Case ID: g-j_4/html/0310-01.html
Source: Caselaw Access Project
Author: {"author": "Stephen, J.,", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Smith, surviving partner of Smith and Lane, vs. Stone and Mullikin,
    
      June, 1832.
    One partner cannot bind another by deed, yet he may execute a release under seal in the partnership name, which will discharge a debtor to the partnership.
    Where debtors transferred property in trust for the benefit of creditors, who agreed to accept their respective proportions of the estate conveyed, and in consideration thereof, released the debtors from all liability, in an action by one of the creditors against the debtors, it is not competent for the plaintiff to show, in order to avoid the release, either, that one of the defendants had represented to the witness, (who was a creditor,) that the creditors generally, had consented to sign the release, and that he (the witness,) had executed it under that impression, or, that one of the creditors had refused to execute the release, and the defendants in order to induce him to sign it, had secretly agreed to pay him, and did pay him, without the knowledge of the other creditors, an additional consideration. Such evidence does not establish any fraud.
    When there is an understanding, that all the creditors of a particular debtor are to sign a deed of release, upon certain conditions, and to receive nothing beyond their proportions of the trust fund, or that the deed should be void, any underhand agreement to pay more, would have been a breach of faith, and a violation of the principles of morality and fair dealing.
    Appeal from Baltimore County Court.
    
      Assumpsit by the appellant William Smith, as surviving partner of James 8. Lane, and John Smith, trading under the firm of James S. Lane and Smiths, against the appellees, trading under the firm of James Stone, Jr. Sf Co., on a promissory note, the execution of which, by the defendants was admitted, dated 20th December, 1831, at six months, for $¡193 75. Issue was joined upon the plea of non assumpsit.
    
    1. At the trial, the defendants having read to the jury a deed, dated 27th July, 1822, executed by them, to trustees, of all their partnership property, and effects, for the purpose of applying the proceeds of the same, among those of their creditors, who should within three months from the date thereof, execute to them a full and final release and dis - charge from any claim and demand, they might respectively have upon them/'offered to read to the jury the following paper. “ We, the several persons who have hereunto subscribed our names, creditors of Benjamin IS. Mullikin, and James Stone, Junior, lately trading under the firm of J. S. Jr. Sf Co., send greeting: Whereas the said B. II. M. and J. S. Jr., by deed bearing date the 27th day of July, instant, and intended tobe recorded, have conveyed unto Alexander Fridge, John Gibson and Thomas W. Hall, their heirs, 8cc. all and singular the joint estates, effects and property, real and personal, of them the said H. 
      
