Sec. 43. POWER OF PARTNER TO SETTLE, COMPROMISE, RELEASE, ETC. A partner who has apparent power to buy and sell and receive and give payment, has apparent power to settle, compromise and release claims.

If a claim is made by or against a trading firm, a member thereof who has the apparent power to collect or disburse moneys would have the power to treat with the debtor or creditor concerning such claim and compromise and settle it. Thereupon the entire firm would be bound by such compromise and settlement.49

Sec. 44. POWER OF PARTNER TO SETTLE INDIVIDUAL DEBTS WITH FIRM ASSETS. A partner has no apparent power to use the firm assets for the payment of his individual indebtedness.

As the firm is not liable for the debts of one of its members, a creditor of one of the partners is bound to know that such partner has no right to take assets of the firm with which to pay his individual debts and in such a case the firm could recover such assets or their value, unless the creditor could show that the firm had known of and assented to such use of its assets.50

Sec. 45. PARTNER MAY BE SPECIALLY AUTHORIZED TO REPRESENT THE FIRM IN ANY LEGAL TRANSACTION. A partner may be given actual authority to represent the firm to bind it in any legal transaction.

We have above considered the cases in which a partner has apparent authority without respect to what his real authority may be. It is of course competent for the firm 49. Dyer v. Sutherland, 75 Ill. 583. 50. Brickett v. Downs, 163 Mass. 70.

to specially authorize the partner to enter into any contract in its name, no matter how far from the usual conduct of the firm. Thus he might be empowered to buy real estate, to contract for the erection of a building, to buy goods of a class different from that in which the firm usually deals, and so on. In such case he is made a special agent, and the firm would be bound because it has given him actual authority. There would be no apparent authority aside from the actual authority. One dealing with a partner in such a case would be bound to make inquiry as to what his actual authority was, or else take the risk that the partner was exceeding his actual authority.

Sec. 46. RATIFICATION WHERE NO ACTUAL OR APPARENT AUTHORITY. Granting that the firm could not be held by the act of one of its members, because neither any actual nor apparent authority, still it may become bound through a ratification of the act.

Very often a firm is clearly not bound by the act of one of its members, because he has neither the real nor the apparent authority to bind it, but it becomes bound because it ratifies the act and thereby cures the lack of au thority.51 Ratification may consist in words or conduct. Thus where a firm receives the benefit of an act, it cannot say that there was no authority. By receiving the benefits of an act done in its name it will become estopped to set up the lack of authority.

In order that there may be ratification the act must have been done in the name of the firm and upon its credit. The rules of agency on the subject of ratification apply here.

51. Porter v. Curry, 50 Ill. 319.

CHAPTER 7.

LIABILITY OF PARTNER FOR TORTS OF CO

PARTNER.

Sec. 47. GENERAL RULE. If a tort is committed by one partner with the consent of the others, or if not with their consent, then within the scope of the wrong-doing partner's authority, the co-partners are liable with the wrong doing partner.

We discover in the law of agency that a principal may be responsible for injuries caused by the tort of his agent, although the tort was totally unauthorized by him. In such a case the tort must have been within the scope of the agent's authority, and not an independent tort. Applying this principle to the law of partnership, a partner may be made liable for the torts of his co-partners committed as a part of the act of representation. If, however, the tort is a wilful and independent tort, the other partners will not be liable. We may consider some particular situations and thus better understand the law.

Sec. 48. LIABILITY OF PARTNER FOR FRAUD AND DECEIT OF CO-PARTNER. Where one partner commits a fraud or is guilty of deceit while representing the firm within the scope of his authority his partners are liable for the fraud.

The not unusual cases in which one partner is held for the tort of another are the cases of fraud and deceit.

It may clearly be seen how such torts fall within the scope of the authority of the partner. They are the torts which would usually be committed in the buying and selling of goods and the carrying on the business of the firm.

Example 11. A and B, partners, sold_C_sheep pelts having on them a large quantity of wool. B fraudulently substituted inferior pelts for some of those purchased. Held, that B's act bound A.52

Sec. 49. LIABILITY OF PARTNER FOR NEGLIGENCE OF CO-PARTNER. Partners are liable for the negligence of their co-partner whereby harm ensues when the negligence is within the scope of the authority.

Whether the negligence of one partner will bind the others depends upon the rules of agency. Thus a partner negligently driving a delivery wagon to the injury of a pedestrian, would make the other partners liable in damages.53 But if he were using the delivery wagon for individual purposes, they would not be liable, although of course, he would be. So, also, in a partnership of physicians, the negligence of one in taking care of business entrusted to the firm would make the other partner liable with him.53a

Sec. 50. LIABILITY OF PARTNER FOR INDEPENDENT TORTS OF CO-PARTNER. For independent torts of a co-partner, though committed for benefit of the firm, co-partners are not liable, when there was no actual assent and has been no ratification.

Where a partner commits a tort which cannot be said to be a part of the act done within the apparent scope of 52. Wolf v. Mills, 56 Ill. 360.

53. Mellors v. Shaw, 1 B. & S. 137. And see subject of Agency, generally.

53a. Hess v. Lowrey, 122 Md. 225.

his authority, but is of a wilful and independent nature, the co-partners will not be liable. Any one can readily see that the partners would not be liable for the torts of a partner which are entirely apart from the firm business; and even if they are connected with the firm business, still if they are of an independent sort, the partners who have not assented to the torts or ratified them, will not be liable. Some courts say that if the tort of the partner is a wilful one, the other partners will not be liable. But this is not strictly true. Fraud and deceit are wilful torts. So we find it better, perhaps, to say that if the tort is of an independent nature as though the wrongdoing partner had, so to speak, stepped out of his representation of the firm, to act, perhaps for its benefit, still upon his own responsibility, the other partners will not be liable. Thus in one case, a partner induced a creditor of the firm to enter the state and then had him wrongfully arrested. The other partner knew nothing of the act and upon learning of it immediately repudiated connection with it. It was held he was not liable for damages caused by the wrongful arrest.54 On the other hand, one partner has been held for the defamation of another where the defamation was uttered as a part of a firm transaction; 54a but if not uttered in partnership business, one partner's libels would not bind the other. So for assault and battery and such torts, the other partner would not be liable unless he sanctioned or ratified the act or took the benefit of the transaction of which it was a part.

54. Rosenkrans v. Barker, 115 Ill. 331.

54a. Haney Mfg. Co. v. Perkins, 78 Mich. 1, 43 N. W. 1073. Lathrop v. Adams, 133 Mass. 471.