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under the act of March 3, 1863 (12 Stat. at Large, 737), are the acts of the firm. United States v. Baker, 5 Ben., 25.

§ 158. A bank will not be protected in charging up the individual note or check of a member of a firm to the partnership account, in pursuance of such partner's direction, accompanied by the statement that the note or check represents a partnership transaction, unless such statement turns out to be true. A partner has no power to bind the firm by such statement. Coote v. Bank of the United States,* 3 Cr. C. C., 95.

$159. A copartnership may exist in the purchase and sale of real property, and each member of the copartnership may contract for the sale or other disposition of its entire property, though for technical reasons the legal title vested in all the copartners can only be transferred by their joint act. Thompson v. Bowman,* 6 Wall., 316.

§ 160. Where a partnership owns stock in a corporation it is not necessary that each member of said partnership should be present at a meeting of stockholders of said corporation and participate in the deliberations to bind the firm. One partner has the power to represent that stock in all matters which relate to it in the usual management of the business of the firm of which he is a member. Notice of a stockholders' meeting given to one partner is notice to all, and he may waive notice, and if he participates in the actions of such meeting, the other members of the firm are estopped from denying notice. Kenton Furnace Railroad & Manuf'g Co. v. McAlpine, 5 Fed. R., 737.

§ 161. An assignment was made by a debtor for the benefit of his creditors to two attorneysat-law, who were partners in their business, as trustees; one of them assented to the assignment at the time, the other being absent. It was held that the latter must be presumed to assent also, unless upon notice he refused to accept the trust, and notified it to the debtor; and especially if he and his partner proceeded to act under the assignment by a private conditional agreement between them as to giving a priority to certain attachments made by them in favor of certain creditors, which agreement was unknown to the debtor. Gordon v. Coolidge, 1 Sumn., 537.

$162. By sealed instruments.- A release under the seal of one of the copartners is a suf、 ficient release of a joint right of action. Beltzhoover v. Stockton, 4 Cr. C. C., 695.

§ 163. A partner has no implied authority to bind his copartner by deed. United States v. Astley,* 3 Wash., 508.

§ 164. If a partner who has express authority from his copartner to bind the firm by deed or bond executes a bond in his own name for a firm indebtedness, the original liability of the firm will be extinguished and the signing partner will alone be liable on the bond. Ibid.

§ 165. A mortgage executed by one partner in the name of the firm, the testatum clause setting forth that said firm, by said partner, had thereto set their hands and seals, said partner alone signing and sealing the document, is the act of the firm, if the other partners of the firm authorized the one executing the mortgage to do so, and after its execution, with full knowledge, acquiesced in what he had done. Gibson v. Warden, 14 Wall., 244.

§ 166. In an action of covenant against two partners, upon a plea putting the execution of the agreement sued upon in issue, in the absence of some special authority to the partner signing to execute a sealed instrument, the other partner is not liable. Hobson v. Porter,* 2 Colo. T'y, 28.

§ 167. A transportation bond for the removal of spirits, in which the blanks were filled in after the signature of the parties, was ratified and delivered by one of two partners with the remark that it was "all right." On the faith of it the collector issued a permit for the removal of the spirits, and they were delivered to the firm. Held, that the act of the partner in a firm transaction was binding on the firm, and that if said partner ratified and adopted the bond, it was the act of the firm and obligatory on them. United States v. Turner, 2 Bond, 379.

§ 168. It is a well settled rule, though a very technical one, that one partner cannot bind his copartners by deed. And it is equally well settled that one partner may dispose of the personal property of the firm. One partner may bind his copartner by deed, if the latter is present and assent to it. The seal of one partner, with the assent of the copartner, will bind the firm. Anthony v. Butler, 13 Pet., 423.

§ 169. By negotiable instruments.- Each partner in a mercantile partnership has authority to bind the other members of the firm by drawing or accepting bills of exchange in the name of the firm. Persons taking such paper are not bound to inquire or assure themselves as to whether the partner is acting on partnership account; they may presume that if they have no reason to suppose the contrary. Le Roy v. Johnson,* 2 Pet., 186.

