Hodges v. Ninth National Bank

Grason, J., delivered the opinion of the Court. It appears from the record that Hodges Brothers issued an attachment against George Hughes, Thomas A. Smith, John Waddell and John Caldwell, partners, trading as James Duncan and Company, and caused the same to be levied upon certain goods in the City of Baltimore. The appellee filed a petition claiming the property, and filed pleas, and also issued an attachment and caused it also to be levied upon the same goods, this second attachment being against George Hughes and Thomas A. Smith, trading as James Duncan and Company. Judgment was rendered in favor of the claimant, and from that judgment this appeal is taken. Three exceptions were taken by the appellants, the two first of which were to the rulings of the Court upon the evidence, and the third to the rejection of their two prayers, and the granting of the prayer of the appellee, by which the jury were instructed that the plaintiffs had offered no evidence to enable them to recover against the defendant, Caldwell, as a member of the firm of James Duncan & Co., and were not entitled to recover in this action.- — 418 — The proof shows that in the early part of the year 1875, about a year before the final failure of the firm of James Duncan & Co. and the issuing of the attachment in this cause, George Hughes and Thomas A. Smith, both members of the firm of George Hughes & Co., of New York, formed a partnership under the name of James Duncan & Co., and commenced business under that name in Baltimore City. Hodges Brothers had refused to sell goods to James Duncan & Co., and Waddell, who was a member of the firm of Hughes & Co., of New York, but not of the firm of James Duncan & Co., arrived in Baltimore for the purpose of starting the business and establishing the credit of James Duncan & Co. He was a friend of Lewis, a member of the firm of Hodges Brothers, and called upon Hodges Brothers, and had interviews with Lewis, and .James Hodges, the senior member of the firm, for the purpose of obtaining credit for James Duncan & Co. with the house of the appellants. He stated that the firm of James Duncan & Co. were in difficulties and that he had come to 'Baltimore to take possession of their effects. He represented that George Hughes & Co. were large creditors of James Duncan & Co., and had taken possession of their effects, and were going to run that house themselves under the name of James Duncan & Co.; that it was their concern; that they owned it and that they were going to be responsible for every dollar of its purchases, and that Hodges Brothers might now sell James Duncan & Co. as many goods as they chose. He further stated that George Hughes & Co. had turned Duncan out of the firm of James Duncan & Co., and that they intended to run the concern profitably. He introduced to Hodges Brothers two young men, named Denny, whom he stated he had brought from Philadelphia to conduct the business; that they were active, smart and energetic, and that they would run the concern. From the time of this introduction Hodges Brothers began — 419 — to sell them goods and continued to sell for about a year, when the Dennys were turned off and a man named Franklin became the manager. It is clearly proved by Lewis that the appellants sold to James Duncan & Co. exclusively on the representations of Waddell that the concern in Baltimore belonged to, or was the concern of George Hughes & Co., and that the latter firm would be responsible for its debts. James Hodges also proved that he never knew, till about the time his firm was about to issue the attachment in this case, who constituted the firm of George Hughes & Co., and then learning who did constitute said firm, the attachment was issued accordingly; and that he did not know, until after the attachment was issued, that George Hughes and Thomas A. Smith only composed the firm of James Duncan & Co. Thomas A. Smith swears that the appellants were never informed, as far as he knew, that the firm of James Duncan & Co. was composed of only two of the members of the firm of Hughes & Co. In January, 1876, George Hughes was in Baltimore, and stated to the appellants that they should never lose one dollar of their indebtedness, but that their accounts should be paid in full, and both Smith and Caldwell testify that they were informed of such promise by Hughes & Co., and it does not appear that they made any objection to, or dissented from such promise. It was also found by Smith and Caldwell that James Duncan & Co. were largely indebted to the New York firm, and the latter, in consequence thereof, had an interest in giving them credit and maintaining their credit and promoting their business success. It also appears in proof that when Franklin was put in charge of the Baltimore house as manager, Hodges Brothers addressed a letter to George Hughes stating that the latter had changed the management of the firm house of James Duncan & Co., and asking whether Hughes was still interested in its business — 420 — and would be responsible still for its purchases. To this-, letter Hodges Brothers received a reply, signed George Hughes & Co., saying “ we still continue to guarantee the payment of all purchases made by James Duncan & Go. Baltimore. After this letter was received, Hodges Bros, continued to sell to the house of James Duncan & Go. till the time of their failure. George Hughes & Go. also failed and made an assignment for the benefit of their creditors, but the contents of, and the debts due to, said Baltimore house, were not included in the assignment. Caldwell, after having testified to the large indebtedness of Duncan & Co. to George Hughes & Co., and of the interest the latter therefore had in giving credit to them, and maintaining