sequent to that date shipments amounting to $11.- seems to have been the intention of the parties, 79 were made at sundry times upon its order. as shown by their agreement that the property At the close of the plaintiff's testimony on the was to be delivered, as far as title was concerned, trial in the Court below, the defendant moved for in sixty days, and that shipments which changed a compulsory non-suit. The motion was refused the possession were to be made as called for. by the Court, and this refusal constituted the "Ordinarily, and in the absence of an agreefirst assignment of error. The second assign- ment to the contrary, the seller is under no obliment relates to that part of the charge which gation to send or carry to the buyer the goods reads as follows: "I say, under the agreement sold. His duty is fulfilled by so placing them at that they have given here, I see no reason why the disposal of the buyer that they can be rejudgment should not be rendered against the de- moved by him. Having done this, an action lies fendants for the amount of the order." This in- against the buyer for goods bargained and sold, struction to the jury was evidently erroneous, even though the goods may never have left the so far as that portion of the goods contained in seller's possession:" 21 Am. & Eng. Enc. of the order and delivered prior to the 31st of De- Law, 524. There is evidence that the defendants cember, 1891, is concerned. The defendants, not only had the goods in their factory ready to however, suffered no injury thereby, for the fill shipping orders, if they had been received, but plaintiff before closing its testimony, expressly so notified Mr. Doubleday, the manager of the remitted the claim of $8.57 for goods delivered North American Construction Company. The prior to the 31st of December, 1891, and rskcd law, therefore, would import delivery in accordjudgment for the balance-$300.38—with interest ance with the terms of the order for the goods from February 21, 1891, which seems to have which constitutes the contract between the parbeen the amount of the verdict. Whatever may ties thereto, at the end of sixty days from its date, be said as to the adequacy of the charge of the which would be February 21, 1892. The appelCourt below, we do not see that the appellants lants seem to admit that, if there was no actual suffered thereby. The entire contention of the delivery of the property on the 21st of November, appellants is that the goods ordered on the 21st 1891, the date of the invoice, as contended for, of November, 1891, were packed and set apart in they would be liable for but $11.79 only, the the factory of the plaintiff, and that this, taken in amount of goods ordered shipped subsequent to connection with the rendering of the invoice for the 31st of December, 1891, and prior to the 29th the same, constituted such a delivery at the time of April, when the remainder of the goods was as vested the property in the North American destroyed. But this contention also ignores he Construction Company and relieved them, the agreement, under which the goods were "all to appellants, from the payment of the claim, under be delivered in sixtv days." Under the terms of the agreement of the 15th of April, 1891. It is the contract made by the North American Condoubtless true that as between vendor and vendee struction Company with the plaintiff, the properthe acts above referred to constituted such a de- ty in the goods ordered passed by virtue thereof livery as could have vested the title to the prop-to the former on the 21st of February, 1892. The erty in the North American Construction Com- appellants were therefore liable to the plaintiff pany, and would have done so, if the parties had for all of the goods embraced in the order of the so agreed: Commonwealth v. Hess, 148 Pa. 98. The appellants, however, entirely ignore the contract of sale which must be the law governing the parties. Keeping in mind the distinction between delivery which denotes the transfer of title and that which denotes the transfer of possession. it 21st of November, 1891, except such as had been shipped prior to the 31st of December, 1891. The verdict included only this amount and the judgment entered thereon should be allowed to stand. Judgment affirmed. W. D. N. Estate of Haines & Co. Grove's Appeal. ized, and no subsequent juggling with the accounts in the books can make these anything else than debts, or amount to payment. Both the firms being insolvent the assignee for creditors of W., B. & Co., had a right to claim as a creditor of G. B. H. & Co., the amount due by the latter to the former firm in spite of the fact that W. and B. were common partners in both, because by the insolvency of W., B. & Co., their creditors became entitled to urge their claim against G. B. H. & Co., and the right was not changed by the insolvency of the latter firm. As to their respective creditors, the two firms were separate and distinct entities and the assets of each a separate fund for its own creditors. Appeal of Henry S. Grove, assignee for the benefit of creditors of Wood, Brown & Co., from the decree of the Common Pleas No. 4, of PhilaPartnership Sharing profits — Compensation delphia County, dismissing exceptions to