be inferred from mere acceptance of the new note.321 And the retiring partners will not be discharged per se by such note or a renewal of it.322 Thus, a note in the name of a steamer "and owners," signed “A. B., Master," will not discharge retiring owners who were originally liable.323 And a partner retiring before the renewal of a partnership note will not be discharged, unless the parties so intend. 32

Partnership Notes after Dissolution.

§ 1540. In general, a firm will not be bound or discharged by a note,325 or renewal,326 made after its dissolution. So, if a firm is dissolved by the death of one partner, his estate will not be discharged by a subsequent renewal of the firm note,327 or by a note of the surviving partners given without such intention in renewal of the firm note; 328 especially where the renewal is in the name of the firm, and the death of the partner is not known to the payee.3 And, where one agrees to receive the note of a partnership in pay

321 Nightingale v. Chafee, 11 R. I. 609.

329

322 David v. Ellice, 5 Barn. & C. 196; Kirwan v. Kirwan, 2 Cromp. & M. 617, 4 Tyrw. 591.

323 Patterson v. Chalmers, 7 B. Mon. (Ky.) 595.

324 Bank of Hamilton v. Mudgett, 34 Hun (N. Y.) 100.

325 Perrin v. Keene, 19 Me. 355; especially if taken without knowledge of the dissolution, Gardner v. Conn, 34 Ohio St. 187; Turnbow v. Broach, 12 Bush (Ky.) 455; although given with the knowledge of the other partner, Norton v. Oil Can Co., 98 Ga. 468, 25 S. E. 501. If the partner signs "in liquidation,” it is notice of the dissolution. Haddock v. Crocheron, 32 Tex. 276.

326 And such renewal will not let in a defense by the partnership which was not available on the original partnership note; e. g. that it was given for an individual debt of one partner. Boyd v. McCann, 10 Md. 118. And see § 432, supra.

327 Burris v. Whitner, 3 S. C. 510; In re Clap, 2 Low. 226, Fed. Cas. No. 2,784; National Exch. Bank v. Wilgus, 95 Ky. 309, 25 S. W. 2; especially where the original note is retained, Hayward v. Burke, 151 Ill. 121, 37 N. E. 846.

328 Tillotson v. Tillotson, 34 Conn. 335.

329 First Nat. Bank v. Morgan, 6 Hun (N. Y.) 348, affirmed 73 N. Y. 593. But, if the note has been fraudulently renewed by one partner after dissolution of the firm, an assignee of the note cannot sue for the original debt without proof of his own good faith and that of his assignor. Ridgeway v. Raymond, $2 Iowa, 592, 48 N. W. 944.

ment, he need not accept the note of one partner offered after dissolution of the firm, and repudiated by the other partners.330 And one who suffers himself to be held out as a partner after dissolution of the firm will not be discharged by a note afterwards given by the remaining partner.3

331

333

§ 1541. - The note of one partner given for a partnership debt after its dissolution will not be a satisfaction, unless received as such,332 although the creditor knew that the firm was dissolved.3 So, if the firm business is continued by a new firm, to which the account of the old firm is transferred, a note subsequently given by one of the partners for both new and old accounts will not be a payment of the account of the old firm, unless so agreed.3 334 And when judg ment is recovered against a firm, and one partner assumes the debts upon its dissolution, and agrees to pay the judgment, which is guarantied by the other partner, the judgment will not be discharged by his note or by a judgment rendered on it without agreement to that effect.335

If the note of the old firm is not surrendered, it will not be discharged by a renewal given after dissolution by the partner who continued to carry on the firm business.336 And the creditor may expressly reserve his rights against the firm, although he knew of the dissolution and assumption by one partner of the firm debts, and took his note for the debt.337 If a firm note with a surety is renewed by the individual note of one partner after its dissolution with the same surety, and is paid by such surety, the firm will still remain liable to him.338 And it has been held that an express agreement to take the new note of one partner as payment of the firm note

320 Goodspeed v. Plow Co., 45 Mich. 237, 7 N. W. 810.

331 Wait v. Brewster, 31 Vt. 516.

332 Medberry v. Soper, 17 Kan. 369; Leach v. Church, 15 Ohio St. 169; Seward v. L'Estrange, 36 Tex. 295. So, the note of a surviving partner, although receipted for as a payment. Thompson v. Briggs, 28 N. H. 40.

