Western Stage Co. v. Walker

2 Iowa 504

• Court: Supreme Court of Iowa
• Decided: June 15, 1856
• Status: Published

Opinion

Stockton, J.

On the trial of this cause, in the District Court, the plaintiffs asked that certain instructions should be given to the jury, which were refused by the court, and the refusal is assigned for error.

By these instructions, the court was asked to charge the jury as to the right of a majority of the partners, against the will of a minority, to bind the firm in the consummation of a contract made before dissolution; and as to the effect and validity of the bill of sale from John Frink & Co. to plaintiffs, dated July 3d, 1854. Our first inquiry is, as to the correctness of these instructions. We ascertain from the evidence, that the partnership firm of John Prink & Co., expired by limitation, on the 30th of June, 1854, at which time the agreement with plaintiffs, of the 26th of May, had not been carried into effect. The property, comprising the stage stock of the firm in the state of Iowa, had been appraised, and a schedule of the same returned by the person •appointed for that purpose. When the parties met on the 3d of July, to consummate the agreement, by the payment of the money, the execution of the bill of sale, and the delivering of the property, there were five members of the firm of John Prink & Co. present. All of these assented to the sale to the plaintiffs, except Walker, who protested against the same, and gave his reason for his dissent. It does not appear how many persons composed the firm, nor whether those present were a majority of the whole. The question has been treated, in the argument, as though a majority were present, and assented; and so we shall consider it.

Neither does it appear, that there was anything in the written articles of partnership, if any such existed, to limit the rights of a majority, or to qualify, what we understand to be otherwise, the well settled rule of law, that in all matters within the scope of partnership dealings, or falling within the ordinary business and transactions of the firm, so long as the relation exists, each partner has the right and power to bind the partnership. By virtue of his relation, he is constituted the general agent of the firm, and is vested with a power, enabling him to act at once as principal, and as the authorized agent of his copartners. Story on Partnership, §§ 101, 104; Van Kueren v. Parmlee, 2 Comst. 525; Wilkins & Rollins v. Pearce, 5 Denio, 540. But, whilst each partner may bind the partnership by his contracts, in any matter within the limits of the partnership business, he cannot bind it by any contract beyond those limits; and a dissolution of the partnership, puts an end to his authority. Story on-Partnership, § 322; Bell v. Morrison, 1 Peters, 331. This may be stated as the general rule; a well defined exception to which exists, where the partnership has contracted engagements which cannot be fulfilled during its existence. In which case, for the purpose of making good such outstanding engagements; of taking and settling all accounts, and collecting all the property, means, and assets of the partnership existing at the time of its dissolution, for the benefit of all interested, the partnership must continue, although for all other purposes it is actually dissolved. -Story on Partnership, § 325. The agreement entered into by the firm with the plaintiffs, May 26, 1854, undoubtedly falls within this class of engagements. Though, as a contract for the sale and transfer of all the partnership stock in Iowa, it might not be considered as technically within the scope of the partnership, in view of a continuance of the business in which it had been engaged; yet, as the partnership was to expire on the 30th of June, succeeding, and as the agreement was made inwlp.w_.of its approaching dissolution, for the purpose of disposing of a portion of the stock which must necessarily be sold, in order to a settlement of the affairs of the firm, we see abundant reason for regarding it as a contract to be carried into effect after the dissolution of the partnership, and in relation to which it has been held, that for the .purpose of making good such engagements, the partnership continues beyond the period fixed for its absolute termination. With this view of the law, as applicable to this cause, we are of opinion, that the first instruction asked by the plaintiffs, was improperly refused by the court.

