15 Vesey, jun. 286, Gordon ex parte. 1 East,53, Hope v. Gist, cited. or note. stances against the defendant, who did not appear to have any knowledge of the contract(i). Yet if the party entering into the contract with the partner who acts thus clandestinely be aware of the circumstance, he will be precluded from recovering, for it is a fraudulent transaction, and there may be such gross negligence as may amount or be equivalent to covin. Transactions took place between a firm and one partner belonging to another, the whole being avowedly with the partner in his separate capacity. But his credit being doubted, the other parties contrived to obtain a guarantee from him in the name of his firm, and then, there being a general bankruptcy of the latter firm, the creditors filed a bill in Chancery to have the benefit of the guarantee, and an issue was directed by that Court to try the validity of it. Lord Mansfield treated the guarantee as obtained either through covin or gross negligence; he said, that the creditors knew that the guarantor was acting in his separate capacity, and that the security was intended to indemnify them against his separate debts. And the jury found for the defendant. It is hardly necessary to say, that if a partner draw, Liability by bill accept, or indorse a bill or note, he will thereby render his firm liable. But this liability rests on the same general principle as the rest, and is capable of being avoided by special circumstances. So that where the plaintiff, who had advanced money to one partner for the (i) After this decision, the case of Duncan v. Lowndes, 3 Campb. 478, does not acquire strength. It was there held by Lord Ellenborough, that evidence ought to be given to show an authority for the signature of the partnership firm to a guarantee. And the judge said, "It is not inci"dental to the general power of a partner to bind his copartners by such an 'instrument."" " payment of partnership debts, and which money was in fact so applied, had notice brought home to him of an advertisement in a newspaper, whereby the other partner, the co-defendant, gave notice to all persons not to give credit to his co-partner on his account, and that he would no longer be liable for drafts drawn on the partnership account, it was held, that he could not recover. The implied authority of one partner to charge another had been rebutted in this instance; and, "if a third person, having notice of this, will take such a security from one of the partners, he shall not sue the others upon "it, in breach of such stipulation." 66 66 Supposing that one partner give his bill or note for Viscount Gallway v. Mathew, by Lord Ellenborough. 10 East, 264, 7 East, 210, a separate debt of his own, the firm still are bound by his act, unless the party taking the security know of the Swan v. Steele. misapplication of the partnership funds. The Court held the case too clear for argument. And, of course, if the creditor, on the other hand, draw a bill upon a partnership, when he has separate dealings with one partner only, he is guilty of fraud, and cannot recover against partners ignorant of the transaction. See Comyn on p. 490. lor. It has been decided, that an indorsee may sue on a bill 13 East, 175, drawn upon the partnership credit in satisfaction of Ridley v. Taya private debt, where no covin is proved to exist. It might reasonably be supposed, by the party to whom it is given, to be a partnership security legitimately and fairly attained. But as soon as a dissolution has taken place, the power of putting the original partnership name upon a security ceases. An indorsement was made nearly two months after the dissolution of a partnership; the promissory note so indorsed had been drawn prior to the dissolution. By Lord Kenyon: "If a fair bill existed "at the time of the partnership, but is not put into "circulation until after the dissolution, all the partners "must join in making it negotiable." That the security Espinasse, 108, Abel v. Sutton. 1 Starkie, 375, Wrightson v. Pullan. 10 East, 418, Thomason v. Frere. 4 Campb. 97, Usher v. Daun bey, has been given for the purpose of liquidating debts, or that the partner may have an authority given him to settle the partnership affairs, makes no difference. So where, after a dissolution of partnership, one party accepted a bill in the name of the partnership, bearing date before the dissolution, it was held, that this security could not be enforced against the original co-partner, though the indorsees, the plaintiffs, had no notice of the dissolution. But the Court, when moved for a new trial, although they agreed that the verdict for the defendant was proper, took a distinction between that case and the case of goods supplied after a dissolution of partnership, but without notice, by one who has been in the habit of supplying goods to a firm. An act of bankruptcy, however secret, will vitiate a security given by the bankrupt partners after the failure, for the purpose of charging the firm, because the controul and disposition over the joint property cease