Houston & Texas Central Railway Company v. Geo. H. McFadden & Bro.; Ft. Worth & New Orleans Railway Company v. Geo. H. McFadden & Bro., 91 Tex. 194

TARLETON, Chief Justice. We adopt the conclusions of fact filed by His Honor, contained in the record on pages 197 et seq. We also adopt the conclusions of law filed by him on all questions in issue between the appellees, George H. McFadden & Bros., and the Houston & Texas Central Railroad Company. This course dispenses with an extended discussion of the questions presented.

We deem it proper, upon the defense of limitation included within these issues, merely" to remark that it rests upon the alleged difference in the corporation known as the Houston & Texas Central Railway Company and that known as the Houston & Texas Central Railroad Company.

We concur fully with the learned judge who tried this case in holding that the relation between the two corporations thus designated is one of substantial identity; that at the time of the institution of this suit the Houston & Texas Central Railroad Company was, in truth, sued under the name of the Houston & Texas Central Railway Company, under which it permitted its property and its franchises and the line of its railway to be operated; indeed, that the name Houston & Texas Central Railway Company was but a cover for the corporation of which the proper name was the Houston & Texas Central Railroad Company; that the corporation was the same, whether known by the name of the Houston & Texas Central Railroad Company or by that of the Houston & Texas Central Railway Company.

The shadowy character of the corporate difference insisted upon as a result of the difference in name adverted to is emphasized by this record, in the fact that while the appeal bond is executed by the Houston & Texas Central Railroad Company, the assignments of error, and the only assignments of error questioning the action of the court in rendering judgment against that company, are signed by counsel as attorneys for the Houston & Texas Central Railway Company.

So that, if in fact the technical distinction should be observed by us, it is very questionable whether there are any assignments of error by the Houston & Texas Central Railroad Company entitled to consideration as a basis for complaint of the action of the court upon the issues presented by the record between that company and the appellees, McFadden Bros. “The Court of Civil Appeals erred in holding that the plaintiffs’ cause of action as against the Houston & Texas Central Railroad Company was not barred by limitation at the time said company was first made a party to this suit. “The Court of Civil Appeals erred in not sustaining appellant’s thirteenth assignment of error, which was as follows: ‘The court erred in not rendering judgment in behalf of defendant, the Houston & Texas Central Railroad Company, because it was shown on the trial that the Houston & Texas Central Railway Company’s property was in the hands of a receiver, and sold out by the receiver to one Olcott, and that said Olcott transferred said property to the Houston & Texas Central Railroad Company, and that under the order by virtue of which the property was sold at the receiver’s sale the same was sold free of all claims arising against the receiver, which should not be established in the Federal Court within six months from the date of said sale; and the proof further showed that plaintiffs did not intervene in said Federal Court, nor in any wise establish their said claim in said court, as provided in the order of said court; and plaintiff’s cause of action having arisen against the receiver, the defendant as a purchaser of said property under said Olcott is not responsible to plaintiffs on their said claim.’ ” Stanley, Spoonts & Thompson, for plaintiff in error, Fort Worth & New Orleans Railway Company, assigned error as follows: “The Court of Civil Appeals erred in reversing the judgment of the trial court, and rendering judgment against the Fort Worth & Hew Orleans Railway Company, because there was no fact found by the court below, nor by ihe Court of Civil Appeals, showing that the Fort Worth •& Hew Orleans Railway Company, defendant in the court below, was in any wise responsible for the destruction of said cotton, as the same did not occur upon its line of railway, but upon a line of railway in which it had no interest, and over which it had no control. “The Court of Civil Appeals erred in overruling the first conclusion ' of law filed by the trial court, to the effect that there was no sufficient proof of joint liability or partnership between the Fort Worth & Hew Orleans Railway Company and the Houston & Texas Central.

Railway Company, to hold the Fort Worth & Hew Orleans Railway Company liable for loss occurring beyond the terminus of its own line, and that the loss in this case did not occur on its line, and it therefore was not responsible for said loss. “The Court of Civil Appeals erred in rendering judgment against the Fort Worth & New Orleans Railway Company, because there was no conclusion of fact found by the court below nor adopted by said Court of Civil Appeals and made the basis of the opinion, that justified the rendition of any judgment against said Fort Worth & New Orleans Railway Company.” Railway v.

Johnson, 37 S. W. Rep., 243; Ins. Co. v. Railway, 104 U. S., 146; Railway v. Neel, 19 S. W. Rep., 963. A. M. Carter, for defendants in error.

