Supreme Court of Canada
Porter v. Armstrong, [1926] S.C.R.
328
Date: 1926-03-13
Robert
Porter & Sons Limited (Plaintiffs) Appellants;
and
J.H.
Armstrong and Another (Defendants) Respondents.
and
William
Washbrough Foster (Defendant).
1926: February 03; 1926:
March 13
Present: Anglin C.J.C. and
Duff, Mignault, Newcombe and Rinfret JJ.
ON APPEAL FROM THE COURT OF
APPEAL FOR BRITISH COLUMBIA
Sale of land—Agreement—Co-purchasers—Covenant to pay—Joint
or several—Intent to re-sale at a profit—Partnership
K., whose rights have been
acquired by P., sold to F. and W.M. a piece of land for $10,000 payable $3,000
cash, $5,500 by assuming a mortgage to P. and $1,500 at a later date. The
agreement for sale contained the following covenant: "The purchasers
covenant with the vendor that they will pay to the vendor the said sum
***." The agreement also contained the following clause: "The terms '
vendor' and ' purchasers' in this agreement shall include the executors,
administrators and assigns of each of them." P. sued F. with A. and W. A.
M., W. M's. executors, for the balance of the purchase price, alleging that the
covenant was a joint and several covenant, or, alternatively, that F. and W. M.
were partners in the purchase of the land and therefore jointly and severally liable.
Held that the covenant was in form joint and not several
and that W.M's. executors were not liable. White v. Tyndall (13
App. Cas. 263) foll.
Held, also, that although the property was bought by F.
and W.M. with the intention of turning it over at a profit, there was no
evidence from which to infer an agreement in the juridical sense that the
property was to be held as partnership property.
APPEAL from a decision of the
Court of Appeal for British Columbia reversing the judgment of the trial court and
dismissing the plaintiff's action as against the respondents.
The material facts of the case
and the questions at issue are fully stated in the judgment now reported.
D. Donaghy and J. F.
Smellie for the appellant.
Geo. F. Henderson K.C. for
the respondents.
The judgment of the court was
delivered by
DUFF J.—I see no reason to differ
from the conclusion of the majority of the Court of Appeal founded on
[Page 329]
the authority of White v. Tyndall,
that the covenant in question, assuming there was no partnership, is a joint
covenant. The argument based upon the stipulation in the agreement that "vendor"
and "purchasers" in the agreement shall include the executors,
administrators and assigns of each of them, is conclusively answered by the
observations of Lord Herschell at pp. 276 and 277.
The question raised by the
allegation of the appellants that the debt sued upon is a partnership debt,
presents more room for controversy. Foster and Miller unquestionably intended
to buy the property, to sell it again at an enhanced price, and thereby to make
profit. Indeed, the sole object of purchasing the land was to dispose of it
profitably. No doubt they intended to share the outlay equally between them. As
regards the purchase money, the law would, of course, give to either of them a
right of contribution against the other for any payment on the joint debt in
excess of his own proper share, and on a sale, each would be entitled to share
in the price according to his interest. The inevitable result, if the property
was held in common and sold, would be that, as between Foster and Miller
themselves, the right to share in the profits and the legal responsibility for
losses would be equally distributed. But these consequences all flow from the
fact that these two persons were jointly responsible for the purchase money,
and that each was entitled to an undivided moiety in the equitable estate
vested in them, as the result of the contract of purchase.
Partnership, it is needless to
say, does not arise from ownership in common, or from joint ownership.
Partnership arises from contract, evidenced either by express declaration or by
conduct signifying the same thing. It is not sufficient there should be
community of interest; there must be contract. In the first chapter of Story's
book on Partnership, there is this passage:—
In short, every partnership
is founded on a community of interest; but every community of interest does not
constitute a partnership; or, as Duranton expresses it: "La société
aussi produit une communauté; en un mot, toute société est bien une communauté;
mais toute communauté n'est point une société. Il faut pour cela la volonté des
parties."
The Roman law has recognized
the same distinction: "Ut sit pro socio actio, societatem intercedere
oportet: nec enim sufficit rem esse
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communem, nisi societas
intercedit. Communiter autem res agi potest etiam citra societatem; ut puta,
cum non affectione societatis incidimus in communionem, ut evenit in re duobus
legata; item si a duobus simul empta res sit; aut si hereditas vel donatio
communiter nobis obvenit; aut si a duobus separatim emimus partes eorum, non
socii juturi. Nam cum tractatu habito societas coita est, pro socio actio est;
cum sine tractatu in re ipsa et negotio, communiter gestum videtur." And again: " Qui nolunt inter se contendere,
solent per nuntium rem emere in commune, quod a societate longe remotum
est!"
Pothier's comment on the words "
si a duobus simul empta res sit " is this: " Scilicet non
animo contrahendae societatis " 17 Pand. II. 30 n.
The real question is whether,
from the evidence before us, one ought to infer an agreement in the juridical
sense that the property these two persons intended dealing with was to be held
jointly as partnership property, and sold as such. Is this what they
contemplated? Had they in their minds a binding agreement which would disable
either of them from dealing with his share—that is to say, with his share in
the land itself—as his own separate property? A common intention that each
should be at liberty to deal with his undivided interest in the land as his own
would obviously be incompatible with an intention that both should be bound to
treat the corpus as the joint property, the property of a partnership. English
law does not regard a partnership as a persona in the legal sense.
Nevertheless, the property of the partnership is not divisible among the
partners in specie. The partner's right is a right to a division of profits
according to the special arrangement, and as regards the corpus, to a
sale and division of the proceeds on dissolution after the discharge of
liabilities. This right, a partner may assign, but he cannot transfer to
another an undivided interest in the partnership property in specie.
Now Foster's arrangement with
MacDonald was obviously not a transfer of a partner's right to his share of the
profits, nor did it involve the introduction of MacDonald by agreement with
Miller, as a partner in Miller's place. Nothing in the correspondence points to
this. And I cannot accept Mr. Donaghy's contention that the transfer to
MacDonald was a transfer resulting from an understanding between Foster and
Miller. Miller's letters indicate very clearly, and in Foster's evidence there
is nothing inconsistent with this, that both Miller and Foster as-
[Page 331]
sumed that Foster was entitled to
assign his interest in the property. It is true, no doubt, that in the special
circumstances under which Miller advanced the funds for the first payment,
Miller had, as between himself and Foster, a lien on Foster's undivided
interest for the amount of the advance; a lien which, it may be (the evidence
is not sufficiently explicit to enable one to form an opinion upon the point),
was, as against MacDonald and his creditors, displaced by the operation of the
Land Registry Act, although I think it quite probable that it was not. But this
lien was not a partner's lien. It was a lien in the nature of salvage, which
the law vests in one co—owner, who advances money at the request of the other
to make a payment to save or protect the common property. The fair conclusion
from all the facts appears to be that the learned trial judge and the majority
of the Court of Appeal were right in their view, that a partnership was not
constituted.
The appeal should be dismissed
with costs.
Appeal dismissed with
costs.
Solicitor for the
appellants: Sydney Child.
Solicitor for the
respondents: E. A. Boyle.
Solicitor for the
defendant: E. A. Dickie.