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John Fortis vs. Gutierrez Hermanos: That He Is A Partner XPN: Profit Was For Payment As Wages of Employee

John Fortis sued Gutierrez Hermanos claiming he was owed salary equal to 5% of the company's net profits for 1902. The court found that Fortis's compensation was as an employee, not as a partner, and that he was owed 13,025.40 Mexican pesos in unpaid salary. The court ruled that receiving compensation based on profits did not make Fortis a partner, and the company partnership agreement did not include him as a partner.

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338 views2 pages

John Fortis vs. Gutierrez Hermanos: That He Is A Partner XPN: Profit Was For Payment As Wages of Employee

John Fortis sued Gutierrez Hermanos claiming he was owed salary equal to 5% of the company's net profits for 1902. The court found that Fortis's compensation was as an employee, not as a partner, and that he was owed 13,025.40 Mexican pesos in unpaid salary. The court ruled that receiving compensation based on profits did not make Fortis a partner, and the company partnership agreement did not include him as a partner.

Uploaded by

Tiff Dizon
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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JOHN FORTIS vs.

GUTIERREZ HERMANOS

o GR: Receipt by a person of share of profits of business is prima facie evidence


that he is a partner

XPN: Profit was for payment as wages of employee.

o It is the net profit, after all expenses (including salary of employee) have been
deducted that is shared between partners.

FACTS:

Fortis is an employee of Gutierrez Hermanos from 1900-1902. He brought an action to recover a


balance of his salary for the year 1902 which he claims was due to him. He alleged that he was
entitled, as salary, to 5% of the net profits of the business of Gutierrez Hermanos for said year.
The complaint also contained a cause of action for the sum of 600 pesos, money expended by
him for Gutierrez Hermanos during the year 1903.

The court ruled in favor of Fortis and held that the 5% net profits for 1902 amounted to
26,378.68 Mexican Pesos (MP), but he received on account of such salary only MP 12,811.75.
Thus, the court ordered Gutierrez Hermanos to pay Fortis the reduced sum of MP 13,025.40.

Gutierrez Hermanos moved for a new trial, which was denied. Hence, the petition/

ISSUE:

Whether or not Fortis is a co-partner.

RULING:

NO. The relationship between Fortis and Gutierrez Hermanos arose from a mere contract of
employment. Fortis neither had any voice nor vote in the management of the affairs of the
partnership. The fact that the compensation received by him was to be determined with reference
to the profits made by the Gutierrez Hermanos in their business did not in any sense make him a
partner. Moreover, the articles of partnership stated that the profits should be divided among the
partners named in a certain proportion. The contract made between the Fortis and Miguel Alonzo
Gutierrez (manager of Gutierrez Hermanos) did not modify nor amend said provision in the
articles of partnership.

Furthermore, the profits of the business could not be determined until all of the expenses had
been paid. A part of the expenses to be paid for the year 1902 was the salary of the plaintiff. That
salary had to be deducted before the net profits of the business, which were to be divided among
the partners, could be ascertained. It was necessary to determine what the profits of the business
were after paying all of the expenses except his, in order to determine what the salary of the
Fortis was. But such determination does not arrive at the net profits of the business yet. It was
only made for the purpose of fixing the basis upon which his compensation should be
determined.

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