Fitch v. Harrington

Metcalf, J.

We are all of opinion that the plaintiffs are entitled to a new trial, for the reason that the instruction respecting a subpartnership between Leonard Harrington and Samuel P. Harrington, given, as it was, without any explanation, may have misled the jury. That part of the instructions was given on the authority of Collyer on Partnership, (3d ed.) § 194, which was cited by the defendants’ counsel at so late a stage of thi trial, that the court had no opportunity to examine the position there laid down, which is thus: “ Although the delectus persona, which is inherent in the nature of pártnership, precludes the introduction of a stranger against the will of any of the copartners, yet no partner is precluded from entering into a subpartnership with a stranger; nom socii met socius, meus socius non est. In such case, the stranger may share the profits of the particular partner with whom he contracts, and, not being engaged in the general partnership, will of course not be liable for their debts.”

The only decided cases which Mr. Collyer cites, in support of this position, are that of Sir Charles Raymond, referred to by Lord Eldon, in Ex parte Barrow, 2 Rose, 255, and that of Brown v. De Tastet, Jac. 284. In the case in 2 Rose, Lord Eldon said: “ 1 take it to have been long since clearly established, that a man may become a partner with A., where A. and B. are partners, and yet not be a member of that partnership which existed between A. and B. In the case of Sir Charles Raymond, a banker in the city, a Mr. Fletcher agreed with Sir Charles Raymond, that he should be interested so far as to receive a share of his profits of the business, and which share he had a right to draw out from the firm of Raymond & Co. 'But it was held, that he was no partner in that partnership, had no demand against it, had no account in it, and that he must be satisfied with a share of the profits arising and given to Sir Charles Raymond.” In the case in Jacob, it was decided that where one of several partners had agreed with a third person to give him a moiety of his share in the concern, the court of chancery might decree an account between them, without making the other partners parties to the bill. These cases show this only : That as between the members of the firm, inter sese, Mr. Fletcher, in the first case, and the third person in the other case, were not copartners. They decided nothing as to the liability of either of them to the creditors of the existing firm.

But Mr. Collyer also cites 2 Bell Com. 636, where it is said : “ There may be a subcontract, by which a stranger may be admitted to divide with any of the partners his share of the profits. The other partners are not bound to take notice of this subcontract ; nor is there any responsibility attached to it, by which the stranger, as sharing in the profit of the concern, becomes liable for the debts of the partnership.” Erskine’s Institutes, and the case of Fairholm v. Majoribanks, decided in Scotland in 1725, are cited in support of this position. In looking at 3 Ersk. Inst. (ed. of 1828,) §§ 21, 22, we find that nothing is there said concerning the liability of such stranger for the debts of the partnership. Mr. Erskine says, “if any of the partners shall assume a third person into partnership with him, such assumed person becomes partner, not to the company, but to the assumer.” We have not seen the report of Fairholm v. Majoribanks. But Mr. Stark cites that case and Erskine’s Institutes, in support of the following passage in his work on partnership " Subcontracts between partners and other persons, by which a beneficial interest in the partnership is granted, do not create new partners. The partner himself remains alone liable to company creditors.” He adds a quotation from the Digest, which is silent, however, as to such other persons’ liability for the debts of the partnership. Stark on Part. 155. It would seem, therefore, that the Scotch writers, Mr. Bell and Mr. Stark, have stated the doctrine which Mr. Collyer has repeated, only as an inference of their own from the established law, that such a subcontract as those writers mention, between one member of a firm and a stranger, does not make the stranger, as between him and the firm, their copartner; and hence that the law of Scotland, as to such stranger’s liability for the debts of the firm, may not differ from the law of England and of this country. Indeed, it is hardly to be supposed that it was decided in Fairholm v. Majoribcmks, that such a stranger was not liable for the debts of the firm in a case in which, by the English law and ours, he would have been liable. For both Mr. Bell and Mr. Stark, as well as Mr. Collyer, correctly state the English law on this point, without an intimation that the Scotch law is different, except by subsequently inserting the passage which the defendants’ counsel cited at the trial of the present case. 2 Bell Com. 625, 626 Stark on Part. 137 Sf seq. Collyer on Part, book I. c. 1.

Now what is our law and the law of England on this subject ? We understand it to be thus: An agreement between one copartner and a third person, that he shall participate in the profits of the firm, as profits, renders him liable, as a partner, to the creditors of the firm, although, as between himself and the members of the firm, he is not their copartner; but if such third person, by his agreement with one member of the firm, is to receive compensation for his labor, services, &c. in proportion to the profits of the business of the firm, without having any specific lien on the profits, to the exclusion of other creditors, he is not liable for the debts of the firm. Denny v. Cabot, 6 Met. 90-94. Bradley v. White, 10 Met. 305. Holmes v. Old Colony Railroad, 5 Gray, 58. Burckle v. Echart, 3 Comst. 132. 3 Kent Com. (6th ed.) 33 & seq. Parsons Merc. Law, 168, & note.

In order to enable the jury to decide whether Samuel P. Harrington was liable for the debts of the firm of Whittemore, Harrington & Co. by reason of a subpartnership between him and Leonard Harrington, they should have received instructions more definite and discriminating than they could derive from the mere words of Mr. Collyer. The kind of agreement which would render Samuel P. liable for the debts of the firm, and the kind of agreement which would not render him liable therefor, should have been so explained to them that they might intelligently decide whether the agreement between the two (if any was proved) was such as did or did not render Samuel P. liable as a partner, for the debts due from the firm to the plaintiffs.

The other instructions given to the jury seem to us to have been unexceptionable. New trial granted.