McBriety v. Phillips

Delaplaine, J., delivered the opinion of the Court. The declaration filed in this case in the Circuit Court for Dorchester County contained the common counts and a special count alleging that the plaintiffs, Ernest C. Mc-Briety, Roy J. Rhodes and Marion F. Kent, trading as R. J. Rhodes Distributing Company, delivered certain beer and ale to the defendants, Hubert Phillips and Norman Willey, trading as Cozy Spot, from August, 1939, to July, 1940. Willey was adjudicated bankrupt on August 24, 1940. Phillips filed general issue pleas and a plea denying that he had ever been associated in partnership with Willey.

The case was removed to the Circuit Court for Wicomico County, and later to the Circuit Court for Worcester County, where Phillips was given permission to withdraw his pleas and demur. The plaintiffs thereupon withdrew all their counts except the seventh common count, to which Phillips again filed general issue pleas and a plea denying partnership. The plaintiffs filed a motion to strike out the special plea on the ground that general issue pleas had been filed previously. At common law, whenever a declaration alleged a partnership or a corporation or a written instrument material under the pleadings, and issue was joined on the general issue pleas, the burden was on the plaintiff to prove the existence of the partnership or the corporation or the genuineness of the instrument.

In the great majority of cases it was impossible to refute the allegation, yet the plaintiff was obliged to produce the evidence, however troublesome or expensive. 9 Wigmore on Evidence, 3rd Ed., Sec. 2596. In order to obviate this useless procedure, the Legislature in 1888 enacted the rule that whenever the pleadings in an action at law allege the partnership of any parties, or a corporation, or the execution of any written instrument filed in the case, the same shall be taken as admitted ⁵⁷² unless denied by the next succeeding pleading of the opposite party. Acts of 1888, Chap. 248, Code, 1939, Art. 75, Sec. 28, Subsec. 108.. The object of the statute is to facilitate the trial of cases by requiring defendants to declare whether they demand such proof.

If a defendant éxpressly denies the existence of a partnership alleged in the declaration, he casts the burden of proof upon the plaintiff. But if the defendant files the general issue pleas and fails to make an express denial of the partnership, then the existence of the partnership is admitted and cannot be put in issue. Banks v. McCosker, 82 Md. 518 , 34 A. 539 , 51 Am. St. Rep. 478 ; Fifer v. Clearfield & Cambria Coal & Coke Co., 103 Md. 1 , 62 A. 1122 ; Commercial Credit Corporation v. Schuck, 151 Md. 367 , 134 A. 349 .

In Farmers’ & Merchants’ National Bank of Cambridge v. Harper, 151 Md. 358 , 137 A. 702 , it was held by this court that after issue was joined on the general issue pleas the defendant was precluded from filing the special plea, and the trial court had no power to grant leave to file such a plea in contravention of the statute. But in the court below, Phillips expressly denied partnership in the pleading next succeeding the original declaration; and after the plaintiffs withdrew all the counts except one, he again expressly denied partnership in the next succeeding pleading. By timely denial of the partnership in pleading both to the original and the amended declarations, he complied with the requirement of the statute. Furthermore, the right of the plaintiffs to a fair and expeditious trial was in no way prejudiced by any action on his part. • It would be unduly technical to hold that a defendant should be deprived of a legitimate defense which he has definitely and promptly asserted, when the practical purpose - of the statute has been gratified.

Commercial Credit Corporation v. Rozier, 152 Md. 268, 272 , 136 A. 636 . The main issue in this case is whether there was any evidence legally sufficient to show that Phillips was engaged in business as a partner of Willey. The trial court directed a verdict in favor of Phillips, and from the judg ⁵⁷³ ment on that verdict the appeal was taken. The plaintiffs are wholesalers of beer and ale on the Eastern Shore.

Harvey Wilson, an employee of Gunther Brewing Company, testified that, while acting as an agent for the plaintiffs in August, 1939, he conferred with Phillips concerning his plan to open the Cozy Spot in Cambridge; discussed the different kinds of beer he intended to sell, and suggested the plan of erecting a sign outside the store. At that time Phillips had not yet decided in whose name the application would be made for the beer license. The sales agent reported the conversation to Roy J. Rhodes, of Salisbury, one of the plaintiffs, and about ten days later the plaintiffs began shipping beer and ale on credit to the Cozy Spot. Dr. Frederick B. Easton, of Cambridge, testified that Phillips told him on several occasions in the summer of 1939 that he was planning to open the Cozy Spot and operate it in another man’s name.

Dr. Easton recalled that soon after the place was opened Phillips said that Norman Willey was managing it for him, and early in 1940 he again said that he owned the place and “everything was going along fine down there and he was making money.” It is an accepted rule that the declarations of an alleged partner are admissible against him to prove the existence of a partnership, even though they áre made to some one other than the plaintiff. Fleming v. Stearns, 79 Iowa 256 , 44 N. W. 378 ; 47 C. J., Partnership, Sec. 127. Willey was not allowed by the trial court to answer whether Phillips had bought the equipment which was used in the Cozy Spot. Inasmuch as evidence of the purchase of store equipment is relevant to the issue, such evidence should have been submitted to the jury for their consideration along with other evidence in determining whether Phillips was actually interested in the business.

The issue of partnership as between the parties themselves may be proved by express agreement, or may be gathered from the intention of the parties as implied from their acts. If parties enter into a con ⁵⁷⁴ tract such as the law considers to be a partnership, they become partners whether they call themselves such or not. Accordingly, when two persons agree to carry on a business for their mutual benefit, one to furnish the capital and the other to perform the services, and to share any profits that might be derived from the business, they are both liable to creditors of the firm. Waring v. National Marine Bank of Baltimore, 74 Md. 278 , 22 A. 140 ; Southern Can Co. v. Sayler, 152 Md. 303 , 136 A. 624 .

The Uniform Partnership Act, which has been adopted by this State, declares that payment to any person of a share of the profits of a business shall be prima facie evidence that he is a partner in the business, except when the payment is made for debt, wages, annuity, interest or the sale of any property of the business. Code, 1939, Art. 7.3A, Sec. 6. It was testified by Rhodes that Willey told him by telephone in August, 1940, that he would instruct him how to make out his bill when he came to Cambridge. Rhodes went to the store on August 6, 1940, with an itemized statement of account showing the amount of indebtedness to be 8893.18.

The court refused to allow Rhodes to tell how Willey had instructed him to make up the heading of the bill, and also excluded the statement, which was approved by Willey. This statement was made out against “Cozy Spot, Hubert Phillips, Norman Willey, Mgr.” The rule' has been adopted in this State that entries made by a clerk in the regular routine of business are admissible in evidence, on the theory that he has no interest in stating an untruth; but entries made by a party to a transaction, having a direct interest in the subj ect matter, are not admissible to charge another. Romer v. Jaecksch, 39 Md. 585 ; Gill v. Staylor, 93 Md. 453, 467 , 49 A. 650 ; Deland Mining & Milling Co. v. Hanna, 112 Md. 528 , 76 A. 850 , 136 Am. St. Rep. 404 .

In this case, however, Willey approved the entire bill with the notation: “Bill to date O. K., Norman Willey.” When memoranda are sufficiently definite and constitute- admissions, they may be introduced as prima ⁵⁷⁵ facie