Whitcomb v. Converse

Gray, C. J. In the absence of controlling agreement, partners must bear the losses in the same proportion as the profits of the partnership, even if one contributes the whole capital, and the other nothing but his labor or services. 3 Kent Com. 28, 29, [43] Whether a loss of capital is a partnership loss, to be borne by all the partners, depends upon the nature and extent of the contract of partnership. If, as is not unfrequently the case in a partnership for a single adventure, the mere use of the capital is contributed by one part ner, and the partnership is in the profits and losses only, the capital remains the property of the individual partner to whom it originally belonged, any loss or destruction of it falls upon him as the owner, and, as it never becomes the property of the partnership, the partnership owes him nothing in consideration thereof. Story Part. §§ 27, 29. Heran v. Hall, 1 B. Mon. 159. But where, as is usual in an ordinary mercantile partnership, a partnership is created not merely in profits and losses, but in the property itself, the property is transferred from the original owners to the partnership, and becomes the joint property of the latter; a corresponding obligation arises on the part of the partnership to pay the value thereof to the individuals who originally contributed it; such payment cannot indeed be demanded during the continuance of the partnership, nor are the contributors, in the absence of agreement or usage, entitled to interest; but if the assets of the partnership, upon a final settlement, are insuificient to satisfy this obligation, all the partners must bear it in the same proportion as other debts of the partnership. Julio v. Ingalls, 1 Allen, 41. Bradbury v. Smith, 21 Maine, 117. Barfield v. Loughborough, L. R. 8 Ch. 1. In re Anglesea Colliery Co. L. R. 2 Eq. 379, 387; S. C. L. R. 1 Ch. 555. Nowell v. Nowell, L. R. 7 Eq. 538, In re Hodges’ Distillery Co. L. R. 6 Ch. 51, 56. 1 Lindl. Part. (3d ed.) 696, 827, 828. Only two cases were cited in the learned argument for the defendant Stanton, in which opinions inconsistent with this view have been expressed. The one is Everly v. Durborow, 1 Leg. Gaz. Rep. 127, a nisi prius decision, with no reference to authorities, except an early edition of Bindley on Partnership, which has been corrected by the learned author, ubi supra, conformably to the adjudged cases. The other is Cameron v. Watson, 10 Rich. Eq. 64. That wall a bill in equity to settle the affairs of a partnership, to which Cameron had contributed labor and Watson capital The mas [44] ter, to whom the case was referred, allowed the claim of Watson for sc much of the capital as he had not withdrawn during the continuance of the partnership, but disallowed his claim for interest thereon, pp. 68, 73. Cameron excepted to the allowance of Watson’s claim for capital, and Watson excepted to the disallowance of interest. The chancellor, before whom the exceptions were heard in the first instance, overruled the exception of Cameron, and also that of Watson as regarded interest before the dissolution of the partnership, but sustained it so far as to allow him interest after the dissolution, pp. 88-90, 95, 96. The Court of Appeals, although in one part of its opinion appearing to discountenance Watson’s claim for capital, ended by confirming the master’s report in every'particular, pp. 103, 107, 108. So that the final judgment, while it disallowed Watson’s claim for interest, established his claim for capital, and was in exact accordance with our conclusion. In the case at bar, the partnership was not for a single enterprise, but for the transaction of a commission business in New York and Boston for a year. Converse and Whitcomb contributed the whole capital, in unequal proportions. Converse was to contribute “ such time as he may be able to give; ” and Whit-comb and the other two partners, Blagden and Stanton, were each “ to contribute all his time to the business.” Those partners who contributed the capital did not contribute merely the use thereof, but the capital itself, and were by express agreement to receive interest thereon at rates specified in the articles of copartnership. The partners were by agreement to receive each one fourth of the net profits, and by implication of law must share the losses in the same proportion. The capital contributed became the property of the partnership; and the partnership, consisting of all the partners, became liable to Whitcomb and Converse respectively for the amount of capital paid in by them. Blagden, one of the partners, being insolvent and unable tc discharge any part of the obligation, it must rest in equity upon the three solvent partners in equal proportions. Whitman v. Porter, 107 Mass. 522. 1 Lindl. Part. 789, 790. Decree for the plaintiff accordingly.