Case ID: serg-rawl_13/html/0411-01.html
Source: Caselaw Access Project
Author: {"author": "Gibson, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

[Philadelphia,
    December 19, 1825.]
    COPE against WARNER, surviving Executor of JOHNSON.
    CASE STATED.
    A. and B., partners, stored certain articles with the plaintiff, agreeing to pay a certain rate of storage per month, and afterwards authorized tlie plaintiff to sell the same, as their factor. A. and B. dissolved partnership, and B. was authorized to settle the partnership concerns. The plaintiff' sold large parcels of the articles, and paid the proceeds to B., who signed a receipt for the same, in his own name, “ for A. and B.” At this time, a sufficient portion of the articles remained in the plaintiif’s hands to pay the storage and factorage expenses; but the plaintiff subsequently delivered to B., at his request, a portion of the remainder of the articles; and when the plaintiff' sold the residue, they were insufficient to pay his expenses. A. afterwards died solvent; and B. died insolvent: held, that A’s. estate continued liable to the plaintiff'.
    In the year 1812, Jacob Johnson and Benjamin Warner, partners, under the firm of Johnson and Warner, put into the stores of Thomas P. Cope, the plaintiff, a large quantity of hempen yarns, cordage, and twine, and agreed to pay for the same a certain rate of storage per month. Subsequently, Thomas P. Cope was authorized by Johnson and Warner, to sell the same as their agent and factor. On the 22d of March, 1816, Johnson and Warner dissolved their firm, and Benjamin Warner was authorized to settle the partnership concerns. On the 3d of April, 1819, the plaintiff having effected sales of two considerable parcels of the yarns, paid nearly the whole of the gross proceeds of one of the sales, in money, and handed over a bill, accepted by the purchaser of the other parcel, for the amount of his purchase, to Benjamin Warner, who signed a receipt for the same, thus: “ Benjamin Warner, for the late firm of Johnson and Warner.” At the time the said sum of money and accepted bill were passed over to Benjamin Warner, there remained of the yarns, &c. sufficient to pay all the storage, and factorage expenses; but in June, 1819, the plaintiff delivered to Benjatnin Warner, at his request, the remainder of the yarns; and the cordage and twine being sold in the summer of 1822, with the concurrence of the defendant, the proceeds thereof, after the delivery of the yarns, in June, 1819, proved insufficient to pay the plaintiff all the storage and factorage expenses. On the 9th of September, 1819, Jacob Johnson died, and his estate is solvent. Benjamin Warner is since dead, and his estate is insolvent.
    It was agreed by the parties, that the above case should be submitted for the opinion of the court. If the court should be of opinion, upon the above facts, that the plaintiff was entitled to recover from the defendant the balance of his storage and factorage expenses, judgment be entered for him for nine hundred and ten dollars, thirty-five cents, with interest, from the 31st of Jlugust, 1822. If not, then judgment to be entered for the defendant.
    The case was argued by Brice and Binney, for the plaintiff, and J. Sergeant, for the defendant.
    Arguments for the defendant.
    This case differs from any case yet decided. The plaintiff’s claim is for storage of goods, accrued part during the partnership, part after dissolution, and during the life of Johnson, and part after his death. At Johnson’s death, the plaintiff had in his hands money of the partnership sufficient to discharge his claim against the partnership, and he had enough of the funds to satisfy his claim for storage, subsequent to Johnson’s death.
    1. Was Johnson liable in law or equity for the claim of the plaintiff, and how much of it? 2. If he was, have the acts of the plaintiff amounted to a discharge in equity of the defendant?
    If the goods stored had been insufficient to answer the rent, the ease would be.different; but they were sufficient; and, therefore, when the partnership was dissolved, and Warner was to settle the partnership accounts, he became owner of the goods, and Johnson having no property in them, was not answerable for the storage. At law, the estate of Johnson was discharged by his death. Therefore, the plaintiff rests solely in his equity. The deceased partner is liable, until the debts for which he was responsible at the time of his death are paid. Gow on Part. 436, 437. The plaintiff ought to have applied the money to the payment of the partnership debt. When he paid the money, he knew the partnership was dissolved, as appears by his receipt. The plaintiff lost his equity against Johnson, when he delivered the goods to Warner. Johnson had no notice of the delivery of the goods to Warner. The plaintiff was paid, when he received money enough to pay his account; and it is unjust, that after this Johnson should be responsible. And when the plaintiff paid the money to W%rner, without deducting his account, the amount of his account was in the nature of a loan to Warner. A partner who settles the partnership accounts, has no right to contract a new debt. The goods, which have been sold since Johnson’s death by the plaintiff, were sufficient to discharge all that part of plaintiff’s account which accrued since the death of Johnson.
    
