Brown v. Farnham

Vanderburgh, J.

This action is brought upon a composition agreement executed by defendant Farnham, surviving partner of the firm of Farnham & Lovejoy, and the executors of Lovejoy. This agreement was before the court in the case of Brown v. Farnham, 48 Minn. 317, (51 N. W. Rep. 377.) It is not, however, set out in the report of the case, and its terms are not specially referred to in the opinion, but it was considered, without much discussion, therein, that this instrument fell within the rule laid down in a class of cases to which belong Good v. Cheesman, 2 Barn. & Adol. 328; Goodrich v. Stanley, 24 Conn. 613; and Billings v. Vanderbeck, 23 Barb. 546,—where the agreement to discharge by the creditors rests upon the agreement to perform by tbe debtors, in contradistinction from ordinary cases, in which the composition necessarily involves a settlement by payment of the amount stipulated, its validity being supported by the legal consideration imported by the mutual promises of the creditors. In all cases where the creditors agree with the debtor and with one another to take a less sum than the amount severally due them in discharge of all, or where the discharge is conditioned upon payment or performance, there is no discharge or bar to a suit upon the original debt, unless and until payment is made as required. If the agreement is performed, it is then a valid and final settlement of the debt. In the former class of cases, however, especially where the agreement is to transfer property to creditors in order to effect a settlement, the rule is that “an acceptance, in discharge of a debt, of an agreement, with mutual promises on which the creditor has a legal remedy for its nonperformance, is a satisfaction of the debt, although such promises are not performed.” Goodrich v. Stanley, supra; Pars. Cont. pt. 12, ch. 3, § 4; 1 Smith, Lead. Cas. (6th Ed.) 444. It is competent for the parties to put their agreement in that form, and their intention, as gathered from its terms, must control.

In the case first mentioned, the attention of the court was more particularly directed to the matter of the consideration in the compromise deed, and the distinction above referred to was not emphasized, though the authorities were referred to.

In the case now before us, the agreement purports to be signed by Farnham, and by the executors of Lovejoy, “as executors,” as parties of the first part, by several creditors, as parties of the second part, and by William L. Wolford, as party of the third part. The parties of the first part (defendants here) thereby agree to transfer certain specified real and personal property to Wolford, in trust for the benefit of the creditors named, within thirty days; and, in consideration thereof, the parties of the second part agree to and with the parties of the first part, and with each other, that they, and each of them, will and do thereby release and forever discharge said firm of Farnham & Lovejoy, and each of said firm, and said parties of the first part, of and from any and all of said indebtedness, and from any and all rights of action arising from any of said indebtedness, or the notes or other papers evidencing the same, or any part thereof. And although, upon a careful construction of the whole agreement, there may be some doubt about the correctness of the conclusion, it was held that the discharge of the debts referred to depended upon the agreement, and not upon the subsequent performance thereof upon defendants’ part; and the question does not arise here, because this action' is brought upon the agreement upon the theory that the debts were so discharged, and it is so alleged in the complaint.

The' complaint is objected to for defect of parties plaintiff, and by the defendants’ executors for insufficiency. The plaintiff’s contention is that, upon the face of the agreement, the executors are personally bound, and the complaint is drawn with • the view to such relief. On the other hand, the executors insist that the liability against them upon the agreement as exhibited by the complaint is solely in their representative capacity.

We are of the opinion that the complaint does not show a liability against them in their representative capacity. The rule is well settled that an executor cannot, by virtue of his general powers as such, make any new contract for the testator. The only effect of such a contract is to bind himself personally, and it is immaterial how he describes himself, or that he assumes to execute it in his representative capacity. Sumner v. Williams, 8 Mass. 162; Schmittler v. Simon, 101 N. Y. 554, (5 N. E. Rep. 452;) Pinney v. Johnson's Adm’rs, 8 Wend. 500; Austin v. Munro, 47 N. Y. 366; McFarlin v. Stinson, 56 Ga. 396; Patterson v. Craig, 1 Baxt. 291.

The general rule is that, upon a promise made after the death of the testator, the executor is chargeable of his own goods; and in contracts for necessary matters relating to the estate he is personally liable, though he may limit his liability to the extent of the assets in his hands. So, if an executor renews a note of the testator, he is personally liable thereon, and must look to the estate 'for his indemnity if he pay the debt. Yerger v. Foote, 48 Miss. 62. And he is so liable upon a bond for a deed, though executed by him as executor. Patterson v. Craig, supra.

And in respect to an arbitration concerning matters affecting the estate, though there is some difference of opinion on the subject of the power of the executor to submit to arbitration disputed claims, Mr. Kedfield says, (2 Redf. Wills, 294:) “If an executor stipulate generally to pay the amount of an award, he is liable personally.”

It is a contract by an executor, and not by the testator, and is •subject to the same rules which govern executors generally. Powers v. Douglas, 53 Vt. 473.

But if the thing promised by an executor is such as he is lawfully authorized or empowered to do, or if he contracts to do what he has a right or it is his duty to do in his official or representative capacity, then he is not personally bound. Brown v. Evans, 15 Kan. 92.

A surviving partner is entitled to settle the affairs of the partnership on the decease of the other members, and is entitled to the possession and disposition of the assets for such purpose, and any real estate belonging to the partnership he is entitled to have so appropriated, and the equitable interest of the firm therein will pass -to his assignee. Hanson v. Metcalf, 46 Minn. 28, (48 N. W. Rep. 441.)

If, then, the property, real and personal, described in the composition agreement in this case, belonged to the firm of Farn-ham & Lovejoy, Farnham, as surviving partner, had a right to dispose of it in settling or compounding the debts of the firm, and would only be responsible to the heirs or representatives of Love-joy for a surplus or an abuse of his power over the estate; and if the title to the partnership real estate stood in the name of Lovejoy or of both partners, and the executors were lawfully empowered to transfer the legal title to the property, or to make a ¡settlement of this character, they might properly join with Farn-'ham in a deed for such purpose in their representative capacity, and they would not be personally bound or liable. The execution of the deed would be merely ancillary to the action of Farnham in the discharge of his duty as surviving partner. But there is ¡nothing in the complaint indicating that the property in question was partnership property, or that the executors had any authority, 'by will or otherwise, to make deeds or any such disposition of property. On the contrary, the complaint alleges that the defendants have never owned the property, and were never able to convey or assign the same.

(Opinion published 56 N. W. Rep. 352.)

There is nothing in the complaint from which the court would be warranted in holding that the contract is not the personal contract of the executors. It was not for the plaintiff to allege in the-complaint that the executors did not possess other than general powers as executors, or what was- or was not contained in Lore-joy’s will on the subject.

The composition agreement discloses on its face the amount of the claim of each creditor, and, though the creditors hare a common interest in the fund, yet the interest of each is several, and the damages accruing to each are severable in case of a breach of the agreement. We are unable to see, therefore, why a separate-action may not be maintained by one creditor in such case to recover his damages. The action follows the nature of the interest.. Emmeluth v. Home Benefit Association, 122 N. Y. 134, (25 N. E. Rep.234,).and cases cited.

We think there was no defect of parties plaintiff in this action-

Order reversed.