By act of the consent of his co-partners, and as one partner is bound by the pro partner. * Admitted in Sheriff v. Wilkes, 1 East, 48. Decided in Swan v. Steele, 7 East, 210. 3 Smith's Rep. 199. S. C. Ridley v. Taylor, 13 East, 175. Barker v. Charlton, Peake, 80. Lane v. Williams, 2 Vern. 277. Arden v. Sharpe, 2 Esp. Rep. 524. Wells v. Masterman, 2 Esp. Rep. 731. Jacaud v. French, 12 East, 322, 3; and see Bayl. 55. 74, 5. In the case of Swan & al. v. Steele, 7 East, 210. the facts were these: A., B., and C. traded under the firm of A. and B. in the cotton business, C. not being known to the world as a partner; and A. and B. traded as partners alone, under the same firm in the business of grocers; in which latter business they became indebted to D. and gave him their acceptance, which not being able to take up when due, they, in order to provide for it, indorsed in the common firm of A. and B. a bill of exchange to D. which they had received in the cotton business, in which C. was interested; but such indorsement was unknown to C., of whom D., the indorsee, had no knowledge at the time; and it was decided that such indorsement in the firm common in both partnerships of a bill received by A. and B. in the cotton business, bound C. their secret partner in that business, and that consequently C. was liable to be sued by D. on such indorsement, the latter not knowing of the misapplication of the partnership fund at the time. Lord Ellenborough, C. J. said, "It would be a strange and novel doctrine to hold it necessary for a person receiving a bill of exchange indorsed by one of several partners, to apply to each of the other partners, to know whether he assented to such indorsement, or otherwise that it should be void; there is no doubt, that in the absence of all fraud on the part of the indorsee, such indorsement would bind all the partners. There may be partnerships where none of the existing partners have their names in the firm; third persons may not know who they are; and yet they are all bound by the acts of any of the partners in the name or firm of the partnership. The distinction is well settled, that if a creditor of one of the partners collude with him to take payment or security for his individual debt out of the partnership funds, knowing at the time that it is without the consent of the other partner, it is fraudulent and void; but if it be taken bona fide without such knowledge at the time, no subsequently acquired knowledge of the misconduct of the partner in giving such security can disaffirm the act; if the interests of the plaintiffs in the bill were once well vested, no subsequent knowledge that such indorsement was made without the consent of one of the partners, will divest it; and it would be highly inconvenient that it should; because, if the plaintiffs had been apprized at the time that the partier who indorsed the bill had no uthority to do so, they might have obtained some other security for their demand." In Ex parte Bonbo us, 8 Ves. 542. the Lord Chancellor Eidon said, This petition is presented here upon a principle which it is very difficult to maintain; that if a partner for his own accommodation pledges the partnership, as the money comes to the account of the single partner only, the partnership is not bound. I cannot accede to that; I agree, if it is manifest to the persons advancing money that it is upon the separate account, and so that it is against good faith that he should pledge the partnership, then they should snow, that he had authority to bind the partnership. But if it is in the ordinary course of commercial transactions, as upon discount, it would be monstrous to hold that a man borrowing money upon a bill of exchange, pledging the partnership without any knowledge in the bankers that it is a separate transaction, merely because that money is all carried into the books of the individual, therefore the partnership should not be bound. No case has gone that length. It was doubted, whether Hope v. Cust was not carried too far, yet that does not reach this transaction, nor Sheriff v. Wilkes, as to which I agree with Lord Kenyon, that as partners, whether they expressly provide against it in their articles, (as they generally do, though unnecessarily,) or not, do not act with good faith, when pledging the partnership property for the debt of the individual, so it is a fraud in the person taking that pledge for his separate debt. The question of fact, whether this was fair matter of discount, or, being an antecedent, separate, debt of Rogers, the discount was obtained merely for the purpose of paying that debt, by the application of the partnership funds, which question is brought forward by the affidavits, though not by the petition, must lead to farther examination. If the partners are privy, and silent, permitting him to go on dealing in this way, without giving notice, the question will be, whether subsequent approbation is not for this purpose equivalent to previous consent. In Fordyce's case, Lord Thurlow and the Judges had a g.eat deal of conversation upon the law; and they doubted upon the danger of placing every man with whom the paper of a partnership is pledged, at the mercy of one of the partners, with reference to the account he may afterwards give of the transaction. There is no doubt, now the law has taken this course, that