possession of and sell the property. The only remaining authority which would seem to sanction the early doctrine of liability from mere participation in profits as compensation for a loan is Parker v. Canfield, 37 Conn. 250; S. C., 9 Am. Rep. 317. That case on a careful examination will appear to sustain no such rule. It is apparent from the facts of the case that it was the intention of the parties that a partnership should exist between the parties, and that the device of a loan was resorted to under advice of counsel, in order that certain of the partners might escape liability as such.

This appears from the statement of facts in the opinion of the court, which is as follows: "In January, 1866, counsel was applied to to draw the papers, and the parties then learned that their agreement would make them partners. Thereupon it was agreed upon by the defendants that the money invested by Canfield and Hutchinson (who were sought to be charged as partners) should be regarded as a loan, and the attorney was requested to prepare a writing which should secure to them one-third of the profits without subjecting them to liability as partners."

The debts on which Canfield and Hutchinson were held liable as partners were debts that were contracted after the agreement was attempted to be changed into a loan. Now it is clear that they were both partners in fact prior to that time. The court so expressly held. "The defendants, while acting under their verbal agreement, were clearly partners both inter se and as to third parties." There was nothing in the modification of the agreement which indicated that that relation was to be changed. Canfield & Hutchinson were to lose no right to exercise the same control over the business which they could exercise before as partners. The only purport of that modification was that for the purpose of shielding them from liability, their investment in the business should be "regarded as a loan." They were therefore still partners, and their attempt to restrict their liability of course afforded them no exemption from partnership responsibilities.

While the court referred with approval to the doctrine of Grace v. Smith, yet what was said on the subject was mere obiter, as the court based its decision on the ground that the two defendants, Canfield and Hutchinson, were parties in fact as well after as before the modification of the original agreement. The court say: "The business is one in which the defendants are all interested. The defendants are all principals. Andrews, as their agent, is using funds furnished by them all in a manner agreed upon by them all for their joint benefit and profits."

These are all the cases which appear to give any countenance to the notion that participation in profits as compensation for a loan rendered the recipient liable as partner. We have already referred to the American cases, which most emphatically denounce that heresy in the law. We will now briefly advert to the English authorities. The case of Molwoo v. Court of Wards, L. R., 4 P. C. 419, has been referred to already. In that case the person whom the creditors attempted to hold as partner advanced large sums of money to certain merchants, and took as security a charge on their business with extensive power of control, and stipulated for a large commission on their profits whilst any thing remained due to them, and for payment of his principal and twelve per cent interest. The court held that the transaction was a loan, and that the lender was not liable as partner. This, like the case of Harvey v. Childs, supra, is a very strong one, as the lender, like the lender in that case, had, by the terms of his agreement, a right to exercise an extensive control over the business. Pooley v. Dwier, 5 Ch. D. 458, is not in conflict with this case. It was not a case of loan. The so-called lenders were not abso

lutely entitled to a repayment of their loan. Their right to a return of their advances depended upon the success of the business, and so far from having under their agreement a right to insist on a repayment of the full amount loaned, they might be compelled to refund whatever they had already received by way of profits, or on account of their loan. It was therefore not a mere loan of money, to be repaid at all events, but the investment of capital in business, with the risk of loss of that capital in case the business should prove unsuccessful. The parties having agreed to share losses, were partners inter se under all the authorities, and they were liable for all losses, even beyond the amount of their investment, because it was not in their power to restrict their liability as partners without forming a special partnership under the statute.

We will now refer more particularly to a few of the American cases already cited. In Curry v. Fowler, 87 N. Y. 33, the court say: "In Richardson v. Hughitt, 76 N. Y. 55, it was held by this court that a person who has no interest in the business of a firm or in the capital invested, save that he is to receive a share of the profits as compensation for services or for money loaned for the benefit of the business, is not a partner, and cannot be held liable as such by a creditor of the firm. The case cited is very similar in its leading aspects to the one at bar."

