Case Name: Valentine v. Hickle
Court: Supreme Court of Ohio
Jurisdiction: Ohio
Decision Date: 1883-01
Citations: 39 Ohio St. 19
Docket Number: 
Parties: Valentine v. Hickle.
Judges: 
Reporter: Ohio State Reports, New Service
Volume: 39
Pages: 19–28

Head Matter:
Valentine v. Hickle.
A., B. and O. agreed to engage in the shipment and sale of cattle as either might from time to time purchase on his own account, and offer to the others at cost for the purpose of shipment and sale on joint account, but it was provided that when the party purchasing delivered a lot of cattle at the place of shipment, the other parties had the option to take an interest in the same or to decline; if they accepted the lot so offered it became partnership property, and was shipped and sold on joint account ; but if they did not it remained the property of the buyer and was shipped and sold on his account.
H., to whom this arrangement was unknown, sold a lot of cattle to A. on his individual credit, to be paid for on his receiving return of sales ; but he failed to pay as agreed.
Held: 1. That the lot of cattle did not become partnership property until it was delivered at the place of shipment, and was accepted to he shipped and sold on joint account.
2. That at the time the cattle were sold and delivered to A. on his credit, B. and C. did not acquire an interest therein, independent of their consent, and they were not liable by operation of law for the debt thus contracted.
3. The fact that they or either of them subsequently elected to take an interest in this lot of cattle under said agreement did not create a liability against them as partners on such purchase.
Error to the District Court of Doss county. ’
The action below was brought by John Hickle against Samuel Yalentine, Eli Neff and William Parcels, as partners, to recover the contract price of a lot of cattle alleged to have been sold and delivered to them about June 20, 1872.
Parcels made no defense, but Yalentine and Neff deny each and every allegation of the petition. The trial resulted in a verdict and judgment for plaintiff, which was affirmed by the district court. Numerous questions are made by a motion for a new trial and in the bill of exceptions. Only so much of the case as raises the question whether this was a partnership liability, is here stated, as the judgment is reversed for error arising on this branch of the case.
From the evidence it appears that Parcels, Neff, and Yalentine had each been engaged in the purchase, shipment and sale of cattle and hogs, on his own account, and that in the latter part of the year 1871 they entered into an arrangement which, as stated in the brief of defendant in error, was substantially as follows : “ In the latter part of September or first part of October, 1871, they agreed together that they would ship and sell cattle and hogs on joint account, and share expenses, profits and losses equally. The cattle and hogs for the business were to be furnished in this way. Either of the partners was to go out and buy stock on his own individual responsibility — £ on his own hook ’ — take them to the station at Stoutsville, and when the others saw them, they had the option to take an interest in them at cost price, or not, as they might then elect. Each had the right to take an interest in the stock purchased by the others if he wanted tó do so; but if stock was bought by one which the others did not want- to take an interest in, that lot was to be handled by the purchaser on his own account; but 'all the other stock purchased by either was to be shipped and sold on joint account, and the profits or losses to be shared in equal proportions by the partners. The business was carried on from about the first of October, 1871, till March, 1873, during which period, the firm shipped, on an average, four or five carloads of cattle per week.”
There was evidence tending to show that Páreels, who was á well known dealer in cattle, and was of good financial standing, purchased this lot of cattle on his individual credit solely, intending, however, to permit Neff and Valentine to take an interest in them under this arrangement, if, on inspection, • when they reached Stoutsville, the place of shipment, they elected so to do; also tending to show that Hickle, when he sold and delivered these cattle to Parcels, trusted him alone, that he was to pay for them on receiving returns, and that, on receiving returns, he took the money to Hickle; but it was then agreed, on request of Parcels, that he might keep the money until fall, by paying interest thereon, and the money was thereupon loaned to Parcels, and afterwards he took the individual note of Parcels for the same; also tending to show that Parcels received the cattle, drove them to Stoutsville, put them in the stock-yard where all the stock was kept for shipment, and on inspection by Neff and Valentine, Valentine did not take an interest in them, but Neff did; and that they were shipped East and sold at a loss. The entire proceeds were returned to Parcels, who, as before stated, borrowed the same of Hickle. Whether either Neff or Valentine shared any part of the loss in the settlement of other partnership shipments is not clear, nor does it become material, in view of the charge of the court.
