Livingston v. Roosevelt

4 Johns. 251 | N.Y. Sup. Ct. | 1809

Van Ness, J.

Whether the plaintiff knew that the debt for which he received the partnership security, was the private debt of Cornelius I. Roosevelt, is a question of fact, and we are called upon to decide whether, if that question had been submitted to the jury, they ought not to have found for the defendant. The partnership was special, being limited to the sugar refining business in the city of New-York, where all the parties resided. At the time the partnership was formed, notice was given for two weeks, successively, of the nature and extent of it, in two daily-papers, published here, both of which the plaintiff took during that period. The house where the business was to be transacted was designated in the notice, and “ Sugar-House,” in large letters, was painted upon it. The defendant, Cornelius C. Roosevelt, at no time consented, or was privy to any extension of the connection, beyond the particular object for which it was originally formed. The article sold, and which was the consideration of the note in question, had no relation to the business of sugar refining, and it would, therefore, never have occurred to any one, that Cornelius I. Roosevelt purchased it on the partnership account, unless he had expressly declared that to be his intention. There was nothing, either in the acts or declarations of Cornelius I. Roosevelt, from which the plaintiff’s agent could infer, that, he bought the brandy for the use of the company. The contract was made with Cornelius I. Roosevelt, without the knowledge or consent of his co-partner. He gave his note at his own house (and not at the counting-house of the company) for the payment of it, with the indorsement of the firm, as collateral security; and the note, in this form, was received by the plaintiff) without objection. The manner in which the note was drawn is inconsistent with the idea of a sale to the firm. It is not hazarding any thing when I say that, where a sale has been made to partners, it would be a perfect novelty among merchants to receive the note of one of them indorsed by the firm. There could be no possible use in it. No additional security was derived from its being given in that form. After the contract for the sale, but before the delivery of the note, the plaintiff himself (and this is the only instance of his personal agency in the whole transaction) made oath at the custom-house, that the sale was made to Cornelius I. Roosevelt; thus giving the highest, most solemn, and satisfactory evidence of his understanding of the sale, at the time when it was made, and which is in exact coincidence with all the documentary and other evidence in the cause, even with that of Mr. Bogert, which I shall presently notice. Upon this evidence, I am persuaded, the jury would have found, that the sale was made to Cornelius I. Roosevelt, in his individual capacity; that this was known to the plaintiff; and, consequently, that, originally, he only was liable for the payment of it. This court has often decided, that one partner cannot pledge the partnership security for what is proved to be the separate debt of such partner, without the consent or privity of the other partners. (Livingston v. Hastie & Patrick, 2 Caines, 246. Lansing v. Gaine & Ten Eyck. 2 Johns. Rep. 300.) In the case of Dubois v. Roosevelt, decided in May term. 1808, and which is not reported,^(a) the facts were almost precisely similar to those I have above stated. The court, in that case, were unanimously of opinion, that the plaintiff could not recover, without overruling the principles laid down in Livingston v. Hastie & Patrick, and Lansing v. Gaine & Ten Eyck. The only difference between these two cases and the present, is that which may be supposed to arise out of the evidence, that the defendants were considered to be general partners at two of the banks, and by-several merchants in this city, who were witnesses on the trial, and the testimony of John G. Bogert, the plaintiff’s agent. As to the first, if mere reputation is sufficient to enable one of several special partners, to charge another in a case circumstanced as this is, then there is an end, as to third persons, of all limited partnerships. In point of fact, here was not a general partnership. Of this notice was given in a manner best calculated to apprise the community of it. What other precautionary measure could the defendant have taken ? After this notice, not a single act at any time appears to have been done by Cornelius C. Roosevelt, from which a well founded reputation of a general partnership could have originated. Besides, this reputation, at most, is but presumptive evidence of a general partnership, and the force of this is completely destroyed by direct and positive proof, that the partnership was limited to a particular object. Next, as to the testimony of Bogert, which was much relied upon.

