Case Name: Robert Walsh v. Michael Lennon
Court: Illinois Supreme Court
Jurisdiction: Illinois
Decision Date: 1880-09-25
Citations: 98 Ill. 27
Docket Number: 
Parties: Robert Walsh v. Michael Lennon.
Judges: 
Reporter: Illinois Reports
Volume: 98
Pages: 27–37

Head Matter:
Robert Walsh v. Michael Lennon.
Filed Ottawa September 25, 1880
Rehearing denied March Term, 1881.
1. Partnership—acts of one partner as binding upon the firm. One partner has not the power to bind the other members of the firm by deed, without other authority.
2. It is, however, within the power of a partner in the mercantile business to borrow money in the name of che firm, and to bind the firm by an agreement to pay interest on the same at any lawful rate, and to sign the firm name to any writing admitting the fact of borrowing and promising to pay, and thereby furnish evidence against the firm and each of its members.
3. In assumpsit against the members of a firm, a note under seal, signed in the firm name by one of the partners, reciting that it was given for money borrowed, and promising to pay ten per cent interest, is admissible under the common counts, and a recovery may he had of both principal and interest on producing the note on the trial, to be canceled. In such case the seal adds nothing to the force and effect of the instrument as an admission of the loan, and of the interest agreed to he paid.
4. Payment—effect of giving a promissory note. The giving of a promissory note for a pre-existing debt, whether sealed or unsealed, does not pay or discharge the original debt unless it be agreed that the note shall he accepted as payment and satisfaction,—and, in the absence of such an agreement, assumpsit may be maintained for the original debt if the note be produced on the trial to he canceled.
Appeal from the Circuit Court of Will county; the Hon. Josiah McEoberts, Judge, presiding.
Mr. George S. House, for the appellant:
The instrument sued upon is executed in the name of “ Walsh Bros.,” and is under seal, and the proof shows that it was so executed by Thomas Walsh, one of the partners of Walsh Bros., and it is sought to charge the firm upon the instrument alone.
It is an inflexible rule of law, that one partner can not affix the seal of his co-partner without his express authority. The reason of the rule has its foundation in the fact that the seal belongs to the common law, and not to the law merchant, while partnership belongs to the law merchant and not to the common law. Parsons on Partnership, 186; Paine v. Weber, 47 Ill. 44.
It may be asserted, as the conclusion of all. the authorities, that when an instrument under seal is executed in the name of the firm by one partner only, to charge the firm it must be shown, either that some prior authority was given, or subsequent ratification had—an adoption of the act by the other partner.
The plea in abatement puts in issue the existence of the partnership, while the plea of the general issue, verified by affidavit, puts in issue, not only the signing of the note, but the authority of the partner who signed the note to execute that particular instrument. Warren v. Chambers, 12 Ill. 124; Stillson v. Hill, 18 id. 262; Stevenson v. Farnsworth, 2 Gilm. 718; Zuel v. Bowen, 78 Ill. 234; Davis v. Scaritt, 17 id. 202.
The implied authority of one partner to make notes in the firm name, and so bind the firm, extends only to transactions in reference to the business of the partnership and on partnership account. Wright v. Brosseau, 73 id. 383.
Messrs. Hill & Dibell, for the appellee:
While it is undeniably true that one partner can not ordinarily bind his co-partner by an instrument under seal, executed in the firm name, yet it is equally well settled, at least in this country, that if the act be within the scope of the power and authority of such partner, it will not be vitiated, or any the less binding upon the firm, by being under seal. Story on Partnership, sec. 122; Tapley v. Butterfield, 1 Metc. 515; Sweetzer v. Mead, 5 Mich. 107; Everett v. Strong, 5 Hill, 163; Everett v. Strong, 7 id. 585.
This exception is very clearly stated in the opinion of the court in Tapley v. Butterfield, supra: “If an act be done which one partner may do without deed, it is not the less effectual that it is done by deed. It is clearly within the scope of partnership authority.”
It is also well settled that in ordinary commercial partnerships, each partner may draw, negotiate, accept or indorse bills of exchange and promissory notes, and checks, and other negotiable securities, or any other acts which are incident or appropriate to such trade or business. Ulery v. Ginrich, 57 Ill. 533; Story on Partnership, secs. 102, 102a.
As to how far one partner may bind the firm, see Story on Partnership, secs. 103-4-5; Story on Promissory Notes, sec. 72; Wilkins v. Pearce, 5 Denio, 541; Sage v. Sherman, 2 Comst. 418.
As to the rule, that in matters where one partner may properly bind the firm, the addition of a seal will not vitiate the act or render it nugatory, see Orn v. Chase, 1 Meriv. 729; McCullough v. Summerville, 8 Leigh, 415; Purviance v. Sutherland, 2 Ohio St. 478; Despatch Line v. Balamy Mfg. Co. 2 N. H. 206; Evans v. Wells, 22 Wend. 240; Lucas v. Bank of Darien, 2 Stew. (Ala.) 297; Price & Co. v. Alexander & Co. 2 Greene, 433; Tapley v. Butterfield, 1 Metc. 515; Milton v. Mosher, 7 id. 248; Wood v. A. & R. R. R. Co. 4 Seld. 167; Flagely v. Bellas, 17 Pa. St. 67; Robinson v. Crowder, 4 McCord (S. C.) 519; Crozier v. Carr, 11 Tex. 376; Mitchell v. St. Andrews Bay Land Co. 4 Flor. 200; Sweetzer v. Mead, 5 Mich. 110; Human v. Caniffe, 32 Mo. 318; Lawrence v. Taylor, 5 Hill, 107; Damon v. Cranby, 2 Pick. 352; Everett v. Strong, 5 Hill, 163; Dubois’ Appeal, 38 Pa. St. 231; Gibson v. Warden, 14 Wall. 247; Ex parte Bosanquit, 1 DeGex, 439; 2 Pars. Part. 191; Story’s Agency, sec. 19; 1 Amer. Lead. Cases, 554; Trewett v. Wainwright, 4 Gilm. 411.

