41 Pa. 306 | Pa. | 1862
Lead Opinion
The opinion of the court was delivered,
That John R. and Charles B. Donnally were partners in mercantile business, and that gold dust of Ryan, to an amount exceeding $800, sent from California to his sister, who was the wife of Charles B. Donnally, for safe keeping, went into the'partner ship of the two Donnallys, and was used by them in the purchase of goods, are among the unquestioned facts of the case; but whether the gold dust was put in as capital by Charles, or was taken and used by the firm on their joint credit, was the contested question of fact. This question was fairly submitted to the jury, and they found that it was not advanced by Charles as capital, but was used by the firm as joint borrowers from Ryan. The consequence was a verdict against John, as the surviving partner of the firm.
The only question that can arise upon such a record for the consideration of a court of error, is whether there was evidence to justify the court in submitting that question of fact to the jury. Upon a careful examination of all the proofs that have been sent up, we are compelled to say, very reluctantly, that the evidence did not justify such a submission. Mrs. Sarah Donnally, widow of Charles and sister of Ryan, proves that John and Charles were in partnership, and that John bought goods with part of the gold dust; but she proves no fact that tends to
Now it is impossible to doubt, with this written evidence before us, that Ryan’s conclusion was not to embark his capital in trade on his own account, but to loan it to his brother-in-law Charles, to be used according to his discretion. There was no reference to John or to the firm, as his borrowers; it was manifestly a personal credit to Charles. In March 1853, John receipted to Charles for $750 in cash — the proceeds of the sale of Charles’s farm — and for a package of gold dust valued at $400, “ as stock for the purpose of forming a partnership of equal shares which is express evidence that half of the gold dust went in as Charles’s stock in trade. Mrs. Donnally says she gaye John an order for the first package, for which he gave no receipt. That this went in also as part of Charles’s capital was shown by the letters and the note above referred to, whilst, from beginning to end, there was nothing to show a pledge of the firm’s credit for the gold dust. John used it in buying goods, because he was the more experienced merchant. He encouraged Charles to embark it as capital, and he encouraged Ryan to permit Charles to put it in as capital; but where is the evidence that he ever assumed or indicated an intention to assume any responsibility in respect of it ? We confess we cannot find it. Counsel speak of a change of the terms of partnership between John and Charles, on the 24th of March 1853. We see no evidence on that point, except the receipt of John before referred to; and that is an express declaration that $400 of the gold dust was received from Charles “ as stock.” The note of August 1853 proves it all to have been loaned to Charles. Both the receipt and the note might have
Out of such a state of facts, would any liability result against John as surviving partner? Clearly not. The authorities are conclusive on the point. “ The attempt is,” said this court in Brook v. Evans, 5 Watts 200, “ to charge a partner with a debt, contracted not by himself, or on his credit, but by his fellow before the partnership was constituted, and this, because the subject-matter which was the consideration of the debt, had been carried into the partnership as stock. Without a subsequent assumption by the firm, this cannot be done.” Again, in Graeff v. Hitchman, Id. 454, “ if a partner borrow money and give his individual note for it, it does not become a partnership debt by reason of the application of the money to partnership purposes.” Once more, in Clay v. Cottrell, 6 Harris 413, the language in reference .to a similar transaction was: “ It was, in fact, an investment of so much capital by Caldwell, for which he was entitled to a credit on the firm-books, but it raised no obligation in morals or law on the part of Cottrell to reimburse the creditor who had loaned the capital to his partner.” See also Collyer on Partnership, § 516; Story on Partnership, § 148, and the cases therein cited.
The point stands as clear on reason as on authority; for where no credit is given to a firm, which, in law, is a distinct person from the members who compose it, why should redress be sought against the firm ? As well might a creditor who had loaned his money on the credit of an individual, attempt to pursue it into the business or property of third parties, and hold them responsible to himself. Neither money nor gold dust has any earmark that it can be so followed. The firm was responsible for this money to Charles — not to his loan-creditor. But the rights of the firm-creditors were paramount to Charles’s rights, and of course to those of his creditor. If, as a consequence of these familiar principles, the plaintiff below have lost his property, he must charge his misfortune to his misplaced confidence.
There is no ground for reversing in the bills of exception to evidence. Mrs. Donnally’s release made her competent, and there was nothing in Jones’s testimony to benefit the plaintiff or to injure the defendant, so that his evidence, if improperly admitted, was harmless.
It is scarcely a case for a venire, but as it is possible the plaintiff may find proofs to support his action, we will give him ano
The judgment is reversed, and a venire facias de novo is awarded.
Concurrence Opinion
Concurring opinion by
There was not sufficient evidence in the case to warrant the verdict of the jury, but the court were right in their view of the law. The principles involved in it are few and simple, and grow out of the partnership relation.
If a partner, who is a bailee of money intrusted to him for safe keeping, with the knowledge of the other member of the firm, applies this trust-money to the partnership business without the knowledge and consent of the bailor or cestui que trust, and contrary to instructions, the firm is liable for it, and it becomes a partnership debt. The case is only a little stronger if he was urged by his partner to commit this breach of trust.
Without entering into the question whether an express agreement to discharge a retired partner is not inoperative for want of consideration, as was ruled by the earlier English authorities, and which seems to be the law of New York, it is sufficient for the present to state the law as laid down at present in England, which is the most favourable for the plaintiff in error. The English cases are generally those of retiring partners where a creditor takes the security of the new firm. In such a case the Master of the Rolls, in Harris v. Farwell, 15 Beavan 31, says: “ The law is this — when a creditor of a firm contracts or agrees with a new firm to take their security in discharge of that of the old, the retiring partner is discharged from any liability to pay the debt: but whether such a contract or agreement has or has not taken place is a question of fact to be submitted to a jury.” “ I think Lord Cottenham clearly states the law in Winter v. Innes, 4 Mylne & C. 108, 109, and I think that all these cases will be found to resolve themselves into this: not only whether it is the fact that the creditor has accepted the separate security of the continuing partners-, but whether he has also done so in discharge of the joint debt.” And the same is the principle of the decision in Lyth v. Ault, 11 Eng. L. & Eq. 580, by the Court of Exchequer.
And Mr. Bindley in his late work on Partnership, vol. 1, p. 257, says: “ It is not unusual to represent Lodge v. Dicas and David v. Ellice as altogether overruled by Thompson v. Percival and other cases. This, however, is going too far. The three
The present case is stronger, for it is that of a simple dissolution of partnership, and the taking of the note of one of the partners by the plaintiff without any proof of any contract whatever to discharge the present defendant. The first two points of the defendant were answered in the affirmative, and the third was properly negatived, as it asked the court to say the simple taking of the note from Charles is a release of the partnership, which 'we have seen is not the law.
The charge of the court, and their answers to the plaintiff’s points, are in strict conformity to the law as we have stated it, and we can discern no error in the manner in which the case was submitted to the jury..
The widow was a competent witness: Cornell v. Vanartsdalen, 4 Barr 364. Under the offer the evidence of John Jones was properly admitted, and we do not see that it was liable to objection as the evidence turned out, but, if it was, the counsel of the defendant should have requested the court to strike it out. We cannot see, however, that the defendant has suffered by its admission.
Dissenting Opinion
I dissent from the conclusion in the above opinion, that there was not sufficient evidence to be submitted to the jury on the point of liability of the firm. I think there was.
