amounts to a contract of partnership or only to an agreement for a future partnership. The test, however, is to ascertain from the terms of the agreement itself whether any time has to elapse or any act remains to be done before the right to share profits accrues; for if there is, the parties will not be partners until such time has elapsed or act has been performed. and losses, but an entering upon some business thereunder. Lucas v. Cole, 57 Mo. 143. A mere promise to "go halves" in a purchase of land, if not carried into effect, does not make the promisor a partner, so as to bind him to pay a note executed by the grantee in both of their names, for improvements thereon. Huckabee v. Nelson, 54 Ala. 12. Evidence of an agreement between a surviving partner and a deceased partner, that, upon the death of the deceased partner, his brother should become a partner in the concern, and be entitled to a share of the profits, is not sufficient to establish a partnership. Brink v. New Amsterdam Fire Ins. Co. 5 Robt. 104. A partnership may be contracted to take effect at a future time, or on certain conditions. Avery v. Lauve, 1 La. Ann. 457. Unless the condition on which a partnership is formed is a condition precedent, its non-fulfillment does not annul the contract. Murray v. Johnson, 1 Head, 353. A and B executed a contract on the 17th day of April, 1855, which they entitled "articles of co-partnership," by which they declared their intention to form a co-partnership for the purpose of trade, which should continue for three years from the first day of May, 1855. The contract declared the parties to be equal owners of a certain stock of goods, of which a schedule was annexed, and that they were to continue to be owners of the same in the same proportions, and contained various provisions with regard to the mode of conducting the partnership business: Held, that the term of the co-partnership was not to commence until the first day of May, 1855, and until then the contract was merely an executory one, which either party had the power to refuse to perform, such refusal constituting only an ordinary breach of contract, for which the party was liable in damages, and not a dissolution of and existing co-partnership. Reboul v. Chalker, 27 Conn. 114. Where a proposed partnership, evidenced by a letter, contemplates in its terms but one transaction, at the conclusion of which the profits are to be divided, and the same letter which makes the offer to enter into the transaction on the joint account, sets a limit on the quantity of stock to be purchased for it, prescribes that it be bought on a joint credit, and requires that the stock when purchased shall be sent by particular persons to be sold in a particular market under the supervision of the party make ing the offer, and the party receiving the letter so acts as to fulfill no one of the requirements contained in it, there is no partnership, and in the event of loss, the party receiving the offer cannot maintain a bill for an accounting as partners and contribution. Metcalf v. Redman, 43 Ill. 264. An agreement was entered into by which the plaintiff, for a fixed annual compensation, was to render service for the defendant in a factory of which he had recently become owner. If certain incumbrances on the property were paid as they became due, from the profits of the business, and if the plaintiff's The general principle that so long as an agreement to form a partnership is executory, no partnership is formed, applies as well to ordinary partnerships as to projected companies, and it will be useful to consider it with reference to each in turn. (a) Application of the principle to ordinary partnerships. It is not unusual for a person who contemplates joining another in business to agree that such business shall be carried Option to be on upon certain terms not themselves creating a part- come a partner. nership, and to stipulate for an option to become a partner, either notes on demand were paid, then the defendant was to convey to the plaintiff one-half of the property and business, and not otherwise: Held, not a partnership, on the ground that the agreement was executory. Haskins v. Burr, 106 Mass. 48. Where an existing partnership takes in a new partner, by a written instrument signed by the old members and the new, which written instrument recites the payment of a certain sum by the incoming partner, and conveys to him one-third interest in the assets, and consents that he shall have a third interest in the profits, the new partnership is complete on the execution of the instrument, notwithstanding it may be agreed that an account of the stock shall be taken, and if it exceeds a certain sum, the new partner shall pay one-half of that sum. Phillips v. Nash, 47 Ga. 218. The existence of a partnership does not depend upon the fact that each partner has in all things complied with his agreement. If the contract has been made, property and labor contributed, and the partnership business commenced, there is a partnership until legally dissolved. Hartman v. Woehr, 18 N. J. Eq. 383. A contract for constituting a partnership, assigning the performance of certain things to put the business to be carried on into operation, constitutes a part nership at the signing of the contract, not from the commencement of the business itself. Aspinwall v. Williams, 1 Ohio, 38; Austin v. Williams, 2 Id. 282; Crary v. Williams, 2 Id. 284. An advance of money to a person engaged in business, and which was used by him for the purchase of goods, does not create a partnership, although it may be made in anticipation of a future partnership, which is never consummated. Hubbell v. Woolf, 15 Ind. 204. Under an agreement that Y. should furnish a certain sum to be used by H. in buying and selling certain kinds of goods until a specified day, and that each should have one-half of the profits, and that Y. was then to be "received into full partnership" in the business on contributing a certain further sum: Held, 1. That this did not constitute them partners inter sese during the period first mentioned. 2. That it was H's duty, at the end of that period, to render a statement of the purchases and sales, with a view to a division of the profits. 