Page images

ostensible partner in the firm, they are of course both liable to you. But if, after you have taken an acceptance of "A and B," you discover that C is a dormant partner, and that D has been acting as a partner, you may treat C as liable to you on the acceptance, for he has been receiving, directly or indirectly, a portion of the profits of the firm, which is the fund to which creditors look for payment. But you cannot make D liable, who was, in the case supposed, merely an ostensible partner, for the only ground on which he could be liable to you was that you contracted with him and on his credit, and that you did not do, for you did not know him as a partner.

To put it shortly: the man who is really a partner is liable, though he was not known to be a partner; and the man who holds himself out as a partner is liable to those who thought him one, whether he was one or not. Thus there are two classes of persons who are liable on a bill or note signed in the name of the firm.

(1.) Those who participate, or are entitled to participate; in the profits of the concern.

(2.) Those on the strength of whose credit a person may have contracted.

As regards the firm, a partner may have no right to pledge the credit of his co-partners, but he has the power to do so; and it is unnecessary here to consider the consequences of a breach of the agreement which the partners have made with one another.

A retired partner is, as regards those who knew of his retirement, only liable upon bills and notes signed while he remained a partner.

A joining partner is only liable upon bills and notes signed after he has joined the firm.

16. We have hitherto considered the doctrine of agency as regards partners in a still subsisting firm; we will now treat shortly of the power which, after a dissolution, a partner may have of binding his late copartners.

There is no charm in the word "dissolution;" for as a partnership may be originally created by a common consent of two or more persons, with or without a deed or written agreement; so, if there has been a deed or written agreement between the partners, and such instrument has been cancelled, and even a deed of dissolution exe

cuted, yet the partnership may still subsist by a common consent, or, what comes to the same thing, a new partnership may by such consent be straightway created. And after a dissolution, one partner may be so intrusted by his late partners with the management of affairs, that even with those who know of the dissolution, he may be able to bind the late firm by contracts made in their name. But independently of any consent on the part of his late partners, each member of the dissolved firm can, as will be seen, under certain circumstances, bind his late co-partners.

After a partnership is dissolved, a dissolving partner has no longer any right to pledge the credit of the firm. To avoid doing so is his duty to his late co-partners. power as regards the public is as follows:


As regards those who know of the dissolution, a partner is no longer able to bind his former partners; but to those who do not know of it, each partner occupies the same position as a nominal or ostensible partner did before the dissolution, i. e. each will be liable to those who may contract upon his credit.

For this reason it is usual upon a dissolution to give express notice of the fact to those who have been customers or correspondents of the firm, and to give notice to the world by advertisements in the Gazette and other papers, which will be always sufficient as to those who have not been customers, and will be prima facie evidence that even customers knew of the dissolution.

If a bill be accepted by an ex-partner in the name of the dissolved firm in favour of a person who has no notice of the dissolution, such person has not only himself a right to sue, but his transferee, though taking the bill with notice, will have a like right.

17. Notice to one partner is considered by the law to be notice to all; so that a bill improperly accepted by an ex-partner in the name of the dissolved firm in favour of another firm, of whom one knew of the dissolution, could not be sued upon by the latter firm.

A dormant or secret partner, whose liability arises solely from his right to participate in the profits (see sec. 15), cannot after a dissolution be bound by the acts of an ex-partner; for with the dissolution, the cause of the liability has wholly ceased.

The estate of a deceased partner is never liable upon

contracts made by the surviving partners after his death.

In taking from an ex-partner a bill belonging to a late firm, it will be well to have the separate name of each partner, or else to see that the partner putting the name of the firm to the bill has actual authority to do so.

A shopman, a foreman, a clerk, or a wife, has not, as such, authority to pledge a man's credit by putting his name to a bill; but there is often not only an express authority to such persons, but a presumed one arising from ratification or payment of bills already drawn, indorsed, or accepted by such persons, as the case may be. An authority to indorse does not include an authority to draw, and vice versa; and neither amount to an authority to accept.

Notes are on the same footing as bills with regard to authority, actual and presumed.

