Halliday v. McDougall , 22 Wend. 264 ( 1839 )

.After advisement the following opinions were delivered :

By the Chancellor.

I have no doubt of the correctness of the decision Of the supreme court, that general reputation alone is not sufficient to establish a copartnership, so as to charge the supposed members of the firm with the payment of its debts; and if the decission of this case turn-ad upon that question, I should have no difficulty in affirming the judgment of that court, by which the judgment of the superior court of the city of New-York, in favor of the present plaintiff -in error, was reversed. Proof of general -reputation, which is sometimes received in such cases in .connection with other evidence, certainly is no proof of the ¡fact of the copartnership as against the reputed members of the firm who reside at a distance, and where the jury cannot fairly infer from the other circumstances in the case •that those persons actually knew they were held out to the world as such copartners. And if the object in this case had been to render Wightman, who lived at Charleston, liable to the plaintiff for the debt contracted by the New-York firm,-this evidence of general reputation at New-York, of which he could not be presumed to know any thing, the judge who tried the cause, -would unquestionably have told the jury to lay it entirely out of view in considering the -question of his liability, in the same manner as he told them to lay out of view the reputation prevailing there before McDougall arrived, in determining the question whether he had made himself liable for the debts of the firm by suffering himself to be held out to the world as a partner.

Where an .action is brought against several persons as joint debtors, all<of whom appear and deny their joint,indebtedness, the plaintiff is obliged to make out by legal .evidence against each, not only that he is personally liable for the debt, but also that he :is jointly liable with all his .co-defendants^ but when part of the defendants admit their individual and joint liability, either by their pleadings or otherwise, or where they are outlawed or proceeded against as absentees by a return of the capias by the sheriff as to them not found, so that, no personal judgment can be rendered in tire suit against them or their individual property,the plaintiff is only obliged to produce evidence which will be sufficient as against those who appear and defend the suit, to establish their joint liability with their co-defendants. In such cases, therefore, the acts and admissions of the parties who thus appear and defend, are legal evidence as against themselves, not only of their own indebtedness but also of their joint-indebtedness with their co-defendants. Thus, in the case of Sangster v. Mazaredo and others, 1 Stark. R. 161, where a suit was brought against four persons as copartners and acceptors of several bills of exchange, and three of the defendants who resided in a foreign country had been proceeded against to. outlawry, and the fourth who had been personally served with process appeared and defended the suit, Lord Ellenborough held that the admissions of the defendant who had appeared, that he was a copartner with the three absentees, were sufficient to entitle the plaintiff to a verdict; and as our statute, authorizing a proceeding aganist joint debtors upon a service of process on a part of them only, is a mere substi~ .tute for the English proceeding to outlawry against the absentees, and the record of the judgment, will not be evidence of a joint liability in any subsequent suit against the defendants who have not been served with process, the decision in Sangster v. Mazaredo and others, is directly applicable to the case now under consideration. Indeed, the same point was substantially decided, under our statute, by the supreme court, in the case of Whitney v. Sterling and others, 14 Johns. R. 215, although the legal effect of a joint judgment upon the rights of the absentee had not then been settled.- The court say, in that case“ Hunter and' Sterling the defendants who had appeared, cannot complain, because the testimony fully establishes their confessions that the firm of Hunter, Sterling & Co. was composed of the four defendants.” I- may also remark, that it is a matter of course, in a proceeding against joint debtors or copartners under the statute, where the instrument declared on is a promissory note or bill of exchange, to have the clerk assess the damages and enter a joint judgment against all the defendants, upon the implied- admission of the one who has been served with process, of their joint indebtedness. The question, therefore, .whether the evidence of general reputation alone was suffix dent to charge Wightman as a copartner did not arise in the' ease;- and the defendant’s counsel had no right to call upon the court to charge the jury on that subject.

As against MeDougatt, the defendant here brought into court, there was sufficient evidence to authorize the jurj to find that he had made himself liable to the plaintiff as a co-partner in both firms, independent of any evidence as to-general reputation. His-own witnesses who were examined in England, and who knew the agreement under which he came out, prove that Ansley represented himself and Wightman as composing the firm of John D. Ansley &f Co.; and it was with them, and them alone, that he was to go into copartnership, if with any body, as the written agreement shows; and immediately upon his arrival at New-York, where the other branch of the house- was to be established, he found his name over the door as- one of the members of the firm. He suffered himself to be introduced as a partner, and remained there until the concern exploded, without taking any steps to have his name removed from the sign over the door, or to inform those who were dealing with the house that he was not a copartner. Under such circumstances, although as between him and Ansley and Wight-man, he had a right to elect at the end of the year whether he would take a salary or a share of the profits of the partnership, he was clearly a partner as to the rest of the world} who knew nothing of this private arrangement between the-individuals wha were held out to'the public as copartners by these introductions and by the sign over the door.

