Demott v. Swaim's adm'r

5 Stew. & P. 293

Opinions

LIPSCOMB, C. J.

This was an action of as-sumpsit, brought by Swaim, against Michael Demott and Richard G. Ryder, after the dissolution of the firm, purporting to be on a promissory note, given by Ryder & Demott. The service of the writ was acknowledged by Ryder, in the following words: “We acknowledge service of thin writ, ninth day of April, 1830. “Ryder G Demott., by

“E. G. Ryder.”

Judgment was rendered by default, against both defendants.

The error now assigned, is the rendering this joint judgment, when Ryder, alone, had been legally served with process. After the cause was brought up here, Ryder, one of the plaintiffs in the writ of error, and Swaim, the defendant in error, both died,- and the suit was revived, in the name of Demott, the surviving plaintiff, and Prescott, the legal representative of Swaim.

The only question presented, is as to the authority of one partner to enter an appearance, or to acknowledge service of a writ, for his former partner, after the dissolution of the firm, when tlie writ is sued out on a partnership liability.

If Ryder had no authority in law, to acknowledge service for his former partner, Demott, the service, so far as it relates to Demott, is void, and the joint judgment is erroneous. The doctrine, that one partner may, by his own act, bind his co-partners, grows out of the close community of interest subsisting between the members of the firm, and the necessity of reciprocal confidence in each, to the successful prosecution of their business.

In matters irrelevant and distinct from the -busk of the firm, one partner can not bind his co-partners, even during the existence of the firm, unless the other co-partners give him authority so to bind them. One co-parrner can not bind the firm, by a promissory note for the payment of his own individual debt, although he may subscribe the name of the firm to such note; because it would be a fraud on his co-partners. But, in all matters connected with the prosecution of the business of the firm, the act of one is the act of all, and will create a joint liability. It is, sometimes, however, difficult to determine, whether tho transaction is strictly within the line of the co-partnership business.

In Hils et al. vs Ross,a the doclrino seems io have been conceded, without controversy, that one partner could'not accept service of a writ for the other partners. In that case, a libel was filed, by the British Consul, in behalf of Waller Ross, against Hills, May and Woodbridge, (who formed a partnership, in Charleston, under that firm,) and John Miller.

The plea was headed — “The plea of Ebenezer Hills, one of the company of Hills, May & Wood-bridge, in behalf of himself, and his said co-partners, who are made defendants in tho libel of Walter Ross;” and concluded with praying, “on the behalf aforesaid, to be dismissed, as far as respects the said Hills, may & Woodbridge.”

The replication regarded the plea of Hills, as the plea of all the company, and the rejoinder was signed by Joseph Clay, jr., proctor for the defendants.-— The decree was against all of tho defendants, and the writ of error was in the name of all. But there was evidence on the record, that May had been absent in Europe, during the whole of the proceedings, and there was no evidence of a warrant of attorney, or other authority to appear for him.

On the objection being made by Ingersol, for the plaintiffs in error, that, partners had no authority to appear for each other, in suits.—

Tilgliman, for the defendant in error, relied on the rejoinder, where the proctor states himself to be employed by all the defendants, arid insisted that his authority could not he denied or examined, in this stage, nor in this form of the objection.

Iredell, Justice, doubted, whether one co-partner could authorise a proctor to appear for all the company. Chase, Jus; ice, said the Court could not affirm too decree against persons who were not before tbe Court that pronounced the decree; and the record must show, that tiny actually did appear—a bare implication, the tilling of a plea, or a general statement, that one of the partners acts for all, is not sufficient. For, though partners, in the course of trade, may bind each other, they can not compel each other to appear to suits, nor undertake to represent each other in Courts of law. What, however, is the legal effect of an appearance by a proctor, an officer of this Court, is another ground that merits consideration.”

I iu-. vfa quoted tVk kv, at h”ge, because, as far as that Court can. bo authority, tho question is settled, as to the right of one partner to appear for another, at common law. It shows, that it was not competent for him to dono; and iho reason is, I apprehend, because it is not in the course of business. The case was one of a subsisting co-partnership, and it would loso nono of its weight, when applied to the the mouthers of a dissolved firm.

Cow, (pago S3'7,) in Healing on tbs law of co-partnerships, says, "After the dissolution of a partnership, to which the necessary publicity has been given, the parties become so disunited in interest, that one can not by any contract or engagement, implicate tho credit of the others.'”

The doctrine of this Court, in the case of Wilson vs Torbert,a is, that one partner can not, by a subsequent promise, after the dissolution of the firm, revive a debt, barred by tho statute of limitations, against the firm.

This decision is, no doubt, founded in the soundest pi’incipies of law, and has the sanction of a most distinguished jurist; but, it is not to bo denied, that it is contrary to what was formerly held to be the law, and reference is now made to it, for the purpose of shewing, that so far from enlarging the powers of partners, after a dissolution, modern authority has greatly curtailed it.

