Norwood v. Francis

25 App. D.C. 463, 1905 U.S. App. LEXIS 5301

• Court: Court of Appeals for the D.C. Circuit
• Decided: May 2, 1905
• Docket: No. 1466
• Status: Published

Opinion

Mr. Justice Duell

delivered the opinion of the Court:

Upon the above state of facts Francis’s liability for the debts of the bank turns upon the question whether he was a stockholder and member of the partnership at the time of its failure, for there can be no question but that this joint stock company, organized and carrying on its business within the District of Columbia, was in law a partnership and its members each liable for all of its debts. It is equally true, we think, that Francis, so far as the other stockholders were concerned, ceased to be a partner in the fall of 1898. Nothing he did after that date reinvested him with the duties or obligations of a partner. He complied with the articles of agreement in withdrawing from the company, and, from the mere fact of being unable to obtain from the company the amount due him for his shares, he was justified in selling them to a third party. If the partnership refused to recognize the purchaser as a member of the company, as undoubtedly they had a right to do, the purchaser might have looked to Francis for any injury caused him; but the fact that the company refused, if it did, to accept Tyson as a member, would not result in continuing Francis as a member against his will and in the face of the notice of November 1, 1898. We think that Francis did all that was necessary for him to do to sever his relations with the company. We do not think that he owed any further duty to his fellow members or to future depositors. It does not appear that the articles of agreement, or the names of the members of the company, were published in any newspaper or filed in any public office, as required by the laws of many states relative to ordinary or special partnerships. Had it been shown that Murray made the deposit with knowledge that Francis had once been a stockholder, then a different question might be presented than the one we are called upon to decide.

We have examined the authorities cited by counsel for both parties, and there seems to be the usual conflict ordinarily found in the decisions of the various State courts. It is, in our opinion, unnecessary to consider them and decide which line of cases give the best reasons for the conclusions arrived at. We consider the decisions of the Supreme Court in Thompson v. First Nat. Bank, 111 U. S. 529, 28 L. ed. 507, 4 Sup. Ct. Rep. 689, to be controlling. In the opinion of that case the authorities, both English and State, are exhaustively reviewed. In that case the court below had refused to instruct the jury that if Thompson was not, in fact, a member of the partnership, the plaintiff could not recover unless it was shown by the testimony that he had knowingly allowed himself to be held out as a partner and knowledge of this plaintiff had during its transaction with the partnership. The court said: “A person who is not in fact a partner, who has no interest in the business of the partnership, and does not share in its profits, and is sought to be charged for its debts because of having held himself out, or permitted himself to be held out, as a partner, cannot be made liable upon contracts of the partnership except with those who have contracted with the partnership upon the faith of such-holding out. In such a case, the only ground of charging him as a partner is that, by his conduct in holding himself out as a partner, he has induced persons dealing with the partnership to believe him to be a partner, and, by reason of such belief, to give credit to the partnership. As his liability rests solely upon the ground that he cannot be permitted, to deny a participation which, though not existing in fact, he has asserted or permitted to appear to exist, there is no reason why a creditor of the partnership, who has neither known of nor acted upon the assertion or permission, should hold as a partner one who never was in fact, and whom he never understood or supposed to be, a partner, at the time of dealing with and giving credit to the partnership.”

We think the court below was right in instructing the jury that upon the whole testimony their verdict must be in favor of the defendant Francis.

2. As to the appellee, Anna M. Johnson, the record discloses that she was a married woman at the time of the trial, and had been for more than twenty-five years the wife of one of the co-defendants, Jerome A. Johnson, and that as early as July, 1892, her husband gave her two shares of stock of the Capital Savings Bank. An account had been kept in her name in the bank, which showed that certain dividends had been applied to her account, the last one on July 16, 1896. She testified that she did not know how the account stood when the bank closed, as all of the business was transacted through her husband, and that she had nothing to do with it; that she never had a pass book of the bank, and that when dividends were declared upon the shares of bank stock her husband would speak to her about it; that some years before giving her testimony, which was in July, 1904, she had signed cheeks at her husband’s request, so that he could draw the dividends; that she never gave any authority to her husband to take the stock for her; that she had nothing to do with the bank; that her husband would give her checks to sign, and that she did not know what became of the money. In July, 1902, she transferred the stock back to her husband, with all the things he had given her, as she was then a sick woman, and that if anything happened to her she wanted it to go back to his people. The articles of agreement which were read in evidence disclose the name of Annie M. Johnson as one of those signing the articles. There is no question raised as to this being the name of the appellee. Upon this state of facts the court below instructed the jury to return a verdict in her favor.

Three questions are presented for our consideration. The first raises the question whether the ownership by a married woman of one or more shares of stock in a joint stock company is the carrying on of a trade, business, or occupation by her within the terms and meaning of the act of June 1, 1896, commonly called “The Married Woman’s Act.” The second question is whether a wife can be a member with her husband in such a partnership; and, third, whether the evidence is sufficient to connect her with the association or its business subsequent to June 1, 1896, or to charge her with liability for its obligation.

Section 3 of the act of June 1, 1896, under which it is claimed that Mrs. Johnson is chargeable, is as follows:

“That any married woman may carry on any trade or business, occupation, or profession by herself, or jointly with others and perform any labor or services on her sole and separate account; and the earnings of any married woman from her trade, business, profession, occupation, labor, or services shall be her sole and separate property, and may be used and invested by her in her own name.” [29 Stat. at L. 193, chap. 303.]

