it is only a mode of remunerating them for their services. But, where a person stipulates for a share in the net profits of a concern, and has a right to an account of the net profits as a partner, he is liable, although the partnership is limited to a single transaction or adventure."

- If

The learned baron then proceeded to the second point, saying,you are satisfied that there was this contract between Fly and Frost and the defendant, then comes the question whether Fly and Frost were authorized to enter into a contract for the work in respect of which it is now sought to charge the defendant as a partner. Now, it is material to look at the contract between Fly and Frost and the railway company, to see whether that authorized such a transaction as this; for, if the contract expressly prohibited the employment of any person in the situation of the plaintiff to do any part of the work, then it could not be said to have been done with his authority: by becoming a partner in the contract, he only authorizes the doing of that which was necessary for carrying the contract into effect. The contract contains this clause, -* And, further, that they, the said William Fly and Daniel [*445 Frost, or either of them, or their or his executors or administrators, shall not nor will, unless with the previous consent of the said company, signified in writing under the hands of three directors thereof, make any sub-contract or sub-contracts for the several works hereby contracted to be executed, or any of them, except as to labour only, and then only with the consent of the principal engineer for the time. being of the said company; and shall not nor will, unless with such consent as aforesaid, signified as aforesaid, assign or underlet this contract, or any part thereof.' If the work in respect of which this action is brought, had been done by the plaintiff under a sub-contract with Fly and Frost, there would have been very great weight in the objection; and I think the defendant could not be made responsible in respect of such sub-contract, unless there were some other evidence than the mere fact of his being a partner, of his having sanctioned the work. But it appears to me that this is not a sub-contract within the meaning of this clause of the deed; the work was to be charged for at measure and value. I will, however, ask your opinion whether, independently of the construction which I put upon the contract, the defendant has by his conduct sanctioned this particular work. If it is not prohibited by the contract, there is considerable evidence which would tend to satisfy you that the defendant must have contemplated that Fly and Frost could not have done the work by themselves or their own servants, but must have had recourse to others to complete the undertaking, carpenters, masons, bricklayers, slaters, &c.; and therefore you may reasonably conclude that the defendant, if a partner, would concur in that mode of carrying the contract into effect." And, in conclusion, his lordship said,- The *question for you to decide in the first place, is, are you of opinion that there was

[*446

a binding contract between the defendant and Fly and Frost, that the former should share in the profits of the adventure? And, secondly, if there was, are you of opinion that the work in question was necessarily done in carrying the original contract into effect? And, further, do you think that this particular work was sanctioned by the defendant? If you are of opinion in the affirmative upon those points, the plaintiff will be entitled to your verdict. If you are not satisfied that the defendant was a partner in the profit and loss of the adventure, and that the execution of the contract necessarily required the employment of the plaintiff in order to carry it completely into effect, your verdict will be for the defendant."

The jury returned a verdict for the plaintiff, damages 3547.

O'Malley, in Michaelmas term, 1848, obtained a rule nisi for a new trial, on the ground of misdirection, and that the verdict was against evidence.

Byles, Serjt., Willes, and Couch, in Trinity term last, showed cause.The main objection to the agreement of the 5th of August, 1846, was, that, the defendant was no party to it, and therefore there was no mutuality. But there is no rule of law, that one who is not expressly named as a party cannot avail himself of a contract, if he has assented to and acted under it: Goldshede v. Swann, 1 Exch. 154.† It is true, the agreement was not executed by the defendant: but there was ample evidence that he had assented to it; and it came out of his possession when he was examined under the fiat against Fly and Frost and Matheson. It is clear, that, under that *agreement, he would have a remedy in equity *447] against Fly and Frost for an account of profits. There was, therefore, abundant evidence to warrant the verdict. Then, as to the alleged misdirection,-it is quite clear, upon the authorities, that a stipulation for a participation in the net profits of a particular adventure constitutes a partnership, just the same as an agreement to share in the profits of trade in general. In Grace v. Smith, 2 Sir W. Blac. 998, DE GREY, C. J., says: "If any one takes part of the profit, he takes a part of that fund on which the creditor of the trader relies for his payment." [CRESSWELL, J.-That reasoning does not apply to an isolated transaction.] The rule is applied to a single adventure, in the subsequent case of Hesketh v. Blanchard, 4 East, 144. In Waugh v. Carver, 2 H. Blac. 235, EYRE, C. J., said, that, "upon the authority of Grace v. Smith, he who takes a moiety of all the profits indefinitely, shall by operation of law be made liable to losses, if losses arise, upon the principle, that, by taking a part of the profits, he takes from the creditors a part of that fund which is the proper security to them for the payment of their debts. That was the foundation of the decision in Grace v. Smith: and I think it stands upon the fair ground of reason." And in Smith v. Watson, 2 B. & C. 401, 407 (E. C. L. R. vol. 9), 3 D. & R. 751 (E. C. L. R. vol. 16), BAYLEY, J., says: "A right to share

