Le Roy Bayard Co. v. Johnson

AN action of debt upon a bill of exchange for 1250 sterling, was instituted by the plaintiffs in error, in the circuit court for the county of Alexandria, in the district of Columbia, against Jacob Hoffman and George Johnson, alleging them to be partners in trade. By the statute of Virginia, adopted as the law of the county of Alexandria, this form of action is authorised for the recovery of the sum due upon a bill of exchange, and damages for non-payment. The declaration charged the bill to have been drawn by Jacob Hoffman and George Johnson, trading as co-partners in Alexandria, under the name of Jacob Hoffman, the same being for the account of the concern; and that the bill was purchased by the plaintiffs, who remitted it to London; where it was presented to the drawers, and was returned protested.

The process was not served on Jacob Hoffman.

Upon the trial of the cause, it was proved that it was generally known in Alexandria, in 1823, that the defendant and Jacob Hoffman were jointly concerned in buying and selling pork; and by the articles of co-partnership signed by both partners, and entered into on the 10th of December 1823, it was agreed, inter alia, that the funds necessary for the purposes of the partnerships were to be borrowed from the banks or otherwise, upon the notes of George Johnson, to be indorsed by Hoffman, or in such other shape, as respects the paper of the parties, as might be found suitable to the object intended. The active partner in the business was Jacob Hoffman, who, besides the business of the concern, carried on that of a sugar refiner, a buyer, seller, and salter of beef, and a tobacconist; and at the same time the defendant, George Johnson, was engaged in the transaction of business on his own account, as a commission merchant and grocer.

The cashier of the bank of Alexandria proved, that an account was opened in that bank on the 3d of December 1823, which he understood, from both parties, was to comprehend the cash deposits of the joint concern, and the proceeds of notes discounted for the purpose of raising funds for the same. For some years before, Jacob Hoffman kept an account in the bank, until the opening of the new account; upon which the private balance due the bank was transferred to it, and no money could be drawn out of the bank upon the account, but upon the check of Hoffman drawn by him in his own name. Accounts of a similar character, in the same form, and used in the same manner and for similar purposes were proved to have been kept at the same period in the Farmers' Bank, and in the Bank of Potomac. These accounts comprehended, indiscriminately, all the deposits of cash kept by Hoffman in the banks; as well as deposits and cash of the joint concern. The same witness also proved, that before a note for $6000, drawn by the defendant, and indorsed by John H. Ladd & Co., was discounted by the bank, he sent the bill of exchange which was the foundation of this action to New York, at the request of Hoffman, to be there negotiated. The bill not being sold immediately in New York, Hoffman went there; and assisted by letters of recommendation from merchants of Baltimore, he negotiated the bill, and out of the proceeds of the same the note for $6000 was paid at the bank of Alexandria. The proceeds of the discount of this note were used by the firm. The partnership of the defendant and Jacob Hoffman was advertised in the public papers of Alexandria, the advertisement being subscribed with the names of both persons; during the continuance of the concern, it was generally known in Alexandria, under the style of Hoffman & Johnson; accounts were rendered, and money was paid in that name, and the firm was dissolved on the 10th of January 1824.

By the terms of the dissolution, Mr Hoffman was bound to pay the debts of the firm, and this bill was drawn to enable him to comply with this contract.

The defendant was called upon early in June, and informed of the fate of the bills; and efforts were made without success to procure payment out of property which had belonged to Hoffman and Johnson, and which was in the hands of a trustee.

The questions submitted to the jury, and upon which the court were requested to charge in favour of the plaintiffs below, who are plaintiffs in error in this court, were:

1. That upon the evidence of partnership, and that the proceeds of the bill were applied to the payment of the note which had been discounted for the firm; unless the defendant could show a notice of the dissolution of the partnership, either public or private, before the bill was sold, and that the bill was not drawn on partnership account; the plaintiffs were entitled to recover.

2. If the jury, from the evidence, should be of opinion that the bill was drawn in reference to the business of the concern, and to meet the engagements of the same, and the proceeds of the same were so applied; then the defendant is liable to the plaintiffs, unless he proves a dissolution of the firm and knowledge of the same by the plaintiffs before the bill was negotiated.

