Sidebilder
PDF
ePub

applied by the purchasing partner, if the seller de clear of the imputation of collusion. A sale to one partner, in a case within the

scope and course of the partnership business, is, in judgment *45 of law, * a sale to the partnership. (a) But if the purchase

be contrary to a stipulation between the partners, and that stipulation be made known to the seller, or if, before the purchase or delivery, one of the partners expressly forbids the same on joint account, it has been repeatedly decided, that the seller must show a subsequent assent of the other partners, or that the goods came to the use of the firm. (b) This salutary check to the power of each partner to bind the firm was derived from the civil law. In re pari potiorem causam esse prohibentis constat. (c) It has been questioned, however, whether the dissent of one partner, where the partnership consists of more than two, will affect the validity of a partnership contract in the usual course of business, and within the scope of the concern, made by the majority of the firm. The efficacy of the dissent was, in some small degree, shaken by the Court of Exchequer, in Rooth v. Quin; (d) and in Kirk v. Hodgson, (e) it was considered that the act of the majority, done in good faith, must govern in copartnership business, and control the objection of the minority, unless special provision in the articles of association be made to the contrary. But this last decision related only to the case of the management of the interior concerns of the partners among themselves, and to that it is to be confined. (f) The weight of authority is in favor of the power of

$ 10, and note. This I consider to be the soundest conclusion to be drawn from the conflicting authorities.

(a) Willett o. Chambers, Cowp. 814; Rapp v. Latham, 2 B. & Ald. 795; Bond v. Gibson, 1 Campb. N. P. 185; Baldwin J., 5 Day, 515; Spencer J., 15 Johns. 422.

(6) Willis v. Dyson, 1 Starkie N. P. 164; Galway v. Matthew, 1 Campb. N. P. 403 ; 10 East, 264, S. C. ; Leavitt v. Peck, 3 Conn. 124 ; Gow on Partn. 48, 49, 54 - 56 ; Feigley v. Sponebeyer, 5 Watts & Serg. 566.

(c) Dig. 10, 3, 28; Pothier, Traité du Con. de Soc. No. 90.
(d) 7 Price Exch. 193.
(e) 3 Johns. Ch. 400.

(f) The rule of the common law was, that in associations of a public or goneral nature, the voice of the majority governed, but in private associations the majority could not conclude the minority. Co. Litt. 181, b; Viner, tit. Authority; Livingston v. Lynch, 4 Johns. Ch. 573, 597. See Story on Partn. & 125.

1 It has been held, that each partner may bind the firm within the scope of the partnership business, though the other partner objects to the transaction. Wilkins v. Pearce, 5 Denio, 541. See S. C. 2 Comst. 469. The case seems to have been decided upon a different ground in the Court of Appeals.

a majority of the firm, acting in good faith, to bind the minority in the ordinary transactions of the partnership, and when all have been consulted. (g)? It seems, also, to be the better opinion, that it is in the power of any one partner to interfere and arrest the firm from the obligation of an inchoate purchase which is deemed injurious. (h) This is the rule in ordinary cases by the civil law, and in France ; (i) and yet, if by the terms of the partnership, the * management of its business be confided to one of * 46 the partners, the exercise of his powers in good faith will be valid, even against the will, and in opposition to the dissent of the other members. (a)

A partner may pledge, as well as sell, the partnership effects, in a case free from collusion, if done in the usual mode of dealing, and in relation to the trade in which the partners are engaged, or when the pawnee had no knowledge that the property was partnership property. (b)" But this principle does not extend to part-owners engaged in a particular purchase; for they are regarded as tenants in common, and no member can convey to the pawnee a greater interest than he himself has in the concern. (c) And if one partner acts fraudulently with strangers in a matter within the scope of the partnership authority, the firm is, nevertheless, bound by the contract. The connection itself is a declaration to the world of the good faith and integ

(9) Const v. Harris, Turner & Russ. 517, 525.; Collyer on Partn. 105; Story on Partn. & 123, and notes.

(h) Willis v. Dyson, 1 Starkie, 164; Leavitt v. Peck, 3 Conn. 124. (i) Dig. 10, 2, 28; Pothier, de Société, n. 87 to n. 91 ; Story on Partn. $$ 124, 427.

(a) Pothier, Traité du Con. de Soc. Nos. 71, 90. This is also the rule in Louisiana. Code, art. 2838, 2839, 2841.

(6) Raba v. Ryland, Gow N. P. 132; Tupper v. Haythorne, in chancery, reported in a note to the case in Gow.

(c) Barton v. Williams, 5 B. & Ald. 395.

2 Johnston v. Dutton, 27 Ala. 245; Western Stage Co. v. Walker, 2 Clarke (Ia.) 504.

1 But if the sale by the partner was, within the knowledge of the vendee, a fraud upon the partnership, the vendee will hold the partnership effects as a trustee for the firm. Croughton v. Forrest, 17 Miz. 131. A sale by a partner of his interest in the firm does not pass his own debt to the firm. Van Scoter v. Lefferts, 11 Barb. (N. Y.) 140.

