Deford & Co. v. Reynolds

| Pa. | Jul 1, 1860

The opinion of the court was delivered by

Strong, J.

Sometime in the year 1851, Reynolds, the defendant belowr, entered into partnership with Robert McCulloh, since deceased, under the firm name of R. McCulloh & Co. In the same year, the new firm opened an account with the plaintiffs below, who were leather merchants, doing business in the city of Baltimore, and became indebted to them in a considerable sum. On the 7th of April 1853, the firm of R. McCulloh & Co. was dissolved by the mutual consent of the partners, and notice of the dissolution was published in the newspapers of Chambevsburg,' where the firm had principally transacted its business. There is, however, no direct evidence that actual notice of the dissolution was given to the Messrs. Deford, with whom the firm had been dealing. Robert McCulloh continued the business after the retirement of Mr. Reynolds, made payments to the plaintiffs, and purchased from them hides, oil, &c., until December 31st 1853. He died in April 1854, and this is a suit against Mr. Reynolds as surviving partner to recover the balance due to the plaintiffs on the 31st of December 1853.

The first contested question is, whether Reynolds is liable for any portion of the debt contracted after April 7th 1853, when the firm of R. McCulloh & Co. was dissolved ? The solution of this depends upon the answers to be given to two other inquiries: first, whether, in this case, the law required notice to' be given to the Messrs. Deford, in order to secure the retiring partner against liability for debts contracted after his retirement; and secondly, whether, if such notice was necessary, it was in fact given, or, what is equivalent, whether the creditors had knowledge of the dissolution before the debt was contracted. It is to the first of these minor questions that the earlier part of the argument of the plaintiff in error is addressed, and to this was directed the first point propounded by him to the court below. That point was that, if the jury believed from the evidence that the defendant was not known to the plaintiffs as a member of the firm of R. McCulloh & Co., he might withdraw at any time, without being required to give notice of the dissolution of the partnership, and is only chargeable for debts contracted during the time he was a partner. To this the court replied, that if the jury believed the defendant was an open partner in the firm of R. McCulloh & Co., and that the plaintiffs sold the goods, and furnished the stock on the credit of the company, then the liability of the defendant did not cease with the dissolution, although the plaintiffs may not have known who were the members of the firm.

The rule doubtless is, that an unknown dormant partner may retire from the firm without giving notice of his retirement, and thenceforth be no longer liable for debts which the firm may incur. Having ceased to be a partner in fact, he is not a party to the contract which creates the debt; and, being unknown, he has not encouraged the creditor to rely upon his responsibility. But was Reynolds a dormant partner? And could the court, as matter of law, instruct the jury that he was, if they believed he was not known by the plaintiffs to be a partner ? Does the mere fact that one selling goods to a firm is unacquainted with the names of all the persons who compose it, establish that those are dormant partners as to him whose names are unknown ? It is perhaps not easy to define what constitutes a dormant partner in all cases. The word is sometimes used in opposition to active, and, at other times', as contradistinguished from ostensible or known. This case does not require us to attempt a precise definition. McCulloh and Reynolds were in partnership, it is admitted, until April 7th 1853. They were the only partners. They transacted business under a firm name that represented to those dealing with them that some other than R. McCulloh was responsible. The vendor of goods, of course, gave credit, not to McCulloh alone, but to him and whatever other persons were embraced within the company. He may not have known the name of the person included under the description “ & Co.,” and yet have known that the partner not named was the most responsible. Indeed, he might have been the active partner, and yet unknown by name to the creditor. Now suppose that the Messrs. Deford had known that there was a partner of Robert McCulloh, an open partner, known as such to the community at Chambersburg. Suppose they had known that he was the active agent in transacting most of the business of the firm, and that he alone was a man of property, but had not been made acquainted with the fact that this partner was Hugh W. Reynolds, can it be said that in selling to the firm, they trusted McCulloh alone, and gave no credit to Reynolds ? If not, then the reason given why a dormant partner is not liable after his retirement without notice, is not applicable to this case. Then credit was given to Reynolds under the name “ & Co.,” and the same reason exists for his continued liability as there is for the liability of any partner who has retired without notice.

