Court Opinion

ID: 6603398
Source: CourtListenerOpinion
Date Created: 2022-07-20 20:09:52.618329+00
Date Added: 2024-06-11T15:58:05.968143
License: Public Domain

TayloR, J.
The learned counsel for the appellant makes the following points, upon which he relies for a reversal of the judgment: First, the court erred in refusing to order a nonsuit; second, the court erred in refusing to charge the jury that if they should find that there was a large portion of property still owned by the firm undisposed of in any way, they must find for the defendant; third, the court erred in refusing to instruct the jury that, to entitle the plaintiffs to recover, it was necessary that they show an express promise on the part of the defendant, to them, to pay some sum of money as a part of the partnership indebtedness; fourth, the court erred in giving the instructions numbered above (2) and (4); fifth, the court erred in refusing to instruct the jury that if they found that there was a large part or portion, or any amount, of property still held by the firm undisposed of, they must find for the defendant; sixth, the court erred in refusing to set aside the verdict and grant a new trial:
The right of the plaintiffs to recover in this action, we think, depends, first, upon questions of fact, viz.: (1) Whether at the time alleged in the complaint the construction company, as a firm, owed the sum of $20,000 or over; (2) whether the members of the firm met together and mutually agreed amongst themselves to apportion such indebtedness amongst the several members of the firm; (3) whether such apportionment was in fact made and assented to by the several members; (4) whether each member assumed to pay the amount apportioned to him, and promised the other members to make such payment; and second, upon the question whether, as a *343conclusion of law upon the facts above stated, the several members of the firm were bound by such agreement, the one to the other. Upon the questions of fact we need only say that the evidence tended to prove them, and the finding of the jury is conclusive upon this court. If the contract which the evidence on the part of the plaintiffs tended very strongly to prove, was a valid agreement at law between the several members of the firm, then we are of the opinion that if, by reason of the defendant’s failure to pay the amount of the debts apportioned, to him, the plaintiffs, as members of the firm, were compelled to pay, or if the defendant, after the lapse of a reasonable time, had neglected to pay the amount agreed upon, and the plaintiffs voluntarily paid the sum apportioned to the defendant, or some part thereof, and the plaintiffs and the other members, including the defendant, had in fact paid the whole of said $20,000 of indebtedness, then the plaintiffs were entitled to recover of the defendant such part of the sum agreed to be paid by him as he had neglected to pay, and as the plaintiffs had in fact paid.
The principal question in the case is, whether the contract, as proved, or which the evidence clearly tended to prove, was void for want of any consideration to support it. There is certainly nothing in the relation of the parties as copartners which prohibits them from contracting with each other; and a valid contract made between partners, which can be enforced without a general accounting as to the partnership business, must be enforced in the courts at law in the same manner as other contracts between other parties. We think there was a sufficient consideration to support this agreement, in the mutual promises of the respective partners to each other. They were all jointly bound for the payment of the whole $20,000 of the debts owing by the firm, and this sum was, as between the partners, chargeable upon the joint property of the firm, which, as between themselves, would, have to be exhausted before their separate property would be charged there*344with. By the mutual agreement of the partners, the firm property, as between themselves, was relieved from the payment of the debt, and it is made a debt in severalty against the separate property of the individual members. This arrangement might be beneficial to the partners, especially if the partnership property was of such a character that it could not be converted into money promptly for the payment of the debts without a great sacrifice of its value. This consideration would be sufficient to support the mutual promises of the partners to pay a definite part of the debts out of the separate property of the respective partners. Again, the fact that each partner is liable for the whole debt, and that liis separate property is liable to be seized and sold by the creditors for the payment of the whole, and that the payment of a portion of the debt out of the separate property of another partner would lessen his liability to the creditors of the firm and relieve his separate property to that extent, would be a sufficient consideration to sustain a contract on his part to pay another definite portion of said debt. The mutual promises, if performed, would be beneficial to the respective parties making them. The contract which the plaintiff’s evidence tended to prove in this case, was therefore a legal contract, founded upon a sufficient consideration; and as between the parties it can be enforced, we think, in an action at law, even though there were some partnership assets not disposed of, or other debts against the partnership, exceeding the $20,000, not provided for by the contract. The contract can be enforced without any accounting between the partners as to the general business of the firm. All that is necessary to fix the liability of the defendant is, to prove the contract, that the debts of the firm amounted to $20,000 or more, that the defendant did not pay the sum he agreed to pay in discharge of the debts, that the $20,000 of debts have been paid, and that the plaintiffs have paid more of the debts than they would have been required to pay had the defendant performed his agreement and paid what *345he agreed to pay. As between the plaintiffs and the creditors, they were bound to pay all the debts; and, the defendant haying neglected to pay the amount he agreed to pay, the plaintiffs were legally bound to pay the same, and they were damaged in just the sum which they were compelled to pay more than they would have'paid had the defendant performed his contract with them and, the other partners. In this case the evidence shows that the business of the partnership was in fact closed, and the partnership dissolved for all practical purposes, when this agreement was made. The only thing left unfinished was the payment of the debts, and the reducing to possession of some of the assets of the firm; and there is some evidence in the case showing that the assets of the firm were divided between the respective partners at the time the alleged agreement was made. Had this fact been clearly alleged in the complaint and established by the evidence, there could have been no doubt as to the liability of the respective partners upon their separate promises to pay a fixed and agreed portion of the debts of the firm. It is a common method of adjusting the business of a partnership, that one or more of the members of the firm take the whole or a definite part of the assets, and in consideration thereof agree to pay all the debts of the firm; and no- one has ever doubted that such an agreement was a valid one, and that any damage which might result to the other members of the firm by the neglect of the party so agreeing to pay the debts, could be recovered in an action at law. We think that, without resorting to the decisions of other courts, the questions involved in this case have been determined against the appellant by this court.
