Court Opinion

ID: 5437511
Source: CourtListenerOpinion
Date Created: 2022-01-08 17:56:35.832243+00
Date Added: 2024-06-11T08:31:53.481262
License: Public Domain

By the Court, Temple, J.:
On the 1st day of August, 1861, the Dardanelles Mining Company, a mining partnership, was in possession of, and was working, certain mining claims of the class known as hydraulic diggings, at Forrest Hill, Placer County.
At that time the company consisted of seven partners, one of whom, Longley, who owned nearly one half of the mine, to wit, six and one half fifteenths, was manager. On that day Longley, professing to act as the agent of the company, and for the piurpose of supplying the company with water to work their claims, purchased certain ditches for the sum of fourteen thousand dollars. The plaintiff held mortgage liens upon the ditches amounting to eleven thousand dollars. By agreement between Longley, as agent of the partnership, and the owners of the ditches, the sum was to be paid to plaintiff. The plaintiff assented to the arrangement, and Longley, acting for the company, executed to him a note for that sum, due one year from date, with interest at two per cent per month. In consideration of this note plaintiff released his mortgages. It does not appear that any members of the company took part in the negotiations for the purchase of the property, or expressly agreed to the transaction, except Longley and one Clark, who at the time owned one and three fourths fifteenths in the company. Clark assisted in negotiating the trade, knew of the note given to plaintiff and assented to it. The company took immediate possession of the property purchased, and have ever since continued to use the water of the ditches in working their claims. The members of the company must have known of the purchase at the time, and of the existence of the debt, and shortly after, as is proved and found, knew of the fact that the note had been given to plaintiff in part payment, and that the sum of three thousand dollars was paid on account of the purchase from *190the partnership funds. There is evidence tending to show that most, of not all, the members of the company knew of the contemplated purchase before it was consummated; hut there is no express finding upon this fact.
On the 19th day of August, 1862, Longley, still acting as Superintendent, took up the first note given, and gave a new note in lieu of it, in the words and figures following:
“$11,000. For value received, one year after date, for and on behalf of the Dardanelles Mining Company, I promise to pay to "Willis Jones, or order,"the sum of eleven thousand dollars, with interest at two per cent per month, payable semi-annually.
“William Ruetjs Longley,
“ Superintendent of Company.
“ Todd’s Valley, August 1st, 1862.”
R does not appear that Longley had express authority to execute this note from the company, or any of its members; but there is a finding that each of the members afterward knew of the fact, and assented to the giving of the note. On the 12th day of-August, 1862, prior to giving the new note, Clark, at the request of Longley, paid the interest on the note out of the partnership furlds.
Longley died in June, 1863. Clark then became Superintendent and manager of the mine, and as such paid upon the note from the partnership funds the following sums, upon the dates mentioned: .July 28th, 1863, two thousand five hundred and forty dollars; February 1st, 1864, one thousand two hundred dollars; August 8th, 1864, two hundred dollars; August 27th, 1864, one thousand dollars; February 2d, 1865, one thousand two hundred dollars.
All these payments were known to the other members of the company, who made no objection. It does not appear that any member of the company has ever objected to the purchase, or complained that it was made without authority. *191All the members of the company, also, acquiesced in the payment of the interest, and do not seem, even to the° last, to have objected to these payments as made without authority; but objection was made that the note was so worded as not to bind the company, for in the answer they admit that Clark, as Superintendent, made the payments because he and the company, not having consulted counsel, supposed that the note was so worded as to bind the company.
The plaintiff, in October, 1866, became the owner of an interest in the company, and afterward commenced this action to obtain a dissolution of the copartnership, to have an account taken, and to have his note paid from the partnership assets. At the time the suit was brought Clark was the only member of the firm who was also a member at the time the purchase was made, or at the time the note was given. All who subsequently became owners by purchase knew at the time of the purchase of the existence of the • debt to plaintiff, and of the note given to secure it.
The findings and judgment are in favor of the plaintiff"; and defendants’ motion for a new trial being denied, this .appeal is taken from the order and from the judgment.
The note purports to be executed for and on behalf of the company, and is signed by Longley as Superintendent. The mode of executing it corresponds very nearly with some of the cases mentioned in section one hundred and fifty-four, Storey on Agency; and there can be no doubt that it is binding on the partnership, provided Longley had authority to execute it, or it has been subsequently ratified by the company.
The company being a mining partnership, managed by a Superintendent, it follows that the Superintendent could not bind the partnership, except upon such contracts as are usual and necessary in the ordinary prosecution of the work. He could purchase the supplies and materials necessary for *192the usual working of the mine upon credit, but could not bind the concern by promissory notes or bills of exchange, unless specially authorized. Such authority might, of course, be conferred by the articles of association, or might be established by proof of general usage of similar companies in this country; but no such proof was adduced in this case. Longley, therefore, had no authority, as Superintendent, to purchase the ditch property, or to give the company’s note in payment. There must have been special authority for that purpose, or his acts must have been after-wards ratified, or the partnership would not be bound.
The answer of Clark, Winspear, and Miner denies the partnership, but admits that the ditch property was purchased by the persons alleged to be members of it as tenants in common. It denies the authority of Longley to give the note for the company, but avers that he was furnished by some of the jaarties interested with all the money necessary to pay for the property. It is found that the company was a mining partnership, and the evidence fully sustains that finding. The defendants failed to prove the allegation as to the advance made to Longley to enable him to make the purchase. It may be considered, therefore, as settled beyond controversy, by the admissions and by the evidence, that Longley was authorized to make the purchase, and that there remained due, on account of the purchase from the company, eleven thousand dollars. Plaintiff has not attempted to prove any special authority in Longley to execute the note on behalf of the company, and the only question in regard to it is, whether it is shown to have been ratified. The Court finds several facts, which, in the opinion of the Court, tend to establish the fact of ratification, and then finds, as a conclusion from them, that the note has been fully ratified and confirmed by the company. This was the ultimate fact to be ascertained, and it is none the *193less a finding of fact because it is stated as a conclusion from other stated facts.