In the fulfillment of the outstanding engagements of the firm, and in the settlement of its business generally, the authority of each member remains the same, after as before -dissolution. The rights of the different partners are not changed, and where there-is no stipulation in the partnership articles, to limit or control their rights, a majority of the partners, acting fairly, and in good faith, may conduct the partnership business, notwithstanding the dissent of a minority. Story’s Partnership, § 125; Collyer on Partnership, 105. It does not appear, in this instance, that there was anything in the partnership articles of the firm of J. Frink & Co., to change the general rules of law, or to restrict the majority of the firm in the conduct of the business, and sale of the property. The only restriction placed upon them by the law, is, that their conduct should be in good faith. Upon this subject, Justice Story says: “In every case where the decision of the majority is to govern, it would seem reasonable that the minority, if practicable, should have notice, and be consulted; and if the majority should choose wantonly, to act, without information to, or consultation with, the minority, it would hardly be deemed a bona fide transaction, obligatory on the latter.” Story on Partnership, § 123. In Corst v. Harris, Turn. & Russ. 496, Lord Eldon says: “ For a majority to say: We do not care what one partner may say, we being the majority, will do what we please, is, I apprehend, what this court will not allow.”

Without undertaking to decide, whether the acts of the members of the firm present, when the bill of sale was about to be executed, were in good faith, or not, it appears to us, that there were circumstances attending the sale, which should have led the court below to submit that question to the jury. A majority of the firm, cannot arbitrarily trifle with the rights of the minority. The dissent of Walker, in the present instance, should have had the effect to arrest the sale to plaintiffs, until the objection urged by him was inquired into, and its truth, or falsity, satisfactorily ascertained. His dissent came in good time, and with notice to the plaintiffs. His reasons for protesting were given, and his statements were entirely uncontradicted, and unexplained. Not only were the other partners present, silent in regard to them, but they attempted, in the absence, and without the knowledge, of Walker, to get up another bill of sale, which should, avoid the objections made to the first. Walker owned one hundred and twenty-one of the three hundred and ten shares of the capital stock of the firm, and was certainly entitled to some voice in its deliberations, and it was a legitimate question for the decision of the jury, whether the effort to smother his objections, with the circumstances attending tbe execution of tbe bill of sale, were sufficient to taint tbe conduct of tbe majority of tbe firm witb bad faitb toward Walker, and thereby invalidate tbe bill of sale, so far as bis interest in tbe property in dispute is concerned.

In refusing tbe second, third, fourth, and fifth instructions, asked by tbe plaintiffs, and in giving tbe third and fourth, as modified by tbe court, tbe jury were in effect told, that the majority of tbe firm could not, under any circumstances, overrule tbe minority in tbe management of tbe business, and that if one member protested against tbe sale, bis interest in tbe property would not pass to tbe purchasers. We think that these instructions, as asked by tbe plaintiffs, should have been given, without tbe modification added by the court, and with tbe single qualification, that tbe jury should believe that tbe majority of tbe firm, in making tbe sale, were acting in good faitb. Tbe third and fifth instructions, given at tbe request of defendant, are equally erroneous, in laying down tbe law to be, that, “if tbe bill of sale was made without Walker’s assent, and tbe same was known to plaintiffs, it would not convey bis interest in tbe property and that, “ after dissolution, no partner has a right to convey partnership property in tbe name of tbe firm, without tbe consent of all tbe partners; and if be does, bis acts will not bind any partner who dissents therefrom, and will not convey such dissenting partner’s interest.”

We have given our reasons, why we think tbe court erred in giving these instructions, and why tbe jury should not have been charged, that Walker’s protest prevented bis interest in tbe property from passing to plaintiffs, under tbe bill of sale. Tbe question, whether it passed or not, was contingent, upon a fact to be ascertained by tbe jury, viz : whether tbe majority of the firm, in making tbe bill of sale to plaintiffs, were acting in good faitb towards Walker. The plaintiffs were entitled to have this question passed upon, and settled by tbe jury. If tbe sale and transfer were made in good faitb, tbe interest of Walker in tbe property, as one of tbe partners, passed witb that of tbe other members of the firm, to plaintiffs. If not made in good faith, then the interest only, of the other partners, passed, and plaintiffs, as joint owners, could not maintain the action of replevin. McIlderry v. Flannegan, 1 Harris & Gill, 322. And we must hold this to be the law, whether the plaintiffs claim under the first bill of sale, made July 3d, 1854, or under the second, made on the following day. The plaintiffs, having had notice of Walker’s dissent, if the same was,.of any validity, to prevent his interest in the property from vesting in plaintiffs, under the first, it was quite as effectual to prevent it from passing under the second. If the first was bad, for want of good faith on the part of the other members of the firm towards Walker, the same objection applies, and quite as forcibly, to the second.