the reequal to share of profits-Marshaling assets-port of an auditor appointed to audit the account Firms having common members-Parol evi- of the assignee of the estate of Haines & Co. dence to vary writing. An agreement between W. and B. of the firm of W., B. & Co., with H., C., J., H. and W., the other partners of the firm of W., B. & Co., reciting that W. and B. had become partners in the firm of G. B. H. & Co., under an agreement by which they were to receive 56.5 per cent. of the profits or to be responsible for 56.5 per cent. of the losses of the latter firm, and providing that H., C., J., H. and W. should indemnify W. and B. from losses which they might thus sustain to an amount equal to 28.2 | per cent. of such losses in consideration of W. and B. agreeing to pay to H., C., J., H. and W., a sum equal to 28.2 per cent. of profits realized by W. and B. out of the firm of G. B. H. & Co., is an agreement of indemnity and not of co-partnership. 1. The distinction between participation in profits as such and a compensation or consideration merely measured by a proportion of profits, while of a very refined and shadowy character, is authoritatively established. 2. No agreement of W. and B. without the joining of every co-partner in the firm of G. B. H. & Co., could make outsiders partners in the latter firm. Where it appears (as it did in this case) that a proposition was made by two partners to which their five copartners objected, that it was then informally discussed and a decision arrived at, which decision, with the aid of counsel, was formally embodied in a written agreement, the case is clearly one in which to apply the rule that all prior negotiations are merged in the writing which is the sole evidence of the intention of the parties. An analysis of the evidence in this case shows that there was no understanding or agreement between the parties different from that set out in the writing and no understanding on the part of the five partners in the firm of W., B. & Co., that they or their firm had been by the agreement constituted partners in the firm of G. B. H. & Co. It appearing that money of W., B. & Co. was used by W. and B. as their contribution to the capital of G. B. H. & Co., and that the former firm was debited on the books of the latter for that purpose, without the consent of the other partners, such use and debiting were unauthorized, if not fraudulent. Subsequently charging W., B. & Co. in the same way upon the books of G. B. H. & Co., with $100,000 worth of merchandise which the former firm never bought or received, was equally unauthor The claim was to recover the sum of about $175,000, claimed to be due by the firm of Haines & Co. (which succeeded to the firm of Granville B. Haines & Co.,) to the firm of Wood, Brown & Co. N. Dubois Miller, Esq., the auditor to whom the account was referred, rejected the claim. The firm of Wood, Brown & Co. was a general partnership formed in 1885 by seven persons, to wit: Richard Wood, Samuel B. Brown, Henry Henderson, Charles A. Jenkins, Andrew E. Crowe, Henry C. Harper and Joseph D. Wilson. The capital was $200,000, contributed by Wood and Brown. The profits were to be divided; 45 per cent. to Wood and Brown, and 55 per cent. to the others in unequal proportions. In December, 1886, Wood and Brown entered into another partnership agreement with three other persons, to wit: Granville B. Haines, Richard W. Bacon, and William Whitaker, under the firm name of Granville B. Haines & Co., afterwards renewed as Haines & Co. This was a special partnership, with a capital of $350,000, of which Bacon and Whitaker as special partners contributed $200,000, Haines $75,000, and Wood and Brown together $75,000. In March, 1894, both firms made assign ments for the benefit of creditors. It was claimed by the assignee of Wood, Brown & Co. that Wood and Brown, without the knowledge and consent of the other partners in their firm, had appropriated to the use of Haines & Co., $175,000 of cash and merchandise belonging to Wood, Brown & Co., accomplishing and concealing this by means of a series of fictitious entries in the books of both firms, the effect of which was that the $175,000 continued to appear as an asset upon the balance sheets and reports to commercial agencies of Wood, Brown & Co., while in reality it had been incorporated into the assets of Haines & Co. The auditor found that the claim should have been allowed if the two firms had been independent, but held that all the partners of Wood, Brown & Co. were liable as partners of Haines & Co., and hence that the estate of one firm could not claim against the other. He held that the partnership was established by the conduct and understanding of the parties and by a written agreement entered into between Wood and Brown at the time they became partners in the firm of Granville B. Haines & Co., and their five co-partners in the firm of Wood, Brown & Co. This agreement was as follows: "Memorandum of agreement made and entered into this 13th day of January, one thousand eight hundred and eighty-seven by and between Richard Wood and Samuel B. Brown, of the city of Philadelphia, of the first part, and Henry Henderson, Charles A. Jenkins, Andrew E. Crowe, Henry C. Harper and Joseph D. Wilson, all