Court Opinion

ID: 6895203
Source: CourtListenerOpinion
Date Created: 2022-07-23 21:48:51.996634+00
Date Added: 2024-06-11T16:05:57.708610
License: Public Domain

Petition for a rehearing.
Thayer, J.
It was claimed upon the hearing of this case, that the instrument signed by Blackburn, in the name of Blackburn and Peckham, by which their copartnership property was attempted to be transferred to Dawson, constituted a general assignment for the benefit of creditors; that it was not within the regular course of the partnership business, and as Peckham was not present when it was executed, and did not assent thereto, it was void. After a very thorough consideration of the matter, we came to the conclusion that the said instrument was only a chattel mortgage, and as it was given to secure the payment of a bona fide indebtedness the said firm was under to Dawson, and those he represented, it was valid. Counsel for the respondents upon a rehearing of the case have pressed upon the attention of the court the question, whether the instrument is such assignment or is a mortgage, is not material, as it was executed against the open protest and opposition of the partner Peckham, and is therefore void. Whether the instrument was executed against the protest and opposition *159of Peckham is a question of fact, upon which the counsel for the respective parties disagree; nor is the testimony which bears upon it at all conclusive.
There is evidence in the case which tends to prove that Peck-ham was not in favor of securing the Portland creditors, without securing the farmers for the wheat they had stored with the firm, which had been shipped and sold and unaccounted for. This seems to have been the only ground of opposition to the mortgage. Peckham did not pretend, nor did respondents’ counsel claim, but that the Portland creditors were entitled to have their debts secured. The parties all acknowledge that it was a just indebtedness. Peckham was evidently willing to secure it, but through a sense of right, or an apprehension that he might be charged with the embezzlement of the wheat, insisted upon the security extending to both sets of claims. What the relative merits of the two may be is not necessary to inquire, as the question raised by the counsel goes to the power of a partner to give such a mortgage in any case against the express wishes of his copartner. I do not think a partner would have any right to mortgage the partnership effects to secure a liability not arising out of the partnership transactions, against the dissent of his copartner, such as the liabilities of the individual partner executing the mortgage. But to mortgage the property of the copartnership in good faith, to secure a valid existing indebtedness against the firm, presents a different question.
In the latter case, it seems to me, that it would not matter whether the other partner assented or dissented. The creditor would have an undoubted right to seize and sequester the property in order to obtain a satisfaction of his demands, and I cannot understand why one of the partners would not have the right to turn it over to him as a security therefor, if the other did object to his doing so. “By the act of entering into the copartnership,” as was said in Wilkins v. Pearce, 5 Denio, 544, “each of its members became clothed with full power to make any and every contract within the scope and limits of the copartnership business. All such contracts will therefore be absolutely binding upon the several, members. This power is *160incident to the copartnership relation, and must exist in defiance of expostulations and objections while the relation endures.”
If the act of the partner were of such a character that it would have the effect to dissolve the copartnership, or if it related to a matter outside of the copartnership business, I should regard the question in a different light. Then each of the partners would be entitled to be consulted in regard to it, and have the right to object to its being done; but I am not able to conclude that a partner, after having tacitly agreed that the other members of the firm shall have authority to represent it in all copartnership transactions, may suspend such authority at his own will or caprice, especially where the proposed act consists in carrying out an obligation which the firm is under to a third person.
Such a view does not appear to me to be reasonable. One partner should certainly have the right to pay off a debt due á creditor of the firm from its assets, notwithstanding the remonstrance of the other pártner, and I am unable to discover any difference in principle in the two cases. If the authority of a partner to transact business of the firm within the scope of the partnership could be abruptly revoked, the agreement which constitutes the foundation of the relation would be very insecure; it would be, in effect, that each partner should have authority to manage the business of the firm, so long as the other members assented to it. That, however, is not the nature of the agreement ; it is that each of them shall be the agent of the partnership, and empowered-to conduct its affairs so long as it continues. If the rule were as contended for, an obstinate partner could at any time interpose and prevent the continuance of the business, however much it might affect the credit and reputation of the other members.
A partner would certainly have no standing in a court of justice to demand that a sale or mortgage of the property of the company, made in good faith in payment of, or as security for a bona fide debt due from it, should be set aside. And if a partner could not enforce such relief, how could the other creditors of the company be allowed to claim that the sale or mortgage *161was a nullity? If such transactions cannot be upheld, honesty and fair dealing must be declared to be unlawful.
I see no reason for changing the former decision of the court in this case, and am in favor of redeclaring it.