Opinion
January 15, 1908.
Oscar Warner [ Andrew J. Nellis of counsel], for the appellant.
Henry J. Speck, for the respondent.
Various defenses are urged to the plaintiff's claim. We are unable to find any evidence to sustain the defense of a novation. It nowhere appears that David Akin, or his estate, has been expressly or voluntarily released by the plaintiff. Upon January 18, 1896, when David Akin sold out to Albert Akin and Albert Davitt, they assumed the debts of the firm. They thereupon became primarily liable for this indebtedness, and David Akin as well as William H. Akin were simply sureties. I cannot see that it matters as to what transpired when William H. Akin went out of the firm upon April 1, 1895. This relation of principal and surety, created by the assumption of the debts of the firm upon the retirement of David, was not subject to the will of the creditor; an acceptance by the creditor of this new firm as primary debtors would not in itself work a release of David Akin or William H. Akin from their liability as sureties for the debt.
Nor do I find any release of the surety David Akin by reason of any matters connected with the bankruptcy proceeding of Albert Davitt. The claim presented by the plaintiff in that action was upon these firm notes. It is claimed that it was not there insisted that the firm assets held by Albert Davitt as survivor and his individual assets should be separated and the claims of the different classes of creditors properly assigned to the different assets. It does not appear, however, that the plaintiff lost anything by not demanding that her claim be paid from the firm assets, and it is only to the extent of a loss caused thereby that the defendant could defend in this action.
Defendant's main contention is to the effect that this claim is barred by the Statute of Limitations. David Akin left the firm upon January 18, 1896. This action was not brought until 1904. The Statute of Limitations is a conceded defense, unless there has been some payment or some other acknowledgement within that time, which would save the statute from running.
To prevent the running of the statute the plaintiff relies upon two facts: First, that the payment of this interest in 1897 and 1898 was made by Albert Akin at the instance and direction of David Akin. At this time David Akin was confessedly a surety only for this debt. The firm of Akin Davitt were the principal debtors. The fact as shown by the evidence is that David Akin spoke to Albert Akin, and told him that he must keep that interest paid, for otherwise he would be compelled to pay the note. It has been held by the trial judge that this is such an authorization and direction for payment of the interest as to make the act of Albert Akin in thereafter paying the interest the act of the surety from which can be implied a new promise by the surety to become liable for the debt. In Littlefield v. Littlefield ( 91 N.Y. 203) the head note in part reads: "One of three makers of a joint and several promissory note, who in fact signed it as surety, upon being applied to for payment, requested the payee to tell the principal that he must make a payment thereon and that he (the surety) said so. The payee made the statement to the principal as requested, who promised to and did subsequently make a payment; this he reported to the surety, who in response stated that it was all right. In an action upon the note, held, that these facts did not show an authority conferred upon the principal to make a payment as the agent of the surety, so as to take the case as to the latter out of the Statute of Limitations; also, that they failed to establish a ratification of the payment." This authority would seem to be a complete answer to the plaintiff's contention upon this point. The case of Winchell v. Hicks ( 18 N.Y. 558) is relied upon by the plaintiff in support of his contention. That case, however, as far as it holds any different rule, must be deemed to have been overruled by the Littlefield case cited. In the case at bar the direction of David to Albert to pay this interest was not to make payment for him as his agent, but was simply an insistance that Akin Davitt should make payment for themselves, as they were bound to do, and thus save him from liability. The promise to renew the obligation, which is inferred from the judgment, must rest upon a payment made by an agent for the principal, or a payment voluntarily made by himself as a recognition of existing liability. ( McMullen v. Rafferty, 89 N.Y. 456.)
Plaintiff further answers in defense of the Statute of Limitations that by the receipt of interest from that firm of W.H. Akin Co., of which David Akin was a member, January 1, 1896, she was a customer of the old firm, and as to her the old firm continued up to January 1, 1897, at which time interest was paid by Akin Davitt, inasmuch as no notice to her is shown that David Akin had retired from the firm. If this payment January 1, 1897, be deemed the payment by David, the statute has not run. The rule of law thus relied upon is that a partner is estopped as to new transactions with an old customer, from showing that he had left the firm, unless the old customer had been given notice of his retirement, because presumptively the old customer has relied upon his credit in subsequent dealings with the firm. Were the question res nova, I should have doubt whether this estoppel would apply for the purpose of establishing an implied promise to renew a debt in favor of one who had full knowledge of the fact of the partner's retirement long before the Statute of Limitations would otherwise have run. Upon this point, however, the plaintiff is supported by authority which this court must recognize. The payment of interest relied upon was upon January 1, 1897. That payment was made by Albert Akin with a check of Akin Davitt, the new firm. The learned trial judge has held that that interest was received by the plaintiff without knowledge of the fact that David Akin had left the firm, and that such payment, therefore, constituted a renewed promise to pay the debt by David Akin, which prevents the running of the statute in this case. This finding of fact that the plaintiff had no knowledge at the time of the receipt of this payment of interest upon January 1, 1897, that David Akin was not then a member of the firm, is strongly questioned by the appellant here, and the question thus presented is to my mind the most important as well as the most difficult one in the case.
There is no proof that David Akin gave to the plaintiff any specific notice of his retirement from the firm. But the situation here is most peculiar. David Akin is dead and cannot testify. This payment of interest was made by the check of Akin Davitt, the new firm, organized January 18, 1896. This new firm consisted of Albert Akin and Albert Davitt. Albert Akin was the son of this plaintiff; Albert Davitt was her son-in-law; David and William H. Akin were her brothers-in-law. This plaintiff was brought upon the stand and sworn in her own behalf, and then was withdrawn from the stand without being asked to give any testimony. It is here urged that her silence must be construed most strongly against her upon the question as to whether she at that time had knowledge that David Akin had retired from the firm. Plaintiff's answer to this proposition is that she was not bound to speak until the defendant had satisfied the burden of proof upon him of showing notice to her, and thus the learned trial court has held. In this holding, however, it appears to us that he has committed an error. At the time that she received this check of Akin Davitt, she had notice at least that some change had been made in the firm. She was largely interested in that firm, because of the fact that she had $20,000 in there. Knowing that that firm had been changed with her interest therein, all the parties living within a short radius, the inference seems to me irresistible that she knew that the firm of Akin Davitt was composed of her son and her son-in-law. That inference is strengthened by the fact that while after 1898 no interest was paid to her no claim seems to have been made against David Akin in his lifetime. With the probabilities so strong that she had knowledge of the retirement of David Akin, her failure to deny such knowledge, or at least to offer to be sworn thereupon, is in my judgment of controlling significance. If such evidence be offered and objected to under section 829 of the Code of Civil Procedure, it is not intended to pass upon its admissibility. To allow a recovery in this case after the death of David Akin, without a denial on her part that she had knowledge that he had retired from the firm, with all the inferences pointing to the fact that she must have had knowledge, would, in my judgment, be against good conscience, and so far against the weight of evidence that it should not be suffered in a court either of equity or law. As the judgment must rest then upon this finding, that she took this interest upon January 1, 1897, without knowledge of the retirement of David Akin from the firm, the judgment must be reversed on law and facts and a new trial granted, with costs to appellant to abide the event.
All concurred, except COCHRANE, J., dissenting.
Judgment reversed on law and facts and new trial granted, with costs to appellant to abide event.