27 U.S.

186
2 Pet. 186
7 L.Ed. 391

LE ROY, BAYARD & CO. PLAINTIFFS IN ERROR

v.
GEORGE JOHNSON, DEFENDANT IN ERROR.
January Term, 1829

AN action of debt upon a bill of exchange for 1250 sterling, was instituted
by the plaintiffs in error, in the circuit court for the county of Alexandria,
in the district of Columbia, against Jacob Hoffman and George Johnson,
alleging them to be partners in trade. By the statute of Virginia, adopted as
the law of the county of Alexandria, this form of action is authorised for
the recovery of the sum due upon a bill of exchange, and damages for
non-payment. The declaration charged the bill to have been drawn by
Jacob Hoffman and George Johnson, trading as co-partners in Alexandria,
under the name of Jacob Hoffman, the same being for the account of the
concern; and that the bill was purchased by the plaintiffs, who remitted it
to London; where it was presented to the drawers, and was returned
protested.
The process was not served on Jacob Hoffman.
Upon the trial of the cause, it was proved that it was generally known in
Alexandria, in 1823, that the defendant and Jacob Hoffman were jointly
concerned in buying and selling pork; and by the articles of co-partnership
signed by both partners, and entered into on the 10th of December 1823, it
was agreed, inter alia, that the funds necessary for the purposes of the
partnerships were to be borrowed from the banks or otherwise, upon the
notes of George Johnson, to be indorsed by Hoffman, or in such other
shape, as respects the paper of the parties, as might be found suitable to
the object intended. The active partner in the business was Jacob
Hoffman, who, besides the business of the concern, carried on that of a
sugar refiner, a buyer, seller, and salter of beef, and a tobacconist; and at
the same time the defendant, George Johnson, was engaged in the
transaction of business on his own account, as a commission merchant and
grocer.

The cashier of the bank of Alexandria proved, that an account was opened
in that bank on the 3d of December 1823, which he understood, from both
parties, was to comprehend the cash deposits of the joint concern, and the
proceeds of notes discounted for the purpose of raising funds for the
same. For some years before, Jacob Hoffman kept an account in the bank,
until the opening of the new account; upon which the private balance due
the bank was transferred to it, and no money could be drawn out of the
bank upon the account, but upon the check of Hoffman drawn by him in
his own name. Accounts of a similar character, in the same form, and used
in the same manner and for similar purposes were proved to have been
kept at the same period in the Farmers' Bank, and in the Bank of Potomac.
These accounts comprehended, indiscriminately, all the deposits of cash
kept by Hoffman in the banks; as well as deposits and cash of the joint
concern. The same witness also proved, that before a note for $6000,
drawn by the defendant, and indorsed by John H. Ladd & Co., was
discounted by the bank, he sent the bill of exchange which was the
foundation of this action to New York, at the request of Hoffman, to be
there negotiated. The bill not being sold immediately in New York,
Hoffman went there; and assisted by letters of recommendation from
merchants of Baltimore, he negotiated the bill, and out of the proceeds of
the same the note for $6000 was paid at the bank of Alexandria. The
proceeds of the discount of this note were used by the firm. The
partnership of the defendant and Jacob Hoffman was advertised in the
public papers of Alexandria, the advertisement being subscribed with the
names of both persons; during the continuance of the concern, it was
generally known in Alexandria, under the style of Hoffman & Johnson;
accounts were rendered, and money was paid in that name, and the firm
was dissolved on the 10th of January 1824.
By the terms of the dissolution, Mr Hoffman was bound to pay the debts
of the firm, and this bill was drawn to enable him to comply with this
contract.
The defendant was called upon early in June, and informed of the fate of
the bills; and efforts were made without success to procure payment out of
property which had belonged to Hoffman and Johnson, and which was in
the hands of a trustee.
The questions submitted to the jury, and upon which the court were
requested to charge in favour of the plaintiffs below, who are plaintiffs in
error in this court, were:
1. That upon the evidence of partnership, and that the proceeds of the bill

