CHAPTER V. As between the firm and the world. One partner That the mere technical difficulty, of the same person being both entitled and liable on the face of the instrument, may be removed by death, survivorship, or transfer, provided there be no liability to contribute. Secondly, as to the rights and liabilities of partners, both actual and ostensible, as between the firm and the world, in respect of bills and notes. The law presumes, that each partner in trade is intrusted in trade binds by his co-partners with a general authority in all partnership the other. affairs. Each partner, therefore, by accepting or making, drawing, or indorsing negotiable instruments (o) in the name of the firm, and for its usual business, binds the firm (p) (unless those dealing with him knew that he had no authority, or were not aware that he was a partner) whether he sign the name of the firm, or sign by procuration, or accept in his own name a bill drawn on the firm (q). But it is a strict rule that the name of the firm must be used, otherwise an action cannot be maintained against the firm even where a partner has signed his own name only, and the proceeds were in reality applied to partnership purposes (r), unless the name of the signing partner were also the name of the firm (s); in which case it was formerly held that the holder might charge either the signing partner or the firm, at his election (t). Where one of the partners indorsed Bing. 149; 12 Moore, 365; 29 R. R. (0) Code, s. 23. Harrison v. (p) 53 & 54 Vict. c. 39, ss. 5 and 6. In Brown v. Kidger a bill given to secure a loan already made to a partnership, was held to bind the firm, 28 L. J., Ex. 66; 3 H. & N. 853. (g) Mason v. Rumsey, 1 Camp. 384; see Jenkins v. Morris, 16 M. & W. 879; Stephens v. Reynolds, 5 H. & N. 513. (1) Siffkin v. Walker, 2 Camp. ($) South Carolina Bank v. Case, 8 B. & C. 427; 2 Man. & Ry. 459; 32 R. R. 433; Smith v. Craven, 1 C. & J. 507; 35 R. R. 764; Nicholson v. Ricketts, 29 L. J., Q. B. 55; and see Er parte Bolitho, 1 Buck. 100; Swan v. Steele, 7 East, 210; 3 Smith, 192; 8 R. R. 618. (t) Hall v. Smith, 1 B. & C. 407; 2 D. & R. 584; Clerk v. Blackstock, Holt, 474; March v. Ward, Peake, 130; 3 R. R. 667 ; Wilks v. Back, 2 East, 142; 6 R. R. 409; but see now Ex parte the name of the firm on fictitious bills, the firm was held CHAPTER liable (u). V. A partner cannot bind his co-partner by the several Not by joint obligation of a joint and several note (a), but such a note and several would not be void as a joint note (y), for it seems a partner note. promissory may bind his co-partner by a joint note (z) for partnership purposes, even though in violation of partnership articles, provided the note be in the hands of a holder for value without notice (a). The firm is not liable where the signing partner varies the style of the firm, unless there be some evidence of assent by the firm to the variation, or unless the name used, though inaccurately, yet substantially describe the firm (b). Therefore, where a firm consisted of John Blurton and Charles Habershon, who carried on business under the firm of John Blurton, it was held that the firm was not bound by an indorsement, by one partner who had written John Blurton & Co. (c). And where defendants never traded under the firm of Dry & Co., but only under the firm of Dry & Everett, it was held that defendant Everett was not bound by a bill accepted by Dry, not for partnership purposes, in the name of Dry & Co. (d). But it a bill be drawn on a firm, and accepted by one partner in his own name for partnership purposes, that acceptance will bind the firm (e). Buckley, In re Clarke, 14 M. & W. 469; 15 L. J., Bktcy. 3. (u) Thicknesse v. Bromilow, 2 C. & J. 425; 37 R. R. 752. (x) Perring v. Hone, 4 Bing. 28; 12 Moore, 125; 2 C. & P. 401. (y) M'Clae v. Sutherland, 3 E. & B. 36. (2) Cross v. Cheshire, 21 L. J., Exch. 3. (a) See the numerous American authorities on this subject, Byles on Bills, 6th American edition, p. 72; Code, s. 38. (b) Williamson v. Johnson, 1 B. & C. 146; 2 D. & R. 281; 25 R. R. 336; Faith v. Richmond, 11 A. & E. 339; 3 Per. & D. 187; Forbes v. Marshall, 11 Exch. 166; Stephens v. Reynolds, 29 L. J., Exch. 278; 5 H. & N. 513. (c) Kirk v. Blurton, 9 M. & W. 284; but see M'Clae v. Suther- (d) Sheppard v. Dry, Norwich, (e) Mason v. Rumsey, 1 Camp. 384. An agent not a partner and not having authority cannot accept a bill drawn on the firm in the names of himself and the sole remaining partner. Odell v. Cormack, 19 Q. B. D. 223. Not varying the style of the firm. CHAPTER Farming and Creditors carrying on business under a deed of It has been held, that as the drawing or accepting of bills is not in general necessary in a farming or mining concern, bills accepted by one of the partners in such a concern without express authority, do not bind the firm (ƒ). And partners not in trade cannot bind each other by bills. Therefore one attorney, who is partner with another, has not from that relation alone power to bind his co-partner by a bill or note (g). No more have partners carrying on business as brokers by getting orders on commission and dividing the expenses (). Creditors who are empowered by a deed of arrangement, made between themselves and their debtor, to carry on the trade to satisfy their debts out of the profits, and to pay over arrangement. the residue to the debtor, are not partners at all, and therefore are not liable on bills accepted by them in the style of their debtor's firm (i). For a creditor, who stipulates