On a critical examination of his evidence, it will, I think, be found to operate against the plaintiff. He says, in the first instance, that he understood the sale of the brandy to be “ to and for the partnership but he adds-immediately afterwards, “ that nothing was said on whose account the purchase was made but “ that the partnership security was to be given for it.” He goes on to state, “ that the sale was not completed until he had satisfied himself, by inquiries, that the defendants were partners.” Now the fact stated by Bogert, that the partnership engagement was to be given, is the only one from which it can be inferred, (for he no where says so in express terms) that he even supposed the sale was made to the company ; and when we see how that was in fact given and received, without objection, and take into view the other facts in the case, the fair conclusion is, that he, considered the contract as made with Cornelius I. Roosevelt, "individually, and that all he was solicitous about, was to obtain the partnership security for the payment of it. If Bogert really conceived this to be a sale to the firm, is it not very singular that he never came to an explanation to that effect with Cornelius I. Roosevelt P Yet it does not appear, that during the whole negotiation, a syllable was uttered as to whom, or on whose account it was made; and this is the more surprising, when it appears that he made inquiries to satisfy the doubts and suspicions which he entertained of the existence of a partnership at all. Why, when making these inquiries, did he not apply to Cornelius C. Roosevelt, whose security he wished to obtain, and who was the only one able to give him correct information l I confess that I am not satisfied with this testimony ; and, after a careful review of all the circumstances, I cannot perceive how the jury could avoid saying that the plaintiff made the Sale to Cornelius I. Roosevelt, in his private capacity; and that the debt, for which the indorsement of the firm was taken, was his private debt, contracted without the concurrence of Cornelius C. Roosevelt, expressed or implied : and if they had so found, it is conceded, that the partnership security, as against Cornelius C. Roosevelt in judgment of law, is fraudulent and void.

But there is another equally fatal objection against the plaintiff’s right to recover.

The distinction between general and special partnerships, is probably coeval with their existence. A general rule applicable to both is, that in transactions relating to the joint concern, one of several partners may bind the rest. He may sign notes, indorse or accept bills for the common benefit, &c. without applying to the rest in every particular case. But this authority of a single partner has its limitation. Formerly, as appears by the case of Parkney v. Hall, (1 Salk. 126. and S. C. 1 Ld. Raym. 175.) it was probably less extensive than at this" day. One partner of the concern has no authority to pledge the partnership goods, for his own debt, nor can he bind the firm to any engagements known at the time to be unconnected with, and foreign to, the partnership. This has not only been so settled by this court, but now is, and always has been the established law in England. Not an adjudged case, nor, I believe, a single dictum, can be found the other way. This will appear from most of the cases which I shall presently have occasion to mention for another purpose. In special partnerships, however, this power of the individuals composing them, is restricted to still narrower limits, and can only be legally exercised within the compass of that particular business to which the partnership relates. It is as circumscribed as the partnership itself. It is, therefore, analogous to that which is conferred on an agent appointed for a special purpose, who, if he exceed his authority, cannot bind his principal. (Fenn and another v. Harrison and others. 3 Term Rep. 757.) This analogy is complete, in, all cases, where third persons have dealings with a special partner, with notice that he is such. And, accordingly, it has been repeatedly ruled that, whenever such a partner pledges the partnership funds, or credit, in a transaction which is known to be unconnected with, and not fairly and reasonably within, the compass of the partnership, it is, as to the other partners, fraudulent and void. ' They, however, to entitle themselves to the protection of this rule of law, must not do, or consent to, or suffer any thing to be done, which may hold them out to the world as general partners; and it would always be prudent and proper (though I will not say it is indispensably necessary) to give public notice to the community, that the partnership is special, and of the particular species of traffic or business to which it is confined. (Cowp. 814. Willet v. Chambers. 1 Esp. N. P. Rep. 29. De Berkom v. Smith and another. 2 Esp. N. P. Rep. 524. Arden v. Sharpe and another. 1 East, 48. Shirreff and another v. Wilks.) In the case, ex parte Bonbonus, (8 Ves. 5401.) Lord Eldon expresses himself thus : “ I agree it is settled, that if a man gives a partnership engagement in the partnership name, with regard to a transaction, not in its nature a partnership transaction, he who seeks the benefit of that engagement must be able to ... . . say, that though in its nature not a particular transaction, yet there was some authority beyond the mere circumstance of partnership, to enter into that contract so as to bind the partnership ; and then it depends upon the degree of evidence.” Nothing has been done, in the present case, to impair the claim to the benefit of this rule. The business, as far as it relates to Cornelius C. Roosevelt, has been carried on, for aught that it appears to the contrary, conformably to the terms upon which the partnership was formed» He has done no act to countenance a belief, that these terms were different from those specified in the notice. He was a stranger to the purchase of the brandy 5 he had no agency nor interest in the shipment of it afterwards ; it was manifestly an article unconnected with the objects of the partnership ; nor was there any thing in the nature of the transaction, or the manner of conducting it, to justify a belief of the contrary. It has indeed been urged, that it might have been purchased for the purpose of exportation to the ‘ West-Indies, and of bringing back from thence a cargo of raw sugar, to be refined in New-Yorh, on the partnership account. But the suggestion is not supported by the evidence. The whole transaction wears a different aspect. Suppose this had turned out to be a lucrative speculation. Certainly Cornelius C. Roosevelt would have had no claim to a participation in the profits. Therefore, there is no justice in imposing upon him the whole of the loss. Had it been submitted to the jury to decide whether the purchase of this brandy was connected with the business of the partnership, I think they would have decided in the negative.

