Dick v. Williams

Opinion,

Mb. Justice Williams :

This action was brought against Joseph Smith and D. H. Williams as partners under the firm name of Smith & Williams. It was upon a note purporting to be executed by the firm, made payable to and indorsed by Joseph Smith, and which matured on August 17,1878. The summons was issued on May 5,1886. A judgment was entered against the defendants on June 28, 1866, for want of an affidavit of defence, which was opened as to D. H. Williams on the next day, and he permitted to make defence. He alleged that the note was not given by the firm, or for a firm debt, but by Joseph Smith for his own individual debt, with the full knowledge of Dick, the plaintiff. He also alleged that the action was barred by the statute of limitations.

Two questions of fact were thus raised for the decision of the jury: (1) Was the note binding on the firm? (2) If binding when given, was the statute of limitations a defence ? It is to be regretted that these questions were not stated separately in framing the issue when the judgment was opened, so that they could have been separately disposed of by the jury. As the case stands, we cannot tell whether the jury found for the defendant on the first or the second of these questions, or whether both were decided in his favor. We must therefore examine the errors assigned relating to both questions, and reverse, if error is found in either, because of the impossibility of determining on which the verdict may rest. We will consider them in their inverse order.

Was the action barred by the statute ? That depended on whether the payment of $1,000 indorsed on the note in the handwriting of Dick as received from D. H. Williams on October 21,1881, was in fact made by Williams to apply on this note. The evidence showed that the $1,000 was due from Williams to Smith as the purchase money of his interest in the storehouse and lot which they had previously owned together, and that it was paid to Dick at Smith’s request, and for his convenience. Dick received it from Williams, not as his creditor, but as the agent of Smith; not as a payment on the note, but as payment in full for the land he had bought from Smith. After it came into his hands, any application he might make of it in accordance with his understanding with Smith could not, without more, bind or in any manner affect Williams. The indorsement, to affect him, must, at the least, have been made at his instance and request. The learned judge of the court below, however, instructed the jury on this subject as follows: “ The plaintiff here has shown by the deposition of M. O. Dick, former cashier, that the defendant Williams was present when the credit was put on the note, and, as we recall the facts, that he handed over the money, or the money was passed then, at least, there in the bank, in his presence. This, not contradicted or explained, would take the case out of the statute of limitations.” The plaintiff in error cannot complain of this. It was more favorable to him than he had the right to ask, and, if complained of by the other side, could not be sustained. As we have already said, Williams was not affected by what Dick might do with Smith’s money, unless it was done at his instance, and of that there is not a particle of proof before us. We do not see why the defendant was not entitled to a peremptory instruction in his favor upon this branch of his defence.

Was this note binding on the firm? It was, if given in the course of the firm business; it was not, if given for the indiwidual debt of Smith. In order to establish the latter position, and to show that Dick not only knew, but suggested, the use of the firm name by Smith for his own individual purposes, the defendant called Smith a,s a witness. Dick died before the trial; and his administrator, who had been substituted on the record, objected to the competency of Smith as a witness. The court below admitted him on the ground that he was called against his interest, and to sustain a defence personal to Williams. It is important to keep in mind that the action was not brought against Williams alone, but against the firm of Smith & Williams ; and he was liable, if at all, because he was a member of the firm. Smith’s liability rested on the same basis. It is true that a judgment by default had been taken against Smith; but if the result of the trial should be to determine that the firm was not liable on the note, the foundation on which the judgment by default rests would fall from under it. If the firm is not liable, the members of the firm, as such, are not. Smith may be liable as an indorser, or as the borrower of the money-represented by the note, but in this action his liability depends upon the fact that he is a member of the firm sued; and, if the firm is not liable, he is not liable. He was made a defendant, as Williams was, because be was a partner in tbe firm against wbicb the action was brought; but if tbe debt sued on is not a firm debt, the plaintiff must fail in bis action, and tbe verdict must be in favor of tbe firm, and necessarily in favor of tbe partners composing it. This being so, it is clear that Smith was permitted to testify in favor of bis own interest, when be was allowed to show by bis testimony that tbe debt was not that of tbe firm : Swanzey v. Parker, 50 Pa. 441. As the other party to tbe contract under investigation was dead, and tbe interest of Smith was adverse to that of tbe deceased bolder of tbe note, be was incompetent to testify, under tbe express provisions of tbe act of 1887.

Tbe learned judge was also in error in treating this line of defence as personal to Williams. Tbe defence made on tbe statute of limitations may be regarded as personal. One defendant may insist upon it as a defence, and the other may be unwilling to set it up. In that event a verdict might be in favor of one defendant, and against tbe other. But a denial of tbe liability of tbe firm goes to tbe entire cause of action. If that defence is maintained, not Williams alone, but tbe firm, and all its members, sued as such, are relieved from liability. For tbe reasons now given the judgment must be reversed; and, because we cannot tell whether tbe verdict of tbe jury rests on tbe determination of both, or one, and wbicb one, of tbe questions of fact before them, we must award

A venire facias de novo.