Bank of Morton v. Etheridge & Hardee

• Decision Date: 20 November 1916
• Docket Number: 18498
• Citation: 112 Miss. 208,72 So. 902
• Parties: BANK OF MORTON v. ETHRIDGE & HARDEE ET AL
• Court: Mississippi Supreme Court

72 So. 902

112 Miss. 208

BANK OF MORTON v. ETHRIDGE & HARDEE ET AL

No. 18498

Supreme Court of Mississippi

November 20, 1916

APPEAL from the chancery court of Scott county, HON. G. C. TANN Chancellor.

Suit by the bank of Morton against Ethridge & Hardee and others. From a decree for defendants, dismissing the bill as to defendant Hardee and others, plaintiff appeals.

The facts are fully stated in the opinion of the court.

Decree reversed.

Howie &amp Howie, for appellant.

We are unable to find any thing in point against us in the cases cited by the counsel in their brief. Most of them are wholly different in the facts and in no wise applicable.

The case of Langan v. Hewett, is a case where there was a partnership agreement which bound the partners as to what they could and could not do. In the present case there was no partnership agreement at all. They were running as general partners without any limitations on the powers of either. The only time that there was any attempt to limit the powers of either was when the appellee wrote the Bank regarding one loan. Later the partner Ethridge states that it was agreed between him and Hardee that he, Ethridge, should come back to Morton and run the business and that he was to get a loan from the Bank of Morton if he could. No one has denied the correctness of this statement of Ethridge, not even Hardee himself. Then the facts are that there was no limitations on the power of Ethridge at the time of making of this loan. Ethridge told the bank that he had authority to borrow the money, he was in charge of the business with the knowledge and consent and on the direction of Hardee.

In the case of Bloom v. Helm, one partner signed accommodation paper. This was not within the scope of his authority nor in the course of the business of the firm. In the present case even counsel for the appellee do not contend that this money was not loaned in the usual course of the business and that it had not been done before and was proper in the handling of the business. Here it was customary for the thing to be done and was within the scope of the partner's authority there it was not. Quite a different case.

The case of Price v. Crawford, is also different. The trouble there was that the debt was contracted without the scope of business. Here it was not only within the scope of the business but had been done many times before. Further, by the uncontradicted testimony of Ethridge, it was procured on the suggestion of Hardee to Ethridge.

The case of Stegall v. Covey turned on the point of fraud on the part of the partner in the making of the debt. Here there is not the least taint, or suggestion of taint, of fraud.

In the case of David v. Richardson, the court repeatedly stated that: "If the money was not necessary in the business" then the firm would not be liable and it not being found necessary in that business under consideration it was held that the partnership was not bound. In the case now before the court everybody acknowledged, and no one will now contend, but that the money borrowed from the bank was necessary to the business and was actually used in the partnership business for the payment of debts that the defendant, Hardee, would have otherwise had to pay.

In the last named case there it also the modification that such is the law unless he "subsequently ratified the transaction." In the present case we are insisting that regardless of all other contentions we are entitled to stand on the proposition of ratification by Hardee.

In the case of King v. Levy, one member of the firm attempted to bind the firm for the payment of his individual debt. This was properly held to be without the scope of his authority. Then, too, there was a contract or articles of agreement which forbade such. Here the money was for the firm and used by the firm and there was no partnership agreement affecting the transaction. The quotation from Judge Campbell's opinion cited recites that there were articles of the partnership agreement which forbade the making of the firm liable for the partner's individual debt; so none of this is in point.

We do not want to be tedious, or appear to cite cases endlessly, in our briefs in this case. But for fear that we shall let our perfect confidence in the correctness of our contentions lead us away from citing some law that would be helpful, we are going to cite further authorities to sustain our argument as set out in our first brief. 5 Elliott on Contracts, pages 1073, 1074, 1075, 1087, 1088, 1102; Buetner v Steinbrecker, 91 Iowa 588; Rand, Commercial Paper, section 399; Clark v. Hymann, 55 Iowa 14; Levy v. Abramsohn, 81 N.Y.S. 344; Tate v. Clements, 16 Fla. 339; Drumwright v. Philpot, 16 Ga. 424, 60 Am. Dec. 738; American Ex. Bank v. Georgia Company, 87 Ga. 656.

To hold that Hardee is not liable is to hold that he can accept the fruits of the loan and keep his money in his pocket, instead of returning that which was borrowed to pay his own debts. This is not equity.

J. D. Fatheree, for appellee.

None of the cases cited by appellant are in line with the case at bar. No one denies that any one partner can bind the partnership business, but that is not the case here. In the case at bar one of the partners, Hardee, gave the complainant written notice that he, Hardee, would not be responsible for any further advances or accommodations made to Ethridge, the other partner, for anything. The court will see from the testimony of Mr. Moore that the bank had made only one loan to Ethridge & Hardee before the loan in question. Hardee learned about this loan, while on a trip over to Forest and came back home and gave the complainant written instructions not to do so again expecting him to be responsible, the complainant acknowledged receipt of the instructions and promised to abide thereby and about eight months thereafter advanced Ethridge the loan, a part of which is in question, without any revocation of the instructions from Hardee, and now tries to hold him for the debt in the face of these facts, according to Ethridge, which is the only testimony on the point, that at the time the note became due there was enough partnership property to satisfy the balance due on the note.

The supreme court says, in the case of Langan et al., Executor, v. Hewett, 13 S. & M. 122, quoting from Story on Partnership, page 194, note 2: "It is said one partner cannot, in violation of known stipulations in articles of partnership, bind the firm even for money which is applied in liquidation of debts of the firm." This case, more than any other cited by appellant, fits the case at bar. The other cases cited merely declare the well known rule that in the ordinary course of the partnership one partner can bind the firm but that rule does not fit the facts of the case at bar and therefore does not apply.

Green & Green, for appellee.

The liability of Hardee is predicated upon the proposition that one partner has power to bind another partner in the firm...