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*SECTION VI.-OF THE LIABILITY OF PARTNERSHIPS AND *336 COMPANIES IN RESPECT OF CONTRACTS NOT ENTERED INTO ON THEIR BEHALF, OR NOT SO IN PROPER FORM.

on foregoing

The general proposition that a partnership or company is bound by those acts of its agents which are within the scope Observations of their authority, in the sense explained in the fore- propositions. going pages, must be taken with the qualification that the agent whose acts are sought to be imputed to the firm or company, was acting in his character of agent, and not as a principal. If he did not act in his character of agent, if he acted as a private individual on his own account, his acts cannot be imputed to the firm or company, and he alone is liable for them, even though the firm or company may have benefited by them. Whether a contract is entered into by an agent as such, or by him as a principal, is often, but not always, apparent from the form of the contract, and it is proposed in the present section to examine the effect of the form of a contract on the liability of partnerships, and then of companies.

1. As regards partnerships and unincorporated companies.

With reference to the forms of contracts, there is no difference between partnerships or unincorporated companies on the one hand, and ordinary individuals on the other. The same laws are applicable to both. So far, therefore, as partnerships and unincorporated companies are concerned, the form of a contract need only be considered in the present place with reference to its bearing on the question whether the contract is binding on the person who entered into it, or on other persons on whose behalf he may have acted. In order to determine this point it will be convenient to consider

1. Contracts under seal.

2. Ordinary contracts not under sea.

3. Bills of exchange and promissory notes.

469

*337

*1. Contracts under seal.

other instruments

If a deed is exe

A distinction is taken between deeds and with respect to the person bound by them. 1. Covenants, cuted by an agent in his own name, he and he only can sue or be sued thereon, although the deed may disclose the fact that he is acting for another. (c) Therefore,

&c.

(c) Appleton v. Binks, 5 East, 148; Pickering's case, 6 Ch. 525; and see next note.

1See the cases collected in Ewell's Evans on Agency, *172, note. See, also, generally, ante, 278, and note.

Where a contract of sale, which must by law be in writing, is made in writing under seal with one partner, who gives his bill single for the price of the thing purchased, the other partner cannot be sued upon the consideration. Harris v. Miller, 1 Meigs, 158.

If one partner borrows money on his own credit, and gives his sealed note for the amount, the firm is not liable, though the money be used in the partnership transactions. Willis v. Hill, 2 Dev. & B. L. 231.

So, where a partner buys real estate in his own name, and gives his individual bond and mortgage in part payment therefor, the firm is not liable to the seller for the unpaid purchase-money, though it appear by the firm books that the land was bought on firm account, and a declaration of trust was afterwards executed by the purchaser, but not recorded, declaring that the money paid was partnership funds, and that the land was held by him in trust as partnership property. North Pennsylvania Coal Co.'s appeal, 45 Pa. St. 181; See, also, Williams v. Gillies, 75 N. Y. 197; Patterson v. Brewster, 4 Edw. 352. A lease from one of the co-partners, sealed with his seal, and, in terms, binding himself only, is not admissible

evidence to support an avowry laying a demise by the co-partners, notwithstanding the deed is expressed as "for himself and his partner," and it is proved that the other party knew of the demise, and was satisfied with it. Tuttle v. Eskridge, 2 Munf. 330.

Two partners took an assignment of a lease of certain rooms, and afterwards one of them, A., by an agreement under seal, without the knowledge of the other, sub-let a part of the room and granted other privileges to the plaintiff for a term of three months beyond the termination of the lease. Subsequently the other partner sold his interest to B. A. and B. received rent from the plaintiff. At the termination of the first lease, the plaintiff was dispossessed, and brought an action of assumpsit against A. and B. for the damage he had sustained: Held, that the agreement under seal was not evidence in the action; that from the receipt of rent by A. and B. no contract could be implied against B., the incoming partner; and that none such was to be implied from the partnership. Bewley v.Tams, 17 Pa. St. 485. A brought assumpsit against B and others whom A claimed to be co-partners of B, for goods furnished them under a sealed agreement, executed by A and B: Held, that an action would not lie as against B. A's claim rested on a specialty, and as B alone could not be made liable in assumpsit, so B, in company with others, could not be held in assumpsit.

where a partner or a director covenants that anything shall be done, he and he only is liable on the covenant, and the firm or company is not bound thereby to the covenantee. (d) A person who has to execute a deed as an agent, should take care that the deed and the

Semble, that if a partnership existed between B and his co-defendants, the partners who did not execute the sealed agreement could only be reached by a bill in equity filed by A. Boston & Col. S. Co. v. Smith, 22 Alb. Law Jour. 232.