§ 170. A partner in a strictly farming partnership cannot bind his copartners by drawing bills of exchange in the name of the firm, but if farming is not their sole business, but they also carry on a saw-mill for manufacturing purposes, or engage in general trade, he may so bind them. Kimbro v. Bullitt,* 22 How., 256.

§ 171. The right of one accepting, on account of a firm, bills of exchange drawn by one of the partners, to recover against the firm, cannot be affected by the fact that the drawer applied the money to an unlawful purpose. Ibid.

172. If a partner draws notes in the name of the firm, payable to himself, and then indorses them to a third party for a personal and not a partnership consideration, the first indorsee cannot maintain an action upon them against the firm, if he knew that the notes were antedated. But if the first indorsee passes them away to a second indorsee before the maturity of the notes, in the due course of business, and the second indorsee has no knowledge of the circumstances of their execution and first indorsement, he may be entitled to recover against the firm, although the partner who drew the notes committed a fraud by antedating them. But if the second indorsee received the notes after their maturity, or out of the ordinary course of business, or under circumstances which authorize an inference that he had knowledge of the fraud in their execution or first indorsement, he cannot recover. Smyth v. Strader, 4 How., 404.

§ 173. Although where one partner gives notes in the firm name, which are indorsed by an accommodation indorser and subsequently taken up by him, the partnership is liable to said indorser for the amount of said notes, though given for the payment of such partner's individual contribution to the stock of the partnership, and consequently a fraud upon the other partner, yet where the circumstances are such that the accommodation indorser should have known of the fraud, or was affected with notice of it, the firm is not liable. In re Dunkle,* 7 N. B. R., 107.

§ 174. Where one partner gives notes in the firm name, and applies the proceeds to his individual indebtedness, such use of the firm credit is unauthorized and fraudulent as to the other partner; but the notes being drawn apparently in the course of partnership dealing, and without notice of the facts from which the holder is bound to infer that they were made without authority, or that a misapplication of them was contemplated, such holder is a bona fide holder of them, and entitled to their allowance as debts against the bankrupt partnership. Bush v. Crawford,* 7 N. B. R., 299; 9 Phil., 392.

A.

§ 175. A., a member of a firm, applied to B. to indorse his notes. Upon inquiry by B., stated that the notes were to be used in payment of goods purchased by the firm. Upon B.'s suggestion new notes were drawn in the name of the firm, which B. indorsed, and was subsequently required to take up. Instead of using these notes in the partnership business, A. applied them to the payment of his individual indebtedness. There being no evidence of mala fides in B., it was held that the firm was liable. Ibid.

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$176. indorsement. Where one partner indorses a note in the name of the firm, evidence that such partner had no authority to do so, under the articles of copartnership of said firm, is inadmissible (1) where the indorsement is made in pursuance of a previous understanding between the firm and the maker of the note, and the evidence shows that the partner indorsing said note was advised by his partner to indorse the parcel of notes which contained the one in controversy, although blanks in the note were left to be filled up by the maker; and (2) where the holder of the note has no knowledge of the contents of the articles of copartnership, nor of any fact or circumstance showing or tending to show that the indorsement was made without authority, but is a bona fide holder for value. Michigan Bank v. Eldred, 9 Wall., 544.

§ 177. The act of a partner outside the scope of the partnership business will not bind the firm. Accordingly where a partner applied for and obtained a loan, in one case for the use of his brother, and in the other to pay a debt of an old firm, and gave as security notes made to the firm (but in which, in fact, the firm had no interest) and indorsed by him in the name of the firm, held, that the other partners were not bound by such indorsement. Newman v. Richardson,* 9 Fed. R., 865.

