Smith v. Dixon

Brief Fact Summary. E.F. Smith, his wife, their children and their children’s spouses constitute a business firm known as E.F. Smith & Sons, A Partnership, (collectively Appellants). Dixon, Appellee, brought this action against Appellants requesting specific performance of a contract for the sale of realty or in the alternative, damages for nonperformance.

Synopsis of Rule of Law. A partnership is bound by the acts of a partner when he acts within the scope or apparent scope of his authority. To determine the apparent scope of the authority of a partner, recourse may be had to past transactions indicating a custom or course of dealing peculiar to the firm in question.

Facts. W.R. Smith on behalf of Appellants, contracted to sell the “Cracraft” plantation for $200,000 to Appellee. Appellants refused to convey the land claiming that W.R. Smith’s authorization to negotiate the sale of the land was based upon different terms of sale and therefore the contract is unenforceable since it was not ratified by other members of the family.

Issue. Whether W.R. Smith was acting within the apparent scope of his authority as a partner when he signed the contract.

Held. Yes. W.R. Smith was acting within the apparent scope of his authority as a partner when he signed the contract and therefore it is binding and enforceable upon the partnership.

Discussion. W.R. Smith was the predominant member of the partnership. He is the managing partner with general powers. W.R. Smith negotiated other conveyances of property. It was customary in past transactions for the partnership to rely upon the co-partner, W.R. Smith to transact the business affairs of the firm. Therefore, W.R. Smith was acting within the apparent scope of his authority as a partner when he signed the contract and therefore it is binding and enforceable against the partnership.