A lease under seal, executed by one partner in the name of the firm as lessees, the firm occupying thereunder for two years, paying rent directly to the lessor, has been held to be evidence of an agreement for a lease, which, as they have had the benefit of it, will be enforced against the surviving partners after the death of him who executed it. Kyle v. Roberts, 6 Leigh, 495.

A writing under seal, executed by one partner in the name of the firm, is held admissible in an action of assumpsit, to prove a promise by the firm, if made on sufficient consideration. Fagely v. Bellas, 17 Pa. St. 67.

A contract was made, under seal, with a partnership, for building a dam; but it was executed by one only of the partnership, and without any authority from the other. The work was duly performed: Held, that assumpsit would lie against such partner, the work being within the scope of the partnership, and the supposed contracts with the firm having no legal existence as such. Van Deusen v. Blum, 18 Pick. 229.

A partner who has pleaded non est factum to a note under seal, executed by a partner without authority, is thereby estopped to deny his responsibility in a joint suit against himself and partners for the demand in assumpsit. Doniphan v. Gill, 1 B. Mon. 199.

If one partner, for the benefit of the

(d) Hancock v. Hodgson, 4 Bing. 269;

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Where money was lent to a firm, and the partner who conducted the transaction, by mistake executed a penal bond for the sum, in the name of the firm, instead of giving a promissory note therefor: Held, that, though at law the creditor had no remedy on the bond, except against the partner who executed it, yet equity would correct the mistake, and hold all the partners bound for the debt. Galt v. Calland, 7 Leigh, 594.

A vendor of goods, taking the bond of the vendee for the price, may afterwards file a bill for relief, on the ground that the purchase was on account of a partnership, of which the obligor was one. Spear v. Gillet, 1 Dev. Eq. 466.

So, where one partner hired slaves in his individual name, but in fact for the use of the firm which had the benefit of their labor, and he gave his individual bond with surety for the hire, on which judgment was subsequently recovered, and paid by the surety, who then filed his bill against his principal and his copartners, on which it appeared that the principal in the bond was a non-resident of the State, and insolvent: Held, that the surety was entitled to a decree against his co-partners for the amount paid by him. Weaver v. Tapscott, 9 Leigh, 424.

In an action by a surviving partner on an obligatory writing given to a firm, the plea was, that the bond was not Hall v. Bainbridge, 1 Man. & Gr. 42.

covenants in it are expressed to be made not by him, but by the person intended to be bound. Thus, if A. is the principal and B. his agent, the deed and covenants should not be expressed to be made by B. for A., but by A.; and the execution in like manner should be expressed to be made by A. by his agent B. (e)

2. Ordinary simple contracts.

2. Ordinary contracts not under seal.

When a person enters into a contract as the agent of another, the name of that other may be either disclosed or not. If it is disclosed, the contract is treated as that of the principal and not as that of the agent (ƒ);' whilst if it is not disclosed, the contract is considered as that of the agent. But in this last case, the person dealing with the agent can, when he discovers the undisclosed principal, hold him liable instead of the agent.(g) *If, therefore, one partner only, enters into a written contract, the question whether the contract is confined to him, or whether it extends to him and his co-partners, cannot be determined simply by the terms of the contract. For supposing a contract to be entered into by one part

*338

Firm liable though not named. Written

contracts.

given to the firm, but to the deceased partner in the firm's name. At the trial, the court instructed the jury that if they believed "from the testimony that the bond in evidence was given for a debt contracted prior to the dissolution of the partnership, the name of the partnership could be used after the dissolution, and the suit maintained by the surviving partner:" Held, that this instruction was unexceptionable. Stillwell v. Gray, 17 Ark. 473. See Survivorship, post.

