Lott, Senator.
The material question presented in this case is, whether a partnership debt can, after notice of the dissolution of the copartnership, be paid and discharged by the negotiable note of one of the partners given to and received by the creditor, as payment and in satisfaction.
To a plain and practical man there would seem to be no possibility of a doubt in relation to it. He would naturally say that parties are at liberty to make such settlements as their convenience or interest may dictate, and that such an arrangement affords great facilities, and is peculiarly advantageous in settling a partnership concern. Such too appears to have been the opinion of Lord Kenyon, when it was sought to make all the partners liable for an original indebtedness under such circumstances. The proceeding, indeed, called forth an expression of indignation. He speaks in the following strong terms: “ Is it to be endured that when partners have given their acceptance, and when perhaps one of two partners has made provision for the bill, that the holder shall take the sole bill of the other partner and yet hold both liable 1 I am of opinion that when he chooses to do so Iu» discharges the other partner.” After referring to the [414] terms of the transaction, he adds: “ It is a reliance on the sole security of Combrune, [one of the partners,] and discharges the defendant,” [the other partner.] (Evans v. Drummond, 4 Esp. N. P. 89. See also Reed v. White, 5 id. 122; Bedford v. Deakin, 2 Stark. N. P. C. 178.)
The question was distinctly and clearly brought under the consideration of the supreme court of this state, as early as 1815, in Arnold v. Camp, (12 John. 409;) and Thompson, Ch. J. there uses this emphatic language : “ If the facts in the case before us will warrant the conclusion that when the individual note of Downing (a former partner) was taken and the partnership note delivered up, it was intended and agreed to be considered as payment of the note in question, there can be no doubt but that, in judgment of law, it will operate as a satisfaction of the partnership note.” And the court gave judgment for the defendant. The same principle was fully recognized in Muldon v. Whitlock, (1 Cowen, 290,.) and also in Frisbie v. Larned, (21 Wend. 450;) and in the latter case Arnold v. Cam.p is cited by the same learned judge who in the present case repudiates it. Indeed that case was universally acquiesced in, in this state, until as late as 1841, when it was for the first time questioned in Cole v. Sackett, (1 Hill, 516.) The case of Smith v. Rogers, (17 John. 340,) which was supposed by the counsel of the defendant in error to be an exception, is not so in fact. The note which was set up in that case as extinguishing the joint debt, was received to be applied to the credit of the partnership account “ when paid,” and the opinion of the court shows that their decision was placed on the ground that it was not intended as- a discharge of the original liability. It is therefore in perfect harmony with the prior decisions, and they were not. questioned by it. (See also Tobey v. Barber, 5 ,John. 72 : Witherley v. Mann, 11 id. 518; Sheehy v. Mandeville, 6 Cranch, 253; opinion of Ch. J. Marshall, p. 264; Harris v. Lindsay, 4 Wash. C. C. 272; Story on Partn. § 155.) I do not deem it necessary to refer to the opinions of judges in England on the point, further than to say that, after careful deliberation, it was finally held as late as the year 1834, in Thompson v. Percival, [415] (5 Barn. & Adol. 925,) that a partnership debt might, by agreement, be discharged by the acceptance of the sole liability of one of the partners only. Lord Denman, in delivering the opinion of the court, speaks in the following terms: “ It appears to us that the facts proved raised a question for the jury whether it was agreed between the plaintiffs and James that the former should accept the latter, as their sole debtor, and should take the bill of exchange accepted by him alone, by way of satisfaction ' for the debt due from both;” and then, after discussing its effect, concludes: “If, therefore, the plaintiffs in this case did expressly agree to take and did take the separate bill of exchange of James, in satisfaction of the joint debt, we are of opinion that their doing so amounted to a discharge of Charles.” That decision was made after a full consideration of Lodge v. Dicas, (3 Barn. & Ald. 611,) and David v. Ellice, (5 Barn. & Cress. 196, S. C. 7 Dowl. & Ryl. 690,) which were much relied on by the ^earned judge below. As to the first of which it was said that “ no new negotiable security was given; nor did the difference between the joint liability of the two and the separate liability of one of them appear to have been brought under the consider- . ation of the court:” and in regard to the latter, “ no bill of exchange was given; and that decision is not altogether satisfactory to us. See also Hart v. Alexander, (2 Mees. & Welsh. 484,) decided in 1837, recognizing the same principle. It is useless here to examine more cases. They are most of them referred to in the opinion of the court below. The result of them is, that in England the note of one partner is considered as a discharge of a previous copartnership debt, when so received; and such also has been the understanding of the courts of this state, till the decision of Cole v. Sackett. above referred to. The authorities referred to in support of that decision will, I think, with great deference to the distinguished jurist who delivered the opinion in that case, as well, as the one under consideration, be found not to sustain his conclusion. They only establish the principle that the naked promise of the debtor himself will never satisfy a pre-existing debt; and that the taking of a note, either from one of several joint debtors or froix a third [416] person, is not considered a payment of it, unless it be agreed to be taken as payment, and are therefore perfectly consistent with the rule laid down and adopted in Arnold v. Camp. A rule thus established, so reasonable and equitable in itself, and of such vital interest and importance to a commercial community, where there are frequent changes in the business relations of our citizens, ought not, after so long and continued an acquiescence, to be disturbed, unless inconsistent with some inflexible principle of law.
