§ 543. Claim of firm against separate estate of member. If funds of a partnership come into the hands of one of the partners as treasurer of the company, the company, in case of the partner's insolvency, is upon the footing of a separate creditor and entitled to repayment of the funds out of his separate estate. Brown v. Curtis,* 5 Mason, 421.

$ 544. Notes of partnership.— Goods were bought by an individual and he gave his note for them. After the note became due he formed a partnership, the goods were put into the firm business, and, by agreement between the partners and the holder of the note, the words "and company" were added to the signature to make the note a company note. the company was bound. Crum v. Abbott,* 2 McL., 233.

Held, that

§ 545. The personal note of a partner given for a partnership debt is not a payment but a renewal, if so intended by the parties. Loveridge v. Larned,* 7 Fed. R., 294.

§ 546. Firm name. If partnership articles omit to provide for a firm name, but the partners adopt a name, which they use in their transactions generally and by which they are known, such name becomes the legitimate firm name, no less so than if it had been inserted in the partnership articles. Under such circumstances, the fact that the firm's bank account is kept in the name of one of the members, and that they stipulate to raise money for the firm upon the paper of one indorsed by the other, or in such other shape as should be found suitable, does not justify the assumption that the individual name of either partner is or can be used as the firm name. Le Roy v. Johnson,* 2 Pet., 186.

547. Where the name of one partner is used as the firm name, the plaintiff, in order to hold the firm upon the signature of such partner, must show that the name was used upon the occasion in question as the firm name. A bank, for instance, which has discounted notes

so signed must show that the notes were offered as notes binding the firm, or that the discounts were made for the benefit and in the course of business of the firm. It is not sufficient to show merely that the bank acted upon the belief that the notes bound the firm; nor is the mere fact that the discounts so procured were applied to the use of the firm conclusive that they were procured on account of the firm, although a strong circumstance tending to show it. United States Bank v. Binney,* 5 Mason, 176.

§ 548. Partner's knowledge of firm's business, presumptions as to.- In a civil suit by the United States to recover of two members of a firm double the value of goods illegally imported, under the statute of 1823, the knowledge of one member of a firm that the goods were subject to duties raises the presumption of knowledge of such fact on the part of the other members of the firm; and if they have received the goods and disposed of them in the usual course of business, and the profits are divided, a jury is authorized to find that they received them knowing that they were illegally imported and liable to seizure. (FIELD, J., dissented.) Stockwell v. United States, 13 Wall., 531; S. C., 12 Int. Rev. Rec., 88. $549. It is presumed that all partners have access to the partnership books and know their contents, but the presumption may be rebutted. Winship v. United States Bank, 5 Pet., 529 (SS 111-18).

$550. A partner will not be presumed to have knowledge of the contents of a letter written by his copartner in his own name relating to both private and firm matters. Rogers v. Batchelor, 12 Pet., 221 (§§ 125–26).

§ 551. Continuation of partnership after term limited. Where a partnership expires by limitation, but the business is still carried on, without any change in the circumstances, or in the expressions of the articles, it must still be considered as conducted on its original principles, and as a continuing partnership. Robertson v. Miller, 1 Marsh., 466.

§ 552. If a partnership is continued beyond the term limited in the partnership articles it is presumed to be continued on the same terms as before in respect to its being a limited or general partnership. Whether or not it is, however, is a matter of evidence. United States Bank v. Binney,* 5 Mason, 176.

§ 553. Miscellaneous.— A judgment was confessed by a partnership and an assignment of goods made to the plaintiffs to secure the judgment. Afterwards one of the partners had the judgment set aside as to him, because the partner confessing had no power to bind him by such confession. The assignment was held void. On motion of the plaintiffs, the judgment was also set aside as to the other partners, and suit brought on the original notes. Held, that the judgment was properly vacated as to the remaining partners, because it had been released as to one, and because the goods assigned to secure the judgment had been taken from the assignee by a previous mortgagee. Clark v. Bowen, 22 How., 270.