333 Rosseau v. Cull, 14 Vt. 83.

334 Mason v. Wickersham, 4 Watts & S. (Pa.) 100.

335 Claflin v. Ostrom, 54 N. Y. 581.

336 Parham Sewing Mach. Co. v. Brock, 113 Mass. 194.

337 Vernam v. Harris, 1 Hun (N. Y.) 451.

238 Leabo v. Goode, 67 Mo. 126.

after its dissolution, without new consideration, is insufficient to discharge the old firm.339

840

341

§ 1542. After dissolution of a partnership, the note of an individual partner may be received on an agreement to discharge the others; and such agreement may be implied from the conduct of the parties, or even, it has been held, from the fact that the creditor knew of the dissolution when he accepted the partner's note.3 So, where a partner's note is given long after the dissolution, and the creditor indorses a receipt on the original bill for "the within amount, per bill of A." 342 So, where the creditor receives part cash and note of a third party, and the note of one partner for the balance; or the note of one partner with the indorsement of a third party; or the notes of the individual partners for their several shares, with an express agreement for their discharge as to the balance, 345

• 343

346

344

Where one partner assumes the business and debts of the firm upon its dissolution, its debt has been held to be paid by his individual note, or the note of a third party, indorsed by him, and subsequently put into judgment against the maker. 347 So, where a partner assumes the firm debts, and informs the creditor of that fact, and the creditor's account is continued with the new firm, and he afterwards accepts such partner's note for the balance due on both accounts.348

839 Cole v. Sackett, 1 Hill (N. Y.) 516.

840 Bank v. Green, 40 Ohio St. 431. And bringing suit on the note is evidence of such agreement. Ricker v. Adams, 59 Vt. 154, 8 Atl. 278. But the note of one partner given after dissolution, and accepted in full of a partnership account, will not of itself discharge the firm, Herring v. Sanger, 3 Johns. Cas. (N. Y.) 71.

341 Stone v. Chamberlin, 20 Ga. 259.

342 Anderson v. Henshaw, 2 Day (Conn.) 272. So, where it is renewed by the surviving partner for several years, and interest paid by him.

Bank, 59 Md. 291.

Ecker v.

843 Waydell v. Luer, 3 Denio (N. Y.) 410, reversing 5 Hill (N. Y.) 448.

844 Yarnell v. Anderson, 14 Mo. 619.

845 Maxwell v. Day, 45 Ind. 509.

346 Maier v. Canavan, 57 How. Prac. (N. Y.) 504; Reed v. Ashe, 18 App. Div. 501, 46 N. Y. Supp. 126.

847 Frisbie v. Larned, 21 Wend. (N. Y.) 450, unless received as collateral only. 348 Harris v. Lindsay, 4 Wash. C. C. 98, 271, Fed. Cas. No. 6,124.

(2212)

Payment of Contemporaneous Debts.

349

§ 1543. A fine distinction has sometimes been made between the payment of an existing debt by a bill or note and the use of such paper in paying debts contracted at the time. Thus, it has been held that the bill or note of a third party is presumed to be taken in payment, if received for goods sold, but not if received for an existing debt. Where such note is taken in payment of a debt contracted at the time, it has been held that the burden of proof is on the seller to show that it was not taken as an absolute payment.35 But, where a note is transferred by the purchaser under an agree ment for "a good and collectible note," it will not be a payment, if the maker is insolvent at the time; 351 especially if the seller offers to return the note on learning that fact (although after the time for due presentment had expired).352 And the nonnegotiable note of a third party transferred after maturity in payment for goods purchased at the time is not an absolute payment.353

On the other hand, the note of a third party transferred by indorsement for goods purchased at the time is a payment, if so received. And, where the indorser of such a note is discharged from liability on it for want of notice, he will also be discharged from his original liability as purchaser.355 But if a note is indorsed by the

349 Gibson v. Tobey, 46 N. Y. 637; Challoner v. Boyington, 91 Wis. 27, 64 N. W. 422. But, to the effect that no such distinction is to be made, see Porter v. Talcott, 1 Cow. (N. Y.) 359. And see 2 Par. Notes & B. 156; 1 Edw. Bills & N. § 287; 2 Edw. Bills & N. § 752.

