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as a salesman; that it is the duty of partners to devote themselves to the interests of the firm, no partner having the right to engage in any business which must necessarily deprive the partnership of a portion of his skill, industry, or capital, all of which he is bound to devote to the partnership. He is not, however, compelled to devote all of his time personally to the concern if there is no such agreement in the articles of partnership. A further reason is that the law presumes in the absence of agreement for compensation that each partner relies on the profit arising from his interest in the partnership business for his compensation.
In those cases in which the contract for a salary is express the decisions are uniform, but there is no uniformity as to the conditions under which a contract may be implied.
There is no express contract in the principal case, and the question arises as to what facts or conduct are sufficient to constitute an implied contract. Where one partner is requested or appointed by the others to act as manager, although no mention of salary is made, it has been held that a compensation is necessarily and equitably implied, and the other partners are considered as dealing with a stranger, the managing partner acting as an agent and not as a partner. In cases where there is no request by the other partners, and one member of the partnership acts as manager and later demands that he be paid for his services difficulty arises. The general rule is that there can be no recovery, and this is true in case of services rendered in the winding up of the partnership. Where, however, the difference in extent or importance of services actually rendered by the various partners was not clearly contemplated by them when they entered into the partnership relation, or where services rendered were special services, that is, those not generally performed by a partner, such as acting as a general clerk in a store, or where, in winding up the affairs, the surviving partner renders services not strictly in settlement, compensation is allowed, although there was no agreement. There is a tendency to allow extra compensation wherever it is possible to construe the services as extraordinary. Some courts hold that where the other partners know and consent to one partner acting as manager, he can recover salary for such service.10 The relation is sometimes considered one of agency.
If one partner is to give his services in lieu of furnishing original capital or money for partnership purposes, undoubtedly that partner should not be allowed compensation for those services. In a Missouri
*Bradford v. Kimberly, 3 Johns Ch. (N. Y.) 431 (1818); Lewis v. Moffett, 11 Ill. 392 (1849).
Williams v. Pederson, et. al., 47 Wash. 472 (1907); Lindsey v. Stranahan, 129 Pa. 635 (1889); see note 2, supra.
"Brown's Appeal, 89 Pa. St. 139 (1879); Dunlap v. Watson, 124 Mass. 305 (1878); Coursen v. Hamlin, 2 Duer (N. Y.) 513 (1853).
Miller v. Hale, 96 Mo. App. 427 (1902). "Godfrey v. White, 43 Mich. 171 (1880). 8Schenki v. Dana, 118 Mass. 236 (1875). 'Thayer v. Badger, 171 Mass. 279 (1898); Zell's Appeal, 126 Pa. St. 329 (1889); Humphreys v. Hurtt, 20 Hun. (N. o.) 398 (1880).
10Levi v. Karrick, 13 Ia. 344 (1862).
case, the court allowed recovery by one partner where the agreement was originally of that character, but one partner actually furnished labor to a greater value than the amount of capital put in by the others.1 Where each contribute the same initial amount, and all equally meet any contingent expenses, and one partner manages the entire partnership business, the others doing nothing, although the courts do not allow recovery, it seems that the managing partner should be remunerated. If the courts thought the equities of the case warranted recovery (for quasi contract is nothing more than equitable relief in law courts) they could allow him to recover as on a promise implied in law.
The court in the principal case allows recovery on the ground that there was an implied contract, but in the opinion there is no hint as to what circumstances the court considered sufficient to constitute this implied contract, except, however, that it was a custom among miners in that district to give compensation where some of the partners in a project of this character devoted their entire time and effort to the business, while others took no part in it.
New York follows the general rule of allowing the managing partner compensation only where there is an agreement express or implied, or the services may be considered extraordinary. The general rule that there can be no recovery of salary for acting in the partnership business has been enacted in the Uniform Partnership Act, which has been adopted in a number of the states. 13
Jane M. G. Foster, '18.
Principal and Agent: Revocation of authority: Recovery of commissions.-In Braniff v. Bair, 165 Pac. (Kan.) 816 (1917), an owner of realty gave a broker an exclusive agency to continue until Oct. I to effect a sale of such realty. The broker spent time and money in efforts to find a purchaser, but before he had found one, the owner withdrew the land from sale, and notified the agent. Shortly thereafter, and before Oct. I, the broker procured a purchaser. The agent sued for his commissions. It was held that the owner was liable. The court said: “The general trend of authorities is that, if the agent proceeds in good faith to comply with the terms of the proposal or agreement like the one in question by advertising the property and spending time and effort to find a purchaser, these acts amount to an acceptance, and thereafter both parties are bound.”
On principle an offer of a promise for an act can only be accepted, in a manner giving rise to a binding contract, by doing the very act
Gaston v. Kellogg, 91 Mo. 104 (1886).
