[QUEEN'S BENCH DIVISION.] MENDELSSOHN PIANO COMPANY V. GRAHAM AND WEST. Partnership—Agreement for participation in profits-Construction of— The plaintiffs sued G. and W. for the price of goods sold to the firm of P. W. G. & Co., and the principal question in the action was whether W. was an actual partner in the firm; the evidence failing to shew that he was an ostensible partner and as such liable to third persons:Held, that the true test to be applied to ascertain whether a partnership existed was to determine whether there was a joint business, or whether the parties were carrying on business as principals and agents for each other. G. and W. did not intend to create a partnership between them. G. was The money was advanced and the following receipt was given by G. :— W. made a subsequent advance of $500 to G., and on the 14th of April, 1888, a receipt was given for such advance containing an agreement to pay "over and above the agreement of the 13th of February, interest at the rate of eight per cent. per annum." : This receipt was at the request of W. signed "P. W. G. & Co., p. P. W. THIS was an action brought by the plaintiffs to recover Statement. from the defendants the price of goods sold and delivered by the plaintiffs to the firm of P. W. Graham & Co., the plaintiffs alleging that the defendant West was a partner in the said firm. The defendant West denied that he was a partner, and said that the only dealings he had with said Graham, apart from a small grocery account, or with the Statement. said firm of P. W. Graham & Co., were that during the year 1888 he loaned the said Graham personally various sums of money, amounting in all to about $1,825, for the purpose of enabling him to continue to carry on the business of said firm, taking as security for the repayment thereof a lien or claim upon the musical instruments held by said firm; and by way of interest on such advances was to receive a proportion of the profits of the business; and that it was at the same time distinctly understood and agreed that he did not become a partner in the said firm. The cause was tried by FALCONBRIDGE, J., without a jury, at the Fall Sittings of this Court at Toronto, 1889. It appeared that the defendant Graham, prior to the transactions which were claimed to have constituted the defendant West a partner with him, was carrying on business in Toronto under the name of P. W. Graham & Co., and had been so carrying on business for some time, and to the knowledge of the plaintiffs; that the defendant Graham continued to carry on business during the said transactions and until some time in October, 1888, when he ceased to carry on business. That the defendant West was a grocer who kept a shop in the Davenport road, and the business of P. W. Graham & Co. was carried on by the defendant Graham in the Arcade, and afterwards in King street in a store leased by him from the plaintiffs. That Graham did not ask West to go into partnership with him, nor did West suggest a partnership: that Graham applied to West for a loan, and West lent him $500, taking the following receipt: Toronto, 13th February, 1888. Received from Charles West the sum of five hundred dollars, to be used for carrying on the business of dealers in pianos and organs, in return for which I hereby agree to give the said Charles West one-half of the profits of said business after all expenses have been paid, including the sum of ten dollars a week which is to be charged as wages to P. W. Graham. This arrangement to continue until the 1st day of January, 1889, and to be continued thereafter, if desired by Mr. West. The said Charles West Statement. reserving a claim upon instruments in the store to the value of five hundred dollars, and he can also at any time demand the said sum upon giving one month's notice, in which case this agreement would be at an end. P. W. GRAHAM.” Afterwards, the following document was signed by both parties: "Toronto, 15th February, 1888. Received from Charles West the sum of five hundred dollars, to be used for the purpose of carrying on the business of dealers in pianos and organs, the profits to be divided equally between myself and the said Charles West, the sum of ten dollars per week being allowed P. W. Graham as wages. "I hereby agree to the above terms. P. W. GRAHAM." CHAS. WEST." Graham and West disagreed in their evidence as to whether this document was signed on the day it bears date, but they both agreed that it was signed because Graham wanted to have the agreement with West's signature to it in his possession, as he had nothing to shew the agreement. Afterwards Graham applied to West for a further loan, and the following document was drawn up : "Toronto, 14th April, 1888. Received from Charles West, Esq., on loan a note for five hundred dollars, made by C. E. Kyle