made, by one partner, in his name only, and without appearing to be on partnership account, or if one partner borrow money on his own security, the partnership is not bound by the signature, even though it was made for a partnership purpose, or the money applied to a partnership use.a (1) The borrowing partner is the creditor of the firm, and not the ori

ginal lender, and the money was advanced solely on the *42 security of the borrower.b (2) If, however, *the bill be drawn by one partner in his own name, upon the firm or partnership account, the act of drawing has been held to amount, in judgment of law, to an acceptance of the bill by the drawer in behalf of the firm, and to bind the firm as an accepted bill. (3) And though the partnership be not bound at law in such a case, it is held, that equity will enforce payment from it, if the bill was actually drawn on partnership account. Even if the paper was made in a case which was not in its nature a partnership transaction, yet it will bind the firm if it was done in the name of the firm, and there be evidence that it was done under its express or implied sanction. (4) But if partnership security be taken from one partner, without the previous knowledge and consent of the

firm in its ordinary business; but partners in other business, as attorneys, for instance, have no such general authority, and cannot bind the firm by negotiable paper without special authority. Hedley v. Bainbridge, 2 G. & D. 483. Levy v. Pyne, 1 Carr. & M. 453.

■ In Hall v. Smith, 1 Barnw. & Cress. 40, it was held, that if one partner only signed a note on behalf of himself and the other partners, he was liable at law to be sued singly. But that case is overruled, and the partnership is liable as for a joint note. Ex parte Buckley, 15 Law Journal in Bankruptcy, N. Y. Legal Observer, March, 1847, p. 82.

b Siff kin v. Walker, 2 Campb. 398. Ripley v. Kingsbury, 1 Day's Rep. 150, note. Emly v. Lye, 15 East's Rep. 7. Loyd v. Freshfield, 2 Carr & Payne, 325. Bevan v. Lewis, 1 Simons, 376. Faith v. Raymond, 11 Adolph. & Ellis, 339. Foley v. Robards, 3 Iredell N. C. Rep. 179, 180. Jaques v. Marquand, 6 Cowen, 497. Willis v. Hill, 2 Dev. & Battle, 231. Pothier, de Société, n. 100, 101.

• Dougal v. Cowles, 5 Day's Rep. 511.

d Van Reims Dyk v. Kane, 1 Gall. Rep. 630.

• Ex parte Peele, 6 Vesey, 602.

(1) It would be otherwise, if the note was made in the partnership name. Pearce v. Wilkins, 2 Comst. R. 469.

(2) Hogan v. Reynolds, 8 Ala. R. 59.

(8) But see Babcock v. Stone, 8 McLean's R. 172.

(4) Or if the note go into the hands of an innocent indorsee. Duncan v. Clark, 2 Rich. R. 587.

others, for a debt which the creditor knew at the time was the private debt of the particular partner, it would be a fraudulent transaction, and clearly void in respect to the partnership. So, if from the subject matter of the contract, or the course of dealing of the partnership, the creditor was chargeable with constructive knowledge of that fact, the partnership is not liable. There is no distinction in principle upon this point between general and special partnerships; and the question, in all cases, is a question of notice, express or constructive. All partnerships are more or less limited. There is none that embraces, at the same time, every branch of business; and when a person deals with one of the partners in a matter not within the scope of the partnership, the intendment of law *will be, unless there be circumstances *43 or proof in the case to destroy the presumption, that he deals with him on his private account, notwithstanding the partnership name be assumed. The conclusion is otherwise if the subject matter of the contract was consistent with the partnership business; and the defendants in that case. would be bound to show that the contract was out of the regular course of the partnership dealings. When the business of a partnership is defined, known or declared, and the

Arden v. Sharpe, 2 Esp. N. P. 524. Shirreff v. Wilks, 1 East's Rep. 48. Ex parte Bonbonus, 8 Vesey, 540. Livingston v. Hastie, 2 Caines' Rep. 246. Lansing v. Gaine & Ten Eyck, 2 Johns. Rep. 300. Baird v. Cochran, 4 Serg. & Rawle, 397. Chazournes v. Edwards, 3 Pick. 4. Cotton v. Evans, 1 Dev. & Battle Eq. C. 284. Spencer, J., Dob v. Halsey, 16 Johnson, 34. 38. Frankland v. M'Gusty, 1 Knapp's Cases before the Privy Council, 301. 306. Story on Partnership, 194-199-202. b Greene v. Deakin, 2 Starkie's N. P. 347. New-York Fire Insurance Company v. Bennett, 5 Conn. Rep. 574.

-435.

