Case Name: John S. Wilson v. John and George Forder
Court: Supreme Court of Ohio
Jurisdiction: Ohio
Decision Date: 1870-12
Citations: 20 Ohio St. 89
Docket Number: 
Parties: John S. Wilson v. John and George Forder.
Judges: Brinxeehoff, C.J., and Scott, Welch, and Day, JJ., concurred.
Reporter: Ohio State Reports, New Service
Volume: 20
Pages: 89–97

Head Matter:
John S. Wilson v. John and George Forder.
A member of a firm after dissolution, witbout authority from bis copartners, renewed firm notes by giving a new note in tbe firm name. Tbe new note, witbout any intent to defraud, was made to bear interest at tbe rate of ten per cent, and to include tbe individual note of one of tbe partners. ' Tbe defendant, a member of tbe firm, supposing tbe new note was simply a renewal of firm notes at six per cent, interest, promised to pay it. Held: That tbe note given in renewal was binding on tbe defendant for tbe amount of tbe firm notes surrendered on tbe renewal, witb simple interest from tbat time.
Error to the court of common pleas of Mahoning county. Reserved in the district court.
The original petition was filed in the court of common pleas, March 6th, 1865, by John and George Border against John S. Wilson, Isaac Wilson, and A. Williamson, partners under the firm name of Wilson, Williamson, & Go., upon a promissory note, of which the following is a copy:
“ Due Jobu and Greorge Forder, or order, five hundred and eighty dollars, for value received, as witness my hand and seal, with interest at 10 per cent, from date. March 15th, 1856.
“ $580. Wilson, Williamson, & Co.”
The answer of John S. Wilson, the plaintiff in error, who alone was served with process, alleges that, in September, 1849, John S. Wilson, Allen Williamson, and Isaac Wilson entered into a copartnership in merchandising, at Deerfield, Portage county, Ohio, under the name of Wilson, Williamson, & Co., and continued until September, 1851, when they mutually dissolved, leaving Isaac Wilson to settle and close up the business, and with sufficient assets in his hands to pay all liabilities of the firm, of which the Forders had full knowledge. That about four years after said dissolution, Isaac Wilson, without the hnowledge of John S. Wilson, executed the note in question, in the name of Wilson, Williamson, & Co., at ten per cent, interest, and also including therein an individual note of Allen Williamson of $40.
The reply denies that the note was executed without the knowledge or authority of John S. Wilson, and admits that it was executed more than four years after the dissolution of the copartnership, and avers that the note was'made of old notes of the firm of Wilson, Williamson, & Co., and that John S., knowing the same, afterward ratified the act of Isaac by-promising to pay the note.
At the October term, 1866, the case was tried to a jury.
The bill of exceptions taken on the trial is in substance as follows:
“ The defendant gave testimony tending to show, that the note in question was given without the knowledge or authority of him; that it included an individual note of Allen Williamson of $40; that the old notes which formed part of the new note, only bore six per cent, interest; that at the time plaintiffs claimed the note was ratified by him, he did not see it and did not know its amount, its rate of interest, or that it included said $40 note of Allen Williamson, but supposed it was simply a renewal of old notes of the firm, and at six per cent, interest.”
The part of the charge of the court complained of is as follows:
“ TJpon this subject I say to you as a matter of law, that if you find that the defendant, with knowledge that the note had been executed by his former partner, promised the plaintiffs to pay it, yet if at the time of such promise he supposed the note bore but six per cent, interest, then the plaintiffs are entitled to recover an amount equal to the principal of the note and interest on the same, at six per cent., and no more. And if you further find that at that time he supposed it was entirely made up of notes upon which the defendant was liable, while in fact it was made up of such notes and also of a note of $40, upon which he was not liable, then the plaintiffs are entitled to recover the amount of the note less the amount of the note and interest upon which he was not liable. If the defendant promised to pay this identical note, then, although it bore a higher rate of interest than he supposed, or if in its consideration was embodied a note of $40 upon which he was not liable; neither of these state of facts would entirely avoid the note in suit, while it would defeat the note to the amount of such extra interest and foreign consideration.
“If then the defendant, with full knowledge of the execution of this note, promised to pay it, yet if the note bore a. higher rate of interest than the defendant supposed at the time of such promise, or if there was embodied in it an obligation unknown to the defendant, then such amounts should be deducted from the amount of the note and interest. While if neither of these claims have been shown by the evidence, then the plaintiffs are entitled to recover the amount of the note and interest expressed upon its face.”
The finding of the jury was for the plaintiffs; and a motion for a new trial having been overruled, judgment was rendered on the verdict.
A petition in error was filed in the district court by the defendant below, which was reserved for decision by this= court. The error relied upon arises on the charge of the court.
