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On the other hand, if the persons sharing gross returns also share the advances by means of which the returns are made, there is necessarily community both of profit and of loss; community of profit if the returns exceed the advances, community of loss if the advances exceed the returns.

tween sharing returns.

profits and gross

The above remarks have appeared necessary in order to explain the reasons for the distinction made by English lawyers Distinction bebetween agreements to share profits (i. e., net profits and profits as such) on the one hand, and agreements to share gross returns (sometimes called gross profits) on the other: and in order to account for the rule that whilst an agreement to share profits creates a partnership, an agreement to share

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gross returns does not. The reasonableness however of the above distinction is very questionable, at least where there is any community of capital or common stock; and the rule itself is probably attributable less to the difference which exists between net profits and gross returns than to the doctrine which so long confused the whole law of partnership in this country, and according to which all persons who shared profits incurred liability as if they were really partners. When this doctrine was rife, the distinction between sharing net profits and gross profits (i. e., returns) had considerable practical value; but, as will be seen hereafter, the doctrine in question is now wholly exploded, and the distinction alluded to is of little importance.

The doctrine to which reference has been made renders it necessary to caution the reader against an ambiguity Quasi-partnerin the word partnership as used by English lawyers. ship. Partnerships are by them divided into partnerships (properly so called), and partnerships as regards third persons, which are not in fact partnerships at all, and should never be so styled.' What is

See this distinction, approved in Turner v. Bissell, 14 Pick. 192; Everett v. Coe, 5 Den. 180; Heimstreet v. How land, Id. 68; Ambler v. Bradley, 6 Vt. 119; Bowman v. Bailey, 10 Id. 170; Mason v. Potter, 26 Id. 722; Patterson v. Blanchard, 5 N. Y. 186; Moore v. Smith, 19 Ala. 774. See, also, Sankey v. Columbus Iron Works, 44 Geo. 228, explaining Sec. 1880, Rev. Code; Wood v. Valette, 7 Ohio St. 172; post, pp. 18, 19, notes.

See, however, contra, Denny v. Cabot, 6 Metc. 82; Pa s. on Part. *88, and note.

See post, p. 37.

2 Parties may often be adjudged partners as to third persons, when they could not be so regarded as between themselves. Stanchfield v. Palmer, 4 G. Greene, 23; Gill v. Kuhn, 6 Serg. & R. 333: Kellogg v. Griswold, 12 Vt. 291.

Where two persons agree to raise together a crop of corn, and divide the

called a partnership as regards third persons (quasi-partnership), is nothing more than a number of persons, who, in consequence of certain acts done by them, are held liable for each other's conduct, as if they had entered into a contract of partnership amongst themselves. What these acts are will be considered hereafter; but the reader is requested to bear in mind that for the present, partnerships properly so called, and not quasi-partnerships, are intended to be spoken of.

Having made these preliminary observations, it is proposed to consider what agreements do, and what do not, result in a partnership in the proper sense of the word.

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*SECTION I.-OF TRUE PARTNERSHIPS.

1.-Partnership is the result of an agreement to share profits and losses.

Whether an agreement creates a partnership or not depends on the Agreements to real meaning of the parties to it as expressed in the agreement itself. (a) But an agreement to share profits and

share profits

and losses.

product, the agreement constitutes a partnership. Allen v. Davis, 13 Ark. 28.

But a contract by which A agreed to let B have all the pine timber on his lands suitable for good lumber, and B agreed to pay A therefor, annually, in money, one-fifth of the lumber sold and collected by him, does not constitute A and B partners inter sese. Fail v. McRee, 36 Ala. 61.

(a) See Ross v. Parkyns, 20 Eq. 331, and other cases cited, infra, p. 20, note (7.)

1 Whether two or more persons associating in business are partners, as between themselves, depends upon their intentions, as legally ascertained. Salter v. Ham, 31 N. Y. 321; Stevens v. Faucet, 24 Ill. 483; Niehoff v. Dudley, 40 Ill. 406; Macy v. Combs, 15 Ind. 469; Gray v. Gibson, 6 Mich. 300; Hazard v. Hazard, 1 Story, 371. See, also, Manhattan B. Manfg. Co. v. Sears, 1

Sweeny, 426.

Voluntary consent to the relation and obligations of partnership is necessary. Hedge's Appeal, 63 Pa. St. 273.

The facts that several persons associated together to run a line of stage coaches; that they had a general meeting, and that debts were contracted on account of the company, do not prove a partnership as between them. Chandler v. Brainard, 14 Pick. 285; Clark v. Reed, 11 Id. 450.