      H. M. and J. 8. Jr., and also all debts and sums of money due or owing to them in their joint or co-partnership capacity aforesaid, to hold, receive, and take the same, and to dispose thereof for the benefit of the creditors of the said firm of J. 8. Jr. if Co., in the manner and upon the terms and conditions in the same deed expressed and set forth. And whereas the said J. S. Jr., individually, by deed of. even date with the one above referred to, and intended to be recorded, hath conveyed, assigned and transferred, to the same trustees, certain real and personal estate, specified ■ in a schedule annexed to said last mentioned deed, and subscribed by the said J. S. Jr., to hold to the said trustees,, for the like purposes with those expressed in the aforesaid deed first mentioned, as by reference to said deeds may more fully and at large appear. We have therefore agreed, and do hereby agree to accept of our respective shares and.. proportions of the property, estate, effects, and debts, so as aforesaid conveyed and transferred by the said B. H. M. , and J. S. Jr., jointly, and the said J. 8. Jr., individually, , to the said A. F., J. G. and T. W. H., in full satisfaction of the debts and sums of money owing to us respectively, at the time of the signing and sealing hereof, by or from the said B. H M. and J. S. Jr., in their co-partnership capacity ■ aforesaid; hereby declaring.our assent to and approbation of, as well the aforesaid deeds of trust, as the provision by them made for the discharge of our respective claims.^Now . therefore, know ye, that for the consideration aforesaid, each of us the said creditors, who have hereunto set .our hands and seals, for himself, his heirs, executors and co-partners, doth by these presents remise, release, and for- , ever discharge the said B. H. M. and J. 8. Jr., their heirs, &c. of and from, all. and all manner of action and actions, suit or suits, claims and demands whatsoever,, which against, the .said B. H. M, and J. 8.. Jr.?ov either of. them,.each. { and.'.every one of us, their said creditors, now .have.,, or which each and every of our heirs, executors, or administra-... tors respectively, hereafter may, can or ought to have, fpr or by reason of our respective debts, to us severally due or owing from the said firm of J. S. Jr. Co., in anywise howsoever. In testimony whereof, we have severally subscribed our names, and affixed our seals, this 29th day of July, 1822.”
    And offered evidence to the jury, that the said instrument of writing was signed '•'■Lane and Smiths,” sealed and delivered by John Smith, one of the partners of the firm of Lane and Smiths, in the name of the said firm of Lane and Smiths, but without any authority for that purpose from either of the other partners, except so far as the said authority was incident to the character and power of a partner. The plaintiff objected to the admissibility of the said instrument of writing or release, on the ground that it was not the deed of the plaintiff, or of the firm of James S. Lane and Smiths, or of any person constituting one of that firm; but the court (Hanson and Kell, A. J.) overruled the said objection, and allowed the said instrument of writing to be given in evidence to the jury. The plaintiff excepted.
    2. The plaintiff, after the evidence stated in the first bill of exceptions, (which is to be taken as a part of this exception,) had been given to the jury, offered to prove by Thomas W. Hall, that he, as one of the firm of T. W. and C. A. Hall, creditors of the defendants, had executed the release mentioned in the first bill of exceptions, before the said release was signed by John Smith, the deceased partner of the plaintiff, as stated in the said first exceptions; that James Stone, Jr. one of the defendants, had represented to him that the creditors generally had consented to sign the said release, and that the witness had executed it under that impression. ,rAnd the plaintiff further offered to prove by the said Hall, and by Henry Beadell, a competent witnesss, that one of the said creditors had refused to execute the said release, and the defendants, in order to induce him to sign it, had secretly agreed to pay him, and actually did pay the said creditor, without the knowledge of the other creditors, an additional consideration, to wit, seventy-five per 
      
      centum, of his whole claim, which the plaintiff contended was a misrepresentation, and in law a fraud by defendants practised on the rest of the creditors, and renders the said release void and inoperative as to the plaintiff; but the court refused to permit the said testimony to be given to the jury. The plaintiff excepted, and verdict and judgment being against him, he prosecuted the present appeal.^
    The cause was argued before Earle, Martin, Stephen, and Dorsey, J.
    
