Case Name: Daniel McNaughten et al. v. Harper Partridge, Reuben Partridge, et al.
Court: Supreme Court of Ohio
Jurisdiction: Ohio
Decision Date: 1842-12
Citations: 11 Ohio 223
Docket Number: 
Parties: Daniel McNaughten et al. v. Harper Partridge, Reuben Partridge, et al.
Judges: 
Reporter: Cases decided in the supreme court of ohio : upon the circuit at the special sessions in Columbus
Volume: 11
Pages: 191–201

Head Matter:
Daniel McNaughten et al. v. Harper Partridge, Reuben Partridge, et al.
One member of a firm can not bind his copartner by a bond under seal.
Where a bond is executed by one member of a firm, all the members intending the instrument should bind them, the obligee has no remedy against the firm at law; but on the ground of mistake, may charge them in equity.
If the obligee, after discovery of the mistake, pursues the individual maker of the bond, it is a ratification of the instrument, and relief against the copartners will not be afforded in equity.
Semble, a mistake of law may be corrected in equity.
This is a bill in chancery, from the county of Stark.
The bill states that, in the years 1836 and 1837, the complainants, with one Gregory Powers, since deceased, were merchants in business, under the firm name and description of McNaughten, Powers & Co., and, during their continuance in business, sold and delivered large quantities of merchandise to the respondents, who were likewise merchants in company, under the name and firm of H. & R. Partridge & Co., which said merchandise was charged in account to the respondents, and used by them in their copartnership business.
*That on September 25, 1837, there was a settlement of all accounts and dealings between the firms of the complainants and respondents, and there was found due to complainants $411.92, for which sum a bond, or judgment note, was executed, and made payable on the 1st day of November, then next ensuing, and by which S. L. Hand, or any attorney, etc., was authorized to enter an amicable suit on said bond, and to suffer judgment thereon by confession, default, or otherwise, in any court of record, for the amount due thereon ; which bond, or judgment note, was signed H. & R. Partridge, [l. s.] by fm. W. Hale. [l. s.]
The bill further states that, at the time of the execution of the bond, it was not their intention to release or discharge any of the individual members of the firm of H. & R. Partridge'& Co. from the amount of said bond, nor had they, nor either of them, any expectation or wish to be released or discharged therefrom.
Both complainants and respondents supposed that ono member of a firm could bind the firm in any contract or bond in the name and for the benefit of the firm, whether the same was under seal or not; and the complainants were not aware of their mistake until they applied to their attorney for the purpose of having the bond collected, and, to their surprise, were then informed it was so made as to bind the individual party only, who signed and sealed it, and who was then insolvent.
The complainants further represent that, at the February term of the court of common pleas of Portage county, in 1838, they caused a judgment to be entered on said bond, in favor of complainants, Daniel McNaughten, Gregory Powers, Titus Chapman, and another, against William W. Hale alone, for the sum of $411.92 debt, and $12.35 damages, and $8.11 costs of suit, and that said judgment remains unsatisfied and unreversed; that an execution was afterward issued on the judgment, and returned, no goods, chattels, lands, *or tenements found whereon to levy. The bill further states that said Hale has no property subject to execution, but is totally insolvent, and has gone to parts unknown; that the complainants have no remedy against the other members of the firm of H. & R. Partridge, except in a court of equity, and pray that the said H. & R. Partridge may be decreed to pay to complainants the amount of their judgment, with costs and interest.
To this bill the respondents demurred.
Alvah Hand, in support of demurrer:
It seems to be a well-established rule of law, that the giving of a bond satisfies and extinguishes a simple contract debt. 1 Bay’s S. C. 495; 1 Hall, 292.
The defendants, H. & R. Partridge, claim that the taking of the bond, by the complainants, satisfied the debt so far as they were concerned, and that the complainants have no further remedy, either at law, or in equity, except as against Hale, the maker of the bond.
The complainants, if they recover at all, in this ease, must succeed on the ground of mistake; but it can not be fora mistake of facts, as no such is charged in their bill; besides, they had as good an opportunity to be acquainted with all the facts of their dealings as the defendants had.
