#### *Williams v. Donaghe’s Executor.

February, 1823.

Partnership — Note of Individual Partner for Partnership Debt — Effect in Equity.† — In equity It is competent for a creditor to prove that his claim was due from a partnership, although he may have taken a note from one of the partners, in his individual name.

Same — Nonresident Partner — Equity Jurisdiction.‡: — A suit in equity may be maintained against a partnership, if one of the partners resides out of the state, although the remedy would have been at law, if they bad both been residents of this state.

Commissioner’s Report — Exception Thereto Sustained— Recommittal. § — Where an exception to a commissioner’s report is correctly sustained by the court, upon the evidence produced, yet if there is good reason to believe that other evidence might be produced, to give the case a different result, and that such evidence has been withheld, in consequence of the commissioner’s having allowed the item the court of chancery ought not to pronounce a final decree, but to recommit the account for farther evidence and enquiry.

‘Hugh Donaghe brought a suit in the Staunton chancery court, against Joseph and Cumberland D. Williams, to recover the amount of a note, executed by the said Joseph Williams, to the said Donaghe, for $2,169 58 cts.

The bill sets forth the following case; that the plaintiff having a waggon and team, in the year 1807, some other horses, and a quantity of grain and bacon for sale, he made a contract with the said Joseph Williams, (then part owner and manager, as he understood, of certain iron works in the county of Augusta, conducted under the name and firm of Joseph and Cumberland D. Williams,) for the sale and delivery thereof, to the amount of $2,169 58 cts. that he made this contract under the assurance, that he was dealing with the firm, and that both partners were liable for the said debt: that he accordingly delivered, in the course of the year, the produce and property to the amount above specified, on the responsibility of the said firm; that he understood that the active partner Joseph Williams, was fully authorised to tiansact all business for the said firm: that it will appear by various orders, for different parcels of the said produce, that this business *was transacted in the name and under the faith of the copartnery aforesaid: that when the same was all delivered, the said Joseph Williams executed his note to the plaintiff for the amount, payable twelve months after date: that the debt aforesaid, has never been paid: that he is informed, that the, said Joseph Williams is ■ about to leave the state, without paying, or in any manner securing the said debt; that Cumberland D. Williams can only be subjected by a suit in equity, as the note was executed by Joseph Williams alone: that Cumberland D. Williams resides in Baltimore, is a man of wealth, and owns large possessions in Augusta, as a partner of the said firm. The plaintiff therefore prays, that a writ of ne exeat may issue against Joseph Williams; that the court may decree payment of the said debt, from the said co-partnery, and hold the property, real and personal, of the co-partnery, responsible to the final decree, unle.ss the absent partner gives am-*113pie security, to abide by such decree, &c.

Cumberland D Williams demurred to the bill, because the plaintiff, by his own shewing, had a complete remedy at law. He, also, filed an answer, stating, that he and Joseph Williams, in the year 1806, became jointly interested in the iron works mentioned in the bill, and continued so curing the year 1807; but that during all that period and ever since, the said Joseph Williams was never authorised, to contract debts, or make engagements on the joint or several account of this respondent, and that he was not so authorised in the transaction alluded to by the complainant: that by the books of accounts of Mount Torry furnace, and Belvidere Forge, (in which establishment the respondent was interested,) the complainant is credited at the former, for certain articles furnished, viz: certain horses and grain, during the year 3807, amounting to the sum of $686, and by the books and accounts of said forge, he is credited for grain to the amount of $186, furnished in 1807: that the complainant agreed, on or about the 20th of August, 1808, with the respondent, to ^receive and purchase of the latter, ten tons of bar iron, at the rate of $100 per ton, deliverable at Belvidere Forge; that the respondent has heard, and verily believes, that nine tons and a half were delivered accordingly to the complainant, and was received by him; and that the remaining half ton, was ready for delivery at the time and place agreed; amounting to $1000, which is due to this respondent alone: that he is willing that the said two sums of $686, and $186, amounting to $872, shall be deducted, leaving a balance due the respondent^ of $128: that the respondent does not believe that the. complainant relied on the faith or credit of the respondent, as the business was not carried on in the name of Joseph and Cumberland D. Williams, and as the complainant received in liquidation of the said debt, the note of the said Joseph Williams alone, in his individual character, and not in the name of the partnership: that the said Joseph, carried on a separate establishment, called Union Forge, in which the respondent had no manner of cencern: the respondent had no manner of concern: ises, as stated in the bill, to pay any part of the money, except so far as is admitted to be due in this answer.

