McDonald v. Western Refrigerating Co.

Moran, J. Appellant contends that the receipt in which the mistake was made was the one which, in the dissolution of the partnership, went to Bennett; and as appellee paid Bennett with knowledge of the mistake, the money could not be recovered back, and that it could not be recovered back from appellant under the circumstances of this case, and the refusal by the trial court to hold propositions embodying such contention is pressed for error. As appellant’s points all arise on the statement of facts, it is unnecessary to consider .the formal propositions submitted to the court to be held. The question is, upon the facts as stated, is the judgment of the court proper? The last receipt issued by appellee to McDonald & Bennett, dated August 17, 1887, was for 100 cases of eggs more than said firm had on store with appellee, and such issue is agreed to have been made by mistake of fact on the part of appellee» and the mistake is shown to have been known to Bennett on the day it was made, and before there was any dealing with the receipt by the firm. How did this knowledge of Bennett affect the firm? We think it clear and well sustained by authority, that such knowledge by one partner is not only notice to the firm of the facts, but that it must in law be held to be the knowledge of his co-partner, for what is known to the firm must be taken to be known by all the persons composing the firm, where the matter relates to the firm business or transactions. 1 Bates on Partnership, Secs. 390-391 and cases cited in notes. If then the firm had, in the regular course of business, transferred to an innocent party the warehouse receipt in question, and had received the money therefor, there can be no doubt but that said firm would be liable to appellee for the money, for the circumstances would make the firm a trustee of the receipt, or of the proceeds thereof for appellee. Kingston Bank v. Etlinge, 40 N. Y. 394; Kansas Lumber Co. v. Central Bk. of Kas., 34 Kas. 635; McLean Co. Bank v. Mitchell, 88 Ill. 52. Defendant is liable for the money or property received by the firm for the use of appellee, and the non-joinder of his co-partner could only be pleaded in abatement. There was no such plea, and the point that Bennett should be sued with defendant can not be made on this record. As to the suggestion that appellee has paid to Bennett the amount represented by the receipt, after knowledge of the mistake, and is therefore barred, the circumstances set out estopped appellant from taking that position. It appears that on a conference with appellant and his attorney, after the mistake was discovered, as to what should be done, appellant’s attorney advised appellee to institute the chancery suit against Bennett, which was soon after commenced, and that appellant was advised of its progress and aided by his evidence and suggestion in its prosecution. As we have already seen, appellant was at that time liable to appellee, as a member of the firm, for the receipt or its proceeds; it is manifest, therefore, that a suit to collect from Bennett alone, or to prevent his negotiation of the receipt, was in the interest of appellant. Under such circumstances lie was bound by the result of that litigation whether the case was correctly decided or not. This proposition is fully sustained by the case of Cole v. Favorite, 69 Ill. 457. The Supreme Court there said: “ Whether the suit in the Federal Court was decided correctly or not, can make no difference in the result of this case. The suit in the Federal Court, although in the name of appellee, was prosecuted at the request, and for the benefit of appellant. He advised and directed it, was a witness therein, and while he was not formally a party to the record, he was a party in interest, and must be regarded a privy. In that suit it was adjudicated and determined that the receipt was a contract, and by its terms and conditions appellee was not liable to appellant to insure the barrels therein named after first of September, 1865. * * * The merits of this question have been previously tried, and parties and privies must be concluded.” The question there decided is in principle applicable here. See also Drennan v. Bunn, 124 Ill. 175. The judgment of the Circuit Court is right, and will therefore be affirmed. Judgment affirmed.