Court Opinion

ID: 6816518
Source: CourtListenerOpinion
Date Created: 2022-07-23 19:01:55.831295+00
Date Added: 2024-06-11T16:03:54.179066
License: Public Domain

ON REHEARING.
Crump, P.,
delivered the opinion of the court.
In the argument upon the rehearing it was urged by the learned counsel for plaintiff in error that the court had, in its opinion, attached too great weight to the statement of the condition of the firm of J. W. Thomas & Company rendered to the National Bank of Petersburg in 1922, and signed by Thomas and also by Hobbs as the two persons comprising the partnership under that name; it was also again insisted that the statement was not relevant in this case as its existence was unknown to and did not influence the plaintiff bank, and was therefore inadmissible. That the statement was admissible as competent testimony in the case is too clear to be questioned. Mr. Hobbs’ oral testimony in the ease is brief, but in the course of it he denied that any arrangement in the nature of a partnership at any time existed between Thomas and himself. This written statement signed by him is in complete refutation of that testimony. Mr. Hobbs denied that the agreement of 1900 authorized Thomas to represent to any one that he was a partner in the concern. This written statement was a declaration *831in writing to the contrary. By this writing Mr. Hobbs declared, in effect, that the agreement of partnership made in 1900 had continued in force during the years intervening up to 1922, and had not been terminated. Mr. Hobbs had contended in his oral testimony that he understood the arrangement he had made with Thomas to have the effect only of allowing the firm to buy goods upon his credit. By this statement Mr. Hobbs declared, over his signature in 1922, in effect that the agreement between the parties which had existed since 1900 authorized Thomas to borrow money from the bank upon the credit of the firm in which he was to be regarded as a partner, and to bind the firm by the obligations which he might give to the bank. Whether this character of testimony was admissible at the time it was first offered, the plaintiff bank not having relied upon it, became immaterial, as it was made admissible by the evidence of Mr. Hobbs and the introduction of the written agreement between him and Thomas.
In order that the importance of this statement of 1922 to the ascertainment of .the extent to which Mr. Hobbs had authorized Thomas to represent to third parties that Hobbs was a partner with him in the firm of J. W. Thomas & Company, it is here transcribed in full as it appears in the record:
“THE NATIONAL BANK OF PETERSBURG.
“Name (firm style): J. W. Thomas & Co.
“Business; General house furnishing goods. “Location: 125 N. Syc.
“For the purpose of procuring credit from time to time, borrowing money and obtaining discounts from you, the undersigned declare the following to be an accurate, true and full statement of the financial con*832dition of the undersigned on January 1, 1922, understanding that the officers of the bank in granting said credits rely upon the accuracy of this statement.
“If at any time the condition of the undersigned should be materially changed, notice will be given you immediately in writing, stating the nature of such changed condition, and in the event of not doing so it shall be evidence that the condition is unchanged.
“dsseis.
“Cash in the National Bank of Petersburg ..$ 300.00
Accounts receivable from customers (good).. 1,500.00
Merchandise finished (how valued) inven-
tory................ 2,500.00
Real estate in fee belonging to partners individually.......................... 75,000.00
Machinery and fixtures_______________________________________ 500.00
Other assets and of what composed:
Bonds, stocks, etc.................... 50,000.00
- “Liabilities.
Bills payable for merchandise____________ None
Bills payable to others........................ None
Bills receivable, discounted................ None .
Open accounts, not due...................... B 500.00
Open accounts, part due...................... None
Mortgage or lien on real estate.. — ..... None
Chattel mortgage or other lien.......... None
Confidential loans from friends or
relatives (and from whom)____________ None
Please list real estate in detail on other side
Contingent
Liability
Accommodations on endorsement...... None
Guarantees on bonds...................... None
*833“Do you pledge, sell or otherwise dispose of any of your accounts receivable? No.
If so, to what extent are any of the accounts in above statement so disposed of? None.
General partners: J. W. Thomas and E. S. Hobbs. Date and expiration of partnership Indefinite.
When was business established 1900.
Sales for year ending: 15,000.
Average term of sale: 30 days.
Amount of rent paid per annum: $112.50.
Amounts charged off for depreciation and bad debts. I have none I consider bad; been very cautious who I sold this year.
Amount of Insurance: On stock $4,000.
Are accounts insured, and if so, in what company? None.
