Grosvenor v. Lloyd

42 Mass. 19

• Court: Massachusetts Supreme Judicial Court
• Decided: March 15, 1840
• Status: Published

Opinion

Shaw, C. J.

delivered the opinion of the court. After stating the directions given to the jury, as to the liability of the defendant, he proceeded thus : The court are of opinion, that this direction was not correct. A dormant partner is liable for debts contracted whilst he is a partner, not because credit is given to him, but because he is in fact a contracting party, taking part of the profits of such contracts. But when he ceases to he in fact a partner, the reason ceases, and he is no longer liable. He is not liable as a contracting party, because the partnership name, under which the remaining partners continue to transact business, no longer includes him, though that name may remain the same ; and he is not liable as holding out a false cred-t for the firm, because the case supposes that he is not known as a partner, and therefore the firm derives no credit whilst he remains a secret or dormant partner. No customer, therefore, or other person dealing with the firm can be disappointed in any just expectations, if he silently withdraws from the firm. A very different rule would apply where one had been a known or ostensible partner, and held himself out as such.

It is stated in the bill of exceptions, that there was evidence tending to show that Lloyd admitted himself to be a partner after the first of April; but by the instructions given to the jury in point of law, the consideration of this evidence became immaterial, and the jury might have found their verdict for th( plaintiff without passing upon it.

Exceptions allowed ; and the verdict to be set aside, and a neiv trial had at the bar of the court of common pleas.