Meehan v. Valentine

Statement by Mr. Justice GRAY:

This was an action of assumpsit brought by Thomas J. Meehan, a citizen of Maryland, against John K. Valentine, executor of William G. Perry, both citizens of Pennsylvania, alleging Perry to have been a partner with Lawrence W. Counselman and Albert L. Scott, under the name of L. W. Counselman & Co., and counting on promissory notes of various dates from August 10, 1883, to November 25, 1884, signed by that firm, indorsed to the plaintiff, and amounting in all to about $10,000, with interest. The defendant denied that Perry was a partner in the firm.

At the trial, the plaintiff put in evidence the following agreement:

'L. W. Counselman. Albert L Scott Office of L. W. Counselman & Co., Oyster and Fruit Packers, corner Philpot and Will streets. Baltimore, Md., March 15, 1880. For and in consideration of loans made and to be made to us by Wm. G. Perry, of Philadelphia, amounting in all to the sum of ten thousand dollars, for the term of one year from the date of said loans, we agree to pay to said Wm. G. Perry, in addition to the interest thereon, one tenth of the net profits over and above the sum of ten thousand dollars on our business for the year commencing May 1st, 1880, and ending May 1st, 1881,-i. e., if our net profits for said year's business exceed the sum of ten thousand dollars, then we are to pay to said W. G. Perry one tenth of said excess of profits over and above the said sum of ten thousand dollars; and it is further agreed that if our net profits do not exceed the sum of ten thousand dollars, then he is not to be paid more than the interest on said loan, the same being added to notes at the time they are given, which are to date from the time of said loans, and payable one year from date. L. W. COUNSELMAN & Co.'

Also the following indorsement thereon: 'March 2, 1881. This contract and agreement is to continue one year longer on the same basis,-i. e., from May 1st, 1881, until May 1st, 1882. L. W. COUNSELMAN & Co.' Alson three further renewals of the agreement from year to year, the first of which was by letter, dated March 18, 1882, from L. W. Counselman & Co. to Perry, with the same heading as the original agreement, and saying: 'We hereby renew the agreement made with you May 1, 1880, which is to the effect that we will guarantee you ten per cent. interest upon loans amounting to $10,000; and that if the net profits of our business are over $10,000 for the year commencing May 1, 1882, and ending April 30th, 1883, we will in lieu of the ten per cent. interest give you ten per cent. of the profits. We have two propositions for partnership May 1st, and if we accept either we will then, if you desire, return your loan.'

The other renewals, dated April 4, 1883, and March 15, 1884, were substantially like the original agreement of March 15, 1880, except that in the agreement of April 4, 1883, the rate of interest was specified as 6 per cent.

The plaintiff further offered in evidence six promissory notes, amounting in the aggregate to $10,600, given by the firm to Perry in the months of March, May, and June, 1884.

The plaintiff also called Scott as a witness, who testified that the firm was composed of L. W. Counselman and himself; that it was engaged in 'the fruit and vegetable packing and oyster business' in Baltimore; that Perry was in the stationery business in Philadelphia; that the $10,000 mentioned in the agreement was paid by him to the firm, receiving their notes for it, and remained in the business throughout, no part of it having been repaid; that from time to time he lent other sums to the firm, which were repaid; that he was an intimate friend of the witness, and visited him every few weeks; that those visits were not specially connected with the business, though on such occasions Perry 'usually went down to the place of business and talked business;' that he annually asked and received from the firm accounts of profit and loss; that the accounts showed an annual profit, which varied from year to year, amounting for the second year to $11,000 or $12,000; that, it being then found difficult to tell at the end of the year exactly what the profits would be, it was agreed with Perry that he should thenceforth receive $1,000 each year, leaving the final settlement until the whole business was settled up; and that he received under the agreement about $1,500 the first year, and $1,000 each subsequent year. On cross-examination, the witness stated that the firm made an assignment to the plaintiff for the benefit of creditors on April 30, 1885; that their liabilities were from $60,000 to $70,000, about half of which was with collateral security, and he did not know whether it had been paid out of such security; that the assets realized less than $2,000; that, so far as he knew, no dividend had been paid; and, in regard to the $10,000 received from Perry, the witness testified as follows: 'Question. Mr. Counselman and yourself did owe this $10,000 to the estate of Mr. Perry, did you? Answer. They had my notes for it. Q. Did you or did you not owe it? A. It was capital he had in the business the same as ours. We owed it to him. Of course, we owed it to him if we did not lose it.'

At the close of the plaintiff's evidence, the defendant moved for a nonsuit, on the ground that there was no evidence to show that Perry was liable as a partner. The court so ruled, and ordered a nonsuit. 29 Fed. Rep. 276. The plaintiff duly excepted to the ruling, and sued out this writ of error.

S. Shellabarger and J. M. Wilson, for plaintiff in error.

[Argument of Counsel from pages 614-618 intentionally omitted]

Samuel Dickson and R. C. Dale, for defendant in error.

Mr. Justice GRAY, after stating the case as above, delivered the opinion of the court.