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Lott, Senator.
The material question presented in this case is, whether a partnership debt can, after notice of the dissolution of the copartnership, be paid and discharged by the negotiable note of one of the partners given to and received by the creditor, as payment and in satisfaction.
To a plain and practical man there would seem to be no possibility of a doubt in relation to it. He would naturally say that parties are at liberty to make such settlements as their convenience or interest may dictate, and that such an arrangement affords great facilities, and is peculiarly advantageous in settling a partnership concern. Such too appears to have been the opinion of Lord Kenyon, when it was sought to make all the partners liable for an original indebtedness under such circumstances. The proceeding, indeed, called forth an expression of indignation. He speaks in the following strong terms: “ Is it to be endured that when partners have given their acceptance, and when perhaps one of two partners has made provision for the bill, that the holder shall take the sole bill of the other partner and yet hold both liable 1 I am of opinion that when he chooses to do so Iu» discharges the other partner.” After referring to the [414] terms of the transaction, he adds: “ It is a reliance on the sole security of Combrune, [one of the partners,] and discharges the defendant,” [the other partner.] (Evans v. Drummond, 4 Esp. N. P. 89. See also Reed v. White, 5 id. 122; Bedford v. Deakin, 2 Stark. N. P. C. 178.)
The question was distinctly and clearly brought under the consideration of the supreme court of this state, as early as 1815, in Arnold v. Camp, (12 John. 409;) and Thompson, Ch. J. there uses this emphatic language : “ If the facts in the case before us will warrant the conclusion that when the individual note of Downing (a former partner) was taken and the partnership note delivered up, it was intended and agreed to be considered as payment of the note in question, there can be no doubt but that, in judgment of law, it will operate as a satisfaction of the partnership note.” And the court gave judgment for the defendant. The same principle was fully recognized in Muldon v. Whitlock, (1 Cowen, 290,.) and also in Frisbie v. Larned, (21 Wend. 450;) and in the latter case Arnold v. Cam.p is cited by the same learned judge who in the present case repudiates it. Indeed that case was universally acquiesced in, in this state, until as late as 1841, when it was for the first time questioned in Cole v. Sackett, (1 Hill, 516.) The case of Smith v. Rogers, (17 John. 340,) which was supposed by the counsel of the defendant in error to be an exception, is not so in fact. The note which was set up in that case as extinguishing the joint debt, was received to be applied to the credit of the partnership account “ when paid,” and the opinion of the court shows that their decision was placed on the ground that it was not intended as- a discharge of the original liability. It is therefore in perfect harmony with the prior decisions, and they were not. questioned by it. (See also Tobey v. Barber, 5 ,John. 72 : Witherley v. Mann, 11 id. 518; Sheehy v. Mandeville, 6 Cranch, 253; opinion of Ch. J. Marshall, p. 264; Harris v. Lindsay, 4 Wash. C. C. 272; Story on Partn. § 155.) I do not deem it necessary to refer to the opinions of judges in England on the point, further than to say that, after careful deliberation, it was finally held as late as the year 1834, in Thompson v. Percival, [415] (5 Barn. & Adol. 925,) that a partnership debt might, by agreement, be discharged by the acceptance of the sole liability of one of the partners only. Lord Denman, in delivering the opinion of the court, speaks in the following terms: “ It appears to us that the facts proved raised a question for the jury whether it was agreed between the plaintiffs and James that the former should accept the latter, as their sole debtor, and should take the bill of exchange accepted by him alone, by way of satisfaction ' for the debt due from both;” and then, after discussing its effect, concludes: “If, therefore, the plaintiffs in this case did expressly agree to take and did take the separate bill of exchange of James, in satisfaction of the joint debt, we are of opinion that their doing so amounted to a discharge of Charles.” That decision was made after a full consideration of Lodge v. Dicas, (3 Barn. & Ald. 611,) and David v. Ellice, (5 Barn. & Cress. 196, S. C. 7 Dowl. & Ryl. 690,) which were much relied on by the ^earned judge below. As to the first of which it was said that “ no new negotiable security was given; nor did the difference between the joint liability of the two and the separate liability of one of them appear to have been brought under the consider- . ation of the court:” and in regard to the latter, “ no bill of exchange was given; and that decision is not altogether satisfactory to us. See also Hart v. Alexander, (2 Mees. & Welsh. 484,) decided in 1837, recognizing the same principle. It is useless here to examine more cases. They are most of them referred to in the opinion of the court below. The result of them is, that in England the note of one partner is considered as a discharge of a previous copartnership debt, when so received; and such also has been the understanding of the courts of this state, till the decision of Cole v. Sackett. above referred to. The authorities referred to in support of that decision will, I think, with great deference to the distinguished jurist who delivered the opinion in that case, as well, as the one under consideration, be found not to sustain his conclusion. They only establish the principle that the naked promise of the debtor himself will never satisfy a pre-existing debt; and that the taking of a note, either from one of several joint debtors or froix a third [416] person, is not considered a payment of it, unless it be agreed to be taken as payment, and are therefore perfectly consistent with the rule laid down and adopted in Arnold v. Camp. A rule thus established, so reasonable and equitable in itself, and of such vital interest and importance to a commercial community, where there are frequent changes in the business relations of our citizens, ought not, after so long and continued an acquiescence, to be disturbed, unless inconsistent with some inflexible principle of law.