Ex parte Agace, 2 Cox, 312. Livingston v. Roosevelt, 4 Johns. Rep. 251. 277, 278. Spencer, J., Dob v. Halsey, 16 Johns. Rep. 38. Foot v. Sabin, 19 ibid. 154. Laverty v. Burr, 1 Wendell, 529. U. S. Bank v. Binney, 5 Mason, 176. Davenport v. Runlett, 3 N. H. Rep. 286. Thickness v. Bromilow, 2 Cromp. & Jerv. 425 The presumption of fraud in the creditor taking partnership security or credit from one partner for his private debt, may be rebutted, but the burthen of proof rests on the creditor. Frankland v. M'Gusty, 1 Knapp's Cases, 315. Gansevoort v. Williams, 14 Wendell's R. 133. Story on Partnership, 202-210. Mauldin v. Branch Bank, 2 Alab. R. N. S. 502. 512. (1)

d Doty v. Bates, 11 Johns. Rep. 544.

(1) Minor v. Gaw, 11 S. & M. Rep. 322.

company do not appear to the world in any other light than the one exhibited, one of the partners cannot make a valid partnership engagement, except on partnership account. There must be at least some evidence of previous authority beyond the mere circumstance of partnership, to make such a contract binding. If the public have the usual means of knowledge given them, and no acts have been done or suffered by the partnership to mislead them, every man is presumed to know the extent of the partnership with whose members he deals; and when a person takes a partnership engagement, without the consent or authority of the firm, for a matter that has no reference to the business of the firm, and is not within the scope of its authority or its regular course of dealing, he is, in judgment of law, guilty of a fraud. It is a well established doctrine, that one partner cannot rightfully apply the partnership funds to discharge his own preexisting debts, without the express or implied assent of the other partners. This is the case even if the creditor had no knowledge at the time of the fact of the fund being partnership property. The authority of each partner to dispose of the partnership funds, strictly and rightfully extends only to the partnership business, though in the case of bona fide purchasers, without notice, for a valuable consideration, the partnership may, in certain cases, be bound by the act of one partner.c

Abbott, Ch. J., and Bayley, J., Sandilands v. Marsh, 2 Barnw. & Ald. 673. Dickinson v. Valpy, 1 Lloyd & Welsby, 6. S. C. 10 Barnw. & Cress. 128. Livingston v. Roosevelt, 4 Johns. Rep. 278, 279. Croathwait v. Ross, 1 Humphrey's Tenn. Rep. 23. Story on Partnership, 168. 194, 195–199.

b Rogers v. Batchelor, 12 Peters' R. 229. Dob v. Halsey, 16 Johnson's R. 34. Evernghim v. Ensworth, 7 Wendell, 326. The true principle, says Mr. Justice Story, (ou Partnership, p. 212, note,) to be extracted from the authorities is, that one partner cannot apply the partnership funds or securities to the discharge of his own private debt, without their consent; and that without their consent, their title to the property is not divested in favour of such separate creditor, whether he knew it to be partnership property or not. His right depends, not upon his knowledge that it was partnership property, but upon the fact, whether the other partners had assented to such disposition of it or not.

• Ex parte Goulding, before Sir John Leach, and confirmed on appeal by Lord Lyndhurst, Collyer on Partnership, 283, 284. Dob v. Halsey, 16 Johns. 34. Evernghim v. Ensworth, 7 Wendell, 326. Rogers v. Batchelor, 12 Peters, 221.

Story on Partnership, 205.

But if the negotiable paper of a firm be given by one partner on his private account, and that paper, issued within the general scope of the authority of the firm, passes into the hands of a bona fide holder, who has no notice, either actually or constructively, of the consideration of the instrument; or if one partner should purchase, on his private account, an article in which the firm dealt, or which had an immediate *connection with the business of the firm, a dif- *44 ferent rule applies, and one which requires the knowledge of its being a private, and not a partnership transaction, to be brought home to the claimant. These are general principles, which are considered to be well established in the English and American jurisprudence.a

With respect to the power of each partner over the partnership property, it is settled, that each one, in ordinary cases, and in the absence of fraud on the part of the purchaser, has the complete jus disponendi of the whole partnership interests, and is considered to be the authorized agent of the firm. (1) He can sell the effects, or compound or discharge the partnership debts. This power results from the nature of the business, and is indispensable to the safety of the public, and the successful operations of the partnership. He is an agent of the whole for the purpose of carrying on the business.b A like power in each partner exists in respect to pur

Ridley v. Taylor, 13 East's Rep. 175. Williams v. Thomas, 6 Esp. N. P. 18. Lord Eldon, Ex parte Peele, 6 Vesey, 604, and Ex parte Bonbonus, 8 Vesey, 544. Arden v. Sharpe, 2 Esp. N. P. 524. Wells v. Masterman, ibid. 731. Bond v. Gibson, 1 Campb. N. P. 185. Usher v. Dauncey, 4 ibid. 97. Livingston v. Roosevelt, 4 Johns. Rep. 251. 265. New-York Fire Insurance Company v. Bennett, 5 Conn. Rep. 574. Rogers v. Batchelor, 12 Peters, 221.

