A Practical Treatise on the Law of Partnership

308

CHAPTER II.

OF EXEMPTIONS FROM LIABILITY.

SECTION I.

Of Exemptions, where the Contract is under Deed.

THE law, from the necessity of encouraging commerce, recognises the universal custom of merchants, which allows one partner to bind his copartner by bills of exchange. But there is no need to extend that custom to instruments which are not negotiable, and which are attended with such solemnities, that they who rely on them as securities, must know under what circumstances, and on whose credit, they are executed.

One partner, therefore, has no implied authority to bind his copartner by deed. In the case of Harrison v. Jackson (a), an action of covenant was brought upon an agreement of three parts, stated in the declaration to have been made between the defendants Jackson, Sykes, and Rushworth, merchants and partners, of the first part; W. and J. Harrison, of the second part; and the plaintiff, of the third part: of one part of which said agreement, as being sealed with the seal of the said W. Sykes, for himself and the other two defendants, the plaintiff made a profert in Court. The defendants pleaded non est factum. At the trial it appeared that the defendants were partners. The agreement stated in the declaration was produced; and the subscribing witness proved that it was executed in his presence by the defendant Sykes in the following form:-" For Jackson, Self, and Rushworth.-W. Sykes:" but neither Jackson nor Rushworth was present at the execution. The question reserved for the opinion of the Court of King's Bench was, whe

(a) 7 T. R. 207.

ther such execution of the agreement by the defendant Sykes was binding on the other defendants, Jackson and Rushworth. The Court held that it was not. Lord Kenyon-“ The law of merchants is part of the law of the land; and in mercantile transactions, in drawing and accepting bills of exchange, it never was doubted but that one partner might bind the rest. But the power of binding each other by deed is now for the first time insisted on, except in the Nisi Prius case cited (a), the facts of which are not sufficiently disclosed to enable me to judge of its propriety. 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 to a favourite creditor a real lien on the estates of the other partners."

Neither does a general partnership agreement, though under seal, authorize the partners to execute deeds for each other, unless a particular power be given for that purpose (b). Generally, therefore, if a deed be expressed to be executed by A. " for himself and partner," it must be shewn that A. had authority by deed from his partner to execute. The partner's subsequent acknowledgment of A.'s authority will not be sufficient (c). But a partner may bind his copartner by deed, if he have a special power under seal for that purpose (d).

I. 2. However, although one partner has no implied authority generally to bind his copartner by deed, yet if one partner execute a deed on behalf of the firm, in the presence and with

(a) Mears v. Serocold, cited by Dampier, arguendo, thus:-" In Mears v. Serocold, the defendant pleaded non est factum to an action brought on a joint and several bond; at the trial, it appeared that Jackson was in partnership with Serocold when the bond was given, and that the consideration of the bond was a partnership debt due from Jackson and Serocold to the plaintiff, and that Jackson first executed the bond for Serocold, and then for himself. Lord Mansfield ruled, that

for a partnership debt one partner had authority to execute a bond for another, and thereupon directed a verdict for the plaintiff."

(b) Per Lord Kenyon, Harrison v. Jackson, supra.

(d) Ibid. And see Horsley v. Rush, 7 T. R. 209, cited; Appleton v. Binks, 5 East, 148; Berkeley v. Hardy, 8 Dowl. & Ryl. 102.

the consent of his copartners, that will bind the firm; in such case the sealing and delivery by one is deemed to be the act of all. In the case of Ball v. Dunsterville (a), an action was brought on a bill of sale; the declaration stated the bill of sale to have been made by the defendants, and sealed with the seal of one of them for and on behalf of himself and the other, and by the authority of the other, &c. It was proved at the trial, that one of the defendants, in the presence of the other and by his authority, executed the instrument for them both, they being partners in this transaction; but there was but one seal, and it did not appear that he had put the seal twice upon the wax. It was objected on the part of the defendants, that the instrument was not properly executed, for that they (not being a corporation) could not have a common seal; that the execu tion by one could not operate as an execution by both, even though they both consented; and that the authority given by one to the other to execute a deed, should itself have been conferred by deed. But the Court of King's Bench were clearly of opinion, that there was no ground for the objection; that no particular mode of delivery was necessary, for that it was sufficient if the party executing a deed treated it as his own. And they relied principally on this deed having been executed by one defendant for himself and the other in the presence of that other (b).