of Toronto, payable to J. A. McLellan, and indorsed by you, dated 5th June, 1887, at twelve months, bearing interest at 8 per cent. We further agree to pay you over and above the agreement of 13th February, interest at the rate of 8 per cent. per annum on the sum of five hundred dollars. P. W. GRAHAM & Co. Per P. W. Graham, sole partner of said firm." All the foregoing documents were drawn by the defendant Graham, who said he signed the last above mentioned Statement. document as he did at the request of West, and West said it was signed in that way to satisfy him because he had nothing to do with it (meaning the business). In June and July following West indorsed two notes for Graham, amounting to $825, and in October Graham ceased carrying on the business, because, as he said, Westwould not continue to indorse for him. The case was argued at the conclusion of the evidence. Coatsworth, for the defendant West. December 13, 1889. FALCONBRIDGE, J.: The case of Badeley v. Consolidated Bank, 38 Ch. D. 238, is the one that has gore the furthest to weaken, if not to destroy, the theory that a participation of profits necessarily involves a partnership. In the case with which I am to deal the only writing signed by both parties is a memorandum dated 15th February, 1888. Now in the Badeley Case there is a most elaborate agreement shewing the relationship between the parties to be, not that of partners, consequently not that of principal and agent, but that of debtor and creditor. And of course there can be no doubt now that the creditor can be secured by a share of the profits, although some time ago that was not the law. Now two other memoranda were put forward, and it was claimed that one of them, namely, that of the 13th of February, shewed rather the understanding between the parties than the one bearing date the 15th of February. And I am not sure that, even in the construction of that instrument, the idea of the partnership is entirely excluded. It is true that Charles West, who claims to be a creditor in that document, reserves a claim upon instruments in the store to the value of $500, and it is provided that he can also at any time demand such sum upon giving one month's notice, in which case this agreement would be at an end." Now that does not, I apprehend, exactly impose on Graham a personal liability. It seems to me rather that he is entitled to draw his money out of the concern. But Graham says that the agreement which bears date the 15th February was the original agreement, and on re-examination he says that the money was advanced under that J. agreement or memorandum. West says in the witness box Judgment. on cross-examination that it truly expresses the agreement Falconbridge, between them. Graham says that West got information about the sales, profits, and expenses, and that he came to the store two or three times a week, and gave assistance about unpacking a piano and made inquiries, and so on. And West says positively there was no distinct agreement between them that he was not a partner. I do not find in Graham's evidence any sign of hostility towards the defendant West at all. I think wherever there is a conflict of testimony between West on the one hand and Graham, or Baird or Barker (the manager and secretary of the plaintiff's) upon the other, that each one of them is entitled to credence as against West, for one reason at all events, namely, that when difficulties arose West endeavoured to destroy the evidence which is furnished by this exhibit I., (the agreement of the 13th February) in other words he burnt the original. But for the fact that the present plaintiffs' solicitor happened to preserve a copy, his destruction of the paper would doubt have ended in the plaintiff utterly failing to make out a case. no In the view I take, that there was an actual partnership between Graham and West, it is unnecessary to decide the question whether there was any holding out of West as a partner so as to render him liable as such, even though a partnership did not in fact exist. I think the plaintiffs are entitled to judgment. The defendant West moved to set aside this judgment. and to dismiss the action against him upon the following grounds:-1. That the judgment was contrary to law and evidence and the weight of evidence. 2. The evidence shewed that the paper writing dated 15th February, 1888, on which the learned Judge based his judgment, was not intended to be, and was not in fact, the agreement made between the parties, but was signed merely for a collateral purpose, to evidence the right of the defendant Graham to wages. 3. The paper writings dated 13th February, 1888, and 14th April, 1888, and the surrounding circumstances shewed the true agreement between the defendants. 4. The evidence shewed that it was not the intention of |