Thomas Fisher, William Henry Fisher, and George Henry Smith were partners in an auctioneering business.
The partnership deed stipulated that in the event of Thomas Fisher's death, the surviving partners would continue the business and pay Thomas Fisher's share of profits to his executors.
Thomas Fisher died in August 1869, and the business continued with William Henry Fisher and George Henry Smith.
Smith later died, leaving William Henry Fisher as the sole proprietor.
In May 1870, Fisher and Smith sold a mill and machinery on behalf of the plaintiff and received the proceeds in July.
The plaintiff sued William Henry Fisher and the executors of Thomas Fisher, claiming the proceeds of the sale as money had and received.
The plaintiff argued that the executors of Thomas Fisher, by receiving profits from the business, became partners with Fisher and Smith after Thomas Fisher's death and were thus liable for the funds owed to the plaintiff.
ISSUE
Whether the defendants at the time when this money was received were the partners of W.H. Fisher and Smith?
JUDGEMENT
The judgement concludes that there is no evidence to establish a contract of partnership on the part of the defendants.
LEGAL ANALYSIS
The court finds that the mere receipt of profits does not automatically make one a partner; there must be an express or implied agreement to enter into a partnership.
It is established that the defendants did not leave any capital in the business nor did they interfere with its operations, indicating they were not acting as partners.
The court ruled that the defendants' actions were consistent with their duties as executors under the will and did not amount to entering into a partnership.
Shaw v. Galt is referenced to discuss the principle that participation in profits alone does not establish a partnership; there must also be a relationship where each person is a principal and agent for the others.
COMMENTARIES RATIO
Executors of deceased partners, who are entitled by the partnership articles to receive a share of profits of a business continued by the surviving partners and do so, but do not take any part in conducting the business, are not liable as partners and would not incur any personal liability.