Maltby v. the Northwestern Virginia Rail Road Co.

This action was brought to recover from the appellant, surviving partner of the firm of Holt Maltby, certain unpaid instalments, claimed to be due on an alleged subscription for one hundred and fifty shares of the capital stock of the appellee, made, in the name of the firm, by the deceased partner, Dan Holt, in his life time.

The plaintiff, to sustain its case, offered in evidence the Act of Virginia, under which it claimed to be a corporation; and also the general railroad law of that State. In addition, it offered the proceedings of the meeting of the subscribers to the capital stock, on the 2nd day of August 1857, for the purpose of organizing the company, as recorded in the minute book of the company, together with the resolution of the president and directors, of August 4th, 1851, under which subscription books were directed to be opened in Baltimore, and a resolution of the 2nd of November 1852, calling for the first and second instalments, to be paid at the Mechanics Bank by Baltimore subscribers. The subscription on which the suit is brought is as follows:

"We, the subscribers, agree to take the number of shares of stock set opposite to our respective names, in the Northwestern Virginia Rail Road Company, and we hereby appoint ___ our attorney, to make the said subscription accordingly on the books of said company.

Holt Maltby — one hundred and fifty shares, 150 shares."

It was then proved, that, during the life time of Dan Holt, who died in March 1853, the first and second instalments upon the above subscription were paid, the first of $375, on the 10th of December 1852, and the second of $1500, on the 8th day of January 1853. According to the receipts the payment of the instalments purported to be "from Holt Maltby," on one hundred and fifty shares of the capital stock of the company, standing on its books in their names.

The resolutions of the appellee, of date July 3rd, 1854, calling for the remaining instalments, and the notices of the calls published in the "American" and "Patriot" newspapers, and also a letter from the defendant, dated 11th of December 1854, enclosing the notices to the administrators of Mr. Holt, were read to the jury.

It was also proven by the plaintiff, that, whilst the main business of Holt Maltby was the procuring, preparing and forwarding of oysters to the western country, yet, they did not confine themselves to it, but had formerly established and owned a line of wagons from Frederick westward, prior to the construction beyond Frederick of the Baltimore and Ohio Rail Road; that they purchased and held in their joint names valuable real estate in Baltimore, which, at the instance of the defendant, was divided by legal proceedings after the death of Mr. Holt; that they had a farm in common in Virginia, bordering on waters in which they planted oysters; that they owned vessels engaged in the oyster trade; that they purchased and owned a barque, in which they made a shipment of butter, dried applies, and the like, to California, in 1848 or 1849; that they owned a large schooner which they employed in the coasting trade; that they subscribed and paid for stock in the Northern Central Rail Road Company; that they purchased stock in the Baltimore and Ohio Rail Road Company, which they afterwards sold; and the account of the firm, on the books of the last named company, was offered to show the particulars of this transaction. It was admitted, by the plaintiff, that the defendant, Maltby, as soon as called on by the plaintiff on account of the subscription, refused to acknowledge it as binding on the firm, and has, at all times since, refused to acknowledge its validity in any way. And it was also proved, that in no entry on the journal, day-book, leger or check book of the firm is the name of the plaintiff mentioned, and that there is no entry of any check on said book for the sum of $375, on the 10th day of December 1852, or at any other date; that the check-book under date of 7th of January 1853, shows a check for $1500, to H. M., and on the 8th of January 1853, a check for $1500 to H. M.; and it was also proved by the exhibition of the account of Dan Holt in the books or ledger of Holt Maltby, that he is not charged at the date of January 8th, 1853, or at any other date, with the sum of $1500. It was admitted that the defendant, Maltby, was not in Baltimore when the subscription was made, or when the payments, as shown by the receipts, were made, and that he did not return to Baltimore until after the death of Dan Holt. It was proven by the witness, Benjamin S. Holt, that the main business of Holt Maltby was the oyster business, shipping them to the west, and then disposing of them; the same witness proved that the firm of Holt Maltby purchased the Baltimore and Ohio Rail Road stock as an investment, and also their real estate as an investment of their partnership profits; and afterwards sold said stock, and that they made money out of their transactions in this stock. This is the substance of the testimony.

