
    GEORGE BEUDEL, Plaintiff, v. MATTHEW HETTRICK, Defendant.
    1. PAPvTSEESHTP.
    1. What does not constitute, inter sese.
    
    1. A participation in the profits of a business by a party as a compensation for his labor or service, without having any other interest or rights in it, does not make him a partner.
    2. Nominal partner not necessan'y or proper party plaintiff.
    
    3. Holding out one as partner who is not so in fact, effect of, in a certain case.
    
    1. When a third party has notice of the actual agreement existing between those who hold themselves out as partners without being such, he is bound to recognize its provisions, and if by them there is no partnership inter sese, they are no longer (after such notice) to be considered as partners so far as he is concerned.
    
      4. Release by one pa/rtner of partnership claim, when not valid.
    
    1. When the consideration is the discharge of an individual debt due the releasee from the releasor.
    Before Monell, Freedman, and Curtis, JJ.
    
      Decided April 5, 1873.
    Exceptions ordered to be heard at General Term.
    The action is to recover for work, labor, and materials.
    The answer states that the work was performed by the plaintiff and one Wagner, composing the firm of Beudel & Wagner, that the latter should have been joined as a plaintiff, and also that $300 had been paid on account of the claim to the firm, and that what remained due for the work was due to the firm, and not to the plaintiff.
    The plaintiff testified on the trial that the arrangement to do the work for the defendant was made by Wagner on plaintiff’s account; that Wagner was then working in his employ; that the work commenced in March, 1872 ; that they both worked at it, and that it was finished about the end of June, and amounted to $505 and some cents. The plaintiff also put in evidence an agreement made between him and Wagner, dated April 10, 1872, containing the following provisions :
    
      First. The said Beudel agrees to take the said Wagner into his employ, in the carpentering and building business, for the term of one year from date.
    
      Second. The business to be carried on under the firm name of Beudel & Wagner.
    
      Third. Wagner is to have no interest in the business, or in the property assets, accounts, or claims belonging to the same.
    
      Fourth. And the said Beudel agrees to pay the said Wagner for his services wages at the rate of a sum equal to one half of the net profits of said firm, and said wages are not to be paid, and are not to become due, until the said profits are first collected by said Beudel.
    A bill in the firm name of Beudel & Wagner was made out for this work, dated May 31st, 1872.
    The plaintiff testifies that the day Wagner left the bill with defendant, he went to defendant, who told him that he held a note for $300 against Wagner, made before plaintiff ever knew Wagner, and that he wanted to deduct it from the bill. The plaintiff told defendant he would never agree to such a settlement; that he had to pay everything, and was responsible for everything, and that a day or two after he showed the defendant this agreement between himself and Beudel. The business card was 61 Beudel & Wagner.”
    The defendant testified he employed only Wagner to do the work. That he paid him $200 on account during its progress, $100 at each time ; and that, before he commenced the work, Wagner agreed to let $100, that the defendant had loaned him previously, apply upon the work. He had heard, when he employed Wagner to do the work, that he had a partner, and he thought the receipt for the payments to Wagner on account were made out in the firm name. The receipts were not produced on the trial, or the note.
    At the conclusion of the testimony, the defendant’s counsel moved to dismiss the complaint on the grounds,
    
      First. That the plaintiff has proved no cause of action.
    
      Second. That it appeared by the evidence and by the . bill-head and card, that the work done for the defend- < ant was done under a contract between one Wagner and the defendant, and that the plaintiff had no interest therein, except as a copartner of said Wagner, who was not joined as a party plaintiff herein.
    
      Third. That payments had been made by the defendant to Wagner, which, under the circumstances, were operative against Wagner, either individually or as a copartner with the plaintiff; .and that whatever relation existed in fact between Wagner and the plaintiff, so far as the defendant was concerned, they were to be considered co-partners.
    
      Fourth. That the private arrangement between the plaintiff and Wagner could not affect the defendant, as he had no notice thereof until after the transaction complained of, and until after he had paid the $300 as sworn to by him.
    The court granted the motion, and the plaintiff excepted.
    The exceptions were ordered to be heard in the first instance at General Term, and judgment in the meanwhile suspended.
    
      D. M. Porter, attorney, and of counsel for plaintiff,
    urged:
    I. The agreement makes the claim sued for the plaintiff’s claim ; using the firm name of Beudel & Wagner makes Wagner liable to third persons for any debts for which Beudel & Wagner were trusted as copartners, irrespective of whether he was a partner or not, only because he held himself out as a partner, not because he was a partner. But as between the plaintiff and himself and all their debtors, and as to the property and effects, he is not a partner, but the same belong to the plaintiff alone, as no one can be injured thereby, and the agreement between the parties must be carried out (Conklin v. Barton, 43 Barb. 435; Lamb v. Grover, 47 Barb. 317; Osbrey v. Reimer, 49 Barb. 265; Ogden v. Astor, 4 Sandford, 311); and after the defendant had notice of the contract as to him, the money was the plaintiff’s sole property.
    II. If the facts are undisputed, the question is a question of law (Fellows v. Northrup, 39 N. Y. 117; Draper u. Stouvenel, 38 N. Y 219; Mason v. Lord, 40 N. Y. 477; Beck v. Sheldon, 48 N. Y. 365); if the facts are contested or conflicting, the dismissal of the complaint was erroneous, as the facts ought to have been submitted to the jury (Stone et al. v. Flower, 47 N. Y. 566). The question whether the judge erred, is presented by the exception to the nonsuit (Sheldon v. The Atlantic Fire Ins. Co., 26 N. Y. 460; Stone et al. v. Flower, supra).
    
