Fitch v. Fraser — 109 A.D. 440

Majority

p. 440

Augustus S. Fitch and Others, Appellants, v. Tina B. Fraser, Respondent.

Third Department,

November, 1905.

Headnote

Contribution between makers of promissory,note— consideration sufficient to create liability as joint maker—when action for contribution not prematurely brought when residuary legatee of deceased partner liable for contribution on promissory note without a partnership accounting. .

When the sole residuary legatee of a deceased partner has, in her individual capacity, become ,a joint maker with the surviving partners on a, note given to the assignee of the partnership assets to.- redeem a prior guaranty that sudh assets were collectible, there is a sufficient consideration for the joint liability assumed, as the liability of the testator to his firm on the prior guaranty was chargeable.on the residuary estate. -"A surrender of property to the surviving partners by the assignee of the partnership property on taking such, note is a further consideration for the liability assumed by such residuary legatee. ■ - . ,

When the residuary legatee is sued for contribution by the other joint makers of such note, the action is not prematurely brought if the note has been paid by

p. 441

the plaintiffs partly in cash and partly in notes, which, although unpaid at the commencement of the action, have since been paid, as the defendant, by the cancellation of the prior guaranty- on which hpr testator was liable^ was relieved from liability thereon.

As'the note on which defendant joined as a maker with the surviving partners of her testator was not a note of the former partnership, an action for contribution against her lies without a previous accounting, even though the original articles of partnership provided that the same should not be dissolved on the death of a single partner, as such provision does not make the residuary legatee a member of the firm.

Parker, P. J., dissented.

Appeal by the plaintiffs, Augustus S. Fitch and others, from a judgment of the Supreme Court in favor of the defendant, entered in the office of the clerk of the county of Delaware on the 10th day, of January, 1905, upon the decision of the court rendered after a trial at, the Delaware Tidal .Term, the jury having been discharged.

Neish & More, for the appellants.

Robert A. Fraser, for the respondent.

The judgment appealed from was entered upon the second trial of this action. Upon the first trial a similar judgment was directed, and upon an appeal therefrom this court reversed the judgment and sent the case back for a new trial. The facts are substantially stated in the record upon that appeal which may be found in 84 Appellate Division at page 119. These facts, do not substantially differ as- they appear upon the second trial. There - are a few variances, however, to which it may be well to refer.

The finding of the trial court that upon the giving of the note for $21,382, a guaranty held by the Delaware Loan and Trust Company was not surrendered is clearly against the weight of evidence. The witness Fitch swears that the giving of that note was in settlement of all claims against White, Griswold & Co., and that the guaranty, which is called in the case the second guaranty, was then and there surrendered to him by Mr. Honeywell, representing the Delaware Loan and Trust Company. In support of that testimony is the production by Mr. Fitch of that guaranty which -could in no way be lawfully in his, possession except by reason of' such sur

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render. In addition to that is the written receipt of Honeywell, representing the Delaware Loan and Trust Company, Of this note ■ “ of $21,382 in full payment of 'all claims and demands against Messrs. "White, Griswold & Co., agreeable to the resolution of the ■Board of Directors of the Delaware Loan & Trust, Co.” That resolution is presented which substantially, authorizes the Delaware Loan and Trust Company to settle- and assign all claims ' and demands against White, Griswold & Co. for $21,382. Opposed to" this testimony is the uncertain, speculation of Honeywell to the effect .that lie does not see why he should have surrendered the guaranty and a lead pencil addition to the resolution of the board of directors, made by Honeywell some time after it had been Recorded, to. the effect that this note of $21,382 should bé given and received as additional security and that it should not affect or prejur dice in any way any obligation or security theretofore taken. As against the positive testimony of Fitch, reinforced by the possession of the second guaranty, so called, still further- reinforced .by thé receipt given by Honeywell at the time of the execution of the $21,382 note, a finding that that second guaranty was not- surrenxdered at the time of the giving of the $21,382 note fails to give ffue" effect to the written declarations of the parties. -

The surrender of this second guaranty, however, is wholly uñnec- . essary to establish a'.consideration fdr the defendant’s undertaking. ■The liability of "her testator, which must be satisfied from the.-: ■ residuum of his property to which she was entitled, and the surrender - by the Delaware Loan'and Trust Company of personal property to White, Griswold & Co. would themselves furnish ample consideration for the defendant’s undertaking.

.Nor is there any force in defendant’s claim that she was surety merely for her cosigners of this tiote. The testimony presented by the defendant herself as to the extent of lier liability, which was stated to lier at the time she signed the note,, conclusively negatives the claim that she was a mere surety. Moreover all the facts in the case show clearly an intention on her part to be bound for lier proportionate share in the liability created by. the note. .

A further claim is made upon this trial' that this note was not fully paid by the plaintiffs at,the time of the commencement of this action and, therefore, that the action is premature. This in fact.

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•is one of the grounds upon which the trial court lias directed judgment for the defendant. Certain payments had been made upon the note and prior to the commencement of this action these plaintiffs had after making certain payments in cash given their individual notes for the balance. These individual notes had not all matured at the commencement of the action but have since matured and been paid. At the time when these individual notes were given this $21,000 note was surrendered up.' This defendants no longer liable to the Delaware Loan and Trust Company thereupon. This would seem, as between these plaintiffs and this .defendant, to constitute such á payment as would authorize them to stie for contribution. If this $21,000 note was in full settlement and adjustment of all claims against White, Griswold & Co., and at the time of the giving of these individual notes this $21,000 note was itself surrendered up to the makers, -the defendant could no longer be held liable to the Delaware Loan and Trust Company upon any of the debts of White, Griswold & Co., and she cannot be heard now to say that her obligation -was not so far satisfied — that this action was prematurely brought, although at the time of the commencement of the action some of these individual notes had not been paid.

The question in the case thus recurs to the question which was decided upon the former appeal as to whether this action can be maintained, there having been no accounting between the partners of White, Griswold & Co., We are not convinced that we were wrong in the proposition which -we then held. This note was not made by the partnership. It is not claimed that this defendant is now or ever was a member of this partnership. The provisions in the articles of partnership providing that the partnership should not be dissolved upon thé death of a single member of the firm did not make a residuary legatee of that partner a member of the firm. It only authorized the continuation of the partnership by the surviving members from which the estate of the deceased member could withdraw its share of the assets. After the partnership then had been "dissolved as to the estate of John Babcock this note was given by individuals interested in the assets of that firm including this defendant. The parties were jointly liable upon the note. Prima facie, the payment by a part of the signers entities them

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’to contribution. It, for the first time, appears in this trial that: defendant, has been discharged as; executrix of the. will of- John. Babcock. It may be that the defendant, upon pleading and proving that upon a- partnership accounting the plaintiffs were, in fac't, indebted to her testator, might present a defense to the whole, or a. part of the plaintiffs’ claim for contribution. Ho such defense,, however, was presented and, upon the plaintiffs? pleading and. proofs, we are unable to see-why they are not entitled to a judgment.

, The judgment must,- therefore,, be reversed upon- the law and the-facts and a new trial, granted, with costs to appellants to abide the event.

All concurred, except Parker, P. J., dissenting on the ground that _ the defendant’s contract was that of a surety only, and, therefore, not subject to an action for contribution. Houghton, J., not voting,, not being a member of this court at the timé this, decisiowas handed down.

Judgment reversed on law and facts and new trial granted, with, posts to appellants to abide event.