The defendant, by his counsel, then proposed to the witness, Holt, the following question, which was objected to and the objection sustained by the court:

"Mr. Holt, you have said that Holt Maltby made a shipment to California, of butter, dried applies, lard and other articles, sometime in or about the year 1848 or 1849; you will please say, whether such shipment was made by either partner alone, without consultation with the other, or whether such shipment was made as the result of an antecedent agreement and assent of both parties?" The refusal of the court to allow this question to be put to the witness, constitutes the first exception.

I think the court properly disallowed the question. If the defendant had succeeded in proving that the shipment spoken of, was the result of an antecedent private agreement between the partners, that would not, looking to the other proof in the cause, have affected the responsibility of the firm to the public; and the rights of the plaintiff would not have been thereby impaired, there being no evidence given or offered to show that they had notice thereof.

The plaintiff offered three prayers, and the defendant nine prayers. Of the plaintiff's, the court rejected the first and second and granted the third; of the defendant's, it granted the first and rejected the remainder, but granted the seventh with a modification; and, also, of its own motion, gave an instruction to the jury. A question underlying the whole case is, whether the evidence be sufficient to justify a jury in inferring that the particular transaction which is the basis of this case, was within the scope of the business of the firm of Holt Maltby? The various transactions in which the partners embarked that were, in their nature, entirely distinct from their main business — the catching, packing, c., of oysters — particularly those relating to the purchase and sale of real estate, and of internal improvement stocks, show, satisfactorily enough, that their business was not confined to dealing in oysters. The only evidence we have of the character of their co-partnership, consists of the transactions in which they were engaged. It is very evident, from the whole tenor of the evidence, that both Holt and Maltby had faith in each other, and that they had joined their capital and exertions in one general enterprize for weal or woe; in other words, that they made a common fund, enjoying its yields and sharing its losses. The evidence is abundantly ample to establish a co-partnership, embracing such a transaction as the one in dispute. There was nothing at all in the testimony from which the contrary could even have been conjectured, except it be that, it was proven that their "main" business was the oyster business. This circumstance surely ought not to control all the other proof on the point. The jury were well justified in believing that, the subscription to the stock of the plaintiff was as well authorized as had been the purchases of stock in other internal improvement companies, which were not only never repudiated, but the profits of which were availed of and enjoyed. There was no dissimilarity in the power employed in these cases; it was the same in all, and was well calculated to notify the world, that dealings in the stocks of rail-road companies were within the terms of the co-partnership; indeed it distinctly conveyed that intelligence. There is no doubt, that under the limitations of a special partnership, one of the partners has not the power in his dealings to exceed them; and if the party, with whom the transaction is had, has knowledge of the nature of the partnership, he is es-estopped from holding the others liable on such contract. And, also, "where the transaction is wholly unconnected with, and beyond the scope of, the partnership business, the firm would not be bound by any contract entered into by a single partner, although the party implicitly trusted on the credit of the firm." Levi on MercantileLaw, 143. On the other hand, each partner is to be taken as "the accredited agent of the rest, whether they be active, nominal or dormant, and has communicated to him all authorities necessary for carrying on the partnership, and all such as are usually exercised by partners in the business in which they are engaged. He is by law held to be prÆpositus negotiis societatis, or to possess a general mandate to transfer, pledge, exchange or dispose of the partnership property and effects, for any purposes within the scope of the partnership, and inthe course of its business;" Ibid., 139, and the authorities there cited. In the present case it was peculiarly the province of the jury to determine, whether or not the particular subject-matter embraced in this controversy was within the scope of the partnership, and in the courseof its business. If they believed the evidence, they could not have found the fact otherwise than they did.

