EN BANC
JOSE FERNANDEZ,
Plaintiff-Appellant,
G.
R.
No. 413
February
2, 1903
-versus-
FRANCISCO DE
LA
ROSA,
Defendant-Appellee.
D E C I S I
O N
LADD, J:
The object of this action
is to obtain from the Court a declaration that a partnership exists
between
the parties, that the plaintiff has a consequent interest in certain
cascoes
which are alleged to be partnership property, and that the defendant is
bound to render an account of his administration of the cascoes and the
business carried on with them.
Judgment was rendered
for the defendant in the court below and the plaintiff appealed.
The respective claims
of the parties as to the facts, so far as it is necessary to state them
in order to indicate the point in dispute, may be briefly summarized.
The
plaintiff alleges that in January, 1900, he entered into a verbal
agreement
with the defendant to form a partnership for the purchase of cascoes
and
the carrying on of the business of letting the same for hire in Manila,
the defendant to buy the cascoes and each partner to furnish for that
purpose
such amount of money as he could, the profits to be divided
proportionately;
that in the same January the plaintiff furnished the defendant 300
Pesos
to purchase a casco designated as No. 1515, which the defendant did
purchase
for 500 Pesos of Doña Isabel Vales, taking the title in his own
name; that the plaintiff furnished further sums aggregating about 300
Pesos
for repairs on this casco; that on the fifth of the following
March
he furnished the defendant 825 Pesos to purchase another casco
designated
as No. 2089, which the defendant did purchase for 1,000 Pesos of Luis
R.
Yangco, taking the title to this casco also in his own name;
that
in April the parties undertook to draw up articles of partnership for
the
purpose of embodying the same in an authentic document, but that the
defendant
having proposed a draft of such articles which differed materially from
the terms of the earlier verbal agreement, and being unwilling to
include casco No. 2089 in the partnership, they were unable to
come to
any
understanding and no written agreement was executed; that the defendant
having in the meantime had the control and management of the two cascoes,
the plaintiff made a demand for an accounting upon him, which the
defendant
refused to render, denying the existence of the partnership altogether.
The defendant admits
that the project of forming a partnership in the casco business
in which he was already engaged to some extent individually was
discussed
between himself and the plaintiff in January, 1900, and earlier, one
Marcos
Angulo, who was a partner of the plaintiff in a bakery business, being
also a party to the negotiations, but he denies that any agreement was
ever consummated. He denies that the plaintiff furnished any money in
January,
1900, for the purchase of casco No. 1515, or for repairs on the
same, but claims that he borrowed 300 Pesos on his individual account
in
January from the bakery firm, consisting of the plaintiff, Marcos
Angulo,
and Antonio Angulo. The 825 Pesos, which he admits he received from the
plaintiff March 5, he claims was for the purchase of casco No.
1515,
which he alleged was bought March 12, and he alleges that he never
received
anything from the defendant toward the purchase of casco No.
2089.
He claims to have paid, exclusive of repairs, 1,200 Pesos for the first
casco and 2,000 Pesos for the second one.
The case comes to this
Court under the old procedure, and it is, therefore, necessary for Us
the
review the evidence and pass upon the facts. Our general conclusions
may
be stated as follows:
(1) Doña Isabel
Vales, from whom the defendant bought casco No. 1515, testifies that
the
sale was made and the casco delivered in January, although the
public
document of sale was not executed till some time afterwards. This
witness
is apparently disinterested, and we think it is safe to rely upon the
truth
of her testimony, especially as the defendant, while asserting that the
sale was in March, admits that he had the casco taken to the ways of
repairs
in January.
It is true that the
public document of sale was executed March 10, and that the vendor
declares
therein that she is the owner of the casco, but such
declaration
does not exclude proof as to the actual date of the sale, at least as
against
the plaintiff, who was not a party to the instrument. [Civil Code, Sec.
1218]. It often happens, of course, in such cases, that the actual sale
precedes by a considerable time the execution of the formal instrument
of transfer, and this is what we think occurred here.
(2) The plaintiff
presented
in evidence the following receipt: "I have this day received from D.
Jose
Fernandez eight hundred and twenty-five pesos for the cost of a casco
which
we are to purchase in company. Manila, March 5, 1900. Francisco de la
Rosa."
The authenticity of this receipt is admitted by the defendant. If casco
No. 1515 was bought, as we think it was, in January, the casco referred
to in the receipt which the parties "are to purchase in company" must
be
casco No. 2089, which was bought March 22. We find this to be the fact,
and that the plaintiff furnished and the defendant received 825 Pesos
toward
the purchase of this casco, with the understanding that it was
to
be purchased on joint account.
