Beatson v. Harris ( 1880 )

In personal actions having more than one plaintiff, release by one of the plaintiffs is a defence (Kimball v. Wilson, 3 N.H. 100, Clark v. Dinsmore,5 N.H. 140); and a release by one partner of an action in favor of a partnership binds the firm. Pierson v. Hooker, 3 Johns. 68; Bulkley v. Dayton, 14 Johns. 387; People v. Keyser, 28 N.Y. 226, 228; 1 Pars. Cont. 186, 187. But fraud vitiates all contracts, and a release given by the fraud of one partner, or obtained through the fraud of the defendant, or through the fraudulent connivance of one partner with the defendant, could not be upheld against the firm. Morse v. Bellows, 7 N.H. 549, 567; Noyes v. N.H. N. L. S. R. Co., 30 Conn. 1; McBride v. Hagan, 1 Wend. 326; Gould v. Gould, 36 Barb. 270; Smith v. Stone, 4 G. J. 310; 1 Pars. Cont. 187.

Fraud has not been found in express terms, but the facts which are found, coupled with omissions, are too significant to admit of any reasonable explanation consistent with good faith on the part of Messer and the defendant. The claim sued for was due. Messer was insolvent, owed Beatson, and knew that this claim with others belonged to him, and that he, Messer, had no authority to collect it. The defendant went repeatedly to Messer before he obtained the release, but did not try to settle with Beatson because he knew he could not without paying the claim. He knew the claim was due, and must have known, or ought to have known, of Beatson's sole authority and Messer's want of authority to collect or adjust the claim. No money was paid on account of the release, and it does not appear that anything else than money was paid, or agreed to be paid, nor what the "certain agreement" was; whether it was of any value as a consideration for the release, and if so, whether or not the partner, Messer, was to receive the benefit of it on his private individual account. The silence of the report on the subject of the agreement is eloquently suggestive, and no other conclusion can be arrived at than that the release was obtained without any legal consideration. Want of authority on the part of Messer to give the release, known to the defendant, and want of a legal consideration for the release, destroyed its force and made it void.

Judgment on the report, for the plaintiffs.

STANLEY, J., did not sit: the others concurred.