McConnell v. Denver

By the Court, Sawyer, C. J.: We think the evidence insufficient to justify the third finding, to the effect that the defendants executed the note upon which the action is brought, by their agent, Denver, and that said Denver had full power and authority to make and execute said note, by virtue of his being a partner in and agent for the company. There is no conflict in the evidence as to the material facts in the case, and it shows, that the defendants constituted one of the ordinary unincorporated ditch companies so common in the mining regions, owning a ditch which conveyed water from a certain stream to a distant mine, for sale to the miners for mining purposes'. The interests were held by the owners in different proportions, in shares, represented by certificates of stock, which were bought and sold at the pleasure of the owners, without consulting their có-owners. The ordinary relations of the stockholders in these associations, like those in the usual mining companies, organized and conducted upon similar principles, and sometimes called mining partnerships, are not those of strict commercial partnerships, but are more in the nature of tenancies in common. (Bradley v. Harkness, 26 Cal. 77; Skillman v. Lachman, 23 Cal. 201; Duryea v. Burt, 28 Cal. 587; Abel v. Love, 17 Cal. 237; Set [370] tembre v. Putnam, 30 Cal. 493.) Some of the incidents of a partnership pertain to them, and some of mere tenancies in common, but the powers of the several members by virtue of being members are different from those of commercial partnerships. A member of one of these associations has no general authority, by virtue of such membership, to bind the company by his contracts, Hor has the managing agent any authority other than that conferred upon him, either expressly, or by necessary implication from his acts recognized by the company, with full knowledge of the acts at the time of the recognition. (Skillman v. Lachman, supra.) The finding of the Court evidently resulted frotii overlooking this distinction between commercial partnerships and associations of this character. The remarks of the Court in Skillman v. Lachman are in point: “ But there is still a more important objection to the findings and judgment in this case. There was no evidence of any authority having been given by the company, or Laehman to Sprout, a member of the company, and the managing agent, or foreman, to execute a promissory note in the name of, and binding tire company, for the indebtedness due the plaintiff, or any general authority to that effect. In fact, several members, including Laehman, testified that they never gave any such authority. It is clear that the law does not, in the case of mining partnerships, imply any such authority, either to a member of such partnership, or to its managing agent. In this respect the law is different from that of ordinary commercial partnerships. It was clearly the duty of the plaintiff to prove that the person executing the note in the name of the company had power and authority to do so. He might have had power to purchase the lumber for the use of the mine, but that is very different from authorizing him to execute a note in the name of the company, bearing interest at the rate of three per cent per month.” (23 Cal. 207.) So, in the present case, there was not only no evidence to show that Denver had express authority to execute the note, but, it was affirmatively shown that he had not, and it was [371] further shown, that one of the members, at least, who is defendant, had expressly declared to him that he would not consent to the incurring of any personal resposibility in any form whatever. The making of notes was no part of the ordinary business of the company, nor was it a necessary incident to its business, nor the practice of the company in conducting its business. It owned a ditch, and sold water, and those who managed it collected the moneys paid for water, paid the various expenses out of the receipts, and divided the balance among the owners. This, according to the testimony, was the regular course of its business for a series of years, from somewhere about 1854 down to 1862, when the note in suit was given. There is nothing to show that any authority was ever given to the managing agent, either expressly, or by necessary implication, to execute notes, or that any such authority was ever recognized by the stockholders. Only two instances, besides the one in question, of giving a note by the managing agent, are shown during the whole existence of the company, and these two notes were connected with the. same general transaction as the one in suit; and, so far as the evidence shows, these were also given without the knowledge, or assent of the owners, other than the agent himself. The agent testifies that the instances referred to are the only ones that occurred during his management. In the case now in question, the agent also testifies, that when Samuel McConnell asked him for the note, he informed him that he had no authority to execute one. He further testifies that the arrangement, in fact, was, that the lumber, for which the note was given, was furnished for the extensive repairs of the ditch, made upon the express agreement that it was to be paid for out of the proceeds of the sales of water; and it appears that the proceeds were all applied in payment. The evidence shows that the owners, so far as they were informed upon the subject at all, were informed that this was the arrangement, and none of them knew of, or assented to, the execution of any note at all. [372] We think the evidence not only shows, that there was no express authority given to Denver to execute the note in suit, but, also, that none can be inferred from the general course of the business of the company, or implied from any authority exercised by the agent with the knowledge or assent of the owners. It also appears that such as expressed their views positively refused to allow any personal responsibility to be incurred in making the large repairs required by the damage done by the floods of 1862, and that Samuel McConnell, when he took the note, was expressly informed by Denver that he had no authority to execute it. The case is clearly within the decision of Skillman v. Lachman, before cited. Hpon the findings, the judgment should have been against Latham, as well as the other defendants. The note purports to be the note of the company, and the third finding is, that Denver had authority to make and execute the note. The sixth finding is entirely consistent with the third, and finds that Latham was a member of this company at the time of the execution of the note sued on. If he was a member when the contract sued on was made, and the contract was. executed by a party duly authorized, he must, of course, be bound by it, as well as the other members. The judgment and order denying a new trial must be reversed and a new trial had, and it is so ordered. Mr. Justice Sanderson, being disqualified, did not participate in the decision.