Opinion
(Filed 11 September, 1918.)
1. Partnership — Negotiable Instruments — Seal — Limitation of Actions.
A promissory note, signed by one of a partnership, with a seal after his own name, in behalf of the firm, or as purchasing agent for the others, is a simple contract as to the other partners, though a contract under seal as to the one thus signing, and is barred as to the others by the three-year statute of limitations.
2. Same — Ratification — Knowledge.
In order for members of a partnership to subsequently ratify the action of one of them in giving the firm's note under seal, and repel the bar of the three-year statute of limitations, it is necessary to show that the acts relied on were with knowledge that the instrument was under seal.
3. Same — Evidence — Trials.
A note under seal is not necessary to secure a lien for agricultural advances; and where the evidence tends only to show a partnership for farming purposes, and that one of the partners gave the firm's note under seal, and the other farmed and applied the proceeds towards the payment of the note, it is not sufficient to show that the other partner acted with knowledge that the note was under seal, and repel the bar of the three year statute of limitations as to him.
ACTION tried before Bond, J., at February Term, 1918, of BEAUFORT, upon these issues:
Small, MacLean, Bragaw Rodman for plaintiff.
John H. Tooly, Harry McMullan for defendants.
WALKER, J., dissenting; HOKE, J., concurring in dissenting opinion.
1. Is the defendant W. S. Riddick indebted to plaintiff, and if so, in what amount? Answer: $252, with interest from November 1, 1910.
2. Is said defendant barred by statute of limitations, as alleged in the answer? Answer: No.
Judgment was rendered, by consent, against the defendants Daniel M. and Melson Windley.
After verdict the judge made the following order:
"The court, as a matter of law and not in the exercise of discretion, orders the verdict rendered in this case on the second issue set aside and that case stand for trial as to said second issue. It does so because in its opinion it should have charged the jury that if they believed the evidence and found the facts to be as it tended to prove they should answer the second issue `Yes.'"
To this plaintiff excepts and appeals.
The purpose of this action is to recover a personal judgment against defendant W. S. Riddick on a bond, under seal, reading as follows:
BELHAVEN, Country of Beaufort, State of N.C. $549.56. Date, 13 May, 1910.
On or before the 1st day of November, 1910, with interest from maturity, payable annually, I promise to pay to the order of C. P. Aycock Supply Company five hundred and forty-nine and 56-100 dollars, for value received, without offset, the homestead and all other exemptions are hereby waived as to the debt evidenced by this note.
Witness my hand and seal. D. M. WINDLEY, (SEAL) Purchasing Agent for Self and W. S. Riddick and Melson Windley.
Witness: O. C. SWINDELL.
This bond was given for farm supplies and advances and was secured by an agricultural lien of same date upon a crop of cotton, corn and potatoes grown during year 1910 on a farm cultivated by the three defendants as partners. The agricultural lien also secured the sum of $215.88, balance due by the copartnership to plaintiff on advances for year 1909. The defendant Riddick pleads the three years statute of limitation. This action was commenced 7 December, 1915.
It is too well settled to admit of dispute that where a written instrument is executed on behalf of a copartnership, and an individual partner signs the firm's name and affixes a seal to it, the instrument is the simple contract of the firm, although it is the sealed covenant of the individual partner who executed it. An action is barred on such instrument after three years from the time the cause of action arose as to the copartnership and the members thereof, except as to the individual who executed the instrument and affixed the seal. Burwell v. Linthicum, 100 N.C. 147.
In Fronebarger v. Henry, 51 N.C. 548, Judge Ruffin declares the rule of the common law to be that one partner cannot bind another by deed by virtue of his authority as partner merely, and that such instrument, under seal, becomes the deed of the executing party alone. The subject is fully and learnedly discussed by Judge Battle in Fisher v. Pender, 52 N.C. 483.
The learned counsel for plaintiff seeks to avoid the effect of this established principle by attempting to show the defendant Riddick ratified the act of Windley in executing a sealed instrument executed by a member of the firm, and when so adopted and ratified it becomes the bond of each member as well as of the one who executed it. Day v. Lafferty, 4 Ark. 450. Notes to Bank v. Johnson, 14 Ann. Cases, 549, where the cases are collected. But these authorities also hold that "a partner cannot be charged with the ratification of a sealed note where it does not appear that he knew he was ratifying a sealed note."
In view of these authorities we agree with the learned judge that there is no sufficient evidence of an adoption and ratification of the instrument as a covenant under seal.
It is true that Windley testified that "Riddick knew about the execution of the papers and why they were executed for the firm," but there is no evidence that Riddick saw the papers or knew that a bond under seal had been given. He knew that an agricultural lien had been executed upon the crops for supplies and fertilizer, but as such an instrument does not require a seal, and as ordinary promissory notes require no seal, he did not know either from the character of the papers or from Windley's statement that a sealed instrument that would bind him for ten years had been executed. Neither do we think the evidence of payments shows a ratification of a sealed instrument. The evidence is that Riddick operated the farm during 1910 and "received and applied the crops that were made." The answer of Riddick admits "that W. S. Riddick paid plaintiff the sum of $513.51 on or about 1 January, 1911." A part of that money, it seems, plaintiff applied to the debt of 1909 and the balance of the bond sued on.
This payment is no evidence of ratification, because it does not appear that Riddick knew that the instrument was under seal before he made it, and, further, because the payment was one Riddick was compelled to make. He was undoubtedly bound by the agricultural lien, and the law itself compelled the application of the crops to the discharge of such lien. It is an indictable offense to willfully refuse to so apply them and otherwise dispose of them.
It may appear on the next trial that Riddick knew of the character of the instrument and that he adopted and ratified it as a sealed instrument, but the evidence on the last trial was not sufficient to establish it.
The order granting a new trial on second issue is
Affirmed.