Date signed. January 1st, 1922.
“Please sign firm name: J. W. Thomas & Co.
“J. W. Thomas & E. S. Hobbs.”
Reading this entire statement in connection with the articles of partnership executed in 1900, we gain a fairly clear idea of the conception of both parties as to the arrangement between them and as to the effect of the so-called articles of partnership, not from dim memory under the stimulus of testifying post litem motam, however upright in intention the witness may be, but from documentary proof, the highest vehicle of proof. Unquestionably the parties who signed these two papers understood and intended that they should be taken by the business world as partners, that the property of Mr. Hobbs accounted as $75,000.00 in real estate and $50,000.00 of securities should be considered as a financial backing of the firm of J. W. Thomas & Company, in which he stated he was a partner, and that the partnership, acting through either one of thepartners, *834had authority to borrow money from banks and to execute the usual evidence of debt therefor in the partnership name. How can the court come.to any other conclusion than that this was the construction placed by both parties themselves upon the agreement of 1900?
It is further contended by the learned counsel for plaintiff in error that Thomas perpetrated a fraud upon Mr. Hobbs when he obtained his signature to the financial statement, and points to the fact that Thomas, who doubtless prepared the statement, placed the liabilities of the firm at only $500.00, whereas they must have been greatly in excess of the amount. The only testimony given by Mr. Hobbs as to the statement consists in his evidence that he did not remember when or where he signed the statement, and he would not have signed it if the liabilities had been correctly stated instead of having been put down at only $500.00. But this is beside the mark. The question here is not whether he would have terminated the agreement. He had a right to do so at any time. The condition of the business, the possibility of his incurring loss by reason of his partnership agreement with Thomas, were matters at all times Open to investigation by him, and he could have terminated his further liability any time at his pleasure. But the fact is that he acknowledged the authority of Mr. Thomas to continue the business under the agreement which made him liable as a partner, and his further authority to borrow an unascertained amount of money from a bank upon his credit as a partner.
 By the first instruction given to the jury which is copied in the opinion of this court, the court instructed the jury that by the agreement between Hobbs arid Thomas, Hobbs had authorized the latter *835to hold him out to the world as a partner for the purpose of giving Thomas credit in and about the trade therein mentioned. The court then in the same instruction told the jury, in substance, that if Thomas represented to the plaintiff that Hobbs was his partner in the business of J. W. Thomas & Company, and the plaintiff in good faith loaned Thomas & Company the money, represented by the notes Sued on, upon the faith of this representation, then Hobbs became liable as a partner upon the notes. It is insisted in argument on the rehearing that this instruction should have contained the further statement that before Hobbs could be held liable for such a representation made by Thomas, then the plaintiff “should have used such care in ascertaining the true facts as an ordinarily careful man would have used under all the circumstances of this case. It must have exercised reasonable care to know the truth as to the alleged partnership.” An instruction of this character was offered by the defendant as a separate instruction, and was refused by the court. In support of this contention it is argued that the liability of one upon the ground that he has been held out as a partner is said to rest upon the doctrine of estoppel. Authorities are cited to the effect that where it is sought to hold a person bound by a state of facts not true or not authorized by him or based upon a misrepresentation of which he was ignorant, and his liability depends upon his silence or failure to speak when he should speak, then the party seeking to hold such person liable should exercise such care to ascertain the truth as a reasonably prudent man would do under the same circumstances. This argument was based upon the assumption that the case arising upon the record before the court is one in which an unauthorized and false statement had been made by Thomas *836under such circumstances. Such is, however, not the case arising upon this record. It is true that there wa,s much evidence introduced tending to show that there was a general holding out of Hobbs as being a partner in J. W. Thomas & Company, and there was evidence tending to show that Hobbs knew of this, and if he did not acquiesce in it he should, therefore, have taken steps to deny it. At the conclusion of the evidence, however, the duty rested upon the court to instruct the jury upon all the evidence before it. It was undisputed that when the business was started in February, 1900, Hobbs and Thomas entered into the agreement as to the conduct of the business, which was signed and sealed by both of them. The business was entered upon and conducted for a long period of years with that agreement in force, certainly up to 1922, for in that year the parties again in writing signed by them stated that the business was still being conducted under that partnership agreement. It became the duty of the court to construe the agreement of February, 1900, and to instruct the jury as to its meaning and effect. This the court did, in the first instruction, and in the opinion in the case we have concurred in the construction placed by the trial court upon that agreement. It is true that the defendant, Mr. Hobbs, stated