the same share of the losses of the business as would have been received and borne by the deceased partner had he lived, provided, however, that if the survivor shall think it necessary to employ an additional clerk in consequence of the death of the deceased partner, in such case the expense shall be charged to and shall be borne by the share in the profits of the deceased partner." The firm business was thereafter continued under these instruments until the 1st day of June, 1882, when Colwell died, leaving children and a will. He appointed the abovenamed defendants, executors and trustees, and gave them in trust for his children the greater part of his estate, and directed a distribution of the whole, making no reference to the business of the firm of S. S. Hepworth & Co., or to it in any way, or to the agreement above set out, and revoking all other wills theretofore made by him. were they to have anything to do with the conduct of the business or its management. On the contrary, the business is "to be continued by the survivor." We have only to inquire, therefore, whether the partnership agreements take the case out of the general rule. The frame of the last articles shows that the parties contemplated and bargained for a continuance of the business for the term of five years from the 1st of February next succeeding the death of either, but the residue of the clause containing this stipulation depends to some extent for its interpretation upon the preceding or original article. The second agreement refers to the first as containing the terms and conditions on which the business is to go on; and, looking there, we find that the capital, however represented by money, tools, machinery or material, was not to exceed $4,000, and was to be provided by Colwell and to remain his individual property. That contribution It also appeared that from the death of Col- made him an equal partner, and upon dissoluwell to September, 1887, the business of S. S. tion of the firm was to be repaid to him, with Hepworth & Co. was continued and carried on interest, before any division of surplus earnby Samuel S. Hepworth, he assuming to do so ings should be made. Death of a partner, under the agreements of February 23, 1877, however, was not as of course to work a disand October 13, 1881. In the course of that solution, but the wife and children of the debusiness, in September or October, 1887, or five cedent were immediately to succeed to his inyears after Colwell's death, he contracted debts terest in the business, which thenceforward with the plaintiff and with other persons or was to be prosecuted for their benefit and that firms in the name of S. S. Hepworth & Co., of the surviving partner. We do not need to for some of which he gave promissory notes in ascertain whether this clause could have any that name, and others of which rest in account. effect without the asssent of the parties named, On the 4th of October, 1887, Hepworth in- for it never came into operation, being susdividually, and as surviving partner, was in- pended by that of the agreement of October 13, volved to the extent of about $500,000, and on, which provides for the continuance of the busithat day made an assignment in both capacities ness "by the survivor," and the distribution of for the benefit of his creditors. The individ-profits or losses "to the estate of the deceased ual debts of Colwell have been paid and prop-partner, as would have been received and borne erty remains in the hands of bis executors. The plaintiffs, either as original creditors or by assignment, are the owners of the debts contracted by Hepworth and set out in the complaint, amounting in the aggregate to about $15,000, and they seek to recover the amount from the individual estate of Colwell, and in the mean time ask for the appointment of a receiver of his property assets and estate and an account thereof from the defendants as his representatives. Various defenses were interposed by them, but so far as material upon this appeal their effect depends upon the single question whether the general estate of Colwell was, by virtue of the above agreements, rendered liable for debts contracted by Hepworth in the firm name, after the death of Colwell. The trial court and the general term have held against the plaintiffs, and the defendants had judgment accordingly. It is a general rule that a contract of partnership is dissolved by the death of one of the parties, whether entered into for a fixed time or not; and that after his death the former partner cannot bind the estate of the decedent by new contracts; and although the partnership be expressly extended to executors, they could not be compelled to carry it on and would be entitled to a dissolution and an account of the assets, subject to the liabilities of the firm incurred up to the time of dissolution. These are familiar and well-settled principles. Here the representatives of the deceased partner were not to be partners with the survivors, nor by him had he lived." It is to be seen, there- The general rule already adverted to does, upon the death of a partner, terminate the un power of his associate or co-partner to contract | the partnership fund was involved and the new new debts on the credit of the firm. Assum- creditor confined, in pursuing his remedy, to so ing, with the appellant, that this general result much of the estate of the decedent as was emof law may be varied by an express agree- barked in the