Loan Association v. . Ferrell

Burwull, J.: The contracts which the plaintiff' receiver seeks to enforce in this action were made by the defendants with the partnership of which they were members, and related solely to a partnership matter.and affected the partnership assets. They contracted that they would be sureties to the firm for the repayment of money loaned by the firm to certain persons. While the partnership continued no suit could be brought by the firm against the defendants, for in such a suit the appellants would necessarily have been both plaintiffs and defendants. Because no suit would *303 lie, the partnership continuing to exist, to enforce the defendants’ liability to the firm evidenced by the notes sued on, the statute of limitations would not run in defendants’ favor until the appointment of a receiver to collect the assets of the partnership and apply them to the payment of the liabilities of the firm. If that one of the defendants who was a director of the business was allowed by plea of the statute of limitations to escape his liability on these contracts, we would have the singular spectacle of the law allowing the neglect of'duty on the part of an agent to work his advantage and the disadvantage of his principal. It is sufficient, however, in this action to say that the plea of the statute of limitations cannot protect the defendants for the reason above stated. We have examined the following cases, to which we were referred by the counsel for defendants, and do not think that they sustain his contention : In Carpenter v. Greenop, 74 Mich., 664 (16 Am. St. Rep., 662), it is decided that the indorsee, though after maturity, of a note of a ’firm payable to one of the firm may maintain an action on it against the firm. In Stitheimer v. Toms, 114 N. Y., 501, the action was by the assignee of one partner against the firm. Bull v. Cole, 77 Cal., 54 (11 Am. St. Rep., 235), was a suit by one partner against another to recover a loan which was not a partnership transaction. There it is said: “It is well settled in this State, as elsewhere, that one partner cannot sue another upon a demand arising out of the partnership transactions in the absence of a settlement of the accounts.” This rule meets any contention of the defendants that the other partners might have sued them on their contract of suretyship, the notes in suit, for they were surely partnership transactions, being between the partners about partnership funds. Bates v. Lane, 62 Mich., 132, was an action b}T one partner against another to recover 'a personal debt *304 due by one to the other. In Conner v. Prince, 12 Am. Dec., 649, which was cited, it is expressly decided that “unless there is a settlement and an express promise to pay, one partner cannot maintain an action at law against the other.” In Bonaffe v. Fenner, 14 Minn., 212, the action was brought by the assignee of.one partner on a note signed by the other partners and payable to him. It appears, therefore, that none of the cases cited fit the case under consideration, and that it is in accord with the authorities as well as justice and reason that the defendant partners shall not be allowed by plea of the statute of limitations to escape their liability on these coutracts and thus add to the burdens of their copartners in the final settlement of the affairs of this insolvent firm. Affirmed.