A. D. Juilliard & Co. v. Orem's

Bryan, J., delivered the opinion of the Court. The question in this case turns on the construction of certain articles of partnership. John M. Orem, W. Morris Orem and George B. Chase in January, 1865, by written articles entered into a commercial partnership for the term of three years. In February, 1868, they agreed in writing to continue their partnership business indefinitely, without any stated limit in point of time; and in January, 1871, another written agreement was made which changed in some important respects the original articles of partnership.

Throughout these successive changes the name of the firm continued to be John M. Orem, Son & Co. John M. Orem died in April, 1876,, and the partnership was dissolved by his death. It is alleged that the losses of the firm in business amounted to more than thirty thousand dollars, and that the other partners are each liable to make good one-third of this amount. By the original articles the capital in the business was fixed at seventy-five thousand dollars, and it Avas stipulated that it should be furnished exclusively by John M. Orem. There Avas also this clause in the articles, which we quote in the language used: “It is further agreed, that the said capital is to be and remain at the risk of the business, and if any loss or losses shall be incurred in the due and proper management of the business, whereby the capital shall be ⁴⁶⁸ diminished, such loss or losses shall be borne by the said John M. Orem, without any right to contribution from either of his said partners, beyond the amount of profits to which they would otherwise respectively be entitled.

But it is further understood and ag'reed, that if any loss shall occur in said business from the wilful neglect or blamable fault of the said other partners, or either of them, then the persons or person guilty of such neglect or default, shall be answerable in their or his individual capacities or capacity, to the said John M. Orem in his individual capacity for the whole amount of such loss. Interest on amount of said capital is to be paid semi-annually to the said John M. Orem out of the profits of the business before any division of profits is made.” The second agreement stated that W. Morris Orem and Chase were to have the privilege of withdrawing by giving six months notice, and it expressly re-affirmed the terms and conditions of the original articles in other respects. But in the agreement of January, 1811, changes-were made which we quote, as far as they affect the question in this case : “1st. The interest of each partner in the profits and liabilities of the firm shall be equal — to each one-third — that is, after the expenses, interest on capital, and losses of all kinds shall have been paid, the profits, if any, shall be divided equally between the three partners — thirty-three and one-third of one per cent, to each.

If the profits of the business shall not have been sufficient to pay expenses, interest and losses, then each jrartner shall pay to the firm his proportion of the deficiency. 2nd. John M. Orem will furnish the capital for conducting the business, but shall not be required to furnish a specified amount. He shall receive for interest and risk of loss, — the capital being placed at the risk of the business, — at the rate of nine per cent, per annum, payable semi-annually.” When merchants ⁴⁶⁹ enter into a partnership, and contribute their money to its assets, they expect to incur the hazards of commercial business, they enjoy the advantages of success, and they endure the consequences of failure in proportion to the amount of their ventures. Each partner takes the risk of losing the capital which he has invested in the enterprise, and does not look to his associates to make reimbursement to him.

But, as in other cases, they may by mutual agreement increase or diminish their' responsibilities to each other. In the present case, the rights and liabilities of the partners were very much varied by the different agreements which they made with each other. According to the first one, Morris Orem and Chase were to receive each twenty per cent, of the clear profits, and John M. Orem sixty per cent.; and the two first named were express^ exempt from