Case ID: ohio-st_58/html/0517-01.html
Source: Caselaw Access Project
Author: {"author": "Williams, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Chase v. Brundage.
    
      Partnership liability — Dissolution of banking copartnership — Time certificate of deposit renewed by continuing partner — Not payment of former firm debt— Unless creditor agrees to so receive it- — Proof of agreement — Error in charge, when cured by special finding.
    
    1. A time certificate of deposit issued after the dissolution of a banking copartnership by a member who had become the owner and was carrying on the business of the bank, in the place of a like certificate of the firm, is not a payment of the firm debt, unless the creditor agrees to so receive it.
    2. The agreement need not be express, but may be implied from the circumstances of the transaction and conduct of the parties ; and no higher degree or greater certainty of proof is necessary to establish the agreement than is ordinarily required to prove any other fact in civil cases, A preponderance of the evidence is sufficient.
    3. The surrender of the firm certificate when that of the partner is received, with knowledge that the firm had been dissolved and that payment of its liabilities had been assumed by the partner, is evidence from which an agreement to receive it in satisfaction of the firm liability may be inferred, but is not conclusive.
    4. It is the province of the jury, and not of the court, to determine whether there was such agreement, which must be done from all the evidence; but error in the failure to submit that question to the jury by the general charge of the court or refusal to charge, is cured, where it is submitted at the request of a party by interrogatories calling for a special finding of the fact, and is determined by such special finding, returned by the jury, consistent with the general verdict.
    (Decided June 21, 1898.)
    Error to the Circuit Court of Morrow county
    Action against a banking firm for money left on deposit. Defense by one partner that he withdrew from the firm under an agreement that his copartner should retain the assets and pay the liabilities, and that thereafter the plaintiff, with notice of the dissolution and agreement, accepted in satisfaction of his claim against the firm, a time certificate of deposit, at interest, from the copartner.
    
      The original action was brought by William Brundage against William G. Beatty and Reuben F. Chase, late partners under the firm name of the Cardington Banking Company. The petition contains three causes of action, which are as follows:
    “The plaintiff, for his first cause of action, says that the defendants at the dates hereinafter stated, were partners in the banking business in the village of Cardington, Morrow county, Ohio, by name and style of Cardington Banking Company, with whom while they were so engaged in the said banking business by said firm name he had made deposits with and done business with as such partners prior to the dates hereinafter mentioned. On or about the 12th day of February, 1890, at the request of the said defendants, he deposited and delivered to the said defendants, as such partners at their said banking house, the sum of one thousand dollars in cash; and he also says that the same has not been paid nor any part thereof except the interest thereon to the 12th day of February, 1893, and that there is now due to him from the said defendants on account thereof the sum of one thousand dollars with interest thereon from the 12th day of February, 1893.
    And for a further and second cause of action, plaintiff says that on or about the 12th day of August, 1890, he delivered to and deposited with the said defendants as such partners and as such bankers at their said banking house, in the said village of Cardington, the further sum of four hundred and seventy-five dollars in cash; that the same has not been paid, nor any part thereof except the interest thereon to the 12th of February, 1893, and that there is now due to him from the said defendants on account thereof the sum of four hundred and seventy-five dollars with interest thereon from the 12th day of February, 1893.
    And plaintiff, for a further and third cause of action, says that on the 2d day of June, 1893, he delivered to and deposited with the said defendants as such partners and at their said banking house in the said village of Cardington, the further sum of one hundred dollars in cash; that the same has not been paid nor any part thereof, and that there is now due to him from the said defendants on account thereof the sum of one hundred dollars, with interest thereon from the 2d day of June, 1893.
    Plaintiff therefore asks judgment against the said defendants for one thousand five hundred and seventy-five dollars with interest on one thousand four hundred and seventy-five dollars from the 12th day of February, 1893, and on one hundred dollars from the 3d day of June, 1893, and for costs.”
    Beatty made no defense. Chase answered, in substance, that his connection with the firm ceased on the first day of September, 1892, when he transferred his interest to Beatty, who assumed the payment of the liabilities of the firm; that the business was thereafter carried on by Beatty in his own behalf; and, that the plaintiff,with knowledge of these facts, on the 12th day of February, 1893, received and accepted in satisfaction of his claims against the firm which are set up in his first and second causes of action, certificates of deposit issued by Beatty, payable in six months, and bearing interest until maturity. And, as to the money claimed in the third cause of action, he avers that was originally deposited after Beatty became the sole owner of the bank, and with notice that Chase was not then a member of the firm. A verdict was returned in Chase’s favor, on a trial of the issues joined by a denial of the allegations of his answer. Judgment rendered on’the verdict was reversed in the circuit court for error in the charg’e to the jury, in refusing instructions requested by the plaintiff, and in not requiring more specific answers to interrogatories submitted to the jury. The ease is brought here to obtain a reversal of the circuit court, and an affirmance of the common pleas. A further statement of the facts, and. of the alleged errors, will be found in the opinion.
    
