Burnett v. Snyder

Headnote

I. PARTNERSHIP.

1. Vt'llA i' WIl.I. CONSTITUTE.

pz) An a/wement was made between several, that certain of their number should be named as copartners in partnership artii 1<»:.

and that the others should have a certain proportion of the interest of certain of those so named, which agreement was carried into effect.

. Held,

it appearing that it was the mutual desire of all that those not named in the articles should be interested as partners, and that it was their common opinion that the interest of the firm' would be best subserved by those, not to be named in the articles, not appearing to the world to be partners; and it also appearing that the above mode was adopted to accomplish the desired result:

THAT

it was the intent of all the parties, including Snyder, that he should, as between themselves, have the interest of a partner; and that the form of the written contracts drawn and executed could not prevent the liability of a partner attaching to Snyder, as between him and third persons dealing with the firm, while this relation existed.

1. Sub-pabtnebship. Such an arrangement does net present a case where, after the firm is formed, one partner forms a sub-partnership, which, when it becomes known to the others, is neither approved nor disapproved of by them, as was the case in Burnett v. Snyder, 43 N. Y. Super. Ct. 238 .

II. LIMITATION, STATUTE OF.

1, Payment on account by one partner after firm has gone into liquidation.

(a) Effect on another partner.

1. S., being liable for the debts of a firm, whether as a partner intei• sese or quoad third persons, after the firm went into liquidation, gave to a partner of the firm an amount of money, to be applied by him towards the payment of the debts of the firm, such partner agreeing to.pay the debts in full; such partner made a part payment on a claim against the firm.

Held,

sufficient to take the case out of the statute of limitations as to S.

1. This, though the claimant may have received no part of the identical money furnished by S.; and though the whole of the money so furnished may have been applied to the payment of other firm liabilities before any payment on the claims in suit.

2. Residence.

(a) Remarks of referee on.

This action was brought against C. Brown Snyder, as partner in the firm of Strang, Platt & Co., to recover an indebtedness due plaintiff from that firm. The principal questions involved were whether he was liable as a partner, and whether the claim was not barred by the statute of limitations.

Strang, Platt, Byley, Sexton and Snyder being mutually desirous that Sexton and Snyder should be interested as partners in two firms to be formed, one to do business at New York under the name of Strang, Platt & Co., and the other to do business at Boston, under the name of George W. Byley & Co., and being of the common opinion that the interest- of the firms would be best subserved by Sexton and Snyder not appearing to the world to be partners, adopted a mode to accomplish the desired result, which mode was the preparation and execution of articles of copartnership to be signed by Strang, Platt, and Byley, in which they alone were named as partners, and that Sexton should have half of the interest of Platt, and Snyder have half of Byley’s interest; separate agreements to be entered into between Sexton and Platt and between Byley and Snyder. Under the terms of the formal partnership, Strang had one-fifth, Platt two-fifths, and Byley two-fifths. Sexton had one of Platt’s two-fifths, Snyder had one of Byley’s two-fifths. They each had a fifth interest.

In 1864, Sexton’s interest ceased, his part of the accrued profits were transferred by him to Snyder, to pay some indebtedness of his to Snyder, and then a new agreement by parol was made between Strang, Platt, Byley and Snyder, by which the business was to be continued as previously, and that Platt should have

one-fourth, Strang one-fourth, and Ryley one-half of the profits, and that Snyder should have one of Ryley’s quarters, thus giving each of the four a quarter of the profits.

Ryley died in June, 1867. Pursuant to agreement between Mr. Platt, Mr. Strang, Mr. Snyder, and the administratrix and administrator of Ryley, the business was continued until December 31, 1869, or January 1,1870.

A new firm was then formed, under the same firm name, to continue and transact the same business. In that firm Snyder’s interest was continued, he having a share of the interest of Ammon Platt and of Strang therein. That was dissolved in or about the following April by the death of Ammon Platt. A new firm was then formed, commencing about May 1,1870, under the same firm name, to continue and transact the same business, and Snyder was also interested in the business and profits of that firm. «That continued until it went into liquidation.

In 1874, it became necessary to provide means to pay the debts of the three firms, and more especially of firms No. 1 and No. 2.

A summary statement of the aggregate amount" of the liabilities of the three firms was furnished by Strang to Snyder, being, as then stated, about $104,000. The liabilities proved to be somewhat larger, by reason of losses accruing on leases taken in Boston. After discussion and consideration, Snyder furnished to Strang $50,000 in funds and credits, to be applied by him in paying the liabilities of these three firms, and Strang agreed with Snyder to pay them in full. Under tins arrangement Strang paid to the plaintiff, October 10, 1874, on account of what Strang, Platt & Co. owed tie plaintiff, the sum of $5,141.31.

Upon the question of the statute of limitations the ! referee held:

] “This payment of $5,141.31, on account of the debt

owing to the plaintiff, operates to prevent the debt being barred by the statute of limitations. It was not only made by the consent and authority of Snyder, but it would have been a breach of faith on the part of Strang if he had not applied the $50,000 in payment of debts owing by the firm, or had not paid that amount by reason of having received that sum. I do not think the fact that the plaintiff may have received no part of the identical $50,000, furnished by Snyder, or that Strang may have, actually paid $50,000 of the firm’s liabilities before he paid to the plaintiff the $5,141.81, affects the question of the force and effect of this payment, as a part payment on account. It was a part of the agreement between Strang and Snyder that Strang should pay not only a part, but the whole of each debt. And in making such payments, Strang did what Snyder not only required he should do, but required him to contract that he would do.”

The referee reported in favor of plaintiffs. Upon his report judgment was entered; and defendant, Snyder, appealed.