Statement of the Case.

At the hearing in the Circuit Court, upon pleadings and proofs, the case appeared to be in substance as follows: In February, 1884, Shaeffer obtained and received from the plaintiff sums of money amounting to $92,882.70, upon fraudulent representations that they were needed to pay for the lands described in the contract; and, within a month after its date, procured conveyances of those lands to himself, by paying therefor sums amounting to $59,789.30 only, and paid $500 for taxes and other necessary expenses, leaving the sum of $32,593.40 due to the plaintiff; and afterwards refused, on

all the money he has paid or advanced, with interest as aforesaid, shall have been returned to him. At the end of each month, said Shaeffer is to report the amount to the credit of said Blair, the same to be subject to said Blair's draft on account of the money advanced or paid for the property and otherwise as aforesaid.

All contracts for the sale of said land or lots to be made in triplicate, and approved by said John I. Blair, or some one appointed by him; on the back of said contracts the word "approved" or "rejected" to be written and signed by said John I. Blair, as aforesaid; one copy of said contract to be retained by said Shaeffer, and one by the purchaser. It shall be specified on the face of said contracts that they shall not be valid unless approved as specified; and all contracts to be made payable to said John I. Blair.

When said Blair shall have been paid in cash, for all the money advanced and furnished by him for the purchase of said lands, and other moneys, and the interest thereon, as specified, then the remainder of the property shall belong, sixty per cent to said Blair and forty per cent to said Shaeffer; and then said Shaeffer shall not be required to deposit in the aforesaid bank, as aforesaid specified, to the credit of said Blair, more than sixty per cent of the net proceeds of sales of said lands or lots.

If it is at this time desirable to divide said lots or land between said Blair and Shaeffer, said Blair to take sixty per cent, and said Blair to convey the title to forty per cent of said property or lots by warranty deed to Shaeffer; or said Shaeffer to sell the lots or lands as aforesaid, and divide the net proceeds of sale, sixty per cent to said Blair and forty per cent to said Shaeffer.

It is understood that said property, or any portion thereof, to be staked out and prepared for sale within one year, by said Shaeffer or assigns, after the Kansas City Belt Railway shall have been completed to said property, unless otherwise postponed in writing by said Blair and Shaeffer.

In witness whereof the parties hereto have hereunto set their hands and seals on this 4th day of February, 1884, at Kansas City, Missouri.

Argument for Appellee.

demand, to convey the lands to the plaintiff. The three tracts of land described in the contract contained, respectively, about thirty-six and a half acres, about one hundred and thirty-eight acres, and sixty-nine acres, near Kansas City, in the State of Missouri, and were worth more at the time of the contract than the sums paid by the plaintiff, and greatly increased in value afterwards.

In an action at law against Shaeffer, submitted to the Circuit Court without a jury at the same time with the present suit in equity, the plaintiff recovered judgment for the aforesaid sum of $32,593.40. Upon that judgment no writ or error was sued out.

In the present suit, the Circuit Court held that the contract sued on created no partnership between the plaintiff and Shaeffer, and conferred on Shaeffer only the right of an agent to sell, with a share in the profits by way of compensation; and that Shaeffer, by his fraudulent conduct, had forfeited all his rights under the contract, including not only the five per cent commission on sales, but the share of forty per cent in the net profits remaining after payment of the sums advanced by the plaintiff; and entered a decree for the plaintiff, as prayed for. 33 Fed. Rep. 218. From this decree Shaeffer appealed to this court.

Mr. C. D. Martin and Mr. R. A. Harrison for appellant.

Mr. Charles O. Tichenor for appellee.

I. It is contended that the payment by Blair for these lands was only a loan to Shaeffer, with the lands as security. But the contract creates no debt in favor of Blair. It carefully shields Shaeffer from any liability for the money which Blair is compelled to pay from time to time. Blair even agrees "to assume and pay" a mortgage which Shaeffer contemplates giving under the contract for a part of the purchase money. Blair binds himself to pay everything; Shaeffer binds himself to pay nothing; Shaeffer, under the contract, must get onetwentieth of the gross sales of the land, even if it is sold for one-half its cost.

Argument for Appellee.

II. Another defence, as stated in the answer, is, that "it does appear by said contract, and it is true and so intended by said Blair and Shaeffer, that said contract created a partnership concerning said lands and the proceeds of the sale thereof." Is this claim valid?

There are certain tests by which this question must be solved. What does the instrument show that they intended by it in this respect? For persons cannot be made to assume the relations of partners, as between themselves, when their purpose is that no partnership shall exist. Burckle v. Echart, 1 Denio, 337; Beecher v. Bush, 45 Michigan, 188; Hazzard v. Hazzard, 1 Story, 371; London Assurance Co. v. Drennen, 116 U. S. 461; McDonald v. Matney, 82 Missouri, 358.

