Case Name: Planters' Bank of Fairfield vs. The Bivingsville Cotton Manufacturing Company
Court: South Carolina Court of Appeals
Jurisdiction: South Carolina
Decision Date: 1856-12
Citations: 10 Rich. 95
Docket Number: 
Parties: Planters’ Bank of Fairfield vs. The Bivingsville Cotton Manufacturing Company.
Judges: O’Neall, Wakdlaw and-Moteo, JJ., concurred.
Reporter: South Carolina Law Reports
Volume: 44
Pages: 95–103

Head Matter:
Planters’ Bank of Fairfield vs. The Bivingsville Cotton Manufacturing Company.
Where the charter of an incorporated Company declared that nothing therein contained should exempt the members “ from all liabilities pertaining to general partners — Held, That the members were liable to creditors of the Company, as partners, and might be sued as such, under the corporate name.
The appointment of an agent with authority to bind the corporation, may be implied from the acts of the Company, and need not be under seal.
Where the members of a corporation are, by their charter, liable as general partners, the Company is bound by the act of a member, acting within the scope of the business of the corporation, as in the case of an ordinary firm: — Semble.
The members of an incorporated Company being liable, by their charter, as general partners, L., the acting member, who did all the business of the Company, drew a bill of exchange in his own name, styling himself agent of the Company. In an action against the members in the corporate name charging them as drawers, the plaintiff was non-suited. On appeal, held, That it should have been submitted to the jury to determine, whether L, drew the bill as the authorized agent of the Company, or in his character as partner.
BEFORE WITHERS, J., AT FAIRFIELD, FALL TERM, 1856.
Tbe report of bis Honor, tbe presiding Judge, is as follows:
“This action was in assumpsit, upon tbe subjoined bill qf exchange, addressed to Messrs. Flint & Bingbam, New York, and by tbem accepted, to wit:
11 Ninety days after date, pay to tbe order of E. C. Leitner, at tbe Corn Exchange Bank, New York, twelve thousand five hundred dollars, and charge tbe same to account of
E. C. LEITNEB,
Agt. BivingsYille C. M. C.
“ On tbe back appeared tbe names E. 0. Leitner, George Leitner, Simpson Bobo, B. B. Poster; tbe last three (there is little, if-any, doubt,) are spurious endorsements.
. • “ This bill was negotiated to tbe plaintiff upon discount by E. 0. Leitner, in person.
“Tbe writ and declaration are against E.. 0. Leitner and George Leitner, as co-partners, trading under tbe name and style of tbe Bivingsville Cotton Manufacturing Company, and they are alleged to be tbe sole stockholders in tbe corporation. Tbe evidence was to tbe effect, that they owned all tbe stock, when tbe bill was drawn and negotiated, and long before; and further, that E. C. Leitner was tbe active and acting manager of tbe business, which was spoken of by witnesses as a cotton factory, producing cotton cloth and yarn, carried on within a few miles of Spartanburg Court House, E. C. Leitner residing at tbe factory, and bis family with him for a part of tbe time.
“These said two persons were sued as partners, by reason of a proviso in tbe Act of 1838, (8 Stat. 463,) which gave (in usual terms,) a corporate existence to Simpson Bobo, James Edward Henry, E. C. Leitner, David Dantzler, James Bivings, and others, and those who now are members of tbe Bivings-ville Cotton Manufacturing Company, and such other persons as may become members thereof, by tbe name and style of ‘The Bivingsville Cotton Manufacturing Company.’ Tbe second clause of said Act, after conferring the usual powers and privileges, as to succession, seal, tbe right to sue and be sued, specifies as follows: “ and have and enjoy all and every right and privilege incident and belonging to incorporate bodies: Provided, That nothing herein contained or hereby provided, shall, in any manner, exempt the said members from all liabilities •pertaining to general partners.” Upon tbe footing of this proviso tbe action was brought against tbe existing stockholders as partners. Tbe motion for nonsuit rested, in part, upon the contrary view — and while I was ratber inclined to concur with tbe view presented for tbe defence upon this point, I granted tbe motion for nonsuit witb a stronger reliance upon an additional ground, to wit: that •there was no evidence to show that tbe negotiation of tbis bill of exchange was within tbe competency of E. C. Leitner, whether regarded as tbe agent of tbe corporation or a stock-holding partner.
