Case ID: wis_12/html/0492-01.html
Source: Caselaw Access Project
Author: {"author": "PAINE, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

June Term, 1860.
    Clapp vs. Upson, impleaded with Strickland.
    S. and IT. had been partners in business as booksellers, in Mobile, Ala., under the name of “S. & Co.,” but in the fall of 1856, their business in that place was broken up by violence, and they were compelled to leave the state, which facts were of public notoriety. Their partnership was thereupon dissolved, and public notice of the dissolution given. In the fall of 1857, S., who had then become engaged in the business of a bookseller at Milwaukee, in this state, which was conducted under the name of “ S. & Co.” (but in which IT. had no interest), bought goods for that trade from a merchant in New York, giving therefor a note signed “S. & Co.,” payable to the order of the plaintiff in this suit. The vendor of said goods had dealt with the firm of “S. & Co.” at Mobile, during the years 1855-6, and although he had hoard of the trouble in their business in that city, and supposed it was the reason why S. removed to Milwaukee, testified that at the time of the giving of the note sued upon, he had no knowledge that the firm of “ S. & Co.” in Mobile was dissolved, but supposed the firm in Milwaukee to be the same as it was in Mobile. The plaintiff was, in 1855, a member of a firm in New York, which had dealings with “S. & Co.” at Mobile, and testified that he retired therefrom in 1856, and that at the time of taking said note he had received no notice of the dissolution of the firm of “S. & Co.,” but had heard that they had been assailed by a mob in that city, and that their property was protected by the city authorities : Held, that the vendor was not justified in presuming that the firm of “S. & Co.” at Milwaukee, was the same as the former firm of that name in Mobile, the distance between the places, and the other circumstances of the case, being sufficient to put him upon inquiry in that respect; and that the plaintiff could not recover against U. upon the note.
    APPEAL from tlie Circuit Court for Milwaukee County.
    Action by Olapp against Upson and Strickland, as partners, upon a promissory note executed in tlie name of “Strickland & Co.,” and payable to the order of tlie plaintiff. Strickland suffered default, and Upson answered under oath, denying bis execution of said note, or that be was a partner of Strickland at the time when the note was executed. On the trial of this issue, the depositions of the plaintiff and one Allen were read in support of the action. Allen testified that be was a dealer in printers’ cards, &c., in the city of Few York, during the years 1855, ’6 and ’7; that be sold goods to the defendants during the years 1855 and ’6, at wbicli period they were partners in tbe book and stationery business in Mobile, Alabama, under tbe name of “ Strict-. laud & Co.tbat be bad not, at tbe time of tbe sale of tbe goods for wliicb tbe note in suit was given, received notice of tbe dissolution of said firm; tbat be bad beard of some difficulty at Mobile, growing out of tbe sale, by Strickland & Go., of abolition books, and supposed tbis was tbe reason wby Strickland removed to Milwaukee; but tbat be bad no knowledge of tbe breaking up of tbe firm of Strickland & Co. in Mobile; “ tbat tbe note in tbis action was given for goods sold by tbe deponent to Stricldand, in tbe name of Strickland & Co., while tbe purchaser was doing business in Milwaukee, to wit, on tbe 6th day of May, 1857, which goods were invoiced to Strickland & Co., as formerly when sent to Mobile, and tbat be then supposed tbe firm in Milwaukee to be tbe same as in Mobile.”
    Tbe deposition of tbe plaintiff stated tbat be was in tbe paper business in tbe city of New York, in tbe year 1855, as one of tbe firm of J. S. Derrickson ■& Co., and retired from said firm in 1856; tbat said firm did business with tbe firm of Strickland & Co., of Mobile, and tbat tbe deponent bad received no notice of tbe dissolution of said last named firm previous to the making of said note; tbat-be bad been told tbat tbe said firm of Strickland & Co. was assailed by a mob, and tbat their property was protected by tbe city authorities, but not tbat tbe firm was broken up; and tbat be did not personally know tbe consideration of said note of Strickland & Co., payable to bis order. . Tbe note, which was offered in evidence, was for $220 51, was dated Nov. 7, 1857, and was payable to tbe order of tbe plaintiff at 12 months from date. Tbe record states tbat several letters, signed Strickland & Co., and bearing date in tbe years 1855, ’6 and ’7, were read in evidence, to show tbe course of business between tbe defendants and said Allen, some of which were dated at Mobile and some at Milwaukee, and, among others, one enclosing tbe note upon which tbis action was brought, which was dated Milwaukee, Nov. 2, 1857, addressed to said Allen, and signed “ Strickland & Co.,” in which it is stated, “We enclose our note for $220 51, as per your request.”
    
