Court Opinion

ID: 6671004
Source: CourtListenerOpinion
Date Created: 2022-07-20 21:09:52.905319+00
Date Added: 2024-06-11T16:00:31.447638
License: Public Domain

Eccrestón, J.,
delivered the opinion of this court.
This is an action of assumpsit, brought by John H. Berry against William H. McLean and George McLean. The latter was not taken. The other defendant appeared and pleaded non assumpsit.
Prior to the 1st of October 1846, the appellant and William H. and George McLean were partners, trading under the firm of William and George McLean & Co. On that day the co-partnership was dissolved, the appellant retiring from the firm. On the dissolution taking place articles of agreement were entered into, providing, among other things, that the debts of the firm should be paid by William and George-McLean. Sundry debts, to a large amount, became due and payable at various times between the dissolution and the spring of 1847, and William and George McLean failed to pay them. In consequence of which Berry, remaining liable to the creditors, paid to them, at various times between April and December 1847, an amount equal to five per cent, on their claims, with an understanding that the creditors would not require any further sum from him. Previous to those payments, on the 23rd of December 1846, William H. McLean, the appellee, applied for the benefit of the insolvent laws, and was subsequently discharged. The greater part of the debts on which Berry made payments, and for which he claims to recover in this case, were not due and payable by the firm when William H. McLean became an insolvent petitioner.
The court, at the instance of the defendant, granted the following instruction to the jury: “That if they believe from the evidence, that any of the sums, paid by plaintiff, were on account of debts owing by the firm of William and George McLean & Co., before the execution of the assignment executed to R. M. McLean, and before the application of the said William H. McLean for the benefit of the insolvent laws of the State, that the said defendant did apply for the benefit thereof, and was finally discharged before the said payment by the plaintiff, the plaintiff is not entitled to recover for any such sum of money as may have been so owing, before said deed of assignment and the said application, except subject to the *97discharge of the said defendant, notwithstanding the jury may find from the evidence that such suras of money were not payable by the said William and George McLean & Co., until after the application of the said William H. McLean for the benefit of the said insolvent, laws.”
The verdict and judgment being in favor of the defendant, the plaintiff appealed. And the question presented for us to decide is, whether the court did wrong in granting the prayer of the defendant?
As the application of William II. McLean, for the benefit of the insolvent Jaws, was made on the 23rd of December 1846, the act of 1854, ch. 193, does not apply to the present case, his petition having been filed under the former act of 1805, ch. 110, and its supplements.
The case of Wharton, et al. vs. Callan, 2 Gill, 173, was decided under the old system; and the principle there adopted is, that, if A gives his note to B, who passes it away for value, and subsequently pays it, although the maker is released, under the insolvent laws, after the note falls due, but before it is paid by B, he may maintain an action against the maker for money paid for him. There is no report of the court’s opinion stating the grounds of the decision, but we understand it was based upon the case of Harris vs. Oliver, decided on the Eastern Shore, but not reported, except so far as what is said of it. on page 178 of 2 Gill. There it is stated: “The note was made for the accommodation of the endorser, who, after his release as an insolvent debtor, was offered as a witness for the maker of the note; and it was held, as the witness would be liable over to the defendant, who offered him, upon his paying the note, he was incompetent.”
In Gow on Partnership, 323, it is said: “Formerly, where the claim of an individual partner originated in his having discharged joint debts, it was essential, in order to entitle him to prove against the separate estate of his bankrupt partner for his proportion, that the debts should have been discharged, and the claim should have arisen antecedently to the bankruptcy. For if the right of calling upon the bankrupt partner for contribution did not accrue until after he became bankrupt, *98the only redress the solvent partner had, was by action at law or by bill in equity.”' But by Sir Samuel Romily's act this rule was changed, so that the debt, if paid after the bankruptcy, could not be made the foundation of an action, but must be proved under the commission.
The rule, as first stated by Gow,is supported by the case of Wright vs. Hunter, 1 East, 20, and same case in 5 Ves., 792, to which he refers.
Speaking in relation to the right of the solvent partner to recover from his bankrupt partner his share of the debt paid after the bankruptcy, to the creditor of the partnership, notwithstanding the bankrupt had obtained his certificate, Lord Kenyon, O. J., says, on page 30 of 1 East: “I cannot distinguish this from the case of a surety who is called upon to pay money for his principal after a bankruptcy, in which case there is no doubt but that the money may be recovered back from the principal, notwithstanding his certificate.” And in this the other three judges, Grose, Lawrence and LeBlanc, all concur, the first two using language very much like that of the chief justice, in reference to the similarity of the case to that of a surety.