The defendants signed articles of association in trade, under the name of "The Farmers and Mechanics Store," by which it was provided that any stockholder might withdraw upon giving six months' notice, and that the business of the company should be done pursuant to a major vote of those present. The defendants subscribed a certain sum, and a by-law provided that

losses, may be said to be the type of a partnership contract. What

each subscriber should become a partner: Held, that the defendants were partners in the company. Atkins v. Hunt, 14 N. H. 205.

A, who was the remaining partner of a manufacturing firm which had been dissolved, said to B that, as his business was so extensive, it was necessary for him to have a partner, so that, in case of his decease, there would be some one who could go on and close up the concern without the delay arising from an administration of his estate, and proposed to take him, (B,) as such partner, saying he should have $1,500 the first year, and the next year an interest in the business; to which B assented, and thereupon an agreement was drawn and signed by them as follows: "Co-partnership. The subscribers have this day formed a co-partnership under the style of A & Co., and will hereafter carry on the business formerly conducted by A & C." Public notice of this agreement was given subsequently, and until the death of A, which occurred before the expiration of the first year, all purchases, sales and consignments of goods were made, and all drafts were drawn, and promissory notes were given, by A & B in the name of A & Co.; and each of them exercised the full power of a partner in relation to all their business. Held, that they were partners, and that after A's death, B, as surviving partner, had power to commence proceedings in insolvency which should include the estate of the firm. Adams Bank v. Rice, 2 Allen, 480.

L and G agreed in writing to "have the right to use the name of each other as a firm name," and G did "grant that L' should "have the right to go to any of the wholesale markets and purchase goods, and sell the same at W;" and G did "do this for the benefit of L, not claiming any of the profits arising from the sale of any goods or articles sold at

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W." It was also agreed that "all money furnished to enable the said firm L & G," etc., " to each other," should “be held at the rate of seven per cent Held, that this agreement constituted L and G partners. Hendrick v. Gunn, 35 Ga. 234.

B orally agreed to contribute his inchoate interest in an invention, and S to furnish the money necessary to make that invention available in the form of a patent, both to contribute their services to make it remunerative: Held, to be an agreement for a partnership, and not a contract for the sale of goods, wares and merchandise, within the statute of frauds. The patent, when obtained, would be, in equity, partnership property, no matter in whose name it might be taken out. Somerby v. Buntin, 118 Mass. 279.

A contract between A & B, and C, by which the former were to furnish the latter goods at cost, to hawk and peddle, adding seven per cent. at such time as C might require, C to furnish a wagon, and to devote his whole time to peddling the goods, the expense of the license, traveling expenses, etc., to be deducted from the amount of the sales, and the balance or profits to be divided, twofifths to C, and three-fifths to A & B, the goods and merchandise, as well as the notes received on the sale of the goods, to be at the risk of the parties, in the proportion of two-fifths to C, and three-fifths to A & B, makes the parties, as between themselves, partners. Emanuel v. Draughn, 14 Ala. 303.

An agreement to engage in the business of prospecting for and the development of, lode mining property, for the joint use of all, is in the nature of a partnership agreement, and under it each party thereto becomes the agent of the other. Lawrence v. Robinson, 4 Col. 567.

Where a manufacturing business con

ever difference of opinion there may be as to other matters, it ad

nection, carried on for many years by a father and his four sons, had all the elements of a partnership except the father's consent: Held, that there was no partnership; but the Supreme Court allowed the bill praying a dissolution and account to be retained, in order that the question might be presented whether such a state of facts appeared from the record as would entitle the complainant, (one of the sons,) to compensation on the principle of a quantum meruit, and to have the cause remanded, with leave to amend the bill for that purpose. Phillips t. Phillips, 49 Ill. 437.

If two persons enter into a joint contract in writing, to perform certain labor and furnish certain materials for another, which contract does not define the relations of such persons between themselves, and if, by the understanding between themselves, one is to perform one part of the labor and the other another, and each is to receive a proportional sum of the money paid for the whole, the relation of partners does not by reason of these facts exist between them. Smith v. Moynihan, 44 Cal. 53.

A and B, by a written contract, agreed to carry on a trade or business in partnership, and in the same instrument B and C agreed to carry on a different trade or business in partnership: Held, that the relation of partners was not created between the three, so as to enable a person dealing with A & B, or with B & C, to commence an action against the whole. Elderkin v. Winne, 1 Chand. 27.

The joint prosecution of a lawsuit does not, per se, create a partnership between the parties as to the subject matter in dispute. Wilson v. Cobb, 28 N. J. Eq. 177.