were applied to the payment of the note which had been discounted for the
firm; unless the defendant could show a notice of the dissolution of the
partnership, either public or private, before the bill was sold, and that the
bill was not drawn on partnership account; the plaintiffs were entitled to
recover.
2. If the jury, from the evidence, should be of opinion that the bill was
drawn in reference to the business of the concern, and to meet the
engagements of the same, and the proceeds of the same were so applied;
then the defendant is liable to the plaintiffs, unless he proves a dissolution
of the firm and knowledge of the same by the plaintiffs before the bill was
negotiated.
3. That if the jury believed the name of Jacob Hoffman was sometimes
used in relation to the business of the concern, and that the bill was drawn
in the name of Jacob Hoffman, and so negotiated for the firm to pay its
notes; the plaintiff is entitled to recover, unless the defendant can prove
that the bill was not drawn and negotiated on partnership account, or that
the partnership was dissolved and the plaintiff notified thereof, or the
dissolution was advertised before the bills were drawn and negotiated.
The court having refused these instructions, and a verdict and judgment
having been obtained for the defendant, this writ of error was prosecuted.
The case was argued by Mr Swann and Mr Key for the plaintiffs in error,
and by Mr Jones for the defendant.
For the plaintiffs, it was contended, that the bill upon which this suit was
brought was drawn by Jacob Hoffman on account of himself and the
defendant, to provide for the payment of a note discounted for the
concern, in the name used by them in their arrangements of finance; and
the proceeds of the sale of the bill having gone to pay the note, the
defendant was liable to the plaintiffs for the amount of the bill and
damages. It was in fact the bill of the firm.
The evidence on the part of the plaintiffs was sufficient to go to the jury,
upon the principles claimed by the plaintiffs. The name of Jacob Hoffman
was used as that of the firm, and if several persons act under one name, all
are bound. Montagu on Partnership, 32, note.
While it is admitted that the partnership was not bound for all the acts
done in the name of Jacob Hoffman, here was a transaction in reference to
its concerns, and it is therefore obligatory on all. Gow on Partnership, 55,
70, 189.

The language of the bill is in the plural, and thus it is manifest that it was
not an individual transaction of Jacob Hoffman. It is thus drawn, 'Ninety
days after sight of our first of exchange, (second, third and fourth of same
tenor unpaid) pay to the order, &c.'
That the partnership was dissolved before the bill was drawn is
immaterial. The dissolution was secret, as it was not known to the
plaintiffs; and they must be supposed to have taken the bill upon the
notoriety of the partnership. The difficulties which prevented the early
sale of the bill in New York, may have been removed by information
obtained by the plaintiff in Alexandria, and particularly of the form in
which the engagements for the money concerns of the firm were drawn.
The propositions stated by the counsel of the plaintiffs should have been
submitted to the jury.
The first requested the court to say, whether the facts proved showed a
partnership.
The second, that unless notice of the dissolution was brought home to the
plaintiffs, the defendants were liable.
The third, that there was evidence that the parties sometimes used the
name of Jacob Hoffman; and the bills were drawn to raise funds for the
partnership, and therefore the plaintiffs were entitled to charge the
defendant, unless the defendant could prove they were not used for the
firm.
The counsel also cited Gow on Part. 155. 2 Bos. & Pul. 679.
Mr Jones, for the defendant. The evidence showed a special partnership,
to buy and sell pork, and all the transactions of the firm were in the name
of Jacob Hoffman and George Johnson. If the name of Jacob Hoffman
was used at the banks, it was not so used as the name of the firm, but as
the name of one individual of the same; each giving his own name to raise
funds for conducting the business.
Nor was the bill taken as that of the firm; the plaintiffs refused it in the
first instance, and took it afterwards, when assured of the respectability of
the drawer, individually. The law is fully settled, that when it is claimed to
make a person liable as a partner, in a firm carried on in the name of one
person, it must be shown to be a partnership concern. The defendant is
protected by this principle; for although the proceeds of the bill were
applied to pay the note discounted for the benefit of the firm, the payment