of said city, of the second part. "Whereas, the said parties of the first part have become general partners in a limited co-partnership under the firm name of Granville B. Haines & Company, for the purpose of carrying on the wholesale and retail dry goods business for the term beginning on the thirtieth day of December, one thousand eight hundred and eighty-six, and ending on the thirty-first day of December, one thousand eight hundred and ninety-one, and as such general partners will together be entitled to receive fifty-six and one-half per centum (56%) of the annual profits of the business of said co-partnership with corresponding liabil; ity as between themselves and their co-partners in said firm for the debts thereof. "And whereas the said parties of the first part desire that said parties of the second part shall indemnify and hold harmless them, the said parties of the first part, from and against all losses which may result to them from the said business to the extent of an amount equal to twenty-eight and two-tenths per centum (28.2-10) thereof, and not exceeding sixteen and one-half per centum (16%) of the total losses of said business, and said parties of the second part, are willing so to indemnify said parties of the first part, in consideration of the payment to them of the sums equal to the proportions of the shares of the yearly profits from said business, to which said parties of the first part are entitled, as hereinafter set forth. "Now this agreement witnesseth that in consideration of the premises and of the mutuality hereof, the said ties hereto have agreed, and do hereby agree together as follows: par "Second. And the said parties of the first part will, at the dissolution of said co-partnership, pay over to said parties of the second part, their respective executors and administrators, a sum equal to twenty-eight and twotenths per centum (28.2) of the profits by them the said parties realized from the business of said co-partnership in the following shares respectively, to wit: "To Henry Henderson, Charles A. Jenkins, Andrew E. Crowe and Henry C. Harper each four and eight hundred and sixty-six thousands per centum (4.866) thereof, and to the said Joseph D. Wilson, nine and seven hundred and thirty-six thousands per centum (9.736) thereof. "In witness whereof, the said parties have hereunto set their hands and seals the day and year first above written. [SEAL] HENRY C. HARPER, JOSEPH D. WILSON, Signed, sealed and delivered in the presence of :" Exceptions to the report of the auditor were dismissed by the Court, ARNOLD, J., filing the following opinion: "The claim of Wood, Brown & Co. for a dividend was properly rejected by the auditor for the reason that Wood, Brown & Co. were members and not creditors of the firm of Haines & Co. We place our decision on the written agreement between the members of the firm of Wood, Brown & Co., dated January 13, 1887, by which all of them became interested in the profits and losses of the firm of Haines & Co. It is true that only Messrs. Wood and Brown signed the articles of agreement of Haines & Co., but the agreement of January 13, 1887, above referred to, made all the members of the firm of Wood, Brown & Co. participants in the profits and losses of Haines & Co., and therefore partners. Whatever distinctions are made when profits are taken, as commissions or otherwise, there never has been any distinction made where profits are taken as such. In all such cases parties participating in profits and losses are partners. This exception will be dismissed." "First. The said parties of the second part will severally indemnify the said parties of the first part and their respective executors and administrators from and against all losses which shall or may result to them, the said The claimant appealed, assigning as error the parties of the first part from the business of the said co-finding of the Court that the written agreement partnership of Granville B. Haines & Company, to the extent of a sum equal to twenty-eight and two-tenths per centum (28.2-10) of the said losses, and not exceeding sixteen and one-half per centum (16%) of the total losses of the business of the said co-partnership, the said parties of the second part to contribute and pay to said parties of the first part the said sum in the following proportions respectively, to wit: "The said Henry Henderson, Charles A. Jenkins, Andrew E. Crowe and Henry C. Harper each four and eight hundred and sixty-six thousand per centum (4.866), and the said Joseph D. Wilson nine and seven hundred and thirty-six thousand per centum (9.736) thereof. made all the partners of Wood, Brown & Co. partners of Haines & Co.; the failure to award a dividend to the assignee of Wood, Brown & Co., and the dismissal of the exceptions which had been filed to the report of the auditor. Frank P. Prichard and John G. Johnson, (Geor-e L. Crawford with them), for appellant. George P. Rich, (Henry C. Boyer with him), for sundry creditors, appellees. George Tucker Bispham, for Richard W. Bacon, one of the appellees. Charles Biddle, (William Rudolph Smith with him), for William Whitaker, one of the appellees. William S. Divine, (Samuel B. Huey with him), for the H. B. Claflin Company and sundry