In an action originally commenced against A. and B. as partners
upon an alleged engagement by the firm, and where A., who was not
found or served with process, was offered as a witness in favor of
B., having been released by B., the Court said
"It is to be premised that the only ground upon which the
objection can be rested is the supposed interest of the witness in
the event of the cause, since, the suit having regularly abated as
to him by the return that he was 'no inhabitant,' he was no more a
party to it than he would have 'been had his name been altogether
omitted in the declaration.' As to the objection upon the score of
interest, it is sufficient to remark that it was manifestly hostile
to the party in whose favor he testified and who offered it in
evidence, since the plaintiffs' recovery against the defendant and
satisfaction from him would be a bar to their action against the
witness, and the release of A. protected him against any action
which A. might bring against him for contribution or
otherwise."
It is well settled that if a bill of exchange be drawn by one
partner in the name of the firm, or if a bill drawn on the firm by
their usual name and style be accepted by one of the partners, all
the partnership is bound. It results necessarily from the nature of
the association and the objects for which it is constituted that
each partner should possess the power to bind the whole when acting
in the name by which the partnership is known, although the consent
of the other partners to the particular contract should not be
obtained or should be withheld.
Third persons are not bound to inquire whether the partner with
whom they are contracting is acting on the partnership account or
for his individual advantage. The interest of the partner in the
joint stock of the concern, and his consequent authority to use the
partnership name raises a presumption that the contract was made
for joint account, which is sufficient to bind the firm unless to
the contrary be shown, and that the person with whom the partner
deals had notice or reason to believe that the former was acting on
his separate account.
Where in the articles of partnership no name of the firm was
mentioned as agreed upon, and the concern went into operation under
the articles, the books being kept and the bills and accounts
relating to their transactions being made out at their warehouse in
the name of "Hoffman & Johnson," it cannot be questioned but
that a name thus assumed, recognized, and publicly used became the
legitimate name and style of the firm, not less so than if it had
been adopted by the articles of partnership.
Where a bill of exchange was drawn by A. after the dissolution
of his partnership with B., and the proceeds of the bill went to
pay and did pay the partnership debts of A. & B., which A. on
the dissolution of the firm had assumed to pay, the holder of the
bill after its dishonor can have no claim on B. in consequence of
the particular appropriation of the proceeds of the bill. It is
admitted, that if one of the partners contracted with a third
person, in the name
Page 27 U. S. 187
of the firm after the dissolution, but that tact not made public
or known by such third person, the law considers the contract as
being made with the firm and on its credit. But if the partner
deals with another in his individual name and upon his sole
responsibility, without even an allusion to the partnership, it was
unimportant to that other to know that the partnership was
dissolved, since he was dealing not with the firm and upon its
credit, but with the individual with whom he was acting, upon his
own credit.
An action of debt upon a bill of exchange for �1,250
sterling, was instituted by the plaintiffs in error in the Circuit
Court for the County of Alexandria in the District of Columbia
against Jacob Hoffman and George Johnson alleging them to be
partners in trade. By the statute of Virginia, adopted as the law
of the County of Alexandria, this form of action is authorized for
the recovery of the sum due upon a bill of exchange, and damages
for nonpayment. The declaration charged the bill to have been drawn
by Jacob Hoffman and George Johnson, trading as co-partners in
Alexandria under the name of Jacob Hoffman, the same being for the
account of the concern, and that the bill was purchased by the
plaintiffs, who remitted it to London, where it was presented to
the drawers and was returned protested.
The process was not served on Jacob Hoffman.
