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APPEAL from a judgment of the Court of Appeal for
Ontario affirming the judgment at the trial of Rose, J.

The facts of the case are set out in the following judgment of Rose J., at the trial (unreported).

ROSE J.-The facts of this case, I think, are comparatively simple, I shall find as a fact that at the time of the making of this note there was a carrying on of business by Dunham in Montreal under the name of J. E. Dunham & Co. Although the certificate of registration, or the certificate which was registered, shews that the firm name as written in the certificate was J. E. Dunham & Company, as a matter of fact we find that the abbreviated form was

used in the signature of the firm name. There is no evidence to displace the statement of fact by Dunham that at the time he signed these notes he signed not for the firm of Dunham & Company, of which Park was or had been a member, but that he signed in respect to the business carried on by him in Montreal. The presumption should be in favour of that proceeding, because first, he had no authority to sign the name of J. E. Dunham & Company to any such paper with reference to the business carried on by him and Park, and secondly, it would have been a fraud upon Park to have made

any such

paper

under the circumstances detailed here in evidence.

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} PARK.

Where, therefore, the transaction can be referred to a state of facts consistent with honesty of purpose, although there may be folly in the carrying out of the design, the man having lost his reason possibly by the use of intoxicating liquors, and where there is another state of facts which is inconsistent with honesty, and the man's oath is given in accordance with the state of facts which is inconsistent with honesty, I think I should not find against his direct statement that he made this paper intending to bind the firm of which Park was not a member. I think, as a matter of fact, as between the partners it had been determined, upon the receipt of that notice, that partnership between them should end, and there is notha few small purchases, if purchases they are, since the

the firm or

ing beyond

first of September, that would militate against that view. A part-
nership
determines their relations between each other as principal and agent,
and the authority which one has to bind the other in any direct
contract, will continue to exist for the purpose of liquidation, and
realizing the assets in which they are jointly associated, they still
continuing liable for the prior liabilities of the firm, but that pos-
sibly may not be so material because it only determines the question
of agency and the express authority of the agent to bind his princi-

although dissolved as between the partners, and which

any stranger to deal with them as if they had continued partners for the purpose of carrying on that business they might be stopped from denying it, and, by the doctrine of implied agency, Mr. Park

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might have been liable. This is not a transaction with the firm, not a dealing with the firm or a purchase from them; it is the making of a note by Dunham, if made with reference to this firm, in fraud of the firm, and in fraud of his partner, and it was a handing of that note to a man who was cognizant of the whole of that transaction and who was not an innocent holder for value. Therefore a contract which is endeavoured to be passed over by the mercantile law through commercial paper to the first holder is a contract which, if it was intended to bind Park, had its inception in fraud. It may be that the first holder was a holder for value without notice. I am not on this evidence prepared to find the contrary. If the case is further reviewed, that matter will be open for further discussion upon the evidence which will be perhaps more carefully analyzed, especially the evidence taken on commission which I, perhaps, have not apprehended as clearly as if orally given. I should rather doubt the position claimed for the bank of being holders for value without some notice, without notice that ought to put them upon enquiry, and I am inclined to think they did take this paper for what it was worth without much regard to the financial strength of the parties who made it or assumed to make it. It is difficult, in face of the letter which has been referred to, coming from headquarters, to conclude there was not some discussion in the town where these transactions took place which would have found its way to the headquarters of the bank in that town. However that may be, I do not rest the case or my decision upon that ground. I think there was no express authority enabling Dunham to bind Park by giving any such paper, that there was no implied authority given, or any dealing with the firm by either of the holders of this paper in such a way that they were misled by the carrying on of the business in Toronto under the name of Dunham & Co. I find as a fact that the paper was given with reference to the Montreal business, that therefore the plaintiff has failed to shew that the paper which he has taken was given either with the authorization of the firm or in respect to their business or by the continuation of the buisness by the partnership in any way misleading the parties into dealing with the firm so as to bind them by estoppel if that be the proper word to use in that connection. I think the case is brought within the principle of Standard Bank v. Dunham, (14 O.R. 67.) and I will give judgment for the defendant. If the case is to be further reviewed, opportunity may be had for further consideration of the authorities, but until that case is further reviewed I think the judgment must be in accordance with these findings. It is only for the defendant Park judgment is given.

Upon appeal to the Court of Appeal for Ontario, this judgment was affirmed, the following reasons being given: (unreported).

Burton J.A.:-I scarcely think the Yorkshire Banking Co. v. Beatson (a) is authority for holding that the plaintiff, if a holder for value in this case, is not entitled to recover against the defendant Park, upon the note sued on.

That case merely decides, as I understand it, that where a partnership is carried on in the individual name of one of the partners, and a bill or note has been accepted or given in that name, a person who has become a holder for value and without notice of whom the firm consists has not the option to sue either the individual or the firm at his election.

It was held in that particular case that as the individual who signed the acceptance carried on no business separate from the business of the firm of which he was a member, the presumption, was that it was given for the firm and binding upon it, but that the presumption might be rebutted by proof that the bill was signed, not in the name of the partnership, but of the individual for his private purposes, and that a dormant partner would not, therefore, be liable upon such a bill.

Generally in such a case the burden of proof is upon the holder of the bill to shew that the paper was given in the business and for the use of the firm, for it will be intended primâ facie to have been given by him individually, and lead to credit being given to him individually, and would be binding upon him alone. There being no uncertainty on the face of the paper, but the uncertainty being created by extrinsic circumstances, it is obviously necessary for the plaintiff to establish that it is a contract of the firm and ought to bind them.

