Bloch v. Price

• Decision Date: 21 December 1886
• Citation: 24 Mo.App. 14
• Parties: A. BLOCH, Respondent, v. S. G. PRICE ET AL., Appellants.
• Court: Missouri Court of Appeals

24 Mo.App. 14

A. BLOCH, Respondent,

v.S. G. PRICE ET AL., Appellants.

St. Louis Court of Appeals, Missouri.

Dec. 21, 1886.

APPEAL from the St. Louis Circuit Court, DANIEL DILLON, Judge.

Reversed and remanded.

C. F. Joy and NAPTON & FROST, for the appellants: It must be shown that the plaintiff knew that the retiring partner was a member of the firm. Pratt v. Page, 32 Vt. 13. One transaction with the firm years before will not constitute the plaintiff a customer. Whitman v. Leonard, 3 Pick. 177; Costello v. Nixdorff, 9 Mo. App. 505.

MILLS & FLITCRAFT, for the respondent: A person dealing with a partnership composed of certain individuals has a right to presume that the same members continue until actual notice of such change is received. Pope v. Risley, 23 Mo. 187; Donzelot v. Rawlings, 58 Mo. 75; Martin v. Fewell, 79 Mo. 412; Costello v. Nixdorff, 9 Mo. App. 505; Anslyn v. Frank, 11 Mo. App. 598; Graves v. Gilbert, 6 Cowen, 701. Although the name may not be known, yet if the partnership relation existed, those dealing with the firm are entitled to hold all who are partners, even if they do not know their names, and may continue to hold such as were partners if they have given no notice. Deford v. Reynolds, 36 Pa. St. 333; Shamburg v. Ruggles, 83 Pa. St. 148. Members of a firm using the expression “& Company” can not be considered dormant partners. Deering v. Flanders, 49 N. H. 225.THOMPSON, J., delivered the opinion of the court.

On November 12, 1881, a partnership was formed in the city of St. Louis for the carrying on of a commission business, between William M. Price, Stephen G. Price, Darwin W. Marmaduke, and Leslie Marmaduke. The partnership was advertised and the names of all the four partners appeared on the bill heads, letter heads, and other stationery used by the firm. Darwin W. Marmaduke retired from the firm in the spring of 1882, but no notice was given at that time of his retiring. William M. Price retired from the firm in October or November, 1882, but no notice was given of his retiring at that time. Leslie Marmaduke retired from the firm in the fall of 1883, but no notice appears to have been given at that time of his retiring. The business remained in the hands of Stephen G. Price alone, and was conducted in the firm name, until July 1, 1884, when a formal notice of the dissolution of the firm was published for three successive days in the St. Louis Republican and the St. Louis Globe-Democrat, two newspapers printed in the city of St. Louis. A notice was also mailed, as the evidence at the trial of this cause tended to show, to every customer whose name appeared upon the current books of the firm. It does not appear that the plaintiff's name appeared upon the current books of the firm, and no evidence was adduced that notice of the dissolution of the firm had ever been communicated to him, and he testified that he had never received such notice. The business continued to be transacted after the first of July, 1884, in the firm name of Price, Marmaduke & Co., by Stephen G. Price, but on the letter heads, bill heads, circulars, etc., which he sent out to customers, the name or names of the persons composing the so-called firm were not given.

The plaintiff was a merchant doing business at Minneapolis, in Kansas. In June, 1882, he had sent to the firm of Price, Marmaduke & Company a shipment of wool, or rather two shipments, for part arrived on one day and the rest on the following day. It was, however, substantially one consignment and one transaction. They immediately sold the wool, and made a prompt remittance to him of the proceeds, less their charges. He had no further business with them for the space of three years, namely, until June, 1885, nor does the evidence disclose that they continued to mail circulars to him or to solicit consignments from him. So far as the record discloses, their relations with each other wholly ceased until the month of June, 1885, when he consigned to the supposed firm of Price, Marmaduke & Company five thousand two hundred and fifty pounds of wool and three hundred and eighty pounds of tag wool. He placed this wool in the hands of the supposed firm, as commission merchants, under instructions not to sell it until they could realize eighteen cents a pound for the wool, placing no restrictions on them in respect of the price which they were to get for the tag wool. Considerable correspondence passed between them with reference to the consignment, all the letters of the commission firm containing the caption, “Price, Marmaduke & Co.,” and being signed, “Price, Marmaduke & Co.,” but these letters do not disclose the name or names of the persons composing the supposed firm. On the thirty-first of July, 1885, the wool being on store in the hands of the supposed firm of Price, Marmaduke & Company, really in the hands of Stephen G. Price, under the instructions of the plaintiff not to sell it (except the tag wool) until eighteen cents a pound could be realized for it, Mr. Price put the wool up at auction for sale without reserve and caused it to be sold for seventeen and three-fourths cents a pound. He made no report of the sale to the plaintiff, but on the twenty-eighth of August, four weeks thereafter, failed and made an assignment for the benefit of his creditors, the proceeds of the sale were wholly lost to the plaintiff, and this action is brought for the value of the wool, against all the persons who originally composed the firm of Price, Marmaduke & Company, as above stated.

The case was tried by the court sitting as a jury. The court found the issues in favor of the plaintiff as against the defendants, Wm. M. Price, Stephen G. Price, and Leslie Marmaduke, and in favor of the defendant, Darwin W. Marmaduke.

As Darwin W. Marmaduke is shown by the testimony to have retired from the firm before the plaintiff ever had any dealing with it, the court in so holding proceeded upon the theory that, under the state of facts above disclosed, the plaintiff was entitled to hold the defendants, Wm. M. Price and Leslie Marmaduke, although they had retired from the firm prior to the transaction in controversy, on the ground that the plaintiff had had dealings with the firm on credit prior to their so retiring, and that notice of their so retiring had not been communicated to him. The instructions given by the court show that it was tried upon this theory.

The rule is laid down in many cases, in various forms of expression, that a person who has had dealings on credit with a partnership firm is entitled to actual notice of the dissolution of the firm, or of the retiring of one or more of the partners from it; and that if in the case of a dissolution or of the retiring of one or more partners, notice is not in fact communicated to him and he continues to extend credit to the firm, he will be entitled to hold the retiring as well as the remaining partners. The rule, when properly applied, proceeds upon an obvious principle of justice. It rests upon the ground that, by continuing to carry on business in the name of the firm, without giving notice of the change in its membership to those who have previously dealt with it, the remaining partners acquire a false credit with the consent of the retiring partner, whose duty it is to see that such notice is communicated to the previous customers of the firm. The customer is presumed to act upon the belief that the state of things once existing continues. In short, the foundation of the rule is that the customers continue to extend credit to the firm under the belief that it is composed of the same members as before.

It is a necessary premise of the rule that the customer knew who the members of the firm were at the time when he commenced dealing with them, or at least before giving the credit which affords the basis of the particular controversy, and before the dissolution. It is upon this ground that it is held that the rule has no application to the case of a dormant partner. As he is unknown to the customers of the firm, is never held out to them as a partner, and credit is never extended to the firm upon the faith of his personal responsibility; therefore, when he retires from the firm no obligation rests upon him or upon the other partners to give notice of his retirement. The same basis of...