Manufacturers & Mechanics' Bank v. Winship

22 Mass. 11

• Court: Massachusetts Supreme Judicial Court
• Decided: March 15, 1827
• Status: Published

Opinion

Putnam J.

delivered the opinion of the Court. The authorities cited for the plaintiffs establish the position, that a note or draft made or indorsed by an individual partner in the name and firm of the partnership, to an innocent purchaser, shall bind the partnership, notwithstanding the proceeds were misapplied to the separate use of the individual partner. In the language of the chief justice, in Boardman v. Gore, 15 Mass. R. 340, “ there seems to be no limitation of the authority of any one of a copartnership over the credit of the whole, when dealing with persons as one of a house ; such persons having no grounds to apprehend that the one with whom they deal is abusing the confidence of the others ”

Such was the case of Swan et al. v. Steele et al. 7 East, 210, where Wood & Payne were trading as partners in groceries, and afterwards admitted Steele to be a dormant partner with them in buying and selling cotton only. That business was to be carried on in the name of Wood & Payne, for the account of Wood, Payne, & Steele, but was not to be at all connected with the business of Wood & Payne as grocers. It happened that Wood & Payne sold cotton to Maitland, and received his bill of exchange in payment, and then they negotiated and paid that bill to Swan et al. for groceries. And Steele was properly held liable, notwithstanding he had no concern in the groceries. It was a misapplication of the funds belonging to the cotton concern, in which Swan et al. had no participation.

That case is somewhat like the case at bar, inasmuch as both of the concerns were carried on in one copartnership name. But it did not appear in that case, as it does in this, that the plaintiff knew that the name used to carry on the business applied to more than one concern. In the case at bar there is nothing upon the face of the note indicating that it was made on the account of Winship and the Binneys, rather than on the account of Winship alone. It is found that Winship carried on business as a merchant on his own account, and also that the Binneys were connected with him in the manufacturing establishment at Charlestown, which was carried on also in the name and firm of “ John Winship.” If ‘t had been proved that the note had been given for the use of the firm at the manufactory, the partners in that concern Would be liable. It would have been just like the transaction with Hovey, where Winship gave his note for stock to be manufactured, which the Binneys paid. But the case at bar was left without any evidence upon that point, and the direction of the chief justice seems to have been perfectly correct, that the burden of proof was upon the plaintiffs. The partners are not to be charged unless upon their contract, and no recovery is to be had against them, so long as it remains doubtful whether they have or have not made the contract declared upon.¹

The rule that a note or draft given in a partnership name, shall, in the hands of an innocent holder, be prima facie considered as having issued for the partnership account, must be confined to cases where the signature or other circumstances indicate a partnership concern.¹ In such cases the burden of proof would rest upon the defendants. They might show that the partnership name had been misapplied, and that the holder knew that the paper was made for the account of the individual, and without the knowledge of the other partners.

From the fact found by the jury, that this was an accommodation note between Winship and Jaques, it would seem more likely that it related to the private concerns of Winship, than to those of the partners. At any rate the uncertainty resting upon the face of the note would still continue. ' The plaintiffs knew, or might have known, that Winship was openly engaged in commercial speculations upon his own account, which were wholly unconnected with the manufactory, and that his signature might relate as well to one concern as to the other. If therefore they meant that the note should be enforced against the partnership, they should have ascertained that the signature of Winship was intended for the signature of the firm. But they made no such inquiry ; and it does not appear that Winship or Jaques ever made any representation to that effect. And although it appears that the plaintiffs supposed that the Binneys would be answerable, because they were partners with Winship in the manufactory, yet they gave no intimation whatever to the parties to the note to be discounted, that such was their understanding of the contract.

Upon consideration of all the facts m the case, we are al' of opinion that the judgment must be rendered upon the verdict for the defendants.

1 See United States Bank v. Binney, 5 Mason, 176 ; S. C 5 Peters, 529 Etheridge v. Binney, 9 Pick. 272; South Carolina Bank v. Case, 8 Barn. & Cressw. 427; S. C. 2 Man. & Ryl. 459.

But where it did not appear that the acting partner carried on a separate Diismesa on his own account, and also in his own name, and where he bor rowed money in his own name, it was held that in the absence of evidence, the presumption of law was, that the money was borrowed on account of the partnership. Mifflin v. Smith, 37 Serg. & Rawle, 165. See further, Collyer on Partn. 227; Bayley on Bills, (Phil. and Sewall’s 2d ed.) 52 to 54; Chazournes v. Edwards, 3 Pick. (2d ed.) 5, and notes to that case.

1 See Livingston v. Roosevelt, 4 Johns. R. 265; Collyer on Partn. 286 to 289