Upon the trial of the cause, it was proved that it was generally
known in Alexandria in 1823 that the defendant and Jacob Hoffman
were jointly concerned in buying and selling pork, and by the
articles of co-partnership signed by both partners and entered into
on 10 December, 1823, it was agreed,
inter alia, that the
funds necessary for the purposes of the partnerships were to be
borrowed from the banks or otherwise upon the notes of George
Johnson to be endorsed by Hoffman, or in such other shape as
respects the paper of the parties as might be found suitable to the
object intended. The active partner in the business was Jacob
Hoffman, who, besides the business of the concern, carried on that
of a sugar refiner, a buyer, seller, and salter of beef, and a
tobacconist, and at the same time the defendant George Johnson was
engaged in the transaction of business on his own account as a
commission merchant and grocer.
Page 27 U. S. 188
The cashier of the Bank of Alexandria proved that an account was
opened in that bank on 3 December, 1823, which he understood from
both parties was to comprehend the cash deposits of the joint
concern and the proceeds of notes discounted for the purpose of
raising funds for the same. For some years before, Jacob Hoffman
kept an account in the bank until the opening of the new account,
upon which the private balance due the bank was transferred to it,
and no money could be drawn out of the bank upon the account but
upon the check of Hoffman drawn by him in his own name. Accounts of
a similar character, in the same form and used in the same manner
and for similar purposes, were proved to have been kept at the same
period in the Farmers' Bank and in the Bank of Potomac. These
accounts comprehended indiscriminately all the deposits of cash
kept by Hoffman in the banks, as well as deposits and cash of the
joint concern. The same witness also proved that before a note for
$6,000, drawn by the defendant and endorsed by John H. Ladd &
Co., was discounted by the bank, he sent the bill of exchange which
was the foundation of this action to New York, at the request of
Hoffman, to be there negotiated. The bill not being sold
immediately in New York, Hoffman went there and, assisted by
letters of recommendation from merchants of Baltimore, he
negotiated the bill, and out of the proceeds of the same the note
for $6,000 was paid at the Bank of Alexandria. The proceeds of the
discount of this note were used by the firm. The partnership of the
defendant and Jacob Hoffman was advertised in the public papers of
Alexandria, the advertisement being subscribed with the names of
both persons; during the continuance of the concern, it was
generally known in Alexandria under the style of Hoffman &
Johnson; accounts were rendered and money was paid in that name,
and the firm was dissolved on 10 January, 1824.
By the terms of the dissolution, Mr. Hoffman was bound to pay
the debts of the firm, and this bill was drawn to enable him to
comply with this contract.
The defendant was called upon early in June and informed of the
fate of the bills, and efforts were made without
Page 27 U. S. 189
success to procure payment out of property which had belonged to
Hoffman and Johnson and which was in the hands of a trustee.
The questions submitted to the jury and upon which the court was
requested to charge in favor of the plaintiffs below, who are
plaintiffs in error in this Court, were:
1. That upon the evidence of partnership, and that the proceeds
of the bill were applied to the payment of the note which had been
discounted for the firm, unless the defendant could show a notice
of the dissolution of the partnership, either public or private,
before the bill was sold, and that the bill was not drawn on
partnership account, the plaintiffs were entitled to recover.
2. If the jury, from the evidence, should be of opinion that the
bill was drawn in reference to the business of the concern and to
meet the engagements of the same, and the proceeds of the same were
so applied, then the defendant is liable to the plaintiffs unless
he proves a dissolution of the firm and knowledge of the same by
the plaintiffs before the bill was negotiated.
3. That if the jury believed the name of Jacob Hoffman was
sometimes used in relation to the business of the concern and that
the bill was drawn in the name of Jacob Hoffman and so negotiated
for the firm to pay its notes, the plaintiff is entitled to recover
unless the defendant can prove that the bill was not drawn and
negotiated on partnership account or that the partnership was
dissolved and the plaintiff notified thereof, or the dissolution
was advertised before the bills were drawn and negotiated.
The court having refused these instructions and a verdict and
judgment having been obtained for the defendant, this writ of error
was prosecuted.
Page 27 U. S. 192
MR. JUSTICE WASHINGTON delivered the opinion of the Court.