Fox v. Hanbury, Cowp. Rep. 445. Best, J., in Barton v. Williams, 5 Barnw. & Ald. 395. Pierson v. Hooker, 3 Johns. Rep. 68. It is a point not quite settled, whether one partner, without the knowledge or consent of his copartner, though under circumstances, may not assign over all the partnership effects and credits in the name of the firm, to pay the debts of the firm, and where all the creditors are admitted to an equal participation, the conclusion is that he may. Harrison v. Sterry, 5 Cranch, 289. Mills v. Barber, 4 Day's Rep. 428. Lamb v. Durant, 12 Mass. Rep. 54. Pothier, Traité du Con. de Soc. Nos. 67. 69. 72. 90.

(1) One partner has no authority to consent to an order for a judgment in an action against himself and a copartner. Hambidge v. De La Cronee, 3 Man. G. & Scott's R. 742. Nor to submit a matter to arbitration. Id. p. 745. Staed v. Salt, 3 Bing. 101. See supra, vol. ii. p. 617, n. (1.) Harrington v Higham, 13 Barb. R. 660.

chases on join account; and it is no matter with what fraudulent views the goods were purchased, or to what purposes they are applied by the purchasing partner, if the seller be clear of the imputation of collusion. A sale to one partner,

in a case within the scope and course of the partnership *45 business, is, in judgment of law, *a sale to the partnership. But if the purchase be contrary to a stipula

Robinson v. Crowder, 4 M'Cord's S C. Rep. 519. Hodges v. Harris, 6 Pick. 360. Deckard v. Case, 5 Watts' Rep. 22. Hitchcock v. St. John, 1 Hoffman's Ch. R. 511. Anderson v. Tompkins, 1 Brock. R. 456. He may give a preference to one creditor over another; though, whether it might be made to a trustee for that purpose, against the known wishes of the copartner, so as to terminate the partnership, was left an unsettled point in Egberts v. Wood, 3 Paige, 517. Same doubt expressed in Pierpont v. Graham, 4 Wash. C. C. R. 232. But that point was afterwards settled in Havens v. Hussey, 5 Paige, 30; and it was decided, that there was no implied authority in one partner, without the consent of the others, to appoint a trustee for the partnership, by a general assignment of the partnership effects for the benefit of creditors, and giving preferences. Such an assignment would be illegal, inequitable and void. The other copartners have a right to participate in the selection of the trustee, and in the creditors to be preferred. (1) Hitchcock v. St. John, 1 Hoffman's Ch. R. 516. Kirby v. Ingersoll, Harrington's Mich. Ch. R. 174. Dana v. Lull, 2 Washburn Verm. R. 390. Gibson, Ch. J., 8 Watts & Serg. 63. S. P. There is no small difficulty, says Mr. Justice Story, in supporting the doctrine, even under qualifications, that one partner may make a general assignment of all the partnership property, so as to break up its operations. Story on Partnership, pp. 145-150. This I consider to be the soundest conclusion to be drawn from the conflicting authorities.

Willett v. Chambers, Coup. Rep. 814. Rap v. Latham, 2 Barnw. & Ald. 795. Bond v. Gibson, 1 Campb. N. P. 185. Baldwin, J., 5 Day's Rep. 515. Spencer, J., 15 Johns. Rep. 422.

(1) Kirby v. Ingersoll, 1 Doug. (Mich.) R. 477. In this case, the assignment gave preferences. Whether a general assignment by one partner, of the partnership effects, for the benefit of the creditors, which gives no preferences, is valid, was regarded as a very difficult question, and left undecided, in Hayes v. Heyer, 4 Sandf. Ch. R. 485. Held not valid. Hayes v. Hyer, 8 Sandf. S. C. R. 284.

In a case free from actual fraud, and where the copartners were solvent, it was held, that an assignment of their partnership and individual property, by the partners, for the payment of their creditors, which gave preferences to certain partnership creditors, and also to certain individual creditors, was valid. It was declared that a partner, with the assent of his copartners, might give his individual creditors a preference over the partnership creditors in the payment of their debts, out of his share of the partnership effects; and that the copartners may, by assignment, give their partnership creditors a preference over their individual creditors, in the payment of their debts, out of the individual property of the copartners. Per Walworth, Ch., Kirby v. Schoonmaker, 3 Barb. Ch. R. 46. 50. A sale by one partner to a bona fide purchaser, for full value, is valid, though it convey the whole stock. Forkner v. Stuart, 6 Gratt. 197.

The general doctrine of this case is hardly consistent with that of the note (b.) post, p. 65. In the New-York Common Pleas, in the case of Fisher v Murray, (1 E. D. Smith's C. P. R. p. 341,) it was held, that an assignment in trust, for the benefit of creditors, by a majority of the members of an insolvent firm, was not valid.