The question was directly involved. Fowler, who was sought to be charged as partner, had loaned $50,000 to certain owners of real estate to enable them to erect certain buildings thereon. Fowler was to receive as compensation for the use of his money interest thereon and one-half of the profits arising on a sale. The claim was for work performed and materials furnished in the erection of these buildings. Held, that Fowler was not liable as partner. In Boston and Colorado Smelting Co. v. Smith, 13 R. I. 27; S. C., 43 Am. Rep. 3, the syllabus accurately states the decision: "An agreement to lend money and indorse to a certain amount for the purposes of the borrower's business, in consideration of a certain percentage of the net profits of that business, does not constitute the parties partners as between themselves or as to third parties."

The authorities are unanimous to the effect that an agreement to receive a certain share of profits as compensation for a loan does not render the parties partners inter se. Ruddick v. Otis, 33 Iowa, 402; Emans v. Westfield, 97 Mass. 230; Linter v. Milkin, 47 Ill. 197; Adams v. Fink, 53 id. 219; Pinkney v. Keyler, 4 E. D. Smith, 469; Salter v. Hum, 31 N. Y. 321. In Smith v. Knight, 71 Ill. 148, the Supreme Court of Illinois, after referring to the two cases in that State cited first above, decided that the lender in that case could not be a partner as to creditors, as he was not a partner in fact; that the only question in the absence of estoppel was whether the party sought to be charged as a partner actually was a partner. After citing those two cases the court say: "Those cases were between the alleged partners. It remains to inquire, as this is a case between alleged partners and a third party, whether any act was done by Knight, Baker & Co. to make them partners as to third parties. Notwithstanding this agreement, did they hold themselves out to the public as partners?" The court thus expressly held that the test of a partnership between the parties is the test of a partnership as to creditors in the absence of estoppel, and that therefore no creditor can hold a person liable as partner who is not in fact a partner, provided he has not estopped himself from denying the partnership relation. This case was also a case of a loan. The purport of the decision is clearly stated in the syllabus: "A. agreed to advance money to B. from time to time up to a certain amount to euable B. to carry on business, and B. agreed to pay interest to A. an the average balance advanced, and also

to divide the profits after deducting a fixed sum for expenses; but A. was not to bear any losses. Held, that A. and B. were not partners as to third persous." This case is reported in 22 Am. Rep. 94, also.

In Beecher v. Bush, 45 Mich. 188; S. C., 40 Am. Rep. 465, the plaintiff endeavored to hold the defendant liable, on the ground of participation in profits. The court decided that the defendant was not liable, and Cooley, J., at the close of his opinion in the case, added the weight of his great name as a jurist to the authorities in favor of the only sound and logical doctrine, that there can be no partnership as to creditors where there is no partnership in fact, provided the defendant has not by acts or declarations estopped himself from denying that he is a partner. He says: "We also think there can be no such thing as a partnership as to third persons, when as between the parties themselves there is no partnership, and the third person has not been misled by concealment of factors or by deceptive appearances."

It has sometimes been stated that participation in profits ought to render the recipient liable on the ground that he has a right to bring an action in equity for an account of the profits in order to fix the amount coming to him. Now the fallacy of this argument lies in the assumption that no one other than a partner can maintain such an action. This is not the law. It is well settled that any person who has a right to a certain share of profits, though he be not a partner, may file a bill for an account of such profits. Bentley v. Harris, 10 R. I. 434; S. C., 14 Am. Rep. 695; Hargrave v. Conroy, 4 C. E. Green, 280; Harrington v. Churchward, 29 L. J. Ch. 521; Sheppard v. Brown, 4 Giff. 208; Buel v. Sely, 5 Ill. App. 116; Garr v. Redman, 6 Cal. 574; Ferry v. Henry, 4 Pick. 75; Hallett v. Clemstone, 110 Mass. 32; Eastman v. Clark, 16 Am. Rep. 192-249; Collyer on Part., § 45, n.; Story on Part., § 50, n.; 2 Lindley on Part. 946. The distinctions which some of the courts have made between partnerships between the parties and partnerships as to creditors has necessitated the use in this article of an expression that is tautological. We refer to the phrase "partnership inter se." The word partnership implies the existence of an agreement between two or more, and there can be no partnership even as to creditors unless there be a partnership in fact. It is incorrect to say that one not a partner is liable as such because he has held himself out as such to the world. He is not a partner; but is liable on the ground of estoppel. Having shown that upon principle and authority there can be no liability as partner in the absence of estoppel, unless the party sought to be charged is in fact a partner, it remains to be determined what will constitute one the partner of

