Court Opinion

ID: 4009670
Source: CourtListenerOpinion
Date Created: 2016-07-06 11:10:15.685582+00
Date Added: 2024-06-11T12:06:06.943325
License: Public Domain

The appellant testified that at the time the first loan of $100 was made he told the cashier of the plaintiff bank not to loan any more money to the firm unless he was present and authorized it. The question is what effect, if any, did such notification have upon the rights of the parties. Independent of such notice the appellant would be liable beyond doubt. I regard the notice as being equivalent to a statement by the appellant that, if loans were made in the future without his consent, he would not be liable therefor. This much I think is fairly impliable from the *Page 660 
language used, and the jury in any event might well have placed such an interpretation thereon. The evidence does not show that the appellant had any knowledge that his partner, who had active charge of the business, was issuing checks when he had no funds in the bank to meet them or that he was paying firm bills with the proceeds of moneys borrowed from the bank. On the contrary, there was evidence from which the jury might have found that the firm moneys were more than sufficient to pay all firm debts, had the same been used by the active partner for that purpose, without borrowing a cent. There is no evidence thatLarsen had any knowledge that any of the firm funds were being converted by his copartner until after the notes in suit were given and the proceeds thereof had been disbursed to the firm creditors or otherwise. The question is, under these circumstances, can the plaintiff recover in an action brought on the notes or for money had and received independent of the notes. The authorities cited in the opinion do not reach what I conceive to be the real point in the case. Recovery was permitted in the two Wisconsin cases where bonds were held void because the municipality in each instance had in effect vouched for their validity and had used the money derived from their sale for a municipal purpose. In Paul v.Kenosha, 22 Wis. 266, it was said that the case fell under the general rule of law "that where a party sells an obligation which turns out to be valueless and not of such a character as he represents it to be, he is liable to the vendee as upon a failure of consideration." In the cases cited, the parties against whom recovery was sought not only had the use and benefit of the money, but they knowingly accepted and used it. Here the money was loaned against the protest of the appellant and was expended without his knowledge, or, what is the same thing, the jury might so find.
I do not think it would be seriously contended that, if one person paid the debt of another against his protest and without *Page 661 
his knowledge or consent, an action for money had and received would lie. The payment under such circumstances is voluntary and not recoverable. 1 Parsons, Contracts (9th ed.) 496 (*457) and cases cited;2 Page, Contracts, § 832, and cases cited; 35 Cent. Dig. sec. 13, pp. 65, 66, and cases cited. As is said by the Massachusetts court: "No one can thus make himself a creditor of another by the unsolicited payment of his debts; and it is not enough to create a liability, that the defendant has had the benefit of the money, by reason of its being expended in his business or in the payment of his debts." Kelley v.Lindsey, 7 Gray (73 Mass.) 287. To the same effect see Stephens v. Boardof Ed. 79 N.Y. 183. A voluntary payment for the benefit of another gives the party paying no right of action against one for whose benefit the payment was made, unless he subsequently ratifies it. Portage Co. v.Waupaca Co. 15 Wis. 362; Clancy v. McEnery, 17 Wis. 177, 179. To the same effect see citation of numerous cases in 27 Cyc. 838, 839, note 30.
An action for assumpsit for money had and received will not lie unless there is an express or an implied promise to support it. Whitehead v.Peck, 1 Ga. 140; 27 Cyc. 841, and cases cited, note 44. It would be paradoxical to imply a contract where a party expressly refused to make one.
Unless there is something in the relation of parties as partners whereby one of them has the right to bind the other against his protest, the verdict was improperly directed. The authorities are to the contrary. It is well settled that one partner may exempt himself from future liability by giving express previous notice to a third person that he will no longer be bound for notes or drafts drawn by his copartners in the name of the firm. Matthews v. Dare, 20 Md. 248, 273;Maltby v. N. W. Va. R. Co. 16 Md. 422.
"It is a well established principle that the contract of a partner is obligatory on his copartner by virtue of an implied authority, which may be rebutted by a refusal to be bound by *Page 662 
his acts. By legal consequence, the partner whose authority is thus declined cannot bind the copartnership in favor of those who have knowledge of this fact. . . . Nothing can be more reasonable than that a person may protect himself in this manner against the fraud and misconduct of his associate." Leavitt v. Peck, 3 Conn. 124.