if under the circumstances the party taking the paper can be considered as being advertised in the nature of the transaction, that mise of his co-partner to provide for a bill, after such a promise, the By act of firm cannot, though deceived by their partner, sue the acceptor; and partner. this rule prevails, although by the terms of the partnership deed, the partners were prohibited from circulating any bills or notes, if the holder were ignorant of that circumstance at the time he received the same; though on proof of such restrictive clause, and that the bill was issued by one partner without the concurrence, and in fraud of the others, the holder must prove that he gave value for it; and though at law the executor of a deceased partner cannot be sued, yet in equity [ 32 the amount of a bill or note issued in the name of the firm, though in fraud of the deceased partner, will be recoverable from such executor by a bona fide holder. But with respect to a person who, at the time he received the instrument from the partner, knew, or had reason to suspect, that he negotiated it for his individual benefit, and without their concurrence, he cannot avail himself of the security as binding on the firm. It has been considered, that a bill being given for an it was not intended to be a partnership proceeding, as if it was for an antecedent debt, prima facie, it will not bind them; but it will, if you can show previous authority, or subsequent approbation; a strong case of subsequent approbation raising an inference of pr..vious positive authority. In many cases of partnership, and different private concerns, it is frequently necessary for the salvation of the partnership that the private demand of one partner should be satisfied at the moment: for the ruin of one partner would spread to the others; who would rather let him liberate himself by dealing with the firm. The nature of the subsequent transactions therefore must be looked to, as well as that at the time." Richmond v. Hapy and another, 1 Stark. 202. 4 Campb. 207. S. C. Sandilands v. Marsh, 2 B. & A. 673. Rapp v. Latham and Parry, id. 795. Grant . Hawkes and another, K. B. Guildhall, 4th June, 1817. Action against the several defendants as partners in the Butterly Company, and as acceptors of a bill at the suit of the plaintiff as indorsee, the defendants having proved that by the articles of the company, the members were prohibited from circulating any bills or notes, Lord Eilenborough said, “An indorsee may recover on a bill against partners in a concern, though the drawing or accepting were contrary to agreement between them; and by one of the partners in fraud of the rest; but then the indorsee must show that he gave value." Scarlett and Reader for plaintiff. Topping, Jervis, Marryatt, Gurney, Gazelee, Peake, &c. for defendants. Bellamy, attorney for plaintiff. Anstice, for one of defendants. 4 Lane v. Williams and others, 2 Vern. 277. 292. Newberry and Williams, the defendant's late husband, were partners, Newberry issued the note in the name of the firm in their shop, and received the money from the plaintiff, but which money was not brought into the trade. Williams died, and afterwards Newberry, the plain tiff, first filed a bill against the executors Arden e Sheriff v. Wilkes, 1 East, 48. partner. By act of antecedent debt due from one of the partners, raises a presumption that the creditor knew that the bill was given without the concurrence of the other partners, and that the taking the instrument from one of the partners in his own hand-writing, without consulting the others, raises a presumption that there is not any concurrence of the firm; and where the plaintiff had, previously to the formation of a partnership, advanced a sum of money to one of the intended partners. to enable him to become one of the firm, it was held, that the plaintiff could not recover on a bill afterwards drawn by such party in the name of the firmn, in payment of such advance; and that the other partners might defend the action without giving any notice of the intention to dispute the consideration. But as a partner may in his individual capacity have a claim upon the firm, in respect of which he might draw, accept, or indorse a bill in its name, the mere circumstance of the party to whom he delivers it, knowing that he was using it for his private benefit, does not afford sufficient evidence of collusion to invalidate the transaction. A strong case of subsequent ap ingly take an acceptance from one of Arden v. Sharp and Gilson, 2 Esp. Rep. Hope v. Cust, B. R., M. 1774, cited by Lawrence, J. in 1 East, 53. and see ante, 32, in notes. Fordyce traded on his separate account as well as in partnership with others, and being indebted to Hope on his separate account, gave him a general guarantee in the partnership name for his own debt. Lord Mansfield left it to the jury, whether the taking of a guarantee were, in respect to the partners, a fair transaction, or covinous; with sufficient notice to the plaintiff, of the injustice and breach of trust Fordyce was guilty of in giving. The jury found 爵 nus, for the defendant. In Ex parte BonboS Ves. 544. the Lord Chancellor, after mentioning the above case, said, that if under the circumstances the party taking the paper can be considered as being advertised of the nature of the transaction, that it was not intended to be a partnership proceeding, as if it was for an antecedent debt prima facie it will not bind them, but it will if you can show previous authority or subsequent approbation, a strong case of subsequent approbation raising an inference of previous positive authority. Ex parte Bonbonus, 8 Ves. 544. Hope v. Cust, cited in 1 East, 53. S. C. 1 Mont 622. Ex parte Bonbonus, 8 Ves. 542. 