In the absence of written stipulations or other evidence showing
a different intention, partners will be held to share equally both
profits and losses but it is competent for them to determine as
between themselves the basis upon which profits shall be divided
and losses borne, without regard to their respective contributions,
whether of money, labor, or experience to the common stock.
L. and W., the owners of a stock of goods, made a written
agreement with H. reciting that the latter was "taken into
partnership," that the stock should be inventoried and delivered to
H. "as a capital stock . . . to be sold with his entire direction
and supervision under the name" of the L. and W. Company; that a
new set of books should be opened showing the business of the new
firm; that the profits and losses should be shared in the
proportion of eight-tenths for L. and W. and of two-tenths for H.;
and that the "partnership" should pertain only to merchandising,
and have no connection with any outside business L. and W. might
have jointly or separately. After this agreement was made, L.
constituted H. his attorney in fact with power
"to bargain, and agree for, buy, sell, mortgage, hypothecate,
and in any and every way and manner deal in and with goods, wares,
and merchandise, choses in action, and other property in
possession, or in action, and to make, do and transact all and
every kind of business of what nature and kind soever, and also,
for me and in my name, and as my act and deed, to sign, seal,
execute, deliver and acknowledge such deeds, covenants, indentures,
agreements, mortgages, hypothecations, bottomries, charter parties,
bills of lading, bills, bonds, notes, receipts, evidences of debt,
releases, and satisfactions of mortgage, judgment, and other debts,
and such other instruments in writing of whatever kind and nature
as may be necessary or proper in the premises."
Held:
(1) That by this agreement, L., W., and H. became partners and
as between themselves established a community of property as well
as of profits and losses in respect to said goods and the business
of the L. and W. Company.
(2) That in the absence of L., this power of attorney authorized
H. to represent him in a general assignment of the property of the
L. and W. Company for the benefit of its creditors.
Replevin to recover possession of goods of the value of $35,000,
taken by the defendant Paul from
"the storerooms
Page 132 U. S. 540
on Congress Street in Tucson, Arizona, . . . formerly occupied
by Messrs. Lord & Williams Company . . . or for the sum of
thirty-five thousand dollars, the value thereof, in case delivery
cannot be had."
The defendant demurred, and also answered with a general denial,
and further pleaded that the seizure of the property in dispute was
made by him as the "duly elected, qualified and acting Sheriff of
the County of Pima, Arizona Territory," under a writ of attachment
duly issued in a case in which one Thompson was plaintiff, and Lord
and Williams were defendants,
"by virtue of which he levied upon and took possession of the
goods, wares and merchandise mentioned in the complaint herein as
the property of said defendants, Lord and Williams, in whose
possession it was and to whom it belonged, and held the same as
said sheriff, and by virtue of said writ at the time of the
commencement of this action."
The cause was tried by the court without a jury, and resulted in
a finding of facts which is set forth in the opinion of the court,
post, 132 U. S. 545.
The power of attorney referred to in the first of those findings is
printed in the margin.
* The
agreement
Page 132 U. S. 541
between Lord, Williams and Harlow by which they formed the
co-partnership of the Lord & Williams Company referred to in
Finding I will be found in the opinion of the Court,
post,
132 U. S.
547.
The court found as conclusions of law on its findings of
fact:
"I. That the property in the complaint mentioned and described
was wrongfully taken and detained by the defendant from the
possession of the plaintiff."
"II. That the plaintiff is entitled to a judgment for the return
of said property, and if the same cannot be made, for the sum of
$35,000 against the defendant."
And thereupon the following judgment was entered:
"The court having this day signed and filed its findings of fact
and conclusions of law in this case, and the value of the property
claimed having been found by the court to be the sum of thirty-nine
[five?] thousand dollars, and the property claimed having been
taken into possession of the plaintiff, therefore --"
"It is adjudged that the plaintiff have and retain possession of
the personal property described in the complaint, together with the
costs of this action, amounting to the sum of five hundred and
thirty-nine dollars. "
Page 132 U. S. 545
MR. JUSTICE HARLAN, after stating the facts in the foregoing
language, delivered the opinion of the Court.