In Sprout v. Crowley, 30 Wis., 187, Justice Lyon, in delivering the opinion of the court, says: “But where there is an express agreement by one partner to repay to the other his share of advances made by th.e latter on account of the partnership business, the amount of such share becomes thereby the debt of the partner who has thus agreed to pay the same, *346which may be recovered in an action brought directly therefor, without any regard to the partnership relation existing between the parties, or the state of their firm accounts.”
In Gauger v. Pautz, 45 Wis., 449, Justice Lyon again says: “Within the same rule” (referring to the rule laid down in Sprout v. Crowley, supra), “ the instructions prayed on behalf of the defendant were properly refused. They are, (1), that unless there was a final settlement of all partnership matters before this action was commenced, the action could not be maintained; and (2), that unless the partnership was fully and fairly terminated and settled, and unless the defendant promised to pay the plaintiff’s claim before suit brought, the action could not be maintained.
“These instructions are based upon the assumption that one partner cannot maintain an action at law against his co-partner, in respect to any matter of partnership concern, until there has been a dissolution of the partnership and a full settlement and adjustment of all the partnership affairs. This proposition was expressly rejected in Sprout v. Orowley.”
These decisions are sustained' by the authority of the courts in England, and of the courts of other states of the United States. In Brown v. Tapscott, 6 M. & W., 119, the English court of exchequer held, that when the several partners had agreed among themselves to contribute a definite proportion of the expenses of the business of the partnership to the partner having the management of the business of the-firm, as it might be necessary to call from time to time, should the earnings of the business be insufficient to pay expenses, it being admitted on the trial that the earnings were insufficient to pay the expenses, and that the defendant had been applied to to pay his proportion of such expenses, and had promised to pay, an action of assumpsit upon such promise to pay could be maintained, although the partnership affairs remained unsettled. See, also, the following cases: Venning v. Leckie, 13 East, 7; Collyer on Partnership (6th ed.), §§ 196, 197, and *347note on page 332; 2 Lindley’s Law of Partnership (4th ed.), 1027; Glover v. Tuck, 24 Wend., 153, 158; Wadsworth v. Manning, 4 Md., 59; Wheeler v. Arnold, 30 Mich., 304; Williams v. Henshaw, 11 Pick., 79, 83-4; Collamer v. Foster, 26 Vt., 754; Gibson v. Moore, 6 N. H., 547; Coffee v. Brian, 3 Bing., 54; Wilson v. Cutting, 10 Bing., 436; Sedgwick v. Daniell, 2 H. & N., 319; Currier v. Webster, 45 N. H., 226, 233; Scott v. Campbell, 30 Ala., 729; Wills v. Simmonds, 51 How. Pr. R., 48; Jackson v. Stopherd, 2 Cr. & M., 361.