There was also evidence tending to show that neither purchaser was bound to offer them to the other, but might sell them on his own account, and that the right to take an interest extended to such stock as was offered for shipment to the Eastern market.
The point on which the case seemed to have turned was, whether this was a purchase on partnership account. On this point the court charged as follows:
“You are to determine, therefore, from a consideration of the whole testimony, whether or not there was a partnership existing between these defendants, and if so, what was its nature and scope; and whether or not, by the terms of the partnership, if there were one, Parcels was authorized to buy, and did buy Hickle’s cattle on account of the firm; for if he were not authorized to buy on firm account, or, if so authorized, he did not, in fact, buy for the firm, the plaintiff cannot recover against the defendants in this action.
“ If you should find from the evidence, that at the time Parcels purchased the cattle, the defendants were associated for the purpose of buying and shipping stock on their joint account, the profits and losses of which were to be divided between them equally, such an association would constitute a general partnership between them in that business, and, as an incident thereto, each member of such partnership would have power to bind the others in any agreement touching any transaction or matter within the scope of such partnership business; and any transaction necessary to the prosecution of the business without which it could not be carried on would be a transaction within the scope of such partnership business.
“ Any limitation upon the power of each member to thus bind the firm upon all matters within the scope of the partnership business, would only be binding between themselves and upon such third persons as had knowledge of the restricted powers of the members, but would not exonerate the firm from liability for a debt contracted within the scope of the partnership business where the persons with whom the contract was made had no knowledge, at the time, of such restriction upon the power of its members, especially where the firm should receive and make use of the property thus acquired in its partnership business.”
At the request of the plaintiff, the court further charged that:
“Should the jury find from the evidence that at the time said cattle were purchased of Hickle by Parcels, the defendants were associated together for the purpose of shipping and selling cattle on their joint account, the profits and losses of which were to be equally divided between them, such an association would constitute a general partnership between them in that business; and as an incident thereto each member of such partnership would have powder to bind the others in any agreement touching any transaction or matter within the scope of such partnership business. And any transaction necessary to the prosecution of the business, and without which it could not be carried on, would be a transaction within the scope of such partnership business. Any limitation upon the power of each member to thus bind the firm upon all matters within the scope of tbe partnership business would be binding among themselves and upon such third persons as had knowledge of the restricted powers of the members, but would not exonerate the firm from liability for a debt contracted within the scope of the partnership business by one of its members, where the person with whom the contract was made had no knowledge, at the time, of such restriction upon the powers of its members, especially where the firm should receive and make use of the property thus acquired in its partnership business.
“ In such cage the firm would not be liable for contracts of purchase of cattle made by one member, unless such purchase was within the scope of such firm business, or otherwise authoi’ized by the firm.
“ Should you find there was a partnership between the defendants only for the purpose of shipping and selling such cattle as either might buy on his own account, and the others take an interest in upon inspection or representation as to their quality, then the firm would not be liable upon the contracts of purchase by one, unless, before the sale was complete, they took an interest in the stock, or unless you find from the evidence that the one buying was authorized to make that particular purchase on joint account, and the authority to make such purchase may be shown to have been expressly given or may be implied from the circumstances of the case and their course of business.”
The court at the same time refused to charge the several following requests made by defendants :
1. “ That if the jury find that the defendants had any arrangement for shipping cattle from Stontsville, by which it was agreed that either of them might buy stock on his own responsibility, and upon its delivery for shipment at said place the others might take an interest in any stock so purchased and delivered, if upon examination of it they thought it suitable to ship or not purchased too high; or by which, if they purchased stock when all together, it was to be shipped on joint account; or if, after looking at or agreeing to take an interest in stock purchased by any one of them before delivered at said place, it was to be shipped on joint account, and the parties to share in the profits and losses, that such facts or agreements did not constitute them general partners, but only partners in each transaction.
2. “The jury are to determine from the evidence in the case when the partnership commenced. Was it a general partnership extending to all purchases and sales made by either, or limited or special as to such purchases as required the assent and concurrence of each before the stock purchased by either became partnership property ? If it were a general partnership formed generally for the purpose of dealing in cattle, and each were authorized to act for the firm, then the act of one would be the act of all, for each acts as the agent of the other. Rut if the jury should find that it was limited in its scope and operation, and was to take effect at the time only of the election of each partner in every particular adventure or purchase— then the partnership could not be held until the property became the general property of all.