In an action brought in a district court of the Territory of
Arizona by G. H. Thompson against C. H. Lord and W. W. Williams,
partners under the name of Lord & Williams, an attachment was
sued out, October 28, 1881, and levied by the sheriff, the present
appellant, upon "certain goods, wares, and merchandise, being the
entire stock of Lord and Williams." H. B. Cullum, claiming to be
the owner of the property at the time the attachment was levied,
brought this action against the sheriff to recover possession
thereof, or its value, in case delivery could not be had. The
answer put in issue the plaintiff's ownership of the goods and
averred that when taken under the attachment, they were owned by
and in possession of Lord & Williams. The pleadings therefore
raised the question of the ownership of the goods attached.
The district court made the following finding of facts:
"1. That on the 25th day of October, A.D. 1881 at the City of
Tucson, Charles H. Lord, W. W. Williams, and C. E. Harlow, then,
and for several months before that time, composing the mercantile
firm of Lord & Williams Company, and exclusively engaged in
general commercial business,
viz., buying and selling
goods, being insolvent, made and executed, as such firm, a general
assignment of all their property, not exempt from execution, for
the equal benefit of all their creditors, to Henry B. Cullum, the
plaintiff, and that the plaintiff immediately accepted said
assignment, and took possession of the property conveyed by it,
including the property mentioned in the complaint, which property
was a portion of the property of the said Lord & Williams
Company at the time of the assignment. The assignment was executed
in the firm name by W. W. Williams, and also signed by said
Williams and said Harlow individually, and by the said Lord, by his
attorney, the said C. E. Harlow, the said Harlow then holding a
general power of attorney from him, and the said Lord being then
absent from the territory, and sick, and his whereabouts
Page 132 U. S. 546
being entirely unknown at that time to his partners and family,
though every reasonable effort had been made to discover it, and
that said assignment was ratified and approved by said Lord at the
earliest opportunity."
"2. That on the said 25th day of October, A.D. 1881, and for a
long time previous thereto at said city, the said Charles H. Lord
and W. W. Williams were co-partners in the banking business, and in
dealing in livestock, under the firm name of Lord & Williams.
That on said last-mentioned day, the said firm of Lord &
Williams, being then insolvent, made and executed a general
assignment of all its property, not exempt from execution, for the
general benefit of all its creditors, to the said Henry B. Cullum,
who thereupon immediately entered upon the possession of the same,
and accepted the trust. Said assignment was executed in the firm
name by said Williams, and also signed by him individually, and by
said Harlow, as Lord's attorney in fact."
"3. That said assignments were made in good faith by the said
firms, respectively, and that at the time of making the same the
assignors had full confidence in the ability and integrity of said
Henry B. Cullum."
"4. That on the 28th day of October, A.D. 1881, one G. Howard
Thompson commenced a suit in this court against the said Lord &
Williams, and sued out an attachment therein against the property
of the said Lord & Williams, and placed the same in the hands
of the defendant, Robert H. Paul, who was then the Sheriff of Pima
County, aforesaid, and the said Paul, claiming that the said goods
and property in the complaint mentioned and described were then the
property of the said Lord & Williams, and not the property of
Cullum, the plaintiff, seized and attached the same on October 28,
1881, and held the same until replevied in this suit."
"5. That at the time the property was so seized and attached, it
was the property of the plaintiff, and not subject to such seizure
or attachment."
"6. That its value was $35,000."
The plaintiff having taken the property into possession, the
judgment was that he retain possession and recover his costs.
Page 132 U. S. 547
That judgment was affirmed by the supreme court of the
territory, the record in that case containing an agreed "statement
on appeal," upon which, in connection with the finding of facts,
the case was heard and determined in that court.
The appellant contends that there was no evidence in the record
of an assignment by Lord & Williams, and insists that the
second paragraph of the finding of facts could only have reference
to the assignment made, on the 25th of October, 1881, by the Lord
& Williams Company. But the finding plainly imports that there
were two assignments to Cullum on the same day -- one by the Lord
& Williams Company, and the other by Lord & Williams. The
absence from the record, as prepared for the supreme court of the
territory -- of the deed of assignment by Lord & Williams, if
any such deed was executed -- is explained by the fact that the
real contest between the parties was in respect to the assignment
in the name of the Lord & Williams Company for the benefit of
its creditors. But it is not essential in this case to inquire
whether an assignment was made by the firm of Lord & Williams,
as distinguished from the Lord & Williams Company, for it is
not claimed that the goods seized under the attachment were
embraced by any other assignment than the one made by the latter
firm.
It appears that prior to March 1, 1881, C. H. Lord and W. W.
