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Holdane et al. v. Butterworth.
There was no error, therefore, in the Judge's charge, that if they found such dissolution to have been a matter of public notoriety, the defendant, Butterworth, was not liable.
Where, on the trial of an action against three persons who had been in partnership together in Liverpool, but one of whom (Humble) had retired, it was proved that, upon his retirement, the new name of the firm was painted upon the counting-house, and the winding up of the affairs of the old partnership was removed to another place in Liverpool, and circular letters announcing the change of partners were sent to the correspondents of the old firm, but there was no public advertisement of the change, nor any notice of it proved which could expressly affect the plaintiffs, the Court of King's Bench held that these circumstances were a sufficient notification to all the world of the change in the firm, and that the action was not maintainable against Humble. (McIver v. Humble, 16 East, 169.)
A change of the form of checks in a banking house, is, without any advertisement in the gazette or circular letter to customers, sufficient notice of an alteration of the firm to a creditor who uses such checks. (Barfoot v. Goodall, 3 Camp., 147.)
II. The rule is, that actual notice of the retirement of a partner is necessary to be given to the dealers with an established firm, in order to shield the retiring partner from liability for new engagements in the name of the firm, and that as to all other parties a publication in the newspaper is sufficient. But it is not held that such publication is the only means, but that any other facts inferring notice are enough, all the cases, however, bave reference to new liabilities in the name of the old firm, not to new liabilities by a new firm or in a new manner, for that alone is notice. (Godfrey v. Turnbull, 1 Esp., 371; McIver v, Humble, and Barfoot v. Goodall, cited above; Clapp et al. v. Rogers et al., 2 Kern., 283; Vernon v. Manhattan Co., 22 Wend., 183; Graves v. Merry, 6 Cow., 701; Ketcham v. Clark, 6 Johns., 144.)
“Public notice in some reasonable manner must be given." A change in the business name seems the best notice, and one that cannot be overlooked.
See Parkin v. Carruthers, (3 Esp., 248,) where La Blanc lays stress on the point that the firm remained the same.
Holdane et al. v.
In Davis v. Allen et al., (3 Comst., 168,) “ The general principle is, that when a person has done business with another as a member of a firm, or has so publicly appeared as a partner, as to satisfy the jury that the plaintiff must have believed him to be such, and he suffers the plaintiff to continue in and act upon such belief, by omitting to give notice of bis having ceased to be a partner after he really had ceased, he will be responsible for the consequences of his original representation uncontradicted by a subsequent notice.”
This means that when a person does business with another as a member of the firm, or does business with a firm in which the party has publicly appeared as a partner, so as to induce the dealer to believe he was such, although the plaintiff did not actually transact business with him, then he shall be liable.
The facts of the case and the context show this to be the meaning, and thus construed it is sound law; but if applied in favor of a stranger to dealings with the firm, it is not supported by any authority.
The judgment should be affirmed, with costs.
MONCRIEF, J., delivered a written opinion, which, after stating the facts of the case, proceeds as follows:
Collyer on Partnership, section 530, states the rule to be, that “all the partners may be bound, after the dissolution of the partnership, by a contract made by one partner in the usual course of business, and in the name of the firm, with a person who contracted on the faith of the partnership and had no notice of the dissolution. The principle on which this responsibility proceeds, is the negligence of the partners in leaving the world in ignorance of the fact of the dissolution, and leaving strangers to conclude that the partnership continued, and to bestow faith and confidence on the partnership name in consequênce of that belief; and where one of two innocent persons must suffer from giving a credit, he who has misled the confidence of the other, and has been the cause of the credit, either by his representation or his negligence or his fraud, ought to suffer instead of the other."
Story on Partnership ($ 160) says: “Unless the ostensible partner, who has retired from the firm, suffers his name still to appear as one of the firm, so as to mislead the public, (as by its Bosw.-Vol. V.
Holdane et al. v. Butterworth.
being stated and still remaining in the firm name,) he will not be liable to mere strangers who have no knowledge of the persons who compose the firm, for the future debts and liabilities, notwithstanding his omission to give public notice of his retirement, for it cannot be said in such cases that any credit is given to the retiring partner by such strangers. Every new creditor or new customer is bound to inquire who are the parties really interested at the time in the firm, if he would be safe in his credit and dealings with them.”
All the cases cited in the argument are cases where an ostensible partner is sought to be held liable for a debt contracted in the old firm name, or by a dealer with such firm not having had notice of dissolution.
A dormant partner is only chargeable to third persons in respect of contracts entered into by the firm during the time he is actually a partner and is receiving the emoluments and profits of the business, for third persons have never trusted to his credit. The dormant partner is liable during that time, because he is in fact a contracting party, taking a part of the profits of such contracts; but when he ceases to be in fact a partner, the reason ceases, and he is no longer liable. (Coll. on Part., $ 536, 3d Am. ed. ; 4 Esp., 89; 5 Cow., 534.)
