text:
    Administrators of B. Cox, deceased, v. Samuel Hill and others.
    Where process is issued against several defendants, and is served upon part only, and returned not served as to others, the attorney employed by those served with process enters an appearance for all, and judgment against all, without the knowledge of the defendants not served: Held, that in a bill for contribution by those served, the others are not concluded by the judgment.
    'The attorney in such case is a competent witness in a suit for contribution between the co-defendants.
    This was a bill in chancery, adjourned here for final hearing ’from Pickaway county. The bill was originally filed in the court, of common pleas, and upon a hearing there dismissed. The complainants appealed from the decree of dismissal to the Supreme •Court.
    The bill charged that the intestate, in his lifetime, together with the defendants, signed a call for the Eev. Wm. Jones, a minister of the gospel, to minister for them, and stipulated to pay him a ■ certain annual compensation. That Mr. Jones accepted the call, and officiated for them ^several years. That finally his compensation being largely in arrear, he commenced a suit against those who gave the call, including the intestate, and the defendants and others, now removed, insolvent, and deceased, and recovered a judgment against them for four hundred and fifty-five dollars, and seventy cents debt, and fifty-two dollars and twenty-two cents costs; of which sum the intestate paid two hundred and sixteen dollars and thirty-four cents, and the object of the bill was to obtain a ratable contribution of the other defendants. Those who answered denied that they had signed the original call of Mr. Jones; denied that they were served with process in the suit at law, and denied that they authorized the attorney who entered an appearance, or any attorney to appear for them. One defendant admitted knowledge of the suit, and his liability, but alleged he had paid two hundred and forty dollars of the judgment, much more than his ratable proportion.
    The payment by the intestate was fully proved. The attorney who entered the appearance testified that he was employed only by the intestate and two others named, neither of them a defendant in chancery, who denied employing him. That some of those who employed him requested him to appear for the whole, but can not say that it was the intestate. He testified also that of the defendants in chancery none of them employed him to appear, except those of the three named. His veracity was impeached.
    The respondents alleged that the attorney was insolvent, and they could have no redress in compensation against him, as to which the proof was not explicit.
    Doan, for complainants:
    It is an established legal maxim that a judgment is conclusive upon all' the parties and privies to it, and while existing, can not be gainsayed by any of them. Swift’s Ev. 9; 1 Day, 170. Neither “can it be collaterally impeached, or called in question for any cause whatever. It can only bo questioned in duo course of law, by writ of error, petition for new trial, or application in chancery, where the direct object is to set aside the judgment in a suit between the original parties, or their representatives. Of course no action can *be maintained to recover back money paid upon a judgment while in force, nor for any wrongful act in obtaining it; for this would be to impeach it collaterally.” Such is the decisive and forcible language of that distinguished jurist, Judge Swift, in his treatise on evidence, pages 9 and 10. The same rule, says the above author, applies to a decree in chancery, though procured by false and forged testimony. Id., and Peck v. Woodbridge, S. C. E. Conn. 1808. The respondents, here, do not attempt to reverse the original judgment, nor petition for a new trial; nor do they apply in chancery against the plaintiff in that judgment to set aside the same. All these remedies wore open to them after the rendition of the judgment, and after, by their own admission, they had notice of the same. They have neglected to pursue any of these obvious remedies, and after one of their co-partners in the judgment has been compelled to pay the amount, attempt, in a suit with him, collaterally to impeach such judgment. Even if the court could, by the rules of law, thus collaterally suffer an inquiry into the consideration or regularity of such judgment, would they do it, in a case where there had been such gross laches on the part of the respondents? The defense set up here would have been pertinent to the issue between the plaintiff in that judgment and the respondents, but which theso .complainants can not be presumed to be conusant of, or qualified to meet. Hence the law forbids it from being collaterally impeached.
    In a late decision of Chancellor Kent the same doctrine is recognized, with some little modification, as that laid down by Judge Swift. He says: “A judgment of a court of competent jurisdiction can not be questioned or impeached collaterally in another court, in an action between the same parties and upon a point once put directly in issue and decided. This court can not examine into the intrinsic merits of a judgment at law without the aid of new and distinct matter, showing fraud in procuring it, or that it is used or retained against conscience.” 7 Johns. Ch. 182.
    That a judgment can not be impeached except for fraud, nor is its consideration inquired into, nor any- irregularity in the mode of its procurement, is more fully established in 3 Johns. Ch. 275, and 6 Johns. Ch. 235. In the last case the chancellor justly observes: “It is much more important to *the community that it (the rule above) should be preserved in all its force, than that even the frauds of the defendant should be detected in a way and by means of which the rules of law do not permit.” And again, he says: “I have always been struck with the wisdom of the remark of Lord Redesdalc, that 1 it is more important that an end should be put to litigation than that justice should be done in every case.’ ” 6 Johns. Ch. 238. See also 1 Johns. Cas. 436, and 1 Salk. 86.
    In the judgment now attempted to be impeached, as shown by the record, the very matter put in issue by the pleadings and decided was, whether the defendants had assumed in the article, as set forth in the declaration; that is, whether they had signed that article, and that issue is found against them. The respondents now propose, in another court, too, and that collaterally, to again inquire as to the consideration of that judgment, upon which issue has been once joined and decided against them by law. The eases above quoted from Johnson’s Eeports clearly show that this can not be done “ unless some new and distinct matter showing fraud in procuring it,” is charged and proved. There is strong doubt whether this can be done even then, except the plaintiff in that original judgment, Jones, was made a party to the suit.
    If, however, the court should think they can interfere with that judgment, although the plaintiff, Jones, is not a party here, and although it was rendered in a different court, let us see whether they have sufficient evidence of fraud in its procurement to warrant such interference. This fraud in procuring the judgment is not even alleged in the answers of Osborne, Bussell, and Latham. It is stated by Osborne and Latham that it was “ wrongfully,” and Osborne says, “unjustly" obtained; which, from the context, has a clear reference only to the appearance for them by attorney. If they have not charged this fraud in their answers they can not be permitted to adduce any proof of it. Wood alone expressly charges the intestate of these complainants with fraudulently procuring the said judgment. But he has taken no evidence whatever to establish this charge. If the evidence on this point, taken by Osborne and Latham, can not be used under their answers, Wood can not use it. As this is new and substantive matter set up by respondents, and denied by replication of complainants, full proof of the fraud must be adduced; it can not be presumed.
    *What' is this proof, then, if admissible, which respondents, Osborne and Latham, produce? It is the deposition alone of the attorney, who appeared and pleaded for these parties in the suit at law. Though ■ this deposition, if credited, falls far short of proving the fraudulent procurement of that judgment, yet it comes from a witness incompetent by interest to testify, and who stands impeached by at least four other witnesses. If a recovery is had in this action against those defendants in that judgment who were not examined, he is liable to them in damages to the amount of such recovery. On this ground, therefore, if on no other, his deposition must be excluded. Without it there is not a scintilla of proof to establish the only material fact of fraud.
    But even if he were not incompetent from interest, would the court permit an attorney, after pleading for a defendant, and suffering judgment to go against him, to come in and attempt to impeach that judgment by pretending he acted without authority, and was party to a fraud ? Would it not be equally competent and consistent with principle to admit the sheriff, after returning service upon his writ, and judgment had in consequence, to come in and disturb that judgment by swearing he never served such writ ? Under such a license what security could there be, or what certainty in a judgment?
    This pai-t of the case being disposed of, it only remains to show that an appearance by attorney to a suit is equally binding and good for all purposes, as a return of service upon a writ by the sheriff. This has been settled from time immemorial, and it is perfectly immaterial, after judgment, whether such attorney be solvent or insolvent, authorized or unauthorized. 1 Salk. 86, 88; 6 Johns. 34; Odlaid v. Dwight, 4 Cranch, 421. It is binding, too, upon the defendants, even if the appearance is procured by the plaintiff himself. Cro. Jas. 685, 694; 1 Strange, 693.
    Folsome, for respondents:
    Complainants contend that the judgment gives them a perfect equity, and that a court of chancery will, under no circumstances, look beyond it.
    Osborne and Latham say they had no personal knowledge of the suit at law; that Oox procured their appearance to *be entered, and plea filed for them without their knowledge or authority, and that they were never liable to Jones, the plaintiff in that suit, and that judgment was wrongfully procured by Oox and other defendants in that suit. They insist that none of their rights in this suit are precluded by that judgment; they were not parties to it; if they were, they became so wrongfully. An act done in wrong is, in chancery, not done at all.
    It is not necessary to impeach that judgment; it is sufficient for respondents that complainants derive no equity under it; but a judgment may be impeached if procured by fraud or collusion; and the authorities cited from Swift’s Evidence and Day’s Reports refer to a different class of cases, and have nothing to do with this. A judgment procured by fraud or collusion is not or-ly reduced to prima fade evidence, capable of being rebutted by adverse testimony, but its effect is wholly destroyed. Those principles are fully established by references, to wit: 2 Starkie’s Ev. 241-243, 254; Hull v. Blake, 13 Mass. 157, 507; Winchell v. Stiles, 15 Id. 230; Rorden v. Fitch, 15 Johns. 121; 19 Id. 164. In all these cases the principle that fraud will vitiate all judicial acts is distinctly recognized. In the Duchess of Kingston’s caso, it was resolved that admitting the sentence of the spiritual court to be conclusive, yet the effect might be removed by showing fraud or collusion. 2 State Trials, 230, 260; 1 Vesey, 159.
    So executors plead judgments recovered; plaintiff may reply they were covinous. Lloyd v. Maddox, Moore, 917. In the case of Hull v. Blake, above cited, the court say, if a party collusively submit to a judgment, which, by law, could not be recovered against him, he can derive no advantage under it if that collusion is put in issue; and on that issue failure to appeal might, under some circumstances, be sufficient evidence of such collusion. Complainants chose that right_should not bo done in this case, rather than their frauds should be attacked with too little ceremony, and seem to forget that they are in a court of chancery, where fraud is without ceremony held in detestation. The proof is clear that the judgment was obtained by fraud, and that, too, by the act of Cox or his attorney. The same attorney acted for Bell and Cox; and if Bell instructed their ^attorney to appear for respondents without authority, Cox is chargeable therewith, and the judgment is thereby vitiated. Complainants do not deny Cox’s liability to Jones, if, by the fraud of any person, judgment has been rendered against Osborne and Latham, and they deprived of legal defense to the action. Cox’s situation is not made worse for judgments being rendered against them, and, of course, it can not inure equitably to his advantage. Wrongs practiced by a stranger, which have done complainants no injury, and surely have done respondents no,good, can give them no equitable rights. He that asks equity must do equity. Let them show that respondents were liable to Jones in the suit at law. If they were not liable there, they can not be liable here. If the judgment is con- ■ elusive as to all persons, whether parties or privies, whose rights have been changed by it, or have derived titles through it, yet in a suit between co-defendants to that judgment, under the rule laid down in the Duchess of Kingston’s case, above cited, its effect may be so far avoided, that complainants can take no benefit from it. They insist that respondents are in gross laches, for neglecting to attack the judgment by writ of error, new trial, bill in chancery, etc. This is sheer grumbling. I will not inquire whether they could have disturbed that judgment, as against Jones. It is enough to say, in so doing, complainants would receive no benefit, as they have not yet suffered, they have no ground of complaint. Respondents only seek to defend themselves, and have lost no time in doing it.
    It is insisted that complainants are. not privy to anything previous to the judgment; and that they can not now, for want of that privity, be driven back of the judgment. If Cox and respondents were joint obligors to Jones, he must be -presumed to be at all times privy to the liability. I shall next inquire, what is the testimony ■that sustains the charge of fraud and collusion ? They seem to admit. that the proof is clear, but the witness is impeached. This witness was complainant’s (Cox’s) attorney, in the suit at law. An inquiry will arise, whether he can impeach him. The attorney is the agent of the client. See Phelps v. Bridge, 11 Mass. 242. The acts of the agent are the acts of the principal. He has trusted him, and must answer for him. Making him his agent, he has from ne-. cessity made him a ^witness. 4 Starkie’s Ev. 768. He has made him a witness; he can not attack his credit. The principal and agent are intimately identified. A man can not stultify himself; can he stultify his agent? His wife may be his agent, and he can not take advantage of her coverture. A man can not falsify himself; can he falsify his agent? Surely not, so far as relates to his agency. The agent is in all eases, a witness to prove his agency, and that he acted according to the instructions of his principal. 4 Starkie’s Ev. 1730. But it is said he is interested. But his interest was against the respondents, who called him. Ho was bound to answer, though his testimony subject him to a civil liability or charge. 2 Starkie, 135. But the witness is strongly corroborated in almost every material part of his testimony. If is proved that he was acting as attorney for Cox and others in that suit. It is in proof that the amount for which said judgment was rendered, was agreed on by Cox, Bell, and others, and that judgment was rendered thereon, by their direction. It appears of record, that the summons was returned not served, as to Osborne and Latham ; and that Cox’s attorney appeared and pleaded for them. It is in proof that Osborne’s name to the paper, which was the foundation of that suit, was a forgery (all this appears, independent of the testimony of the attorney); therefore, by law, no judgment could have been rendered against any of the defendants in that suit; and according to the rule laid down in the case of Hall v. Blake, above cited, the evidence of collusion is sufficiently strong. Complainants argue that the appearance of an attorney is equal to the sheriff’s return ; admitting it to be so, and after judgment it should appear that the attorney had, through mistake, entered the appearance for a defendant without authority, or that the sheriff had served his process through mistake upon a wrong person, though of the same name, aud judgment should be rendered against the defendant without his knowledge, it is not contended that the judgment would, in its operation, as to the plaintiff or third person, be affected; but in a suit in chancery, between co-defendants to that judgment, for contribution for moneys paid thereon, and against the defendant above who knew nothing of the judgment, nor of the existenoe of the suit, until after the judgment was rendered, would not these facts remove the effect of the judgment *as to that defendant, and place the parties’ equity on the original liability ? Can an equity originate in fraud, accident, or mistake ?
    Douglas, on same side:
    Without stopping to inquire whether this bill can be sustained upon any principle, it is sufficient to say, as to the respondent Wood, that nothing is so plain as the fact that it can not be sustained against him.

