MbBride v. Hagan , 1 Wend. 326 ( 1828 )

By the Court,

Savage, Ch. J.

The questions presented by the bill of exceptions in this case, are, 1. Whether, under the circumstances, the submission and award were competent evidence 1 and 2. If competent, whether the award is valid %

It seems to be well seitled, that one partner cannot bins! his co-partner under seal. He may, indeed, discharge a co-partnership debt, under seal, but that authority arises not fr°m any capEicity to bind his co-partner in a manner to impose an obligation upon him, but from the power which each partner has over the partnership property, and partnership debts. This proposition does not seem to be contested by the plaintiffs’ counsel; but they contend, that the submission and award were competent evidence to shew that one item in the defendants’ account should be stricken from it. It 'seems proper, therefore, to look into the -cases, and ascertain with precision what is the extent of the power of one partner to bind another by seal. The case of Harrison v. Jackson, Sykes & Rushworth, (7 T. R. 207,) was an action of covenant against three partners, upon an agreement under seal, signed by the defendant Sykes, in this form: “For Jackson, self and Rushworth, W. Sykes” The agreement related to a partnership transaction, and was executed by Sykes, the other partners not being present. It was said upon the argument that Lord Mansfield had ruled at nisi prius, that for a partnership debt, one partner had authority to execute a bond for another; but the authority of that decision was not admitted by Lord Kenyon, who gave the opinion of the court. He admitted the authority of partners, according to the law merchant in mercantile transactions, but denied that any power existed to bind each other by seal, unless a particular power be given for that purpose; and adds, this would be a most alarming doctrine to hold out to the mercantile world. If one partner could bind the-others by such a deed as the present, it would extend to the case of mortgages, and would, enable a partner to give a favorite creditor a real lien on the estates of the other partners.

In the case of Ball v. Dunslerville, (4 T. R. 313,) the action was against two, upon a bill of sale executed by one of the defendants in the presence of the other, and by his authority, they being partners in this transaction, and using but one seal. It was objected, that the authority given by one to the other to execute a deed, should have been conferred by deed ; hut the court held the execution good, and relied principally on the fact, that the deed was executed by one defendant for himself and the other, in the presence of that other. These decisions have been recognized by this court.

In the case of Clement v. Brush, (3 Johns. C. 180,) it was -decided that a scaled note given by the defendant, in the name of himself and partner, though the sealed instrument was void as to the partner, it was good against the defendant, and extinguished the partnership debt for which it was given. And in Markay v. Bloodgood, (9 Johns. R. 285,) an arbitration bond, signed by one partner, where the other partner had approved it, was held to be valid, though that other was not present and assenting at the moment of execution, hut was by in the store, though perhaps not in the same room where the bond was signed. In pursuance of the same principle, it has been held, that a bond and warrant of attorney to confess a judgment, signed by one of two partners for himself and partner, is void as to the partner not assenting, though for a partnership debt. On a motion to set aside such a judgment, (2 Caines, 254, Green v. Beals,) the motion being made by the partner who executed the bond and warrant, was denied. The court said, that on a plea of non esl factum, a verdict must have been found for the defendants, and that relief would have been granted to the partner who had not executed the bond and warrant. They said a separate suit might have been sustained against T. Beais, who had executed the bond. And Motteux v. St. Aubin, (2 Black. 1133,) was referred to, where the court set aside a judgment against an infant, leaving it in force against his surety. The case of Tom v. Goodrich, (2 Johns. R. 213,) was decided upon the same principle. There Tom had become surety for a partnership debt, in a bond with one of the firm. He was compelled to pay the bond, and brought his action against the firm for the money so paid; but this court held, that the giving the bond extinguished the partnership debt, and converted the demand into an individual one, and therefore the plaintiff’s only remedy was against the particular partner with whom he had executed the bond.

In the case of Pierson v. Hooker, (3 Johns. R. 68,) it was decided, that one partner may release, under seal, a partnership debt. Kent, chief justice, distinguishes this from the class of cases just referred to. He says, “Here was no attempt to charge the partnership with a debt by means of a specialty, but it is the ordinary release of a partnership debt.” “ Each partner is competent to sell the effects, or to compound or discharge the partnership demands : each has an entire control over the personal estate,” &c. (See 17 Johns. R. 58. 15 id. 387.)