The plaintiffs instituted an action of debt under the statute of
Virginia, in the Circuit Court of the District of Columbia for the
County of Alexandria against Jacob Hoffman and the defendant upon a
bill of exchange drawn by the said Hoffman and dated 3 January,
1824. The declaration charges that the said Jacob Hoffman and
George Johnson were partners in the business of buying, curing, and
selling pork and bacon,
and carried on their said
co-partnership business under the name and firm of Jacob
Hoffman, and that the bill of exchange on which the suit is
brought was drawn in the name of Jacob Hoffman for and on account
of the said firm, and was sold to the plaintiffs, who caused it to
be presented for acceptance, and that the same was duly protested
for nonacceptance and nonpayment, of which due notice was given to
the defendants, the drawers. The writ being returned "no
inhabitant" as to Hoffman, the suit abated against him.
From the evidence disclosed in a bill of exceptions taken by the
plaintiffs to the opinion of the court, the case appears to be as
follows.
On 10 December, 1823, Jacob Hoffman and the defendant entered
into articles of co-partnership under their respective signatures
to commence and prosecute, on joint account, during that winter,
the business of purchasing, salting up, and smoking pork. The funds
necessary to the accomplishment of the objects, intended to be
borrowed from the banks or otherwise upon the paper of the said
George Johnson to be endorsed by Hoffman or in such other shape as
respected the paper of the parties as might be found most suitable
to the object intended, Johnson agreeing, in consideration of the
extraordinary trouble and experience which Hoffman would devote to
the purchase and
Page 27 U. S. 193
putting up of the pork, to pay two-thirds of the interest
arising or growing out of the loan which should be made for the
business contemplated. It was further stipulated that the business
should be carried on as far as the parties should agree and could
command the funds, and that the profits and loss should be equally
divided between them. No name of style is agreed upon under which
the business of the concern was to be transacted, but evidence was
given that after the parties commenced their operation under these
articles, the books of the concern were kept, and the bills and
accounts were made out at their warehouse, where the pork was cured
and kept, in the joint names of Hoffman & Johnson and never
otherwise; and that they continued to be so kept and made out until
the pork was sold. They were generally known in Alexandria as
partners in buying, curing, and salting pork, under the name and
style of Hoffman & Johnson in which they acted in relation to
the business of the concern and advertised in the newspapers.
It further appears that, besides the business of this concern
and during the same period, Hoffman carried on the business of a
sugar refiner, of a buyer, salter and seller of beef, and of a
tobacconist, and the defendant that of a grocer and commission
merchant in the Town of Alexandria.
Notwithstanding what has been stated as to the name by which
this firm was known in Alexandria and in which they did business at
their warehouse, it seems that one particular branch of business
was conducted solely by and in the name of Hoffman alone. In
December, 1823, an account was opened in the Bank of Alexandria
which the cashier understood from both Hoffman and the defendant
was to comprehend both the cash deposits of the said concern in
that bank and the proceeds of notes therein discounted to raise
money for the use of the firm. This account was opened on the 3d of
the month just mentioned, into which a trifling balance against
Hoffman upon his private account, before kept at that bank, was
transferred. This new account was so kept that no money could have
been drawn out of the bank upon that account except upon the
check
Page 27 U. S. 194
of Hoffman, in whose name alone all the checks were drawn.
Hoffman had likewise longstanding accounts in his own name in two
other banks in Alexandria which were continued in the same name
after this concern was formed, in which accounts all cash deposits
in those banks respectively, and the proceeds of notes therein
discounted to raise cash for the use of the concern were entered.
These latter bank accounts comprehended indiscriminately all the
deposits and cash kept by Hoffman in those banks, as well as the
deposits and cash of the joint concern.
The partnership between these gentlemen, which commenced on 10
December, 1823, was dissolved by mutual consent on the 21st of the
succeeding month under an agreement by which Hoffman contracted to
pay all the debts due by the firm, the defendant binding himself to
give the use of his name either as drawer or endorser in the
renewal of all notes then existing until the bacon should be
sold.
