Hahlo v. Mayer

• Decision Date: 19 May 1890
• Citation: 13 S.W. 804,102 Mo. 93
• Parties: Hahlo v. Mayer et al., Appellants
• Court: Missouri Supreme Court

13 S.W. 804

102 Mo. 93

Hahlo v. Mayer et al., Appellants

Supreme Court of Missouri

May 19, 1890

Appeal from St. Louis City Circuit Court. -- Hon. G. W. Lubke Judge.

Reversed and remanded.

Hugo Muench and F. A. Cline for appellants.

(1) The record does not contain any evidence of an actual copartnership between the defendants, and the instructions of the court do not properly submit that question. 1 Lindley on Partnerships, p. 1; Campbell v. Dent, 54 Mo. 325. Not even participation in profits and losses would constitute partnership without more. Clifton v. Howard, 89 Mo 192; Donnell v. Harsche, 67 Mo. 170. (2) There was no such "holding out" of Fred. Mayer as a partner of A. B. Mayer as would entitle plaintiff as bona fide holder of these accommodation notes to charge defendant, A. B Mayer, as maker, and the instructions improperly submit that question. 1 Bates on Part., secs. 90-98; Thompson v. Bank, 111 U.S. 530; Rimel v. Hayes, 83 Mo. 200; Wood v. Pennel, 51 Me. 52.

Albert Arnstein for respondent.

(1) Instruction, numbered 3, was proper; a man taking a promissory note has a right to rely on the signature he finds on it. Daniel on Neg. Inst., sec. 352; Edmunds v. Bushell, 1 Q. B. 97; Lindley on Part., sec. 181; Smith v. Hill, 45 Vt. 90. (2) The instructions given by the court of its own motion properly presented the law to the jury under the facts disclosed in the case. Smith v. Hill, 45 Vt. 90; Edmunds v. Bushell, L. R. 1 Q. B. 97; Hinman v. Littell, 23 Mich. 484; Lindley on Part. 54, 181; Daniel on Neg. Inst., sec. 352; Bates on Part., sec. 90; Wheeler v. McEldowney, 60 Ill. 358; Story on Part., secs. 64, 192; Grieff v. Byrner, 18 La. Ann. 631; Mershon v. Hobensack, 22 N. J. L. 372; Barrett v. Blackman, 53 Ga. 98; Cottrill v. Vanduzen, 22 Vt. 511-515; Tams v. Hitner, 9 Pa. St. 441-8; Smith v. Smith, 27 N.H. 244; Campbell v. Hastings, 29 Ark. 512; Young v. Smith, 25 Mo. 341; Reppey v. Evans, 22 Mo. 157; Campbell v. Hood, 6 Mo. 211. (3) The evidence shows that A. B. Mayer held Fred. Mayer out as a partner. There is a class of cases in which the legal presumption is that the plaintiff extended the credit on the faith of the "holding out," although no actual proof of the knowledge of such holding out is brought home to the plaintiff, namely, where the holding out is general and public to the world. This case properly comes under that class. Campbell v. Dent, 54 Mo. 333; Thompson v. Bank, 111 U.S. 529.

Brace J. Barclay, J., dissenting.

OPINION

Brace, J.

-- This is an action against Abraham B. Mayer and Frederick Mayer as partners under the firm name of A. B. Mayer & Son, on two negotiable promissory notes, one for $ 1,500, dated September 4, 1884, the other for $ 1,000, dated September 6, 1884, each payable to J. R. Wallach & Bro. six months after date, and signed, A. B. Mayer & Son. Abraham B. Mayer answered under oath denying the execution of the notes, and the alleged partnership. Frederick answered admitting that he executed the notes, avers that they were executed by him without consideration, for the accommodation of the said J. R. Wallach & Bro., and without the knowledge of his codefendant, the said Abraham, and denies the alleged partnership between him and the said Abraham. There was a verdict and judgment for the plaintiff for the amount of the notes, interest, damages and costs, against both defendants, and they appeal.