It is nowhere stated in the contract that the parties were to be partners. There is nothing said about a firm name; in fact, there was no business to be carried on. The contract is not in the form of partnership contracts. There is nothing in it to lead Blair to suspect that he was making himself liable to a suit for dissolution, subjecting the land which he had bought and paid for to the risk of going into the hands of a receiver, to be sold under order of court, attended with delays, vexation and great expense. The word "assigns" is significant; a word not used in a partnership contract. To assign is to dissolve.

The relation of the parties to each other was simply that of principal and agent. In no way was Blair the agent of Shaeffer, and the latter never had the authority of a partner. The contract made him an agent with limited powers; if he exercised any discretion he violated his contract. He did not have the power of an ordinary real estate agent, and his acts could have created no partnership liabilities, even as to third persons, for the contract was entitled to record and when recorded was notice.

Lord Wensleydale says, in Cox v. Hickman, 8 H. L. Cas. 268, 312: "The law as to partnership is undoubtedly a branch of the law of principal and agent; and it would tend to simplify and make more easy of solution the questions which arise on this subject, if this true principle were more

Argument for Appellee.

constantly kept in view. A man who allows another to carry on trade, whether in his own name or not, to buy and sell and to pay over all the profits to him, is undoubtedly the principal, and the person so employed the agent, and the principal is liable for the agent's contracts in the course of his employment." See also Winel v. Stone, 30 Maine, 384; Thompson v. Bowman, 6 Wall. 316.

In the leading case of Meehan v. Valentine, 145 U. S. 611, 623, this court, while criticising what was said by Lord Wensleydale as to agency, approves of the rule laid down in Cox v. Hickman; and Mr. Justice Gray, speaking for the court, says: "If they do this, the incidents or consequences follow, that the acts of one in conducting the partnership business are the acts of all; that each is agent for the firm and for the other partners; that each receives part of the profits as profits, and takes part of the fund to which the creditors of the partnership have a right to look for the payment of their debts; that all are liable as partners upon contracts made by any of them with third persons within the scope of the partnership business; and that even an express stipulation between them, that one shall not be so liable, though good between themselves, is ineffectual as against third persons."

Here there was no community of interest in the land. True, Shaeffer, at first, took the title not because he owned an interest, but for prudential reasons. He held it for Blair, and was compelled to convey to him. Shaeffer was never to get any interest unless the speculation turned out favorably, and then solely as compensation, because there were profits. Such an interest did not work a change, either in possession or title. Drennen v. London Assurance Co., supra; Musser v. Brink, 68 Missouri, 242. There was no community of profit; no interest in the profits as principal; no specific interest in profits as profits, in contradistinction to a stipulated portion of the profits as compensation for services.

So, then, we say, Shaeffer was to have no partnership or property right, from the start, in the profits; but his interest was only at the end, when the land was sold; and not even then, unless he had performed the services contemplated by

Opinion of the Court.

the contract on his part. Hanna v. Flint, 16 California, 76; Walker v. Hirsch, 27 Ch. D. 460; Durkee v. Gunn, 41 Kansas, 496; Holmes v. Old Colony Railroad, 5 Gray, 58. Seymour v. Freer, 8 Wall. 202, is not in conflict with our contention.

If the contract of February 4, 1884, created neither the relation of partnership nor that of debtor and creditor, it made Shaeffer the agent of Blair for the purposes specified in the contract. Dieringer v. Meyer, 42 Wisconsin, 311; Phonix Mutual Life Ins. Co. v. Holloway, 57 Connecticut, 310; Vennum v. Gregory, 21 Iowa, 326; Balsbaugh v. Frazer, 19 Penn. St. 95; Farnsworth v. Hemmer, 1 Allen, 494; S. C. 79 Am. Dec. 756.

Blair's case is stronger than any case cited, for the evidence shows that the fraud accomplished was by means of the contract, and was in pursuance of a design formed prior to the execution of the contract. Even though the contract made them partners, yet, under such circumstances, a court would decree it a nullity, leaving Blair with the land which he bought to put into the partnership. Hynes v. Stewart, 10 B. Mon. 429; Gibson v. Cunningham, 92 Missouri, 131; Newbigging v. Adam, 34 Ch. D. 582; Oteri v. Scalzo, 145 U. S. 578.

MR. JUSTICE GRAY, after stating the case, delivered the opinion of the court.

The decision of this case turns upon the construction of the contract of February 4, 1884, by which the parties agreed to buy certain lands and to sell them again for the joint benefit of both.

The provisions of that contract were, in substance, that those lands, in the greater part of which Shaeffer already had an equitable title under agreements of third persons to sell and convey them to him, should be purchased, for the mutual interest of the parties; that the legal title in all the lands should be taken in Shaeffer's name, and be conveyed by him to Blair; that Blair should advance the sums required to enable Shaeffer to pay the purchase money of the lands, as