Leavitt v. Peck

Hosmeu, Ch. J. It is a well established principle, that the contract of a partner is obligatory on his co-partner, by virtue of an implied authority, which may be rebutted, by a refusal to be bound by his acts. By legal consequence, the partner whose authority is thus declined, cannot bind the co-partnership, in favour of those, who have knowledge of this fact. Lord Galway v. Matthew & Smithson, 1 Campb. 403. S. C. 10 East 264. Willis v. Dyson, 1 Stark. 164. Nothing can be more reasonable than that a person may protect himself, in this manner, against the fraud and misconduct of his associate. The principle under consideration is not founded at all on any supposed waiver by the creditor ; but solely and exclusively on the declaration of the person declining to be bound. The im- j plied authority of his partner he has annihilated ; and the con-) tract in the name of the firm, is of no validity, beyond the l personal obligation it infers on the individual making it. Whether a person, in any given case, has rebutted the implied authority of his partner to bind him, is a question of fact. On this head I am inclined to think the charge to the jury was incorrect. They were directed, if Gad Peck was a dormant partner with Egbert, and refused to give a joint note with him, to render a verdict for the defendant. The charge involved this principle ; that a refusal by Gad Peck to put his name to the note in suit, was necessarily a revocation of Egberts implied authority. This ascribed a consequence to the act of Gad Peck, which the premises did not warrant. It is very possible, that he might decline affixing his signature to the note, and not refuse to be bound by his acts as a partner. I ám aware, that there is a difficulty attending the prohibition oí Egberts authority, without dissolving the partnership ; but I do not consider it as insuperable. If it should appear, [129] that Gad Peck did not merely decline to execute a joint note with Egbert, but refused to be bound by his act, in all events, and this was clearly understood by the plaintiffs, I should consider him as within the principle of the cited cases. The ignorance of the plaintiffs relative to the existence of the copartnership, could be of no avail. It is true, they did not know, that Gad Peck was partner with Egbert; and of consequence, they could not foresee the manner in which his refusal to become bound as joint promissor would operate. But they would know, and this alone was necessary, that, if Eg-bert were a partner, his authority was disclaimed. The opposite principle involves this proposition ; that the plaintiffs must have knowledge of the precise consequences to which the refusal would extend. Sufficient is it, if they know the fact, that in every conceivable shape, Gad Peck refused to be bound by the note of Egbert. Peters, J. I think the charge of the court on the circuit was correct. The first question submitted to the jury, was certainly proper; was Gad Peck a co-partner of Egbert D. Peck ? If decided in the negative, it made an end of the case ; if in the affirmative, it introduced the second question, did Gad Peck, in the presence of Leavitt, refuse to incur any new liability for this debt, other than as endorser ? And the jury were properly instructed to return a verdict for the defendant, if they found he did so refuse, and the plaintiffs accepted his endorsement. It seems to be admitted, that the power of one co-partner to bind another, is revocable. But it is said, this cannot be done, unless the creditor have knowledge of the co-partnership ; that concealment of this, is a fraud. But Gad Peck was liable for this debt, by an original and express stipulation, in the knowledge and power of the plaintiffs, who, having consented to accept of an express collateral liability, which needed nothing but diligence to become effectual, in lieu of an original express liability, waived all right, not only to the express, but to the implied obligation of Gad Peck. “ Expressio unius, exclusio alterius.” New trial to be granted.