Cutler v. Estate of Thomas

The opinion of the court was delivered by Bennett, J.

This action is founded upon a bill of exchange, drawn by what -was called th'e “ Union Bank of Montreal, Lower ■Canada,” upon H. Gray & Co., New York, on the 14th day of August, 1841, payable to the order of the plaintiff. It is claimed, and the declaration proceeds upon the ground, that this “ Union Bank,” was an unincorporated joint stock company, and that Henry Thomas was, at the time this bill was drawn, one of the company, and as such, liable as a partner upon this bill. ■ We think, that the trial below must-be regarded as a mistrial. The liabilities of the members of this joint stock company, should be judged of, by the laws of Canada. Though it may be true that the bill itself should be governed by the laws of the place where it is made payable, yet, *77 when we inquire for the liability of the individual stockholders, growing out of the association, we must have reference to the laws of Canada, where it was formed, and where their place of business was. In the late case of Bennett v. Chambers, in the Supreme Court of the United States, American Law Register, Vol. 4, p. 187, it was held, that a contract to convey lands in Texas, made at Cincinnati, during the war between Mexico and Texas, and before the independence of Texas was acknowledged by the United States, was not to be treated as a Texan contract, and to be judged of by the laws of Texas; but its validity was to be determined by the laws of the United States. Much more should the liability of the stockholders of this association, be judged of by the laws of Canada. The evidence before the court and jury, tended to show, that there were material distinctions between the English common law, and the law which was in force in Canada, in relationi to the liability of members of joint stock companies.

The court evidently intended to try this case upon the principles of the common law. No allusion is made in the charge of the court, to the laws of Canada. In this there was an error; and we think if the case had been to be tried upon the principles of the common law, it must be regarded as á mistrial. It appeared from the testimony of Bean and Gray, that this association was formed, and went into operation, in 1838, or 1839, as an unincorporated company, and in the name of the “ Union Bank of Montreal,” and that the drawing of bills of exchange, was a part of their ordinary business; and Bean testifies, that after this association was formed, and while it was in operation, and he thinks in 1840, Henry Thomas became a stockholder in said bank, by the purchase of stock of the bank, and that he continued as such, down to the tíme, and until after, the bill in question was drawn.

It was also in proof, that this bank, or association, was managed by Bean, who acted as cashier, and H. Gray, and one James, now deceased, who were the ostensible directors, or managers; and that, in addition to these, there were others having a secret interest in the concern, as stockholders; and that Chandler, in the absence of the cashier, was authorized to draw bills of exchange.

The court, after giving the jury instructions, in regard to the law of the case, in case they should find that Thomas held himself out as a partner, concluded by saying, that if they did not so find,it *78 “ was incumbent upon, the plaintiff, to prove, that such a contract “ existed between Thomas, and the other members, as would consti- “ tute a partnership between them, and would entitle him. to partiei- “ pate in the profits of the concern; and that the testimony of Bean “ was not sufficient proof of such contract.” It is not readily apprehended, upon what ground the court below went, in withdrawing the consideration of Bean’s testimony from the jury. It may have been upon the ground that the written articles themselves, should have been produced. Though it should be conceded that if the question was inter se, the only competent evidence of partnership, would be the articles themselves; yet, the same principle will not apply, when the suit is by a creditor of the partnership, as against the parties; the partnership may be proved by oral evidence of the actions, or declarations of the parties. See Alderson v. Clay, 1 Stark. Rep. 405. Widdifield v. Widdifeld, 2 Binn. 249. Allen v. Rostain, 11 S. & R. 362.

If the two depositions of Bean taken together, tended to prove a liability upon this bill, on the part of Thomas, upon common law principles they should have been submitted to the jury with proper instructions. I suppose the law to be settled, that the members of a joint stock company, are liable, in solido, for the debts contracted by the company. In Carlew v. Drury, 1 Ves. & B. 157, Lord Eldon says, “I hold it clear, that each individual is, at law, an- “ swerable for the amount of the whole of the debts of the concern.” And in that very case, the articles provided, that one thousand persons might eventually become interested in the concern.

In Keasley v. Codd, 2 Car. & Payne 408, note, Abbott, Ch. J. speaking of joint stock companies, says: “ It is important that the “ public should know, that if persons connect themselves with a “ company of this description, they are every one of them, liable “ to pay the demands upon it.” The testimony of Bean, if credited, went to show that Col. Thomas was a shareholder in this bank at the time the bill in question was drawn. In the case of Harrison v. Heathorn, 6 Man. & G. 81, it was held, that the attending in the character of a shareholder, a meeting of the members of a joint stock company, was sufficient prima facie evidence, that the party was a shareholder, to charge him with an engagement, entered into, by a majority of the shareholders, at a subsequent meeting, which he did not attend. The particular terms of a partnership, are of *79 no importance to third persons. That is a matter inter se. We think, then, the depositions of Bean should, upon common principles, have been submitted to the jury, with proper instruction as to their effect, if the witness was credited.

In regard to the questions arising, relative to the notice to the drawers, of the presentment and non-payment of the bill, we do not find it necessary to express any opinion at this time.

The result must be a reversal of the judgment of the County Court, and the cause go down for another trial.