350 Clerk v. Mundall, 12 Mod. 203; Noel v. Murray, 13 N. Y. 167; Rew v. Barber, 3 Cow. (N. Y.) 280. But see, contra, Johnson v. Weed, 9 Johns. (N. Y.) 310; Bartsch v. Atwater, 1 Conn. 409, where the maker became bankrupt before maturity. And the presumption may be rebutted by a contrary agreement either express or implied from subsequent conduct, Youngs v. Stahelin, 34 N. Y. 258; although it has been held that an express agreement to the contrary is necessary, Whitbeck v. Van Ness, 11 Johns. (N. Y.) 409.

351 Torry v. Hadley, 27 Barb. (N. Y.) 192.

252 Robson v. Oliver, 10 Q. B. 704.

353 Plimley v. Westley, 2 Bing. N. C. 249, 2 Scott, 423.

354 E. g. by terms of sale to that effect. Soffe v. Gallagher, 3 E. D. Smith (N. Y.) 507. And it is a sufficient plea to aver that it was "for and on account of said debt. Kearslake v. Morgan, 5 Term R. 513.

1 Farr v. Stevens, 26 Vt. 299.

purchaser without recourse, and the maker is then insolvent, but the note is afterwards declared by the vendor to be satisfactory, it will be a question for the jury whether it was received in satisfaction. 356 If a note is not only indorsed over in payment for goods, but guarantied absolutely by the purchaser, he may still be sued on the original debt.357

§ 1544. When a bill is delivered without indorsement to the vendor in payment for goods sold, it amounts often to a sale of the bill, if taken at the vendor's own option, and (as such) to a payment for the goods.358 And the purchaser will be discharged from further liability, except in case of forgery or fraud.359 So, if the seller takes such a note by delivery from the buyer, under an agreement for payment "in obligations," it will be at his own risk, in the absence of fraud on the part of the purchaser; especially if the purchaser has expressly refused to indorse the note. 361 But it has been held that a certificate of deposit payable to, and indorsed by, a third party, and taken by the vendor from the purchaser, is not a payment; and the fact that the bank issuing the certificate was then solvent is no evidence of an intention to discharge the purchaser.362

360

If a note is transferred, however, without indorsement, and the maker is in good credit, but actually insolvent at the time, the purchaser will be discharged.363 And this has been held, although the insolvency was not known to either party or publicly, and al

356 Roberts v. Fisher, 53 Barb. (N. Y.) 69.

357 Butler v. Haight, 8 Wend. (N. Y). 535.

358 Byles, Bills, 391; 2 Dan. 288; 2 Pars. Notes & B. 183; Camidge v. Allenby, 6 Barn. & C. 373, 9 Dowl. & R. 391; Ward v. Evans, 2 Ld. Raym. 928; Brown v. Kewley, 2 Bos. & P. 518; Guardians of Litchfield Union v. Greene, 26 Law J. Exch. 140, Hurl. & N. 884; Smith v. Mercer, L. R. 3 Exch. 51. So. when a third party's note is taken in payment and made payable to the vendor. Whitbeck v. Van Ness, 11 Johns. (N. Y.) 409.

359 Breed v. Cook, 15 Johns. (N. Y.) 241; especially where it is receipted as given in "settlement," Susquehanna Fertilizer Co. v. White, 66 Md. 444, 7 Atl. 802, 10 Eastern Rep. 617.

360 Hardin v. Kretsinger, 17 Johns. (N. Y.) 293.

361 Breed v. Cook, 15 Johns. (N. Y.) 241.

362 Although no steps were taken against the purchaser for a year, Huse v. McDaniel, 33 Iowa, 406.

363 Long v. Spruill, 52 N. C. 96.