544. Henderson v. Wild, 2 Campb, 561, 2. Ridley v. Taylor, 13 East, 175. In the last case it was held, that if one partner draw or indorse a bill in the partnership firm, it will primâ facia bind the firm, although passed by the one partner to a separate creditor, in discharge of his own debt; unless there be evidence of covin between such separate debtor and creditor, or at least of the want of authority, either express or to be implied, in the debtor partner, to give the joint security of the firm for his separate debt. But it was held that no sufficient circumstance appeared in that case, to raise any presumption adverse to the separate creditor, for taking such joint security, in a case where the bill appeared to have been drawn in the name of the firm, to their own order, eighteen days before the delivery of it to the separate creditor, and to have been accepted and indorsed before such delivery, and to have been drawn for a larger amount than the particular debt; and where, though the indorsement was in fact made by the probation by all the partners, raises an inference of their previous By act of authority having been given to the particular partner to sign the part-partner. nership name to a bill, or to negotiate it, and will subject the partners to liability in a transaction, where they would not have been chargeable without such subsequent assent.* Even in transactions in which all the partners are interested, the authority of one partner to bind the other, by signing bills of exchange, or promissory notes, in their joint names, is only implied, and may be rebutted by express previous notice to the party taking the security from one of them, that the other would not be liable for it.1 And though where A. was partner in a firm trading under a particular [ 35 ] name in one branch of business, and some of the partners in that firm carried on another line of business in the same name, and issued a bill in the name of the firm, merely on account of transactions concerning the latter business, in which A. had no concern, yet it was held that he was liable to a bona fide holder," yet where persons are partners only hand of the debtor partner, yet it did not appear that the fact was known to the separate creditor at the time; and this is too in a case where direct evidence might have been given of covin, or want of authority, if it existed. For the action being brought by the separate creditor against the acceptor, either of the partners might have been called as a witness by the defendant, to disprove the authority of the debtor partner, to give the joint security; for though if the separate creditor recovered against the acceptor, he would have his remedy over against the firm; yet the innocent partner would have his remedy over against the other; and the bankruptcy of the debtor partner in the mean time does not vary the question of competency. And Lord Ellenborough, C. J. said, “ Prima facie one partner is bound by the indorsement of another in the partnership firm; but that presumption may be cut down, by showing collusion: but the difficulty of the case is, that we have not the facts sufficiently before us to show that collusion. If this were distinctly the case of a pledging by one partner of a partnership security, for his own separate debt, without the authority of the other partner; or if there existed in this case evident covin between one partner, and the holder of the partnership security, upon which the action is brought, in order to charge the other partner without his knowledge or consent, either express or implied, for the private advantage of the parties to such covinous agreement, we should have no hesitation to pronounce a bill, drawn and indorsed under such circumstances, void in the hands of the eovinous holders, upon the principal laid down in the case of Sheriff and another v. Wilkes and others, 1 East, 48; but upon the facts stated, such does not distinctly appear to us to be the case; nor does it appear that there was any such crassa negligentia on the part of the plain tiffs, in not inquiring whether Ewbank, the one partner with whom they dealt, was authorized to dispose of this security (which had originally been partnership property) as his own, as to render this transaction on that account fraudulent, and therefore void." See the cases, 1 Mont. 622. Watson, 202. ante, 32, in notes; and Sandilands v. Marsh. 2 B. & A.673. Lord Galway v. Matthew and another, 10 East, 264. v. Layfield, 1 Salk. 291. Minnit v. Whitney, 16 Vin. Abr. 244. Bayl. 57. 