that he did not intend by that agreement to make himself liable as a partner nor to authorize Thomas to represent him as a partner, and that he had forgotten the existence of the agreement. It is, however, a fundamental principle of law that a person cannot deny the effect of a writing intentionally and purposely signed by him in order to accomplish a definite object. The probative effect of the writing overweighs all parol testimony as to intention. As held by us in our opinion in this ease, the agreement of February, 1900, *837was intended to effect what was done in this case, that is, to pledge the credit of Mr. Hobbs with exactly the same effect as if he were a partner in J. W. Thomas & Company. The language is perfectly plain and it leaves no doubt in the mind of the readers of the agreement as to the object of the parties, the intention of the parties, and the necessary purport and effect of the instrument. It is true that as to any question that might arise concerning that agreement between Hobbs and Thomas, it would be held that its terms were such as not to constitute them partners inter se, or an actual partnership. There is no magic in the phrase actual partnership and it is used as a basis of a distinction between a party who has made himself liable to third persons for partnership debts, and the partnership rights and duties which may arise between partners in fact. If this agreement does not mean that Thomas should have perfect liberty to pledge the credit of Mr. Hobbs as a partner in the firm of J. W. Thomas & Company whenever he sought credit “in and about the said trade,” then one would be at a loss to draw a contract which would effect that object.
It is true, as stated in the books, that the liability of one not actually a partner with another rests upon the doctrine of estoppel. This, however, does not mean that it necessarily rests upon that branch of law relative to estoppel by silence, when a man stands aside and knowingly permits a false statement to be made concerning Mm. The cases cited in argument show that in the application of the doctrine of estoppel to the ease of one sought to be held liable as a partner by holding out, there is a distinction between the cases where the holding out is shown to be by the consent or authority of the defendant, and the eases in wMch the liability is rested upon a statement shown *838to have been untrue and which the defendant had failed to deny. In the case of Morgan v. Farrel, 58 Conn. 413, 20 A. 614, 18 Am. St. Rep. 282, cited for plaintiff in error, there was a written paper signed by the parties who it was alleged were partners. The court held that there was no suggestion in this paper that either one was or was to be the agent of the other. It contained no attempt to provide how the business was to be carried on as a joint undertaking between themselves, and the mere fact of a community of interest did not make a partnership. It further appears, on page 427 (20 A. 614) of the report, that the only fact which the defendant knew was that some one had wrongfully used his name on the note. It did not appear that he knew that the third person, with whom it was claimed he was a partner, was the man who signed the nqte. Under all the circumstances of that case, the court held that the duty of inquiry rested upon the plaintiff, because if the plaintiff had made inquiry he would have learned that there was no partnership and that the person signing the note had no authority to make such a statement and because the other circumstances of the case rather tended to arouse suspicion. In the case of Anfenson v. Banks, 180 Iowa, 1066, 163 N. W. 608, L. R. A. 1918-D, page 482, the evidence presented a case resting entirely upon a holding out by parties other than and without the knowledge or assent of the defendant, and while the opinion-is of considerable length, upon the evidence disclosed it is very plain that no case had been made out against the defendant. In the course of the opinion the court says in reference to the law of estoppel: “Examination of precedents shows that in general the claim of an estoppel in pais is based upon alleged postive acts, declarations, statements, or admissions *839by the party sought to be charged; or upon the alleged silence of such party under circumstances in which as an honest man with due regard for the rights of others he was in duty bound to speak. It is manifest that cases of the first description are more easy of solution, for statements, declarations, and admissions are matters capable of direct proof, and their meaning and effect may be ascertained by application of the ordinary rules of construction. But when the party is sought to be charged because he was silent or because he has done nothing or because he did not do as much as in equity and good conscience he was bound to do, the party claiming the estoppel assumes a more different burden. TÍhe case before us is of the latter class.” A careful reading of the opinion discloses that when the court says that by ordinary precaution and inquiry creditors can protect themselves from imposition, the court had reference to cases of the latter class, when there were circumstances of suspicion indicating that a duty of inquiry should rest upon the plaintiff. As said in Gilmore on Partnership, page 62: “It is plainly just that one who has held himself out as a partner should be held liable to those who have acted on such representation. The cases where such'holding out has been shown are clear. The rule is the same where such holding out has been authorized by the defendant; for what is done by his authority is, in law, done by himself. Such authority may be shown by conduct as well as by words. Where, however, no authority can be shown, the question is more perplexing. One cannot be held for that for which he is in no way responsible, ete.