Williams were engaged as partners under the style of Lord &
Williams in the buying and selling of goods as well as in the
business of banking. The latter business was kept distinct from the
former, although both were carried on in the same building.
On the day last named, the following written agreement was
entered into between the parties signing it:
"Tucson, A.T., March 1st, 1881"
"This agreement, entered into by and between Lord and Williams
and C. E. Harlow, all of Tucson, Arizona Territory, witnesseth that
the said Lord and Williams have this day and date taken into
partnership the said C. E. Harlow under the following conditions:
they agree that an inventory of their
Page 132 U. S. 548
stock of merchandise shall be taken under the supervision of
said Harlow, and after its value shall be agreed upon by the
parties interested the same, shall be turned over and delivered to
the said Harlow as a capital stock, to be sold with his entire
direction and supervision, under the name and style of 'Lord and
Williams Company,' for the term of one year from the date of this
agreement. The said Harlow shall attend to all the business of the
new concern, such as the payment of debts, employment of help,
purchase of goods, payment of same, and all expenses attending the
proper and legitimate carrying on of the business; shall open a new
set of books, in which a complete and true exhibit of the business
shall be kept, and always open to the parties interested for
inspection; shall, as far as possible, do a cash business; shall
remit money to pay debts incurred as fast as the same may be
realized from sale; shall not sign, endorse, or negotiate any
notes, bonds, or agreements using the new firm name unless strictly
in connection with the business of the house, and only then after
consultation with one or both the other members of the firm; shall
cause at the end of each month an exhibit to be made of the
condition of the firm in the shape of a balance sheet; and,
finally, every six months shall cause an inventory to be taken of
all the property, and the books balanced, after which any profit
there may be shall be divided as follows: the said Lord and
Williams shall have eight-tenths of the same, and the said Harlow
two-tenths of the same. In case of loss, the same ratio shall
prevail in sharing the same. In this contract it is distinctly
understood by the parties interested that the partnership only
pertains to that of merchandising, and has no connection in any
shape or manner with any business the said Lord and Williams may
have jointly or severally outside. Any trade or business they may
be able to direct to the new concern they shall do so, any profits
to be derived from same to be considered identical with those
arising from business with other parties. They, however, shall have
at cost price any merchandise they may need or require for their
own individual account. In case said Harlow shall add any cash to
the capital stock, he shall receive for same ten percent interest
per
Page 132 U. S. 549
year, which amount shall be charged to the general exchange and
interest account."
"C. H. LORD"
"W. W. WILLIAMS"
"C. E. HARLOW."
The goods whose ownership is here involved constituted a part of
the stock of merchandise referred to in the above agreement.
Nevertheless, appellant contends they were liable to be taken under
the attachment sued out by Thompson against the property of Lord
& Williams.
This contenton rests in part upon the assumption that the
agreement of March 1, 1881, did not work a change in the ownership
of the goods, or establish a partnership between Lord &
Williams and Harlow, or pass any interest whatever in the property
to Harlow, but constituted the latter simply an agent for the other
parties in respect to their mercantile business, thereafter to be
carried on under the name of the Lord & Williams Company, as
distinguished from their banking business, to be carried on, as
before, under the name of Lord & Williams. It is consequently
insisted that the goods levied upon belonged to the firm of Lord
& Williams at the time the attachment was levied.
The words of the agreement forbid such an interpretation of its
provisions. The only fact tending to support the position of
appellant is that Harlow did not put any goods into the new concern
nor pay any money for an interest in the property, or for the
privilege of becoming a partner with Lord & Williams in their
mercantile business to be conducted under his direction and
supervision. But that is not a controlling fact in view of all that
is disclosed by the agreement. The contribution by Harlow of money
or property was not essential to the creation of the partnership.
It was competent for Lord & Williams, in consideration of his
undertaking the entire charge and control of the business of the
Lord & Williams Company, to give him an interest -- though not
necessarily an equal interest -- in the property, which was to
constitute at the outset, the whole capital of the partnership.