(3) Antonio Fernandez
testifies that in the early part of January, 1900, he saw Antonio
Angulo
give the defendant, in the name of the plaintiff, a sum of money, the
amount
of which he is unable to state, for the purchase of a casco to
be
used in the plaintiff's and defendant's business. Antonio Angulo also
testified,
but the defendant claims that the fact that Angulo was a partner of the
plaintiff rendered him incompetent as a witness under the provisions of
Article 643 of the then Code of Civil Procedure, and without deciding
whether
this point is well taken, we have discarded his testimony altogether in
considering the case. The defendant admits the receipt of 300 Pesos
from
Antonio Angulo in January, claiming, as has been stated, that it was a
loan from the firm. Yet he sets up the claim that the 825 Pesos which
he
received from the plaintiff in March were furnished toward the purchase
of casco No. 1515, thereby virtually admitting that casco
was purchased in company with the plaintiff. We discover nothing in the
evidence to support the claim that the 300 Pesos received in January
was
a loan, unless it may be the fact that the defendant had on previous
occasions
borrowed money from the bakery firm. We think all the probabilities of
the case point to the truth of the evidence of Antonio Fernandez as to
this transaction, and we find the fact to be that the sum in question
was
furnished by the plaintiff toward the purchase for joint ownership of casco
No. 1515, and that the defendant received it with the
understanding
that it was to be used for this purpose. We also find that the
plaintiff
furnished some further sums of money for the repair of this casco.
(4) The balance of
the purchase price of each of the two cascoes over and above
the
amount contributed by the plaintiff was furnished by the defendant.
(5) We are unable to
find upon the evidence before Us that there was any specific verbal
agreement
of partnership, except such as may be implied from the facts as to the
purchase of the casco.
(6) Although the
evidence
is somewhat unsatisfactory upon this point, We think it more probable
than
otherwise that no attempt was made to agree upon articles of
partnership
till about the middle of the April following the purchase of the cascoes.
(7) At some time
subsequently
to the failure of the attempt to agree upon partnership articles and
after
the defendant had been operating the cascoes for some time, the
defendant
returned to the plaintiff, 1,125 Pesos, in two different sums, one of
300
and one of 825 Pesos. The only evidence in the record as to the
circumstances
under which the plaintiff received these sums is contained in his
answers
to the interrogatories proposed to him by the defendant, and the whole
of his statement on this point may properly be considered in
determining
the facts as being in the nature of an indivisible admission. He states
that both sums were received with an express reservation on his part of
all his rights as a partner. We find this to be the fact.
Two questions of law
are raised by the foregoing facts:
(1) Did a partnership
exist between the parties?
(2) If such
partnership
existed, was it terminated as a result of the act of the defendant in
receiving
back the 1,125 Pesos?
(1) "Partnership is a contract
by which two or more persons bind themselves to contribute money,
property,
or industry to a common fund, with the intention of dividing the
profits
among themselves." [Civil Code, Article 1665].
The essential points
upon which the minds of the parties must meet in a contract of
partnership
are, therefore, (1) mutual contribution to a common stock, and (2) a
joint
interest in the profits. If the contract contains these two elements
the
partnership relation results, and the law itself fixes the incidents of
this relation if the parties fail to do so. [Civil Code, Sections 1689,
1695].
We have found as a
fact that money was furnished by the plaintiff and received by the
defendant
with the understanding that it was to be used for the purchase of the cascoes
in question. This establishes the first element of the
contract,
namely,
mutual contribution to a common stock. The second element, namely, the
intention to share profits, appears to be an unavoidable deduction from
the fact of the purchase of the cascoes in common, in the
absence
of any other explanation of the object of the parties in making the
purchase
in that form, and, it may be added, in view of the admitted fact that
prior
to the purchase of the first casco the formation of a
partnership
had been a subject of negotiation between them.
Under other
circumstances
the relation of joint ownership, a relation distinct though perhaps not
essentially different in its practical consequence from that of
partnership,
might have been the result of the joint purchase. If, for instance, it
were shown that the object of the parties in purchasing in company had
been to make a more favorable bargain for the two cascoes than
they
could have done by purchasing them separately, and that they had no
ulterior
object except to effect a division of the common property when once
they
had acquired it, the affectio societatis would be lacking and
the
parties would have become joint tenants only; but, as nothing of this
sort
appears in the case, we must assume that the object of the purchase was
active use and profit and not mere passive ownership in common.
