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complainant and Stevens was that of copartners. The parties, in their pleadings and in their testimony, agree that the contract between them, by which the complainant claims a partnership was formed, and under which he advanced his money, was made in October, 1890. They also agree that the brief partnership, for the purpose of doing a real-estate, stock, and brokerage business, formed in 1891 between Stevens, Graham, and the complainant, had nothing to do with the contract of 1890 referred to. It appears from the testimony that, at the time the agreement between the complainant and Stevens was made, the latter was, and for some time had been, engaged in buying and selling phosphate lards in the state of Florida, and had secured options on, and a control of, a large quantity of such lands, and that to complete the purchase of these lands it would require a large amount of money; that it was agreed between the parties that the complainant was to advance money to Stevens, to invest in phosphate lands, and was to have an interest in the profits realized therefrom, and it was also agreed that the complainant would accept Stevens' receipts for any money he might contribute to the adventure. There were no definite terms of partnership employed or agreed on in the contract. There was no estimate or valuation placed on the options and contracts already secured by Stevens, and there was no agreement as to the amount of money, time, or attention that was to be contributed to the business by either of the parties. The complainant was not bound to contribute any certain sum, but for such sums as he did contribute he was to accept Stevens' receipts, and Stevens was to use the money in dealings in phosphate lands. There was no agreement as to the proportion of the profits he was to receive, and none as to his sharing the losses. Indeed, the complainant himself does not undertake to state, in his testimony, what was definitely said by him and by Stevens about a copartnership. His testimony on the subject is indefinite and uncertain. He says that his intention was to form a copartnership, and his understanding was that they were entering into a copartnership, and states, as a reason for such understanding, the fact of his contributing funds to carry it on. He says that he agreed to accept Stevens' receipts for any money he might contribute, and that he was to share in the profits, but that there was no definite agreement as to the proportion of the profits he was to receive. The contract between the parties was entirely verbal, except so far as the same is expressed in the receipts given by Stevens to the complainant for the moneys contributed by him. Stevens testifies that the receipts were intended to express the contract between the complainant and himself, and he says that he guarantied to the complainant that his interest in the profits would not be less than double the amount of money he might contribute to the adventure, and that it was upon these terms the complainant advanced his money for investment, and that there was no partnership agreed on or intended. Other evidence in the case corroborates Stevens' statement as to this, and that he guarantied the complainant against any loss in his investments. One Gardner testifies that he was present when the agreement was made between the

complainant and Stevens, and that the agreement was that the former was to furnish some money, which the latter was to invest in lands, and which he agreed to double, and that neither party said anything about a partnership.

We think the character of the contract may be determined by the receipts exhibited in the testimony. They furnish the only written evidence which the parties themselves have made of their agreement. Two of the writings are more than receipts. They are contracts requiring Stevens to return the money advanced by the complainant to him when the lands in which the money was invested were sold. One of the receipts expressly provides that the complainant shall have, as use for the money, an equitable interest in all profits from the sale of the lands. We think these receipts disclose a purpose and agreement to repay the money at all events. It was to be paid when the lands to the purchase of which it was to be applied should be sold, and whether they were sold at a profit or a loss. The stipulation is not that the money advanced would be repaid out of the proceeds of the land when sold, but would be repaid when the lands were sold; the sale of the land fixing the time of the payment of the money. The testimony of the witnesses by whom it is sought to prove Stevens' admission of a partnership with the complainant is indefinite and uncertain, both as to what was said by Stevens in regard to his business relations with the complainant, and as to the time when the statements were made. They doubtless referred to the partnership in the real-estate and brokerage business of 1891–92, which had no connection with the partnership sought to be established in this suit, or to the particular land deals in which the complainant's money was used. "A partnership is a voluntary contract between two or more persons to place their money, effects, labor, and skill, or some, or all of them, in lawful business, and to divide the profit and bear the loss in certain proportions.” 3 Kent, Comm. 20. If it be one of the terms of the contract that each shall share in the risks and losses, and also in the profits to be realized, this constitutes them partners inter sese. These risks or interests are not required to be equal, nor is it important that they shall agree in kind. The investment may be unequal, and the parties may agree to divide the profits unequally, but there must be a mutuality of risks,-an interest both in the profits and losses. Smith v. Garth, 32 Ala. 368. In the case of Cassidy v. Hall, 97 N. Y. 165, it is said: "It is well settled that when a party is only interested in the profits of a business, as a means of compensation for money advanced, he is not a partner.” The receiving of part of the profits of a commercial partnership in lieu of or in addition to interest, by way of compensation for a loan of money, does not make the lender a partner with the borrower. Meehan v. Valentine, 145 U. S. 611, 12 Sup. Ct. 972. Thus a party may by agreement receive, by way of interest, a portion of the profits of an adventure, on money loaned to be used in the adventure, without becoming a partner. Judge Story says that the true rule is that “the agreement and intention of the parties themselves should govern in all cases." Story, Partn. $S 1, 38, 49. This certainly must be the rule, as between the parties themselves. In this case there are two of the essential requisites of a partnership wanting,-a joint fund and a common risk; and our opinion is that the testimony wholly fails to establish an agreement and intention of the parties to create the partnership alleged in the bill. The decree of the circuit court is reversed, and the cause remanded, with directions to dismiss the bill, but without prejudice to the complainant's rights to proceed against the defendant at law or in equity, as he may be advised his interests require.


