Mellor v. Lawyer

Mr. Presiding Justice Wall delivered the opinion op the Court. This case grows out of the failure of the banking firm of J. Mershon & Co. referred to in the case' of Mellor v. Carithers, 52 Ill. App. 86. The appellees, administrators of Thomas Lawyer, deceased, recovered a judgment for $610.03 against the appellants and the members of that firm, on account of a balance standing to the credit of appellees as depositors when the bank suspended. The appellants alone defended the action. The theory upon which appellees sought to bind the appellants was that by their action they .had held themselves out as members of the firm and that thereby the appellees were induced to rearrange and continue their account with what they supposed was the new bank, and that the appellants should not now be permitted to deny liability. It is claimed that the banking firm was really reorganized with the appellants as copartners. Such was not the case. There was no doubt an intention on the part of some or all of the appellants to take part in the proposed reorganization and become members of the new concern which would succeed to the business of J. Mershon & Co. A preliminary subscription of stock had been executed and a notice to that effect had been published in a local newspaper. How far this publication was authorized by, or binding upon, all of the appellants, need not be discussed at this time. There is some testimony to the effect that the appellees, being doubtful as to the solvency of J. Mershon & Co., and having heard of the projected reorganization, made inquiry of appellant M. Y. Lawyer, and were assured by him that the reorganization was accomplished in effect, and that he and the other appellants were liable for all deposits then in the bank, and in response to a suggestion that the appellees were thinking of withdrawing their deposit, he urged them not to do so. This is denied by him, and he asserts that he merely said that when the contemplated steps were taken and the reorganization completed the new concern would be amply responsible. The appellees claim that because of what they thus learned from appellant Lawyer they so arranged matters with their co-distributees of the estate that the latter received chocks for their shares of the estate not only against this account, but also in part against an account in another bank, and that the balance remaining in the Mershon bank in the name of appellees as administrators really belonged to one of them, Joseph, as a distributee. In the case of Wright v. Brosseau, 73 Ill. 381, it was said that “ it is the cleai’ly established doctrine that a new partner coming into an existing firm will not be liable in respect to debts contracted by the firm previously to his entering it, unless he expressly assumes them.” It is not denied that this is the rule, but it is urged by appellees that the facts above stated are tantamount to a deposit by said Joseph as an individual. Shortly stated, their position is that if they had done no act, but simply left the money in the bank as the deceased did; then appellants’ application of this rule of law might be well enough; but that if they had taken the money out and then re-deposited it in their own names (after the acts of appellants which it is assumed estop them to deny that they were partners in the bank), appellants would be liable, and that so far as extending credit to the new bank is concerned, appellees did the same as though they had so withdrawn and re-deposited the money. In other words, because of the division of the funds among the other distributees, the sum remaining in the name of appellees as administrators became Joseph’s individual property; that is, they had the right to pay it to him for his personal use, and this amounts to a withdrawal and a new deposit in his name. So they argue. But it is not contended that they had made their final report; that their distribution had been approved, and they authorized to so dispose of this balance. Perhaps such an order might have been obtained, but it had not, and till it had, the money would belong to the estate. There was no change in the account except to reduce it by checks which were paid as presented. The mental purpose and expectation of appellees could make no difference in the legal aspect of the situation. We are unable to find from a careful reading of the evidence that this position now held by the appellees was occupied by them in the trial court. It is suggested that no such view was presented there, and that reliance was had upon the broad ground that appellants, by their acts, having held themselves out as partners, would be liable for money previously deposited and allowed to remain, as well as for money subsequently deposited. In other words, if appellees were so induced to believe appellants were partners, and for that reason suffered the money to remain, appellants would be liable. As already observed the appellees seem, by their argument, to concede that such is not the rule, and that but for acts of appellees Avhich they assume are equivalent to a withdraAval and a new deposit, the appellants Avould not be liable; but they insist that in the light of such acts the court properly gave the 11th and 13th instructions asked by them, which do announce such a rule without qualification. This view of the law Avould render a partner (Avhether so in fact or only because estopped to deny partnership), liable for the debts of the old concern, though he may not have expressly assumed such debts. That is to say: 1st, by the doctrine of estoppel, the appellants must be held to have become partners in the firm of J. hlershon & Co.; and 2d, because of a mental operation of the appellees Avithout any act, a liability of the old concern will attach to the appellants, though they neither assumed or even kneAv of such liability. We can not assent to this position, and are disposed to hold that the court erred in giving these instructions and in re- • fusing the converse proposition contained in the 17th and 18th asked by the appellants, and that upon the facts as disclosed by this record the appellants are not liable. The judgment will be reversed and the cause remanded.