We have said this much upon the questions arising upon the bill of sale of July 3d, and Walker’s protest against the same, because they have been^argued at length by counsel, and are intrinsically important and interesting, whatever may be the effect of the conclusions we have arrived at upon the decision of this cause. We proceed to the other questions, raised by plaintiffs’ motion for a new trial. It seems to us, that the question whether the interest of Walker in the property, passed by the bill of' sale of July 3d, 1854, to plaintiffs, is altogether secondary to the question, whether or not the whole of the property had passed to Walker, under the bill of sale of John Erink & Co., of June 10th, 1854 ? Walker claimed, not only an interest as a member of the firm, which he was unwilling should pass to plaintiffs, but he claimed that he had purchased the horses and coaches in dispute, as a part of the stage stock on the Burlington and Peoria route, and that they were his own, and not the property of the firm. His objection to the bill of sale to plaintiffs, was that the property was not Erink & Co.’s to convey; and whether it was or not, is the important question in this cause? Erink & Co. sold to Walker, on the 10th of June, all their stage stock in the state of Illinois. It was sold in gross, and for a sum in gross. They, on the 26th of May, agreed that on the first of July succeeding, they would sell to the plaintiffs, all their stage stock in the state of Iowa, at an appraisement and by schedule, to be made and returned by persons chosen for that purpose. The whole difficulty between the parties, has arisen from the fact that the property in question had been used by Erink & Co. in both states, having been about the 1st of May, 1854, transferred from Illinois to Iowa, and again between the 5th and 20th of June, been sent back to Illinois. The persons appointed to appraise the stock sold to plaintiffs, included in their schedule the property in question, and the schedule was attached to the bill of sale to plaintiffs. The question then arises, whether Erink & Co., on the Sd of July, had any interest in the property in dispute, which they could convey to plaintiff. There is no question as to their intention, because the property was included in the schedule attached to the bill of sale, and the majority of the firm were unquestionably seeking to convey it to the plaintiffs, at the time Walker made his objections and protested against it. Had it then been conveyed to Walker, by the bill of sale to him of June 10th? Let us look at this bill of sale. In consideration of sixty-five thousand dollars, Erink & Co. agree to grant, bargain, and sell to Walker, “all the stage stock now used or owned by us in the state of Illinois, including the stage stock on (among others) the Burlington and Peoria route, and all such personal property and other articles used in, about, or upon said route, and in the state of Illinois.”