of that note had been assumed by Jacob Hoffman, and he had a right to
raise funds on his own responsibility to discharge it.
To bind a partnership, the name of the firm is essential. If it is not used, it
must be presumed to be an individual transaction; and if the proceeds of
the same are brought into the concern, it is presumed it is done as an
individual duty to the firm.
The books show universally, the difference between a manual act of
purchasing goods, which may be done by one partner to bind all; and the
binding of all by writing, in which all must act, or he who acts must have
authority to bind all. How far the courts have gone in considering that a
separate debt, which is contracted by one of a firm, is shown by the
following cases. 4 Term Rep. 270. 12 East, 122. Gow on Part. 32. 1 Atk.
223. 1 Marshall's Rep. 249.
It is incumbent on the plaintiffs to prove they dealt with the firm, or with a
view to the liability of all the parties to it. Here George Johnson was
unknown to the plaintiffs; Jacob Hoffman alone appeared in the
transaction, and he drew the bill in his own name, on his own
responsibility, to obtain the means to carry into effect the terms of the
dissolution of the partnership. The court in refusing the instructions,
therefore, acted in conformity with the law, and the facts of the case.
Mr Justice WASHINGTON delivered the opinion of the Court.

The plaintiffs instituted an action of debt under the statute of Virginia, in the
circuit court of the district of Columbia, for the county of Alexandria, against
Jacob Hoffman and the defendant upon a bill of exchange drawn by the said
Hoffman, and dated the 3d of January 1824. The declaration charges, that the
said Jacob Hoffman and George Johnson were partners in the business of
buying, curing, and selling pork and bacon, and carried on their said copartnership business under the name and firm of Jacob Hoffman, and that the
bill of exchange on which the suit is brought, was drawn in the name of Jacob
Hoffman, for and on account of the said firm, and was sold to the plaintiffs,
who caused it to be presented for acceptance; and that the same was duly
protested for non-acceptance and non-payment, of which due notice was given
to the defendants, the drawers. The writ being returned 'no inhabitant,' as to
Hoffman, the suit abated against him.

From the evidence disclosed in a bill of exceptions, taken by the plaintiffs to

the opinion of the court, the case appears to be as follows.

On the 10th of December 1823, Jacob Hoffman and the defendant entered into
articles of co-partnership under their respective signatures, to commence and
prosecute, on joint account, during that winter, the business of purchasing,
salting up, and smoking pork. The funds necessary to the accomplishment of
the objects, intended to be borrowed from the banks, or otherwise, upon the
paper of the said George Johnson to be indorsed by Hoffman, or in such other
shape, as respected the paper of the parties, as might be found most suitable to
the object intended; Johnson agreeing, in consideration of the extraordinary
trouble and experience which Hoffman would devote to the purchase and
putting up of the pork, to pay two-thirds of the interest arising, or growing out
of the loan which should be made for the business contemplated. It was further
stipulated, that the business should be carried on as far as the parties should
agree, and could command the funds; and that the profits and loss should be
equally divided between them. No name of style is agreed upon under which
the business of the concern was to be transacted; but evidence was given, that
after the parties commenced their operation under these articles, the books of
the concern were kept, and the bills and accounts were made out at their
warehouse, where the pork was cured and kept, in the joint names of Hoffman
& Johnson, and never otherwise; and that they continued to be so kept and
made out until the pork was sold. They were generally known in Alexandria as
partners in buying, curing, and salting pork, under the name and style of
Hoffman & Johnson, in which they acted in relation to the business of the
concern, and advertised in the newspapers.

It further appears, that, besides the business of this concern, and during the
same period, Hoffman carried on the business of a sugar refiner, of a buyer,
salter and seller of beef, and of a tobacconist; and the defendant that of a
grocer, and commission merchant, in the town of Alexandria.

