*721OPINION.
Ceben :Two issues are presented in this appeal. First, did the respondent err in including $23,930 in the petitioner’s income for *7221919, which action was taken on the theory that he, Sheegog, Erwin, and Cralle had formed a partnership in 1917, each having a one-fourth interest, and that this so-called partnership was in turn a partner in three other partnerships? Second, did the respondent err in including $372 in the petitioner’s income for 1919 as a cash dividend determined by the Commissioner to have been received by the petitioner from the Fisher-Whaley Oil Co.?
We have found as a fact that the petitioner was not a stockholder of the Fisher-Whaley Oil Co. and received no money or distributions of any kind from that source. It follows that the respondent was in error in including $372 in the petitioner’s income as a cash dividend from this corporation.
In connection with the first issue, section 218 (a) of the Revenue Act of 1918 provides in part as follows:
Tliat individuals carrying on business in partnership shall be liable for income tax only in their individual capacity. There shall be included in computing the net income of each partner his distributive share, whether distributed or not, of the net income of the partnership for the taxable year * * *.
The term “ partnership ” as used in section 218, supra, “ refers only to ordinary partnerships.” Burk-Waggoner Oil Assn. v. Hopkins, 269 U. S. 110; 46 Sup. Ct. Rep. 48; 5 Am. Fed. Tax Rep. 5663.
If the net income of Ed Sheegog & Co. for 1919 was $95,720.03 and if Ed Sheegog & Co. was in fact and in law a partnership during 1919, then in accordance with section 218 (a), supra, the petitioner should be taxed on his distributive share of such profits, regardless of the fact that he actually received no part of the $23,930 in 1919.
' The oral agreement of the petitioner, Sheegog, Erwin, and Cralle in connection with the Beach lease was made in the State of Oklahoma. It was, however, to be carried out in the State of Texas. Would the Oklahoma or Texas law govern as to the interpretation of the agreement and the determination as to whether an ordinary partnership existed between the parties? The Supreme Court of the United States in Scudder v. Union National Bank, 91 U. S. 406, at page 412 states:
Matters bearing upon the execution, the interpretation, and the validity of a contract are determined by the law of the place where the contract is made. Matters connected with its performance are regulated by the law prevailing at the place of performance. Matters respecting the remedy, such as the bringing of suits, admissibility of evidence, statutes of limitation, depend upon the law of the place where the suit is brought.
See also Gaston, Williams & Wigmore of Canada, Ltd. v. Warner, 260 U. S. 201.
*723This being a matter bearing upon the interpretation of the agreement the determination as to whether a partnership existed between the parties will be governed by the Oklahoma law.
Chapter 71 of the Compiled Statutes of Oklahoma provides in part as follows:
8103. "Partnership defined. — Partnership is the association of two or more persons for the purpose of carrying on business together, and dividing its profits between them.
8104. Consent necessary — information. A partnership can be formed only by the consent of all parties thereto, and no new partner can be admitted into a partnership without the consent of every existing member thereof.
8117. General partnership defined. — Every partnership that is not formed in accordance with the law concerning special partnership, and every special partnership, so far as the general partners are concerned, is a.general partnership.
In its discussion of the definition of a partnership as outlined under section 8108 supra, the Supreme Court of Oklahoma, in the case of Citizens’ Nat. Bank of Chickasha v. Mitchell, 24 Okla. 488; 103 Pac. 720, at page 726 holds as follows:
A partnership exists as a result of a voluntary contract between the parties, and never solely by operation of law. Causler v. Wharton, 62 Ala. 358; Cowles v. Garrett, 30 Ala. 341; Haycock v. Williams, 54 Ark. 384, 16 S. W. 3; Einstein v. Gourdin, 4 Woods 415, 8 Fed. Cas. No. 4, 320; 22 Am. & Eng. Ency. of Law (2d 3d.) p. 14, footnote 3. It is a relation, arising out of a contract to do certain things, and exists only where the parties intend to enter into a contract of partnership, and, unless they have estopped themselves by holding themselves out to the world as partners, their intention as derived from the contract is decisive of the question.
Tenants in common are not partners in Oklahoma. Perry v. Jones, 48 Okla. 362; 150 Pac. 168.
In Gorman v. Carlock, 179 Pac. 38, the Supreme Court of Oklahoma, in deciding that certain individuals interested in a certain oil lease were not partners,'said, inter alia:
Whether a general partnership in oil leases in the Healdton field was formed by the plaintiffs and defendants was the principal question at issue, and the general judgment for the defendants embraces the finding that such alleged partnership was never entered into between the parties. It is apparent that such finding is not clearly against the weight of the evidence, for, as heretofore stated, defendants testified that instead of there being a general partnership agreement, the understanding was that the plaintiffs and defendants were to be co-owners and equally interested only in the particular leases that all agreed to take. It is a •well recognized principle of law that a mere community of interest as owners of specific property, or of the profits from a particular adventure or business, does not necessarily constitute the co-oumers partners. (Italics ours.)
A joint adventure lias been defined as a “ special comb ation of two or more persons, where in some specific venture a profit is jointly sought without any actual partnership or corporate designation." *72433 C. J. 841, citing In re Desnoyers Shoe Co., 224 Fed. 372; 140 C. C. A. 58.
In our opinion the petitioner and bis three associates in buying and operating the Beach lease, under the circumstances set out in the findings of fact, did not thereby create a partnership but operated the property only as a joint adventure. Appeal of Florida Grocery Co., 1 B. T. A. 412; Appeal of Ernest Woodruff, 4 B. T. A. 842. Either of the parties here could have sold their interest in the Beach lease without the consent of the others. They never intended to form a partnership. The petitioner, Erwin, and Cralle were all in separate businesses by themselves. The following excerpt from the petitioner’s testimony shows that similar ventures were quite common in the oil business:
At the time this Beach lease was purchased there was considerable oil development and operation around over the country and it was a very frequent thing that a man would come in and say, “X have bought a lease. Do you want to take an interest with me?” or “X have bought this or that” and one or two or three or four would say, “ Yes, I will take a little interest,” and they would. Now I never intended and it was taken on the same basis with the other three, they did not intend that this would be a joint partnership. In fact it was never operated as such and these transactions here were had on that same basis, the same intention of the parties, all taking these interests.
The respondent argues that had a third party been injured by the negligence of an employee of Ed Sheegog & Co. there could have been no question but that the petitioner as well as the three associates would have been personally liable. Such liability may also exist in a joint venture. Its existence alone does not create a partnership within the meaning of that term as used in section 218 (a) of the Revenue Act of 1918.
Since we have decided that Ed Sheegog & Co. was not a partnership it becomes unnecessary to determine whether it was a partner in the Turner, Noble, and Fisher companies.- The petitioner clearly was not a partner in any of these concerns. His relationship with respect to Turner & Sheegog and T. B. Noble & Co. was no more than that of a joint adventurer. He had no relationship whatever with J. A. Fisher & Co.
In our opinion, the respondent erred in including the $23,970 in petitioner’s income for the year 1919.
Judgment will he entered on 15 days’ notice, u/nder Rule 50.
Considered by Sternbcagen and AetjNdell.