pare Johnson v. Rothschilds, 63 Ark. 518, 41 S. W. 996; Rector v. Robins, 74 Ark. 437, 86 S. W. 667; Harris v. Threefoot (Miss.) 12 So. 335.

The true rule, however, seems to be that an intent is essential to the actual creation of a partnership even as to third persons, the existence of that intent being determinable according to the facts and circumstances of each case.

England.-Mollwo v. Wards Ct. L. R. 4 P.

C. 419.

Canada.-Kelly v. Sayle, reported in full, post, this volume, at page 444.

Alabama.-Owensboro Wagon Co. v. Bliss, 132 Ala. 253, 31 So. 81, 90 Am. St. Rep. 907; Bass v. Clements, 6 Ala. App. 167, 60 So. 443. Georgia. Falk v. LeGrange Cigar Co. 15 Ga. App. 564, 84 N. E. 93.

Illinois.-Niehoff v. Dudley, 40 Ill. 406; Brown v. Melick, 185 Ill. App. 3.

Indiana.-Bradley v. Ely, 24 Ind. App. 2, 56 N. E. 44, 79 Am. St. Rep. 251; Breinig v. Sparrow, 39 Ind. App. 455, 80 N. E. 37. Indian Territory.—Hart v. Hiatt, 2 Indian Ter. 144, 48 S. W. 1031.

Iowa.-Johnson v. Carter, 120 Ia. 355, 95 N. W. 850.

New York.-Central City Sav. Bank v. Walker, 66 N. Y. 424. Compare Leggett v. Hyde, 58 N. Y. 272, 17 Am. Rep. 244; Haas v. Roat, 16 Hun 526; Catskill Bank v. Gray, 14 Barb. 471.

Ohio.-Meridian Nat. Bank v. McConica, 4 Ohio Cir. Dec. 106. Compare Wood v. Vallette, 7 Ohio St. 172.

Oklahoma.-Citizens' Nat. Bank v. Mitchell, 24 Okla. 488, 20 Ann. Cas. 371, 103 Pac. 720. Oregon.-Klosterman v. Hayes, 17 Ore. 325, 20 Pac. 426; North Pac. Lumber Co. v. Spore, 44 Ore. 462, 75 Pac. 890.

Pennsylvania.-Walker v. Tupper, 152 Pa. St. 1, 25 Atl. 172.

Rhode Island.-Boston, etc. Smelting Co. v. Smith, 13 R. I. 27, 43 Am. Rep. 3. Tennessee.-Polk v. Bushanan, 5 Sneed (Tenn.) 721.

Vermont. See Collidge v. Taylor, 85 Vt. 39, 80 Atl. 1038.

Washington.-See Z. C. Miles Co. v. Gordan, 8 Wash. 442, 36 Pac. 265.

Thus in Diamond Creek Consol. Gold, etc. Min. Co. v. Swope, 204 Mo. 48, 102 S. W. 561, the court said: "Except in cases in which parties have held themselves out as copartners and credit has been extended to

Minn. 87, 104 N. W. 760. Missouri.-A. N. Kellogg Newspaper Co. v. Farrell, 88 Mo. 594; Hughes v. Ewing, 162 Mo. 261, 62 S. W. 465; Diamond Creek Consol. Gold, etc. Min. Co. v. Swope, 204 Mo. 48, 102 S. W. 561; Kelly v. Gaines, 24 Mo. App. 506; Osceola Bank v. Outhwaite, 50 Mo. App. 124; Gille Hardware, etc. Co. v. McCleverty, 89 Mo. App. 154; Saine v. Rooney, 125 Mo. App. 176, 101 S. W. 1127; A. Graf Distilling Co. v. Wilson, 172 Mo. App. 612, 156 S. W. 23; Ellis v. Brand, 176 Mo. App. 383, 158 S. W. 705; Aehle v. Brand, 176 Mo. App. 395, 158 S. W. 709; Willoughby v. Hildreth, 182 Mo. App. 80, 167 S. W. 639.

Montana.-Beasley v. Berry, 33 Mont. 477, 84 Pac. 791.

