Court Opinion

ID: 6409060
Source: CourtListenerOpinion
Date Created: 2022-06-25 11:51:14.062666+00
Date Added: 2024-06-11T15:51:13.887126
License: Public Domain

Metcalf, J.
We are of opinion, that the instructions, which were given to the jury, were strictly conformed to the law of the case.
And we are of opinion, that the last prayer for instructions, made by the defendant, was rightly refused. When a party makes or indorses a note, for the purpose of its being used in a particular way, he takes the risk of its being used in a different way, and cannot refuse to pay it to any bona fide holder into whose hands it may come. Byles on Bills, (2d Am. ed.) 143 [113] ; Powell v. Waters, 17 Johns. 176.
But we are also of opinion, that the defendant’s first prayer for instructions ought to have been granted. One partner has an implied authority to bind the firm by simple contracts relating to the partnership, and within the scope of the reg' *314ular partnership business. In such cases, the act of each partner is regarded as the act of all. But guaranties of the debts of others, and notes or bills of exchange made or indorsed for the accommodation of others, or as surety for others, are out of the scope of the business of a trading firm.
Whatever the English law may formerly have been, as to guaranties, we consider it now settled, in England as well as in the United States, that one partner cannot bind the firm by a guaranty of the debt of another, without a special authority for that purpose, or an authority to be implied from the common course of the business of the firm, or the previous course of dealing between the parties; unless the guaranty be afterwards adopted and acted upon by the firm. Crawford v. Stirling, 4 Esp. R. 209; Duncan v. Lowndes, 3 Campb. 478; Theobald on Prin. and Surety, § 41; Burge on Surety-ship, 33, 34; Addison on Contracts, 487; Pitman on Prin. and Surety, 80; Bac. Ab. (Dodd’s ed.) Merchant and Merchandise, C; 3 Kent Com. (6th ed.) 46; Collyer on Part. 3d Am. ed.) $ 421. It has also been decided, that when a party takes such a guaranty, to which the partnership name is signed, the burden of proof is on him, in a suit thereon, to show that the partner who signed such name was authorized so to do by the other partners, or that they subsequently ratified his act. 3 Campb. ubi sup.; Hamill v. Purvis, 2 Pennsyl. 177.
We are not inclined, however, to put this case solely upon the ground of a guaranty. For though the plaintiff has sued the defendants as guarantors, yet he might, by our law, have sued them as original promisors. If he had so done, the note, as to them, would have been regarded as made for the accommodation, or as sureties, of McLellan and De Puy; and the law, as to the burden of proof, would have been the same, if Ames & Co. knew, when they received the note, that it was thus made by one only of the defendants. Foot r. Sabin, 19 Johns. 154; Laverty v. Burr, 1 Wend. 531; Bank of Rochester v. Bowen, 7 Wend. 159; New York Firemen Ins. *315Co. v. Bennett, 5 Connect. 574; Darling v. March, 9 Shep. 184; Wallace’s notes to 1 American Leading Cases, 300 — 304.
The burden which the law puts upon a plaintiff, in a case like this, to prove the precedent authority or subsequent ratification of the other partners, may be sustained by circumstantial evidence. Direct or positive proof is not required. As has been already stated, such authority may be implied or inferred from the common course of the business of the firm, cr the previous course of dealing between the parties. So a ratification may be implied or inferred from the acts or omissions of the other members of the firm, after they know or have the means of knowing that one of its members has signed the names of the firm as guarantors or sureties, or for the accommodation of others. Duncan v. Lowndes, 3 Campb. 478; Ex parte Nolte, 2 Glyn & Jameson, 295; Gansevoort v. Williams, 14 Wend. 139, 140 ; Bank of Kentucky v. Brooking, 2 Littell, 41 ; Jones v. Booth, 10 Term. 268.

New trial ordered.