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ROGERS & SONS V. BATHCHELOR, 37 U. S. 221 (1838)
U.S. Supreme Court
Rogers & Sons v. Bathchelor, 37 U.S. 12 Pet. 221 221 (1838)
Rogers & Sons v. Bathchelor
37 U.S. (12 Pet.) 221
An action of debt was instituted in the district court of the United States on an obligation under the hands and seals of two persons. The action was against one of the parties to the instrument. The laws of Mississippi allow an action on such an instrument to be maintained against one of the parties only.
The funds of a partnership cannot be rightfully applied by one of the partners to the discharge of his own separate preexisting debts without the express or implied assent of the other parties, and it makes no difference in such a case that the separate creditor had no knowledge at the time of the fact of the fund being partnership property.
Whatever acts are done by any partner in regard to partnership property or contracts beyond the scope and objects of the partnership must, in general, to bind the partnership, be derived from some further authority express or implied, conferred upon such partner, beyond that resulting from his character as partner.
The authority of each partner to dispose of the partnership funds strictly and rightfully extends only to the business and transactions of the partnership itself, and any disposition of those funds by any partner beyond such purpose, is an excess of his authority as a partner, and a misappropriation of those funds for which the partner is responsible to the partnership: though in the case of bona fide purchasers, without notice for a valuable consideration, the partnership may be bound by the acts of one partner.
If one partner write a letter in his own name to his creditor, referring to the concerns of the partnership and his own private debts, to those to whom the letter is addressed, the letter not being written in the name of the firm; it cannot be presumed that the other partner had a knowledge of the contents of the letter, and sanctioned them. Unless some proof to this effect was given, the other partner ought not to be bound by the contents of the letter.
In the District Court of Mississippi, an action of debt was instituted on an obligation executed on the first day of January, 1824, by which John Richards & A. H. Buckholts promised, under their respective hands and seals, to pay to N. Rogers & Sons, on the first day of April, 1824, three thousand two hundred and eighty-eight dollars, with interest from the date.
The defendant, Abel H. Buckholts, pleaded payment, and there was a general replication. After a trial and verdict for the defendant in 1833 and a new trial granted, the cause was again tried in February, 1836, the administrators of A. H. Buckholts having been
brought in after his decease, and a verdict was again found for the defendant, the jury at the same time having certified that the plaintiffs, N. Rogers & Sons, were indebted to the estate of A. H. Buckholts, the sum of one thousand eight hundred and twenty-six dollars.
A bill of exceptions was taken by the plaintiffs to the charge of the court, and judgment having been rendered on the verdict for the defendants, the plaintiffs prosecuted this writ of error. The bill of exceptions stated that on the trial of the cause the defendants set up offsets to the demand of the plaintiffs. They were contained in an account made up to April 1, 1830, and show a balance due to John Richards & Co., which firm was composed of John Richards and Abel H. Buckholts. The balance due was one thousand five hundred and forty-one dollars. The accounts credit N. Rogers & Sons, the plaintiffs, with the amount of the note for which the suit was instituted, and with interest on it for six years, amounting to four thousand eight hundred and sixty-six dollars, and charges several items as payments to the plaintiffs, with interest on the same, showing the balance of one thousand five hundred and forty-one dollars.
Two items on the debit side of the account were made the subject of controversy, viz., a charge of one thousand four hundred and fifty dollars, received from Lambert & Brothers on 4 September, 1825, and a charge of three thousand dollars under date of January, 1827, for John Richards' acceptance of the draft of N. Rogers, &c.
The account was stated as follows:
"Dr. N. Rogers & Sons in account current (account to April 1, 1830) with John Richards & Co. Cr."
The debits, among others, were:
1825. Sept. 4. To cash from Lambert & Bro's $1,450.46
Interest on the same 530.62
1827. To acceptances of your draft on John
Richards & Co., payable at 6 mo. 3,000
The credits were:
1827. April 19. By amount of John Richards & A. H.
Buckholt's note due this day $3,325.25
Interest on same, 6 years 1,541.06
In support of this setoff, the defendants relied upon the testimony of one Rowan, who testified that sometime in the year 1830, he was requested by Buckholts to be present at a conversation he expected to have at his office, with a Mr. Rogers (a member of the firm of Rogers & Sons, as he understands) relative to their accounts, and requested him to note down and recollect the conversation, that sometime after Rogers came into the office, and a conversation ensued relative to their accounts; that the accounts before them were accounts made out by Rogers & Sons, between themselves and Richards & Buckholts, and John Richards & Co. and John Richards, and Lambert & Brothers, in account with John Richards & Co. Richards & Buckholts, and John Richards, and an account made out by Buckholts between Richards & Buckholts, and Rogers & Sons; that in their conversation relative to those accounts Buckholts asked Rogers if the several items charged in his account had not been received, and Rogers admitted they had been; that among other items so admitted, was the item charged in the account of offsets, filed under the plea of payment of one thousand four hundred and fifty dollars and forty-six cents, and the item of three thousand dollars.