This view will be sufficient to show what ought to be our decision, in the case before us, if the act of February, one thousand eight hundred and eighteen, does not operate on it. This act has two sections on the subject of suits against co-partners. The fifty-seventh section, as numbered in Aik in’s Digest, (page 268,) provides, “where any cause of action may exist against two or more partners, of any denomination whatever, it shall be lawful to prosecute an action against one or more of them: and, when a writ shall be issued against all the partners of any firm, service of the same, against any one of them, shall be deemed equivalent to service on all; and the plaintiff may file his declaration, and proceed to judgment, as if the said writ had been served on each defendant.”

The fifty-eighth section provides, “ that when any suit shall he instituted against two or more persons, as partners in any firm, if one or more persons, not partners, in such firm, shall have been such as such, the Court, before whom such suit is pending, shall discontinue said suit against such person or persons as shall appear not to be partners in said firm, and proceed to judgment and execution against all or any of the defendants, in such action, who shall appear to he partners.”

If this act applies to a dissolved firm, I should incline to the opinion, that the error relied on, could not be sustained; because, in that aspect, it would not be material, whether Demott had been served with process or not. It would be sufficient, if Ryder had been served; and accepting service, would seem to be equivalent to service executed by the proper officer; yet, if is not altogether clear, that the voluntary acceptance of service, would be sufficient under the statute — and there would be much plausibility in requiring the words of the statute to be strictly complied with.

If the process were required to be placed in the hands of a public officer, for execution, in the ordinary discharge of his duty, the publicity of the act would be greater, and the means of practicing a fraud on the rest of the co-partners lessened. I am not certain, therefore, if we do not concede too much, when we say, that service acknowledged by one of a firm on the back of a writ, that is, never, perhaps, submitted to the light of day, until the return term, when it is filed in Court by the plaintiff, is good.

I have introduced two sections of the act of one thousand eight hundred and eighteen, on the subject of suits against co-partners, for the purpose of enqui-ring how far we may go, consistently with the ordinary rules of construction, in subjecting a case of the description of the one under our consideration, to its influence; and I will here lay down a very uni-universal rule of construction. If there is an ambiguity in the statute, we should resort to the intention of the law-making power, and ascertain the object in view, in its enactment, and so construe it as to repress the evil comolained of, and advance the remedy. The intention of the actor is the key to all acts of doubtful import — therefore, the application of the rule to> acts of the legislature, is not peculiar, when there is no room to doubt the object in view, either from the decisive character of the thing done, or from the language employed. We should indulge in no conjectures that something more was intended, lest our speculations might be idle, and lead to erroneous results.

If one evil has been removed by the direct and obvious terms of the act of the legislature, we have no right to suppose, that it was intended to be so extended as to remove another, merely because that other is equally onerous. This would be assuming to judge what the laws ought to be : and in fact, officiously aiding in legislation, a power expressly withheld from us, by the constitution.

There are two objects explicitly enough expressed in the first section of the act referred to. The first was to enable a plaintiff to sue a less number than all the members of a firm; the second, if all the members of the firm were included in the writ, that service on one of them, should be sufficient to sustain a declaration and judgment against all. These provisions were, no doubt, remedial in their character; but they are, never the less, an innovation on the long and well established principles of the common law.

At common law, all the partners of a firm were required to he made parties in a suit; if one was omitted, the writ would be abated on plea. This presented a difficulty often very embarrassing, and productive of cost and delay, from the want of information, on the part of the plaintiff, as to who .composed the firm. Again, if all the members named in the writ, could not be found, the tedious process of outlawry had to be resorted to, before you could proceed ; as at common law, you could not proceed against those who had been served with process, and discontinue as to the others — the discontinuance as to one, would operate as a discontinuance of the action. These diííiculües are removed by the act of one thousand eight hundred and eighteen.

But, are we authorised to extend the act so far as to embrace within its meaning, not only existing firms ; but, also, the members of dissolved firms ?— It is true, that, for the purpose of closing the concerns of the firm, it is supposed to have a legal existence after its dissolution, and the joint-obligation and liabilities of the co-partners continue.

If the terms of the act would, by implication, only admit of such a construction, I should hesitate much to believe that such was the intention of the legislature; and, if such intention was clearly expressed, I think that its constitutionality, might be doubted. In principle, there seems to me, to be a marked difference in the application of the act to an existing firm; and to the members of it, collectively, after the dissolution. Whilst the firm continues, there is, ex necessitate, a mutual confidence subsisting between its members, arising from a community of interest; and, in many instances, any one member, if so disposed, has it completely in his power to sa- orifice the interest of the concern. A service of process on one member, under such circumstances, to affect the whole, is not conferring on such member, greater power over the firm, than he possessed before, from his relation to it. True it is, that he may, to effect some selfish or fraudulent object, withhold from his co-partners, notice of the suit, and permit judgment to be rendered, without a defence, and thereby sacrifice their interest.