“ Tbe evidence that can have any bearing upon tbe question of authority to raise money upon such instrumentality as tbis bill of exchange, was derived from three witnesses of Spartanburg District, to wit: Messrs. G. W. H. Legg, H. H. Thompson, and John Bomar, who used very much tbe same phrases in most of their answers, and may be summed up as of tbe following purport:
“ That several hundred bags of cotton (Bomar said about one hundred and fifty thousand pounds,) were used annually at tbe factory; that cotton cloth and yarn were made, and tbe products, or if not both, tbe cloth, was sent, in considerable quantity, to Charleston, sold for cash by agents, upon whom E. C. Leitner drew for proceeds. (Mr. Thompson said tbis: ‘ they sold and bartered their manufactured cotton in Charleston and different parts of tbe State; at tbe North; in Tennessee and North Carolina, as I believe, and have been informed by E. C. Leitner.’ There was no other evidence of any dealings at tbe North;) that E. C. Leitner was held out as the ‘ active and acting agentthat he lived at the place of business generally, since 1847, when and ever since (said Bomar) he and George Leitner became the sole stockholders; [‘I have had in possession (said Bomar) a writing, authorizing E. C. Leitner to act as agent at one thousand five hundred dollars a year till the property was paid for, which has not been done yet. I don’t know that George Leitner signed it; don’t know of any other power by George to E. C. L. to sign his name;’] that George Leitner was understood to be a resident of Eairfield district, and to have property in
Florida, and was alternately in the one and the other State. Mr. Thompson used this language: ‘ I only know from Ms conduct, that E. C. L. was agent. He acted as such, was so reputed and treated generally. I know of no written power from George to E. 0. Leitner to use his name, or bind him in any way, further than to bind him as partner, and George ratifying his acts as agent of the company.’
“ I find notMng else on my notes touching the question of the scope of authority of E. 0. Leitner as agent or partner; nor was there any evidence to show the application of the proceeds of the bill of exchange, in whole, or in part, to the use of the corporation or partnership; nor any evidence of any kind tending to show a ratification; none tó show that such a bill as this, on a firm in New York, at ninety days, producing a loan of money, had ever been made and negotiated before by E. 0. Leitner, at all, much less that any tMng of this kind had been done by authority of George, by previous mandate or subsequent ratification; or within his knowledge; for to sell or to barter goods, or draw on agents in Charleston, or even elsewhere (if that was proved) for proceeds of cash sales already in hand, was regarded as a wholly-different sort of transaction; quite a different course of business.
“ Other positions for nonsuit were urged, to wit: that there was no proof of proper demand of payment on the acceptors — • and none of proper notice to drawers; none of notice to George Leitner. My mind did not rest on these positions on the question of nonsuit. The protest produced, seemed to be ample evidence of adequate demand on the acceptors; and though the testimony was not full, clear, precise and positive, as to notice having been duly given to George Leitner, yet I was quite satisfied that such question should have been submitted to the jury. If such grounds are relied on by. the counsel concerned to maintain the nonsuit, my memoranda of what the only witness to those matters said, will serve to enable the Court of Appeals to pass judgment upon them.
“Prom my judgment of nonsuit an-appeal goes up on grounds annexed.”
Tbe plaintiff appealed, and now moved tbis Court to set aside tbe nonsuit.
1. Because it is respectfully submitted, tbe evidence of tbe authority of E. C. Leitner to draw tbe bill of exchange sued upon, so as to make defendants liable, was sufficient to authorize tbe sending of tbe case to tbe jury.
2. Because tbe evidence sufficiently showed that tbe drawing of- tbe bill of exchange sued upon was within tbe scope of tbe authority of E. C. Leitner, and should have been submitted to tbe jury on tbe evidence adduced.
Me Gants, Boylston, for appellant.
Sullivan, Gregg, contra.

Opinion:
Tbe opinion of tbe Court was delivered by
Clover, J.
In support of tbe nonsuit two grounds have been assumed:
1. That tbe action cannot be maintained against tbe stockholders as general partners, and
2. That there was no evidence showing that E. 0. Leitner - was competent to negotiate tbe bill of exchange, either as tbe agent of tbe corporation, or as a general partner under tbe proviso of tbe Act.
1. Por tbe protection of tbe creditors of tbe Company, tbe intention of tbe Legislature manifestly was to render tbe stockholders responsible beyond tbe liability which attaches to them as corporators. They are to stand in the relation of partnership debtors to those with whom they contract, and a» security is thereby provided for the payment of their debts beyond the assets of the corporation; The Act confers upon the members, corporate powers, to be exercised under the grants in their charter, for the benefit of the Company; but it also expressly provides, that they shall not be exempt from the liabilities pertaining to general partners. To enforce this liability, creditors must sue the members constituting the corporation, as partners under the corporate name, which is the statutory designation, applicable to them as defendants, in either character. The proviso subjects them to all the hazards and responsibilities attaching to persons who are associated together for the transaction of business without a charter. Their primary liability on contracts made by the corporation, is in their character as partners, and no obligation is imposed by the Act on creditors to exhaust the assets of the corporation, nor is there any condition which requires them to pursue it to insolvency before they shall commence their actions against them as general partners. In this respect the Act differs from the statutory provisions of other States, which make the absolute liability of individual stockholders, for debts due by the Company, depend upon its dissolution, or upon the return of an execution against the corporation unsatisfied. Bank of Poughkeepsie vs. Ibbotson, 24 Wend. 473; Moss vs. Oakly, 2 Hill. N. Y. R. 264.