F. G. Servis for plaintiff in error :
As the note was made by Isaac "Wilson, an unauthorized agent of John S. Wilson, he could not in law bind himself by .a promise to pay it, unless he knew all the material facts; and as the extra interest and the $40 note were material, and the note lout one entire contract, he could not in law, by the promise to pay a particular note, thereby bind himself to pay a part of another note.
And the court below erred in charging the jury that John 'S. Wilson could by such promise or part ratification bind .himself to pay the amount of the old firm notes at six per cent.
It is well settled in the case of Palmer v. Dodge, 4 Ohio St. 21, “ that after a dissolution of partnership, none of the members can create contracts or obligations binding on the .firm, although one of the members is authorized to settle, liquidate, and close up the company affairs, and, for this purpose, authorized to sign the name of the firm.”
No doctrine is better settled both upon principle and authority than this, that the ratification of an act of an agent previously unauthorized, must, in order to bind the principal, be with a full knowledge of all the material facts. If these be either suppressed or unknown, the ratification is treated as invalid, because founded in mistake or fraud. Owing v. Hull, 9 Peters, 629, and authorities there cited.
It is also settled that when a principal ratifies the act of his agent, he ratifies the whole act. He will net be permitted to ratify in part and reject in part. He must adopt the whole or none. 1 Parsons on Contr., p. 47; Story on Contr., p. 143, sec. 164.
If the law will not permit him to adopt in part, how can the court compel him to adopt in part ?
It is claimed by counsel for defendant in error that this is an apportionable contract, subject to division at any numeri. <cal, point, and that John S. Wilson is liable as far as the proof showed he had knowledge of the facts or consideration of the new note. But we say there must be a contract or liability before it can be apportioned; and as there was no contract upon which John S. Wilson could be at all made liable, unless he knew it all and then ratified it, there was nothing to apportion. The ratification of an unauthorized act is the ratification of a power only, and not of a consideration, for the ratification relates back to the inception of the transaction. 4 N. Y. Digest, p. 766, and the authorities there cited.
There was no agency until after the pretended ratification.
It is also claimed that John S. Wilson has received a benefit. It can as well be claimed that he has received an injury / for if the Borders had been as vigilant as they should have-been, they could have made their claim from the assets of the firm, or, at least, collected it before the other members became insolvent.
S. W. Gilson for defendants in error:
1. A principal, to be bound by the ratification of an obligation made by his agent, must be made' acquainted with all the circumstances of the same, or it is void. 23 Penn. 340. Admitting the above principle, yet by no authority is it required that the principal shall be advised beyond the general terms and provisions thereof; and if he desires information in regard to the particular elements involved therein let him inquire. Besides, if the obligation ratified be divisible, then that of which the party is fully advised remains valid and binding, while that of which the part} is not fully informed,, and which should not form any part thereof, may fail.
2. Contracts are of two kinds, those which are entire and those which can be apportioned. Those which are entire-must stand in full or fall in full. 2 Parsons on Contracts, 30 and note; 3 B. & P. 162 ; Story on Contracts, sec. 21; 2 Story’s Equity Jur. 470, and 1 Swanston Rep. 338. “ Those which can be apportioned or divided become two separate and distinct contracts, and a ratification of the original entire-contract may be good as to one of the contracts into which the entire contract was divided, and void as to the other • for an apportioned contract, good in part, may be void in part.” See Parsons on Contracts, 30 and 31, and note and cases there cited; also, see Johnson v. Johnson, 3 B. & P. 162; Mayfield v. Wadsby, 3 B. & P. 159; Robinson v. Greene, 3 Metc. 159.
3. A promissory note is a severable contract, capable of being dimided at any numericalpoimt where the consideration fails. See 2 Parsons on Promissory Notes, p. 175; Swan’s Treatise, pp. 562-3 ; Doty et al. v. Knox County Bank, 16 Ohio St. 132, 140, 142.
In this case John S. Wilson, plaintiff in error, by ratifying the note in controversy, thereby made it his own note, as much as if he authorized its execution — as much as if he had executed it himself — and so might defend till where the consideration did not fail.
4. If a principal receives a benefit from the contract made by his agent, it is a ratification to that extent, and if the contract be- a promissory note, that apportionment (viz.: to the extent of the amount received) of the contract binds the principal. That is equitable — it is accordant with “ common reason,” in which the common law delighteth. See Com-stock’s Rep. 434; Story on Contracts, 143.
5. By the disaffirmance of the contract, if the principal is thereby benefited, he must place the party with whom the agent dealt as he was at the time when the same was made by the agent. But a party, or, if you please, this plaintiff in error, having escaped by being made liable only to the extent clearly admitted, and to which he derived a full benefit, he can by no means with any reason complain; for by his own showing and by his own admission, but equity and substantial justice have been done him, and so he ought to be content.