The court charged the jury, that if the property in controversy was not in the state of Illinois on the 10th, the title of the same did not pass under the bill of sale, according to the strict letter of the same; but that they were authorized to judge and determine what was the intention of the parties; and if they thought it was their design to sell to Walker, all the stage stock that belonged to the Burlington and Peoria route, they should so determine by their verdict, and give to defendant all the stage stock belonging to the Hlinois route, wherever it might be temporarily, or casually situated. This, in substance, is the instruction of the court, and the jury found that Walker was entitled to the right of property, as well as the right of possession. The jury, by their verdict, ascertained that the property, in dispute, passed to Walter, under the bill of sale to him, of June 10th, 1854. We think we are justified in this conclusion, by the language of the verdict. It was directly responsive to the issue made for their decision, under the direction of the court; and there is, in our opinion, no reason for supposing that their verdict was induced or influenced, by what we consider the erroneous instructions of the court, as to the effect of the bill of sale, of July 3d, 1854. If there was any room for doubt on this subject, we should be disposed to give the plaintiffs the benefit of that doubt, by ordering a new trial. They find tbe right of property, as well as the right of possession, in defendant, and allow him, as damages, the appraised value of the property, with interest at six per centum per annum, from the date of the replevin till the day of the rendition of the verdict. How could the jury have found such a verdict, but by finding that the property passed to Walker, under the bill of sale of June 10th, 1854? The facts do not admit of any other conclusion. Tbe verdict cannot be looked upon as anything .but an ascertainment by the jury, that it was the design and intention of the parties, that the interest of John Frink & Co., should pass to the defendant by the bill of sale of June 10th, and that it did so pass. If it did, then, the firm had no interest in the property in dispute, to convey to plaintiff by the bill of sale of July Sd, 1854. They had previously parted with it to defendant. All the bills of sale they could have made, would not have strengthened or helped the plaintiffs’ right. Walker’s right, as absolute owner, overrides his interest as partner, and his dissent acquires a double significance, when it is understood as intended, not merely to prevent the transfer of his interest as a partner, but as a protest against the sale of property of which he was the absolute owner. The finding of the jury, on the question of the absolute ow'nership of the property, rendered it unnecessary that they should 'consider the question of the effect of the bill of sale of July 3d, 1854. As the greater always includes the lesser, so if Walker had acquired the complete title, by the bill of sale of June 10th, there was no necessity for' an inquiry on the part of the jury, whether he retained an interest as partner after the bill of sale of July 3d. The plaintiffs’ only claim of title was under the latter bill of sale, and if the jury were convinced that, before the time of its execution, the parties making it, had parted with all their interest, there was little need of investigation into the validity of the bill of sale of July 3d, when, whatever conclusion they might have arrived at, it could not have altered their verdict on the paramount question of defendant’s title, under the sale of June 10th, 1854. If the charge of the court had been different — - if it had been in accordance with what we have indicated the law, in our judgment to be — and the jury, upon consultation, had found that the bill of sale of Frink & Co., was made in good faith — still, it could only convey to plaintiffs, the interest in the property Avhich the partnership firm held at that time. If they had previously sold and conveyed their interest to Walker, there was none to sell and convey to plaintiffs, and the bill of sale of July 3d, passed nothing. If we could see that the charge of the court, had in any respect misled the jury, in making up their verdict upon what we deem the paramount question of the absolute title of Walker, under the bill of sale of June 10th, or had in the slightest degree prejudiced the plaintiffs’ cause, we should reverse the judgment, and order a new trial. But where the court has misdirected the jury on an immaterial point, or on a question not important to the- decision of the cause on its merits, we shall hesitate a long time before we disturb their verdict. We must see more in the record than we see in this, to induce us to order a new trial.

The plaintiffs’ motion for a new trial rests upon the alleged ground, that the verdict was against the evidence, and against the instructions of the court, and that the jury did not find the value of the property. The jury were told that they were to decide, whether the property in controversy belonged legitimately to the Illinois, or to the Iowa Stage stock of John Frink & Co., and that if they were of opinion it belonged to the Illinois stage stock, it passed to defendant, under the bill of sale of June 10, 1854, and they were to return their verdict accordingly; or, in the language of the court, they were to effectuate the true intention of the parties, and to give to the defendant the property which in fact belonged, at that time, to the Illinois stage stock, wherever else it might temporarily be at the time.” This charge of the court, left to the jury the determination of the fact, and the all important question in this ease, viz i whether the property belonged to the Illinois, or to the Iowa-stage stock of Frink & Co. We do not see from the record, that they have found against the weight of the evidence, or that they have given a wrong interpretation to the understanding and intentions of the parties to the bill of sale of June 10, 1854. If the property in question was part of the Illinois stage stock, on the Burlington and Peoria route, it was embraced by the terms of the bill of sale to defendant, and the verdict of the jury was in accordance with the intention of the parties to that agreement. That was a question to be determined by the jury.

The objection that the verdict of the jury does not find the value of the property, is not, in our opinion, well founded. We must presume that the jury were properly instructed by the court, as to the measure of damages, if they found for the defendant; and there is good reason to believe that the value of the property replevied, with interest, was the amount found by the jury. The finding of the value of the property, would be mere matter of form. If the amount of damages in this case were too small, it might be a matter of complaint on the part of defendant. We do not understand the plaintiffs to complain that the damages are excessive. We may state, that we have not examined the questions raised by plaintiffs’ third and fifth assignment of errors, because the ruling out the answer of Yernon to the third cross interrogatory, and the verbal instructions given by the court, as to the effect of the bill of sale to defendant, dated June 10, 1854, were not excepted to in the District Court. The question as to the correctness of the decision of that court, must first be raised there, by bill of exceptions, before it can be passed upon here.

Judgment affirmed.