 The estoppel involved in the case at bar is not that character of estoppel which closes the mouth of a defendant because he did not speak when he *840should have done so. It is rather in the nature of estoppel by contract. Mr. Hobbs, upon the evidence, was estopped to deny all the just and reasonable consequences that resulted from the agreement between himself and Thomas. The court properly construed that instrument and it had no other recourse than to tell the jury that if Thomas represented to the plaintiff that Hobbs was his partner, he had a right to do so and was authorized by Hobbs to do so. As soon as that paper was introduced into the evidence, the burden on the part of the plaintiff of relying solely upon the holding out by others than Hobbs, and the failure on the part of Hobbs to deny it, was to a great extent relieved. The uniform partnership act adopted in Virginia in 1918 (Laws 1918, c. 365) expresses with accuracy the true rule as to the liability of one consenting to a representation that he is a partner of another. Its language is as follows: “When a person, by words spoken or written or by conduct, represents himself, or consents to another representing him to any one, as a partner in an existing partnership or with one or more persons not actual partners, he is liable to any such person to whom such representation has been made, who has, on the faith of such representation, given credit to the actual or apparent partnership.” Certainly the fact that Mr. Hobbs consented to his being represented by Thomas as a partner with him in the firm of J. W. Thomas & Company, is within the scope of the written agreement between the parties, and in fact was the very purpose of that agreement, because Thomas could not have obtained credit for the partnership upon the faith of Hobbs being liable for the partnership debts unless he represented Hobbs, as authorized by the agreement, to be a partner.
In Thompson v. National Bank, 111 U. S. 529, 4 *841S. Ct. 689, 28 L. Ed. 507, it was held that although a holding out is shown, still the defendant is not bound unless it was communicated to the plaintiff and he gave credit on the faith of it. The lower court had held that such a general holding out had been established that the defendant became liable to all creditors of the apparent firm, although the plaintiff did not know of the fact; this was the ruling which the Supreme Court reversed. The court refers with approval to the following language of Mr. Justice Parke in an English case:
“No person can be fixed with liability on the ground that he has been held out as a partner, unless two things concur, viz, first, the alleged act of holding out must have been done either by him or by his consent, and secondly, it must have been known to the party seeking to avail himself of it. In the absence of the first of these requisites, whatever may have been shown cannot be imputed to the person sought to be made liable; and in the absence of the second, the person seeking to make him liable has not in any way been misled.” In concluding the opinion the court sums up the doctrine, alluding to a New York case, as follows:
“And the judgment of the Court of Appeals in the later ease of Savings Bank v. Walker, 66 N. Y. 424, clearly implies that in the opinion of that court a person not in fact a partner cannot be made liable to third persons. on the ground of having been held out as a partner, except upon the ground of equitable estoppel, that he authorized himself to be so held out and that the plaintiff gave credit to him.”
The instruction in the instant case is in exact accord with those principles.
Both of the requisites essential to a recovery having *842been submitted to the jury, what duty of inquiry rested upon the plaintiff? The proof of authority to Thomas to represent Hobbs as his partner, and thereby obtain credit for the firm, rested upon a contract in writing, the construction of which was a judicial function, and the court properly left to the jury to find whether Thomas, acting under this authority, communicated the fact of the partnership to the plaintiff and whether the plaintiff loaned the money on the faith of the existence of the partnership. All the authorities hold that where prior consent, knowledge or authority is shown, and the other requisites concur, then the estoppel is established. There is no foundation for an inference from the testimony that Thomas acted without authority in communicating the fact of Hobbs being a partner in the firm, of J. W. Thomas & Company, or that he made a false or unauthorized representation in so doing. Learned counsel seemed to argue that despite the authority necessarily flowing from the agreement, and further confirmed, we should look to that instrument to ascertain whether the parties to it were actual partners inter se. But this is reasoning in a circle. When the estoppel prevails in favor of a creditor holding a person to a partnership liability, it is upon the assumption that there was no actual partnership, but by reason of the proof the party held liable is estopped from denying that there was an actual partnership.- The party against whom the estoppel works becomes in the eye of the law, as to the creditor, an actual partner and will not be heard to deny it. Otherwise the entire doctrine of a partnership by estoppel, when a party sought to be held authorizes or consents to another holding him out to be or representing him as a partner, resting upon the principles established by the authorities and embodied in our statutes, becomes meaningless and nugatory.