The trial court erred in not holding the Fort Worth & New Orleans Railway Company liable for the loss, and in not rendering judgment against it for the entire amount thereof, and in not holding that the said Fort Worth & New Orleans Railway Company was a co-partner with the Houston & Texas Central Railroad Company, and if not, that it was being operated in connection with said railroad under one management and upon a division of the gross receipts thereof, and was therefore liable for said loss. Hutchinson, Carriers, secs. 159, 170. GAINES, Chief Justice.

These two writs of error were granted to the same judgment. The case as made in the Court of Civil Appeals is very fully reported in 40 Southwestern Reporter, page 216; and we refer to that report for a statement of the proceedings had in the cause. When we acted upon the two applications, we were of opinion that the Court of Civil Appeals erred in reversing the judgment of the District Court in favor of the Fort Worth & New Orleans Railway Company and in rendering judgment against it, and we therefore granted the writ as to that applicant.

We were also of the opinion, that there was no error in the judgment against the Houston & Texas Central Railroad Company. But it is the practice of this court, whenever two applications are made in the same case and one is granted, to grant the other as a matter of course; hence we granted the application of the latter company. However, since the submission of the case we have reviewed the assignments presented on its behalf with the result that we see no reason to change our first opinion. We think the conclusions of the trial court and of the Court of Civil Appeals upon the case of that company correct.

The cotton, for the loss of which the suit was brought, was to be shipped from Ft. Worth to Houston over the Fort Worth & New Orleans Railway and over the Houston & Texas Central Railway, and thence to Galveston, to be delivered to a steamer for transportation to Germany,—one Dillingham as receiver of the Houston & Texas Central Railway Company, acting through a local agent, executing the bill of lading. The Fort Worth & New Orleans Railway Company did not appear as a party to the contract upon the face of the bill. The cotton was destroyed by fire on the line of the Houston & Texas Central Company.

The plaintiffs in the trial court claimed that the defendant companies were jointly liable as partners; but that court held that the facts proved were not sufficient to establish the partnership and gave judgment for the Fort Worth & New Orleans Company. It was upon this point the Court of Civil Appeals held that the trial court was in error, and reversed and rendered the judgment against that company.

The third paragraph of the findings of fact by the trial judge reads as follows: “This line of railway from Fort Worth to Houston was operated as one property by the said Charles Dillingham under some arrangement, the character of which is not disclosed by the evidence.

It is shown that the Fort Worth & New Orleans Railway Company was not, at the time of this shipment, operating its road other than as it was being operated by t.he said Dillingham, and that it received from said Dillingham some part of the gross receipts of the operation of the line, but what this part was, or how paid, is not shown by the evidence, nor does the evidence show in what way the expenses of operating the several roads were paid, or by whom.” It was upon the facts as found that the learned judge predicated his conclusion that the partnership was not proved.

It was upon the same facts that the Court of Civil Appeals reached a contrary result. Do the facts that Dillingham as receiver of t.he Houston & Texas Central Railway Company was operating both roads jointly and that a portion of the gross receipts was paid to the Fort Worth & New Orleans Company established a partnership either between the parties or as to third persons? We think not.

While the relations of the receiver to the Fort Worth & New Orleans Company are obscure, the facts found would indicate that the arrangement between the parties was that Dillingham was to have the use of the Company’s road and that he was to pay for such use a portion of the gross proceeds of the traffic. This would constitute the relation of lessor and lessee and not that of partners. If such a lease were authorized by statute, the lessor would not be responsible for the acts of the lessee in operating the line.

If without authority of law, then the purported lease would not have protected the company from liability for any wrong which may have accrued from the operation of its own road. But in neither case could the parties to the arrangement be treated and held responsible as partners. The mere participation of two persons in the gross receipts of an enterprise in which their capital, skill and labor may be combined cannot of itself make them partners. To constitute a partnership the parties in the business or transaction must be entitled to share in the net profits.

It is not sufficient that they participate in the “gross profits,” as they are sometimes called. Beecher v. Bush, 45 Mich., 188; see also Buzard v. Bank, 61 Texas, 89. A partnership may exist in which the partners agree to divide the gross receipts, but that circuffistance alone does not establish the relation. A partnership may have existed in this case, but the relation does not follow as a legal result from the facts found by the trial court.

If the Fort Worth & New Orleans Company was not in fact a partner it cannot be held to be such as to third persons, in the absence of some proof that it permitted itself to be held out as such. We conclude that the judgment of the Court of Civil Appeals in so far as it reverses the judgment of the District Court ought to be reversed; and that the judgment of the District Court should be in all things affirmed. And it is so ordered. Judgment of Court of Civil Appeals in part affirmed and reversed in part. Judgment of District Court Affirmed.. '