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is not, in fact, any genuine promise, express or tacit, to contribute to the loss sustained. The principle which binds persons quasi ex contractu, is at least as applicable to corporations who obtain materials and services from others, as to infants who are supplied with such necessaries as gold latch-keys and onyx studs. In the case of Diggle v. The London and Blackwall Railway Company, 5 Exch. 442, the plaintiff had, with the full knowledge and at the request of the officers of a corporation, executed considerable works for it, and on claiming payment was turned round because he could not produce a contract under seal. Surely this was wrong, for, admitting to its full extent the doctrine of the common seal as applied to contracts, a liability to pay results from other matters besides a contract, and to hold that the corporation, taking the benefit of the plaintiff's work, was not bound to pay for it, was cruel in the extreme, and, as appears to the writer, uncalled for in point of strict principle. If a person enters into a contract, which is invalid in consequence of some form not being complied with, is he, having obtained the benefit of that contract, to retain that benefit for nothing? To say yes, and that it was his own folly not to see that all necessary formalities were complied with, is strictly in accordance with the maxim summum jus summa injuria, but is unworthy of countenance in any system of law the object of to which is to repress and not encourage fraud.
It is not, however, the object of this paper to examine the grounds on which any particular case was decided. The object has been solely to draw attention to what are conceived to be the principles which, in point of reason, ought to be applied for the solution of the question, whether any particular act can by law be held to cast responsibility on a corporation, and to show that the harsh decisions to be found in the books have arisen from a departure from, and not from conformity to, those principles.
The results endeavoured to be established may be thus briefly recapitulated :
1. Personality is attributed to corporations solely as a means to an end, and with a view of baving something
wherein rights and obligations may reside, without interruption by those casualties which disturb the actions of individuals.
2. The capacity of every corporation is limited by the purpose for which it is created, and its so called will is in truth the will of individuals, who are by its creation made its representatives.
3. According to recognised principles of jurisprudence, crimes cannot be imputed to corporations.
4. Corporations are civilly responsible for all unlawful acts or omissions for which a principal would be responsible, if similar acts or omissions were committed by an agent having such powers and authorities as are conferred on the individuals to whom the management of the corporate affairs is intrusted.
5. Corporations are civilly responsible for all genuine contracts to which the individuals intrusted with the management of their affairs have power to assent on their behalf, and have so assented.
6. Whether they have assented or not is a question of evidence merely, to be determined in precisely the same way as the assent or non-assent of ordinary individuals, and not conclusively by the existence or non-existence of a document sealed with a common seal.
7. Corporations are civilly responsible, quasi ex contractu, upon precisely the same principles as ordinary individuals, subject only to such qualifications as may be rendered necessary by the fact, that corporations exist for certain definite purposes, and no others.
III.—ON THE MERCANTILE NOTION OF “THE FIRM," AND THE NEED OF ITS LEGAL RECOGNITION. BY JOHN MALCOLM LUDLOW, Esq.
[Read 9th November, 1857.]
Few persons have conferred a more essential service upon English jurisprudence than the late Mr. Cory, when, in his Treatise on Accounts, he unfolded, from a legal point of view, the simple and beautiful theory of commercial book-keeping, and pointed out the discrepancies of practice between legal and mercantile accounts. To these discrepancies—or rather to the stolid rejection by our Courts of the principles of commercial book-keeping from which they flow-are to be traced, I believe, nine-tenths of the perplexities of our partnership law, and much also, I suspect, of that chronic inability of our
I bankruptcy law to satisfy the needs of a mercantile community, which manifests itself by a re-naming and re-modelling of its whole procedure every half generation. I wish to point out in this paper one or two of the mischiefs arising from this antagonism between the law and the facts of trade, with reference to the bankruptcy of partners. It is absolutely necessary that I should begin it with Mr. Cory's name, as I should be otherwise guilty of plagiarism of the worst description; since Mr. Cory's work is yet so little known in proportion to its merit (part of its contents as a legal treatise being indeed now obsolete), that much even of what I may directly borrow from him will, I fear, be new to most of my readers.
To Mr. Collyer's Treatise on Partnership, I need hardly express my obligations in detail. His text-book is one which every one dealing with the subject must have constantly in his hands, and to which he must always owe more than he can acknowledge.
The great reform suggested by Mr. Cory, which alone can supply a basis for the thorough reconstruction of our partnership law, is the legal recognition of the firm. Nothing, as he points out (a), can be simpler than the mercantile idea of partnership, as it comes out in commercial book-keeping. There is an ideal person called a “firm," for whom the individual partners are agents at once and sureties. The accounts of the partnership are always those of the firm itself, never of the partners; the firm is always, as a firm, exactly solvent, through the guarantee of the partners. All property brought into the joint-trade belongs to the firm itself, and not to the partner who brings it in; the firm alone contracts in all transactions. On the other hand, every partner is “an acting and all-efficient officer," the sole visible representative of the unseen firm; able, as to third parties, not only to dispose of all the effects of the firm, but also to bind it by his acts and deeds in all partnership transactions; his agency being unlimited as his guarantee. It is simply as an agent that each partner contracts on behalf of the firm, and binds it. He is not directly responsible to the party with whom the engagement is entered into; that party looks to the firm, behind which he stands as surety—so that, if the engagement entered into exceeds the resources of the firm, it is to the firm and not to the creditor that the individual partners are on the books made debtors. Again, the partner's agency, like any other, ceases by his death, without the existence of the firm being in any wise impaired by it; and the partnership may be carried on by the surviving partners, on paying to the representatives of the deceased the sum standing to his credit in the books of the firm, assuming them to have been correctly made up.
This simple and consistent view, whatever be its originshadowed forth, it would seem, by the philosophic instincts of old Greece; certainly brought out into clearness and shape by the sharp wits of Italian merchants in the middle ageshas more or less won force of law in every civilized country, Every where, more or less, there is a legal recognition of that ideal personage
“ the firm," of the relation of the partners (a) See Cory on Accounts, ch. iv.
towards it as that of agent and principal, surety and debtor of the signature of the firm as establishing the validity of contracts—sometimes of the conclusiveness of partnership accounts-generally, of the power of the firm to sue and be sued as such in Courts of justice.
Strange to say, however, in no country has this idea found such difficulty in obtaining legal reality as amongst the “nation boutiquière,” of which we are members. Nowhere has it had to fight such battles step by step with stiff old feudal notions, however absurdly inapplicable in practice; nowhere has it been obliged to take such roundabout ways of attaining its ends ; nowhere is it yet so far from having completely reached them.
Let us take a few instances of the confusions which have resulted from the struggle :
1st. Interest of Partners in the Stock :--The mercantile view presents here absolutely no difficulties. The firm is the only real owner of the partnership stock, the only person having any actual interest in it. The partners, its general agents, have no interest in the stock, they have only powers.
But the Common Law could not recognise the personality of the firm. The only ideal persons it knows of are corporations. The Crown alone, it holds, can create corporations—though that power may sometimes be delegated, and sometimes the existence of such ideal persons may be recognised, without its being very clear how they grew up. But to admit that Jack and Tom, by clubbing together £10 each, can make an ideal person called a firm, was more than any Common Law imagination could reach to. In fact it would be a contempt of the royal prerogative—high treason, or something like it. What was to be done ? Those obstinate persons called traders-outlandish vagabonds at the first, Lombards and Jews-would enter into this kind of joint trade which they called partnership, would regulate it according to their own notions, and not according to the “perfection of wisdom ;” and it was not the policy of this country to put them down altogether, any more than it would have been King John's policy to pull out all a Jew's teeth. How then was law to be administered towards men