It is thus apparent
that a complete and perfect contract of partnership was entered into by
the parties. This contract, it is true, might have been subject to a
suspensive
condition, postponing its operation until an agreement was reached as
to
the respective participation of the partners in the profits, the
character
of the partnership as collective or en comandita, and other
details,
but although it is asserted by counsel for the defendant that such was
the case, there is little or nothing in the record to support this
claim,
and the fact that the defendant did actually go on and purchase the
boats,
as it would seem, before any attempt had been made to formulate
partnership
articles, strongly discountenances the theory.
The execution of a
written agreement was not necessary in order to give efficacy to the
verbal
contract of partnership as a civil contract, the contributions of the
partners
not having been in the form of immovables or rights in immovables.
[Civil
Code, Article 1667]. The special provision cited, requiring the
execution
of a public writing in the single case mentioned and dispensing with
all
formal requirements in other cases, renders inapplicable to this
species
of contract the general provisions of Article 1280 of the Civil Code.
(2) The remaining
question
is as to the legal effect of the acceptance by the plaintiff of the
money
returned to him by the defendant after the definitive failure of the
attempt
to agree upon partnership articles. The amount returned fell short, in
our view of the facts, of that which the plaintiff had contributed to
the
capital of the partnership, since it did not include the sum which he
had
furnished for the repairs of casco No. 1515. Moreover, it is
quite
possible, as claimed by the plaintiff, that a profit may have been
realized
from the business during the period in which the defendant had been
administering
it prior to the return of the money, and if so he still retained that
sum
in his hands. For these reasons the acceptance of the money by the
plaintiff
did not have the effect of terminating the legal existence of the
partnership
by converting it into a societas leonina, as claimed by counsel
for the defendant.
Did the defendant waive
his right to such interest as remained to him in the partnership
property
by receiving the money? Did he by so doing waive his right to an
accounting
of the profits already realized, if any, and a participation in them in
proportion to the amount he had originally contributed to the common
fund?
Was the partnership dissolved by the "will or withdrawal of one of the
partners" under Article 1705 of the Civil Code? We think these
questions
must be answered in the negative.
There was no intention
on the part of the plaintiff in accepting the money to relinguish his
rights
as a partner, nor is there any evidence that by anything that he said
or
by anything that he omitted to say he gave the defendant any ground
whatever
to believe that he intended to relinquish them. On the contrary, he
notified
the defendant that he waived none of his rights in the partnership. Nor
was the acceptance of the money an act which was in itself inconsistent
with the continuance of the partnership relation, as would have been
the
case had the plaintiff withdrawn his entire interest in the
partnership.
There is, therefore, nothing upon which a waiver, either express or
implied,
can be predicated. The defendant might have himself terminated the
partnership
relation at any time, if he had chosen to do so, by recognizing the
plaintiff's
right in the partnership property and in the profits. Having failed to
do this he can not be permitted to force a dissolution upon his
co-partner
upon terms which the latter is unwilling to accept. We see nothing in
the
case which can give the transaction in question any other aspect than
that
of the withdrawal by one partner with the consent of the other of a
portion
of the common capital.
The result is that
we hold and declare that a partnership was formed between the parties
in
January, 1900, the existence of which the defendant is bound to
recognize;
that cascoes Nos. 1515 and 2089 constitute partnership
property,
and that the plaintiff is entitled to an accounting of the defendant's
administration of such property, and of the profits derived therefrom.
This declaration does not involve an adjudication as to any disputed
items
of the partnership account.
The judgment of the
Court below will be reversed without costs, and the record returned for
the execution of the judgment now rendered. So ordered.
Arellano, C.J.,
Torres, Cooper, and Mapa, JJ., concur.
Willard, J.,
dissenting.
ON
MOTION FOR A
REHEARING.MAPA, J:
This case has been decided
on appeal in favor of the plaintiff, and the defendant has moved for a
rehearing upon the following grounds:
1. Because that part
of the decision which refers to the existence of the partnership which
is the object of the complaint is not based upon clear and decisive
legal
grounds; and
2. Because, upon the
supposition of the existence of the partnership, the decision does not
clearly determine whether the juridical relation between the partners
suffered
any modification in consequence of the withdrawal by the plaintiff of
the
sum of 1,125 Pesos from the funds of the partnership, or if it
continued
as before, the parties being thereby deprived, he alleges, of one of
the
principal bases for determining with exactness the amount due to each.