trade, and to the personal responment, it will then depend upon the particu-sibility of the party who continued the business, lar terms of that agreement to what extent whether as trustee, executor, or partner, the estate of a deceased partner may be bound less, indeed, the testator had otherwise plainly by the surviving member of the firm, "whether and expressly bound his general assets. his estate shall be generally liable for all the debts, or only to the extent of the property embraced and left in the partnership to be employed by the survivors." Story, Partn.201 a. But it is said in Burwell v. Cawood, 43 U. S. 2 How. 560 [11 L. ed. 378]: "Nothing, however, but the clearest and most unambiguous language, showing in the most positive manner an intention on the part of the testator to render his general assets liable for debts contracted after his death, will justify a court in extending the liability of his estate beyond the actual fund employed therein at the time of his death." In that case (Burwell v. Cawood), it appeared that the testator died while in partnership with one Cawood, leaving a will by which he distributed his estate, and a codicil made during the existence of the firm, by which, in substance, he directed that the business of the copartnership existing between Cawood and himself should be carried on by Cawood and his (the testator's) interest therein continued until the expiration of the term limited by the copartnership articles, and the profit and loss distributed as those articles provided. Cawood carried on the business and before the time limited for the partnership expired, failed, and an action was brought against him and the executors of the deceased partner, by a creditor of the firm, upon debts contracted with him by Cawood on account of and in the name of the firm after the death of the testator. The executor denied that the assets were liable. The answer was demurred to, but the defense was held good and so the action failed, the court holding that the general assets of the testator were not bound for debts contracted after his death in behalf of the partnership, and that the rights of any creditor in respect to such death were exclusively restricted to the funds actually embarked by the testator in the business, and to the personal responsibility of the surviving partner, the court saying, the interest" of the partner dying "in the firm was his share of the capital stock and profits, after the payment of all debts and liabilities of the firm. It is this interest, and not any new capital, which he authorizes to be embarked in the firm. He does not propose to add anything to his existing interest, but simply to continue it as it then was. How, then (the learned judge continues), can the court say that he meant to embark all his personal assets in the hands of his executors as a pledge for the future debts, or future responsibilities, or future capital, of the firm? That would be to enlarge the meaning of the words beyond their ordinary and reasonable signification," and he says: "No court of justice ought, upon principle, to favor, much less adopt it," and adds: "There is no authority to support it." On the other hand, several cases are cited by the learned court as reasoned out and sustained upon the broad and general principle that only The same doctrine was established in the courts of Connecticut at an earlier time (1829) in Pitkin v. Pitkin, 7 Conn. 307, also cited with approval by Judge Story in Burwell v. Cawood, supra. The general subject of the construction of language giving power or authority for the continuance of a trade after the death of one member of a firm, has also been under consideration in this court and its conclusion expressed in the decision of Willis v. Sharp, 113 N. Y. 586. Among other cases referred to was Burwell v. Cawood, supra, and the general proposition there laid down, restated. It was assumed that the courts with reasonable unanimity sustained as valid a direction in the will of a testator that his trade should be continued whether his business was that of a sole trader or of a firm of which he was a member; but it was held that a mere power to carry on the testator's trade, or to continue his business in a firm of which he was a partner, without anything more, will be construed as an authority simply to carry on the trade or business with the fund already invested in it at the time of the testator's death, and to subject that fund only to the hazards of the trade and not the general assets of the estate; and also that the property already embarked in the business is the trade fund, unless it appears from the will that the executor was authorized to use the general assets in the business. These views were sustained upon authority. They require us to search for the intention of the deceased partner in the language used by him in giving his directions. In the case then before us (Willis v. Sharp, supra) the testatrix at the time of her death was engaged in the "merchant tailoring busi ness," and by will directed that after her death some legitimate business should be carried on by her executors for the benefit of her son, Harry, and that her husband, the defendant, should be retained as manager thereof at a salary of $1,500 a year," and this was followed by a provision empowering her executors "to sell or make such other disposition of my real and personal estate as the safe conduct of such business shall seem to require;" and in favor