Allen, Nugent & Co. v. Cary

The opinion of the Court was delivred by Bermudez, C. J. This is an action to hold John P. Bichardson, as one of the partners composing the firm of Bichardson & Cary, liable for the obligations of C. W. Cary as drawer of three notes, aggregating $7013 97, and as obligor under a contract by which he bound himself to the plaintiffs to make to them shipments of cotton, the proceeds to be applied to the payment of the notes, commissions and eventually attorney’s fees in case of breach of contract. The liability is sought to be imposed on the grounds that the notes were endorsed by Bichardson & Cary, and the fulfillment of the contract engagements was guaranteed by them. G-. W. Cary made no defense. Bichardson denies liability. He admits that the name of the firm was endorsed on the notes and put to the guarantee, on the contract; but avers that it was so used by G. W: Cary, his partner, out of the course of the business of the firm, beyond the range of his authority as partner, in matters disconnected with the affairs of the partnership, without any authority; to plaintiffs’ knowledge; that no consideration was received by the firm, or enured to its benefits, as plaintiffs knew or should have known. There was judgment in favor of plaintiffs, ailowing the amount of the notes, but rejecting the remainder of the claim. From the judgment against him Bichardson has appealed. In their answer to the appeal the plaintiffs ask that the judgment be amended so as to be allowed'their entire demand. The differences of the parties have to be determined particularly and almost exclusively, on the facts as they are shown to have occurred on the 23d of June, 1879. The evidence first shows that, on the 12th of March, 1879, the formation of a partnership between John P. Bichardson and Gf. W. Cary, was announced in the papers, under the firm name and.style of Bichardson & Cary, for the purpose of doing a general dry goods and notion business at No. 31 Magazine street, in this city; the notice bearing the names of both partners. The record next establishes that on the 23d of June, 1879, a contract, evidenced in writing, was entered into between one C. W. Cary of Alabama, with the plaintiffs, whereby he acknowledged his indebtedness to them in the sum of $7013 97, for advances made and to be made to him to carry on his business and planting interest, during the year 1879, [1458] as evidenced by his three notes (which are described in the petition); and whereby he stipulated that, in order to reimburse said advances, he would, during the years 1879 and 1880, make shipments of cotton to the plaintiffs, and, in case of failure, he would incur and make good, certain pains and penalties specified in the deed, which concludes saying that: “it is well understood that, without the special agreements hereinbefore recited, to properly conduct their business relations, the said Allen, Nugent & Co. would not have entered into this contract.” This instrument is signed “ C. W. Cary, by G. W, Cary,” and bears the following stipulation: “ We hereby guarantee the prompt fu'fillment of the above contract, (Signed) “ Richardson & Cary.” The only witness who testified as to the occurrences of the 23d J une, 1879, surrounding the drawing up and signature of the contract and the endorsement of the notes described in it, which are those sued on, is Mr. Lallande, one of the plaintiffs. As we understand his testimony, it is to the effect that his firm was applied to early in June, 1879, by G. W. Cary, a partner in the firm of Richardson & Cary, for a loan of money for the wants of the partnership, which was refused, their business being a cotton factorage and the charges in the same and their advances being only made to parties dealing with them in that line. On the 23d of June, following, some ten days later, it appears that Cary returned to plaintiffs’ countingroom and stated that his firm had •to remit to a great many parties, particularly to one who could influence a thousand bales of cotton, and that he was readyjto accept the loan on plaintiffs’ terms (which are detailed.) He was then handed a blank cotton contract and told to read it carefully; which he did. Under the pretence of going to see Mr. Richardson, his partner, he left the office, came back in about half an hour and said that Mr. Richardson thought the terms pretty tight, but that they would accept them. The blank was filled by the witness. G. W. Cary signed it for C. W. Cary in presence of the witness. He then, simultaneously, endorsed the notes, and signed the warrants on the contract in the name of Richardson & Cary, and passed them to plaintiffs through the witness. Thereupon, the plaintiffs delivered to G. W. Cary their check on the Canal Bank, to the order of Richardson & Cary, for $6550 27, which, upon being endorsed by G. W. Cary in the name of the firm, was collected by him. The liability sought to be fastened upon Richardson depends upon the construction to be placed upon the contract, the notes and the testimony referred to. It cannot be affected by occurrences' which took place previously or subsequently and which do not prove knowledge, consent or ratification by J. P. Richardson. [1459] It is clear to our minds, that the doings of G. W. Cary, on the occasion, can only be viewed as the acts of a partner using the partnership name and credit to secure the obligations of a third party, to the direct, immediate knowledge of the other contracting party, however in good faith and shamefully deluded. The contract, the