      Lloyd, for the appellant.
    1. It is a settled principle of law, that one partner cannot bind the firm by deed, no matter what consideration passes, unless a special authority under seal he given him for that purpose; or unless the other partners be present at the execution and assent thereto. Harrison vs. Jackson et al. 7 Term. Rep. 207. Ball. vs. Dunsterville, et al. 4 T. R. 313. The deed in question, not being stated to have been executed in the presence, or with the knowledge of the other members of the firm, and there being no special 'authority, is clearly therefore not the deed of the firm. But it is said, that the case of a release is an exception to the rule : that though such release is not the deed of the firm, yet it is the deed of the individual member who executes it, and is obligatory on the firm. It is true, that the books make this distinction, and it is on the principle, that a release by one joint obligee, is an extinguishment of the debt. Gow. on Partnership 83, 84-5-6-7. Mont, on Composition, 15. This exception as before stated, is made on the ground, that the instrument of release, though not the deed of all the partners, is the deed of the particular individual of the firm, who executed it. Therefore, I apprehend, that unless it can be shown, that the instrument in question can operate as the deed, and is the deed of John Smith, it is no bar .to the plaintiff’s suit. Is it then the deed of John Smith? It will be observed, that the instrument purports on its face to be the deed of those “who have thereunto severally subscribed their names, and affixed their seals,” and that the name of John Smith, does not appear in any pari of it. The only name, or names, subscribed by John Smith, according to the proof, are the names “ Lane and Smiths.” Is this then the name of John Smith? Can parol eyideliee be admitted to show, that a certain person by name, John Smith, subscribed the names “Lane and Smiths,” and affixed a seal thereto, when the deed on its face purports to contain the names of the several persons who executed it? By the admission of such evidence will the court say, that although the deed on its face shows the surnames of two or three persons, with one seal affixed, and although such surnames do not identify any individual yet that in fact it is the deed of a particular person ? And will the court do this, when the surname subscribed to the instrument does not even correspond with the surname of the person who is said by the parol evidence to have executed it? The names subscribed are “Lame and Smiths,” the person, who is proved to have subscribed them, is named John Smith. It is a principle of law, that a deed must ■pn its face distinguish with reasonable certainty the person who is the grantor, and the person who is the grantee : and if the deed does not so distinguish, it is void for uncertainty, as it would be for uncertainty in the description of the thing granted. Shep. Touch. 233—4. 10. Co. Rep. 123-4, and the cases there cited. Can any one from an inspection of this instrument say, that there is any certainty as to the grantor? And if parol evidence may be adduced to show, that John Smith subscribed the names “ Lane and Smiths, and it may thence be inferred, that the instrument is the deed of John Smith, might it not with equal reason, and on the same principle, be allowed, that parol evidence shall be introduced to show, that a deed purporting on its face to be the deed of Robert Rogers is in tact the deed of Thomas Rogers? Yet the books all say, that a mistake in the Christian name of the grantor, or grantee avoids the deed. And the same books say that the omission of the Christian name avoids the deed, which is the fact in the present instance. Comyn. Dig. Tit. “ Grant. ”(A, 2.) lays it down expressly, that “ a mistake of the Christian name of a grantor or grantee shall not be supplied.” Again—Bac. Abrid. “Grant” (C.) “It seems by the better opinion of the books, that a mistake of the Christian name will vitiate the grant: as when the grant is without any Christian name at all, or where a wrong name is made use of, as Edmund for Edward.” Also, in Sheppard’s Touchstone, 233-4, after stating that the names of the persons in grants are set down to distinguish them, and to make the person intended certain; that it is best to describe the person by his true and proper name of baptism, and also by his surname; and if it be a corporation, by the true name whereby the corporation is made, “ yet (it is added,) mistakes in this case, unless they be very gross, will not make void the grant. “Nihil facit error nominis cum de cor pore constat.” But the author shows afterwards by the cases which he states, what he means here by a very gross mistake; for, in the same paragraph he says,. “But if an ordinary man grant by his surname only, without any name of baptism, or by his name of baptism, without any surname at all ; in these, and such like cases, for the most part, the grant will be void for uncertainty; unless there be some other matter in the deed.to help it, or some matter done ex post facto to supply .it: for in some cases, where the thing granted doth lie in livery, such a mistake or uncertainty in the grant may be holpen by the livery of seisin upon the deed afterwards.” Shep. Touchs. 233-4 “ Grant.” ad id. 4 Cru. Dig. 35. “Deed.” Now, in the case before the court, there is no Christian name, neither does the surname subscribed to the instrument correspond with the surname in the parol evidence—and there is no other matter in the deed to. help it, neither is there any matter done “ex post facto,” to supply the. uncertainty. So also in the case of the Mayor, and 
      