They can not recover on the ground of a mistake in law, as every man is presumed to know all the law that relates to his conr tracts, as well as to his civil duties.
It is a well-known maxim that ignorantia legis neminem excusat, and one which the student learns when he first enters upon the study of municipal law; 4 Black. Com. 23; Archbold’s Ed; Plowd. 343; and this rule was early adopted into English jurisprudence-from the civil law,.and is equally respected by courts of equity, as-by courts of law.
But suppose that ignorance of the law was an excuse for a man’» •mistakes, these defendants claim that the complainants have ratified the arrangement by subsequently entering judgment *on the bond against Hale, and ought to be estopped from pursuing fthem, either at law or in equity.
, The complainants once had a legal right of action against H. & R. Partridge, and W. W. Hale, but, by a mistake of law, they have lost it, as against H. & R. Partridge, but it still exists against Hale. They have tried their remedy at law against him, but with out effect. They now ask this court to restore them to the right which they had lost by their own act.
H. & R. Partridge would be holden on this bond if the complainants could show that they had adopted it either before, at the time, 'or after it was executed. The court, however, can not presume they have adopted it without proof, and the complainants do not claim such in their bill to be the fact. If adopted by the Partridges, the complainants’ remedy would have been at law, and not in equity.
S. L. Hand, for complainants:
The question presented for the decision of the court in this case is, whether a creditor of a partnership, who has taken for his debt ■a bond signed and sealed by one partner for and in the name of the firm, can, if such partner prove insolvent, enforce collection of the debt against the firm, in a court of equity.
This question was once presented to the Supreme Court of this state in the case of James v. Bostwick, Wright, 142, and decided in the affirmative. Upon that authority and the manifest equity of the case, this suit is predicated.
The question arose as follows: James sued Bostwick on a contract, signed “ Richmond & Bostwick,” and sealed; but Bostwick having, in fact, executed the contract, the action was brought against him alone. In the course of the trial Bostwick called Richmond, his copartner, as a witness, and executed to him a release; but he was still objected to by the counsel for the plaintiff. *“ By the court. This contract is a partnership contract in equity, though, at law, so executed as to subject one of the partners only upon the covenant, as but one sealed it. There can bo little doubt but that, if a recovery is had, and the defendant prove insolvent, the witness might be subjected, in equity, to the debt. He is called, then, in favor of his own interest, and the release of his copartner can not affect his liability to the other party to the covenant. He must be rejected.”
It is insisted, on the part of the complainants, that their property has been appropriated to the use of the firm, and has increased the partnership effects to the amount of their claim, and that all have had a benefit from the property sold; that the obligation to pay exists independently of any instrument by which the debt may have been secured, unless it was clearly the inten tion to release the firm from all further liability; but, from the manner of the filling up and executing of this bond, it is clear that such was not the intention.
From a close examination of the equity of the case, I have been unable to discover any good reason why the mere affixing of a seal to a contract, by an individual partner, when transacting the business of the firm, should, in equity, change the nature of that contract, and that, too, contrary to the intention and understanding of the contracting parties. It is contended that one partner can not bind the firm by contract under seal. This may be the law, but equity would seem to suggest a different rule. The right of each individual partner to bind the firm should be coextensive with the business of the firm; and as partnerships are founded in mutual confidence, that confidence should not be limited to any particular manner of transacting the partnership business; neither should these defendants complain if complainants have placed the same unlimited confidence in their integrity that they have reposed in the integrity of each other.
The right of the individual partner to settle the account is not denied, nor is it contended that there was not due from the firm, to complainants, the amount mentioned in the bond. *The sole defense is, that a seal was affixed to the bond; and, therefore, they are not, in equity, bound to pay a debt by them admitted to be justly due from the firm to the complainants. A defense of this kind might, and probably would, prevail in a court of law; but that a court of justice, acting upon the principles of equity, would refuse relief to a party, under circumstances so trifling, is hardly to be conceived.
