Cavitt v. A. B. James & Co.

Walker, J. This suit was commenced in the District 'Court by the defendants in error against the plaintiffs in ■error, and one James Nations, upon a draft, of which the ■following is a copy: “Doll. 3074-^. Gonzales Texas, Nov. 15,1859. “ Twelve months after date pay to the order of Brantly & Nations three thousand and seventy-four and dollars, value received, and charge the same to account of your obedient servants, “ W. C. Cavitt, “ J. T. Nations, “ J. M. Nations. To John Williams & Co., New Orleans, La.” This draft purported to be endorsed by Brantly & Nations, and also by James Nations. It was in proof that the firm of Brantly & Nations was composed of J. B. Brantly and James Nations. During the pendency of the suit the plaintiffs dismissed as to James Nations, and judgment was rendered against the plaintiffs in error, Wm. C. Cavitt and J. T. Nations. It is averred by the appellants that the endorsement of the draft by Brantly & Nations and James Nations was made after the death of Brantly and the consequent dissolution of the firm, and this is proven by the testimony of Everett Lewis. In 24 Texas, p. 639, in White v. Tudor, the court held that after the dissolution of a partnership one of the partners cannot impose new obligations upon the firm, or vary the character of those already existing. Nor can he endorse a note in the firm name, even in payment of a prior partnership debt. A general authority to one partner, upon a dissolution, to settle the business of the firm, does not authorize him to give a note in . the firm name for a partnership debt, or to renew one given before the dissolution. — 192 — The same doctrine is laid down in Speake v. White, 14 Texas, 369, and in 18 Texas, 287, and 3 Kent’s Com., p. 50. A. B. James & Co., the plaintiffs below, had no other-right or title to the draft sued on than that acquired by. the endorsement, which was made after the dissolution# of the firm of Brantly & Nations. True it is that the name of James Nations appears upon, the endorsement, and he may have made himself individually liable if he had possessed the power thus to transfer the draft. But we think he had no such power, and therefore a suit against him individually, upon the draft, could not be maintained, for he had no power to transfer it by endorsement. This question is decisive of the case, and it is unnecessary for us to notice the other assignments of error. The judgment of the District Court is reversed and the-cause dismissed. Rehearing granted, James B. Morris and T. M. Harwood, for defendants', in error, upon rehearing.—The evidence, we say unhesitatingly, establishes these facts: 1. That Brantly was dead, and James Nations, as surviving partner, was settling up the partnership business, when the draft was drawn. 2. That the execution, endorsement and delivery of the-draft to Harwood & Lewis, as attorneys for A. B. James & Co., was a simultaneous transaction, and that the drawers executed the same as a written promise to pay a debt for James Nations. 3. That said draft was then and there simultaneously accepted by Harwood & Lewis as full satisfaction for the claim of James & Co. against Brantly & Nations, and that the evidences of said claim were then and there delivered to the surviving partner, Nations, and that said draft was. — 193 — accepted in full satisfaction of said claim, and the firm of Brantly & Nations forever released. Can it be denied that the surviving partner, Nations, in the settlement of his affairs with the representatives of Brantly, either privately, in a probate court, or in a court of equity, would not be permitted, under the facts, to return the James & Co. claim as settled; or will it be asserted that he could not be forced thus to return it ? And again, could not Brantly’s representatives successfully plead this settlement against the firm of James & Co., in a suit on their claim? We think they could. Then, since this settlement, being untainted by fraud or illegality, estops James & Co. from proceeding against the firm of Brantly & Nations, will a court of equity refuse them the right to enforce their claims against those who assumed in writing to pay them the Brantly & Nations claims? We think not, and will now give our reasons■ for this opinion. Appellants in their brief cite 3 Kent, margin, 63. This authority is in our favor. It reads, “ One partner cannot endorse bills and notes previously given to the firm, nor accept a bill previously drawn on it,' so as to bind the firm.” (Story on Partnerships, 322.) This case refers expressly to securities which were in esse at the date of the dissolution of the partnership, and closes, “In short, none of them can do any act, or make any disposition of the partnership property or funds, in any manner inconsistent with the primary duty, now incumbent upon all of them, of winding up the whole concerns of partnership.” The case in 4 Johnson, p. 224, cited and copied from in appellant’s brief, decides that á partner, after a dissolution of partnership j cannot bind the firm by endorsing a bill which was given to the firm before its dissolution. This is all it decides. We have examined the long array of authorities cited in appel — 194 — lants’ brief, and we find that every one of them, when they speak of this subject, say that one partner cannot endorse a bill given to the partnership before its dissolution so as to bind the firm. The reason of this 'rule is thus given in the case in 4 Johnson: “It would be a peculiar hardship.to put a partner, retired from the whole concern, so completely in the power of the other as to charge him by negotiating bills given during the partnership.” The case of Speake v. White, 14 Texas, 364, decides on the question of partnership only this one point, that an acknowledgment by one partner after the dissolution of the partnership of an antecedent indebtness is no evidence against his copartners. The case in 18 Texas, 287, simply declares that a surviving partner cannot carry on the partnership business, but it does decide that he has a tight to use the partnership assets to settle up the partnership business. The case in 