Kittel v. Callahan — 46 N.Y. St. Rep. 404

Majority

p. 404

Joseph J. Kittel, Resp’t, v. Thomas J. Callahan, Impl’d, App’lt.

(New York Common Pleas, General Term,

Filed June 6, 1892.)

Headnote

1. Partnership—Guaranty—Evidence.

Declarations of a partner are not evidence of authority to give a guaranty in the name of the firm,

2. Same—Ratification—Statute of frauds.

A paroi assent by the other partner to abide by the guaranty is a ratification of the part ier’s act, and is not void under the statute of frauds, as by the adoption of the signature in that manner the signature becomes-that of the assenting partner and the guaranty his contract.

S. Triad—Motion to dismiss.

A refusal to dismiss is not error where the motion is made in behalf of two or more defendants jointly, if the ruling is correct as to one of them.

p. 405

Appeal from judgment on trial by referee.

Action on a guaranty against appellant and one Gartlan, constituting the firm of Callahan & Gartlan. The guaranty was for the accommodation of the maker of a note, and was endorsed, on the note in the firm name by Gartlan. Judgment went against both defendants, but Callahan alone appeals. Defense, that the guaranty did not bind Callahan, because, to the knowledge of plaintiff, beyond the scope of the partnership business.

William Settle, for app’lt; John A. Straley, for resp’t.

Technical objections are interposed to a review of the judgment; but as we are of opinion that it is unimpeachable on the merits, we prefer to entertain the appeal.

The power of a partner, implied in the contract of partnership, is limited to transactions within the scope of the partnership business. It results, therefore, that one partner has no authority, merely by virtue of the partnership relation, to bind the firm by a contract of surety or guaranty for the accommodation of a stranger. He has no right to be generous at the expense of his associates. Laverty v. Burr, 1 Wend., 529 ; Stall v. Catskill Bank, 18 id., 466; Fielden v. Lahens, 2 Abb. Ct. App. Dec., Ill; 3 Kent, 47.

Involved in this principle is the further proposition that where-the fact that the firm name is endorsed or signed by a partner for • accommodation, or by way of surety or guaranty, is apparent upon the face of the paper, or implied in the circumstances of the transaction, or actually known to him who would avail himself of such guaranty, surety or endorsement, the contract cannot without: more be enforced against the firm, Bank of Tennessee v. Saffarrans., 3 Humph., 597 ; and in such case it devolves upon the plaintiff to rebut the presumption of want of authority by showing the express or implied assent of the other partners to the use of the firm name. Hendrie v. Berkowitz, 37 Cal., 113 ; N. Y. F. Ins. Co. v. Bennett, 5 Conn., 577 ; Foot v. Sabin, 19 Johns., 155 ; Rust v. Hauselt, 41 Super. Ct., 467; Rolston v. Click, 1 Stew., 526 .

Proof of previous authority is, of course, sufficient to fix the firm with liability ; and since subsequent ratification is -equivalent to prior command, after assent is equally effectual to bind the firm. Butler v. Stocking, 8 N. Y., 408 ; Duncan v. Lowndes, 3 Camp., 478; Sweetser v. French, 2 Cush., 309 .

In the case at bar the plaintiff is conclusively presumed to have had notice that the guaranty was beyond the scope of the partnership business; but he relies upon proof of previous authorization as well as subsequent ratification of the guaranty by the defendant. Was the proof sufficient?

Counsel for respondent assumes that Gartlan’s admissions are evidence óf his authority; but the rule is familiar that an agent, and a partner in relation to his copartner is but an agent, cannot establish his authority by his own mere declarations. The argument to the contrary revolves in a vicious circle ; he is a partner because he says so, and what he says is conclusive because he is a partner. Precarious, indeed, would be the fortunes of a firm

p. 406

if the power of a member to bind it were commensurate not with his real authority, but with the possibilities of his claim of power.

The case exhibits no evidence of authority in Gartlan to give the guaranty in behalf of the firm.

As to ratification, however, the proof is sufficient to show an adoption and confirmation by defendant of the act of his copartner. Butler v. Stocking, 8 N. Y., 408 ; Commercial Bank v. Warren, 15 id., 577.

But, appellant contends that his paroi assent to abide' the guaranty is a promise to pay the debt of another, and so is void within the statute of frauds because not in writing, and because without apparent consideration. The answer is, that upon the adoption of the firm signature by Callahan, it became his signature and the guaranty his contract; and that the guaranty imports “ value received ” on its face.

The referee, therefore, committed no error in refusing to dismiss the complaint; but if otherwise, the error is not available; because the motion and the exception to its denial were in behalf of Callahan and Gartlan jointly; whereas, in any event, Gartlan was bound by the guaranty no matter how absolutely without authority. Fielden v. Lahens, supra. There should have been a several motion and exception in behalf of defendant Callahan. Bosley v. Nat. Mach. Co., 123 N. Y., 550 ; 34 St. Rep., 277 ; Murray v. Usher, 117 N. Y., 542 ; 27 St. Rep., 928 ; Markham v. Washburn, 18 Suppl., 355; 45 St. Rep., 683 .

The rule enunciated by the authorities just cited disposes of the only plausible point upon the admission of evidence, namely, the introduction of statements of Gartlan in the absence of Callahan to affect him; a several objection and exception should have been taken by Callahan.

Judgment affirmed, with costs.

Bookstayer, J., concurs.