Story Case

Albert Bosworth, in a conversation with Edward "West, made this statement "I know of a splendid section of land in Florida which can be purchased at a bargain. Will you buy one half if I purchase the other?" West assented to the agreement, answering, "Go ahead, buy, and I will take a half." Bosworth therefore purchased the land, putting the title in the name of himself and West. Later, without any authority from "West, Bosworth made a contract with Alonzo Hart for the fencing of the entire section. Before the work was begun, Bosworth became ill, and as a consequence, desired that the work should not be started. When Hart was informed of this, however, he maintained that a contract existed between himself and the other two as partners. The liability of West depended upon whether he and Bosworth were partners.

Ruling Court Case. Helme Vs. Smith, Volume 7 Bingham Reports, Page 709

Plaintiff and defendant owned a certain vessel jointly; the plaintiff acted as manager of the vessel, and as such, incurred large expenses in fitting the vessel out for several voyages. All of these voyages proved unsuccessful, and the plaintiff brought this action against the defendant, as part owner of the vessel to recover the share of expenses which he contended the defendant owed, by virtue of the fact that he was part owner.

The defendant contended that they, as part owners of the vessel, were partners; and accordingly one partner could not sue another at law, and that the case, therefore, was started in the wrong court.

Decision

"If, indeed, the plaintiff and defendant were partners, there is an end of the question; but part owners of a vessel are not necessarily partners; if the parties had laid out money on a speculation in goods, the proceeds to be divided on the ship's return, they would have been partners in every sense; but there is nothing here to show that they were more than part owners, and the question is whether, if one lays out money to enable the ship to proceed, he may not sue each of the owners for his share of the expense. There is nothing to show that the plaintiff's claim was to depend on the profits of the voyage, or that he was to be deprived of remuneration if the voyage turned out to be without profit."

Accordingly, it was held that the plaintiff was entitled to recover from the defendant his share of the expense in fitting out the vessel for the several voyages in question, in accordance with their contract. Therefore, the suit started in a common law court, was good, and the plaintiff need not proceed in a court of equity for an account, as he should, had they been partners.

Ruling Law. Story Case Answer

The existence of the relation of partnership depends entirely upon the intention of the members for its creation. "Whereas the relation of co-ownership does not necessarily depend, for its creation, upon the intention of the co-owners; as for example, heirs may be co-owners of land. A co-owner may assign his interest in the joint property without the consent of the other, and his transferee will take his place, but such a transfer by a partner will operate to dissolve the relation. In dealing with partnership property, the partners necessarily share in the losses and participate in the profits, in the absence of an agreement to the contrary. Such is not the case in co-ownership; the liability of one for the losses occasioned by the other, or his right to the profits made by the other, depend upon their agreement. Finally, each partner, as such, is an agent of his copartner; but a co-owner has no power to bind the other, by virtue of the relation, but must have the authority of some agreement between them.

In the case of Helme vs. Smith, the parties were probably more than merely co-owners, and had it been shown in evidence that this was intended as a joint venture and that the parties were to share in the profits and losses, then the Court would have decided that a partnership existed. If it were a partnership the plaintiff should have brought an action for an accounting against the other partners. A partnership always implies a co-ownership, but, as is shown, a co-ownership does not always imply a partnership.

In the Story Case, Bosworth and West were merely co-owners. There was no agreement to share in a joint business venture, in which each was an active agent of the other, and from which each should divide the profits or share the losses; there was merely an agreement consenting to the common ownership of property.