Notwithstanding what has been stated as to the name by which this firm was
known in Alexandria, and in which they did business at their warehouse, it
seems that one particular branch of business was conducted solely by, and in
the name of Hoffman alone. In December 1823, an account was opened in the
bank of Alexandria, which the cashier understood from both Hoffman and the
defendant, was to comprehend both the cash deposits of the said concern in that
bank, and the proceeds of notes therein discounted to raise money for the use of
the firm. This account was opened on the 3d of the month just mentioned, into
which a trifling balance against Hoffman upon his private account, before kept
at that bank, was transferred. This new account was so kept that no money
could have been drawn out of the bank, upon that account, except upon the
check of Hoffman, in whose name alone all the checks were drawn. Hoffman
had likewise long standing accounts in his own name in two other banks in

Alexandria, which were continued in the same name after this concern was
formed; in which accounts all cash deposits in those banks respectively, and the
proceeds of notes therein discounted, to raise cash for the use of the concern,
were entered. These latter bank accounts comprehended, indiscriminately, all
the deposits and cash kept by Hoffman in those banks, as well as the deposits
and cash of the joint concern.
6

The partnership between these gentlemen, which commenced on the 10th of

December 1823, was dissolved by mutual consent, on the 21st of the
succeeding month; under an agreement, by which Hoffman contracted to pay
all the debts due by the firm, the defendant binding himself to give the use of
his name, either as drawer or indorser, in the renewal of all notes then existing
until the bacon should be sold.

On the 30th of January 1824, the bill of exchange on which this suit is brought,
was drawn by Jacob Hoffman in his own name, and, as he states in his
deposition, on his individual responsibility, in order to enable him to raise
money to comply with his part of the above contract, and in particular to enable
him to discharge a note for $6000 which had been drawn by the defendant,
indorsed by John H. Ladd & Co. and Jacob Hoffman, and discounted at the
bank of Alexandria. With much difficulty, and after great personal exertions by
Hoffman, and with the aid of a letter from Mr Colt in favour of his mercantile
standing, he succeeded in selling this bill to the plaintiffs, the proceeds of
which he immediately applied to the discharge of the above note for $6000. In
his negotiations with the plaintiffs the name of the defendant was never
mentioned.

As a part of the evidence here detailed is taken from the deposition of the
before mentioned Jacob Hoffman, which was offered by the defendant's
counsel, it will be proper, in the first place, to dispose of the objection made to
the competency of this evidence. The offer to read the deposition, was preceded
by the exhibition of a release executed and delivered by the defendant to the
witness prior to his examination. It does not appear that any objection was, or
could be made to the form of the release; and the only question is, whether, in
point of law, the defendant could by any release render Hoffman a competent
witness.

It is to be premised, that the only ground upon which the objection can be
rested, is the supposed interest of the witness in the event of the cause, since
the suit having regularly abated as against Hoffman, by the return that he was
no inhabitant, he was no more a party to it than he would have been, had his
name been altogether omitted in the declaration.

10

As to the objection upon the score of interest, it is sufficient to remark, that it

was manifestly hostile to the party in whose favour he testified, and who
offered it in evidence; since, if the plaintiffs recovered against Johnson, and
obtained satisfaction from him, that would be a bar to their action against
Hoffman, and the release of Johnson protected him against any action which
Johnson might bring against him for contribution or otherwise.

11

The general rule of law, in relation to witnesses who are interested in the event
of the cause, goes no farther than to exclude them from giving evidence in
favour of that party to whom their interest inclines them. If they stand, in point
of interest, indifferent between the litigating parties, or if they testify against
their interest, the reason of the rule which excludes their testimony, no longer
exists.

12

We come now to the instructions to the jury, asked for by the plaintiffs'
counsel, and which the court refused to give. The first is, that if the jury believe
from the evidence, that the defendant and Jacob Hoffman entered into the
articles of co-partnership offered in evidence, and that an account was kept for
the said concern in the bank of Alexandria, in the name of Hoffman, in which
the notes discounted for the use of the partnership, and deposits of money on
partnership account, were entered to the credit, and checks drawn for the same
in the said Hoffman's name, and that the said Hoffman drew the bills
mentioned in the declaration, and sent them to New York to be sold, for the
purpose of raising money to pay certain notes which had been discounted in the
bank of Alexandria on partnership account, some of them drawn by said
Hoffman, and indorsed by the defendant or other persons, and others drawn by
the defendant, and indorsed by Hoffman or others, and that the same was sold
to the plaintiffs, and the proceeds thereof applied by said Hoffman to the
payment of the said notes; then the plaintiffs are entitled to recover, unless the
defendant can show a dissolution of co-partnership, and notice thereof, either
public, or to the plaintiffs, before the bills were sold, or that the said bills were
not drawn on partnership account, but on the individual responsibility of
Hoffman.

