First Nat. Bank of Mankato v. Grignon

• Decision Date: 24 May 1901
• Parties: FIRST NATIONAL BANK OF MANKATO, MINNESOTA, v. GRIGNON
• Court: Idaho Supreme Court

65 P. 365

7 Idaho 646

FIRST NATIONAL BANK OF MANKATO, MINNESOTA, v. GRIGNON

Supreme Court of Idaho

May 24, 1901

PARTNERSHIP-PRESUMPTIONS.-Where a copartnership is shown to exist, it is presumed to continue until notice is published or brought to the attention of those dealing with it.

AUTHORITY OF MANAGING PARTNER.-The managing partner has authority to execute and deliver notes and renew them as the business of the firm may require.

SERVICE BY PUBLICATION-JUDGMENT IN REM.-A judgment rendered in another state on promissory notes against a firm, one of whom is a resident of the state in which the business is carried on, and the other of this state, and service on the resident of this state is by publication, is a judgment in rem, and is not a bar to a suit in this state on the original obligation.

NOTES-CONSIDERATION WANT OF.-A plea of want of consideration cannot be maintained, where it is shown that all transactions were had by and with the managing partner, and for an existing obligation, and no fraud or collusion is shown.

(Syllabus by the court.)

APPEAL from District Court, Canyon County.

Reversed and remanded.

Frank Smith and W. E. Borah, for Appellant.

Either partner is a general agent of the firm to carry out and transact its business. (Barber v. Van Horn, 54 Kan 33, 36 P. 1070; Rich v. Davis, 4 Cal. 23; Pierce v. Jackson, 21 Cal. 636.) Every member of an ordinary trading partnership has implied power to bind the firm by trading, accepting or indorsing bills of exchange, or by making and indorsing promissory notes in its name and for the purpose of the firm. (Lindley on Partnership, 287; Gray v. Ward, 18 Ill. 32; Morse v. Hagenah, 68 Wis 603, 32 N.W. 634; Stimson v. Whitney, 130 Mass 541.) A partnership cannot impeach a note signed with its firm name by one partner when its course of business has been such as to induce an honest belief in the payee that the partner has authority to sign. (Kelton v. Leonard, 54 Vt. 230; Carrier v. Cameron, 31 Mich. 373, 18 Am. Rep. 192; Littell v. Fitch, 11 Mich. 525; Davis v. Cook, 14 Nev. 265.) If a person known to be a partner retires and does not notify his retirement, he will continue to be bound by the acts of his late partners as if his partnership, with them continued. (Lindley on Partnership, sec. 410, p. 509; Southwick v. McGovern, 28 Iowa 533; Howell v. Adams, 68 N.Y. 314; Ellis v. Bronson, 40 Ill. 455; Hickson v. Pixley, 15 Nev. 475; Lindley on Partnership, 540; Elkinton v. Booth, 143 Mass. 479, 10 N.E. 