have such right in that case by virtue of the agreement between himself and another, in the absence of any express provision conferring that right upon his associate in the business. If it appears that he would have had such right had it not been for his agreement to the contrary, then he is a partner, and his agreement merely operates as a surrender to his associate of a right which he would otherwise have enjoyed. We submit that upon principle the question of partnership is to be determined by the three following rules: 1st. When the recipient of profits has, by virtue of an agreement with another, a right to participate as principal trader in the management of the business out of which the profits are to arise, then he is a partner, and liable as such; and no secret intent not to become a partner, and no provision in the contract restricting his liability or exempting him from all liability will afford him immunity from the responsibilities of a partner.

2d. When the recipient of profits would, in the absence of any express provisions in the agreement to the contrary, have by virtue of such agreement a right to participate as principal trader in the management of the business, then he is a partner, even though he has expressly agreed that his associate in the business shall have the right to exercise exclusive control in conducting the business.

3d. In all other cases the recipient of profits is not a partner, aud cannot be held liable to creditors unless he has estopped himself from denying that he is a partGUY C. H. CORLISS.

ner.

ST. PAUL, Minn.

CONFISCATION PROCEEDINGS-RIGHTS OF AS

SIGNEE

SUPREME COURT OF THE UNITED STATES, MARCH 24, 1884.

Wm. M. Evarts and Flamen B. Candler, for plaintiff

*Affirming 83 N. Y. 318.

the money in its hands due to the Bank of Georgetown had been seized, condemned, and paid over to the marshal of the Southern District of New York by virtue of certain confiscation proceedings in the District Court of the United States for that district.

The sufficiency of those proceedings as a defense to the action raises a question of a claim asserted under an authority of the United States, and as the Court of Appeals sustained the judgment of the inferior court of that State rejecting the defense, the case, as to that question, is cognizable in this court.

The record of the confiscation proceedings in the District Court was rejected by the State court when offered in evidence by defendant, and our inquiry must be directed to ascertain, whether if admitted, it would have been a good defense.

The judge, before whom the jury trial was had, refused to receive the record in evidence, because it showed that the confiscation proceedings, being in rem, were directed against certain specific money, which was the property of the Georgetown Bank and which the Phoenix Bank held as a special deposit in the nature of a bailment, and not against the debt which the Phoenix Bank owed to the Georgetown Bank arising out of their relations as corresponding banks; that this debt being assigned to Risley, the plaintiff was unaffected by the confiscation proceedings, because it was not mentioned in them, and no attempt was made to subject that debt to condemnation.

That the relation of the Phoenix Bank and the Georgetown Bank was that of debtor and creditor and nothing more, has been the settled doctrine of this court, as it is believed to be of all others, since the case of the Marine Bank v. Fulton Bank, 2 Wall. 252. In that case it was said, that "all deposits made with bankers may be divided into two classes, namely, those in which the bank is bailee of the depositor, the title to the thing deposited remaining with the latter; and that other kind of deposit of money peculiar to the banking business, in which the depositor, for his own convenience, parts with the title to his money and loans it to the banker; and the latter, in consideration of the loan of the money and the right to use it for his own profit, agrees to refund the same amount, or any part thereof, on demand." "It would be a waste of time," said the court, "to prove that this latter was a debtor and creditor relation." This proposition has been reaffirmed in Thompson v. Riggs, 5 Wall. 572; Bank v. Millard, 10 id. 155; Oulton v. Savings Institution, 17 id. 503; Scammon v. Kimball, 92 U. S. R. 370; and Newcomb v. Wood, 97 U. S. 583.

