Mitchell v. Dall , 2 H. & G. 159 ( 1828 )

Martin, J.

at this term delivered the opinion of the Court In the trial of this cause, three bills of exceptions were taken by the defendant to opinions given by the court below, and four by the plaintiff. As the defendant obtained a verdict, and no appeal has been prosecuted by him, it will only be necessary to consider those presented to us by the plaintiff.

This is an action of assumpsit, instituted by Mitchell, upon an agreement in writing, by which Dali engaged, if Mitchell would furnish goods to Lewis & Co. through their agent, Archibald JLustin, upon a credit of four months, he would guaranty the payment for them. This letter of guaranty was dated the 3d of January 1821. Evidence was given to the jury, that goods to the amount of $552 97, were delivered in pursuance of this agreement; and also that Lewis & Co. were indebted to Mitchell in another sum of $395 89 for goods sold to them on the 25th of October 1820. Dali, to discharge himself from the claim of Mitchell, gave in evidence to the jury, two receipts signed by Mitchell, the first dated the 10th of May 1821, and the second, on the 16th of June in the same year, each for the sum of $400; and also a letter from Mitchell to Dali, dated the 5th of May 1821, advising him, that the amount for which he had become responsible for Lewis Sr Co. was then due. Mitchell, to prove the money mentioned in the receipt of the 10th of May 1821, ought to be applied to the discharge of the debt due by Lewis Sr Co. on the 25th of October 1820, and not to that for which Dali was responsible, offered to give in evidence a copy of a letter, alleged to have been written by him to Lewis & Co. which copy was found in a book kept for the purpose of copying letters by the firm of which Mitchell was a partner; and who offered to prove, that he (Mitchell,) drew' a draft on Lewis Sf Co. dated the 7th of May 1821, at 3 days sight, for $395 89, which was not paid, but was returned to him; which draft has been lost, and can - not be found; and in connexion with the said draft, offered to read in evidence the letter found in the record, written by Archibald Austin, as the agent of Lewis Sr Co. dated May 8th 1821; but the court refused to permit this evidence to go to the jury. And whether this procedure was correct, is the only question presented to us by the first and second bills of exceptions, on the part of the plaintiff.

We agree in opinion with Baltimore county court, that the eopy of the letter found in the letter-book of the plaintiff, was not legal evidence for him in the cause, and that it was properly rejected; but we must dissent from them, so far as it relates to the evidence offered to show a draft was drawn on Lewis & Co. and the letter written by Austin, the acknowledged agent of that firm.

If the draft, drawn by Mitchell on Lewis & Co. had been in his possession, and he had it in his power to produce it, it certainly ought to have been produced; but when it was proved to have been lost, and could not be found, he ought to have been permitted to have given evidence of its contents.

It is admitted in the record, that Austin was the agent of Lewis & Co. and it has been decided by this court, that where an agency is sufficiently established, the acts and declarations of the agent, within the scope of his authority, are to be considered as the acts and declarations of the principal, of which evidence may be given as if they had been done and made by the principal himself. City Bank of Baltimore v Bateman, 7 Harr. & Johns. 108. Lewis & Co. were indebted to Mitchell in two several sums of money, and were about to make a part payment; they had an undoubted right to apply that payment to either the one or the other of those claims, as they thought proper, and Mitchell was bound to apply it, as directed by his debtor. On the 8th of May 1821, Lewis & Co. write to Mitchell, (for we consider the letter by Austin, their acknowledged agent, as their letter,) in substance, that they were about to remit to him a sum of money for the purpose of discharging the debt of @395 89, tor which a draft had been made on them. ■The money was received by Mitchell, and the question before the jury was, whether Lewis & Co. had given any directions ta which debt this money should be applied?' We think the letter was not only legal, but the best evidence, for the purpose for which it was offered. It was the direction of the debtor to the creditor, in writing, how this payment was to be applied. It was the creditor’s authority for making the application, and after the receipt of this letter, he could not have rightfully applied it in any other manner. It has been contended that Lewis and ,.Austin were legal witnesses in this cause, and ought to have been produced by the plaintiff. Admit they were competent witnesses, why was it necessary that he should have produced them? Was it to prove that Austin was the agent of Lewis & Co.? That fact was admitted by the defendant, in the trial of the cause. Was it to prove that Austin wrote a letter to the plaintiff, as the accredited agent of Lewis & Co.? That fact was also admitted by the defendant; and if they were called on to prove the manner they^had directed this payment to be applied, the moment they mentioned this direction was given, in a letter, in the possession of the plaintiff, they would haVe been stopped from giving in evidence the contents of that letter, and the letter itself would have been demanded of the plaintiff.

