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Matanuska Valley Bank v. Arnold - 223 F.2d 778 (9th Cir. 1955)

Rule:

A joint venture is distinguished from a partnership in that one member cannot bind another unless he has either express authority or authority implied from the necessities of the particular transaction with which the joint venture is concerned.

Facts:

Plaintiff Matanuska Valley Bank brought suit against defendants, Irene Arnold and Willard Davis, individually, and as Copartners, doing business as Davis Construction Company, to recover payment of three notes; Arnold disclaimed liability on the notes and counterclaimed against Matanuska for alleged damages sustained by her because of an alleged breach of a deposit contract with the partnership. The notes were purportedly executed on behalf of the partnership. Judgments in defedant Arnold's favor were rendered by the trial court by denying relief to the bank on its suit on the notes, and granting her relief on the counterclaim against Matanuska. 

Issue:

Does the signature of one partner bind the partnership?

Answer:

No.

Conclusion:

It was determined that defendants' firm was formed solely to build a garage and storage building for the government and that defendants did not contemplate that this would require financing beyond the initial amount for which defendant Arnold signed.The court held that when tdefendant Davis signed the latter notes, he had no express authority to bind Davis Construction Company. The court further held that Davis lacked apparent authority to bind the partnership as well because the manager of Matanuska Valley Bank had known of the arrangement between Arnold and Davis, thus the manager's knowledge should be imputed to the bank.

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