266 S.W. 864 | Tex. App. | 1924
Lead Opinion
It is not contended here (and if it was the contention would be overruled) that the Perfected Curing Storage Company was not, in law, a partnership, nor that its members were not, as partners, individually liable for obligations it incurred in transactions within the scope of the business it was engaged in. The contention (as we understand it) is that the assumption by the storage company of indebtedness of the storage system to the bank was not such a transaction; and that, because it was not, it was incumbent on the bank, before it was entitled to the judgment it obtained, so far as it was against appellant, to show, and that it did not, that he agreed to be bound individually for the payment of said indebtedness of the storage system.
Undoubtedly it is true, generally, that the assumption by a partnership of indebtedness it did not incur and for which it was not liable is not within the scope of partnership business; and undoubtedly it is also true that a member of a firm which undertakes to assume the payment of such indebtedness is not individually liable on such undertaking if he did not agree to such assumption and is not estopped from asserting he did not so agree. 20 R.C.L. 985; 30 Cyc. 614; Baptist Book Concern v. Carswell (Tex.Civ.App.)
The testimony relied upon to show that appellant agreed to become and be liable individually for indebtedness of the storage system, or if he did not so agree, was estopped from asserting the fact, consisted alone of the note sued upon and the provision in the "articles of association" between him and Emerson, Waldrop, and Ormesher that the storage company should assume the liabilities of the storage system. We think that testimony would have warranted the judgment rendered but for the provision in said articles of association that persons or corporations contracting with the storage company should look only to its funds and property for the fulfillment of their contracts, and that none of the members of the association should be personally liable for any debt "or other obligation or engagement or contract made or entered into by the trustees or any officer" of the storage company.
It is plain, we think, when the provisions in the articles of association referred to are considered together, that it appeared appellant not only did not agree to become and be liable individually for the indebtedness of the storage system, but that he expressly contracted against such liability. The question is, Was he nevertheless liable to the bank as determined by the judgment? We do not think so. If he was, it must have been because he was estopped by the act of the storage company in making the note sued upon from denying that he was so liable. Doubtless he would have been estopped by that act had the making of the note been within the scope of the business of the storage company. But it was not, and we think the bank was chargeable with knowledge of the fact that it was not. If the bank was chargeable with such knowledge, then it was not entitled to claim an estoppel against appellant merely because he was a member of the storage company partnership, for it had no right when it took the note sued upon to assume that he had agreed to be liable individually for the payment of the indebtedness of the storage company to the bank. Webb v. Butler,
Appellee argues in support of the judgment that the storage company had a right to buy the property of the storage system, and as a consideration for the sale to it to unconditionally assume the payment of the indebtedness of the storage system. We think there is no doubt it had such a right. But it did not exercise it. If the transaction between the storage company and the storage system should be treated as a sale by the latter to the former in which the storage company assumed to pay indebtedness of the storage system, plainly the undertaking of the storage company was on the condition that the individuals composing it should not be personally liable for the payment of the indebtedness assumed.
We think the judgment was not warranted by the testimony so far as it was against appellant. It will be reversed in that respect, and judgment will be here rendered that the bank take nothing as against him. The judgment will not be otherwise disturbed. *867
Dissenting Opinion
While there was an apparent effort to organize the Perfected Curing Storage Company as a common-law trust, it is conceded that both it and the former joint-stock company, known as the Perfected Curing Storage System, were general partnerships. That being true, the partners were, by operation of law, jointly and severally liable for all the valid partnership debts. In order to escape that legal personal liability in this instance, it devolved upon Cohen, the appellant, to prove either that under the provisions of the partnership agreement he was not to be held personally liable beyond his interest in the partnership assets, and that the appellee bank had notice of that limitation at the time the debt was created, or that the note sued on was not a partnership obligation binding on his company. While the record shows a stipulation against personal liability in that agreement, there is no evidence to authorize a finding that the bank had any notice of that limitation. But, even if there was evidence enough to support a finding of such notice, it was not sufficient to require such a finding. The judgment of the trial court involves a finding against notice. In the opinion of the majority reversing the judgment as to Cohen it is not contended that there was notice of that special limitation upon Cohen's liability.