Mr. Parker, the cashier of the Phoenix Bank, speaking of the time when the marshal served the monition in the confiscation case on him, says that there were no specific funds, separate in kind, in the bank belonging to the Georgetown Bank, and only a general indebtedness in account for money, or drafts remitted, which has been collected. "It was a debt. No specific money or bills, the property of the Georgetown Bank."

The libel of information in the District Court commences by saying that it is "against the estate, property, money, stocks, credits, and effects, to wit: against $15,000 (fifteen thousand dollars), more or less, belonging to the Bank of Georgetown, a corporation doing business at Georgetown, in the State of South Carolina, which said $15,000 is now in cash, and is now on deposit in the Phoenix Bank, a corporation doing business in the city of New York, all of which are owned by and belonging to and are the property of the said Bank of Georgetown."

And it is alleged, that by reason of the use of this property in aid of the rebellion, and the treasonable practices of the Georgetown Bank, the said property,

estate and effects are subject to lawful prize, capture and seizure, and should be confiscated and condemned.

The monition, after reciting the libel against $15,000 belonging to the Georgetown Bank, which said $15,000 is now in cash and on deposit with the Phoenix Bank, commands the marshal to attach the said $15,000, and to detain the same in his custody until the further order of the court.

The return of the marshal is that he attached $13,000, more or less, deposited in the Phoenix Bank, belonging to the Bank of Georgetown, and gave notice to all persons claiming the same that the court would try the case on January 24 thereafter.

The decree of the court is, that he, the judge, doth hereby order, sentence, and decree that $12,117.38 belonging to the Bank of Georgetown, of Georgetown, in the State of South Carolina, and now on deposit in the Phoenix Bank, in the city of New York, which said $12,117.38 has been heretofore seized by the marshal in this proceeding, be and the same is hereby condemned as forfeited to the United States.

On this sentence a venditione exponas was issued to the marshal, in which he is ordered to sell this $12,117.38, and to have the moueys arising from the sale at the District Court on a day mentioned.

It is not possible to understand that this case proceeded on any other idea than the actual seizure of a specific lot of money, supposed at first to amount to $15,000, but which turned out to be less, and that that lot of money was seized, was formally condemned and ordered by the court to be sold, and the proceeds of the sale brought into court for distribution under the confiscation law. The specific money is described by apt words, as the property of the Bank of Georgetown, for whose misconduct it is seized, condemned and forfeited.

The very language is used, and no other, that would be if it were twelve hundred horses instead of twelve thousand dollars, of which the Georgetown Bank was owner, though in the possession of the Phoenix Bank.

There is not the slightest intimation in the libel, the mouition, the return to that monition, or in the final decree, that a debt due by the Phoenix Bank to the Georgetown Bank is attached, and no language appropriate to such a purpose is found in the whole proceeding from the beginning to the end. On the contrary, the whole case presents the idea of tangible property, actual cash taken by manual seizure, in the hands of the Phoenix Bank, the ownership of which was in the Georgetown Bank; that these dollars, whether of gold, silver, or bank bills, were to be placed in the hands of the marshal and sold, and the sum bid for them brought into court under its order.

In further illustration of this idea, the libel charges that the Bank of Georgetown, the owner of the property libelled, did purchase and acquire said property, and the same was sold and given to it by a person unknown to the attorney, with intent to them to use and employ, and to suffer the same to be used and employed, in aiding, abetting and promoting the insurrection, and resistance to the laws, and in aiding and abetting the persons engaged therein, and that the Georgetown Bank did knowingly use and consent to such use of the property, contrary to the provisious of an act to confiscate property used for insurrectionary purposes," approved August 6, 1861.

It is beyond question that this act was directed to the confiscation of specific property used with the consent of the owner to aid the insurrection, and had no reference to the guilt of the owner, and could only apply to visible, tangible property which had been so used.

