#### Grubbe, Respondent, vs. Pierce, imp., Appellant.

*January 16*

February *3, 1914.*

*Partnership: Acceptance of note of one partner for firm debt: Discharge of other partners: Contracts: Consideration: Waiver of claim: Questions for jury.*

1. Where a creditor accepts an evidence of indebtedness from one of two persons jointly liable and informs the debtor who gives such evidence that he accepts him for the debt, a jury may reasonably draw the inference that the creditor intends to release the other debtor.

2. Where a due-bill or note of one partner for the amount of a firm debt is accepted by the creditor, and the latter at the same time expressly agrees to accept such partner alone for the debt, such acceptance and agreement make a valid contract which operates to discharge the other partner or partJ ners.

3. "Even if it should be conceded that such an agreement is not supported by any valid consideration, yet if it was made by the creditor with full knowledge of the facts it may be found that he thereby waived his claim' against the other partners, especially where there are equitable considerations which might well have induced him to do so.

*30Appeal from a judgment of tbe circuit court for Outa-gamie county: JohN GoodlaNd, Circuit Judge.

*Reversed.*

For the appellant there was a brief by *Francis 8. Bradford,*attorney, and *E. T. Fairchild,*of counsel, and oral argument by *Mr. Bradford.*

*Julius P. Frank,*for the respondent.

BabNes, J.

The defendants were copartners doing business at' Appleton under the firm name of Lahay *&*Company. Their business consisted of taking orders for $16 suits of clothes made by the International Tailoring Company of Chicago. The plaintiff was the agent of the Wells Fargo Express Company at Appleton. The defendant *Pierce*lived in Milwaukee and took no active part in the management of the business. He first directed that the clothes be shipped on open account to the firm, but, learning that Lahay was not paying the bills as he should, undertook to protect himself by directing the shipments to be made by express, C. O. D., and they were so made. Grubbe, without *Pierce’s.*knowledge or consent, and against the rules of his employer, delivered goods to the amount of $418 to Lahay without collecting the amount called for on delivery of the goods. He was required by the express company to make good this sum, and sues both partners to recover bis loss. The court directed a verdict in plaintiff’s favor. *Grubbe*was advised by Lahay that *Pierce*was a partner in the business and was responsible, but testified that, he did not know whether he was so informed, before or after the credit was furnished. He also testified that before the credit was extended he knew that *Pierce*was in the firm.

On July 25, 1912, *Grubbe*took a due-bill signed by W. E. Lahay for the amount of the account. ■ Later he took a note signed by Lahay for the amount due and attempted to negotiate it. He was asked if he took the note in settlement of the indebtedness, and replied: “No, sir, I took it as an ae-*31■commodation mote to pay tbe account'.” He also testified that be did not take Labay for tbe amount of tbe bills, but took Labay & Company. One Steidl, wbo bad been employed in defendants’ store, testified that *Grubbe*wanted to learn Labay’s address because be tbongbt Labay was bonest .and be might get' $20 or $25 on account from bim from time to time. Labay testified that plaintiff accepted a due-bill signed by bim individually for tbe amount of the claim and agreed to take bim (Labay) for tbe amount of tbe debt. Tbe note was destroyed and it does not appear when it became due.

Under this testimony a jury might find that plaintiff accepted tbe due-bill and note of Labay for tbe amount of tbe debt with tbe understanding and agreement that *Pierce*should be released. Where a creditor accepts an evidence of indebtedness from one of two persons jointly liable 'and informs tbe debtor wbo gives such evidence that be accepts bim for tbe debt, tbe inference may reasonably be drawn that tbe creditor intends to release tbe other debtor. It was for tbe jury to draw sucb inference in tbis case, if tbe alleged agreement was valid.

Tbe briefs on file give us no assistance on tbe most difficult question in tbe case. Numerous authorities bold that where a creditor accepts tbe note or obligation of a third person under an agreement to discharge one primarily liable,-tbe agreement is valid. *Challoner v. Boyington,*83 Wis. 399, 53 N. W. 694; *Willow River L. Co. v. Luger F. Co.*102 Wis. 636, 78 N. W. 762; *Davenport v. Schram,*9 Wis. 119; *Allis v. Meadow Spring D. Co. 67*Wis. 16, 29 N. W. 543, 30 N. W. 300; *First Nat. Bank v.*Case, 63 Wis. 504, 22 N. W. 833.

There are authorities which bold that the taking by a creditor of a note or obligation of one partner under an agreement t'o discharge a copartner jointly liable does not preclude tbe creditor from proceeding against all tbe part*32ners to collect tbe debt. It is said tbat' tbe party giving tbe obligation is simply agreeing to pay bis own debt and tbat tbe creditor receives no benefit from tbe promise made by bim to release one of bis debtors, and therefore it is *nudum pactum. Cole v. Sackett,*1 Hill (N. Y.) 516; *Waydell v. Luer,*5 Hill (N. Y.) 448; *Frentress v. Markle,*2 G. Greene (Iowa) 553; *Early v. Burt,*68 Iowa, 716, 28 N. W. 35; *Walstrom v. Hopkins,*103 Pa. St. 118; *Morrison v.*Kendall, 6 Ind. App. 212, 33 N. E. 370.

