Court Opinion

ID: 6620744
Source: CourtListenerOpinion
Date Created: 2022-07-20 20:29:28.520295+00
Date Added: 2024-06-11T15:58:42.068217
License: Public Domain

ELLISON, J.
This action is for contribution. The trial court made a finding of facts and thereupon declared the law thereon to be that plaintiffs could not recover. The action arises on a contract of guaranty whereby a partnership, of which defendant’s ancestor is alleged to have been a member, guaranteed the payment of two- certain promissory notes made by one Ketchum, and assigned by the partnership. The facts-, necessary to state appear to be as follows:
On the 27th of June, 1883, Louis Hax (whose administrators are the plaintiffs), James N. Burnes (whose heirs, including the administrator of one of them who is dead, are the defendants),°S. A. Walker and John Calhoun by written agreement of that date formed á partnership for a period of five years for the purpose of doing business as a private bank under the name of Schuster, Hax & Co-. Of this partnership, James N. Burnes owned twenty-three per cent. The contract of partnership contained this provision: “In case of the death of any one of the partners during the continuance of this contract, the business shall not on account thereof be discontinued, but the interest of said partner shall be kept in the business and the same shall be continued by the surviving partners, and the administrator or executor of such deceased until the expiration of the time agreed upon. ’ ’ On the 12th of June, 1888, shortly before such contract expired, it was extended in writing for another period of . five years, which extension contained a provision that a majority of the stockholders *711might convert the partnership into a banking corporation at any time they deemed it practicable. It is alleged by plaintiffs that all the partners signed this extension, bnt defendants deny that James N. Burnes signed it. A few months after the date of this extension on January 29, 1889, Burnes died, his widow, the defendant Mary, becoming his administratrix, and a few months after his death, the surviving partners converted the partnership into a national bank known as the Schuster-Hax National Bank, with a capital stock of $500,000, of which stock the Burnes estate took $50,000. At the organization of this bank, the partnership transferred its "assets, including two notes made to' it by Ketchum, as aforesaid, the notes upon which this controversy is founded, to such national bank, and upon which the following written endorsements were made: “For value received we hereby assign the within note and guarantee payment of same at maturity or at any time thereafter; waiving demand, protest and notice of non-payment, (Signed) Schuster, Hax & Co.”
The partnership received of the national bank for this transfer of its business and assets, $50,000, representing its capital; $60,000 for its surplus, and $50,000 for its good will; making a total of $160,000. Ketchum died and his estate proving to be insolvent, plaintiffs’ intestate, Louis Hax, was compelled to pay the note under the guaranty aforesaid and they' thereafter instituted this action. Defendant Mary S. Burnes, as administratrix of the Burnes estate, never took active or affirmative part in the management or direction of the partnership. Her passive conduct probably resulting from the fact that the Burnes estate organized itself into a corporation (theheirs being the stockholders) and was managed as such. The administration was closed long prior to the institution of this action.
On the foregoing facts we conclude that the trial court should have found for the plaintiffs instead of defendants. Ordinarily, the death of á partner puts an *712end to the partnership, except for certain necessary purposes in winding up its affairs. The prosecution of further partnership business is not permissible. But a partner may by contract provide for a continuation of the partnership business after his death, and that the interest of his estate therein shall not cease. Edwards v. Thomas, 66 Mo. 468; Bank v. Tracy, 77 Mo. 594. The above quoted provision of the contract of partnership undoubtedly provided for a continuation of the partnership. It prevented the ordinary result of dissolution of the partnership which otherwise would have followed the death of Burnes.
The extension of this contract contained an addition to the contract itself, wherein it was provided that the partnership might be converted into a corporation (state or national), whenever a majority of the stockholders so decided. The partnership merged itself into a corporation bank at great profit to the partners on the amounts originally put in by them. In making the transfer of its assets, the partnership guaranteed the payment of the Ketchum notes, as stated. We believe it to be clear that it had the power, in view of the facts stated, to make this guaranty. But in addition to the original power, under the facts it appears that neither the Burnes estate nor any of the heirs ever objected to the transfer. They received ’the benefits and profits of the transaction and joined in the association which made up the corporation bank, taking a large portion of its stock.
The briefs and arguments of counsel would indicate that the court considered that the surviving partners ■could not, under the terms of the contract of partnership and its provisions of extension, enter into', or merge into the national bank corporation. Suppose this should be conceded, it would not affect the result which we think should have been reached in the trial court. The fact remains that the partnership survived the death of Burnes. It had the power to transact partnership bus*713iness as before Ms death. TMs power included the rigM to-guarantee the collection of an asset which it assigned for a valuable consideration, a consideration wMch is received and accepted by the members of the partnersMp, including those who succeeded to Burnes’ interest.
But it is said by defendants that the evidence failed to show that Burnes signed the extension. The court found that he did, and we believe there was ample evidence admitted to support the finding.
Our conclusion is that the judgment should be reversed and the cause remanded, with directions to enter judgment for the plaintiffs.
The other judges concur.