The next question then is, Was this obligation binding on the Perfected Curing Storage Company as a partnership? Or, to state the question in another form, had the Perfected Curing Storage Company, of which Cohen was a member, agreed to pay that debt? Caudle, who represented the appellee bank in the transaction, testified:
"I met Mr. Cohen several times in Dallas. This note that has been offered in evidence was prepared by me, and I mailed it to the Perfected Curing Storage Company at Dallas. This note was a renewal note, renewing another note that was due at the time. The old note which this note was a renewal of was given prior to January, 1921. It was by the Perfected Curing Storage System. * * * When the old note became due I had conversations with all three of these parties about the payment — with Mr. Cohen, Mr. Emerson, and Mr. Waldrop. That was prior to the renewal when I talked to Mr. Cohen in his office in Dallas about the old note, and he told me they were making arrangements to take care of their old indebtedness, and if we would wait a short time we would get our money in full."
Cohen testified in part as follows:
"I went into the organization (the Perfected Curing Storage Company) with the distinct understanding that there was to be no personal liability against me either for the liabilities of the old organization or for the new company. For all the stock I took in the new company I paid for it in cash and in full. I don't know whether I took the stock out before this note was executed that is now sued on or not, but I took my stock when the new company was first organized. I never agreed to become personally liable for the debts of the Perfected Curing Storage System. I never agreed to any more than is stated in the articles of association of the new company. I never at any time authorized Emerson, Waldrop, or Ormesher to act as my agent to create any personal liability with reference to this note or any other obligation."
The articles of association of the Perfected Curing Storage Company contain the following provision:
"Whereas Chas. B. Cohen, of Dallas, Texas, is desirous of associating himself with the said Emerson, Waldrop, and Ormesher for the formation of a company to take over the entire assets, together with the liabilities of the business of the Perfected Curing Storage System, and to conduct and operate a similar business to be known as Perfected Curing Storage Company:
"The first board of trustees shall and does consist of Chas. B. Cohen, A. W. Emerson, D. L. Ormesher, F. E. Waldrop, who shall continue in office for one year from date hereof and until their successors are elected as herein provided."
Those articles were signed on January 20, 1920. At that time the appellee held a note against the Perfected Curing Storage System given for borrowed money. The note sued on was executed by the proper officials of the new company on the 16th day of June, 1920, and was understood by Cohen and his partners to be a renewal of the indebtedness of the old company which the new company had expressly agreed to assume.
The law is well settled that a new partner is not liable for the debts of the old partnership, unless he in some form agrees to become liable. His liability will then depend upon the terms and conditions of the contract by which he binds himself to pay the debts of the former partnership, and not upon his legal relations as a partner. Freeman v. Huttig Sash Door Co.,
It is equally conclusive that the officers of the company were authorized to execute this renewal note. The articles of association themselves stipulate for the assumption of this debt by the new firm. The testimony of both Caudle and Cohen justifies the inference that Cohen understood that his firm was to be so bound.
The legal effect of these articles, when offered as proof of authority on the part of the officers of the firm to execute the note involved, is entirely different from what it would be when offered as evidence of Cohen's assumption of liability. If the articles had formed the only basis of Cohen's liability to the bank, the latter would have therein constructive notice, at least, of all the conditions attending his assumption of the debt. But such notice would not be implied when the articles are used only to combat the plea interposed by Cohen on the trial.
This record contains no proof that the appellee had notice of the limitations of liability upon which Cohen relied. In taking the note of the new firm for the debt of the old we have a case of novation. 30 Cyc. 615, and cases cited. That such a novation was contemplated in this case clearly appears from the testimony of Caudle and Cohen himself. I think the judgment should be affirmed as to all the parties defendant.
