SMITH, BELL & Co., LTD., plaintiff and appellant, vs. M. H. AZNAR & Co. et al.

, defendant and appellees. No. 5427 February 28, !4 S"LLAB#S . $ARTNERSHI$% MANA&IN& $ARTNER% A#TH'RIT" T' EFFECT R'#TINE TRANSACTI'NS% 'RDINAR" $R#CHASES AND SALES% $#RCHASES 'N CREDIT. as manager of the firm with the privilege of using the firm name and with his only co-partner absent most of the time attending to personal business of his own, an industrial partner must be deemed clothed with sufficient authority to effect the routine transactions of the firm. Such transactions would naturally include ordinary purchases and sales, since the firm was in the business of buying and selling merchandise of all kinds. The fact that the purchases are on credit hardly makes any difference. For it is held that where the business of a partnership is to buy and sell, a partner who purchases on credit in the name of the firm is acting within his implied powers, since it is usual to buy and sell on credit. ( ! ". #.$., pp. %&'-%&() 2. ID.% THIRD $ERS'NS NEED N'T IN(#IRE ')ER A#TH'RIT" 'F $ARTNER. *ersons dealing with a firm have a right to assume that the authority of a partner is coe+tensive with the business transacted by his firm ( ! ".#.$., p. %%(). *. ID.% ARTICLES 'F C'$ARTNERSHI$% INTER$RETATI'N% &ENERAL A#TH'RIT" 'F THE MANA&ER. The clause ,To make, sign, seal, e+ecute and deliver contracts, documents, agreements, deeds and other writings of whatever nature, kind and description, with any and all third persons, concerns and entities, upon terms and conditions acceptable to him duly approved in writing by the capitalist partnerobviously refers to the e+ecution of formal contracts in writing and not necessarily to routine transactions such as ordinary purchases and sales of merchandise which naturally come within the scope of the general authority of the manager of a business. .**/.$, from a 0udgment of the #ourt of First 1nstance of 2anila. .. $ocsin, 3. The facts are stated in the opinion of the court. Ross, Lawrence, Selph & Carrascoso, James Madison Ross, and Diosdado Macapagal for appellant Apolonio R. Chavez for appellees RE"ES +A.,, -..

*laintiff is a *hilippine corporation with principal office in the #ity of 2anila. 2.4. .5nar 6 #ompany was a registered commercial partnership with principal office in the #ity of 2anila organi5ed for the purpose, among others, of buying and selling merchandise of all kinds. The partnership was composed of 2atias 4. .5nar, 0r., as capitalist partner, and /ufrone /. Tobes, as industrial partner. Tobes was the manager of the partnership with the privilege of using the partnership name, 7n various dates from September !, 8&9%, to :ovember 8& of the same year, plaintiff, upon order of Tobes as manager of the defendant firm, delivered to the latter merchandise of the total value of *8,(&(.;9. .s the merchandise was not paid for notwithstanding repeated demands, plaintiff brought the present action against the firm and its two partners for the recovery of the value thereof. .t first the firm and its capitalist member 2atias 4. .5nar, 0r., filed a general denial, but on .pril 8, 8&9&, these defendants amended their answer by setting up the defense that the obligation which plaintiff was seeking to enforce was contracted without the knowledge and consent of the capitalist partner and beyond the authority conferred upon Tobes by the articles of partnership. Though the fact does not appear in the bill of e+ceptions, plaintiff informs us in its brief that, on the same date, the complaint was dismissed as to Tobes, who had died before the trial. The lower court absolved the remaining defendants from the complaint on the ground that Tobes had no authority to sign any document or receipt or have any transaction with any third person without the written approval of the capitalist partner. From this 0udgment plaintiff has appealed. The orders for the merchandise in <uestion were said to have been given by Tobes on the telephone, and for that reason no written orders were produced at the trial. =ut we have it from the testimony of the plaintiff>s employees that all of the merchandise in <uestion was delivered to Tobes in the office of the partnership and receipted for by Tobes in the name of the firm. The original receipts (of which e+hs. ,/- to ,/-'- are copies) could not be produced in the evidence because they had been delivered by the plaintiff>s collector to the defendant firm for e+amination when said collector called with a statement of account. Such delivery is evidenced by the counter-receipts e+hs. ,F,- ,F-8,- and ,F- issued by the accounting department of the defendant firm. ?efendant .5nar testified that the signatures and initials affi+ed on those counter-receipts were not those of Tobes or of any of his employees. =ut his testimony is rebutted by that of the plaintiff>s collector, who saw the initials on e+hibit ,F- - affi+ed by Tobes, and the signatures on e+hibits ,F- and ,F-8- affi+ed by a clerk in the accounting department of the firm. 2oreover, .5nar>s testimony that the signatures on e+hibits ,F- and ,F-8- were not those of an employee of his firm is weakened by his admission that he did not know or remember the name of one of the firm>s employees. 1t may well be that those signatures were those of the one whose name .5nar could not remember. .nd there can be no <uestion that the signature ,Tomas #. =anta- appearing on e+hibits ,F- and ,F-8was that of an employee of the firm, because we find the same name it its articles of association. 7ur conclusion, therefore, is that the goods in <uestion were actually

