Associated Piping & Engineering Co. v. Jones

California Court of Appeal Oct 15, 1936 No. Civ. 10901Published

Before: White

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Holding. The court held that the defendant was a partner by estoppel, as his conduct and the terms of the agreement indicated a joint venture for mutual profit, rendering him liable to third-party creditors despite the contract's characterization of the relationship as a loan.

Issues

Whether the defendant's agreement and conduct established a partnership relationship with the other defendants.
Whether the defendant was liable to the plaintiff as a partner by estoppel based on the plaintiff's reliance on the defendant's involvement in the business.

Disposition. affirmed

Quotations verified verbatim against the opinion

“It is the intent to do the things which constitute a partnership that usually determines whether or not that relation exists between the parties.”

“We are satisfied that the conduct of appellant clearly brings him within the provisions of section 2410 of the Civil Code, defining a partner by estoppel.”

“The courts will not countenance contrivances for giving persons the whole of the advantage of a partnership, without subjecting them to the liabilities”

[108]

WHITE, J.,

pro

tem.

The plaintiff brought this action against C. E. Jones, George A. Mott and A. E. Austin, individually and as copartners doing business under the firm name of J & M Manufacturing Company, to recover a balance due for merchandise sold and delivered, money advanced to, and services performed for defendants. From a judgment rendered in favor of the plaintiff, defendant A. E. Austin appeals.

On the 12th day of December, 1934, the defendants entered into an agreement which reads as follows:

“THIS AGREEMENT made and entered into this 12th day of December, 1934, by and between Aubrey E. Austin of Santa Monica, California, hereinafter referred to as party of the first part, and George A. Mott and Charles C. Jones, both of Santa Monica, California, hereinafter referred to as parties of the second part.

“WITNESSETH:

“WHEREAS, heretofore, to-wit, on or about the 7th day of November, 1934, the said parties of the second part did apply through Victor J. Evans & Company, patent attorneys of Washington, D. C., and of San Francisco, California, for letters patent on a certain device known as the J. M. Extractor, being application #757027 United States Patent Office, which said device is used for the purpose of extracting solvent from dry cleaners muck.

“WHEREAS, it is the desire of parties of the second part to procure financial assistance from party of the first part for the purpose of exploiting and promoting the manufacture and sale of said J. M. Extractor, and also of territorial rights for the promotion and sale of said extractor when and if rights patent have been issued.

“IT IS NOW, THEREFORE, AGREED:

“Party of the first part agrees to loan to parties of the second part, from time to time, various sums of money, which said sums shall not exceed a total of Ten Thousand Dollars ($10,000.00).

“IN CONSIDERATION of all the singular the above, parties of the second part do hereby transfer, assign, set over and sell to party of the first part a one-third (%) interest in and to any and all contracts, profits and/or benefits derived from the exploitation and/or sale of said J. M. Extractor, or from the sale of any territorial rights

Associated Piping & Engineering Co. v. Jones

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WHITE, J.,

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