If the thing seized and condemned in the District

Court was the actual dollars, they were the property of the Phoenix Bauk, and the loss was its loss, and that did not satisfy the debt which at that time it owed to Risley; nor would it have been otherwise if the debt had been then due to the Georgetown Bank, for the debt was not seized, but the dollars of the Phoenix Bank.

Phoenix Bank due to the Georgetown Bank pointed out by the very rule to which the act of Congress referred as prescribing the mode of practice in such

cases.

In the first case, above referred to, the court, after referring to the practice in admiralty, said: "These are, indeed, proceedings to compel appearance, but they are nevertheless attachments or seizures bring

We are not able to see that this view of the matter places the case in any more favorable coudition for the bank,

While the manner of seizing ordinary personal property or real estate, for the purposes of confiscation proceedings, uuder the two acts of Congress on which this libel professes to be founded, namely, the act of April 6, 1861, and the act of July 17, 1862, is easily understood and followed, namely, an actual seizure and actual possession by the officer under the monition, it has not been so plain what proceeding should be had in the confiscation of debts due to one who has incurred the penalty of such confiscation, and who is not within the jurisdiction of the court.

In this class of cases, where the debt is evidenced by a note, bond, or other instrument in writing whose possession carries the right to receive the debt, it may be that the manual seizure of that instrument gives jurisdiction to the court to confiscate it and the debt which it represents.

And we are not prepared to say that the debt itself may not be confiscated in the absence of the bond or note which represents it. But in this class of cases, aud in the case of an indebtedness on a balance of accounts where no writing or other instrument represents the debt or ascertains its amount, or carries with it by transfer the right to receive it, it is obvious that something more is necessary than the statement of the marshal that he has attached or seized a certain sum of mony.

In the case of Miller v. United States, 11 Wall. 268, which was a case of confiscation of stock in a railroad company, these difficulties are fully considered, and it is there held that the proper mode of seizure of such stock is by notice of the proceeding and attachment to the proper officer of the company, whose stock is the subject of the proceeding. And the same matter is very fully considered in the subsequent case of Alexandria v. Fairfax, 95 U. S. 774, where the sufficiency of the seizure was brought up collaterally in another suit, and the whole proceeding held void, because notice of the seizure or attachment of the debt of the city of Alexandria was not made to the officer of the city named by the statute of the State, though it was given to another officer of the city government.

The statute authorizing these confiscation proceedings requires that they be conducted according to proceedings in admiralty as near as may be, and hence libels, monitions, publications, and sentences have been the usual mode of enforcing confiscation. The thirty-seventh admiralty rule in force, long before this statute was enacted, provides how such seizures shall be made:

"In cases of foreign attachment, the garnishee shall be required to answer under oath or solemn affirmation as to the debts, credits, or effects of the defendant in his hands, and to such interrogatories touching the same as may be propounded to him by the libellant; and if he should refuse so to do, the court may award compulsory process against him. If he admits any debts, credits, or effects, the same shall be held in his hands liable to the exigency of the suit."

Here was a plain mode of attaching the debt of the

court, and what is of primary importance, they show that in admiralty practice, rights in action, things intangible as stocks and credits, are attached by notice to the debtor or holder without the aid of any statute."

In the latter case the court said: "We are compelled to inquire whether the simple statement of the marshal, that he had given notice to R. Johnson, auditor of the city, was a sufficient seizure, in face of the conceded fact that he had made no actual or manual seizure of any thing to give jurisdiction to the court. And in determining what it was of which Johnson had notice, it is, perhaps, fair to infer that the marshal read to him the paper issued by the district attorney."

The court, after saying there is no doubt that the stocks were credits and liable to confiscation within the meaning of the act, added:

"It is clear that there was a mode of reaching them under the act of Congress, notwithstanding the evidences of Fairfax's right to them were in his pocket and beyond the reach of the court. If the debt due him had been by an individual, there would have been no difficulty in serving such a process or notice on the debtor as would have subjected him to the order of the court in regard to it."

95