Court Opinion

ID: 5558007
Source: CourtListenerOpinion
Date Created: 2022-01-11 00:44:52.776432+00
Date Added: 2024-06-11T08:35:23.236262
License: Public Domain

Warner, Chief Justice.
This was an action brought by the plaintiff against the defendants as partners in a mercantile firm in the city of Atlanta, in the statutory form, to recover the sum of $21,915 37, with a bill of particulars annexed. On the trial of the case, the jury, under the charge of the court, found a verdict in favor of the plaintiff for the sum of $11,859 93 principal, and $3,335 05 for interest, against both defendants; where*485upon they made a motion for a new trial, on the several grounds therein set forth, which was overruled, and the defendants excepted.
1. The demurrer to the plaintiff’s declaration, on the ground that the governor had no authority to institute the suit in behalf of the state, was properly overruled. The disability of the plaintiff to sue was not objected to until after the defendants had pleaded to the merits of the action, and if good, should have been taken advantage of at the first term by plea in abatement.
2. But we do not think the objection would have been good at any time. The governor had the power and authority to institute suit against the defendants, under the general power granted, of a general supervision over all property of the state, with power to make all necessary regulations for the protection thereof when not otherwise provided for, and to engage the services of any competent person for the discharge of any duty required by the laws, and essential to the interest of the state, or necessary in an emergency to preserve the property or funds of the state: Code, sections 61-74.
3. The legal presumption was, at least, upon demurrer, that the attorneys, whose names were signed to the writ, had the authority of the governor to institute the suit.
4. There was no error in admitting the evidence of Harris to prove the items of $1,153 20 and $1,944 00. The declaration and bill of particulars charged gross amounts, and the items sought to be proved were a part thereof; there was no objection to the declaration and bill of particulars, that it was not sufficiently specific, at any time before the trial.
5. There was no error in admitting in evidence the award of the auditing board and accompanying papers, inasmuch as the same constituted a part of the transaction under investigation and connected with it.
6. There was no error in rejecting the record of the judgment against Fry, for the reason it did not appear that any part thereof had been paid.
7. There was no error in refusing to allow the testimony of *486Hillyer and Clark as to the promise made by Judge Stephens not to proceed against the defendant, J. C. Alexander, inasmuch as Judge Stephens had no authority to bind the state, even if he had made such promise. As a question of law, the state is not bound nor estopped from asserting her rights to her own property, unless it be done in her sovereign capacity by a legislative enactment or resolution.
It appears from the evidence in the record that the defendants, as partners, did quite an extensive business with the Western and Atlantic Railroad, selling it goods from time to time, and receiving payment therefor, and that J. C. Alexander was the active member of the firm in selling the goods and receiving payment from the treasurer of'the road; that at the time the bogus bills in favor of the firm were paid by the treasurer of the road, he had no reason for knowing that the Same were not genuine bills, but paid the bogus bills when presented for payment, in the same manner as he paid the genuine bills due to the firm. There can be no doubt, from the evidence in the record, that the partnership firm of J. M. & J. C. Alexander, were engaged in the business of selling goods to the Western and Atlantic Railroad and receiving payment therefor from the treasurer of the road, and there is just as little doubt, from the evidence, that J. C. Alexander, one of the partners, whilst engaged in that business, fraudulently duplicated accounts, and by other fraudulent means received a large amount of money from the treasurer of the road, for which no goods were ever sold or furnished. J. M. Alexander was about the store, and usually ordered the goods, and knew they were selling goods to the Western and Atlantic Railroad. In view of the evidence in the record the court charged the jury as follows :
“This suit is brought by the state of Georgia for the purpose of recovering the sums of money named in the bill of particulars which you will find attached to the declaration.
