Mutual Life Insurance v. Polhemus

Plaintiff appeals from a judgment in favor of the defendant respondent in an action brought to recover the rent of certain premises from August, 1909, to May, 1910, under a written lease made between plaintiff and defendants for a term beginning January 25, 1908, and 1, 1911.

At the time of the making of the lease, the defendants constituted the firm of Polhemus Bros. The defendant David D. S. Polhemus defaulted herein, and the defendant respondent interposed an answer, admitting the making of the lease by the firm of Polhemus Bros., and the nonpayment by defendant respondent of the rent sued for, but setting up as an affirmative defense that on October 31, 1908, the firm of Polhemus Bros, was dissolved, and all the liabilities of the firm assumed by the continuing partner, David D. S. Polhemus, and that notice of such dissolution and of the assumption of the firm liabilities by David D. S. Polhemus, including all liability under the lease herein, was given to plaintiff by defendant respondent on or about the 30th day of November, 1908; also that plaintiff agreed with the defendant David D. S. Polhemus, for a valuable consideration, to forbear and extend the time of payment of the rent sued for from the respective dates of the maturity of said rent until shortly before the commencement of this action, without the knowledge arid assent of this defendant respondent; that plaintiff never gave this defendant any notice of said agreement, and has never made any demand on this defendant respondent for the payment of said rent, except by the commencement of this action; that at the several times when the said rent became due the defendant David D. S. Polhemus was solvent, and it might have been collected from him, if the plaintiff had endeavored to make such collection, but the plaintiff unreasonably and improperly neglected so to do; that David D. S. Polhemus is now insolvent.

As a further separate answer, defendant alleges that plaintiff, at some time prior to the 1st day of August, 1909, accepted the defendant David D. S. Polhemus individually as a tenant in lieu of the defendant respondent, and thereby discharged this defendant respondent from further liability under the lease; also that at some time after the 1st day of December, 1908, the defendant David D. S. Polhemus, with the knowledge, consent, or acquiescence of the plaintiff, but without the knowledge, consent, or acquiescence of this defendant respondent, sublet or assigned a part of the premises mentioned in the complaint to a tenant that has been since, and still is, in occupation of that portion of the premises.

The court charged the jury as follows:

“The law Is incontrovertible and irrefutable that a partner, retiring from a firm and turning over the assets of the partnership to the continuing part

ner, stands in a relation in reference to the obligations of the partnership, not only as a surety for those obligations, or in other words as a guarantor of those obligations, as between himself and his partner, but also as to all third parties, providing that, in order to make the situation as a surety binding on third parties, he must show by a preponderance of the credible testimony that such third, parties knew the nature of the dissolution, namely that the one partner continuing the business had received and obtained all the assets and claims of their partnership, and in consequence had assumed all the obligations and liabilities of the firm. If such knowledge is brought home to third parties dealing with the partnership, then such third parties must, respect the change of relationship from coprincipal on the part of the retiring partner to surety for the obligations of the partnership from, that time on.”

. [L2] While the learned court correctly stated the law on this subject, so far, at least, as concerned obligations thereafter incurred in the name of the copartnership, it erred in submitting this question to the jury, for the reason that there was no evidence introduced from which the" jury could determine the terms of the dissolution of co-partnership, or could find that the obligations of the firm were assumed by the defendant David D. S. Polhmeus; and the finding of the jury in favor of this defendant respondent on that point is unsupported by competent evidence. The testimony of the defendant respondent, admitted under objection and exception by plaintiff’s counsel, that David D. S. Polhemus assumed thé obligations under the lease, was improperly admitted, was at best but a conclusion of the witness, and insufficient to relieve this defendant respondent of his obligations under the lease. On the evidence adduced, plaintiff would have been entitled to the direction of a verdict against this defendant respondent, had a motion for such a direction been made. The verdict in favor of the defendant must be set aside as against the evidence.

The judgment is therefore reversed, and a new trial ordered, with costs to appellant to abide tfye event.

GERARD, J., concurs. SEABURY, J„ concurs in the result, on the authority of Phillips v. Schlang, 139 App. Div. 930 , 124 N. Y. Supp. 40 .