      First. He never signed or authorized the signing of the original call.

      Second. He was not summoned in the suit at law.

      Third. .No appearance was entered for him in that suit, either with or without his consent.
    Wood’s answer stands uncontradicted, that he never placed, or authorized the placing of his name to the instrument upon which the judgment at law was obtained; and the instrument is not in proof, to show his handwriting or authority: nor is it in any manner proved. Was there an appearance entered for him in the suit at law ? I answer, no ! The whole strength of the words is : “Plea, general issue notice of set-off of any payments which may have been made by defendants previous to this date.” These Pennsylvania words, even under their system, in their fullest extent, could be received as an appearance only for such defendants as the attorney was authorized to appear for; and the words themselves import that nothing further was intended. It is not the genius and spirit of our laws that the rights of absent parties should bo compromitted in such way. They are of too serious a nature to be made a catching business. Therefore, in a late case, where the attorney had entered an appearance for his client, by his own handwriting, to the suit, the court permitted him to explain by saying it was done through mistake.
    But the deposition of the attorney himself puts the matter beyond all question. Ho proves that ho never intended, nor in fact never did enter, an appearance for the respondent Wood. The bill, as to him, ought at any rate to be dismissed.
    *Doan, in reply:
    The argument of respondents' counsel, seems based upon a novel idea, viz : that complainants must show the liability to Jones, the original plaintiff at law. One would suppose the record of the judgment produced, was sufficient evidence of this liability. To require us to trace their liability beyond that would be to reverse all the common rules of evidence. It would imply the presumption that complainants could know and be prepared to investigate the dealings and transactions between the plaintiff and the respondents, to which they are presumed to be perfect strangers. On this principle there could be no end put to litigation; a judgment could never settle the rights of parties, or be evidence of anything. Such is not the law. A record showing a judgment against a certain number of defendants is conclusive evidence of the joint liability of such defendants. If one defendant pay that judgment, the others are clearly liable to contribute their proportion. To avoid this, the onus probandi surely rests upon those seeking to get rid of it. The record is sufficient evidence for complainants of respondents’ liability. It is more than mere prima facie evidence; for it can not bo gainsayed certainly, unless fraud be shown in procuring the judgment.

