Story Case

George Hudson had been a clerk in David Brown's grocery store for two years. One day Brown said to Hudson, "George, I think I'll give you an interest in my store and make you a partner, provided you are willing to become a member. I'll give you a third interest, if you agree to stay two years, and a third of the profits at the end of that time, deducting of course your salary. Think it over." Nothing more was said or done concerning the matter. Hudson continued to work as usual, and received his weekly salary. At the end of two years, he demanded an accounting of Brown, on the ground that they were partners. At the trial of the case, Hudson's attorney did not produce more evidence than is given above. Does this show the existence of a partnership?

Ruling Court Case. Sabel Vs. Savannah Rail And Equipment Co., Volume 135 Alabama Reports, Page 380; Same Case, Volume 33 Souther Reports, Page 663

The Savannah Rail Company informed Sabel that locomotives could be bought from a certain company at a reasonable price. The parties, thereupon, entered into an agreement to purchase the engines, and whichever party should have the first opportunity should buy "upon the best terms possible," and when purchased, the engines should be sold upon joint account. The company did buy, but it does not appear that the engines were bought on joint account. After the purchase, Sabel wrote the company reminding its members of the agreement; to this the company replied that it had purchased the engines for $18,000; and stating that, in case he wished to become a partner in the transaction that he should send $9,000, as his share of the purchase price. To this Sabel never replied. The company, thereafter, sold the engines at a profit of $10,000.

This bill was brought by Sabel to compel the company to account for the profits of the transaction; it was contended that they became partners by virtue of the agreement, and that, as such, they were entitled to half of the profits of the sale of the locomotives.

Decision

There was no partnership in this case. Sabel did not accept the offer of the company and therefore, he cannot recover on a partnership contract. Mr. Justice Tyson said in part: "To constitute a partnership, there must be a valid agreement to enter into partnership, and this contract must be executed. Unless something is done, or unless the agreement, from its nature, operates in the present, the contract is executory, and either party may decline to carry it out, so long as there has not been an acceptance of the offer. In accordance with the opinion, the Court held that the bill of Sabel should be dismissed, since he was not entitled to an accounting upon the basis of a partner.

Ruling Law. Story Case Answer

As is well indicated by the Court Case of Sabel vs. Savannah Rail & Equipment Company, "a person cannot claim the privileges of a partnership until there has been a contract making him a partner; there must be an offer from the one side, with an acceptance on the other, or conversely." Of course, neither the offer or acceptance need be in express words; they may be indicated by the conduct of the parties in acting together as partners. In the Story Case, there was no express acceptance by Hudson of Brown's offer, and, as his work in the store could be construed as a continuance of his clerkship, there was not any acceptance by conduct. Had Hudson acted as a partner, in reliance on Brown's offer, a partnership would have been perfected.