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thus obtained an absolute discharge and has | to the party thus acting, when called upon paid over the money in accordance with the to perform the acts directed in the plaintiff's directions of the court, he cannot now be judgment. compelled to pay the same, or any portion Nor does the case of Herring v. Railroad thereof, over to the plaintiff. It is undoubt- Co., supra, decide this case. In that case there edly true that in many instances a receiver had been a dispute as to whether certain may be discharged without personal notice property belonging to the Erie Railway Comto those who might be interested somewhat pany was included in the mortgages given in the performance of his trust or in the by it to the Farmers' Loan & Trust Comfunds in his hands. pany, and consequently there was a contest We have lately held in the case of Tele- as to whether such property went to the regraph Co. v. Jewett, 115 N. Y., 21 N. ceiver appointed in the action brought by E. Rep. 1036, that where proceedings against that company to foreclose these mortgages, the receiver of a railway company have been or whether it went to the receiver appointed commenced to compel him to pay the claim in the action brought by the people, by their of a creditor out of the assets in his hands, attorney general, to dissolve the corporation yet, if the receiver has been finally dis- on the ground of its insolvency. An invescharged, and all the property, by direction of tigation was made in one of these two cases, the court, taken out of his hands, although and it was determined therein that the propthis order was made without personal no- erty in question was included in the morttice to the party who made the claim, still it gages given to the plaintiff as trustee, and it was a valid order, and while it stood it was passed upon the sale on the foreclosure judga complete answer to the claim itself. In ment. Various unsecured creditors, of whom the case cited there never had been any ju- the plaintiff was one, in the Herring Case, dicial determination in favor of the claimant claimed that the Erie Railway Company was or against the receiver, and of course no owner of the property mentioned, and that judgment had ever existed in favor of the it was not included in those mortgages, and plaintiff or against the receiver. On the that they were not included by the decision contrary, the claim had been always and con- or judgment in the foreclosure case, adjudgstantly repudiated, and at last, upon appeal ing that such property was covered by the from an order denying its legality, that or- mortgages. It was held by this court that der was affirmed by the general term upon the decision in the foreclosure case was bindthe ground that the order discharging the ing upon all the unsecured creditors, alreceiver was a full answer to the application. though they were not named as parties to This court agreed with the general term. the foreclosure action, or to the action by the The petitioner was an unsecured general people by their attorney general, brought to creditor, even assuming his claim to have dissolve the corporation. It was further held been a just one, and was represented by the that, although not nominally parties, they attorney general in the people's suit, and had were represented in the litigation by the atnotice, therefore, of the application. Her-torney general in the people's action, and ring v. Railroad Co., 105 N. Y. 340, 376, 377, 379, 12 N. E. Rep. 763. But here the plaintiff has a judgment and a direction of the court that his claim was to be paid by the receiver. We think the plaintiff is not bound by It was not a case of representation at all. either of the above-cited actions. He is not The attorney general did not represent him, an unsecured creditor, and was not at the nor did any one else. He was already under time when this discharge was given. On the protection of the court, and his rights the contrary, he was a judgment creditor, had been already judicially ascertained and with a valid judgment then in existence derecognized. How, then, can it be that such termining the amount of his claim, and the rights are to be taken away by any judgment liability of the receiver to pay it; and the or direction in another action to which he only question that was undetermined was as was not a party, and in which he was not to the amount of funds in the hands of the represented in any way? The direction in receiver from which such payment might be the foreclosure action to pay over the moneys made. It is true, that judgment was subseand the orders discharging the receiver, etc., quently reversed by the general term, but it may well be regarded as given subject to the is also true that that reversal was itself rejudgment of the court in any other action versed by this court, and that the judgment then existing, where directions had been stands to-day, as it stood at the time of the therein given to the receiver, which he was discharge of the receiver, valid and absolute. bound to obey. If otherwise, then to attempt We think the fact of the discharge of the reto obtain orders in a foreclosure action with-ceiver is no defense to the entry of the final out notice to one situated as this plaintiff, judgment, as made in this action; and we and in respect to matters where his rights think that the modification of the general might be unfavorably affected, and where term, as made by it, was therefore erroneous. the attention of the court was not called to such failure, would seem very like a fraud upon it, and certainly it would seem as if such orders ought not to constitute a shield

also by the corporation defendant in the foreclosure action, and that consequently the judgments were binding upon them.