      Theodore 8. White and Jabez Dickey, for plaintiff in error.
    Our position is that the record shows an agreement on the part of Brundage to release Chase and accept Beatty as his sole debtor. And this agreement, again, is not required to be made in any particular form or manner. It is required that the creditor acquiesce in, assent or agree to the arrangement between the partners, but when that is done, that is all that is required. It is a contract that requires no special formality, but is proven like any other agreement. It need not be express, but may be implied from conduct, fact and circumstances. Bank v. Oreen, 40 Ohio St., 431.
    It is shown by the record in the special findings of fact by the jury, that after the dissolution of the partnership, Brundage, the creditor, with knowledge of the dissolution, surrendered to Beatty the certificate of deposit issued by the firm and accepted a new certificate issued by Beatty alone. Bindley on Partnership (Ewell’s 2d Am. Ed.), page 248 (star paging); Evans v. Drummond, 4 Esp., 89; Reed v. White, 5 Esp., 122.
    
      In regard to the question of substitution of debtors and the release of retiring partners, see Clark on Contracts, page 615; Ila/rt v. Alexander, 2 Mees. & W., 484; 1 Bates’ Law of Partnership, section 528; Springer v. Shirley c& Hyde, 11 Maine, 204; Register v. Dodge, 6 Fed. Rep., 6; Bates’Law of Partnership, Volume 1, section 519; Shato v. MoGregory, 105Mass., 96; Hart v. Alexander, 2 M. & W., 484; Oaldy v. Pasheller, 10 Bligh. N. R., 548; 4 Ct. & Pin., 207; Harris v. Lindsay, 4 Wash. C. C., 98; Pitáis v. Robinson, 32 Up. Can. 2 B., 362; Bates’ Law of Partnership, Volume 1, page 537; George on Partnership, 270; Harris v. Famoell, 15 Beav., 31; Clark on Contracts, 616.
    
      Olds <& Olds, for defendant in error.
    We think the circuit court was clearly right in their judgment of reversal in this case, and that the court of common pleas was clearly wrong.
    In the charge as given the court refuses to give in charge that in order to release Chase there must have been an agreement in which the minds of both parties come together, and that it must have been understood by both parties that Chase was released and Beatty accepted, but proceeds to tell the jury that if certain things were done Chase was released, and their verdict should be for the defendant, and wholly ignores the proposition that there should be an agreement. We maintain that i t is for the jury to say whether or not there was such agreement; and if the court will read the charge given to the jury they will find that the court of common pleas carefully avoids that proposition, and leaves the jury to understand that an agreement is not necessary, and that it is no matter what was the understanding and intent of the parties.
    
      The authorities in all or nearly all the states, and especially in Ohio, say that while the conduct of the parties and other circumstances may be considered by the jury in determining whether or not such an agreement has been made, it must be an agreement; it must be the understanding and intent of both parties, and it must be clearly proven; and the jury must be able to find from the proof clearly that such an agreement has been made, and it is not the province of the court to say what circumstances will amount to an agreement, and much less is it the province of the court to say, under certain circumstances they must find for the defendant and leaving them to ignore all other circumstances in the proof.
    There are various authorities of other states sustaining our position in this case; some very respectable courts going so far as to hold that the agreement must be supported by a consideration, such as additional security or the like, but we think the question so well settled in Ohio that we content ourselves with simply citing Ohio cases, and we cite in support of our position: Merrick v. JBoury, 4 Ohio St., CO; Leach v. Church, Admr 15 Ohio St., 169; Bamson v. Taylor et al., 30 Ohio St., 389; Bank v. Creen, 40 Ohio St., 431.
   Williams, J.

It is not contended here that there is any ground upon which Chase can be held liable for the money deposited by the plaintiff on the 2d day of June, 1893. The errors for which the judgment of the trial court was reversed concern his liability upon the first and second causes of action, for the money deposited while he was a partner in the bank. It appears from the record, that the banking copartnership between Beatty and Chase was formed in 1888, and continued until September 1,1892, when it was dissolved by agreement, under which Beatty took its assets and assumed the payment of its liabilities. Beatty thereafter continued the business, in the name of the Cardington Bank, until August 16, 1893, when he failed. The plaintiff left on deposit with the firm, on the 12th day of February, 1890, the sum of one thousand dollars, and on the 12th day of August, 1890, the further sum of four hundred and seventy-five dollars. And upon these two deposits his first and second causes of action are founded. For each of these sums, the firm issued to the plaintiff, at the time the money was left with it, a certificate of deposit payable six months thereafter with a special rate of interest for that period only. These certificates were surrendered by the plaintiff at maturity, when the interest was paid, and new ones issued to him in like form for another period of six months; and, thereafter renewals were made in the same way every six months so long as the firm continued to exist. Each of the certificates bore the names “R. F. Chase, President,” and “fm. G. Beatty, Cashier,” printed at the top, and was signed “F. A. Bayer, a cashier.” On the 27th day of October, 1892, being in the month following the dissolution of the firm, the plaintiff made a new deposit in the bank, of one hundred and twenty-five dollars, and then received a certificate of deposit for the amount, in the same form as those which had been previously issued by the firm, except that the name of Chase, President, was erased by lines of red ink drawn over it. After that, on the 12th day of February, 1893, the plaintiff surrendered to the bank the last renewal certificates issued to him for the one thousand dollars and the four hundred and seventy-five dollars while Chase was connected with the bank, received the interest then due on them, and accepted new certificates for corresponding amounts payable six months from that time, and bearing a like rate of interest until their maturity. The name of Chase did not appear on these last certificates, as President, or otherwise. The evidence tended to prove that when the plaintiff accepted them he knew that Chase had withdrawn from the firm, that Beatty had assumed payment of its liabilities, and was then the sole owner of the bank, and, that the plaintiff had made inquiries concerning Beatty’s solvency and responsibility.