3. That if the jury believed the name of Jacob Hoffman was sometimes used in relation to the business of the concern, and that the bill was drawn in the name of Jacob Hoffman, and so negotiated for the firm to pay its notes; the plaintiff is entitled to recover, unless the defendant can prove that the bill was not drawn and negotiated on partnership account, or that the partnership was dissolved and the plaintiff notified thereof, or the dissolution was advertised before the bills were drawn and negotiated.

The court having refused these instructions, and a verdict and judgment having been obtained for the defendant, this writ of error was prosecuted.

The case was argued by Mr Swann and Mr Key for the plaintiffs in error, and by Mr Jones for the defendant.

For the plaintiffs, it was contended, that the bill upon which this suit was brought was drawn by Jacob Hoffman on account of himself and the defendant, to provide for the payment of a note discounted for the concern, in the name used by them in their arrangements of finance; and the proceeds of the sale of the bill having gone to pay the note, the defendant was liable to the plaintiffs for the amount of the bill and damages. It was in fact the bill of the firm.

The evidence on the part of the plaintiffs was sufficient to go to the jury, upon the principles claimed by the plaintiffs. The name of Jacob Hoffman was used as that of the firm, and if several persons act under one name, all are bound. Montagu on Partnership, 32, note.

While it is admitted that the partnership was not bound for all the acts done in the name of Jacob Hoffman, here was a transaction in reference to its concerns, and it is therefore obligatory on all. Gow on Partnership, 55, 70, 189.

The language of the bill is in the plural, and thus it is manifest that it was not an individual transaction of Jacob Hoffman. It is thus drawn, 'Ninety days after sight of our first of exchange, (second, third and fourth of same tenor unpaid) pay to the order, &c.'

That the partnership was dissolved before the bill was drawn is immaterial. The dissolution was secret, as it was not known to the plaintiffs; and they must be supposed to have taken the bill upon the notoriety of the partnership. The difficulties which prevented the early sale of the bill in New York, may have been removed by information obtained by the plaintiff in Alexandria, and particularly of the form in which the engagements for the money concerns of the firm were drawn.

The propositions stated by the counsel of the plaintiffs should have been submitted to the jury.

The first requested the court to say, whether the facts proved showed a partnership.

The second, that unless notice of the dissolution was brought home to the plaintiffs, the defendants were liable.

The third, that there was evidence that the parties sometimes used the name of Jacob Hoffman; and the bills were drawn to raise funds for the partnership, and therefore the plaintiffs were entitled to charge the defendant, unless the defendant could prove they were not used for the firm.

The counsel also cited Gow on Part. 155. 2 ''Bos. & Pul.'' 679.

Mr Jones, for the defendant. The evidence showed a special partnership, to buy and sell pork, and all the transactions of the firm were in the name of Jacob Hoffman and George Johnson. If the name of Jacob Hoffman was used at the banks, it was not so used as the name of the firm, but as the name of one individual of the same; each giving his own name to raise funds for conducting the business.

Nor was the bill taken as that of the firm; the plaintiffs refused it in the first instance, and took it afterwards, when assured of the respectability of the drawer, individually. The law is fully settled, that when it is claimed to make a person liable as a partner, in a firm carried on in the name of one person, it must be shown to be a partnership concern. The defendant is protected by this principle; for although the proceeds of the bill were applied to pay the note discounted for the benefit of the firm, the payment of that note had been assumed by Jacob Hoffman, and he had a right to raise funds on his own responsibility to discharge it.

To bind a partnership, the name of the firm is essential. If it is not used, it must be presumed to be an individual transaction; and if the proceeds of the same are brought into the concern, it is presumed it is done as an individual duty to the firm.

The books show universally, the difference between a manual act of purchasing goods, which may be done by one partner to bind all; and the binding of all by writing, in which all must act, or he who acts must have authority to bind all. How far the courts have gone in considering that a separate debt, which is contracted by one of a firm, is shown by the following cases. 4 Term Rep. 270. 12 East, 122. Gow on Part. 32. 1 Atk. 223. 1 Marshall's Rep. 249.

It is incumbent on the plaintiffs to prove they dealt with the firm, or with a view to the liability of all the parties to it. Here George Johnson was unknown to the plaintiffs; Jacob Hoffman alone appeared in the transaction, and he drew the bill in his own name, on his own responsibility, to obtain the means to carry into effect the terms of the dissolution of the partnership. The court in refusing the instructions, therefore, acted in conformity with the law, and the facts of the case.

Mr Justice WASHINGTON delivered the opinion of the Court.