Case Name: JACOB GULICK v. JAMES H. GULICK AND THOMAS H. GREEN, LATE PARTNERS, &c.
Court: New Jersey Supreme Court
Jurisdiction: New Jersey
Decision Date: 1837-11
Citations: 16 N.J.L. 186
Docket Number: 
Parties: JACOB GULICK v. JAMES H. GULICK AND THOMAS H. GREEN, LATE PARTNERS, &c.
Judges: 
Reporter: New Jersey Law Reports
Volume: 16
Pages: 186–192

Head Matter:
JACOB GULICK v. JAMES H. GULICK AND THOMAS H. GREEN, LATE PARTNERS, &c.
In case on Demurrer.
To a suit on a promissory note, made to the plaintiff, by the defendants; J, H. G. one of them, severs, and pleads that soon after making said note, they dissolved partnership, that T. H. G. assumed the debts of the firm, gave his note to J. for the stock, &c., with the plaintiff as his security for its payment: and that the plaintiff, immediately after said dissolution, became a partner with said Thomas, the other defendant, in similar business.
Held, on demurrer to said plea, that the facts therein stated do not prove a release of the makers of said note to the plaintiff, from their liability thereon ; nor is said plea a bar to the action.
J. 8. Green, for plaintiff.
Bogart for defendant.
The cause was submitted to the Court, at the last term, upon the following
STATE OF THE CASE.
This is an action of assumpsit brought by the plaintiff against the defendants, upon a promissory note, bearing date the twenty-second day of August 1833, payable ninety days after date, for the sum of nine hundred and ninety-seven dollars and ninety-four cents, to the order of tbe plaintiff' and signed by James H. Gulick and Co. The declaration contains two counts; the first is upon the note, the second is for money had and received, paid, laid out and expended, and upon an account stated. To this declaration, the defendant, James H. Gulick has pleaded as follows:
Supreme Court, of the Term of February, in the year of our Lord, one thousand eight hundred, and thirty-seven.
Middlesex ss. And the said James H. Gulick, who is impleaded with Thomas H. Green, as lately trading under the firm of James H. Gulick and Co. by David N. Bogart, his attorney, come and defends the wrong and injury when, &o. and says, that the said Jacob Gulick ought not to have or maintain his aforesaid action thereof against him, because he says, that heretofore, to wit, on the sixth day of September, in the year of our Lord, one thousand eight hundred and thirty-six, at Kingston, viz: at New Brunswick aforesaid, and after the making of the said promissory note in the said declaration specified, the said co-partnership theretofore subsisting between the said James H. Gulick and the said Thomas H. Green, in the name of James H. Gulick and Co. was by the recommendation and advice of the said plaintiff, then and there dissolved by mutual consent, and the said James II. Gulick, for certain considerations, then and there stipulated and agreed upon, by and between the said James H. Gulick and the said Thomas H. Green, and by and with the know ledge, approbation and consent of the said plaintiff, withdrew from the said Firm, leaving his said co-partner in full and entire possession of the stock, trade, business and dealings thereof; a part of which said consideration, being a payment by the said Thomas H. Green to the said James H. Guliek, of the sum of three thousand one hundred and one dollars, to be secured in manner following, to wit, by two promissory notes, each in the sum of one thousand five hundred and fifty dollars and fifty cents, with the said Jacob Gulick the plaintiff, as security thereon ; one payable on the first day of April, eighteen hundred and thirty-seven, and the other payable on the first day of May, eighteen hundred and thirty-seven, with interest from the date of said notes, and also that he the said Thomas H. Green, his executors and administrators, should at all times forever thereafter, save and keep harmless and indemnified, the said James H. Gulick, his executors and administrators, against all and every person or persons whatsoever, to whom they, the said James H. Gulick and Thomas H. Green were indebted on account of the said Co-partnership, and of and from all manner of actions, suits and costs, or charges whatsoever, which might thereafter be brought against or incurred by the said James H. Gulick, for or by reason of any debts or sums of money, any bill, bond and specialty, promise or contract, touching the said co-partnership, and the said defendant further saith that immediately thereafter, to wit, on the said sixth day of September, in the year of our Lord, one thousand eight hundred and thirty-six, the said Jacob Gulick the plaintiff, took the place of the said defendant, in the said Firm, and entered into co-partnership in the same business with the said Thomas H. Green, with a full knowledge of all the facts and circumstances aforesaid, and subject thereunto, and the said defendant further saith, that the said promissory note in the said declaration specified, was and is one of the said debts outstanding against the said Firm, at the time of the dissolution thereof, as aforesaid, and against which the said defendant was to be so as aforesaid indemnified ; of all which, the said plaintiff then and there had notice, and this, he, the said James IT. Gulick is ready to verify, wherefore he prays judgment if the said plaintiff ought to have or maintain his aforesaid action thereof against him.
