Case ID: seld-notes_1/html/0028-01.html
Source: Caselaw Access Project
Author: {"author": "", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Thomas Burch against Walter L. Newberry, Imp’d, &c.
    
      Partnership; brokers; guaranty.
    
   The defendants, exchange brokers at Chicago, in April, 1845, agreed to terminate their partnership on the first of May following. On the 30th of April, one partner, having formed a new partnership with the plaintiff, to continue the business from the 1st of May, settled with his former partner, and, in the settlement, cancelled two notes of the old firm, amounting to $10,000, which had been taken up by the new firm; and received therefor, from the old firm, a draft, payable to the order of the new firm, for $3,000, on J. T. Smith & Co., of New York, correspondents and agents of the old firm, and an order for certain drafts (or their proceeds) which had been sent by the old firm to Smith & Co. for collection — the drafts and order amounting to near $11,000—cover-ing all the assets of the old firm in the hands of Smith & Co., and exceeding the amount of the two notes, $940.93, for which sum the note of the new firm was given to the old. The new firm, on the 1st of May, transmitted by mail, from Chicago, to Smith & Co. at New York, the draft and order, with instructions to place the amount of the draft to their credit, and to hold the paper, mentioned in the order for collection, for them. Smith & Co. acknowledged the receipt of the draft and order, on the 9 th of May, by mail, saying they had placed the $3,000 to the credit of the new firm, but had not then time to examine the accounts of the old firm as to the order. This letter, by mail, could not reach Chicago until after the 16th of May. No other demand was made by the new firm upon Smith & Co. for the $3,000, or the drafts, until after May 16th, when Smith & Co. failed, having previously received the avails of all the drafts, except one of $1,000. They were insolvent on the 30th of April, but were in good credit, and paid all demands upon them until their failure. The bill in this cause was filed by the incoming partner against the members of the old firm, to compel the retiring partner to pay to the new firm one-half the amount of the two notes and interest.

Held, that the old firm was not liable to the new for the losses sustained by the insolvency and failure of Smith & Co.

That the only guaranty on the part of the old firm was, that the things that they assumed to transfer were, in fact, what they described them to be.

That if the guaranty extended farther, the new firm had made Smith & Co. their agents, and assumed the risk of their responsibility.

(S. C., 1 Barb. 648; 1 How. Pr. 145; 10 N. Y. 374.)