“The plaintiff claims that the defendants, J. M. & J. C. Alexander, received those sums of money from it; that they received this money without consideration, and that it should *487be returned. The defendants deny that they are liable for any of it. The plaintiff claims that this money was paid from the treasury of the Western and Atlantic Railroad to the defendants, and that the money belonged to the state of Georgia. Money held in the treasury of the Western and Atlantic Railroad by its treasurer, for the purposes of the railroad, was the money of the state of Georgia.
“If you find, from the testimony in the case, that a portion of the money thus held in the treasury of the Western and Atlantic Railroad, was paid to the defendants, J. M. & J. C. Alexander, on account of articles or goods which were claimed to have been sold or furnished by them to the road, but which, in fact, were not sold or furnished, and the money was paid to them without consideration, the state would have the right to recover it from them in this suit. If (to repeat the proposition) you find from the testimony in the case, that the money of the state, thus held in the treasury of the Western and Atlantic Railroad was paid to defendants, J. M. & J. C. Alexander, for goods or articles they claimed to have delivered to the road, but which were not, in fact, furnished, and the money was paid without consideration, the state would have the right to recover in this suit. It is claimed in this case that fraudulent claims were made, in the name of J. M. & J. C. Alexander, on the officers and agents of the Western and Atlantic Railroad for goods furnished, and that the claim was false and the goods were not furnished, and that on that account the money was paid. The defendants deny the charges, and say they are not liable at all. This is the question you are called to determine by your verdict.
“It has been said that if money was paid improperly from the treasury of the road, that it was not paid to J. M. & J. C. Alexander, and that no money, thus paid, ever went into the hands of the firm; if any such payment occurred, that it was the act of J. C. Alexander, for which the firm is not responsible ; about that, I will now instruct you. I have already stated, in general terms, if certain things took place, the firm would be liable.
*488“The question you now have to consider is, to what extent the defendants in this case, J. M. & J. C. Alexander, are bound by the acts of J. C. Alexander. Look to the testimony in the case, and see, first, what the partnership business of J. M. & J. C. Alexander was; what was the scope of the partnership business; what was their business, their real business transactions ; ascertain from the testimony what that was, so as to be able to determine when an act was within the scope of that legitimate partnership business. After having ascertained that, proceed under this rule: For the acts of J. C. Alexander, within the scope of the partnership business, within the ordinary business transactions of the firm, and under color of and in the name of the partnership, the firm would be liable, if the officer from whom the money was obtained had no knowledge or notice that J. C. Alexander was acting in violation of his duties and .obligations to the firm. For his acts within the scope of the ordinary partnership business of the firm, done in the name of the firm, under color of the partnership, the firm would be liable if the officer paying the money had no knowledge or notice that he was acting in violation of his duties and obligations to the firm. ■ If he was acting in violation of his duties to the firm, and the officer of the state paying the money had notice or knowledge of that at the time he paid the money, then the firm would not be liable for it. To apply the rule to this case; if you should find, from the testimony, that Fry was an agent, purchasing agent or other agent, of the Western and Atlantic Railroad, that bills were made out in the name of J. M. & J. C. Alexander, or claims were presented in their name for or by the party, J. C. Alexander, for articles purporting to have been furnished for the use of the road, and on that claim or claims in the name of the partnership, payments were made by the treasurer or other officers of the Western and Atlantic Railroad, and the officers withdrawing money from the treasury, and paying on that claim, had not knowledge of its true character, the firm would be liable.
