Lovejoy v. Spafford - 93 U.S. 430 (1876)
U.S. Supreme Court
Lovejoy v. Spafford, 93 U.S. 430 (1876)
Lovejoy v. Spafford
93 U.S. 430
1. A., having had no previous dealings with a firm but having heard of its existence and who composed it, sold goods to one of the partners and received in payment therefor a draft by him drawn upon the firm and accepted in its name. At the time of the transaction, the firm was in fact dissolved, but A. had no notice thereof. Held that in order to protect a retired partner against such acceptance of the draft at the suit of A., evidence tending to show a public and notorious disavowal of the continuance of the partnership is admissible.
2. It is not an absolute, inflexible rule that there must be a publication in a newspaper to protect a retiring partner. Any means of fairly publishing the fact of such dissolution as widely as possible in order to put the public on its guard -- as by advertisement, public notice in the manner usual in the community, the withdrawal of the exterior indications of the partnership -- are proper to be considered on the question of notice.
The testimony, as exhibited by the bill of exceptions, is set forth in the opinion of the Court.
The court below charged the jury as follows:
"The facts in this case are in the main undisputed. The plaintiffs seek to hold the defendant Lovejoy for the payment of two acceptances of J. B. Shaw & Co. To establish his liability, the plaintiffs must show that Lovejoy was a member of the firm of J. B. Shaw & Co., and was a joint promisor, or that, having ceased to be a member of the firm, he still remained liable for obligations made in the name of the firm by reason of failure to give proper notice of the dissolution of the firm to the public. Had he been a member of the firm when the acceptances were given, there would be no doubt of his liability. It is material for you to decide whether credit on the sale of the lumber at Reed's was given to J. B. Shaw alone, or to J. B. Shaw & Co. If to Shaw alone, then Lovejoy would not be bound. From 1868 to May 12, 1870, Lovejoy was a member of the firm of J. B. Shaw & Co. This is not disputed. It also appears that on May 12, 1870, the firm was dissolved. Plaintiff's claim, notwithstanding the dissolution, Lovejoy is liable because the lumber was sold on the credit of the company and no notice given them of any dissolution. If you find that the sale at Reed's was in fact made to the firm, and that the plaintiffs, in making such sale, gave the credit to the firm of J. B. Shaw & Co.
and relied on such credit, then Lovejoy cannot escape liability unless he has given legal notice. Many interesting questions, as to what is proper notice to persons who have not been dealers with the firm which has dissolved, have arisen in this case. It is not necessary for me to go to the extent of those authorities which hold that, in cases of dissolution, in order to avoid liability on the part of retiring partners to strangers, that there must be actual notice, or public notice by advertisement in a newspaper. I do not say that these are the only kinds of proper notice that might be given. In this case, there is no evidence of any public notice; for private communications made to particular persons at the place where the firm did business, or elsewhere, is not sufficient notice to bind other persons."
"There are two questions for you to decide:"
"First, was there such a firm as J. B. Shaw & Co., and was Lovejoy a member thereof up to May 12, 1870? This is undisputed."
"Second, did plaintiffs, or their assignees, as in the case of the Mead draft, have reasonable knowledge or information that the firm of J. B. Shaw & Co. still existed at the time the lumber was sold? Knowledge obtained from public notoriety, and from individuals who had knowledge thereof, was sufficient to warrant the plaintiffs in such a belief. If the evidence warrants you in finding that Angell or Mead had reason to believe that the dissolution had taken place at the time of the sale, then the plaintiffs cannot recover. Now has there been any actual notice or public notice? Without public notice or actual notice, good faith makes Lovejoy responsible, and he cannot escape if the credit was given to the firm. Angell and Mead were in possession of the property. As to the arrangement with other parties, as testified to, it is not material in this case. One partner can bind the firm in a transaction for the benefit of the firm, and the other partners would be responsible for his acts. In this case, J. B. Shaw accepted these drafts in the name of J. B. Shaw & Co.; and if the credit was given to the firm, and Lovejoy had omitted to do anything to relieve himself from liability, then he is still responsible."
To the following portions of this charge the defendant duly excepted, and his exception was noted, viz.:
"If you find that the sale at Reed's was, in fact, made to the firm, and that the plaintiffs, in making such sale, gave credit to the firm of J. B. Shaw & Co., and relied on such credit, then Lovejoy
cannot escape liability unless he has given legal notice of the dissolution of the firm."