An agreement between a sawyer in Wisconsin and a lumber merchant in Chicago, whereby the latter was to advance $10,000 to be used by the former

in sawing, etc., and the former to deliver all the lumber produced to the latter at $1.00 per M less than the market rates at the time of the arrival of each cargo in Chicago, does not create a partnership. Freese v. Ideson, 49 Ill. 191. A made the following written agreement with B: "Sold B, on joint account with A, 2000 boxes of candles, at 26 cents, six months from delivery; B to be allowed 21⁄2 per cent. on sales; on all sales not approved by A, B is to guaranty the same, receiving a commission of 21⁄2 per cent.; for half of the sales made by B he is to pass over the paper to A; there are to be no charges for storage, property in store to be covered by insurance by B for joint account and expense." A delivered the candles to B under this agreement, and received from time to time, as the candles were delivered, eight notes of B for half the value of the candles, payable in six months, two of which were paid by Bat maturity, and the others indorsed and negotiated by A, and afterwards paid by him, B having become insolvent: Held, that these facts showed a sale of an undivided half of the candles by A to B, and not a partnership between A and B with regard to the candles; and therefore that A had no lien on B's half of the candles as against B's assignees in insolvency. Hawes v. Tillinghast, 1 Gray, 289.

A, having given his notes to certain creditors of a partnership for debts due to them from the partnership, gave a written agreement to one of those creditors that he would not enforce the amount of said notes against the partnership until said creditors should have been fully paid all sums then due and thereafter to be due from the partnership, and that the amount of his notes as to all said creditors should remain as part of the business capital of" the partnership for three years: Held, that

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mits of no doubt whatever that persons engaged in any trade, busi

this agreement did not make A a copartner, nor prevent his proving against the estate of the partnership in insolvency a note given to him by them, in consideration for his said notes. Wall v. Balcom, 9 Gray, 92.

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Where the plaintiff and one P. purchased a mail contract from the original contractors, and executed to them a bond for the performance of the contract, and procured four of the five defendants to sign with them as sureties; and afterwards the plaintiff sold his interest in said contract to P. and took from him a like bond, signed by the remaining defendant, with one of the others as sureties; and afterwards, P having failed to perform the contract, the plaintiff and the five defendants signed a contract which recited that the " dersigned" had taken charge of said property, and by which they constituted the plaintiff their "agent or superintendent on said mail route, for which he was to "receive a reasonable compensation, and by which they bound themselves to indemnify all persons who might assist the plaintiff in the execution of said business; and also to pay the bills which had accrued under the plaintiff and P. It was held that the plaintiff did not thereby become a partner with the defendants, but might sustain an action against them on the contract. Stearns v. Haven, 16 Vt. 87.

An instrument in the following form: "The following is the property owned jointly or as described below, by G. F. and J. W. One hundred acres in, etc., bought from 0. W. and since sold for $7,500 to V. S. $2,100 paid, out of which J. W. received $1,000. Two acres on the hill, etc.; each paid half in full, and sold by G. F. for $2,600, no part of which has been given to J. W. Six lots in, etc., one-third undivided belongs to J. W. as per deed on record. Nineteen acres on,

etc., bought of D. U. the whole of the purchase money was paid by J. W. G. F. paid A. B. $50 for getting the land. See the deed for particulars. The titles to the above lands are in the name of G. F. and on record, which the deeds will explain. I certify that the above statement is correct, except the taxes and other expenses. (Signed) G. F:" Held, not to show a partnership between G. F. and J. W. in purchasing and selling lands. White v. Fitzgerald, 19 Wis. 480.

A bill in equity, filed before St. of 1857, Ch. 214, alleged that the parties made an oral agreement that the defendant should advance the requisite money to purchase a tract of land, and to build warehouses thereon, in consideration that the defendant should be paid from the proceeds all the money so advanced by him, with interest and 5 per cent. commission for the use and advancement of the money; that, for greater security, a deed of the land was made to the defendant, which, although absolute on its face, conveyed the land to him as security for the money to be so advanced, and in trust for the plaintiff'; that warehouses were erected on the land with money so advanced by the defendant, and money advanced by the plaintiff; that portions of the property were sold, and the proceeds received by the defendant; and that a part of the property remained unsold; and prayed for a conveyance of this part of the property, and for an account. The answer denied the allegations in the bill, and averred that the actual agreement was that a partnership, of which the defendant was a member, should advance the money, and receive from the proceeds the amount advanced, with interest and 5 per cent. commission for advancement, and 6 per cent. commission on all amounts received by them therefrom; and that the surplus, if any,

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