Story Case

Louis Adcock, owner of a plumbing business, had in his employ Nels Johnson. Adcock made this offer to Johnson: Johnson should put $1,000 in the business for which he should receive one third of the profits and an increase in salary to $150 a month; also he was to be foreman on all jobs. The contract was drawn for five years. Johnson accepted this offer and began to work upon this basis. Soon after, while engaged in a plumbing construction, Howard Baker, an employee, was severely injured. He brought suit for damages against both Adcock and Johnson, as partners. Johnson maintained in defense that he was acting only as an agent, and since there was no carelessness on his part, he was not liable. Liability depends upon whether Johnson is an agent or a partner, as determined by his contract with Adcock.

Ruling Court Case. Phillips Vs. Phillips, Volume 49 Illinois Reports, Page 437

About twenty years before the bringing of this suit, John Phillips, with his family, moved from Scotland to this country. At the time he was a very poor man. He was a wood turner and made a very humble beginning in that trade when he arrived in America. He had four sons, all of whom worked with him in his business. His business prospered and he eventually became a very wealthy man.

This suit was brought by one of the sons, with the claim that there was a partnership existing between the father and the sons, in respect to the business in which they had been engaged. In this suit, the complainant asked for an accounting of the profits. It was contended by the complainant that there was a partnership because the sons had continued in the business even after they had become of age, and had never received any compensation in wages for their services. It was also contended that the public had come to believe that the business was carried on by the father and his sons as partners. On the other hand, it was contended by the defendant, the father, that he never had intended that the sons should be his partners during his life; he showed that it was the custom in his native land, Scotland, for sons, who, as minors had worked for their parents, to continue upon the same basis after they became of age.

Decision

As between alleged partners, it is a question of what the parties intended; what the public thinks is not material in determining this question between the parties themselves. The evidence in the case showed that the father did not intend that the business should be carried on as a partnership business; consequently, there is no partnership and the complainant has no right to an accounting.

Chief Justice Caton, in delivering the opinion of the Court said:" It must be remembered at the outset that this is not a controversy between a third party and the alleged members of the firm. Parties may so conduct themselves as to be liable to third persons as partners, when in fact no partnership exists as between themselves. But as between the parties themselves, the relationship depends upon their intention as determined by contract. No partnership contract is shown in this case. Therefore, it was decided that the plaintiff was not entitled to an accounting.

Ruling Law. Story Case Answer

Partnership is a legal relation between two or more competent persons created by an expressed or implied contract between them. The relation contemplates the union of their capital, property, labor, or skill, to be managed and used for their common profit. Both the subject matter and the use must be legal, else the normal rights and duties of each partner will not be recognized or enforced by the courts. This relation, generally termed "Partnership", is often referred to as "Copartnership", and is sometimes called the "Firm." Members of the relation are called "partners" or "copartners."

Since, in the Story Case, Johnson contributed capital to the business, furnished his labor and skill, and expected to receive a share in the profits, he would be considered a partner by the Court. The fact that the relation was not definitely called a partnership does not alter their implied intention, as evidenced by the terms of the contract.