"In this case, there is no evidence of any public notice, for private communications made to particular persons at the place where the firm did business, or elsewhere, is not sufficient notice to bind other persons."
"Did the plaintiffs, or their assignees, as in the case of the Mead draft, have reasonable knowledge or information that the firm of J. B. Shaw & Co. still existed at the time the lumber was sold? Knowledge obtained from public notoriety, and from individuals who had knowledge thereof, was sufficient to warrant the plaintiffs in such a belief."
The defendant requested the court to charge the jury as follows:
"1. The evidence in this case shows that the firm of J. B. Shaw & Co. was dissolved, and that the defendant had withdrawn therefrom on the twelfth day of May, 1870, more than four months before the lumber was purchased from plaintiffs, or their assignees, and the bills of exchange in suit given and accepted."
"2. That at the time said bills of exchange were given and accepted, said J. B. Shaw had no authority to accept the same in the name of the previous firm so as to bind the defendant by such acceptance."
"3. The evidence shows that none of the persons selling lumber, for which these acceptances were given, had had any dealing with J. B. Shaw & Co., during its existence, and that they were not, at the time said firm was dissolved, entitled to any notice of the dissolution."
"4. When J. B. Shaw applied to purchase the lumber, and represented that he had authority, as partner, to bind the defendant, those having the lumber to sell were bound to inquire as to the fact, whether he had such authority or not in the absence of previous dealings. And, if the fact of the dissolution of the firm was so publicly and generally known that the jury believe that a reasonable inquiry by the persons selling the lumber would have disclosed the fact of the dissolution, and that they neglected to make any reasonable inquiry, the defendant is not bound."
"5. If the jury find that the fact of the dissolution of the firm of J. B. Shaw & Co. was made known to the business men engaged in the same business as those who sold the lumber to Shaw, in the town where they resided and did business, and was so communicated
as to be likely to come to their knowledge, the jury may infer that fact, if they believe it, from the evidence and circumstances."
"6. That, as the persons selling the lumber in this case had not had any dealings with the firm of J. B. Shaw & Co., during its existence, they were not justified in presuming that defendant was a member of that firm, on the statement of any one or two persons who are not shown to have ever had any dealing with that firm during its existence."
"7. That, as to persons who had never dealt with the firm of J. B. Shaw & Co., the defendant, on the dissolution of that firm, was not bound to give notice directly of such dissolution. Neither was it absolutely necessary that notice of the dissolution should have been published in any newspaper, in order to protect Lovejoy against persons who had never dealt with the firm. The jury are at liberty to consider, from the generality and extent to which knowledge of the fact of the dissolution had been spread, especially in the vicinity where the plaintiffs and their assignees lived and did business, and from the lapse of time occurring after the dissolution, whether notice of the dissolution had not reached the plaintiffs, or their assignees, or would not have been ascertained upon such inquiry as they were reasonably bound to make."
"8. If the jury believe that the purchase of lumber, by Shaw, was made for his own benefit alone, and this was known to the sellers, or there were circumstances connected with the sale from which they ought to have known this, the defendant is not bound."
"9. That the fact, that Shaw drew the acceptances in his own name, as drawer, is a circumstance which tended to show that the purchase was for his individual benefit, and that the draft, on the face of it, was for his own funds in the hands of the drawee."
In reference to such requests of the defendant, the court charged as asked in the first and the second, with the qualification that it was true if he had given legal notice of the dissolution of the firm, and eighth requests; but as to all the other requests and every of them, the court said, "I have already stated to you all the law which I deem applicable to this case, and therefore decline to charge as requested by the defendant," and declined to give any of said requests except the first and second as above, and eighth; and the defendant duly excepted, and his exception was noted, to the refusal of the court to give each of the requests so refused severally.
The jury retired to consider their verdict, and afterwards came into court for further instructions, in response to which the court said,
"The first proposition which I charged you was, that there is no dispute that the partnership existed in 1868 and 1869, and that it was in fact dissolved May 12, 1870. So far as Lovejoy is concerned, unless he had done something to bring public or actual notice of the dissolution to these plaintiffs or their assignors, or had given public notice of the dissolution, he would continue liable, and cannot escape, if you are satisfied credit was given to the firm."
To all that portion of the charge which follows after the words and figures "May 12, 1870," the defendant duly excepted, and his exception was noted.
The jury returned a verdict in favor of the plaintiffs; judgment was rendered thereon. The defendant then sued out this writ of error.