There is no collision between what I have said, and the cases ex parte Bonbonus, (8 Ves. 540.) and Swan v. Steele, (7 East, 210. As I understand these cases, they were decided upon the very principles which I have attempted to establish. To borrow money, and to negotiate bills and notes, are as incidental to, andáis usual and necessary in, a special, as a general partnership. Business of this sort falls equally within the scope of the one as the other; and, in the absence of all fraud, the authority of the individual partners to bind the company is the same in both. This is one of the risks common to ail kinds of partnerships ; and it would be repugnant to commercial policy and convenience, to make any distinction, in this respect, between them. The reason why this would be the tendency of such a distinction, is obvious. In all money concerns, and negotiations in commercial paper, there is nothing-upon the face of them foreign from a limited partnership ; nothing to awaken suspicion or excite inquiry ; and if one partner, in the course , of business, abuse the special trust in him, innocent third persons might suffer.

My opinion is, that there ought to be a new trial, with costs, to abide the event of the suit.

Thompson, J. and Yates, J. were of the same opinion.

Spencer, J.

It cannot, I think, be pretended, that in point of fact, the plaintiff knew, when the brandy was sold, that it was on the private account of Cornelius I. Roosevelt. Mr. Bogert is explicit in his testimony, that the sale was on the credit of the partnership; that he knew of no limitation of the partnership, but, after inquiry, believed it to be general.

1 he circumstances which are supposed sufficient to render the plaintiff chargeable with notice of the limitation of the partnership, appear to me to be susceptible of easy explanation. From the evidence, in relation to the publication in the gazette, considering the lapse of time from the insertion of the notice, and the fact that the plaintiff was not engaged in commerce, with the further fact, that merchants who took both the papers, were ignorant that the partnership was special, and had not attended to the notice, my mind is decisively impressed, that the plaintiff cannot be supposed ever to have retained it in his-recollection. The Mil of parcels and form of the note, which were the acts of Cross, ought, on no principle, to excite suspicion, for Cross was not the agent of the plaintiff, and, as he has testified, proceeded without any instructions from the plaintiff or Mr. Bogert, in making out the bill and in taking the note. The affidavit at the custom-house was made after the sale by Bogert; it is, therefore, impossible that he should have given information to the plaintiff, that the sale was to Cornelius I. Roosevelt, contrary to the fact to which he testifies, that the sale was to the firm and on its credit. The affidavit was substantially true, and ought to be construed in reference to the object to be affected by it.

As it regarded the United States, it was perfectly immaterial whether the affidavit stated a sale to one or all the vendees; the object was to identify the goods, and obtain a debenture. I cannot but consider, for the reasons which I have given, that it would be contrary to the facts in the case, to suppose the plaintiff knew that there was a special limited partnership when the brandy was sold, and, with this knowledge, is making an attempt to charge one of the firm for articles sold to the other ; it would be neither more nor less than presuming a fraud, without a fact to support it.

The case ought to be tested by other principles, and if on those principles the defendant, Cornelius C. Roosevelt, is not responsible, then the plaintiff must submit to his loss.

I recognise the authority of the cases of Livingston v. Hastie & Patrick, and Lansing v. Gaine & Ten Eyck, and fully assent to the law, that where a person takes a partnership security from one of a firm, knowing it to be for his private concerns, and disconnected with the objects off; the partnership, the other partner is not chargeable, and ho is not responsible, in consequence of the collusion and fraud. I hold it to be equally xvell settled, that if a person, in the course of trade, bona jide takes a bill, uninformed that it xvas given without the knowledge of the other partner, and not in relation to the partnership concerns, whether the partnership be a limited one or general, the whole firm will be bound. The cases of Swan and others v. Steele and others,^* and ex parte Bonbonus,^† though not authoritative here, justify the position I have made. These cases decide, that a bona fide holder of a bill, for a sufficient consideration, and without notice that it was given by one partner for an individual debt not relating to the partnership, might recover against all the partners, though the bill was in fact given by one of them for a debt not relating to the partnership. But whatever might have been the objects of the defendant’s partnership, in its inception, it appears to me, that the evidence in the case shows, conclusively, that by their own acts, the reputation that it had become general was well warranted.

