Sherman v. Christy

Lowe, J. [324] 1. Promisory note: firm: confession of judgment. [323] —In the case of North & Scott v. Mudge & Co., 13 Iowa, 496, the facts were quite different. The party [324] executing the note, which was joint, both upon its face and in its execution, was the one which confessed the judgment: afterwards the other copartner was sued upon the contract. We held that he was not liable, because the note was joint, and not joint and several, and being turned into a judgment, which was a demand of a higher degree, the contract was merged. With this decision we are still content. The cases at bar differ from that, in this: The notes sued are clearly on their face several as well as joint; the party sued is the one who executed them; and whilst^he could not execute such instrument so as to be binding on his copartner in his several capacity, as he could not confess a judgment on a firm note, which would bind his partner, yet, if such a confession would be good and valid against himself, we see no reason why he may not make a several contract in the name of the firm, on which he alone shall be individually responsible. In reason and common sense, the principle involved in the one cannot be essentially different in the other. We all understand that the responsibility of partners is joint, and that one partner has no right or power to bind his copartner in a several contract so that he can be separately sued; but does it follow from this that one partner executing a firm note may not, if he choose, so execute it as to make himself separately liable? Why not? With what principle does it interfere ? It is true an individual creditor may demand that the judgment, when obtained in such case, shall be satisfied out of the firm property, if the enforcement of said judgment is likely to interfere with his rights. And so a firm creditor may insist upon the same thing, if there should be but little individual property and a sufficiency of partnership effects. But whilst the two classes of creditors may thus protect themselves, as they often have to do, through the aid of courts, it does not follow that the defendant can take shelter under their [325] rights and ignore a responsibility which he has voluntarily, yet unnecessarily, if yon please, incurred. To illustrate once more. On these notes, Griffe, the other partner, confessed a judgment, not against himself alone, but in the name and against the firm. Now, we have made a judicial determination upon the legal effect of this act, and we have said that it was only effectual against the party confessing. If, then, one partner does incur a separate liability in confessing a judgment on a firm note, by mere implication of law, why may not the other partner, by an express covenant to that effect, incur a similar responsibility for himself. If not, the writer of this opinion is unfortunate in not being able to distinguish the difference in principle between the two cases, except that he thinks the liability arising from the express contract is more reasonable, obvious and just than the one fixed upon the party from reason, analogy or mere implication of law. We conclude, therefore, that it is competent for one partner to execute a firm note in such way as to render himself separately liable thereon; and when he has done so, as in the case at bar, and the other partner confesses a judgment on the same instrument, the contract is not carried into the judgment so confessed, so far as the defendant is concerned, but a separate action may be maintained thereon against him, being the party who signed the firm’s name to said note. If, however, the party executing such joint and several note, had confessed a judgment on the same, it would not follow that a separate suit could be maintained on said note against the other partner, for the reason it was not competent to fix upon him, without his consent, a separate liability. The case, in that aspect of it, would fall within the rule laid down in the cáse of North & Scott v. Madge & Co., supra. In support of the principle intended to be settled by this opinion, we refer to the case of Snow v. Howard, 35 Barb. S. C. R., 55, where the same question [326] under a like state of facts arose, and was similarly determined. We also cite tire case of Sheehy v. Mandeville, 6 Cranch, 253, where MARSHALL, Oh. J., substantially held, that the doctrine of merger applies only to a case in which the original declaration or judgment was in a joint covenant. But it may be said that in this case the execution of the note sued is in the name of the firm alone, and not by their individual names, and that this joint execution thereof will conti’ol the body of the note and determine the character of the paper, whether it be joint or several. In this proposition we cannot concur. The note in question was upon its face several as well as joint. "We see no reason why the partner signing such a note may not be held liable, upon the same .principle that he would be liable upon a note joint, both by its terms and signature, but given for a consideration that was personal and outside of the firm business. In the latter case, the partners signing the firm name has been held to be liable on the note, which his copartner would be discharged; for the reason that he will not he allowed to take advantage of his own malfeasance, by claiming that the instrument is void for want of power to execute it for a purpose personal and individual. Livingston v. Hostic, 2 Caines, 246; Laverty and Gantley v. Burr & Baldwin, 1 Wend., 529; Parker v. Jackson, 16 Barb., 33; Doty v. Bates and Handy, 11 Johns., 544; Dob & Dob v. Halsey, 16 Johns., 34. Judgment below Reversed.