§ 178. Where a note was indorsed in a firm name, by one member thereof, and the transaction showed on its face that the indorsement was only an accommodation indorsement, it appearing that the other member of the firm did not consent to said indorsement, held, that the note could not be proved against the partnership in bankruptcy. In re Irving,* 17 N. B. R., 22. $ 179. in name of one partner. If a partner draws a bill in his own name against the account of his copartners, and the proceeds inure to their benefit, they will be held responsible in equity for the amount of the bill. Van Reimsdyk v. Kane,* 1 Gall., 630.

§ 180. If no original authority to draw were given, but subsequently the whole transaction were ratified by all the partners, such ratification would be equivalent to original authority. Ibid.

§ 181. If a check upon a bank be drawn in the name of one of a firm only, it cannot be charged to the firm, unless drawn by authority of the firm, although used and applied in the

business of the firm; and the promise of one partner, individually, to make good an overdraft, does not bind the firm. Patriotic Bank v. Coot, 3 Cr. C. C., 169.

§ 182. In order to charge B. upon a bill drawn by A. in his own name, it is necessary to prove that A. and B. carried on business in partnership under the firm name of A. Prima facie it is the sole bill of A. Nicholson v. Patton, 2 Cr. C. C., 164.

§ 183. Money deposited in a bank in the name of a firm cannot be drawn out by the individual check of oue of the firm in his own name only; and if the bank pay such a check out of the joint funds, it can only justify itself by showing that the money thus drawn out was ap plied to the use of the firm. Coote v. Bank of the United States, 3 Cr. C. C., 50.

§ 184. It is no excuse for a bank, in paying out the joint funds of a firm upon the individual check of one of the partners, that the individual partner who drew the check told the bank officer that it was drawn on the joint account, and drawn in his individual name by mistake, and directed him to pay it and any others of the like kind which he might draw out of the joint funds. Ibid.

§ 185. If one partner, in a voyage on joint account, be authorized by the others to take up money on the credit of the whole concern, and draws bills therefor on a house at Amsterdam, and the partner take up money and draw a bill for the same, directing it to be charged to the account of all the partners, but it is signed by himself only, it seems such a bill is binding on all the partners; at least equity will enforce payment thereof against all the partners in favor of the payee of the bill, who has trusted the money on the faith of the joint credit. Van Reimsdyk v. Kane, 1 Gall., 630.

§ 186. —— for partner's individual debt.— Where one partner had given notes of the firm for his separate debt, which were fraudulent as to the other partner and constituted no claim against the partnership, the subsequent recognition of such notes by the latter, or promise to pay them as acts of the firm, would render them partnership debts. But where an agreement of dissolution was made, and the defrauded partner agreed to pay the other, upon retiring, a specific sum, a part of which was to be appropriated to the payment of said notes, there was no ratification of them, and they could not be proved against the partnership estate in bankruptcy; but the effect of such agreement was to make such partner so agreeing a separate debtor in equity from its date for the amount of said notes, without any merger of the former relation of the partner giving them, who also continues a separate debtor. In re Dunkle,* 7 N. B. R., 107.

$187. Where G., being a member of the firms of S. M. & Co. and D. & Co., drew a bill of exchange in the name of the former firm upon the latter firm, payable to himself, accepted it in the name of D. & Co. and then negotiated it for value before maturity to an innocent third person, held, that the latter could recover thereon, although the bill was drawn to secure an individual debt and not on account of the firm of D. & Co. or any indebtedness of theirs. Babcock v. Stone,* 3 McL., 172.

$158. By assignment.- A general assignment is valid for future liabilities, as well as for debts due, if the parties so intend; and one partner may sign and seal such an assignment for the firm, and it will bind the partnership, as a release of the debt. Halsey v. Fairbanks, 4 Mason, 206.

§ 189. Where various parties are tenants in common of a steamboat and partners in the business of carrying freight, and one of the part-owners of said boat incurs a debt for freighting, which the captain, another part-owner, authorized to transact the business of the boat, with assent and authority of a majority of the owners, but without the knowledge of the said debtor, assigns to a third person, it was held that the assignment was valid, and the assignee was authorized to sue in his own name. Russell v. The Minnesota Outfit,* 1 Minn., 162.

