Cronly v. Bank of Kentucky
Cronly v. Bank of Kentucky
Opinion of the Court
delivered the opinion of the court.
The only question in this case is, whether the following instrument of writing, executed by Cronly when he and McMurtry were in partnership, authorized the latter, after the partnership was dissolved, still to use the name of the firm, or whether the authority it conferred terminated, when the firm was dissolved. The writing referred to is as follows:
“John McMurtry is authorized to use, at discretion, the name of the firm of Cronly and McMurtry.
EDWARD CRONLY.
Lexington, June 10th, 1854.”
By virtue of the partnership, one partner is constituted an agent for another, as to all matters within the scope and objects of the partnership business in which they are engaged. This authority does not however extend beyond the scope of the ordinary business and transactions of the firm; and cannot be exercised by either partner in the management and for the benefit of his individual afFairs. This limitation on the powers, which one partner derives from the relationship which exists between them, was removed by the execution of the foregoing.instrument of writing, by which McMurtry was empowered, as partner, to use the name of the firm, not only in cases within the scope of its ordinary business, but also in all other cases at his discretion.
For what length of time was this authority to continue? As the power created by the partnership ceases when the partnership is dissolved, the enlargement of that power would seem necessarily to cease and determine at the same time. The power conferred by the writing under consideration is merely to use the name of the firm, and when the firm no longer exists the power cannot be properly exercised. An authority by a firm carries with it an implied limitation of its existence, its duration being necessarily confined to the continuance of the partnership by which it was created. There is in this respect no difference between this power, and one granted by the firm to a third person. The authority in both cases is to use the name of the firm, and when the firm is dissolved the power is as effectually revoked as it is by the death of a person who has created an agency for the transaction of any kind of business.
The principle by which we are governed in the construction of this writing, has been frequently applied in analagous cases. Thus, where one firm of bankers took from another firm of bankers, namely A and B, a bond conditioned for the repayment of all sums of money, for which they, A and B, or either of them, should draw upon the obligees by means of bills, it was held that this bond did not extend to or embrace a bill drawn by B after the death of A, by which the partnership was dissolved. (Simpson vs. Cooke, 1 Bing. 452.)
The like doctrine has been applied to cases where a guarranty is given by a firm; in all cases of this sort, the uniform rule of construction is, that the guarranty does not apply after the firm is dissolved, or any change of the members of the partnership has been made. Of course the application of this doctrine assumes that notice of the change of the members, or of the dissolution of the firm, is necessary. (Story on Partnership, section 251; Collyer on Partnership, page 368.)
Wherefore, the judgment is reversed, and cause remanded for a new trial in conformity with this opinion.
Case-law data current through December 31, 2025. Source: CourtListener bulk data.