*843Here the affirmative act of Mr. Hobbs in agreeing with Thomas that he would be liable for credit extended to the firm fixed his liability so long as the written agreement remained in force, and it was immaterial in what form Thomas conveyed the information that Hobbs was liable. Unless we close our eyes to the fixed meaning and purport of the language employed by the parties to the agreement of 1900, we cannot view that instrument in the ordinary light of a paper by a principal merely conferring authority upon an agent. The agency to bind the firm here, and so bind Hobbs, was not. a mere agency conferred upon him by the agreement. On the contrary, the character of agency to bind the firm, possessed by Thomas, was the kind of agency which results from a partnership, in which each partner by an act within the scope of the partnership business binds the partnership and all the members.
These principles of the common law are restated in section 16 of our uniform partnership act: “When a partnership liability results, he is liable as though he were an actual member of the partnership,” and further: “When a person has been thus represented to be a partner in an existing partnership, or with one or more persons not actual partners, he is the agent of the persons consenting to such representation to bind them to the same extent and in the same manner as though he were a partner in fact, with respect to persons who rely upon the representation.” McCaskey Register Co. v. Blakeney (Mo. App.), 224 S. W. 62; First National Bank v. Spangler, 49 Cal. App. 133, 192 Pac. 874; Boise, etc., Lumber Co. v. Sarrett, 38 Idaho 278, 221 Pac. 130; Dimon v. Romeo, 99 Conn. 197, 121 Atl. 352.
The principle of law, upon which the decision in this case rests, was properly applied in the Michigan case of *844Hinman v. Littell, quoted from in our opinion, and is in accordance with, the reasoning of the courts in Thompson v. First National Bank, 111 U. S. 529, 4 S. Ct. 689, 28 L. Ed. 507, and other cases; that where one has authorized a statement or representation that he is a partner, he is bound thereby to a person to whom the statement or representation was made, and who relied upon it in dealing with the apparent partnership.
The court instructed the jury in the third instruction given to it that each member of a partnership has authority “to bind all the partners by his acts or contracts in relation to the business of the partnership, including the borrowing of money and the making and delivering of the notes of the partnership therefor; and, as between the firm and third persons dealing with them in good faith, it is of no consequence whether the partner is acting in good faith with his copartner or not, provided the act is done within' the scope of the partnership business and professedly for the firm.
The principle of law enunciated in this instruction is well settled and is applicable to all commercial or trading partnerships; and it is clear that J. W. Thomas & Company were engaged in a commercial or trading business. Without seeking other authority, it is sufficient that the doctrine embodied in the instruction has been acknowledged in Virginia. In Commercial Bank v. Miller, 96 Va. 357, 31 S. E. 912, the court, quoting with approval from Daniel on Negotiable Instruments, holds it to be “settled law” that “the borrowing of money and negotiation of bills and notes being incident to, and usual in, the business of copartnerships formed for the purpose of trade, it follows that when a copartner borrows money professedly for the firm and execution therefor a negotiable instrument *845in the copartnership name, it will bind all the partners, whether the borrowing were really for the firm or not, provided the lender is not himself cognizant of the intended fraud, and the burden will not be thrown on him to show that he was not cognizant of such fraud, or to prove value given for the paper.”