      It is contended that this fraud is proved, independent of the attorney impeached. How? It surely can not be supposed that the allegation in the answers, that the attorney’s appearance for them was unauthorized and wrongful, is any evidence of that material fact. This allegation is denied by the replication, and must of course be proved by the respondents. Not a witness, save the attorney, speaks a word to this fact, orto any other fact indicating fraud. Even if that appearance was proved unauthorized and wrongful on the part of the attorney, that would still be insufficient to attach fraud to the intestate Cox, or his co-defendants. The attorney might enter such an appearance upon his own mere motion, or by accident; and would this warrant the court to look beyond the judgment. I think this is not the kind of fraud required to justify it.
    It seems to be questioned by respondents whether, from the relation existing between the client and his attorney, the ^client can impeach him. If he can not be impeached, he certainly can not be examined as against his client. Indeed, there is strong doubt whether he can be examined, or suffered to disclose anything committed to him, as an attorney, by his client. In the original suit between Jones and these parties, he clearly could not be allowed to disclose anything of tlie kind-. Can he do so in a suit between his client and other parties, and that, too, relating to the same subject matter? I am inclined to think not. This is an additional reason, to those already urged, why his testimony should be wholly excluded. The authorities cited by respondents to the point of the right to impeach, are where the principal calls the agent, or where no other relation exists than mere principal and agent. Between the client and his attorney a different, and necessarily more intimate relation exists. The client must repose special confidence in his attorney, and make many confidential communications to him, which it would be frequently ruinous to him to have disclosed. The ends of justice require that this confidence should be held sacred, and on no account bo betrayed. Hence the reason of the law, why the attorney can not be called on to disclose anything arising between him and his client, as such. But if he can be examined by the adverse party, he can certainly be impeached by his client, whose trust he is betraying.
    The record exhibited shows not only an appearance by attorney of respondents, but it shows, too, that the plaintiff considered them in court, and filed his declaration against them accordingly. The court can not presume an attorney would appear for parties unless he was authorized, and would require other proof of that material fact than the mere allegation in the answers. If, however, the attorney’s testimony is excluded or discredited, there is not a particle of evidence showing his want of authority. As those respondents base their whole charge of fraud in procuring that judgment upon such alleged unauthorized appearance for them by the attorney, and as they fail to prove that appearance unauthorized, they have nothing on which to rest such charge, or to claim exemption from contributing to said judgment.
    It is incumbent on respondents to show not only that the judgment was obtained by fraud and collusion, but that the *intestate Cox was a party to that fraud, before they can avoid contributing to him. Of this fact there is nothing deserving the name of proof, though a strenuous effort is made to give that color to the testimony, and it is strongly insisted on in respondents’ argument. The character of intestate, however, is proved to have been above a suspicion of this kind. Though he may have employed A. as an attorney, and though he may have been present when the amount'was agreed on for which judgment should be rendered, yet all this is very far from laying the least foundation for a suspicion of fraud as attaching to him; and it must be borne constantly in mind that fraud can not be presumed, but must be proved. There is not a particle of evidence showing that Cox requested an appearance to be entered for these respondents, or that he colluded in any manner with the attorney, or any one else, to procure said judgment against them. Though this is assumed in respondents’ argument, there is no foundation for it whatever in the evidence, or in fact. A great part of the argument of respondents having a foundation equally imaginary, it is not deemed necessary further to reply to it.
   By the Court :

The complainant comes before us seeking equitable relief against the defendants upon the ground that they are equally liable with himself to pay the money which he has actually been compelled to pay. This liability the defendants controvert. But the complainant contends they are precluded from disputing his claim by the joint judgment against them all at law. The first question to be determined is, whether it is competent for the defendants to show that they were not actual parties to, and did not make defense against, the suit at law.

It is not pretended, on either side, but that the judgment, as between the parties, plaintiff and defendants, is conclusive. Tho matter debated is, whether, as between the defendants themselves, it is equally conclusive. And we are of opinion that it is not.

As between the defendants to a suit, nothing is adjudicated by a joint judgment against them. Their joint liability to *the plaintiff is established as between him and them, and nothing more. Who of tho defendants ought to pay the debt, or in what proportions they should contribute to pay it, remains to be settled between themselves, and must remain open for controversy.

If each defendant is actually before the court, and makes defense, it may be that, as between each other, the original liability is established. But this can not be admitted, in a case where the complainant in equity was before the court, an actual defendant, and the defendants in equity were put before the court by the act of the complainant himself, and the proceedings had without their knowledge. Were this permitted, very little effort would be necessary to fix individuals with unheard of liabilities. It can not be controverted, but that, in case of a judgment against joint obligors upon a bond, if one paid the whole and brought his bill for contribution, it would be competent for the other to prove that he was originally only a security, and therefore not liable. So in case of a judgment against one of two obligors, and payment coérced, in a suit against the other for contribution, the execution of the bond must be proved.

The defense set up here is, that the defendants never signed the original call, and were in fact parties to the judgment, except by' the procurement of the complainant. This defense, it is said, impeaches the judgment collaterally, which is not allowable. On the contrary, we are of opinion that it does not affect the judgment at all, as between the parties to it. It is. but showing a reason why it is not conclusive between others, who were co-defendants in it, and whose relative rights were not settled by it.

The defendants, who resist their present liability, were brought before the court by the attorney employed by the complainant, without their knowledge, or consent, and judgment passed against them before they knew a suit was pending. This fact is established by the testimony of the attorney himself. In bringing these parties before the court, .he acted as the agent of the complainant; and, if not by his direct procurement, it was in consequence of the character conferred upon him, by appearing as attorney for the complainant, who, if conusant of the fact, is equally culpable with the attorney. Be that as it may, the connection ^between those who improperly caused the appearance to be entered, is too intimate to permit the acts of any one of them to conclude those who, by their agency, were made parties. In this light we regard the judgment as collusive, and consequently it proves nothing against the defendants in this case.

It is objected that the fact of the collusion is proved only by the testimony of the attorney, who was inadmissible upon account of interest, and whose veracity is impeached. The interest of the witness is only that of every agent, or every person who assumes to act as an agent. Between parties affected by his acts, he may be called upon to prove his agency, or to prove the fact that he acted without authority. The decision founded upon his testimony can not be given in evidence to affect him, if an action be brought against him with respect to his conduct. And the fact, that to speak the truth may disclose matter whereon to ground a civil action against him, furnishes no excuse from testifying in his own mouth, much less can either party make it an objection to his testifying. We do n.ot consider his testimony discredited by the impeaching evidence. He is corroborated by many circumstances, as well as by the oaths of the defendants, in their answers, which is in no respect answered or impeached.