As the drawers and acceptors of the bills- in this case were-the same persons, or at least, as there is not a shadow of doubt that Ansley was a member of both firms-, the refusal-of the firm in Charleston to pay the bills was* notice of' their dishonor to him, and,- fr course, to the New-York firm. Gowan v. Jackson, 20 Johns. R. 176. Johnson on Bills, 23. It is therefore unnecessary to inquire whether the statement in the protest of the deceased notary was of itself sufficient evidence of notice of the1 dishonor of the bills; And it* now appears- to be settled', noth withstanding the dictum of Mr. Justice Van Ness in Miller v. Hackley, 5 Johns. R. 375, that a- bill of exchange drawn in one state of the union and payable in another, is a foreign bill, within the meaning of the rule which makes the notarial protest prima-Jade evidence of the' presentment and- dishonor of sucli bills. Buckner v. Finley, 2 Peters’ R. 586, and other cases cited in-opinion of Justice Cowen- See also Johnson on Bills, 31, and Muir on Bills, 52, as to bills drawn between England- and Scotland and Ireland-

I have therefore arrived at the conclusion, that no error in.. law occurred upon the trial of-this cause to the prejudice of the defendant McDougall;' arid that the questions of fact were properly submitted to the jury for their determination* thereon. For these reasons* although I concur in opinion with Mr. Justice Cowen in reference to the abstract question of law upon which his decision was based, I think the judgment of the supreme court should be reversed, so that the .plaintiff may be restored to- his judgment in the superior court of the city of New-York.

By Senator Edwards.

The material points in this case appear to be, whether the judge of the superior court of the city of New-Y ork was bound to charge the jury that general reputation was not alone sufficient to establish the co-partnership ; and whether he charged correctly.

At the close of the testimony, the defendant’s counsel, among other things, requested the court to charge the jury that the plaintiff could not recover, unless he shewed that the defendant Wightman was a partner in the firm of Ansley, McDougall & Co., and that general reputation was not alone sufficient to establish the fact. The court are undoubtedly bound to give an opinion, if required, upon any point of law necessarily connected with the issue, whether it originates from the pleadings or the testimony produced on the trial. Douglass v. McAllister, 3 Cranch, 300. Scott v. Lunt, 7 Peters, 607. But the court can never be required to declare the law upon a hypothetical question foreign from the cause, 11 Wheaton, 75, or upon an abstract point of law, unless it be so stated as to show its connection with the cause. Hamilton v. Russell, 1 Cranch, 310. In all such cases, as I understand the law, the court may refuse to give an opinion, and if the party proposing the question is dissatisfied, he may except to such refusal, which exception will avail him, if he shows that the question was warranted by the testimony, and that the opinion he asked ought to have been given.

Had there been in this case no other testimony than that of general reputation, and had the counsel called upon the court to charge that this testimony was not alone sufficient, I think the court would have been bound so to charge • for I readily admit, that in my viqw, proof of general reputation that a copartnership exists, is not sufficient to prove the fact whether such testimony is admitted with or without objection, and so I believe it has been held in most if not all of the cases where this has been the only testimony offered; but in most of this class of cases, the testimony has been objected to in limine, as in 2 Har. & Johns. 400, in the court of appeals of Maryland; in Goddard v. Pratt, 16 Pick. 433, and in Brown and others v. Crandall and others, 11 Conn. R. 93. But in the case under review, no objection was made to the introduction of the testimony as to general reputation; but the judge, after the testimony was closed, was called upon to charge that general reputation alone was not sufficient to establish the fact of copartnership, when this too was not the only testimony in the case ©n which the plaintiff relied to show that fact.

