Court Opinion

ID: 7889063
Source: CourtListenerOpinion
Date Created: 2022-09-08 21:46:30.384862+00
Date Added: 2024-06-11T16:31:50.849548
License: Public Domain

The opinion of the court was delivered by
Johnston, J.:
It is insisted by plaintiffs in error that, as Settle and Keith were dormant partners of the firm of John Y. Benfer, they are liable for the goods ordered during the existence of the partnership. It will be observed that while the goods were ordered during the continuance of the partnership, they were not to be shipped nor delivered until the partnership had expired. By agreement of the parties, the partnership was to be discontinued on the last day of February, 1888, and Benfer ordered the goods in his own name, to be shipped the day after the dissolution of the partnership occurred. It is true, as contended, that the persons who participate in the profits of a trade or business, ostensibly carried on by another, are liable for contracts made and credits given during the existence of the partnership. The credit is not presumed to have been given on the sole and separate responsibility of the ostensible partner, but binds all for whom the partner acts, if done in their business and for their benefit, to the same extent as though the partnership had been open and avowed. Here, however, no goods had been furnished, no sale made, nor was any credit given while the partnership existed.
Particular attention is called to the case of Bromley v. Elliott, 38 N. H. 287, as being on all fours with the case at bar. In that case the goods were furnished and the credit given while the dormant partner was a member of the firm. He received the benefits of the transaction, and, according to all the authorities, was equally liable with the ostensible partner. The distinction in this case is that the goods were not received while Settle and Keith were connected with the partnership, nor was it intended by Benfer that they should be shipped and delivered to the firm. Knowing that the partnership would expire with the month of February, Benfer ordered the goods in his own name, and particularly directed that they should *113not be shipped to him until the 1st of March, after the expiration of the partnership. It was evidently his intention that no sale or shipment would be made to the firm, and that delivery would be purposely deferred until he would have absolute control of the business. No benefits were received by Settle and Keith from the transaction, nor was there any credit given to the firm for these goods while they were members of it. A dormant partner when discovered is liable to the same extent as an ostensible partner, but no further, and if the partnership had been open and avowed in this case, and its duration known, and Benfer had ordered goods in his own name to be shipped and delivered after the dissolution of the partnership, Settle and Keith would not have been liable for the value of the same. Judge Story, in speaking of the liability of dormant partners, remarks that—
“ Of course, the retiring partner is not by his retirement exonerated from the prior debts and, liabilities of the firm. In the first place, then, a dormant partner is not liable for any debts or other contracts of the firm, except for those which are contracted during the period that he remains a dormant partner. Upon his retirement, his liability ceases, as it began, dejiire, only with his accession to the firm. The reason is that no credit is, in fact, in such case given to the dormant partner. His liability is created by operation of law, independent of his intention, from his mere participation in the profits of the business; and therefore it ceases by operation of law, as soon as such participation in the profits ceases, whether notice of his retirement be given or not.” (Story, Part., § 159.) .See, also, Pars. Part. (3d ed.), p. 451.
Here no liability was created until Settle and Keith had retired from the firm. The goods never came into the possession of the firm, nor was it the purpose that they should. They were sold to Benfer and came into his individual possession as his own property, and he sold them as such. We think the court correctly held that he alone was liable for the price of the same.
The judgment of the district court will be affirmed.
All the Justices concurring.