Independent of the judgment against them, there is no proof that the defendants, now before us, ever subscribed the call to Mr. Jones, on which the judgment is founded. They all deny it positively, or qualifiedly. The complainant does not show that he is entitled to the relief sought, which, as the case stands, it is incumbent on him to do. The bill is dismissed as to those defendants who have answered, and is continued as to those in default.


source: Caselaw Access Project

author: By the Court:

license: Public Domain

text:
    *Bezl. Wells and others v. Hanse Wilson and others.
    Manufacturing association is a joint stock company, subject to the law of partnership, and its officers may, without special authority, bind the company for a loan of money. As between the members themselves, stock may be assigned, so as to discharge the assignor, though the mode prescribed be not pursued, if the company receive and treat the assignee as a partner, and cease to regard the assignox as such.
    This cause came before the court by an appeal on behalf of the defendants, from a decree against them in the court of common pleas, and was adjourned here for decision from Jefferson county. It was a suit in chancery between the members of “ The Steuben-ville Manufacturing Company,” the object of which was to settle and adjust the rights and liabilities of the members, and close its concerns. The bill, answers, exhibits, and depositions are very voluminous, but the material facts upon which the decision was grounded are abstracted from them, and occupy much less space. They are as follows :
    In the month of August, 1812, the company was first organized and commenced operations. In conformity with the provisions of the original articles of the association, the stock was extended on April 9, 1814, and then consisted of thirty-eight shares of five hundred dollars each, which was then held by the following named persons, who are here arranged as they stand, complainants and defendants:
    Complainants.
    B. Wells.................. 1 share.
    W. Wallace.............. 4 “
    D. Larri more........... 2 “
    J. G-. Henning......... 1 “
    J. C. Wright............ 1 “
    J. Abrahams............ 1 “
    Thos. Patton............ 1 “

    11
    Dependants.
    H. Wilson................ 1 share.
    J. G-albraith............. 2 “
    D. Hoge.................. 2 “
    W. Hamilton............ 2 “
    S. Patterson............. 6 “
    T. Henderson............ 2 “
    J. Larrimore............ 2 “
    S. Hunter................. 2 “
    J. Wilson................. 2 “
    R. Carrol.................. 1 “
    A. Moderwell............ 3 “
    T. McK. Thompson.... 2 “
    27

