Case Name: CARTER against CONNELL and Others
Court: Supreme Court of Pennsylvania
Jurisdiction: Pennsylvania
Decision Date: 1836-04-05
Citations: 1 Whart. 392
Docket Number: 
Parties: CARTER against CONNELL and Others.
Judges: 
Reporter: Reports of cases adjudged in the Supreme Court of Pennsylvania (Wharton)
Volume: 1
Pages: 392–399

Head Matter:
[Philadelphia,
April 5th, 1836.]
CARTER against CONNELL and Others.
1. In an action against A. B. and C. as partners, to recover the price of goods sold to A., the others being* dormant partners, the defendants gave in evidence a release executed by the plaintiff to A. of all demands, &c. It appeared that-A. had executed an assignment to B. of all his estate, for the payment of creditors, among whom B. and C. were preferred to a large amount, an'd that the release was executed in consequence of a stipulation in the assignment: Held, that the concealment of the fact of the partnership at the time of the execution of the*release, was a fraud upon the plaintiff, which avoided the release*. ' ' /
2. In an action against three persons as partners, two of whom only have been summoned, the partner as to whom a return of n. e. i. has been made, is not a competent witness for the other defendants* to disprove the allegation of a partnership having existed, although released by them. .
3. A witness called to authenticate a paper, cannot be asked whether to the best of his impression, the paper is in the hand writing of the party.
This was an action of assumpsit brought by Durden B. Carter against John Connell, Francis Worley, and Thomas Welsh, to recover the price of goods sold and delivered by the plaintiff to John Connell.
The action was tried before the Chief Justice, at a Court of Nisi Prius, held at Philadelphia on the 19th of November, 1835.
The plaintiff having proved ihe sale and delivery of the goods, ■ gave in evidence certain promissory notes, drawn by Connell for the same, each dated the 8th of June, 1829—
One at 5 months for - - - $172 63
“■ at 6 months for - - 172 00
“ at 7 months for • - 172 00
“ at 8 months for - - 172 00
$688 63
He then gave in evidence the articles of agreement or copartnership, stated in the case of Mason v. Connell, (ante, p. 381,) and the assignment by Connell to Worley, mentioned in the same case. Besides these, the books of Worley & Welsh, and of Connell were given in evidence; and certain letters between the defendants in the years 1827, 182S, and 1829; and certain draughts and acceptances, upon which the name of John Connell appeared with that of • Thomas Welsh.
The defendant then gave in evidence, the general release to Connell, which had been executed by the plaintiff in this case; the account settled by Worley as assignee of Connell; the receipts • of the several creditors for their dividends under the assignment; and the agreement of revocation or annulment, endorsed on the articles of partnership, (ante. p. 383.)
The counsel for the defendants then offered in evidence the deposition of John Connell, to which the plaintiff’s counsel objected, but the Chief Justice admitted it to be read; reserving the question of the competency of the witness.
The defendant’s case being closed, the plaintiff gave evidence to show that at the date of the alleged revocation, (June 1st, 1829,) Connell was not in Philadelphia but in Balmimore, which place he left on the 3d of June.
A paper alleged to be in the handwriting of Connell was produced by the defendants; and several witnesses were examined upon the question of the handwriting. Among others, a witness named See, testified as follows: “ I know John Connell. I think I know his handwriting, but would not be willing to be qualified to it. I think I have seen him write. I have received promissory notes from him. If I were to see some of the notes, I could say if it was his handwriting.” The following question was then proposed to the witness: “ Are you able to say whether, to the best of your impression, this paper is in the handwriting of John Connell or not?” The defendants’ counsel objected to the question, and the judge decided that it could not be put.
The evidence on both sides being closed, the Chief Justice charged the jury in substance: that in point of law, a partner could not enlarge the partnership contract by taking in another partner, Or taking his copartners into another firm. Assent might however be given subsequently; and if the agreement in this case was carried into actual execution, the presumption was that Welsh knew of it; and if he did know the fact, he was.bound to disclaim the ar-. rangement, or he would be bound by it. The presumption is that a man executes his contracts. But it is not to be presumed for the purpose of founding another presumption, that Welsh'knew of the arrangement being in force. How far the evidence supported the plaintiff’s allegation as to the partnership arrangements having been carried into effect, was a question of fact for the jury. Supposing, however, that a partnership was established, the defendants say that they are not bound by it, if drawn into it by fraud and misapprehension. The law is so^ but they jury will say what evidence there is of fraud. It was also contended on the part of the defendants, that whatever may have been the partnership arrangements, they were relinquished before the purchase from the plaintiff, and therefore they are not liable. If such were the fact, it would certainly follow that they were not liable; the defendants being dormant partners. The question of the effect of the release to Connell was reserved.