The defendants, from the commencement of the partnership, kept accounts at two of the banks in the, city, and had there been considered as general partners ; the entry of the partnership firm was in the hand-writing of C. I. Roosevelt, in the name of the firm; credit was given to the partnership on the responsibility of C. C. Roosevelt, and nothing was known, at either of the banks, of a limitation of the partnership business, until after its dissolution!. In addition to this, the presidents and cashiers of the two banks, several merchants of extensive business, and brokers, testified, that they knew of the partnership, but never heard of any limitation, until after the dissolution. It cannot be denied, that a special partnership may become general, from the acts of the parties in the conducting of their business, as well as from their specific arrangements. It is impossible to believe, that C. C. Roosevelt did not know of the mode adopted in carrying on business with the banks, and that he was there regarded as a general partner; and if he did, then it seems to me to follow, that he aided and assented to his being consied a general partner, it is probable that the reputation of a general partnership proved so fully, and not attempted to be contradicted, had its origin in the mode the defendants adopted, in carrying on their business at the banks ; and certainly the authority devolved on C. I. Roosevelt to negotiate paper at the banks, warranted the reputation, and renders both the defendants liable. The case seems to consider the plaintiff as the principal, and Bogert as the agent, in the sale of the brandy, but 1 cannot see on what facts this is founded. The legal property of the brandy was in Bogert, and the plaintiff was merely a creditor beneficially interested in the proceeds, without any authority to control or direct the disposition of the property. But it is not necessary to scrutinize or enlarge on this part of the case, as it will not change my opinion, be the fact either way.

One of two innocent men must suffer j I cannot hesitate in saying, that the person who has been so incautious in adopting a partner, deficient in prudence or funds, who has given to that partner the management of the concerns, who has stood by, and permitted him to raise money unlimitedly on his credit, by pledging the name of the firm, and who has thus given his aid to the reputation which certainly existed, and on which the credit in this case was given, must be responsible.

Kent, Ch. J.

The plaintiff cannot succeed in this case, if the facts warrant the conclusion, that he took a partnership security for a debt which he actually knew, at the time, was the private debt of the particular partner. Nor can he succeed, if this actual knowledge be not made out, provided the subject matter of the contract, and the nature and circumstances of the copartnership, were sufficient to charge ' him with constructive or legal notice of the fact. Believing these propositions to be correct, I shall examine the case to see if, according to them, the plaintiff can be permitted to retain the verdict.

1. The law is well settled, that if a person takes a partnership security from one of the partners, for what is known, at the time, to be the particular debt of the partner who gives such security, the copartnership is not holden. The cases in this court of Livingston v. Hastie & Patrick, and of Lansing v. Gaine & Ten Eyck, (2 Caines, 246. 2 Johns. Rep. 300.) were decided upon this ground ; and the cases in the English courts of Arden v. Sharpe & Nelson, Shirreff v. Wilks, and the case ex parte Bonbonus in Chancery, (2 Esp. Rep. 524. 1 East, 40. 8 Vesey, jun. 540.) all recognise the same principle. The knowledge in the creditor, that the partnership name is given for the individual debt of one partner, renders the transaction fraudulent and void in respect to the copartnership. In the present case, the jury were told, that by law the plaintiff was entitled to recover. According to my view of the case, it ought to have been observed to the jury, that the weight of evidence was in support of the allegation, that the . plaintiff understood, at the time, that he was contracting a debt with Cornelius I. Roosevelt, in his individual capacity, and that, therefore, the plaintiff was not entitled to recover. Let us cast an eye over the material facts.

