Opinion
(December Term, 1843.)
1. Where a vendor, before he sells to a partner, has notice that there is a partnership, but that each partner is to be liable only for his own purchases, the vendor cannot look to the partnership for payment, but can have recourse only against the partner purchasing.
2. But where the vendor is informed there is no partnership existing, he may, upon discovering the partnership, make all the partners responsible for goods he has sold to any one and which have been carried into the copartnership concern.
APPEAL from Bailey, J., at Fall Term, 1843, of WAKE.
Badger for plaintiff.
W. H. Haywood for defendant.
Assumpsit to recover the value of certain castings and machinery for an oil mill, in which one Mead and the defendant Clark were partners. Plea: Non-assumpsit. It was proved that a partnership (128) existed between Clark and Mead for carrying on an oil mill for their joint benefit, and that the articles for which this suit was brought were applied to the uses of that concern. It was agreed between these partners at the formation of the firm that each one was to be individually liable for what he bought, and one was not to be responsible for the other. Clark, on 1 June, 1836, on being asked if Mead was not his partner, told the plaintiff that there was no connection amounting to a partnership existing between them; that everything was in his name; that if he bought anything for the concern he made himself individually responsible, and if Mead bought anything he did the same. The plaintiff then said that he knew it, and approved of the arrangement. Clark at that time made large purchases from the plaintiff of articles for the mills in his own name and paid for them in a bill of exchange drawn in his own name. Afterwards, on 17 November, 1836, Mead purchased from the plaintiff, and procured him to order the articles, for the price of which this action is brought. At that time the plaintiff made out his account against Mead individually, and took his separate note for the articles then sold and delivered; and pursuant to the request of Mead, he then ordered the other articles for the mills mentioned in the account, which articles were received and used by the firm at the mills. The court charged the jury that as the plaintiff, before the sale to Mead, had been informed by the defendant that there was no partnership between himself and Mead, he had a right, upon the discovery of the existence of the partnership, to hold both the parties liable; and the jury were instructed to find for the plaintiff, which they accordingly did. Judgment being rendered pursuant to this verdict, the defendant appealed.
It is a general rule in law that partners are all liable for articles purchased for the benefit of the partnership, though the vendor did not know of the existence of the partnership and (129) supposed himself dealing with an individual partner, to whom he gave credit by charging him alone in his books. And if a special contract should be made by the vendor and such partner, the partnership would not be discharged from liability, unless it appeared that the vendor had taken such individual partner for his debtor knowing that there were other partners. Reynolds v. Cleveland, 4 Cowen, 282. But the authority which one partner has to bind the firm in contracts relating to the partnership is an implied authority (Collyer, 212), and the other partners may prove a disclaimer of the alleged contract, and that they gave notice to the vendor that they would not be answerable. Collyer, 450. Where the creditor knows there is a partnership, and has express notice of a private arrangement between the parties by which either the power of one partner to bind the firm or his liability in respect of partnership contracts is qualified or defeated, in such case it is clear that the creditor himself must be bound by the arrangement between the partners. Collyer, 214; Ensign v. Ward, 1 Johns. Cas., 171; Boardman v. Gore, 15 Mass. 339; Bailey v. Clark, 6 Pick., 372.
In June, 1836, Clark told the plaintiff that there was no connection amounting to a partnership between him and Mead; that everything was in his name; that if he (Clark) bought for the concern he made himself individually liable, and if Mead bought anything he did the same. From this conversation, the plaintiff must have understood Clark to mean that Mead had no interest in the "concern" as a partner. Clark, it is true, then informed him of the arrangement between Mead and himself as to any purchases which either of them should make, which arrangement the plaintiff approved. What kind of connection between two men would, in Clark's estimation, make them partners in law we are unable to say. He might have supposed that the contract inter se, that one should not be liable for the purchases of the other, prevented them in law from being partners. If that was his understanding, he was mistaken. The agreement between them that they should share in the profits of the mills, if any there should be, constituted them (130) partners as to the rest of the world. The plaintiff, with the information which he had received from Clark, must have concluded that there was no partnership, and therefore that the creditors of Mead would have a right at all times and in all events to look to the property which he was then purchasing in satisfaction of their debts, whereas the fact was that the said property was transferred immediately into the firm, and the separate creditors of Mead could not reach it until the partnership creditors were all satisfied; at least, this is so in equity. If Clark had informed the plaintiff that Mead and he were partners, and at the same time had given him notice not to trust Mead on the credit of the firm, the plaintiff could not have recovered; but Clark did not do so; what he said amounted to a denial of a partnership. The plaintiff said that he understood the arrangement between Mead and Clark, and approved of it. What did he understand and approve? Why, that Mead was not a partner with Clark, and that if he purchased anything for the "concern" (viz., the mills), he did it on his individual credit. The plaintiff might well approve of Clark's caution in restraining a man who had "no interest amounting to a partnership" from purchasing articles to charge him, who represented himself as the entire owner of the mills. It seems to us, therefore, that this case is within the rule of a firm being liable where a vendor, not knowing of the firm, sells to a partner articles which come to the use of the firm.
PER CURIAM. No error.
Cited: Sladen v. Lance, 151 N.C. 494.
(131)