(Circuit Court, N. D. Illinois. April 3, 1895.)


Act Ill. June 15, 1887, as amended by Act June 1, 1889, provides that every corporation organized for the purpose of accepting and executing trusts shall deposit with the auditor of public accounts, for the benefit of its creditors, the sum of $200,000, and declares that it shall not be lawful for any such company to accept any trust without first procuring a certificate from the auditor stating that it has made such deposit. Held, that

a mortgage to secure a debt was not within the prohibition of the act. 2. MORTGAGES_VALIDITY-CORPORATIONS.

Where a mortgage to a corporation that has not complied with said act provides for the execution of certain trusts which are within the prohibi

tion of the act, such trusts are void, but the mortgage is not invalidated. B. SAMELIABILITY OF MORTGAGOR-ESTOPPEL-TRANSFER OF PROPERTY.

Both the mortgagor in such a mortgage and a purchaser who has assumed the mortgage debt are estopped from asserting that the corporation

has no power to act as mortgagee. 4. SAME-FORECLOSURE-INTERVENTION_RIGHTS OF STATE.

Where the mortgagee in such mortgage brings suit in a federal court to foreclose such mortgage for the benefit of the innocent holders of the mortgage bonds, the state has no right to intervene in order to have the mortgage declared invalid because in violation of the state law, since the

state has no property interest in the litigation. 6. SAME-RIGHTS OF JUDGMENT (REDITOR.

A judgment creditor of a corporation has no right to intervene in a suit to foreclose a mortgage given by the corporation in order to assert the invalidity of the mortgage, on the grounds that there was no resolution of the stockholders authorizing the mortgage and that the mortgage was not recorded, where such creditor did not obtain judgment till after the foreclosure suit was begun.

In Equity.

Bill by the Farmers' Loan & Trust Company against the Chicago & Northern Pacific Railroad Company, the Northern Pacific Railroad Company, and others to foreclose a mortgage. Louis Daenell and the state of Illinois prayed leave to file petitions in intervention.

Mr. Turner, Mr. Herrick, and Mr. Burry, for complainant.
Mr. Spooner, Mr. Connell, and Mr. Miller, for defendant companies.
Mr. Varnum, for petitioner Louis Daenell.
Mr. Maloney, Atty. Gen., for the state of Illinois.

