Marshall Field Co. v. Fishkin , 180 Wis. 149 ( 1923 )

While appellant denies that there was in fact a partnership between him and his son from May 21, 1921, to January 2, 1922, he admits that the business was conducted under the name of Fishkin Son, with his knowledge and consent. He therefore permitted himself to be held out to the public, and those doing business with the Redgranite store, as a partner, and we understand that his original liability as such is not seriously disputed. It appears that W. G. Forrest, the house attorney and adjuster for plaintiff, called at the Redgranite store on or about March 11th and had a talk with Abraham Fishkin concerning the indebtedness of the store which had been incurred prior to January 2d and was owing to the plaintiff; that Abraham then and there gave him six postdated checks aggregating the amount of the indebtedness; that the adjuster supposed that the checks were those of A. Fishkin Son, but it transpired that only one of them was so signed, that being the one on top of the number handed to the adjuster; the others were signed simply "Abraham Fishkin," but, by reason of the top check being signed Fishkin Son, the adjuster did not give special attention to the manner in which the others were signed. Only one of these checks was paid; the others were protested.

Appellant claims that this transaction discharged him from any liability on the account because the transaction amounted to (1) a novation, or substitution of the son for the father as debtor by the act of the plaintiff; (2) that after the dissolution of the partnership, on January 2d, when the son assumed and agreed to pay the debts of the firm, the father thereafter as retiring partner was liable only as a surety, and that the acceptance of the postdated checks extended the time of payment and thereby released appellant; and (3) that this conduct of the plaintiff, under the circumstances, was a waiver of its claim against the father. We will treat these contentions in their order.

1. Whatever may have been the effect of receiving the postdated checks, even though accompanied by a promise to release the father, it did not amount to a novation. It was not the agreement of a debtor to release a creditor and to accept another therefor. It was no more than an agreement to release one of two joint debtors and accept the other for the debt, as was the case in Grubbe v. Pierce, 156 Wis. 29,145 N.W. 207, which, it was said in T. W. Stevenson Co. v. Peterson,163 Wis. 258, 157 N. W. 750, did not amount to a novation.

2. The dissolution of the partnership did not of itself change the relation of appellant from that of principal debtor to surety, as far as the then existing obligations of the firm were concerned. While the cases of Gates v. Hughes, 44 Wis. 332, and Brill v. Hoile, 53 Wis. 537,11 N. W. 42. seem to so hold, a different conclusion was announced inFirst Nat. Bank v. Finck, 100 Wis. 446, 76 N. W. 608, where it is held that the assumption of a joint debt by one of the debtors and a promise to hold the other harmless therefrom do not render the latter a surety merely as between him and the creditor where the creditor did not consent to any change of liability and received no consideration for such a consent. This conclusion is inconsistent with the doctrine ofGates v. Hughes and Brill v. Hoile, and although these cases were not referred to in the opinion of the court or cited in the briefs of counsel they must be considered to have been inferentially overruled byFirst Nat. Bank v. Finck. The latter case is in accord with the great weight of, if not universal, authority, aside from Gates v. Hughes andBrill v. Hoile, supra. See note in 9 L.R.A. N. S. 76, where it is stated that while, "as between partners, or as between retiring and continuing and incoming partners, the new firm obligating itself to the retiring partner to pay all the debts, the relation of principal and surety exists between the continuing or incoming partners on the one hand and the retiring partners on the other, yet, as to a creditor of the old partnership not consenting to the change, all the members of the old firm remain principals and joint debtors"

3. In Grubbe v. Pierce, 156 Wis. 29, 145 N. W. 207, it is held that where the note or obligation of one partner is tendered to and accepted by the creditor, and the latter agrees to look to such partner alone for his debt, the remaining partner or partners are discharged. If plaintiff's adjuster accepted the postdated checks in payment of the partnership debt and agreed to release appellant, it resulted in the discharge of the latter and he has a good defense to the present action. However, it must appear that there was an agreement on the part of the plaintiff to release the appellant and to look only to the son for the payment of the account. While this fact is alleged in the proposed answer, there is nothing in the record to justify a belief that any proof thereof is available to the appellant. An affidavit of the adjuster was filed in opposition to the motion in which such agreement is explicitly denied. The appellant was not present, and, while he verifies the answer of his own knowledge, it is apparent that he has no knowledge of what occurred upon the occasion of the adjuster's visit to the Redgranite store. The son has absconded and his present whereabouts are unknown. The mere delivery of the checks raises no presumption that they were either given or taken in payment of the debt. In fact, the contrary presumption obtains. HŒflinger v. Wells, 47 Wis. 628, 3 N. W. 589. An affidavit of the plaintiff's attorney was filed in opposition to the motion, in which it is stated that this very claim was included in the judgment which the appellant recovered against the son on the ground that he was liable for the payment thereof. This is not denied.

This motion is addressed to the sound discretion of the court. Even though the default was excusable, the judgment should not be opened up and the parties subjected to the expense of a trial unless there is reason to believe that injustice will result from a denial of the motion. Besides the case of the father against the son, it appears that at least one other case was brought by a creditor of the partnership against the appellant which was tried in the circuit court for Green Lake county. The trial judge evidently concluded that the granting of the motion would result in a waste of time and money and place an unjustifiable burden upon both parties. We cannot disturb the order unless it was the result of an abuse of discretion. As appellant's only defense rests upon an agreement of the plaintiff to release him from liability, of which there appears to be an entire absence of proof, and the circumstances all tend to negative rather than confirm such an agreement, we cannot say that there was an abuse of discretion in refusing to vacate the judgment.

By the Court — Order affirmed.