We do not absolutely and definitely now determine that the discharge of the receiver does not constitute a defense to the receiver when called upon to perform the terms of

the judgment now existing against him. If neither the receiver nor the parties indemnifying him choose to pay or procure the payment of the amount of the judgment to the plaintiff herein, and proceedings to compel the receiver to perform its requirements are taken, he may then have an opportunity of again presenting this question, and possibly he may obtain some benefit thereby. We do not now determine that question. We do say that there is nothing in this court as yet which holds that the discharge of the receiver under the circumstances mentioned, without personal notice to this plaintiff, operates as a discharge of the requirements of the judgment herein as against the receiver.

For the reasons already stated we think the modification of the judgment as made by the general term should be stricken out, and the judgment as entered at special term should be affirmed, with costs against the defendant. All concur, (ANDREWS, J., in result,) except EARL, J., not voting.

(115 N. Y. 328)

STEWART et al. v. ROBINSON et al.1 (Court of Appeals of New York. Oct. 8, 1889.) PARTNERSHIP-LIABILITY OF DECEASED PARTNER'S ESTATE.

Articles of copartnership provided that the business should be conducted with a capital not exceeding a certain sum, furnished by one part ner, and that upon the death of either partner "the business shall be conducted by the survivor" for a specified period, decedent's estate to receive and bear the same share of the profits and losses "as would have been received and borne by the deceased partner, had he lived. " Held, that on the death of the partner who furnished the capital, his general estate was not liable for debts contracted by the firm during the specified period after his

death.

Appeal from supreme court, general term, second department.

Ralph E. Prime, for appellants. Wm. B. Ellison, for respondents.

DANFORTH, J. The defendants are brought before the court as trustees and executors of the estate of Joseph Colwell, deceased. It appears that Colwell, in his life-time, and one Samuel S. Hepworth, carried on business as copartners under the name of S. S. Hepworth & Co., for the manufacture and sale of centrifugal machines and some other machinery, under articles of agreement, one of which was entered into February 22, 1877, and provided for the continuance of the partnership for five years from January 1, 1877, and for a capital in cash, not exceeding $4,000, to be furnished by Colwell, and to be represented "by the good-will of the business, its shops, fixtures, tools, machinery, and materials for manufacture, all of which should belong to and be his individual property," profits to be shared equally, and all losses of the business, including loss of capital, borne equally. Hepworth was to devote his time and personal

1Affirming 2 N. Y. Supp. 309.

attention to the business, but Colwell was not required to do so further than might be convenient for himself. The seventh clause of the articles declared that, "should either partner die during the term of said copartnership, the firm shall not be deemed dissolved thereupon, but the wife and children of the decedent shall immediately succeed to his interest in the business, which thenceforward shall be prosecuted for the remainder of the term for the benefit of them and the surviving partner. Either partner may designate by will what interest his wife and children, as between themselves, shall have in his said copartnership interest in the event of his death as aforesaid." Before the expiration of the stipulated time, and on the 18th of October, 1881, a further agreement was made that the copartnership should continue until dissolved by mutual consent or terminated by six months' notice in writing by one party to the other, and that, "in the event of the death of either, the business shall be continued by the survivor until the expiration of five years from the 1st day of February next succeeding such death; the estate of the deceased partner to have the same share and interest in the profits, and to bear the same share of the losses of the business, as would have been received and borne by the deceased partner had he lived: provided, however, that if the survivor shall think it necessary to employ an additional clerk in consequence of the death of the deceased partner, in such case the expense shall be charged to and shall be borne by the share in the profits of the deceased partner." The firm business was thereafter continued under these instruments until the 1st day of June, 1882, when Colwell died, leaving children and a will. He appointed the above-named defendants executors and trustees, and gave them, in trust for his children, the greater part of his estate, and directed a distribution of the whole, making no reference to the business of the firm of S. S. Hepworth & Co., or to it in any way, or to the agreement above set out, and revoking all other wills theretofore made by him. It also appeared that from the death of Colwell to September, 1887, the business of S. S. Hepworth & Co. was continued and carried on by Samuel S. Hepworth, he assuming to do so under the agreements of February 23, 1877, and October 13, 1881. In the course of that business, in September or October, 1887, or five years after Colwell's death, he contracted debts with the plaintiff and with other persons or firms in the name of S. S. Hepworth & Co., for some of which he gave promissory notes in that name, and others of which rest in account. On the 4th of October, 1887, Hepworth individually and as surviving partner was insolvent to the extent of about $500,000, and on that day made an assignment in both capacities for the benefit of his creditors. The individual debts of Colwell have been paid, and property remains in the hands of his executors. The plaintiffs, either as