their credit, further stated that such interest induced George Hughes & Co. to assume the entire obligations of James Duncan & Go., and that, when parties called upon them about James Duncan & Go., “ we said if they did not pay their bills we would.” He further swore that George Hughes & Co. did give credit to James Duncan & Co. with the firm of Hodges Bros., and assumed the payment of any purchases they might make with that firm, guaranteeing the payment of the bills; and in answer to the fifth interrogatory, he stated that there was an understanding between George Hughes & Go. and Hodges Bros., that George Hughes & Co. should be responsible for all sales made by Hodges Bros, to James Duncan and Company. Smith, also, another member of the firm of George Hughes & Co. swears that “we assured Hodges Bros, that we would be responsible for all purchases which James Duncan & Co. should, from time to time, make from them ;” and he states that this assurance was given at the beginning of the sales, and that it was the understanding that George Hughes & Go. should be responsible for all the purchases during the entire period. But while both Caldwell and Smith thus testify, they in other parts of their testimony speak of the obligation of — 421 — 'George Hughes & Co. as a guaranty, and state that whatever personal assurances were given to Hodges Bros, were given hy either Hughes or Waddell. Caldwell says these assurances were both verbal and in writing, and that his knowledge of them was derived from Hughes and Waddell. It will appear from the language of the interrogatories and cross-interrogatories to Caldwell that the •assurances made to Hodges Bros, were assurances of Hughes & Co., and not individual assurances of Hughes •and Waddell. Upon the aforegoing proof the appellants offered two prayers, both based upon the verbal representations made to the appellants by Waddell. The first prayer asked an instruction, that, if the jury should find the •sales of goods mentioned in the account filed, to have been made hy the appellants to Duncan & Co. and that any part of the account was due when the attachment issued; and should also find that Hughes, Smith, Waddell and Caldwell composed the firm of George Hughes & Company, and that said firm, before the sale and delivery of the goods, held itself out to the appellants as James Duncan & Co. hy declarations of Waddell to that effect, made to the appellants in the course of the business of George Hughes & Co., and within the scope of its partnership, •and through and hy those declarations, stated to the •appellants that the concern of James Duncan & Co. was the concern of George Hughes & Co., and that the ■latter firm owned the same; and if the jury should further find that the appellants, after and on the faith of said ■statements gave credit to James Duncan & Co., as composed of the parties above named,‘and sold to'it on the faith and in the belief that it was composed of the said parties, and that its business was their business, and that Waddell’s statements were true, then the appellants were ■entitled to recover, notwithstanding the jury might believe that the firm of James Duncan & Co. in fact consisted of Hughes and Smith only. The second prayer con — 422 — ■tained a fuller statement of facts, and required the jury to-find, before a recovery could he had by the appellants, instead of the “holding out,” as assumed in the first prayer, that George Hughes & Oo. were large creditors of James. Duncan & Go., and had a pecuniary interest in the welfare and success of that house, and were desirous and intended to give it credit, and to maintain its credit and business prosperity, and that Waddell, a member of the firm of George Hughes & Go., accordingly came to Baltimore on behalf of his firm and by its authority, for the purpose of establishing the credit of James Duncan & Oo. and enabling it to make purchases on credit here, and promoting its success, and in pursuance of such purpose and on behalf of George Hughes & Oo., and in their name, made the representations as set forth in the evidence of Hodges and Lewis in the course of the business of George Hughes & Oo., and within the scope of their partnership. The evidence in this case shows that Waddell did not “ hold out” Caldwell as a member of the firm of James Duncan & Oo. Waddell was not a member of that firm himself. The authorities relied upon by the appellee to show that one person cannot he made liable as a member of a partnership by such “holding out” by another, without his authority therefor, are not applicable to this case. Waddell, not a member of the firm of James Duncan &- Oo., but of the firm of George Hughes & Oo., was sent by the latter firm to Baltimore for the purpose of re-establishing the house of James Duncan & Go., which hqd failed, largely indebted to George Hughes & Co., and of giving it credit and insuring its business success. The objects of George Hughes & Go. in so doing were to recover the loss they had sustained, and make the Baltimore house a source of profit to them in the future. It was for the jury to decide whether or not these objects were within the scope of, and connected with, the business of their partnership. Maltby vs. N. W. Va. R. R., 16 Md., 443; Cadwallader vs. — 423 — Riveson, 22 Md., 205. It does not appear what were the particular instructions given to Waddell to effect these objects, hut it clearly appears that he had authority to reestablish the house of James Duncan & Co., to give it credit, and especially to give it credit with the house of the appellants. He did so by informing the appellants that George Hughes & Co. had taken possession of the house of James Duncan & Co.; that it was their concern, and that they intended to conduct business there