A cross claim lies between co-parties, where it arises out of the transaction which is the subject matter of the original suit, may include a liability over of the co-defendant for all or part of the claim asserted by the plaintiff against the cross claimant. This does not mean that any and all liability of the defendant to the plaintiff in cross claim may be brought in on the basis that it would constitute a payment of funds with which to satisfy any judgment obtained by the plaintiff, but rather it must rest upon the claim asserted by the plaintiff in the first instance. Where the plaintiff sued the defendant partnership for materials furnished on open account in a court without equity jurisdiction, the defendant is not entitled to cross file against a third party, whether a party defendant or not, alleging in effect that the latter holds funds belonging to the cross plaintiff and necessary to pay off any judgment obtained against it.
Bremen Steel Co., Inc. sued Metro Steel Co., a partnership, and each of its partners on an open account debt. The partners alleged were Metro Affiliates, Ben O'Callaghan Co., Ben O'Callaghan, Thomas Moore and Robert Peckham. Metro Steel Co. answered, admitting liability in an unknown amount, and asserting that it was a partnership composed of general partner Metro Affiliates and limited partners Ben O'Callaghan Co. and Moore; also that Peckham, as president and sole stockholder of Metro Affiliates, Inc., conducted his corporation's affairs with Metro Steel in such manner as in law and in fact to become an active general partner of Metro Steel, and that as such general partner he transacted business with the plaintiff. These defendants then cross claimed against Peckham for sums paid by Metro Steel to Peckham or Metro Affiliates for the benefit of the latter, one of the transactions being a check drawn on Metro Steel and signed by Peckham, and for certain property in Peckham's possession. Peckham moved for dismissal as defendant in both the main action and the cross complaint. After the motion was overruled plaintiff dismissed as to Peckham. This appeal is from the denial of his motion for dismissal of the cross complaint, which motion was filed on behalf of both Peckham and Metro Affiliates, but as to the determination of which no exception is taken by Metro Affiliates.
There is some doubt as to whether the order in question should be considered as a denial of the motion to dismiss the cross complaint or as the denial of summary judgment (Code Ann. 81A-112 (c)) in view of an affidavit in the record that Peckham assumed full charge of the business of Metro Steel and otherwise held himself out as a partner in that enterprise, and a statement in the court's order that the case was being decided on the record. However, one not in fact a partner is not estopped from denying partnership by the fact that he held himself out as a partner, for it must also appear that the opposite party was misled by the putative status and acted thereon. Mims v. Brook & Co., 3 Ga. App. 247 (2) (59 SE 711). Obviously the plaintiff, who has dismissed Peckham as a defendant, no longer claims he is a partner of the defendant Metro Steel. Metro Affiliates does not so claim. Metro Steel and the remaining partners assert that Metro Affiliates was organized in order to limit Peckham's liability; this being their intention when the partnership was farmed, whether or not Peckham held himself out to third parties as a partner could in no way have misled the partnership as an entity or the remaining partners therein. "The intent of the parties is the true test of a partnership" as between themselves. Huggins v. Huggins, 117 Ga. 151 (1) (43 SE 759).
Under these circumstances, should the defendants' claim against Peckham be tried in Bremen's case? We have a situation where A sues B (a partnership and its acknowledged partners) and B, acknowledging the debt but contending that it may not be able to meet its total obligations because a part of its assets have been drained off illegally by C (who has been managing its affairs) seeks to inject its claim against C into A's lawsuit. There is no contention that B's debt to A for purchase of supplies has any relation to B's claim against C based an conversion of assets.
Ordinarily a plaintiff has the right to determine whom he shall sue, and a cross complaint will not lie unless authorized by statute. That means, as to Code Ann. 81A-113 (g) that the cross claim must be (a) between co-parties and (b) arise out of the transaction which is the subject matter of the original action. "Such cross claim may include a claim. that the party against whom it is asserted is or may be liable to the cross claimant for all or part of a claim asserted In the action against the cross claimant." The claim assented, of course, is one for materials furnished the partnership, and its subject matter is the purchase and sale of material. Assuming but not deciding that had the cross claim been proper at the time the suit was filed (Peckham having first been designated as a party but later dismissed) the dismissal would not have altered the situation, for the removal of assets with which to satisfy plaintiff's judgment cannot be considered as the same transaction in which the materials were purchased. Cf., as to the corresponding Federal rule, Hoosier Gas. Co. of Indianapolis, Ind. v. Fox, 102 FSupp. 214, where one of the criteria set up is whether the same evidence would establish both claims. Obviously it would not. This case having been brought in the Civil Court of Fulton County which has no equitable jurisdiction, we are not concerned with any equitable rules relating to the recovery or distribution of assets. Accordingly, it was error to deny the appellant's motion to dismiss the cross claim.
Judgment reversed. Eberhardt, P. J., and Clark, J., concur.