“ This same rule will apply if payment is made from the *489treasury of the state, if such payment was made to one of the firm or one acting under their authority. The firm, or either member of the firm, would have the right and power to appoint another to receive the money thus claimed for either of them, if it was for the benefit of the firm; and if Ery was appointed by the firm or a member of it, for the purpose of receiving money from the treasury of the road on claims of this character, it would stand just as if it had been received by a member of the firm, and the firm would be liable, or not liable, under the rules I have given you. Gentlemen, if you have any difficulty in understanding me as I go along, I hope you will let me know, as I wish you to understand me. (A pause, no answer.) It is not absolutely necessary to a recovery on the part of the state that the money obtained should have gone to the use of the firm; what is necessary is that it should have been collected without consideration by a member of the firm, under color of the firm name, acting apparently within the legitimate scope of the partnership business, and without notice that the member was violating his duty to the firm, to the officers by whose act the money was taken from the state road treasury, and delivered to defendants, or either of them, or their agent. For articles or goods that were in fact furnished, money could be properly paid, and when thus paid, it could not be recovered in this suit to the extent that it may appear from the testimony in the case; if there was valuable consideration for the money paid, it could not be recovered. If you find that plaintiff has no right to recover in this case, and payment has been made for all claims due, to that extent the verdict should be lessened. If you find that payment has been made for all claims due the state, find for the defendants. If partly satisfied, verdict should be for balance due.
“ It has been said in this case that because ofa transaction with one Charles P. McCalla, the claims of the state of Georgia, if it had any against the firm of J. M. & J. C. Alexander was settled, and that transaction operates as a bar to the recovery in this case; and it is claimed that by virtue of an executive order McCalla was agent of the state, and had the right to *490make settlement of these claims, and that he did make it with J. C. Alexander, and that operated as a satisfaction against the firm. By the terms of this executive order, McCalla would proceed to bring up the accounts, etc. (Reading executive order.) This executive order did not confer on McCalla the power to make the alleged settlement with J. C. Alexander, and to release him from any claims the state might have against him; an agent must act within the scope of his powers, when he does that, as a general rule, his principal is bound; under this executive order it did not extend so far as to authorize him to accept from J. C. Alexander a sum of money in satisfaction of these claims.
“ It is claimed that one Hargroves, who, it is said, was one of the attorneys of the state in this case, was party to the arrangement with J. C. Alexander and McCalla, and because of his position as attorney of record in the case, the settlement, if one was made, has force and is binding, and for that reason there can be no recovery. If Hargrove, whose signature appears, was attorney for McCalla, and not for the state, he only can represent his principal, and not the state, and his signature would not bind the state. If he was attorney of the state to represent this case, he was not authorized by law to accept, in satisfaction of any debt that was due from J. M. & J. C. Alexander, any less amount than was due in satisfaction of those claims. It will be your duty to take the testimony and give it a careful, impartial consideration. If you find in favor of plaintiff, express the amount; if in favor of defendants, say, we, the jury, find in favor of defendants. If you find in favor of plaintiff, look to the papers for the time suit was commenced; interest can only date from that time.”
What is the legal status of this case when stripped of all irrelevant matters, and reduced to its simple elements? It is an action brought by the plaintiff to recover from the defendants, as partners, a sum of money which the plaintiff alleges they have fraudulently received from it, without consideration. The defendants admit that at least a part of the money claimed was procured from the plaintiff by the fraud of one *491of the partners, J. C. Alexander, but insist that he is alone liable for the fraud, and not the other partner, and that is the real question in the case. There was a good deal said on the argument about the state being bound by the promises made by certain parties, to the defendant, J. C. Alexander, and about accord and satisfaction, and settlement, etc. To all of which, we reply, as we have already said, that the state is not bound or estopped from asserting her rights to her own property, otherwise than by some act in her soverign capacity. It is not to be presumed however, that she will do or has done injustice to any of her citizens.