In Mitchell v. Dale, 2 Harr. & Gill 172, it was said by Martin, J., that every partner is dormant, unless his name appear in the firm, “ or is embraced under general terms, as the name of one of the firm and company.” Without assenting to this as universally true, it may be said, that its obvious implication is, that if one is embraced in the general description, the name of one partner and company, his is not a case of dormant or secret partnership. Collyer, in his treatise, sect. 4, defines a dormant partner to be one “whose name and transactions as a partner are professedly concealed from the world.” The only object which such an one can have in remaining dormant or secret, is, that credit'* may be given to the ostensible partners alone, and not to him. With such a purpose or object, doing business under the name of one partner and company, is inconsistent. It can be nothing less than an invitation to the public to give credit to more than the single partner named. Entertaining such views, we are of opinion that there was no error in the answer of the court below to the defendant’s first point. Whether he was a dormant partner or not, was a question for the jury, and, trading as he .did under the firm name of R. McOulloh & Co., the solitary fact that he was not known by the plaintiffs to be the company, was not sufficient to enable the court to say that his liability ceased at the dissolution of the firm, without notice to those who had dealt with it, Tf he was an open partner, and the credit was .given to the company, he was still bound.

The next question in the case is, whether the Messrs. Deford had notice in fact, of the dissolution of the firm, before the debts incurred between April 7 th 1853 and December 31st 1853 were contracted. This, of course, was for the jury. We are strongly impressed with the belief that their finding has done injustice to the defendant, and were it in our power to interfere for that reason, we would gladly do so. But it is not. The remedy for mistakes of the jury is exclusively in the court below. We can do no more than inquire whether the question was properly presented to them. There was evidence on the trial that, after the actual dissolution of the firm, in April 1853, most of the charges in the plaintiffs’ books were made against R. McOulloh, that the drafts upon them were signed R. McOulloh, and that bills of leather were receipted as coming from him alone. ,In view of this evidence, the defendant asked the court to charge the jury that, “ if they believed from the evidence that there was an actual dissolution of the -partnership of R. McOulloh & Co., and that after this time Robert McOulloh purchased hides of the plaintiffs, and drew drafts upon them, and received bills of the sales of leather, and all in the name .of Robert McOulloh, they ought to infer from such facts and circumstances notice of the dissolution of the partnership of R. McOulloh & Co.” This was asking for binding instructions. That these facts were very cogent evidence of notice of the dissolution cannot be denied, and we think it should have outweighed, in the minds of the jury, the other evidence in the cause that the Messrs. Deford had no notice. There was, however, some such other evidence, and the jury alone could determine its weight. It was proved, that some charges were made to the company of R. McOulloh & Co., and that the credits were given to the firm until December 31st 1853. The book-keeper of the plaintiffs also testified that they had no notice until that time, that he certainly would have known it if they had. The testimofiy of the clerk was, indeed, of little moment, for he could only speak of his want of knowledge that his employers had notice, but it was for the jury to pass upon all the evidence. It was not for the defendant to select a part and ask the court to instruct the jury that such part proved notice. The court sub ■ mitted all to the jury, not, it is true, with the instruction that they “ ought” to infer notice, but that they might. We think they could not have given the binding direction which the defendant requested.

The third assignment of error must fail, for the reason that the point propounded assumed that of which there was no evidence in the cause.

The fourth assignment relates to the answers given to the fourth, fifth, sixth, and seventh points proposed by the defendant. They were all substantially answered in the affirmative. It is impossible that the defendant was harmed by anything that was said by the court to the jury respecting the application of payments. Under the instruction given, there could have been no verdict -for the plaintiffs, unless the jury had found that Keynolds was not a dormant or secret partner, and that the plaintiffs had no knowledge of the dissolution until December 31st 1853. In other words, they must have found that, as between the plaintiffs and defendant, the partnership continued until that time. This remark is applicable also to the fifth assignment. And even if the two points filed in the other suit were not in substance affirmed, an answer to them was rendered unnecessary by the agreement between the parties.

Upon the whole, we have failed to discover any error in this record. We are therefore constrained, though reluctantly, to affirm the judgment.

The judgment is affirmed.