Boyd v. Thompson & Coxe

Opinion by

Mr. Justice Williams,

These eases depend on the same questions. The -difficulty thought to be encountered in them is much more apparent than real. There is a long line of cases among which is Schmertz v. Shreeve, 62 Pa. 457, holding that one partner cannot bind his partners or his firm by a deed or other instrument under seal by virtue of his implied power as a member of the firm to represent it. There is another line of cases which hold that a judgment confessed by one partner for a partnership debt will authorize a levy and sale of goods belonging to the firm as well as the separate goods of him who confessed the judgment. Perhaps the most recent of these is McCleery v. Thompson, 130 Pa. 443. The apparent inconsistency between these lines of decisions will disappear when the cases themselves come to be examined and the real point in controversy ascertained. Thus Schmertz v. Schreeve, supra, was an action on an executory contract, under seal, for the future delivery of oil at the city of Pittsburgh. A seal was not necessary to the proper execution of such a contract, but if the partner had the power to bind the firm by its use he changed the nature of the undertaking; for the seal imported a consideration, and would prevent the running of the statute of limitations applicable to the case of a simple contract. The question was therefore one of the power of a partner so to bind his firm. The’ opinion of this court was delivered by Justice Sharswood, wbo said in substance that as the contract was executory the question whether a seal was necessary to its valid execution was unimportant. The controlling question was whether one partner could bind the partnership by an executory contract under seal. “Executed contracts, such as assignments,” said he, “stand on another ground.' They form but the evidence of the act. The sale and delivery of merchandise, for example, is within the implied power of one partner. That he superadds a bill of sale or transfer under seal is but evidence of the act of disposition, and does not change its nature.” The seal is unnecessary upon such an instrument and its presence neither adds to nor modifies in any measure its legal effect.

Now the implied power of a partner to bind his firm rests on the doctrine of agency. The firm is an invisible artificial person, and necessarily represented by the natural persons who compose it. What they do therefore within the scope of the business in which the firm is engaged, and on its behalf or in its name, they do as its agents; and the agency grows out of and is implied from the relation between the invisible firm and the persons who have united to create it. A partner may buy and sell the goods in which the firm deals. He may borrow money for its use and give a note in the firm name therefor. He may indorse negotiable notes received by the firm in the course of its business with the firm name. He may give receipts, bills of sale, releases, and the like, in the firm name, and whether he appends a seal thereto or not is wholly unimportant, as such papers evidence a past transaction and impose no new liability. He may settle an existing debt by sale of the firm goods, or payment out of its funds, or by a note in the firm name. He has a right to insist that the goods belonging to the partnership shall be used to pay the partnership debts, and if he deems it necessary to his own security or that of the creditor, he may confess a judgment against the firm for the amount of such debt which will justify the levy and sale of the goods of the firm and his own in payment thereof. In so doing he imposes no new or original liability on his firm, for the debt was already due from it. In that sense the judgment is not an executory contract to be performed in future, but a mode of payment for a debt contracted in the past, the consideration for which the firm has alreadjr enjoyed. Such a judgment has been sustained for purposes of execution against the goods of the firm in many cases, among which are Harper v. Fox, 7 W. & S. 142; Grier v. Hood, 25 Pa. 430; Ross v. Howell, 84 Pa. 129; McCleery v. Thompson, 130 Pa. 443.

But the implied power of one partner does not extend to the persons or separate estates of his copartners, and for that reason such a judgment will be vacated on their application so far as they individually are concerned, or their individual estates real or personal: McNaughton’s Appeal, 101 Pa. 550. So much is necessary for their protection, but they have no equity as against the creditors of their firm which entitles them to be heard against the enforcement of such a judgment. On the contrary, the superior equity is in the creditors, whose right, in law as well as in morals, to have recourse to the firm property for the payment of their debts, is clear.

In the case before us the firm appears to consist of two members. One of these has confessed judgments in favor of certain firm creditors who have proceeded to seize the partnership property. The debts are not denied. There is no controversy over the amount of the judgments. No defence to a single dollar of them is suggested. But one partner asserts that the court should set aside these writs and vacate the judgments, because there was a seal appended to the warrant of attorney to confess judgment.

But in tbe language of Justice Shabswood, the confession of the judgment has imposed no new liability upon the firm. It was liable to the same creditors for the same sums before it was given. The seal was wholly unnecessary, but, what is of more consequence, it has not changed the nature of the instrument. Whether sealed or not the warrant is lost in the judgment., The seal cannot change the remedy, affect the statute of limitations or the order of proof. The addition of it to the confession of judgment was a waste of a very valueless formality, without object on the part of the maker, and without results to the creditor.

The court below was exactly within the rule in Schmertz v. Schreeve in holding that the dissenting partner had suffered no injury, and that neither he, nor the firm whose debt it was, had any equitable ground for relief, upon the petition or proofs before the learned judge who heard the motion.

For these reasons the appeal is dismissed and the order of the court below affirmed, so far as it relates to the firm of Thompson & Coxe. The judgment should be vacated as to Coxe as an individual, if he so desires.