The witness stated that in their conversation about the one thousand four hundred and fifty dollars and forty-six cents item, Rogers admitted that sum had been received by Rogers & Sons from Lambert & Brothers, in New York, and was part of the proceeds of seventy-four bales of cotton shipped by Richards & Buckholts to Lambert & Brothers. That very little was said about the item of three thousand dollars; the witness recollected nothing more but an admission that it had been received. That something was said between Buckholts and Rogers about the right to apply moneys to the payment of John Richards' private debts, Buckholts contending Rogers had no right to do so, and Rogers that he had: but which particular item of payment witness did not understand. This was all the evidence introduced by defendants in support of the above two items of one thousand four hundred and fifty dollars and forty cents and three thousand dollars. The said witness further testified that he had understood the said John Richards had once failed, before he went into partnership with the said Buckholts. No other witness was introduced on the part of the defendants. The defendants admitted that in the account made out by Buckholts between Richards & Buckholts and Rogers & Sons, above-mentioned, about which the said conversation between Buckholts and Rogers took place; that the item of three
thousand dollars was charged by Buckholts in his said account as an item received upon a bill of exchange, drawn in 1825 by Rogers & Sons on John Richards alone.
The plaintiffs then introduced a letter from John Richards to them dated Natchez, June 6, 1825, of which the following are extracts:
"Today we have amount of sales of all the cotton we own (except half interest in seventy-eight bales gone to England, which was sold by Messrs. Lambert in New York, at twenty cents, subject to benefit of half profits, without being accountable for any loss) which, although bought lately, nearly netted twenty percent. Our profits on cotton will be from four to five thousand dollars; and our business is, I think, prospering. The following is about the payments we have left in the hands of Messrs. Lambert, Brothers & Co., to be divided between you and them: "
Part sales of seventy-eight bales of cotton, about . . . $2,800
Foster & Steel's notes . . . . . . . . . . . . . . . . . 4,250
My three notes . . . . . . . . . . . . . . . . . . . . . 1,500
This intended to pay my own debts. . . . . . . . . . . $8,550
On account of John Richards & Co.
The half profits of seventy-eight bales of cotton,
gone to England, which I hope may be. . . . . . . . . $1,500
J.R. & Co.'s notes. due next winter, at New Orleans . . 1,500
"This day, sent to New Orleans six hundred and fifty-four dollars and fifty-five cents, to purchase exchange on New York, which will be forwarded as soon as received, to go to the payment of J. R. & Co.'s debt to you and Messrs. Lambert, Brothers & Co. With these payments I hope you will be satisfied until next winter. I have hopes of selling my private residence, at a sacrifice of two thousand five hundred dollars, which will be sent to you as soon as realized. I have a prospect of getting for it nine thousand dollars."
The plaintiffs, by their attorney, requested the court to charge the jury:
"First, that the defendants are not entitled, upon the evidence before them, to the item of one thousand four hundred and fifty dollars
and forty cents as an offset to the plaintiff's claim. Second, that the defendants are not entitled, upon the evidence before the jury, to the item of three thousand dollars as an offset"
Which charge the court refused to give, and thereupon the defendants requested the court to charge as follows:
"First, that if the jury believe the offset of one thousand four hundred and fifty dollars was the proceeds of cotton of Richards & Buckholts, or John Richards & Co., shipped on their joint accounts, then it is a legal offset to a joint debt, and cannot be applied to the individual debt of John Richards, without proof that Buckholts was himself consulted, and agreed to it. Second, that if the jury believed that the draft of three thousand dollars was paid by Richards & Buckholts, or John Richards & Co., or out of the effects of either of those firms, with the knowledge of Rogers & Sons, then, in law, it is a legal offset to the joint debt of said Richards & Buckholts, or John Richards & Co., and cannot be applied to the private debt of either partner, without the consent of the other partner. Third, that the letter of John Richards, read in this case, is not evidence against Buckholts, unless the jury believe that Buckholts knew of the letter and sanctioned its contents, which letter is the one beforementioned in this bill of exceptions. Which charge the court gave as requested."
To which decision, in refusing to charge as requested by the plaintiffs and in charging as requested by the defendants, the plaintiffs excepted. The defendants remitted five hundred and sixty dollars, part of the debt certified by the jury.
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