[blocks in formation]

1. What it is.-Presumed in Bills and Notes.-Rule as to necessity of it.

2. Accommodation Bills; how far no Consideration a Defence.

[ocr errors]

3. Holder in due course."

4. Presumption of consideration.

5. How far Fraud is an answer to an action on a Bill or Note.

6. What constitutes Consideration, Fraud, and Illegality.

7. Of a subsequent fatal failure of Consideration. 8. Fraud; what, and how far a Defence.

9. Illegal Consideration; what and how far a Defence. Bills and Notes for future cohabitation, for procuring marriages or separations, in restraint of trade; gaming, wagering, and stockjobbing, &c. 10. Table illustrating the different defences treated of. 1. A consideration is some benefit given, or promise

made, or loss suffered by the plaintiff to or for the defendant.

It is necessary for a plaintiff suing on contracts or promises, whether made by word of mouth or in writing, (unless by deed, i. e. under seal,) to prove a consideration to have been given for them.

Bills and notes are exceptions to this rule; for where a bill or note is given, a consideration will be presumed to have passed, till the contrary is made probable; and to do this rests with the person sued on the bill.

For instance, if A has drawn upon B, and he has accepted the bill, and A then sue him upon it, it is B's business to show by his witnesses, or by cross-examination of A, and those called by him, that the acceptance was given not for value, but for the accommodation of A, and to enable him to obtain money from other parties.

Although consideration is presumed to have been given for a bill or note, yet, under certain circumstances, to be presently explained, a defence may be made out by showing either:

(1.) The absence of consideration.

(2.) That the bill or note was obtained by fraud. (3.) That it was given in pursuance of an illegal contract, i. e. on an illegal consideration.

The rule regarding the necessity of consideration is this: Where a person gives a bill gratuitously to another, either by way of accepting, drawing, or indorsing it for his accommodation; if the accommodating party is afterwards sued on the acceptance, drawing, or indorsement by the party accommodated, it will be a sufficient answer to the action that the plaintiff gave no consideration for the bill or note.

2. Accommodation bills and notes being, however, meant for the person accommodated to obtain money upon, the latter can, by indorsing them to another party for value, entitle him to recover both against the party accommodating and the party accommodated.

[ocr errors]

For instance, suppose a bill accepted gratuitously (which we will call an accommodation bill,'') were indorsed by the drawer in whose favour it was accepted, to a third party for value, such party can recover upon the bill as well against the gratuitous acceptor as against the drawer who indorsed it. And, to go one step further, suppose the indorsee for value, instead of

being the plaintiff, were to transfer the bill gratuitously, his transferee would be able to stand in his place, and the transferee might successfully sue all the parties to the bill, except his gratuitous transferor.

From this it will be seen that any person may sue upon a bill or note, who has either himself given value for it, no matter to whom, or deduces his title from some one who has; and any person may be sued on a bill either if he has received value for it, no matter from whom, or if the plaintiff has given value, or deduces title from one who has.

Therefore where a person, who has gratuitously drawn, accepted, or indorsed a bill, or made or indorsed a note, is sued upon it, it is necessary for him to allege in his plea, and to prove, not only that it was an accommodation bill, but that the plaintiff and those through whom he deduces his title gave no value for it.

If the accommodation acceptor, maker, or indorser, has to pay the bill or note, he may recover against the party whom he accommodated the amount paid and interest, but not the cost of defending an action on the instrument.

Let me here quote ss. 29 and 30 of the B. of Exch. Act:

3. (1) A holder in due course is a holder who has taken a bill, complete and regular on the face of it, under the following conditions; namely,

(a) That he became the holder of it before it was overdue, and without notice that it had been previously dishonored, if such was the fact:

(b) That he took the bill in good faith and for value, and that at the time the bill was negotiated to him he had no notice of any defect in the title of the person who negotiated it.

(2). In particular the title of a person who negotiates a bill is defective within the meaning of this Act when he obtained the bill, or the acceptance thereof, by fraud, duress, or force and fear, or other unlawful means, or for an illegal consideration, or when he negotiates it in breach of faith, or under such circumstances as amount to a fraud.

(3) A holder (whether for value or not), who derives his title to a bill through a holder in due course, and who is not himself a party to any fraud or illegality affecting it, has all the rights of that holder in due course as regards the acceptor and all parties to the bill prior to that holder.

« PreviousContinue »