It is not contended that the mere attaching of the name of the firm to the subscription by Holt, was, of itself, independently of all other circumstances, sufficient to fix the liability of the firm. Whatever advantage the defendant could derive from the assertion of this proposition, he had by the court granting his first prayer. And by the granting of his seventh prayer, with a modification, the jury were required to find, that the subscription "was authorized by the scope ofthe partnership existing between the said Holt Maltby." If it was so authorized, then, of course, the subscription was binding as asubscription of the firm. The instruction given by the Superior court, of its own motion, goes even farther than this. It required the jury to find, that the subscription was not an individual undertaking of Holt for his own advantage, but that it was recognized, acquiesced in and approved by Maltby, during the life time of Holt; it was greatly more than the defendant had the right to ask, or the court to grant. These two instructions, so far as the powers of Holt, his action, and the concurrence of Maltby in the latter, were concerned, placed the case of the defendant before the jury in the most favorable light for him; and he has no cause of complaint against the ruling of the court in these particulars.

There is no doubt that, in general, a strict compliance must be shown with the provisions of the charter, and that, in this case, so much of the Code of Virginia, as is applicable, is made part of the Act of the plaintiff's incorporation. But, in some cases, a compliance will be presumed, and in others, it may be waived. Assuming the authority to make the subscription, and the fact of its having been made, the payment of instalments on it is a sufficient recognition of the legal existence and organization of the plaintiff. That the law will make presumptions in favor of the legality of the proceedings of corporations, is settled by the case of The Hagerstown Turnpike Road Company vs. Creeger, 5Harris Johnson, 123; see, also, Commonwealth vs. Woelper andothers, 3 Sergeant Rawle, 29.

The third prayer of the plaintiff was nothing more than a recapitulation of the testimony, deducing from it the liability of the "responsible" party or parties. If, in my judgment, there be any objection to the prayer, it is to be found in its inconclusiveness of sequence, and not elsewhere. It in fact decided nothing, farther than that, if the facts were found, the proper party or parties were responsible, without pointing out who were the parties.

BARTOL, J., delivered the opinion of this court.

A majority of this court are of opinion, that the ruling of the Superior court, in the first exception, ought to be affirmed, and they also concur in the general views of the case which are expressed in the opinion of the Chief Justice; but they think there was error in the last instruction given by the Superior court to the jury.

The formal objection to its phraseology, made by the appellant's counsel, that it assumes the fact of the subscription instead of leaving that to be found by the jury, it is consid- ered is sustained by the well established practice in this State, and by numerous decisions of this court.

But the instruction is substantially defective, in entirely omitting material facts which were necessary to the maintenance of the action. These facts were the resolutions and action of the corporation calling for the instalments on the capital stock, and the notice to the defendant of the calls. However clear the evidence may have been to prove those facts, it was necessary for the jury to pass upon it. See 4H. J., 517. 7 H. J., 291. 3 Gill, 31. 10 Md. Rep., 346. There are many other cases to the same effect.

In the opinion of a majority of this court, the third prayer of the plaintiff was also erroneously granted. In it the jury were instructed, that if they found certain facts therein enumerated, "then there wassufficient evidence of a subscription," c. It is competent for the court to pass upon the legal sufficiency of evidence to go to the jury, as tending to prove a given fact; but it is an invasion of their province to instruct them, that the evidence is sufficient to prove thefact. The legal sufficiency of evidence is for the court to determine; but its weight, or its sufficiency, to establish another fact, sought to be inferred from it, is exclusively for the jury. Cole vs. Hebb, 7G. J., 39, 40. The instruction was calculated to mislead the jury, who might well have supposed that the court was instructing them as to thesufficiency in fact of the evidence to prove the subscription. SeeState, use of Barber, vs. Hammond's Ex'crs, 6 G. J., 169, 170.Grove vs. Brien, 1 Md. Rep., 438.

A majority of this court concur in affirming the action of the court below upon the defendant's prayers, but dissent from that upon the plaintiff's third prayer, and consider there was error in the court's instruction to the jury; the judgment must therefore be reversed.

Judgment reversed and procedendo ordered.