I see no difficulty in such a case in evidence being receivable to shew that the note never was the note of the firm, but was given for the individual and private purposes of the person who signs it, and I see no hardship in holding that a person taking a bill so signed assumes the risk of its being one given for partnership purposes, but the case is very different where paper is signed in a partnership name, which is not that of the individual member; in such a case all the partners, whether named or not, and whether they are known or secret partners, will be bound, unless the title of the person who seeks to charge them can be impeached.

It is unnecessary to consider whether the case of Fleming v. McNair (aa), a decision in the House of Lords, referred to without approval by Lord Eldon, also in the House of Lords in Davison v. Robertson (b), is still to be considered as good law; it is sufficient for the purpose of this case to say that here is paper prima facie binding upon the Toronto firm, taken, as I assume, for the purpose of this branch of the case by a bona fide holder for value without notice that there was any other firm carrying on business in another

(a) 5 C.P.D. 109.

(aa) Dom. Proc. 16 July, 1812. (b) 3 Dow 218, at p. 229.

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country under the same name, and that being so I think it would be contrary to the first principles of commercial law to admit evidence to shew that the maker of the paper had a secret intention not to bind the Toronto firm but one in Montreal.

In considering this point it can make no difference that by the terms of the articles of co-partnership he was prohibited from granting negotiable paper, it is one of the incidents of a partnership that each partner can put such paper in circulation, and it would tend to destroy all confidence, if, when paper is signed in a partnership name which has been assumed (other than the individual name of one partner) evidence could be receivable to shew that although these persons are all members of a firm carrying on business, say in Toronto, another business under the same style or firm, in which only one of the partners is interested, was being conducted in New York or Montreal, and that the party signing had it in contemplation to bind that firm only, I am of opinion, therefore, that the evidence on this point was improperly received, and that the plaintiff should recover unless his title is displaced on some of the other grounds that were urged.

It is said in the first place that the firm was dissolved by the notice given in pursuance of the articles of co-partnership on the 1st August, and although no notice of that dissolution was published until the 21st, still the agency of Dunham ceased with the dissolution, and it cannot therefore be enforced against Park.

The plaintiffs, on the contrary, contend that in the absence of notice they, as holders for value, are entitled to succeed, and that would undoubtedly have been so if any evidence had been given to shew that either Gardner or the plaintiff had any knowledge of Park being a member of the firm during its existence, all the information they got was at the time they acquired the note; they were then told that Park was a member, which was untrue.

As to persons who had had actual dealings with the firm previously to the dissolution, or persons who had actual knowledge of the existence of the partnership whilst it existed, I cannot define the law more clearly than in the language of Lord Selbourne in Scarf v. Jardine (c).

After referring to a passage in Lindley that where an ostensible partner retires, or where a partnership between several known partners is dissolved, those who dealt with the firm before a change took place are entitled to assume, until they have notice to the contrary, that no change has occurred, he proceeds: "And the principle on which they are entitled to assume it, is that of the estoppel of a person, who has accredited another as his known agent, from denying that agency, at a subsequent time, as against the person to whom he has accredited him, by reason of any secret revocation. Of course, in partnership, there is agency-one partner is agent for another,

(c) 7 App. Cas. 345.

and in the case of those who, under the direction of the partner for the time being, carry on the business according to the ordinary course, where a man has established such an agency and has held it but to others, they have a right to assume that it continues until they have notice to the contrary."

I quote also Lord Blackburn's remarks in the same case: -"But then I do not think that the liability is upon the ground that the authority actually continues. I think it is upon the grounds as has been very well put and explained in Freeman v. Cooke, that there is a duty upon the person who has given that authority, if he revoke it, to take care that notice of that revocation is given to those who might otherwise act on the supposition that it continued, and the failure to give that notice precludes him from denying that he gave authority against those who acted upon the faith that that authority continued."

But how can that apply to a case like the present, for all that appears, neither Gardner nor the plaintiff had ever heard of the firm until the note was offered to them.

The short judgment of Mr. Justice Littledale, in Carter v. Whally (d), seems to apply precisely to it:-"It was incumbent." he says, "on the plaintiff in this action to prove a contract between the parties whom he named as acceptors and himself as indorsee. If they were all partners when the accepance was given by Veysey that contract is established. But it appears that they had ceased to be so, Saunders having withdrawn. Then it it said that the defendant ought to have proved some notice received by the plaintiff of this separation, and it is true that if the plaintiff at any previous time knew Saunders to be one of the partners such notice ought to have been shewn. Now, where all the names in a firm appear it may be presumed that every one knows who the partners are, but where there is only a nominal firm, as in the present case, the fact of such knowledge must be ascertained by express proof."

In other words, the partner cannot be made liable to a creditor who did not know him to be a member, while he was such in fact, and therefore cannot be supposed to have dealt with the firm on the faith of having his credit to look to, and in this respect the case does not differ from that of a dormant partner, who may always retire from the firm without giving notice to the world.

It was further urged that notwithstanding the notice of dissolution, the partnership was not actually dissolved until the 20th of August. That position is not tenable, the partnership was, by reason of the notice, terminated and dissolved, beyond doubt, on the 1st of August. The fact that Park remained about the premises superintending the business and doing things from which persons might infer that he was a partner after that time would no doubt be perti

(d) 1 B. & Ad. 11.

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