Court Opinion

ID: 5230677
Source: CourtListenerOpinion
Date Created: 2022-01-06 16:55:35.433151+00
Date Added: 2024-06-11T08:27:39.645093
License: Public Domain

Scott, J. (dissenting):
I am unable to concur in the affirmance of the judgment appealed from. The action is not to recover upon contract, but for damages for a tort, to wit, the fraud and misrepresentation which was used to induce plaintiff to purchase the drafts described in the complaint. That there was such fraud and misrepresentation on the part of one of the members of the firm of Tracy & Co. is not denied, but it is not claimed, nor is there any evidence to show that the appellant, Frederick W. Parker, personally committed any fraud or made any misrepresentation by his partner. He is sought to be held in this action solely upon the theory that the fraud and misrepresentation of his copartners is attributable to him by the bare fact of his copartnership relation. He does not question his liability for the indebtedness arising out of the dishonor of the drafts, but that question is not involved in this action. The plaintiff must recover, under its pleading, if it can recover at all, not for the debt, but for the tort. The law of the case as charged by the court and as acquiesced in by both counsel is that the appellant Parker can be held liable for the tort only if it appears that the drawing and sale of foreign bills of exchange was within the scope of the partnership business and such unquestionably is an accurate statement of the law.
The following facts are clearly established by the evidence and are not disputed: In the year 1906 the firm of Tracy & Co. was organized, Parker then becoming a member of it. It was organized for the purpose of engaging “ in the general brokerage business, such as has heretofore been done by the prior firm of Tracy and Company.” This prior firm had never engaged in the business of selling exchange, nor did the successor firm until after the month of March, 1909. The business of the firm was the usual stock exchange brokerage business, to which was added, apparently in a small way, what is known as a promoting business. Parker was the board member of *504the firm spending all of his time on the floor of the Stock Exchange. The office business was managed by a partner named Covington, who was the person actually guilty of fraud and misrepresentation. In February, 1909, Parker was taken very ill with diphtheria and was confined to his house for about a month. During this time he was informed that the firm was short of available money and advanced to it about $20,000 or its equivalent in securities, but it does not appear that he was informed- or knew that the firm was in failing circumstances. On March 23, 1909, while still very ill, he sailed for Europe, and was quite ill there for some time. He returned to this country in November of the same year. Soon after Parker left, but without his knowledge, Covington began to draw and sell bills of exchange on foreign banks, which he failed to protect or provide for. Among them were the drafts purchased by plaintiff. The firm failed on May 17, 1909. The evidence is convincing and conclusive that the firm had never, until after Parker sailed for Europe, engaged in the business of selling foreign exchange; that that was a business not usually engaged in by stock brokerage houses, who, when they have occasion to deal with foreign countries, customarily have resort to banking houses making it a part of their business to deal in exchange, and that Parker never knew that his firm had undertaken to draw and sell bills of exchange until after the failure.
I think that the evidence clearly established the fact that the issue and sale of foreign bills of exchange was wholly outside the scope of the partnership business, and consequently the fraud of one partner in selling the bills to plaintiff was not attributable to Parker, who knew nothing about it, and who had not, in fact or by inference, authorized his partner to engage in that kind of business. The prevailing opinion, as I read it, proceeds upon the theory that because the firm might have had occasion in the transaction of its usual business to draw foreign bills of exchange, therefore the plaintiff was entitled to believe, upon Covington’s representation, that the bills which it purchased had been drawn and were offered for sale in the regular course of business. That, however, as I conceive, is not the question upon which Parker’s liability in this *505action depends. The right of one partner to bind another depends upon the principle of agency, each partner acting as the agent of all. If Parker is to be held liable for Covington’s tort, it can only be upon the ground that the transaction in the course of which the tort was committed was within Covington’s implied authority to act for Parker. If it was within the usual course of business of the firm such an authority will be implied, but where, as in the present case, it was wholly without the usual scope, there is no ground for implying an agency. For these reasons I am of opinion that it was the duty of the trial judge to have dismissed the complaint or, at the least, to have set aside the verdict as against the evidence.
The judgment should, therefore, be reversed and a new trial granted, with costs to the appellant to abide the event.
McLaughlin, J., concurred.
Judgment and order affirmed, with costs.