Litton v. Hill and Ceron
Litton v. Hill and Ceron
Litton v. Hill and Ceron
HELD:
1. NO. The stipulation in the articles of partnership that any of
the two managing partners may contract and sign in the
name of the partnership with the consent of the other, creates
an obligation between the two partners, which consists in
asking the other's consent before contracting for the
partnership. This obligation of course is not imposed
upon a third person who contracts with the
partnership; it is not necessary for the third person to
ascertain if the managing partner with whom he
contracts has previously obtained the consent of the
other. A third person may and has a right to presume
that the partner with whom he contracts has, in the
ordinary and natural course of business, the consent of
his copartner.
This finds support in the legal presumption that the
ordinary course of business has been followed, and that the
law has been obeyed. Therefore, unless the contrary is shown,
the presumption subsists. If we are to interpret the
articles of partnership in question by holding that it is
the obligation of the third person to inquire whether
the managing copartner of the one with whom he
contracts has given his consent to said contract, would
operate to hinder business transactions.
2. NO. If Ceron stated to the appellant that he had the consent
of Hill, and if it turns out later that he did not have such
consent, this would not annul the contract. Article 130 of the
Code of Commerce, provides that when, not only without the
consent, but even it is against the will of any of the managing
partners, a contract is entered into with a third person who
acts in good faith, and the transaction is of the kind of
business in which the partnership is engaged, as in the
present case, said contract shall not be annulled, without
prejudice to the liability of the guilty partner. This provision is
to protect a third person who contracts with one of the
managing partners of the partnership, thus avoiding fraud and
deceit to which he may easily fall a victim without this
protection which the Code of Commerce wisely provides.