Court Opinion

ID: 7068516
Source: CourtListenerOpinion
Date Created: 2022-07-24 07:29:30.90192+00
Date Added: 2024-06-11T16:12:30.618523
License: Public Domain

On Petition for Rehearing.
McMahan, J.
Appellants on petition for rehearing insist that the bankruptcy of Jenkins and Hines dissolved the partnership existing between Jenkins, Hines and Dalton and that he cannot be held liable for the payment of money which Dalton borrowed from appellee banking company.
*179*178He contends and cites numerous authorities in support of the contention that, being an accommodation surety, he has a right to stand on the strict letter of his contract; and that it is no concern of his what the result of such construction may be. The fault with this contention is the common one of misapplication. Appellant seemingly overlooks the fact that there are well settled rules of construction of contracts, and that these when found are the true rules for the guidance of the court. While the surety may stand on the very terms of his contract, he is as much bound by the intent and meaning of his contract which he voluntarily subscribes as is the principal. Sureties are bound in the manner, to the extent and under the circumstances as they existed when the contract was executed. Read v. Bowman (1864), 2 Wall. *179591, 17 L. Ed. 812. The law throws no particular wall of defense around a surety. When he has made a lawful contract, his obligations are to be determined by the same rules of construction as that of any other lawful contract. Regard must be given to the object which the writing was to accomplish, to the occasion which gave rise to the relative positions of the parties and their obvious designs as to the object to be accomplished. The whole writing should be considered in determining the meaning and intent of the contract. Where reference is made to another instrument and it is clear that that instrument was considered by them at the time of contracting and was the inducement for the act, that instrument becomes a part of the contract. The contract for the construction of the roads was mentioned in the bond now under consideration.' We must, therefore, consider that appellant when he signed the bond did so with reference to the contract and with knowledge of the law requiring the contractor to give such bond.
The liability of the contractors Jenkins, Hines and Dalton was joint and several. The bankruptcy of Jenkins and Hines dissolved the partnership theretofore existing, but it did not release the other partner, Dalton, from his obligation to complete and carry out the contract for the construction of the roads. Under the law it was his duty, as surviving partner, to finish the work already contracted. When appellant signed the bond in controversy, he did so well knowing that death or bankruptcy might dissolve the partnership and prevent the three partners from.participating in the actual carrying out the contract, and he is presumed to have known that in such an event the contract would not be abrogated, but that it would be the duty of the remaining partner to complete the *180roads in accordance with the contract. §5 U. S. Bankrupt Law 1898, 30 Stat. at L. 547, 548. The position of appellant is similar to that of a surety on the bond of joint administrators or executors, where, under the terms of the will or under the law, the other, in case of death or disability, may act. Iii such cases where the sole administration devolves upon one administrator or executor in consequence of death or other disability, it has been held that “the law contemplated that state of things, and the obligation of the bond will not be impaired, but the securities will be held liable.” State v. Boon (1869), 44 Mo. 254; Dobyns v. McGovern (1852), 15 Mo. 662.
As said in Dickson v. Indianapolis, etc., Co. (1878), 63 Ind. 9: “The cessation of the partnership, therefore, was not an abandonment of the contract on the part of the defendants, nor did it authorize the plaintiff to treat the contract as • rescinded.” Chancellor Kent in the leading case of Griswold v. Waddington (1819), 16 Johns (N. Y.) 438-493, says: “A dissolution of a partnership only has respect to the future. The parties remain bound for all antecedent engagements. The partnership may be said to continue as to everything that has past, and until all pre-existing matters are wound up and settled.”
This is not a case where death or bankruptcy put-an end to the business. The business of this partnership was to construct the roads in accordance with the contract, and upon the bankruptcy of the two partners, the duty devolved upon the other partner to finish the work. After dissolution, partners have the power, and are under the duty to perform existing firm contracts. 1 Rowley, Mod. Law of Partnership §599; Fail & Mills v. McRee (1860), 36 Ala. 61; Whiting v. Farrand (1814), 1 Conn. 60.
The rule is stated in Jacksonville, etc., R. & N. Co. v. *181Warriner (1895), 35 Fla. 197, 16 South. 898, as follows: “Where a partnership had entered into an executory contract, which was only partially performed at the death of the deceased, his death does not absolve either party from performance, in the absence of an express stipulation to that effect; and the existence of the partnership with its active functions to be exercised by the survivor is continued until the contract has been fully performed.” To the same effect see Davis v. Sowell & Co. (1884), 77 Ala. 262.
A recent author states the rule as follows: “A surety upon a partnership bond is liable only for a breach of the obligation occurring before the dissolution of the firm, but if the surety has become liable for the performance of a particular contract by a partnership, its subsequent dissolution before the completion of the contract will not release him from the liability for each of the former partners so far as that particular contract is concerned.” 2 Rowley, Mod. Law of Partnership §837. Citing Kaufmann v. Cooper (1896), 46 Neb. 644, 65 N. W. 796; Freeman v. Berkey (1891), 45 Minn. 438, 48 N. W. 194.
In Holmes v. Shands & Johnson (1854), 27 Miss. 40, it was held that where a contract was made with a firm during the existence of the partnership, it was competent for the parties, after dissolution to carry out a contract previously made, and in part performed. To that extent the partnership would be considered in law as still existing.
The argument of appellant is that he did not, by the bond, agree to pay the liabilities of Dalton, but that his agreement was to stand responsible for the acts and omissions of the partnership made up of Jenkins, Hines and Dalton; that he has a right to insist that he is not liable for the debts created by Dalton after the discharge in bankruptcy of Jenkins and *182Hines, because the uprightness, integrity and honor of Jenkins and Hines may have been the inducing cause which lead to the execution of the bond; that he as surety might have been willing to stand responsible for the acts of the partnership so long as Jenkins and Hines were there to watch Dalton, but would not be willing to trust Dalton alone.
This argument can avail nothing. So far as we are advised there was nothing to prevent Jenkins and Hines being present during the completion of the contract. The court, without naming the parties interested,' found that “after adjudication in bankruptcy consultations were had between the parties interested, said David J. Dalton, Frank J. Hines and others, about the completion of said contract and that it was understood and agreed that said Dalton was to go ahead and complete said contract and to borrow whatever sums of money needed therefor.” While the court did not specifically state that appellant was one of the parties to these consultations, he was certainly an interested party and being such we have a right to infer that he was present at such consultations and agreed that Dalton should finish the work as required by the contract and if necessary borrow money for that purpose.
The fact that appellant was an accommodation surety does not relieve him from liability.
Petition for rehearing denied.