Emanuel v. Draughn

DARGAN, J. Whea two or more persons simply agree to share the profits in. any trade or adventure between them, they will be considered partners; but if one is employed as a mere agent, to conduct, carry on, or aid in the management of the business, and it is agreed that he shall receive a certain portion of the profits in lieu of compensation, the contract will not be a partnership. 6 Ala. Rep. 215; Coll, on Part. 29. It is often a question of difficulty to determine, when the contract creates a partnership inter se se, and the decisions, both in England and the United States, are so conflicting on this subject, that to reconcile them is impossible, and a collection of them tends rather to confuse the mind, than to elucidate the question. The best test, to my mind, is, to consider the intention of the parties, in connection with the rights and obligations each party takes under the contract; and as between the parties themselves, to give effect to this intention. By this rule, courts will enforce the contract of the parties, and not violate it, or make one; and if we find the intention to be, that one is to bestow' his services or skill, and in the stead of compensation, he is to receive a part of the profits, either nett or gross, without assuming the obligations of a partner, he ought not to be held such. But I have found no case that goes to the length, that the contract can be construed into au agency, or as a contract of employment of a servant, when by its terms, there is a communion of interest, not only in the profits, but also in the losses. It is true, that when one agrees to receive a part of the nett profits, in lieu of compensation, he must have an interest in the losses, for if there be no profits, he receives no compensation. But as he loses nothing more, such a contract may not create a partnership. But when the party is-entitled to share in the profits, and is bound to bear a portion of the losses, and which may not only exclude him from receiving any thing by way of compensation, but also bring him in debt, which he must pay out of his own funds, then the contract is inconsistent with the nature of an agency, or the simple employment of a servant, and must make the parties to the contract partners. . Watson v. Smith, 2 B. & C. Rep. 401; Waugh v. Carver, 2 H. Black, 235; Coll. on Part. Am. ed. 22. [307] Let us test this contract by this rule: Emanuel is bound to bear two-fifths of the losses resulting from the bad debts created in the course of the business, and after he receives the goods for the purpose of peddling, they are at the joint risk of the parties, in the same proportion they are to share in the profits. If the goods had been destroyed by any casualty, or if he had been robbed of them, he was bound to bear two-fifths of the loss. These obligations on his part, might not only have deprived him of the share of profits he was to receive, but over and above them, brought him in debt to Draughn & Crane; and this result might have taken place by the terms of the contract, and without any dereliction of duty on his part. Such a contract is, in my judgment, wholly inconsistent with an agency, or the mere employment of a servant, to transact the business; and consequently must make the parties, as between themselves, partners. The charge of the court was erroneous, and the judgment is reversed, and the cause remanded.