To ibis Plea the plaintiff has filed a demurrer and joinder in demurrer.
J. 8. Green, for plaintiff.
This is a suit against partners on a partnership note. Their original liability is not denied.
The note is their note, and signed by James Ii. Gulick and Co. The dissolution of the firm, does not release them. They stand jointly and severally responsible for the claims against the firm, fairly and regularly contracted. The dissolution being by the consent of the parties, and with the advice of the plaintiff, can make no difference.
2d. How could these stipulations change the liabilities of the partners to others, Green was to secure his partner, three thousand one hundred and eighty-one dollars upon his withdrawal, and to indemnify his partner against all partnership debts?
1st. This is a mere agreement, between the partners, and can be enforced only by James H. Gulick against Thomas H. Green. He may possibly bring his action and recover damages. It does not destroy or affect his former liability. It does not amount to a discharge or payment of his note and even in this agreement-, he cannot bring suit till be has paid this note.
2d. Jacob Gulick is no party to the agreement and cannot be affected by it. It is res inter alios aeta: his being present at the time it was made, or his assenting to it after it was made, cannot make him responsible C. J. Kent, in bis 3d. vol. 10. Edition of 1828 — says, though the law allows partners, to regulate their concerns as to each other, they cannot by arrangement among themselves, control their responsibility to others.
3d. Jacob Gulick took the place of James H. Gulick with a knowledge of these circumstances. What circumstances? The security of three thousand one hundred and one dollars ; and the indemnity against outstanding debts. He did not agree to release James H. Gulick. At that time the bank held the note, and Jacob Gulick bad not been called upon to pay. 1 Strange, 403, Heath v. Percival, P. Williams, 681; Cox’s Pig. 516 60.
Bogart for defendant.
The general principle is that all partners continue liable after dissolution, for debts contracted during partnership. Chitty on Bills, 65.
But by a new express agreement for adequate consideration, there may be such a change of credit as completely to discharge a retiring partner. 1 Chitty Pl. 54 5 1 New Rep. 124, 131. 4 Esp. Rep. 91. 2, 5, 122. 3 East 141 8 T. R. 451. 2 Camp. 99 12 4 East 21. 2 Taunt. 49, 13, 7, 4, 58.
Instances of a new firm adopting a debt of an old firm, and thereby becoming liable. 1 Chit. P. 55 N. 6 1 Mont. Bank Law 619. 20 4 Taunt. 673. 2 B. and A. 39 2 B. and C. 72.
When a firm adopts the debts of a partner or of an old firm, and the creditor elect to take the new debtor, it seems the old debtor is released. 1 Mont, on Part. 81; 2 Brown, 595; 3Il205.
If a creditor of a firm, consent to accept security of one partner, in discharge of joint debt, such conduct may vary his right and deprive him of joint action. 1 Mont. on Part. 81 vide 133. 2 Barn and Ald. 216. 3 Ibid. 611.
Where upon a dissolution, C. one of the defendants, a partner, told the plaintiff, he was to look to him alone for the debt, and he accordingly drew a bill for the amount which 0. accepted, the bill was dishonored and time given to C. held it, was for the jury to say whether the plaintiff took the bill of C. in satisfaction of the joint debt, and if so, it was a discharge of the other partner. 1 Ohitty on Bills 848, 1886.