guarantee, the notes, the. testimony of Mr. Lallande, are all In evidence by the plaintiffs and conclude them. - They cannot pretend that the contract does not say that the advances were not made to C. W. Cary; that he was not their debtor; that he was not a third party; that Richardson & Cary were not sureties on the notes and on the contract, to the end that his liabilities to them, to that extent, would be faithfully met. The fact that the check was made to the order of Richardson & Cary, does not show that the consideration of the notes was given to them for their benefit and enured to their advantage; for, the only capacities in which they can be deemed to have acted in, with reference to the matters, are those of merchants of C. W. Cary, for whose account they had negotiated, and of securities of his engagements as set forth in the contract and the notes mentioned in it. The plaintiffs cannot say that they did not know that the partnership between Richardson & Cary was not in existence at the dates of the notes, which appear to have been issued some six months prior to the announcement of the formation of the partnership in the city papers-on the 12th of March, 1879. If the partnership was not in existence at the date of the notes, how could they have been properly made to the order of Richardson & Cary? This was a circumstance well calculated to arouse suspicion and to put plaintiffs on their guard and on inquiry. It is shown that they prudently and safely inquired into the financial condition of the firm. Informed by the unusual character of the last approach, of the offers and doings of Cary, it would have been •quite easy for them to have proceeded to 31 Magazine street, the place of business of the concern, and there ascertained from the only other partner, Mr. Richardson, whether Cary had his assent for the proposed use of the name of the firm for the guarantee of ithe obligations of W. C. Cary, the alleged drawer of the notes and obligor on the contract mentioning the notes. It is the duty of every one who deals with a member of a commercial partnership who apparently transcends his mandates and powers, to require evidence of his authority to bind his co-partners, and this at his risk and peril. The plaintiffs cannot say that they were authorized, under the circumstances, to believe with certainty of correctness, that G.'W. Cary was acting in the course of the business of the partnership within the [1460] •range of his powers as partner, in a matter connected with the affairs of the partnership, or with the authority of the other partner, for, the .notice of the formation of. the partnership published in the papers, as said and proved, distinctly announced that the partnership was formed “/or the purpose of doing a general dry goods and notion business ” and gave the address of the place where the business was to be carried on that third,parties might be better informed. The acts and doings of G. W. Cary, in the name of the firm of Richardson & Cary, could not be considered as accomplished for the purpose of doing a general dry goods and notion business. The transaction was unusual. It would have been easy for the plaintiff to have inquired. It was their duty to have done so. Eor their omission, in the matter, John P. Richardson cannot be made gratuitously to suffer. There is no evidence that the amount of the check was received by and enured to the benefit of the firm. Testimony was adduced to the contrary. Neither is it proved that Mr. Richardson either knew of the ■transactions, consented thereto, or ratified the same. The authorities relied upon by the plaintiffs are undoubtedly correct, but they can afford no relief in a case like the one at bar to the plaintiffs. 2 Wall. I10; Daniel, N. J. 83, 359; Byles on Bills, 166; Edwards, 150; Bayley, 21; Story, 37; 11 M. 427; 4 Rob. 193; 22 How, 266; 5 Pet. 529; 4 Metc. 577; 18 Penn. 408; 16 Wend. 505. The rule of law is that, where a partner, acting apparently beyond the limits of his authority, untruly states his partner’s consent, his representations will not bind them, even in favor of parties who may have acted in good faith. 12 Pet. 221; 3 Kent Com. Sec. 43; 4 Exch. 622; 1 Wend. 529; ex parte Agare, 2 Cox, 312; 37 Cal. 113; 10 An. 107, 783; 394; 2 Mart. 183; 7 M. 364; 10 M. 18. The rule of law is also that one partner cannot without the assent of his co-partners, give a security, in the partnership name, for the payment of his individual debt; nor can he, without such assent, lend the name of the firm as surety, endorser or guarantor for a third person. 2 Ala. 502; 1 Ala. 565; 12 Peters, 221; 4 Ech. 623; Parsons, vol. 1, p. 184, 221, 228; Story, Sec. 128; Chitty, 48; 6 B. Monroe, 60; 4 Wend. 168; Daniels, 1, p. 276; Collyer, 490; 28 An. 941. See, also, Mechanics’ and Traders’ Co. vs. Richardson & Cary; Mut’l N. B. vs J. P. Richardson, 33 An. p. _ and _; and authorities there quoted. We, therefore, conclude that Richardson is not liable. It is, therefore, ordered and decreed that the judgment of the lower court in so far as it condemns Richardson to pay plaintiffs any amount, be reversed, and that, in so far as it relieves him from responsibility to the plaintiffs, it be affirmed, and proceeding to render such judgment, as said court should have rendered, [1461] It is ordered, adjudged and decreed that plaintiffs’ demand be rejected, with judgment in favor of the defendants, at the costs of plaintiffs in both courts. Mr. Justice Fenner recuses himself, having been consulted as counsel. Rehearing refused.