Eady v. Newton Coal & Lumber Co.

51 S.E. 661, 123 Ga. 557, 1905 Ga. LEXIS 541
CourtSupreme Court of Georgia
DecidedAugust 1, 1905
StatusPublished
Cited by7 cases

This text of 51 S.E. 661 (Eady v. Newton Coal & Lumber Co.) is published on Counsel Stack Legal Research, covering Supreme Court of Georgia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Eady v. Newton Coal & Lumber Co., 51 S.E. 661, 123 Ga. 557, 1905 Ga. LEXIS 541 (Ga. 1905).

Opinion

Evans, J.

(After stating the facts.) 1. Counsel for the defendant in error insists that the agreement between Brooks and the manager of the Newton Coal & Lumber Company was an engagement in furtherance of the partnership business, which Brooks had the right to make and by which .his copartner is bound. This proposition is claimed to be supported by the case of Perry v. Butt, 14 Ga. 699. The report of that case discloses [561]*561that the partnership concern did a cash and credit business and bartered goods for other articles. The defendant was a tavern-keeper, and, in a conversation with one of the partners upon the subject of boarding, said that when merchants or their clerks boarded with him, it was his custom to trade it out, aud that he did not expect cash. It was the understanding that the tavern-keeper’s charge for the board of one of the partners was to be allowed for any goods he might buy of the firm; the tavern-keeper had twice settled his account with the firm for goods purchased prior to the time the note in suit had been given, and in each settlement the partner’s board had been allowed as a credit. These settlements were duly entered on the books of the firm. Upon these facts, the great judge who delivered the opinion of the court said that one partner, in furtherance of the joint business, may agree with a hotel-keeper that if he will deal with the firm, his account shall be settled by the board .of the partners, and the contract will be binding on the firm. It is perfectly clear and manifest from the entire report of the case that the court did not intend to hold that one partner could sell the firm’s goods for his private benefit. Otherwise it would have been entirely useless for the court to discuss ratification because of prior entries on the books. Aud to make it more clear that such was not the intent is the express recognition of the principle that one partner can not appropriate the partnership effects in payment of his individual debt. Still, as the language used is susceptible of the construction placed upon it by counsel for the defendant in error, leave was granted to review the ruling announced in the fifth division of the opinion filed in that case. We think the true rule of liability is well stated in Worder v. Newdigate, 11 B. Mon. (Ky.) 177: “If a firm sells goods and receives various commodities in payment, the act of one partner in relation thereto binds the firm, because it is in the course of its trade and done in the name and for the benefit of the partnership. But when goods are purchased to be paid for in commodities furnished, not for the firm, but for one of the partners individually, and this fact is known to the purchaser, the act of one partner in such a case'' does not bind his copartners unless they assent to it.” To bind the partnership it is essential that a contract of this character be made not only in the name of the firm, but at least ostensibly [562]*562for the firm’s benefit. Otherwise it will not be binding on the partnership. One of the reasons advanced why such a contract would be binding on the copartners is that a partner has a right to accept specifics in payment of the goods ,of the firm, and when firm goods are sold under a contract to be paid for in specifics for the individual use of one of the partners, and the goods are paid for in this way, a suit in the firm name to recover the value of the goods is not maintainable, because the. goods have been paid for in terms of the contract under which they were purchased. Fay v. Green, 1 Aik. 71; Strong v. Fish, 13 Vt. 277; M’Kee v. Stroup, Rice, 291; White v. Toles, 7 Ala. 569 (overruled in Cannon v. Lindsey, 85 Ala. 198). The fallacy of this argument is that the truth of the premise is assumed. The goods have never been paid for; the firm has never received any quid pro quo from the customer. As was said in Thomas v. Pennrich, 28 Ohio St. 55: “The assumption is true if the setting off of a debt due the firm against the private debt of the partner is a payment of that debt. But it is conceded that a partner can not pay his own debt by using the firm property to that end.” Other cases are based on the observation of Lord Ellenborough in Henderson v. Wild, 2 Campb. 561, to the effect that a receipt by one of the partners discharging the firm debtor in consideration of the settlement of a private debt of the partner executing the receipt is binding on the firm. Halls v. Coe, 4 McCord, 136. But this doctrine is repudiated by the great weight of authority, and recognition is given to the principle that one member of a partnership has no implied authority to dispose of property of the partnership in satisfaction of his individual debt or for his individual benefit. Bank v. Rice, 48 Neb. 428; Evernghim v. Ensworth, 7 Wend. 326; Thomas v. Pennrich, 28 Ohio St. 55; Minor v. Gan, 11 Sm. & Mar. 322; Flower v. Williams, 1 La. 22; Atkin v. Berry, 1 Tenn. 91; Thomas v. Stetson, 62 Ia. 537; Dob v. Halsey, 16 Johns. 34; Cotzhausen v. Judd, 63 Wis. 213; Chase v. Buhl Iron Works, 55 Mich. 139; Brooks v. Carpenter (Ky.), 53 N. W. Rep. 40; Taylor v. Rasch, 23 Fed. Cas. 789; McNair v. White, 46 Ill. 211; Bell v. Faber, 1 Grant, 30; Gullatt v. Tucker, 2 Cranch C. C. 33.

Several American courts have followed the English case of Jones’ Assignee v. Yates, 9 B. & C. 532, assigning as the reason [563]*563why a partnership could not sue for the value of goods sold by one of the partners to a customer, under an executed agreement that the goods were to be paid for by delivery of specifics to the partner’s private use, that it would allow a plaintiff in a court of law to rescind his own act on the ground that such act was a fraud on some other person. Greely v. Wyeth, 10 N. H. 15; Homer v. Wood, 11 Cush. 62; Craig v. Hulschizer, 34 N. J. Law, 363. As was clearly demonstrated in Purdy v. Powers, 6 Pa. St. 494, “ tins action does not proceed upon a suggestion of mala fides or imputed fraud in one of the parties, but upon the foot of the original claim, springing from the debt contracted with the firm in the usual course of dealing, and there is nothing standing in the way of the action which requires to be rescinded.” An agreement between one partner and a purchaser to sell partnership goods and receive in exchange therefor commodities to be applied to the private benefit of the individual partner is a void act, in that it is beyond the scope of the authority of a partner to make such an agreement, and the very nature of the agreement informs the purchaser that the firm is parting with its property and receiving nothing in exchange. A private agreement by one partner for bis separate advantage would work a great injury to partnership assets, and thereby to associates in the firm and the creditors of it. Several cases upon practically the same facts as are involved in the case under consideration have been before the courts, and a brief reference to some of them may aid in illustrating our position. In Brickett v. Downs, 163 Mass. 70, Brickett and Shorey were coal dealers, and the defendant was a dentist. The suit was for the price of coal, and the defendant pleaded that Shorey was haying teeth fixed in the defendant’s office, and proposed that defendant take coal in part payment for dental work done and to be done for Shorey and his family, and to this proposition the defendant assented.

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Bluebook (online)
51 S.E. 661, 123 Ga. 557, 1905 Ga. LEXIS 541, Counsel Stack Legal Research, https://law.counselstack.com/opinion/eady-v-newton-coal-lumber-co-ga-1905.