Freeman v. Carpenter

17 Wis. 126

• Court: Wisconsin Supreme Court
• Decided: January 15, 1863
• Status: Published

Opinion

By the Court,

Cole, J.

The first obiection which we deem it necessary to notice is to tbe ruling of tbe circuit court rejecting the record offered to show the pendency of a prior suit for tbe same cause of action. It is stated on tbe brief of counsel, that tbe court rejected tbe record solely on tbe ground that, being matter in abatement, it was waived by pleading matters in bar. In other words, tbe court held that tbe present system of practice bad not changed tbe common law rule wbicb required that matters in abatement should be pleaded and disposed of before putting in a defense on the merits. We disagree with tbe circuit judge upon this point, since we have no doubt that, under tbe statute, a defendant may unite in his answer matters in abatement with those in bar. It has been so decided in New York, and such, we think, is tbe fair and rational construction of the provisions of chapter 125, R. S. Sweet vs. Tuttle, 4 Kernan, 465; Gardner vs. Clark, 21 N. Y. 399. But this error we consider quite immaterial, for tbe reason that tbe record showed a discontinuance of such former suit, and therefore tbe appellant could not have been prejudiced by its exclusion. For the record states that tbe plaintiffs in that suit discontinued tbe action on the 22d day of January, 1861, which, in tbe absence of all proof to tbe contrary, we must presume was done before tbe commencement of this suit. This is an order actually entered of record in tbe cause. But it is said that the order was ineffectual to discontinue tbe suit without tbe payment of tbe defendants’ costs. Concede that this was so, but what is there to show that those costs were not paid ? We do not suppose it is usual to enter upon tbe record that the costs are paid. It was undoubtedly competent for the plaintiffs to discontinue the first suit by entering the proper order and paying or offering to pay the costs of the opposite party. This will not be denied. The proper order was entered, and there is not one particle of proof offered or shown upon the question of payment of costs. As the record itself shows that the suit was discontinued, we cannot presume that such discontinuance was ineffectual on account of some extrinsic fact not shown to exist. On the contrary we must follow the record, since this is the only evidence we have upon the point, and say that the prior suit was properly discontinued. And in this view the exclusion of the record could work no injury to the defendant, it not tending to show the pendency of the former suit.

The action was brought upon a promissory note claimed to have been given by a member of the firm of Carpenter, Noyes & Co., in a manner and under circumstances making it a partnership debt. The defendant Carpenter resists the payment of the note principally upon the ground, as stated in his answer, that it was not given to secure any debt for which he or the firm was liable; nor made with his knowledge or consent; nor for his profit or advantage; nor in any transaction of partnership business; but was given in fraud of his rights by his partner and co-defendant Noyes, to secure a private and individual debt. It appears that the note was given for money borrowed by Noyes, who signed the firm name and the real and important point of inquiry is, whether, under the circumstances, he had authority to borrow money and give a note therefor which should bind the firm. If he had such authority, then, though the money was. not used for the firm, but was misappropriated by Noyes, still we suppose the firm is liable, unless the lender had notice of the misapplication, which was not the case here. We have then to inquire whether borrowing money and giving notes therefor in the name of the firm was consistent with the partnership business and within the scope of its authority express or implied. On the one hand it is contended that the partnership was special or limited, confined to the transaction of land-agency and money-broker business on commission, without any authority given one partner to borrow money on the credit of the firm: while on the other hand it is insisted that one of the objects of the partnership was to loan and deal in money, and that borrowing money is perfectly consistent with this business and with the regular course of the partnership dealings. Considerable evidence was given on the trial, or was offered and rejected, tending to support one theory of the case or the other, and a number of points are made arising upon instruction^ either- given or asked and refused, which we think will be sufficiently met and disposed of in considering the different clauses of the articles of copartnership. These articles of copartnership were introduced in evidence, and if it can be said, upon a fair construction of them, that authority was given one member to borrow money in the name or on the credit of the firm, or if such a power may fairly be implied from the nature and objects of the partnership operations, then a consideration of all other questions discussed upon the argument becomes unnecessary. We will then look into the articles of copartnership themselves, to see what business was contemplated to be transacted by the partnership and what comes fairly within the scope of the authority therein granted.

In the first clause of the articles the parties therein named agree with each other “ to engage in the general business of land agents and money and commission brokers, and to continue in the same so long and no longer than the said parties can mutually agree.” The fourth clause provides, “ Should either party hereto furnish more cash capital than the other, in the business, he shall be allowed ten per cent, per annum for all such moneys, and the balance of the profit, if any, shall be divided equally, as the other profits, between the parties hereto.” Eighth: “ Neither party shall draw from the funds of tbe firm, unless there shall appear from the books and accounts thereof to be funds over and above the liabilities of said firm; and in no case shall either party draw more than twenty-five dollars per month without the mutual consent of the parties hereto.” Ninth: “All moneys belonging to the firm or individuals, when amounting to more than fifty dollars, shall be deposited in one of the banks of the city of Madison, unless by mutual consent we agree to do otherwise. Said moneys to be deposited in the name of the firm or the individual to whom said moneys may belong.” Tenth: “No moneys belonging either to the firm or to individuals shall be loaned or paid out without the consent of the parties hereto, and all matters pertaining to the value or safety of securities offered for money shall be submitted to both parties hereto for approval.” The other clauses of the agreement relate to the place and manner of conducting the business, but they have no bearing upon the point in consideration.