13

The second instruction which the court was called upon to give, is substantially
the same as the first, except that it omits a circumstance much relied upon in
the argument, that the bank account of the concern was kept in the name of
Hoffman, upon whose checks alone the money was drawn out.

14

The third instruction states, that if the jury should believe from the evidence,
that the defendant and Hoffman sometimes used, in relation to the business of
the concern, the name and style of Jacob Hoffman, as representing the firm,

and that the bill in question was drawn in that name by the said Hoffman, and
negotiated for the purpose of raising funds to pay notes due by the said
concern; then the plaintiffs were entitled to recover, unless the defendant could
prove that the said bill was not drawn and negotiated on partnership account,
but on account of the said Hoffman alone, or that the partnership was dissolved,
and the plaintiffs notified thereof, or the dissolution advertised before the bills
were drawn and negotiated.
15

In support of this action, it has been argued by the counsel for the plaintiffs,
that the bill in question was drawn in the name of the firm under which the
partnership concerns of Jacob Hoffman and George Johnson were transacted;
that it was drawn on partnership account, and that the proceeds of the bills were
in fact applied by Hoffman to the discharge of a debt due by the concern. These
being the facts, it is insisted that the court below ought to have complied with
the prayer of the plaintiffs' counsel, and instructed the jury, that if they were so
understood by them, the plaintiffs were entitled to recover. And if this
statement of the facts be correct, and the instructions asked for had been so
framed as to present them fairly to the jury, this court entertains no doubt but
that such instructions should have been given.

16

It is well settled, that if a bill of exchange be drawn by one partner in the name
of the firm, or if a bill drawn on the firm by their usual name and style, be
accepted by one of the partners, all the partners are bound. It results necessarily
from the nature of the association, and the objects for which it is constituted,
that each partner should possess the power to bind the whole, when acting in
the name by which the partnership is known, although the consent of the other
partners to the particular contract should not be obtained, or should even be
withheld. Were it otherwise, the affairs of the concern could with difficulty be
carried on; and these persons could seldom, if ever, know, when they might
safely deal upon the credit of the firm. It follows, that such third persons are not
bound to inquire, much less to assure themselves that the partner with whom
they are contracting is acting on the partnership account, or for his own
individual advantage. The interest of the partner in the joint stock of the
concern and his consequent authority to use their name, raises a presumption
that the contract was made for joint account, which is sufficient to bind the
firm, unless the contrary be shown and that the person with whom the partner
deals, had notice or reason to believe, that the former was acting on his separate
account.

17

It is now to be seen how these principles of law apply to the case under
consideration.

18

It is quite clear, that the name of this firm is no where designated in the articles
of copartnership which have been referred to. The mode in which a particular
branch of their business was to be conducted, cannot reasonably be construed to
give a name to the firm. It manifestly had no allusion to that subject. The
stipulation that the funds necessary for the purposes of the concern should be
raised upon the paper of Johnson, to be indorsed by Hoffman, or in such other
shape as might be found most suitable to the object of the parties, no more
designated Jacob Hoffman, that it did George Johnson, as the name of the
copartnership. If it did, then the name would be lost or changed, as often as the
parties should agree to raise funds for the concern in some other mode than the
one specified. It is unnecessary to decide whether the omission to agree upon a
partnership name in the body of the instrument was, or was not supplied by the
signatures of the contracting parties to it, because it was in full and
uncontradicted proof, that after the concern went into operation under the
articles, their books were kept, and the bills and accounts relating to their
business were made out at their warehouse, in the joint names of Hoffman &
Johnson, by which name the firm was generally known in Alexandria, and in
which they acted in relation to the business of the concern, and advertised in
the newspapers. Now it cannot be questioned, but that a name thus assumed,
recognized and publicly used, became the legitimate name and style of the firm,
not less so, than if it had been adopted by the articles of copartnership.

