Summary
In Curry v. Fowler (supra) W.G. and J.E. McCormick were an existing firm owning certain vacant real estate in New York, which they desired to improve.
Summary of this case from Hackett et al. v. StanleyOpinion
Argued October 20, 1881
Decided November 22, 1881
Abner C. Thomas for appellant. Aaron Pennington Whitehead for respondent.
The plaintiff's claim to recover of the defendant Fowler depends upon the question whether, by the terms of the contract between Fowler and the McCormacks, Fowler had such an interest in the profits of the business of that firm as to render him liable jointly with them as a partner, for the amount of the plaintiff's demand.
By the agreement, which recited that the McCormacks were the owners of certain real estate therein mentioned, and were about to erect fifteen houses on the same, and in consideration of a share in the profits of the purchase and building of the said houses, Fowler agreed to advance the sum of $50,000 toward the purchase and erection of the buildings, from time to time, as required, and the McCormacks were to share the profits with Fowler, and he was to be allowed interest on the moneys advanced and one-half of the profits of the houses, when sold, which were to be equal to at least the sum of $12,500. The amount of the advances was to be secured by a bond and a mortgage on the premises. Fowler was also to take new second mortgages for his loan and the profits under the agreement, whenever the McCormacks should be ready to obtain a first loan on said premises, which said mortgages were to be paid off when the houses covered thereby were sold. All the mortgages called for by this agreement were executed and delivered, aggregating $62,500. Fowler having been advised that the taking of $12,500 was usurious, all of the mortgages were canceled and new mortgages given, amounting to only $50,000. In Richardson v. Hughitt, 76 N.Y. 55, it was held by this court that a person who has no interest in the business of a firm or in the capital invested, save that he is to receive a share of the profits as a compensation for services, or for money loaned for the benefit of the business, is not a partner and cannot be held liable as such by a creditor of the firm. The case cited is very similar in its leading aspects to the one at bar. In both cases money was advanced or loaned and security taken upon property; in the case cited upon personal property, and in the case at bar by a mortgage upon real estate. A percentage was to be paid in each case as interest, and in one of them one-fourth of the profits and in the other one-half thereof. The money was to be repaid to the party advancing the same, after a sale had been made of the property taken as security therefor. In the case cited, the borrower did not personally agree to pay the loan except from the proceeds realized upon the sale of the property, while here he was obligated to do so in any contingency, and in this respect the circumstances in the case at bar tend more strongly to establish that there was no copartnership. A distinction is recognized in the case cited between a provision made as to the profits as a means of compensation for the use of the money advanced or loaned, and the receipt of the profits as a partner only; and the question is considered and discussed whether the money was advanced by the defendant as a member of the firm, or a loan made where the profits were to be received as a measure of compensation for such loan. In the case at bar it is not claimed that the defendant took any part, or had any thing to do with the construction of the buildings, or any connection with the contract, except by the advancing of the money, and as that was all he did, there is no ground for claiming that, by reason of making a loan which related to a building contract, he became a partner with the builders. The case cited is directly in point, and we are unable to discover any such difference from the case at bar as would authorize us to disregard the principle which it establishes. We have examined the various grounds upon which it is claimed to be distinguished by the appellant's counsel, and are brought to the conclusion that none of them are well founded. The points urged in this connection are, so far as material, covered by what has already been remarked as to the similarity of the leading features of the contract here to that in the case cited, and the legal effect of its provisions as to the money advanced and the payment of the same, and the profits to be derived therefrom. In neither of the cases can it be urged on any reasonable ground that there was an attempt to evade responsibility as a partner while reaping the advantages of the copartnership, and the case cited is, we think, decisive, and the question presented must be considered as res adjudicata.
The judgment should be affirmed.
All concur, except RAPALLO, J., not voting.
Judgment affirmed.