In the case of Buchanan v. Curry, (19 Johns. R. 137,) it was decided that one of two partners may discharge a partnership demand after a dissolution of the partnership. And further, if one partner enter into a submission to an arbitration in the name of both, and an award is made in favor of the partners, and if payment is made of the amount awarded and accepted by such partner, such payment "operates by way of release by one partner, or as an accord and satisfaction, and is binding upon both partners. It follows from these cases, that a submission by one partner in the name of both, is valid as to the partner who executes the bond, but void as to the other who never authorized his name to be used in that manner. Should an action be brought against the partner who signed the bond, he cannot take advantage of his own irregularity; but should an action be brought against both partners, upon a plea of non est factum, the defendants would be entitled to a verdict. The case of Green v. Beals shews, that a judgment entered upon a bond and warrant thus executed, would be held regular as to one, and irregular and void as to the other; that the party whose name has been thus used may waive the irregularity, and sanction the use of his name; that such sanction will be presumed from his silence; and that a motion to vacate such judgment, when made by the partner alone who executed the bond, will not be listened to. The court in that case said further, that it would not be necessary to vacate the judgment,.even on the motion of the partner whose name had been used without authority, but they would direct execution not to be served on his person or property, and that only the interest of the partner who executed the bond in the partnership property, should be sold; thus giving perfect protection to the partner whose name had been used unwarrantably. This relief would be granted under the equitable powers of the court; but so long as the parties are contesting their legal rights, the rules of law alone must govern the court. According to the principles established by the cases referred to, had the award in this case been such as to give the plaintiffs a right of action upon it; had the arbitrators awarded to the plaintiffs as damages, the value of the 1000 bales of cotton, purchased by the defendants contrary to their instructions, the defendant Barrett could not be made responsible for it in any manner, but the defendant Hagan would be liable. Should the plaintiffs in such case bring a joint action against both, and only Hagan be taken, and plead non est factum, a verdict must pass for the defendants; but should the plaintiffs prosecute Hagan alone, and. declare upon the bond as his bond, he could not deny it successfully. Again, had Hagan confessed a judgment, such judgment would extinguish the partnership debt, and Barrett would be protected from execution of every kind, even as to his share of the partnership property. Had the arbitrators awarded a sum of money to be paid by the defendants to the plaintiffs, such award must certainly be a security of as high a nature as a bond, if not higher, and, consequently, would extinguish the simple contract debt. The plaintiffs in that case would have had no remedy against the firm, nor would they have had any against Barrett, upon the bond of submission and award, as Barrett had never authorized his name to be put to it; the plaintiffs then could only look to Hagan,

It results, then, that one partner cannot do any act under seal, to affect the interests of his copartner, unless it is to release a debt. In the case of Buchanan v. Curry, a submission and award in favor of the firm, and an acceptance of the amount awarded, were held to operate as a release, or an accord and satisfaction ; but no such consequence, I apprehend, results from the award in this case. Had the award in the case of Buchanan v. Curry been against the Buchanans, it could never have been enforced against R. Bu» chanan, who had never assented to the submission ; but on the contrary, R. Buchanan would be exonerated from all claims of Curry against the firmthose claims would have been extinguished by the award, and W. Buchanan alone could be compelled to pay it. What is the effect óf this award if valid 1 The defendants have received the money of the plaintiffs, to the amount of $107,911 56, which Was a fair demand against the defendants.. The defendants contended that they had accounted for that sum by the pnrchase of 1000 bales of cotton : that is denied by the plaintiffs, and asserted by the defendants. It is submitted to arbitrators to decide, whether that cotton was purchased according to instructions ; or, in other words, was it purchased for the plaintiffs, or did the defendants, by neglecting to pursue their instructions, make the purchase for themselves 1 The arbitrators determine that the. cotton was not purchased according to the instructions received by them from the plaintiffs. They did not, therefore, purchase for the plaintiffs. The defendants have, consequently, the above amount of the plaintiffs’ money in their hands to be accounted for; and tha sum, with interest, should have been the damages awarded to the plaintiffs, according to the facts appearing in this bill of exceptions. But the award says that the plaintiffs have sustained no damage, because the cotton purchased belongs to the defendants. This seems tó me a non seqiiitur. Is it no damage to the plaintiffs that the defendants have in their hands $107,911 56, which remains unaccounted for 1 The award seems to me to be a felo de se; but if valid, it is so only against Hagan, and cannot be enforced against Barrett. But it is said that this suit is virtually against Hagan alone, as Barrett has not been arrested, and, at all events, Hagan cannot defend himself upon the ground that Barret is. not liable; that the submission was at least his deed, and the award is good against him. The case of Sangster v. Mazaretto and others, (1 Starkie’s Rep. 128,) is referred to, as shewing that Hagan is concluded. That was an action against the defendant and three others, as acceptors of several bills of exchange: the other three defendants were residenis abroad, and had been outlawed. The plaintiff, to prove a partnervhip, produced a letter from the defendant, Mazaretto, admitting the partnership. It was objected that this defendant’s admission could not bind the other defendants, ' and the promises were all laid as made jointly by the four defendants; but Lord EAlcnborough held the evidence sufficient, inasmuch as in any future action by Mazaretto against his co-defendants for contribution, the record in the action against Mazaretto would not prove the partnership, but that must be proved by other evidence.

