Kelley-Goodfellow Shoe Co. v. Long-Bell Lumber Co.

SMITH, P. J. The Martin Lumber Company (Limited), which for convenience we shall hereafter refer to as the Louisiana company, a corporation engaged in the manufácture of lumber at Bolinger, in the state of Louisiana, kept a branch business office in'St. Louis until January 1, 1897, when the same was discontinued. One VanCleave, who had been in charge of "the St. Louis business office, for the purpose of succeeding to the business that had been built up by it at that place, entered into a co-partnership with the Long-Bell Lumber Company, a manufacturing corporation, under the name — 442 — and style of the Martin Lumber Oompanv. The co-partnership thus formed opened its chief business office in the same building in St. Louis in which the Louisiana company had formerly kept its office. Van Cleave was placed in charge of' the business of the partnership at this office. The Martin Lumber Company, it seems, sustained no other relation to the Louisiana company than that of purchaser of its monthly output to the amount of five or six thousand dollars. The Louisiana company sent YanCleave an order for a bill of shoes with a request that he place it and have the goods shipped. The latter handed the order to the plaintiff who, on investigation, declined to extend credit to the Louisiana company and so refused to fill the order, of which it gave notice to that company. The Louisiana company thereupon informed YanCleave, who was then in New York, of the action of the plaintiff, VanCleave then wrote a letter to the plaintiff signed Martin Lumber Co., Per T. ■W. YanCleave, Prest., telling it that the Martin Lumber Company would guarantee that the Louisiana company would pay the bill for the shoes ordered by the latter, and if this was satisfactory to ship the goods at once. On receipt of this letter the plaintiff wrote to the Martin Lumber Company saying it would fill the order on the basis that it would guarantee the bill. The Martin Lumber Company thereupon wrote the plaintiff inclosing the original order for the shoes. Two days later the plaintiff wrote the Martin Lumber Company that it had filled the order of the Louisiana company and shipped the goods and would charge the same to it — the Martin Lumber Company. The Louisiana company became defunct and the partnership under the name of the Martin Lumber Company was dissolved within a couple of months after the plaintiff filled the order of the Louisiana company for the shoes. This action was brought against the Long-Bell Lumber — 443 — Company a member of the partnership under the name of the Martin Lumber Company to recover the amount of the bill for the shoes. The cause was tried by the court without the aid of a jury and judgment given for plaintiff. The question decisive of the case here is whether or not the letter of guaranty given by YanCleave in the name of the Martin Lumber Company is binding on it, for if so the defendant, the Long-Bell Lumber Company, is liable — otherwise, not. Every partner is an agent of the partnership, and his rights, powers, duties and obligations are in many respects governed by the same rules and principles as those of an agent. One partner by virtue of the partnership relation is constituted a general agent for another as to all matters within the scope of the partnership dealings and has communicated to him, by virtue of that relation, all authorities necessary for carrying on the partnership, and all such as are usually exercised by partners in that business in which they are engaged. Story on Part., sec. 101; Lindley on Part. (2 Am; Ed.), 256; Hawkins v. Bourne, 8 M. & W. 703; Irwin v. Palmer, 110 U. S. 505. Each partner may enter into any contracts or engagements on behalf of the firm in the ordinary trade and business thereof; as, for example, by buying, or selling, or borrowing moneys or by drawing or negotiating, or indorsing, or accepting bills of exchange and promissory notes and checks and other negotiable securities, or by procuring insurance for the firm or by doing any other acts which are incident or appropriate to such trade or business according to the common course and usages thereof. ‘ Whenever credit is given to a firm within the scope of the business of that firm, whether the partnership be of a general or a limited nature, it will bind all the partners, notwithstanding any secret reservations between them unknown to those who give the credit. The authority of a partner to be — 444 — valid must be exercised in cases witbin the scope of the ordinary business and transactions of the firm. And powers and authorities not ordinarily deemed within the scope of a partnership require special delegation to confer them. And in ascertaining what contracts, engagements and acts are properly within the scope of a particular partnership, trade or business, it is not enough to show that in other trades or other business certain rights, powers and authorities are incident thereto and may be lawfully exercised by each of the partners, but we must see that they appropriately belong to, or are by usage or otherwise implied or incidental to the particular trade or business in which the partnership is engaged. Story on Part., secs. Ill, 113, 114, There are certain powers and authorities which from long usage and recognition are so generally attracted to all sorts of partnerships that they will be deemed to exist by presumption of law, unless there is clear evidence to repel the presumption, or some positive contrary stipulation between the parties. But