    III. Even under the defendant’s answer, the application of the property of the firm cannot be given to pay the individual debt of one of the firm (Dob v. Halsey, 16 Johns. 34). One partner cannot release a debt due to the firm, even during copartnership, in consideration of a debt due to him individually (Gram et al. v. Cadwell, 5 Cowen, 489).
    IV. The evidence as to the $205.40 and interest is undisputed, and as a matter of law the plaintiff is entitled to judgment for that amount; and as to the $300, the facts are conflicting and ought to have been left to the jury; and the dismissal of the complaint ought to be set aside and a new trial granted, with costs to the plaintiff (Stone et al. v. Flower, 47 N. Y. 566; The International Bank v. Monteath, 39 N. Y. 297).
    
      David MeAdam, attorney, and of counsel for defendant,
    urged:
    I. The cause of action arose and was contracted for under the firm name of Beudel & Wagner. It is clear therefore, that as to third persons, Beudel and Wagner must be regarded as partners, and the payments made to either, on the faith of that relation, good payments against both.
    II. Being copartners as to the defendant who dealt with them on the faith of that relation, they are to be so regarded for all the purposes of this suit; and the defendant was entitled to have Wagner before the court as a party, and the claim was made in the answer, and the objection was never obviated by amendment, or otherwise.
    III. The private agreement between Bendel and Wagner conld not affect the defendant, who had no notice of it; and on the pleadings, the real question was whether the work was done by Bendel alone, or by the firm of Bendel & Wagner; and the evidence disclosed that it was done by the latter as a firm, and the plaintiff therefore failed in his action (Guidon v. Robson, 2 Camp. N. P. R. p. 302; Clark v. Howe, 23 Maine, 560; Radenhurst v. Bates, 3 Bing. 470; 11 Moore, 421; Davies v. Hawkins, 3 M. & S. 48; Colyer on Partnership, §§ 656, 663).
    IV. The court must remember that the contract sued on was made by Wagner, in the firm name, and for the firm, and must be sued on in the firm name (Code, § 111). Neither partner is trustee of the other, or of an express trust under § 113 of the Code, for the contract was made in the firm name as a firm.
    
    
      Y. Having made the contract in the firm name of Beudel & Wagner, a recovery in this suit would be no bar to an action by Bendel & Wagner as a firm.
    VI. The nonsuit was correct, and the plaintiff’s exceptions should be overruled, and the defendant should have judgment thereon.
   By the Court.—Curtis, J.

The evidence fails to show that the plaintiff and Wagner were actual partners. A participation in the profits of a business by a party as a compensation for his labor or services, without having any other interest or rights in it, does not make him a partner (Conklin v. Barton, 43 Barb. 435; Ogden v. Astor, 4 Sand. 311). It is clear, however, that Wagner was a nominal partner of the plaintiff, and the first question to be considered is, in whose name the action should have been brought.

In the case of Kell v. Nainby, 10 Barn. & Cres. 20, it was held, that where an. attorney carried on business under the firm of “A. & Son,” and the son was not in fact a partner, but acted as a clerk to Ms father, with a salary, that the attorney A. might maintain an action in his own name alone for business done as an attorney.

The present case seems to be analogous, and the tendency of the provision of the 111th section of the Code, directing every action to be prosecuted in the name of the real party in interest, apparently leaves little room for doubting the correctness of the proceeding in bringing this suit in the plaintiff’s name only. It appears to me that the action should have been brought as it was, in the name of the plaintiff Beudel alone, the real party in interest.

Wagner, by holding himself out as a partner, became liable to third persons who may have trusted Beudel & Wagner as a firm, but as between himself and the plaintiff Beudel, his actual rights and position are defined by the agreement, which declares that he is to have no interest in the business, property, or assets of the nominal firm. As no wrong is worked by this, it is the duty of the court to give effect to it, and after notice of this agreement, the defendant was bound to recognize its provisions, and so far as he was concerned, they were no longer to be considered as copartners.

In tMs view of the case, the plaintiff was entitled to a verdict, at least for all that portion of the claim remaining unpaid over the $300. There is conflicting evidence as to whether tMs sum of $300, or only $100 of it, were paid by the defendant to Wagner upon the pre-existing individual indebtedness of Wagner to the defendant. However that may be, a partner cannot release a debt due to the-firm, even during copartnership, in consideration of a debt due from him individually (Gram v. Cadwell, 5 Cow. 489).

A release by Wagner of a firm debt, or any part of it, due by the defendant, in consideration of a debt due from him, Wagner, individually, to the defendant, is void, and fails to sustain the defence pleaded in the answer, that the defendant paid to the firm $300 on account of the work and services, and is entitled to credit therefor. If, in the conflict of evidence, the jury had found that any part of the $300 had been paid by the defendant to the firm as alleged in the answer, such finding would be sustained by evidence that such payment was made to Wagner as one of the firm, and before notice was given the defendant of his actual position in respect to it under the agreement.

The facts in this case were so contested and conflicting in respect to Wagner’s employment by defendant, and in respect to the alleged payments on account, that they should have been left to the jury to pass upon.

As to the position taken upon the argument, but not at the trial, that some portion of this work was done before the making of the agreement, I do not very well see how the question can now be raised by the defendant in view of the allegations of his answer, that the work was done by the firm, and that whatever is due of the money is due to the firm.

The dismissal of the complaint, should be set aside, and a new trial granted, with costs to abide the event.  