12 Bradford v. Kimberly, 3 Johns. Ch. (N. Y.) 431 (1818); Gilhooly v. Hart, et al., 8 Daly (N. Y.) 176 (1878); Caldwell v. Leiber, 7 Paige (N. Y.) 483 (1839); Coursen v. Hamlin, 2 Duer (N. Y.) 513 (1853); Franklin v. Robinson, 1 Johns. Ch. (N. Y.) 158 (1814); Lyon v. Snyder, 61 Barb. (N. Y.) 172 (1871); Evans v. Warner, 20 App. Div. (N. 'Y.) 230 (1897).
13 Uniform Partnership Act, sec. 18 (f): “No partner is entitled to remuneration for acting in the partnership business, except that a surviving partner is entitled to reasonable compensation for his services in winding up the partnership affairs." called for by the offer. Thus in Biggers v. Owent a reward was offered for apprehending a criminal and procuring evidence sufficient to convict him. The plaintiff apprehended him, but did not get evidence sufficient to convict. The offer of a reward was then withdrawn. After such withdrawal the plaintiff went ahead and procured the necessary evidence. But it was held that he was not entitled to the reward, since the offerors could revoke the offer at any time before it was accepted. A part performance of the acts called for was not sufficient to bind the promisors. The same principle applies to the offer of a commission by a principal to an agent upon the doing of an
It is inevitable that a strict application of this principle will often result in great hardship. Professor Ashley puts the following case: “A desires his safe moved from his old office to a new one. He asks B to do this act, and says he will pay him $25. When the safe has been carried to the door of the new building, A appears and tells B that he withdraws his offer, directing him to leave the safe there. Nevertheless B proceeds and completes the moving.''3 On what theory can A be held? He cannot be held on the ground that B has accepted the terms of the offer, for B has not done the act called for,-he has not moved the safe from one office to the other,-before the time of the revocation of the offer. In cases where the defendant has been unjustly enriched there may be recovery in quasi-contract. But the defendant in the principal case has not been unjustly enriched. Therefore no recovery may be had on the theory of unjust enrichment. Ashley suggests that in cases of this kind, the offeror should be estopped from revoking his offer before the completion of the work. The problem does not seem to have bothered Professor
179 Ga. 658 (1887).
2The following cases hold that a principal without incurring liability, may expressly or by a sale made by himself revoke a real estate agent's authority to sell his land, before the agent has completed the act of finding a purchaser: Auerbach v. Internationale Wolfram Lampen Aktien Gesellschaft, 177 Fed. 458 (1910); Rees v. Pellow, 97 Fed. 167 (1899); Milligan v. Owen, 123 Ia. 285 (1904); Tracy v. Abney, 122 Ia. 306 (1904); Sibbald v. The Bethlehem Iron Co., 83 N. Y, 378 (1881); Wylie v. The Marine National Bank, 61 N. Y.415 (1875). In Siegel v. Rosenzweig, 129 App. Div. (N. Y.) 547 (1908), it was held that a real estate broker authorized by the owner of lands to offer them for sale on specific terms, has, like the owner himself, a right to rescind the agency and may do so even when he has procured a probable purchaser. Hence, having found a purchaser, he may agree that the purchaser shall deal directly with the owner in consideration of the payment of a commission by the purchaser. Such a contract does not rest upon an immoral consideration, and the broker may recover his commission from the purchaser on the completion of the sale.
3Ashley, Law of Contracts, p. 78.
*Ashley, Law of Contracts, pp. 86–88: “An offer remaining open is simply a statement by the offeror that he wishes a certain thing, and will continue in that state of mind. Upon such indication of intent, the withdrawal of the offer, after the offeree has accepted and started in to do the act in reliance thereon, will cause loss. This suggests estoppel in pais. The doctrine of consideration is not affected in any way. There is no promise until the consideration is performed, and the offeror can never be held to his proposed promise unless he receives the consideration, but nevertheless he cannot withdraw his offer.
An estoppel simply limits the power of revocation, and there is no good reason why this should not be done. It takes place only when strict justice requires, and both parties are
Langdell. He says: “The true solution for both parties is to have a binding contract made before the performance begins by mutual promises."5 Ashley's comment on this is: “This is much like replying to a question as to a specific for a certain poison ‘Don't take the
There has been much difficulty in dealing with cases involving this problem. In Los Angeles Traction Company v. Wilshire the defendant agreed to pay the plaintiff a sum of money on the completion of its street railroad to a certain point. The plaintiff bought a franchise, and did considerable work on its track. The defendant then revoked his offer. It was held that the plaintiff was entitled to recover the stipulated sum agreed upon. The court said: "When the respondent purchased and paid upwards of fifteen hundred dollars for a franchise, it had acted upon the contract; and it would be manifestly unjust thereafter to permit the offer that had been made to be withdrawn. The promised consideration had then been partly performed, and the contract had taken on a bilateral character, and if appellant thereafter thought he discovered a ground for rescinding the contract, it was, as it always is, a necessary condition to the recission that the party should be made whole as to what he had parted with on the strength of the contract.” It is not easy to see just what the court means by this; for on strict theory no obligation on the part of the promisor arose until the road was actually completed to the point named. The court in its desire to give the injured party the relief which it seemed to deserve was not particular about the legal reasoning it used. In the Minnesota case of Stensgaard v. Smith, where a broker was given the exclusive agency to sell land and his authority revoked after he had spent money in advertising and had made other efforts to sell the land, the strict legal theory was applied, and recovery
fully protected.” An interesting case in which the dictrine of estoppel is applied to avoid defect of consideration is Ricketts v. Scothorn, 57 Neb. 51 (1898). Ricketts made a promissory note for $2000 and gave it to his granddaughter, Miss Scothorn, who was employed as a bookkeeper. When he gave it to her he said: "I have fixed out something that you have not got to work any more.” Miss Scothorn immediately gave up her work and remained unemployed for a year. Ricketts died and Miss Scothorn brought an action on the note against his executor. The defendant pleaded want of consideration. The court said: “Having intentionally influenced the plaintiff to alter her position for the worse, it would be grossly inequitable to permit the maker, or his executor, to resist payment on the ground that the promise was given without consideration. The petition charges the elements of an equitable estoppel, and the evidence conclu. sively establishes them." The executor was estopped to deny consideration for the note.
