242 U.S. 138 (1916), 88, McIntyre v. Kavanaugh

Docket Nº:No. 88
Citation:242 U.S. 138, 37 S.Ct. 38, 61 L.Ed. 205
Party Name:McIntyre v. Kavanaugh
Case Date:December 04, 1916
Court:United States Supreme Court

Page 138

242 U.S. 138 (1916)

37 S.Ct. 38, 61 L.Ed. 205




No. 88

United States Supreme Court

December 4, 1916

        Argued November 10, 1916




        Partner are individually responsible for tort committed by their firm while acting within the general cope of it business, whether they personally participate therein or not.

        One who, being entrusted with the possession of corporate stocks as security for an indebtedness, deliberately sells them and appropriates the proceeds, in excess of the debt secured, without the knowledge or consent of their owner, is guilty of a "willful and malicious" injury to property within the meaning of § 17, clause 2, of the Bankruptcy Act, as amended by the Act of February 5, 1903, 32 Stat. 798, and, consequently, his liability is not released by a discharge in bankruptcy.

        210 N.Y. 176 affirmed.

        The case is stated in the opinion.

        MCREYNOLDS, J., lead opinion

        MR. JUSTICE McREYNOLDS delivered the opinion of the Court.

        Plaintiff in error was a member of T. A. McIntyre & Company, engaged in business as brokers. During February, 1908, the partnership received certain stock certificates owned by defendant in error, and undertook to hold them as security for his indebtedness, amounting to less than one sixth of their market value. Within a few weeks, without authority and without his knowledge, they sold the stocks and appropriated the avails to their

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own use. Shortly thereafter, both firm and its members were adjudged bankrupts. After his discharge in bankruptcy, this suit was instituted against plaintiff in error, seeking damages for the wrongful conversion. He set up his discharge and also personal ignorance of and nonparticipation in any tortious act.

        The trial court held the liability was for willful and malicious injury to property and expressly excluded from release by § 17(2), Bankruptcy Act, as amended in 1903, and that the several partners were liable. A judgment for damages was affirmed by appellate division, 128 A.D. 722, and Court of Appeals, 210 N.Y. 175.

        That partners are individually responsible for torts by a firm when acting within the general scope of its business, whether they personally participate therein or not, we regard as entirely clear. Castle v. Ballard, 23 How. 172, Matter of Peck, 206 N.Y. 55. If, under the circumstances here...

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