In oral argument on the rehearing it was contended that Thomas had perpetrated a fraud upon the defendant in borrowing so large a sum, when the statements of the condition of the business showed that the sums loaned were out of proportion to the amount of business done by J. W. Thomas & Company, and therefore the bank should have taken cognizance of this condition. The evidence from financial and business men is overwhelming to the effect that in business, financial and trade circles in Petersburg the concern of J. W. Thomas & Company was considered to be a partnership composed of Thomas and Hobbs, and that Thomas was in the habit of borrowing from banks and trading generally upon the faith of such a partnership. Both the mercantile agencies, for many years prior to the death of Thomas, carried this information with the usual items as the financial worth of the partners individually in their reports. As the reporter for Dun’s agency testified: “The general inf ormation, from sources that I have consulted from time to time and presumed to be well informed sources, was to the effect that it was composed of the two individuals I have mentioned, Mr. J. W. Thomas and Mr. E. S. Hobbs. That was the general understanding of the prominent business concerns, banks, insurance companies, real estate agents, wholesale houses, etc., that we have consulted at times.” There is some direct evidence tending to show that Mr. Hobbs knew Thomas was carrying on the business upon the faith of such a partnership, but. *846this was denied by Mr. Hobbs, and was therefore for the jury. The inference from the evidence is that the universal Understanding as to the partnership resulted from, statements made by Thomas and the business as conducted by him, and that Thomas was acting with the assent and authority of Hobbs growing out of the agreement between them.. In 1919 Thomas approached the president of the plaintiff bank for the purpose of opening an account with the bank in the name of ,T. W. Thomas & Company and having credit extended to them. Thomas stated to him that he desired to make loans from the bank to pay off indebtedness of the partnership to the National Bank of Petersburg. Mr. Wright, the bank’s president, knew both Mr. Thomas and Mr. Hobbs intimately, he testifies. He knew of the general understanding among the business men of the city that Thomas and Hobbs were the two partners constituting the firm of J. W. Thomas & Company. Upon inquiry of Thomas, .the latter told him that the firm was composed of himself and Hobbs. Upon consulting the reports of the two mercantile agencies, this was further confirmed. He then consented to extend credit to the firm. We find nothing in the testimony to arouse any suspicion on the part of the bank’s president that Thomas was in any way intending to deceive him. or to defraud his partner, as Thomas was considered a reputable business man of the community, and the president knew he was engaged in the crockery business, and he knew also that Thomas’ financial means were negligible and that Hobbs was a man of comparative wealth; he testified that credit was extended on the strength of Mr. Hobbs’ financial condition. The notes in suit, which by extension and renewals resulted in the indebtedness due at the time of Thomas’ death, originated during a period commenc*847ing in November 1920. A very brief statement of the condition of J. W. Thomas & Company for the year ending January 1, 1920, was rendered to the bank, as' follows:
“Inventory.........................-......-..........$ 4,500.00
Open accounts...................................... 1,500.00
Store fixtures.......................•................. 500.00
Real and personal property................ 100,000.00
Bonds, stocks, etc. .............................. 50,000.00
Life insurance...................:............ — ..... 30,000.00
“$ 186,500.00.”
The only liabilities given was the amount of $450.00 due on open accounts, and “deduct our accommodation from the above.”
In January, 1921, the bank was furnished with the following statement:
“For the purpose of procuring credit with the above named bank on our negotiable paper, we furnish the following as being a fair and accurate statement of our financial condition on the 1st day of January, 1921:
“Assets.
“Cash on hand and in bank..................$ 1,000.00
Accounts receivable — good___________ 1,500.00
Accounts receivable — doubtful.......... 19.85
Accounts receivable — bad........... 30.00
Real estate..................... 90,000.00
Fixtures..................... 500.00
Merchandise — -how valued: Estimated market value........................ 4,000.00
Other accounts:
Stocks and bonds.............................. 50,000.00
Life insurance....................... 25,000.00
$ 172,049.85

*848
“Liabilities:

“Notes payable for merchandise..........None
Notes payable to banks......................$ 16,600.00
Notes payable to individuals..............None
Open accounts payable........................ 387.56
Mortgages on real estate....................None
Mortgages or liens on personal property....................................................None
Total liabilities......................................$ 16,987.56
Net worth..............................................• 155,062.29
Total......................................................$ 172,049.85
“Names of partners: J. W. Thomas & E. S. Hobbs. How long in business, 20 years.
Contingent liability, such as aecommondation endorsement, etc. None.
“Amount of insurance on stock............$ 4,000.00
Amount of total sales per annum______ 25,000.00
Gross earnings per annum.................. 7,600.00
Amount of expenses per annum........ 4,000.00
Net earnings per annum...................... 3,600.00
“(Signed) J. W. Thomas & Co., “Per J. W. Thomas.”
A similar statement rendered in January, 1922, is in the main the same as in 1921, except the cash on hand is listed at $600.00, uierchandise at $2,500.00, and the life insurance is omitted so that the total assets are placed at $155,100.00; the individual worth of the partners is placed at $130,000.00, the total sales per annum at $15,000.00, the gross earnings at $5,000.00, and the net earnings at $2,000.00. Mr. Thomas died in October, 1922.