3. “ It must be shown by the plaintiff that Parcels bought the cattle as a partner, and therefore as the agent of the firm, which gave them an immediate vested interest at the time of the purchase, so that they would have called upon him for the profits or charged him with the losses in any sale that he might have individually made to others.”
Clark (& MeDougal, for plaintiffs in error :
It is a principle, as applicable to partnerships as other contracts, that no person can be bound by an agreement but with his own consent, expressed by the means and in the mode he has authorized. A person cannot claim to bo a member of a partnership composed of a number of persons, unless all the persons composing said firm have agreed to accept him as such. 16 Ohio, 166. No man can be a partner of others without their assent. Id. 169. “ Where there is no joint purchase or. joint incurring of debt, but a purchase by one to whom alone credit is given, a subsequent joint interest in the property purchased, and in the business and profits depending upon it, carnes no liability for the original debt.” 1 Parsons on Cont. 172; 4 Tannton, 582; 3 Kent’s Com. 256 ; 2 Carr. & P. 325 ; 9 D. & Ryland, 19; Harvey v. Childs, 28 Ohio St. 319 ; Story on Partn. 6 ed. note 1, page 7, and cases cited; Id. 53, 59, 73, 75, 76, 77, 78, 80, 83, 98, and notes to each page; Smith v. Wright, 5 Sandf. 113; Patterson v. Blanchard,, 5 N. Y. 186; 1 Parsons on Oont. 172, 173; 3 Rent’s Com. 25, 27; 4 Term Rep. 720; 2 Taunton, 49.
Vanmeter <& Throckmorton, and J. T. Holmes, for defendant in error:
It will not be denied that this is a universally recognized rule of tha law of partnership, viz.: that each partner has power to bind his copartners upon all contracts within the scope of the partnership business. Harvey v. Childs, 28 Ohio St. 323.
We claim this further rule to be self-evident — that all contracts or transactions are within the scope of the business, which are necessary to the prosecution of the business, and without which it cannot be can’ied on. The partners may, by their agreement, establish whatever business they please. But the business, when established, has its scope prescribed by the law, and the partners can no more extend or circumscribe the scope of the particular business, than they can repeal any of the laws of the land. The scope of the business is inherent in the business itself. Every business, of whatever hind or character, has its scope prescribed by the law, and this scope, although not a part of the business, is always surrounding it, and is as inseparable from it as the rings of Saturn are from that planet. Mathews on Partnership, 12, 13, §§ 30, 31.
The defendants admit there was a partnership for the purpose of shipping and selling such cattle as either might buy and bring to the station, and the others, upon seeing them, should take an interest in. We maintain that this is a general trading business. It is, at least, a general partnership for shipping and selling cattle and hogs that were to be bought by the partners. The purchase of cattle was within the scope of the business, because the business could not have been carried on without it, and because it was provided for in the contract between them. And given the two facts, that there was a partnership existing at the time of the .purchase, and that the purchase of the Hickle cattle was within the scope of the business, it follows that defendants were bound for the performance of the contract, unless Hiclde had notice of the particular limitation upon the power to purchase at the time lie sold the cattle.
But we maintain that another rule that is supported by high authority as well as by reason, justice, and sound public policy, is applicable here. The rule referred to prohibits a partner who contracts for a full share of advantages and profits to be derived from a partnership business from making a contract with his partners, whereby he shall be exempt from the liability to pay for such purchases as are made in furtherance of the business of his firm. Parsons on Partn. 102. See also Id. 102, side paging 98; Matthews on Partn. 12; Parsons on Partn. 119 (note), 120, 121, 122, 123; Everett v. Chapman, 6 Conn. 317.
This case was decided while Hon. War. White was Chief Justice, and before Hon War. H. Upson came on the bench.

Opinion:
Johnson, J.
The expressed intention of the parties was that each should buy on his own credit; that the cattle when purchased should be and remain the property of the purchaser,, unless upon delivery at the station for shipment and sale the others should on inspection elect to take an interest in them. If they so elected, the stock became joint property and was shipped and sold on joint account. In short, by the terms of this contract or arrangement, the partnership did not commence until the cattle reached the station and were accepted; until then, there was no community of interest, nor right to share in the profits. If the stock purchased by either and brought to the station was not accepted by the others, the property remained that of the purchaser. He alone was entitled to all the profits, and was liable for all the losses. As Parcels alone was trusted in this sale by TIickle, the question presented is, were Neff and Yalentine by operation of law liable for the debt thus incurred ?