§ 554. The whole arrangement to secure the debt being annulled, the original indebtedness stood revived and was properly enforced by judgment. Ibid.

§ 555. An undertaking by all the members of a firm is not necessarily the contract of a firm. Forsyth v. Woods, 11 Wall., 484.

§ 556. Where a mortgage had been given to one partner to secure a debt of a firm, and after the failure of the firm and an assignment of the debt, one of the partners entered into an ar

rangement with the debtor, without the consent of the assignees, by which he took negotiable notes for the debt payable on time, and afterward he assigned the mortgage to the other partner, who was not a party to the arrangement, it was held that the mortgage was not extinguished. Osborne v. Benson, 5 Mason, 157.

§ 557. Where money belonging to A. and C., arising out of a joint transaction between them, has, with the knowledge by B. of the interest of A. in the same, been placed by the agent of A. and C. to the credit of B. and C., who are partners, and C. is indebted to his partner, B., B. cannot apply the money of A. to the credit of C. in satisfaction of his claim upon him. Vanderwick v. Summerl, 2 Wash., 41.

§ 558. A separate and express promise by one copartner to pay a debt of the firm is not a promise to pay the debt of another within the statute of frauds, although judgment for the same debt had been recovered against the other partner; and forbearance to arrest this other partner, at the request of the former, is a good consideration to support his promise. Rice v. Barry,* 2 Cr. C. C., 447.

$559. The signature of a firm to a paper reciting only the name of one of the partners binds the firm. George v. Tate, 12 Otto, 564.

$560. If, in the course of the business of a firm, a clerk is in the habit of signing the name of the firm to transportation bonds for the removal of spirits, without objection, and impliedly with their consent and approbation, and they apply for and obtain permits from the collector, from time to time, for such removal of spirits, it may be fairly inferred that he had the requisite authority, and the signing is obligatory on the members of the firm. United States v. Turner, 2 Bond, 379.

§ 561. Any partner in a firm may be the agent of a third person in drawing bills in favor of the firm, for advances made to such third person, under an express authority. Baring v. Lyman, 1 Story, 396.

§ 562. A firm may negotiate its own paper to one partner, and the latter will thereby become the owner thereof. So, a firm may take a separate negotiable security from one of its partners, and hold and use the same for its own purposes. A fortiori, where he acts as the agent of third persons. Ibid.

PARTNERSHIP ESTATES.

See ESTATES OF DECEDENTS.

PARTITION.

See LAND.

PASSENGERS.

See CARRIERS; TORTS.

PATENTS.

See volume 25.

PAYMASTER.

See WAR.

PAYMENT AND SETTLEMENT.

I. IN GENERAL. WHAT CONSTITUTES PAY-
MENT, SS 1-136.

II. APPLICATION OF PAYMENTS, §§ 137-222.
III. RECOVERY BACK. §§ 223-255.
IV. TENDER, §§ 256-272.

V. ACCORD AND SATISFACTION, SS 273-279. VI. RECEIPTS, S$ 280-291.

VII. SETTLEMENT AND RELEASE, SS 292–306. VIII. COMPROMISE, §§ 307–329.

I. IN GENERAL. WHAT CONSTITUTES PAYMENT.

SUMMARY-By note, §§ 1-3, 6.— Check on a bank, §§ 4, 5.

§ 1. Contrary to the doctrine of the common law, the rule in Massachusetts is, that whenever a party bound to a simple contract debt gives his own negotiable security for it, whether it be a bill of exchange or promissory note, it is presumed as a matter of fact, in the absence of any circumstances to indicate a contrary intention of the parties, that the bill or note was given and received in satisfaction and discharge of the pre-existing debt. If there is, however, any deception or fraud in the giving of the new security, or if it was accepted without a full knowledge of the facts, or under a misapprehension of the rights of the parties, the plaintiff or libelant is not bound by the acceptance of the note, but may tender it back or produce it at the trial, to be canceled, and seek his remedy on the original contract. Baker v. Draper, § 7.