$ 190. Transfers of reservations by assignees, whose assignments express them as a firm, are not valid when executed by one member thereof, but only when executed by them all, unless the partner assigning exhibit authority to assign from all. But where the reservee assigned to a firm, as to "M. W. Perry & Co.," and the transfer by the firm was signed in that manner, the assignment is valid. Transfers of Creek Reservations,* 3 Op. Att'y Gen'l, 423.

$191. Whatever acts are done by any partner in regard to partnership property, or contracts beyond the scope and objects of the partnership, must in general, in order to bind the partnership, be derived from some authority, express or implied, conferred upon such partner beyond that resulting from his character as partner. A general assignment, if it does not dissolve a partnership, at least takes away the right of disposing of the effects from the partners, and if made by one partner against the known wishes of the other, is a fraud upon him and invalid; if made without his knowledge it is presumptively so. If one partner has left the country he must be considered as having vested in the other implied authority to act in all matters for the benefit of the firm, and an assignment under such circumstances, if fairly made, and beneficial to the interests of the company, will be sustained. But if the partner VOL. XXIV-15 225

has not left the country, but is only absent from the place where the business is carried on, and in another city, where he may be communicated with or personally seen in a few days, his assent is essential to the validity of the assignment. Bowen v. Clark, 5 Am. L. Reg., 203; 1 Biss., 128.

§ 192. An assignment of copartnership effects in the name of the firm by one of the copartners for the benefit of particular creditors is valid. Harrison v. Sterry, 5 Cr., 289.

§ 193. By fraudulent acts.— An agreement to sell an individual partner certain articles for his individual use and consumption, to be paid for out of partnership goods of the firm of which he is a member, without the knowledge, assent or approval of his copartners, is fraudulent and void as to them. To uphold such an agreement, the party selling must show the assent, express or implied, of the other partners to it. Taylor v. Rasch,* 5 N. B. R., 299.

§ 194. Where goods are in the custody of a partnership for sale on commission, and one or more of the partners make false and fraudulent representations as to the party to whom they are to be sold, the partnership is liable, if, in consequence of such representations, the plaintiff consents to the sale to that party and the sale is accordingly made. Castle v. Bullard, 23 How., 172.

IV. RIGHTS, DUTIES AND LIABILITIES OF PARTNERS.

SUMMARY - Partnership in developing an invention, §§ 195, 196.— Illegal partnership; right to an accounting, §§ 197–199. — Opening settlement, § 209.

§ 195. In case of a partnership formed for the purpose of perfecting and patenting an invention under articles providing, among other things, that any improvement or modification of the invention made by either party shall inure to the benefit of both, if one partner, upon the discovery of an important improvement, whether made by him or his copartner, has it patented in the joint names of himself and a third party, the patentees will be liable to the copartner for an undivided half in the patent and the profits. Ambler v. Whipple, 201–204. § 196. The copartner in such case cannot be held to have abandoned the enterprise by leaving the city where it was to be prosecuted for a week or two, nor would his bad character, drunkenness or dishonesty justify the other partner in treating the partnership as at an end of his own motion, whatever effect they might have as the basis of a suit for dissolution. Ibid.

§ 197. Plaintiff and defendant formed a partnership to buy up soldiers' claims to land warrants, a traffic which was made illegal by act of congress. After carrying on the business for some time and when all the claims thus illegally purchased had been converted into land warrants and all the warrants sold or located, plaintiff brought suit to set aside a contract made with defendant to sell to the latter his interest in the business and for an account and division of profits. Held, that the rule of public policy against enforcing illegal contracts did not extend so far as to enable a partner to withhold from his copartner the latter's share of the profits of the business, under circumstances like the present, and was no bar to the present suit. Brooks v. Martin, § 205-208.

