Court Opinion

ID: 6509451
Source: CourtListenerOpinion
Date Created: 2022-07-19 18:21:05.25215+00
Date Added: 2024-06-11T15:54:50.036402
License: Public Domain

BBICKELL, C. J.-
It is a legal consequence of all mercantile partnerships, that each partner is the general agent of the firm, in all transactions within the scope of its business. Within the range of ifs ordinary business, his acts *23and engagements are as binding on the firm, as if all the members had united in them. Partnerships are formed for the common benefit of all the partners, not for the exclusive individual benefit of either partner; and contracts made by one, on his own account, for his own benefit, to the injury of the other partners, are without the scope of the partnership business, and without the range of the authority the law implies. They are not, consequently, binding on the firm, unless the other members authorize them, or subsequently ratify them. Each partner has an implied authority to make or indorse promissory notes in the name of, and binding on the firm, if they are made or indorsed for the benefit of the partnership, in the course of the partnership business. But neither partner can, for his own benefit, or for mere accommodation of a third person, by virtue of his general 'agency, make or indorse promissory notes in the name of the firm, which will bind it. — Mauldin v. Br. Bank of Mobile, 2 Ala. 502.
Each partner has an implied authority to dispose of the partnership property; but there is a well-defined limitation of the authority. The disposition must be on account, and for the benefit of the firm. A disposition on his own account, and for his own individual benefit, is without his authority, and, like the unauthorized act of other agents, is not valid against the firm. An appropriation of the partnership property to the payment of his individual debt, whether it is a pre-existing debt, or a debt contracted cotemporaneously with the appropriation, is as inoperative against the firm, as an executory contract by which he may attempt to bind the firm for the payment of such debt. — 1 Amer. Lead. Cases, 557; Parsons on Part. Ill; Pierce & Baldwin v. Pass & Co. 1 Port. 232; Nall & Brooks v. McIntyre, 31 Ala. 532; Burwell & Clarke v. Springfield, 15 Ala. 273.
In the present case, Clarke knew that the partnership existed between Hurt and Atkins, and that the goods Atkins proposed to sell him in satisfaction of the debt due from him, and the debt it was contemplated he would contract in the future, were the property of the partnership. The dealing was with Atkins on his own account, for his own benefit, and to the injury of the partnership. It may be that neither Atkins nor Clarke intended, or supposed it possible, that eventual loss would result to the partnership. Indemnity against loss, it was doubtless believed that Atkins would make, and be fully able to make, on the settlement of the partnership accounts. The risk of Atkins’s solvency was thus transferred, or attempted to be transferred, from Clarke, his creditor, to the partnership, without their consent. One man can not, and ought not to be permitted, thus to dispose *24of the property of another, without his consent. Atkins, with Clarke’s knowledge, in the transaction we are considering, exceeded his authority, and violated the duty of his relation; and the agreement of Atkins is not binding on Hurt, unless it was ratified by him subsequently.
The case of White v. Toles & Dunlap, 7 Ala. 569, is wholly unlike the present case, and rests on its peculiar facts. The contract, in that case, was for work and labor to be done and performed by one of the partners, and to be paid for in board furnished him. The contract was made, the work done, and the board furnished, in ignorance of the existence of a partnership ; wdiile, in the case before us, it is apparent Clarke knew of the existence of the partnership, and that the goods to be sold him, and which were subsequently purchased, were th'e property of the partnership. The case is not distinguishable from that of Pierce & Baldwin v. Pass & Co., supra.
2. It is insisted, however, that the proposition made by Hurt, when informed of the agreement between Clarke and Atkins, was an assent to, and ratification of it. It is certainly true, that if Hurt assented to the agreement, when informed of it, the assent has the effect on it which a previous authority to Atkins to make it would have had. It would become valid and binding on the partnership. But a mere offer by Hurt, to take the debt due from Atkins in part payment, if Clarke pay the remainder, until acted on by Clarke, by acceptance, and making payment according to its terms, would not operate as an assent to, or ratification of the unauthorized agreement. Yielding assent, or ratification of the agreement, was a voluntary, gratuitous act on the part of Hurt; and a proposition to assent or ratify is not distinguishable from a proposition to enter into a contract. Until Clarke accepted the proposition, and closed the transaction by a compliance with its terms, Hurt had the right of retraction; and if he did retract, the parties stood in the same condition, as if the proposition had not been made. — 1 Chit. Con. 16; Strong v. Catlin, 35 Ala. 607.
The assignments of error are numerous, but it is unnecessary to notice them separately. Several of the rulings of the Circuit Court were not consistent with the views we have expressed, and what has been said will probably be decisive of the cause on another trial.
The judgment is reversed, and the cause is remanded.