With respect to
the first
point, the appellant cites the fifth conclusion of the Decision, which
is as follows: "We are unable to find from the evidence before us that
there was any specific verbal agreement of partnership, except such as
may be implied from the facts as to the purchase of the cascoes."
Discussing this part
of the Decision, the defendant says that, in the judgment of the Court,
if on the one hand there is no direct evidence of a contract, on the
other
its existence can only be inferred from certain facts, and the
defendant
adds that the possibility of an inference is not sufficient ground upon
which to consider as existing what may be inferred to exist, and still
less as sufficient ground for declaring its efficacy to produce legal
effects.
This reasoning rests
upon a false basis. We have not taken into consideration the mere
possibility
of an inference, as the appellant gratuitously states, for the purpose
of arriving at a conclusion that a contract of partnership was entered
into between him and the plaintiff, but have considered the proof which
is derived from the facts connected with the purchase of the cascoes.
It is stated in the decision that with the exception of this evidence
we
find no other which shows the making of the contract. But this does not
mean [for it says exactly the contrary] that this fact is not
absolutely
proven, as the defendant erroneously appears to think. From this data
we
infer a fact which to our mind is certain and positive, and not a mere
possibility; we infer not that it is possible that the contract may
have
existed, but that it actually did exist. The proofs constituted by the
facts referred to, although it is the only evidence, and in spite of
the
fact that it is not direct, We consider, however, sufficient to produce
such a conviction, which may certainly be founded upon any of the
various
classes of evidence which the law admits. There is all the more reason
for its being so in this case, because a civil partnership may be
constituted
in any form, according to Article 1667 of the Civil Code, unless real
property
or real rights are contributed to it - the only case of exception in
which
it is necessary that the agreement be recorded in a public instrument.
It is of no importance
that the parties have failed to reach an agreement with respect to the
minor details of contract. These details pertain to the accidental and
not to the essential part of the contract. We have already stated in
the
opinion what are the essential requisites of a contract of partnership,
according to the definition of Article 1665. Considering as a whole the
probatory facts which appears from the record, we have reached the
conclusion
that the plaintiff and the defendant agreed to the essential parts of
that
contract, and did in fact constitute a partnerhip, with the funds of
which
were purchased the cascoes with which this litigation deals, although
it
is true that they did not take the precaution to recisely establish and
determine from the beginning the conditions with respect to the
participation
of each partner in the profits or losses of the partnership. The
disagreements
subsequently arising between them, when endeavoring to fix these
conditions,
should not and can not produce the effect of destroying that which has
been done, to the prejudice of one of the partners, nor could it divest
his rights under the partnership which had accrued by the actual
contribution
of capital which followed the agreement to enter into a partnership,
together
with the transactions effected with partnership funds. The law has
foreseen
the possibility of the constitution of a partnership without an express
stipulation by the partners upon those conditions, and has established
rules which may serve as a basis for the distribution of profits and
losses
among the partners. [Article 1689 of the Civil Code]. We consider that
the partnership entered into by the plaintiff and the defendant falls
within
the provisions of this Article.
With respect to the
second point, it is obvious that upon declaring the existence of a
partnership
and the right of the plaintiff to demand from the defendant an itemized
accounting of his management thereof, it was impossible at the same
time
to determine the effects which might have been produced with respect to
the interest of the partnership by the withdrawal by the plaintiff of
the
sum of 1,125 Pesos. This could only be determined after a liquidation
of
the partnership. Then, and only then, can it be known if this sum is to
be charged to the capital contributed by the plaintiff, or to his share
of the profits, or to both. It might well be that the partnership has
earned
profits, and that the plaintiff's participation therein is equivalent
to
or exceeds the sum mentioned. In this case it is evident that,
notwithstanding
that payment, his interest in the partnership would still continue.
This
is one case. It would be easy to imagine many others, as the possible
results
of a liquidation are innumerable. The liquidation will finally
determine
the condition of the legal relations of the partners inter se at the
time
of the withdrawal of the sum mentioned. It was not, nor is it possible
to determine this status a priori without prejudging the result, as yet
unknown, of the litigation. Therefore, it is that in the decision no
direct
statement has been made upon this point. It is for the same reason that
it was expressly stated in the decision that it "does not involve an
adjudication
as to any disputed item of the partnership account."
The contentions
advanced
by the moving party are so evidently unfounded that we can not see the
necessity or convenience of granting the rehearing prayed for, and the
motion is, therefore, denied.
Arellano, C.J.,
Torres, Cooper, and Ladd, JJ., concur.
Willard and
McDonough, JJ., did not sit in this case.
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