It then remains to be considered whether such a principle exists. The whole argument of the court below appears to be placed on the ground that a debt cannot be discharged by the mere promise of the debtor to pay it. “ The logic of these pleas, (says the learned judge in Cole v. Sackett,) is no more than saying, Your precedent debt is discharged, because I promised o pay it in another form, and you accepted the latter promise as a satisfaction.” Now I concede that the note of a debtor himself will not discharge a precedent debt, though it may suspend the remedy; yet I consider it to be equally well settled that the acceptance, by a creditor, of the note of a third person for an existing indebtedness, operates as an -extinguishment of the original consideration, when agreed to he accepted in full satisfaction of it. See Booth v. Smith, (3 Wend. 68,) and Frisbie v. Larned, (21 id. 450,) where the whole doctrine is well considered by Mr. Justice Cowen. And here it may be useful to examine on what, principle this latter rule is placed. In Booth v. Smith, the defendant was sued for the balance of a due bill, made by him to the plaintiff, in satisfaction whereof he subsequently gave a note for the amount due, of three other persons, endorsed by himself. These facts being set up in a plea, were held to be a good defence. Justice Sutherland, in giving the judgment of the court, says : “ The plea is unquestionably good. It would have been good, by way of accord and satisfaction, if no part of the original debt had been paid prior to the acceptance by the plaintiff of the last note.” He concludes by saying, “ Although the defendant still remains liable, the character of his responsibility is changed. He has entered into a new con[417] tract with his creditor, who, upon an adequate consideration (the obtaining the note of a third person as an additional security for the debt) has agreed to look to the defendant as endorser only, and to relinquish all claim on him in any other character. ‘He cannot be charged upon the original consideration.” In the latter case, (Frisbie v. Larned,) there was an acceptance of the note of a third person from one of the members of a firm, endorsed by him, together-with the payment of the balance of an account in cash. Judge Cowen held it a good accord and satisfaction, saying, “ When a note of a third person is transferred by the debtor to and taken by the creditor, and- credit is given for it as payment, the effect is the same as the acceptance of a horse or other chattel on the same terms. The simple contract of sale or claim by one side, and a promise to pay by the vendor or debtor, is departed from. A new. and distinct contract is made, and new relations arise out of it.” From these remarks it will be seen, that.where there is a new contract made varying the relation of the parties, or where even the character merely of the responsibility is changed, upon a good consideration, then the original cause, of action is discharged. This principle I understand indeed to be conceded, in the opinion of the court in the present case 5 but it is insisted that, in the acceptance of the individual note of one of the partners only, there is no consideration for the discharge of the other partners, and that an agreement, to that effect, is rmdum <pactum. It is argued, with much plausibility, that as the note of all of the debtors could not have that effect, it follows as “ an obvious corollary, that the less and weaker security could not have a greater effect than the higher and strongerbut the argument is, in my opinion, fallacious. It assumes that each partner is individually liable for the debt of the partnership,, and that consequently there is no new consideration for the promise. Although the debt is equally the debt of all the partners, yet. there is no separate liability.. The obligation is joint, and it cannot be enforced against one only. It is, in no sense, the several debt of either. In case of the death of one, the survivor is entitled to the possession and disposition of the assets to enable him to discharge the debts and settle the [418] concern. He alone is suable at law, and it was settled by this court in Lawrence v. The Trustees of the Leake & Watts Orphan House, decided in December, 1845,