Court Opinion

ID: 5475358
Source: CourtListenerOpinion
Date Created: 2022-01-09 20:52:17.703746+00
Date Added: 2024-06-11T08:33:27.570081
License: Public Domain

By the Court—Miller, P. J.
The business of the defendants, as merchants, was conducted under the name of<£ Cowen & Chapin, agentsand Cowen’s compensation for his ser*142vices in managing and conducting the same was to be one-half of the profits; no arrangement being made as to the losses.
Admitting that, ordinarily, a participation in the profits will establish the existence of a partnership between the parties in favor of third persons, in the absence of all other opposing circumstances, yet, as the proof shows that the profits were a measure of compensation, it may be questionable whether the circumstances under which the participation in the profits existed did not qualify the legal presumption, and establish that the profits were to be taken by Cowen in the character of an agent, as a mere compensation for labor and services, and not as a partner. (Collyer on Part., § 44; Story on Part., §§ 32, 36, 38; Buckle v. Eckhert, 1 Den., 337; affirmed in Court of Appeals, 3 N. Y., 132; Lamb v. Grover, 47 Barb., 317; Merwin v. Playford, 3 Robertson, 702.)
But it is not important to decide this question, inasmuch as there is no evidence that the plaintiffs or their agents ever knew that the defendants were connected in the dry goods business; and the note in question was given, and the advance made, ostensibly for the purpose of carrying on and working the plantation.
As to the business of managing the plantation, there was a separate and distinct agreement, by which the defendant, Chapin, was to furnish all of the capital to stock and work the same; and it was to be conducted and managed by Cowen, independent of the other business and in connection with the owner, upon a different division of the profits. If there was any partnership at all it was not a commercial partnership, where one partner could bind the firm by the making of commercial paper. There is no proof that the plaintiffs or their agent had any knowledge or expectation that the money was to be used in any other business; and, so far as the proof goes, it establishes that the money was procured as an advance for the benefit of the plantation alone, although not used for any such purpose. As an inducement *143in obtaining the loan, it appears that the plaintiffs expected to have the sale of the cotton raised, which was to be Consigned to them in payment of the note. The note, therefore, was given entirely distinct from the dry goods business, and the loan in part for the benefit of the owner of the land, who was equally interested in the profits with the defendants who worked the plantation.
Under the circumstances presented, I think that the defendant, Cowen, had no authority whatever to borrow money and to make a note which would bind the defendant, Chapin. The rule which authorizes one member of a copartnership to bind the firm by commercial paper does not extend to all kinds of business, and is only applicable to business of a trading or commercial nature, or to the ordinary business of buying or selling for a profit. It has no application to professional partnerships, or to those formed for mining, farming or other purposes of a similar character.
It is thus stated by Judge Stoby : “ This doctrine (that one partner can make commercial paper) is not applicable to all kinds of partnerships, but is generally limited to partnerships in trade and commerce, for in such cases it is the usual course of mercantile transactions, and grows out of the general customs and laws of merchants, which is a part of the common law, and is recognized as such. But the same reason does not apply to other partnerships, unless it is the common custom or usage of such business to bind the firm by negotiable instruments, or it is necessary for the due transaction thereof.” (Story on Partnerships, § 102 a.) And it has been held in England that the rule does not apply to partnerships formed for mining, and especially to those formed for farming purposes. (Healey v. Bambridge, 3 Adol. & Ellis, N. S., 316; Dickinson v. Valpy, 10 Barn. & Cress., 128; Grunslade v. Down, 7 id., 635.)
The business of the defendants was the cultivation and raising of crops on the land which they worked as farmers or planters; and even if they can be regarded as copartners, according to the authorities cited, one of them could not bor*144row money upon the credit of the firm, and bind the firm by promissory notes or bills of exchange.
It is insisted that if the parties were not copartners, and the signature to the note is to be treated as that of Cowen only, the defendant is still liable upon the contract of the agent made in Ms business and for his benefit. Where the act of the agent is authorized by the terms of the power, such act is binding upon the principal as to all persons dealing in good faith with the agent. (North River Bank v. Aymar, 3 Hill, 262; The Exchange Bank v. Monteath, 26 N. Y., 505 ; Prest, &c., of Westfield Bank v. Cowen, 31 N. Y,, 321.) And in such case the principal would be liable, even although the funds were misappropriated. In the case at bar, the agent was not expressly authorized to borrow money or to make notes; and in order to make the principal liable, it must be made to appear that the agent was acting within the general scope of the authority conferred upon him by the agency. I think it cannot be implied, from the character of the business itself, that Cowen had authority to borrow money, or to give notes in conducting and managing the plantation. Hor does the proof show, in any way, that the exercise of such a power was necessary for such a purpose. The case is also destitute of any evidence of the universal usage of the cotton States for merchants to make advances on the crops, so as to authorize the court to regard it as a course of business, of which they can take judicial notice.
The testimony establishes that Chapin had furnished every article and all the materials necessary to carry on the business, and that the hands were not to be paid until the end of the season, in December or January. Ho money was therefore required until that time, while the money was actually borrowed by Cowen and the note given in the month of July previous, and not a dollar of the funds used for the purposes of the business of the plantation, but appropriated by Cowen for his individual benefit. There is, therefore, nothing to show that the money was required, even if Cowen was authorized to borrow it.
*145As there was no express authority to borrow the money, and none to be implied from the nature of the business, or to be inferred from any custom to borrow money known to Chapin, it follows, necessarily, that Cowen acted without authority, and the note was not valid as against Chapin.
Authorities are not wanting to sustain this view of the subject. In Davison v. Stanley (2 Man. & Grrang., 721) it was held that a bailiff of a large farming establishment, through whose hands all payments and receipts passed, had no implied authority to pledge the credit of his employer by drawing and indorsing bills of exchange, and that to fix the principal the evidence should distinctly show that he knew, or had the means of knowing, the acts done in his name. In the case under consideration there is no evidence whatever to show, either authority from, or acquiescence by, Richard Chapin.
In Howtayne v. Browne (17 Mees. & Weis., 595) the action was brought by the plaintiffs to recover money advanced to an agent appointed by the company of proprietors for the management of a mine, and it was held that there was no proof of express authority to borrow money for the purpose of carrying on the business, nor that it was necessary, and that no such authority could be assumed. When the bill upon its face shows that it was the act of an agent, the parties must see that the agent is acting within the scope of his authority. (Beach v. Vandewater, 1 Sand., 265.)
The judge was right upon the trial, and the judgment must be affirmed with costs.
Judgment affirmed.