Spurck v. Leonard

• Decision Date: 31 May 1881
• Citation: 9 Ill.App. 174,9 Bradw. 174
• Parties: PETER E. SPURCKv.LOUISA M. LEONARD ET AL.
• Court: United States Appellate Court of Illinois

9 Ill.App. 174

9 Bradw. 174

PETER E. SPURCK

v.LOUISA M. LEONARD ET AL.

Appellate Court of Illinois, Second District.

May Term, 1881.

OPINION TEXT STARTS HERE

APPEAL from the Circuit Court of Peoria county; the Hon. N. M. LAWS, Judge, presiding. Opinion filed October 11, 1881.

Messrs. PUTERBAUGH & PUTERBAUGH, for appellant; contending that a firm guaranty executed by one partner in a matter outside the partnership business will not bind the other members of the firm unless it is by their authority, or is ratified by them after a full knowledge of the facts, cited Sutton v. Irwine, 12 Serg. & R. 15; Livingston v. Roosevelle, 4 Johns. 251; Foot v. Sabin, 19 Johns. 156; Dobb v. Halsey, 16 Johns. 38; Bank of Rochester, 7 Wend. 159; Robertson v. Smith, 18 Johns. 459; Mercien v. Mack, 10 Wend. 461; Bank of Kentucky v. Brooking, 2 Litt. 44; Boyd v. Plumb, 7 Wend. 310; Rollins v. Stevens, 31 Me. 454; N. Y. F. Ins. Co. v. Bennett, 5 Conn. 574; Livingston v. Hastie, 2 Carnes, 246; Laverty v. Burr, 1 Wend. 529; Lansing v. Gaine, 2 Johns. 300; Joyce v. Williams, 14 Wend. 141; Weed v. Richardson, 2 Dev. & Bat. 535; Rolston v. Click, 1 Stew. 526; Taylor v. Hillyer, 3 Blackf. 433; Miller v. Hughes, 1 A. K. Marsh, 181; Long v. Carter, 3 Ind. 238; Tompkins v. Woodyard, 5 W. Va. 216; Stahl v. Catskill Bank, 18 Wend. 477; Mauldin v. Branch Bank, 2 Ala. 502; Marsh v. Tompkins, 2 Bradwell, 217; Davis v. Blackwell, 5 Bradwell, 32; McNair v. Platt, 46 Ill. 211; Brewster v. Mott, 4 Scam. 378; Hilliard v. Walker, 11 Ill. 644; Story on Part. § 127; Parsons on Part. 216; Parsons on Bills, 140.

The name of the firm appearing as guarantors merely, is notice to the payee that it was given out of the course of the partnership business: Foot v. Sabin, 19 Johns. 156; Bank of Rochester v. Bowen, 7 Wend. 159; Rollins v. Stevens, 31 Me. 454; Sweetzer v. French, 2 Cush. 314; Hamill v. Perris, 2 Penn. 177; Duncan v. Lowndes, 3 Camp. 478; Marsh v. Tompkins, 2 Bradwell, 217; Davis v. Blackwell, 5 Bradwell, 32.

An instruction not based on the evidence is erroneous: Bradley v. Parks, 83 Ill. 169; Howe Sew. M. Co. v. Layman, 88 Ill. 39; Badger v. Batavia Mfg. Co. 70 Ill. 302; Nichols v. Bradsly, 78 Ill. 44.

Dissolution of a partnership operates as a revocation of authority to make new contracts, and the giving of a note is the making of a new contract: Collyer on Part. § 541; 3 Kent's Com. 70; Hamilton v. Seaman, 1 Ind. 185; Palmer v. Dodge, 4 Ohio St. 21; Wilson v. Forden, 20 Ohio St. 89; Haddock v. Crockeron, 32 Tex. 276; Curry v. White, 51 Cal. 530; Brown v. Broach, 52 Miss. 536; Smith v. Sheldon, 35 Mich. 42; 1 Daniell's Neg. Inst. 280.

A partner cannot sign the firm name to a negotiable paper after dissolution of the firm, even in settlement of prior debts: Perrin v. Keene, 19 Me. 355; Nat. Bank v. Wharton, 1 Hill, 572; Parker v. Cousins, 2 Gratt. 373; Haddock v. Crockeron, 32 Tex. 276; Palmer v. Dodge, 4 Ohio St. 21.

Mr. WM. DON MAUS and Messrs COOPER & TENNERY, for appellees; that evidence that a firm was in the habit of endorsing for another is sufficient evidence of authority from all the members of the firm, cited Duncan v. Lowndes, 3 Camp. 478; Gansevoort v. Williams, 14 Wend. 133; Gans v. Samuel, 14 Ohio, 592; Darling v. March, 22 Me. 184.

LACEY, J.

This was an action in assumpsit by appellees against appellant, declaring against him and Simon J. Kilduff as partners, on an alleged guarantee of a promissory note, for the sum of six thousand dollars, dated May 30th, 1879, payable to appellees, due six months after date, with interest at the rate of ten per cent. per annum, and executed by Neil & McGrew as principals. There was trial by jury, and verdict and judgment for appellees for $6,675. There were appropriate pleas under oath by appellant, denying the execution of the guarantee sued on, and his joint liability with Simon J. Kilduff. The guarantee was signed in the firm name of “Spurck & Co.” by and in the handwriting of Kilduff, and was endorsed on the back of the note.

