Case ID: ad_159/html/0476-01.html
Source: Caselaw Access Project
Author: {"author": "Hotchkiss, J.:", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Walter Schultze, Appellant, v. Oscar Huttlinger, Respondent.
    First Department,
    December 5, 1913.
    Partnership — dissolution—assumption of firm debts — effect of foreign judgment against partnership—liability of partner assuming debts.
    A complaint alleged the copartnership of the defendant and another, the dissolution of the firm and an agreement by the defendant to assume the firm debts, and in particular the liability on drafts drawn on a foreign bank. It was further alleged that the foreign bank obtained judgment against the copartners on the drafts, which judgment had been assigned to the plaintiff, and that by the foreign law the judgment was res adjudieata, as to the firm debt, but did not bind the separate estates of the partners, and that in order to recover from them individually another action was necessary.
    
      Held, that it was error to dismiss the complaint in an action to recover against the partner who had assumed the firm debts, for his liability rested, not upon the foreign judgment, which was merely evidence of the debt, but upon his agreement to assume the partnership debts.
    Appeal by the plaintiff, Walter Schultze, from a judgment of the Supreme Court in favor of the defendant, entered in the office of the clerk of the county of Hew York on the 11th day of April, 1913, upon the dismissal of the complaint by direction of the court at the close of plaintiff’s case.
    
      Antonio Knauth, for the appellant.
    
      Paul C. Schnitzler, for the respondent.
   Hotchkiss, J.:

The complaint alleged the copartnership of defendant and one Vivie; the dissolution of the firm by a written agreement by which defendant assumed all the firm assets and agreed to pay its debts, particularly the drafts drawn by the firm, on the Hamburger Bank. A copy of this agreement was attached to and made part of the complaint, and its execution was not denied. The complaint also alleged that while the firm was so indebted on such drafts the bank commenced its action against the firm in the State Court at Hamburg, that being a court of general jurisdiction, to recover the amount due on the drafts; that by the Herman law such action could be brought against the members of the copartnership or against a partner engaged in liquidating the business after dissolution of the firm, and that a judgment rendered in such an action was, by a similar law, enforcible against the defendant appearing in the action as the representative of the firm; that this defendant appeared and defended said action, and that the issues were tried and resulted in a judgment against the firm, which judgment had been assigned to the plaintiff. By the judgment roll "offered in evidence it seems that the German action and the judgment therein was against the firm “ in liquidation,” the firm having apparently been sued as an entity. By the testimony of an expert witness plaintiff proved that under the German law the judgment in question was res adjudicata as to the firm debt; that it did not bind the individual partners or their separate property, and that in order to recover the debt from them, or either of them, an action to which those sought to he bound were parties would have to be brought, but that in such action the judgment would he conclusive evidence of the firm debt. The complaint seems to have been dismissed on the theory that notwithstanding the defendant appeared and defended the action which resulted in the judgment, his appearance was an impersonal one, as liquidator only; that the judgment was not binding on him as an individual, and that to enforce his liability, to use the language of the court, “it would he necessary to bring a separate action * * * and obtain a second judgment based upon the judgment against the firm.” I think this was error. While the action has been treated as one on the judgment, I regard it differently. The complaint alleged the indebtedness of the firm on the drafts, the dissolution, the defendant’s agreement to pay, and the assignment of the debt to plaintiff. From these facts the defendant’s liability arose. The judgment was res adjudicata as to the firm indebtedness, and it was not necessary to resort to it as the basis of defendant’s personal liability. It is true that the drafts were not put in evidence, nor was this necessary, because the debt they evidenced was as to the firm merged in the judgment, and it was this debt, namely, the firm debt, for which the defendant was sued, his obligation to pay resting not upon the judgment hut upon his agreement.

The judgment should be reversed and a new trial granted, with costs to appellant to abide the event.

Ingraham, P. J., McLaughlin, LAUGHLiN-and Dowling, JJ., concurred.

Judgment reversed, new trial ordered, costs to appellant to abide event. Order to be settled on notice.