The jury found for the defendants; and a rule having been granted to show cause why there should not be a new trial;
Mr. Brashears and Mr. D. P. Brown, argued in support of the rule:—
1. The deposition of Connell was improperly admitted. One partner cannot be a witness to discharge his copartners from liability, by proving that in point of fact, there,was no partnership. 3 Starkie, 1083, 4; Goto on Partnership, 202, note (1) to Am. ed.; Simons' v. Smith, (1 fly, Sp Moody, 29; 21 E. C. L. R. 374.) Miller v. M'Clenachan, (1 Yeates, 144.) Gardiner v. Olden, (2 Yeates, 185.) 1 Phillips, 59, 134. M‘Coy v. Lightner, (2 Watts, 347.) Black v. Mason, (2 Penn. Rep. 138.)
2. The Court ought to have permitted the question to be put to the witness, of his impression respecting the handwriting of Connell. There is no substantial difference between impression and belief; and evidence of handwriting,.except when the witness was actually present at the signature, is all matter of opinion. 2 Starkie, 372, 658. Rogers v. Shaler, (Anihon’s JV. P. C. 109.) 4 Esp. JV. P. C. 37.
3. The release of Connell cannot be held to operate as a release of his copartners, who were not known at the time to possess that character. The doctrine has never been carried so far as to discharge dormant partners. In Robinson v. Wilkinson, (3 Price, 538,) it was held, that the acceptance of a bill of one partner did not discharge a dormant partner; and Graham, B. said, “ In general' a release of one partner is a release of all; but a party has always a right against a concealed partner of whom he has previously had no knowledge, as soon as he discovers him, unless that ignorance were his own fault, as if he had not used due diligence in finding him.” In this case, the release ought not to be allowed to operate; because it was a fraud upon the plaintiff to hold out Worley & Welsh as creditors, when in fact they were partners.
Mr. Randall, for the defendants:—
1. Was Connell interested so as to render him inadmissible. The question relates to the time of his deposition, viz. August, 1834. I admit that if there was a partnership fund which might be increased or diminished by his evidence, he would not be admissible. But it was shown by the accounts of the assignee, that the assets fell far short of the debts. The testimony was offered after the release had been given in evidence, and after the plaintiff had produced the assignment, which was of itself a dissolution of the partnership. Gow, 252. Grisvjold v. Waldington, (15 Johns. 82.)' Marquand v. Man. Co. (17 Johns. 535.) Murray v. Munford, (6 Cowen, 443.) There is a strong current of authorities in favour of the admission of copartners, co-obligors, and others in similar situations. Co/lyer onPp. 462, 3. Roscoe on Evidence, 88. Gow on Pp. 216. Ward v. Hnyton, (2 Esp. JY. P. C. 552.) Green v. Deacon, (2 Starhie, JY. P. C. 347.) Moody v. King, (2 Barn. ó¡- Cres. 558.) A falo v. Foudrinier, (6 Bing. 306.) Worrell v. Jones, (7 Bing. 395.) Bate v. Russell, (1 M. 4* M. 332.) Smith, v. Mien, (18 Johns. 245.) Clark v. Carter, (3 Cowen, 84.) Grant v. Shurter, (1 Wendell, 148.) Willing v. Consequa, (1 Peters, C. C. R. 303.) D'Wolf v. Johnson, (10 Wheal. 367, 384.) Le Roy v. Johnson, (2 Peters, .Rep. 194.) Robertson v. Mill, (2 Harris Sp Gill, 98.)
