Court Opinion

ID: 7129645
Source: CourtListenerOpinion
Date Created: 2022-07-24 15:17:23.716979+00
Date Added: 2024-06-11T16:14:19.423185
License: Public Domain

ju(jge Simpson
delivered the opinion of the court.
The only question in this case is, whether the following instrument of writing, executed by Cronly when he and McMurtry were in partnership, authorized the latter, after the partnership was dissolved, still to use the name of the firm, or whether the authority it conferred terminated, when the firm was dissolved. The writing referred to is as follows:
“John McMurtry is authorized to use, at discretion, the name of the firm of Cronly and McMurtry.
EDWARD CRONLY.
Lexington, June 10th, 1854.”
Cronly and McMurtry were partners in business; during the existence of the partnership Cronly gave to McMurtry the following authority in writing: “John MeMurtry is authorized to use, at discretion,the name of the firm of Cronly & McMurtry. Lexington, 10 June, 1854.— Signed, Edw’d Cronly.” Held, that this instrument conferred authority upon McMurtry to sign the name of Cronly & Mc-Murtry to obligations not con nected with the business of the firm, during the partnership, but after the dissolution of the partnership it conferred no authority to sign the firm name to any paper whatever.
*409The firm of Cronly and McMurtry was dissolved in October, 1854, and the bill of exchange on which this action was brought, was made by McMurtry, in the name of Cronly and McMurtry, in October, 1855.
By virtue of the partnership, one partner is constituted an agent for another, as to all matters within the scope and objects of the partnership business in which they are engaged. This authority does not however extend beyond the scope of the ordinary business and transactions of the firm; and cannot be exercised by either partner in the management and for the benefit of his individual afFairs. This limitation on the powers, which one partner derives from the relationship which exists between them, was removed by the execution of the foregoing.instrument of writing, by which McMurtry was empowered, as partner, to use the name of the firm, not only in cases within the scope of its ordinary business, but also in all other cases at his discretion.
For what length of time was this authority to continue? As the power created by the partnership ceases when the partnership is dissolved, the enlargement of that power would seem necessarily to cease and determine at the same time. The power conferred by the writing under consideration is merely to use the name of the firm, and when the firm no longer exists the power cannot be properly exercised. An authority by a firm carries with it an implied limitation of its existence, its duration being necessarily confined to the continuance of the partnership by which it was created. There is in this respect no difference between this power, and one granted by the firm to a third person. The authority in both cases is to use the name of the firm, and when the firm is dissolved the power is as effectually revoked as it is by the death of a person who has created an agency for the transaction of any kind of business.
*410When Cronly authorized his partner to use the name of the firm at his discretion, it cannot reasonably be presumed that he intended to empower him to use it any longer than the partnership continued. When the partnership was dissolved all power, either express or implied, in relation to its business, except so far as it was necessary to close the business of the concern, was thereby revoked. McMurtry, therefore, had no power to use it any longer for partnership purposes, and not having that power, why should he be permitted to use it for his own benefit? An authority to use the name of a firm after its dissolution, might no doubt be conferred either on a stranger, or on a member of the firm, but such an authority, if created during the existence of the firm, would have to be conferred in express terms, otherwise its duration would, by necessary implication, be limited to the continued existence of the firm.
The principle by which we are governed in the construction of this writing, has been frequently applied in analagous cases. Thus, where one firm of bankers took from another firm of bankers, namely A and B, a bond conditioned for the repayment of all sums of money, for which they, A and B, or either of them, should draw upon the obligees by means of bills, it was held that this bond did not extend to or embrace a bill drawn by B after the death of A, by which the partnership was dissolved. (Simpson vs. Cooke, 1 Bing. 452.)
The like doctrine has been applied to cases where a guarranty is given by a firm; in all cases of this sort, the uniform rule of construction is, that the guarranty does not apply after the firm is dissolved, or any change of the members of the partnership has been made. Of course the application of this doctrine assumes that notice of the change of the members, or of the dissolution of the firm, is necessary. (Story on Partnership, section 251; Collyer on Partnership, page 368.)
*411The principle is, that an authority or guaranty by a firm is, from its very nature, limited in its duration by the existence of the firm; and when the latter is dissolved the former ceases to have any operation or effect. Here the authority was to use the name of the firm, and not the individual name of Cronly, and when the firm ceased to exist the authority could not be any longer properly exercised, and ceased to exist also.
Wherefore, the judgment is reversed, and cause remanded for a new trial in conformity with this opinion.