It abundantly appears from the evidence, and is not controverted, that the consideration of the note was the surrender of a note of similar tenor and amount, dated about six months earlier than this one, payable to one J. E. Leonard, father of F. E. Leonard, appellee; that this was in fact a renewal note. It likewise appears that none of the considerations of the note in question or the former one, passed to appellant or to the firm of Spurck & Co., but wholly passed to Neil & McGrew, and that the purported guarantee was wholly for the accommodation of the latter. The evidence we think abundantly shows that at the time the note in suit was signed, the appellant knew nothing whatever of the signing of the guarantee by his partner Kilduff, and gave no authority for such act, nor has he ratified the same since.

It appears from the evidence that appellant and Kilduff were associated together under the firm name of Spurck & Co., for the purpose of carrying on the business of distilling spirits in the city of Peoria. That they commenced such business in the fall of 1875, and continued till the last part of May, in the year A. D. 1877, when they shut down and transacted no business after that. The evidence further shows that Neil and McGrew, the makers of the note, were a firm composed of Thomas Neil and Thomas J. McGrew, and during the existence of the firm of Spurck & Co., and while the latter were carrying on the distilling business, were largely engaged in the live stock business, and feeding cattle in the City of Peoria, and fed cattle at the distillery of Spurck & Co. for several years, and until the latter quit business, in the spring of 1877, Neil was the managing, active man of the firm of Neil and McGrew. At the date of the note in question, Kilduff was a member of the firm of Neil, McGrew, & Co., carrying on the live stock business in Peoria. This latter firm was the successors of Neil & McGrew. Another fact in the case is that Neil, McGrew & Co. failed in December, 1879, and Neil absconded and left the State.

Under these circumstances, so far as stated, can appellant be held liable on this guarantee?

We think not, for the following reasons: The firm of Spurck & Co., though not formally dissolved by agreement of the partners, was really and in law dissolved in May, 1877, at the time the distillery shut down and the firm quit business. For the rule of law is that “The partnership in any business shall cease when there is an end put to the business itself.” The business of the firm of Spurck & Co. had ended long before the supposed signing of this note by Kilduff in the name of the firm as guarantors. And the law is well settled that after dissolution of a firm the authority for making new contracts is completely revoked. “The giving of a promissory note, or the acceptance of a bill of exchange or draft is the making of a new contract, although it may be for a prior debt: a partner after dissolution cannot thus bind the firm.” For a full statement of the law on both the above points, we cite Bank of Montreal v. Page, 38 Ill. 109, and cases there cited. Had there been any authority, either express or implied, prior to the dissolution of the partnership, on the part of appellant to Kilduff to sign the name of the firm to a guarantee of the nature of the one sued on, it was wholly revoked by the dissolution.

It is conceded by counsel for appellee to be the law that one partner, by virtue of the partnership, has no legal right to sign the name of the firm as surety or guarantor for a third party to any note or bill, and if he does so the act as to the member not consenting, will be a nullity. It is also conceded to be the law, and it cannot be controverted, that the fact that one member signs the name of the firm as guarantor to a promissory note is notice to the payee of such note that he is signing such name outside of the scope of the partnership business, and that it will not bind the firm unless some other authority is shown than the mere fact of partnership; and the payee knowing the fact takes the burthen of proof on himself to show some other and sufficient authority or subsequent ratification by the partner not signing, if he seeks to hold such partner bound as guarantor. The presumption is that the partner not signing it is not bound. McNair v. Platt, 46 Ill. 213.

It is held in the case last cited, that “beyond the scope of the partnership business, authority to act must be shown, precisely as if any other person had performed the act, or the firm will not be bound.” But it is claimed on the part of counsel for appellees, that they have shown a right of recovery, by showing (1) that Kilduff, by the usages of the firm, had general authority to sign the name of the firm of Spurck & Co. to any guarantee of the notes of Neil & McGrew, that the appellees have proven facts from which the jury might rightfully find the existence of such general authority. (2) That the note in question “was the last in a series (all signed and indorsed in the same way) of a note of Neil & McGrew, in the same amount to J. E. Leonard, in his life time, dated May 1, 1877, guaranteed by Spurck & Co., on which a loan of $6000 was obtained by Neil & McGrew, from Leonard, the accrued interest being paid at each renewal, but no part of the principal;” * that the original indorsement was given, not only before the formation of the partnership of Neil, McGrew & Co., but before the business of Spurck & Co. was closed. (3) That if the original signing of the guarantee was valid, which they contend is proven, and authority of Spurck shown, “the legal inference would be that the authority continued to sign renewal guarantees from time to time, till the debt was paid or the authority was revoked by Spurck. While the evidence is not satisfactory that Spurck acquiesced in the signing of guarantees of his firm, to the paper of Neil & McGrew, to such a general extent without Kilduff first obtaining...