Rowsey v. Lynch

Hough, Judge, delivered the opinion of the court. Prior to January 1st, 1855, the plaintiff and the defendant were co-partners, doing business under the firm name of Rowsey & Lynch. On that day one McCadden was admitted as a partner, and the style of the firm became Rowsey, Lynch & Co. Thereafter the plaiutiH sold and transferred to said Lynch and McCadden all his interest in the assets of the firm of Rowsey & Lynch, and also in the firm of Rowsey. Lynch & Co., and on the 28th day of February, 1855, the parties entered into an agreement under seal, which contained, with others, the following stipulation: “Said Lynch & McCadden also agree to pay off and discharge all the liabilities of the late firm of Rowsey & Lynch, as the same appeared on the books of that firm on the 1st day of January, 1855, and of which a schedule was made at that date, on the formation of the new co-partnership of Rowsey, Lynch & Co.” In the schedule of liabilities mentioned in the foregoing stipulation were three promissory notes made by Rowsey & Lynch, each for the sum of $1,360.79, payable respectively in two, three and four months, to the order of Poland & Henry. The date of the execution of these notes is not given, but it is evident they were dated at or before January 1st, 1855. At all events they were not paid at maturity by Lynch & McCadden, and on November 1st, 1855, Poland & Henry instituted suit thereon against Rowsey & Lynch, both of whom were personally served, and on the 22d day of February, 1856, judgment was rendered against them for the sum of $4,326.04, which judgment was, on the 21st of April, 1858, affirmed on appeal. [563] On the 2d day of October, 1858, execution was issued on this judgment and levied upon certain real estate belonging to the plaintiff Eowsey, which was sold on November 8th, 1862, for the sum of $2,813, which amount was on the same day credited on said judgment. On the 10th day of November, 1870, the plaintiff instituted the present action against the defendant in the circuit court of St. Loi^is county, for the breach of the covenant hereinbefore recited, committed by him in failing to pay the notes of Eowsey & Lynch to Poland & Henry. It was admitted that the agreement, of which the stipulation sued on formed a part, and which was executed beyond the limits of this State, was, by the law of the place where it was entered into, a joint and several contract. The circuit court ruled that the plaintiff’s action was barred by the statute of limitations; whereupon the plaintiff took a non-suit with leave to move to set the same aside, and after an unsuccessful motion for that purpose the plaintiff appealed to general term, where the judgment at special term was affirmed, and from that judgment he has appealed to this court. The ten years statute is undoubtedly applicable to the present action, and the only question presented for our determination, therefore, is when did the plaintiff’s cause of action accrue. If the covenant in question is simply a contract of indemnity, then there was no breach thereof until the plaintiff suffered damages by the sale of his property, on the 8th of November 1862, and his right of action was not barred. If. on the contrary, the covenant in question is not a contract of indemnity, but an affirmative covenant to pay certain sums of money at specified times, then a right of action arose in favor of the plaintiff, upon the failure of the defendant to pay at such times; and in the absence of any designated time at which payment was to be made, the law will imply an obligation to pay when payment should be lawfully demanded. The notes were certainly due, and their payment legally required at the time of the rendition of the judgment against [564] the plaintiff and the defendant, on the 22d of February, 1856, and if the covenant is such that a cause of action then arose in favor of the plaintiff, in consequence of the failure of the defendant to pay said notes, the statute began to run at that time, and the plaintiff’s action was barred. The legal effect of a covenant in all respects similar to tbe one on which the present action is founded, was considered and determined by this court in the.case of Ham vs. Hill,(29 Mo., 275), though that case seems to have escaped the. attention of the counsel on both sides of this cause. That was an action on a bond executed by one partner to his co-partner, containing the following condition : “ that, whereas the said John H. Hill having purchased the interest of the said James H. Ham, in the firm of Ham & Hill, in the carriage business, in the city of Boonville, Missouri, and has agreed with the said Ham to assume all partnership liabilities of the said firm, incurred between the 1st'day of April, 1858, and the 1st day of July, 1858, and to pay the same whenever payment is demanded legally by the creditors of said firm; now, if the said Hill shall observe and keep said agreement, and pay said debts in manner and form above prescribed, then this bond to be void, otherwise to remain in full force. The breach alleged was the failure of the defendant Hill to pay certain debts of the firm incurred within the period mentioned in the bond, payment of which had been legally demanded, and for which suit had been brought by the creditors of the firm against the plaintiff. It was the opinion of this court that the undertaking of the defendant in that case, was not one of indemnity merely, but that “in promising to pay debts for which, as a firm they wmre jointly liable, the defendant thereby incurred an obligation which wás violated, and for which a right of action accrued to the plaintiff when he failed to pay them on demand of the creditors.” In the matter of Negus (7 Wend., 499) cited in the opinion delivered in the foregoing case, Savage, C. J., in considering a covenant made by one partner to another, to pay the debts [565] of the firm, and also to indemnify the obligee, said, “When indemnity alone is expressed,-it has always been - held that damage must be sustained before a recovery can be had ; but where there is a positive agreement to do the act which is to prevent damage to the plaintiff, there an action lies, if the defendant neglects or refuses to do such act; and where the covenant is both to do the act and to indemnify, we must resort to the intention of the parties.” These authorities are decisive of the point in issue here. The covenant in question is not one of indemnity, and a right of action for the breach thereof existed in favor of the plaintiff, certainly, on the 22d day of February, 1856, if not before ; and the circuit court properly held that his action was. barred. The judgment must therefore be affirmed. All the judges concur, except Judge Tories, who is absent.