Consolidated Furniture Manufacturers v. Goldstein

SCOTT, J., pro tem. Plaintiff: sued defendant for “balance due on open book account” for goods delivered by plaintiff’s assignor to defendant. The answer was in effect a general denial. From judgment for plaintiff, defendant appeals.

Appellant contends that the evidence showed that plaintiff’s assignor, Northwest Table Corporation and appellant, who was doing business under the fictitious name of West-land Import and Manufacturing Company, had entered into a partnership; that a proposed amended answer setting up the partnership relation should have been allowed by the court, and that judgment against him was erroneous because the action should have been for a partnership accounting and not for an open book account; and “if, as an alternative view, it be deemed the account was an agency account, is not the judgment vitally defective in that no proper credits are given to the agent and no proper balance struck?”

It appears that appellant wished to buy goods from the table corporation which the latter declined to sell to him because they expected to open a branch in this territory. After further negotiations appellant agreed to form a corporation which would handle the sale of such goods, and the stock of which would be divided, with 49 per cent going to ap'pellant and 51 per cent going to the table corporation so that the latter would have the controlling interest. The evidence indicated that on the strength of appellant’s promise to form such a new corporation, the table company shipped goods to him which he received and sold, without taking any steps toward fulfilling his promise. After his dealings resulted in a loss and this ease was ready for trial, appellant advanced the view that because of the proposed incorporation the relationship of the table corporation to him was that of a partner. It is not claimed that there was an express oral or [565]written partnership agreement, but appellant contends that it must be inferred from the acts and words of the parties. He placed especial reliance on a letter received from the table corporation written to him after the company experienced difficulty in collecting their account, offering to share the loss which he had incurred on condition that he pay the balance of his account with them.

A corporation cannot lawfully enter into a copartnership agreement with an individual unless expressly empowered to do so by the terms of its charter. (McTigue v. Arctic Ice Cream Supply Co., 20 Cal. App. 708 [130 Pac. 165]; Fee v. McPhee Co., 31 Cal. App. 295 [160 Pac. 397]; Bates v. Coronado Beach Co., 109 Cal. 160 [41 Pac. 855].) It has been intimated that a corporation thus incapable of becoming a partner may bind itself by contract for a joint adventure, the purposes of which are within those of the corporation (Keyes v. Nims, 43 Cal. App. 1 [184 Pag. 695]); and even where a corporation is without authority under its charter to form a partnership with another, it may be held liable as a partner to prevent injustice. (Mervyn Inv. Co. v. Beber, 184 Cal. 637, 643 [194 Pac. 1037].)