Tbe preponderance of authority is, however, to tbe contrary. Tbe English cases bold tbat tbe taking of a note or obligation of one partner for a partnership debt, coupled with an agreement to accept tbe same as a payment and to discharge tbe other parties liable for tbe debt, does in fact discharge them. *Thompson v. Percival,*5 B. & Ad. 925; *Lyth v. Ault,*7 Exch. 669. These cases bold tbat tbe transaction constitutes an accord and satisfaction..

Chief Justice MaRshall, in speaking of tbe discharge of one of two joint debtors in tbe manner above specified, says:

> “Tbe note of one of tbe parties, or of a third person, may,, by agreement, be received in payment. Tbe doctrine of *nudum pactum*does not apply to such a case; for a man may, if such be bis will, discharge bis debtor without any consideration. But, if it did apply, there may be inducements to take a note from one partner liquidating and evidencing a claim on a firm which might be a sufficient consideration for discharging tbe firm.” *Sheehy v. Mandeville,*6 Cranch, 253, 264.

Tbe following cases bold directly or inferentially tbat where tbe note or obligation of one partner is tendered to and accepted by tbe creditor and tbe latter agrees to look to such partner alone for bis debt, tbe remaining partner or partners are discharged: *Collyer v. Moulton,*9 R. I. 90; *Motley v. Wickoff,*113 Mich. 231, 71 N. W. 520; *Harris v. Lindsay,*4 Wash. C. C. 271; *Wadhams v. Page,*6 Wash. 103, 32 Pac. 1068; *First Nat. Bank v. Cheney,*114 Ala. *33536, 21 South. 1002; *Hoopes v. McCan,*19 La. Ann. 201; *Lewis v. Davidson’s Ex’r,*39 Tex. 660; *Burdett v. Greer,*63 W. Va. 515, 60 S. E. 497. Other eases which lean in the same direction, but which were decided on somewhat different facts, are: *Venable v. Stevens,*94 Ga. 281, 21 S. E. 516; *Hellman v. Schwartz,*44 Ill. App. 84; *Rusk v. Gray,*83 Ind. 589; *Stone v. Chamberlin,*20 Ga. 259; *Frye v. Phillips,*46 Wash. 190, 89 Pac. 559.

There seems to be but one case decided in this court which involves the- question under consideration. *Hœflinger v. Wells,*47 Wis. 628, 3 N. W. 589. In this case it is held that, where the individual note of one partner is taken for a loan made to a firm, the presumption is that it was not taken in payment. In the opinion it is said:

> “And if the jury or the court should find as a fact' that the money was borrowed by and loaned to the firm, and upon its credit, then the taking of the individual note of one member of the firm would not be a payment of such firm debt, unless it was affirmatively shown that such note was taken in payment of the same.”

The case of *Sheehy v. Mandeville, supra,*is cited to the proposition quoted, and the court evidently intended to follow Chief Justice Marshall’s decision and hold that such an. agreement as we are considering would not be *nudum pac-tum.*

'Considering what our own court' has said upon the subject and the authorities elsewhere, we think it should be held that if plaintiff accepted a due-bill or note from Lahay for the amount of the firm debt, agreeing expressly at the same time to accept Lahay solely for the debt, such acceptance and agreement made a valid contract which operated to discharge *Pierce.*

If it should be conceded that there was no valid consideration to support such an agreement, we still think the question of whether or not such an arrangement had been made should *34have been submitted to the jury. Surely the plaintiff had the right to waive his claim against *Pierce.*There are some equitable considerations which might well induce him to do so. *Pierce*had tried to protect himself against the very thing that happened, by directing the goods to be shipped 0. O. D., and it was only because plaintiff failed to do what *Pierce*had a perfect right to assume he would do that *Pierce*became liable. Some of our cases have defined a waiver to be an intentional relinquishment of a known right. *Monroe W. W. Co. v. Monroe,*110 Wis. 11, 22, 85 N. W. 685; *Swedish Am. Nat. Bank v. Koebernick,*136 Wis. 473, 479, 117 N. W. 1020; *Dunn v.*Superior, 148 Wis. 636, 645, 135 N. W. 145. Other cases have gone still farther, but for present purposes the cases cited go far enough. If it should be found that' plaintiff made the agreement claimed with full knowledge of the facts, it might also be found that he waiyed his claim against *Pierce. Consaulus v. McConihe,*2 N. Y. Supp. 89, and 119 N. Y. 652.

*By the Court.*— Judgment reversed, and cause remanded for a new trial.