Where the contract can be apportioned, fraud, suppression, or misrepresentation of facts, or the failure of consideration, quo ad hoc, destroys the contract so apportioned out of the entire contract affected thereby; and yet it leaves good and valid that portion of the once-entire contract not affected by such fraud, suppression, or misrepresentation. Robinson v. Greene, 3 Metc. 159; Parish v. Stone, 14 Pick. 198.
John S. Wilson received a benefit to the amov/nt of the old notes on which he was liable, and to that extent and that amount it was a good consideration; and as the note was a contract subject to apportionment, to the amount of the old notes, it formed a distinct contract, as to which there was no misrepresentation; and clearly to that amount his ratification bound him, for to that there was no defence; while, as to the other part of the composition of the note, it forming a distinct apportionment thereof, and not obligatory on him, against that he could defend — his ratification, as to that extent, being in no manner binding upon him.
This plaintiff in error seeks to reverse a judgment clearly beneficial to him — a judgment for no more than the amount for which he was liable before the renewal. Such a judgment will not be reversed on the application of the party benefited. Sterrett v. Creed, 2 Ohio, 343-4; Burt v. Dodge, 13 Ohio, 131; Story on Contracts, p. 143, sec. 164, also sec. 162; 2 Kent, 467.

Opinion:
White, J.
After the dissolution of the firm neither partner was authorized to renew the firm notes. There was no express authority, and the law does not imply it. Palmer v. Dodge, 4 Ohio St. 21.
The question in the case is, whether the act of Isaac Wilson, one of the firm, in giving the note in suit, was so ratified as to bind the defendant for the amount of the firm notes surrendered on the renewal, with simple interest from that time.
In answering this question it is necessary in the first place to determine whether the note must be treated as an entirety, or whether it may not be apportioned according to the considerations for which it was given.
In Parish v. Stone (14 Pick. R. 198) it was decided tha' " where a promissory note is given upon two distinct and independent considerations, and one is a consideration which the law deems valid and sufficient to support a contract, and the other not, the note will be apportioned between the original parties, or such as have the same relative rights, and the holder will recover to the extent of the valid consideration and no further."
It was said that " the holder in such case recovers on the note, and not on the original consideration."
In Darwell v. Williams (2 Starkie's R. 145), the action was brought by the drawer of a bill for £19 5s. payable to his own order, against the acceptor. It appeared that the bill was accepted for value as to £10, and as an accommodation to the plaintiff as to the residue. Lord Ellenborough held " that although with respect to third persons the amount of the bill might be £19 5s., yet as between these parties it was an acceptance of £10 only."
The same principle was recognized by this court in Doty et al. v. The Knox County Bank, 16 Ohio St. 123. See also, Byles on Bills, s. p. 98; 1 Parsons on Notes and Bills, 211.
The considerations entering into the note now in question, are separate and distinct; and we see no good reason why the note may not be regarded as divisible, and held valid to the extent that the firm debts constituted the consideration, and invalid as to the residue.
If the note had been signed by the defendant personally upon the understanding that it embi'aced only the firm debts,, he would have been liable to the extent of such indebtedness. So also, if Isaac Wilson, the acting partner who gave the note, had been previously authorized by the defendant to renew the notes of the firm, and, in executing the authority, had, by mistake, given the note for too much, the invalidity would only have gone to the excess. In either case the notes, in legal effect, would be onlyjpro tanto the note of the defendant.
In this case there was no claim that the creditor, or the acting partner in making the note, intended any fraud. The evidence tended only to show that the note in question was given without the knowledge or authority of the defendant; that it included an individual note of a member of the firm other than the one giving the note; and that the firm notes bore only six per cent, interest.
It is a maxim of the law that the subsequent ratification of an act has a retrospective effect, and is equivalent to a prior command. It is true that in order to bind the principal he-must ratify with a full knowledge of the material facts affecting his rights. But if the note can be apportioned, and is only enforcible to the extent of the firm indebtedness, the defendant had full knowledge, at the time of making the promise, of the facts affecting his liability.
At the time the note in question was given the firm notes were surrendered by the plaintiffs. The defendant received the benefit resulting to the firm from the surrender of the-old notes; and, from aught that appears, took no steps to pay them, as he ought to have done if they were regarded by him as outstanding liabilities of the firm.
On the question of ratification, the conduct of the defendant ought to be liberally construed in favor of the agent. Story on Agency, see. 253.
Under the circumstances, and in the absence of any intent to defraud, we think effect ought to be given to the promise of the defendant as a ratification to the extent that he in tended when he made the promise. This is but justice to the-creditor, and does no injustice to the defendant.
Judgment affirmed.
Brinxeehoff, C.J., and Scott, Welch, and Day, JJ., concurred.