Joseph Williams answered, that it _ is true that he entered into a contract with the complainant, by which he became indebted to him in the sum stated in his bill: that this contract was in part for the benefit of Joseph and Cumberland D. Williams, and in part for the benefit of the respondent alone; that is to say, about $1200 of the debt contracted, was for the benefit of the firm, and the balance of $969 58 cents, for the benefit of the respondent: that since he executed his note to the complainant, the latter entered into a verbal agreement with the respondent, to receive from him ten tons of iron, to be delivered at the forge of Joseph and Cumberland D. Williams, on the South river, at $100 per ton, in part discharge of the claim he now sets up: that, at the time of the said contract, the respondent understood from the ^complainant, that he had entered into some negociation with Henderson & Robinson, by which they were to get the ten tons of iron; and the complainant requested the respondent to write to the said Henderson & Robinson, and inform them at what time they might expect to receive it: that the respondent accordingly wrote, and the said Henderson & Robinson actually received two tons of the said iron: that he had two other tons-ready to be delivered to the said Henderson & Robinson, on the same account; but he was prevented by the complainant, who sent a message to the respondent, to request that he would not deliver any more iron to them, but that he would pay for what they had already received: that the respondent has always been ready to del’ver the said ten Ions of iron to the complainant, and trusts that he will still be compelled to receive it: that the respondent has been informed, and believes, that the complainant entered into an agreement with Cumberland D. Williams, for ten tons of iron more, at the same price, as he believes; which will only leave a balance due to the complainant of $169 58 cts. which the respondent has been at all times willing to discharge, if the complainant had complied with his several agreements aforesaid: that the complainant had no ground to require him to give security to abide by and perform the decree, as he could have no reason to suspect him of an intention to remove out of the state of Virginia.

Depositions were taken, and exhibits filed, to prove that the articles were furnished on account of the partnership, and to explain the transaction relative to Henderson & Robinson.

The cause was referred to a commissioner to state an account of the goods which were purchased by the - defendant, Joseph Williams, on his own account, and those furnished on account of the partnership, &c.

The commissioner reported a balance of $38 53 cts. in favor of Joseph and Cumberland D. William's; and a balance of $1167 19 2-3 cts. against Joseph Williams, individually. *In making up this account, the commissioner allowed a credit to Joseph Williams, for ten tons of iron, delivered to the order of Henderson & Robinson; and he charged the amount of the note of $2,169 58 cts. to Joseph Williams, alone.

The plaintiff filed exceptions to the report; two of which were, that the note above-mentioned should have been charged to Cumberland D. Williams and Joseph Williams, jointly: as it appeared that the articles for which it was given were purchased in the name of the said firm, on their credit, and for their use; and that nine and a half tons of iron were credited to the said firm when there is no evidence to support this credit; and if there was evidence to support it, the iron was delivered «while Joseph Williams was tenant of Belvidere Forge; and if the accounts *114are to be' separated, this credit ought to be given to Joseph Williams.

The chancellor sustained the two exceptions above mentioned, and decreed the sum of $1167 19 2-3 cts. against the defendants, with interest, &c.; and Cumberland D. Williams appealed.

Nicholas, and Wickham, for the appellant.

Leigh, for the appellee.

†

Partnership — Note of Individual Parties for Partnership Debt — Effect in Equity. — in Sale v. Dishman, 3 Leigh 555, it-is said; "Unless it appears that the note or bond of an individual partner is designed to be accepted in discharge of the partnership, it will not have that effect in equity. Thus even if a j udgment be obtained against a surviving partner, on notes of the firm, that judgment is, at law, an ex-tinguishment of the original notes (for, transit *in rem adjudicatam)*and so in case of a bond, it would be, at law, an extinguishment of the simple contract; yet, In both cases, it would be in equity a partnership debt still. Jacomb v. Harwood, *2*Ves. sen. 265; Heath v. Percival, 1 P. Wms. 682; Orr v. Chase, 1 Meriv. 729; David v. Ellice, 5 Barn. & Cress. 196, 11 Com. Law Rep. 201. And this principle I understand to be distinctly recognized by this court, in *Williams v. Donaghe,*1 *Rand.*300, and Linney v. Dare, 2 Leigh 588.” In this case (Sale v. Dishman), it was held that, though a bond or covenant executed by one partner of a mercantile house, in the name of the firm, for a debt of the partnership, is not binding on his copartner who did not seal the instrument, yet the debt being originally a debt of the concern, both partners are liable for it to the creditor.

