Whiting v. Leakin

Yellott, J., delivered the opinion of the Court. The hill of complaint in this cause was filed by the appellees in the Circuit Court of Baltimore City, and in it they aver that they are the administrators of James Whiting, deceased, and that the said James, being possessed of a large stock of hardware and a good trade, did, on the first day of May, 1865, enter into a co-partnership with his two sons, Albert L. Whiting and James A. Whiting. The existence of a written contract is not alleged, and the proof shows that the formation of this association in business was by oral agreement. By the terms of this agreement, as averred in the bill and established by the evidence in the cause, the father, owning the whole of the capital stock, contributed the use of it to the firm and received one-half of the net profits, and his two sons, contributing their services in conducting the business, each received one-fourth of the net profits.

The firm was designated and known as James A. Whiting & Co., and under that name its business was transacted. The system adopted, in keeping the accounts of the firm, was to put the cost of merchandise in one column and the product of sales in another, the difference representing the gross profits, from which a deduction for losses, clerks’ hire and all expenses gave the net result, which was divided between the father and his two sons in the proportions already mentioned. On the 31st of July, 1876, Albert L. Whiting withdrew from the association, and his death occurred soon after his withdrawal; but the business was conducted on the same basis by the father and his son James A. Whiting, the latter continuing to receive one-fourth of the net profits, until the death of the father on the 4th of January, 1883. The proof shows that after the father’s death, J ames A. Whiting was fully cognizant of his right, as surviving partner, to settle up the business of the firm, but that, in consequence of his declining to exercise this right, letters ²⁶³ of administration on the estate of the deceased were granted on the 27th day of January, 1883, to his two sons James A. Whiting and W. H. Whiting.

There being a difference of opinion between these administrators in relation to the proper adjustment of the accounts, they were removed on the 27th day of March, 1885, and, on the 24th day of April, in the same year, the appellees were appointed administrators in their place and stead by the Orphans’ Court of Baltimore City. This cause having progressed, on bill, answer and proof, to a hearing, the Circuit Court decreed “thatthe parties account with each other,” and referred the matters in controversy to the auditor with directions to state an account from the pleadings and proof. The Court also decreed adversely to the defence of the Statute of Limitations relied •on by the defendant in his answer. There having been no opinion filed in this cause in the 'Court below, it is impossible for this Court to know what disposition was made in relation to the exceptions to evidence which appear in the record.

The learned Judge who sat in the case may have rejected the evidence excepted. to, or, it is probable, that he may not have deemed it necessary to pass upon these exceptions ; for it is clearly apparent that there is sufficient evidence in this record, to which no exceptions have been taken, to determine this controversy by the passage of the decree from which the defendant has appealed. The relief sought for is against James A. Whiting, and he has been properly made sole defendant in the cause. In his answer he denies the existence of a partnership, because the whole capital was owned by his father; and he alleges that he received one-fourth of the net profits as a remuneration for his services. If he received a portion of the profits in payment of wages or salary for services rendered the firm, this would not, as the law is now settled, constitute him a partner, although it was other ²⁶⁴ wise determined in the old case of Taylor vs. Terme & Jauffret, 3 H. & J., 506 , which decided that “if a person derives a benefit from a trade, in which another is engaged,, hy receiving a portion of the profits, he is liable as a partner, though he acts only in the character of an agent, and receives such profits as a compensation for his agency.” But this decision is in conflict with the determination of this Court in the more recent cases,- and it is now an acknowledged principle that if a portion of the profits are received by an employe in the firm as a compensation for services rendered in some special capacity, such employé does not thereby acquire the rights and incur the responsibility of a