Case ID: ohio-st_48/html/0613-01.html
Source: Caselaw Access Project
Author: {"author": "\n      Minshall, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Keeper v. Wood.
    
      Limitations — Note made by partner, after dissolution, for balance of an account with firm before dissolution — Effect of, on the account, as to the other partners — Effect of payments made by such partner.
    
    1. A promissory note executed by a member of a firm, after its dissolution, in consideration of the balance due upon an account with the firm prior to dissolution, is not, in the absence of express authority to execute it, such promise in writing as will, under the provisions of § 4992, Revised Statutes, take the demand on the account out of the statute of limitations, as against the other members ; and this is so, although the business of the firm was conducted, and the note executed, in a state by whose laws the one executing the note has power, as liquidating partner, to execute a note in settlement of the business of the firm that will bind the other members.
    2. The law is the same as to payments made by such liquidating partner.
    (Decided December 8, 1891.)
    Error to the Circuit Court of Hamilton county.
    
      The suit below was upon an account against the member of a dissolved firm. Service was obtained upon one of them, the plaintiff in error, Kerper; no service was had upon the other, he being a non-resident. The answer, for one of its defenses, relied on the statute of limitations. The plaintiff in reply, averred payments made after' the dissolution by Parker, as liquidating partner under the laws of Pennsylvania ; also, the execution of a promise in writing to pay the same, and that the payments and promise were within six years of filing the petition. On the trial to the jury, the court at the close of the evidence for the plaintiff, directed a verdict for the defendant. The plaintiff excepted and placed the evidence on record by a bill of exceptions. A motion for a new trial was made, overruled, and judgment rendered for the defendant, dismissing the action; which, on error, was reversed by the circuit court.
    The present suit is prosecuted to reverse the circuit court and affirm the common pleas.
    
      Ramsey, Maxwell Ramsey, for plaintiff in error.
    Brief of Lawrence Maxwell, Jr.
    
    I. Payment or acknowledgment made after notice of dissolution, by a partner who has taken the assets and assumed the debts of the firm, will not interrupt the running of the statute of limitations. The question is settled in Ohio by —Palmer v. Dodge, 4 Ohio St., 21; Hance v. Hair, 25 Ohio St. 349. And in Pennsylvania by —Levi v. Cadet, 17 S. & R. 126; 17 Amer. Dec. 650 (A. D. 1828); Reppert v. Colvin, 48 Pa. St. 248; McCowin v. Cubbison, 72 Pa. St. 358; Wilson v. Waugh, 101 Pa. St. 233.
    In 2 Bates on Partnership, sec., 704, note 3, will be found a collection of twenty-six cases from sixteen different states and from England, in support of the proposition. Hackley v. Patrick, 3 Johnson 536.
    The argument which, under our statute, leads to the conclusion that a partner cannot, after dissolution, make an acknowledgment which will toll the statute,' is plain. Mar
      
      ienthal v. Mosler, 16 Ohio St. 566, 569. Hance v. Hair, 25 Ohio St. 349, 352.
    It is true that under the law of Pennsylvania what is there known as a “liquidating partner,” has authority to make an acknowledgment which will toll the statute in that state. But — 1. Parker was not a liquidating partner under the law of Pennsylvania. All the authorities in that state show that a liquidating partner is one who is authorized by the partners to close up the business as their agent and on behalf of all. See especially Reppert v. Colvin, 48 Pa. St. 248; McCowin v. Cubbison, 72 Pa. St. 358; Wilson v. Waugh, 101 Pa. St. 233; Watson v. Woodman, L. R., 20 Eq., 721; Bullitt v. Methodist Episcopal Church, 26 Pa. St. 108, 110.
    2. But the law of Pennsylvania is immaterial. The question is one under the statute of limitations of Ohio, and must be settled by the lex fori. Bank of U. S. v. Donnally, 8 Pet. 361, 370, 372; Alliance Bank v. Carey, L. R., 5 C. P. D., 429; Bank v. Hemingray, 31 Ohio St. 168.
    The question at bar is whether such an acknowledgment was made as brings the case within Revised Statutes of Ohio, sec. 4992, and the acknowledgment relied on being one made by a former partner, the court will determine whether the partner had authority under the agreement of dissolution to make such an acknowledgment as is contemplated by sec. 4992. There is no statute in Pennsylvania fixing the authority of partners after dissolution. The question is simply one of construction of the agreement of dissolution, and that question this court must determine for itself.
    II. If it be true, as claimed by counsel for defendant in .error, that Parker was a liquidating partner and authorized to give the firm note in settlement of the account, the judgment of the court of common pleas must, nevertheless, be sustained. It may be that the note was not taken in payment of the account. But during the currency of the note given in settlement of the account, suit could not be brought on the account, nor could suit be brought after maturity, without surrendering the note. In this case the note was uot returned, and could not be, for the reason that judgment had been taken on it in Pennsylvania against Parker.
    There cannot be two subsisting causes of action against the same firm with respect to the same debt, both maintainable ; one on a note and the other on an account. There may be one or the other of the two actions, at the election of the creditor, but not both. Here the plaintiff had made his election bj' suing one of the partners to judgment on the note. He could not thereafter sue Parker on the account. If not, he cannot sue Kerper on the account; for Kerper’s liability, if it exists, is a joint liability. As a partner he cannot be liable otherwise than jointly with Parker, and if the liability on the account does not exist jointly against both, it does not exist at all against either.
    We are not now denying Kerper’s liability on the note, or insisting that his liability thereon is barred by the judgment recovered in Pennsylvania against his co-obligor. It may be- that under Revised Statutes, sec. 5366, he can be sued on the note, notwithstanding that judgment. That question is not before the court. It cannot arise until he is sued on the note. We are simply insisting that his liability, if any, is on the note, and that an action cannot be maintained against him on the account.
    The fundamental doctrine that the liability of partners on all firms obligations is joint, and joint only, and not joint and several, except sub moda for purposes of administration of assets in case of death, is discussed with great clearness in the house of lords, in the important case of Kendall v. Hamilton, 4 App. Cas. 504.
    In Pennsylvania it is settled that the liability of partners is joint, and not joint and several. Smith v. Black, 9 S. & R. 142.
    
