transferred and afterwards put into suit, and the other is transferred after judgment recovered on it.271

If the note of a third party is taken from the debtor upon his responsibility, it will only be a payment on the implied condition that it is paid at maturity.22 So, if the debtor transfers the note of another, to be credited on account, when it is payable.273 And even an entry on the creditor's books as payment will not be conclusive, the intention as to payment being still a question of fact.274

Payment by Note of Partner.

§ 1536. If the note of one partner is taken for a partnership debt, it will be a payment, if so received.275 So, too, a note of the partnership taken in satisfaction of a debt of the individual partner. 276 If the partner's note is taken for the firm debt, it is in some states a prima facie payment.277 And the partnership will be discharged by such note, taken with the note of a third party as collateral.278 So, if the joint note of A. as principal and B. as surety is taken up by B.'s note, with the express agreement that it shall be a payment. 27 Where the note of one partner is given for a debt of the firm, the intention may be indicated by the surrender or retention of the origi

271 Hawks v. Hinchcliff, 17 Barb. (N. Y.) 492.

272 Allen v. Bantel, 2 Thomp. & C. (N. Y.) 342; Emery v. Richardson, 61 Me. 99. In such case, if part is paid, it is a satisfaction to that extent, but no further. Emery v. Richardson, supra.

273 Cushing v. Wyman, 44 Me. 121.

274 Brigham v. Lally, 130 Mass. 485.

275 Bonnell v. Chamberlin, 26 Conn. 487; Smith v. Turner's Adm'r, 9 Bush (Ky.) 417; White v. Rech, 171 Pa. St. 82, 32 Atl. 1130; Klippel v. Shields, 90 Ind. 81; but not unless so received, Bates v. Rosekrans, 37 N. Y. 409; Watson v. Owens, 1 Rich. Law (S. C.) 111. And whether it has been so received is a question for the jury, Bonnell v. Chamberlin, supra; and may be shown as a fact, Mosley v. Floyd, 31 Ga. 564. But indorsing a note of one partner on a partnership note as a part payment does not make it such. Ward v. Howe, 38 N. H. 35.

276 And it will discharge a mechanic's lien against the partner. Benneson v. Thayer, 23 Ill. 317.

277 Robinson v. Hurlburt, 34 Vt. 115.

278 Adams v. Reid, 56 Ga. 214.

279 Mims v. McDowell, 4 Ga. 182.

nal security.280 Thus, if the partnership paper is still held by the creditor, it will not be presumed to be paid by the note of one partner, although the note was indorsed by another party.281 So, if a partnership note is secured by the mortgage of one partner, and his individual note is afterwards taken for that and other indebtedness, and the original note and mortgage are retained, they will not be discharged.2 282 On the other hand, if a joint note is surrendered for the note of one maker with a surety, it will be presumed to be paid by the new note.2 So, if a partnership note is surrendered, and the aggregate amount of it apportioned among the dif ferent partners, and new notes taken from the several partners individually for their shares, it will be a payment, and not a renewal.284 But it has been held that, where one maker claims that the joint note has been satisfied by the other maker's individual note, he must show an express agreement to that effect or a surrender of the original note.285 And, even where the partnership note is surrendered for a new note of one partner, it is sometimes held to be not even prima facie satisfaction.286

283

$ 1537. Where goods are purchased for a firm either by an agent or partner whose individual note is taken, it will not be a payment, but the firm will still remain liable.287 So, where one of several shipowners gives his individual note for repairs to the ves288 or where one master and owner gives a note without authority in the joint name of both owners.289 It has been held, however, that the owners of a vessel will be discharged from liability for sup plies by the negotiable note of one owner (the ship's husband),290

sel;

281 Bedford v. Deakin, 2 Starkie, 178, 2 Barn. & Ald. 210.

282 But the mortgage may be foreclosed for the amount of the new note. Kaphan v. Ryan, 16 S. C. 352.

283 Washburn v. Pond, 2 Allen (Mass.) 474.

284 Shinkle v. Bank, 22 Ohio St. 516.

285 Appeal of Kimberly (Pa. Sup.) 7 Atl. 75.

286 Powell v. Blow, 34 Mo. 485; Spear v. Atkinson, 23 N. C. 262.

287 Duvall v. Wood, 3 Lans. (N. Y.) 489; unless such is the agreement, Tyner v. Stoops, 11 Ind. 22. But see Carnahan v. Hughes, 108 Ind. 225, 9 N. E.

