McClatchy Newspapers v. Robertson

BARNARD. P. J. This is an action to collect on an open book account from the defendants, both individually and as copartners.

In August, 1939, the defendant Robertson became associated with the defendant McFarland, who then owned and operated a business known as “Standard Markets and Standard Food Stores.” For convenience, this business and any partnership will be referred-to as “Standard Stores.” At that time Robertson invested $14,500 in the business, taking McFarland’s note for that amount, it being understood that a corporation would be formed and Robertson would be given stock therein for his investment. He also went to work as a part-time buyer for Standard Stores. In October, 1939, he signed a Dunn & Bradstreet statement which described him as a partner in the business.

On October 30, 1940, this arrangement was terminated and Robertson withdrew from the business. By mutual agreement, McFarland deeded certain real property to Robertson and in payment therefor Robertson' gave McFarland $8,000 in cash and cancelled the $14,500 note. McFarland assumed all debts of the business and paid a part thereof with the $8,000 he had received. McFarland made this arrangement after being advised to do so by the plaintiff herein.

On February 28, 1941, certain creditors of Standard Stores, including the plaintiff, entered into an agreement with Mc[140]Farland in which they agreed to extend the time of payment of all his indebtedness, including that sued upon, to March 31, 1942, with a provision for certain monthly payments in the meantime. While this agreement recited that the creditors were signing the same in consideration of the consent of Robertson thereto, it appears without contradiction that the consent of Robertson was never obtained. In spite of this fact the creditors and McFarland carried out the provisions of the agreement until October, 1941, at which time McFarland made an assignment for the benefit of all of his creditors, which assignment was accepted by the creditors, including the plaintiff. The trustee disposed of the assets and the plaintiff received $1,904.20 as its share. In accordance with the assignment agreement the plaintiff then executed a full release of McFarland doing business as Standard Stores.

This action was then brought against the defendants individually and as copartners in the Standard Stores. The defendant Robertson set up as an affirmative defense that any partnership relationship had been dissolved and terminated on October 30, 1940, that this was known to the plaintiff, and that he had been released from any liability by the extension granted McFarland through the agreement of February 28, 1941. A similar affirmative defense was based upon the assignment for the benefit of creditors, the sale of the assets and the release given upon receipt of a pro rata share of the proceeds.