of a creditor who became such in the course of the business so carried on, we held that this provision indicated an intention to subject her general assets to the debts of that business and that her general estate was bound by the debt contracted; but we also said: "If, in this case, there was in the will simply an authority or direction to the executors to carry on a trade, and in pursuance of the power the executor continued the existing business, we think, un der the authorities cited, the plaintiffs coul have no remedy, except to pursue the assets embarked in the trade at the death of the testatrix." In the case now before us the directions or authority are such only as we said in the for mer case would be insufficient to enable a creditor to reach the general assets of an estate. They are almost literally, in every sense, substantially the same as those actually presented by Burwell v. Cawood, supra, and in view of the decisions thus referred to it would be useless to go on in this discussion as a new one, or do more than call attention to the terms of the contract on which appellants must succeed or fail in their contention against the decision of the court below. 1. The "capital" is fixed at $4,000, the sole property of Colwell. 2. It is with that capital that "the business of the co-partnership is to be conducted." 3. The profits of the business are to be divided between the parties at convenient periods. 4. At the dissolution of the partnership and the liquidation of its business the cash capital is to be repaid before any division of surplus earnings. These terms and conditions are by reference incorporated into the new agreement on which the appellants rely. The second agreement repeats the same general language. In the event of death "the business" shall be continued, i. e., the business already described as employing a "certain capital," not an additional capital; and the profits and losses of the same "busi ness" are to be shared in the same manner as if the deceased partner were alive, with only one addition-the survivor may, if he thinks necessary in consequence of his partner's death, employ an additional clerk, the expense of whose employment shall be borne by "the share of the profits of the deceased partner." Here are no words from which can be implied an intention to bring into the concern other capital, or make new debts a charge upon any assets outside of those already pledged to the business of the firm. It is nothing more than an authority to the surviving partner to continue an existing business, and therefore within the authorities cited; and upon reason and common sense, the plaintiffs cannot have the relief they seek in this action. The respondents assail the validity of the agreement for any purpose. I do not think it necessary to determine the question so raised. It is enough to dispose of the present case that we find no language on the part of the deceased which indicates any intention on his part to put in hazard his general estate, or which by fair construction furnishes any ground for the present action. It follows that the judgment appealed from should be affirmed, with costs. All concur, except Earl, J., not voting. WISCONSIN SUPREME COURT. Jacob SPYCHER, Respt., V. (September 24, 1889.) Dora F. WERNER, Impleaded, etc., Appt. APPEAL by defendant, Dora F. Werner, (....Wis.....) from a judgment of the Superior Court of Milwaukee County in favor of plaintiff in an action for the foreclosure of a mortgage. Affirmed. The facts sufficiently appear in the opinion. Mr. H. A. Wambold, with Mr. F. P. Hopkins, for appellant: 1. To constitute a novation there must be the substitution of a new obligation for the old one, and the new contract must be a valid one upon which the creditor can have his remedy. 2. An agreement by a mortgagee to The facts pleaded in appellant's answer hold a grantee of the mortgaged property as show that there was a perfect contract of nohis debtor and release the mortgagor is not a vation entered into between the plaintiff, Fred. valid novation which will discharge the mortgage, H. Werner, the original debtor, and Dora F. where the deed was not made subject to the mort-Werner, this appellant, wherein and whereby gage, and the grantee, who was in fact incompetent to make a binding contract, did not therein assume the mortgage, and no consideration for such assumption existed. NOTE.-Novation; what constitutes. Novation is the substitution of one debtor for another, or of a new for an old obligation, which is thereby extinguished. Anderson, Law Dict. 716; Guichard v. Brande, 57 Wis. 536. The requisites are a previous valid obligation, agreement of all parties to the new contract, extinguishment of the old, and the making of a valid new contract. Clark v. Billings, 59 Ind. 509; Bristol Milling & Mfg. Co. v. Probasco, 64 Ind. 413. Dora F. Werner was substituted and made the plaintiff's debtor to pay him the indebtedness in the place and stead of Fred. H. Werner. out this promise, the assignee must sue in the name of the assignor. Mowry v. Todd, 12 Mass. 284; Derby v. Sanford, 9 Cush. 264; Hosack v. Rogers, 8 Paige, 238; Sharp v. Fly, 9 Baxt. 10. Where after breach of a contract, the performance of which is guaranteed, the creditor and principal debtor enter into a new contract, such new contract presumptively merges the old; and if taken upon a sufficient consideration it becomes the exclusive medium by which the rights of the parties in respect to