original creditors or by assignment, are the pended by that of the agreement of October owners of the debts contracted by Hepworth, 13th, which provides for the continuance of and set out in the complaint, amounting in the business "by the survivor," and the disthe aggregate to about $15,000, and they seek tribution of profits or losses "to the estate of to recover the amount from the individual the deceased partner, as would have been reestate of Colwell, and in the mean time ask ceived and borne by him had he lived." It for the appointment of a receiver of his prop- is to be seen, therefore, that the capital inerty, assets, and estate, and an account vested was to remain the same. It was not thereof from the defendants as his represent- to exceed $4,000. It belonged to Colwell, atives. Various defenses were interposed but was to continue in the business notwithby them, but, so far as material upon this ap-standing his death, and could not be withpeal, their effect depends upon the single drawn until the expiration of five years from question whether the general estate of Col- that event. So much the surviving partner well was by virtue of the above agreements might insist upon. I do not see that he rendered liable for debts contracted by Hepworth in the firm name, after the death of Colwell. The trial court and the general term have held against the plaintiffs, and the defendants had judgment accordingly.

could rightfully exact more, and, if he could not, how could third persons? There is in fact no partnership, for there are no partners. There is a surviving partner. Under the first article it might be said that, if the wife and children assented, they would have become partners. The executors cannot be deemed partners, for that capacity has not been put upon them, nor have they assumed it directly or indirectly by taking any part of the management of the business. They knew of its continuance, and loaned Hepworth money upon security. Nothing more. A new partnership was not formed; nor can one be implied. But it is said the "estate" of the deceased partner is to share in profits or bear a portion of the losses. Of what? Not a partnership, but a business conducted by a surviving partner. An estate cannot be a partner. I think the provision in the agreement means nothing more than that the capital actually invested in the business before or at the death of the partner shall continue to be so subject or liable.

It is a general rule that a contract of partnership is dissolved by the death of one of the parties, whether entered into for a fixed time or not, and that after his death the former partner cannot bind the estate of the decedent by new contracts, and, although the partnership be expressly extended to executors, they could not be compelled to carry it on, and would be entitled to a dissolution and an account of the assets, subject to the liabilities of the firm incurred up to the time of dissolution. These are familiar and wellsettled principles. Here the representatives of the deceased partner were not to be partners with the survivors, nor were they to have anything to do with the conduct of the business or its management; on the contrary, the business is "to be continued by the survivor." We have only to inquire, therefore, whether the partnership agreements take the The general rule already adverted to does, case out of the general rule. The frame of upon the death of a partner, terminate the the last articles shows that the parties con- power of his associate or copartner to contemplated and bargained for a continuance tract new debts on the credit of the firm. of the business for the term of five years Assuming, with the appellant, that this genfrom the 1st of February next preceding the eral result of law may be varied by an exdeath of either, but the residue of the clause press agreement, it will then depend upon containing this stipulation depends to some the particular terms of that agreement to extent for its interpretation upon the preced- what extent the estate of a deceased partner ing or original article. The second agree- may be bound by the surviving member of ment refers to the first as containing the the firm, "whether his estate shall be genterms and conditions on which the business erally liable for all the debts, or only to the is to go on; and looking there we find that extent of the property embraced and left in the capital, however represented, by money, the partnership to be employed by the surtools, machinery, or material, was not to ex-vivors." Story, Partn. 201a. But it is said ceed $4,000, and was to be provided by Col- in Burwell v. Mandeville's Ex'rs, 2 How. well, and to remain his individual property. 560: Nothing, however, but the clearest and That contribution made him an equal part- most unambiguous language, showing in the ner, and upon dissolution of the firm, was to most positive manner an intention on the be repaid to him, with interest, before any part of the testator to render his general asdivision of surplus earnings should be made. sets liable for debts contracted after his death, Death of a partner, however, was not as of will justify a court in extending the liability course to work a dissolution, but the wife of his estate beyond the actual fund emand children of the decedent were immedi- ployed therein at the time of his death. In ately to succeed to his interest in the busi- that case (Burwell v. Mandeville's Ex'rs) ness, which thenceforward was to be prose- it appeared that the testator died while in cuted for their benefit and that of the sur- partnership with one Cawood, leaving a will, viving partner. We do not need to ascertain by which he distributed his estate, and a codwhether this clause could have any effect without the assent of the parties named, for it never came into operation, being susv.22N.E.no.13-11

icil, made during the existence of the firm, by which, in substance, he directed that the business of the copartnership existing be

thority. They require us to search for the intention of the deceased partner in the language used by him in giving his directions. In the case then before us (Willis v. Sharp, supra) the testatrix, at the time of her death, was engaged in the "merchant tailoring bus

