Stanley & Gravitt v. Roberts Bros.

Luke, J. 1. Where, without notice to creditors, a partnership is dissolved by the retirement of one of the partners, and the continuing partner agrees to assume the debts of the firm, and liability of each partner to creditors of the firm remains the same as before the dissolution, although as between the copartners themselves the dissolution agreement is enforceable. Richards v. Butler, 65 Ga. 593. (a) Where actual notice of such a dissolution agreement and of the terms thereof is subsequently given to creditors, the retiring partner becomes, as to all creditors with such notice, a mere surety for his copartner, and must thereafter be so treated by all creditors with such notice, even though they were not parties to the dissolution agreement. Preston v. Garrard, 120 Ga. 689 (48 S. E. 118, 102 Am. St. Rep. 124, 1 Ann. Cas. 724); Grigg v. Empire State Chemical Co., 17 Ga. App. 385 (87 S. E. 149). (5) But where a creditor is himself a party to such a dissolution agreement, expressly agreeing to release the retiring partner from and to look solely to the continuing partner for the payment of the firm’s debt, and in pursuance thereof the retiring partner delivers to the continuing partner the entire interest and equity of the former in the firm’s assets, the contract is binding and enforceable against copartners and the creditor alike, the undertaking of each party constituting a sufficient consideration to support the undertakings of the others. Civil Code (1910), § 4242. 2. The defendant Gravitt and the defendant partnership having pleaded a defense of the character last above indicated (which, as against a demurrer thereto, must be taken as true), the court erred in striking the original plea, and in disallowing the proffered plea, on the ground that the alleged release was a mere nudum pactum. The subsequent proceedings were nugatory. Judgment reversed. Broyles, O. J., and Bloodworth, J., concur.