Opinion ID: 2393498
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Heading Rank: 1

Heading: Did the contract of sale signed by Kay, bind the partnership?

Text: Having determined that Kay and Eckles held lot 5 as tenants in partnership, other results follow under the Uniform Act. § 25 (2) (e) provides, A partner's right in specific partnership property is not subject to dower, curtesy, or allowances to widows, heirs, or next of kin. Consequently, there is no need for a partner's spouse to join in a contract of sale, instrument of conveyance or a mortgage. The fact that Mrs. Kay and Mrs. Eckles joined in the purchase money deed of trust certainly could have been occasioned by an excess of caution on the part of the lenders and not by any legal requirement. § 10 (4) of the Uniform Act deals with a conveyance of property not titled in the name of the partnership: Where the title to real property is in the name of one or more or all the partners,    a conveyance executed by a partner in the partnership name, or in his own name, passes the equitable interest of the partnership, provided the act is one within the authority of the partner under the provisions of paragraph (1) of § 9. It therefore follows that Kay's signature on the contract was all that was needed to bind the partnership, provided that he acted within the scope of § 9 (1) of the Uniform Act: Every partner is an agent of the partnership for the purpose of its business, and the act of every partner, including the execution in the partnership name of any instrument, for apparently carrying on in the usual way the business of the partnership of which he is a member binds the partnership, unless the partner so acting has in fact no authority to act for the partnership in the particular matter, and the person with whom he is dealing has knowledge of the fact that he has no such authority. In Bradford v. Harford Bank, 148 Md. 1, 128 A. 899 (1925) we held that a firm was bound by notes executed by one partner, without showing that he had express authority from his copartner, when the partner acted within the scope of his authority. See also, Brocato v. Serio, 173 Md. 374, 196 A. 125 (1938). The Uniform Act, § 4 (3) specifically incorporates the law of agency as an aid to construction. In Phillips v. Cook, 239 Md. 215, 210 A.2d 743 (1965) we said: In a case involving a partnership, the contract of partnership constitutes all of its members as agents of each other and each partner acts both as a principal and as the agent of the others in regard to acts done within the apparent scope of the business, purpose and agreement of the partnership or for its benefit.    Partnership cases may differ from principal and agent and master and servant relationships because in the nonpartnership cases, the element of control or authorization is important. This is not so in the case of a partnership for a partner is also a principal, and control and authorization are generally within his power to exercise. At 219-20. We think that the lower court was correct when it held that Kay's signature on the contract bound the partnership  not because the act was within the scope of Kay's apparent authority, since the sale of partnership real estate would ordinarily be within the apparent authority only of a partner in a firm which dealt in real estate, Crane and Bromberg, Partnership (1968) § 50 A at 288-90; Harmon v. Martin, 395 Ill. 595, 71 N.E.2d 74 (1947), but because in our view, Kay had actual authority to sign the contract. The Uniform Act, § 9 (2) provides: An act of a partner which is not apparently for the carrying on of the business of the partnership in the usual way does not bind the partnership unless authorized by the other partners. There was testimony from which the court could have found that Eckles, having admitted that he participated in the conversation with Urciolo on 23 November, in which an acceptable price and terms were indicated, had authorized Kay to act. Compare, however, the result reached in Smith v. Dixon, 238 Ark. 1018, 386 S.W.2d 244 (1965) which held, on almost identical facts, that the selling partner had apparent authority. Of even more significance is the court's finding that Eckles never actually disaffirmed the contract until suit was brought, but that the resistance came from Mrs. Eckles, who complained at the zoning hearing that the contract needs more signatures on it, after she had arranged for the closing papers prepared by Gitomer to be examined by her counsel, who attempted to exact the payment of the purchase price in cash as a condition of Mrs. Eckles' and Mrs. Kay's joinder. Having seen and heard the witnesses, the chancellor made a finding of fact: 1. The defendants took title to the subject property as tenants in common on June 18, 1959. 2. That at the time of the conveyance the defendants intended that it be partnership property. 3. That when the contract for the sale of the property was made on November 25, 1964 the defendants were partners in a contracting business. 4. That since 1959 the defendants not only considered the real property partnership property but reported it as such on their official tax returns, and considered it a capital asset in their partnership records. 5. That there is a strong inference, from the conduct of the defendant partners, that Mr. Eckles did in fact authorize Mr. Kay to sign his name to the contract. 6. That there was no fraud or misrepresentation by the plaintiff. 7. That the plaintiff did all he was bound to do to complete settlement. We cannot say that the result which he reached on these facts was clearly erroneous. Decree affirmed; costs to be paid by appellants.