      Burgesses of Linne, 10 Co. Rep. 123, a. which was an action on a bond given .by John Pain to the Mayor, 8fc. of Linne, by the name of “ Majoris et Burgensium de Linne Regis,” it was in proof that the grantees were incorporated by the name “Majoris et Burgensium, burgi domini regis de Linne regis,” and an objection was made by defendant’s counsel, that the bond was void on account of the misnomer of the grantee. The court held in that case, (after it had been oftentimes argued at the Bar (p. 123 a.) that the variance was only “in syttabis et verbis,” and not “in sensu et re ipsa,” and therefore, not material, (p. 125 a.) Coke adds, (p. 125-6) “so that the name in the bond by matter apparent therein imports a sufficient certain demonstration of the true name of the incorporation.” And it will be found, as well by the principles applied by the court to that case, as by the cases therein cited and approved, that the decided cases go at least as far as the positions above laid down by Comyn and Sheppard, and followed by Bacon and Cruise. The case of 10 Co. R. 123, is a case of uncertainty in the name of the grantee, but the principles equally apply to the case of the grantor, as may be seen from the case of the “Eaton College” therein cited (p. 124 a) and admitted to be of authority. Vid. et Moor. 13, 1 Anders. 23, Dyer 150, pl 84,1 Leon 159. From all these authorities, I think it clear, that it is material in law, that the grantor should be named. Is there any grantor named here? From the same authorities, (particularly Shep. Touchs. 234, and 10 Co. R. 125 a. b.) it seems equally clear, that the name must be certain from matter apparent in the deed itself; and that parol evidence cannot be introduced to supply the defect in this respect. Comyn Dig. “Grant” (A 2) says expressly “a mistake in the Christian name of the grantor, or grantee shall not be supplied.” Is there any matter apparent in the deed itself here, which (to use the words of 10 Co. R. 125 a. b.) “imports a sufficient certain demonstration of the true name of the grantor ?” It certainly cannot be pretended that there is any Christian name here—and an omission, according to the same books, is equally fatal with a mistake: and moreover as I have before stated, the surname proved by the parol evidence, even if such evidence was admissible, does not correspond with the name subscribed to the instrument before the court.
    if then these authorities are to be relied on, the instrument in question is not the deed of the firm, neither is it the deed of John Smith. If it cannot operate as a deed, it cannot operate at all against the plaintiff in this ease. For it is clearly the deed of John Gibson and of several others, who it appears have duly executed it. The same instrument cannot operate as the deed of one person, and the parol agreement of another, as a deed for one purpose, and not a deed for another, and that too, when it purports on its face to be a deed. But if it were held to be a discharge not under seal, yet it would not be a bar to the plaintiff’s suit in this case. It will be observed, that the debt, for which this suit is instituted, was due at the time of the signing of the instrument of writing in question. Watson on Part. 234. “A promise, before it is broken, may be discharged by a parol agreement: but after it is broken, it cannot be discharged without deed, by any new agreement without satisfaction.” Again—this instrument does not purport to be in consideration of full satisfaction, but of the shares, whieh may come to each creditor. In Fitch vs. Sutton, 5 East. 230, it was expressly decided, “that where a less sum than the whole demand was paid, and agreed to be received, in satisfaction of the claim, the acceptance of the less sum is no discharge of the debt, unless it is dene by deed; and in that case, the plaintiff recovered the balance, the discharge not being under seal. Ad id. Cumber vs. Wane, 1 Stra. R. 426, vid. et Pinnel's case, 3 Co. R. 118. For these reasons we think the court below erred in the decision in the first bill of exceptions.
    2. On the 2d bill of exceptions. In Cooling vs. Noyes, 6 Term. Rep. 263, it was decided, that if. a debtor represents to one of bis creditors, that if he will agree to accept a composition for his debt, all the other creditors will do the same, and such creditor do agree to accept it in consequence of such representation, the agreement is not binding on the said creditor, if the representation be untrue. Again—In Child vs. Danbridge, 2 Vern. 71, it was held, that a secret agreement, to pay some of the creditors in full, was a fraud on the rest; and the court on that ground, refused the debtor the relief prayed. And Small vs. Brackley, 2 Vern. 602, is to the same effect. Doe. vs. Anderson, 5 M. and Selw. 161, decides, that where a party executes a release under seal, with an ignorance and concealment of important facts, he is not bound by it. Bayeey, J., says “I do not see any reason why the plaintiff should have gone on under a deed, executed in ignorance, and under concealment. The bankrupt was guilty of a fraud, by concealing, instead of disclosing an act of bankruptcy, which distinguishes the case from Bamford vs. Baron.” See also Montague ou Composition, 32. And how, I would ask, do the courts in these cases ascertain that there has been a fraudulent representation, if the party against whom the agreement or release is produced, may not be permitted to offer parol proof of such fraud ? Yet here such proof was rejected.
    In conclusion I will add, that the present case does not come within the principle of that class of cases, in which it has been held, “ that if the plaintiff by signing a composition induced others to sign, he cannot afterwards sue for his whole debt, because it would be a fraud on those who signed after him.” Because in the present case, there was a fraud practised on all the parties signing, the .plaintiff, as well as those who signed after him. The latter therefore, are not bound by the release, any more than the former, and any of them may sue. Whereas in the cases in which the above principle was applied, it will be found, that there was no fraud on the part of the debtor, and consequently, the other creditors were bound by the compost
      
      tion, and the plaintiff in those cases, wished to take advantage of certain circuznstances peculiar to his own case, which avoided his release to the defendant, while he left the other creditors (whom, he had induced to sign) without the benefit of the consideration they had eonteznplated, to wit, the discharge of the defendant, or a certain amount of composition znoney.
    No counsel argued for the appellees.
   Stephen, J.,

delivered the opinion of the court.