As we have heretofore stated, it is our opinion that a joint stock association, organized and carrying on business within the District of Columbia is a partnership, and, being a partnership, we see no good reason why a married woman, if she can enter into a partnership under the act of 1896, cannot hold shares of stock in a joint stock company and make herself liable to the extent that other shareholders are. The section above quoted is broad, and a fair construction of its terms permits a married woman to become a member of a partnership. It states that she “may carry on any trade or business, occupation, or profession by herself, or jointly with others.” We do not think the act is to be so limited that a married woman, in order to carry on a trade, business, or occupation in conjunction with others, need necessarily perform labor or render services in order to render her liable, as to third parties, as a partner. It must be borne in mind that there is no statute in the District of Columbia providing for the formation of joint stock companies, as in many of the States, which results in their being very analogous to corporations. A stockholder in an unincorporated joint stock company is a partner, and the liability and duties of one so interested differs very materially from that of a holder of stock in any incorporated company.

The second question is one not free from doubt. The conflict of decisions is very marked. The statutes adopted in England and the various States of this country differ materially in terms, and, as the decisions are based upon such statutes, we would naturally look for decisions apparently conflicting, although most of them can be reconciled when considered in the light of a special statute which is the foundation of the proceeding. In Massachusetts a husband and wife cannot enter into a partnership contract, although they may do so with others. Bowker v. Bradford, 140 Mass. 521, 5 N. E. 480. In Michigan the same is true. Artman v. Ferguson, 73 Mich. 146, 2 L. R. A. 343, 16 Am. St. Rep. 572, 40 N. W. 907. In New York there was a conflict of decisions between the court, of appeals and what was known as the second division, the latter being a court composed of judges of the supreme court, delegated to assist the court of appeals in disposing of a large arrearage of business. In Hendricks v. Isaacs, 117 N. Y. 411, 6 L. R. A. 559, 15 Am. St. Rep. 524, 22 N. E. 1029, the court of appeals, by unanimous decision of its seven judges, held that a married woman at that time was not permitted to make a binding contract with her husband, while the second division, by a vote of four to three, in Suau v. Caffe, 122 N. Y. 308, 9 L. R. A. 593, 25 N. E. 488, held that a married woman could not be a copartner with her husband. Following these conflicting decisions, the statute relating to married women was amended in 1892 so as to provide that a married woman might contract with her husband or any other person as though she were unmarried, except that the husband and wife were prohibited from contracting that the married relations should be altered or dissolved, or to relieve the husband from his liability to support his wife. N. Y. Stat. 1892, chap. 594. In several of the States married women are allowed to enter into partnerships with their husbands and to make contracts with them. Hoaglin v. Henderson, 119 Iowa, 720, 61 L. R. A. 756, 97 Am. St. Rep. 335, 94 N. W. 247; Lane v. Bishop, 65 Vt. 575, 27 Atl. 499. The text writers, however, agree that the weight of authority goes to show that husband and wife may not be memberst of the one partnership. One writer thus states the reasons for the rule:

“The incapacity is not one that concerns the wife only, and hence it remains notwithstanding snch laws, unless, indeed, they expressly declare that the husband and wife may contract with each other generally. The disability is one entirely outside of the common-law doctrine of the feme covert not being sui juris, and therefore is not removed by statutes intended to merely change the common law in that respect. The point upon which the disability rests is the legal status of husband and wife, who, in contemplation of law, are one person, no individual being able to contract with himself.” George, Partn. p. 15.

While the tendency of legislation has been to remove the disabilities of married women, we think, in view of all the authorities, that such statutes removing such disabilities should not be construed so broadly as to permit a partnership between husband and wife, unless the statute expressly gives the husband and wife power to contract with each other generally, we therefore conclude that the appellee Anna M. Johnson could not become a member with her husband of a partnership such as the one in question. Any doubt we might have on the subject we would feel constrained to resolve in her favor, in view of the facts disclosed by the record. Her husband signed her name to the articles of association without, so far as appears, her knowledge or authority; any benefits resulting from the ownership of the two shares of stock were received by him, and she is not shown to have in any way participated in the business of the bank. While these facts, standing by themselves, would not be sufficient to give her immunity in view of the fact that she knew that her husband had transferred the shares to her, and, at his direction, she signed checks, which facts were sufficient to apprise her that, at least, her husband was using her name, yet it must be remembered that the shares were transferred to her prior to the passage of the act of 1896, and at a time while she was admittedly disqualified from becoming a- member of such partnership. While it is true that the account shows that on July 16, 1896, a dividend of $10 was placed to her credit, it is not shown that she had any knowledge of this fact, and therefore, it cannot be considered a ratification; neither, under the circumstances, can there be held to be a ratification by reason of her permitting the shares to stand in her name, she not being shown to have had possession of them. All the circumstances tend to intensify the correctness of our conclusion that a married woman should be held to be incompetent to become a member with her husband in such a partnership as the one in question, in the absence of a statutory enactment clearly and positively conferring upon her the power so to do.

On the whole, we conclude that none of the assignment of errors set forth any error which would warrant us in reversing the judgment of the lower court, either as to the appellee John Id. Francis, or his coappellee, Anna M. Johnson. It follows that the verdict for the appellees was properly directed, and that the judgment in favor of the appellees should be affirmed, with costs. Affirmed.