Huntington v. Henry Lyman & Co.
1 D. Chip. 438
Vt.
1824
Check Treatment
Skinner, Ch. J.

delivered the opinion of the Court. This action is founded upon a note of hand, executed in the name of Henry Lyman & Co, to Daniel Huntington the plaintiff. The firm of Henry Lyman & Co. consisted of Henry Lyman Of Shaftsbury, and Clarinda Boardman of Troy. The consideration of the note *446was a horse sold by Huntington. At the trial the counsel for the defendants, or rather for Mrs. Boardman, resisted a recovery on the ground that the partnership was for such mercantile purposes as usually appertain to a country store, and did not extend to the purchase and sale of horses ; and also, that the plaintiff at the time of taking the note, knew the debt was not the debt of the. partnership, but the purchase of the horse was by Cornelius Clarke, a third person, and for his benefit, or for that of himself and Lyman. To oppose the first part of the defence, the plaintiff relied on proving that the partnership had been extended, by the transactions of the partners, to the purchase and sale of horses upon credit, and thereby he was authorized to take the note. And from the case as allowed it would seem, that the attention of the Court was wholly drawn to the testimony upon this point, and that the other ground was overlooked in directing a verdict for the plaintiff. Whether the testimony was sufficient to justify the Court in directing a verdict upon the question of the extension of the partnership is not necessary now to examine. In deciding upon this application for a new trial, the attention of the Court has been directed to the inquiry, Is the plaintiff entitled to recover, if he knew at the time of taking the note, that the contract was not for the benefit of the partnership ? Was there evidence given to the Jury tending to prove this, and which they ought to have weighed ?

In the case of Arden v. Sharp and Gilson, although there was no proof direct, that the transaction was known to the plaintiff to be for the sole benefit of .Gilson, one of the partners, Lord Kenyon says, “ When the party, who brings the action, took the bill, with the indorsement of one partner only, (Gilson indorsed in the name of the firm) and was informed that the transaction was to be concealed from the other, he cannot sue the partnership 5 the transaction indicates that the money was for the partner’s own use, and was not raised on the partnership account.” The same Judge again says, in the case of Wells v. Masterman et al. — “ If a man, who has dealings with one partner only, draws a bill on the partnership, on account of those dealings, he is guilty of a fraud; and in his hands the acceptance made by the partner is void.” The doctrine here expressed is, a knowledge that the dealing is not for the firm, renders the security fraudulent and void. In the first case the circum*447stance of the partner’s having requested the transaction concealed, without other evidence, was considered sufficient to establish both facts, that is, that it was not for the firm, and knowledge thereof in the party. In the case of Sheriff v, Wilks et al. the same principie is fully recognized^ by the whole Court, and in many other cases. The case of Ridley v. Taylor, which is much relied on by the counsel for the plaintiff, cannot be considered as opposed to this principle. Lord Ellenborough, in delivering the judgment in that case, says, “ If this were distinctly the case of a pledging, by ope partner, of the partnership security, for his own separate debt, without the authority of the other, we should have no hesitation in pronouncing a bill, drawn under such circumstances, void, &c.”

The law we believe to be settled, that where the party seeking to charge the partnership is apprized that the transaction is not for or on account of the firm — that the credit is not for their benefit, and the act is not in the usual course of business, prima facie the firm is not holden. The onusprobandi then fall's upon the plaintiff. He must show the authority or approbation of the party attempted to be charged. 1 Sal. 126, 1 East. 49. 4 John. R. 251. 2 Esp. 525, 731. 8 Vez. 544. Liv. D. 342. The remaining inquiry is, was there testimony given to the Jury tending to prove Huntington’s knowledge ? And of this no doubt can be raised. If the testimony of Barlow is to be credited, and, of its credibility the Jury ought to have been permitted to decide, not only knowledge, but covin is fairly inferable from the whole transaction. The horse, he says, was purchased for Clarke, and to mate one that he owned, and this understood by Huntington at that time. The note of Clarke indorsed by Lyman, or of Clarke and Lyman jointly, was executed. Huntington wished a new note drawn and signed by Lyman in the name of the firm, which was done, and the first note destroyed. If the credit of Clarke, or Claike and Lyman were good, it would have been relied upon; but if not, and the credit of Mrs. Board-man was demanded, there ought to have been evidsnce of her consent, express or implied. But, so far from this, the evidence not only shows that Huntington knew it was not a partnership concern, but on the contrary, from the execution of the first note by Clarke and Lyman, it was fairly to be inferred that neither the usual course of business, nor any assent of Mrs, Boardman, would warrant the *448attempt to charge her. From the facts the Jury might very naturally conclude, that Huntington was persuaded* that if Mrs. Board-man was charged, it must be effected without her knowledge or consent,-She resided at a distance from the store where the business of the partnership was transacted, and her capital constituted the means employed.

It is not necessary, to secure a person giving credit to a partnership, that he should know or believe that each individual of the firm would approve the transaction; but it is necessary that lie should not know that the debt attempted to be secured was not the debt of the partnership, or the property sold was- not to inure to their benefit, in the absence of all proof of the assent or approbation of the party attempted to be charged.

The verdict therefore must be set aside and a new trial granted-