      Kittredge ¿- Wilby, and Avery Holmes, for defendant in error.
    Did Parker have power to so bind Kerper at that date ? Whether he did or did not have such power is not a question of Ohio law, but of Pennsylvania law. There is no conflict here between different statutes of limitation. It is not, therefore, a question of the law of the forum, but a question of agency or power to contract, and is to be determined by the law of the place where the act of agency was performed or the contract entered into.
    Parker as liquidating partner had power to bind Kerper by the firm note after dissolution. The evidence tended to show that Parker was the liquidating partner. He took the assets, and was to settle up the business, and continue at the old stand. Being the liquidating partner, he had, by the law of Pennsylvania, full power to bind Kerper as his agent, although after dissolution, by giving a written acknowledgment of a pre-existing firm indebtedness.
    The law of Pennsylvania as to this power of a liquidating partner was a question of fact to be proved like any other issue of fact in the case. To prove it plaintiff offered testimony of experts; the defendant offered no evidence to the contrary. Williams v. Findlay, 40 Ohio St. 342; Ennis v. Smith, 14 How. 400. And the following reported cases fully sustain the testimony of plaintiff’s witnesses. Parsons’ on Partnership, 3d ed., 423; Estate of Davis Desauque, 5 Whart. 530; Hauser v. Irvine, 3 Watts & Serg. 345; Robinson v. Taylor, 4 Pa. St. 242; Fulton v. Central Bank, 92 Pa. St. 112; Wilson v. Waugh, 101 Pa. St. 233; Siegfried, v. Ludwig, 102 Pa. St. 547.
    If the evidence tends to prove all the facts which it is incumbent on the plaintiff to establish in order to maintain his action, he has a right to have the weight and sufficiency of the evidence1 passed upon by the jury, and it is error for the court to render judgment against him. Stockstill v. D. & M. R. R., 24 Ohio St. 83.
    Plaintiff in error in his brief, however, makes the statement that Wood cannot recover against Kerper on the account if it be true that Wood got a judgment upon this note of Parker & Kerper against Parker alone.
    We deny the propositions of law involved in this statement. But, even if they were sound, it cannot disturb the judgment of the circuit court, because the only question here raised on the record is as to the action of the common pleas in arresting the cause from the jury on the first and fourth defenses. But the propositions are not sound. Whether or not the note was given in extinction of, or as collateral to, the account is a question of fact. The plaintiff offered evidence tending to show that it was given and received simply in acknowledgment of Wood’s claim. That question of fact could not be taken from the jury. But, even if there were no testimony offered expressly tending to show that the note was given and received in acknowledgment of, and collateral to, and not in extinction of, the debt on the account, the presumption is, in the absence of any contrary showing, that it was not in extinction of the debt, and the burden is upon the party alleging that it was received in extinction of the debt. Hunter v. Moul, 98 Pa. St. 13, 15; Leach v. Church, 15 Ohio St. 169; Bank v. Green, 40 Ohio St. 431, 439, 440; Freeman on Judgments, sec. 463 ; Estate of Davis & Desauque, 5 Whart. 530; Walstrom v. Hopkins, 103 Pa. St. 118; Drake v. Mitchell, 3 East 251, 258; Wright v. Lathrop, 2 Ohio 33; Lord v. Bigelow, 124 Mass. 185; Fairchild v. Holly, 10 Conn. 474; Colebrooke on Collat., secs. 108, 109, 110.
    But section 5366 of the Revised Statutes, which is the “ joint debtor act ” in Ohio, disposes of any embarrassment that might otherwise arise from proceeding on the account against Kerper subsequent to a judgment on the same cause of action in another jurisdiction against Parker. For it is thereby provided that where judgment is rendered on a joint contract outside of the state of Ohio, against one of two joint debtors, the plaintiff may bring suit upon such contract or instrument, against the debtor not summoned, in any county in Ohio where such party resides or may be summoned.
    This is also the law of Pennsylvania. Moreover, in the absence of any proof, the law of Pennsylvania upon the subject will be presumed to be the same as the law of Ohio, which we have just quoted. McCulloch v. Norwood, 58 N. Y. 567; Hickman v. Alpaugh, 21 Cal. 226.
   Minshall, J.