225. Lord Galway Matthew and Smithson, 10 East, 264. The defendants and Whitehouse (since deceased) were in partnership as brewers. Matthew applied to the plaintiff to lend his acceptance for 2007., to enable him to pay excise duties due from the house, and promised in return to give the note of the firm, payable four days before the acceptance. The plaintiff gave his acceptance, and Matthew drew the note, and signed it for himself, and partners. He then got the acceptance discounted, and applied 1807. in payment of partnership debts, reserving enough to himself. The plaintiff, after Whitehouse's death, was obliged to take up his acceptance, and now sued the defendants on the note. Matthew suffered judgment by default, and Smithson proved that the plaintiff, before he took the note, had received notice of an advertisement by him, warning persons not to trust Matthew on his account, and that he would be no longer liable for drafts drawn by the other partners on the partnership account. And Lord Ellenborough held, that the plaintiff having taken the note after such warning could not recover, and therefore nonsuited him, and on motion to set aside the nonsuit, the court refused the rule. Swan v. Steele and another, 7 East, 210. Baker v. Charlton, Peake, 80. ante, 30, note. partner. By act of in a particular and single transaction, and not general partners, they are not liable even to a bona fide holder, on a bill issued by one of them in relation to a different concern." An act of bankruptcy committed by one of several partners, however secret, ipso facto determines his power to make use of the name of the firm, and no person can derive any benefit or right of action against the firm, upon any bill or note negotiated by the party, after such his act of bankruptcy. And after the dissolution of a partnership by agreement [86]duly notified in the Gazette, one of the persons who composed the firm cannot put the partnership name on any negotiable security, even though it existed prior to the dissolution, or were for the purpose of liquidating the partnership debts, notwithstanding such partner may have had authority to settle the partnership affairs. And after notice of the dissolution of a partnership published in the Gazette, and sent round to the customers of the firm, if one of the partners, who carries on the business under the old firm, draws, accepts, or indorses bills in the name of that firm, the other partners need not apply for an injunction against his doing so, for they are not liable upon such bills, given to a person ignorant of the dissolution of the partnership.4 though it has been held that notice in the Gazette is not sufficient against persons who were customers of the firm, during the existence of the partnership, and that a particular notice should be given to each; it appears to be clearly established, that notice in the Gazette is at all events sufficient against all persons who have not previously had transactions with the firm. And where after the actual dissolution of a Williams v. Thomas, Hunter and Latham, 6 Esp. Rep. 18. Messrs. Leake and List drew a bill for 15007. in favour of plaintiff, for goods furnished the ship Cecelia, in which the defendants were charged as acceptors. Defendants proved that the acceptance was made by the defendant Latham on his own account. The defendants were partners in the ship Cecelia, of which defendant Thomas was Captain, and had guaranteed Leake and List to secure to them the money for the outfit Per Lord Ellenborough, Leake and List could give no better title to the holder than they had themselves; they could not draw for a general account, but for the account of the ship only; they could not bind Thomas by drawing a bill upon him, and the other defendants, for an account unconnected with the ship. Plaintiff nonsuited.* • Thomason and others v. Frere and others, 10 East, 418. Thomason, Underhill, and Guest, were partners in trade at Birmingham, and being indebted to the defendants to the amount of 18007., and creditors upon Gamble and Co. for 14507., Underhill and Guest, on the 11th of October, 1807, without the knowledge of Thomason, who was then abroad, indorsed to the defendants a bill drawn by Thomason, Underhill, and Guest, upon and accepted by the agents of Gamble and Co. for this 1450/ Underhill and Guest had on the 7th October, 1807, committed acts of bankruptcy, upon And which separate commission issued on the 19th. The bill for 14501. became due on the 6th December, and was then paid. And to recover this money, the present action was brought by Thomason and the assignees of Underhill and Guest. The house of Thomason, Underhill, and Guest, was still indebted to the defendants beyond the amount of the sum now sought to be recovered. The plaintiffs were nonsuited by Grose, J. But on a rule nisi for a new trial, the court (Ld. Ellenborough absente) held, that the indorsement having been made after an act of bankruptcy, though before the issuing of the commission, and though for the purpose of paying a partnership debt, was invalid, and they inclined to think that this action being brought to recover the money received on the bill, which had been thus wrongfully indorsed, the defendants had no right to set off their demand upon the firm against this claim by Thomason and the assignees. Rule absolute. And see Ramsbottom v. Lewis, 1 Camph. 279 F Kilgour v. Tinlyson, 1 Hen. Bla. 155. Abel v. Sutton, 3 Esp. Rep. 108. Watson, 209. Henderson and another v. Wild, 2 Campb. 561 Wrightson and another v. Pullan and another, 1 Stark. 375. 9 Newsome ". Coles, 2 Campb. 617. and Wrightson and another v. Pullan and another, 1 Stark. 375. Gorham v. Thompson, Peake, 42. Graham v. Hope, id. 154. Fox v. Hanbury, Cowp. 449. Godfrey v. Macauley, |