Opinion
Argued April 12, 1878
Decided September 17, 1878
W.F. Cogswell, for appellant.
Theodore Bacon, for respondent.
The note upon which the judgment in controversy was recovered was in fact a joint obligation of the McLeans, Goddard and Flint, as between themselves, though in form Flint was indorser and the others were makers. It was made and indorsed for the purpose of raising money to be employed in the partnership business of the makers and indorser, and the proceeds of its discount were so used. The judgment was against the makers only, a separate judgment having been afterwards entered up against the indorser, but a payment in full by either of the co-partners had the same effect upon these judgments, as between the parties, as if the debt had been embraced in one joint judgment against all the debtors. It is within the principle of the rule referred to by SELDEN, J., in Harbeck v. Vanderbilt ( 20 N.Y., 395). Where one of several joint debtors pays the debt, his remedy against the others is confined to a claim for contribution, and where, as in the present case, the debt arises out of a partnership transaction, the amount, if any, to which the party paying is entitled as against the others necessarily depends upon the state of the partnership account. He cannot keep the paid claim, or any judgment thereon, alive and enforce it against the others, either in his own name or in that of any third party to whom he may cause it to be assigned, unless perhaps under special circumstances to the extent of the sum which may be found due to him from his co-partners on an accounting with them. Prima facie, at least, the debt and all judgments recovered thereon against the co-partners are discharged by the payment of the debt by one of them.
The payment of the debt by Flint to the bank therefore enured to the benefit of his co-partners and satisfied the judgment against them, so that neither he, nor any party to whom he caused it to be assigned in consideration of such payment, could enforce it, at least without showing some equity entitling him to hold it as security for the sum due Flint for contribution, and in that event it could be enforced only to the extent of the sum shown to be thus due.
The plaintiff in the present case did not pay anything to the bank for the judgment. The only consideration received by it was the payment by Flint, and the assignment was by him procured to be made to the plaintiff. The only consideration given by the plaintiff passed from him to Flint, and he took no greater rights than Flint had the power to transfer to him. He also had notice of the character of the debt for which the judgment was recovered. If the whole debt was paid by Flint to the bank after the assignment, as is claimed by the plaintiff in this action, such payment none the less operated to discharge Goddard, and the receipt of it by the bank was no violation of its contract and did not render it liable to the plaintiff, for by the terms of the assignment the bank remained at liberty to collect from Flint, his liability to the bank being expressly reserved. The plaintiff accepted the assignment subject to this condition, and therefore if the joint debt was collected by the bank out of Flint the plaintiff has no cause of complaint against it. The giving of the satisfaction piece by the bank caused no damage to the plaintiff, as he could not, after the payment by Flint, have enforced the judgment against the property of either of the other debtors, at least unless there was some amount due from them to Flint on the partnership accounts, and of this there was no proof or even allegation. For all that appears the amount paid by Flint to the bank may have been no more than his just proportion of the partnership debts.
The order of the General Term should be affirmed and judgment absolute, etc.
All concur, except MILLER and EARL, JJ., absent.
Order affirmed and judgment accordingly.