§ 198. A., B. and C. were partners in buying up soldiers' claims to land warrants. A. advanced the money necessary to carry on the business, but took no active part in the management, B. having almost exclusive control thereof, in pursuance of an understanding to that effect, and by which he was to represent A. so as to give him a preponderating influence over C. B. was also A.'s brother-in-law. The business, after they had ceased buying up claims, as they did after a time, consisted in obtaining warrants and disposing of the latter, or the lands located under them, and this was done at a long distance from A.'s residence. A. having agreed with B. to sell out to him his interest in the business, held, upon a suit brought by A. to set aside the agreement on the ground of fraud, that, whether or not the relation of partner and partner is of itself one of those fiduciary relations which require of the parties more than ordinary fairness and candor in dealing with one another, the relation in this case was, at any rate, of that character, and, it appearing that the business had been very prosperous; that A.'s share of the profits would probably be $30,000 as matters then stood; that B. concealed this condition of the business from A., and, as the consideration for the purchase, merely agreed to assume the debts of the firm, and perhaps paid a small account previously owing to A., the contract should be annulled. Ibid.

§ 199. In order to sustain a sale between persons occupying such relations to each other, it must be made to appear, first, that the price paid approximates reasonably near to a fair and adequate consideration for the thing purchased; and, second, that all the information, in the possession of the purchaser, which was necessary to enable the seller to form a sound judgment of the value of the thing sold, was communicated to the latter. Ibid.

§ 200. A settlement of partnership accounts made during the life-time of one of the partners will not be opened and a re-settlement ordered at the instance of his executor, unless it appears that errors were committed or imposition practiced. Where the principal errors complained of consisted of alleged overcharges for commissions and insurance and similar matters, but it appeared that the deceased partner had originally approved the charges and afterwards allowed them in the settlement understandingly, the court refused to open the settlement. Brydie v. Miller, §§ 209-12.

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APPEAL from the Supreme Court of the District of Columbia.

STATEMENT OF FACTS.- Ambler and Whipple were in partnership in getting up an invention for the manufacture of gas, the former being the inventor and the latter the capitalist and business inanager. Ambler filed a bill charging that Whipple had defrauded him by patenting one of his inventions in connection with Dickerson, who pretended to be himself the inventor. The bill prayed for a discovery and account of profits made on the pirated invention, and for compensation and damages. The answer of Whipple denied the availability of Ambler's inventions, made charges against him of gross misconduct, alleged that Dickerson had made the real invention himself, and admitted that he had entered into partnership with him in it. There was a cross-bill, and a supplemental bill, and much contradictory testimony. Further facts appear in the opinion. The bill was dismissed.

Opinion by MR. JUSTICE MILLER,

It is to be observed that neither party prays for a dissolution of the partnership. Indeed, the bill and cross-bill, and the answers to both, proceed upon principles which do not recognize the partnership as existing. The complainant seems to imply that by reason of Whipple's course of conduct he is remitted to all his rights as the inventor, and claims that being the sole inventor of the successful machine he is entitled to all the benefit of it. Whipple assumes that by his purchase from Ambler, and Ambler's misconduct, that the partnership has been dissolved, and he has succeeded to all its rights, if they are of any value.

The testimony is voluminous and contradictory. In the view we shall take of the case, while the decision will mainly turn on these questions of fact, we shall only state the effect which the testimony has had upon our minds without referring to it in detail.

201. An agreement containing mutual releases, signed by one party and not by the other, is not obligatory on the party who did not sign it.

1. If the complainant really released or sold his interest in the partnership business, or in the patent of Whipple and Ambler, his case is at an end, and we will, therefore, consider that question first. The instrument of writing. dated September 24, 1869, is supposed to have that effect. There is no doubt that the language of the instrument is sufficient for the purpose for which it was intended, but it wants the signature of Ambler. Nor is it pretended that he ever signed it or any copy of it. It is clearly on its face a paper which requires the signature of both parties to make it binding on either. The releases and assignments are mutual, and each is the consideration of the other, and it requires no great penetration to see that it was drawn in the interest of Whipple, who signed it, and not in the interest of Ambler, who did not sign it.

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