Chapin v. Brown

California Supreme Court Mar 1, 1894 No. 18147Published

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Holding. The court held that there was no novation of the purchasing contract, but that the trial court erred by charging the defendant for lumber manufactured from logs not owned by the partnership at the contract rate rather than the agreed-upon mill-use rate.

Issues

Whether a novation occurred that would relieve the defendant of individual liability under the purchasing contract.
Whether the defendant was properly charged the contract rate for lumber manufactured from logs not owned by the partnership.

Disposition. reversed

Quotations verified verbatim against the opinion

“there is no novation of that contract”

“the defendant was charged three dollars per thousand for all the lumber manufactured from the logs purchased by the North Fork Lumber Company, whereas he should have been charged only for the use of the mill”

Synopsis

Partnership—Contract With Individual Partners—Purchase op Lumber—Distinct Partnership—Assignment—Novation.—Where a partnership in the business of manufacturing and selling lumber made a contract with two of its members for the purchase of lumber who constituted a distinct copartnership, from which one of the partners withdrew, and into which from time to time third parties became interested under assignments of the purchasing contract, one of the original partners retaining an interest in the purchasing contract during all transactions under it, the mere fact that the lumber was delivered to and paid for by the new partnership as constituted of different members at the time of the delivery and payments made, without the consent of the original partnership to any release of liability upon the part of the partners to whom the purchasing contract was made, or to accept the new partners in the purchasing contract in their stead for any part of the obligation, does not establish a novation of the purchasing contract, and one of the partners with whom it was originally made is individually liable for all indebtedness due to the original partnership upon the purchase of lumber under the contract, by the new partnership.

Id.—Action to Dissolve Partnership—Accounting—Parties.—In an action to dissolve the original partnership, and to enforce the liability of one of its members for a balance due upon the purchasing contract, the strangers who became members of the new firm, under the assignment of the purchasing contract, are not necessary parties to the accounting.

Id.—Purchase of Logs From Third Persons.—Where logs were purchased by the new partnership from third persons, and sawed in the mill belonging to the original partnership, it is error for the original partnership to charge a copartner interested in the purchasing contract, the contract price for such lumber, and his liability is limited to payment for the use of the mill in sawing the logs at the rate chargeable for sawing only.

Id.—Lumber Partnership.—An association of persons for the purpose of carrying on business together and dividing the profits between them, and engaged in the manufacture and sale of lumber, under the name of the “ Sugar Pine Mill and Lumber Co.,” is a partnership.

The Court.—

On August 15, 1887, the plaintiffs and the defendant were copartners, doing business in the firm name of “ Sugar Pine Mill and Lumber Co.” Their business was that of manufacturing and selling lumber. They owned 160 acres of timber land, upon or near which they had built a sawmill.

On August 15, 1887, a written contract between the co-partnership and two of its individual members, namely, Chapin and the defendant, Brown, was executed, by which the copartnership agreed to sell to Chapin and Brown, and the latter agreed to purchase, all the lumber to be sawed from the timber then standing or fallen on the said 160 acres of land, “or that maybe sawed in the mill of the said parties of the first part (the copartnership) from other claims before finishing sawing the timber from the above-described claim” (the 160 acres), at the price of nine dollars per thousand feet, to be delivered in the mill-yard. The parties of the first part further agreed that after the year 1887 they would deliver, as aforesaid, “ an annual amount of one million feet or more at the option of the said second parties.”

[502]

The agreement contains other stipulations not relevant to the issues in this case.

On the same day (August 15, 1887) another agreement was executed between the copartnership and two others of its members, namely, T. E. Peckinpagh, and Charles Peckinpagh, by which the latter agreed to cut, haul, and saw into lumber all the timber on said 160 acres of land, and to stack the lumber in said mill-yard, for which they were to be paid six dollars per thousand feet. As to the amount of lumber to be sawed, they agreed to be governed by the above-mentioned contract with Chapin and Brown. For the purpose of performing this contract they were to have the use of said mill, but were to keep it in repair. This contract also contains matters not material to this case.

Chapin and Brown assumed to constitute a distinct copartnership, under the firm name of “North Fork Lumber Co.” and transacted the business under their contract with the Sugar Pine Mill and Lumber Company in that name; but at some time prior to January 1,1888, Chapin assigned his interest in their contract with the Sugar Pine Mill and Lumber Company to Brown, who agreed with him to perform all its obligations, and withdrew from the North Fork Lumber Company. Brown continued the business under the contract in the name of North Fork Lumber Company until January, 1888, when he assigned an interest in the contract to John Bar tram; and on May 1,1888, assigned another interest to B. F. Ellis. After these assignments Brown, Bartram, and Ehis constituted the North Fork Lumber Company, and conducted the business with the Sugar Pine Mill and Lumber Company under the lumber contract in that name.

Chapin v. Brown

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