Court Opinion

ID: 6573248
Source: CourtListenerOpinion
Date Created: 2022-07-20 19:31:56.522702+00
Date Added: 2024-06-11T15:56:59.061704
License: Public Domain

Williams, Ch. J.,
dissenting. I cannot come to the conclusion, to which my brethren have arrived in this case. The plaintiffs, in my opinion, are entitled to judgment for. the whole of their account. It is very desirable, that, in all mercantile transactions, in all transactions which respect partners, and bills of exchange, the decisions in the several States should be uniform, and should be in unison with the decisions in Great Britain. The different parties to be affected by them frequently reside in different States and governments, and hence the law in relation to these subjects should *647be the same. In all such transactions I receive as an authority a decision made in any of the neighboring states, unless it contravene some principle previously established here, or is plainly at variance with the principles of the common law. I should therefore receive the decision, which has been read from 7 Wendell 326, Everngldm v. Ensioorth, as decisive of this question, unless it was in contravention of the principles of the common law. I apprehend, however, that the principles laid down in that case are of known and approved authority in the commercial world, where the common law is recognized.
The power of one partner to bind the firm by any contract of his is restricted to transactions in relation to the business of the firm, and for the benefit of the firm; so far as this, each partner may be considered as the accredited agent of all, and any contracts he may make in the partnership business will be binding on all. The partner may exceed his authority in this particular, and yet bind his co-partner, if the business, about which he contracts, is apparently the business of the firm, and the contrary is not known to the person with whom he contracts. If the person, with whom he transacts business, is ignorant of his want of authority, and is guilty of no fraud, the firm may be bound, upon the same principle that others are sometimes bound by the acts of agents, apparently within the scope of their authority.
But when the transaction has no apparent relation to the partne'rship business, but is evidently for the private benefit of the partners and not for the benefit of the company, I apprehend the partners are not bound, unless they have assented to the transaction; and the burden of showing this is upon the person contracting with the individual partner. This principle was laid down by Eyre, Ch. J., in Ex parte Agace, 2 Cox 312. “When, from the nature of the business, it is apparent that it is for the separate account and bene-efit of the individual, it is incumbent on the person dealing to show a previous authority, or subsequent approbation.” This was laid down By, Lord Eldon, in Ex parte Bonbonus, 8 Ves. 540. If a partner attempt to bind a firm in any contract connected with his private business alone, or if he engages in a contract connected with the business, but from which he solely derives the benefit, the firm are not liable, unless from their knowledge and assent to the *648transaction. The former is laid down in the case of Sandilands v. Marsh, 2 B. & Ald. 678, and the latter proposition in the case of Bignold Vi Waterhouse, 1 M. & S. 255. Without multiplying authorities to this point, I will only refer to the cases of Vere v. Ashby, 10 B. & C. 288, [21 E. C. L. 79,] and Jones v. Corbett et al., 2 Ad. & El., N. S., 828, — where the principle was recognized, though the decision was upon the insufficiency of the pleas. In the case of Chazournes v. Edwards, 3 Pick. 5, the doctrine was distinctly laid down by Ch. J. Parker; and the reporter, in a note, adds, “ If, from the subject matter of the contract, or the course of dealing of the partnership, the creditor was chargeable with constructive notice of the fact, that the debt, for which he takes the partnership security, was a private debt of a particular partner, the partnership is not liableand, among other cases referred to, is the case from 7 Wendell, to which I have before adverted.
Applying these principles to the facts in this case, I think judgment should be for the plaintiffs. The account in favor of Fuller & Shaw was properly charged to the defendant, as he assented thereto, after the firm of Eaton & Shaw was formed. Before any agreement was made by Shaw and the defendant, there was due the sum of $21.24, which was payable in cash. The goods, which the > defendant received from time to time, were charged, in the usual course of business, to the defendant, and stood on the books of the plaintiffs as a debt due from the defendant, and, after allowing the items which were credited by the plaintiffs upon their books, there remained an apparent balance due to the plaintiffs of $44.34. This, by the report of the auditor and the judgment of the county court, was absorbed and paid by the account of the defendant for materials found and services rendered for the benefit of Shaw, the other partner, not in any way connected with, or for the business or benefit of, the partners, but solely and exclusively for the private business and benefit of Shaw, in building a house for himself. The agreement,' made between the defendant and Shaw, was a private agreement between them, of which neither Fuller nor Eaton had any knowledge, and of which they could not be presumed to have any knowledge, as the defendant was, from time to time, made debtor on the partnership books for every thing he received. To give effect to this agreement is a fraud on Fuller and on Eaton. *649The defendant is to be charged with knowledge, that this was not for the benefit of the firm, or in any business connected with the firm ; and, unless he obtained the consent of the other partners, or they had knowledge of the transactions, and did not dissent, he cannot thus extinguish his debt to the firm. If, in the ordinary business of a mercantile firm, articles are received by an individual partner and made use of in his family, the consent of the other partners might be proved, or inferred, and none of the consequences, which have been depicted in the argument, would follow.
Of the case of Strong v. Fish, 13 Vt. 277,1 can only say, that I had entertained a different opinion in that case in the county court, and the judgment of the county court was reversed. The general principles laid down by the court I readily accede to. The authority of Fay v. Green, 1 Aik. 71, was relied on in that case. This point was not made by the counsel, and was passed over by them sub silentio. But in both cases stress was laid upon the fact, that there was no fraud, or bad faith. There is a material distinction, in the authority of partners, between two attorneys in partnership and partners in a mercantile transaction. One attorney has no authority to bind his partner by a promissory note; Hedley v. Bainbridge, 3 Ad. & El., N. S., 316. One may be the prominent man in all business in court, and the other principally confined to office business. A contract, made with the prominent and known partner, in relation to the management of a cause, and the compensation therefor, might not be a fraud on the other partner, when it would be in a mercantile partnership. I should therefore confine the authority of the case of Strong v. Fish to cases similar to that case, and not extend it to a mercantile transaction.
In the present case, I consider the agreement between Shaw and the defendant as not binding on the plaintiffs, as, in a legal sense, a fraud on them, as made without authority and against their consent, and that the defendant must, from the nature of the transaction, have known this want of authority. I should hold him liable for the whole amount of his account, and render judgment on the report for the plaintiffs.