The defendant having admitted that Austin was the agent of Lewis & Co. and that he had, in that character, directed the application of the payment, in a letter to the plaintiff\ the letter itself was the only legal evidence to show what that direction was.

It was not merely the declarations of a third person, as was ingeniously urged in the argument, but it is an act done by the party who had the legal right to make the application of the payment, directing in what manner it should be made.

The third bill of exceptions was not relied on by the counsel for the appellant; we shall therefore pass it without notice; the law submitted to the court in that exception, will, however, necessarily demand our attention in examining thz fourth bill of exceptions.

The fourth bill of exceptions was a general prayer on the part of the plaintiff, that if the jury believed the evidence offered by him, they must find a verdict in his favour. This prayer was refused by the court.

The first question to be disposed of under this exception is, whether Mitchell could sustain the action in his own name, and without joining his partners, Appleton & Henry, in the writ?

It is a general rule of law, that all the parties composing a firm must be named as plaintiffs, and an omission to name them may be taken advantage of, on non assumpsit. Gow on Partnership, 164, 167, 153; but there is an exception to this rule, for where the partners are dormant, it is not necessary they should be named in the writ. Gow, 167, 153. Lloyd v Archbowle, 2 Taunt. 324. Leveck & Pollard v Shaftoe, 2 Esp. Rep. 468. 1 Chitty on Pleading, 8.

What then constitutes a dormant partner, is the point upon which this part of the cause depends. In common parlance it appears a solecism in terms to say, that he who was actively engaged in the business, should be dormant, yet in the strict legal acceptation of the term, we are led to believe, every partner is considered dormant, unless his name is mentioned in the firm, or embraced uñder^gcneraTterms, as the name of one of the firm and company. We are brought to this conclusion, not only by the definitions contained in elementary authors, but by adjudged cases upon this subject.

Gow, in his Treatise of Partnership, 12, 13, describes' the several kind of partners. He says, “An actual ostensible partner, is a party who not only participates in the profits, and contributes to the losses, but who appears and exhibits himself to the world as a person connected with a partnership, and as forming a component member of the firm. A dormant partner is likewise a participant in the profits of the trade, but Ms name being suppressed and concealed from the firm, his interest is consequently not apparent.” The same distinction is taken in Watson on Partnership, 34, 46. He says, “Sometimes all the partners in trade do not appear ostensibly to the world, though they share in the profits and loss, &c. Where they do not suffer their names to appear 'in the co-partnership firm, but at the same time receive their share of the profits, and bear their risk of loss, they are styled dormant partners.” In the case of Leveck v Shaftoe, 2 Esp. Rep. 468, Lord Kenyon held, “that if a person had been a partner, and Ms name in the firm, and he afterwards withdrew his name, but continued to receive part of the profits; though such person still continued liable to all the demands against the partnership on the ground of the profits he derived; he would not allow persons who dealt with the firm, without his name appearing in it, to avail themselves of the objection of such partner’s not having joined in the action, for the purpose of a nonsuit See also the case of Lloyd v Archbowle, 2 Taunt. 324. Lucas and others v De la Cour, 1 Maul. & Selw. 249; and Bryden v Taylor, 2 Harr. & Johns. 396.

In this case it appeared the firm was carried on under the name of Mitchell alone; that all the books of the said firm, checks drawn, and notices of sale, were signed in his name; and that every part of the transaction, that gave birth to this suit, the letter of guaranty, and other evidence offered, was addressed to him alone, without reference to his partners. They-were therefore dormant partners, and it was not necessary to name them in the writ.

The next question is the application of the payments made by Lewis & Co. And in deciding this question, we shall confine our remarks solely to the ease as it appears in the record, without intending to lay down a rule of law, that will apply to every case that may possibly arise- We adopt the law, as declared by the court in the third bill of exceptions, as correct in this case. That it is the undoubted right of the debtor to direct the appropriation of money paid by him to any debt he may think proper. And although he may not give an express direction, at the time of the payment, such direction may be implied from circumstances; but if no application has been made by the debtor, either express or implied, then the creditor may apply it.