James H. Parker and George B. Kerper, as partners under the firm name of Parker & Kerper, carried on the business of a tannery in the state of Pennsylvania, from some time in 1870 to July 1, 1875, at which time the partnership was dissolved. At the time of the dissolution the firm was indebted to John S. Wood in the sum of several" thousand dollars upon an account. On May 8, 1876, notice of the dissolution was given Wood by Parker, and that he “ was settling up the concern.” On March 20, 1882, the plaintiff, Wood, commenced an action in the Court of Common Pleas of Hamilton county, upon the account, claiming a balance of $8,777.16 to be due him. Service was obtained upon Kerper, but not upon Parker, he being a non-resident of the state. The last item in the account before the dissolution was of the date of March 4, 1876. Other pajments had been made by Parker subsequent to that time and within six years of the commencement of the suit. The defendant answered, pleading, among other things, the statute of limitations ; to which the plaintiff replied, that the defendants had made payments on the account within six years next preceding the filing of the petition, and, also, within the same time, had delivered the plaintiff a written promise to pay the same. The case was tried to a jury, w'hieh at the close of the plaintiff’s evidence, rendered a verdict for the defendant by direction of the court. The testimony disclosed that the only payments that had been made upon the account after the dissolution, had been made by Parker, and that the only written promise to pay the account was a promissory note, dated Jauuary 1, 1878, made by Parker in the firm name and delivered to the plaintiff. It was also shown (but not pleaded) that by the law of Pennsylvania, where the partnership had been formed and its business carried on, “ a partner who, after dissolution, remains in possession of the store or place of business, and attends to the collection of the debts due the firm, may give a note in the name of the firm for a debt due by the partnership, which will bind all the partners, although he may have no express authority to settle the business.”

If the pajunents made by Parker on the account after the dissolution of the firm, may be treated as payments made by Kerper; or, if the note executed and delivered by Parker can be regarded as a note executed and delivered by Kerper, or his authority, then the'court of common pleas erred in directing the jury to return a verdict for defendant, and its judgment was properly reversed. And it is plain, as we think, that if the note cannot be so treated, then the payments should not. Payments are, at most, but evidence from which a promise may be inferred. And if an express promise by one member of a dissolved firm, has not the effect of extending the running of the statute of limitations as against the others, plainly a promise that is simply inferred from a payment cannot be given any greater effect. Shoemaker v. Benedict, 11 N. Y. 176, 185.

The question so far as it is controlled by the laws of this state, can hardly be regarded as open to discussion. Our statute of limitations fixes a period in which every action, according to its class, must be commenced. It is a statute of repose and not of presumption; and, unless the suit is commenced in the time limited, cannot be maintained: It is said to be barred. When, however, the demand is founded on contract, and a payment has been made, or a written acknowledgment thereof, or a promise to pay the same “has been made and signed by the party to be charged,” an action may be brought in the time limited by the statute, “ after such payment, acknowledgment, or promise.” § 4992 Revised Statutes. In giving a construction to this provision, it is said by Dav, J., in Marienthal v. Mosler, 16 Ohio St. 566, 569, “ By comparing this section with the one for which it is substituted in the limitation act of 1831, and the judicial construction given to the act of 21 James, it is apparent that the legislature did not intend to enlarge the facilities for taking cases out of the statutory bar.” And, as to payment, it was there held, that it “ must be made by the party to be affected thereby, or by an agent authorized for that express purpose.” And, by a like construction, it was held, in Hance v. Hair, 25 Ohio St. 349, that, “ a partial payment on a joint and several promissory note, by one of tbe several makers, will not prevent the running of the statute of limitations as to the other makers.” These decisions give emphasis.to the reason and language of the statute. A payment, an acknowledgment, or a promise in writing, will not avail to take a case out of the statutory bar, unless made by the party to be charged thereby, or by an agent authorized for that express purpose.