    
      Arguments for the plaintiff.
    The plaintiff’s claim is founded wholly on a partnership transaction. It is all one contract, and an entire transaction : and the contract was between the plaintiff and Johnson and Warner. No new contract arose by implication of law, with one of the partners on the dissolution of the partnership, or on the death of Johnson. Our whole claim is for services rendered to partnership effects. No circumstance appears in the case stated, taking away the clear equity which the plaintiff has against the estate of Johnson. Warner was authorized to settle the partnership. It does not appear that Warner misapplied the money paid him by the plaintiff, or that Johnson suffered at all by that payment. We must presume, till the contrary is proved, that Warner applied the money received of the plaintiff, to the payment of partnership debts. On the dissolution of the partnership, Warner was authorized to settle its concerns. After this, there was no occasion to resort to Johnson, or give him notice of any thing that was transacted with Warner. There never was a payment of the plaintiff’s debt, nor any thing like a loan of any part of the money paid by the plaintiff to Warner; it was all. paid on the partnership account by the plaintiff, who was agent for the partnership. The plaintiff’s charge for storage was not introduced into his account as factor. The storage account was reserved for settlement when all the goods were taken out of the store: it was not brought forward and charged in their books till the conclusion of the business. The giving up a pledge does not destroy the original contract: therefore the contract of storage was not destroyed by the delivery of the goods to Warner, the acting partner, in settling the accounts. They cited Lang v. Keppele, 1 Binn. 123. 1 Caine’s Case, 122. 2 Johns. Ch. 508. 3 Johns. 328. 3 Binn. 300. 1 East, 220. 2 Stra. 919. Gow on Part. 286, 450. 5 T. R. 601. 14 Mass. Rep. 16. 17 Johns. 340. 2 Marsh. 285. 1 P. Wms. 682. 3 Vez. jr. 397. 3 Johns. Ch. 508.
   The opinion of the court was delivered by

Gibson, J.

The argument is, that the payment over to Warner of the proceeds of the sale, and the subsequent delivery to him of the yarns that were on hand, created an equity which rebuts that on which the action is founded, and leaves the matter as it would stand at the common law. The plaintiff undoubtedly had a lien, and might have retained for it, but he undoubtedly might also part with possession of the property, without parting with his claim to compensation, either at law or in equity. Had he indeed done so with notice of Warner’s insolvency, and after being required by the defendant’s testator, to use his lien as a means of procuring satisfaction, his refusal would have furnished a countervailing equity sufficiently powerful to induce chancery to withhold its assistance. But so far is this from the truth, that it is expressly made a part of the case, that Warner was authorized to wind up the business and close the concern. After the dissolution of the partnership, he continued to represent the firm as before — perhaps emphatically so, as he became its exclusive representative, and under an express authority. In his capacity of liquidating partner, therefore, his acts were for all purposes of law -or equity, the acts of the outgoing partner; and to be taken as strongly against the latter, as if they had been accompanied with a special recognition of the authority under which they were performed, in the particular instance. It does not appear even that Warner was insolvent at this time, or that the plaintiff knew it; but were it otherwise, I should view it as a matter of indifference. A debtor who is not particularly requested to be on his guard, has nothing to do with the balance of the account between the partners themselves; nor is he bound to see to the application of the money. He pays on the foot of an express authority, which may have been confided to. the liquidating partner with a perfect knowledge of his insolvency, and which therefore is sufficient for the purposes of the debtor, whilst it remains unrevoked : nor is he bound to be mindful of the interest of a party who is not mindful of it himself.

Another argument is, that the receipt by the plaintiff of the price of the goods sold, was to the extent of what was then due to him from Warner and Johnson, received to his own use, and In extinguishment of his demand; and consequently that payment over of the whole sum to Warner was pro tanto substantially a loan to him, in his individual capacity, for which the firm cannot be made liable. Were the premises true, the conclusion would Inevitably follow; for the authority of Warner undoubtedly did not extend to the contracting of a new responsibility, which was unnecessary to enable him to execute the trust beneficially for the firm. But this is plainly not a case in which the law makes the application in a particular way. It is the ordinary case of a creditor obtaining possession of the funds of his debtor, and to hold that in such case the law, even against the assent of the party, sets one demand against the other, would make short work with the distinction between set-off 'and direct payment. The plaintiff might have applied this money to his own demand, and had he done any act to evince such a determination, he would have been bound by It; but nothing of the kind appears.

The last ground of defence is, that a part of the plaintiff’s demand accrued after the dissolution of the partnership; and that for such part, the partners are separately liable in the proportions in which they were interested in the firm. A part of the services were certainly rendered after this period, but the origin of the plaintiff’s demand for those services, was nevertheless before it. The bailment was under a continuing contract with the partnership for services to be rendered indefinately, in point of time, and no matter when the services were actually rendered; the demand arising from the performance of the agreement has relation, not to the period of performance, but of the origin of the contract. The dissolution of a partnership does not dissolve its contracts. Here the agreement was that the goods should be bailed to the plaintiff, to be stored at a certain rate per month, with authority to sell them; and as it was indefinite in point of duration, it necessarily was to continue till it should be rescinded by at least one of the parties: consequently, services rendered under it, at any time, would give an action on the contract. We are of opinion that judgment be entered for the plaintiff.

Judgment for the plaintiff.