Davis v. Westphal

CRAIG, Acting P. J.

It appears that the parties to this action entered into a tentative agreement in writing on March 7, 1925, by the terms of which respondent agreed to loan the appellant $2,500 for the conduct of the latter’s

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business, and to enter into his employment for a period of six months at a salary of $150 per month, in contemplation of forming a copartnership. It is contended that appellant received the $2,500 and gave to respondent hig promissory note therefor; that he also paid said salary for the first five months, but refused to repay the amount of the note, or to pay the salary for the sixth month. Suit having been instituted for both sums, and judgment entered in favor of the plaintiff, this appeal is taken from said judgment.

The note in controversy called for the legal rate of interest upon the principal for a period of six months, together with a bonus of eight per cent per annum. The defendant incorporated the original agreement in his answer as an exhibit, alleging that said note was usurious, and that the monthly salary was merely a bonus which he had agreed to pay for the use of the money loaned. As a counterclaim the defendant allowed a credit of $50 per month for said five months, which the plaintiff was alleged to have' earned in commissions and otherwise, and prayed judgment in the sum of $1500, or treble the amount claimed to have been paid illegally, under the terms of the contract and promissory note. It is respondent’s contention that the salary and the amount of the note were separate and distinct items, and that in the event of the formation of a copartnership, the $2,500 was to have gone into the business, and a new contract was to have been executed between the parties. Said contract reads, in part, as follows:

“Witnesseth: That whereas the parties contemplate a permanent business association together as partners, this memorandum of agreement is made for a period of six (6) months from its date for the purpose of permitting the parties to1 determine whether or not a permanent association between them shall prove satisfactory.

“The said William R. Davis agrees to loan to the said J. M. Westphal, upon the signing of this agreement, the sum of twenty-five hundred dollars ($2500.00), which the said J. M. Westphal shall use in the general conduct of the business as above outlined. The said William R. Davis is to, and shall associate himself with said business commencing upon the signing of this agreement and the payment of the said sum of $2500.00, devoting hig full time and