? Hawkins v. Appleby, 2 Sandf. (N. Y.) 421 ; Griswold v. Haven, 25 N. Y. 595 ; Babcock v. Stone, 3 McLean, 172; Duncan v. Clark, 2 Rich. 587. But one partner is not liable for the consequences of an illegal contract made by another partner. Hutchins v. Turner, 8 Humph. 415.

rity of the members of the association, and an implied undertaking to be responsible for the acts of each within the compass of the partnership concerns. (d)

(5.) How far by guaranty.

It was formerly understood that one partner might bind his copartners by a guaranty, or letter of credit, in the name of the firm ; (e) and Lord Eldon, in the case Ex parte Gardom, (f) considered the point too clear for argument. But a different principle seems to have been adopted; and it is now held, both in Eng

land and in this country, that one partner is not authorized *47 to bind the partnership by a guaranty of the debt * of a

third person, without a special authority for that purpose, or one to be implied from the common course of the business, or the previous course of dealing between the parties, unless the guaranty be afterwards adopted and acted upon by the firm. The guaranty must have reference to the regular course of business transacted by the partnership, and be confined to advances made or credit given to the partnership as then constituted, and not extended to new advances or credits, after a change of any of the original partners by death or retirement, and then it will be obligatory upon the company; and this is the principle on

(d) Willet v. Chambers, Cowp. 814; Rapp v. Latham, 2 B. & Ald. 795; Longman v. Pole, Danson & Lloyd, 126; Bond v. Gibson, 1 Campb. 185. Hume v. Bolland, 1 Ryan & Moody, 371; 6 Barn. & Cress. 561; M. &. M. Bank v. Gore, 15 Mass. 75; Hadfield v. Jameson, 2 Munf. 53. But a tort, or even a fraud, committed by one of the partners, will not bind the partnership, if it be not in the matter of contract, and there be no participation in it. Parsons C. J., Pierce v. Jackson, 6 Mass. 245; Sherwood v. Marwick, 5 Greenl. 295. There are exceptions, however, to this rule. Partners aro responsible for the tortious acts of a copartner in the prosecution of the copartnership business, as well as for the tortious acts and negligences of their servants, and a partner himself may sometimes act in that capacity. Moreton v. Hardern, 4 Barn. & Cress. 223 ; Attorney-General v. Stranyforth, Bunbury, 97; Collyer on Partn. 252 - 254, 296, 297, 305, 306, 307; Story on Partn. 257 – 260. But the servant must be employed by one of them in the prosecution of the business of the partnership. Waland v. Elkins, 1 Starkie N. P. 272; Bostwick v. Champion, 11 Wendell, 571.

(e) Hope v. Cust, cited in 1 East, 53. () 15 Vesey, 286.

8 Andrews v. Planters' Bank, 7 Smedes & Marsh. 192; Sweetser v. French, 2 Cush. 309.

4 Coomer v. Bromley, 12 Eng. L. & Eq. 307. See, also, Lloyd v. Bellis, 37 Id. 545, State v. Neal, 7 Foster, 131.

which the distinction rests. (a) The same general rule applies when one partner gives the copartnership as a mere and avowed surety for another, without the authority or consent of the firm ; for this would be pledging the partnership responsibility in a matter entirely unconnected with the partnership business. (6)

(6.) How far by deed.

Nor can one partner charge the firm by deed, with a debt, even in commercial dealings. It would be inconsistent with technical rules, and contrary to the general policy of the law; for the execution of a deed requires a special authority; and such a power has been deemed by the English courts to be of dangerous tendency, as it would enable one partner to give to a favorite creditor a mortgage or a lien on the real estates of the other partners. (c) But one partner, by the special authority of his copartners under seal, and if in their presence, by parol authority, may execute a deed for them in a transaction in which they were all interested. It amounts, in judgment of law, to an execution of the deed by all the partners, though sealed by one of them only; and this is the case, if the other partners, by assent or acts, subsequently ratify the deed. (d) The general doctrine of the English law on

(a) Duncan v. Lowndes, 3 Campb. N. P. 478; Sandilands v. Marsh, 2 B. & Ald. 673 ; Crawford v. Stirling, 4 Esp. N. P. 207 ; Sutton v. Irwine, 12 Serg. & Rawle, 13; Ex parte Nolte, 2 G. & Jameson, 295 ; Hamill v. Purvis, 2 Penn. 177; Story on Partn. SS 127, 245, 251 ; Cremer v. Higginson, 1 Mason, 323 ; Myers v. Edge, 7 Term Rep. 254; Strange v. Lee, 3 East, 490; Weston v. Barton, 4 Taunt. 673, 682; Pomberton v. Oakes, 4 Russ. 154; Dry v. Davy, 10 Adol. & Ell. 30.