where one partner gives-a letter of guaranty in the name of the partnership it is not to be treated as of course binding on the partnership, for it is not a natural or necessary incident in all sorts of partnerships for one partner to possess the power to bind his co-partners by a guaranty. It must be shown to be justified, either by the usages of the particular trade or business or by the known habits of the particular partnership or by the express or implied approbation of all the partners in the given case. Story on Part., secs. 114, 121 and cases there cited. And it has been declared in effect in numerous cases that one member of a co-partnership can not be made liable for the tact or undertaking of another in a transaction not embraced in’ their original partnership business unless proof is adduced that such member knew of the-transaction and assented to, or subsequently ratified it. Cayton — 445 — v. Hardy, 27 Mo. 536; Rimel v. Hayes, 83 Mo. 200; Goodman v. White, 25 Miss. 163; Scott v. Bandy, 2 Head (Tenn.), 197; Chandler v. Sherman, 16 Flor. 99. And so it has been ruled that it is the duty of every one who deals with a member of a commercial partnership out of the line of business of such partnership to require evidence of that partner’s special authority •to bind his co-partners — and this at the risk and peril of said party. Allen v. Cary, 33 La. Ann. 1455. Applying the foregoing principles of the law of partnership to the facts of this case as we have stated them to be and it seems clear to us that the defendant can not be held liable. The plaintiff was apprised by the commercial report, to which VanOleave in the letter of guaranty referred, of the nature and character of the business of the Martin Lumber Company. That letter inclosed the business card of the Martin Lumber Company which informed the plaintiff that it was a “manufacturer and wholesale dealer in quarter-sawed flooring, casing and base yellow pine lumber, cypress shingles, Washington red cedar lumber and shingles.” The plaintiff must therefore be held to have known, when accepted by it, that the writing by Nan Cleave of the letter of guaranty in the name of the Martin Lumber Company involved an exercise by him of a power not within the scope of the ordinary business and transactions of the partnership, nor incident or appropriate to its business according to the common course and usages thereof. Lindley on Part., 263. It would not, according to the principles to which we have already adverted, be within the scope of the authority of a partner of a firm engaged in the manufacture and sale of lumber to contract for the purchase of a bill of shoes or groceries, or drugs, or dry goods, or liquors, and thereby bind the partnership therefor, unless it should appear, as it does not in the present case, that the exercise of such authority was justified by the usages of the lumber business, — 446 — or by the habits of the partnership, or by the express or implied approbation of the other partners. The letter of guaranty given by VanCleave in the name of the Martin Lumber Company is not to be treated as of course binding on the company for it is not a natural or necessary incident in all sorts of partnerships for one partner to possess the power to bind the c.o-partners by guai'anty, and, therefore, before such guaranty can be considered binding on the defendant, the other partner, it must appear, as it does not, that there was a delegation by the defendant of special authority to him’ — VanCleave—to give such guaranty. The dealing which the plaintiff had with VanCleave was most manifestly in respect to a matter out of the line of the business of the partnership — the Martin Lumber Company. This fact it was bound to know. It was its duty to have required VanCleave, at its peril, to produce evidence of his authority to bind the Martin Lumber Company. There is no pretense that VanCleave was authorized by the articles of co-partnership or by any special delegation of authority to either bind the partnership by guaranty or by outright purchase of the plaintiff’s goods. And if we regard VanCleave as the general agent of the Martin Lumber Company, representing it as the managing partner, still we can not hold that company either liable on the guaranty or for the purchase price of the goods because he was most obviously not acting within the scope of his apparent authority. The plain-tiff had the right to assume that VanCleave was empowered to do for the Martin Lumber Company whatever was necessary for the transaction of its business in the way in which that business is ordinarily carried on by others, but it had no right to assume that he had a more extensive authority. It is a custom, of which courts will take notice, prevailing among jobbers in the various lines of merchandise, to purchase — 447 — of each other small bills of goods for their customers and have the same charged to them, the purchasers, but a guaranty or purchase like the present is not authorized by any such custom. McLaughlin v. Mulldy, reported in 47 Pacific Reporter 1031, is itf its facts not analogous to the present case and therefore it is inapplicable. There is nothing in the business relations existing between the Martin Lumber Company and the Louisiana company which would justify the application here of the rule of liability declared in the case just referred to. It is our conclusion that in-refusing the defendant’s instruction in its nature a demurrer to the evidence the court erred, and for which the judgment must be reversed. All concur.