§ 2. A receipt of payment by note is not conclusive, but only prima facie evidence of the payment of the debt, and such evidence may always be explained by other extraneous circumstances showing the intention of the parties when the receipt was given, and that there was in fact no actual payment of the debt. Moore v. Newbury, §§ 8. 9.

§ 3. A receipt in the following terms: "Received payment by note," does not extinguish the debt or the lien of the original account, unless there is evidence of a manifest intention to take the note as sole security. Ibid.

§ 4. A check on a bank which is not paying specie, drawn by A. in favor of B., on account of a debt due from the bank to the former, is not payment of A.'s debt to B., although exchanged at the bank by B. for a certificate of deposit, unless A. and B. so agreed. Downey v. Hicks, SS 10-12.

§ 5. An admission by A., after the maturity of the certificate, that he is liable to make it good, conduces to prove that neither the check nor the certificate was taken in payment, and evidence of such an admission is admissible in suit by B. against A. for the original debt. Ibid.

§ 6. The taking of a promissory note of one of two joint debtors, and acknowledging receipt of payment on the bottom of the account, is prima facie payment, and in the absence of evidence showing a contrary intention of the parties will be deemed payment. Palmer v. Priest, § 13.

[NOTES.-See SS 14-136.]

BAKER v. DRAPER.

(Circuit Court for Massachusetts: 1 Clifford, 420-425. 1860.)

Suit in personam for supplies. Answer, payment by promissory note. The note was brought into court and tendered to respondents.

Opinion by CLIFFORD, J.

It is insisted by the respondents on this state of the case that the note was accepted by the libelants in payment of the bills for the supplies in question, and therefore that the suit cannot be maintained. On the part of the libelants it is denied that they ever received the note in payment, and they insist that the whole case shows that it was not so agreed or intended by the parties. 7. Unless so intended, a note does not extinguish a debt.

At common law a promissory note given for a simple contract debt does not operate as a discharge of the original obligation or constitute a payment of the original debt unless it affirmatively appears from the evidence that

such was the intention of the parties at the time it was given. Holt, C. J., said in Clark v. Mundall, 1 Salk., 124, that a bill shall never go in discharge of a precedent debt except it be a part of the contract that it should be so. Such bill or note of the debtor himself or of a third party, say the supreme court in Downey v. Hicks, 14 How., 249, is never considered payment of a precedent debt unless there is a special agreement to that effect. Where persons were indebted to a bank, and gave their promissory notes for the amount of the debt, it was held by the same court that the mere acceptance of the notes by the bank did not necessarily operate as a satisfaction; and whether or not there was an agreement at the time to receive them as payment, or whether the circumstances attending the transaction warranted such an inference, was a question of fact for the jury. Lyman v. The Bank of the United States, 12 How., 225. Satisfaction of the pre-existing debt, as distinguished from an actual payment, must always arise from the agreement of the parties and not from the new security given for that purpose, which only operates as the consideration for the agreement. Hence the agreement must always be proved, and cannot be implied by law in a case where there are no facts or circumstances from which it may reasonably be inferred. James v. Hackley, 16 Johns., 277; Peter v. Beverly, 10 Pet., 567 (EST. OF DEC., §§ 34550); Whitleck v. Van Ness, 11 Johns., 414; Callagher v. Roberts, 2 Wash., 191.

