“ If that business be to buy and sell, then the individual buys and sells for the company, and every person with whom he trades in the way of its business, has a right to consider him as the company, whoever may compose it. It is usual to buy and sell on credit; and if it be so, the partner who purchases on credit in the name of the firm must bind the firm. This is a general authority held out to the world, to which the world has a right to trust. The articles of co-partnership are perhaps never published. They are rarely if ever seen, except by the partners themselves. ”

“ The reason which makes a note drawn or indorsed by one partner, in the joint name, though for his own use, binding on the firm in the hands of an innocent holder, is, because it has been taken on the faith of his name. ”

“ The authority of a partner is derived from the law; is a construction of law. The only limitation is that it must be within the scope of the partnership. The name is nothing. If within the scope of a general authority, strangers are not bound to distinguish. They may be affected by actual knowledge. The circuit court went as far in behalf of the defendants as the law would warrant.
Taking the whole of the instructions together, there can be no doubt, if the facts were found correctly by the jury, that the defendants below were liable. ”

“ A peculiar sanctity is thrown round the obligation of negotiable paper, actually negotiated in the usual course of business, and in the hands of an innocent holder, for a valuable consideration, without notice. Every presumption which the law can raise, is in favour of such a holder, whether he receives the note in payment, or by discount. ”

“ But their responsibility, in all partnership transactions, is admitted to be the same. Those who trade with a firm on the credit of individuals whom they believe to be members of it, take upon themselves the hazard that their belief is well founded. If they are mistaken, they must submit to the consequences of their mistake; if their belief be verified by the fact, their claims on the partners, who were not ostensible, are as valid as on those whose names are in the firm. ”

“ It is said that the authority of each to bind the others is a conclusion of law. This is true, and so is that of every agent to bind his principal. But it is a conclusion of law from facts, and varies or ceases as they change.
The written instruments did not authorize the pledging the credit of the Binneys to those who knew their terms. This is ruled by the court, and not controverted. If, then, Winship had exhibited the articles, he could not have bound his co-defendants to the payment of the notes in suit; all his authority being derived from the articles. ”

“ It is the right of action which constitutes the interest. Will Jacques gain or lose by the event of this suit; or can the verdict be given in evidence for or against him? However minute the interest, it is equally fatal; and that is a reason for holding the rule strictly. Where two are bound in a joint obligation, and one is not sued, he may be a witness against the other. ”

“ No man's credit can be pledged except by himself. If it be by the intervention of another, that other must have authority from him. When the ground of liability is, that credit was given to the name, then the liability is co-extensive with the authority which the partner had to pledge the name. This power is usually conferred by the avowal of the co-partnership ”

“ The case finds, and the circuit court considered it a case of discount, which is a purchase of the note on stipulated and well known terms. The purchase or discount of a note is a contract wholly unconnected with the objects, uses, or application of the money paid. A party who sells a bill or note, incurs no liability to the discounter by the mere contract of discount, where he does not indorse it: nor does the discounter who pays for the discounted bill or note in other bills and notes, without indorsement, guaranty their payment. ”

“ The partnership remains dormant as to all, whose names do not appear on its transactions. The dormant, the sleeping, inactive partner may be known by reputation, or the declaration of his co-partner, but these do not make him an avowed or active one without the avowal and pledge of his name or paper. If credit is given to the other names on the faith of such reputation or representation, the persons so trusting must do it at the risk of suffering, if their information is not true. ”

“ In the actual state of the commercial world, it is perhaps impossible to conduct the business of any company without credit. Large purchases are occasionally made on credit; and it is a question of convenience to be adjusted by the parties, whether the credit shall be given by the vendor or obtained at the bank. If the vendor receives a note, he may discount it at the bank. ”

“ But it is not always so: a person may avow or profess himself a general partner, when he is in fact a special partner, or no partner at all: or, on the other hand, the authority to use his name may be more restricted than his interest, or withheld altogether. In these cases the question is, was the credit obtained on his name, authorized by him in any manner; if so, he is a surety from the beginning?
In this case, was Winship authorized to pledge the creidit of the Binneys? ”

“ If he has abused this confidence, the loss must fall where it always falls when a partner, acting within his authority, injures his co-partners. If, then, the agreement between Amos Binney and John Winship contains nothing more than is recited in the condition, it contains no inhibition on Winship to negotiate notes in the ordinary course of business. ”

“ The declarations of one of a firm are not evidence of another person's being a partner, in any particular transaction, unless a previous connexion is established, which gives him authority to bind by his acknowledgment, or proof given of subsequent assent: reputation is not, per se, evidence, unless brought home to the party charged ”

