Lewis v. Moffett

Opinion by Mr. Justice Catón : It is undoubtedly a general rule that one partner cannot charge the other partners or the firm for services rendered in the business of the copartnership, unless there is an express agreement to that effect; or where such agreement may be implied from the course of business between the copartners, or from the nature of the services rendered in connection with the duties and obligations imposed by the copartnership articles upon the several members of the firm. This general rule, that one partner cannot charge the firm for extraordinary services, results from the fact, “ that there is an implied obligation in every partner to exercise due diligence and skill, and to devote his services and labors for the promotion of the common benefit of the concern.” Story on Part., sec. 182. When this reason fails, the rule itself must be relaxed. When it is impossible to determine how far the skill and experience of each, which was to be applied to the business of the firm, induced the terms upon which the copartnership was formed, it would be manifestly unjust for the Courts to undertake to inquire which had rendered the most services to the concern. In this case, the duties imposed upon Lewis towards the firm, as respects his personal services, do not depend upon an inference of law, but are regulated by the express agreement of the parties, in the copartnership articles, as follows : “ The said Lewis agrees, in lieu of his services, to furnish the foundry and machine shop, now occupied by Lewis & Johnson, free of rent, and purchase stock for the concern in St. Louis, when there, free of charge to the firm.” Here, then, the appellant, for a sufficient equivalent, was absolved from that obligation which the law would otherwise impose upon him, “ to devote his services and labors for the promotion of the common benefit of the concern.” This duty, thus imposed by the law upon partners generally, is the reason assigned why a partner cannot charge the firm for services rendered. In this case, it is true there was no express contract that Lewis should be paid for the services which he should render in the sale of the patent right; but when he was expressly requested and employed to render those services, which he was under no more obligation to render than a stranger, and when he has devoted his time and talent to the business of the firm upon such request, it is but reasonable and just that he should be paid for such services. His time and talent were as much his own as was his capital, and as much entitled to be taken into the account in the formation of the copartnership. This was done in the arrangement made, and the former were reserved to his own use. Suppose, by the partnership articles, he had been exempted from paying any portion of the rent of the foundry and machine shop, in consideration of personal services which he had agreed to render, and that afterwards, at the request of the other members of the firm, he had paid the rent, would any one contend that he was not entitled to be reimbursed ? Take this very case—and we have but to reverse the proposition—suppose Johnson and Moffett had paid the rent of these buildings, which Lewis had agreed to furnish free of rent, their claim to have that taken into the account in a final settlement would be denied by no one. If they might claim to be indemnified for the payment of rent, which by their agreement they were exempted from paying, why may not Lewis be paid for rendering services which, by the agreement, he was expressly exempted from rendering ? In no case that we are aware of, where it has been held that, in the absence of an express agreement, one partner should not recover for rendering more services than the other members of the firm, was he exempted by the partnership agreement from rendering those very services for which he had charged the firm; and that is the reason assigned by Judge Story why such claim should be disallowed. Story on Part., sec. 182. But there is no inflexible rule of law that one partner shall not recover for extraordinary and unusual services, without an express agreement that he shall be paid for such services. The case of Bradford vs. Kimberly, 1 Johns. Ch. R., 431, shows that where certain members of a firm are employed to render services, which the law, or the agreement of the parties, does not impose upon them as partners, there the law implies an agreement that they shall be paid. After stating the general rule, the chancellor in that case proceeds : “But where the several owners meet and constitute, one of the concern an agent to do the whole business, a compensation is necessarily and equitably implied in such special agreement, and they are to be considered as dealing with a stranger.” It is true, as was insisted on the argument, that the statement in the answer of Lewis, that he sold the patent rights as agent of the firm and not as partner, is not conclusive as to the character in which he acted; but that character must be determined from the facts established. That he rendered the services at the request of the other members of the firm, is abundantly established. As lie was on the point of starting to St. Louis on other business, the patent for the churn arrived from the patent office. One of the active members of the firm requested him to postpone his departure until a churn could be manufactured, and to take it with him to St. Louis and sell the rights. Upon such request he did postpone his departure for several days, until the churn was completed, which he took with him to St. Louis, and made the sales. All the circumstances of the case show that the other partner acquiesced in and approved of this employment, even if that were necessary. Here, then, was an express agreement to employ Lewis to render services which he was under no more obligation to