On 30 January, 1824, the bill of exchange on which this suit is
brought was drawn by Jacob Hoffman in his own name, and as he
states in his deposition, on his individual responsibility in order
to enable him to raise money to comply with his part of the above
contract, and in particular to enable him to discharge a note for
$6,000 which had been drawn by the defendant, endorsed by John H.
Ladd & Co. and Jacob Hoffman and discounted at the Bank of
Alexandria. With much difficulty, and after great personal
exertions by Hoffman, and with the aid of a letter from Mr. Colt in
favor of his mercantile standing, he succeeded in selling this bill
to the plaintiffs, the proceeds of which he immediately applied to
the discharge of the above note for $6,000. In his negotiations
with the plaintiffs the name of the defendant was never
mentioned.
As a part of the evidence here detailed is taken from the
deposition of the before-mentioned Jacob Hoffman which was offered
by the defendant's counsel, it will be proper in the first place to
dispose of the objection made to the competency of this evidence.
The offer to read the deposition was preceded by the exhibition of
a release executed and
Page 27 U. S. 195
delivered by the defendant to the witness prior to his
examination. It does not appear that any objection was or could be
made to the form of the release, and the only question is whether,
in point of law, the defendant could by any release render Hoffman
a competent witness.
It is to be premised that the only ground upon which the
objection can be rested is the supposed interest of the witness in
the event of the cause, since the suit having regularly abated as
against Hoffman by the return that he was no inhabitant, he was no
more a party to it than he would have been had his name been
altogether omitted in the declaration.
As to the objection upon the score of interest, it is sufficient
to remark that it was manifestly hostile to the party in whose
favor he testified and who offered it in evidence, since if the
plaintiffs recovered against Johnson and obtained satisfaction from
him, that would be a bar to their action against Hoffman, and the
release of Johnson protected him against any action which Johnson
might bring against him for contribution or otherwise.
The general rule of law in relation to witnesses who are
interested in the event of the cause goes no further than to
exclude them from giving evidence in favor of that party to whom
their interest inclines them. If they stand, in point of interest,
indifferent between the litigating parties, or if they testify
against their interest, the reason of the rule which excludes their
testimony no longer exists.
We come now to the instructions to the jury asked for by the
plaintiffs' counsel, and which the court refused to give. The first
is that if the jury believe from the evidence that the defendant
and Jacob Hoffman entered into the articles of co-partnership
offered in evidence and that an account was kept for the said
concern in the Bank of Alexandria in the name of Hoffman, in which
the notes discounted for the use of the partnership and deposits of
money on partnership account were entered to the credit and checks
drawn for the same in the said Hoffman's name, and that the said
Hoffman drew the bills mentioned in the declaration and sent them
to New York to be sold for the
Page 27 U. S. 196
purpose of raising money to pay certain notes which had been
discounted in the Bank of Alexandria on partnership account, some
of them drawn by said Hoffman and endorsed by the defendant or
other persons, and others drawn by the defendant and endorsed by
Hoffman or others, and that the same was sold to the plaintiffs and
the proceeds thereof applied by said Hoffman to the payment of the
said notes; then the plaintiffs are entitled to recover unless the
defendant can show a dissolution of co-partnership and notice
thereof, either public, or to the plaintiffs, before the bills were
sold, or that the said bills were not drawn on partnership account,
but on the individual responsibility of Hoffman.
The second instruction which the court was called upon to give
is substantially the same as the first except that it omits a
circumstance much relied upon in the argument that the bank account
of the concern was kept in the name of Hoffman, upon whose checks
alone the money was drawn out.