. But this he could have done as effectually, and as disastrously, in'a variety of ways, before, and without the operation of the statute. The evil would be one of a class resulting from a misplaced confidence in a dishonest partner. After a dissolution of the firm, this confidence is not to be presumed, either in fact, or by implication ; for, in truth, a loss of mutual confidence is not unfrequentiy the cause of the dissolution of the firm ; and, after the dissolution, one can not bind the others, by his promise or undertaking, and would have no power to commit a fraud on the other members of the firm, unless the statute enables him to do so.

If the partnership property only were liable, and the judgment operated as in cases of attachment in rem, there would not be so strong an objection to the rendition of the judgment against all who were jointly liable, although one only had been served with process. This salutary rule of the civil law, has never been adopted in this country: the judgment would not only affect the co-partnership property, but also the private property and future acquisitions of each member of the firm.

It may well be questioned, if, in giving the com- moa law effect of a judgment against partners, against one who has never been served with notice, and consequently had no opportunity to be heard in his defence, we would not be violating one of our proudest and most cherished rights — the right of a trial by jury.

So far as the judgment operated on the partnership property, as before intimated, the consequences, if not the principle, would be essentially different.— Because, one equally interested in that property had been served with process; and, by implication, it would not appear unreasonable, that all who were jointly interested should be affected with the notice, so far as that joint-interest was involved.

In the case of Wilson & Hallett vs Stratton & Winthrop, (a suit in the State of New York,) the constitutionality of the act of one thousand eight hundred and eighteen, so far as it affected those who had not been served with notice, was subjected to a judicial investigation.

I have seen no report of the case in print; but, from a manuscript of the decision of the Court, I understand it was ruled, that the statute was unconstitutional and void, so far as it subjected partners, who had not been served with process — because it, in effect, was a denial of the privilege of a trial by jury.

It perhaps may not be exactly in conformity to established usage, and may not be very flattering to one’s self-love, to invoke the authority of a Court of another State, against the constitutionality of an act of our legislature. Yet, it is the part of prudence, not to reject, but cheerfully and freely to receive lessons of wisdom from whatever source they may emanate.

i am constrained to say, that if -the decision in the case just referred to, in New York, is cot well, founded, according to the principles of our constitution, and in conformity to the genius of our government, I have not been able to detect its fallacy. We, however, are not driven to the strait of declaring an act of the legislature void, in the case under our consideration.

Whether the act of one thousand eight hundred and eighteen, be constitutional or not, is not material in this case, because it does not come within its provisions. This suit was brought after the dissolution of the firm of Ryder and Demott.

We subject the act of one thousand eight hundred and eighteen, to rigid and narrow rule of construction, when we confine its operation to existing firms. The two sections of the act quoted above,the last for the purpose of aiding in the construction of the first, both use terms strictly applicable to an existing firm. The wo:ds “partners,” and “firm,” are uniformly, used in both sections, in connection with the present tense. The whole of the last section shows that existing firms were to be acted on.

I am aware that a different construction was given to the act of one thousand eight hundred and eighteen, in the case of Morgan & Click vs Click,a decided at a very early period of our judicial history. And I apprehend, the act had not, at that time, received much reflection from any one. At least, I am free to confess, that for one, I had not bestowed as much thought on it, as wa,s necessary to enable me to give it a correct construction. My subsequent reflections have long since satisfied me, that the decision of Morgan & Click vs Click ought to be overruled. The opinion of the Court is short, and it states that it is not material to say, whether the act would apply, if the copartnership was dissolved, because it did not appear, in that case, to have been dissolved, at the time of declaring; but, expresses' an opinion, that the statute would embrace the members of a dissolved firm, for the reason, that as the dissolution of the firm was always within the control of the members, they would not be permitted, by so doing, to evade the effect of the .statute.

With due respect, I may be permitted now, (for I then concurred,) to say that it does not appear to me, that any depu ration of right would result from such an evasion, even if the dissolution of the firm had such object in view; nor can I perceive how that consideration should govern the construction of the law. So long as partners had confidence in each other’s integrity, they would fear nothing from the operation of the statute — they would not believe any member capable of so much depravity, as to prac-tise a fraud on the rest, under the color of a suit, brought against him.

If mutual confidence were destroyed a dissolution; would certainly follow, if no suit was expected. A fear that a suit might be brought, and service on one of the partners alone concocted in fraud, and defended in bad faith, without the knowledge of those most materially to be ail’ectsd thereby, would be only ah additional, and a more urgent motive for the disso- lation. If a door to such fraud could be closed, by a dissolution, it would surely not be a reprehensible act, so to close, and evade the writ.

The oppressive consequences, that obviously may-result, under the law, even when it is confined in its operation, to the plain and obvious import of the language in which it is couched, would admonish us against an enlargement of its influence, by a liberality of construction, that would be an infringement of the soundest and most salutary principles of the common law, if not an infraction of a right guaranteed by the constitution.

A majority are, therefore, of the opinion that the judgment must be reversed.

Footnotes

a

3 Dalias 331.

a

3 Stewart, 296.

a

Minor’s R. 79.