A joint obligation under seal, executed by all the members of a firm, in its business and for its benefit, will be regarded as a co-partnership obligation and payable out of the firm assets, although the firm name is not mentioned therein, and it appears upon its face to be simply the obligation of the co-partners, contracted in their individual Berk. Woollen & Co. v. Julliard, 75 N. Y. 535.

names.

(e) Combe's case, 9 Co. 76 b; Wilks v. Back, 2 East, 141.

(f) Fairlie v. Fenton, L. R. 5 Ex. 169; Ex parte Hartop, 12 Ves. 352; Russell v. Reece, 2 Car. & Kir. 669. But even in this case the contract may be so worded as to bind the agent. See Paice v. Walker, L. R. 5 Ex. 173; Calder v. Dobell, L. R. 6 C. P. 486.

2 See Ewell's Evans on Agency, *177, note.

(g) See Paterson v. Gandasequi, 15 East, 62; Thompson v. Davenport, 9 B. & C. 78; and the note to those cases in 2 Smith, L. C. If a man contracts for "my principal," the principal, although undisclosed, and not the agent, is liable, unless there is some special custom rendering the agent personally liable. But if there be such a custom, the agent will be liable, see Fleet v. Murton, L. R. 7 Q. B. 126.

3 See Ewell's Evans on Agency, *304, 308, 442, and notes.

ner in his own name only, still if in fact he was acting as the agent of the firm, his co-partners will be in the position of undisclosed principals; and they may therefore be liable to be sued on the contract, although no allusion is made to them in it.' This was expressly decided in the well-known case of Beckham V. Beckham v. Drake. (h) There, Drake, Knight and Sturgey were in

(h) 9 M. & W. 79, and 11 M. & W. 315, overruling Beckham v. Knight, 4 Bing. N. C. 243.

'See Burnley v. Rice, 18 Tex. 481; Everett v. Chapman, 6 Conn. 347; Snead v. Barringer, 1 Stew. 134.

A, B and C entered into partnership in the business of tanning hides, stipulating, in the articles, that A should furnish hides for one-half of the stock necessary to keep the tannery in operation, and should receive and make market for one-half of the leather, and that B and C should furnish the other half of the stock, and receive and make market for the other half of the leather; and that in making purchases each should use his own credit separately. B purchased of D, in another state, a quantity of hides which D, being ig norant of the partnership, charged to B. individually. These hides were received at the tannery and manufactured into leather for the joint benefit of the partners. In an action of book debt brought by D against A B and C, as partners, to recover the value of these hides, it was held, that the manner in which the goods were in fact purchased and charged, did not preclude the seller from resorting to the partnership when discovered. Everett v. Chapman, 6 Conn. 347.

A written contract, in its caption, named "Charles W. Weeks" as one of the parties; in the body he was called "the said Charles Weeks," and in the subscription, at the end, he, as well as the other party, employed only the initials of his Christian name. In neither the body of the contract nor in the signa

Drake.

tures was there any indication that it was the contract of a co-partnership. At the date of the contract C. W. Weeks was a partner in a firm doing business under the name of C. W. Weeks, but the matters included in the contract did not relate to the partnership business. There was no proof that the other party to the contract knew that C. W. Weeks represented a partnership firm until after the execution of the contract. The contract was drawn by Weeks, and in all the correspondence, etc., relating to it, the personal pronoun "I" was employed by him; the words "firm " or "we not at all: Held, that this was the individual contract of C. W. Weeks, and not that of the firm of which he was a member. Marvin v. Buchanan, 62 Barb. 468.

Conversely, such undisclosed principals may sue upon such contract. See Ewell's Evans Agency, *308, note.

Thus, where one partner enters into a simple contract, though in writing, in his individual name, but in fact for his firm, although that fact is not known to the other contracting party, an action may be maintained on it in the name of the firm, by alleging that it was entered into by the firm by the name and style of the name of the one partner, each partner being the agent of the firm. Havana, etc., R. R. Co. v. Walsh, 85 Ill. 58.

Two partners may maintain a suit in the name of both for breach of a contract to transport property of the firm, though the same was executed only in the name of one, and the partners had sometimes signed in the name of both.

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