Story Case

James Parker and Andrew Hall entered into a partnership for doing a general printing and publishing business. Parker contributed $5,000 as his share of capital, and Hall, $3,000. Each gave all his time to the work of the firm, and, by agreement, each received $100 a month as salary. At the end of the first year, the firm had cleared $800, which was deposited in the bank, as a firm account. "When it came to the point of dividing this profit, Parker maintained that he should receive $500, and Hall should have $300, since this is the proportion in which they had invested in the business. Hall objected on the ground that, since they were partners, each should receive $400 as equal shares. They could not settle the matter and brought it into court. "What should be done in this case?

Exiling Court Case. Miller Vs. Hale, Volume 96 Missouri Appellate, Page 427; Same Case, Volume 70 South Western Reports, Page 258

Miller and Hale jointly entered into an agreement with Mrs. Moore and Mrs. St. Clair whereby they jointly undertook to perform the duties of architects in the erection and construction of a certain school building in the City of Columbia. They were to receive as compensation, four per cent of the cost of the building. As the work proceeded, occasional payments were made, sometimes to the plaintiff, and sometimes to the defendant. But since in the aggregate, those made to the defendant were of a much larger amount than those made to the plaintiff, the defendant received more than one-half of the whole sum due under the contract. After the building had been completely finished, the plaintiff demanded a settlement with the defendant, to the end that he might receive half of the sum paid for their services. The defendant refused and the plaintiff then filed the present bill for an accounting between them as partners. It was contended by the defendant that, as he did more than half of the work, he was entitled to more than half of the compensation.

Mr. Justice Ellison said in answer to this contention of the defendant: "Since the contract of partnership is silent, partners are entitled to share equally in the compensation for their labor. The courts decline to look into the question of which performed the most onerous duties, and whether one was more skillful or more industrious than the other." It is, therefore, decreed that the defendant should pay to the plaintiff a sufficient amount so that they would share equally in the compensation received under the contract.

Ruling Law Story Case Answer

In the absence of any agreement as to the proportion by which the profits of the business shall be shared between the partners, the general rule is that they shall share them equally. The situation is not altered if one contributed money as capital, and the other contributed only his labor and skill; or even if one partner contributed twice as much money as another to the capital of the firm. Unless the partners themselves agree upon the proportion in which they are to share the profits, the Courts will not decide upon the question as to which of them performed the most valuable services. In the Story Case, therefore, Hall's contention is correct and the other two partners should share equally in the profits of the firm, although they did not contribute in equal amounts to the capital of the business.