Pittsb. Melting Co. v. Reese , 1888 Pa. LEXIS 398 ( 1888 )

Opinion,

Mr. Justice Gbeen :

The defendant is a limited and not a general partnership-The powers of the members are subject to the restraints and limitations imposed by law, and these are operative as well against strangers dealing with the partnership as against the members themselves. In a general way this was conceded by the learned court below; but, in describing the authority of Mr. Winter, who was chairman of the company, we think the court erred in attributing to him an authority he did not possess. . Thus, in the charge the learned judge said: “ As we instruct you, Mr. Winter had a right to sell this oil. He was-chairman of the concern and — to put it clearly and without question apart from the evidence — we instruct you as matter of law, the very position he had as a member of this firm, and as the executive head of it gave him a right to sell any oil they had, whether the whole stock in hand or not, even if there was an agreement between him and the other members of the firm that he should not sell for the price he did sell.” In answering the third point of the defendant the same idea was still more strongly expressed. The judge then said: “ I instruct you that under the act of assembly and the articles of association, Winter being chairman of the board of managers, had authority to do business for the defendant, to sell its products in the market without any specific authority to that effect.” The point requested an instruction that the sale made by Winter was not binding upon the association unless he had express authority from the managers, or implied authority from the fact that he had been making similar sales without objection; that there was no evidence of express .authority, and as to the implied authority there was no evidence but his own, and that was contradicted by the other managers. The answer simply ignored every other consideration than that of a general authority, which it declared to exist without any specific authority, and without regard to the action of the managers. Practically this amounts to an ascription to one of the several partners, of all the power which may be exercised by an ordinary general partner.

The validity of the limited partnership in the present case has not been impeached or even questioned. We assume it to be entirely legitimate and therefore subject to the operation of the law relating to limited partnerships. Under that law the individual members do not have the authority of general partners. The powers of the association are to be exercised by a board of managers and not by each of the members. Other limitations are imposed not necessary to be now considered, but it is perfectly certain that the general authority of an ordinary partnership does not exist in the individual members. Strangers dealing with a limited partnership, being supposed to know the law, are bound by the limitations imposed upon the members, and cannot have the benefit of those inferences which flow from a relation of general partnership merely. We think the third point of the defendant should have been affirmed as it stood, and if it was true that the board of managers had on the 12th of July, 1886, refused to make the sale to the plaintiff at 6J cents, the jury should have been instructed that the sale made by'Winter was not binding upon the defendant. These views require a reversal of the judgment upon the third assignment of error.

We are also of opinion that both the plaintiff and the defendant are bound by the restriction of liability in any case for more than, five hundred dollars unless reduced to writing and signed by at least two managers. The term “ liability ” expresses in the broadest and most comprehensive manner any form of legal obligation, certainly all such as are measured by money values. A purchase for more than five hundred dollars would undoubtedly be a liability prohibited. Why not a sale ? The purchase imposes an obligation to receive a commodity and pay for it, and if this obligation is not discharged by performance, a liability to pay damages for its breach ensues. A sale imposes an obligation to deliver a commodity and receive money for it, and if not discharged a liability to respond in damages for its breach results. We can see no essential difference between these two different species of liabilities, in construing a legislative enactment such as this, the manifest purpose of which is to protect the association and its members from all obligations not sanctioned in the manner especially directed. This view requires a reversal on the first and second assignments.

Judgment reversed.