Deford & Co. v. Reynolds

36 Pa. 325
CourtSupreme Court of Pennsylvania
DecidedJuly 1, 1860
StatusPublished
Cited by2 cases

This text of 36 Pa. 325 (Deford & Co. v. Reynolds) is published on Counsel Stack Legal Research, covering Supreme Court of Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Deford & Co. v. Reynolds, 36 Pa. 325 (Pa. 1860).

Opinion

The opinion of the court was delivered by

Strong, J.

Sometime in the year 1851, Reynolds, the defendant belowr, entered into partnership with Robert McCulloh, since [332]*332deceased, under the firm name of R. McCulloh & Co. In the same year, the new firm opened an account with the plaintiffs below, who were leather merchants, doing business in the city of Baltimore, and became indebted to them in a considerable sum. On the 7th of April 1853, the firm of R. McCulloh & Co. was dissolved by the mutual consent of the partners, and notice of the dissolution was published in the newspapers of Chambevsburg,' where the firm had principally transacted its business. There is, however, no direct evidence that actual notice of the dissolution was given to the Messrs. Deford, with whom the firm had been dealing. Robert McCulloh continued the business after the retirement of Mr. Reynolds, made payments to the plaintiffs, and purchased from them hides, oil, &c., until December 31st 1853. He died in April 1854, and this is a suit against Mr. Reynolds as surviving partner to recover the balance due to the plaintiffs on the 31st of December 1853.

The first contested question is, whether Reynolds is liable for any portion of the debt contracted after April 7th 1853, when the firm of R. McCulloh & Co. was dissolved ? The solution of this depends upon the answers to be given to two other inquiries: first, whether, in this case, the law required notice to' be given to the Messrs. Deford, in order to secure the retiring partner against liability for debts contracted after his retirement; and secondly, whether, if such notice was necessary, it was in fact given, or, what is equivalent, whether the creditors had knowledge of the dissolution before the debt was contracted. It is to the first of these minor questions that the earlier part of the argument of the plaintiff in error is addressed, and to this was directed the first point propounded by him to the court below. That point was that, if the jury believed from the evidence that the defendant was not known to the plaintiffs as a member of the firm of R. McCulloh & Co., he might withdraw at any time, without being required to give notice of the dissolution of the partnership, and is only chargeable for debts contracted during the time he was a partner. To this the court replied, that if the jury believed the defendant was an open partner in the firm of R. McCulloh & Co., and that the plaintiffs sold the goods, and furnished the stock on the credit of the company, then the liability of the defendant did not cease with the dissolution, although the plaintiffs may not have known who were the members of the firm.

The rule doubtless is, that an unknown dormant partner may retire from the firm without giving notice of his retirement, and thenceforth be no longer liable for debts which the firm may incur. Having ceased to be a partner in fact, he is not a party to the contract which creates the debt; and, being unknown, he has not encouraged the creditor to rely upon his responsibility. But was Reynolds a dormant partner? And could the court, as matter of [333]*333law, instruct the jury that he was, if they believed he was not known by the plaintiffs to be a partner ? Does the mere fact that one selling goods to a firm is unacquainted with the names of all the persons who compose it, establish that those are dormant partners as to him whose names are unknown ? It is perhaps not easy to define what constitutes a dormant partner in all cases. The word is sometimes used in opposition to active, and, at other times', as contradistinguished from ostensible or known. This case does not require us to attempt a precise definition. McCulloh and Reynolds were in partnership, it is admitted, until April 7th 1853. They were the only partners. They transacted business under a firm name that represented to those dealing with them that some other than R. McCulloh was responsible. The vendor of goods, of course, gave credit, not to McCulloh alone, but to him and whatever other persons were embraced within the company. He may not have known the name of the person included under the description “ & Co.,” and yet have known that the partner not named was the most responsible. Indeed, he might have been the active partner, and yet unknown by name to the creditor. Now suppose that the Messrs. Deford had known that there was a partner of Robert McCulloh, an open partner, known as such to the community at Chambersburg. Suppose they had known that he was the active agent in transacting most of the business of the firm, and that he alone was a man of property, but had not been made acquainted with the fact that this partner was Hugh W. Reynolds, can it be said that in selling to the firm, they trusted McCulloh alone, and gave no credit to Reynolds ? If not, then the reason given why a dormant partner is not liable after his retirement without notice, is not applicable to this case. Then credit was given to Reynolds under the name “ & Co.,” and the same reason exists for his continued liability as there is for the liability of any partner who has retired without notice.

In Mitchell v. Dale, 2 Harr. & Gill 172, it was said by Martin, J., that every partner is dormant, unless his name appear in the firm, “ or is embraced under general terms, as the name of one of the firm and company.” Without assenting to this as universally true, it may be said, that its obvious implication is, that if one is embraced in the general description, the name of one partner and company, his is not a case of dormant or secret partnership. Collyer, in his treatise, sect. 4, defines a dormant partner to be one “whose name and transactions as a partner are professedly concealed from the world.” The only object which such an one can have in remaining dormant or secret, is, that credit'* may be given to the ostensible partners alone, and not to him. With such a purpose or object, doing business under the name of one partner and company, is inconsistent. It can be nothing less than an invitation to the public to give credit to more than the single [334]*334partner named. Entertaining such views, we are of opinion that there was no error in the answer of the court below to the defendant’s first point. Whether he was a dormant partner or not, was a question for the jury, and, trading as he .did under the firm name of R. McOulloh & Co., the solitary fact that he was not known by the plaintiffs to be the company, was not sufficient to enable the court to say that his liability ceased at the dissolution of the firm, without notice to those who had dealt with it, Tf he was an open partner, and the credit was .given to the company, he was still bound.

The next question in the case is, whether the Messrs. Deford had notice in fact, of the dissolution of the firm, before the debts incurred between April 7 th 1853 and December 31st 1853 were contracted. This, of course, was for the jury. We are strongly impressed with the belief that their finding has done injustice to the defendant, and were it in our power to interfere for that reason, we would gladly do so. But it is not. The remedy for mistakes of the jury is exclusively in the court below. We can do no more than inquire whether the question was properly presented to them. There was evidence on the trial that, after the actual dissolution of the firm, in April 1853, most of the charges in the plaintiffs’ books were made against R. McOulloh, that the drafts upon them were signed R. McOulloh, and that bills of leather were receipted as coming from him alone.

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Related

Rowland v. Estes
42 A. 528 (Supreme Court of Pennsylvania, 1899)
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30 A. 202 (Supreme Court of Pennsylvania, 1894)

Cite This Page — Counsel Stack

Bluebook (online)
36 Pa. 325, Counsel Stack Legal Research, https://law.counselstack.com/opinion/deford-co-v-reynolds-pa-1860.