Banner Tobacco Co. v. Jenison
| Decision Date | 14 June 1882 |
| Citation | 48 Mich. 459,12 N.W. 655 |
| Court | Michigan Supreme Court |
| Parties | BANNER TOBACCO CO. v. JENISON and others. |
An insolvent debtor made a chattel mortgage on his stock of goods to a particular firm of creditors who did business in another town, and recorded the mortgage without their request or knowledge. One of the firm, however, took nominal control of the business, putting their sign over his door and starting a bank account in the firm name, but leaving him to carry on the store as their agent, with the caution not to get it in debt. The agent carried on the business for over four years and made purchases on credit. And one from whom he had so purchased afterwards brought suit against the firm for the purchase price of goods. Held that very slight circumstances of knowledge or assent on the part of the other partner ought to be enough to make the firm responsible for acts of the agent in keeping up the stock in the usual way.
Where one member of a firm has taken a chattel mortgage on a stock of goods to secure a debt to the firm, he has authority, as partner, to take goods in payment of the debt and to create an agency for selling them by putting them in the mortgagor's charge, and if he thinks that keeping up the stock is the best way to sell the goods to advantage, slight evidence of his partner's assent is enough to make the firm responsible for the agent's acts in purchasing goods for that purpose. And secret instructions to the agent will not enable them to escape responsibility for acts which, in the usual course of the business, the public would have a right to understand were authorized.
Where a firm doing business in one place take charge, under a chattel mortgage, of the business of an insolvent debtor in another place and leave him to carry it on in their name, it is not negligence for others to sell to the agent on the responsibility of the firm without inquiring into the agent's authority; the firm must take the risks of the arrangement, which is of a questionable nature.
The question whether the carrying on of a specified business is within the scope of a partnership is a question of law rather than of fact.
It is not error to reject a special question to the jury where it involves law rather than fact and is covered by instructions.
Inconclusive special questions to a jury may be rejected.
Error to Kent.
Taggart, Stone & Earle, for plaintiff.
J.C Fitzgerald, for defendants and appellants.
This is an action of assumpsit originating in justice's court appealed to and tried in the circuit court, where the plaintiff had judgment. The defendants bring it here by writ of error.
The following facts will present the general features of the case:
On June 26, 1875, the defendants were in business together as millers at Jenisonville, near Grand Rapids, under the partnership name of L. & L. Jenison. One B.F. Emery was at the same time in business selling groceries, flour and feed at Whitehall and was indebted to defendants in upwards of a thousand dollars. He was indebted to others also, and it is inferable from the record that he was insolvent. Under these circumstances he executed and put on record a chattel mortgage of his stock to defendants, without their request or knowledge, and then telegraphed them to come to Whitehall. Mr. Luman Jenison, who had personal charge of the milling business, received the telegram and went to Whitehall in response to it. When there an arrangement was made between him and Mr. Emery under which the apparent ownership of the stock of goods was placed in the firm of L. & L. Jenison, and their name placed upon the store as is usual to indicate proprietorship. Mr. Emery was then to go on and sell the stock in the usual course of business as their agent, keeping it up by new purchases as should be found needful. Luman Jenison in his testimony says that no purchases were to be made on credit, and all authority to use the credit of the firm was expressly withheld. Emery denies this, but admits he was cautioned not to get the store in debt. He bought, however, from time to time on credit, and among other purchases made of the plaintiff the purchase of cigars, the bill which is the subject of this suit. Luman Jenison at the time of the arrangement opened a bank account for Emery in the name of L. & L. Jenison with a banker at Whitehall, and Emery procured letter and bill heads in the same firm name which were used by him.
The business continued under this arrangement until the fall of 1879; Emery and Luman Jenison evidently understanding that though Emery was ostensibly agent, he was really as between the parties themselves only mortgagor, with permission to sell the mortgaged goods to pay the debt. He did not, however, during all this time reduce the debt, but on the other hand received flour from defendants for which he paid only in part. Meantime he took the benefit of the bankrupt law, and received his discharge on September 11, 1879. Luman Jenison went to Whitehall and with the concurrence of Emery sold out the stock to one Banks, realizing therefor less than the sum due his firm. Subsequently the account of the plaintiff was presented to him for settlement, and he...
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