Page 132 U. S. 550
And that is what they did. The agreement, it will be observed,
prescribes the conditions upon which Harlow was "taken into
partnership" by Lord & Williams in respect to the property
placed in his hands "as a capital stock" for the Lord &
Williams Company. He was to open "a new set of books," exhibiting
therein the business of the "new concern" or the "new firm," the
profits of such business to be divided at stated periods, upon the
basis of eight-tenths to Lord & Williams and two-tenths to
Harlow, and the losses to be borne in the same ratio. That which
Harlow was to receive when the books were balanced cannot be
regarded merely as compensation for services rendered as agent or
manager for Lord & Williams, but as the stipulated part of the
profits, as profits, accruing to him as a partner in the new firm
of the Lord & Williams Company, the owner of the partnership
property. He became, by the agreement, one of the joint owners and
possessors of that property. That instrument does not so declare,
in terms, but such is the necessary implication of its words.
While, in the absence of written stipulations or other evidence
showing a different intention, partners will be held to share
equally both profits and losses, it is entirely competent for them
to determine, as between themselves, the basis upon which profits
shall be divided and losses borne, without regard to their
respective contributions, whether of money, labor, or experience,
to the common stock. Story on Partnership ยงยง 23, 24. Such matters
are entirely within the discretion of parties about to assume the
relation of partners. If anything further was needed to prove that
Harlow became a partner with, and not a mere agent or employee for,
Lord & Williams in their mercantile business, it is found in
that clause of the agreement providing that
"the partnership only pertains to that of merchandising, and has
no connection in any shape or manner with any business the said
Lord & William may have jointly or severally outside."
A different conclusion, it is contended, is required by the
decisions of this Court in
Drennen v. London Assurance
Co., 113 U. S. 51, and
116 U. S. 116 U.S.
461,
116 U. S. 472. The
principal question in that case was whether one Arndt became, by
virtue of a certain
Page 132 U. S. 551
written agreement, a member of an existing partnership, so as to
give him an interest in its property within the meaning of a
contract of fire insurance, which provided that the policy should
be void if the property insured
"be sold or transferred, or any change takes place in title or
possession, (except by succession by reason of the death of the
insured), whether by legal process or judicial decree, or voluntary
transfer or conveyance."
When the case was first before this Court, it was held that the
agreement there in question did not make Arndt a member of the
existing partnership, but only contemplated his becoming a member
of the firm at a future time and after the performance of certain
conditions, one of which was the creation of an incorporated
company. It was observed in the same case that the parties
ex
industria excluded the possibility of Arndt's acquiring an
interest in or control over the property insured in advance of the
formation of such corporation.
When that case was brought here a second time, the Court, after
stating that mere participation in profits would not give an
interest in the property contrary to the real intention of the
parties, said:
"Persons cannot be made to assume the relation of partners, as
between themselves, when their purpose is that no partnership shall
exist. There is no reason why they may not enter into an agreement
whereby one of them shall participate in the profits arising from
the management of particular property without his becoming a
partner with the others, or without his acquiring an interest in
the property itself, so as to effect a change of title."
The case now before us is altogether different. It cannot be
said that the parties excluded the possibility of Harlow's
acquiring an interest in the property. They did not form a
partnership in which, as between themselves, there was to be a
community of interest only in profits and losses, leaving the
property in the goods to remain in Lord & Williams. On the
contrary, the written agreement shows a purpose to put the goods
themselves into partnership, and to establish a community of
property, as well as a community of profit and loss, among its
several members.
Page 132 U. S. 552
For the reasons stated, we are of opinion that the agreement of
March 1, 1881, created between the parties signing it a partnership
by the name of the Lord & Williams Company, and that the stock
of merchandise therein mentioned became the property of such
partnership. It results that if the deed of assignment of October
25, 1881, was not invalid upon the ground urged by the defendant
and to be presently adverted to, the right of property passed by
that instrument to the appellee, for the benefit of the creditors
of the Lord & Williams Company, before the goods were seized
under the attachment against the property of Lord &
Williams.
Thus far, we have assumed that the deed of assignment in
question was executed by Lord. But the appellant contends that it
was void as against Thompson, the plaintiff in the attachment,
because not so executed as to become a valid assignment of the
property described in it. The deed was signed by Williams and
Harlow and by the Lord & Williams Company. It was executed for
Lord by Harlow, as his attorney in fact. Harlow acted for him under
a written authority dated April 6, 1881, which, among other things,
constituted Harlow attorney in fact for Lord, with power
"to bargain and agree for, buy, sell, mortgage, hypothecate, and
in any and every way and manner deal in and with, goods, wares, and
merchandise, choses in action, and other property in possession or
in action, and to make, do, and transact all and every kind of
business, of what nature and kind soever, and also for me, and in
my name, and as my act and deed, to sign, seal, execute, deliver,
and acknowledge such deeds, covenants, indentures, agreements,
mortgages, hypothecations, bottomries, charter-parties, bills of
lading, bills, bonds, notes, receipts, evidences of debt, releases
and satisfactions of mortgage, judgment and other debts, and such
other instruments in writing, of whatever kind and nature, as may
be necessary or proper in the premises."
