Russell v. Leland , 94 Mass. 349 ( 1866 )

Chapman, J.

It appears that in March 1861 the firm of Leland & Co., doing business in Muscatine, Iowa, made a draft on the firm of Baldwin & Dunning, doing business in Boston, for the sum of $1000, the drawers having no funds in the hands of the drawees. The firm of Leland & Co. had been composed of Thomas J. Leland, since deceased, Gorham A. Leland, Thomas L. Leland, Henry Dunning, and Thomas M. Stock-man. The defendants now contend that Dunning ceased to be a member of the firm in January 1861, because at that time a stock account was taken., and the amount due to Dunning as a partner was by consent of all parties transferred on their books to the credit of Baldwin & Dunning. But this fact would not of itself dissolve the partnership. Dunning might be retained as a partner notwithstanding such a transfer. Taft v. Buffum, 14 Pick. 322. The letter of the defendant Stockman to Brown, dated October 7, substantially admits that he was still a partner.

We must, then, regard him as a partner when the draft was made. He was also a partner in the firm of Baldwin 5c Dunning, the drawees. As the drawees had no funds to pay the draft, they borrowed $1000 of the plaintiffs for the purpose and charged the amount to Leland & Co. on their books. . In September 1861 they found themselves unable to repay the plaintiffs, having failed in business, and made to the plaintiffs an assignment of the account against the defendants which was still standing on their books, and agreed that it should be transferred to the credit of the plaintiffs on the books of the defendants. On the 12th of September, they wrote a letter to O. W. Brown, the clerk of the defendants, at Muscatine, directing him to make the transfer, and to give the plaintiffs notice of it. On the 16th of September, Brown, having made the transfer as directed, wrote to Baldwin & Dunning, and also to the plaintiffs, notifying them that it was done. It then stood as a credit to the plaintiffs on the books of Leland & Co., the defendants.

As against Baldwin & Dunning this assignment, whether intended as security or payment, was valid ; as against Leland & Co. it was valid in equity, and if they assented to it, and passed it to the credit of the plaintiffs on their books, it was valid in law, and the present action may be maintained to recover the amount. Crocker v. Whitney, 10 Mass. 316. Mowry v. Todd, 12 Mass. 281.

But none of the members of the firm of Leland & Co., except Dunning, assented to the transfer, and when it came to the knowledge of Stockman on the 7th of October he wrote to Brown dissenting from it. The other partners also objected to it. The question then arises whether Dunning had authority to make it. Undoubtedly such an act is within the general scope of the authority of a partner; and the only reason that can be assigned why Dunning could not do it is, that he was a member of the firm of Baldwin & Dunning, the original creditors. It is objected that he thereby used the partnership funds to pay his own debt.

But this is not a correct view of the matter. The defendants owed the debt to his firm, and not to him personally. We cannot doubt that as a member of the defendants’ firm of Leland & Co. he had a right to take the money or goods of the firm and therewith pay Baldwin & Dunning, and pay the plain-, tiffs with the same money or goods. Or he might have made a negotiable note of the firm of Leland & Co. and used it in the same way. Either of these acts implies an authority of the same character with that which he exercised in directing the transfer of the credit. In Homer v. Wood, 11 Cush. 62, one of the partners owed a debtor of the firm, and paid his debt by ap - plying upon it the debt due to the firm from his creditor. Thus he applied the assets of the firm to the payment of his private debt, and this was held binding on the firm, although it was a fraud on his part, his creditor having acted in good faith.

But in the present case Dunning did not owe the defendants, and it does not appear that they had any claims of any kind against him. If they had had any claims against him individually, it does not appear that they could havé been set off against this debt that they owed to the firm of Baldwin & Dunning. But we have no occasion to decide now whether any right of set-off would have existed, equitable or legal. Nor does it appear that the defendants had any claim against Baldwin & Dunning which they could have set off against this debt. The bill of exceptions presents a simple case of a debt, due from the defendants to Baldwin & Dunning; an assignment of that debt to the plaintiffs; an assent to the transfer by Dunning, a member of the defendant’s firm; and a transfer of the credit from Baldwin & Dunning to the plaintiffs by his direction. In the absence of other facts affecting this transfer and assent, i t is sufficient to sustain this action. Exceptions sustained.