The very ground of this decision is,-that the evidence can have no effect against any one but the defendant who made the admission. In that case, in consequence of the outlawry of the three joint debtors, the plaintiff was enabled to proceed against one as if he were a several debtor, and the judgment to be obtained, would be a lien on the property of the defendant who was arrested, and no other of the partners or joint debtors; neither could execution affect the property of any other. Our statute has varied the common law in this respect. It allows the plaintiff to proceed to judgment upon bringing in one joint debtor, and judgment is rendered against all. That judgment is a lien upon all the joint real estate of the defendants. Execution issues against all, and may be levied on all the personal property jointly held by the defendants, as well as the separate property of the defendant arrested. The principle of that case, therefore, when applied to this, would exclude the award. It seems to me, therefore, that as well the weight of authority as of argument, prove that the award offered in evidence was properly excluded. That it came in collaterally, can make no difference. If it be admitted at all, it is to affect the rights of a person who was no party to it, and to whom the law affords a protection from its consequences. If admitted in this way, it has precisely the same effect upon Barrett, as if a joint action were brought upon the arbitration bond ; it must, therefore, be governed by the same roles of evidence.

2. The next question which I had proposed to examine is whether the award is valid 1 Perhaps the conclusion to which I have arrived, on the competency of the evidence offered, considering the award valid, may render the examination of the latter question unnecessary. If I am correct in the opinion which I have formed, that the submission and award, if valid, are not proper testimony in this suit, then it is immaterial at present whether the award be good or not. If the award is void, then upon the plaintiffs’ own shewing, there is a balance due the defendants. It may not be improper to remark, that it is noN doubt competent for parties to submit a single item of a long account, and the award will, if regular, be valid as to the subject submitted. But in this case, it seems to me that the arbitrators misunderstood the object of the parties. The defendants had purchased the cotton. The plaintiffs had received it; they had exercised an act of ownership over it, by selling one sixth of it. I apprehend, therefore, the title to the cotton was never submitted. The cotton was considered the property of the plaintiffs ; but it was alleged by the plaintiffs that they had been injured by the purchase being made on terms different from those contained in the instructions. Had the plaintiffs intended to submit the question of ownership, they were putting it in the power of the arbitrators to decide a question of an amount exceeding $100,000; and yet they took a bond of submission in the penalty of $20,000. This circumstance is not conclusive, but certainly is strong to shew the extent to which the plaintiffs then estimated their damages. They, probably calculated their damages by the probable loss on the cotton. That part of the award which declares that the cotton shall be taken to the account of the defendants, is certainly not warranted by the submission, and is therefore void. An award may be good in part and bad in part; and if that which is void does not affect the merits of the submission, the residue will be valid. If we strike out of this award that part which is clearly not warranted by the submission, then the award decides nothing in favor of the plaintifis; the award then stands, that the defendants were not warranted in purchasing the cotton, but the plaintiffs had sustained no damage. This might all be true for aught appearing in the case; for instance, the defendants might have been limited to a certain price, but they gave much more ; the purchaSer, then, would have been unauthorized by their instructions, But if the plaintiffs accepted the cotton, and sold it at a large profit, the award would be true; but it would give no right of action. It seems to me, therefore, that in any point of view, the judge was correct in rejecting the award.

The motion to set aside the nonsuit should be denied.