§ 300. In the next place, as to the authority and liability of partners. Each partner is the general agent of the firm. For all purposes connected with the partnership, therefore, he may dispose of the whole, or any part of the personal property belonging thereto, and collect debts due the firm, as a partner,3 in like manner as if he were sole owner. But one partner cannot sell to himself, without the consent of the other partners.4 So, all transactions by a partner, as agent of the firm,5 will bind a firm, notwithstanding the objections of the other partners,6 unless the objections are known to the party dealing with the firm.7 This rule applies to all cases, whether the partners be ostensible, nominal, or dormant;8 for if any one be held out as a partner, and he be trusted upon faith in such representation, not to hold the partnership liable would be a fraud upon the public; and if he be actually a partner, there is no reason why the other partners should not be responsible for acts done by him as their agent. A partner, therefore, would have full power, without the consent or knowledge of his copartners, to mortgage or sell all the stock in trade by his contract.1 And if money be borrowed by one of the partners on the credit of the firm, all the partners are liable although he misappropriate the money.2
1 Shibley v. Angle, 37 N. Y. 626 (1868).
2 Dickinson v. Valpy, 10 B. & C. 142; Bourne v. Freeth, 9 B. & C. 640; Meigh v. Clinton, 11 Ad. & El. 418; Fox v. Frith, 10 M. & W. 131; Fox v. Clifton, 6 Bing. 776; Gabriel v. Evill, 9 M. & W. 297; Battley v. Bailey, 1 Scott, N. R. 143; Walstab v. Spottiswoode, 15 M. & W. 501.
3 Ayer v. Ayer, 41 Vt. 346 (1868).
4 Comstock v. Buchanan, 57 Barb. 127 (1864).
5 Story on Part. § 94, 101; 3 Kent, Comm. lect. 43, p. 44, 4th ed.; Watson on Part. ch. 2, p. 91 to 93, 2d ed.; Gow on Part. ch. 2, § 2, p. 57 to 54, 3d ed.; Coll. on Part. B. 3, ch. 1, § 1, p. 263 to 268, 2d ed.; Fox v. Hanbury, Cowp. 445; Coles v. Coles, 15 Johns. 159, 161; Anderson v. Tompkins, 1 Brock. 456.
6 Wilkins v. Pearce, 5 Denio, 541; Sage v. Sherman, 2 Comstock, 418.
7 Yeager v. Wallace, 57 Penn. St. 365 (1868).
8 Swan v. Steele, 7 East, 210; Sandilands v. Marsh, 2 B. & Al. 673; U. S. Bank v. Binney, 5 Mason, 176; Winship v. Bank of U. S., 5 Peters, 529; Coll. on Part. B. 3, ch 1, p. 259; Watson on Part. ch. 4, p. 166, 167, 2d ed.; Gow on Part. ch. 2, § 2, p. 36, 37, 3d ed.; Coll. on Part. B. 2, ch. 2, § 1, p. 128, 129; Story on Part. § 103, 104; Tarns v. Hitner, 9 Barr, 441.
§ 301. One partner does not, however, by virtue of his partnership, possess authority to sign and seal deeds for the others; and, therefore, in a conveyance of real estate, all the partners must join, or the deed will only operate as a conveyance of the separate interest of the actual grantors.3 Nor does the mere fact of the existence of a partnership, per se, imply an authority in one of the partners to open a banking account in his own name on behalf of the firm.4 Nor does a mere partnership to get orders on commission and divide the expenses authorize one of the partners to draw a bill in the firm name to raise funds to execute an order.5
§ 302. The authority of each partner to bind his copartners, being coextensive with those of a general agent of the firm, is subject, also, to the same limitations as those which apply to cases of general agency. It must, therefore, be restricted in its exercise to such transactions as arise in the ordinary course of the business carried on by the partnership. But he will be authorized as to third persons, regardless of the articles of partnership,6 to follow any particular mode or course of dealing, if it be justified by the usage of trade, or expressly authorized, or be implied from the circumstances of the case.1 Thus, in a mercantile partnership for commercial purposes, the right of each partner to pledge the credit of the firm grows out of the general usage and law merchant, and is implied in the very object of the partnership. And in such cases, therefore, one partner may, by drawing or indorsing promissory notes, or accepting bills of exchange or other negotiable securities, or by any other acts appropriate and incident to the business, bind the firm.2 So one partner has the power to employ a banker; and when that banker ceases to carry on business, he may employ another.3 But if a partnership be organized for farming or mining purposes, the directors or agents thereof will not, as incident thereto, possess a power to draw or accept bills, or to draw and indorse notes for the company;4 for such powers do not necessarily or naturally grow out of a partnership for those purposes. Nor has a member of a firm of attorneys authority to bind his partners by drawing a post-. dated check in the firm name.5 So, also, where it is not in the common course of the business to give letters of credit or of guaranty, one partner could not bind the firm by the letters of credit or guaranty 6 drawn by him. Nor does the mere fact of partnership give authority to one partner to bind the other by a submission of a partnership matter to arbitration.1 In such cases, therefore, either an express authority, or usage, or extraordinary exigencies, must be proved.2 And it is immaterial that an incidental benefit may result to the firm; if the contract is beyond the scope of the firm business it will not bind the other partner.3
1 Tapley v. Butterfield, 1 Met. 515; Arnold v. Brown, 24 Pick. 89; Hennessy v. The Western Bank, 6 Watts & Serg. 300; Greeley v. Wyeth, 10 N. H. 15; Lawrence v. Taylor, 5 Hill, 107; Anderson v. Tompkins, 1 Brock. 456; Halstead v. Shepard, 23 Ala. 558; Nelson v. Wheelock, 46 111. 25 (1867).
2 Onondaga Bank v. De Pay, 17 Wend. 47. See Emerson v. Harmon, 14 Me. 271; Hayward v. French, 12 Gray, 453.
3 Coles v. Coles, 15 Johns. 159; Story on Part. § 94. See McDonald v. Eggleston, 26 Vt. 154 (1853); Dillon v. Brown, 11 Gray, 179.