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Vernon v. The Manhattan Co. notice of the dissolution, must be one who has had business relations with the firm, by which a credit is raised upon the faith of the copartnership. Professor Bell does not use the word dealing, in stating the rule, but states it thus : “A credit already raised on the faith of the partnership is presumed to be continued on the same footing, unless special notice of a change shall be given.” 2 Bell's Comm. 640. It is not necessary, therefore, for us to decide that every person, through whose hands the copartnership securities have passed, and who may be wholly unknown to the firm, is entitled to actual notice, in order to protect the copartners from liability for debts contracted with him by some of the partners after the dissolution. But in the present case there was a continued credit in the bank, upon the faith of this copartnership, for fourteen montlis previous to the dissolution of the firm, by cight successive renewals of the note made by the partnership and discounted upon the application of Moore, the payee; and as the eighth renewal, although a short time after the dissolution of the copartnership, was by a note in the name of the firm, precisely in the same form as the previous notes, it is evident that it was a case in which the firm would be liable to the bank, unless the bank had actual notice that the copartnership was dissolved at the time the last renewal took place. I think the charge of the judge who tried the cause was therefore right in that respect.
It appeared, however, on the trial, that the paper in which the notice of the dissolution was published was taken at the bank; and the counsel for the defendants called upon the court to charge the jury that this was in law proof of notice of the dissolution. But the judge told the jury that it was not in law actual notice of the fact. I have no doubt, upon the cases that have been decided, that upon such evidence, if there are no circumstances from which a different conclusion may be drawn, the jury may be authorized to presume that the party by whom the paper was taken had read the notice of dissolution and was therefore actually aware that it had taken place at the time the new security was taken in the name of the firm. That; howev
. Vernon v. The Manhattan Co. er, would not have justified the court in charging the jury, as a matter of law, that the taking of a newspaper filled with advertisements, was actual notice of every thing contained therein. Where a special notice is necessary in consequence of a previous dealing with the firm, or a credit already raised upon the faith of the copartnership, such notice may be inferred from many circumstances, as well as from direct and positive proof of notice of the dissolution ; but to exempt the copartners from liability, the jury musi be satisfied that the person with whom the new debt was contracted either had actual notice that the copartnership was dissolved, or that facts had actually come to his knowledge suffi. cient to create a belief that such was the fact. From the evidence in this case, I do not believe that the officers or the directors of the Manhattan Company, cither knew or believe ed that the firm of William Vernon & Co. was dissolved when they received this last note in renewal of the note of the 15th of February, 1833 ; upon which last mentioned note that firm was holden as the drawers, at the time such renewal took place.
It seems to have been taken for granted by the counsel for the defendants on the trial, that proof that the note was originally discounted for the accommodation of John A. Moore, and had been subsequently renewed as an accommodation note, was legal evidence that it was not given for a debt actually due from the drawers of the note to him. Without some evidence that the notes were not what upon the face of them they purported to be, the question of notice to the bank is wholly immaterial. There is not a particle of evidence in the case that John A. Moore had notice of the dissolution of the partnership at the time the last note was given to him, and as there was clearly a direct dealing with the firm by him, previous to the dissolution, so as to entitle him to actual notice to discharge the copartners from liability to him upon this last note, it follows of course, that if the note could have been collected of the copartners by him, at the time he negotiated it at the bank in renewal of the former note, the bank is entitled to recover thereon, even if the officers of the bank actually knew of the dissoVernon v. The Manhattan Co. lution of the copartnership at the time it was thus received. Graves v. Merry, 6 Cowen, 703.
Upon the whole, I am satisfied that there was never any intention on the part of the Manhattan Company or its officers, to discharge their claim against all or any of the members of the firm of William Verpon & Co., for the balance due to the bank from that firm at the time of its dissolution ; and that the bank was entitled to recover the sum which remained unpaid at the time of the trial, either upon the special count upon the last note or under the common counts; and that there was no misdirection in point of law by the judge who tried the cause, to the prejudice of the plaintiffs in error. I shall therefore vote for an affirmance of the judgment of the supreme court, which affirmed the judgment of the superior court of the city of New-York.