Nebraska.-Garrett v. Republican Pub. Co. 61 Neb. 541, 85 N. W. 537.

Nevada.-Horton v. New Pass Gold, etc. Min. Co. 21 Neb. 184, 27 Pac. 376, 1018.

New Jersey-Wild v. Davenport, 48 N. J. L. 129, 7 Atl. 295, 57 Am. Rep. 552.

ners between themselves, a partnership is a relation between two or more competent per sons resulting from a contract, and accordingly only exists where the parties intend to enter into a contract of partnership, for this, like other contracts, must be construed according to the manifest intention of the parties and must be determined by the contract itself and the surrounding circumstances." And in Niehoff v. Dudley, 40 Ill. 406, it was said: "The first and controlling element in the contract is the intention of the parties between themselves. . . There is no absolute rule of law, that a participation in the profits renders the participant a partner. It is only a presumption of the law, which prevails in the absence of controlling circumstances, but is controlled by them. This seems to be the extent of the rule announced by the authorities. And there is no hardship on third persons, where the party does not hold himself out as a partner. And this is only carrying into effect the intention of the parties, and is consonant with equity and justice."

In Shrum v. Simpson, 155 Ind. 160, 57 N. E. 708, 49 L.R.A. 792, wherein the rights of the parties inter sese were concerned, the court said: "An author of great and exact learning states the law thus: 'In short, the true rule, ex aequo et bono, would seem to be that the agreement and intention of the parties themselves should govern in all cases. If they intended a partnership in the capital stock, or in the profits, or in both, then, that

the same rule should apply in favor of third persons, even if the agreement were unknown to them. And, on the other hand, if no such partnership were intended between the parties, then, that there should be none as to third persons, unless where the parties had held themselves out as partners to the public, or their conduct operated as a fraud and deceit upon third persons.' Story on Partnership, sec. 49. Such intention must, of course, be legally ascertained, and mere declarations of the persons interested and uniting in the prosecution of a common enterprise that no partnership existed, would not be permitted to control the legal effect of acts or proceedings from which the existence of a partnership is by the law presumed."

What Intent Is Required.

The rule is well settled that a partnership is created where the parties contract to do all that in law is necessary to the formation of a partnership, although the parties neither understand the legal effect of their agreement nor intend to incur the liabilities which the law imposes upon partners.

England-Pooley v. Driver, 5 Ch. D. 458; Ex p. Delhasse, 7 Ch. D. 511; Moore v. Davis, 11 Ch. D. 261; Pawsey v. Armstrong, 18 Ch. D. 698, 50 L. J. Ch. 683, 30 W. R. 469; Adam v. Newbigging, 13 App. Cas. 315.

Canada.-Trustees V. Oland, 35 Nova Scotia 409.

United States.--Fleming v. Lay, 109 Fed. 952, 48 C. C. A. 748. See also Bigelow v. Elliot, 1 Cliff. 28, 3 Fed. Cas. No. 1,399.

California. Chapman v. Hughes, 104 Cal. 302, 37 Pac. 1048, 38 Pac. 109. And see the reported case.

District of Columbia.-Robinson v. Parker, 11 App. Cas. (D. C.) 132.

Florida.-Webster v. Clark, 34 Fla. 637, 16 So. 601, 43 Am. St. Rep. 217, 27 L.R.A. 126 Hawaii.-Tucker v. Metcalf, 3 Hawaii 180; Barnes v. Collins, 16 Hawaii 340.

Illinois.-Lintner v. Millikin, 47 Ill. 178; Fougner v. Chicago First Nat. Bank, 141 Ill. 124, 30 N. E. 442; Morse v. Richmond, 6 Ill. App. 166.

Indiana.-Bradley v. Ely, 24 Ind. App. 2, 56 N. E. 44, 79 Am. St. Rep. 251; Breinig v. Sparrow, 39 Ind. App. 455, 702, 80 N. E. 37, 40.

Iowa.-Johnson v. Carter, 120 Ia. 355, 94 N. W. 850.

Kansas.-Jones v. Davies, 60 Kan. 314, 56 Pac. 484, 72 Am. St. Rep. 354.

