Court Opinion

ID: 6312767
Source: CourtListenerOpinion
Date Created: 2022-02-18 20:17:46.983459+00
Date Added: 2024-06-11T08:59:08.207968
License: Public Domain

The opinion of the Court was delivered by
Sergeant, J.
— The argument of the plaintiff in error, reduced to its essence, amounts to this, that Delaway was not liable for the partnership estate’s not appearing to be solvent, as he had covenanted it should, unless the plaintiff had forthwith settled or paid off the debts of the firm agreebly to the covenant on his part. But the argument seems to be without foundation. The two subjects are in their nature distinct and unconnected, and each may be performed independently of the other, and without reference to it. The payment of the debts cannot go to make the estate more solvent, nor is the plaintiff exempted from paying the debts because the estate may appear to be insolvent. In addition to this the covenants are separated into distinct classes and both parties required and gave security for the performance of them respectively, and may be considered as relying on that, and not on the prior or concurrent performance by the other. It is true damage may have been, and it is alleged was, sustained by Delaway in consequence of the plaintiff’s failing to pay the debts of the firm: but for that Delaway had his remedy by action against the plaintiff or his security for any damage he could show he had sustained, in the same way as the plaintiff has against him. And it is not possible to say that any one of these covenants by the plaintiff, or all taken together, were vital to the defendant’s performance of his undertaking, but on the contrary, each party was to perform for himself his own covenants, whether the other party made default or not. Delaway chose to stipulate and the defendant to guarantee that the estate should appear to be solvent, for reasons best known to themselves, and that without reservation or condition, and without any express or implied reference to anything to be done on the part of the plaintiff as involved in its performance. It is now settled that the dependency or independency of mutual covenants does not arise from the use of any particular phraseology, such as covenant, condition, consideration or the like, or on the collocation of words or sentences in an instrument. The nature of the transaction, and the object and design of the parties, are to be looked at, and such construction is to be given as will best effectuate their object and do justice between them. On looking at these, we agree with the court below that in this case it comports with the design of this agreement and best carries out the *534intention of the parties, to construe the covenants as distinct and independent, to be performed by each party for himself, independently of any performance by the other, and that each is liable to the other for any damage sustained by the non-performance of what either undertook to perform on his part.
2. The defendant further contends, that even if the covenants are independent he had a right to set-off or defalcate the damages he had sustained in consequence of the plaintiff’s violation of his covenant to pay the debts, against the present claim. That he offered, however, to do so on the trial in the regular and accustomed manner, does not appear by the record, except that he infers it from an answer by the court to a different question. No notice of such set-off or defence was given; no evidence was adduced expressly with that view; no point was put to the court on the subject. All that can be said in regard to it is, that if the court did err it was in going out of the way to lay down a hypothetical position of its own. We have, however, no hesitation in saying that a claim of unliquidated damages accruing to the defendant merely by reason of the breach of the plaintiff’s separate and individual covenant to pay the debts, is not a subject of set-off or defalcation either under our Act of Assembly or the English statutes of set-off. To do this the claim must be first reduced to some certainty by a judgment.
Another objection is, that the court erred in receiving in evidence the list of debts due by the firm, and in their charge on that point. It is true a list of debts due by a firm is not, correctly speaking, a subject of appraisement, and there may be a doubt how far the language of the contract authorized the appraisers to append such a list. But when we observe that it was in some measure a necessary item to be fixed in order to determine whether the firm was solvent, and that it appears by the parol evidence the settlement of everything was pressed on the appraisers by Delaway, and the books of the firm brought to them by him for that purpose, we think in this there was no error.
Judgment affirmed.