In the same manner, it has been held in a Court of equity, that a bond is binding on the firm, though not executed by all the partners, if executed in the name of the firm and in the presence of all the partners. In the case of Burn v. Burn (c), a bond commenced thus:-"Know all men by these presents, that we, Mayne & Co., of &c., are held and firmly bound" &c. The condition ran thus: "The condition of this bond is such, that if the above-bounden Mayne & Co., their heirs, executors, or administrators, shall and do well and truly pay" &c.; and

(a) 4 T. R. 313.

(b) If one of the officers of the Forest put one seal to the rolls by assent of all the verderers and other officers, it is as good as if every one had put his several seal; as in case divers men enter into an obligation, and they all consent, and set but one

seal to it, it is a good obligation of them all. Lord Lovelace's case, Sir W. Jones, 268, cited arguendo in the principal case. See Sheph. Touch. 55; Fitzh. tit. Feoffment, pl. 105 ; Com. Dig. Fait, (A. 2).

the instrument concluded thus:-"Mayne & Co. Signed, sealed, delivered &c. in the presence of A. B." The bond was executed by Thomas Mayne only, because his name stood first in the firm; but he executed it with the privity of the two other partners, who were both present at the execution. It was held to be valid and binding on the other members of the firm.

In a recent case, where a deed giving time to the debtor of a banking firm was executed by one of the partners of the bank, at the banking house, in the following manner: "For Self and partners, S. G. Smith," but there was no evidence of any express assent to or dissent from this mode of signature by the other partners, the Court of Exchequer declined to give any opinion as to whether the deed was binding on the other partners in the banking house (a).

II. The general rule of law, that one partner cannot bind his copartner by deed, although applicable, with the exceptions which have been mentioned, to every deed in the nature of a grant, yet appears not to extend to releases. It has been said. by a learned Judge, that "a release of a demand executed by one of five partners would bind all; for if a person owe money to five several partners, he is not bound to pay them altogether, but may pay the debt to any one of them, whose receipt or discharge operates as the receipt or discharge of the whole firm (b)." Perhaps this observation refers rather to discharges for minor payments in the ordinary course of trade, than to releases of important debts, or to general releases of all debts due from a debtor to the firm because the convenience arising to the customer by his being permitted to pay his debt effectually to one of several partners, seems hardly a sufficient foundation for any general rule of law regarding deeds of release executed by one partner in the name of the copartnership.

But, however this may be, it seems to be the prevailing opinion, though the point has not been expressly decided, that in all cases a release by one of several partners to a debtor of the firm, binds the firm. In Rolle's Abridgment it is laid down,

(a) Smith v. Winter, 4 Mee. &

W. 454.

(b) D. Best, C. J., 10 Moore,

393.

that, "if there are divers obligees, and one release, it bars all (a). And in Perry v. Jackson (b), Lord Kenyon says "A partner may release as well as create a debt." It has also been laid down, that if copartners are creditors, and come in under a composition deed, which is in the nature of a release, and usually contains a clause of release, it binds all, if executed by one; and may be pleaded in bar of an action brought for the previous debt, either in conjunction with him who executed it, or by the others as surviving partners after his death (c). It has likewise been stated generally, that one partner may release partnership debts (d). And Lord Eldon, speaking of the case of Harrison v. Jackson, says "The question depended in a great measure on the nature of the deed. I take it that that was a deed by which one partner signing, sealing, and delivering for himself and his partners, undertook to make a grant; the effect of such a deed is very different from the effect of a release (e).

In the case before his Lordship, the bill was filed by a surety in a bond against the partners (ƒ), stating, that they having agreed to execute a release to the principal, in consideration of an assignment of his effects, one alone executed the release, signing and scaling it for himself and his copartners. The bill then alleged, that the release being executed by one partner only, the plaintiff could not defend himself at law, and prayed that it might be declared a good discharge in equity against the surety; that the defendants might be restrained from proceeding on the bond at law, and that the bond might be delivered up to the plaintiff to be cancelled. The defendants put in a general demurrer; insisting that the release, though executed by one partner only, might be pleaded at law to an action brought by both; and therefore that the plaintiff, having by his own statement a defence at law, had no remedy in equity. Lord Eldon seemed to be clearly of opinion, that such a release might be pleaded at law. But he held, that whether the plaintiff had or had not a defence at law, was in this case immate

(a) 1 Roll. Abr. 410 (D).

(b) 4 T. R. 519. See Ellison v. Dezell, post, Chap. 5.

and D. arg. Wood, Swan v. Steele, 7 East, 211.

(e) Hawkshaw v. Parkins, 2 Swanst. 544.

(f) The principal in the bond was out of the jurisdiction.

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A Practical Treatise on the Law of Partnership: With an Appendix of Forms