tween Cawood and himself should be carried | there laid down restated. It was assumed on by Cawood, and his (the testator's) inter- that the courts with reasonable unanimity est therein continued until the expiration of sustained as valid a direction in the will of a the term limited by the copartnership arti- testator that his trade should be continued cles, and the profit and loss distributed as whether his business was that of a sole trader those articles provided. Cawood carried on or of a firm of which he was a member, but the business, and, before the time limited for it was held that a mere power to carry on the the partnership expired, failed, and an action testator's trade, or to continue his business was brought against him and the executors in a firm of which he was a partner, without of the deceased partner, by a creditor of the anything more, will be construed as an aufirm upon debts contracted with him by Ca-thority simply to carry on the trade or busiwood on account of and in the name of the ness with the fund already invested in it at firm after the death of the testator. The ex- the time of the testator's death, and to subecutor denied that the assets were liable.ject that fund only to the hazards of the trade, The answer was demurred to, but the de- and not the general assets of the estate; and fense was held good, and so the action failed, also that the property already embarked in the court holding that the general assets of the business is the trade fund, unless it apthe testator were not bound for debts con- pears from the will that the executor was autracted after his death in behalf of the part-thorized to use the general assets in the busnership, and that the rights of any creditor iness. These views were sustained upon auin respect to such death were exclusively restricted to the funds actually embarked by the testator in the business, and to the personal responsibility of the surviving partner; the court saying the "interest" of the partner dying "in the firm, then, was his share of the capital stock and profits, after the pay-iness," and by will directed that after her ment of all debts and liabilities due by the firm. It is this interest, and not any new capital, which he authorizes to be embarked in the firm. He does not propose to add anything to his existing interest, but simply to continue it as it then was. How, then," the learned judge continues, "can this court say that he meant to embark all his personal assets in the hands of his executor as a pledge for the future debts or future responsibilities or future capital of the firm? That would be to enlarge the meaning of the words used beyond their ordinary and rea-cated an intention to subject her general assonable signification." And he says: "No sets to the debts of that business, and that court of justice ought, upon principle, to her general estate was bound by the debt favor, much less adopt, it;" and ads: "There contracted. But we also said: "If in this is no authority to support it." On the other case there was in the will simply an authorhand, several cases are cited by the learned ity or direction to the executors to carry on a court as reasoned out and sustained upon the trade, and in pursuance of the power the exbroad and general principle that only the part-ecutor continued the existing business, we nership fund was involved, and the new think, under the authorities cited, the plaincreditor confined in pursuing his remedy to so tiffs could have no remedy except to pursue much of the estate of the decedent as was the assets embarked in the trade at the death embarked in the trade, and to the personal of the testatrix." responsibility of the party who continued the business, whether as trustee, executor, or partner, "unless, indeed, the testator had otherwise plainly and expressly bound his general assets." The same doctrine was established in the courts of Connecticut at an earlier time, (1829,) in Pitkin's Case, 7 Conn. 307, also cited with approval by Judge STORY in Burwell v. Mandeville's Ex'rs, supra.

The general subject of the construction of language giving power or authority for the continuance of a trade after the death of one member of a firm has also been under consideration in this court, and its conclusion expressed in the decision of Willis v. Sharp, 113 N. Y. 586, 21 N. E. Rep. 705. Among other cases referred to was Burwell v. Mandeville's Ex'rs, supra, and the general proposition

death "some legitimate business should be carried on by her executors for the benefit of her son, Harry, and that her husband, the defendant, should be retained as manager thereof, at a salary of $1,500 a year; and this was followed by a provision empowering her executors to sell or make such other disposition of my real and personal estate as the safe conduct of such business shall seem to require,'" and in favor of a creditor who became such in the course of the business so carried on, we held that this provision indi

In the case now before us the directions or authority are such only as we said in the former case would be insufficient to enable a creditor to reach the general assets of an estate. They are almost literally in every sense substantially the same as those actually presented by Burwell v. Mandeville's Ex'rs, supra, and in view of the decisions thus referred to it would be useless to go on in this discussion as a new one, or do more than call attention to the terms of the contract on which appellants must succeed or fail in their contention against the decision of the court below: First. The "capital" is fixed at $4,000, the sole property of Colwell. Second It is with that capital that "the business of the copartnership is to be conducted." Third. The profits of the business are to be divided

Appeal from supreme court, general term, second department.

