Sheridan v. Medara

The question is, whether Sheridan was a partner of John P. Combs ? If he was, then the judgment confessed by Combs to Sheridan was fraudulent as against the complainants, who are subsequent judgment creditors. It makes no difference, as to the rights of the complainants in respect to the judgment of Sheridan, that the complainants’ judgment is against Combs alone. They are not concluded by this fact from showing that Sheridan was a partner. It is true they contracted their debt with Combs, and obtained judgment against him alone. The complainants allege, that when they obtained their judgment, they were not aware of the fact of Sheridan’s connection in business with Combs. Sheridan now denies that he was a partner. He procured Combs to confess a judgment to him for advances he alleges he had advanced in the business. If he was a partner, he has no right to appropriate the partnership property to satisfy his judgment to the exclusion of other creditors : it is a fraud upon them to permit him to do so.

The partnership is proved by Combs and by H. B. Hutchins. If they are competent witnesses, and their testimony entitled to credit, then Sheridan was a partner, *475and his judgment must be postponed to that of the complainants.

Their competency is objected to. I think they are both competent witnesses. The objection to Combs is on account of his being a partner. The objection was not well taken in point of time. It was not made until after the direct examination. A party cannot speculate by waiting to discover whether the testimony of a witness is favorable or unfavorable, and then interpose his objection at pleasure. He is bound to make his objection as soon as he is made acquainted with the position of the witness. In this ease the defendant knew the position of the witness, as to interest, when he wras first put upon the stand. The bill was filed on the ground that Combs and Sheridan were partners. This was the foundation of the suit, and yet the defendant reserved his objection until the complainants had closed with the witness. It was then too late to make the objection. But Combs has no interest. Sheridan has a judgment against Combs,.and so has the complainants. They are both confessed judgments. Combs cannot question either of them. Both parties are his judgment creditors, and the only question involved in this controversy is as to the priority of the judgments. It can make no difference to Combs, whatever may be the result of this suit. One of the judgments will be reduced by the application of his property, and it cannot affect his liability or interest in any way as to which of the two judgments such application is made. Hutchins testifies that he was a partner also, and he is objected to on that account. The objection to this witness was also made too late. I cannot, however, see how he is interested in the result in this case. It can make no difference to him which judgment takes the property.

Are these witnesses credible ? Their general character is not impeached. It is said that the facts they state are contradicted by other credible witnesses. It is true Combs is contradicted in some particulars. It is proved that he *476represented himself as alone interested in the business, and denied that Sheridan was a partner; but these representations are consistent with his whole story. He says that it was the agreement that Sheridan was not to be known as a partner, and that the representations made by him were made at the particular request of Sheridan. He is corroborated by Hutchins and by many circumstances in the case. I do not feel justified in throwing out the testimony of these witnesses. Hutchins is not contradicted on any material matter. Both witnesses state facts establishing beyond a doubt that Sheridan was a partner. From the very character of the dealings of the parties, they alone were cognizant of those facts. It is not one single fact to which they testify, but to particulars of various kinds going to establish the point in controversy. These men are well known in the community; they are men of business; they have had large dealings in the community. It can hardly be credited that they could manufacture the story they have told, unless they are men utterly destitute of moral principle, and yet their general character for truth and veracity has not been impeached. I have no right to discredit them; and, as I said before, relying upon their evidence, the complainants have proved their case beyond a doubt.

I am of opinion that the complainants have established the case made by their bill, and that their judgment is entitled to priority, the complainants’ cost of this suit to be first paid out of the fund.

The opinion of the court was delivered at the same term, by

The only point relied upon by the appellant for reversal in this case is, that the partnership alleged in the bill to exist between Combs, the defendant in execution, and Sheridan, the appellant, is not sufficiently proved.

The rule, that a participation in the profits of business constitutes a partnership as to third persons, is not questioned. The only inquiry is, does the evidence in the cause show to a reasonable degree of certainty that Sheridan was to share in the profits of the business carried on in the name of John P. Combs. If it does, the partnership is established. The fact is expressly sworn to by two witnesses, called on the part of the defendant. The competency of these witnesses is not denied. It is insisted, however, that their credibility is impeached by facts stated by themselves and proved by other witnesses.

The fact mainly relied on as impeaching the credibility of Combs is, that he repeatedly stated during the continuance of the business, that he was carrying it on alone, and that Sheridan was not a partner. But that fact is perfectly consistent with the integrity and veracity of the ■witness. There was no agreement for a partnership between the parties. The contract in form was a loan of money. Combs was a borrower. Slieridan was a lender. ITe held a judgment bond for every dollar advanced by him. The business was carried on in the name of Combs. Probably neither Combs nor Sheridan supposed they were partners. They did not intend to become partners; as between themselves, they were not partners. The law, indeed, holds them liable as partners to third persons, upon an agreement to share in the profits. But that is a legal consequence of the contract, of which both partners may well have been, and of which Combs swears that he was entirely ignorant. His saying, therefore, that Sheridan was not his partner, and that he was carrying on business on his own account, ought not to be regarded as any impeachment of his character for veracity.

*478It is said again, that his evidence was prompted by malevolence. He may, and probably did testify under the influence of strong feeling. The same fact may be true of Hutchins, the witness by whom he is principally corroborated. This fact requires that their evidence should be carefully scrutinized, but will not warrant its rejection as incredible. Their evidence, moreover, is corroborated by facts and circumstances stated by others. The weight of the evidence is decidedly in support of the case made by the bill. The fact that Sheridan was to participate in the profits of the business, and consequently his liability as a partner to third persons is sufficiently established.

But if the evidence on the part of the complainant be utterly incredible, the case proved by one of the witnesses on the part of the appellant himself establishes his liability as a partner, and the right of the complainant to a decree against him. The case, as proved by the appellant, is that he loaned the money to Combs, for which he was to receive twenty-five per cent, in case Combs succeeded in business; in other words, he was to receive nineteen per cent, per annum out of the profits of the business over and above the legal rate of interest. The better opinion is, that such contract, though usurious as to the other party, as to third persons made Sheridan a partner with the borrower, and liable, as such, for the debts of the firm. 2 W. Blac. 999, Bloxom v. Peel; 1 Parsons on Con. 134.

A court of equity would surely never permit Sheridan, himself holding a judgment for his loan, the validity of which is unimpeached, to set up his own usury in avoidance of his liability as a partner to the bona fide creditors of the concern.

There is no such material or essential difference between the allegations and proofs as to prejudice the complainants’ right of recovery. The material averment in the bill is, that the appellant is liable as a partner of Combs,- by reason of his participation in the profits of the *479business. The precise share of profits received by Sheridan, or the time of receiving of it, is not material.

The decree of the Chancellor should be affirmed with costs.

The decision was affirmed by the following vote:

For affirmance—Chiee Justice, Judges Arrowsmith, Huyler, Risley, Vredenburgti, Cornelison, Haines, Potts, Valentine, Wills.

For reversal—None.