      Tbe defendant Upson, by bis counsel, moved tbe court for . a judgment of non-suit, wbicb was refused, and the defendant excepted. On tbe part of tbe defense, it was proven that tbe said firm of Strickland & Co., composed of tbe defendants, ¿Strickland and Upson, was dissolved at Mobile in tbe fall of tbe year 1856, of wbicb fact public advertisement was made in a daily newspaper published in tbe city of Mobile, and by printed circulars; that previous to such dissolution tbe business of said firm was forcibly assailed and broken up and tbe parties compelled to leave tbe city; and that such forcible breaking up of said business was a matter of public notoriety in Mobile and elsewhere. It was also proven, that since such dissolution said Strickland and Upson bad not been partners in business anywhere.
    Tbe court instructed tbe jury “that tbe said Allen, who sold tbe goods for wbicb tbe note was given, as between liim (Allen) and the defendant Upson, was entitled to actual notice of tbe dissolution of tbe firm of Strickland & Co., and that, in the absence of such actual notice, be could reasonably infer that tbe firm of Strickland & Co. in Milwaukee was one and tbe same with tbe Mobile firm, and would, in such case, be entitled to recover against Upson, in an action between them for tbe value of such goods; and that if the jury found that tbe note in this case, made by Strickland & Co. to the order of the plaintiff, was delivered to Allen in settlement of tbe bill of goods purchased of him by Strickland, under tbe name of Strickland & Co., subsequently to tbe dissolution of Strickland & Co. at Mobile, and that Allen bad received no actual notice of such dissolution, then tbe plaintiff would be entitled to recover against tbe defendant Upson, in this action, and that tbe plainin'?, in Ms action upon said promissory note, is entitled to tbe same equities that said Allen would have been entitled to in an action by him against tbe said defendant upon an account, or upon a note given to Mmself for said goods.” To these instructions tbe defendant excepted.
    The defendant’s counsel requested tbe court to instruct tbe jury as follows: “1. If tbe jury find that tbe plaintiff in this action seeks to recover against tbe defendant Upson, upon a note made by the defendant Strickland, to the order of the plaintiff, after the firm of Strickland & Co. of Mobile had. been in fact dissolved, and when Upson was not a partner with Strickland, and not in settlement of any bill of goods sold by the plaintiff to the defendant Strickland, or on account of any dealings between them, the plaintiff will not be entitled to a judgment against Upson. 2. If the jury find that Allen knew of the breaking up of the business of Strickland & Go., in Mobile, this was in itself a sufficient circumstance to put the said Allen upon inquiry as do the continuance of the identical firm in Milwaukee; and having information of such 'violence in Mobile, he cannot presume that the Milwaukee firm is the same with the Mobile firm. There is no presumption applicable to this case, that the Milwaukee firm was the same as the Mobile firm; the distance and dissimilarity between the two forbid it.” These instructions the court refused to give, and the defendant excepted.
    Yerdict against the defendant Upson. Motion for a new trial overruled, the defendant Upson excepting, and judgment upon the verdict.
    
      Nelson Gross, for appellant:
    The plaintiff, as an individual, had never had dealings with Strickland & Co., of Mobile. Hence the notice of dissolution, published in the Mobile paper, is sufficient as to him. Coll, on Part., 311, 312, §§ 531, 532; Lansing vs. Gaine, 2 John., 303,304; Ketcham vs. Olark, 6 id., 147; Graves vs. Merry, 6 Cow., 701; National Bank vs. Norton, 1 Hill, 578; Mowatt vs. Howland, 3 Day, 353. 2. The principle that after a partnership is dissolved, one partner, dealing with a person who has no notice of the dissolution, may bind his copartner, applies only to transactions in the usual course of business. Whitman vs. Leonard, 3 Pick., 177; Bernard vs. Torrance, 5 Gill. & J., (Md.), 383. The transaction between Allen and Strickland, as to the making of this note is unusual and extraordinary. 3. As to a person entitled to actual notice o dissolution, under the rule, notice may be inferred from circumstances. Mauldin vs. Bank, 2 Ala., 505; Goddington vs. Hunt, 6 Hill, 595; Lrby vs. Yining, 2 McCord, 379; YThit-
      
      man vs. Leonard, supra. Tbe court therefore erred in refusing to give tlie jury the second instruction asked by the appellant. 4. The authority of one partner to bind another ceases upon the dissolution of the partnership, and the rule applies even to the case of a promissory note made in settlement of a partnership debt, by the partner authorized to make such settlement Draper vs. Bissel, 3 McLean, 275; Lockwood vs. Comstock, 4 id., 383 ; Lansing vs.^Gaine, 2 John., 300; Lusk vs. Smith, 8 Barb. (S. 0.), 570 ; Perrin vs. Keene, 1 App., 355 ; Woodworth vs. Downer, 13 Yt., 522. He cannot even renew a partnership note, (National Bank vs. Norton, supra; Qalliottvs. Bank, 1 McMullen, 209,) nor endorse the notes given to the firm, so as to bind the firm. Sanford vs. Mickles. 4 John., 226; Parker vs. Macomber, 18 Pick., 505. The exception to this rule is where the party taking such note is a creditor of the firm whose name is signed as maker, holding such relations to it as to be entitled to notice of its dissolution. The facts in this case do not bring it within the exception. The plaintiff in this action is not such a party. The peculiar rights and equities of such a party are not capable of being transferred to another.
    
