Columbia National Bank of Lincoln v. H. M. Rice & Co.

• Decision Date: 06 May 1896
• Docket Number: 6509
• Citation: 67 N.W. 165,48 Neb. 428
• Parties: COLUMBIA NATIONAL BANK OF LINCOLN v. H. M. RICE & COMPANY
• Court: Nebraska Supreme Court

67 N.W. 165

48 Neb. 428

COLUMBIA NATIONAL BANK OF LINCOLN v. H. M. RICE & COMPANY

No. 6509

Supreme Court of Nebraska

May 6, 1896

ERROR from the district court of Lancaster county. Tried below before TIBBETS, J.

AFFIRMED.

Atkinson & Doty, for plaintiff in error.

Deweese & Hall, contra.

OPINION

IRVINE, C. J.

The Columbia National Bank brought this suit against H. M. Rice & Co., a copartnership composed of H. M. Rice and the State Journal Company, a corporation, to recover on a promissory note for $ 150 and upon an overdraft of $ 67.42. The defendants denied the allegations of the petition and pleaded a counter-claim of $ 500 as a balance due on account of the sale and delivery by Rice & Co. to the bank of a safe. The reply admitted the counter-claim, but alleged payment. A jury was waived and the case tried to the court, which found for the plaintiff on its petition and for the defendants on their counter-claim, and rendered judgment in favor of the defendants for the excess of the counter-claim over the amount claimed in the petition. There was no dispute on the trial as to the validity of plaintiff's claim; the whole controversy concerns the counter-claim. The evidence discloses that at the time the Columbia National Bank was organized, Rice, acting for Rice & Co., sold the safe in question to the bank for $ 1,200. Rice individually subscribed for $ 500 of stock in the bank. The bank paid Rice & Co. $ 700 in cash or its equivalent, and credited the remaining $ 500 due upon the safe to Rice in payment of his subscription to stock in the bank. It is by this credit that the bank claims to have discharged the balance due upon the safe.

The plaintiff invokes the rule that a partnership is bound by the acts of one of its partners within the scope of the partnership business; but counsel, in argument, overlook the qualification indicated by the latter part of the rule, which is a feature of all the cases they cite in support of their position. It was not within the scope, or the apparent scope of the business of the partnership to dispose of its property for the individual benefit of Rice. In Norton v Thatcher, 8 Neb. 186, it was held that a partner binds the firm necessarily only when he uses the name of the firm and acts within the scope of his authority. In Howell v Wilcox & Gibbs Sewing Machine Co., 12 Neb. 177, 10 N.W. 700, it was held that one partner has no power to bind the firm by promissory notes given in renewal of such partner's individual notes. In Levi v. Latham, 15 Neb. 509, 19 N.W. 460, it was held that a partner in a nontrading partnership cannot bind his copartner by a promissory note in the firm name unless he has express authority therefor, or the giving of such note was necessary to the carrying on of the business, or was usual in similar partnerships, and in such case the burden is upon the party suing on the note to prove authority; and especially was the firm not bound when the note was executed for the individual benefit of the partner making it. In Tolerton v. McLain, 35 Neb. 725, 53 N.W. 667, it was held that a partner has no right to pledge notes owned by the partnership for the payment of his individual debt. In Cady v. South Omaha Nat. Bank, 46 Neb. 756, 65 N.W. 906, the rule was announced arguendo, but with abundant citation of authorities, that a partner cannot, without the consent of his copartners, apply the firm property in satisfaction of his individual liabilities; and that the burden is cast upon the person receiving the property to prove either consent of the other partners of facts creating an equitable estoppel. The case is so plain on principle that we do not deem it necessary to cite any foreign cases. Those from our own state already cited are sufficient to establish the principle. The evidence in this case was somewhat conflicting, but certainly sufficient to sustain the finding that Rice either disposed of the safe in settlement of his private subscription to stock in the bank, or else that, having sold the safe to the bank, he undertook to have the debt owing therefor applied in satisfaction of his subscription to the stock; that this was done without the consent or knowledge of the other partners, and that the bank was aware that the subscription to the stock was that of Rice individually and not of the firm. Under these circumstances it was charged with notice of his want of authority. There was evidence tending to show that Rice had represented to the bank...