Moore, Marsh & Co. v. Duckett

Simmons, Justice. 1. The facts of this case appear in the reporter’s statement. The dissolution of a partnership does not affect the liability of the partners upon binding contracts previously made by the firm. Each partner continues to be bound just as if the partnership had continued to exist. Otherwise, the members of any firm, simply by dissolving, could_ relieve themselves of all individual liability upon partnership debts or obligations. It is obvious that the law will not tolerate such a thing as this to be done. It follows that if, before dissolution, a partnership makes a binding contract for the purchase of goods, a delivery of the goods to one partner after dissolution is sufficient, and all the members are bound for the price. If, in the present case, the orders for the goods had been in writing, it is perfectly clear that the statute of frauds could have no application ; that all the members of the firm would, individually, have been [757] bound, and that the mere dissolution of the firm could not have operated to release the retiring partner. Moore, Marsh. & Co., notwithstanding the dissolution, would have had the right to hold Duckett bound by the purchases made by his firm, even if they had been informed of the dissolution before delivering the goods. Down to this point, we are quite sure there can be no serious, question that the law is as we have stated it to be. The orders for the purchase of the goods, however,, were not in wifiting, and the value being more than fifty dollars, it was insisted that the contracts were within the statute of frauds (Code, §1950, par. 7), not legally binding upon the firm itself until they became executed by the actual delivery and acceptance of the goods, and that as Duckett retired from the firm before the delivery took place, he was released, whether Moore, Marsh & Co. knew of the dissolution or not. The argument was, that as Duckett retired before the firm ever became legally bound, and as the firm ceased to exist after the dissolution and could never thereafter become bound as a firm of which he was a member, he was released. ¥e do not think this argument is sound. We concede that, for the reason already stated, the contracts of purchase were not binding on the firm of Smith, Duckett & Dobbins, if they had chosen to repudiate these contracts, and had so informed Moore, Marsh & Co. before the goods were shipped; but in the absence of such action by the firm, it certainly cannot be denied that Moore, Marsh & Co. had the right, on their part, to complete the contracts by delivering the goods. The right of Moore, Marsh & Co. existed as to a firm of which Duckett was still a member ; and they had the further -right, in the absence of knowledge or notice to the contrary, to regard the firm as a continuing concern, and deal with it accordingly. They had previously dealt with this firm, composed of these very persons, and the [758] evidence shows that credit was extended to the firm upon the faith of Duckett’s being a member. ¥e see no reason, either in law or morals, why they could not safely assume that Duckett would continue to be a member. In order to prevent the shipment of the goods, and thus become relieved from any obligation to pay for them, it was necessary for the firm to notify Moore, Marsh & Co. not to ship them, and we do not think Duckett could be relieved unless he did this, or its equivalent. He knew, or ought to have known, that if he remained silent, Moore, Marsh & Co. would have the right to send the goods to the firm, still regarding him as a member of it; and it was incumbent on him to inform them that he had retired from the firm, and, consequently, would no longer be liable upon its contracts, and thus leave them free,' after receiving this information, to ship, or decline to ship, as they might see fit. It does not seem lawful or just that he could escape liability without doing at least as much as the firm would have to do to accomplish this end, for as to Moore, Marsh & Co., he was still a member of the firm until they were informed of the dissolution ; and it follows, necessarily, that the burden of proof was upon him to show they had notice of the dissolution at or before the time they delivered the goods. The case of Chamberlain et al. v. Dow et al., 10 Mich. 319, is somewhat like the present; and though, at first glance, apparently in conflict with the decision now made, really sustains it. A majority of the court in that case held that a parol bargain for the purchase of a machine worth more than fifty dollars, made by two persons, not as partners but as joint purchasers, was not taken out of the statute of frauds by delivering the machine to one of the purchasers without the knowledge or consent of the other, and that the latter was not hound. Chief Justice Martin dissented, and in a strong [759] ■opinion held that, under these circumstances, he would be bound. The evidence showed that the joint purchasers had not formed a partnership, but had made an .■agreement to do so, expecting to use the machine in the ptartnership business, and that there had been a termination of this agreement before the delivery of the machine. Manning, J., who delivered the opinion of the •court, does not deny, but rather seems to concede, that •if the purchasers had actually been partners when the machine was bargained for, the ruling would have been •different. 2. We have carefully examined the evidence in the case before us. In no fair view of it can it be said that Moore, Marsh & Co., when they delivered the goods, had any notice or knowledge of the dissolution of the ■partnership ; and we therefore hold that the verdict in favor of Duckett, the retiring partner, was contrary to law, and order a new trial. Judgment reversed.