460; Strecker v. Connecticut, 90 Ind. 469.) Upon the dissolution of a firm, a bank with which it has kept its deposits is entitled to actual notice of the dissolution, and until such notice members of the firm will be liable as partners. (National Shoe Co. v. Herz, 89 N.Y. 629; Pursley v. Ramsey, 31 Ga. 463; Am. & Eng. Ency. of Law, 1122.) The common-law rule that in a suit against several joint debtors plaintiff must recover against all or none is changed by the statute which we have above quoted. (Knatz v. Wise, 16 Mont. 555, 41 P. 711; Lewis v. Clark, 18 Cal. 389; Bailey Co. v. Hall, 110 Cal. 490, 42 P. 962; Morgan v. Rigetti (Cal.), 45 P. 260; Atlantic Ry. Co. v. Laird, 164 U.S. 393, 17 S.Ct. 120; Bonesteel v. Todd, 9 Mich. 371, 80 Am. Dec. 90; Odom v. Denny, 16 Gray, 114; Stone v. Wainwright, 147 Mass. 201, 17 N.E. 301; D'Arcy v. Ketchum, 11 How. 165, 13 L. ed. 647; Larison v. Hagar, 44 F. 49.) Where there is a want of jurisdiction, the records are not entitled to credit. (Board of Public Works v. Columbia College, 17 Wall. 521, 21 L. ed. 687; Hall v. Lanning, 91 U.S. 160, 23 L. ed. 271; Ells v. Bone, 71 Ga. 468; Pitts v. Spots, 89 Va. 71, 9 S.E. 502; Bank v. Robinson, 13 Ark. 214; Goldey v. Morning News, 156 U.S. 518, 15 S.Ct. 559, 39 L. ed. 517.) The original loan was sufficient consideration for the last note, and the original note being past due and in the possession of the plaintiff below, the defendant is fully protected against a recovery thereon. In the case at bar the notes are here for cancellation. (Saunders v. Bates, 54 Neb. 209, 74 N.W. 578; Perrin v. Royal, 42 Ind. 132; Woodbridge v. Skinner, 15 Conn. 304; Murphy v. Cary, 89 Hun, 106, 34 N.Y.S. 1038; Low v. Learnerd, 13 Misc. 150, 34 N.Y.S. 68.) The partnership being once established or admitted, it is presumed to continue until its dissolution or discontinuance is affirmatively shown. (1 Jones on Evidence, sec. 54; 2 Wharton on Evidence, sec. 1284; 1 Greenleaf on Evidence, sec. 42; 1 Rice on Evidence, sec. 44; Kidder v. Stevens, 60 Cal. 414.) The dissolution of a partnership will not affect the rights of holders of negotiable paper executed thereafter in the firm name by one of the partners unless the holders have notice of the dissolution. (Rocky Mt. Nat. Bank v. McCaskill, 16 Colo. 408, 26 P. 821; Farwell Co. v. Cashman, 16 Mont. 393, 41 P. 443; Johnson v. Totten, 3 Cal. 343, 58 Am. Dec. 412; Williams v. Bowers, 15 Cal. 321, 76 Am. Dec. 489; Palmer v. Dodge, 4 Ohio St. 21, 62 Am. Dec. 271, 273; Elkinton v. Booth, 143 Mass. 479, 10 N.E. 460; White v. Hudson (Tex. Civ. App.), 36 S.W. 332; Bank of Monongahela v. Weston, 159 N.Y. 201, 54 N.E. 40, 45 L. R. A. 547.)