JENKINS, Circuit Judge. The Farmers' Loan & Trust Company, a corporation created by and under the laws of the state of New York, and authorized by the laws of that state to accept the trust hereinafter stated, filed its bill to foreclose a mortgage executed by the Chicago & Northern Pacific Railroad Company to the Farmers' Loan & Trust Company, as trustee. This mortgage is dated the 1st day of April, 1890, and covers all the lines of railway and property owned by the mortgagor company in the state of Illinois, and was given to secure an issue of bonds by said company, aggregating thirty millions of dollars. The mortgage provided, by article 9, that the trustee should have the right to enter and operate the road in case of default; by article 10, that the trustee might enter and sell in case of default. This latter provision is, however, understood to be void under the laws of the state of Illinois. By article 11 the trustee, upon default, and upon requisition and indemnity by the bondholders, should proceed to execute the trusts set forth in the instrument; by article 13 the trustee, at any sale of the mortgaged property, upon request of the holders of three-fourths in amount of the outstanding bonds, may bid for and purchase the property in behalf of the bondholders. These are all the special provisions in the mortgage to which reference is deemed necessary. The mortgagor company, simultaneously with the execution of the mortgage, leased its railway property, corporate rights, and franchises to the Wisconsin Central Company and the Wisconsin Central Railroad Company for a period of 99 years, at a stipulated rental of $350,000 a year, the lessees covenanting to pay such further sum or sums of money as might be necessary to pay the interest upon the mortgage bonds issued under the mortgage referred to. On the same day, the Wisconsin companies executed to the Northern Pacific Railroad Company a lease of all the properties described in their lease from the mortgagor company, and the Northern Pacific Company covenanted to keep and perform all the conditions and obligations of the lease executed by the Wisconsin companies, and, among other things, to pay such sums as might be necessary to pay interest on the mortgage bonds of the mortgagor company.

The Chicago & Northern Pacific Company and the Northern Pacific Company now file pleas to the effect that the complainant trustee has never deposited with the auditor of public accounts of the state of Illinois, for the benefit of its creditors, the sum of $200,000 in securities, as provided by law, and has never procured from the auditor of public accounts a certificate of authority stating that the complainant has complied with the requirements of the law of the state of Illinois of 1887, entitled "An act to provide for and regulate the administration of trusts by trust companies and the act amendatory thereof,” and assert that the complainant is not now and has never been authorized or empowered to hold in trust the property alleged to have been conveyed in the alleged trust deed or mortgage of April 1, 1890, or to accept, enforce, or execute the trust or trusts therein reposed, or to bring any suit or action for the enforcement thereof, or for the foreclosure of the mortgaged property; that neither the defendant companies nor any of their officers knew, at the time of the execution of the trust, or at any time thereafter prior to this suit, that the complainant had failed to comply with the statutes of the state of Illinois above referred to, but believed it had so done. They claim that by reason of the facts alleged the mortgage or trust deed in question is absolutely void. Louis Daenell, a judgment creditor of the mortgagor company, by judgment recovered on the 17th day of February, 1894, and since the institution of the suit, asks leave to intervene, and prays that the trust deed or mortgage may be declared null and void, and to constitute no lien upon the property of the mortgagor company, and that he may be permitted to sell the property now in the hands of the receivers of this court, under execution issued out of a state court of Illinois, under his judgment therein obtained. This petition proceeds upon the same ground as stated in the pleas of the two railroad companies defendant, and upon the further ground that the mortgagor company, prior to the making of the trust deed, did not cause and procure an order or resolution authorizing the mortgage to be passed by the concurrence of the holders of two-thirds of the amount of stock of the mortgagor company at a meeting of the stockholders called by the directors of the corporation for such purpose after notice given as provided by law, and cause such order or resolution for such trust deed to be recorded in the office of the secretary of state of the state of Illinois, or in the office of the recorder of deeds of Cook county, Ill., in which county the mortgagor company was located. Subsequent to the hearing the attorney general of the state of Illinois had leave amicus curiae to submit a brief against the validity of the mortgage and the power of the complainant to accept the trusts therein. Upon such submission, he presents with the brief his petition in behalf of the people of the state of Illinois, asking leave to intervene and to file an intervening bill making the people of the state of Illinois a party to the cause, and that the court will decree that the attempted acceptance by the complainant of the trusts of the mortgage without compliance with the laws of the state of Illinois is unlawful, and ineffective to clothe the complainant with the trusts therein declared, and that the mortgage deed is void for want of a grantee or trustee capable in law of taking or holding thereunder, and that the complainant may be enjoined from interfering with the rights, property, and franchises of the Chicago & Northern Pacific Railroad Company, and from transacting any other business within the state of Illinois.

The statute of Illinois (section 26, c. 32, Rev. St.) provides that, “foreign corporations, and the officers and agents thereof doing business in this state, shall be subject to all the liabilities, restrictions and duties that are or may be imposed upon corporations of like character organized under the general laws of this state, and shall have no other or greater power, and no foreign or domestic corporation established or maintained in any way for the pecuniary profit of its stockholders or members, shall purchase or hold real estate in this state except as provided for in this act.”

The act ap

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