Opinion:
Mr. Chief Justice Dickey
delivered the opinion of the Court:
This is an action of assumpsit, brought by Lennon, against Robert Walsh and Thomas Walsh, as partners, doing busi ness under the firm name of "Walsh Bros.," upon an instrument in writing, dated Joliet, 111., May 27, 1875, and purporting, on its face, to be signed and sealed by Walsh Bros, and by Thomas Walsh, by which they promised, jointly and severally, for value received, to pay to the order of Lennon ¡§980, one day after date, with interest at ten per cent per annum after due, in which instrument it Avas recited that the same Avas given for money loaned. The instrument also contained a power of attorney authorizing'a judgment by confession to be entered at any time for the amount, then due thereon.
Defendants were served with process. Thomas Walsh suffered judgment by default. Robert Walsh made defence, upon the sole ground that he did not seal the instrument in question. The declaration contained special counts upon the instrument, and also the common money counts.
On the trial, it was proven that Thomas Walsh and Robert Walsh were partners, doing business as dealers in dry goods, under the firm name, "Walsh Bros.," and that .Thomas Walsh signed the firm name to the writing in question. It is authenticated thus:
" Witness our hands and seals.
Walsh Beos. [seal.] Thomas Walsh, [seal.] • [seal.] "
The plaintiff recoArered, and Robert Walsh appeals to this court.
It is insisted that the instrument, being a sealed instrument, is not such an instrument as one partner may execute for another. It is Avell settled that the power of a partner does not enable him, merely as such, to bind the other members of the firm by deed. It is, however, among the powers of a partner in such business, to borroAv money in the name of the firm, and thus render His partners liable for the sum borrowed; and to bind the firm by an agreement to pay interest on the same at any lawful rate; and to sign the firm name to any writing admitting the fact of the borrowing, and promising to pay, and thereby to furnish evidence against the firm and each of its members. All this Thomas Walsh did do, and thereby, (as a majority of the court think), did bind the firm and each of its members. He also added a seal to the signature. This he had no authority to do, in behalf of his firm or of his partner. This seal added nothing to the force and effect of the writing to which the firm name was signed, and a majority of the court are of opinion that the addition of a seal to the firm name did not impair or vitiate the written acknowledgment of the firm, and the written promise of the firm contained in the paper, and sanctioned by the firm name placed thereby one of the partners.
It is undoubtedly true, that one partner has no power to bind the firm by deed,—but this instrument is not sued upon as a deed. The declaration contains the common counts. The proof shows defendants were partners, and that the writing in question has the firm name attached thereto by one of the partners. This partner had the right to borrow money on the credit of the firm and give the promise of the firm for its payment. A seal is not necessary to render such a promise effective. The writing, without reference to its effect as an obligation, contains a written admission that the money was borrowed by the firm at the agreed rate of interest mentioned. Had the partner written a letter to a third party and stated these facts in the letter, can any one doubt that such a letter, signed by one of the partners, would be competent evidence to prove these facts ? And can it be contended that the adding of a seal to the letter would have impaired the force of such evidence? Purviance v. Sutherland, 2 Ohio St. 478. The giving of a note for a debt, whether sealed or unsealed, does not pay or discharge the debt, unless it be agreed that it shall be accepted as payment and satisfaction, and assumpsit may be maintained for the debt, if the note be produced on the trial to be cancelled. One partner, acting for the firm, may, in its name, appoint an agent and author ize him to bind the firm by his contracts, made in the name of the firm by him, as such agent. Such authority may be given in writing, and such writing need not be under seal; and if a seal be added it will not vitiate the effect of the writing. Lucas v. Bank, 2 Stewart (Ala.) 297.
There are many respectable authorities to the position, that while one partner can not bind his co-partners by deed, yet, if the instrument used in commercial transactions be valid and effective without a seal, and within the power of a partner, the attempt to seal the same in behalf of the firm will not vitiate its legal effect as an unsealed instrument. See Parsons on Part. (2d ed.) p. 191, note m, and Price v. Alexander, 2 Greene (Ia.) 427; Lawrence v. Taylor, 5 Hill, 107; Sweetzer v. Mead, 5 Mich. 107; Tapley v. Butterfield, 1 Metc. 575; Gibson v. Warden, 14 Wall. 247; and authorities collated in Am. Law Peg. vol. 9, N. S. pp. 271—2.
Whatever maybe the true rule on this question, a majority óf the court are clear that the plaintiff had a right to recover under the common counts, by bringing in the paper to be cancelled. The proof shows the partnership, from which springs the power of one partner to borrow money for the firm, and to promise, in behalf of the firm, to pay the principal at a' given time, and the interest at any given, lawful rate. The writing, proved to have been signed by one of the firm, without reference to its effect as an obligation, contains an admission made by one of the partners, that the money was borrowed by the firm at the rate of interest mentioned.
The judgment must be affirmed.
Judgment affirmed.