The evidence tended to prove that the notes were executed by Frederick Mayer without any consideration for the accommodation of the payees, J. R. Wallach & Co., and by them negotiated, and that the plaintiff acquired them for value before maturity, and that they were so executed and negotiated without the knowledge of the said Abraham. The main question in the case was, were the said defendants at the time the notes were executed partners? and, if not partners in fact, did the said Abraham so hold out the said Frederick as his partner, as that he is estopped from denying that he was a partner in an action upon the negotiable promissory notes executed by the said Frederick in said firm-name, brought by the holder thereof who acquired the same for value, before maturity?

Upon the second proposition the court gave the following instructions (We quote only so much of them as bears upon the proposition):

"2. The court instructs the jury that if they find from the evidence that, at the time the notes in controversy were executed, and were received by plaintiff, the business of A. B. Mayer was conducted under the name of A. B. Mayer & Son, and that said A. B. Mayer knew such to be the fact and acquiesced therein, then said A. B. Mayer is liable on the notes in suit, even though the jury finds that there was in fact no actual partnership then existing between said A. B. Mayer and his son Frederick.

"3. The court instructs the jury that the presumption of law is, that a party, to whom a negotiable note is transferred, takes it upon the faith of the persons whose names appear upon it as makers; therefore, if the jury find from the evidence that A. B. Mayer knew that his son Frederick was using the name of the firm of A. B. Mayer & Son in the business of said A. B. Mayer, and said A. B. Mayer acquiesced therein, then plaintiff had a right to rely on the signature on said notes as being the signature of A. B. Mayer and of his son Frederick, and the jury will find against both defendants, even though they find that the defendant Frederick had no express authority to sign the name of A. B. Mayer & Son to the notes."

The name that appeared upon the face of the notes sued upon as maker was A. B. Mayer & Son. The plaintiff took the note upon the faith of that firm; he has a right to look for payment of his note to every individual who was a member of that firm at the time the note was executed; he has the further right to look for payment to every individual who when he acquired the notes was holding himself out to him as a member of that firm, whether he was in fact a member of that firm or not. If the instructions had been confined within these limitations, they would have been unobjectionable, but they go further and declare that the defendant Abraham B. Mayer is liable as a member of the firm of A. B. Mayer & Son, although in point of fact he was not a member of such concern, if at the time of the execution of the notes sued on he was holding himself out to the world as a member of the firm of A. B. Mayer & Son, whether the plaintiff knew of such holding out to the public or not.

While this proposition may be said to have had the sanction of respectable authority (Young v. Axtell, cited in Waugh v. Carver, 2 H. Bl. 242; Poillon v Secor, 61 N.Y. 456; Smith v. Hill, 45 Vt. 90; Rizer v. James, 26 Kan. 221), it has not been able to stand the test of critical judicial inquiry, which has in vain sought for a principle upon which it could stand. The great weight of modern authority is against it. The only conceivable ground upon which one can be charged as a partner, by one who contracts for him and in his name as a partner without his authority, and when, in fact, he was not a partner, is upon the ground of estoppel. The supreme court of the United States in Thompson v. First Nat. Bank of Toledo, 111 U.S. 529, 28 L.Ed. 507, 4 S.Ct. 689, considered this question very fully, and, after a thorough review of the authorities, held that a person not in fact a partner could not be made liable to third persons on the ground of having been held out as a partner, except upon the principle of equitable estoppel, and approved the following summing up of the law on this subject by Mr. Justice Lindley in his treatise on the law of partnership: "That no person can be fixed with liability on the ground that he has been held out as a partner unless two things concur, viz.: First, the alleged act of holding out must have been done by him, or by his consent, and, secondly, it must have been known to the person seeking to avail himself of it. In the absence of the first of these requisites, whatever may have been done cannot be imputed to the person sought to be made liable, and in the absence of the second the person seeking to make...