“ The language of some of the cases is, that it is rather on the ground of agency, than partnership resulting from the community of interest in the subject matter of the contract. The principle which makes a dormant partner liable is this: having an interest in the profits which are a part of the fund to which a creditor looks for payment, he shall be bound. ”

“ Can a principal, who has merely signed a written power, and has neither said nor done any thing, or caused or suffered or acquiesced in any act or declaration by any other person, from which authority could be deduced, be bound beyond the extent of the power which he has subscribed, by the mere suppression of the truth by the agent. ”

“ And then it becomes of importance to determine whether another part of the first instructions be correct: that the avowal of the partnership by Winship, when intended to be kept secret, and against the will of the Binneys, could extend their liability.
The legal responsibility of partnership is not to be determined by any classification into limited and unlimited. We must search deeper, and look to the real nature of the subject. In strictness there are no unlimited partnerships: all have their boundaries. ”

“ Where a person is responsible, merely and exclusively by virtue of written articles, can he be rendered liable beyond the extent of those articles?
Mr Chief Justice MARSHALL delivered the opinion of the Court.
This was an action brought in the court for the first circuit and district for Massachusetts, against John Winship, Amos Binney and John Binney, merchants and partners, trading under the name and firm of John Winship, as indorser of several promissory notes, made by Samuel Jacques, Jun. At the trial the maker was called by the plaintiffs, and sworn. ”

“ The trading world, with whom the company is in perpetual intercourse, cannot individually examine these articles, but must trust to the general powers contained in all partnerships. The acting partners are identified with the company, and have power to conduct its usual business, in the usual way. This power is conferred by entering into the partnership, and is perhaps never to be found in the articles. If it is to be restrained, fair dealing requires that the restriction should be made known. ”

“ There is then wanting in this case that fact on which the power of one partner to bind the firm by negotiable paper is created, the use of the names. The plaintiff who seeks to make those parties to a note, whose names do not give it currency or credit, must make them parties by affirmative proof of an interest in profits, previous authority, or subsequent recognition. It is true, that when a dormant partner is discovered, he is liable ”

“ That if they are also satisfied that the Messrs Binneys furnished Winship with sufficient capital and credit for carrying on the business of the firm, no such consent can be implied from the mere fact that Winship applied these moneys, or any part of them, to the payment of partnership debts. ”

“ Those who purchase in good faith, without notice of fraud, and pay their money, confiding in the face of the transaction, ignorant of any thing which can affect its legal or equitable character, are entitled to the protection of all courts as their most favoured parties. ”

“ So strong is Winship's interest against the Binneys, that it would exclude him from testifying against them to prove the partnership. To allow Winship then to create an interest in Jacques, which would induce him to testify that the Binneys were his partners; is to enable him to bribe the witness to accomplish his purpose. ”

“ Second. It does not appear that Winship had any interest arising from the release. The bank could only come in as a creditor for so much of the proceeds of the notes as went to Jacques's use. The release was only co-extensive with this: and if this were not so, by the terms of the indenture, it would be so from the nature of the case. The notes therefore did not constitute a debt by Jacques. It does not appear that any part of the money raised by these notes went to his use; his being drawer makes no difference. ”

“ In the next place, it was not the act of the defendants who are contesting this demand. The Binneys only have an interest to resist this action. The interest of Winship is adverse to theirs; as he seeks to render them equally liable with himself. If he can make them his partners, he thereby transfers one half of this debt from himself, and throws it upon them. He alone made this release: the Binneys had no knowledge of it. It was not a partnership act ”

“ In some particulars the evidence in the cause referred to was more favourable to the bank than in this. The note was discounted at the bank, on the belief that the Binneys were liable as partners of the manufactory at Charlestown only. This was found by the jury: but it was not found, and there appears to have been no evidence that the bank or its officers knew the note to be an accommodation one. The judgment of the court was on the fact being so found, not on its being known to the plaintiffs. ”

“ The counsel for the plaintiff in error has objected to this instruction with great force of reasoning. He contends very truly, that in fact scarcely any unlimited partnerships exist. They are more or less extensive; they may extend to many or to few objects ”

“ That indenture expressly names and identifies the notes in suit; and declares, 1. That those who are or may be holders thereof may participate in the fund; 2. That the assignees are to indemnify Winship against his liability as indorser; 3. That if on a settlement of accounts a balance shall be due Winship, he is to hold it towards this indemnity: and it contains a release, duly and legally executed by Winship, of all claims or demands which he had, or in any event might have, on account of these notes. ”