The note in question was given for 20 pipes of brandy, sold to C. I. Roosevelt, and there is no evidence in the case, drat Cornelius C. Roosevelt & Co. ever dealt in the article of brandy, or carried on any business in the grocery line, or were concerned generally in trade. There was no evidence that the firm ever held themselves out to the world, as being engaged in any other concern than the sugar-refining business, nor that they ever did in fact step beyond that limited concern. The plaintiff was then unauthorised to conclude, that this purchase was upon a partnership account. Prima facie, it certainly was not, and.it lay with him to show what colour he had for a contrary inference, and if he has shown none that is reasonable, he is not well founded in his attempt to charge this debt upon the firm.

The intrinsic circumstances of the transaction are sufficient to show, that the plaintiff knowingly dealt with C. I. Roosevelt, in his private capacity, and there can be no doubt but that, as a matter of fact, the purchase of the brandies was on the separate account of C. I. R. and that the partnership was not interested in the purchase. The brandy was not only purchased by C. I. Roosevelt, but shipped by him. for the West-Indies, on board a vessel owned by him. individually, and with other goods purchased and shipped by him on his private account. He drew this note, in his own name, for the purchase-money, in favour of the company, and then indorsed the name of the firm, and delivered the note, so indorsed, to the plaintiff. What can be plainer than the language of this fact, that the note was drawn, and received for a private debt, and that the firm was only given as a security ? Was it ever known before, that one partner contracting a debt, in behalf of the copartnership, took this circuitous mode to give the note of his house ? There could be no possible use in it, and merchants are not accustomed to take such indirect methods in doing business, without a motive. If it was under-stood to be the proper debt of the company, why was the individual partner bound directly and absolutely for the money, and the company only contingently, in the character of indorsers ? Why did the plaintiff, when he sold to a company, take upon himself the bur-then of making the first demand, at the precise time of payment, upon the individual partner, and of then using due diligence in giving notice so as to fix the indorsers ? And, lastly, why did the partner himself assume the responsibility of being first singly answerable for the debt, and of being obliged to pay it, or to lose his credit before the company were resorted to ? These questions cannot be answered, as it strikes me, but upon the supposition, that the seller, as well as the purchaser, understood that the sale was on a private, and not on a partnership account. The agent of the plaintiff sufficiently explains, why the note was taken in this shape, when he says that “ the partnership engagement was tobe given for the brandies.”

There are other facts which go to prove that the brandies were understood to be sold to C. I. Roosevelt, and not to the company. The note was called for and given at the dwelling-house of C. I. Roosevelt, not at the counting-house of the firm; the bill of parcels was made üut in the name of C. I. Roosevelt only ; the brandy was entered at the custom-house in his name, and the plaintiff made oath there, that the sale was to C. I. Roosevelt. This last fact ought to have great weight in forming our conclusions upon the transaction. The affidavit was made before the note was given, and when the intention of the parties must have been well'understood and recollected. It was a solemn act, in which we must suppose, that the fact of the sale, and to whom, was stated with caution and precision. It was made by a person who was perfectly competent to scrutinize and feel the force and import of expression, and who must have distinguished quickly and accurately between a sale to an individual, and a sale to a mercantile company. The affidavit is conclusive, that the plaintiff did not then understand there was any other purchaser, than the single individual, and he must have obtained his knowledge of the sale, either from his own view of the act, or from the information of his agent. It appears then to me to be a consequence not to be resisted, that the note was drawn in the shape which we see it, in order to obtain the security of the firm to a debt, which both the contracting parties knew to be the proper debt of the single partner.

The written testimony, from which this conclusion is drawn, weighs much more in the scale of evidence, than the parol testimony (even if opposed to it) of the agents of the plaintiff, given two years and a half after the transaction took place. John Cross says, that the bill of parcels was made out as C. L Roosevelt directed, and that he received no directions from the plaintiff, “ nor does he recollect” receiving any from John G. Bogert, his agent, to make out the bill; that Bogert directed him to call for the note, “ but gave him no directions relative to the form of it," and when it was delivered, neither Bogert, nor the plaintiffs, made any objection to the form of it. This negative testimony then proves nothing. Bogert was the principal agent of the plaintiff in the transaction, and he says that he understood the purchase was on a partnership account, although he declares that “ nothing was said relative to whose account the purchase was made." It was then a latent inference which he had no authority to draw; and it is a little remarkable. that if it was understood from the beginning to be a partnership purchase, that the agent should say, “ that the sale was not completed until he had satisfied himself by inquiries, that the defendants were partners, and that the partnership engagement was to be given for the brandiesThe construction, which i give to this parol testimony, goes in confirmation of the written proof; and even if any part of it should be deemed repugnant, it cannot be compared to the .former, either in judgment of law, or in its power to produce conviction.