We are, therefore, of opinion, that the members constituting the Bivingsville Cotton Manufacturing, Company, are primarily liable as partners, under their corporate name, to the creditors of the corporation, and that the objection to the plaintiff's declaration, in this respect, is not well taken.
2. The motion for the nonsuit was granted with stronger reliance on the second ground. It is through the intervention of agents that corporations act or contract, who are either specially designated by the Act, or appointed by, and derive tbeir authority from, the corporation-; and although, generally, the contracts of corporations are under their common seal, the seal is not necessary in accepting bills of exchange, or in issuing promissory notes, by companies incorporated for the purposes.of trade. (Mayor of Ludlow vs. Charlton, 6 Mees. & Wels. 822.) The rule, however, which requires their common seal to be affixed to the acts and con- - tracts of corporations, has undergone important modifications and changes in the United States. Mr. Justice Story, says, " whatever may be the original correctness of this doctrine as applied to corporations existing by the common law, in respect to which it has evidently been broken in upon in modern times, it has no application to corporations created by statute, whose charters contemplate the business of the corporation to be transacted exclusively by a special body or board of directors. And the acts of such body or board, evidenced by a written vote, are as completely binding upon the corporation, and as complete authority to their agents, as the most solemn acts done under the corporate seal." (Flecner vs. United States Bank, 8 Wheat. 357.) Reviewing the authorities on this subject, Angel & Ames remark, "Upon the same principle, it seems clear that a vote or resolution appointing an agent, need not be entered on the minutes or records of the corporation in order to his due appointment; unless the charter, statute, or by-laws, are not merely directory in this particular, but render it absolutely essential. The vote of appointment, may, therefore, as an appointment of an •agent by a natural person, be implied from the permission or acceptance of his services, from the recognition or confirma•tion of his acts, or, in general, from his being held out as an authorized agent of the corporation." (Ang. & Ames, on Corp. 220, 2d ed.)
But it is not necessary to pursue the inquiry and ascertain the competency 'of E. C. Leitner, as an agent of the corpora tion, to contract for, and bind it; it is enough that be was when be negotiated tbe bill, one of tbe members of tbe Bivingsville Cotton Manufacturing Company, wbo are liable as general partners by tbe express terms of tbeir charter, and in which character they must be regarded in all tbeir contracts with tbe public. How far then can be bind bis associates by bis acts and contracts as a partner ? One partner has implied authority to bind tbe firm by contracts relating to tbe co-partnership, to borrow or pay money, tp draw, accept or indorse bills or notes, and tbe firm will be liable, although tbe money be mis-applied. (Col. on Part. 348, 356, 365.) His authority to bind bis co-partners arises from tbe nature and objects of tbe association. C. J. Marshall has very cléarly Stated this general authority of tbe partners. " A partner, certainly the acting partner, has power to transact tbe whole business of tbe firm, whatever that may be, and consequently to bind bis partners in such transactions as entirely as himself. 'This is a general power, essential to tbe well conducting of business, which is implied in tbe existence of a partnership. When then, a partnership is formed for a particular purpose, it is understood to be in itself a grant of power to tbe acting members of tbe Company to transact its business in tbe usual way. If that business is to buy and sell, then tbe individual buys and sells for tbe Company, and every person with whom be trades in tbe way of its business, has a right to consider him as tbe Company, whoever may compose it. It is usual to buy and sell on credit; and if it be so, tbe partner wbo purchases on credit in tbe name of tbe firm, must bind tbe firm. This is a general authority held out to tbe world, to which tbe world has a right to trust." (Winship & al. vs. Bank of United States, 5 Peters R. 561.) An understanding among tbe partners to withhold tbe power to draw or indorse bills by an individual member will nevertheless bind tbe firm as regards third persons not affected with notice of such under standing. (Bank of State of South Carolina vs. Case, 8 Barn. & Cress. 422.)
Tbe competency of E. 0. Leitner to negotiate tbe bill to tbe plaintiff, is derived from bis relation to tbe members of tbe Bivingsville Cotton Manufacturing Company, either as a cor-porator or a general partner. If tbe former, some evidence, and, perhaps, more than was introduced on tbe trial, is necessary to render tbe corporation liable for bis contracts; but by tbe charter under which tbe defendants transacted business and claimed corporate privileges, tbe world was authorized to bold E. C. Leitner and George Leitner, responsible, as partners, for tbe acts or contracts of either, relating to tbe partnership. Whether tbe agent act improperly or not, so long as be acts within tbe scope of bis authority, tbe principal is liable, unless there be fraud on tbe part of him dealing with tbe agent.
Tbe evidence offered by tbe plaintiff, may have satisfied tbe jury that tbe bill was" negotiated by E. C. Leitner either as an authorized agent of tbe corporation or in bis character as partner, and it is proper that this inquiry should be submitted to tbe decision of the jury.
Tbe motion to set aside tbe nonsuit is, therefore, granted by a majority of tbe Court.
O'Neall, Wakdlaw and-Moteo, JJ., concurred.
Motion granted.,