The third instruction states that if the jury should believe
from the evidence that the defendant and Hoffman sometimes used, in
relation to the business of the concern, the name and style of
Jacob Hoffman, as representing the firm, and that the bill in
question was drawn in that name by the said Hoffman, and negotiated
for the purpose of raising funds to pay notes due by the said
concern, then the plaintiffs were entitled to recover unless the
defendant could prove that the said bill was not drawn and
negotiated on partnership account, but on account of the said
Hoffman alone, or that the partnership was dissolved, and the
plaintiffs notified thereof, or the dissolution advertised before
the bills were drawn and negotiated.
In support of this action it has been argued by the counsel for
the plaintiffs that the bill in question was drawn in the name of
the firm under which the partnership concerns of Jacob Hoffman and
George Johnson were transacted; that it was drawn on partnership
account, and that the proceeds of the bills were in fact applied by
Hoffman to the discharge of a debt due by the concern. These being
the facts, it is insisted that the court below ought to have
complied with
Page 27 U. S. 197
the prayer of the plaintiffs' counsel, and instructed the jury
that if they were so understood by them, the plaintiffs were
entitled to recover. And if this statement of the facts be correct
and the instructions asked for had been so framed as to present
them fairly to the jury, this Court entertains no doubt but that
such instructions should have been given.
It is well settled that if a bill of exchange be drawn by one
partner in the name of the firm or if a bill drawn on the firm by
their usual name and style be accepted by one of the partners, all
the partners are bound. It results necessarily from the nature of
the association and the objects for which it is constituted that
each partner should possess the power to bind the whole when acting
in the name by which the partnership is known, although the consent
of the other partners to the particular contract should not be
obtained or should even be withheld. Were it otherwise, the affairs
of the concern could with difficulty be carried on, and these
persons could seldom, if ever, know when they might safely deal
upon the credit of the firm. It follows that such third persons are
not bound to inquire, much less to assure themselves that the
partner with whom they are contracting is acting on the partnership
account, or for his own individual advantage. The interest of the
partner in the joint stock of the concern and his consequent
authority to use their name raises a presumption that the contract
was made for joint account, which is sufficient to bind the firm
unless the contrary be shown and that the person with whom the
partner deals had notice or reason to believe that the former was
acting on his separate account.
It is now to be seen how these principles of law apply to the
case under consideration.
It is quite clear that the name of this firm is nowhere
designated in the articles of co-partnership which have been
referred to. The mode in which a particular branch of their
business was to be conducted cannot reasonably be construed to give
a name to the firm. It manifestly had no allusion to that subject.
The stipulation that the funds necessary for the purposes of the
concern should be raised upon the paper of Johnson to be endorsed
by Hoffman, or
Page 27 U. S. 198
in such other shape as might be found most suitable to the
object of the parties, no more designated Jacob Hoffman, that it
did George Johnson as the name of the co-partnership. If it did,
then the name would be lost or changed as often as the parties
should agree to raise funds for the concern in some other mode than
the one specified. It is unnecessary to decide whether the omission
to agree upon a partnership name in the body of the instrument was
or was not supplied by the signatures of the contracting parties to
it, because it was in full and uncontradicted proof that after the
concern went into operation under the articles, its books were kept
and the bills and accounts relating to their business were made out
at their warehouse in the joint names of Hoffman & Johnson, by
which name the firm was generally known in Alexandria and in which
they acted in relation to the business of the concern and
advertised in the newspapers. Now it cannot be questioned but that
a name thus assumed, recognized, and publicly used became the
legitimate name and style of the firm, not less so than if it had
been adopted by the articles of co-partnership.
Keeping in mind the principles of law which have been stated and
the fact or the evidence of it in relation to the name of this
concern, it will not be difficult to decide the question whether
the instructions asked for by the plaintiffs ought or ought not to
have been given. It is obvious that the court was required by the
two first of them either to assume the fact that Jacob Hoffman
& George Johnson carried on their business as partners under
the name and firm of Jacob Hoffman or to lay it down as law to the
jury that it is competent to one partner to bind the co-partnership
by a bill drawn in his individual name, even after a dissolution of
the partnership if that fact was not advertised or known to the
person taking the bill, provided the object of the partner who
draws and negotiates the bill be to discharge certain debts due by
the concern, and the proceeds are afterwards so applied.