There is one circumstance in the case not well explained. It states, that the sale of the brandies was made by Bogert, as agent of the plaintiff. This fact appears to be conceded throughout the case, and Bogert himself testifies, that he acted as the plaintiff’s agent; and yet it is further stated, that the brandies were in the hands of Bogert, as administrator of one Anthony Carroll, deceased, by whom the brandies were imported, and that they were sold in part satisfaction of a debt due from that estate to the plaintiff. It is possible, that Carroll, and the plaintiff, had been concerned together as partners in importing the brandies, or that Carroll acted nominally as owner, and really as agent of the plaintiff on whose capital the business was conducted, for the affidavit of the plaintiff at the custom-house (and which was made to obtain the usual debenture) must have been in the character of purchaser from Carroll. But without being able to solve this fact, it is sufficient to observe, that upon this case, the court must consider the plaintiff as the real vendor of the brandies, whatever may have been the form which the title had previously assumed. He was considered by all parties, both at the trial, and upon the argument, as the vendor, and he took the note, as principal, for a debt due to him from Roosevelt. The question of notice, therefore, applies to him as an original party to the sale, and though he may have chiefly effected the sale, and took the-note, by means of Bogert, his agent, yet in ail such cases nptise to the agent is notice to the principal.

I am, therefore, of opinion, upon the first point, that the verdict is against evidence. The inevitable inference from the testimony appears to me to be, that the plaintiff or his agent, actually knew, that the purchase was not a partnership concern, and that they required a partnership indorsement, by way of security. Instead of a pointed direction in favour of the plaintiff, the justness of this inference ought to have been submitted to the jury.

2. But if the plaintiff did not in fact know that the purchase was made by C. I. Roosevelt upon his own account, and acted under the mistaken impression, that it was a partnership purchase, still the firm were not bound by the indorsement, because the facts disclosed amounted to constructive notice, or notice in law. The partnership between the defendants was confined to the sugar-refining business. It had nothing to do with the purchase or sale of brandies. The partners had given timely and due notice in the public gazettes, of their limited engagement, and had designated the place where their business was to be carried on. Every precaution was taken, which the nature of the case admitted, to guard the public against misapprehension. If persons were, afterwards, under a mistake as to the confined nature of the partnership, it must have been owing to some dealings of the copartnership, inconsistent with its declared object, or to gross negligence in those persons, in not seeking information at the proper sources. The understanding of particular merchants, that the defendants were general partners, was of no avail, without showing that the house had done some act to mislead, or given some reasonable cause for that impression. But there is no evidence before us, according to my view of the case, that the partnership ever misled the public, by a single act, or transacted any business which had not an immediate connection with its limited concern.