2. The release of Connell necessarily operated as a discharge of the other partners, if they were such. The plaintiff relies upon an extremely sharp rule of law, to charge Worley and Welsh upon contracts which they never made, and to which they were not privy; and he cannot complain if another rule of the same branch of the law is applied to him. The doctrine is well established and extends through a variety of cases, that a release of one joint contractor is a release of all. Gow on Pp. 202. Cheetham v. Ward, (1 Bos. 4* Pull. 630.) Consequa v. Willing, (1 Peters, C. C. R. 306.) Ward v. Johnson, (13 Mass. Rep. 148.) Robertson v. Smith, (18 Johns. 459.) Smith v. Black, (9 Serg. óp R. 142.) Coe v. Hutton, (1 Serg. óp R. 398.) Milliken v. Brotan, (1 Rawle, 391.) These cases show that the law with respect to ostensible partners is clearly settled ; and the principle applies with equal force to the case of a dormant partner. It is said that there was fraud in the concealment of the partnership in this case. This may be averred of every case of partnership in which the names of the partners are not communicated to the world. If the concealment of a dormant partnership is a fraud, then the dissolution of such a partnership ought to be published, which has never been held to be necessary. At all events, Welsh cannot be charged with a fraud, since the evidence shows that he was at the time and continues to be, a resident of Baltimore ; and to succeed in this action, the parties must be shown to be jointly liable. Gow, 273. Armstrong v. Hussey, (12 SergJóp R. 315.) Kelly v. Hurlbut, (5 Coioen, 534.) JVewmarch v. Clay, (14 East, 239.)' There is no authority for the position taken on the other side, excepting the case of Robertson v. Wilkinson; and there is little more in that case, than the dictum of Baron Graham.

Opinion:
The opinion of the Court was delivered by
Sergeant, J.
The defence in this suit embraced the grounds taken in Mason v. Connell, and others not arising in that case. In the first place, the sale by the present plaintiff was made on the 8th June, 1829, which was subsequent to the date of the paper executed by Connell and Worley, revoking the partnership of the 1st September, 1828; and the defendants contended that the firm was, in no event, liable for this debt. The plaintiff answered that the paper of the 1st June, 1829, was antedated ;'and called witnesses to show that Connell was absent from Philadelphia at that time. In the next place, the defendants set up the release executed by the plaintiff to Connell on the 20th August, 1829, as a bar to his present demand. The plaintiff insisted that this'release was fraudulently obtained, and was therefore not binding on the plaintiff) who had refused to receive a dividend under Connell's assignment.
Two points were reserved on the trial. 1st. How far the alleged fraud would affect the validity of the release. 2d. Whether the deposition of Connell was admissible in evidence. Besides these reserved points, on an objection made by the defendants, to a question proposed by the plaintiff to Richard C. See, a witness for the plaintiff) the question was overruled; and this forms another ground of the plaintiff's motion for a new trial. The second reason for a new trial, assigned by the plaintiff, does not appear to be correct in fact; and the 4th has not been urged.
The first question is, how far the validity of the release, as a bar to this suit, is affected by the alleged fraud in its procurement. It is contended by the plaintiff) that Worley & Welsh were at the time of the sale of the goods for which this action is brought, dormant partners of Connell, in the mercantile house in his name at Pitts-burg: that on the'21st June, 1829, he made an assignment of all his estate, goods, debts, &c. to Francis Worley in trust, and in that assignment which was executed by Connell, of the one part, and Francis Worley, of the other part, they represented Worley & Welsh to be creditors of J'ohn Connell, and gave them a preference as such, to the amount of upwards of eleven thousand dollars, being more than one-half of theassets of Connell; by virtue of which Wor-' ley & Welsh received that sum, leaving the unpreferred releasing creditors but about ten per cent, of their claims: that it was a fraud in the parties to that assignment, not only to conceal the fact of the partnership, but, in addition, to hold out Worley & Welsh as creditors, when they were partners with Connell, and co-debtors; and to enable them to abstract a large amount of money from funds that ought to have gone to creditors; and that a release procured under such circumstances, is voidable at the option of the party imposed upon.
A release or any other conveyance obtained by fraud, will be set aside by a court of equity. A release to an insolvent under the stipulations contained in his assignment, is subject to this rule as much as any other. While on the one hand, the assigning debtor possesses the lawful power of paying such creditors first as he pleases, and of stijaulating that none shall receive any thing from the assigned funds unless they discharge him from their claims; on the other hand it is his duty to make a fair- and candid statement of his circumstances, and to avoid any thing like the,use of deception or unfair dealing to obtain a discharge. The creditors in general, can know little or nothing of his affairs; they must rely in a great measure, on his representations of his situation: and if he makes false representations in material matters, and there be mala fides in so doing, by means of which the creditors are subjected to ¡oss, a release obtained under such circumstances, may be avoided. This principle is stated in various cases; and in 2 Eq. Ca. Ab. 379, there is this case: If there be two dealers, and one of them is very much indebted to the other, and in order to get an abatement from him, he makes him believe he is insolvent, by absconding, skulking, or shutting up shop, and thereby procures a release or an abatement, when in truth the man was really solvent, the Court will relieve against such release: and this was agreed to have been done, and the case of Bonny v. Bonny, quoted for an instance. Secus, if the party had not just cause to fear the loss of his debt.
