Page:Federal Reporter, 1st Series, Volume 9.djvu/881

 866 PEDEEAL BEPOBTEfi. �nient of the debts of the old house bf Wallaco & Gary, and upon making the loan the plaintifif received the promiissory note upon whlch suit is broughtj which is a note purporting to be draWn by S. Miras, Jr., to the order of Bich- ardson & Cary, and was indorsed by George W. Cary in the naine of the firm. Mims was not even a customer of defendanfs firm, and they were undgr no obligation to pay the debts of Wallace & Cai-y, and had no interest either in the paper delivered to plaintiff nor 'in the loan to George W. Cary. ■ ' .' " . .-1 �These cases are identical in principle. In both cases one partner frau'dulently indorses the name of tho partnership upon commercial paper, in which the partnership had no property or interest, and obtains monoy upon it from the plaintiff, for a purpose manifestly not a partnership purposo. The doctrine upon which partners are held for the action of each other is the, doctrine of agency. Authority is implied whenever the act done is within the seope of the partnership business, or is, according to outward circumstances, the act of the partnership. But when.the act done is beyond the scope of the part- nership business, or is admitted not to be the act of the firm, then a special authority from the other pArtnera, either expressed or implied, must be shown in order to bind' them so far as first parties are con- cerned. These loans were both made for a purpose, not a partner- ship one. In the one case it was a loan fo the brother of George W. Cary, and in the other, a loan for the purpose of paying a debt of another finn. �But it is urged that when one of two innocent parties must suffer, that party who has held out to the other a third party as having an authority he did not possess, must bear the burden or loss. This is true. But the limit of the application is reached when the purpose or object of the act done is unquestionably not that of the firm. The reason of the limitation is that when a partner attempts to use the firm name for a purpose admitted to be outside of a partnership transaction, the party with whom he deals is fairly affected with notice, and put upon bis guard, and, if he fails to make suitable inquiry, oceupies in law the same attitude as does any other person who deals with an agent whom he knew, or ought to have known, was exceeding his authority. The laws upon the subject are well nigh innumerable, but the Amer- ican authorities, with great unanimity, establish the doctrine that, so far as first parties are concerned, the firm name cannot be used by one member for a purpose confessedly distinct from the firm's busi- ness, so as to bind the other members, without showing special power. �Judgment must therefore be given in favor of the defendant Eich- ardson and against the defendant Cary. ��� �