79, where the suit was to compel the signature of the other partner.

288 Higgins v. Packard, 2 Hall (N. Y.) 547.

289 Wilkins v. Reed, 6 Me. 220.

290 Chapman v. Durant, 10 Mass. 47.

291

or by a bill drawn by one owner.2 And if goods are sold to a partnership, and the note of one partner is received with full knowledge as to the firm, it has been held sufficient to discharge the other partners.292

294

In general, the note of one partner for an existing debt of the firm will not be presumed to be an absolute payment,293 unless intended *** and agreed.295 And this is true, although the partner's note is discounted, and afterwards taken up by the creditor at maturity.29 And the individual note is no payment of the partnership debt, where there is an express agreement to the contrary.297

Partnership Renewals.

$1538. Where a joint note is renewed by the individual note of one maker, the others will not be discharged without an agreement to that effect.298 So, where a partnership note with two sureties is renewed by the note of one partner with the same sureties, upon a representation that it was partnership business, and that the other partner would sign it, it will not be a payment of the original

291 Reed v. White, 5 Esp. 122.

292 French v. Price, 24 Pick. (Mass.) 13.

293 Hoflinger v. Wells, 47 Wis. 628, 3 N. W. 589, and 10 Cent. Law J. 116. 294 Nichols v. Cheairs, 4 Sneed (Tenn.) 229; Tyner v. Stoops, 11 Ind. 22. So, the note and mortgage of one partner. Rayburn v. Day, 27 Ill. 46. So, of a sealed note given by one partner in the partnership name. Walsh v. Lennon,

98 Ill. 27.

295 Van Eps v. Dillaye, 6 Barb. (N. Y.) 244. And action lies against the original parties, although the note was taken "as in full for" the debt of both. Muldon v. Whitlock, 1 Cow. (N. Y.) 290. And, in the absence of proof that it was so taken, the holder cannot claim preference in bankruptcy as an individual creditor of the partner whose note he has taken. In re Parker, 6 Sawy. 250,

11 Fed. 397.

296 Kean v. Dufresne, 3 Serg. & R. (Pa.) 233. 297 Spaulding v. Woolen Mill, 36 Vt. 150.

298 Hill v. Sleeper, 58 Ind. 221; Schollenberger v. Seldonridge, 49 Pa. St. 83. So, the sealed note of the individual partner. Chalmers v. Turnipseed, 21 S. C. 126. So, a note given by one maker before the maturity of a joint note, "to provide for the payment" of the first note. Bates v. Rosekrans, 37 N. Y. 409. So, a renewal by one partner in the name of both, whether he is authorized to sign the name of the other or not. Parker v. Cousins, 2 Grat. (Va.) 372.

302

(Ch. 41 note.29 So, if a note by A. as principal and B. and C. as sureties is renewed by the note of B. and C., it will not discharge A., unless it is so agreed.300 The note of one partner in renewal of a partnership note is not a payment, unless so intended, and the burden of proving such intention is on the partner alleging it.301 So, if the original partnership paper is renewed, first by the firm "in liquidation," and afterwards by the paper of the individual partner.3 But if one partner receives consideration from the firm for giving his note in renewal of the firm note, and the latter is surrendered, it will be extinguished, although the renewal note is afterwards surrendered, and the original firm note resumed by the creditor.303 And if a corporation note is signed by one of its members as maker, and by the others as indorsers, and one of the indorsers is afterwards omitted in a renewal, it will be paid as to him, if the omission was intentional.304

