Ewing & Gaines vs. Trippe et al.

Supreme Court of Georgia1884-12-02

73 Ga. 776

Summary · law.co

Holding. The court reversed the trial court's grant of a new trial, holding that the jury's verdict for the plaintiffs was compelled by the evidence because a retired partner remains bound by promissory notes executed in the firm's name after dissolution when the creditor had no actual notice of the dissolution and no notice was publicly given.

Ewing & Gaines sued Trippe and Davis on a promissory note issued in January 1882 in the firm name of W. M. Trippe & Company for $280. The defendants claimed the partnership had dissolved in the preceding year—Trippe sold his interest in April 1881 and Davis retired in June 1881. The plaintiffs were unaware of any dissolution and received no notice of it. At trial, the court rejected plaintiffs' evidence that the note's consideration came from goods sold to the firm before dissolution, and plaintiffs did not file exceptions to this ruling. The jury nonetheless returned a verdict for the plaintiffs, but the trial court granted the defendants' motion for a new trial.

The central issue was whether a promissory note executed in a firm's name after dissolution, by a remaining partner to a creditor with no knowledge of the dissolution, binds all former partners when no public or private notice of dissolution was given. The court held that partnership dissolution must be communicated to creditors and the public to be effective against them. Until such notice is given, the law presumes the partnership continues to exist, and creditors may rely on that appearance. A retired partner remains liable on obligations created in the firm's name by other partners, even after dissolution, unless proper notice has been provided to the creditor.

Summary generated by law.co from the public-domain opinion. The opinion text itself is public domain.

Key issues

Effect of partnership dissolution on liability for obligations created after dissolution
Whether notice of dissolution must be given to creditors to discharge liability
Apparent authority of partners to bind the firm after dissolution without public notice
Distinction between dissolution between partners and effect on third parties

Procedural posture

The trial court granted defendants' motion for a new trial after the jury rendered a verdict for the plaintiffs on a promissory note claim, and plaintiffs appealed the grant of the new trial.

Authorities cited

No cited authorities resolved to law.co cases yet.

Opinion · public domain

majority opinion

Blandford, Justice.

The plaintiffs in error brought their action against the defendants in error on a promissory note, dated January 26th, 1882, and due February 14th, 1882, for the sum of $280, payable to plaintiffs, which was signed in the firm name of W. M. Trippe & Oo. Trippe and Davis pleaded to this action that, in April, 1881, Tripp 3 sold out his interest in the firm to Whitehead and Davis, the other two members of the firm, and that the partnership was thereby dissolved; that in June, 1881, Davis sold out to Whitehead and retired from the firm. It was shown on the trial that no notice of the dissolution, either public or private, was given, nor did plaintiffs have any actual notice of the same; that plaintiffs had never heard of the dis solution. The plaintiffs offered to prove that the consideration of the note was for goods sold the firm before its dissolution. This testimony was rejected by the court upon objection by defendants, but the plaintiffs filed no exceptions to this ruling by the court, and consequently, however erroneous the ruling, this court cannot consider it. With this testimony in, we think a verdict for the plaintiffs was inevitable.

The jury, under the facts, rendered a verdict for the plaintiffs. Defendants moved the court for a new trial, which was granted, and this is the error complained of. So that the only question is, did the evidence admitted compel the verdict? If so, the court erred in granting the new trial, and this depends upon the law as applicable to the facts of this case. The question is this: where a note is given in the firm name by a member of the firm, after dissolution, to one who extends credit to the firm, who has no notice of such dissolution, and where no notice of any kind of the dissolution was given, does it bind the members of the firm, notwithstanding the dissolution ?

“The dissolution of a partnership by tho retiring of an ostensible partner must be made known to creditors and to the world. By the retiring of a dormant partner,, it must be made known to all who had knowledge of his connection with the firm.” Code, §1895. The notice which a creditor has to have is actual. See 30 Ga , 691. The world would be bound by such notice as a publication in a public gazette The Code-declares that the dissolution must be made known to the world. Why ? Simply because when a partnership has once existed, the presumption is that it still exists until its dissolution is made known, and, until this is done, the public have the right to presume on its continued existence, and when a former member contracts a debt in its name, to allow a retired member to escape liability from its payment would be to allow the perpetration of a fraud. Where one person allows another to use his name in any business, he is estopped from denying his authority, and until notice of a dissolution of a firm is given, the public, who has no sucli knowledge, may treat the firm as in existence, and a note given by one member of such firm is binding upon all the other members, notwithstanding such dissolution. If a partnership is dissolved, and ono or more of tbe known members retires from the firm, until the dissolution is duly notified, the power of each to bind the rest remains in full force; as between the partners themselves, such dissolution is a revocation of the authority of each to act for the others. 1 Lindley on Part., 407; 1 Brock., 33; 28 Iowa, 533; 11 B. Mon , 118; 24 Vt., 278; 25 Grat., 322; 67 Ill., 106; 68 N Y., 314; 8 Ind., 215; 69 Pa. St., 185; 6 Johns., 144; 16 B. Mon., 355; 28 Ala., 289.

Again, it is stated that, if a known partner retires, and no notice is given, he will be liable in respect to a promissory note made since his retirement by his late partner, even though the plaintiff had no dealings with the firm before the making of the note. 1 Lindley on Part., 407; 3 Esp., 248; 2 Stark., 290; 2 Chitty, 120; 2 C. & P., 104. It would seem from these authorities that the verdict of the jury was demanded by the evidence in this case. When this is the case, a new trial should not be granted.

Judgment reversed.