But the courts of this state have adopted a different rule, and the question in this case must be governed by the rules of law which prevail in the jurisdiction where the transaction took place. Whenever a party bound to a simple contract debt in this state gives his own negotiable security for it, whether it be a bill of exchange or promissory note, it is presumed as a matter of fact, in the absence of any circumstances to indicate a contrary intention of the parties, that the bill or note was given and received in satisfaction and discharge of the pre-existing debt. That rule was adopted at a very early period in the history of the state, and has been followed by such repeated decisions that it must be regarded here as the settled law upon the subject. Very little embarrassment results from the practice, as was remarked by this court in another case, so long as the application of the principle is kept within the bounds which the rule itself announces. Properly understood, most or all of the cases admit that it is a presumption of fact and not of law, and that it may be controlled by any circumstances which show that such was not the intention of the parties to the contract. When the rule was first adopted it was placed upon the ground that, if an action could be maintained for the original debt, the debtor might also be sued by an innocent indorsee of the bill or note, and thus be compelled to pay the debt twice; and that is the principal reason assigned for the rule at the present time. Wherever the doctrine prevails, the new security is regarded in all respects as a substitute for the first promise, and the reasons assigned for its adoption show that it ought to be very cautiously applied in all cases where the remedy upon the new security is not as effectual and comprehensive as upon the one for which it was substituted. Mr. Greenleaf says, where the debtor's own negotiable bill or note is given for a pre-existing debt, it is prima facie evidence of payment, but is still open to inquiry by the jury. To the same effect also are the remarks of Shaw, Ch. J., in the case of Fowler v. Bush, 21 Pick., 230. He says the rule here differs from that of the common law, only in determining what shall be presumed to be the intent of the parties, from the fact of giving and accepting a negotiable

note for a simple contract debt. Without further evidence of intent, we construe it, says the learned judge, to be payment, but the common law deems it to be collateral security. But this presumption may be controlled by other evidence, and when ascertained such intent shall govern.

All of the cases upon the subject, in point of fact, agree that the giving and accepting of such a security is only presumptive evidence of the intent to extinguish the prior simple contract debt, which, like other presumptions of fact, is liable to be repelled by the circumstances. Courts of justice in this state and in Maine, where alone this rule prevails, have often had occasion to inquire and determine what circumstances are, and what are not, sufficient to repel this presumption. In the course of the numerous decisions upon the subject they have established certain general principles, to which it may be useful to refer. If there is any deception or fraud in the giving of the new security, or if it was accepted without a full knowledge of the facts, or under a misapprehension of the rights of the parties, the plaintiff or libelant, as the case may be, is not bound by the acceptance of the note, but may tender it back or produce it at the trial, to be canceled, and seek his remedy on the original contract. So also, if, when the note was taken, he supposed the maker was the only person bound for the goods, and that he was not changing the parties, but only taking a new security from the same party, then it is clear, say the supreme court of this state in French v. Price, 24 Pick., 22, that the original contract is not so far extinguished as to prevent a resort to it after new parties are discovered. Where negotiable paper had been taken for a pre-existing debt, Shepley, Ch. J., in Fowler v. Ludwig, 34 Me., 461, held that if the paper was not binding on all the parties previously liable, or, if the paper of a third party was received not expressly in payment, the presumption that it was so accepted might be considered as repelled. Similar views were also expressed in the case of Melledge v. The Boston Iron Co., 5 Cush., 170, where it was held, that when the promissory note given is not the obligation of all the parties who are liable for the simple contract debt, and a fortiori when the note is that of a third person, and if regarded as in satisfaction, would wholly discharge the liability of the party previously liable, the presumption, if it exists at all, is of much less weight.

Applying these principles to the present case, there can be no doubt what the result must be on the state of facts disclosed in the evidence. Testimony was introduced by the libelants tending to show, as matter of fact, that the note was not accepted as payment, but was received only as a convenient mode of adjusting the accounts; and the book-keeper testifies expressly that it was not so accepted, and that he made the transfers on the books without the authority or knowledge of the libelants. Whether so or not, and wholly irrespective of that evidence, I am of the opinion, from the circumstances of the case, that the libelants did not understandingly and with a full knowledge of all the material facts accept the note in satisfaction and discharge of the parties to whom the original credit was given; and there is much reason to conclude from the evidence, that there was a want of good faith on the part of the maker of the note in negotiating the transaction. His clerk went to the counting-room of the libelants with the note already prepared; and when the maker of it sent the clerk, he must have known that the libelants supposed him to be owner of one-half part of the bark, else he could not have expected that the proposition would have been accepted; and he well knew at the same time that he had conveyed his interest to another person.

An