Hogg v. Orgill
| Decision Date | 01 January 1859 |
| Citation | 34 Pa. 344 |
| Parties | Hogg versus Orgill. |
| Court | Pennsylvania Supreme Court |
There was a verdict in favour of the plaintiff below, and defendant in error, subject to the opinion of the court on several reserved points of law. Those questions were subsequently determined by the court in favour of the plaintiff, and judgment entered on the verdict.
There are two questions embraced in the first of these points. 1st. Was the affidavit of defence sufficient under the rule of the District Court, to put the plaintiff on proof of the execution of the note on which the suit was brought? That rule provides that "the note, bond, or instruments of writing declared on, shall be taken to be admitted, unless the defendant, at or before the time of filing his plea, shall have by affidavit filed, denied that such deed, note, or other instrument of writing, was executed by him."
The defendant filed an affidavit of defence, in which he set forth "that the note on which this suit is brought, was not made or given by him, and that he knows nothing of it." From evidence in the case, in proof of the execution of the note, we conjecture that the court below determined this to be a sufficient denial under the rule of court. We think this was a proper disposition of that question. Certainly, an affidavit that he did not execute the note, and knew nothing about it, was as strong a denial that it was not the note of the firm, so far as he was informed or knew, as any other terms he could have used. If he was false in the assertion of execution or knowledge, there could be no difficulty in assigning perjury upon it. And it certainly, to the comprehension of every mind, was a denial of execution, and not merely an evasion.
2d. The second question embraced in the point is, whether the admissions of one of the firm, made after dissolution, was sufficient evidence of execution of the note; and on this point, there is a great contrariety of decision in England, and in several states of the Union.
Mr. Story, in his work on Partnership, § 323, treating on the subject of the admissions of a partner, after the dissolution of the firm, and of the question of his power by admissions, declarations, and acknowledgments, to bind his copartners, and whether such declarations and admissions may be evidence for that purpose, says, "It seems difficult, upon principle, to perceive how they can be, any more than the declarations, or acts, or acknowledgments of any other agent of the partnership, would be, after his agency had ceased." He cites very many authorities in support of this view of the subject.
Directly the opposite of this is the view taken by Collyer on Part. § 423, who is also sustained by many authorities, American and English: see note 5 to the section.
I think our own authorities sustain the principle cited from Story. In Levy v. Cadet, 17 S. & R. 126, it was held, that the admissions of the existence of a debt by a partner, after dissolution of the firm, did not preclude his copartners from pleading the statute of limitations. This was directly in conflict with the rule in England on the subject, per Lord MANSFIELD, in Whitcomb v. Whiting, Doug. R. 652, and which is evidently the foundation of the rule stated by Mr. Collyer. In Houser v. Irvine, 3 W. & S. 345, the case of Levy v. Cadet is reaffirmed by GIBSON, C. J., who had delivered the opinion in the former case. After saying, that although dissolved for the purpose of future operations, the partnership remains in force for closing the concern, and that the liquidating partner may bind the firm within the scope of his power, he adds, "that the proper limitation to the exercise of it is, that it be restrained to acts necessary to be done for the beneficial" termination of it; and on the point of a confession of the debt, he concludes by saying "it was not an act done in the liquidation of it, for his authority over it had expired, for that and every other purpose." The same doctrine is held in Bell v. Morrison, 1 Pet. R. 351. So, in Schoneman v. Fegley, 7 Barr 433, it was held that, after dissolution, one partner could not, by acts or declarations, bind the firm to liability for an endorsement from which they had been discharged by the laches of the payee. In Tassey v. Church, 4 W. & S. 141, it was held, that the acknowledgment of the correctness of an account by one partner, after dissolution, bound no one but himself, per SERGEANT, J. See also, Coleman v. Fobes, 10 Harris 157.
In Moddewell v. Keever, 8 W. & S. 63, the same doctrine is maintained, and the principle upon which it is based, is that of agency for the firm by each member of it. In Hannay v. Stewart, 6 Watts 489, it was held, that the admissions of an agent, as to what he had done while such agent, was not evidence against his principal. This is, in fact, an elementary principle. Why, then, is it not applicable to partners? If the question were res nova, it seems to me, the statement of the proposition would lead to the inevitable conclusion, that when the agency has ceased, the agent may no longer affect his principal by declarations, nor a partner his associates. But we think, although the point has been much controverted, the true rule is indicated in the cases cited, and that his declarations are only evidence against himself, but go no farther.
From these general principles, and the decisions cited, we are of opinion that the admissions of the execution of the note by Robert Ellis, and that it was given for partnership purposes, were not evidence against any other member of the firm; they having been proved to have been made several years after the dissolution of the partnership. The admission was not of an obligation, properly, of the party making it, but the note of a party of which he was only a unit. It was not his note, but the note of a different and distinct party — it was the note of a firm — he could no longer speak for that firm — the agency had ceased, and his declarations only bound himself. We think, therefore, that it was error to hold the admissions of R. Ellis, as evidence of the execution of the note, so as to bind the firm.
3d. The next question reserved was, whether, if the note was signed in the firm's name, and bore date during the existence of it, it implied that it was given for partnership purposes. In The U. S. Bank v. Binney, 5 Mason R. 176, it is said, that "where the contract is made in the name of the firm, it will primâ facie bind the firm, unless it is ultra the business of the firm. Where the firm imports, on its face, a company, then the contracts made by the partners in that name, bind the firm, unless they are known to be beyond the scope and business of the firm:" 17 Maine R. 180; 39 Id. 160. The partnership being proved, and also the signature of the firm, I think, the conclusion to be drawn, or presumption is, that it represents a firm transaction or obligation, unless something to impeach it as such appears on its face; and this seems to be the tenor of the decisions of this court, although the point does not seem to have been very directly raised in any of them: Foster v. Andrews, 2 Penn. R. 160; Ihmsen v. Negley & Co., 1 Casey 297; Brewster v. Sterrett, 8 Id. 115; Bank v. Halderman, 4 Id. 440; Burroughs's Appeal, 2 Id. 264. The note in question, then, the partnership having been proved — if the execution had also been proved, would have been primâ facie evidence of what it purported to be, a partnership transaction, and so would have stood, unless the presumption were overturned by proof.
4th. This brings us to the main points of the case, the first of which is, as to the payment by Mr. Hogg, the special partner, of a portion of the $40,000 which he was to contribute, in checks of third persons. Twelve thousand five hundred and sixty-four dollars and eighty-two cents were so paid. Whether the court below determined that this was a violation of the statute of New York, in regard to limited partnerships, under which the partnership in question was formed, we know not. We have nothing in the whole case to show on what points the judgment of the court was given. A more unsatisfactory presentation could hardly be gotten up, than we have here. Taking it, as argued on both sides, that the court did so decide, was this payment in checks such a violation of the statute as renders the plaintiff in error answerable as a general partner?
The provision of the statute claimed to have been violated by the plaintiff in error, may be found in the 2d section, in which it is provided, that such partnership "may consist of one or more persons, who shall be called general partners, and one or more persons who shall contribute, in actual cash payments, a specific sum, or capital, to the stock, and who shall be called special partners, and shall not be liable for debts of the partnership beyond the fund so contributed by them."
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