Court Opinion

ID: 7985876
Source: CourtListenerOpinion
Date Created: 2022-09-09 01:25:29.934796+00
Date Added: 2024-06-11T16:35:11.972129
License: Public Domain

Cooper, J.,
delivered the opinion of the court.
It is admitted that if the object of McLaurin in procuring Moore to become surety with him for Polk was merely to release Polk’s cotton from the custody of the officer, it was one in which the firm of McLaurin & Stevens had no interest, and that it was beyond the power of McLaurin to impose under such circumstances any obligation whatever upon Stevens ; but it is contended that since it is shown by the record that the firm had a mortgage upon the cotton to secure a debt due to it from Polk, and that the bond was executed under a contract between Polk and McLaurin that the cotton should be delivered to the firm and by it sold, and the proceeds applied to the payment of the debt, the suretyship of the complainant was, in fact, for the firm, and in a matter in which one partner was authorized to bind the other by any contract, the result of which was to secure the cotton to the firm. It is well settled that a firm which derives a benefit from a contract or obligation made by one partner alone, does not for that reason become liable on the contract from which the benefit was derived. The liability of the firm, if it exists at all, arises not from the reception of a benefit, but from the contract itself, from the fact that the partner who acts acts for and as agent for the other members, and the contract, though made by one, is the contract of all. It is equally well settled that one partner cannot by reason of any implied authority bind his firm by deed. Neither our own researches, nor those of counsel for the appellant, has discovered any case in which the non-executing partner has been bound by a deed which in itself and of itself has created the liability sought to be enforced. There are cases in which the courts have passed over the deed to enforce a liability which existed independent of the deed — a liability which one partner had a right to incur for and on behalf of the firm. Tom v. Goodrich et al., 2 Johns. 213, and Krafts v. Creighton & Woodville, 3 Rich. 273, were cases of suits by sureties on bonds executed by one partner in his individual name to' the United States to secure *815the payment of duties on goods imported by the firms. In each case it was determined that the surety had no right of action against any other member than the one executing the bond. In the first case Chancellor Kent said : “ The plaintiff executed the bond as Barber’s surety, and cannot charge auy other person as principal. There is no privity between the parties but what arises from the bond. It would be refining upon the doctrine of implied assumpsits, and going beyond every case, to consider the surety in a bond as having by that act a remedy at law against those for whom the principal in the bond may have acted as trustee. * * * We can only look to the principal and surety in the bond to the United States, and to the obligations resulting from that obligation relation, because the money was paid by the plaintiff in discharge of that bond and in exoneration of the personal representatives of Barber, who alone was legally responsible for that debt. * * * We cannot, in this action, unravel the accounts between the partners; and to push the implied assumpsit beyond the party in the bond may lead to great difficulties, and produce injustice.”
In Krafts v. Creighton it was said : “ The bond in this case is not in the partnership name, and it therefore casts no liability on the defendant Creighton. The execution of the bond by Woodville discharged the liability of the firm for the duties, and made the debt legally his own. When the plaintiffs paid it, they paid the money for Woodville, and at his implied request. They can, therefore, have no legal right of action against Creighton & Woodville. If it was necessary to go back to the consideration of the bond to ascertain whether both of the partners, or only the obligor, was liable to it, it would necessarily lead to an investigation and settlement of the accounts of the partners. For, if the partner who executed the bond was in arrears to the firm, it could not be pretended that he would have the right to call on the others to contribute to its payment. This examination the court of law cannot make. It may be that if the plaintiffs, in equity, could show that Wood-*816ville is in advance to the hum the amount of the bond, and that he is insolvent, they might make the defendant Creighton liable.”
In Russell v. Anable, 109 Mass. 72, an attachment had been levied upon the partnership goods of the firm of Dennett & Pottle. A bond was executed for their release, and in its body it purported to be the bond of Erastus Dennett and Charles B,. Pottle, who composed the firm. It was subscribed by one of the firm in the firm name of Dennett & Pottle. In an action on it by the obligee it was held that the bond was not the bond of both members, but only that of the one who signed the firm name; that the surety signed upon the implied contract that he was to be bound only when it was executed by both the principals, and as only one had executed it, be was not liable on it.
The cases cited by counsel for the appellant illustrate the rule, which is well settled by a great number of cases, that where the act done, or obligation incurred, was within the scope of the partnership business, then, though it be done by the unnecessary use of a seal, yet if it be done in the partnership name, or on the partnership account, the firm is bound, as where one having authority by the course of business to borrow money for the firm gives a bond to secure its payment. In such cases the firm is bound by the substance of the contract, and its liability is not merged in the bond of the partner. Wharton v. Woodburn, 4 Dev. & B. 507; Purviance v. Sutherland, 2 Ohio St. 478 ; Sale v. Dishman’s Exrs., 3 Leigh, 548 ; Weaver v. Tapscott, 9 Leigh, 425.
So also where a partner transfers by a sealed instrument the personal property of the firm, which might have been sold by parol or by an unsealed transfer, the title passes notwithstanding the fact that the seal was used. Everett v. Strong, 5 Hill, 163; Harrison v. Sterry, 5 Cranch, 289; McCullough v. Summerville, 8 Leigh, 415; Dubois’ Appeal, 38 Pa. St. 531.
Though McLaurin & Stevens, as a firm, were interested in *817the property seized, and afterwards became on their own petition parties to the suit and actually received the proceeds of the property when sold, yet it was not within the power of McLaurin, as a partner, to bind his firm by the execution of the bond. It was not an obligation, which could have been entered into at all except by a sealed instrument, for the statute, which conferred the right on .the defendants to replevy the property, required that they should first execute a bond as a condition precedent to its restoration to them. The bond was the contract, and it imposed the liability, which could have been assumed or incurred in no other manner. It does not purport to be the bond of the firm, and it could not have been unless executed by both partners, or by one with the assent of the other, or by a subsequent ratification by the non-executing partner.
We are of opinion that the demurrer was properly sustained, and the decree is affirmed.