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of C & Co., and delivers it to D, who is a creditor of C & Co. D sues B & Co. on the note, and the firm is held liable, although in fact the execution of the note by A was an abuse of authority.12

The note was regular in form; to D nothing appeared in the transaction that was irregular, or that would put him on inquiry; and so it was a matter of fact that these trading firm names were signed by a partner whose general authority, till its absence was brought home to the parties who took the firm paper in regular course, was to be presumed.

In Freeman's Nat. Bank vs. Savery, 127 Mass., 75, the court discusses the question of notices as follows: "It is settled that one who takes a negotiable promissory note for value, before maturity, in good faith, and without knowledge of any defect of title, may recover upon it, although facts are offered in evidence which impeach its validity between antecedent parties. A suspicion that there is a defect of title, or a knowledge of circumstances that might excite suspicion in the mind of a cautious person, or even gross negligence not amounting to evidence of fraud, or bad faith, will not defeat the title of the purchaser."

"When the defect or infirmity of title to the bill or note however, appears on its face at the time of the transfer, it was said in Goodman vs. Simonds, that the question whether the party who took it had notice or not, was a question of construction, and must be determined by the court as a matter of law; as, where a person who took a bill which appeared upon its face to be dishonored, was held not to have the rights of a bona fide holder; or where one taking a note so 13 Murphy vs. Camden, 18 Mo., 122; Miller

vs. Consolidation Bank, 48 Pa., 514.

marked as to show for whose benefit it was to be discounted was presumed to have knowledge of what the note imported. A party must be presumed to know the contents and true meaning of a written instrument which he takes as evidence of title, or of contract, and when it is in form of negotiable paper, to know the construction which must be given to it, with reference to the time when it is transferred to him, and the order of the several names then upon it. If the attempt is to impeach the title by facts accruing between other parties, independent and outside of the instrument itself, the question whether the purchaser had knowledge of them is a question of fact for the jury, to be proved by showing that they were directly communicated to him, or by proof of circumstances from which notice must be presumed."

Notice that the discussion is on a case where authority is implied and therefore exists as far as the public is concerned, and the question is whether an innocent third party should suffer through the abuse of authority of the agent of another.

The defenses of the maker to negotiable paper in the hands of a bona fide holder for value, before maturity, and without notice of the existence of any defects therein, are non-execution, fraud in execution (not fraud in consideration, want or failure of consideration, immorality or duress), statutory illegality and incapacity of the maker. Therefore, if the partner has no authority, express or implied, to sign the firm name to negotiable paper, it has never been executed by the firm, and the holder cannot recover.

In a trading firm the partner has implied authority, but not in a non-trading firm; and therefore, to enable a plaintiff to recover upon negotiable paper,

given by a partner in a non-trading firm, he must show the consent of the other partners, or such a situation or such usage, as will take the case out of the general rule.13

SECTION 51. NEW OBLIGATIONS.

No liquidating partner, or any partner, after dissolution of the firm, has power to create, as a rule, any new obligation or to make or sign any negotiable paper. The surviving partner or partners, who take the title to the property on the death of a partner, hold this title in trust for the purpose of closing up the business, and cannot mortgage the property or borrow, except when necessary to preserve the estate and meet its obligations. Inasmuch as the entity of the firm now speaks through them, and no other consent is possible, their powers are somewhat more extended than those of other partners after dissolution." They could not, however, bind the estate of the deceased partner by any new obligation.15

SECTION 52. SET-OFF.

Inasmuch as the title to the property, including choses in action, passes to the surviving partner, so in suits by and against him, whether originating in partnership transactions or not, individual claims may be set off against partnership claims, and vice versa, on either side, as though individual and partnership credits and debits were from one and the same source. This doctrine of identity is carried so far that when the surviving partner died, it was held

"Smith vs. Sloan, 37 Wis., 285;

Harris vs. Baltimore, 73 Md., 22; Levi vs. Latham, 15 Neb., 509. Durant vs. Pierson, 124 N. Y., 444; Emerson vs. Senter, 118

U. S., 648; Barton vs. Lovejoy, 56 Minn., 380; Buckley vs. Barber, 6 Exchequer Rep., 164. 15 Smith vs Ayer, 101 U. S., 320; Junes vs. Walker, 103 U. S., 444.

that the right of widow's award applied to partnership assets. It would seem that this was carrying the doctrine too far, as the surviving partner must account with the representative of the deceased partner's estate, and that the award ought not be allowed out of property held in trust.1

SECTION 53. DEEDS.

A deed should name the partners as grantees, and add the firm designation to indicate the relation in which they hold the land; and a deed specifying the grantees only by the partnership name will, according to the jurisdiction, either pass the legal title to the partners whose names are included in the firm designation, if any, or be deemed in equity a contract to convey, and constitute the grantor, who retains the legal title, a trustee for the firm, as one partner would be, if the legal title passed to him."

It has been held in Illinois that a deed made to a partnership in the firm name, does not amount to color of title, because, the partnership not being a legal person, there is no legal grantee.18

SECTION 54. GARNISHMENT.

On judgment against an individual partner, a debtor of the firm cannot be garnished, since he is not for the reason of being indebted to the firm, a debtor of the individual partner, and since partnership property and assets cannot be taken on execu

16 Holbrook vs. Lackey, 13 Met

calf, 132; Ames' Cases on Partnership, page 160 and note; Bossett vs. Miller, 39 Mich., 133; Strange vs. Graham, 56 Ala., 614; Robertshaw Hanway, 52 Miss., 713; contra: only an equitable, not legal,

VS.

right; Hughes vs. Trahern, 64 III., 48.

17 Beaman vs. Whitney, 20 Me.,

413; Morse vs. Carpenter, 19 Vt., 613; Silverman vs. Kristupek, 162 Ill., 222; Todd vs. Rines, 9 C. L. J. (Minn.), 338. 18 Burns vs. Edwards, 163 Ill., 494.

tion upon judgment against the individual partner.1 But on judgment against a partnership, a debtor of an individual partner may be garnished, since the property of the individual partner is subject to levy of execution on such judgment.20

SECTION 55. EXECUTION.

In Newell vs. Townsend, 6 Sim., 419, one partner died before the writ of execution on judgment against the firm came into the hands of the sheriff. Held, that as the title had changed, the sheriff could acquire no right in the property under the writ, and that an injunction would lie to restrain him from interfering with the effects of the partnership.

SECTION 56. NOMINAL PARTNER.

In a firm of Secor, Swan & Co., Secor was a nominal partner only. Goods were sold to the firm under the supposition that this Secor was the Secor who had formerly been a member of the firm but lately retired. However, in a suit against the firm, Secor, nominal partner, was made a party defendant, and set up the defense that no credit had been extended to the firm on account of his nominal connection with it. Nevertheless, he was held liable, the court saying:

"Perhaps a reasonable rule might be stated thus: Where one is held forth to the world as a partner, the first question is, was he so held out by his own authority, assent, or connivance, or by his negligence?

19 Johnson vs. King, 6 Humphrey

233; Winston vs. Ewing, 1 Ala.,
129; Day vs. McQuillan, 13
Minn., 205; Sheedy vs. Second
Bank, 62 Mo., 17; Myers vs.
Smith, 29 Ohio St., 120;

Towne vs. Leach, 32 Vt., 747. 20 Stevens vs. Perry, 113 Mass., 380; Straus vs. Kerngood, 21 Grat., 584; contra: Weaver vs. Weaver, 46 N. H., 188.

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