This action of assumpsit was brought upon a promissory note, executed by Stone and Mullikin, to Lane and Smith, in the course of the trial of which, two bills of exception were taken to the opinion's of the court below. The defendants to support the issue of non assumpsit by them pleaded, gave in evidence to the jury, a deed of trust executed by them, by which they conveyed certain real estate and all their partnership property of every description, to certain trustees for the benefit of such of their creditors* as should within a limited tizne, give them a final discharge from the payment of their respective claims. In conformity with the provisions of this deed of trust, several of the creditors of Stone and Mullikin executed a deed of release* and among the number it was executed by John Smith* one of the partners of Lane and Smith, by the name of the firm of “ Lane and Smith.” To the admissibility of this release as evidence in the cause, the plaintiff by his counsel objected, upon the ground, “ that it was not the deed of the plaintiff, or of the firm of James S. Lane and Smith, or of any person, constituting one of that firm.”1 Which objection was overruled by the court, and the deed of release held sufficient to be given in evidence to the jury.

As a general position it is incontrovertibly true, that ozie partner cannot bind another by deed ; but this well settled principle of law,' was not applicable to the case then before the court. It was not the effect, or operation bf the instrument of writing, to charge the partnership with a debt; but it was nothing more than a release, or discharge of a debtor to the partnership. See 3 Johns. Rep. 70, where chief justice Kent, in delivering the opinion of the court, holds the following language; “ it is a general principle of law, that where two have a joint personal interest, the release of one bars the other, and I cannot perceive that the case of co-partners in trade forms an exception to the general rule. Each partner is competent to sell the effects, or to compound, or discharge the partnership demands. He is to be considered as an authorised agent of the firm, for all such purposes. Each has an entire control over the personal estate.” See also 2d Wheat. Selw. 311, where it is said, cc there is an exception to the general rule, that a partner cannot bind his co-partners by deed. A release under seal by one partner in the name of the firm, of a debt due the partnership, is binding on all the partners.” The court below were therefore unquestionably correct in the opinion given by them, to which the first exception was taken. Nor do we think, that they erred in the opinion delivered by them, which is contained in the second exception. The plaintiff offered to prove by one of the creditors of the defendants, that he had executed the release before it was signed by John Smith, and that Stone, one of the defendants, had represented to him, that the creditors generally, had consented to sign the said release, and that the witness had executed it under that impression; and further offered to prove by said witness and another witness, that one of the creditors had refused to execute the release, and the defendants, in order to induce him to sign it, had secretly agreed to pay him, and actually did pay the said creditor, without the knowledge of the other creditors, seventy-five per centum of his whole claim, which the plaintiff contended was a fraud upon ; the other creditors, and rendered the release void, and. inoperative as to him. TV Inch testimony the court refused to be given to the jury.

pit is presumed that the ground upon which the counsel supposed the release to be invalidated, was, that a deceit had been practised upon the other creditors, by the payment of this extra sum to the refusing creditor. But we do not think such a position tenable under the circumstances of this particular case. There was no understanding that all the creditors were to sign the deed of release upon certain conditions, and to receive nothing beyond their proportions of the trust fund, or that the deed should be void. If such had been the stipulation of the contracting parties, any underhand agreement to pay more, would have been a breach of faith, and a palpable violation of the principles of morality, and fair dealing^ Small vs. Brashley, 2 Vern. 602. In such a case, a creditor would have a right to say, that he had been imposed upon; that the release had been obtained per fraudem, and was therefore void. But in the case now before this court, there is no one feature of fraud, or deception. There was no understanding between the parties, that all the creditors were to receive only a certain sum, by way of composition, for their respective demands; or that their respective releases should be void. On the contrary, the agreement was absolute and unconditional, that the defendants should be discharged, upon the creditors, who should sign the deed of release, receiving their respective proportions of the trust fund^'indeed, the evidence offered only tended to prove, that the defendants had represented to the witness, that the creditors generally had consented to sign the release, and that he had executed it under that impression. We therefore think, that no deception was practised upon the plaintiff in this case, and that the judgment of the court below ought to be affirmed, j

JUDGMENT AFFIRMED.