The result was a judgment in favor of Wright, the plaintiff, for 168=#, 13s., 4d., that being the sum paid by him, to the creditors of the partnership, after the bankruptcy; which sum should have been paid by three of the partners, of whom Hunter, the defendant, was one. The suit being against him alone, the court, at first, entertained a doubt whether the plaintiff should have judgment for the whole or only for a third of the amount so paid, but finally judgment was given for the whole sum of 168.J1, 13s., Ad., as there was no plea in abatement.
The report of this case in 5 Ves., shows, that after the decision in the Court of King’s Bench, when the cause came •on again in chancery, “the only question was as to costs.” And Mr. Richards for the plaintiff insisting, that the bill should be dismissed without costs, it was so dismissed.
In addition to the cases which have been noticed, we likewise refer to the following: Chilton vs. Whiffin & Comwell, *992 Wilson's Rep., 13. Frost vs. Carter, 1 Johns. Cases, 74. Lansing vs. Prendergast, 9 Johns. Rep., 127. Bennett vs. Bartlett, 6 Cush. Rep., 225. Boarman vs. Nash, 9 Barn & Cres., 145, (17 Eng. Com. L., 344.) Buel vs. Gordon, 6 Johns. Rep., 126. Taylor vs. Mills, 2 Cowper's Rep., 525.
The defendant’s counsel has said, the contract in this case must be regarded, not as an agreement to indemnify Berry, but as a contract to pay the debts of the partnership, and that in a reasonable time. In support of which he refers to the decision in Dorsey vs. Dashiell, 1 Md. Rep., 201. Conceding this position to be true, still the contract does not justify the defendant in contending, as he does, that a failure to pay, before the application in insolvency, even of those debts which were not payable until after the application, gave authority to Berry to exhibit a claim against the assets of the insolvent, in the bands of his trustee, on account of such debts, and, therefore, for them, although paid by the plaintiff after the application, he could not recover against the defendant, after his discharge, except subject to such discharge. This position necessarily assumes, that the contract to pay in a reasonable time, bound the McLeans to pay debts of the firm, before the creditors could demand payment of them. To this we cannot yield our assent. On the contrary we think that payment of a claim, so soon as it falls due, is paying in a reasonable time.
Where such a contract as the present does not, in terms, state when the debts are to be paid, and all or part of them will not be due and payable to the creditors of the partnership, until after the execution of the contract, it does not require the payment of the debts until they respectively fall due. And such as may be due, at the date of the contract, are to be paid in a reasonable time, according to the principle stated in Dorsey vs. Dashiell.
in that case the court say: “The contract before us must be construed as equivalent to a promise to pay. And as the , claims in controversy were all due prior to the dissolution of the partnership, Dorsey was bound to discharge them within a reasonable time after the date of the covenant. He failed to *100flo this. Which failure gave the appellee a right of action against him more than twelve years prior to the issuing of the writ.” The question there was in reference to the plea of limitations.
Here, instead of the debts being all due and payable at the time of the dissolution, many of them were not payable till after the insolvent’s application.
• This contract is not under seal, it contains no penalty, nor does it promise to pay any sum of money to Berry, but provides, that “all debts due by the firm, of whatsoever nature or description, are to be paid by William and George McLean, so that John H. Berry, Jr., is to be entirely acquitted and discharged from said debts.” On account of such of those debts as were not payable until after William H. McLean applied for the benefit of the insolvent laws, there could be no breach of the contract, until after such application. And, if so, Berry could not claim dividends for those debts under the insolvent proceedings.
The prayer looks to the evidence alone, and notwithstanding the very ingenious argument of the defendant’s counsel, we cannot think, that under the proof in the cause, it was proper for the court to instruct the jury, that the plaintiff had no right to recover for any such sums of money as may have been owing from the firm of William and George McLean & Go., before the deed of assignment to R. M. McLean, and before the application of William H. McLean for the benefit of the insolvent laws, except subject to his discharge, notwithstanding the jury might find from the evidence, that such sums of money were not payable by William and George McLean & Go., until after the application of the said William H. McLean for the benefit of the insolvent laws.
Believing the court did wrong in granting the defendant’s prayer, the judgment will be reversed.

Judgment reversed and procedendo awarded.