Court Opinion

ID: 7278283
Source: CourtListenerOpinion
Date Created: 2022-07-25 20:02:52.634282+00
Date Added: 2024-06-11T16:18:57.511352
License: Public Domain

Mr. Chief Justice Shepard
delivered the opinion of the Court:
There was no error in the direction of the verdict. Clapham was a dormant partner of Halstead, and as such, liable as other partners are for transactions within the scope of the partnership. The business of the partnership was confined to transactions on the Washington Stock Exchange in which the partnership had a certificate of membership held in the name of Halstead. All transactions on that exchange are in cash; all purchases and sales being out and out for cash.
In addition to this special business of the partnership, Hal-stead transacted other business as a broker on the New York *486Exchange, carrying stock purchased for customers on margin. Plaintiff did not know of the connection of Clapham with Hal-stead and had no transactions with him. He purchased stock . through Halstead by depositing a margin with the latter and paying him interest on advances. He had a general running account with Halstead, and at the time of the transaction in question was indebted to him. When the American National Bank stock had been sold as directed, Halstead, at plaintiff’s direction, credited this, account with the proceeds of the sale. Clapham shared only in the profits of the transactions on the Washington Exchange. He had no interest in the marginal transactions, and received no part of the commissions thereon, or of- the interest charged customers for carrying stock.
A secret partner is liable, not because credit is supposed to have been given to the partnership by reason of his connection with it, but because he is one of the contracting parties and is benefited by the contract. In order to charge him with the debts of the firm of which he is a dormant member, it is necessary to show that such debts were contracted in the name and business which was within the scope of the partnership, or that he had an interest in the transaction or the profits. Re Munn, 3 Biss. 442, 446, Fed. Cas. No. 9,925; Pitts v. Waugh, 4 Mass. 424, 426; Livingston v. Roosevelt, 4 Johns. 251, 4 Am. Dec. 273.
It is clear that this transaction was not included in the partnership agreement, but was a separate transaction of Halstead, in which he alone was interested. Clapham received no part, of .the profits. See Howell v. Commercial Nat. Bank, 40 App. D. C. 370; Wilson v. Edmonds, 130 U. S. 472, 32 L. ed. 1025, 9 Sup. Ct. Rep. 563. There was no evidence to show that the .proceeds of the sale of the stock were converted by Halstead.
Plaintiff had a running account with Halstead, to whom he was indebted, and by his direction the stock sale was credited to him on. this account.
The judgment is affirmed, with costs. Affirmed.