Conceding to the fullest the power of a partner during the continuance of the firm, by virtue of his ’ agency, to bind it by acts of his own done within the scope of the business and intended to bind it, it is well settled in this state, that such power is revoked by dissolution; and he can no longer execute a note that will bind the other members without an express authority to do so. Palmer v. Dodge, 4 Ohio St. 21. And it was also held, in the case just cited, that no such power could be inferred from an authority given by one partner to the other, to settle, liquidate, and close up the affairs of the partnership. That his duty in such case is “ to close up and settle the partnership liabilities, and not to prolong them by new credits; to deal with the existing creditors of the firm and not to make others; to discharge its existing indebtedness, and not to add to it.”

And in this inspect the law of Ohio is the same as that of most of the states of the Union. Van Keuren v. Parmelee, 2 Com. 523; Shoemaker v. Benedict, 11 N. Y. 176; Bell v. Morrison, 1 Peters 351. Bates on Partnership, §704, and notes.

“ Each partner,” says BiíONS«N, J., in Van Keuren v. Parmelee, “ when acting within the scope of the partnership, is deemed to be the authorized agent of his fellows. The authority is presumed from the nature and necessity of the case; for without it, third persons would not be safe in dealing with one of the associates, and the business of the partnership could not be carried on with success. Now how long does this presumed agency continue? Clearly, not longer than the necessity for it exists; and for most purposes, the. necessity ceases with the termination of the partnership. When that is dissolved, there is no longer any ground for presuming an agency, except as to such things as are indispensable in winding up the concerns of the company. If there be no agreement to the contrary, it may be .presumed that each partner still has authority to dispose of the property, to collect, adjust, and pay debts. But there is no ground whatever for presuming a power to make new promises or engagements in the name of the firm, even though they only change without increasing the prior obligations of the partners.”

The question then remains whether by the law of Pennsylvania, where the business of the partnership was conducted and the note executed, the rights of the parties are varied. We think not. Statutes of limitation relate to the remedy, and are, and must be, governed by the law of the forum ; for it is conceded, that a court which has power to say when its doors shall be opened, has also power to say when they shall be closed. There was no evidence to show that by the terms of dissolution Parker, was given any express authority to bind Kerper by executing new obligations in the name of the firm. His authority was simply to settle the business of the firm, and was so disclosed in the notice of dissolution sent to Wood by Parker, so that the only authority he did have to bind Kerper by the note relied on as a promise in writing, taking the action on the account out of the primary limitation of the statute, was, at most, an implied one, attached by the law of Pennsylvania to the power of Parker as liquidating partner; it was not an express authority. This does not answer the purpose of our statute, which, in view of the decisions that had been made following Whitcomb v. Whiting, 2 Doug. 652, and the uncertainty of the law on the subject of such payments, acknowledgments and promises as would prolong the running of the statute of limitations, fixes a definite and certain rule, confining it to such payments, acknowledgments and promises as are made by the party to be charged; and further requiring the acknowledgment or promise to be in writing and signed by the party.

The fact that payments were made, and that the note was given by Parker, within six years of the commencement of the suit and before the action was barred, can make no difference in the application of the statute, as, whether payments were made or a premise given before or after the demand was barred, in either case, it is a question of the authority of the one making the payment or promise to bind the other, and if the authority is not express, the other is not bound, nor affected thereby. Shoemaker v. Benedict, supra. Again, whether by the laws of Pennsylvania Kerper would be liable on the note is immaterial, as the suit is not on the note but on the account. His liability on the note, if at all, results from an implied promise attached by the law of Pennsylvania to the act of appointing a liquidating partner on the dissolution of the firm of which he was a member, which, as we have shown, is not sufficient in this state to sustain an action on a demand that is otherwise barred.

There was, then, no evidence tending to show that the bar of the statute in favor of Kerper in an action on the account, as it existed at the time of the dissolution, had been tolled by any act of his; and the court, trying the case, properly directed a verdict for the defendant.

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