Court Opinion

ID: 6948743
Source: CourtListenerOpinion
Date Created: 2022-07-24 01:28:44.51791+00
Date Added: 2024-06-11T16:08:00.713079
License: Public Domain

Catón, J. The question presented by the pleadings in this cause is this: George Smith was doing a banking business under the name of George Smith & Co. And, as such, employed Noble as his teller in the bank. Barnett and Armour executed the bond sued on, to Smith, by the name of George Smith & Co., conditioned that Noble should conduct himself with integrity, &c., in his said appointment, and in any other employment of the obligee. Smith afterwards entered into a contract of copartnership with Willard, in the said banking business, by which it was agreed that he should be a partner in the firm of George Smith & Co., and that Smith should pay him three thousand dollars per annum for his share of the profits in the business, and that he should devote his entire time to the business of the firm. After its expiration this contract of copartnership was renewed, increasing the amount to be paid to Willard, for his share of profits, to five thousand dollars per annum. During all this time, Noble w%s continued as teller in the banking house, and after Willard was admitted as a partner with Smith, Noble abstracted of the funds of the house nearly ten thousand dollars, for which he failed to account. Smith and Willard sued Noble for this money and obtained a judgment against him, but failing to obtain satisfaction, Smith brought this action against the obligees in the aforesaid bond to him. Barnett and Armour knew that Willard had been admitted as a partner in the house, but did not know of the provision of the contract by which Wil lard was to receive a stipulated sum in lieu of profits. The question is, whether they are liable for the misconduct of Noble, after Willard was admitted to the partnership. It was freely admitted, that if Willard had been admitted as a general partner, they could not be liable; but it is insisted that by the contract between Smith and Willard, he did not become in fact and in law a partner in the house; that he was an employee of the house upon a stipulated salary, entitled to no profits and liable to no losses. If that were so inter partes, it would not follow that such was Willard’s position as to the public or third persons. But as between themselves their relations were not those of master and servant. For instance, Willard was bound to devote his time and services to the business of the house, and by that, he was bound to do so when able, but suppose he was sick for a day, a week, or a month, or even a whole year, if he was a clerk on a salary, the salary would stop whenever the services stopped; but as partner his share of the profits did not stop, nor did his stipulated compensation which he was to receive in lieu of profits. As between themselves then, a different degree of obligation is imposed upon Willard to render the service specified. Again, he could not sue Smith for work and labor, as he could were he at service for a salary. Should he sue Smith for the stipulated sum, he would have to count specially for the price of his share of the profits and not for the services. He did not serve Smith alone, but himself and Smith as partners. As between" themselves, their relations differ from those of master and servant. But that is a matter of very little moment in the present inquiry. The question is, what is their position as regards the public and third persons ? To that, there can be but one answer. They are partners. The agreement, set out in the pleadings, declares them to be partners; and as súch they held themselves out to the world, by carrying on business in the partnership name. The legal title to all the partnership effects was in Willard and Smith, and all actions to collect their debts had to be prosecuted in their joint names, and both were alike liable for the debts of the house. Willard was just as liable as Smith for all losses, and should Smith fail to meet them, he would be obliged to do so, if necessary, out of his private estate, and look to Smith for indemnity on the contract. .In case of the death of Smith, Willard, I apprehend, would have the right to. close up the business of the firm as surviving partner, in defiance of Smith’s personal representatives. The money then, which Noble abstracted, was not Smith’s, but it belonged to Smith and Willard. Smith alone is the obligor in the bond, and the sureties only undertook for the principal, that he should act with fidelity to Smith, when in his employ alone. They never undertook to answer for him when in the employ of Smith and Willard, or of any other person than Smith. While in Smith’s employ, self-interest would prompt them to carefully watch the conduct of Noble, but when he left Smith’s employ and entered into the service of Smith and Willard, they were no longer called upon to look after him, for they had a right to consider that they were no longer answerable for his conduct. After that, scrutiny into his conduct would have been officious, if not impertinent. We think the rejoinders were good, and that the replication was bad, so that the demurrer should have been overruled as to the rejoinders, but sustained to the replication. The judgment must be reversed, and the cause remanded. Judgment reversed.