Richter vs. Poppenhusen and Van Auw, ex'rs &c., impleaded, &c

Richter vs. Poppenhusen and Van Auw, ex’rs &c., impleaded, &c. To render the executors of a deceased partner liable as partners, with the surviving partner, in respect to the business carried on after the death of their testator, it is necessary to show that they voluntarily employed the testator’s assets which had come to them, in the trade. It is not sufficient that the business is carried on by the surviving partner with their assent and encouragement; it being his right and duty to do so without either. Nor do executors incur any responsibility by allowing the share of the capital of their testator to remain in, and be employed in, the business of the partnership, after his death, foj; the benefit of the cestuis que trust, when it is done in accordance with the testator’s instructions, contained in his will, or with the partnership agreement; but the assets so directed to be employed are Bable to make good the debts contracted during their employment. To this extent the estate of a deceased partner will, in equity, be applicable to the liquidation of the demands of those who have become creditors of the partnership after his decease. But the executors cannot be made liable personaUy without entering into the partnership. OH the 6th of October, 1865, John G. Perzel, aa general partner, and Herman A. Schleicher, aa apecial partnér, formed a apecial partnerahip under the firm name of “ John G. Perzel.” They commenced buaineaa in the city of Hew York, and continued to.tranaact the same there until the spring of 1866, when they removed their business to the county of Kings. Schleicher, the special partner, died on the 17th of July, 1866, leaving a will by which he appointed the defendants, Conrad Poppenhusen and A. J. Van Auw, Herman Funk and H. A. Cassaheer his executors. The will was duly proved, and the defendants Poppenhusen' and Van Auw, having qualified as executors, commenced a suit against Perzel,' the general partner of their deceased testator, to wind up the affairs of the firm, they refusing to continue it. . On the 28th of Hovember, the present plaintiff commenced an action in the Supreme Court against Perzel, and Poppenhusen and Van Auw as executors of Schleicher, by the service of a summons and complaint on Perzel alone, alleging that they sold and delivered to the defendants the property mentioned in the complaint, between the 20th of June and the 6th of October, 1866, nearly all of it before the defendants became executors. The defendant Perzel alone, appeared. On the 5th of January, 1867, the plaintiff entered judgment against the defendant Perzel, for $562.76. On the 9th of December, 1867, the plaintiff, Richter, served on the defendants Poppenhusen and Van Auw a summons under section 375 of the Code, to show cause why they sho'uld not be bound by such judgment. They put in an answer denying each and everyallegation in the complaint. The action was tried at the circuit on the 26th of January, 1869, before Justice Gilbert and a jury. At the close of the plaintiff’s testimony the court, on the defendants’ motion, dismissed the proceedings, and the plaintiff appealed. Weeks $ Forster, for the appellant. Ira D. Warren, for the respondents. [MAJORITY — By the Oourt, Gilbert, J.] By the Oourt, Gilbert, J. The issue tried was between the plaintiff and the defendants named as executors of Mr. Schleicher, deceased; and arose upon a denial of the allegation in the complaint that the plaintiffs sold and delivered coal to the defendants, at various dates between 20th June, 1866, and 1st of October, 1866, at an agreed price therein stated. The evidence showed a sale in fact of most of the coal to a partnership composed of the defendant Perzel and the deceased Mr. Schleicher, and a portion thereof to the surviving partner, after the death of the latter. It was sought, however, to make the executors of Mr. Schleicher liable on the ground that they had carried on the partnership business in connectiomwith the surviving partner, after the death of their testator. The court below deemed the evidence insufficient to establish this fact, and dismissed the complaint. Upon a review of the evidence wé are satisfied that this ruling was correct. The material facts are these: ■ The partnership between Mr. Perzel and the testator was formed for the manufacture of woolen goods, and was to continue until October 2,1870. The articles provided that, in case of the death of Mr. Schleicher, the capital contributed by him, being $20,000, should remain for the benefit of Ms representatives, and the business should be continued until the expiration of the term. Mr. Schleicher died July 17,1866. The defendants qualified as executors on the 17th of September, following. Mr. Perzel, the surviving partner, was called as a witness, by the plaintiff and testified that the sign put out, on commencing business, was “ Pioneer "Woolen Mills;” that he continued the business up to October 5, 1866, and bought coal of the plaintiff and others, and whatever was required to carry on the establishment, after Mr. Schleicher’s death. The plaintiff' testified that on the 16th or 17th of September, 1866, he went to see the executors, to know what he had to do about delivering coal at the factory; that Mr. Poppenhusen referred him to Mr. Van Auw; that he told Mr. Van Auw he had a contract with Mr. Schleicher to deliver coal for the Pioneer Woolen Mills; and asked him what he had to do as to the delivery of any more coal there, and that he had been advised not to deliver on Perzel’s order. He further testified: “Mr. Van Auw told me, ‘ the business is going on just the same; we are going on with the business there just the same as before Mr. Schleicher’s death;’ he wanted me to go on and deliver coal, only to be very careful that I only delivered what was wanted; that I should be paid, but that he would not pay any thing before the estate was settled. After that, I went on and delivered coal; the amount so delivered was about one third of the coal sued for.” Two other witnesses testified to sales of goods to the firm of John Gk Perzel, after the death of Mr. Schleicher; and that after suits against the surviving partner and" the executors were brought, the hills were paid by work at the mills. This was all the evidence connecting the executors with the business carried on after the death of Mr. Schleicher, and we are of opinion that it is insufficient to make them liable as partners. To create such a liability, it is necessary to show that they voluntarily employed the testator’s assets which had come to them, in the trade. It is not sufficient that the business is carried’ on by the surviving partner, with their assent and encouragement; for it was his right and duty to do so, without either. The surviving partner succeeded, primarily, to the rights and interests of the partnership. He had the entire control of the partnership property, and the sole right to collect the partnership dues. (Voorhis v. Childs’ Executor, 17 N. Y. Rep. 356.) Nor do executors incur any responsibility by allowing the share of the capital of the testator to remain in, and be employed in, the business of the partnership, after his death, for the benefit of the cestuis que trust, when it is done in accordance with the testator’s instructions, contained in his will, or with the partnership agreement; but the assets so directed to be employed are liable to make good the debts contracted during their employment. To this extent the estate of a deceased partner will, in equity, be applicable to the liquidation of the demands of those who have become creditors of the partnership after his decease. (Devaynes v. Noble, 1 Mer. 616, 622. Vulhamy v. Noble, 3 id. 614. Whightman v. Townroe, 1 M. & S. 412. Ex parte Garland, 10 Vesey, 119. Ex parte Holdsworth, 1 M. D. & D. 475. Thompson v. Andrews, 18 K. 116. Cutbush v. Cutbush, 1 Beav. 184. Thompson v. Brown, 4 John. Ch. 627. Story on Part. § 70.) The executors, however, cannot be made liable personally, without entering into the partnership. When this is done, then they become liable as partners, although they derive no profit personally, but are concerned only for the use and benefit of others; and this liability arises either by virtue of an actual agreement, or upon the familiar principle that they have held themselves out to the world as partners. [Kings General Term, February 14, 1870. We have looked into the other exceptions, but find no error in the rulings of the court. The evidence rejected, however relevant to establish grounds of equitable relief, was wholly impertinent to the issue presented for trial. The judgment should be affirmed, with costs. J. 1K Barnard, Tauten and Gillei-t, Justices.]