Hyperlawhypertext legal database Beardslee v. Hemingway 20 N.Y.S. 214

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Beardslee v. Hemingway

20 N.Y.S. 214 Court N.Y. Gen. Term English

Delivered by Merwin, J.

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p. 214
Beardslee v. Hemingway et al.
(Supreme Court, General Term, Fourth Department.
September, 1892.)

Headnote

1. Death of Partner—Discharge—New Agreement with Survivor.
On the death of a member of a banking firm, the survivor continued its business, and, without the consent or knowledge of decedent’s administrators, agreed to pay the holder of interest-bearing certificates of deposit, payable on demand, a higher rate of interest, and did so until he became insolvent. Reid, that decedent’s estate was not thereby discharged from liability.
3. Same—Insolvency of Survivor—Necessity to Recover Judgment.
The estate of a deceased partner may be sued by a creditor of the firm on proof of the survivor’s insolvency, without first recovering judgment against him and having execution returned unsatisfied.
Appeal from circuit court, Broome county.
Action by Darwin M. Beardslee against Vincent W. Hemingway and another, administrators of Harry Hemingway, deceased. From a judgment for plaintiff, defendants appeal. Affirmed.
Argued before Hardin, P. J., and Martin and Merwin, JJ.
Alex, & A. W. Cumming, for appellants. Carver, Deyo & Jenkins, for respondent.

This action is brought to recover the amount of four certificates of deposit, amounting in the aggregate to SI,208, given by the banking firm of H. Hemingway & Son to P. P. Beardslee, prior to May 14, 1886. The certificates were in the usual form, and each had, the clause, “Interest at

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3 per cent, if left 6 months.” The firm was composed of Harry Hemingway and Eugene B. Hemingway. The former died on May 14,1886, and the certificates in question were then outstanding. Eugene B. continued and individually carried on the business at the same place, and also adjusted unsettled copartnership business. On or about June 15, 1886, there was a conversation between P. P. Beardslee and Eugene B. Hemingway with reference to an increased rate of interest upon the certificates. Beardslee said to Hemingway that he could at some other bank get 4 per cent., and Hemingway replied that he would allow him 4 per cent, on the certificates if he would leave them. At the close of Hemingway’s evidence, in reply to the question, “When you agreed to pay the four per cent., what was the conversation between you and Mr. Beardslee?” the witness testified: “He said he could get four per cent, here in Binghamton at the Savings Bank, and that if I could not pay it he would probably make the change. He did not say he really would, but carried that idea, and I told him I would give him the increased orate of interest, four per cent., on the condition that he left it. That is all She conversation in regard to it.” In substance, Hemingway verbally agreed to pay Beardslee 4 per cent, interest if he would leave the money. The money was not drawn out, and thereafter, and up to December 1,1889, interest was paid at the rate of 4 per cent. There was, as the court below found on sufficient evidence, no agreement to leave the money any time, or till the happening of any event, and no agreement which would have prevented the holder from demanding the same at any time. The defendants had no knowledge of and did not consent to the change of interest. They were appointed administrators on the 23d September, 1886. Shortly after December 1, 1889, Eugene B. Hemingway failed. The present action was commenced on 20th August, 1891, and the plaintiff, to whom the certificates had been transferred, recovered their amount, with interest at 3 per cent, from December 1, 1889.

The defense is mainly based on the transaction between plaintiff’s assignor and the surviving partner with reference to the increased rate of interest. There was nothing to prevent the creditor from demanding his pay at any Sime upon the certificates. There was, therefore, no extension of time of payment that would release the estate of the surviving partner, assuming it occupies the position of a surety. Indeed, the claim of the defendants does not seem to be placed on this basis, but upon the theory that there was in effect a new contract between the creditor and the surviving partner, that operated to release the estate. In Hamersley v. Lambert, 2 Johns. Ch. 508 , it is said by Chancellor Kent to be the established doctrine that neither delay, nor lapse of time, nor dealing with the survivor, nor calling for and receiving part of the debt from the survivor, amounts to a waiver or bar of the claim upon the assets of the deceased. In Parsons on Partnership, (2d Ed.) p. 438, it is said, with reference to the liability of a retiring partner, that “if a creditor of a firm contracts or agrees with a new firm to take their security in discharge of that of the old, the retiring partner is discharged from any liability to pay the debt, and whether such an agreement has taken place is a question of fact for the jury. To discharge the retiring partner, however, it is not sufficient to take a new security, but there must be an agreement to discharge him from the liability of the old firm.” The mere receiving of interest from the new firm will not discharge the old. Id. p. 441; Daniel v. Cross, 3 Ves. 277. In Heath v. Percival, 1 P. Wms. 682, 1 Strange, 403, and referred to in 2 Colly. Partn. (6th Ed.) 914, there was an agreement by the continuing partner to pay an increased rate of interest, and a receipt of the same by the creditor. It was held that the estate of the retiring partner was not released. The question in such cases seems to be whether the transactions, show that the creditor has accepted the liability of the survivor in discharge of the liability of the partnership, (Winter v. Innes, 4 Mylne & C. 101; 16 Amer. & Eng. Enc. Law, 906, 908, and cases cited; Fogarty v.

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Cullen, 49 N. Y. Super. Ct. 397 ,) and this is a question of fact, (Harris v. Farwell, 15 Beav. 33.) In the present ease, the certificates of the firm were not surrendered, nor was there any further obligation in writing taken from the survivor. The creditor was given the option of allowing his money to remain, and receiving an increased rate of interest. This option the creditor availed himself of for several years. The debt was not changed. There is no finding or request to find that the creditor intended to release the estate, or that the survivor intended or agreed to become solely liable. We cannot say as matter of law, upon the facts as here presented, that such intent existed on the part of either party, or that exclusive credit for the debt was given to the survivor. It follows that the defense in this regard is not made out. In the course of the trial the plaintiff showed that on the 2d of July, 1890, he recovered a judgment in the supreme court against Eugene B. Hemingway upon the claim in controversy, upon which execution was thereafter issued, and returned wholly unsatisfied. The defendants claim that this judgment is invalid by reason of certain defects in the affidavits upon which an order for the service of the Summons by publication was based. This question it is not important hereto consider, as it is found upon sufficient evidence that Eugene B. Hemingway, at the time of the commencement of this action, and for some time prior thereto, was insolvent. This authorized an action to enforce payment against the estate of the deceased partner. Pope v. Cole, 55 N. Y. 124 . It was not error for the court to decline to receive evidence that defendants had no assets. Code, § 1824. Nor does it appear that the ruling of the court as to certain declarations of plaintiff’s assignor was erroneous. Clews v. Kehr, 90 N. Y. 633 . The judgment should be affirmed.

Judgment affirmed, with costs. All concur.

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