the payment of damages are to be ascertained. Weed Sewing Mach. Co. v. Winchell, To constitute a novation there must be a mutual agreement between all parties to substitute a new debt for the old debt, and the extinguishment of | 5 West. Rep. 824, 107 Ind. 260. the old debt. Kelso v. Fleming, 1 West. Rep. 845, 104 Ind. 180. In the civil law, the substitution may be in the debt, the debtor, or the creditor. Adams v. Power, 48 Miss. 454. The new creditor may maintain an action in his own name, founded upon the assignment and the express promise of the debtor to pay him. With A purchaser of property insured, to whom the policy is assigned with the consent of the insurer, is not affected by a forfeiture of the policy occurring previous to the assignment. Continental Ins. Co. v. Munns (Ind.) post,— An assignment, by a written order, of a debt to become due the defendant on the completion of a certain job of work, followed by a promise made There was an understanding of some kind had by all of the three. This is one essential element of a contract of novation. Lynch v. Austin, 51 Wis. 287. sibility given, suffered or undertaken by the other. Am. and Eng. Encyclop. Law, 831. Novation means simply the substitution of plaintiff for his assent, that it led appellant to one debtor for another. Lynch v. Austin, 51 Wis. 287-289. When appellant had purchased the property and owed Fred. H. Werner the balance of the value over and above the $1,000 that she paid thereon by way of releasing that much of his indebtedness to her, it was perfectly proper for Fred. H. Werner's creditor, this plaintiff, to take this appellant, Fred. H. Werner's debtor, to pay him, said plaintiff, in the place and stead of said Fred. H. Werner. His contract to do so under the circumstances brings this case directly within the rule laid down in Cotterill v. Stevens, 10 Wis. 422; Cook v. Barrett, 15 Wis. 596; Hoile v. Bailey, 58 Wis. 434; York v. Orton, 65 Wis. 6; Heaton v. Angier, 7 N. H. 397, 28 Am. Dec. 353; Browne, Stat. Fr. § 166, 166a, 166b; Bishop, Cont. Enl. ed. 1263. A party to a contract, even if it be under seal, may by a subsequent oral contract waive any of its provisions beneficial to himself, or may abandon it entirely if he chooses; and the facts may be proved by parol evidence. Bryant, Wis. Just. § 709, and authorities there cited; 1 Greenl. Ev. § 303, and authorities cited. The extinguishment of the debt extinguishes the mortgage for every available purpose. Hitchcock v. Merrick, 18 Wis. 357-361. Whatever interests of the plaintiff were affected by this agreement, they were not interests or estate in lands, and no deed or conveyance in writing was necessary to affect them, or evidence the contract to render it valid. Boone, Law Mort. § 125, citing Bowen v. Kurtz, 37 Iowa, 239; Thomas v. Dickinson, 12 N. Y. 364; Conover v. Brown, 29 N. J. Eq. 510. There was consideration, to support this con tract: 1. Mutual promises of these parties. Bishop, Cont. Enl. ed. §§ 76, 77, 78, and authorities there cited. 2. A valuable consideration in the sense of the law, may consist either in some right, interest, profit or benefit accruing to one party, or some forbearance, detriment, loss or respon by the one for whom the work was done, to the assignee, after the job was finished, to pay him the amount due, effects a novation, and the debt cannot, after that, be held by trustee process as the right or credit of the assignor. Clough v. Giles, 2 New Eng. Rep. 870, 64 N. H. 73. An agreement consented to by a mortgagee, whereby the grantee of the mortgaged premises assumes payment of the mortgage note as part of the purchase money, constitutes a novation which discharges the original mortgagor, and renders the grantee the sole debtor. Brown v. Kirk, 3 West. Rep. 762, 20 Mo. App. 524. give up a right she had against Fred. H. Werner, and gave plaintiff one against her. The effect of the contract of novation is to discharge the first or original debtor. Cotterill v. Stevens, Cook v. Barrett, Hoile v. Bailey, York v. Orton, and Heaton v. Angier, supra; Mulcrone v. Am. Lumber Co. 55 Mich. 622. A mortgagee can release a mortgagor from personal liability and destroy the lien of the mortgage. Coyle v. Davis, 20 Wis. 564, 567; Sexton v. Pickett, 24 Wis. 346; McClellan v. Sanford, 26 Wis. 595. It can be done by verbal agreement. This appellant having been a minor when this contract of novation was made, and still being one, has all of the rights of an infant debtor and mortgagee; and this being a trade or business contract, as distinguished from a contract for necessaries, it is voidable by this appellant. Stokes v. Brown, 3 Pin. 311; Davies v. Turton, 13 Wis. 185; Cailis v. Day, 38 Wis. 643. The law is very regardful of a minor's interests, guards them jealously, and extends its favors to him to the utmost degree rather than have him injured. Davies v. Turton, supra; Miller v. Smith, 26 Minn. 248; Leacox v. Griffith, 76 Iowa, 89. Messrs. Nath, Pereles & Sons, for respondent: According to appellant's pleading and brief, no novation could ever have taken place for the reason that she was a minor and not legally able to enter into a contract of novation. Where there is a novation by the substitution of a new contract for an old one, the new contract must be a valid one, upon which the creditor can have his remedy. Guichard v. Brande, 57 Wis. 536; Hosack v. Rogers, 8 Paige, 238; Clark v. Billings, 59 Ind. 509; Cornwell v. Megins, 39 Minn. 407; Kelso