It is not for McDougall to say there was no such firm as John D. Ansley 8f Co., for the proposition was made to him in the name and behalf of this firm to enter into the copartnership, and this proposition formed the inducement for him io come to this country ; and the question is, does it depend Upon general reputation alone that he was a partner with this firm, or did he suffer himself to be held out to the world as such partner. A sign was put up in the fall of 1825, over the door of their counting house in Pearl-street, New-York, in a conspicuous place, representing their firm to be Ansley M’Dougall & Co., which remained until winter. This sign was up when M’Dougall arrived, the 8th of November, and had been for about three weeks previous. M’Dougall went on board the ship for Charleston the 3d of December, but did not sail until the 5th ; Ansley left a week Or fortnight after, but the sign was not taken down until after they left New-York. Thus the sign must have been up between three and four weeks, while M’Dougall was passing in and out of the store, and yet he took no steps to remove it, and even left it thus to represent the firm when he left New-York. During this time the checks in question were drawn in the name of the firm, as it appeared on the sign, and discounted. Again : one of the witnesses, states that he was introduced to M’Dougall by Ansley in the store, as his partner, and relates a conversation he had with Ansley aad M’Dougall relative to the goods in the store. These and other facts and circumstances, which might be enumerated, presented by the case, were proper subjects for the consideration of the jury, and* although the proof of general reputation would not, of itself, be sufficient testimony to establish a copartnership, yet, in my judgment, it is competent testimony, and may be taken into consideration by the jury, in connection with the other facts in the case, when a plaintiff is endeavoring to make out a co-partnership among defendants. This doctine has been recognized by the supreme court of this stare. In the case of Whitney v. Sterling, 14 Johns. R. 216, the court say; The only question in the case is, whether the testimony is sufficient to charge Jacob Brown as a partner with the other defendants. There was no objection as to the testimony of general reputation. It must therefore be considered as evidence in the case, and as forming a part of the testimony upon which the jury was to determine the fact of partnership ; nor could any objection have been made to such evidence; Whether general reputation ought to be sufficient, may be questionable, but such testimony is competent, and there are circumstances in the case which go very much in corroboration of it.” Precisely so here. I consider the testimony competent, and there are in this case several facts and circumstances which go in corroboration, all constituting proper subjects for the consideration of the jury-

In some cases the supreme court of this state has carried this doctrine much further. In the case of Gowan v. Jackson, 20 Johns. R. 178, Mills, the witness, testified that he had done a good deal of business for the defendant, and had sold goods to a large amount by his orders. He had always understood there were two brothers connected in business—the defendant and Daniel Jackson, and that the firm in London was Ja.ckson & Brothers, and that the firm here was either Joseph Jackson or Joseph Jackson & Co., which he did not recollect; aud that he understood from common report that the defendant was a partner of the firm of Jackson & Brothers, in London, and that had so understood in the course of business, and in" the settlement of accounts made by him with the defendant. The testimony the court deemed sufficient prima facie to show a co-partnership, and as casting the burden of proof upon the defendant to show the commencement of the partnership, if it began at a time subsequent to drawing the bill. How-much Mr. Justice Spencer (who delivered the opinion of the court,) relied upon the proof of general reputation, as prima facie sufficient, does not appear from the case, as he speaks of the testimony collectively—but as this was the principal testimony as to the foreign partner, it is fair to presume he placed much stress upon it. In M‘Pherson v. Rathbone, 11 Wendell, 98, the court say it was undoubtedly competent to have proved a partnership of all the defendants by general reputation, but probably no such reputation could be shown as to Samuel Rathbone. If Chief Justice Savage (who delivered the opinion of the court in this case) intended to lay down the broad doctrine that a copartnership may be proved by general reputation, I am of the opinion he has carried it further than it has been carried in any other case, and further than prudence and sound discretion would warrant. But I am not prepared to believe he intended thus to extend the doctrine. As the case then under consideration called for no such decision, I think that portion of his opinion is to be regarded rather as a dictum, than as laying down so important a principle of law. While no case has been found to sanction the doctrine to such an extent, there are several cases which, either in substance or in direct terms, repudiate it. Whitney v. Sterling, 14 Johns. 216. 2 Har. & Johns. 400. Brownson v. Crandall, 11 Conn. R. 93. Goddard v. Pratt, 16 Pick. R. 433.

The position contended for by the plaintiff’s counsel, that in actions against partners, it is not required of the plaintiffs to give as strict proof of the existence of the copartnership, as partners themselves are required to give when they are plaintiffs, is undoubtedly correct. Cary on Part. 136. And the reason is obvious. In the latter case the facts are presumed to be within their own knowledge; but not so when the plaintiff is endeavoring to show the defendants partners. In such cases, to establish a joint liability, it is sufficient for the plaintiff to show that the defendants have held themselves out and appeared to the world in the character of partners, and that they have carried on their business together. Cary on Part. 136.

I am of the opinion, therefore, that the testimony was proper to be submitted to the jury, and was properly submitted ; that the charge of the judge was correct, and that the judgment of the supreme court should be reversed.

On the question being put, Shall this judgment he reversed ? all the members of the court voted in the affirmative. Whereupon the judgment of the supreme court was accordingly reversed.