upon that event; so that the defendants, who claimed to set off in respect an indorsement given under these circumstances by bankrupt partners, were not suffered to do so, as they could not acquire a property in the bill from those who had no control over it. But it is otherwise in the case of a death in the firm. A bill was drawn in blank by a partner, and delivered to a clerk, to be filled up as the exigencies of business might require. After this, he died; and the surviving partners having assumed a new firm, the bill was filled up, dated prior to the decease of the old partner, and sent into circulation: it came into the hands of the plaintiffs, indorsees, for value, and they sued the firm for the amount. Here Lord Ellenborough said, that the power must be considered to emanate from the partnership, not from the individual partner, and that, therefore, after his death, the bill might be so filled up as to bind the survivors. If separate partnership concerns be carried on under the same name, and the same signature be adopted by both, it has been determined, that the holder of a bill drawn on account of one concern, is not only entitled to the security of the other, but may select which of the partnerships he chooses for his debtor; and it is not necessary for the holder to declare, that he took the Cary, p. 45, bill on account of any particular firm. McNair v. Fleming. Contracts, As a general rule, one partner cannot bind another by By deed, &c. deed, unless he be expressly authorized by a writing under seal; and the partnership instrument being by See Comyn, on deed implies no authority for this purpose. But the p, 503. exception is, where one party executes a deed in the Cary, p. 48. presence of the other, and by his authority, as where a bill of sale was made in that manner; the Court held the instrument valid in this case, and relied principally on the execution in the presence of the other partner; 4 Term Rep. and it was considered no sufficient objection that the deed was only once executed. 313, Ball v. Dunsterville. Holt's Nisi `A subsequent acknowledgment by a partner will not Prius Cases, avail, unless it be by deed. 141, Steiglitz v. It is said, however, that a release of debts under a composition deed is an exception to the general rule. Although this execution of a deed by one partner will not bind the firm, it is nevertheless valid against himself. And so where the defendant executed a bond as a surety in the name of his firm, without the consent of his co-partner, who expressed his disapprobation of the transaction, he was not permitted to set up as a defence that there was no single execution of the bond; if necessary, said Lord Eldon, we would hold him to have described by the name of J. D. and G. W. [the description of the firm.] So, where an award was 2 Bosanquet & signed by three of five partners, it was held, that the Elliot v. Davis. signatures of the three should not bind the five; but it seemed to be admitted, that the three who had signed 3 Bingham,101, would be bound as far as the engagement could be complied with. Stead v. Salt. 7 Moore, 356, Furnival v. Weston. 3 Bingham, 103. By Best, C. J. Ibid. Cowper, 814, Willet v. Chambers. 2 Barnewall & Alderson, 795, Rapp v.Latham. Again, one partner may release actions, debts, &c. without the concurrence of the others. In the first case, the rule was carried so far, as that although the attorney was directed to proceed to trial in a suit, and then one of the partners released the defendant without even communicating with the attorney, the Court refused to interfere. And, with respect to debts, as the debtor may lawfully pay his debt to one partner, he ought also to be able to obtain a discharge upon payment. One partner may therefore sign a receipt, a note for the weekly payment under the Lords' Act, may "prove a joint debt under a commission "of bankrupt, or singly vote in the choice of assignées, or may execute a power of attorney to enable a third person to act for the firm in these respects." So, one partner may sign a bankrupt's certificate, even after a dissolution, provided the debt were proved before the dissolution. As a payment to one partner is a discharge of the obligation, so the misapplication of money by one of a firm makes all the other members of it answerable. So that where two persons were in partnership as attorneys and conveyancers, and one of them received a sum to be laid out on mortgage, and gave a separate receipt for it, the other was considered responsible, for one branch of their business was conveyancing, and incident to conveyancing is the receiving of money to place out upon securities. So, if one partner suffer himself to be engaged in an illegal transaction, as smuggling, the residue of the firm must suffer for his misconduct. So, again, one partner is liable for the false representations of another: as where a fictitious sale of wines was pretended by a person who never either bought nor sold any, and thus, an individual who had advanced money on the faith of such purchases, and had even |