But it is claimed that this finding is not justified by the evidence. It is true there is no evidence that the note was authorized by the company, at a company meeting, or that it was adopted in that manner after it had been executed by Longley. Uor is there any evidence either of the practice of this particular company, or of usage in similar companies, which would show the necessity of such action. Mining partnerships, where there are no partnership articles, are governed by the law of ordinary partnerships, except so far as the general usage of persons engaged in similar pursuits, or the established practice of the particular company has established a different rule. The only difference generally existing, as established by the decisions of this Court, are such as legitimately flow from the fact that in such partnerships there is no delectus personae. (Bainbridge on Mines, 425.)
The partnership was bound for the money at the time the second note was given, even if the first were invalid. They were using the property, to purchase which the indebtedness was incurred, and the evidence shows that all agreed that the purchase was a beneficial one for the company. All knew, soon after the note was given, of its existence, and certainly then believed it to be a company note, for they aver in the answer that they supposed it was so worded as to bind the company. Ho one can be supposed so ignorant as to have thought it would bind the company, no matter how it was worded, if given without authority, and in a matter in which the company had no concern. All acquiesced in paying interest upon the note until long after the debt would be barred, if the note were held invalid. Under ' such circumstances, justice and fair dealing require that they should be estopped from disputing its validity.
*194The case differs widely, upon the question of ratification, from the cases of Skillman v. Lachman, 23 Cal. 198, and McConnell v. Denver, 35 Cal. 365. In the first case, it appears affirmatively that Lachman did not authorize the. note, and had in no way recognized its validity. In the case of McConnell v. Denver, the note was' given contrary to the terms of the contract, and had not been recognized as valid in any way. The proceeds of the ditch had been paid on account of the indebtedness, in accordance with the terms of the original contract of sale.
The note being established as a valid contract, binding upon the partnership as such, the partnership continued liable, at least to the extent of the partnership assets, although some members of the company had in the meantime parted with their interests in the concern. The new members purchased with full knowledge of the indebtedness and of the note, and of course took their interests subject to the payment of the partnership debts. (Duryea v. Burt, 28 Cal. 569.)
But it is contended that Hernsley, Cummings, and Baker, who were partners at the time the note was given, and who sold and transferred their shares before the commencement of this action, ought to have been made parties. If this were an action upon the note there would be some plausibility in this position. _ Ordinarily, when a partner retires from a firm he continues personally liable for the indebtedness, unless the new firm has assumed the debt and the creditor has taken them for it. If, in the case of a mining partnership, the retiring partner still continues bound, he, nevertheless, has parted with his equity to have the partnership debts paid out of the partnership property. The purchaser, however, having taken his interest subject to the debts, has no claim to recover against his vendor for any debts which may be paid out of the partnership assets. The former partners, therefore, have no interest except con*195sequentially, in this proceeding, and, if proper, are certainly not necessary parties to it.
At the time the note was given, it appears that a mortgage was executed by Longley upon the property of the company to secure it. This mortgage, like the note, was executed for and on behalf of the company, and purported to be an incumbrance upon the property of the partnership, and not upon Longley’s. interest in it. This being a proceeding by one of the partners to obtain a dissolution of the partnership, and to have the partnership assets applied to the payment of the firm debts, and there being no other creditors, it is not material to inquire whether this instrument is valid or not. The plaintiff does not appear here primarily as a creditor, but as a partner seeking a dissolution of the company and a settlement of its affairs. If he is entitled to a dissolution, the other relief must follow.. There appears to have been no agreement that the partnership should continue for a fixed term, nor was any custom shown which could affect the question of duration. If it were otherwise, however, sufficient cause for a dissolution was 'shown. As the partnership was not dissolved by the death of Longley, Clark had no right, as survivor, to take control of the property. This rule can only apply where the delectus persones exists, and the partnership is dissolved by the death of a partner.
The character of the interest which Glover had acquired in the partnership, if any, is not shown. Had it been, it may be that it would have appeared to the Coúrt that he was not a necessary party. He may have had no transfer of any interest, but only a promise, 'from Jones. At all events, he is not shown to have been a necessary party.
The exceptions to the findings were properly overruled. The additional findings asked for were either immaterial or are the probative facts merely.
It was not necessary; upon a reference, such as was had in *196this case, to move for a new trial, in order to have the report modified by changing some of the findings of the referee. (Harris v. San Francisco Sugar Refinery, 41 Cal. 393.)
The facts found by the referee in regard to the injury by washing away the bed-rock by the plaintiff show that the damage was altogether hypothetical. There is no evidence of bad faith in the matter. Upon this state of facts the allowance was properly stricken out.
The allowance of one thousand dollars, for washing away the reservoir, seems correct. It was virtually disposing of the property of the company, and Jones should be made to account for the value of it to the company. The allowance of one thousand dollars by the referee seems reasonable, and if it were too much, this would not authorize the Court to reject the demand altogether. The decree should be modified in this particular, by charging the plaintiff with this sum of one thousand dollars, as found by the referee.
Ordered that the case be remanded, with directions to modify the decree in accordance with this opinion.