## Facts

- C.N. Stroud and Earl Freeman operated a grocery business as a general partnership under the name Stroud’s Food Center.
- The partnership routinely purchased bread from National Biscuit Company for resale as part of its ordinary grocery operations.
- Months before the disputed transactions, Stroud told National Biscuit’s representative that he would not be personally responsible for any further bread sold to the partnership.
- Between February 6 and February 25, 1956, National Biscuit sold and delivered $171.04 of bread to Stroud’s Food Center at Freeman’s request.
- The partnership dissolved on February 25, 1956; Stroud took possession of the assets and agreed to liquidate assets and pay partnership debts.
- Stroud paid most partnership creditors but refused to pay National Biscuit for the $171.04 delivered after his notice.
- National Biscuit sued both partners; judgment was entered for National Biscuit in lower courts, and Stroud appealed.

## Issues

1. Whether a partner in a continuing general partnership can, by unilateral notice to a supplier, restrict another partner’s authority to bind the partnership in transactions within the ordinary course of the partnership business.
2. Whether Stroud remained liable for the partnership debt for bread ordered by Freeman in the usual course of business despite Stroud’s disclaimer of personal responsibility.

## Decision

- The Supreme Court of North Carolina affirmed judgment for National Biscuit.
- Freeman’s purchase of bread for a grocery business was an act apparently carried on in the usual way of the partnership business.
- Stroud’s unilateral notice to National Biscuit did not terminate or limit Freeman’s authority to bind the partnership while the partnership continued as a going concern.
- Because the partnership was bound, Stroud as a general partner was jointly liable for the $171.04 debt incurred before dissolution.

## Legal Principles

- In a general partnership, each partner is an agent of the partnership, and a partner’s act for apparently carrying on in the usual way the partnership business binds the partnership unless the partner lacked authority and the third party knew of that lack.
- A partner’s unilateral communication to a third party disclaiming liability does not, by itself, revoke a co-partner’s authority to bind the partnership in ordinary transactions while the partnership continues.
- Ordinary-course management decisions are controlled by a majority of the partners; with two equal partners, one partner acting alone cannot constitute a majority to curtail the other’s authority in ordinary business matters.
- Dissolution after a debt is incurred does not eliminate partner liability for obligations validly incurred before dissolution.

## Conclusion

The court held Stroud liable for the bread delivered on Freeman’s order because a general partner cannot unilaterally restrict a co-partner’s power to bind the partnership in ordinary transactions while the partnership continues, and the supplier could enforce the partnership debt against Stroud.


Nat'l Biscuit Co. v. Stroud, 106 S.E.2d 692 (N.C. 1959)