In Niday v. Harvey, 9 Gratt. 454, 470, it was held that, whether a bond and deed of trust to secure it, given by a partner after the dissolution of the partnership, for a simple contract debt of the partnership, releases the other partner in equity, depends upon the intention of the parties in giving and taking them; and that this intention may be ascertained from the attendant circumstances. In this case (Niday v. Harvey), it was held-that there had been such a dealing on the part of the creditor with the partner executing the bond, etc., and such a relying on the individual liability of that partner as showed that his obligation and the means provided for Its payment were alone looked to for the satisfaction of the debt, and that, therefore, the other partner was released in equity as well as at law, according to the real intention and understanding of the parties concerned. The court, citing the principal case, Sale v. Dishman, 3 Leigh 548, and Galt v. Calland, 7 Leigh 594, said that though, in each of these cases it was held that the giving by one of the partners of his individual promise or obligation for a debt of his firm, and its acceptance by the creditor, did not, under the circumstances, release the other partner in equity, yet, in no one of these cases, were the circumstances attending the transaction similar to those found in the case under consideration; and that there was nothing in any one of them which militated at all with the conclusion to which the court had arrived in the case at bar.

See the principal case also cited in Weaver v. Tapscott, 9 Leigh 426; Ward v. Motter, 2 Rob. 547.

See further, monographic *note*on "Partnership” appended to Scott v. Trent, 1 Wash. 77.

‡

**Same — Equity Jurisdiction. — See principal case ' cited with approval in Brooke v. Washington, 8 Gratt. 257.

See generally, monographic *note*on “Jurisdiction” appended to Phippen v. Durham, 8 Gratt. 457; monographic *note*on “Partnership” appended to Scott v. Trent. 1 Wash. 77.

§

Commissioner's Report — Exception Thereto Sustained — Recommittal.—See principal case cited in Holt v. Taylor. 43 W. Va. 161, 27 S. E. Rep. 323,

See further, monographic *note*on “Commissioners in Chancery” appended to Whitehead v. Whitehead, 23 Gratt. 376.

JUDGE CABELL,

February 10. — delivered the opinion of the court.

The evidence abundantly proves, that the debt which was the consideration of the note in the bill mentioned, was contracted with Hugh Donaghe by Joseph Williams, one of the partners of the firm of Joseph *&*Cumberland D. Williams, on the credit, and for the benefit of the firm. It did not cease to be a debt of the firm, by the said Joseph Williams giving his individual note therefor; nor by his applying, to his individual use, some of the property *for which the debt was contracted. Being a debt due from the partnership, and one of the partners residing out of this commonwealth, the suit was properly brought in chancery; and the demurrer was, therefore, correctly overruled. The court is farther of opinion, that all the exceptions to the commissioner’s report, that were sustained by the chancellor, were correctly sustained. But although there is no sufficient evidence in the record to shew that the 9J4 tons of iron, the subject of the 3'd exception, were delivered by the appellants to the testator of the appellee; and although in consequence of the absence of such testimony, that exception was correctly sustained; yet, as there is strong reason to believe from the deposition of Cahill, and the answers of the defendants, that the said iron, or a* part thereof, was delivered to the said Donaghe, or his order; and as the commissioners having allowed a credit therefor on the evidence exhibited, may have prevented the appellants from producing other evidence, in their power, on that subject; the court is farther of opinion, that under these circumstances, the chancellor erred in pronouncing a final decree; a-nd that he ought to have recommitted the account to a commissioner for farther evidence and enquiry, whether any, and if any, how much iron was delivered to Donaghe, or his order, in pursuance of the agreement evidenced by the letters of the 23d and 24th of August, 1808. The decree, on this ground only, is reversed, and the cause is remanded for farther proceedings, &c.