Marsh v. Wheeler , 77 Conn. 449 ( 1904 )

The question which naturally first presents itself in this case is as to whether or not the two notes bearing the name of C. B. Wheeler Co., which the plaintiffs held at the time of the dissolution of said partnership, May 31st, 1900, were, in the plaintiffs' hands, paper upon which Wheeler Co. was obligated. It is conceded by both parties that any such obligation is, under the facts found, solely dependent upon authority in Charles B. Marsh to make and utter negotiable promissory notes in the name of the firm.

The plaintiffs contend that the articles of copartnership gave him express authority to that end. This the defendants deny. This claim, which rests upon a very slender foundation, may be disregarded.

Upon the question of implied authority the defendants rely upon the distinction recognized in Pease v. Cole,53 Conn. 53, between commercial or trading and nontrading partnerships, and the further distinction, also recognized in that case, between the two classes of partnerships, in that the power of one partner to pledge the credit of the partnership in the emission of commercial paper is presumed with respect to trading and not presumed under ordinary conditions with respect to nontrading partnerships. So far there is no difference between the parties as to the law, and as respects the legal consequences of the facts found there is such a concurrence of view that the question of implied power resolves itself into the narrow one as to the class of partnerships to which that of Wheeler Co. belonged, to wit, whether it was a trading or nontrading one.

A trading partnership is one which buys and sells; but buying and selling need not be its sole purpose, nor even its most characteristic feature. A partnership for the conduct of a manufacturing or mechanical business is none the less a trading one for the reason that buying and selling in the market is only one of its incidents. George on Partnership, 92. In Kimbro v. Bullitt, 63 U.S. (22 How.) 256, 268, the rule is stated as follows: "Wherever the business, according to the usual mode of conducting it, imports, in its nature, the necessity of buying and selling, the firm is then properly regarded as a trading partnership." Another statement of the principle is found in several authorities, to wit: "If the partnership contemplates the periodical or continuous or frequent purchasing, not as incidental to an occupation, but for the purpose of selling again the thing purchased, either in its original or manufactured shape, it is a trading or commercial partnership." Bates on Partnership, 327; Baxter v.Rollins, 48 Amer. St. Rep. 432, 439 note; Randall v. Merideth,76 Tex. 669.

But in whatever language the distinction between the two classes of partnerships is expressed, it is not to be forgotten that it is not a purely arbitrary one, but has an underlying reason and purpose which should not be overlooked when an application to any given situation is attempted. This reason and purpose have their origin in a need on the part of certain partnerships arising out of the kind and manner of their business, and the absence of such need on the part of others, and in the interest of the commercial world into contact with which the business of the one class brings it and that of the other does not. Pease v. Cole, 53 Conn. 53; Kimbro v.Bullitt, 63 U.S. (22 How.) 256; Holt v. Simmons,16 Mo. App. 97; Story on Partnership, § 102a. So it is with respect to those partnerships the nature of whose business naturally comprehends certain courses of dealing, that the law says that they belong to the class denominated commercial or trading. These are those whose conduct so involves buying and selling, whether incidentally or otherwise, that it naturally comprehends the employment of capital, credit, and the usual instrumentalities of trade, and frequent contact with the commercial world in dealings which in their character and incidents are like those of traders generally.

If we turn now to the case of Wheeler Co. we find a partnership whose business was the taking and execution of plumbing contracts. It conducted no store over whose counter articles it had bought were sold. Whatever buying and selling it did was that incident to the execution of plumbing contracts as a stated business. It is common knowledge, however, that the execution of plumbing contracts in these modern days involves extensive purchases in the market of fixtures and fittings of large cost. These are not bought for use by the buyer, but to be disposed of for money. The value of that which is bought enters as a large factor into the receipts of the contractor. The value of labor necessary to the adaptation of the purchased articles to their intended uses will also become a factor. But that makes no difference. The sale is not required to be of the articles in the same form as when purchased.

It thus appears that the firm carried on a business which contemplated frequent and extensive purchases, not as incidental to an occupation or for use, but for the distinct purpose of selling again in an adapted or applied, if not the original, shape; and that its business, therefore, carried it frequently into the market and brought it into contact with the commercial world in transactions naturally involving the use of credit and the usual instrumentalities of trade. Its business being of such a character, it was a commercial or trading partnership within the meaning of that term as used in this connection.

In view of these conclusions the plaintiffs' objection to the admissibility of testimony requires no consideration.

We have next to consider the validity in the plaintiffs' hands of the note sued upon, which is neither of those hereinbefore determined to have been valid, but the last of a series of renewals thereof. Marsh, at the time that this note was made and discounted, was not a partner of Wheeler. The firm of Wheeler Co. had been dissolved some six months before its date, and before several of its predecessors in the line of renewal had been given. The plaintiffs, however, had no notice of the dissolution, unless the same was inferable from the circumstance that upon an occasion prior to the date of the note Wheeler went to the plaintiffs' banking-house for the purpose of opening an account for a new partnership into which he had entered, and there met an employee of the plaintiffs named Judson, who made certain inquiries of him, and the same Wheeler who had been a member that he was the same Wheeler who had been a member of Wheeler Co., that that firm had been dissolved, and that he had formed another partnership for which the new account was desired to be opened. The finding was evidently intended to express the idea, and counsel have so treated it, that the plaintiffs had no knowledge of the dissolution, and dealt with Marsh, in the matter of the renewals thereafter, in good faith, in the belief that the firm still continued and in reliance upon its assets and responsibility, unless the contrary should be inferred from the facts recited.

"Notice to an agent, to bind the principal, must be within the scope of the agent's employment, and notice to him of any fact outside the scope of his agency will not affect his principal." Trentor, v. Pothen, 24 Amer. St. Rep. 225, 233 note; Farmers Citizens Bank v. Payne, 25 Conn. 444;Smith v. Board of Water Commissioners, 38 id. 208; FarrelFoundry v. Dart, 26 id. 376; Willard v. Buckingham, 36 id. 395; Platt v. Birmingham Axle Co., 41 id. 255; McGurk v. MetropolitanLife Ins. Co., 56 id. 528; Ward v. MetropolitanLife Ins. Co., 66 id. 227; Mechanics Bank v. Schaumburg,38 Mo. 228; McCormick v. Wheeler, Mellick Co., 36 Ill. 114.

It will be noticed that the statement made to Judson was incidentally made, and was not intended as a notice of dissolution. All that the finding discloses of this man, who thus casually acquired the information imparted by Wheeler, is that he was an employee of the plaintiffs. That he was not a janitor or errand boy is perhaps to be implied from the circumstances of the meeting and the character and apparent purpose of his inquiries. It would appear that his duties brought him into connection with depositors and their accounts. Perhaps he was a teller. However this may have been, there is absolutely nothing in the finding to indicate even presumptively that his employment related to the bank's discounts, or comprehended within its scope anything which had to do with the Wheeler Co. notes or obligation, or which gave him any knowledge that there were such notes or obligation. Whether his principal's responsibility be determined upon the theory of the legal identity of the principal and agent, or as arising from the duty which the agent's relation and the circumstances imposed upon him to communicate his information to his principal, the law under these circumstances does not impute Judson's knowledge of the dissolution of Wheeler Co. to the plaintiffs. His information is not shown to have been of a fact within the scope of his agency.

The Court of Common Pleas is advised to render judgment for the plaintiffs to recover the amount due upon the note in suit.

The costs in this court will be taxed in favor of the plaintiffs.

In this opinion the other judges concurred.