24 Texas announces the legal generalities in a case totally dissimilar from the one at bar, which are announced in the eases cited in appellant’s brief, and in the opinion of the court rendered in this cause, and we think we have shown that these cases do not and cannot apply to this cause. In 1st Vol., 5th Ed., of Parsons on" Contracts, page 201, it is said, “When a partner dies, the partnership property goes to the survivors for the • purpose of settlement, and they have all the power necessary for this purpose, and no more.” “After the dissolution of a partnership, one of the partners, who has authority to collect the debts, may transfer to himself a debt, due to the firm.” (Oxley v. Willis, 1 Cranch. C. Ct., 436.) We quote these authorities to show the authority of a surviving partner, and to prove that Nations had the right to settle the James claim as he did. The facts show that the draft sued on was not in existence when Brantly — 195 — died. It was never partnership effects. The insertion of the firm name of Brantly & Nations in the body of the draft could not have made it so, because the evidence shows that the draft was drawn for the express purpose of settling the James claim, and for the benefit of James Nations, the surviving partner. In 3 Kent, p. 72, note b, it is said: “ If such notes are made payable to the order of the maker, or to the order of a fictitious person, and be negotiated by the maker, they have the same effect and validity as if made payable to bearer.” This is the law in reference to bills. (See Story on Bills, Sec. 200.) Now, if this draft had been made payable to a fictitious person and immediately endorsed in the same name, would not the drawers be liable % Those who inserted “Brantly & Nations” in the draft could no more create an obligation for said firm than they could for a fictitious person. How, then, can appellants hope to avoid the payment of this draft % It must be, if at all, by taking advantage of their own wrong and acknowledging that they attempted a fraud on James & Co. If any one other than appellees ever had an interest in the draft, that one was James Nations, and he endorsed and delivered it. In view of the law appellants cannot for a moment insist that the signature of “Brantly & Nations” on the back of the note could possibly create a debt, against the estate of Brantly. Appellees never so considered it—never by act or deed manifested any other intention than that their claim was settled. We have discussed this case as the facts present it in our opinion. We will now ••argumenti gratia assume with appellants that the draft sued on was at the time of its endorsement the partnership ■ effects of Brantly & Na-. tions. We think that under this state of the case we can establish, that Brantly being dead, Nations, as surviving partner, did, by endorsing the firm name and his own on — 196 — the draft, and delivering it to Harwood & Lewis for the purpose of extinguishing a partnership debt, vest in James & Co. such a title to the draft as authorized them to recover judgment thereon against appellants. In Crawshay v. Collins, 15 Vesey, 226, Lord Eldon says of partnerships: “Another mode of determination is, not by the effluxion of time, but by the death of one partner, in which case the law says that the property survives to the others. It survives as to the legal title in many cases, but not as to the beneficial interest.” In the case of Ruffin ex parte, 6 Vesey, 126, the same jurist announced the same doctrine. In the case of Jones v. Thorne, 1 Martin R. (N. S.), 465, this doctrine is applied to the endorsement of a surviving partner. The cases of Sanford v. Mickles, 4 Johns., 224; Abel v. Sutton, 3 Esp., 108; and Foltz v. Poune, 2 Dessaussere Eq., 40, decide that after the dissolution of a partnership, all the members being alive, one of them cannot validly endorse a bill or note. On the authority of the above cases, Judge Story (Promissory Notes, 125), deduces this elementary principle: “But where the partnership is dissolved during the lifetime of the partners, neither partner can after-wards endorse a note payable to the firm in the name of the firm. But where the dissolution is by the death of one partner, there the survivor may endorse a note payable to the firm in his own name. The reason of the distinction is, that in the former case the implied authority for one partner to act for all is gone; whereas, in the latter case, the note or chose in action vests exclusively in the partner by survivorship, although he must account therefor as a part of the assets of the partnership.” This would be enough, in our opinion, to settle the point. But we have our own court agreeing with this — 197 — principle. In the case in 18 Texas, 287, this court, in speaking of the rights of a surviving partner, says: “ Ordinarily, he would be entitled to close up the affairs of the firm, and to this end receive the debts' due to ■ the partnership, and to apply the partnership assets and effects to the discharge of its debts.” Under appellants’ view of the case this is all the surviving partner, Nations, did. We do not wish to be misunderstood. We admit that such an endorsement could not bind the firm. This court has decided in the cases of Thompson v. Cartwright, 1 Texas, 87; McMillan v. Craft, 2 Texas, 399; Andrews v. Hoxie, 5 Texas, 171; Barnett v. Logue, 23 Texas, 282; and Christie v. Gunter, 26 Texas, 700, that the person who appears to be the legal owner of a note or draft can maintain suit on it in his own name, and that the defendant cannot defeat a recovery by proving that another party is the beneficial owner of the claim sued on. Under the authorities above cited, what we contend for is that the endorsement and delivery of the draft by James Nations vested sufficient title to the draft in James & Co. to authorize them to recover thereon from appellants, who do not allege that the draft had been paid, or that they have any meritorious defense thereto. The draft was a chose in action, and the survivor clearly had a right to pay a firm debt with it, and by so doing vest just title to it in James & Co., as the firm had, and no more.