(6) Foot v. Sabin, 19 Johns. 154; New York Firemen Insurance Company v. Bennett, 5 Conn. 574 ; Laverty v. Burr, 1 Wendell, 531. See, also, the same point, 7 Wendell, 158; 14 Id. 146 ; 15 Id. 364; Andrews v. Planters' Bank, 7 Smedes & Marsh. 192.1

(c) Collyer on Partn. 308 – 312; McNaughten v. Partridge, 11 Ohio 223. A custom-house bond for duties given by one partner will not bind the firm. Metcalfe v. Rycroft, 6 Maule & Selw. 75; Elliot v. Davis, 2 Bos. & Pull. 338. The act of Congress of 1st March, 1823, c. 149, sec. 25, has, however, rendered such bonds, given in this country, binding upon the firm. Harrison v. Jackson, 7 Term Rep. 207; Montgomery v. Boone, 2 B. Mon. 244 ; Turbeville v. Ryan, i Humph. (Tenn.) 113; Story on Partn. § 117.

(d) Ball v. Dunsterville, 4 Term Rep. 313; Williams v. Walsby, 4 Esp. N. P. 220;

1 Langan v. Hewitt, 13 Smedes & Marsh. 122; Rollins v. Stevens, 31 Maine, 484. But the authority or consent of the firm may be shown by circumstances. Butler v Stocking, 4 Seld. 408.

this point has been clearly recognized and settled by nu* 48 merous decisions in our American courts. (a) The more

recent cases have very considerably relaxed the former strictness on this subject; and while they profess to retain the rule itself, they qualify it exceedingly, in order to make it suit the exigencies of commercial associations. An absent partner may be bound by a deed executed on behalf of the firm, by his copartner, provided there be either a previous parol authority or « subsequent parol adoption of the act. (6)

Steiglitz v. Egginton, 1 Holt N. P. 141; Brutton v. Burton, 1 Chitty, 707; Swan v. Stedman, 4 Metcalf, 548.2

(a) Gerard v. Basse, 1 Dallas, 119; Green v. Beals, 2 Caines, 254; Clement v. Brush, 3 Johns. Cas. 180 ; Mackay v. Bloodgood, 9 Johns. 285 ; Anon. 2 Hayw. (N. C.) 99; Mills v. Barber, 4 Day, 428 ; Garland v. Davidson, 3 Munf. 189; Hart v Withers, 1 Penn. 285; Posey v. Bullitt, 1 Black. (Ind.) 99; Skinner v. Dayton, 19 Johns. 513; 1 Wendell, 326 ; 9 Id. 439; Nunnely v. Doherty, 1 Yerger (Tenn.) 26; Swan v. Stedman, 4 Metcalf, 548.

(6) Skinner v. Dayton, 19 Johns. 513; Anderson v. Tompkins, 1 Brock. C. C. 462; Story on Partn. S$ 119-122; Cady v. Shepherd, 11 Pick. 405, 406; Bond v. Aitkin, 6 Watts. & Serg. 165. In Jackson v. Porter, 20 Martin (Louis.) 200, it was admitted, that where a deed was executed by one partner in the name of the firm, parol evidence was receivable to show the written assent of the other partner. The case of Gram v. Seton & Bunker, in the city of New York, 1 Hall (N. Y.) 262, goes a great deal further, and holds that one partner may execute, in the name of the firm, an instrument under seal, necessary in the usual course of business, which will be binding upon the firm, provided the partner had previous authority for that purpose ; and such authority need not be under seal, nor in writing, nor specially communicated for the specific

may be inferred from the partnership itself, and from the subsequent conduct of the copartner implying an assent to the act. In Tennessee, the doctrine, that a subsequent ratification or a parol authority will render valid the act of one partner to bind the other by deed, is rejected, as being contrary to their established decisions.1 Turbeville v. Ryan, 1 Humph. 113. This was adhering to the stern doctrine of the common law, that it required a prior authority, under seal, or a subsequent ratification, under seal,

purpose, but it

? See Potter v. McCoy, 26 Penn. 458; Freeman v. Carhart, 17 Geo. 348.

1 The principle of Gram v. Seton has been sustained in the N. Y. Court of Appeals, in the case of Smith v. Kerr, 3 Comst. 144, 150. But see a dictum of Paige J., in Worrall v. Munn, 1 Seld. 229, in which he confines the cases in which a parol authority or ratification is sufficient, to that class to the validity of which a seal is not requisite. See, also, Purviance v. Sutherland, 2 Ohio (N. S.) 478. In Drumright v. Philpot, 16 Gco. 424, and McDonald v. Eggleston, 26 Vermont, 154, the doctrine of Gram v. Seton is adopted. In Jackson v. Stanford, 19 Geo. 14, it was held that a deed by all the firm of land owned by the firm, but which deed is executed by only one partner, is effectual to convey that partner's undivided interest. And in Ely v. Hair, 16 B. Mon. (Ky.) 230, it was held that a deed of trust executed by one copartner, with the knowledge and assent of the other is valid without a subsequent ratification. See Robinson v. Gregory, 29 Barb. (N. Y.) 560.

« ForrigeFortsett »