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plaintiffdefendantappealtrialverdictpleapartnership

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Slayden, Fakes & Co. v. Lance, 151 N.C. 492, 66 S.E. 449

Facts

The plaintiffs sued to recover a balance of $292.22 for goods sold to the partnership of J. G. Lance & Co., with the defense resting on a verbal partnership agreement that prohibited Lance from incurring debt. M. R. Jones, who was served with summons, claimed she had communicated this stipulation to the plaintiffs and had made inquiries about Lance's payment status, receiving assurances that he was keeping his bills paid. Upon discovering that Lance was in debt, she sought a statement from the plaintiffs, who admitted they should have informed her of the situation. The jury ultimately found that Jones was not indebted to the plaintiffs.

Issue

The main legal issue was whether the plaintiffs could recover the debt from M. R. Jones despite her claims of a verbal partnership agreement limiting Lance's authority to incur debt.

The principal question presented by this appeal is the correctness of his honor's refusal to instruct the jury, upon the evidence, to return a verdict for the plaintiffs, for the reasons that the defense pleaded was not good, and that it was unsupported by any sufficient evidence, in view of the written admissions of the defendant at the trial.

Rule

The court applied the principle that a partner's authority to bind the partnership is generally presumed unless third parties have notice of limitations on that authority.

It is, undoubtedly, a generally accepted doctrine that 'whatever, as between the partners themselves, may be the limits set to each other's authority, every person not acquainted with those limits is entitled to assume that each partner is empowered to do for the firm whatever is necessary for the transaction of its business, in the way in which that business is ordinarily carried on by other people.'

Analysis

The court analyzed the evidence presented, noting that M. R. Jones had informed the plaintiffs of the partnership's agreement that Lance should not incur debt. Despite her inquiries about Lance's payment status, the plaintiffs continued to allow him to run up debts. The court found that the plaintiffs' conduct constituted a fraud upon Jones's rights, as they knowingly permitted Lance to violate the partnership agreement without her consent.

The evidence in this case tended to prove that, in the partnership agreement it was stipulated that Lance should not go in debt for goods purchased; that Mrs. Jones notified a member of plaintiff firm of the agreement, and that she wished them to quit selling to him if he did not pay promptly; that she inquired from time to time of plaintiff's salesmen if Lance was keeping his bills paid up, and was uniformly told that he was; that when she was told that Lance had run the business in debt, she promptly complained to plaintiffs, and they admitted that they ought to have informed her; that plaintiffs were permitting Lance to become and remain indebted to them during the period she was inquiring if Lance was indebted; that she offered to turn over the stock of goods to plaintiffs, and they refused to accept it; that she sold the stock, inventoried by an employé sent by the plaintiffs and paid the plaintiffs the entire proceeds; that plaintiffs hesitated upon her demand to give her a statement of the account, for the reason it might make Lance mad; that plaintiffs sold goods to the partnership upon the financial strength of Mrs. Jones.

Conclusion

The court affirmed the lower court's judgment, concluding that the jury's finding that M. R. Jones was not indebted to the plaintiffs was justified based on the evidence presented.

The judgment is therefore affirmed.

Who won?

The defendants, M. R. Jones and J. G. Lance, prevailed in the case because the jury found that Jones was not indebted to the plaintiffs, supported by her prior instructions and the plaintiffs' failure to inform her of Lance's debts.

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