That this bond was taken by complainants, through mistake or ignorance of the law, there can be no doubt; and that the partner who executed it must have been equally mistaken or ignorant, is equally clear. In the case of. Edwards v. Morris, 1 Ohio, 531, the court say, that “ it is the peculiar province of chancery to relieve against fraud, mistake, or accident. But how far parol testimony can be admitted, to prove mistake in a written instrument, has been matter of much altercation and doubt. Mistakes in matter of fact, it seems, may be rectified. And the opinion of the court, in the case of Hunt v. Rousmanier’s Adm’rs, 8 Wheat. 174, goes far to establish the doctrine, that where the parties, through a mistake and ignorance of the law, execute a writing which does not carpy into effect their contract and intention, that, the true contract and intention may be enforced in chancery.” See also Young v. Miller, 10 Ohio, 89.
It is said that if ignorance of the law was an excuse for a man’s mistake, complainants have ratified the arrangement by subsequently entering judgment on the bond against Hale, and ought to be estopped from pursuing them, either at law or equity. Had this suit been instituted before pursuing Hale to insolvency, defendants might, with propriety, have contended that complainants had a legal remedy against him, and must first pui’sue that remedy before a court of equity could interpose; for, had that remedy been effectual, there would have been no necessity for-the interposition of a court of equity.
The defendants seem to attach the utmost importance to the seal of this instrument, as though it was a matter of such magnitude that no court of justice could overlook it, or a barrier, beyond which a court of equity could not pass. It is said *that seals were first introduced because men were unable to write their names, and were used instead of a signature. If such is the fact, the reason of using them having ceased, the seal itself should no-longer be used.
A. Hand, in reply:
-To sustain this bill, the complainants’ solicitor relies upon the case of James v. Bostwick, Wright, 142, as an authority. That was an action of covenant, on a contract, to finish and put up a. steam boiler, etc., etc., for which the plaintiff was to pay $1,000 The contract between the parties was under seal, and signed “ Richmond and Bostwick.” On the trial, Bostwick released his copartner from all liability, and offered to use him as a witness (he not being party to the record). It was objected that he was. still interested, and the court decided that he was not competent on account of his interest.
There is this difference between the case cited and the one now-in hearing: Partridge & Co., while in company, had contracted a running account, or debt, with the complainants; and, to settle it, Hale gave a bond, signed with the name of the firm by himself Here was the adjustment and extinguishment of a simple contract debt, by the giving of- an obligation under seal. It was intended by the complainants, at the time, that the bond should extinguish the account.
In the ease in Wright, the property was delivered and put up under the agreement upon which the suit was brought, and there could, therefore, be no obligation of a higher nature. This question could not then arise in that suit. There the parties were exactly where they had originally placed themselves; here that relation has been changed.
In the case of James v. Bostwick, the court say: “ This is a .partnership contract in equity, though in law so executed as to subject one of the parties only upon the covenant, as but one sealed it.” This language of the court seems not a little mysterious ; and we should be at a loss to know what the *court meant by it, were we not helped out (if help it may be called) by the last clause of the sentence, “as but one sealed it.” We suppose, by this, that Richmond had never acquiesced in the sealing of the contract by Bostwick in the partnership name. If he had .so acquiesced, the plaintiff had not been able to prove that fact. It is a well-established principle of law that covenant could have been brought upon that contract against Richmond & Bostwick, if the plaintiff could make the necessary proof of knowledge and recognition, of the mode of executing the contract. In 1 Hall, 292, Chief Justice Jones holds the following language: “If the co-partnership took a store upon lease, to transact their business, and both are named as lessees,* but one of them only seals the counterpart, and the other agrees to it, and they occupy and enjoy the store conjointly under the lease, it is seen that covenant will lie against both for the rent.” This is a full and perfect recognition of the doctrine that the seal of one binds the firm, when the partnership name is affixed, if the other partner recognize the transaction, and that covenant may be sustained on the contract against both. This decision was made in December, 1828, and nearly four years before the one in Wright. If the court do say, in the case just referred to, that covenant would not lie in such a «ase, they must have overlooked or entirely misapprehended the force of the authorities on this subject, or else Chief Justice Jones must have been mistaken.