in the profits of a particular adventure, may have the effect of rendering a person liable to third persons as a partner, in respect of transactions arising out of the particular adventure in the profits of which he is to participate; but it does not give him any interest in the property itself which is the subject-matter of the adventure." In Pott v. Eyton, 3 M. Gr. & S. 32 (E. C. L. R. vol. 54), this court held, in conformity with the rule laid down in Grace v. Smith, *that one who takes a share of the profits, as such, of a trading concern, thereby becomes [*448 a partner as to third persons, on the ground of those profits forming a portion of the fund upon which the creditors have a right to rely for payment. In Bond v. Pittard, 3 M. & W. 357,† A. and B. carried on business together as solicitors, in partnership, and held themselves out as such, and the defendant employed them in that capacity. By the agreement under which A. and B. entered into business together, B. was to receive annually out of the profits the sum of 300l., but he was not to be in any manner liable to the losses of the business, and was to have a lien on the profits for any losses he might sustain by reason of his liability as a partner. It was held that A. and B. were properly joined as plaintiffs in an action for work and labour, as the money when recovered would be the joint property of both, until the accounts were ascertained, and the division took place. PARKE, B., there says: "In Gilpin v. Enderby, 5 B. & Ald. 954 (E. C. L. R. vol. 7), 1 D. & R. 570 (E. C. L. R. vol. 16), (a) a person who, by a partnership deed, was exempted from all possibility of loss, was held to be a partner, though of an unusual kind, and so considered by the court, in giving judgment.' In Ex parte Rowlandson, 1 Rose, 89, Lord ELDON says it is settled, "that, if a man, as a reward for his labour, chooses to stipulate for an interest in the profits of a business, instead of a certain sum proportioned to those profits, he is, as to third persons, a partner, and no arrangement between the parties themselves could prevent it." Ex parte Gellar, 1 Rose, 297, is an authority to the same effect. In Gouthwaite v. Duckworth, 12 East, 421, A. and B., general partners in trade, being indebted to C. for advances paid by him on the joint account of the three in *the purchase of tobacco which had been sent out on a special [*449 joint adventure to Spain, with a view to liquidate that balance, C. agreed with A. and B. to join with them in another adventure to Lisbon, of which he was to have one moiety; and it was agreed that A. and B. should purchase goods for the adventure, to be shipped on board a certain vessel, and pay for them, and the returns of such adventure were to be made to C., to go in liquidation of his demand on them; but C. was to bear his proportion of the loss, if any, and also to receive his share of the profit, if any, after reimbursing himself out of the returns, the amount of his advances previously made to A. and B.: it was held, that this agreement constituted a partnership between the

(a) And see Enderby v. Gilpin, 5 J. B. Moore, 571 (E. C. L. R. vol. 16).

three in the adventure, at and from the time of the purchase of the goods for the adventure by A. and B., although C. did not go with them to make the purchase, or authorize them to purchase on the joint account, but A. and B. alone in fact made the purchase; and although C. also purchased in his own name, and paid for, goods to be sent out at the same time, in which B. was to share the profit or loss, and these goods were consigned for sales and returns to the same person who went out as supercargo on the joint account of the three. And GROSE, J., said: "I think this is a strong case of partnership, within the description given of it by Lord Chief Justice DE GREY in the case cited,"-Grace v. Smith. In Cheap v. Cramond, 4 B. & Ald. 663 (E. C. L. R. vol. 6), a merchant in London recommended consignments to a merchant abroad, and it was agreed that the commission on all sales of goods recommended by one house should be equally divided, without allowing any deduction for the expenses; and it was held that this was a participation in profit, and constituted a partnership between the parties quoad hoc. *This clearly was a partnership, according to the principles