perform than a stranger; and the law must imply an agreement to render him a reasonable compensation therefor. To what compensation is the appellant reasonably and justly entitled ? The evidence on this point is very voluminous, but it is unnecessary to state and review it all minutely. The nature and character of the services rendered, the time employed, and the results accomplished, admit of no dispute. The balance of the testimony is principally made up of the opinions of witnesses as to the value of the services rendered, and of the commissions usually allowed in the sales of patent rights. Of this last branch of the evidence, it may be here remarked, that while it may be entitled to be considered, upon the question of the amount of compensation to be allowed, it by no means establishes such an usage as to be binding upon the parties, as an implied contract. In order to give a usage that effect, it must have become so universal and notorious as to raise a reasonable inference that the parties acted in reference to it, and with the expectation of being governed by it, without a particular allusion to it. That a majority of patent rights are hawked about the country by trading agents who receive a commission upon the amount of their sales, may be truc ; yet this is by no means universally the case. Nor are the commissions allowed these itinerant agents, by any means uniform; frequently varying, as it appears, from one-fourth to one-half of the amount of sales effected. Nor with any degree of propriety or justice could they be uniform, unless all patent rights were equally valuable, or at least equally saleable. While the opinions of witnesses, who have been extensively engaged in the sale of patent rights, as to the value of these services, may not be absolutely binding upon the Court, yet they are certainly entitled to serious consideration. But after all, we must look to the nature and character of the services rendered, the time employed, the skill and talent exercised, and the benefits derived to the firm, and then, by exercising our own judgments, in connection with the judgments of others, where, as in this case, their opinions are not necessarily conclusive, we must come to the most satisfactory conclusion at which we can arrive. The appellant went to St. Louis with this churn, and in the course of a few weeks sold out the entire right to various individuals, for the nominal aggregate sum of $52,000, and for which the firm actually realized the sum of $ 38,000. Now, the time actually employed was very inconsiderable, but the results were truly wonderful, when we consider the sales were made upon an actual exhibition of the churn, when the testimony shows, and all now seem to admit, that the invention is really valueless. Yet it is but justice to say, that we do not believe that this fact was known to any of the parties at that time. There must have been a certain speciousness about the churn, which deceived Lewis, as well as his victims, as to its real value. Whatever plausibility there was about this invention, which commended it to the favorable notice of purchasers, ought to inure to the benefit of the owners of the patent, while Lewis may be entitled to the merit of whatever skill he displayed in presenting these commendable appearances to the view of purchasers, and the judgment with which he made his contracts. His success ought to satisfy any reasonable ambition in that way. Although he may not be entitled to the merit or demerit of having imposed, by the force of his genius alone, upon the purchasers, so as to have realized that large sum from the sales of an invention, which, in the hands of another, would have produced little or nothing, yet that his services were very meritorious, to the firm, at least, cannot be disputed, and the other members ought not to object to paying him a proportionate compensation, and one which ought abundantly to satisfy him for the time and labor bestowed. Were we to be governed by the opinions of a majority of those witnesses who have expressed opinions, as to the amount of compensation to which the appellant is entitled, we might have to allow even the full extent of his present claim, yet we cannot shut our eyes to the fact, that most of those wit.nesses arrive at their conclusions by assimilating this to other patent rights ; which, while they may have been, intrinsically, more valuable, yet were undoubtedly less saleable. To allow the claim of $ 12,000, now set up by Lewis, we think would be extravagant; and it is manifest, from his own conduct, that he did not originally consider himself entitled to that amount. We may reasonably suppose that he designed to retain in his own hands, independent of the wares left with Lewis & Adams for sale, enough, over and above his proportion as partner, to compensate him sufficiently for his services. By having paid over the balance to the other members of the firm, he indicated a limit, beyond which he did not expect to claim for his commissions. His whole conduct shows that he would not be likely to pay over to his partners more than what he considered their just proportion of the proceeds of these sales. By allowing him what he did retain, we give him no stinted compensation; but as we think the evidence abundantly warrants this, we have determined, for the want of a more satisfactory criterion, to adopt that as the measure of his compensation. To this, at least, Johnson in his answer does not object. As the decree which Moffett obtained against Lewis for $ 1,377 41, was for his proportion of these sales, which had been retained by Lewis, over and above the compensation allowed him by the Circuit Court, it follows that that portion of the decree must be reversed, and the balance of the decree must stand affirmed. The costs of this Court must be equally divided among the parties. Decree reversed.