The habit of keeping partnership accounts with the banks, I do not consider as forming an exception to this Conduct. That habit was perfectly consistent with their particular and avowed business, and it was, besides, a private matter, not in the way of dealing, and which the public were not to know. The checks and other proper negotiations with the banks, were generally, if not entirely drawn and conducted by C. I. Roosevelt, and it does not appear that his partner ever knew of or rectified a single transaction with the banks. What those transactions were ought to have been explained, and not left, as they are now, by the case, in total uncertainty. Each partner had a power to draw checks, in the partnership name, for the partnership monies in the bank, because it is incident to every partnership, that each partner should have a power to possess and dispose of the partnership monies and stock. Each partner, in limited, as well as in general partnerships, can draw checks and give notes, but it does not follow from thence, that paper given by a partner, on his private account, would bind the firm, because here the authority of the partner fails ; there must, then, be something in the nature of the debt, or in the nature or conduct of the copartnership, to make the other partner responsible. ' There are cases which go the length of this general proposition, that one partner cannot pledge the partnership funds, nor make a valid partnership engagement for his individual debt, (Pinkney v. Hall, 1 Salk. 126. and 1 Ld. Raym. 175. The cases of Gregson v. Hunton, and Marsh v. Vansemmer, cited in 1 East, 49. The opinion of Le Blanc, J. in 1 East, 55. and of Lord Eldon, jun. in 6 Ves. jun. 604.) Whether this doctrine can be supported, in cases where the person dealing with the partnership is not chargeable with knowledge of the fact, I am not prepared to say. I believe the English law is now understood to be otherwise, and, perhaps, there is no distinction in principle, upon this point, between special and general partnerships, and that the question, in all cases, is a question of notice, express or constructive. : All partnerships are more or less limited. There is no one that embraces, at the same time, every branch of business ; and when a person deals with one of the partners, in a matter not within the scope of the partnership, the intendment of law will be, that he deals with him on his private account, notwithstanding the partner may give the partnership name, unless there be some circumstances in the case to destroy that presumption. “ If, says Lord Eldon, (8 Vesey, p. 544.) under the circumstances, the person taking the paper can be considered as being advertised, that it was not intended to be a partnership proceeding, the partnership is not bound.” Public notice of the object of a copartnership, the declared and habitual business carried on, the store, the counting-house, the sign, &c. are the usual and regular indicia, by which the nature and extent of a partnership is to be ascertained. When the business of a partnership is thus defined, and public 5 declared, and the company do not depart from that particular business, nor appear to the world in any other light than the one thus exhibited, one of the partners cannot make a valid partnership engagement, on any other than a partnership account. There must be some authority, beyond the mere circumstance of partnership, to make such a contract binding. Were it otherwise, it would be idle, and worse than idle, to talk of limited partnerships, in any matter or concern whatever, and the law would be recognising an association, only to render it a most dangerous illusion to those whom it embraced. Lord Kenyon must have understood the capacity of one partner to bind the rest with this restriction, when he observed, in the case of De Berkom v. Smith and Lewis, (1 Esp. Rep. 29.) that persons might be partners in a particular concern, and if they did not appear to the world as partners, it should not be sufficient to make them liable in cases not connected with the particular business. The law will presume, in all such cases, that the creditor is advertised, that he is not dealing on a partnership account, and for him to take a partnership engagement, without the consent of the firm, is, in judgment of law, a fraud upon the firm. Suppose, in the case of a general commercial partnership, a debt was to be contracted by one partner upon the purchase of new lands ; or suppose, in the case of a partnership between two attornies, in law business, a partnership note was to be given by one of them upon the purchase of groceries or furniture for his family, it could not be supposed by any one that the company would be holden. These would be plain cases of a fraud, practised upon the firm, of which the creditor would be chargeable with notice. When the public have the usual means of knowledge given them, and no means have been suffered by the partnership to mislead them, every man is to be presumed to know the extent of the partnership with whose members he deals.

There are, however, qualifications, as to the extent of this doctrine, and some instances occur to me which explain and define its application, and which it may not be amiss to mention.

If negotiable paper of a firm be given by one partner, on Ms private account, and that paper should pass into the hands of an innocent and bona fide holder, as in the case of paper negotiated or discounted at the banks ; or if one partner should purchase, on his private account, an article in which the firm dealt, or which had an immediate and direct connection with the business of the firm, in these cases I should think that a different rule ought to be adopted, and one requiring the actual knowledge of its being a private, and not a partnership dealing, to be brought home to the... claimant. The circumstances of these cases would take away the intendment of knowledge in the creditor. The indorsee, for instance, of such a note, takes it upon the credit of the partnership, and he has no means of knowing, from the paper itself, on what account it was created, and he has a right to presume it was a fair partnership engagement. This is the English rule (2 Esp. Rep. 524. 731.) in those particular cases. But the present case cannot be taken out of the operation of the general rule. The plaintiff had no just ground to infer, that, when he was selling brandy to C. I. Roosevelt, he was dealing with the sugar-refining company; considering the circumstances under which the partnership was announced and conducted, he was chargeable with notice, that he was not dealing on a partnership account.

I am accordingly of opinion, that the verdict is against law and evidence, and that it ought to be set aside, and a new trial awarded, with costs to abide the event.

New trial granted.

(a) The court thought that case so precisely similar in principle to that of Livingston v. Hastie & Patrick, that it was not deemed important to report it; but since it has been referred to, it is thought proper to subjoin the following account of the case:

Dubois against C. C. Roosevelt & C. I. Roosevelt.