Action by David F. Butcher, as receiver, against Samuel S. Hepworth & Co. The complaint was dismissed, and from a judg ment of affirmance by the general term plain tiff appeals.

between the parties at convenient periods. Fourth. At the dissolution of the partnership and the liquidation of its business the cash capital is to be repaid before any division of surplus earnings. These terms and conditions are by reference incorporated into the new agreement on which the appellants rely. The second agreement repeats the same genMr. Wallace and Mr. Arnoux, for appellant. eral language. In the event of death "the Thos. Darlington, Joseph H. Choate, Edbusiness" shall be continued, i. e., the busi-ward M. Bliven, Wm. B. Ellison, and Ralph ness already described as employing a certain E. Prime, for respondents. capital, not an additional capital; and the profits and losses of the same "business" are DANFORTH, J. This case differs essento be shared in the same manner as if the tially from the case of Stewart v. Robinson, deceased partner were alive, with only one ante, 160, and from that of Delamater, v. addition; the survivor may, if he thinks nec- Hepworth, ubi supra, and especially because essary in consequence of his partner's death, in the former there was no claim that the exemploy an additional clerk, the expense of ecutors of Colwell became partners with whose employment shall be borne by "the IIepworth, and in the other there was an exshare of the profits of the deceased partner." plicit declaration that no such relation exHere are no words from which can be implied isted; whereas in the present case it is made an intention to bring into the concern other a distinct ground of right to a recovery that capital, or make new debts a charge upon any the business was conducted by "Samuel S. assets outside of those already pledged to the Hepworth and the said executors as copartbusiness of the firm. It is nothing more than ners under the firm name of S. S. Hepworth an authority to the surviving partner to con- & Co.," from the time of the death of Coltinue an existing business, and therefore wel! down to October 4, 1887. Indeed, the within the authorities cited; and upon reason plaintiff's case rests upon the truth of this and common sense the plaintiffs cannot have allegation. His claim is "that a valid partthe relief they seek in this action. The re- nership was formed, which continued until spondents assail the validity of the agreement the failure of S. S. Hepworth & Co.; that the for any purpose. I do not think it necessary executors were partners in that company to determine the question so raised. It is after they qualified; that a certain mortgage enough to dispose of the present case that we given by Hepworth as surviving partner to find no language on the part of the deceased the executors was invalid because the estate which indicates any intention on his part to of Colwell was liable for the debts of the put in hazard his general estate, or which by firm, and for other reasons; that certain infair construction furnishes any ground for struments, assignments, mortgages, etc., the present action. It follows that the judg-given by Hepworth are invalid; that therement appealed from should be affirmed, with | fore the plaintiff is entitled to a decree estabcosts. All concur, except EARL, J., not lishing the lien of his judgment as superior voting.

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(115 N. Y. 664)

DELAMATER v. HEPWORTH et al. (Court of Appeals of New York. Oct. 8, 1889.) Appeal from supreme court, general term, second department. See 2 N. Y. Supp. 310.

PER CURIAM. The judgment in this action should be affirmed on the authority of the decision just rendered in Stewart v. Robinson, ante, 160.

(115 N. Y. 328)

BUTCHER v. HEPWORTH et al.1 (Court of Appeals of New York. Oct. 8, 1889.) PARTNERSHIP-DECEASED PARTNER'S ESTATE. 1. Where a partnership agreement contains a clause that "the business shall be continued by the survivor," the death of one of the partners dissolves the partnership, decedent's general estate does not share in the profits and losses of the business, and his executors do not become partners with the survivor.

2. An action against such executors and the surviving partner, in which the complaint alleged that they constituted a firm for the continuance of the business, and that the debt sued for was by them contracted, was properly dismissed where there was no evidence, other than the agreement, that defendants were in partnership.

1Affirming 5 N. Y. Supp. 949, mem.

to these incumbrances." The plaintiff sues as receiver, appointed upon an application made in supplementary proceedings by certain creditors of S. S. Hepworth & Co., who had recovered judgment against Hepworth and the executors as copartners, in actions nominally against them all, but in which the summons was served upon Hepworth alone. The defendants answered, and upon trial of the issues at special term, the complaint was dismissed, and upon appeal by the plaintiff to the general term the judgment of the special term was affirmed. 5 N. Y. Supp. 949, mem. The appellant's argument rests mainly upon the clause in the supplemental contract between Colwell and Hepworth, which is set out fully in the Stewart Case, supra, and especially upon that part of it which provides "that the estate of the deceased should share in the profits and losses. as he would have done. In view of our recent decision (ante, 160) in the case of Stewart v. Robinson, we think it necessary to consider only, and that briefly, the second point made by the learned counsel for the appellant, viz.: "That technically, under the law of partnership, the firm of S. S. Hepworth & Co., existing at the time of the de

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