Case Name: Gardner et al. v. Conn et al.
Court: Supreme Court of Ohio
Jurisdiction: Ohio
Decision Date: 1877-12
Citations: 34 Ohio St. 187
Docket Number: 
Parties: Gardner et al. v. Conn et al.
Judges: 
Reporter: Ohio State Reports, New Service
Volume: 34
Pages: 187–193

Head Matter:
Gardner et al. v. Conn et al.
1. As between a copartnership and a creditor thereof, a note given in the-firm name, without authority, by one partner, after dissolution, for a debt of the firm, the parties to the note intending to bind, and believing the note was binding on the firm, will not extinguish the firm debt.
2. As between the partners themselves, such transaction will not discharge-the non-consenting partner from liability to make contribution to the-partner paying the debt.
Error to the District Coui’t of Brown county.
Robert Conn, John P. Helbling, John Henry, James M- Manning, James P. Mooney, and J. W. and E. M. Gardner, on the 10th day of November, 1871, entered into a partnership, for the purpose of carrying on the business of packing pork, “ for the then ensuing pork season.”
The first five named were interested to the extent of one-sixth, each, and the two last named, together one-sixth. The firm lost money in the venture.
The original action was brought in the court of common pleas, in April, 1873, by Conn, Helbling, and Henry against the Gardners to compel a settlement of the partnership affairs, and also to compel the latter to make contribution to the former to the extent of one-fourth of certain designated claims against the firm, which it was alleged they had paid, including the amount of two promissory notes, which are particularly described in the agreed statement of facts made in the district court, which is set out below.
The Gardners by answer aver, in substance, that the members of the firm fully settled all the firm accounts and losses, and dissolved the partnership on the 9th of November, 1872, and that on the same day, the firm being indebted to the First National Bank of Ripley, the partners liable for four-sixths thereof, namely, Conn, Helbling, Henry, and the Gardners, each settled one-sixth of such firm indebtedness with the bank, and that the notes in controversy (being those described below in the statement of facts), were given to the Bank, or to its cashier, by Manning and Mooney, in payment of their respective portions of the firm indebtedness, being one-sixth each, and that the firm name was signed to the notes, “ without the knowledge and consent of these defendants, and that these defendants never did give their consent thereto.” The reply put the averments of the answer in issue.
On the trial of the cause, on appeal, in the district court, the parties agreed to the following facts in the case, which were acted upon by the court, and made part of the record by bill of exceptions, to wit :
“ The two promissory notes set out in the petition, dated November 9, 1872, one calling for five hundred and eighty- three dollars and fifty-eight cents, made payable to W. T. Galbreath, cashier Eirst National Bank of Ripley, in sixty days, signed by J. M. Manning, as principal, and by the firm of Conn, Helbling & Co., as surety, and a note of same date, payable to same party, calling for three hundred and forty-nine and thirty-eight one-hundredth dollars, payable in ninety days after the date, and signed by Manning & Mooney, as principals, and the firm of Conn, Helbling & Co., as surety, was given as part payment for other notes that were due from the firm of Conn, Helbling & Co. to the Eirst National Bank of Ripley, under the following arrangement between the parties: All the parties herein named were members of the firm of Conn, Helbling & Co., and said firm was indebted to the Eirst National Bank of Ripley, Ohio, and on the 9th day of November, 1872, they all met at the Eirst National Bank of Ripley, and agreed among themselves that they would settle up the then existing bank debt, by making k proper division of the bank debt of the firm among the individual members of said firm. After the partners had made this arrangement between themselves, John ~W. Gardner and E. M. Gardner executed their separate note, payable to the bank in one hundred and twenty days, for their share of said bank' debt; they then left the bank. Conn, Helbling, and John Henry also executed their notes to the bank for their share of the hank debt, all of which were accepted by the bank. The hank refused to accept the notes of Manning, and Manning & Mooney, unless they gave security on their notes, and refused to give up the notes they then held against Conn, Helbling & Co. Then all the members of said firm of Conn, Helbling & Co. being present, except the Gardners, the clerk of the company signed the firm name to said notes of J. M. Manning, and Manning & Mooney, as security for Manning, and Manning & Mooney, the Gardners never consenting that the firm name should be signed to said notes as security thereon. At the date of said notes and at the time the firm name was signed to the notes, above set out and described, as security thereon for J. M. Man ning and for Manning & Mooney, the firm owed other •claims and debts, some of which were spoken of by the members of the firm at the date of said notes, to wit: the 9th day of November, 1872. After this date the parties contributed to and paid off several claims. The firm had no effects, having sold out their partnership effects, nor had they any claims due them at said date. At the date of the notes set out in the petition, the cashier of the First National Hank of Ripley, refused to receive the notes of J. M. Manning and Manning & Mooney, regarding them as insolvent at the time, and at the maturity of the notes they were insolvent. It is further agreed that all the items of ■account set out in the petition of the plaintiffs are correct, except-the notes in the petition described. This being the evidence offered by the parties the ease was submitted to the court.”
There was a judgment for the plaintiffs, against the Gardners, for one-fourth of the amount of the notes in ■question. A motion for a new trial was overruled, and a bill of exceptions taken and made part of the record.
By this proceeding, the plaintiffs in error, defendants below, seek the reversal of the judgment of the district court.