THIS was an action of assumpsit. The plaintiff declared on a promissory note, dated the 27th April, 1805, drawn by the defendant, C. I. Roosevelt., payable to Cornelius C. Roosevelt & Co. and indorsed by C. I. R. with the name of C. C. R. & Co. A judgment by default was entered against C. I. Roosevelt, and the other defendant pleaded non assumpsit. The cause was tried at the New-York sittings, in June, 1807, and a verdict was taken for the plaintiff, by consent, subject to the opinion of the court, on a case, containing the following facts:

On the 3d of February, 1803, the defendants entered into a copartnership in the sugar refining business, in the city of New-York, where the plaintiff also resided, and the following advertisement was inserted in the "Evening Post, and the "American Citizen,” two newspapers published in the city. "Copartnership. Cornelius C. Roosevelt and Cornelius I. Roosevelt, have entered into partnership, in the sugar refining business, under the firm of Cornelius C. Roosevelt & Co. Have ready for sale, loaf and lump sugar of a good quality; also molasses, at their sugar-house in Thames-street, in the rear of the City Hotel.”

The copartnership was dissolved in June, 1805, and public notice of the dissolution given.

In April, 1805, the plaintiff sold to C. I. Roosevelt, a quantity of beef, the bill of which was made out in the name of C. I. Roosevelt, and his own note, without any indorser, was received for the amount. A short time afterwards, the plaintiff sold to C. I. Roosevelt, a quantity of cloves, for which, by agreement, he was to give his note, with a good indorser. The cloves were purchased by C. I. Roosevelt, on his own account, and the bill of parcels was madd out in his own name only. The note in question was drawn by C. I. Roosevelt, and indorsed by him, in the name of the firm, and given for the cloves to the plaintiff. The note was protested for non-payment, and due notice thereof given to the defendants.

The defendant, Cornelius C. Roosevelt, was in no manner interested in the purchase of the cloves, which were purchased for an adventure, in which he had no concern. They were exported in the name of C. I. Roosevelt, and in order to obtain the usual debenture, the plaintiff made oath at the custom-house, that the sale was to him.

It appeared that the business of the partnership was principally transacted by C. I. Roosevelt, and that he made notes issued for the sugar refining business, and signed the name of the copartnership. The plaintiff sent a clerk to the counting-house of the defendants, for the note, and the same was received from C. I. Roosevelt, at the counting-house of the firm, which was in the building where the copartnership business was carried on. On the outside of the building was a sign painted in large letters : “ Sugar-House,” and "Cornelius C. Roosevelt & Co.'s Office."

It was admitted that there was no fraud or collusion on the part of the plaintiff; but that his intentions were fair, and his conduct bona fide.

Brinkerhoff, for the plaintiff; attempted to distinguish this case from those of Livingston v. Hastie & Patrick,^* and Lansing v. Gaine & Ten Eyck,^† and admitted, that unless the case could be distinguished from them, the plaintiff must fail. In those cases, the action was against the makers, here it is against the indorsers, which precludes any inquiry into the original transaction on which the note was founded. He observed, that the cases decided in England, went on the ground of fraud and collusion between the parties, and in the present all intention of fraud was negatived. He cited the case of Swan and others v. Steele,^‡ in which Lord Ellenborough held, that where a person bona fide, and without any fraud, receives a note indorsed by one of several partners, in the name of the firm, it should bind all the partners.

Griffin and Harison, contra, relied on the case of Livingston v. Hastie & Patrick, and that of Lansing v. Gaine & Ten Eyck, as precisely in point. They contended, that the case of Swan and others v. Steele, was in favour of the defendant, as Lord Ellenborough recognised the principle, that where a person takes the copartnership firm, as security for the individual debt of one partner, knowing that it was without the consent of the other, it is fraudulent and void. Knowledge of the fact of its being out of the copartnership business, or not, made all the difference. They cited, l Salk. 126. Cowper, 814. 6 Vesey, jun. 604. 1 Caines, 184. Watson on Partnership. 2 ed. 180.

- Hoffman, in reply, was stopped by the court, who seemed to think, that there was no difference between this case and that of Livingston v. Uasiie Patrick. Hoffman said he should decline arguing the cause; for unless the court thought the distinctions taken Ly j3'rinkevhoff' were well* founded, the plaintiff could not prevail.

Per Curiam. We are of opinion, that this cause is clearly within the principle decided in that of Livingston v. Hastie & Patrick, and that the plaintiff must be nonsuited.

Judgment of nonsuit.

* 2 Caines, 246.

† 2Johns. Pep.

‡ 7 East, 210.

* 7 East, 210

† 8 Ves. 540.

Case Details

Case Name: Livingston v. Roosevelt

Court Name: New York Supreme Court

Date Published: May 15, 1809

Citation: 4 Johns. 251

Court Abbreviation: N.Y. Sup. Ct.