The bank officials probably knew when the loans originated that the business conducted by J. W. Thomas *849& Company was not very extensive, and these statements show that the business was not progressing, although they show a large amount of assets amply authorizing a loan of $18,000.00 or $19,000.00. Whether any officer of the bank examined these statements with care, or examined them at all, does not appear. The president of the bank testified he extended credit to the firm in reliance on Mr. Hobbs’ financial ability. In answer to questions concerning his knowledge of the purpose of the firm in making loans from his bank, he says:
“Q. Mr. Wright, at the time those loans upon these notes were obtained from the Virginia National Bank, was there any statement made to you as an officer of the bank as to what was to be done with the money, the proceeds of the notes?
“A. Mr. Thomas told me that it was to pay the National Bank.
“Q. To pay the National Bank?
“A. Yes, sir.
“Q. Do you know to whose account the money was placed?
“A. To J. W. Thomas & Company.”
Mr. Wright was placed upon the stand on three different occasions during the course of the trial, and on none of them was he cross-examined at all. His testimony remains undisputed and therefore the facts are that the bank loaned the money in the regular course of business, in perfectly good faith, to a firm of known financial ability, and for a purpose regularly within the scope of a trading partnership, i. e., to discharge indebtedness it owed.
We find nothing in the record to impugn the good faith of the bank officials, or to put them on their guard, otherwise than to satisfy themselves that the loans could and would be repaid by the firm.
*850The learned counsel for the plaintiff in error in the case has argued so earnestly and exhaustively his insistent contention that Hobbs is not shown to be a partner by estoppel, that we have felt constrained to deal with that question at considerable length in our original opinion and in this discussion of the ease on rehearing; although it seems after all that our disagreement with that view is based upon the fundamental principle that one person cannot put another in a position to mislead third parties and then disavow the results of his act. We have shown that no duty of inquiry rested upon the bank to ascertain whether Hobbs was a partner in fact, because Hobbs had consented to Thomas making such a statement.
This duty of - inquiry, however, may arise in another phase of the ease brought to our attention in the oral argument on the rehearing. By the record brought to this court, and the verdict of the jury, it is placed beyond further dispute, and must be regarded as settled law of the case that Hobbs is. to be taken, in considering his liability for the debt sued upon, as a partner with Thomas in the firm of J. W. Thomas & Company, and as a partner in fact. There was evidence tending to show that the officialism of the bank, when the loans of money commenced in November, 1920, knew the business of J. W. Thomas & Company was small, and that the large advances made to the firm seemed out of proportion to the necessities of the business conducted on the scale appearing in the statements made to the bank in January, 1921, and the following year. W.a,s there anything in the amounts of money borrowed, under all the circumstances shown in evidence, to arouse suspicion on the part of the bank that Thomas was exceeding the authority, which was conferred upon him as a partner, to bind the partnership? The firm was a *851commercial or trading partnership, and as has been pointed out it seems settled in Virginia that in such a partnership any partner may bind the firm by borrowing money and executing a note therefor in the partnership name. This rule seems universal. 1 Rowley on Partnership, sections 423, 424. As there said, in section 424: ■
“In general, a commercial partnership will be liable for money borrowed by one of its members on the credit of the firm, for commercial partnerships are engaged in buying and selling, and within the scope of buying and selling, it is an incident of the business to borrow money, therefore the power to borrow money for the firm and the authority to bind the firm by the loan is implied in each partner. Moreover the lender, in order to charge all of the several partners, is not required to see that the money thus borrowed is applied to partnership purposes. All that is necessary is that he act in good faith and without knowledge, actual or constructive, that the borrower intends to use the money to further his own individual interests. But if the lender, at the time of making the loan, knows or has reason to believe that the partner is seeking to obtain money for his individual benefit, or that the transaction is out of the ordinary course of business, then the firm is not liable.”
What is “out of the ordinary course of business” must depend upon the circumstances of each case. If Thomas had undertaken to purchase a coal mine and had executed the note of the partnership in payment of the price thereof, the transaction would have been on its face beyond the scope of his implied authority as a partner in the firm dealing in china ware and like articles, although he had implied authority generally to borrow money for the firm.