"Both in England and the United States there are cases which assert the general proposition that a partner may protect himself against the consequences of a future contract by giving notice of his dissent to the party with whom it is about to be made. . . . And where the firm consists of but two persons, and there is nothing in the articles to prevent each from having an equal voice in the direction and control of the common business, the correctness of the proposition cannot be questioned. In such case the duty of each partner would require him not to enter into any contract from which the other in good faith dissented; and if he did it would be a violation of the obligations which were imposed by the nature of the partnership. It would not, in fact, be the contract of the firm; and the party with whom it was made, having notice, could not enforce it as such." Johnston v. Dutton's Adm'r, 27 Ala. 245, 252.
"The authority of one partner to bind another by signing bills of exchange in their joint names is only an implied authority, and may be rebutted by express previous notice to the party taking such security from one of them, that the other would not be liable for it. And this, though it were represented to the holder by the partner signing such security that the money advanced on it was raised for the purpose of being applied to the payment of partnership debts, and though the greater part of it were in fact so applied. Nor can he recover against the other partner the amount of the sum so applied to the payment of the partnership debts against such notice." ELLENBOROUGH, C. J., inGallway v. Mathew, 10 East, 263, 1 Campb. 403.
The partnership relation makes each partner the agent of the others when acting within the scope of his power, but when the agency is denied and his act forbidden by his copartner, with notice to the party assuming to deal with him as agent of the firm, the act is his individual act and not that of the firm. Yeager v. Wallace, 57 Pa. St. 365. *Page 663 
Where a laborer does work which inures to the benefit of the firm, with knowledge of the fact that there is an agreement between the partners that one of them shall pay for such labor, recovery cannot be had against the other partner. Urquhart v. Powell, 54 Ga. 29;Pollock v. Williams, 42 Miss. 88; Nolan v. Lovelock, 1 Mont. 224. Other cases holding that, where one person deals with a member of a firm with knowledge of the equities of another partner, he is bound by such knowledge and cannot recover against the partner in whose favor the equities exist, if he disregards the same, are: Radcliffe v.Varner, 55 Ga. 427; Knox v. Buffington, 50 Iowa, 320; Combs v.Boswell, 1 Dana (31 Ky.) 473; Williams v. Barnett, 10 Kan. 455;Wilson v. Richards, 28 Minn. 337, 9 N.W. 872; Cargill v. Corby,15 Mo. 425; Boardman v. Gore, 15 Mass. 332; Monroe v. Conner, 15 Me. 178;Bromley v. Elliot, 38 N. H. 287; Baxter v. Clark, 26 N. C. 127;Minnit v. Whinery, 5 Brown's Cas. in Parl. 489; Rooth v. Quin, 7 Price, 193; Willis v. Dyson, 1 Starkie, 164.
In principle the foregoing decisions are right. No one has any right to arrogate to himself the right to pay the debt of another without his consent and against his protest, unless it be the intention of the party paying to make a donation. Otherwise he is simply meddling in affairs which do not concern him. It is the right of the debtor to pay his debt at the time and in the manner he chooses, in so far as third parties are concerned. The money having been loaned in violation of the express command of appellant, the debt did not become his, but was solely that of his copartner who negotiated the loan. The plaintiff, having made the loan after being forbidden so to do, should not be permitted to recover from Larsen. If Smiley paid the debt to the bank he might have an accounting and settlement with Larsen, wherein their rights and equities would be adjusted, but I cannot see where there is any privity betweenLarsen and the bank, assuming the testimony of the latter to be true. Surely Smiley had no implied *Page 664 
authority to violate the law by issuing firm checks when there were no available funds to meet them. The issue of such checks did not affect the bank on which they were drawn. Its duty to refuse payment thereof was plain and obvious. It was not called upon to disregardLarsen's instructions, and offers no excuse for so doing. I think the jury should have been permitted to pass upon the issue raised, and, if it found in appellant's favor, that appellant would be entitled to relief against all of the indebtedness evidenced by the notes except the first one.
 *Page 529