Now the fact which the court was called upon to assume was
all-important to be proved to entitle the plaintiffs to recover. It
is averred in the declaration, and is in point of
Page 27 U. S. 199
law the foundation of the plaintiffs' demand against the
defendant Johnson. But what right had the court to assume a fact
which was not warranted by any just interpretation of the articles
of co-partnership, or of any other written instrument which was
given in evidence, but which, if it existed at all, was to be
deduced from the parol evidence, of which the jury were alone
competent to judge?
The court was not called upon to predicate the conclusion of law
upon the fact that the defendant and Hoffman traded under the name
and firm of Jacob Hoffman; if that fact should be so found by the
jury -- and unless it was so found, it is quite clear that the bill
in question, although drawn for the purpose before mentioned, and
although the proceeds were so applied, did not bind the defendant,
and consequently, the court was right in refusing to give these
instructions in the form in which they were propounded -- unless
the fact was that which all the instructions assume, and which
formed the basis of the plaintiffs' argument before this Court; the
plaintiffs contracted in point of law, as they manifestly did in
fact, with Jacob Hoffman alone, and upon his sole responsibility,
and the use which Hoffman intended to make or did make, of the
proceeds of the bill, was quite as unimportant to them and to their
cause, as it would have been had they contracted with Hoffman &
Johnson under the name of their firm.
As to the necessity of bringing home to the knowledge of the
plaintiffs in one of the modes stated in the instructions asked
for, the dissolution of the co-partnership, in order to prevent
their recovery against Johnson, we are all of opinion that it did
not exist in point of law unless in point of fact the bill was
drawn in the name of the firm. We admit that if one of the partners
contracted in the name of his firm with a third person after the
partnership is dissolved, but that fact not made public or known by
such third person, the law considers the contract as being made
with the firm and upon their credit, and this for a reason too
obvious to require explanation. But if the partner deal with
another in his individual name and upon his sole responsibility,
without even an allusion to the partnership, as the jury would
Page 27 U. S. 200
have been well warranted in concluding the facts to be in this
case, it was unimportant to that other to know that the partnership
was dissolved, since he was dealing not with the firm and upon its
credit, but with the individual with whom he was contracting and
upon his credit.
It only remains to notice the single point of difference between
the last and the two preceding instructions. These, as has before
been noticed, assume the fact that the partners carried on the
business of the concern under the name and style of Jacob Hoffman.
That places the plaintiffs' right of recovery upon the circumstance
that the defendant and Hoffman sometimes used, in relation to the
business of the concern, the name and style of Jacob Hoffman, as
representing the firm, in connection with the other facts stated in
the preceding instructions.
But would the court have been warranted in stating to the jury
what this instruction manifestly purports -- that whatever may be
the name agreed upon by the partners and in which they generally
act in relation to the business of the concern, still if they have
sometimes used in that relation the name and style of one of the
partners, bills drawn in that name and negotiated for the purpose
stated in the instruction would bind the other partner? We clearly
think not. The circumstance relied upon in this instruction as to
what the partners sometimes did was no doubt proper to be left to
the jury as evidence conducing to maintain the averment in the
declaration that Jacob Hoffman and the defendant carried on
business as partners in trade under the name of Jacob Hoffman, if
the court had been called upon to leave that as a fact to the jury.
But it was nothing more than evidence of that fact, upon which it
would have been highly improper in the court to predicate any
principle of law whatever. This point we conceive was fully settled
in the case of
Townsley v. Sumrall, decided a few days ago
by this Court,
ante, page
27 U. S. 170.
We are, upon the whole, of opinion that the court below was
right in refusing to give any of the instructions prayed for, and
that the judgment of that court ought to be
Affirmed with costs.
