75 N.Y. 535 | NY | 1879
[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *537 The bond upon which the banks found their claim against the co-partnership assets of the firm of Hoyt, Spragues Co. is executed by all the six members of that firm, and purports to be their joint obligation, as well as the several obligation of each of them. It also purports to create a joint obligation on the part of any two or more of them. The only aspect in which it is necessary to consider it on this appeal, is as the joint obligation of all the members of the firm, and the question presented is whether it can be enforced as a co-partnership obligation against the co-partnership assets, notwithstanding that the firm name is not mentioned therein, but it appears on its face to be simply the joint obligation of the co-partners, contracted in their individual names, and is under seal. *539
We are of opinion that notwithstanding the form of the instrument, if it was executed in the business of the firm and for its benefit, it should be regarded as a co-partnership obligation payable out of the co-partnership funds.
In the present case it is quite clear from the proofs that the transaction in which the bond was given was for the benefit of the firm of Hoyt, Spragues Co., and that all but a fraction of the sum advanced by the banks on the credit of the bond was paid over by them to that firm, and applied on account of its claims against the Riverside Mills and the City Woolen Company. The loan from the banks to Chapin was negotiated by Mr. Gallup, one of the firm of Hoyt, Spragues Co. in behalf of that firm, as he testifies. The two companies last named being indebted to Hoyt, Spragues Co. in a million of dollars, for which indebtedness Mr. Chapin was surety, Mr. Gallup negotiated the arrangement whereby the banks agreed to loan to Mr. Chapin the sum of $600,000 on his notes for that amount, secured by mortgage on his real estate and the collateral guaranty of the bond in question executed by all the members of the firm of Hoyt, Spragues Co. All this was done to enable Chapin to reduce the debt for which he was surety to Hoyt, Spragues Co., and accordingly he gave that firm orders on the several banks for their respective proportions of the loan of $600,000, all of which sums were paid to and receipted for by Hoyt, Spragues Co. except the first six months interest in advance, which was retained by the banks, and the sum of about $55,000 of the principal sum loaned, which Hoyt, Spragues Co. do not appear to have received. The form of the bond is peculiar but seems to have been contrived for the purpose of giving to the banks power to enforce it against either the joint or separate estates of the members of the firm of Hoyt, Spragues Co. or any of them, as might prove most to the interest of the banks. From the nature of the transaction we think it must have been the intention of the parties that the firm should be bound, and that the individual names of all the partners were used for the reason *540 that the instrument was under seal, and that a several as well as joint liability was desired. We can see no objection to a firm binding itself in that form, where the transaction is one for the account of the partnership and all the partners unite in the act; while it would be in the highest degree inequitable to deny to the creditors whose funds have under such circumstances gone into and increased the co-partnership assets, the right of resorting to those assets for repayment.
When funds or property are obtained on the obligation of only a portion of the members of a firm, the fact that the property thus obtained goes to the use of the firm is not of itself sufficient to render the firm liable. But where the property is not only obtained for and applied to the benefit of the firm, but is so obtained by the joint act and upon the joint written obligation of all its members, and the credit is given to all, the transaction is in substance a co-partnership transaction, though the firm name is not actually used in the writing and though the partners may have superadded to their joint obligation the several liability of each of them. The cases cited on the part of the appellant in support of the proposition that the joint obligation of all the members of a firm is not equivalent to an obligation of the firm do not sustain that proposition, where the transaction is in the business or for the benefit of the firm. InForsyth v. Woods (11 Wall., 486) the reasoning is strictly confined to an obligation contracted by the members outside of the partnership business, and proceeds wholly on the ground that the firm property should be applied in the first instance to the payment of debts incurred for the benefit of the partnership, as its property presumably consists of what has been obtained from its creditors. In Turner v. Jaycox (
We think it sufficiently appears in this case that the purpose of the transaction was to raise money from the banks, to be paid to the firm of Hoyt, Spragues Co., for which loans Chapin and his property were to be primarily liable to the banks, and that the bond now in question was given by the members of the firm to induce the banks to make the loan, so that the firm might receive the avails in part payment of the claims for which Chapin was liable to them as surety, and that these circumstances are sufficient to justify the allowance of the claims of the banks against the co-partnership.
The orders should be affirmed, with costs out of the fund.
All concur.
Orders affirmed. *542