*852 The presumption is that money borrowed in the partnership name was borrowed for partnership purposes and in the course of the business conducted by the partnership. If by reason of the unusually large sums borrowed and the knowledge the bank officials had of the business and of the partners and other circumstances, the defense is made that notice should be imputed to the bank that the loans were not intended for the partnership business, and that the bank should have made inquiry, and that such inquiry would have developed that the money borrowed was not to be used in fact for partnership purposes — then the establishment of such defense is upon the defendant. Lind v. Crowley, 29 Kans. 756; Sheldon v. Bigelow, 118 Iowa 586, 92 N. W. 701; Chicago Trust, &c., Bank v. Kinnare, 174 Ill. 358, 51 N. E. 607; First National Bank v. Webster, 130 Minn. 277, 753 N. W. 736; National Shawmut Bank v. McGlinn (Mass.), 150 N. E. 151; Union Nat. Bank v. Neill, 149 Fed. 711, 79 C. C. A. 417, 10 L. R. A. (N. S.) 426.
The power of a partner to bind the partnership is thus expressed in the uniform partnership law, Code (ed. 1924), section 4359 (9):
“(1) Every partner is an agent of his partnership for the purpose of its business and the act of every partner, including the execution in the partnership name of any instrument, for apparently carrying on in the usual way the business of the partnership of which he is a member binds the partnership, unless the partner so acting has in fact no authority to act for the partnership in the particular matter, and the person with whom he is dealing has knowledge of the fact that he has no such authority.
“(2) An act of a partner which is not apparently for the carrying on of the business of the partnership in the *853usual way does not bind the partnership unless authorized by the other partners.”
In the instant case it is clearly established that Thomas had general power to bind the partnership by borrowing money, and to execute a note therefor, in carrying on the business in the usual way. Were the notes in question here so executed, or do the large sums borrowed, apparently unnecessary for the small business, indicate to a prudent money lender otherwise, or that there was something amiss about the transaction.
In Cotter v. Porter, 88 Mich. 549, 50 N. W. 658, the plaintiff loaned money to a partnership in which her brother was a member, and it was contended that the brother had secured the loan for his personal use. The court applied the principles of law thus:
“The jury were also instructed, and we think correctly, that when partners were engaged in such a grocery business as this was, where they were doing a wholesale and retail business, they had the right to borrow money for the necessary purposes of the business ; but, if it was not borrowed for the necessary purposes of the firm, the plaintiff could not recover, if she knew it was not borrowed for such purposes; but she had a right to rely upon the implied power of Coller to borrow money, and if she loaned the money in good faith, and did so without knowledge or notice of such facts as would lead an ordinarily prudent person to suspect that the loan was for .her brother, she had the right to recover.”
In 1 Joyce on Defenses to Commercial Paper (2nd ed.), section 175, the author deals with the ostensible or apparent authority of a partner to borrow money, and there says:
“If one of several partners obtains a loan of money for his individual use, by giving the note or cheek of the *854firm, but without their authority, the other partners will nevertheless be bound thereby unless there be something in the transaction to induce the lender to suspect that the money is not borrowed for their benefit or the circumstances were such as to put him upon inquiry.”
 Without undertaking to state the evidence in detail, there is, in our opinion sufficient testimony in .the record to have allowed the jury to pass upon the following two questions, viz: (1) Whether, in making the loans from the plaintiff bank, Thomas was borrowing for his personal benefit, or otherwise not for the reasonable requirements of the firm’s business, and Avithout the knowledge of and in fraud of his partner, Hobbs; (2) whether under all the circumstances in evidence and with the knowledge which may be shown to be possessed by the bank and by Hobbs respectively, notice should be imputed to the bank that the transactions of Thomas in making the loans were suspicious and should have put the bank upon inquiry, and inquiry would have disclosed that Thomas was exceeding his implied power as a partner without the assent of Hobbs. In the event of an affirmative answer to these two questions, the verdict should be for the defendant, otherwise for the plaintiff. We will reverse the case and remand it for a new trial to be had only upon the said two issues, all other questions in the case to be taken as settled in accordance with the views expressed by this court. The first instruction given by the court practically excluded from the jury the consideration of these issues, though otherwise correct and in accord Avith the general rule enunciated in Commercial Bank v. Miller, supra. An order will be entered setting aside the verdict of the jury and reversing and remanding the case for a new trial as indicated.

Reversed and remanded.