*450] laid down by all the text-writers. In Vinnius's Commentary on

the Institutes, book III. tit. xxvi., it is said,—" De damno nihil adjeci, quia lucrum tantum sperant spectantque socii, damnum præter votum eorum accidit. Sed nec damni communio ad substantiam societatis pertinet: quippe quæ etiam ita constitui potest, ut unus e sociis damni sit expers. So, in Smith's Mercantile Law, 3d edit. p. 21, 4th edit. p. 19, it is said: "There may be a partnership in one transaction, as well as in a continuing business, and between persons out of trade, as well as in trade, since, in either case, there may be a combination of property or labour, in order to a common undertaking and a common profit. (a) This community of profit is the criterion whereby to ascertain whether a contract is really one of partnership; for, one partner may stipulate to be free from loss, and the stipulation will hold good as between himself and his companions, (b) though it will not diminish his liability to strangers."(c) So, Story, in his Treatise on Partnership, lays the rule down thus :(d) The cases in which the liability as partners as to third persons exists, may be distributed into the following classes,-first, where, although there is no community of interest in the capital stock, yet the parties agree to have a community of interest, or participation, in the profit and loss of the business or adventure, as principals, either indefinitely, or in fixed proportions, — *secondly, where there is, strictly speaking, no capital stock, but labour, skill, and industry, are to be contributed by each in the

*451]

(a) Ex parte Gellar, 1 Rose, 297; Salomons v. Nissen, 2 T. R. 574.

(6) Fereday v. Hornderne, Jacob, 144; Gilpin v. Enderby, 5 B. & Ald. 954; Bond v. Pittard, 3 M. & W. 357.† See 18 Ves. 300: unless, indeed, such stipulation be inserted as a mask to disguise usury; Jestons v. Brooke, Cowp. 793; Morse v. Wilson, 4 T. R. 353.

(e) Waugh v. Carver, 2 H. Blac. 235, 1 Smith's Leading Cases, 491; Jacob, 147, per Lord FLDON.

(d) Ch. IV. 54.

business, as principals, and the profit and loss thereof are to be shared in like manner, thirdly, where the profit is to be shared between the parties as principals, in like manner, but the loss, if any arises beyond the profit, is to be borne exclusively by one party only,-fourthly, where the parties are not in reality partners, but hold themselves out, or at least are held out by the party sought to be charged, as partners, to third persons, who give them credit accordingly,-fifthly, where one of the parties is to receive an annuity out of the profits, or as a part thereof." It is to the third class that the present case more immediately belongs. The learned author proceeds, in § 60,- In the next place, as to the class of cases where the parties are to share the profits between them, if any, as principals, but the losses are to be borne exclusively by one party. It is here that the pressure of the general doctrine, that a participation in the profits, as profits, creates a partnership between them, is most severely felt, and is most difficult to maintain, upon general reasoning. In all this class of cases, it is the intention of the parties that no partnership shall exist between themselves; and the common law, in this respect, gives full force and effect to that intention. But, in regard to third persons, the common law holds that the mere right to participate in the profits creates a partnership between the parties, notwithstanding there is no participation in the losses, ultrà the profits, and it is not their intention to be partners. The doctrine here seems to be founded in part upon the consideration, that, even in such a case, there is incidentally, and to a limited extent, a participation in the losses, as well as in the profits; for, before it can be ascertained that there are any profits, the losses must first be deducted, and the *residue only [*452 shared as profits. But the main reason is, that which has been already adverted to as the first foundation of the doctrine, to wit, that every man who has a share of the profits of a trade or business, ought also to bear his share of the loss; for, if one takes part of the profit, he takes a part of the fund on which the creditor of the trader relies. for his payment." He then proceeds, in § 75, to treat of partnerships in a single transaction or adventure. "Special partnerships, in the sense of the common law, are those which are formed for a special or particular branch of business, as contradistinguished from the general business or employment of the parties, or of one of them. They are more commonly called limited partnerships, when they extend to a single transaction or adventure only; such as, the purchase and sale on joint account of a particular parcel of goods, or the undertaking of a voyage or adventure to foreign parts upon joint account. But the appellation may be applied indifferently, and without discrimination, to both classes of cases. They, therefore, fall within the denomination of the Roman law. Societas sive negotiationis alicujus, sive vectigales, sive Barry v. Nesham, 3 M. Gr. & S. 641 (E. C. L. R.

etiam rei unius."