The name of Butterworth never appeared as a member of either firm. He was known to have been the capitalist and interested with Tupper as a member of the firm, doing business in the name of “The Atlantic Forge," and not otherwise. It was as a member of that house one of the plaintiffs had heard of him, and to which he claims to have given credit in this particular transaction. He cannot sustain such a claim, because he gave the credit either to C. H. Tupper, or C. H. Tupper & Lee, and for the reason that he had notice of a change in the name of the firm upon the receipt of the note. He had notice by the new sign with the new firm name thereon. He had notice by the new firm name signed on the note received for the iron. (See 16 East., 169; 3 Camp., 147.) That was a clear, distinct and unmistakable notice. A fair presumption of actual notice can be raised from circumstances that will be sufficient. (1 Smith's L. C., p. 978, old p. 505.) As a matter of fact, it was not disputed that Butterworth was in no wise interested in business at No. 268 Eleventh
Holdane et al. v. Butterworth,
street, after March 1, 1855. This transaction occurred seven months afterwards, (in October, 1855.) He cannot be held as a dormant partner, because he was not interested in its profits, and the partnership never did include him. He could not be held liable after his retirement, for the reason that the firm name did not include him, though that name had remained the same. (See Coll. on Part., $ 536, pp. 488, 489; 1 Barn. & Adol., 11; 5 Cow., 531; Story on Part., SS 159, 160, &c.; 1 Esp., 182.)
If it be true, as contended by the plaintiffs, that a liability against Butterworth could arise from the fact that he was somewhat generally known, or reputed to have been a partner in business transacted at a particular place, then it should follow as a necessary consequence that his discharge could be shown by the same publicity or notoriety as to his disconnection or withdrawal prior to the making of the contract.
The jury found, as matter of fact, that it was a matter of public notoriety that the firm was changed on and after March 1, 1855; and it seems to me that the plaintiffs would be as much bound to hear what was said by public report or rumor, as they are supposed to see what may be published in a newspaper. Either method of conveying information is somewhat uncertain and dependent upon circumstances materially different from actual notice.
The other exceptions being thus disposed of, in this view of the case, it is unnecessary to consider the particular language of instruction to the jury. Even if erroneous, it could not affect the right of the defendant to judgment.
The judgment should be affirmed, with costs.
HOFFMAN, J. This case has some particularities distinguishing it from the leading authorities upon the subject. The plaintiffs had not in any sense dealt with the old firm, of which Butterworth was a member. He was not then called upon to give actual notice of his retirement to persons who had not had transactions with the firm, much less with himself personally. Nor can the question arise, whether any degree of publicity by newspaper advertisement or circulars, could be, under any circumstances, a substitute for actual notice, as to previous
Holdane et al. v. Butterworth.
dealers. (Clapp v. Rogers, 2 Kern., 283; Vernon v. The Manhattan* Co., 22 Wend., 183; Graves v. Merry, 6 Cow., 701.)
Again, the case is not governed by authorities tending to show that as to subsequent dealers, a publication of a dissolution in newspapers printed in the place of business, would, under certain circumstances, be sufficient. (Ketchum v. Clark, 6 Johns. R., 114; Collyer on Partnership, $ 532 and note.) All that has been urged or cited upon these points appears to us inappropriate.
The case presents these important particulars. It was a matter of public notoriety that Butterworth was a member of the old firm up to the 1st of March, 1855. It is in proof that the plaintiffs heard of his connection with it as early as 1853, and had not heard of his retirement until after December, 1855, the period of the failure of the new firm. One of the plaintiffs swears that he supposed Butterworth was a partner, when the sale of the iron was made. No advertisement of a dissolution was ever published. But the jury have found that it was matter of public notoriety, that the firm was changed after the 1st of March, 1855.
If the head note to Davis v. Allen, (3 Comst., 168,) is fully borne out by the decision, it would seem to involve the rule that when once knowledge of an existing partnership is possessed by a party actually, or is to be inferred from notoriety, notice of retirement must be traced to such party, or the partner will continue bound.
But the facts of the case show, that the plaintiff had worked for the firm from 1833 to 1843, and that Child, the defendant, was a partner from 1832 to some time in 1840. The work sued for was performed between the 1st of June and the 26th of November of that year, after the time when Child ceased to be a member.
The Court held that it must be inferred from the facts found by the referee, that Child was known to the plaintiff to have been a partner by direct transactions, or public notoriety. An omission to give notice of retirement was equivalent to a continued representation of his remaining a partner.
“The report necessarily involves a finding that Child was thus known to the plaintiff," that is, as a partner and so known in one mode or the other, by direct transactions, or public notoriety.