Frye & Bruhn v. Phillips

Per Curiam. The defendant Phillips and the appellant Oliver were partners conducting a restaurant business. As such partners they contracted an indebtedness for meats, to the respondent, on which there was due August 19, 1905, the sum of $330.14. On that day Mrs. Oliver sold her interests in the business to Phillips and retired from the partnership. Later in the day she went to the manager of the respondent, stated that she had sold her interests in the restaurant to Mr. Phillips, and that she desired to pay half of the partner-. 191 ship indebtedness and be released therefrom. The manager told her that that would be satisfactory. She thereupon paid a part of the account, and later another part, in all $85. The manager then told her that she owed nothing more, as Mr. Phillips had taken up the account, and the company would look to him for it. Phillips did not pay the balance, and this action was begun against both partners to recover the amount. Phillips defaulted, and Mrs. Oliver pleaded the agreement above set out as an accord and satisfaction. The action was tried before the court without a jury, and resulted in a judgment for the respondent; the court holding that the agreement was without consideration. The appellant and respondent have discussed at some length the question whether, under the laws of this state, a payment of a part of a debt under an agreement to release the whole operates as a release of the whole debt, but we have found it unnecessary to discuss this question, as it seems to us the case is governed by another principle. The evidence clearly shows a novation. The creditor agreed, in consideration of the payment of a part of the debt by the retiring partner and the promise of the continuing partner to pay the debt, to release the retiring partner. Under the great weight of authority, this effects a substitution of debtors and operates to release the retiring partner. Scott v. Hallock, 16 Wash. 439, 47 Pac. 968; Bates, The Law of Partnership, § 505; 22 Am. & Eng. Ency. Law (2d ed.), p. 182, 183. The court was therefore in error in holding the appellant liable. The judgment is reversed, and the case remanded with instructions to enter judgment for the appellant.