Brown & Cahalan and Hawley & Puckett, for Respondent Coughanour.

A partnership is dissolved when it ceases to do the business for which it was organized. (Potter v. Tolbert, 113 Mich. 486, 71 N.W. 849; 3 Kent's Commentaries, 13th ed., 62; Parson's on Partnership, 3d ed., 416; Spurck v. Leonard, 9 Ill.App. 174; Bank of Montreal v. Page, 98 Ill. 109; Ligare v. Peacock, 109 Ill. 94.) Notice of dissolution may be expressed or implied. (Byles on Bills, 50, note; 3 Kent's Commentaries, 8th ed., 53, note, p. 58; Parsons on Partnership, 1st ed., 385; Bank of Montreal v. Page, 98 Ill. 119; 1 Randolph on Commercial Paper, sec. 437; Dickinson v. Dickinson Co. , 25 Gratt. (Va.) 321; 2 Bates on Partnership, sec. 621; Mauldin v. Branch Bank at Mobile, 2 Ala. 502; Collyer on Partnership, sec. 533; Kent's Commentaries, 66, 67; Laird v. Iven, 45 Tex. 621.) The moment a partnership terminates, the partners become distinct persons with respect to each other, and that consequently one partner can have no power to subject, by his acts or declarations, his former associate to new obligations, burdens or responsibilities. (Ellicott v. Nichols, 7 Gill, 85, 48 Am. Dec. 546.) He cannot change the form of the indebtedness by giving a new note in the name of the firm. (Perrins v. Keene, 19 Me. 355, 36 Am. Dec. 759; National Bank v. Norton, 1 Hill (N. Y.), 572; Palmer v. Dodge, 4 Ohio St. 21, 62 Am. Dec. 271; Haddock v. Crocheron, 32 Tex. 276, 5 Am. Rep. 244; Smith v. Sheldon, 35 Mich. 42, 24 Am. Rep. 529; Bank of Montreal v. Page, 98 Ill. 109, 120; Collyer on Partnership, 4th Am. ed., sec. 541; 3 Kent's Commentaries, 8th ed., 70; Hamilton v. Seaman, 1 Ind. 185; Palmer v. Dodge, 4 Ohio St. 21, 62 Am. Dec. 271; Wilson v. Forder, 20 Ohio St. 89, 5 Am. Rep. 627; Carry v. White, 41 Cal. 530; Brown v. Broach, 52 Miss. 536; 1 Daniel on Negotiable Instruments, p. 280, sec. 373; Perrin v. Keene, 19 Me. 355, 36 Am. Dec. 759; National Bank v. Norton, 1 Hill, 572.) A new promise to pay a debt cannot be enforced without a consideration therefor. Unless the old promise is treated as discharged by the new, an action will not lie on the new, and where suit is brought on the old it cannot be considered as so treated. (Gilmore v. Green, 14 Bush (Ky.), 772; Ogden v. Redd, 13 Bush (Ky.), 581; Smith's Leading Cases, pt. 1, p. 270; Ritenour v. Matthews, 42 Ind. 7; Laboyteaux v. Swigert, 103 Ind. 596; Vanderbilt v. Schreyer, 91 N.Y. 392-401; C. R. I. & P. R. Co. v. Grinnell, 51 Iowa 478, 1 N.W. 712; Schuler v. Myton, 48 Kan. 282, 29 P. 163; Sullivan v. Sullivan, 99 Cal. 187, 33 P. 862.) The liability of partners for a debt due from the firm is such that a several action cannot be maintained against each partner, if a plea in abatement is interposed. In case no such plea is made and a judgment is obtained against one or more of the partners, no further suits can be maintained. (Freeman on Judgments, sec. 232; Stoo v. Lea, 18 Ohio 279; Crosby v. Jeroloman, 37 Ind. 276; North v. Mudge, 13 Iowa 496, 81 Am. Dec. 441, 15 Am. & Eng. Ency. of Law, 342; Barnet v. Judry, 38 Ind. 86.) A recovery upon a partnership contract merges the debt, and a judgment against one partner constitutes an estoppel in a subsequent action for the same breach against his copartners. (Herman on Estoppel, 91, 189; Tinkum v' O'Neal, 5 Nev. 93; Mason v. Eldred, 16 Am. Law R. 402; Bank of Columbus, 5 Ohio St. 34; Olmstead v. Webster, 8 N.Y. 413.)

STOCKSLAGER, J. Quarles, C. J., and Sullivan, J., concur.

OPINION

STOCKSLAGER, J.

The appellant alleges that it is a corporation doing business at Mankato, Minnesota, and that Henry R. Grignon and W. A Coughanour are copartners under the firm name and style of Grignon & Coughanour; that on the seventeenth day of August, 1896, at Mankato, Minnesota, the said defendants made, executed, and delivered to plaintiff their certain promissory note, to wit: "Sixty days, without grace, after date, I promise to pay to the order of the First National Bank of Mankato $ 1000, with interest at the rate of eight per cent per annum until paid. Payable at the First National Bank of Mankato, Minnesota. Value received. Grignon & Coughanour." Then follow the usual allegations for a second cause of action, based upon a promissory note of the same date, and for the sum of $ 1,000. And for a third cause of action it is alleged that the same defendants executed and delivered their promissory note to plaintiff for the sum of $ 3,000, also payable at the same place in sixty days, and with the same rate of interest. The fourth allegation is that there has been paid on said note (the last one), February 15, 1897...