The argument of the appellant upon this branch of the case is
that the authority of one partner to make a general assignment of
the partnership effects to a trustee for the benefit of creditors
cannot be implied from the partnership relation merely; that Lord's
general power of attorney did not authorize
Page 132 U. S. 553
Harlow to act for him in a general assignment either of the
property of the Lord & Williams Company or that of Lord &
Williams, and that a special authorization was necessary to enable
him to represent Lord in such a matter; further, that while Lord
might subsequently ratify, as he did, the act of Harlow, such
ratification occurred after the levy of Thompson's attachment, and
could not relate back so as to invalidate that intervening
attachment.
It is not necessary to consider all of these propositions, for
we are of opinion that the above power of attorney, interpreted in
the light of the relations in business of the parties to it, gave
Harlow ample authority to represent Lord in any general assignment,
made in good faith, of the property of the Lord & Williams
Company for the benefit of its creditors. In respect to goods,
wares, merchandise, choses in action, and other property in
possession or in action, and in respect to all business of whatever
nature and kind, Harlow, for Lord and in his name, was expressly
authorized to bargain, agree for, buy, sell, mortgage, and
hypothecate the same and in any and every way and manner to deal in
and with such property and rights. And this authority was conferred
while Harlow had, by another written agreement, to which Lord was a
party, the entire direction and supervision of the property and
business of the Lord & Williams Company. It would be
extraordinary if a partner to whom was committed such direction and
supervision of partnership property could not, in the matter of a
general assignment of the partnership effects for the benefit of
firm creditors, represent an absent partner who had given him the
broad authority expressed in the above power of attorney.
Judgment affirmed.
*
"Know all men by these presents that I, Charles H. Lord, of the
County of Pima, Territory of Arizona, have made, constituted and
appointed, and by these presents do make, constitute and appoint C.
E. Harlow, of the county and territory aforesaid, my true and
lawful attorney for me and in my name, place and stead, and for my
use and benefit to ask, demand, sue for, recover, collect and
receive all such sums of money, debts, dues, accounts, legacies,
bequests, interests, dividends, annuities and demands whatsoever,
as are now or shall hereafter become due, owing, payable, or
belonging to me, and have, use and take all lawful ways and means,
in my name or otherwise, for the recovery thereof by attachments,
arrests, distress, or otherwise, and to compromise and agree for
the same, and acquittances, or other sufficient discharges for the
same for me, and in my name to make, seal and deliver; to bargain,
contract, agree for, purchase, receive, and take lands, tenements,
hereditaments, and accept the seizing and possession of all lands,
and all deeds, and other assurances in the law therefor, and to
lease, let, demise, bargain, sell, remise, release, convey,
mortgage, and hypothecate lands, tenements, and hereditaments upon
such terms and conditions and under such covenants as he shall
think fit. Also to bargain and agree for, buy, sell, mortgage,
hypothecate, and in any and every way and manner deal in and with
goods, wares and merchandise, choses in action, and other property
in possession or in action, and to make, do and transact all and
every kind of business of what nature and kind soever, and also for
me and in my name, and as my act and deed to sign, seal, execute,
deliver and acknowledge such deeds, covenants, indentures,
agreements, mortgages, hypothecations, bottomries, charter parties,
bills of lading, bills, bonds, notes, receipts, evidences of debt,
releases and satisfactions of mortgage judgment, and other debts,
and such other instruments in writing of whatever kind and nature
as may be necessary or proper in the premises."
"Giving and granting unto my said attorney full power and
authority to do and perform all and every act and thing whatsoever
requisite and necessary to be done in and about the premises as
fully, to all intents and purposes, as I might or could do if
personally present, hereby ratifying and confirming all that my
said attorney shall lawfully do, or cause to be done, by virtue of
these presents."
"In witness whereof, I have hereunto set my hand and seal the
sixth day of April, one thousand eight hundred and eighty-one."
"CHARLES H. LORD [SEAL]"
"Signed, sealed, and delivered in the presence of --"
"CLAUDE ANDERSON"