Now from these clauses it is very obvious that the parties did not contemplate the transaction of a mere agency or brokerage business alone, but did intend to keep on hand a cash capital belonging to the firm and individuals, and to make loans of money as the exigencies of their business might enable them to do. For if indeed they intended to confine the partnership operations to a mere agency and money brokerage, why was provision made that if either party furnished more cash capital than the other he should be allowed ten per cent, interest thereon; or that no funds of the firm should be drawn out unless there was sufficient to meet the liabilities of the firm ; and more especially why were the stipulations made in regard to depositing the money belonging to the firm in bank, or to loaning it out on securities to be approved by the parties ? These stipulations are utterly inconsistent with the idea that they were to confine their business to that of a land agency and middle men or intermediate negotiators. They evidently contemplated keeping on hand a cash capital and dealing in money by making loans. If tbis was one of the objects of tbe partnership, then the power was necessarily granted to the members of the firm to transact the business in the usual way and bind the firm by his acts. Eor the principle is elementary, that each partner has power to bind his copartners by any acts within the legitimate limits of the partnership operations. This partnership being formed not to transact agency business alone, but one of its objects being to deal in money, to keep it on hand and make loans as their means and circumstances would allow, the power was necessarily given each member of the firm to borrow money in its name and on its credit. It seems to be strictly analogous to a partnership formed to conduct a mercantile business, where each individual buys and sells for the company and purchases on the credit of the firm when necessary for its successful operation. Eor if the intention was to deal in money, make loans &c.r it would be essential frequently to borrow funds, or this branch of their business would cease. This power to borrow is implied in the very existence of a partnership formed for such a purpose.

On the argument we were referred to a great number of authorities where it had been decided that in partnerships between attorneys, physicians, artisans or farmers, or those established to conduct some particular business, one partner could not bind another in a matter unconnected with the objects of the firm. These cases are decided upon sound principles and in entire harmony with the views announced. They all say if the act performed is necessary for the successful carrying on of the business of the firm, then the law implies an authority to do it. Persons associated together for the practice of law or medicine have no general authority to bind each other by giving promissory notes or drawing bills of exchange, because these things are foreign to the purpose of the partnership. But the cases say, if the note was executed for anything for which the firm had use, or which, from the nature of the company, was necessary and usual to the successful prosecution of its operations, then it becomes a charge against the firm. This is the result of the authorities, and disposes of this case.

Note. — On a motion for a rehearing, the counsel for the appellant urged that the payment of the costs being necessary to a valid discontinuance of the suit, the pen-dency of which was plead in abatement, a record which did not show such payment did not show a valid discontinuance. It cannot be claimed that there is any legal presumption that attorneys have done everything necessary to be done previous to filing a paper. 'JPhe party who claimed the benefit of the discontinuance must show that it was rightfully entered. Babb vs, Mackey,' 10 Wis., 371. Clerks invariably enter the payment of costs on their dockets when made to them, or when reported by the sheriff, or when any receipt or other evidence of such payment is produced to them. Rule 1st of the Rules of1857 contemplates that books shall be kept for that among other purposes. But if it were unusual to make such payment matter of record, then, the record being offered and admitted, there would be no proof either way, and the party who relied upon showing a discontinuance should be required to prove such payment by other evidence. Sec. 71, ch. 133, R. S., requires every officer receiving any fees to give a receipt for them. If, therefore, the costs were paid, the plaintiff had, or might have had, the means of proving when, where and to whom they were paid. 2. But suppose the defendant was bound to show affirmatively that the costs remained unpaid, still he must first have produced and given in evidence the record. It would be absurd to offer proof that the costs in a particular suit were not paid, until the record be admitted to show the existence of the suit. The record was rejected, in fact, because the.circuit court held the answer to be improper, and this court, holding the answer to be good, sustains the ruling because the defendant did not prove a fact which he could not prove until he had first introduced the record. 8. Counsel contended that the articles of copartnership should all be construed with reference to the first paragraph, which defined the business in which the partners proposed to engage, viz., that of “ land agents and money and commission brokers; ” that they were all consistent with the idea of an exclusive agency business, and did not show that the borrowing of money was contemplated. 4. Even if the articles of copartnership did authorize the firm to engage in something more than an agency business, it might well be that, in fact, no such business was ever done. Two persons enter into copartnership as lawyers. In the articles there may be provisions contemplating the further business of buying and selling land warrants, exchange, &c.; but in fact they never engage or advertise to engage in anything beyond the practice of the law. The public knows nothing of the secret provisions of the articles of copartnership. One of them borrows money for a purpose not connected with their professional business, and gives the firm note. In a suit against the other there is proof tending to show, or showing positively, that the firm advertised and did no business except as lawyers. Ought not the court to instruct the jury as to the law of the case on the theory that no other business was in fact done ? And ought it not to permit the defendant to prove what business the firm was engaged in at the time the money was borrowed and the note given?

In this view of the nature of this company, and of the power conferred upon the members of the firm by the articles of co-partnership, it follows that the judgment of the circuit court must be affirmed.

Judgment affirmed.

The motion for a rehearing was denied. — Hep.