Kentucky.-See also Crawford v. Wiedemann, 159 Ky. 18, 166 S. W. 595.

Louisiana.-Cameron v. Orleans, etc. R. Co. 108 La. 83, 32 So. 208; Cooley v. Broad, 29 La. Ann. 345, 29 Am. Rep. 332.

Maine.-Winslow v. Young, 94 Me. 145, 47 Atl. 149; Cummings Mfg. Co. v. Smith, 113 Me. 347, 93 Atl. 968.

Massachusetts.-Williams v. Milton, 215 Mass. 1, 102 N. E. 355.

Michigan.-Beecher v. Bush, 45 Mich. 188, 7 N. W. 785, 40 Am. Rep. 465; Purvis v. Butler, 87 Mich. 248, 49 N. W. 564; Dutcher v. Buck, 96 Mich. 160, 55 N. W. 676, 20 L.R.A. 776; City Nat. Bank v. Stone, 131 Mich. 588, 92 N. W. 99.

Mississippi.-Lea v. Guice, 13 Smedes &

M. 656.

Missouri.-Mulhall v. Cheatham, 1 Mo. App. 476; Monson v. Ray, 123 Mo. App. 1, 99 S. W. 475; Steckman v. Galt State Bank, 126 Mo. App. 664, 105 S. W. 674.

New Jersey. Sheridan v. Medara, 10 N. J Eq. 469, 64 Am. Dec. 464.

New York.-Haas v. Roat, 16 Hun 526; Manhattan Brass, etc. Co. v. Sears, 45 N. Y. 797, 6 Am. Rep. 177; Evans v. Warner, 20 App. Div. 235, 47 N. Y. S. 16; Griffin v. Carr, 21 App. Div. 51, 47 N. Y. E. 323, affirmed 165 N. Y. 621, 59 N. E. 1123; Wolf v. Lawrence, 33 Misc. 481, 67 N. Y. S. 900; Pell v. Baur, 16 N. Y. S. 258.

Ohio.-Wood v. Vallette, 7 Ohio St. 172. Pennsylvania.-Righter v. Farrel, 134 Pa. St. 482, 19 Atl. 687; Poundstone v. Hamburger, 139 Pa. St. 319, 20 Atl. 1054.

South Carolina.-Price v. Middleton, 75 S. C. 105, 55 S. E. 156.

Texas.-Cothran v. Marmaduke, 60 Tex. 370; Stevens v. Gainesville Nat. Bank, 62 Tex. 499; Freeman v. Huttig Sash, etc. Co. reported in full, post, this volume at page. 446; Cleveland v. Anderson, 2 Willson Civ. Cas. Ct. App. § 146.

Utah.-Bentley v. Brossard, 33 Utah 396, 94 Pac. 736.

Wisconsin.-Spaulding v. Stubbings, 86 Wis. 262, 56 N. W. 469, 39 Am. St. Rep. 888; Bartelt v. Smith, 145 Wis. 31, 129 N. W. 782, Ann. Cas. 1912A 1195.

That the foregoing rule supplements and does not conflict with the rule that the intention governs was pointed out in Barnes v. Collins, 16 Hawaii 340, wherein the court said: "Whether an agreement creates a partnership or not depends upon the intention of the parties. But by the intention of the parties is meant, not what they call or consider the relation into which they enter, but what the relation is in legal effect. The parties may expressly agree that there shall be a partnership and yet such agreement will be ineffective if the specific stipulations do not establish a partnership as matter of law, and on the other hand they may expressly agree that their relation shall not be that of partners and yet it may be such as matter of law. Perhaps there is no single element that will necessarily show as a mat

ter of evidence, that a partnership was intended. Of course there need be no partnership name, nor need it be stipulated that there shall be a partnership, nor is it necessary that the partners should understand or realize what the legal consequences of their agreement will be. The question is whether that which they have agreed upon constitutes a partnership as matter of law." And in Johnson v. Carter, 120 Ia. 355, it was said: "The crucial test seems to be the intention of the parties. If it appears to have been their purpose to enter into the relation of partners, all subterfuges of either, resorted to in order to evade liability for possible losses, while securing certainty of the advantages to be derived from the relation, must be disregarded."

