other, which could be enforced hi an action in the names of those injured by the default. In that case it was also held that those who derived little or no benefit from the project could not relieve themselves from liability by refusing to participate in the business of the association. It — 537 — has also been held, that where partners agree to contribute capital, from time to time, to meet expenses as occasion might require, one who contributed the whole might recover from his copartners what they should have paid: Brown v. Tapscott, 6 M. & W. 119; Lindley on Partnership, 564. It is clear, on principle and authority, that the agreement in the present case was sufficient to bind the parties after its purposes were accomplished according to its provisions. There is no just cause for complaint against the rulings or charge of the court. The learned judge tried the case fairly and correctly. The specifications of error are all overruled and the judgment is affirmed.