Bond against Aitkin

Supreme Court of Pennsylvania1843-12

6 Watts & Serg. 165

Summary · law.co

Holding. The judgment was reversed and a new trial awarded. The court held that sufficient evidence existed for the jury to determine whether the copartner had authorized or ratified the sealed bill, but affirmed that the plaintiff could not recover on the additional count based on money loaned.

This case addresses whether one partner can bind the firm by executing a sealed instrument on behalf of the partnership. The court confirmed the established rule that a partner may bind copartners through a sealed contract made in the firm's name during the course of partnership business, provided the other partner consents beforehand or ratifies the action afterward—such approval may be given orally. The court found sufficient evidence that James Aitkin had either authorized or ratified the sealed bill in question, as demonstrated by his statements to Carter acknowledging he would have approved it had he known, his willingness to pay it, his requests that it be treated as a partnership claim, and his characterization of the note as equivalent to his individual obligation.

Regarding a secondary count in the complaint, the court determined the plaintiff could not recover because when a partner's bond is given at the time money is loaned to the partnership as consideration for that loan, the bond becomes the sole security and obligation in that transaction. The plaintiff must pursue recovery on the bond itself rather than on additional money counts, and since only one partner made the express promise on the bond, there was no implied contract binding both partners on the alternative claim.

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

Key issues

Whether one partner may bind copartners through a sealed contract executed on behalf of the firm
Whether oral ratification or assent by a copartner is sufficient to bind the partnership
Whether a partner's bond given as consideration for a loan to the partnership can be treated as collateral security or is the sole obligation

Procedural posture

The trial court rendered a judgment that was appealed, with the question of whether evidence of authorization or ratification should have been submitted to the jury.

Authorities cited

No cited authorities resolved to law.co cases yet.

Opinion · public domain

majority opinion

The opinion of the Court was delivered by

Sergeant, J.

The question arising in this case has undergone a thorough discussion in the two late cases of Gram v. Seton, (1 Hall 262), and Cady v. Shepherd, (11 Pick. 400), where ail the authorities are examined, and the principle is settled that a partner may bind his copartner by a contract under seal, in the name and for the use of the firm, in the course of the partnership business, provided the copartner assents to the contract previously to its execution, or afterwards ratifies and adopts it; and this assent or adoption may be by parol. And we are satisfied that the rule is founded on principles of justice and policy, and supported by the general tenor of the adjudged cases in this country and in England. The only question in the present case is, whether there is any evidence to go to the jury to show that James Aitkin assented to the giving of the sealed bill in the name of the firm, before or at the time of its execution, or afterwards ratified it; and we think there is. The admissions made by him in the conversation with Carter, if believed, in connection with the fact that the money was got for the firm and went to its use, are evidence to go to the jury. He said that though he did not know of it at the time it was given, yet, if he had, he would have been perfectly satisfied; if he could make collections, he would pay it in October. He repeatedly desired it should be sued as a partnership claim, and declared the note was as good as if he gave his individual note. This and the whole tenor of the conversation tend strongly to the inference that he had authorized the giving of it; and we think the evidence ought to have been left to the jury to say whether such authority was given, or whether the defendant subsequently ratified the instrument.

On the additional count, we think the plaintiff has not shown a right to recover. Where the bond of one of the partners is taken for an antecedent partnership debt, it may be considered either as payment and extinguishment of such debt, or only a collateral security, according to the nature of the transaction and the circumstances attending it. Wallace v. Fairman, (4 Watts 378). But where there is no antecedent debt, but the bond of one partner is taken at the time money is loaned to the partnership, and as the consideration for loaning the money, it can hardly be treated as a collateral security. It must be considered as all one transaction, and the bond as the only security contemplated; unless, perhaps, there were strong and positive evidence to show an express agreement to the contrary by all parties. If so, then in this case the bond was the only debt; the plaintiff, if he recovered at all, must .recover on it, and not on the money counts. And as there was no implied contract by both, so the express promise proved was only by one; and, therefore, we are of opinion the charge of the court below was correct, that the plaintiff could not recover on the additional count.

Judgment reversed, and a venire de novo awarded.