v. Fleming, 1 West. Rep. 845, 104 Ind. 180. Orton, J., delivered the opinion of the court: An agreement between defendant' and his wife, that she would assume the indebtedness to plaintiff, does not release defendant where plaintiff is not a party to the agreement. Charles v. Amos, 10 Colo. 272. Loose statements by the maker of a note to the executor of the deceased payee, to the effect that he would settle the entire indebtedness between them, and would pay the balance, should any remain, upon the termination of a certain business transaction in which they were engaged, do not constitute a novation within the meaning of Cal. Civ. Code, § 1531, by the substitution of a new obligation. Re Sollenberger, 72 Cal. 549. Renewal of an old note is not a novation. Davis v. Dunn, 74 Ga. 36. In a suit against the maker of a promissory note by the assignee of the payee, the agreement of payee to accept the vendee as payor does not constitute a novation. Kelso v. Fleming, 1 West. Rep. 845, 104 Ind. 180. This action was brought to foreclose a mortgage given by the defendant Frederick H. Wer ner to the plaintiff, to secure a note for $700, and interest, given at the same time by said mortgagor to said mortgagee. The said Frederick H. Werner made default; but the said appellant, Dora F. Werner, an infant under the age of twenty-one years, appeared by guardian ad litem, and answered substantially as follows: That the defendant Frederick was indebted to her in the sum of $1,000, and that, in consideration thereof, he conveyed the mortgaged premises to her, after said note and mortgage were given, and that the plaintiff agreed to take and hold this defendant (Dora) as his debtor for the $700, to secure the payment of which the said note and mortgage were given," and discharge the defendant Frederick from said indebtedness. These facts the appellant offered to prove, but such offer was rejected by the court. It is contended by the learned counsel of the appellant that these facts constituted a novation, by which the indebtedness of said mortgagor, Frederick, was discharged, and, if the indebtedness was discharged, the mortgage security thereof was also discharged; and that the defendant Dora could not be held for said indebtedness, because she was, and is yet, an infant. This may be a very plausible theory by which, at one stroke of this deadly agreement, the plaintiff has lost his claim, and all of the defendants are discharged; but it is as futile, gauzy and transparent as it is inequitable and unjust. If the plaintiff ever accepted this infant, Dora, as his only debtor and discharged Frederick, he was very simple and easily satisfied; and, if he knew or intended that he would thereby release and discharge his mortgage, he must have been mentally incompetent to do business for himself. After Dora took the conveyance of the mortgaged property in payment of the $1,000 as the whole consideration of the deed, according to the answer, the transaction between her and Frederick was closed, and there was no indebtedness between them, one way or the other. There is no averment in the answer that Dora was to pay or assume the $700 to the plaintiff as any part of the consideration of the conveyance, and the deed was not made subject to 5 L. R. A. the mortgage, and Dora did not therein assume to pay the debt secured by the mortgage as a part of the consideration or otherwise. The answer sets up no agreement on the part of Dora to buy the land of Frederick for $1,700, but only for $1,000, which Frederick owed her. There was therefore no indebtedness by her over to Frederick, and no consideration for her promise to pay the $700 to the plaintiff. Her indebtedness to Frederick was essential to the novation. But perhaps it may be claimed that the answer, by a liberal construction, does aver that the $700 and interest was assumed by Dora as a part of the consideration for the deed, -but I am unable to find such an averment,-yet the novation fails for want of the essential requisite that there must have been a valid claim against Dora, and she must have been bound to pay the debt. The answer carefully avers that the plaintiff knew or was informed that the appellant, Dora, was under twenty-one years of age at the time she so promised, and she now alleges that she was not bound. If not, then the defendant Frederick was not discharged. "There must be the substitution of a new obligation for the old one, and the new contract must be a valid one upon which the creditor can have his remedy.” Lynch v. Austin, 51 Wis. 287; Guichard v. Brande, 57 Wis. 536; Hosack v. Rogers, 8 Paige, 238; Clark v. Billings, 59 Ind. 509; Bronson v. Fitzhugh, 1 Hill, 186. It is not claimed that there was any agreement that the mortgage security should be affected in any way, but that it is discharged because the debt was transferred from Frederick to Dora Werner. The debt itself was not paid nor discharged. In this case it would be preposterous to claim that the plaintiff ever intended to accept the irresponsibility and voidable promise of the infant, Dora, in the discharge of all the security, as well as the liability there was for the payment of the debt. We cannot put any such construction upon this pretended agreement, or give it any such effect. It would be most unreasonable, as well as unjust, to do so, and stultify the plaintiff. The court very properly denied the offer of such evidence to defeat the mortgage. The judgment of the Superior Court is affirmed. |