If the court erred in saying that no action could be sustained at law against Richmond & Bostwick upon that contract (and we humbly conceive the court did so err), we shall also contend, and try to prove, that its conclusion in regard to the jurisdiction of a court of equity was equally erroneous and unfounded.
If the plaintiff in that suit had a remedy, olear and unembarrassed, at law, as he doubtless had, equity could not step in and take jurisdiction of the subject matter of the contract. And the court was equally without justification in saying that *the contract was a contract in equity, when it was clearly a contract at law.
What we mean to say, then, is, that the case in Wright is not applicable here. If applicable, it is a violation of principle and contrary to adjudicated cases, and ought not to be sustained; and we trust the court in' reviewing the same will come to the same conclusion in the matter that we have.
In regard to the mistake of law, we have to say that the case of Edwards v. Morris, 1 Ohio, 531, was a case of mistake of fact, and not of law. The parties had neglected to insert in their contract that part of their agreement whereby the defendant at law was to have the privilege of paying his note in the “ notes of the Miami Exporting Company.” It was a mere omission of a part of the agreement, and all other things being equal, the court could have afforded the proper relief. And why the court should have gone into the question of mistake in matter of law, we can not well imagine. The facts in the case did not necessarily lead to it. All thatis there said is merely arguendo, and not entitled to the weight o.f an authority. We have not been able to examine the case of Hunt v. Rousmanier, 8 Wheat. 212, fully, but can say that if the case decides that a court of equity will relieve against mistakes of law, that it is an exception to the authorities generally.
Judge Story says, 1 Story’s Eq. Com. 121, “It is a well-known maxim that ‘ignorance of law will not furnish an excuse for any person, either for a breach or for an omission of duty; ’ ” and he then refers to the authorities, one of which is the very case of Hunt v. Rousmanier, in 8 Wheat., the very case which the court cites in Edwards v. Morris, 1 Ohio, 531, to sustain the position that courts of equity will relieve against mistakes of law. Whether the court here wiLl establish a new rule in this case upon the authority of Edwards v. Morris, and Hunt v. Rousmanier, we can never believe till, we are furnished with the proof.

Opinion:
*Wood, J.
The rule in simple contracts appears to be settled, that to give a note or other security for a prior engagement is no discharge of the original agreement, unless the latter be paid or performed, or, unless it was the understanding of the parties that the latter should extinguish the former. It has accordingly been held that the merchant who disposes of his wares and receives a note or bill at any number of days, if the note or bill is not paid at maturity, may set up the original consideration and recover iuindebitatus assumpsit, on the common count for his goods. Numerous are the decisions in New York and Pennsylvania to this effect.
But when a bond or sealed instrument is taken for a simple contract debt, the former is of a higher nature than the latter, and the simple contract is merged, lost, and discharged by the bond. 1 Bay S. C. 495; 1 Hall, 292. The presumption is, that such was intended by the parties where a security of a higher nature is received, and that, too, whether it be the bond of the debtor or a third person. Such, then, being the situation of these parties, the complainants having the bond of Hale, one of the respondents, for the debt of all, it is clear the complainants have no remedy at law. It is equally clear they are remediless in equity, unless upon the ground averred in the bill, and admitted by the demurrer, that both the parties were under a mistake as to the legal effect of the execution of the bond, and its operation to discharge all but the individual partner who sealed it. Upon this last ground, if there was no other point to be considered, the court are unanimous in their opinion the complainants would be entitled to relief. This is one of the original grounds of equity jurisdiction. Though it is beyond the reach oí a court of law, in ordinary cases in equity mistake may be molded nto any shape to meet the intentions of the parties when it occurred. The counsel for respondents claim, however, that upon this ground the complainants' bill can not be sustained, because if a mistake has occurred, it is a mistake of law, and a court of equity will not attempt to correct mistakes in that which every, man is presumed to know. Rules of policy are, sometimes, it *is true, adhered to with great tenacity, and the common good of a whole community requires, oftentimes, that they should not be relaxed. There are, however, other cases where the proof has been so clear as to overthrow this presumption, and whore individual hardship was so great that they have, occasionally at least, been permitted to stand as exceptions to, if not to form general rules under which to grant relief. I do not know that I am authorized by a majority of my brethren to say a mere mistake of law may be corrected, but I am authorized to say that relief might be granted in the ease at bar if it depended on the case of mistake made in the bill. The inquiry then is, what is the mistake as averred in the bill and admitted by the demurrer ? Is it of law or fact? The bond given by Hale was precisely such as was agreed to be given. It was executed in the manner it was agreed to be executed. It contained every stipulation the parties supposed it contained, but they were mistaken in its legal effect. Its operation was to discharge H. & R. Partridge, and charge only Hale, who was insolvent, with the debt. This neither the complainants nor the respondents designed. Is it not then manifest that it was a sheer mistake of law, and may not such in certain cases afford ground for relief in equity ?