In Fougner v. Chicago First Nat. Bank, 141 Ill. 124, 30 N. E. 442, the court said: "While the intention of the parties is the criterion by which to determine whether or not a partnership has been formed, yet, as said by Justice Matthews in his work on Partnership (page 12, sec. 31), it is very plain that parties cannot, by agreement, enter into a partnership, and at the same time agree that what they have entered into shall not be a partnership.' Or, in the language of Breese, C. J., in Lintner v. Millikin, 47 Ill. 178: 'Parties may become partners without their knowing it, the relation resulting from the terms they have used in the contract or from the nature of the undertaking. They may make a bargain together without knowing it, which creates or involves a partnership, and subjects them to the law of partnership.""

The rule was applied in Pooley v. Driver, 5 Ch. D. (Eng.) 458 as follows: "It was said, and said with considerable force, by Mr. Chitty and Mr. Mathew, that they never intended to be partners. What they did not intend to do was to incur the liabilities of partners. If intending to be a partner is intending to take the profits, then they did intend to be partners. If intending to take the profits and have the business carried on for their benefit was intending to be partners, they did intend to be partners. If intending to see that the money was applied for that purpose, and for no other, and to exercise an efficient control over it, so that they might have brought an action to restrain it from being otherwise applied, and so forth, was intending to be partners, then they did intend to be partners. . I must say that I have come to a clear conclusion that this is not a transaction of loan within the meaning of the Act of Parliament; that the true relation of the parties towards one another was that of dormant and active partners, and not of mere creditors and debtors; that in this case I need not rely on one provision or on two pro

[94] Appeal by plaintiffs from the judg ment of McInnes, Co. J., heard at Vancouver on the 8th of November, 1913. Defendant Sayle carried on business by himself and in the course of same obtained certain financial assistance from defendant Dick. Ultimately a partnership agreement was drawn up between them, but never registered. The partnership name was the Leonard-Sayle Company. The defence was that the partnership was merely a form of security to defendant Dick for his advances. The trial judge dismissed the action as against Dick. Plaintiffs appealed. DISMISSED.

Arnold for appellants.

J. W. de B. Farris for respondents. C. S. Arnold, solicitor for appellants. Farris & Emerson, solicitors for respondents.

MACDONALD, C.J.A.-I think the appeal should be allowed.

We have an extraordinary state of facts in this case. The respondent Dick advanced $2,100 to the respondent Sayle to buy out the former partner in the business that Sayle was carrying on. A year afterwards a partnership agreement was drawn [95] up

between Sayle and Dick. That agreement, on its face, purports to be signed, sealed and delivered by the parties. Each carried away a counterpart of it. One of the parties, Sayle, took it to his banker: the banker was not called. Following that, Dick indorsed notes from time to time to assist in carrying on the business. Finally the business was a failure and now Dick decides to claim as a creditor of the firm for the $2,100 which he advanced, and which is treated in the partnership agreement as his contribution to the capital. His status as a creditor is allowed on this extraordinary evidence: he and Sayle get into the witness box, the only parties who could give any evidence on the point at all, and say that this partnership agreement never came into force at all, that it was given for the purpose of enabling Dick's executors on his death to shew that Sayle owed Dick this money. Now this partnership agreement is a perfectly futile document for that purpose and if produced by the executors it would shew nothing of the kind. It would shew that the deceased had been a partner from the date of that partnership agreement and that his executors were entitled to an account of his share.

On that extraordinary evidence it has been found that Dick was not a partner at all, but was entitled to put in his claim as a creditor. The banker, who was the only person who could verify this tale, was not called.

I decline to accept evidence of that kind. I decline to accept it in the face of the document, on the faith of a story utterly ridiculous, to my mind.

MARTIN, J.A.-The question has admittedly come down to the weight of evidence, and in view of the fact that the trial judge has specifically accepted as true the harmonious evidence of the only two persons who had knowledge of the matter, shewing that the contract was contingent only, I am unable to say that we would be justified in interfering with his verdict.

