Story Case

Joshua Noonan and Clarence Linderman were partners in a show venture at the San Francisco World's Fair, having a concession called the Pan-American Scenic Ride. The venture was entirely financed by Noonan, who matched his money against Linderman's experience. Noonan, however, restricted Linderman, who had no authority to incur partnership liabilities. Nevertheless, Linderman did make a contract with Howard Rowe during the course of the business, incurring an indebtedness to the latter of $5,000. This Noonan refused to pay. Rowe brought suit against both of the parties, securing a joint judgment against Noonan and Linderman. Subsequently, Rowe proceeded to collect the entire amount by levy upon Noonan's property. Can Rowe secure satisfaction in this manner?

Ruling Court Case. Stevens Vs. Perry, Volume 113 Massachusetts Reports, Page 380

Perry and Grimes had been copartners in business under the firm name of Perry and Grimes. During the course of their business, they incurred certain obligations. Being unable to meet them, they made an assignment of all property, individual and partnership, to a trustee for the benefit of creditors. Stevens, to whom the firm owed money, received judgment on Ins claim and caused an execution to issue against the trustee in an attempt to collect his judgment. The trustee answered, that they had no property whatsoever then belonging to the firm; but that they did have in their possession certain property belonging to Perry personally, but since the service of the execution upon him, these goods had been attached by the individual creditors of Perry. Under these circumstances, the question was whether the firm creditor would take precedence over the individual creditor, in view of the fact that the execution of the firm creditor was served upon the trustee before the execution of the individual creditor.

Mr. Justice Ames delivered the opinion of the Court: "It is a well settled law of this Commonwealth, that in a suit against two or more copartners upon their joint debt, the separate property of any one of the partners may be attached, and the lien so acquired is not discharged or impaired by a subsequent attachment of the same property upon a suit in favor of a separate creditor of the same partner. * * * As the debt due from the partners jointly is also due from each, it may be enforced against the separate property of each." Accordingly, it was held that the lien acquired by this attachment of the plaintiff, would prevail over the lien acquired by the attachment of the separate creditor of Perry, since the firm creditors were first to levy their attachment.

Ruling Law. Story Case Answer

As has been pointed out heretofore, each partner is an agent with implied authority to act for the firm, and to transact its business, within the scope of his authority. Accordingly, if he makes such a contract and does not exceed his authority, it binds not only himself but all members of the firm. This obligation is a joint obligation of all and not a several liability of any. If a third person sues one of the partners, it is a good defense to the action to show that the other members of the firm were not joined. But when the judgment has been recovered, the third person may then get satisfaction from the separate property of any individual member, and is not restricted to partnership property alone for satisfaction.

In the Story Case, Rowe secured a judgment against both Noonan and Linderman. His judgment is properly a joint judgment. Thereafter, he could proceed and collect from the individual property of either party. Therefore, he can now collect the entire judgment from the property of Noonan.