By two of the judges of this court, relief was granted in a case by no means dissimilar, on the circuit in Cuyahoga county, at the last term. I cite from memory only, as I have with me no note of that case. Cushing had been negotiating with Clark, Hilliard, and Clark, for the purchase of two lots of ground. He concluded, not to complete the contract. The parties had proceeded so far that two blank contracts had been filled up, but not signed by Cushing. In this situation Hall applied to purchase the two lots, and, to avoid trouble and expense, it was agreed Cushing should sign the contracts and assign them over to Hall, one of the vendors, saying that Cushing would not be liable upon it for the purchase money, and Cushing being advised to the same import by others.
Hall failed to make payment, and the vendors, threatening to enforce the collection of Cushing, the contracts were *decreed to be canceled as against him. In Muskingum county, at the last term, a bill was pending to enforce the collection of interest upon a mortgage, and a mistake of law was set up by way of defense; that it was understood between the parties, by the terms employed, that if the mortgager paid the principal punctually, the interest was not, in law, demandable, and the court refused a decree to the complainant, the principal having been punctually paid. The case of Hunt's Adm'r v. Rousmanier, 8 Wheat. 212 has been the subject of much comment. It is cited by both the parties in this ease to show that equity will and will not relieve against a mistake of law merely. I have not had time to apply the investigation of it anew, but it is certain that the bill was brought to correct the instrument executed between the parties, because the legal effect was not such as the parties •supposed it to be, from the terms employed by the draughtsman, though as to the actual language used there was no mistake. In this case Chief Justice Marshall delivered the opinion of the court. He observed, we aré called upon to say, whether a mistake may be corrected, and that mistake is clearly at law. For the instrument is such as the parties supposed it was; the terms used are such, .and there is no mistake of fact. He then reviews all the authorities, and comes to the conclusion that there is no one of them where the point was necessary to be decided, and where it had been expressly held that such mistake could not be corrected, and lays it down as a general rule that when, from the terms used in an instrument, it fails to carry out the clear and manifest intention •of the parties, it will be reformed in equity to meet that intention and decreed accordingly. And yet this very case is cited by Judge Story,- in his treatise upon equity, to show that a court of -equity will not relieve for a breach or omission of duty arising from a mistake of law. 1 Story's Com. on Eq. 121.
But unfortunately for the complainants, there is another point in this case which destroys all right to the relief prayed, on the principle of mistake, whether such mistake be of fact or of law. It is averred by the complainants that when they *applied to their attorney to collect the bond, they were surprised to learn that Hale only, who sealed it, was bound by it; that afterward they caused a judgment to be entered, and execution to be issued against Hale. These proceedings were after the mistake had come to their knowledge. The complainants, notwithstanding, per•severed, and tried their remedy at law against Hale, without effect. By thus proceeding, after the mistake was known, they ratified and confirmed the'arrangement, as it then stood; and it is, after this, too late for them to reform it. As .well might the •defendants have claimed not to be bound had they confirmed the •act of Hale, in the execution of the bond, in which case, it is well settled the complainants would have had a remedy at law against .all the partners. Bill dismissed, with costs.