Now the case here supposed is, that the assignor and assignee combined to make the plaintiff believe that Worley & Welsh were creditors,.and to induce him to ratify ah assignment by which they were preferred for more than half the assets, and to give a release by which they are forever discharged from their liability to him; and that the plaiqtiff is to be bound by that release, notwithstanding it should afterwards turn out that these supposed creditors were in fact the debtors, that the money abstracted by them as a preferred debt, was in justice and law, the property of the plaintiff and other creditors ; and that they were bound not only to refund that money, but to make good all deficiencies. It is impossible to sustain such a proposition. Whether the ostensible partner is bound to disclose the name of a dormant partner, and how far his omission to do so would "render the latter liable when discovered, notwithstanding a release to the former, it is not necessary to determine: thought the dicta of judges in the case cited from Price's Excheq. Reports are pretty strong on the point. But where there is not merely a suppressio veri but a suggestio falsi, not merely a suppression of the name of a dormant partner, but a representation that he is a creditor, and a course of conduct calculated to mislead the creditors, and to divert a portion, of the funds of the ostensible partner into the hands of the dormant partner, to the injury and loss of the creditors, no doubt can be entertained of its being deemed in law fraudulent, and rendering the release inoperative.
It has been suggested that supposing the preference an undue one, the only consequence would be, that the assignee is liable for the amount, and must account for if to the creditors, but the release remains good. If the creditor chose to ratify the release, and-look to the assignee for the moneys misapplied, he might elect to do so. But he may also elect to consider a release fraudulently 'procured, as null and" void, and be remitted to his original rights. Even with the restoration of the abstracted funds, the assigned estate might not suffice to pay. Besides, the creditors ought in justice and equity to have received" the proceeds of that fund as soon as realized. It would be exceedingly unjust and oppressive' if after detecting an imposition, and a long delay, they were in no better situation than they would have been had nothing of the kind happened, and if they were at last compelled to force out of the assignee what should have passed into their hands in the regular course of settlement of the estate. It may also reasonably be questioned whether any release . would have been given,'had the circumstances then appeared as they are now stated to be.' If then, the partnership existed, the concealment of the names of the dormant partners, connected with the other matters alluded to, gives the plaintiff a right to treat the release as a nullity; and it is not a bar to his action.
Was the deposition of Connell evidence for the defendants? This deposition went to disprove the alleged partnership: to show its dissolution prior to the sale by the plaintiff: that Worley & Welsh were bona -fide creditors of the witness, and generally, to prevent the plaintiff's recovery: and the defendants rely on the circumstance of Connell's not being served with -process in this suit, and a release to him by the defendants, prior to his examination, of all claim or demand on account of moneys that might be recovered, as removing the objection, that he is a partner. The contrary, however, was decided by this court in the cases of Marvin v. Black, (2 Penn. Rep. 138,) and M'Coy v. Lightner, (2 Watts, 347,) and the same point was determined in Young v. Bairner, (1 Esp.N. P. 103,) and Simons v. Smith, (1 Ry. & Mood. 29; 21 Eng. Com. L. Rep. 374.) The reason is that a judgment in favour of the plaintiff would authorise a payment of this debt by the defendants out of the partnership funds, or it could be enforced by execution; which would not be the case if the plaintiff failed. The interest of the witness in these funds as partner is, therefore, directly affected by the result of the suit. It is our opinion, that the deposition was inadmissible.
The decision of the second point renders the last immaterial; because it was to impeach the credit of Connell, that the plaintiff offered the paper, in relation to which the question objected to was put- At the same time we have no doubt, the question was rightly-rejected. If a witness is called to speak to handwriting, and possesses a knowledge ©f it, from having seen the person write, .or seen his writing, he ought to be asked as to his belief, whether the paper is his hand-writing or not. To inquire of a witness in such case, what is his impression, is descending to a test too vague to form a judgment upon. It is like asking a witness, what was his understanding of a conversation, instead of inquiring what the parties said. The rule is stated in Phill. Eo. 421: "A witness may b'e asked, whether he has seen a particular person write, and after-wards whether he believes the paper in dispute to. be- his handwriting."
New trial awarded.