under the old name of James Duncan & Co.; that he had brought two smart, active and energetic young men from Philadelphia to manage the business for them, and that they might now sell as many goods as they pleased to them, and the house of George Hughes & Co. would he responsible for them. And all these assurances were made by a member of the firm of George Hughes & Co., who, it turns out, was not one of the members of the firm of James Duncan & Co. Upon these assurances alone credit was given and the account sued on in this case was made. There is no doubt left by the proof in the record that all the members of the firm of George Hughes & Co., including Caldwell, either knew personally, or were informed by Hughes or Waddell, that credit had been given by their firm to the house of James Duncan & Co., though in their evidence they sometimes denominate the liability of their firm as a “ guaranty,” and sometimes as a responsibility. The proof shows beyond question that Waddell, in his interviews with Hodges and Lewis, never spoke of a “guaranty,” hut stated that the house of James Dun„can & Co. was the concern of George Hughes & Co., and that they would he responsible for all goods sold to them; and that responsibility was to continue throughout the whole dealings between the parties. If these representations were made by Waddell, and were communicated or known to the other members of the firm of Hughes & Co., and were acquiesced in by them, of which there is some — 424 — evidence in the record, then that firm is hound by them, and this attachment in its present form against the firm of Hughes & Oo. can be maintained. Parsons on Partnership, 197; Story on Partnership, chap. 7, sec. 107; Doremus vs. McCormick, 7 Gill, 64. These questions should have been left to the jury upon all the evidence and it was error to grant the prayer of the appellee. (Decided 2nd July, 1880.) With respect to the point, made in the brief of the appellants, as to their right to amend the short note issued with the attachment, it must be said that, if the short note were amended in the particulars mentioned, the result would be the quashing of the attachment. The appellants took two exceptions to the rulings of the Court below on evidence, but both of them were waived in this Court. The judgment appealed from will be reversed, and a new trial awarded. Judgment reversed, and new trial awarded. Miller, J., filed the following dissenting opinion : In this case an attachment was issued by the appellants to affect the goods, chattels, rights and credits of “ James Duncan & Co.,” and was levied upon a stock of goods belonging to that firm which was doing business in the City of Baltimore. The appellee claimed the property by virtue of a subsequent attachment issued and levied upon it, and resisted the condemnation under the 'appellants’ attachment. The question therefore is, was the appellants’ attachment rightfully issued, and can it be sustained ? In the affidavit to their account the appellants aver “that George Hughes, Thomas A. Smith, John Waddell and John Caldwell” were “partners, trading as James Duncan and Company,” and I take it to be clear — 425 — law that in order to sustain their attachment it was incumbent on the appellants to sustain hy the requisite proof that each and all of the several parties mentioned in this affidavit, were liable to the appellants as partners of the firm of “ James Duncan & Co.” In point of fact it is •conceded that Hughes and Smith were the only persons actually composing the firm of “ James Duncan & Co.,” while they, together with Waddell and Caldwell, constituted the firm of “ George Hughes & Co.,” which did business in the City of Hew York. The Court below granted an instruction to the effect that the appellants, the plaintiffs, were not entitled to recover because they had offered no evidence that. Caldwell was a member of the firm of “James Duncan & Co.” This means, of course, that there was no evidence legally sufficient to go to the jury on that question, and in my opinion the instruction was correct and the judgment should be affirmed. I find in the record abundant evidence to show that the firm of “ George Hughes & Co.” became responsible as guarantors for any sales the appellants might make to the firm of “ James Duncan & Co.,” and if the former firm had been sued in the proper form of action, and in the proper form on this guaranty, there could he no doubt •as to their right to recover, hut that is not the question the case presents. Evidence sufficient to establish such a guaranty is wholly' insufficient to render the individual members of the firm of “ George Hughes & Co.,” partners or liable as partners of the firm of “James Duncan •& Co.” It is a familiar principle of the law of partnership as well as of the law of evidence generally, that when it is sought to make a person liable as if he were a partner, evidence must be adduced of his own acts or of what has been done hy others with his knowledge and with his •assent; the mere statements, declarations and acts of his •alleged co-partners are no evidence as against him. Caldwell could not he made a partner, or made liable as a part — 426 — ner of the firm of “ James Duncan & Co.” by the mere declarations of Waddell, or of Hughes, or of Smith, or of all of them conjointly, that he was such partner, and beyond this, even if it comes up to that point, the evidence in this record does not go. I have searched the record in vain for any evidence legally sufficient to enable a jury to find that Caldwell was a partner, or was liable to the appellants as a partner of this Baltimore firm of “James Duncan & Co.,” and I am therefore constrained to dissent from the opinion of the majority of the Court in reversing this judgment.