The claim is that the arrangement between Neff, Yalentine and Parcels for the shipment and sale of cattle and hogs was such that the purchase by either was within the scope of the partnership business and on joint account; or at least it was a general partnership for shipping and selling such property, to be purchased by the several partners; and as the business of shipment and sale could not be carried on without each partner making the necessary purchases, the debts incurred by each for that purpose were within the scope of the partnership business. Briefly stated, the claim is that by operation of law there was a partnership liability for this debt, though made on the sole credit of Parcels. The sale was made to Parcels on his sole credit. Hickle had no knowledge of this arrangement between the parties, and trusted Parcels only, to whom he delivered the property. Under the partnership contract for the ' shipment and sale of cattle brought to this station, it remained his unless it was accepted and shipped on joint account. It was not joint property. Partnership rights and liabilities did not attach. As to this lot of cattle the partnership would not commence until Neff and Yalentine elected to adopt the purchase. Parcels was not bound to deliver them for shipment, but might sell elsewhere on his own account. Until accepted there was neither a community of interest in the property nor in the profits, nor any joint liability for losses.
The better test of a partnership which authorizes one to bind the other partners is to apply the principles of agency. If Parcels had authority express or implied to buy on joint account, then when he made this purchase the cattle go instanti belonged to the firm, whether the others so elected or not. There was no such authority expressed, and none can be implied from the fact that the property was to remain individual property unless Neff and Yalentine should elect to take an interest.
This was a continuing arrangement, applicable, at the option of the parties, to all the cattle and hogs brought for shipment to the eastern market. It 'resulted in a series of partnership ventures. The agreement to purchase stock on individual credit, to be afterwards taken into a joint venture at the option of others than the purchaser, no more rendered the latter liable, than does the borrowing of money by one partner to pay up his share of the partnership capital render the partnership liable. In such a case, the partnership is not liable, even though the money is received and used in the partnership business. Norwalk Bank v. Sawyer, 38 Ohio St. 339; Peterson v. Roach, 32 Ohio St. 374; Bevan v. Lewis, 2 Eng. Ch. 377.
The same rule applies to property purchased on individual account, and afterwards turned over to the firm to be used in its business. Harvey v. Child, 28 Ohio St. 339; Saville v. Roberts, 4 Durn. & East, 720; McGar v. Drake, 5 Reporter, 347 (Tenn. Sup. Ct.); Walls v. Fife, 37 Pa. St. 394; Hoare v. Davis, Doug. 371.
Everett v. Chapman, 6 Conn. 347, and Gouldwaite v. Duckworth, 12 East, 420, are each distinguishable from the case at bar. In each case, there was a prior agreement that each should buy property on individual account, and the property so purchased was to become the joint property of'all for the purposes of the venture. It was held, that a purchase made in pursuance of this arrangement became, by operation of law, partnership property, and the firm was, therefore, liable, on the principle that holds dormant partners liable. The act of purchasing property under such an existing contract, which thereby became partnership property, was, as to third persons, the act of all the partners. On the other hand, where, as in the case of Saville v. Roberts or McGarr v. Drake, supra, the partnership w^as not to commence until after the purchase, there was no liability on joint account. The partnership interest did not vest until after the purchase and credit given. The charge of the court fails to note this distinction, and is misleading in its character, In substance, the jury were told that if sudr purchases were necessary in order to carry on the partnership business (a fact that could not be disputed), then this was within the scope of the authority which Parcels had to bind Neff and Yalentine, though there was not, at the time, and might never be, any joint interest in the property.
The court refused to charge the, propositions numbered 1, 2 and 3, which recognize the correct rule, and should have been given in view of the evidence which tended to raise the question.
Again, the charge' given at the request of the defendant in error, is to the effect, that if there was a partnership in the shipment and sale of such stock on joint account, then it is a general partnership for tha purchase, also, and therefore a purchase by each was within the scope of partnership business, though no joint interest attached at the completion of the purchase, and none might ever attach.
Judgment is reversed and cause remanded.