Langdell, Summary of Contract, sec. 4.
*Ashley, Law of Contracts, p. 88, note 2. For a criticism of Ashley's views see 28 Law QUAR. REV. 100. The reviewer says: “Both the plain man and the average lawyer will say that, whatever Prof. Ashley's logic may be, the law really cannot be so absurd as that; and they will be right, and, what is more, any rational court before whom such a question is moved will surely find a way to make them so."
"135 Cal. 654 (1902). 843 Minn. 11 (1890).
refused. A later case in the same jurisdiction allowed the broker to recover, and a rather unsatisfactory attempt was made to reconcile this conclusion with the decision in Stensgaard v. Smith, supra. an Alabama casel0 it is remarked: “Even though an agreement is, when made, unilateral, if the party in whose favor the promise is made accepts its performance, or does any act in recognition of its implied or intended, though unexpressed, consideration, this supplies the element of mutuality and gives a right of action.
When a broker is given an agency to sell real estate, the courts at times seem eager to construe the contract so as to make it come within either one or the other of two classes of cases where there is no difficulty in allowing recovery. The first of these classes is where the contract is bilateral; the owner promises to pay the broker a commission in consideration of the broker's promise to make efforts and incur expenses in finding a purchaser.11 The other class is where the contract is unilateral, but the owner promises to pay the broker, not in consideration of his finding a purchaser, but in consideration of his efforts to find one.12 Some courts have said that where the consideration does not appear on the face of the contract, it may be found by implication,13 or proved by parol." But when a consideration is once found, the principal, though he has the power to revoke, does not have the right to revoke, and may become liable in damages if he does so.15 In several cases analagous to the principal case the courts permit recovery and do not raise the question of consideration.16
'Lapham v. Flint, 86 Minn. 376 (1902). The court in this case says: “The contract under consideration in Stensgaard v. Smith, supra, contained no express provision that the owner should pay the agent commission in case he should himself make the sale. The only question before the court in that case was whether the contract, upon its face, unaided by evidence or allegations in the complaint, expressed a mutuality of obligation; and it was properly held that it did not, because there was nothing in the contract to indicate any acceptance of the obligation, either in writing or by performance. But in the case before us, conceding that the contract, upon its face, is unilateral, and does not express mutuality of agreement, yet the complaint alleged that, after delivery of the contract, the respondent performed services in pursuance thereof, by listing and advertising the property, and endeavoring to sell it. This allegation is sufficient to support evidence of acceptance by the agent."
10Pullman Co. v. Meyer, 195 Ala. 397, 401 (1916). See also De Wolf Co. v. Harvey, 161 Wis. 535 (1915).
"Rowan & Co. v. Hull, 55 W. Va. 335 (1904).
19 In the following cases the contract expressly provided that the consideration for the promise of the owner should be the efforts of the broker in attempting to find a purchaser: Kimmell v. Skelly, 130 Cal. 555 (1900); Maze v. Gordon, 96 Cal. 61 (1892); Crane v. McCormick, 92 Cal 176 (1891). In Long v. Herr. 10 Colo. 380 (1887) and Metcalf v. Kent, 104 Ia. 487 (1898) the court found this to be the consideration, though the contract did not expressly so provide. See also Hoskins v. Fogg, 60 N. H. 402 (1880).
18Goward v. Waters, 98 Mass. 596 (1868).
14Attix, Noyes & Co. v. Pelan, 5 Ia. 336 (1857). The contract recited a consideration of $i, but the court paid no attention to this.
1*Cloe v. Rogers, 31 Okla. 255 (1912).
16Hardwick v. Marsh, 96 Ark. 23 (1910); Blumenthal v. Bridges, 91 Ark. 212 (1909); Harrison v. Augerson, 115 Iul
. App. 226 (1904); Schultz v. Griffin, 5 Misc. (N. Y.) 499 (1893). From the Arkansas cases it appears that the rule in that state is that the broker will be allowed to recover where the agency is exclusive, and that employment for a definite time implies an exclusive agency.