other creditors, appellees. July 15, 1896. MITCHELL, J. The Court below placed its decision on the written agreement of January 13, 1887, between the members of the firm of Wood, Brown & Co., holding that it made all of that firm partners in the firm of Granville B. Haines & Co. But the learned Judge in his brief opinion overlooked the distinction between participation in profits as such, and a compensation or consideration merely measured by a proportion of profits. While this distinction was admitted in Edwards v. Tracy, 62 Pa. 374, 381, to be "of a very refined and shadowy character," it was held to have been "authoritatively established . . . . and it is entirely too late now to question either the rule or the exception." proposed venture, and whose right to have the debits and credits of Haines & Co. and Wood, Brown & Co. with each other settled on a strictly distinct basis could not have been questioned. The judgment cannot be sustained on this agree ment. The auditor reached the same conclusion, but by a different process, based on the acts and declarations of the parties, the oral testimony. and the agreement of January 13, 1887, treated as merely an item of evidence in the inquiry for the intentions of the parties and the actual relations of the two firms. This ground of conclusion, however, is no more tenable than the other. The auditor finds that Wood and Brown were the representatives of Wood, Brown & Co. in Haines & Co. and that the two firms were practically one, and therefore Wood, Brown & Co. could not claim as a creditor of Haines & Co., while the other creditors remained unpaid. This view, as already discussed, is contrary to the legal effect of the written agreement. It is not worth while to consider that part of the argument which denies that the circumstances of the case were such as to justify a Court in going behind the writing to inquire into the real intention of the ceding that much, the auditor's finding is against the evidence. The facts are practically undisputed and the question is of the proper inference to be drawn from them. The agreement of January, 1887, nowhere provides for a participation in profits as such. Its language is "the said parties of the first part will at the dissolution of said co-partnership (Granville B. Haines & Co.) pay over to the said parties of the second part . . . a sum equal to twenty-parties, because we are of opinion that even coneight and two-tenths per centum of the profits," etc. No agreement of Wood and Brown without the joining of Haines and the other partners, could make any outside persons partners in Haines & Co., nor did this agreement attempt to do so, for even as to Wood and Brown, there was no obligation to pay until their profits had been actually received by them, and then it was not a share but a sum equal to a share that was payable. If Wood and Brown had become individually insolvent, owing the parties of the second part, and having undeclared profits in Haines & Co., the parties of the second part could not have called upon Haines & Co. to declare and account for profits to them, for they had no title to profits as such, even against Wood and Brown. The agreement of 1887 is not a contract of partnership at all, either as regards G. B. Haines & Co., or Wood, Brown & Co. It is a contract of indemnity only, between Wood and Brown of the first part, and Henderson, Crowe, Jenkins, Harper and Wilson of the other part. The firm of Wood, Brown & Co. is not a party to it, or even mentioned in it at all. The fact that the seven persons concerned in the contract were also the members of the firm of Wood, Brown & Co., was immaterial as a matter of law. The legal effect would have been the same if the contract had been between Wood and Brown and X. Y. and Z., strangers, who agreed for the consideration named, to indemnify Wood and Brown in the A general statement is all that is necessary. The firm of Wood, Brown & Co. was formed for a term of five years from January 1, 1886. In the latter part of 1886, Wood and Brown, who were the senior partners and the capitalists of the firm, proposed that the firm should buy out Cooper & Conard, who had a retail business of similar kind next door. The junior partners objected that the proper business of Wood, Brown & Co. would suffer, because, among other reasons, customers objected to dealing with a wholesale house which had a retail branch, and because it would lessen the financial ability of the capitalist partners in their own firm, and would withdraw part of the time and attention of Brown, which were due to their own business. The auditor reports that "the question remained under discussion in an entirely informal way for a month or more, but eventually the junior partners consented to do what Wood and Brown wanted." This brings us to the crucial question, what was it that the junior partners did consent to? As to this the auditor reports: "Exactly what was to be done to carry out their wishes was not exactly or succinctly stated. It was known to some if not all of the junior partners that the business of Cooper & Conard was to be bought by a new firm which was to be a limited partnership, and that Granville B. Haines was to be interested in it and give it his name; but