MCPHILLIPS, J.A.-I must admit at the outset the situation is a strange one, and it may, perhaps, seem singular that a court of law should come to the conclusion as against the [96] writing, that there was no partnership, when in the writing a partnerBut what has taken ship is said to exist. place does not necessarily constitute legal For instance, one may sign a liability. document-put one's name upon a negotiable instrument and retain same, but that does We must not constitute a legal liability. go further and establish the facts attendant execution and delivery--that the upon the

document was delivered or the negotiable instrument was issued. I can quite readily understand that Sayle did not want to give a chattel mortgage. In my practice at the bar I many a time found people who were engaged in commercial business indisposed to give a chattel mortgage or such securities as would be noted by commercial agencies. Therefore, when it was suggested that something other than a chattel mortgage should be given, that was not exceptional and indicates truth. These two men, in a clumsy way, without legal advice, decided that a partnership agreement should be written out, but I do not find any evidence at all to satisfy me that it was really intended that there It should be any partnership agreement. was, after all, only to be evidence of the existing debt. Sayle thought it would assist in case of death. Dick does not say that. Dick treats it throughout as being merely an evidence of the debt. The plaintiffs frankly, through their counsel, state that they did not give credit upon Dick's worth or stability at all; they knew nothing whatever about the writing. I understand also that the only other person mentioned as having seen the writing was the bank manager, and if he did give credit upon the belief that Dick was a partner, nothing is owing to the bank. The indorsements of Dick would be evidence against there being a partnership, because if there was a partnership, the partnership signature would carry liability against Dick. It would rather preclude the contention that Dick was a partner.

In the end it resolves itself into this: was there an agreement of partnership in fact? There is no magic in the words of the writing and the learned trial judge has undertaken to believe Sayle and Dick; it is a question of credibility.

I wholly agree with the trial judge that Dick is not liable for the debts of this partnership. I could only come to the conclusion [97] that there was liability upon the most positive evidence, evidence that I should be constrained to give effect to against the trial judge's finding of fact, and I see no such evidence. I think that to say there was not partnership is to rightly apply the law to a state of facts, though peculiar, still truthful and quite believable, believed in by the one best able to decide, the trial judge. I would dismiss the appeal. Appeal dismissed.

MacDonald, C.J.A., dissenting.

NOTE.

It is held in the reported case that where a partnership agreement is signed by persons who know what they are signing but who

A purchaser of a partner's interest in a going firm is not liable for existing firm debts for goods purchased merely because the new firm receives and uses them for its own benefit.

Intent as Essential to Creation of Partnership.

Persons may form a partnership, though not intending so to do, since a partnership may be implied by agreement, whereby persons assume a relation in law constituting a partnership.

[See note at end of this case.] Same.

A purchaser of a partner's interest in a going firm did not intend to enter the firm and there was no agreement that he should become a partner, but it was the purpose of the purchaser and the remaining partners

Incoming Partner Liability for Past Debts.

Where a purchaser of a partner's interest in a firm became a partner with the copartners in a new firm, the purchaser, as partner, was liable for goods ordered by the firm before the purchase and delivered thereafter, and for goods ordered and delivered after the purchase, but was not liable for goods ordered and delivered before the purchase. Lien of Creditor on Partnership Property.

A creditor of a firm acquires no lien on the property of a new firm created by a third person acquiring the interest of a partner in the former firm.

[567] PHILLIPS, J.-In this case we are called upon to determine the correctness of the decision of the Honorable Court of Civil Appeals for the Fifth District in affirming the judgment of the District Court of Dallas County [568] whereby the plaintiff in error, Freeman, was held liable as a partner for certain debts of the Independent Lumber Company, a partnership engaged in the lumber business at Dallas, contracted both before and after his association with it. The suit was instituted by the Huttig Sash and Door Company upon its debt, in connection with which an attachment was sued out and levied. Thereafter a receiver was appointed who took charge of all the assets of the company, including the property attached, all of which was subsequently sold and its proceeds held to abide the final judgment. Other creditors, parties to this appeal, in