3. That his refusal to do so excused Y. from entering into the partnership which was then to be formed. Haile v. York, 27 Wis. 209. Articles of partnership purporting to be between the complainant on the one part and the defendant and a minor brother on the other, but which were executed only by the two: Held, not to have made the minor brother a partner. at a specified time, or at any time the person having the option may choose. Such agreements, if bonâ fide and not mere colorable schemes for creating a partnership, and at the same time concealing it (u), do not create a partnership until the person having the option has exercised it, and elected to become a partner. A strong illustration of this is afforded by ex Ex parte Davis. *28 parte Davis (x), * in which it was in substance agreed between Davis and Harris that Harris. should carry on business in the name of "J. Harris & Co.," for the benefit of himself and any person Davis might, at any time within eight years name; that Davis should advance Harris 12007. for the purpose of the business, and should become surety for him to a certain company; that Harris should give Davis promissory notes for his advances, and any sums he migh pay as surety; that Harris should carry on the business in partnership with Davis' nominee for twenty-one years on certain terms specified in the agreement; that the profits of the business should, for the first eight years, be applied, first, in paying Harris 1007. a year, secondly, in paying Davis his advances, with interest at 5l. per cent., and, thirdly, that the residue should be divided between Harris and Davis' nominee, in the proportions of one-third to the former and two-thirds to the latter, and that all losses should be borne in the same proportions. The agreement also contained clauses giving Davis a right to see the accounts relating to the business, and a number of other clauses of a special nature, all tending to show, as was indeed not disputed, that Davis might at any time within the eight years nominate himself as partner, and become entitled to two-thirds of the business and to two-thirds of the profits accruing therefrom anterior to the nomination. However, there never were any profits, and before eight years had expired, and before any nonination by Davis had been made, Harris became bankrupt; and the McGunn v. Hamlin, 29 Mich. 476. Where goods are purchased by several parties, under an agreement to hold them in aliquot shares, and with no arrangement for a joint sale, but with the intention of subsequently forming a copartnership in regard to the goods, until the partnership agreement is actually made the purchasers, are not co-partners, but only tenants in common. Baldwin v. Burrows, 47 N. Y. 199. (u) See Courtenay v. Wagstaff, 16 C. B. N. S. 110. (x) 4 De G. J. & Sm. 523. The agreement was in the form of a bond, and was, as Lord Westbury remarked, "an ingenious piece of mechanism." Such an agreement, however, cannot be relied upon as affording protection against third parties. question then arose whether Davis was entitled to prove against Harris' estate for the money Davis had advanced Harris. There were no persons claiming to be joint creditors of both Davis and Harris, and the question therefore was in substance whether, as between themselves, Davis and Harris were partners or not. The commissioner of the Bristol Court of Bankruptcy thought they were; but Lord Westbury properly reversed this decision, and held that whatever Davis' position might have been, as regards third parties, he and Harris had not become partners as between themselves. *29 Gabriel v. Evill. Again, in Gabriel v. Evill (y), it was agreed between the defendant and two others that the defendant should enter into partnership with them, and bring in 10007. in cash and 10007. in goods, and that the partnership should date retrospectively from the 1st of January; but the defendant reserved to himself the option of determining at any time within twelve months from that day whether he would become a partner or not. The defendant advanced the 20007., and several other acts were done in execution of the agreement; but within the twelve months the defendant declared his option not to become a partner, and it was held that he never did in fact become one, and that he had not incurred any liability as if he had. (2) In Price v. Groom (a), a debtor's business was carried on by him under an inspectorship deed, which authorized the trustees to carry on the business themselves; and to take the profits, if they chose. Their interest in the profits, however, did not commence until the debtor's interest determined; and it was held that whilst he carried on the business there was no partnership between him and them, they and he not being entitled to the profits at the same time. Price v. Groom. In Howell v. Brodie (b), the defendant, intending to become a partner in a scheme for making and letting out a mar- Share not yet ket-place, advanced considerable sums of money, and taken. (y) 9 M. & W. 297, and Car. & Marsh. 358. See, too, Ex parte Turquand, 2 M. D. & D. 339, which turned on the same agreement. See, also, Re Hall, 15 Ir. Ch. 287, a similar case. (2) Compare this case with Jefferys v. Smith, 3 Russ. 158. There A agreed to purchase B's share in a firm; A acted and was treated as a partner by the (b) 6 Bing. N. C. 44. ultimately, on the completion of the market, took one-seventh share in it. It was sought to make him liable for the expense of erecting the market, on the ground that he was a partner with those by whom the plaintiff had been employed; but the Court held that there was no partnership between them and the defendant until the share was taken by him.' Partnership dependent on the result of experiments. *30 In Osborne v. Juillon (c) the plaintiff and the defendant agreed to work some patented inventions for their joint benefit. But it was agreed that experiments should be made to satisfy the plaintiff as to the utility of the patent, and that if the plaintiff should be satisfied with the result of the experiments (such satisfaction to be testified by writing, signed by him), then the remaining clauses of the agreement should take effect, but not otherwise. The patents were worked for some time. There was nothing to show whether the plaintiff was satisfied or dissatisfied with the result, but it appeared that he was not sufficiently satisfied to insist on the agreement, and it was held that no partnership existed. In Burnell v. Hunt (d), an agreement was come to between A and Share of profits B, that A should take premises and purchase machinery and and materials to carry on the business of a expected in lieu of salary.2 'On the formation of a partnership, for the purpose of speculating in Indian lands, certain rules and regulations were adopted at a meeting of the company, by which the number of shares was fixed, and his interest assigned to each partner; and by which it was required that a specified sum should be paid on each share; that relinquishments should be executed to the company of all interests in any of the lands embraced in their contract; that any service should be performed for the company in furtherance of its business when called upon by a resolution of the company; and that a failure to comply with any of these requisitions, or any violation of good faith to the interest of the company, should forfeit to it the interest of the person so offending: Held, that a person to whom an interest in the company was assigned at this meeting, and who assented within a reasonable time afterwards to take it, was liable as a partner, at least as to third persons, who afterwards dealt with the company, although he was not present at the meeting, did not pay the installment on the share assigned to him, did not execute the relinquishments, and did not perform any of the services required by the rules and regulations. Grady v. Robinson, 28 Ala. 289. (c) 3 Drew. 596. The agreement in this case was long and unusual in its provisions, and even if the later clauses had come into operation, it would probably have been held that a partnership did not exist. (d) 5 Jur. 650, Q. B. The real point here was whether B had any interest in the goods, which he clearly had not, and would not have had even if there had been profits to divide. See ante, p. 20, note. |