19

Keeping in mind the principles of law which have been stated, and the fact or
the evidence of it, in relation to the name of this concern, it will not be difficult
to decide the question, whether the instructions asked for by the plaintiffs
ought, or ought not to have been given. It is obvious that the court was required
by the two first of them, either to assume the fact that Jacob Hoffman & George
Johnson carried on their business as partners under the name and firm of Jacob
Hoffman: or to lay it down as law to the jury, that it is competent to one partner
to bind the copartnership by a bill drawn in his individual name, even after a
dissolution of the partnership, if that fact was not advertised or known to the
person taking the bill; provided the object of the partner who draws and
negotiates the bill, be to discharge certain debts due by the concern, and the
proceeds are afterwards so applied.

20

Now the fact which the court was called upon to assume, was all important to
be proved to entitle the plaintiffs to recover. It is averred in the declaration, and
is in point of law the foundation of the plaintiffs' demand against the defendant
Johnson. But what right had the court to assume a fact which was not warranted
by any just interpretation of the articles of copartnership, or of any other written
instrument which was given in evidence, but which, if it existed at all, was to be
deduced from the parol evidence, of which the jury were alone competent to

judge?
21

The court was not called upon to predicate the conclusion of law upon the fact
that the defendant and Hoffman traded under the name and firm of Jacob
Hoffman; if that fact should be so found by the jury,and unless it was so
found, it is quite clear that the bill in question, although drawn for the purpose
before mentioned, and although the proceeds were so applied, did not bind the
defendant, and consequently, the court was right in refusing to give these
instructions in the form in which they were propounded, unless the fact was
that which all the instructions assume, and which formed the basis of the
plaintiffs' argument before this court; the plaintiffs contracted in point of law,
as they manifestly did in fact, with Jacob Hoffman alone, and upon his sole
responsibility, and the use which Hoffman intended to make or did make, of the
proceeds of the bill, was quite as unimportant to them and to their cause, as it
would have been, had they contracted with Hoffman & Johnson under the name
of their firm.

22

As to the necessity of bringing home to the knowledge of the plaintiffs, in one

of the modes stated in the instructions asked for, the dissolution of the copartnership, in order to prevent their recovery against Johnson; we are all of
opinion, that it did not exist in point of law, unless, in point of fact, the bill was
drawn in the name of the firm. We admit that if one of the partners contracted
in the name of his firm with a third person, after the partnership is dissolved,
but that fact not made public or known by such third person, the law considers
the contract as being made with the firm and upon their credit, and this for a
reason too obvious to require explanation. But if the partner deal with another
in his individual name, and upon his sole responsibility, without even an
allusion to the partnership, as the jury would have been well warranted in
concluding the facts to be in this case, it was unimportant to that other to know
that the partnership was dissolved; since he was dealing, not with the firm, and
upon their credit, but with the individual with whom he was contracting, and
upon his credit.

23

It only remains to notice the single point of difference between the last, and the
two preceding instructions. These, as has before been noticed, assume the fact
that the partners carried on the business of the concern under the name and
style of Jacob Hoffman. That places the plaintiffs' right of recovery upon the
circumstance, that the defendant and Hoffman sometimes used, in relation to
the business of the concern, the name and style of Jacob Hoffman, as
representing the firm, in connection with the other facts stated in the preceding
instructions.

24

But would the court have been warranted in stating to the jury, what this
instruction manifestly purports; that whatever may be the name agreed upon by
the partners, and in which they generally act, in relation to the business of the
concern, still, if they have sometimes used, in that relation, the name and style
of one of the partners, bills drawn in that name, and negotiated for the purpose
stated in the instruction, would bind the other partner? We clearly think not.
The circumstance relied upon in this instruction, as to what the partners
sometimes did, was no doubt proper to be left to the jury, as evidence
conducing to maintain the averment in the declaration, that Jacob Hoffman and
the defendant carried on business as partners in trade under the name of Jacob
Hoffman; if the court had been called upon to leave that as a fact to the jury.
But it was nothing more than evidence of that fact, upon which it would have
been highly improper in the court to predicate any principle of law whatever.
This point we conceive was fully settled in the case of Townsley vs. Sumrall.
decided a few days ago by this court, ante page 170.

25

We are, upon the whole, of opinion that the court below was right in refusing to
give any of the instructions prayed for; and that the judgment of that court
ought to be affirmed with costs.