Case ID: nys_2/html/0309-01.html
Source: Caselaw Access Project
Author: {"author": "Barnard, P. J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Stewart et al. v. Robinson et al.
    
    
      (Supreme Court, General Term, Second Department.
    
    May 14, 1888.)
    .Partnership—Agreement t;o Continue Business by Survivor—Liability of Decedent’s Estate.
    A partnership contract provided that on the death of either partner the business should be carried on by the survivor for five years, the deceased partner’s estate to share the profits and losses, as the deceased partner would have done had he lived. One partner died testate, making no provision for his executor carrying on the business. The survivor continued the business for a time in the partnership name, and failed. Meld, that the contract conferred no power on the survivor, but only allowed him five years in which to wind up the business, and therefore the general estate of the deceased partner was not liable for partnership debts contracted by the survivor.
    Appeal from special term, Westchester county.
    Action by James Stewart and George Stewart against George H. Robinson and others, executors of Joseph Colwell, deceased, for distribution of decedent’s estate, and payment of the debts of S. S. Hepworth & Co., a partnership, of which deceased was a member in his life-time. The complaint was -dismissed, and plaintiffs appealed.
    
      Ralph E. Prime, for appellants. William B. Ellison, for respondents.
   Barnard, P. J.

The case shows that there were two agreements of partnership between Joseph Colwell, deceased, and Samuel S. Hepworth. By the first agreement Colwell owned the stock, and Hepworth received half the profits for the sole management of the business. In this agreement it was provided that the wife and children of a deceased partner should succeed to " his share therein for the remainder of the term, which was for five years. The deceased partner had the right to designate by will the interests of the wife and children as between themselves. The next agreement is based upon -a continuation of the partnership indefinitely “on the same terms and conditions as those which have previously existed, ” with the right to either party to terminate the partnership by a six-months notice. In this last agreement is contained this clause, out of which the question presented arisesf “In the ■event of the death of either, the business shall be continued by the survivor until the expiration of five years from the 1st day of February next succeeding such death; the estate of the deceased partner to have the share and interest in the profits, and to bear the same share of the losses, of the business, -as would have been received and borne by the deceased partner had he lived: provided, however,- that if the survivor shall think it necessary to employ an additional clerk in consequence of the death of the deceased partner, in such case the expense shall be charged to and shall be borne by the share in the profits of the deceased partner.” Colwell died, leaving a will disposing of his whole estate, and made no mention in it of the partnership, and giving consequently no power to the executor to continue the business. The surviving partner carried on the business under the partnership agreement, and failed in business. The business, was carried on under the old firm name, and the plaintiffs are persons who are creditors of the partnership with debts contracted subsequent to Colwell’s death.

The question, therefore, is whether the general estate of Colwell is holden for these debts. The authorities are by no means clear. It is definitely settled that death absolutely ends the partnership agreement, in the absence of words continuing it after death. Martine v. Insurance Co., 53 N. Y. 339. An executor cannot carry on a business without express authority to do so by the will. Hartnett v. Wandell, 60 N. Y. 347. An executor cannot bind an estate through a contract having for its object the creation of a new liability not founded on the testator’s contract. They take testator’s property as owners, and must account for it to those entitled to distribution. Schmittler v. Simon, 101 N. Y. 554, 5 N. E. Rep. 452. By the partnership agreement, the-surviving partner carried on the business after Colwell’s death, under ah express agreement made by tile testator; and the executors took the property of deceased as owners, without power to continue the partnership, and without power to appropriate any of the property of deceased in aid of its purposes and-during its continuance. A direction by the testator to apply his estate to a partnership for five years after his death would have been clearly illegal as-against his creditors, and even his next of kin and devisees. The clause in the contract, 1 think, has no greater effect than to permit the surviving partner to take live years to close up the partnership, without intending or fairly meaning that the general estate of testator was to be bound for the new debts-created by the surviving partner after his death, other than those incurred inclosing up the business, “hfothing but the most clear and unambiguous-language, demonstrating in the most positive manner that the testator intends-to have his general assets liable for all debts contracted in the continued work after his death, and not merely to limit it to the funds embodied in that work,, would justify the court in aiming at such a conclusion from the manifest inconvenience thereof, and the utter impossibility of paying off the legacies bequeathed by the testator’s will, or distributing the residue of the estate, without in effect saying at the same time that the payment may be recalled if the trade should become unsuccessful or ruinous.” Burwell v. Cawood, 2 How.. 577. This language is used, it is true, in regard to a will, but the meaning as well applies to contracts. The case shows reasons for such a construction. The property all belonged to deceased, and no expectation of a total loss-can be imputed to him by the extension, and the clause itself provides that the clerk was to be charged “to the share” of the profits of the deceased partner. The clerk was not to be a general charge. The judgment should therefore be affirmed, with costs.