US SUPREME COURT DECISIONS

An agreement by A, with B. that on the payment of a sum of money, B. shall participate in the profits of A.'s business gives B. no interest, as between themselves, in A.'s stock in trade when it appears that it was their intention that he should have no such interest.

This case was before the Court at the last term, 113 U. S. 113 U.S. 51, when the Court gave a construction to the contract between the Assurance Company and the present defendants in error, then plaintiffs in error. That contract and other facts in that case which also enter into this case will be found on pages 113 U. S. 51, 52, 53 and 54 of vol. 113. At the new trial had in September, chanrobles.com-red

Page 116 U. S. 462

1885, a verdict was rendered for plaintiffs for $6,770, and judgment accordingly. This writ of error was sued out to review that judgment. There was a bill of exceptions which incorporated all the evidence, including the agreement reported in the statement of facts in vol. 113, and the evidence offered by the Insurance Company to show that there was a partnership between the defendants in error and Arndt, and rebutting testimony offered by defendants in error, and then continued:

"Upon the foregoing admissions and testimony, which was all that was received or considered on said trial, the defendant prayed the court to charge the jury that"

"On the undisputed evidence in this case, the jury are instructed that Mr. Arndt became a co-partner in the insured property with the plaintiffs, Drennen, Starr & Everett, and was such co-partner at the time of the fire, and your verdict must be for the defendants,"

"which charge the court refused to give, and the defendant then and there duly excepted to the said ruling, and said exception was then and there duly noted and allowed."

"The defendant prayed the court to charge the jury that"

"The question is whether Arndt, in paying his money into the firm and executing his note to the firm, became a lender of money to the firm, and the firm a mere borrower from him, or whether he acquired an interest in the business and property of the firm itself as a member thereof. On this subject the law is: if it was not the understanding that Arndt became a lender to the concern, and if it was the understanding between the parties that the amount of his investment was to be risked in their business and become part of the capital stock, and he was to have a share of the net profits, he is not a mere lender, but a partner,"

"which charge the court refused to give, and the defendant duly excepted to the said ruling, and said exception was then and there duly noted and allowed."

"The defendant prayed the court to charge the jury that"

"Where a person contributes a portion of the common capital which is mingled with the contributions of the other parties, and the whole is managed for the joint interests of those who contribute, the contributors each having a share of the net profits of the business, they become thereby partners as between themselves

Page 116 U. S. 463

in the capital stock or property of the concern,"

"which charge the court refused to give, and the defendant then and there duly excepted to the said ruling, and said exception was then and there duly noted and allowed."

"The court charged the jury that the making of the written contract, Exhibit 'K,' and the payment of money and giving of note by Arndt to plaintiffs, as shown, could not be considered as proving partnership relation between the plaintiffs and Arndt, and that the issue as to whether such partnership relation was formed must be determined from all the other testimony and facts in the case, outside and independent of said contract and payment under it; that said payment of money must not be considered as evidence of such partnership, but must be taken in connection with said contract and as part performance thereof. The defendant then and there duly excepted to the said instruction so far as it excluded from the consideration of the jury the payment of said money and giving of said note as evidence upon the question of partnership, and said exception was then and there duly noted and allowed."

"The court charged the jury as follows:"

" Even if you should find from the evidence that the apparent relation between the plaintiffs and Arndt was such as would charge them as partners at the suit of creditors or third persons, that alone would not be sufficient to constitute them as partners as between themselves, or to maintain the defense in this action -- that is, Arndt might have an interest in the profits without being an actual partner."

"To which charge the defendant then and there duly excepted, and the said exception was then and there duly noted and allowed."

"The court charged the jury as follows:"

" If you find from the evidence that up to the time of the fire it was not the intention of the plaintiffs and Arndt to become partners, but that it was their intention to organize a corporation of which they should be members and stockholders, and that the goods and property of the plaintiffs should be transferred to said corporation when organized, and they should take stock in said corporation to the extent of the ascertained value thereof, and that Arndt should take stock in said corporation to the extent of ten thousand

Page 116 U. S. 464

dollars contributed by him, and that no change should take place in the name or character of the firm of Drennen, Starr & Everett until such corporation should be organized, then the defense fails, and the plaintiffs are entitled to a verdict for the full amount of the policies, with interest, as claimed in the complaint. That is another way of putting it, that if there was no partnership -- that is, if Arndt was not taken in as a partner -- then the plaintiffs are entitled to recover."

"To which charge the defendant then and there duly excepted, and the exception was then and there duly noted and allowed."

"The court charged the jury as follows:"

" If you find from the evidence that said Arndt was to be a participant in the profits realized from the business of the plaintiffs, to a certain extent from January 1st, 1883, this would not necessarily constitute him a partner in or joint owner of the goods and property of the plaintiffs insured by these policies. He might have an interest in such profits without having any joint title or interest with the plaintiffs in the ownership of their goods."

"To which charge the defendant then and there duly excepted and said exception was then and there duly noted and allowed."

"The court charged the jury as follows:"

" If you find from the evidence that the plaintiffs, in consideration of Arndt's paying in $10,000 with interest thereon from January 1st, 1883, in advance of the formation of the contemplated corporation, agreed that he should receive a proportionate share of the profits of their business from said January 1st to the formation of said contemplated corporation, that fact would not have the effect to assign or transfer to him any title or interest in the insured goods or property of the plaintiffs in the absence of any agreement to that effect."

"To which charge the defendant then and there duly excepted, and the exception was then and there duly noted and allowed."

"The court charged the jury as follows:"

" The defendant is entitled to contradict or vary the written contract of May 24, 1883, by parol evidence, and the parol evidence which has been received may be considered by you and is competent. And if you find from it that, contemporaneous with the making of the written contract of May 24th, the plaintiffs entered

Page 116 U. S. 465

into a verbal contract with Mr. Arndt for a present partnership, you are not precluded from finding that fact because of said written contract. "

Page 116 U. S. 468