Court Opinion

ID: 6545595
Source: CourtListenerOpinion
Date Created: 2022-07-19 22:19:18.235267+00
Date Added: 2024-06-11T15:55:57.484441
License: Public Domain

Riddick, J., (after stating the facts.) This is an action by Wynne, a surety, against Johnson and Davidson, the two principals in the note paid by the surety. It is admitted that the surety paid the note, and, so far as the defendant Davidson is concerned, the evidence shows no defense whatever. But there was evidence tending to show that one Powell purchased the interest of . Johnson in the saloon business of Johnson and Davidson and that it was agreed between himself and Johnson and Wynne that Powell should assume the debt of Johnson to Wynne, and that Johnson should be released from further liability to Wynne for that debt. There was at least some evidence tending to show that this trade was consummated, and that Johnson was released, and that, with Wynne’s knowledge and consent, an indorsement to that effect was made on the note which Wynne had paid. The defendant Johnson set up this agreement for a release as a bar to the action of Wynne. Counsel for Wynne contend that the trade between Powell and Johnson was never consummated, and that J ohnson was never released, and that if it was consummated it was afterwards rescinded. They say further that, after the negotiations of Powell for the purchase of an interest in the saloon were broken off, Davidson, acting for Johnson, agreed with Powell to rescind the contract of purchase and release, and thereupon repaid to Powell the money he had paid Johnson on his purchase, and, acting for himself and Johnson, sold the saloon business to' a third party, and- took the purchase money notes in the name of Johnson and Davidson, and deposited them in the bank to the credit of Johnson and Davidson; that so much of the notes as was collected was placed to their credit and drawn out by them; and that this conduct of Johnson was a ratification of the acts of Davidson in rescinding the contract of purchase with Powell, and in selling the business to another party for the benefit of himself and Johnson. If Johnson did these acts with knowledge of the attempted rescission made by Davidson with Powell, and knowing the fact that Davidson was selling the saloon business as the property, not of Davidson and Powell, but as the property of himself and Johnson, this contention would be sound. But a ratification presupposes a knowledge of the act ratified, and before the acts of Johnson referred to can be treated as a ratification of the rescission made for him by Davidson with Powell it must be shown that he had some notice of such acts of Davidson, and that with this knowledge he accepted the fruits of the rescission, or acted in a way that showed that he approved of the acts of his agent. Counsel for plaintiff, by the instruction asked by him, which is set out in the statement of facts, and which the court gave, seems to admit that there was evidence tending to show that Johnson had sold his interest in the saloon business to Powell, and that in consideration thereof Wynne had released his claim against Johnson for money paid as surety, but he contends that, if this was so, and if Davidson afterwards sold the saloon, and took notes payable to himself and Johnson, and Johnson after-wards urged the collection of those notes, or consented that the proceeds should be applied to the debt of Johnson and Davidson, he was then liable to Wynne in this action. But this contention does not seem to us to be sound. We must keep in mind that, if the sale by Johnson of his interest in the saloon business to Powell was actually consummated, and if, in consideration thereof, Wynne released his claim against Johnson for money paid, that sale and release could not, in the absence of fraud, be set aside without the consent of Johnson. It is true that if Davidson, acting for Johnson, agreed with Powell, to rescind it, and ■Johnson afterwards ratified this act of Davidson’s, the rescission would be in effect the act of Johnson, and would bind him. But, as we have before stated, in order to show a ratification by Johnson, it must be shown by evidence, either direct or circumstantial, that Johnson had notice of the act done -by his agent. And right on this point is where the instruction given by the court at the request of counsebfor plaintiff seems to us to be defective, for it makes Johnson liable to Wynne in this action if he urged the collection of the notes taken by Davidson in the name of Johnson and Davidson, in payment of the saloon business, or if Johnson consented that any of the proceeds of said notes should be paid on the debts of. Johnson and Davidson, regardless of whether at that time Johnson had notice of Davidson’s attempted rescission of the contract of sale and release made by Johnson with Powell'-and Wynne or not. Now, if Johnson had been released from this claim of Wynne, then, in the absence of any knowledge by him of the attempted rescission made by Davidson with Powell, it cannot be said as a matter of law that the mere fact that he urged the collection of the notes given to Davidson in the name of Johnson and Davidson amounted to a ratification of the rescission. It is a well-known fact that the partnership name often remains the same after the personnel .of the firm has changed. The new firm may carry on business under the old name. If Johnson had no notice of the fact that Powell had attempted to rescind his contract of purchase, he might have urged the collection of the debts, not because the money was coming to him, but to aid the new firm which had assumed the debts of the old firm, and in whose success he was interested to that extent. It can not therefore be said, as a matter of law, that such action on his part amounted to a rescission, though it might be potent evidence tending to show such rescission. If, after having sold his saloon business to Powell, Johnson treated the proceeds of that business as his own, this would no doubt be evidence, probably very strong evidence, that the sale to Powell had not been consummated; or, if consummated, that it had been rescinded; but the instruction complained of did not submit that question to the jury, but told them, as a matter of law, that if Johnson urged the collection of notes given for the saloon business, they should find for the plaintiff. The latter clause of this instruction was, in view of the facts, specially objectionable. It, in effect, told the jury to find for the plaintiff if any of the proceeds of the sale of the saloon business was with Johnson’s consent paid on the debts of Johnson and Davidson. Now, as before stated, the evidence shows that Powell agreed to take Johnson’s place and assume his part of the debts. When the saloon business was sold, it was entirely proper that the proceeds should go to the payment of the creditors of that business, and the fact that Johnson consented that this should be done did not set aside a release made by Wynne, or give Wynne the right to sue him, for the payment of the debt was a part of the contract of release. The questions in this case are, first, did Wynne, in consideration of a sale by Johnson of his interest in the saloon business to Powell, release Johnson from the debt which he now claims against him. Second, if there was such a sale and release, did Johnson ratify the subsequent agreement of the other parties thereto with Davidson that it be set aside ? The evidence, we think, tends to show that he did; but that was a question for the jury, which in our opinion was riot properly submitted. For the reasons stated the judgment is reversed, and the cause remanded for a new trial.