      K Marriner, for respondent:
    1. An ostensible partner retiring from a firm, must, if ho would be' released from liability for the subsequent transactions of the firm, with those who have dealt with such former firm, give actual notice of such retiring; and until such actual notice, the former partnership still exists as to all jeer-sons having previously so dealt. Coll, on Part., § 530, etseq., and cases cited: Story on Part., § 334, and cases cited; Ketcham vs. Clark, 6 John., 144; Kelley vs. HurTburt, 5 Cow., 534; Vernon vs. Manhattan Co., 17 Wend., 524; Same vs. Same, 22 id. ,183. To this rule there is but one exception, viz., when the dissolution is by operation of law. Coll, on Part., § 120, and cases; Story on Part., §§ 336, et seq. 2. A purchaser of a note executed in the partnership name by one of a firm, in the partnership business, after dissolution of the partnership, to a former dealer with the firm, without notice of the dissolution, may enforce it against all the partners, even though such purchaser have notice of the dissolution at the time of purchase. Graves vs. Merry, 6 Cow., 701.
    October 15.
   By the Court,

PAINE, J.

We think the court below erred in applying to this case the general rule, that where a person known as a partner retires from the firm, he, notwithstanding that, remains liable to those who, having previously dealt with the firm, continue to deal with it without actual notice that he has left it. That rule is founded on the fact that those persons who continue to deal with the firm, do so upon the faith and credit of those whom they had known to constitute it, and that they have the right to assume that it remains the same, until they have some information to the contrary. Now it seems to us that the entire reason of this rule fails in this case, the facts of which are certainly of an extraordinary character. Strickland & Co. did business as booksellers at Mobile in Alabama. The defendant Upson was at that time a membef of the firm. Their business was broken up by violence, and they were compelled to leave the state. These facts were notorious, and were known to the person selling the goods to recover for which this suit was brought. The firm actually dissolved at 'the time, and Upson ceased to be a member of it, though notice of that fact was not brought home to Allen, who sold these goods. Subsequently Strickland came to Milwaukee, and it seems a new firm was established under the old style of!i Strickland & Go., of which, however, Upsón was not a member. Then these goods were sold to Strickland for the establishment in Milwaukee, and he gavre a note in the firm name. Allen, the vendor, had previously dealt with Strickland & Go., in Alabama, and testified that he supposed it was composed of the same persons in Milwaukee. But the question is, had he a right to suppose so ? Had he the same right to assume that to be the case, that one dealing with a firm under ordinary circumstances has, to assume that it remains composed of the same persons, until notified to the contrary ? It seems to us not. Ordinarily there is nothing to suggest an-inquiry to the dealer. Nothing has happened to indicate the probability that a change has taken place. Therefore the law gives bitfi the right to assume that no change has taken place, and holds those responsible to him on whose credit he thus continues fairly to deal, until they notify him that they are no longer members. But here the whole ease is different. The facts suggest at once to every mind the probability that the firm in Milwaukee may not be composed of the same persons as the firm in Mobile. It is not reasonable, therefore, for the dealer to assume that it is, and if he chooses to assume it, it should be at his own risk. Suppose Mobile had been destroyed' by an earthquake, or by war, and Strickland had subsequently been found in California, or in London, in partnership with somebody, but with nothing in the firm name to indicate whom — could it be said that any previous dealer could, without inquiry, reasonably sell him goods on the credit of those who were members of the firm in Mobile? We think not. It would be unreasonable for him to do so. The facts before him woidd show that it was at least quite as probable that they were not members, as that they were. And if he then deals it should be at his own risk. We do not intend here to establish a rule applicable to any case where there may be slight circumstances tending perhaps to excite suspicion or suggest inquiry, or to any ordinary change in the place of doing business by a firm. But we do think that when, as in this case, the entire business of a partnership at its established location is broken up by violence, and one of the partners is found in a distant part of the world, doing business afterwards, under the same firm name it is true, but one which indicates none of the old members except himself, the presumption that it is the same firm ceases to be the natural and ordinary jnesumption, and those who deal with it as such without inquiry, ought not to bind men who do not belong to it.

The judgment, as against the appellant Upson, must be reversed, with costs, and a new trial awarded.