Scott v. Campbell

'WALKER, «J. The fact that the note sued on was given by the defendant for the purchase from plaintiff of an interest in the stock of goods which was the basis of the partnership at its commencement, does not deprive the plaintiff of his remedy at law on the note, and render it necessary for him to go into chancery. — Bumpass v. Webb, 1 Stewart, 19. The plaintiff had, therefore, a right of recovery upon the note, unless some ground of legal defense against the note was made out for the defendant. If there was any such ground of defense, it consisted in a right of set-off, for a sum less than the amount of the note, due to the defendant under the contract which was proved by the plaintiff’s answers to the interrogatories propounded to Mm by the defendant. Those answers acknowledge, that the defendant is entitled, under that contract, to the sum of $266 66. Consequently, the defendant was entitled to a set-off for that amount, unless it was a demand not available at law; and if that demand was the proper subject of a set-off at law, the court erred in its charge to the jury. The fate of the [731] appeal, therefore, is suspended upon the single point, whether the defendant’s demand could be enforced at law. Under the contract admitted by the plaintiff, as the same is set out in his answers to the interrogatories, it is clear that the relation of partners existed between him and the defendant after the dissolution, not only as to third persons, but inter sese. If the agreement had been merely that the plaintiff should compensate the defendant for his services as clerk, by giving him one third of the profits, the relation of partners, as between themselves, would not have resulted; nor would such partnership have been inferred, from the fact that the defendant’s compensation as clerk was to be determined by ascertaining how much one third of the profits, after the deduction of losses, would be. — Hodges v. Dawes & Co., 6 Ala. 215; Moore v. Smith, 19 Ala. 780; Ellsworth v. Tartt, 26 Ala. 736; Collyer on Partnership, §§ 44 ; Story on Partnership, §§ 48, 49. The evidence does not tend to show such a state of facts. The agreement that the defendant should have one third of the profits was not in consideration of his services as clerk, but of his interest in the debts and stock of goods. The plaintiff’s statement is, that the agreement was “in consideration aforesaidand, looking back at a former part of the answer, it is seen that this consideration was the defendant’s interest in the goods, notes and accounts due the firm. The defendant’s agreement was, not simply that the losses should be deducted before his share of the profits was ascertained, but that he would share one third of the losses. Here, therefore, was an unqualified agreement to bear one third of the losses. It is clear that such an agreement produces a partnership, and the defendant must resort to a court of chancery to recover upon his demand. While it is plain that, upon the proof, the defendant is entitled to recover the sum of $266 66 ; it is equally plain that his remedy is in chancery, and not at law. The judgment of the circuit court is affirmed. [732] L