By Senator VerplanCK. It is a fundamental doctrine of the law of partnership, that if a person suffers his name to be used in trade, or otherwise holds himself out as partner, he is to be considered as such, whatever may be his real relation to the firm; and this is so, because he may induce others to give credit to the copartnership which it would not else have obtained. Hence, a person once known as a partner, or having held himself out as such, is liable for all the debts of the firm in the usual course of its business, as long as he gives reason to suppose that he is still a partner. Thus, in one of the decided cages, 2 Stark. 290, a trader who suffered his name to remain on the sign of his former shop, was held liable for the debts of his former partners continuing the business there.
Now following out this principle, how is a person once known as a partner, to prevent that inducement to false credit to his former associates, which may arise after the withdrawal of his funds, from their continued use of the credit which he assisted to obtain ? How shall he entitle himself to be exempted from future liability on their account? The natural reply is, that he must take all the means in his power to prevent such false credit being given. It is impossible for him to give direct notice of his withVOL. XXII.
Vernon v. The Manhattan Co. drawal to every man who may have seen the name of his former firm, or have accidentally received its check or note. No man is held to impossibilities. But he does all that he can do in such a case, by withdrawing all the exterior indications of partnership, and giving public notice of dissolution in the manner øsual in the community where he resides.
He may have obtained credit for his copartnership, by making his own interest in it known through the course of trade. So far as those are concerned who have had no direct intercourse with the firm, he does all that is in his power to prevent the continuance and abuse of such credit, if he uses the same sort of means to put an end to that credit which may have caused it. But there are persons with whom he or his partners may have transacted business in the copartnership name, and received credit from. To such persons, he has given more than a general notice of partnership, for he has directly or indirectly ratified the acts of the house, and confirmed the credit that may have been given either wholly or in part upon his own account. He knows, or he has it in his power to know, who are the persons with whom such dealings have been had. Public policy, then, and natural justice, alike demand that he should give personal and special notice of the withdrawal of his responsibility to every one who had before received personal and special notice, either by words or acts, of his actual responsibility and interest in the copartnership. Justice requires that the severance of the united credit should be made as notorious as was the union itself. This is accomplished by the rule that persons having had particular dealings with the firm should have particular notice of the dissolution or alteration; but that a general notice by advertisement or otherwise, should be sufficient for those who know the firm only by general reputation. Hence our law has established the rule that to all persons having previously dealt with the copartnership, it is requisite for the discharge of a retiring party from new liability, that actual notice should be brought home to the creditor, or at least, that notice should be bona fide given under such circumVernon v. The Manhattan Co. stances, as to shew that he has done all that custom, prudence and good faith require to bring the knowledge home to the party. These are familiar principles, but I have stated them thus fully, in order to trace their application to the chief and important question in this case: « Who in the sense of these rules, are dealers with a firm in consequence of taking or holding their negotiable paper ?”. /?
For the reasons already suggested, I cannot consider those who merely take the paper of a firm and pass it away without any other intercourse with the makers, to be therefore dealers in the meaning of this rule. It is not dealing with a commercial house, to have occasionally taken from others, paper made or endorsed by that firm. Temporary credit has here been given to the firm on its general reputation alone, but nothing has passed between the parties whereby the partners confirm and acknowledge their joint responsibility. If such paper was not taken in some immediate and reciprocal transaction with the firm, so as to bring the parties into mutual dealing, or if there were no continued or repeated giving and receiving of credit upon such endorsement, it requires a great stretch of the ordinary meaning of words to call such a taking of paper, dealing with the makers or endorsers. We cannot, it seems to me, rightly call a man a dealer with a firm who has thus taken paper from a third hand, and received payment through a bank, or passed it away to another. In such a case, it would commonly be to require impossibilities, to insist that the partners of a house in extensive trade, should be able to know for years who had been the last owner of their paper, or through whose hands it may have passed. Even where payment is made, as through a bank, it can rarely be known whether the bank or other last holder, held it as discounted or merely for collection. There is nothing in the most minute system of accounts which could enable a house to trace out all the persons who may have at any time, thus given them credit on general reputation, and to send all of them special notice as dealers. The case is quite otherwise in respect to those to whom the paper is immediately made payable, and issued in the ordinary course of