Case ID: scl_38/html/0544-01.html
Source: Caselaw Access Project
Author: {"author": "Withers, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Samuel J. Wilson, for his assignees, vs. Theodore Dargan.
    
    Where B is indebted to A, and A is indebted to a firm of which B is a co-partner, and it is agreed, between A and B, that the one demand shall be setoff or extinguished by the othei, such agreement is bindingupon a subsequent assignee of A’s demand against B, if the assent thereto of the other members of the firm can be shewn ; it is not necessary, however, to shew an express assent, or even that the other members of the firm knew of the agreement — it is enough to shew that A, by previous assent, express or implied, between the partners, was authorized to bind the firm by such an agreement.
    
      Before Frost, J., at Darlington, Spring Term, 1850.
    This was an action of assumpsit on an open store account.
    Samuel J. Wilson had been a merchant, and .had made a general assignment for the benefit of his creditors. The defendant and Timothy Dargan were physicians, practising in co-partnership. Wilson had a store account against each of the co-partners, and they had a co-partnership medical account against Wilson. The medical account was charged between July, 1846, and September, 1849, and the store account, December, 1846, and March, 1849. The defendant pleaded the co-partnership account against Wilson as payment.
    
      Wilson proved the account against the defendant, amounting to $221. The medical account was admitted. With his consent, Wilson was made a witness for the defendant. He testified that, in August, 1848, it was agreed, between himself and the defendant, that the partnership account should be set off against the store account; but no receipts were passed, and the account against the defendant had been included in his assignment. Timothy Dargan told the witness that he abstained from contracting a large account with him, because he was reluctant to reduce his means by paying for goods in a medical account. The witness did not know that Timothy Dargan was informed of his agreement with the defendant. Dr. Timothy Dargan, who was admitted as a witness, declared his consent to the agreement between the plaintiff and defendant. He said he knew that defendant had a store account with Wilson, and he expected that it should be settled by a credit for the partnership account. The witness and defendant had, impliedly, the right to set off a co-partnership demand against an individual account j but he had no explicit notice of the agreement between Wilson and defendant.
    The jury were instructed, by his Honor, that though only mutual demands can be set off, yet the parties might make any agreement, respecting payment, which they saw fit; and that, if one partner contracts an account, and promises that a co-partnership demand shall be applied in payment, and the other partner consents to the arrangement, it would be binding as a contract on both partners. It might have been that Wilson would not have credited the defendant, and that defendant would not have dealt with Wilson, if the agreement had not been made ; and the consideration would support the agreement against all of the parties. But, if Timothy Dargan were not a party to the agreement, it would not be obligatory, since he might otherwise apply, or satisfy by his receipt, the partnership account against Wilson. The jury were further instructed, that the consent of Timothy Dargan to the agreement, expressed at the trial, was nugatory; because no agreement with Wilson, after his assignment, could impair the right of his assignees ; and that the mutual confidence between the defendant and Timothy Dargan, that either might apply a partnership account in payment of his individual debt, could not charge Timothy Dargan with the agreement between the defendant and Wilson ; and they were advised that there did not appear any evidence of Timothy Dargan’s assent, because he could give-no explicit assent to an arrangement of which he was not informed. Without such assent, they were told the verdict should be for the full amount of the plaintiff’s demand ; which they found.
    The defendant appealed, and now moved for a new trial.
    
      Moses, for the motion,
    cited 4 Strob. 12; 4 Camp. 67; Kins-ler & McGregor vs. Pope, (5 Strob. 126.)
    
      Harllee, contra.
   Curia, per

Withers, J.

This is one of a class of cases that are of frequent occurrence, and are generally attended by some difficulty in the solution. When, as in the present instance, the debtor of a firm agrees, with one of the partners, that the demand against the latter shall be extinguished by a credit on the partnership demand against him, or that the one shall be set off against the other, and such agreement remains executory until a foreign interest is introduced by an assignment on the part of the partners or their debtor, such agreement, can be of no avail against such foreign interest, unless it be made to appear that the agreement stipulated by one partner was fortified by the assent of the other before the interest of the third party arose. When such assent, however, on the part of both partners can be established, by testimony competent and sufficient for that end, whether direct or legitimately inferential, before the accrual of another’s interest, it would be a contract founded on sufficient consideration, (as we determined in Kinsler & McGregor vs. Pope, 5 Strob. 126,) and the question of fact, if raised by the evidence, should be submitted to the jury. If a contract, binding on the partners, accompanies an account, owing to them by a debtor, into the hands of his assignee, such assignee must take the demand cum onere, since he cannot occupy a better legal position than the law allows to his assignor.

It is in this particular only, and not in regard to the propositions of law laid before the jury on the Circuit, upon the trial of this case, that we think the defendant can discover any just ground of exception. The agreement between the defendant and Wilson, that the account of the latter against the former should be paid by the partnership account of Timothy Dargan and the defendant against Wilson, was distinctly made before the assignment by Wilson. Dr. Timothy Dargan said he knew that Wilson had a store account against defendant, “ and he expected that it should be settled by a credit for the partnership account. He and defendant had, impliedly, the right to set off a partnership demand against an individual account, but he had no explicit notice of the agreement between Wilson and defendant.” By the presiding Judge the jury were advised that there did not appear any evidence of Timothy Dargan’s assent, because he could give no explicit assent to an arrangement of which he was not informed.”

We suppose the jury would infer, from this, that the express assent of Timothy Dargan to the specific agreement by the defendant, his partner, was deemed by the presiding Judge to be requisite.

Now the power of one partner to bind another, is resolvable into the principle of agency. In the absence of a specific agreement between copartners, or proof of acquiescence in a particular course of business, sanctioned by them, and beyond the general scope of their trade or dealings, the power of each to bind the other is limited to such scope. But by agreement, which may be implied in this as in other species of agency, in favor of those who have a right to insist on the implication, the power of each to bind both, may be extended to such a transaction as that which is disclosed in the present case. We think the testimony of Dr. T. Dargan presented the question, to be left to the jury, whether, by previous assent between the partners, the defendant was not authorized to bind the firm in such an agreement as he made with Wilson, whether the occasion occurred to make the same with Wilson or any body else. If the defendant had failed, and Wilson had been seeking to secure the benefit of the agreement for himself against the partnership, our view mi'ght seem more palpable. Yet, if there be any validity at all in such an agreement as we are considering, its obligation should be mutual.

Whether the particular act of a partner be wilcnown to, or unauthorized by, another partner, are not equivalent propositions.

Upon the point thus indicated, and on that only, we think the case should be again submitted to the jury; and it is so ordered.

O’Neall, EvaNs, Frost and Whitner, JJ„ concurred.

Motion granted.