Court Opinion

ID: 5556302
Source: CourtListenerOpinion
Date Created: 2022-01-11 00:41:46.63781+00
Date Added: 2024-06-11T08:35:20.369376
License: Public Domain

McCay, Judge.
1. We think it but a fair and reasonable construction of the writing entered into and signed by all the parties in this case, that the contract of partnership was complete on the execution of the instrument. That it was necessary to take an accurate inventory of the stock, and the amount on the books were only matters of detail that were not conditions of the contract taking effect. The words of the instrument pass a present interest to Phillips, and the moment the instrument was fully executed he had a legal title to the interest conveyed. The arrangement for taking stock was only for the purpose of ascertaining the price. The terms of the instrument show a clear intent to pass a present title to Phillips. This is sufficient to give Phillips a legal interest, even though there be yet something to be done to ascertain the quantity : See Benjamin on Sales, book 1, part 2, chapter 4, and the authorities cited. If Phillips acquired then a legal interest in the stock, it would be a perversion of the intent of the parties to say he did not forthwith become a partner.
2. The name of each .ostensible, open partner ordinarily *228appears in the designation of the firm — the partnership name as it is called; but one is not necessarily a dormant partner because his name is not included in the partnership name. To constitute a dormant partner it must be intended that 'his name shall not be known to the public. If in any way one holds himself out as a partner, or knowingly permits himself to be so held out, he is liable as .an ostensible partner whatever may be the agreement between the partners themselves : Story on Partnership, 980. Collyer on Partnership, book 1, chapter 1,'Section 1. See also, 3 Kent’s Commentaries, 31, 4th edition; United States Bank vs. Binney, 5 Mason’s Reports, 176, 185. The name of Phillips does not appear in the firm name, and the evidence tends to show that he was not in fact known or intended to be known to the public as a partner.
3. The liability of a dormant partner, to all who deal with a firm during his connection with it, is well settled. He is liable just as though he Avere an ostensible partner, even though the person dealing with the firm does not know of his connection at the time of the dealing. And this grows out of the fact that he gets the benefit of the dealing, whatever it maybe: Winship vs. Bank of the United States, 5 Peter’s Reports, 529; Etheridge vs. Binney, 9 Peck, 272; 1 Douglass, 371; Coop vs. Eyn, 1; H. Black 37. And this is so, even if there be a private agreement between the partners to the contrary: Gow on Partnership, 12, 18; Collyer on Partnership, book 1, chapters 1, 11, 27; 4 East, 144.
4. If, however, a dormant partner retire, he ceases to be liable, even though he fail to give notice of his retirement, except, indeed, that he must, give notice to those Avho are aware of his connection with the firm: Story on Partnership, section 159; Collyer on Partnership, book 1, chapter 2, section 2; 2 Kent’s Commentary, 68, 4th edition; Newmarch vs. Clay, 14 East, 239. And this rule is founded on the principles of justice. Since as a dormant partner is only liable by reason, not of the credit his name gives the firm, but by reason of his receipt of the profits, it follows that Avhen he ceases to receive *229any portion of the profits his liability ceases. But if his name be known, then it is presumed that his name gives the firm credit, and to such as have the knowledge he must give notice of his retirement, or he will continue liable: See Story on Partnership, section 80.
5. When this dissolution in fact took place is a question for the jury. There is evidence on both sides, that is, Phillips and his son fix the date the very next day after the signature of the articles, whilst Richmond fixes it at the date of the entry on the articles. We do not think that entry is conclusive. It may or it may not have been made by Phillips’ consent.. The fact that it is signed by the firm name does not conclude Phillips, for if the partnership had been previously dissolved Richmond would have had no right to sign the firm name.
6. The general rule is well settled that if a creditor of a firm which has been dissolved, by the retirement of a partner, accept the new firm as his debtor, either by taking its obligation for the debt, or by an alteration of the contract with the new firm, the retiring partner-is discharged: Story on Part., sec. 156; Collyer on Part., b. 3, chap. 3, sec. 3; Lyth vs. Ault., 11 E. Law and E. Rep., 581. As a matter of course this rule is to be applied with reference to the question óf notice, as in other cases, for if the creditor be one having a right to notice, and deal with the new firm without notice of the change of the parties, his acts of novation do not affect his rights, since he supposes he is still dealing with the old firm.
Judgment reversed.