8. We will first consider the question as to the liability of the partnership, for the money fraudulently obtained from the Western and Atlantic Railroad by J. C. Alexander, one of the partners. The 1915th section of the Code declares, that all the partners are responsible to innocent third persons for damages arising from the fraud of one partner in matters relating to the partnership. The 1916th section declares that partners are not responsible for torts committed by a copartner. So far as the evidence shows, the state is an innocent third party, her treasurer of the Western and Atlantic Railroad, from whom her money was obtained by the fraudulent conduct of J. C. Alexander, had no knowledge that he was acting fraudulently and not in the regular and legitimate business matters relating to the partnership, when the money now sued for was’paid to him as one of the partners of that firm, with whom it was then, and had been for a considerable time, dealing. It was insisted on the argument, that although the conduct of J. C. Alexander in obtaining the money may have been a fraud, yet it was more than a fraud, that it was a crime purnishable by law, and that one partner is not responsible for the torts or crimes committed by a copartner. The reply is, that the plaintiff is not seeking to make J. M. Alexander criminally responsible for the torts or crimes of his copartner, J. C. Alexander, but is seeking to make him responsible, on the civil side of the court, for the damages sustained in consequence of the fraud of his co-*492partner, J. C. Alexander, whilst engaged in matters relating to the partnership, that is, when acting within the scope of the copartnership business. One copartner is not responsible and liable to be punished on the criminal side of the court for the torts or crimes of his copartner, unless he has participated therein, and that is the true intent and meaning of the provisions of the Code. In regard to the liability of one partner on the civil side of the court for the fraud of another partner in the course of the transactions and business of the partnership, the rule is so clearly stated in Story on Partnership, that we extract the entire section in which the rule is stated, and the reasons for it: “The principle extends further, so as to bind the firm for the frauds committed by one partner in the course of the transactions and business of the partnership, even when the other partners had not the slightest connection with, or knowledge of, or participation in the fraud; for (as has been justly observed) by forming the connection of partnership, the partners declare themselves to the world satisfied with the good faith and integrity of each other, and impliedly undertake to be responsible for what they shall respectively do within the scope of the partnership concerns. Hence, if, in the business of .the partnership, money is received partly by one of the firm, and partly by another, to be laid out upon a mortgage, and a mortgage is forged by one partner without the. knowledge of the.other, the innocent partner will be liable for the whole money. So, if representations of certain facts as existing are fraudulently made by one partner, unknown to the others, in the partnership business, and the facts never existed, but the whole statement is a mere fiction, the firm will be bound to I he same extent as if it were true and the facts existed. This whole doctrine proceeds upon the intelligible ground that where one of two innocent persons must suffer by the act of a third person, he shall suffer who has been the cause or occasion of the confidence and credit reposed in such third person:” Story on Partnership, section 108. The same author (section 168) in relation to the knowledge of the acts of one partner by another partner, thus states the rule: “In *493respect to what acts of one partner the others will and ought to be held to have notice of, so as to bind them all by implied consent or acquiescence, it may be laid down as a general rule, for the protection of those who deal with partners, that all of the partners have such knowledge and notice of the acts of any of their partners relative to their business, as in discharge of their plain duty they might or ought to have obtained.” We find no error in the charge of the court in relation to the liability of the defendants as partners, so far as the money fraudulently received from the treasurer of the Western and Atlantic Railroad is concerned, and there is sufficient evidence in the record to sustain the verdict as to that branch of the case.
9. But the claim of McEwen, Grant & Company for $5,995 40, which was allowed by the auditing board of commissioners, and directed to be paid to J. C. Alexander, and which was paid by the state treasurer, on an executive warrant, stands upon an entirely different footing as to the liability of the copartnership firm of J. M. & J. C. Alexander to pay it. There is no evidence that the copartnership had any dealings with the auditing board in the sale of goods or otherwise, but, on the contrary, the evidence shows that the draft and the bills on which it was founded, were fabricated by J. C. Alexander and Fry, wholly outside of and having no connection whatever with the business of the mercantile firm of J. M. & J. C. Alexander, and did not purport to have any connection with the business of that firm, nor does it appear that firm received any part of the proceeds thereof. In- our judgment, so much of the verdict as found the sum of $5,995 40, the amount of the McEwen, Grant & Company draft, which was allowed by the auditing board, and paid out of the state treasury, against the defendants, as partners, was contrary to law and the evidence.
We therefore reverse the judgment of the court below in overruling the defendant’s motion for a new trial, unless the plaintiff shall write off from the verdict the sum of $5,995 40, with the interest on that amount; and in the event the plain*494tiff shall do so, then the judgment of the court below will stand affirmed.