Case Name: Survivors of Halls, Kirkpatrick, & Co. vs. Coe, Green, & Randolph
Court: South Carolina Court of Appeals
Jurisdiction: South Carolina
Decision Date: 1827-01
Citations: 4 McCord 136
Docket Number: 
Parties: Survivors of Halls, Kirkpatrick, & Co. vs. Coe, Green, & Randolph.
Judges: Colcock, J. dissented from the result of the opinion, but gave no reasons.
Reporter: South Carolina Law Reports
Volume: 15
Pages: 136–141

Head Matter:
Survivors of Halls, Kirkpatrick, & Co. vs. Coe, Green, & Randolph.
One of sevaral co-partners can discharge his iudividual debt to a third person, by releasing or giving a receipt to such person for a debt due by him to the firm.
Coe, Green, and Randolph had been partners in the business of Blacksmiths. Coe was the only blacksmith, and was the acting partner in attending to the business of the concern. On the 17th'of January, 1822, Green introduced Coe as a partner of Coe, Green, & Randolph, lo Hails, Kirkpatrick, & Co. and requested them to let Coe have whatever might be wanted for the shop on account of Coe, Green, & Randolph. The firm of Coe, Green, & Randolph was dissolved in January, 1823, though the dissolution was not known to Halls, Kirkpatrick, & Co. before February 1823, and not published until April 1823. On the 13th February 1823, the account against Coe, Green, & Randolph amounted to $¡593 82. Halls, Kirkpatrick, & Co. had also a running account against Coe individually, which on the 31st of August, 1822, amounted to $248 75, and in September 1823, to $388 75. Coe, Green, & Randolph had an account against William Hall, one of the partners, amounting in December 1822, to $156 37. Coe, Green, & Randolph held Hayne’s order for $74 43, and Levy’s order for $45, in their favor, drawn on and accepted by Halls, Kirkpatrick, & Co. some time in the year 1822. On the 31st of August 1822, Coe being at the store of Halls, Kirkpatrick, & Co. they requested him to settle his private account. He said he had not the money, but that they might charge his private account, amounting at that time to $248 75, to Coe, Green, & Randolph; he at the same time gave them in the name of his firm a receipt for so much money on account. In February 1823, before the dissolution of the firm of Coe, Green, & Randolph was known to Halls, Kirkpatrick, & Co., Coe settled $248 75 of his private account with Halls, Kirkpatrick, & Co. by giving a receipt for the shop account against William Hall, and by giving up Hayne’s and Levy’s orders to Halls, Kirkpatrick, & Co. who accepted their account against Coe individually for that amount, and applied the balance of $29 37, as a credit on their account against Coe, Green, & Randolph, leaving a balance of $564 45, for which this action was brought. Green and Randolph were not consulted by Halls, Kirkpatrick, & Co. in relation to this settlement, either in August 1822, or February 1823. It also appeared that Coe took the benefit of the prison bounds act in March 1824, and a witness swore he would not have trusted him for $300, and considered him insolvent in 1822. The technical objection to William Hall’s account as a discount, was waived by the plaintiff. The defendant’s counsel contended that the above mentioned settlement was not sustainable, and that the amount of the account against William Hall and of the two orders, should have been applied to the credit of the account against Coe, Green, & Randolph, and now offered them together with the orders as a discount. The court, (James, J.) instructed the jury accordingly, and the jury found a verdict for the balance of $284 58 The plaintiff appealed on the ground that the settlement was legal and valid, and the discharge signed in the partnership name, conclusive against the firm, and therefore the discounts should not have been-allowed.
Preston, for the appeal
cited 1 Montagu Part. 1. 7 East. R. 210.
DeSaussure, contra,
cited 1 East. Rep. 47.
The Court. .Cannot a member of a firm receive money on a debt due to the firm, and then apply the same money to pay his private debt to the very person from whom he received payment for the debt due to the firm ?
DeSaussure. He admitted that was the very question in the case, and put in the strongest point of view. He thought the partner could not, and cited'Montagu on Part. 29, 30; 4 John. R. 251, 270, Livingston vs. Roosevelt. 2 Caines Rep. 246. If the plaintiffs knew that one of the firm was committing a fraud upon the others by paying his private debts with the money of the firm, or by giving the receipt, the transaction would not bind the firm. 8 Ves. 540: líí John. R. 34.
Uregg, in reply,
cited 1 Mont. 23; 2 Campb. 561; 4 . John. Rep. 2S0 ; Addison’s R. 259 ; 4 Day 428; 13 East, 142.

Opinion:
CuKiA,per
Nott, J.
The simple question is, whether one copartner can discharge his own individual debt by releasing a debt due to the firm ? It is admitted that he can sell the goods, collect and pay away the money, give receipts, and even pay his own debts out of the copartnership funds; so that if he had received the money in this case and returned it immediately to the plaintiffs, it would have been a good discharge of both debts. If so, why might not the same thing be effected by the single operation of executing mutual releases. It is much more consonant with commercial usage, and carries with it less suspicion of fraud than the mock ceremony of paying the money with one hand and receiving it back with the other. But let us test the principle by bringing it down to the common affairs of life. A physician may be in the habit of attending the usual members of a large commercial establishment, and of taking up goods from their store at the same time, may not each member of the firm at the end of the year pay off his account by entering a credit to the physician on their books, and charging himself with the amount ? The same thing may be done with his lawyer, his tailor, his blacksmith, and so on through all the relations in which the diversified accounts of an extensive establishment can run. Neither would the case be varied if the individual who has thus discharged his own debt, should neglect to charge himself with the amount on the books of the firm, even though it were done with the express view of defrauding his copartners; for if the debt be justly due, it is immaterial as it regards the creditor to whom it is paid, what are the motives of the debtor, or in what manner it may affect the interest of those with whom he is connected. Each member of a firm is the accredited agent of the rest. They recommend him to the world as entitled to their confidence, and if he abuse his trust, the loss must fall upon those who have conferred upon him such authority, and not upon those who have trusted him upon their recommendation. It would be destructive of all confidence, and subversive of the first principles of such associations, if the law were otherwise. The case of Henderson and Smith vs. Wild, 2 Campbell 561, is in conformity with this opinion. The defendant was a tailor and had done business on the separate account of Smith, one of the plaintiffs, he was indebted to them for goods which he had taken up at different times, and now produced the receipt of Smith, one of the plaintiffs, in bar of the action. It was alledged that the receipt was obtained after the dissolution of the copartnership, and antedated-for the purpose of giving effect to the settlement. The court held that the receipt was good, notwithstanding it operated to the benefit of one of the plaintiffs only, if it were given bona fide. But, that if given after the dissolution of the copartnership, and after the advertisement in the Gazette, it must be considered fraudulent and void. It is admitted in this case that if the receipt were given after the partnership was dissolved, and after it was known to the plaintiffs, they can de-''ve no benefit from it; and that may be n question for future investigation. Some reliance has been placed on the circumstance that the individual account of Coe was actually charged to the company some months before the -settlement of the accounts took place, but it does not appear to me to vary the question; for although one partner cannot bind the company to pay his individual debts, and the plaintiffs could not if they had sued, have recovered the amount of that account against Coe, Green, & Randolph, yet as Coe thought proper to pay it himself, it was immaterial whether it stood in the books as a charge against him or against the firm. I am of opinion that a new trial ought to be granted.
Colcock, J. dissented from the result of the opinion, but gave no reasons.
New trial granted.