If on a dissolution, one partner agrees to retain all the funds and pay all the debts; and a creditor with full knowledge of such stipulation, enters into a totally new contract with the paying partner, changing the character of the debt, varying it essentially from what t'he retiring partner was bound to pay, and subjecting him to a different responsibility, such new contract amounts to a discharge of the retiring partner and an acceptance of the other as sole debtor. Coxe’s Digest, 516. 4 Wash. C. C. Rep. Harris et. al. v. Lindsay.

Opinion:
Ford J.
This is an action on the ease against James H. Gulick and Thomas II. Green, who were trading under the firm of James H. Gulick and Co., founded on their promissory note hearing date the 2d. of August 1836, for the sum of nine hundred and ninety-seven dollars and ninety-four cents, payable ninety days after date, to the order of Jacob Gulick the plaintiff. To a declaration on the note in ordinary form, James H. Gulick severs from his partner in a special plea, to which the plaintiff, gives a general demurrer, thereby admitting the facts contained in it to be true, but denying that they amount to-any legal defence against the note; and I think it will abundantly appear that they do not. Let us consider them in the order they are staled in the plea.
It avers that the partners, sometime after having made the note in question, made a dissolution of their partnership concern, pursuant to the advice and recommendation of the plaintiff, and that James II. Gulick left all the stock, trade and business to his partner Green, on receiving from him promissory notes for three thousand one hundred and one dollars, with the plaintiff'as security therein for payment, and on receiving from his late partner, an assurance of being saved harmless against all debts owing by their firm. Now which of these acts of the plaintiff can possibly invalidate his note against the firm ? His recommendation to them to dissolve their partnership was received by them as friendly advice, which could have no operation in destroying-his note. His becoming security for the payment of a large sum of money, by one partner to the other, is no reason why he should forfeit a just debt owing to him by both of them; and beyond this, he was no party to any other of their transactions. The transference of the partnership effects, to Thomas H. Green, and his contract with James H. Gulick, to pay all the debts outstanding against the firm, were acts between the partners alone, in which the plaintiff was no party and of course had no responsibility. And surely no agreement between themselves, can invalidate their note in the hands of a third person. So far therefore the matter amounts to no bar. But the plea proceeds to other facts.
It states that immediately on that dissolution, the plaintiff formed a partnership with Thomas H. Green, in the same kind of business, and that the note in question is one of the outstanding debts against the old firm, which Thomas H. Green had undertaken to pay off. This is the whole of the plea in substance. Now as soon as the old firm came to be regularly dissolved, each partner was at liberty to contract new relations in business with whomsoever he pleased. It is averred that the plaintiff knew Thomas II. Green was in debt at the time they entered into part nership it ought however to have made further averment that this new house made a legal assumption to pay the debts owing by that other and different firm, and even then it would have been insufficient; for if the partners were really indebted to James Gulick, he could not set it off against a separate demand of one of the partners; so that under every view of the plea, it is utterly defective, and judgment must be rendered for the plaintiff.
Ryerson, J.
I have been unable to perceive any principle on which, the plea in this case, can be supported. It is true, in the brief submitted to us, a succession of propositions are suggested, with numerous authorities cited in their support. But I must confess my inability to discover any influence which those propositions, any or all of them, can, or ought to have, on the judgment which this Court should render. They all seem to result in this, that when a creditor of a Firm, with due notice, accepts the separate undertaking of only a part of that firm, on, or after the retirement from its business, of the other part, with a contract of indemnity from its debts; the retiring partner is thereby discharged. Admitting the truth of this proposition, in its greatest latitude, it cannot relieve the defendant who has pleaded. He does not show in any part of his plea, that the plaintiff has done any thing to change the relation between him and the defendants, or either of them. He has given no discharge express or implied, of either. He has accepted of no new security, no new promise, or liability. The defendants were originally, jointly liable to him. Nothing has occurred to enable him to pursue a remedy on this joint liability, against one of them alone. And he has received no new security, no new promise, on which he may recover against one alone.
If the defendant pleading this plea, has any defence, it is in equity, and not at law. If the plaintiff have come into the possession of any funds which ought to be appropriated to satisfy this claim, that fact can only be properly manifested and applied, in whole or in part, in another tribunal. The demurrer is therefore well taken, and the plaintiff must have judgment.
Hornblower, C. J. concurred in the opinions of both Justices.
Judgment for plaintiff.