Where a partnership bill is taken for a debt of the firm, and renewed at maturity by the bill of one partner individually, it has been held to be a sufficient payment to discharge the other partner.305 But, where goods are sold to a firm, it is liable for the price, although the creditor has received the individual bill of the only partner who resided in England, and has proved the bill as a debt against him.306 And, prima facie, a partnership debt is not paid by the draft or order of one partner upon a third person,3 307 or upon the firm itself; 308 or by one partner's acceptance of a bill drawn on him at the request of the firm.309 But the intention with which such acceptance is received is a question of fact.310

299 And, on payment by the surety, he may recover against the partnership. McKee v. Hamilton, 33 Ohio St. 7.

300 Elwood v. Deifendorf, 5 Barb. (N. Y.) 398.

301 Davis v. Desauque, 5 Whart. (Pa.) 530.

302 Swire v. Redman, 1 Q. B. Div. 536.

303 Arnold v. Camp, 12 Johns. (N. Y.) 409.

304 But it is a question for the jury whether he was omitted intentionally. Slaymaker v. Gundacker, 10 Serg. & R. (Pa.) 75.

305 Byles, Bills, 389; Evans v. Drummond, 4 Esp. 89.

306 Bottomley v. Nuttall, 5 C. B. (N. S.) 122.

307 Brill v. Hoile, 53 Wis. 537, 11 N. W. 42.

308 Dougal v. Cowles, 5 Day (Conn.) 511.

309 Proctor v. Marshall, 18 Tex. 63.

810 Thompson v. Percival, 5 Barn. & Adol. 925, 3 Nev. & M. 667.

Dormant and New Partners.

§ 1539. Where there is no evidence that the creditor knew of the existence of other partners, his taking the note of one partner for the debt of the firm will not discharge the others, although the account is receipted as paid.311 And even if goods are sold to A., and his note taken, and judgment recovered on it against him, it will not bar a suit against him jointly with a secret partner afterwards discovered.312 So, too, although the creditor has proved the note against the individual maker's estate,313 or although he took it after the dissolution of the firm.314 Where the note of one partner is given for a firm debt with the other nominal partner as surety, and the latter is really the agent of a third and dormant partner, recovery may be had against him also, notwithstanding the note.315 So, if one partner, by agreement with another and secret partner, gives his individual note for a debt of the partnership (which has no firm name), it will not be discharged by the note.316 And if the firm name is that of one partner, who is insolvent, his individual note will not be payment for goods sold to the firm.317

If the debt of a firm is paid by the note and renewal of a new firm having the same name, it will not be a payment as to the old firm without proof of an agreement to that effect; 318 especially where the creditor has no knowledge of the change in the firm.319 So, where the new firm whose note is taken has dropped one of the old partners, and taken in one new partner, and there was no intention of discharging the old partner.320 There may be a valid agreement to take the note of the partners that remain in discharge of the note of the old firm and of the retiring partners, but it will not

311 Schemerhorn v. Loines, 7 Johns. (N. Y.) 310.

312 Sheehy v. Mandeville, 6 Cranch, 258; Nichols v. Cheairs, 4 Sneed, 229. 313 Smith v. Smith, 27 N. H. 244.

314 Parker v. Canfield, 37 Conn. 250.

315 McCreary v. Van Hook, 35 Tex. 631.

316 Palmer v. Elliot, 1 Cliff. 63, Fed. Cas. No. 10,690.

317 Bill v. Porter, 9 Conn. 23.

318 Crane v. McDonald, 45 Barb. (N. Y.) 354; First Nat. Bank of Pueblo v. Newton, 10 Colo. 161, 14 Pac. 428.

319 Buxton v. Edwards, 134 Mass. 567.

320 Archibald v. Argall, 53 Ill. 307.

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