what the extent of Wood, Brown & Co.'s interest was to be, or where the capital to represent that interest was to come from, was never discussed or stated." It is just here that the auditor makes the misstep which led to his erroneous conclusion. He assumes, without expressly finding the fact, that the firm of Wood, Brown & Co. was to be "interested," i. e. partner, in the new firm of G. B. Haines & Co., and that Wood and Brown were to go into that firm not in their individual capacities but as representatives of Wood, Brown & Co. The evidence will not bear this construction. Pursuing the same view, the auditor then recites the agreement of January 13, 1887, and continues: "This agreement was intended by all parties to represent the proportions in which the profits to be made by the firm of Wood, Brown & Co. in the firm of Haines & Co., were to be divided, and the losses, if any, shared." As we have already seen, this is exactly what the agreement does not do. The firm of Wood, Brown & Co. was not party to it, was not even mentioned in it, and it was contract of indemnity between Wood and Brown on one side, with Henderson, Crowe, Jenkins, Harper and Wilson on the other, which might just as well have been with five strangers so far as concerned its legal effect on the firm of Wood, Brown & Co. What then do we have? A proposition made and objected to, an informal discussion prolonged for a month or more, then a yielding of objections and a consent; but what was to be done "not exactly or succinctly stated;" and finally, the parties, with the aid of counsel, putting their agreement formally into writing. It would be difficult to imagine a case calling more strictly for the enforcement of the rule that all prior negotiations are merged in the writing which is to be the sole evidence of the intentions of the parties. a But if we look beyond the writing, what is the evidence? We must start with the inherent incredibility that five men, partners in a large business, but not themselves capitalists, would embark their firm and their firm's capital in an additional enterprise of a different though somewhat similar character, without, as the auditor reports it, "the extent of the firm's interest, or where the capital to represent that interest was to come from, being ever discussed or stated." Coming then to the parol testimony, the five junior partners deny positively and emphatically that there the writing, was any agreement outside of that there was any intentio.. that the firm of Wood, Brown & Co. should become partner in Haines & Co., or furnish any capital to it, and any knowledge that Wood and Brown were using the firm capital for that purpose. On the other hand both Wood and Brown speak in a general way of the intention that the firm should go into Haines & Co., but when brought squarely to the pinch of the question whether there was any other agreement than the one in writing, refuse to say so. One or two other small items, such as the sale of goods by Wood, Brown & Co to Haines & Co., at cost, and loose talk that the latter firm was the retail branch of the former, are not worth serious consideration. That the relations of the two firms were close, and that there were large transactions between them, both in money and in goods, is entirely clear, but we find nothing to justify the inference of a partnership. Several creditors of Haines & Co., and others as appellees, have supported the judgment with arguments varying almost as much from each other as from that of the appellant. What has been already said disposes of the whole case on the main ground of contention, but one or two other suggestions may be briefly noticed. It is urged that the assignee, appellant, is not entitled to prove against the fund until the accounts between the partners of Wood, Brown & Co. shall have been settled, and then only for the amount that may be found due to the partners other than Wood and Brown. In other words, that Wood and Brown, being partners in the debtor firm, cannot be creditors also of that firm as against other creditors. But this argument overlooks the effect of the insolvency of Wood, The moment that fact is asBrown & Co. certained, the creditors acquire a right to all the assets of that firm, among which undoubtedly is their claim against Haines & Co. If Haines & Co. were solvent, there could be no question of the validity of this claim, although Brown and Wood might be creditor partners, the right would be in the creditors of Wood, Brown & Co., as a firm, without reference to the status of the individual partners in either firm among themselves. And the insolvency of Haines & Co. does not change the rights of Wood, Brown & Co.'s creditors. As to their respective creditors, the two firms are separate and distinct entities, and the assets of each are a separate fund for its own creditors, just as the firm assets and the individual property of the partners are separate funds for the partnership and individual creditors in ordinary cases, although the partners are equally debtors of both. Each class has a prior claim on its own fund, and only a secondary or postponed claim on the other after the latter's preferred creditors are satisfied. The validity of the appellant's claim on its mer |