      After this new arrangement, the copartners agreed upon additional articles for their government, under which a board, of directors, a president, a secretary, and a treasurer, were chosen to manage the affairs of the company, by whom aud their successors duly chosen the business was subsequently *conducted. Amongst the provisions of the articles the following, treated as the third of the new articles, is the only one necessary to bo inserted :
    “ The stock shall be transferable on the books of the company, to be kept by the secretary, in such manner as to entitle the assignee to all the rights and privileges, and to subject him to the same liabilities and penalties as the assignor: provided, that no share of stock shall be transferred or assigned until the same shall have been offered to the company at one of their meetings, and an offer thereof made to them, that they may purchase the same for the use of-the company, if they please; and provided, also, that no transfer shall be made until all calls previously made by said company, on each share proposed to be transferred, shall have been paid into the treasury.”
    The stock was all called in and paid, and the amount invested in ground, buildings, and machinery for a steam mill and cotton factory. In June, 1815, the directors commenced borrowing money for the use of the company, and before June 6, 1816, had incurred a debt exceeding fourteen thousand dollars, which was finally increased to about nineteen thousand, when the compeny found it impracticable to do a further business.
    With a view to a dissolution of the company, some part of the members, in June, 1819, filed a petition against the others, in the court of common pleas for Jefferson county, praying for partition of the real estate. An order for partition was made, and a report •that the property could not be divided was also made, upon which the court directed a sale. At this sale B. Wells became the purchaser, as it was understood, in trust for the parties interested.
    On June 6,1814, Galbraith transferred his two shares to J. Larri more, and early in April, 1815, Hamilton transferred his two shares to Moderwell. Neither of these transfers were made in the manner prescribed by the articles, but the company permitted Moderwell to represent them as owner. No debts were incurred at the time these sales were made.
    On June 6,1816, Hunter sold his shares to Moderwell. On the 7th of the same month, Hanse and J. Wilson sold their shares to Moderwell also. These transfers *were not formally entered on the books, but the company admitted Moderwell to represent them. At this period the company was indebted to the banks above fourteen thousand dollars, borrowed for its use by a part of the complainants upon their own personal credit.
    In August, 1816, Hoge sold his shares to Gray, but did not transfer them on the books. Gray was never recognized as the owner by any act of the company.
    Carrol, December 20,1816, sold to Kells, but without transferring on the books. Kells was, however, upon one or two occasions, received to act with them as members.
    When the transfers were made to Larrimore, Moderwell, Gray, and Kells, they were all considered responsible and solvent men. And the master commissioner, who took the account in the cause, reported the real estate owned by the company then worth a greater sum than the debts at that time due from them.
    Subsequent transfers were made by Kells and Gray, to persons notoriously insolvent, who again transferred to others, none of whom ever acted as members of the company. Patterson was dead, Henderson and Moderwell were both insolvent, and the complainants were personally liable for a debt of about nineteen thousand dollars, upon account of the company. They filed this bill in the court of common pleas, praying that the real property purchased by Wells might be decreed a trust, and sold for the payment of the debts; and that contribution might be decreed amongst the other copartners, to pay the balance of debts due upon account of the' company.
    The defendants, Galbraith, Hamilton, H. and J. Wilson, Hunter, Hoge, and Carrol, each answered, and by their answers denied their liability. They insisted, that by the transfer of their stock, and the acceptance of their assignees, as owners, by the company, their responsibility ceased. They denied the authority of the directors to borrow money, and render the individuals of the company liable for the repayment; and they insisted that the sale of the real estate upon partition was made subject to the payment of all the debts; and that the purchaser, one of the complainants, consequently became charged with them. In point of fact, the evidence did not sustain this latter position. The court of common *pleas, by an interlocutory decree, directed the sale of the real estate for the benefit of the company, which was effected at ten thousand dollars, and confirmed. Upon the final hearing, that court dismissed the bill as to Hamilton, Galbraith, and Kells, and the other defendants, except Henderson, Carrol, H. Wilson, J. Wilson, Hunter, Hoge Thompson, and Moderwell; and decreed these latter defendants to contribute for the payment of the debts, charging upon all the solvent partners the proportion otherwise chargeable upon Henderson and Moderwell. From so much of this decree as charged them with contribution, the defendants appealed. The complainants did not appeal from that part of the decree which dismissed their bill as to certain defendants. All parties acquiesced in the sale of the real property; so that in this court the only questions agitated were, the liability of the defendants as partners, and the authority of the directors to bind the company for loans.
    Goodenow, for complainants:
    This is a partnership concern, and so treated by all the members of the company who have answered. It must, consequently, be decided upon according to the law of partnership. And on the subject of partnership associations, we hold it a sound principle, that without a special provision for that purpose, no individual of a company ■could withdraw, or, in other words, dissolve the partnership, without the consent of the whole. It is a question in which every member has an equal voice; and of which numbers can not deprive him. Take, for instance, a partnership of A., B., and C. Could C. abandon, “give up the ship,” and discharge himself from responsibility, ,or even liability, with the consent of B., but without the consent of A.? He could not; the law would still hold him liable, until the .last cent of loss was apportioned’and paid.
    The law will permit partners to form any rule of dissolution between -themselves, which they may deem expedient; and when formed by mutual consent, will compel each partner to abide by it to its fullest extent. So we should willingly accede, that in the first era of this company, while it transacted business in democratic style, the regular admission *of an assignee to take the pla'ee of an assignor, and an entry of such admission appearing upon the records of the company, may be considered as an exoneration of the assignor from any liability to the members of the company, his former partners; for such act would be a mutual dissolution of the former partnership ; and the admission of the assignee operated to form a new partnership. Hence we say, that the admission of R. Carrol, J. Wilson, and T. Patton absolved their assignors from all liability on the shares which they transferred to these new members. Yet, we say further, lest we should be misapprehended, that although a majority, under the old articles of said company, might so manage as to effect a dissolution, they could not, as a majority, absolve the obligation of any of the members to strangers or to each other.
    The section in the new articles which authorized an individual to transfer his stock and release himself from future obligations, is in these words :
    “Art. III. The stock shall be transferable on the books of the company, to be kept by the secretary in such manner as to entitle the assignee to all the rights and privileges, and to subject him or her to the same liabilities and penalties as the assignor; provided, that no share of stock shall be transferred or assigned until the same shall have been offered to the company at one of their meetings, and an offer thereof made to them that they may purchase the same for the use of the company, if they please. And provided, also, that no transfer shall be made, until all calls previously made by said company, on each share proposed to be transferred, shall have been paid into the treasury.”
    Before a member could claim the benefit of this provision, and say that his assignee was subject to all his liabilities as an original stockholder, he must have complied with the provision in all its requisitions. It was, as between him and the company, an ex parte proceeding, and he was bound to know that he pursued the provision in its strict sense. But we are yet to learn that even if he pursued this provision strictly and thoroughly as an assignor, he would thereby exonerate himself from any obligation he might previously have been under to the company or its members. The proviso itself evinces ours to be the correct construction, provided *that all previous calls are paid, etc. This proviso was made for the facility of the company in calling in its stock, etc. It is clear that the transfer subjects the assignee prospectively to the duties and obligations which might attach to the original holder had the stock remained with him.
    The language of this section, touching the transfer, is like that usually employed in the like instance in incorporated companies, excepting, that in this, the stock is first to be offered to the cornpany. But there is a wide difference in the characters of the two kinds of stock; and this difference has probably been a great agent in leading the defendants to ei’rouoous conclusion upon the nature of their stock. The stock of a corporate body is commonly a distinct, separate property, drawing to it no individual or personal responsibility beyond the amount of money adventured. But in the case of an unincorporated company, like the Steubenville Manufacturing Company, the stock attaches itself to a man’s estate, and will draw his last cent to the hammer of the auctioneer. In the former case, neither his purse nor his character is concerned beyond the stock to which he has put his signature; in the latter, both his purse and his name are embarked, and if the ship sinks he must sink with it, for his responsibility ceases only when all the world shall be satisfied in every claim it may hold against the company; and no person can discharge his purse or his name from the fortunes of the company, except by a formal and mutual dissolution. And surely it requires no wisdom above that of an ordinary understanding to know that a dissolution relieves' none of the members from the existing obligations to strangers; nor can it relieve one member from his accountability to another member, only by an express agreement to that effect.
    This doctrine appears a plain and palpable one, and has been recognized by all the respondents in their answers, where they speak of the sale of their stock; for they say they made an express condition in their contracts that their assignees were to take the stock subject to the debts of the company. This condition would have been unnecessary, if the company had in their articles provided, and, by the word liability, expressed such to be their understanding that the assignees became responsible for all prior debts. Because, such being a by-law of the company, the assignee would be Abound, in becoming a member, to inquire and make himself acquainted with the by-laws of the association, and must be held to have voluntarily acquiesced in them.
    Again: If the contrary doctrine bo correct, if the right to transfer be absolute, except as to the two conditions of paying calls, and offering the stock to the company, the stockholder could exercise it in defiance of the will of the company. What would be the result of such doctrine ? It would be this: When A., B. and C. found the partnership losing money they procure some worthless beings to accept of transfers, and thereby release themselves; and every other one in the alphabet does the same, excepting a few whose names are on the company scrip; and these, for being the members on whom the burden of the labor and credit of the company rested, must “ breast the shock ” — “ grin and bear it.”
    It is certain, however, allowing the fullest credit to everything offered on the part of the defendants, that there never was a single transfer made on “the books of the company,” in any “manner” whatever; much less in “such a manner as to entitle the assignee to all the rights and privileges, and subject him to the same liabilities and penalties as the assignor.” No such transfer having been made, it may well be asked on what ground do the defendants claim to be exonerated? They claim that they have done what they could to comply with this provision of the articles, and were prevented by the want of a secretary; that, therefore, they are entitled to the full benefit of it, the same as if transfers had been made in form upon the books of the company. In this argument the facts do not sustain them; and as they remained interested or liable, it was their own fault that they did not take effectual measures to complete their transfers and have the question, of their liability settled. They can not escape a just responsibility on this ground.
    Hallook,.for defendants:
    The complainants claim a decree against Galbraith, Hamilton, Hunter, the two Wilsons, Carrol, and Hoge, respectively, for that proportion of the whole debts of the company which the stock owned by each one bears to the whole stock. They proceed upon the principle that they are yet members *of the company; on the other hand, we claim that they are not now members of the company, and that they ceased to be members when they sold out and transferred.
    As this is an important point in the cause, we shall examine it somewhat in detail. It will be necessary to examine the right of members to transfer, and the manner in which it could be done, both before the additional articles were adopted and afterward.
    I take it to be clear law that any member of a copartnership, unless there is a provision in the articles of copartnership to the contrary, may sell out and transfer his interest in the company at any time, with the consent of the other partners. This is admitted. They may also transfer without consent of partners. 1 Montague on Part. 113; 15 Johns. 57; and this may be to one who is already a member, or to one who is not. 1 Swift Dig. 348, 349; 17 Johns. 525.