The court in its general charge instructed the jury, in substance, that the agreement made between the defendants on the dissolution of the firm would not affect Chase’s liability to the plaintiff, unless the latter consented to the arrangement, or acquiesced in it; but if, with knowledge of the agreement, he surrendered the certificates issued to him while Chase was a member of the firm, and received in place of them certificates issued by Beatty, with Chase’s name omitted therefrom, calling for the same or a greater rate of interest for a specified time, that would release Chase. The instruction requested, which the court declined to give, was, in effect, that Chase would not be released from liability unless the plaintiff agreed to accept the new certificates in payment of the indebtedness of the firm, or intended, in accepting them, to take Beatty for the debt and release Chase.

The instruction requested is in accordance with the rule established in this state. In Merrick v. Boury, 4 Ohio St., 60, it is held that a note given for a precedent debt of the maker will not be regarded as a payment of the debt unless the creditor agreed to so receive it. And in Leach v. Church, 15 Ohio St., 169, the same rule was applied in a case where, after the dissolution of a partnership, a note was given for a debt of the firm by one of the partners who had agreed to pay its liabilities. It is a question of fact for the jury to determine, in such cases, whether the creditor agreed or intended to receive the note or other obligation of the partner, in payment. In the cases cited it is said, that the agreement or intention to so receive it must be clearly shown; but that, we apprehend, is a consideration addressed to the judgment of the jury, rather than a rule of evidence. The agreement or intention need not be express, but may be implied from the circumstances of the transaction and conduct of the parties. And no higher degree or greater certainty of proof is necessary to establish the agreement than is ordinarily required to prove any other fact in civil cases. A preponderance of the evidence is sufficient. The new certificates of deposit issued to the plaintiff after the dissolution of the . banking firm, were the individual obligations of Beatty. They imposed no liability on Chase. And their substitution for the old ones then surrendered, in satisfaction of the firm debt and discharge of Chase from liability', being in accordance with the agreement of dissolution, Beatty’s intention to thus pay the firm debt with his individual obligation would be sufficiently obvious; and the plaintiff’s intention to so receive them might be inferred from the fact that he surrendered the firm certificates, and accepted, and has since retained, the new ones, knowing them to be the individual obligations of Beatty, who was bound by his agreement with Chase to pay the firm debts. The plaintiff might reasonably understand that, in the transaction, Beatty was acting in pursuance of his agreement to pay the debts of the firm, and be willing to rely on his individual responsibility in order to secure the continuance of the money at interest for a definite future period. These facts, however, are evidential merely; and it was the province of the jury, and not of the court, to draw the proper inferences, and from them, in connection with all the evidence in the case, determine whether there was an agreement or intention to accept the certificates in payment of the firm debt.

But, while the court failed in its general charge to properly submit this question to the jury, it was so submitted upon the written requests of the plaintiff for special findings. In pertinent and sufficiently certain responses to these requests the jury found and returned, in addition to the general verdict, that when the plaintiff received the certificates of deposit issued to him after the dissolution of the banking firm, he had knowledge of its dissolution, and of the ag’reement between the partners by which Beatty was to pay the indebtedness of the firm, and, that he then consented to release Chase, and take Beatty alone for the payment of his debt against the firm, and intended to do so. The special findings are consistent with the general verdict, and cured the error in the general charge of the court, and in its refusal of the instruction requested. They find the essential facts which fix the legal rights of the parties, and cover the questions that the plaintiff desired to have submitted to the jury by the instructions which were refused. Nor, can the findings be regarded as any the less impartial or decisive than if the jury had been instructed concerning the effect they should have on the general verdict. A new trial, with those instructions, could only result in a resubmission of the same questions of fact to another jury. And though that jury might find differently, it could only do so because it might take a different view of the weight of the evidence. There being nothing in the record to show that the findings already made are erroneous, the plaintiff in error is entitled to the judgment which he recovered in the trial court.

Judgment of the circuit court reversed, and that of the common fleas affirmed.