received by the defendant firm, so that they only <uestion that remains to be determined is whether Tobes had authority to order those goods on credit. The articles of partnership e+pressly provides that Tobes ,shall manage, operate and direct the affairs, business and activities of the partnership.- They also e+pressly give him the privilege of using the partnership name. .s manager of the firm with the privilege of using the firm name and with his only co-partner in #ebu most of the time attending to personal business of his own, Tobes must be deemed clothed with sufficient authority to effect the routine transactions of the firm in 2anila. Such transactions would naturally include ordinary purchases and sales, since the firm was in the business of buying and selling merchandise of all kinds. The fact that the purchases are on credit hardly makes any difference. For it is held that where the business of a partnership is to buy and sell, a partner who purchases on credit in the name of the firm is acting within his implied powers, since it is usual to buy and sell on credit ( ! ".#.$., p. %&'-%&(), and persons dealing with a firm have a right to assume that the authority of a partner is coe+tensive with the business transacted by his firm. ( ! ".#.$., p. %& ), 2oreover, third persons are not as a rule bound to in<uire whether the partner with whom they are contracting is acting on the partnership account, or for his individual advantage ( ! ".#.$., p. %%(). The lower court declared Tobes to be without authority to order the goods in <uestion without the consent of .5nar in writing, presumably on the strength of the following provision of the articles of partnership@ ,/./. Tobes is the industrial. 4e shall manage, operate and direct the affairs, businesses and activities of the partnership and devote his time, effort and energy to the same for the sole benefit of the partnership. .mong others, he shall have the power, authority and right +---+---+ ,To make, sign, seal, e+ecute and deliver contracts, documents, agreements, deeds and other writings of whatever nature, kind and description, upon terms and conditions acceptable to him duly approved in writing by the capitalist partner.=ut the latter clause obviously refers to the e+ecution of formal contracts in writing and not necessarily to routine transactions such as ordinary purchases and sales of merchandise. These, as we have already seen, naturally come within the scope of the general authority of the manager of a business. The evidence also shows that previous purchases made by Tobes in the name of .5nar 6 #ompany from the same plaintiff were honored and paid for by the said firm, and we may well also assume that the goods here in <uestion which were delivered to defendant firm were made use of by the latter. 1t is, therefore, but 0ust that the firm answer for their value.

Aherefore, the 0udgment appealed form is reversed and one shall be entered condemning 2.4. .5nar 6 #ompany and 2atias 4. .5nar, 0r., to pay plaintiff the sum of *8,(&(.;9, with interest at B per cent per annum from the time of the filing of the complaintC but it is understood that 2atias 4. .5nar, 0r., shall not be made to pay the 0udgment without the assets of the company being first e+hausted. The appellees shall pay the costs in both instances. Padilla, Lopez Vi o, and !"ason, LL., conc"r J"dgmen reversed.