    No particular' mode of transfer is necessary. It may be in writing, or it may be by parol. The proof of the transfer will be the same as the proof of any other fact. The doctrine assumed that a private company can only speak through their books in the same manner that a corporation does, is entirely new to me; and it is supported neither by authority nor reason. Indeed," such a doctrine might operate rather hardly upon the complainants in some respects.
    I take it that the mode of proving that the other partners agreed to a transfer will be the same whether it be the transferrer or transferee, or a third person who is wishing to make out that fact. If an assignee, for the purpose of entitling himself to a share of the profits made by a company, should prove that the transferrer assigned his stock or interest to him, either by parol or in writing; that the other members of the company treated him for several years as partner, and joint-owner of the company property — admitted him to act with them as partner — made no objections to the assignment, and ceased to treat the other as a partner,'it would seem to me that no one would say that this was all to go for nothing, because at a meeting of the company a formal resolution had not been passed", and entered on the books of the company, that the assignee was approved of and admitted as a partner. Such a doctrine would be palpably absurd, especially in a court of equity, which professes to overleap forms and ^ceremonies, and proceed at once to the justice of a cause. Or suppose a creditor of the assignee should wish to get at his interest, and should prove his interest in the way above mentioned, or in any other way, as by showing confession of the other partners that the assignee was their partner, would it not be sufficient? These principles apply to ordinary or technical partnerships established under the law merchant. The Steubenville Manufacturing Company, however, is nota partnership, in the legal signification of the term, although it has many of the properties. It is an association of individuals, holding their property in common, assuming the form of a corporation, but not having the powers. The interest of the members is not joint; neither has each one the power of binding the others, by contract or otherwise; and each one does not commit his entire rights to the discretion of each of his copartners; although their liability to third persons, and between themselves, is the same as in a commercial partnership.
    The original articles, or agreement, made at the organization of the company, are binding upon all, as a contract, and will be enforced by courts; and whatever is done in pursuance of the original articles will be binding upon all. But the original constitution, or mutual contract, can not be altered or waived without the consent of all; and whatever is done not in pursuance of the original articles, is not binding upon those who do not assent.
    The case of the North River Steamboat Company, 4 Johns. Ch. 5, 73, is exactly in point; and also Davis v. Hawkins, 3 Maule & Selw. 488. If I am correct as to the legal character of this association, this consequence follows, that each member has an entire dominion over his own share or proportion of the property, and can alien at his own pleasure/provided there is nothing in the con stitution of the society, which he has agreed to, to the contrary. And this he can do without consulting the other members. So one tenant in common of a ship, or a house, may dispose of his interest to another at his own option, and the purchaser becomes a tenant in common with the others, whether they will or not. But one tenant in common may not dispose of the whole property, or pledge the credit of the others. We claim, then, that the members of the Steubenville Manufacturing ^Company, before the adoption of the additional articles, had a right to sell out and transfer to whom they pleased.
    Galbraith ceased to be a member of the company June 6,1814. The fact of the transfer is not denied. The transfer itself is in evidence, and the entry in the book of the treasurer proves it. There is also evidence that the other members assented. They have never treated Galbraith as a member of the company since. He has never had anything to do with the company.
    The company received the balance due on the stock from Larrimore, the assignee, and gave him credit for it. At one meeting of the company, four votes are allowed to the heirs of Lai-rimoré, which includes these shares. This shows the understanding of the company, that Larrimore owned these shares of stock. Not a single act of the company, or any member of it, appears, which goes to show that it was not the understanding of all parties, that Larrimore was the assignee of Galbraith. Having assented to it by their acts for five years, it would be singular that they should be permitted to deny their assent, because it was not formally entered on their book.
    We hold, then, that G-albraith ceased to be a member on June 6,1814. At that time no debts were owing by the company ; those for which- the defendants claim contribution have been contracted since; he therefore can not be made answerable for them. No property of the company ever came to his hand. The bill as to him must be therefore dismissed.
    The mutual agreement between the members of the company, as specified in the third additional article, is, that each member shall first offer his stock to the company, and pay up all calls before he sells. The assignee shall stand in the place of the assignor in all respects, and all transfers shall be made on the books of the company. The parties to a contract may at any time, if they please, waive the whole or any one of the stipulations contained in it; and having so done, they can not afterward insist upon a compliance.
    I shall contend that,, in the case of every one of the defendants for whom I appear, there has been a waiver of the stipulations contained in this article, where they have not been complied with. 8 Com. Dig. 842, Amer. ed.
    *Take the case of William Hamilton, which is the first transfer after the adoption of this article. He transferred to James Larrimore, April 21, 1815. He had not paid up the previous calls; he had not offered his stock to the company; the transfer was not entered on the book of the company at length. Hamilton never afterward attended any company meetings, or interfered in its affairs, and was never in any respect treated by the company as a member until this claim is set up by this suit. Moderwell, through Larrimore, is received as the assignee of this stock by the comjmny; he is charged with the balance due upon it; it is received from him, and he credited with the payment. Moderwell ever afterward represents this stock, and votes it.
    The next transfer in point of time is Hunter’s, on Juno 6, 1816. The two Wilsons transferred on the 7th of the same month. These transfers are so near in point of time that they may be considered as made at the same time. They had all paid up the whole amount of their stock. The two Wilsons had formally offered their stock to the company, who had refused to pturchase. Hunter did not formally offer his stock to the company, and obtain a formal vote, and have it entered in the company book. But he was one of those who offered at the time no vote was taken upon the offers, it being a matter understood that the company would not buy. The only objections to these transfers is, that they were not made on the book of the company kept by the secretary, but on a slip of paper, and given to the assignee. By the third article the company had authorized sales and transfers, if the right did not before exist. The object of requiring the transfers to be made on the book was, it may be presumed, the giving of notice to the company. If they, in fact, had notice, and received the assignee as such, and no injury happened for want of notice, the objection, it seems to me, would have little weight in a court of equity.
    Whatever objections there may have been to these transfers from a neglect to comply with the third additional article, let us examine if they have not been waived, and the transfers assented to, as in Hamilton’s case. Hunter and the Wilsons never after interfered in the affairs of the company. They were never after treated by any of the company as members, until the bringing of this suit, which is more than *four years, unless the petition for partition in 1819 should be considered as treating them as members. If it should, that proceeding was more than three years after these transfers. On the contrary, Moderwell was treated by the company as the owner of Hamilton’s stock, and has been ever since. He represented it and voted it at meetings of the company; and so he did upon that of the two Wilsons. What other acts could have been done, waiving any objections which might have been made to, and assenting to these transfers, I can not conceive. The evidence stares us in the face wherever it is possible to meet any evidence upon the subject.
    The next transfer in the order of time is Robert Carrol’s. He' transferred December 20, 1816. He had paid up all calls of the company, had offered his stock in the same manner as Hunter, and his transfer was not made on the books of the company. His transfer was also accepted, and any objections which might have been made to it, waived by the company. They ceased to treat or consider him as a member, and accepted and treated his assignee as a member standing in his place. His assignee is Thomas Kells. These facts show conclusively that Carrol’s transfer to Kells was agreed to by all parties, and Kells accepted as a member in place of him.
    The transfer of Hoge is the last one I have to notice. This transfer was not actually executed until January, 1817, although sale was made in August, 1816, according to Hoge’s answer. It was, at any rate, made some time before the transfer; and the transfer will take effect from the time of the sale. The equity rule is, that that shall be considered as done which ought to have been done. And the stock was considered, by Gray and the company, as his, December 28, 1816.
    Hoge’s transfer stands in the same situation as the others; he had paid up all calls, offered his stock at the same time, and in the same way, as Hunter and Carrol; but no transfer was made on the company books. But the same waiver of any objection and acceptance of the assignee exists here as in other cases.
    Considering the question as settled that these defendants ceased to be members of the company when they sold out, we will proceed to examine the consequences.
    *In the first place, we claim that they are not liable for any debts of the company contracted after they ceased to be members. The only exception that could be made to this proposition would be, where creditors of the company, who had been in the habit of dealing with them, should continue to give credit to the company without notice that these defendants had left it. A case coming within the exception is not made in the papers. On the contrary, these complainants, and the Bank of Steubenville, had notice of the transfers; Wells, Hoge, and Henning, being directors of the bank, and have acquiesced too long now to make us liable.
    Further, as between the assignor and assignee, the assignee takes the stock or property assigned subject to the debts of the company, due at the time of the assignment. This necessarily results from the manner in which partnership property is held. The partnership property is first liable to the payment of the debts of the company ; and no one member of the company has any right except in the overplus after debts are paid. Swift’s Dig. 345. Therefore, neither can the assignor give, nor the assignee take,- anything more than the assignor’s share in this surplus.
    It also results, from these principles, that although the assignor remains liable to creditors, the assignee is bound in equity to ex onerate him, or indemnify him, at least as far as the property will go, because the fund for the payment of these debts is transferred to, and goes into, the possession of the assignee; and ho becomes a trustee for the due application of the funds. This is the implied undertaking in all cases of sales of an interest in a partnership concern, where there are no express stipulations between the parties which shall vary it.
    These complainants were themselves members of the company at the time of the sale, and have continued so ever since. What right have they to call upon those who have sold out, and left funds in the possession and under the control of the company, more than sufficient to pay all the debts for which the complainants now seek to make them liable. If the company, instead of applying the funds which we left in trust with them to pay off these debts, have wasted them without paying the debts, it is not for them to call upon *us now to pay, although a creditor who had no control of the funds might.
    When we sold out, the debts were but fourteen thousand five hundred dollars. The property which we left in their hands had just cost in cash more than thirty thousand dollars. The assignments were made to persons then responsible, and were acquiesced in until these assignees became insolvent. Until that event, they were treated as members of the company, and we were regarded as strangers. Whatever cause may have occasioned the deterioration of the property, we surely’are innocent in respect to it, and ought not to be charged in favor of .those who, either by negligence, mismanagement, or misfortune, were concerned in it.
    We conclude that the defendants, Galbraith, Hamilton, the Wilsons, Hunter, Carrol, and Hoge, ceased to be members when they sold their stock. That they are not liable for debts subsequently contracted; and that they are discharged from all liability to their copartners for existing debts, because they left with the company sufficient funds to discharge them, and because they were so long treated as persons having no interest in it, by the parties who now claim to subject them.
    Mr. Beebe also argued the cause for the defendants; but the reporter has no copy of his argument.
    Hammond, in reply:
    It seems to me incontrovertible that this is a joint stock cornpany, or public partnership; and as such, its stock is subject to the general law operating upon such companies, where the articles of association make no distinction. It is usually a provision of the articles of association of all public joint stock companies, that the stock shall be assignable. Where this is part of the compact, it would follow, as of course, that this absolute power or right to sell the stock, agreed upon by all as a fundamental rule, could not be limited or controlled by a part. I apprehend, therefore, that this doctrine is only applicable to such public companies as have made their stock transferable by their original and fundamental compact. In such case it is a just and necessary doctrine. . But if applied to a company that have not made *their stock transferable as matter of right, it is unjust and mischievous.
    It is unjust, because it can not be supposed that the omission to declare, the stock transferable was without intention or design; and to enable one member of a company to change the associates and the responsibilities of the other members, without their consent, either in the formation of the company or at the time of the transfer, is to make, not enforce a contract. It is mischievous, because its tendency is to obstruct the business, destroy the harmony, and ruin the credit of the company. Tiewing the subject in the aspect here presented, I conclude that the stock of this company could not be transferred so as to constitute new members without the assent of the company.
    As property, the stock of this company was a subject of contract and barter. In equity, a purchaser of this stock might be regarded as the owner, and claim the profits; or upon a dissolution of the company, he might claim the original capital; but this would be upon the ground that the holder was his trustee, and .known as such to the company; but he could not become a member of the company against their assent.
    The third of the additional articles is intended to make provision generally forexpressing the consent of the company to the admission of assignees of stock as members, instead of leaving the subject open to be decided in each particular case. It contains nothing unreasonable. It requires the transfer to be made on the books of the company. This scorns indispensable. The company ought to know who are its members. Without this knowledge they could not transact business. If, by transfer between the parties, new members could be constituted, without the knowledge of any but the seller and purchaser, it could not be known when a majority of members were present, or by whom a majority of the stock was owned; it could not be known upon whom calls were to be made, nor to whom the officers or agents were responsible. If a suit were to be commenced, none could know who should be made plaintiffs; and if the company were impleaded, it would be impossible to determine who ought to be made defendants. No one member could know his associate; for no one could know to whom others *had transferred. Whatever equitable interest might be acquired in the stock, it is clear actual membership ought not to be changed but upon the company records. And this would certainly be held, even if the company were compelled to receive assignees as members, in the sense asserted by the counsel for defendants.
    The provision that the assignee, when invested with the legal character of membership, shall have all the rights and be subject to all the responsibilities of the assignor, is a necessary consequence of his becoming a member of the company. In the very nature of things these rights and liabilities must commence with his membership, and operate prospectively. Such is the obvious meaning of the terms used; and that they were understood in this sense is evidenced by the subsequent provision that the stock should not be transferred until all previous calls were paid. In all this there is nothing contravening the original articles.
    Suppose the stock absolutely assignable as matter of right, still the right can not avail until the manner of exercising it shall be. agreed upon. It is a right to be enjoyed under the regulation of the company. If not regulated by the fundamental articles, it must be regulated, like all the other rights of the members, by the rules and by-laws. If the company refuse to prescribe a rule or regulation for the exercise of- this right, it violates its duty, and the party aggrieved is in the same situation as if the cempany neglect or refuse to make other-proper and indispensable regulations. But he can not, in this case, any more than others, prescribe a rule for himself, and conclude the company by his own act. When a rule for admitting assignees is once prescribed, the company can not refuse to receive the person who complies with it, whether the stock be made assignable by the original articles, or subsequent agreement of the company. Until such rule be prescribed and complied with, the legal relation and existence of the members of the company can not be changed.
    After the general regulation for admitting members was agreed to, no member was ever admitted, or transfer of stock made, conformably to the law of the company. The consequence is, that no person ever was a member of the company for any legal purpose but such as were members of the ^company on June 13, 1814. And as it respects strangers, I entertain no doubt that the legal liabilities of every one of those persons remain unchanged, except so far as they may be affected by the decease of the parties. If, then, the moneys in question had been loaned direct to the company, and this were an action at law for the money, I should entertain no possible doubt but that all who were members on June 13, 1814, were liable, except those deceased before the money was borrowed.
    Those who were members of the company when the loans were first respectively made are responsible for them, because the amount went to their use, and because the individuals became security upon their responsibility. Upon any other doctrine the most monstrous injustice might be practiced. The company funds originally subscribed were all invested in a steam mill and cotton factory—the whole of a most perishable character. Without funds no business can be done so as to render the stock invested in any way productive. The stockholders are men of property, and it is known that they are responsible for any debts that may be contracted. Individuals lend their names to raise money, from time to time. It is obtained and applied. At length it is ascertained to be a losing concern; when suddenly every member, whose name is not involved in loans, transfers his stock to a man without property; and those who are in advance, whether money or credit, are left without redress. It can not be that any individual can thus discharge himself from the obligations of an existing debt.
    Galbraith claims that he sold his stock to James Larrimore, June 6, 1814; and Hamilton, that he sold his April 10, 1815. But as they never procured their vendees to be admitted in their place by the company, or made a regular transfer according to the bylaws, or additional articles, they both remained legally members of the company. At law, strangers could charge them upon the contracts of the company. But I am inclined to think that their copartners can not charge them in equity for debts contracted after they had ceased, in equity, to have an interest.
    Their case is totally different from that of the other defendants. They sold in good faith, when the company were unincumbered, and while the company were in active operation. *They were never afterward called upon or treated as partners. They owed nothing at the time of their sale; and it can not be supposed that debts were afterward created, or responsibilities incurred upon their credit. If as to' them the bill should be dismissed, they ought not to recover costs, because it was in consequence of their own negligence in not making transfers that it became necessary to make them defendants.
    Hunter sold his stock on the 6th, and the two Wilsons on June 7, 1816. At that time the company had borrowed fourteen thousand five hundred dollars, which had been applied to their uso. I consider that the complainants are to be regarded as security for this money to the lender. If this is not their condition they must be the actual lenders of this sum. In either case, a sale of the stock, had there been an actual transfer on the books, could not change the rights or responsibilities then in existence. No matter who were the lenders, Hunter and the two Wilsons were debtors, and could not shake off their obligation to pay by abandoning the concern.
    It is urged that the conduct of the other parties has discharged Hunter and the Wilsons, by renewing the notes and changing the securities. But this is a refinement which equity can not adopt or recognize. . •
    If the loan be regarded in equity as the debt of the company, and the complainants as surety for its payment, the nature of the debt can not be changed by renewing the notes, or changing the security. The debt was that of the individuals who constituted the company when it was contracted. It was for them that the complainants became responsible, and not for the ideal and abstract entity called the Steubenville Manufacturing Company. Tnis debt and responsibility were incurred for a particular purpose. While the lender would give credit the sureties could incur no just censure if they lent their names to preserve that credit, in the hope that the concern would enable the company to pay the debt. If any one of the debtors wished to discharge his liability he could do so only according to the articles of association and bylaws. He could transfer his stock upon the books, cease to be a member in respect to further transactions, and call upon ali concerned to give him an acquittance, or wind up *the concern so far as he was interested. If the 'associates refused to do this, a court of equity would compel them. But an informal transfer of the stock could not have a more beneficial effect than a formal one. A renewal of the note was a continuance of credit to the original debtors, not an acceptance of new debtors and a discharge of the first, because legally and technically the members of the company were the same. Equity surely would not lend its aid to exonerate the original debtor, if the liability remained in consequence of his own laches, where the credit was originally given to him. If the complainants are to be considered as advancing the money, and therefore creditors of the company, then the renewal of the notes is put out of the case. They wore creditors from the moment the money was advanced, and the defendants have nothing to do with the means by which the money was obtained.
    Whether, then, the complainants be sureties or creditors, a transfer of stock can not affect their rights. That the debt was suffered to subsist, and an effort made to turn the concern to the best account, ought not to be considered as an acquittance of responsible men, and an acceptance ofthose that were not responsible.
    It is insisted that Hunter and the Wilsons can, in no event, be charged with the money borrowed after Tune 7, 1816; and perhaps it may be thought that, in this particular, their case can not be distinguished from that of Galbraith and Hamilton. I am of a different opinion. When Galbraith and Hamilton sold their stock they were liable for nothing, and could have no further interest in the success or failure of the company. Hot so Hunter and the Wilsons. They were liable for a large debt, and were deeply interested that the company concern should be made to' liquidate it’. Subsequent loans, made in good faith for the use of the company, were made for their benefit as much as for any other members of the concern; for, until the debts were paid, no profit could be made by any. They were legally members of the company, legally interested in its prosperity, and legally liable for its debts. They could have no ground to ask equity to relieve them against making payment. And let it be remembered, that this bill is not prosecuted to recover the money advanced for the company alone, or paid for them by the ^complainants as sureties. The object of this bill is to settle the whole transactions, to ascertain the interests of each, and who are members in equity; and, finally, to-close the whole business. It is upon these subjects that the equitable jurisdiction of the court attaches. For the money, I apprehend, the defendants might be made liable at law.
    Another argument is pressed very strongly. It is said that the assignees had been received and acknowledged by the other memmers, and admitted by them to transact business. And it is insisted that members may be admitted without any particular act or form of admission, at least as between the members themselves. This I do not admit. The fact that the assignees were permitted to act as members, proves that the company did not understand the nature of their association and their rights and duties under it. But it can not make the assignees members for any purpose. Admit, however, that they are to be regarded as members, the consequences claimed by the defendants do not legitimately follow. The acceptance, by the company, of the assignee, does not discharge-the assignor of his debts, neither at law nor in equity.
    The provision of the regulation for making transfers, that the assignee shall be subject to the same liabilities and penalties as the assignor, is prospective. It could not be made retrospective. Personal liabilities can not thus be transferred. There is nothing in the terms used that warrant us in maintaining that it was intended to subject the assignee to the personal liabilities of his assignor previously incurred. Such liability could not be created except in a very imperfect manner, and -could not be created at all between others than the members of the company. The rights and privileges of the assignee could not commence until the assignment; and it is clear to me that the article contemplates that the rights and privileges conferred, and the liabilities and penalties to be incurred, should commence at the same time. The legal power of the parties, sound policy, and the terms used, all unite in support of this interpretation.
    By accepting the assignees—had they been formally and legally accepted—the company would not have discharged the assignors from their liabilities unless a distinct discharge was given; and the assignees would not have .incurred these ^liabilities, as between them and the company, unless the one had made an express stipulation and the others had accepted it. Transacting business with the assignees, therefore, proves nothing but that the company received them and accepted them for personal liabilities incurred after their reception.
   By the Court:

We entertain no doubt but that the extension of the stock of the original company, in April, 1814, and the regulations subsequently entered into for managing its affairs, were obligatory upon all the parties; and as all the matters litigated arose subsequent to that event, they must be decided by the rules and regulations made under the new organization. The power .to borrow meney for the use of the company, and to bind the members to repay it, results necessarily from the'power to contract. It seems inherent in all trading companies, unless specially restrained in the articles of association.

The real question-now before the court, and the only one of importance to the parties, is, whether the complainants can hold the defendants, Galbraith, Hamilton, the Wilsons, Hunter, Carrol, and Hoge, to be members of the company, as amongst themselves, and claim contribution of them to make up the losses sustained ? The application to charge them is made to a court of equity, and the facts and circumstances upon which it must be decided, though involved in voluminous papers, are, in truth, confined to a very narrow compass. The partners agree amongst themselves that each one shall be authorized to sell out his interest in the company a'nd substitute in his place a new partner, whom the others are bound to receive, upon complying with certain previous conditions. He shall first offer his stock to the company, and he shall, secondly, pay up so much of it as shall have been called for. These two conditions being performed, every member had an absolute right to transfer his stock on the company books, and the -company were bound to receive his assignee, and look to him for all subsequent liabilities.

When the company were in full operation, in June, 1814, Galbraith transferred his stock, and his assignee was received *and acted with as a member. In April, 1815, the same facts occurred as to Hamilton. At this period no debts were incurred. In June, 1816, Hunter and the Wilsons transferred their stock, and their assignee, previously a member of the company, was received to represent their shares. From this period no one ■of the sellers took any part in the business of the company, nor Were ever treated by the acting and officiating members as partners. When Hunter and the Wilsons sold their stock, the company were indebted, and part of the complainants were personally and individually liable for the debts. But the company property was estimated at a larger sum than the debts due; and the assignees, who under the assignment became members, at least in equity, were also solvent in their circumstances. The company proceed in their business, associate with the assignees as members until the company itself, as such, becomes insolvent, and until the assignees become individually insolvent; and then, after a lapse of more than four years, set up a claim that the defendants, so long disregarded as partners, are to be treated as members, for the purpose of compelling them to share the loss ! And this claim they ask a court of equity to enforce, upon the ground that the assignments were not formally made, and therefore do not techni■cally and legally divest the interests of the defendants. ■ This certainly is not the ordinary and natural office of a court of equity.

It is admitted in argument, indeed it could not be controverted with any hope of success, that the assignments in this case were operative in equity, and would entitle the assignees to share the profits, and to a division of the stock. Suppose that suddenly after these transfers were made, the business of the company had created great profits, and the assignors had refused to make the transfers on the books of the company, and the company had refused to recognize the assignees, or pay to them their dividends, nan it be doubted that a court of equity would have decreed relief? Suppose that, after notice of the informal transfer, the assignors had become insolvent, and the company had persisted in paying them dividends, would not a court of chancery have decreed a transfer, and compelled the company to recognize the assignees as members, and account to them for the dividends paid out?

^Suppose, again, that the creditors of the company, at the time of the transfer, or at a subsequent time, had subjected the assignors to the payment of a portion of the debts upon the doctrine now set up by the complainants that they remained legally members of the company, would not a court of equity give them relief upon the very ground that, in equity, they had ceased to be members, had ceased to have any chance to share the profits, had «eased to act, and that others had been received in their places?

Again: Suppose that, in 1817, a suit at law had been brought against the company for a debt contracted in 1817, and the assignees were made defendants, and the asignors omitted, would that matter avail in a plea in abatement? Would the informality of the assignment be held to counteract the conduct of all the parties, and to fix their rights in contradiction to their own proceedings and acknowledgments? On these points we entertain nodoubt ourselves, and we conceive there is little room for any one' to doubt.

It would, obviously, be most unjust that those who sold out of a profitable concern, or out of one which, though losing, was still-solvent, whose assignee was solvent at the time, and was received and treated by the company as a partner, should afterward be made a partner to subsequent insolvency by a mere informality in making the contract. If this may sometimes occur at law, we can conceive no case in which a court of equity should be made an instrument to produce such a result. And such must be the result if we give the aid which the complainants now ask of us.

But we do not consider that there is any such defect in the transfers as requires the aid of chancery to perfect them. The form or mode prescribed by the articles was intended to confer upon each member the absolute right to transfer his stock, and dissolve the-partnership as to himself and the other partners. This provision-is not regarded as precluding the company from admitting assignments in a different mode, either by positive resolution or by tacit acquiescence. They have, in the case before us, recognized the assignees as their partners by acting with them; and they have •recognized that the assignors were no longer members by ceasing to consult with them. And this conduct, on their part, concludes the complainants.

*lt is urged, in argument, that a certain part of the complainants, who have individually made themselves liable for the debts of the company, may be considered as creditors. But that, we think, can not mend their case. They can not merge the character of partners in that of creditors. And we are by no means satisfied that creditors, who became so with a perfect and full knowledge of all the circumstances, would be aided, in equity, to charge the assignors of the stock. Had it been the intention of the complainants, who were individually liable for the debts due when Hunter and the Wilsons transferred their stock, to look to them-for contribution, notice ought then to haye been given them of such intention. If there were then no such intentions the claim can not now be set up. It would be a fraud to conceal the intention in the first place; and there is no principle for originating a claim upon subsequent matter, which was not contemplated when the transactions, out of which it arises, took place.

We hold, therefore, that G-albraith, Hamilton, Hunter, the two Wilsons, and Carrol are discharged. For it is in proof that Kells was recognized by the company as the assignee of Carrol. There is not satisfactory proof that the company ever received Gray as the assignee of Hoge; the latter must consequently be held liable. No appeal having been taken by the complainants, from so much •of the decree as dismissed the bill as to Kells, he is now before the •court.