Johnston & Co. v. Dutton's Adm'r

GOLETHWA1TE, J. The evidence in this case tended to show that appellants and one Vanderslice carried on in co-partnership a steam saw-mill, which, by the articles of copart-nership, was to continue at least five years; that the note sued on was given with the concurrence of two of the partners, Eogg and Vanderslice, for supplies necessary for the han ds engaged in carrying on the mill, which had been ordered by one of them. Upon these facts alone, there can be no doubt that the firm would bo bound. The furnishing of the supplies to those engaged in the immediate direction of the business, was essential to the conducting of it, and within the scope of the purposes for which the individuals had associated ; and the authority of either of the partners to purchase such supplies, and give the note of the firm, cannot be questioned. The principal ground of objection, however, is, that the . evidence proved that, before the goods were furnished and the note given, the appellant, Johnston, gave notice to the public that ho Avould not be responsible for any future- debt contracted on account of the copartnership, and that this notice was brought home to the party with whom the debt [252] was contracted ; and it is insisted that its effect was, to revoke the authority of the other partners, so far as he was concerned, to bind the firm from that time. It is tb be observed, that in the present case, the contract ■was concurred in by two members of the firm; and the question, therefore, is, as to the right of the majority to bind the other partners, against their dissent, as to matters appertaining to the common business, and in the absence of any stipulation conferring that power in the articles of copartnership. This question is a new one in this court, and indeed we have found no case in which it has been expressly decided. Both in England and the United States, there are cases which assort the general proposition, that a partner may protect him-, self against the consequences of a future contract, by giving notice of his dissent to the party with whom it is about to be made. — Gallway v. Matthew & Smithson, 10 East, 264; Willis v. Dyson, 1 Stark. 164 ; Vice v. Fleming, 1 Y. & Jerv. 227-30; Leavitt v. Peck, 3 Conn. 125; Feigley v. Sponeberger, 5 W. & S. 564 ; Monroe v. Conner, 3 Shep. 178. And where the firm consists of but two persons, and there is nothing in the articles to prevent each from having an equal voice in the direction and control of the common business, the correctness of the proposition cannot be questioned. In such case, the duty of each partner would require him not to enter into any contract from which the other in good faith dissented ; and if ho did, it would be a violation of the obligations which were imposed by the nature of the partnership. It would not, in fact, be'the contract of the firm; and the party with whom it was .made,- having notice, could not enforce it as such. So, if the firm .ivas composed of more than ' two persons, and one of them dissented, the party with whom the contract is made acts at his peril, and cannot hold the dissenting partner liable, unless his liability resalís from the articles, or from the nature of the partnership contract. All the cases can be sustained on this principle: and it is in strict analogy with the civil law, which holds where the stipulations of the partnership expressly entrust the direction and control of the business to one of the partners, that the dissent of the other would not avail, if the contract was made in good faith (Pothier Traite du Oom. de Soc., No. 71, 90); and such also, [253] we think, is the rule of the common law. — Const v. Harris, Turn. & Russ. 496; Story on Part. § 121. Were it otherwise, it would be denying to parties the right to make their own contracts. If our views as to the governing force of express stipulations are correct, the.effect of such terms or conditions^ as result by clear implieationfroin the articles, or arise out off the nature of the partnership, must be the same. It is as if they had been expressly provided. Now, whenever a partnership is formed by more than two persons, we think that, in the absence of any express provision to the contrary, there is always an implied understanding that the acts of the majority are to prevail over those of the minority, as to all matters within the scope of the common business; and such we understand to be the doctrine asserted by Lord Eldon in Const v. Harris, supra, and such was tho opinion of Judge Story. — Story on Part. § 128; 3 Kent’s Com. (5 edit.) 45. The rule, as thus laid down, is certainly more reasonable and just, than to állow the minority to stop the operations of the concern, against the views of the majority. We do not say that it would-be deemed a bona fide transaction, so as to bind the firm, if the majority choose wantonly to act without information to or 'consultation with the minority (Story on Part. § 123); but when, as in the present case, the one partner has given notice, and expressed his dissent in advance, there could be ho reason or propriety in requiring him to be consulted by the other two. We do not consider, the cases to which we have been referred, holding that one partner has the right at pleasure to dissolve a partnership, although the articles provide that it is to continue for a specified term (Marquand v. New York Ins. Co., 17 Johns. 525; Skinner v. Dayton, 19 ib. 513, 538), as having any bearing- on the case under consideration. Conceding they are law — which is doubtful (Story on Part. § 215, n. 3, and cases there cited) — the decisions rest solely upon the ground, that the limitation or the right of dissolution is incompatible with the nature of the copartnership contract; and this principle does not militate against the positions we have asserted.- The dissent, in the present case, cannot be regarded' as a dissolution; for, if effectual, it would not necessarily produce that result, although it might operate to change [254] the mode of conductiug the business. In other words, it might be carried on without contracting debts. Our conclusion is, that the act, being concurred in by two of the partners, was, under the circumstances, the act of the firm ; and that the charge, asserting the proposition that the dissent of one partner against the other two would necessarily exonerate him, was properly refused. Judgment affirmed,