W. PL. Sly, for plaintiffs in error : ,
The notes given for the so-called “ bank debt ” were new contracts. They differed in amounts, the time of payment, were executéd by different parties, the relation of principal and surety was created, and thus many of the ■essential elements of the contract were changed. The partnership debt, manifestly, was merged in the individual obligation of the executing partner (principal payor), and thereafter ceased to be the debt of the firm. McNaughton v. Partridge, 11 Ohio, 223. See also Shinkle v. First National Bank of Ripley, 22 Ohio St. 516.
It follows that the partners who did not consent to, or join in, the'se notes, are not liable to contribution.
The proofs are clear, that the firm’s name was attached ■as surety for other members of the firm, these plaintiffs being absent, and not assenting, or afterward ratifying this act, that the notes were given for the portions of the losses which had been distributed to and assumed by these members, who were the principals to the notes. See 1 Disney, 27 ; 19 Mc. 355; 18 Pick. 505 ; 13 Wend. 522 ; 3 Esp. 108; 1 Ind. 188; Story on Part. § 322; 4 McL. 383.
Loudon $ Yomig, for defendant in error:
We deny that the partnership had been dissolved. Still, if there had been a dissolution, we fail to see how it could help the plaintiffs.
“ Though partnerships may be terminated by limitation of time, or the completion of the business which was its •subject, yet as to partnership responsibilities, they continue until all are discharged.” See Horsey v. Heath, 5 Ohio, 356, 357.
“ When a partnership is dissolved, it is not dissolved with regard to things past, but only with regard to things future. With regard to things past, the partnership continues, and always must continue.” See Wood v. Braddick, 1 Taunt. 104, cited in Parsons on Partnership, top page 410, note u.
This is not a case of a member signing the firm name to a note after dissolution. It is the case of the continuance of a firm indebtedness upon a renewed note, given by a majority of the partners. No new note was created at the bank. The old debt remained outstanding, at least so much of it as was the proportional share of the insolvent partners, whose notes were secured by the firm. It was simply a chauge in the form of the evidence of the debt. See Horsey v. Heuth, 5 Ohio, 356, cited supra.
It is not a case of merger; the debt continued to be the debt of the firm.
Where a sealed instrument is taken for a simple contract debt, the contract merges in the sealed instrument, because it is of a higher character. But when a promissory note is given in lieu of, or in renewal of another promissory note, it is a misnomer to call it a merger. In some cases, dependent on the understanding of the parties, the latter note may operate as a discharge or extinguishment of the former.

Opinion:
Gilmore, J.
If the bank had brought an action, on the notes mentioned in the agreed statement of facts, against the firm of Conn, Helbling & Co., or if the plaintiffs, claiming to be subrogated to the rights of the bank under the notes, had brought an action against the Gardners thereon, it may be conceded that in neither case would the latter have been liable on the notes; for it sufficiently appears in the agreed statement, that the notes were executed after the dissolution of the partnership, without the knowledge or consent of the Gardners.
After dissolution, a co-partner is not authorized, in the absence of authority, to use the name of the firm in creating new contracts or liabilities. 8 Esp. 108; Lockwood v. Comstock, 4 McLean, 383; Palmer v. Dodge, 4 Ohio St. 21. It is on this doctrine that the Gardners claim that the firm debt was paid by the new notes, as to the shares of Manning and Mooney, and that they are discharged from liability in reference thereto.
But the bank is not suing, nor do the plaintiffs bring their action upon the notes. They sue for a settlement of the partnership. The gist of their special claim against the Gardners is, in substance, that they have paid $1,351.33 of the firm indebtedness, and ask that the Gardners may be adjudged to pay to the plaintiffs their proportionate share thereof, and for equitable relief.
The Gardners admit the payments and their liability to contribute as claimed, except as to the aggregate amount of the notes mentioned.
Assuming that the agreed statement inferentially, but sufficiently, shows that the notes of Manning and Mooney, signed in the firm name as surety, in the absence of and without the consent of the Gardners, were received by the bank in payment, of their share of the firm debt, we must then look to the agreed statement to ascertain the purpose and intention of the partners present in giving, and the bank in receiving, the notes, in order to determine the effect of the transaction (1) as between the co-partnership and the bank, and (2) as between the partners executing the notes without authority and the non-consenting partners.
Eirst. We think the agreed statement clearly shows that Conn, Ilelbling, and Henry intended to bind the firm as surety for the amount of the notes, and that the bank supposed the firm was so bound when it accepted the notes as-payment pro tanto of the firm debt.
But inasmuch as the parties were mistaken as to the-legal effect of the transaction, the bank, as between it and the firm, was not bound by the acceptance of the notes. It did not get what the makers intended to give, nor what it supposed it was getting in payment, and, hence, the-notes did not operate as a payment or extinguishment of the firm debt, which still continued to subsist in its favor against all the members of the firm.
In Davis v. Desaque, 5 Whar. 529, it is said: " Where-the separate note of one partner is taken by a creditor-holding the note of the firm, it is a question of intention whether this amounts to an extinguishment of the joint-debt." See, also, Perrin v. Kane, 19 Maine, 355 ; Mason v. Wickersham, 4 Watts & Serg. 100.
Second. On principle it must follow that, when Conn,. Helbling, and Henry made payment to the bank, they paid a subsisting firm debt, and that, as between themselves- and the Gardners, the latter must make contribution.
On the facts agreed upon there is no error in the judgment of the district court.
Judgment affirmed.