In Williams v. Henshaw, supra, the court- say: “ So, if one partner covenants or agrees to advance a certain portion of the capital stock, or to perform any other specific acts, an action will lie for a violation of these express contracts, even during the continuance of the partnership.” “ If the plaintiffs had shown an agreement on the part of the defendants to advance one-half of the money necessary to carry on the joint speculation, or a promise to repay the plaintiffs for their advance, they might well recover upon such undertaking in the present action.” In this case the evidence is clearly sufficient to support a finding that the firm was'dissolved by the mutual consent of the parties. The purpose for which it was formed had been fully accomplished; there was nothing further for the firm to do, except to reduce its assets to possession and pay off the debts existing against the firm. As to the payment of the debts of the firm to the extent of $20,000, it was mutually agreed between the partners that it should be apportioned amongst them according to the supposed equities of the case; it was so apportioned, and each partner assumed and agreed to pay the amount so apportioned -to him. This agreement, as we have said above, was valid and binding, and the rights of each party under it can be determined and adjusted without any regard to the general settlement of the affairs of the partnership. If, by a failure of any one of the partners to perform his part of this contract by paying the sum agreed to be paid by him, some other member of the firm was compelled *348to pay more than he agreed to pay, sueh party is clearly damaged by the default of the party not paying, to the amount which he is so compelled to pay; and there does not appear to be any good reason, either upon principle or authority, why the party so damaged by a breach of such agreement may not maintain an action at law upon such contract to recover his damages. If the firm had not accomplished the purposes for which it had been formed, and they had become indebted in the sum of $20,000, which it was necessary to provide for immediately in order to further prosecute their business, and the partners had met, and each had agreed with the others to advance out of his separate funds an agreed sum to pay off said debt, and any one had failed to make his payment as agreed, and some other members had advanced the amount, and so the debt had been paid off and the business continued, it is clear that, under the authorities cited, the delinquent party would be liable in an action at law to the .party advancing his proportion. The supposed case is in no way different in principle from this ease, and the reasons for sustaining the action in the case at bar would be fully as strong as in the one supposed.
In this view of the case, the instructions given the jury by the learned circuit judge were correct, and the instructions asked and refused were properly refused. The instruction requested, and which was refused, “ that, in order to find for the plaintiffs, it was necessary that the plaintiffs should show an express promise on the part of the defendant to them to pay some sum of money as a part of the partnership debt,” was properly rejected, for the reason that it would tend to mislead the jury. If the instruction had been given, the jury might have supposed that an express promise to pay some part of the debt, made by the defendant to the plaintiffs and the other members of the firm, would not be sufficient to enable the plaintiffs to recover; but that a separate agreement must be shown between the plaintiffs and the defendant, dis*349connected from the other parties to the contract, which, we think, was clearly unnecessary.
The learned counsel for the appellant urges that the plaintiffs ought not to he permitted to recover, because they have not alleged in the complaint that the whole $20,000 of debts had been paid at the time the action was commenced; and that, consequently, admitting that the plaintiffs had paid a share of the debts over and above the amount agreed to be paid by them, and equal to the amount which the defendant had agreed to pay and had not paid, they did not show a right to recover of the defendant the whole amount for which he was in default, as the others who had not paid would be equally liable to the plaintiffs as the defendant for a portion of the money paid by the plaintiffs. The allegations of the complaint are, “ that the defendant utterly neglected and refused to pay the said amount so as aforesaid apportioned to and assumed by him; that in consequence of his said failure the plaintiffs have been compelled to pay, and have paid, the said amount apportioned to the defendant.” This language, it is true, is very general, but there is a specific allegation that the defendant refused to pay his portion of the debt, and, by reason thereof, the plaintiffs were compelled to pay and did pay the same. This allegation can only be established by proof that the whole $20,000 was paid, and that the plaintiffs had paid the amount apportioned to them, and, in addition thereto, the amount apportioned to the defendant; for, as is insisted by the learned counsel for the defendant, if the whole debt had not been paid, the plaintiffs would not, in contemplation of law, have paid the whole amount agreed to be paid by the defendant, and what they did pay, beyond the amount agreed to be paid by them, would be paid as much for the benefit of the others who had not paid as for the defendant. We think the allegations of the complaint were sufficient to admit of the pro.of that the whole debt was in fact paid before the commencement of the action.
*350It is urged by the learned counsel for the appellant, that there is no evidence that the plaintiffs were compelled to pay the debts of the firm, and that if they paid them voluntarily the defendant would not be liable to refund the amount, even though they had agreed to pay a certain portion thereof. We think otherwise. If the defendant agreed to pay a portion of the debts of the firm with his separate funds, and no time was fixed for such payment, he was bound to make payment within a reasonable time; and if he neglected to do so, the other partners need not wait until the creditors of the firm got judgment against the firm,.upon which their separate property could be seized, before paying such debts. Where two or more persons are jointly liable for the payment of the same debt, one need not wait until after judgment before he pays the debt, in order to charge his co-debtor in an action for contribution; he may pay it at any time after the debt becomes due, and then bring an action against his co-debtor' for contribution. So, in this case, the members of the firm were jointly indebted to their creditors in the sum of $20,000, and they agreed amongst themselves that each should contribute to the payment of such debt a definite sum out of their separate property. This.agreement fixed the right to contribution as between the parties.
We think the verdict was sustained by the evidence, and that the judgment ought to be affirmed.
By the Cowrt.— The judgment of the circuit court is affirmed.