Many cases might be produced to sustain this doctrine; we deem it necessary to refer only to a few. In Tayloe v Sandiford, 7 Wheat. 20, Chief Justice Marshall, in delivering the opinion of the court, says “a person owing money under distinct contracts, has undoubtedly a right to apply his payments to which ever debt he may choose; and although prudence might suggest an express direction of the application of his payments, at the time of their being made, yet there may be cases in which this-power would be completely exercised without any express direction given at the time. A direction may be evidenced by circumstances as well as by words. A payment may be attended by circumstances which demonstrate its application as completely as words could demonstrate it ” In Newmarch v Clay & others, 14 East, 242, Lord Ellenborough said, “that there might be a special application of a payment made arising out of the nature of the transaction, though not expressed at the time in terms by the party making it.” And it was admitted in the argument of that cause, as a general rule, and many cases cited in support of it, that if the debtor, who owes money on several accounts, do not apply a part payment when made, to a particular debt, but pay in the money generally, the creditor has a right to apply it to any part of his demand which he pleases. In the case of The Mayor and Commonalty of Alexandria v Patton & others, 4 Cranch, 320, Chief Justice Marshall declares it to be a clear principle of law, “that a person owing money on two several accounts, as upon bond and simple contract, may elect to make his payments to which account he pleases; but if he fails to make the application, the election passes from him to the creditor.”

Objections have been taken in this court, to the sufficiency of the declaration filed in the cause, which we think justified fhe court below in refusing the prayer of the plaintiff in the fourth bill of exceptions. The agreement, which is the foundation of this suit, is susceptible of but one rational construction. That Lewis & Co. being desirous to purchase goods, &c. of Mitchell, through the agency of Archibald Austin, Dali engages, if the goods are furnished to Lewis § Co. upon a credit of four months, and they do not pay for them at the expiration of that time, that he will do it. The goods then are sold to Lewis & Co. They are the original debtors, and upon their default, and their default alone to pay, Dali becomes answerable. Austin has nothing to do in the transaction, but merely as an agent for Lewis & Co. No sale is made.to him individually, nor is he bound to pay for the goods. It is essential, therefore, that the declaration should contain an express averment, that the money was not paid by Lewis fy Co. at the expiration of the time limited for payment; for until there was default on the part of Lewis & Co. no responsibility attached upon Dali.

The first count, instead of stating the money had not been paid by Lewis & Co. (the condition upon which Dali had agreed to pay,) says Austin did not pay it. Austin was not bound to pay it. He was not. the debtor, nor did Dali assume any responsibility upon the nonpayment by Austin.

The declaration, to be effective, ought to have averred the nonpayment by Lewis 8f Co. for it by no means follows, that although not paid by Austin, -that Lewis fy Co. may not have discharged the debt.

The same objection applies to the second count. It is stated that Austin, and not Lewis & Co. did not pay. The third count has no reference to the guaranty; it charges Dali with goods, &c. money lent, &c. furnished to him on his own account, and for his own use, and not as being charged with a debt, upon the default of another to pay it. The fourth count is supposed to be sufficient; because on default of Lewis & Co. to pay, it was unnecessary to set out the special agreement in the declaration, but that it might be given in evidence on the general count. If this position were correct, it would not support -the count. If the rule relied on could be applied to this case, still it was necessary to set out the transaction as it appeared in evidence — that the goods, &c. were sold to Lewis & Co. and Dali promised to pay for them. But in this count, Lewis fy Co. are entirely lost sight of. It is stated, not as a debt contracted by them, but by Archibald Austin; and surely evidence that ©«//promised to pay the debt of Lewis & Co. will not make him answerable for a debt contracted by Austin on his own account. The fifth count is on an insimul computassent; and whether this can be sustained, must depend upon the evidence in the cause. The responsibility of Dali under the guaranty, did not attach until default was made by Lewis & Co, to pay, nor was there any debt due and owing by him until the expiration of the time limited for payment. His undertaking was collateral and conditional, and to make him answerable upon an insimul computassent, it must appear there was an accounting between the parties, after the debt was due and owing; and such is the express language of the declaration.

This is not like a debt between two persons, on their own account, with a future time for payment; there the debt is due, when the goods are delivered. But in this case, as before observed, the assumption is conditional; there is no debt before default, nor is there any legal demand on Dali, until that- time. The evidence offered by the plaintiff, to support this count, was a memorandum signed by Dali, admitting the amount of the-goods delivered under the guaranty; but that writing has no date. If it should be found by the jury, that the memorandum was signed after the time limited for payment, it may be sufficient to charge Dali on the insimul computassent-, if before, it could only be evidence to show the amount of the claim, on; a count founded on the special agreement.

An objection was also made to the declaration, that it did not contain an averment, that a demand had been made on Lewis & Co. for payment, before this suit was brought. Having declared all the counts founded on the guaranty insufficient, it is unnecessary to consider this objection.

JUDGMENT REVERSED, AND PROCEDENDO AWARDED.