that he will be paid out of the profits only, gains nothing beyond what he already had as a creditor; on the contrary, he only abandons some other sources from which he might have obtained satisfaction. As a creditor he could have satisfied himself out of the whole property of his debtor, including profits. Consequences of partner ex ceeding his common law authority. Even if a partner exceed the authority conferred by the common law and pledge the partnership credit on a negotiable security for his own private advantage, his co-partners are liable to a holder for value without notice. (f) Greenslade v. Dower, 7 (g) Hedley v. Bainbridge, 3 See (h) Yates v. Dalton, 28 L. J., Exch. 69. (i) Cox v. Hickman, 8 House of Lords' Cases, 268; 9 C. B., N. S. 47; 30 L. J., C. P. 125. This case has been supposed to shake the authority of Waugh v. Carver. See Bullen v. Sharpe, L. R., 1 C. P. 86. Executors of a deceased partner receiving a share of the profits in accordance with the articles of partnership, were not on that account merely held to be partners. Holme v. Hammond, L. R., 7 Ex. 218; 41 L. J. 157. Participation in profits is strong, but not conclusive evidence of partnership, 53 & 54 Vict. c. 39, s. 2. Pooley v. Driver, L. R., 5 Ch. D. 459; Ex parte Tennant, 6 Ch. D. 303; Mollwo & Co. v. Court of Wards, L. R., 4 P. C. 419. Written evidence may be required to bring a case within the above statute. Syers And if there be a good defence against one of several partners or co-plaintiffs suing on a bill, note, or other joint contract, it is a good defence against all (k); although the co-partner or co-plaintiff to whose right to sue the objection applies have been guilty of a fraud on his co-partners and companions, and they have been innocent of it. "Are they not bound by his acts," says Lord Ellenborough, "when they are to recover by his strength?"(). The defrauded partner's remedy (at least during his companion's lifetime) must have been in equity (m). Thus, if one partner assume to relieve an acceptor of his responsibility, the firm lose their action. Two bills had been drawn by a partnership, and accepted, and it was proved that the value received for the acceptance had been employed in taking up other acceptances for the accommodation of the partnership; the promise of one partner, in fraud of his co-partners, to provide for the acceptances, was held to be a sufficient defence to an action by them against the acceptor (). So, where D. drew a bill in his own name, and gave the acceptor a memorandum, in writing, that he would provide for it when due, having indorsed it to the firm of A., B., C. and D., it was held that the firm were bound by his acts, and could not recover against the acceptor (0). CHAPTER V. But, if the party taking a bill or note of the firm knew, Where there at the time, that it was given without the consent of the is notice. other partners, he cannot charge them (p). And the taking a joint security for a separate debt raises a presumption that the creditor who took it knew that it was given without the concurrence of the other partners (q). If there existed edition of Byles on Bills, p. 77. (4) Richmond v. Heapy, 1 CHAPTER V. Effect of partnership articles against drawing bills. Pleading and evidence. fraud and collusion between the partner and his creditor, the bill is void in the hands of the fraudulent holder, not only against the partnership, but against other parties to the bill (r). But securities which may be unavailing against the firm, when in the hands of the party privy to the transaction, will nevertheless bind them when in the hands of an innocent indorsee for value (s). But in such a case it lies on the plaintiff to show that he gave value in good faith (t). Articles of agreement between the partners, that no one partner shall draw, accept or negotiate bills of exchange, will not protect the firm against bills drawn, accepted or indorsed in violation of the agreement, if the holder had at the time of taking the bill (t), no notice of the stipulation, and can show that he gave value. But if notice of such agreement can be brought home to the holder, or if, in the absence of such agreement between the partners, the other partners have given him notice that they will not be responsible for bills circulated by their co-partner, the firm cannot be charged, though the bill was given in the course of partnership transactions (u). The proper mode of raising the defence of unauthorized and fraudulent acceptance by one of several partners and notice to the plaintiff, was by a traverse of the acceptance (r). If the defendants show that the bill was circulated in violation of partnership articles, they will thereby put the plaintiff to prove that he or some one under whom he claims gave value in good faith for it, subsequently to the fraud (). But it has been held by the Court of Queen's Bench, after conference with the Judges of the other Courts, that in order to maintain the action, where it appears that one partner has accepted in fraud of his co-partners, and where issue is taken on the acceptance, it is not necessary for the the onus of proof may be shifted. (r) Ex parte Bonbonus, 8 Ves. ($) Ridley v. Taylor,13 East,175. (t) Hogg v. Skene, 34 L. J., C. P. 153. Code, s. 30 (2). (u) Galway v. Mathew, 10 East, 264; 1 Camp. 403; 10 R. R. 289. (x) Jones v. Corbett, 2 Q. B. 828; Grout v. Enthoven, 1 Exch. 382. See now Ord. XIX. rr. 22 and 23. (y) Grant v. Hawkes, Chitty, 42; Hogg v. Skene, 34 L. J., C. P. 153; Code, s. 30 (2). |