Harris v. Zier

• Decision Date: 07 September 1906
• Citation: 86 P. 928,43 Wash. 573
• Parties: HARRIS v. ZIER et al.
• Court: Washington Supreme Court

86 P. 928

43 Wash. 573

HARRIS v. ZIER et al.

Supreme Court of Washington

September 7, 1906

Appeal from Superior Court, Spokane County; Henry L. Kennan, Judge.

Action by J. A. Harris against George Zier and others. From a judgment for plaintiff, defendant Zier appeals. Reversed and dismissed as to appellant.

Zent &amp Lovell, for appellant.

Belt &amp Powell, for respondent.

MOUNT C.J.

The plaintiff brought this action to recover a balance alleged to be due upon a large number of claims assigned to him by the creditors of a copartnership known as Kissler & Zier. Plaintiff recovered judgment against the defendants Kissler &amp Zier for the full amount claimed. The defendant Zier prosecutes this appeal.

The facts are these: The defendants Conrad Kissler and George Zier were copartners doing a general merchandise business at Odessa, Wash., under the firm name of Kissler & Zier. In the month of March, 1902, the partnership became financially embarrassed. It was unable to meet its matured obligations. The assets of the firm amounted to about $30,000, and the liabilities amounted to about $16,000. The partners had some difficulty between themselves, and Zier brought an action to settle up the affairs of the partnership, and upon his application a receiver was appointed. About the same time, one of the largest creditors, viz., Wyman, Partridge & Company, brought an action against the copartnership, and attached certain of the property. While these two actions were pending, the defendant Miller was induced to purchase the interest of Zeir in the copartnership. Miller agreed to do so if the creditors would consent to discount their claims 15 per cent. to him. A meeting of the creditors was called at Spokane, where all were represented and fully informed, and understood the object of the meeting. All agreed to accept from Miller 85 per cent. of their claims, except Wyman, Partridge & Company, who refused to take less than the face of their claim. Mr. Kissler, without the knowledge of Zier or Miller or of the creditors, had a secret agreement with the agents of Wyman, Partridge & Company, by which Kissler himself was to pay the 15 per cent., and Wyman, Partridge & Company thereupon agreed to accept from Miller the other 85 per cent. of their claim. Mr. Kissler then informed Mr. Miller and the creditors that Wyman, Partridge & Company would take 85 per cent. of their claim in settlement thereof. Mr. Miller then, on March 19, 1902, entered into a written agreement with the creditors that he would pay all the creditors of the firm of Kissler & Zier 85 per cent. of their claims, and take an assignment thereof to himself. A few days later all the creditors with the exception of Wyman, Partridge & Company entered into an agreement in writing that they would accept from Mr. Miller 85 per cent. in full satisfaction of their claims against Kissler & Zier. Mr. Miller, within the time named, paid all the claims as he had agreed to do, and took an assignment thereof, and thereupon purchased Mr. Zier's interest in the copartnership, paying him $4,500 therefor. The suits were then dismissed, and Kissler and Miller entered into a copartnership and thereafter conducted the business in the name of Kissler & Miller. Subsequently Kissler & Miller failed or dissolved their copartnership, and in the year 1905 Kissler informed the attorneys of the secret agreement which he had made with the agents of Wyman, Partridge & Company, as above stated. Thereupon, certain creditors who had taken part in the agreement with Miller as above stated assigned their claims to respondent, who at once began this action.

The foregoing is a fair statement of the facts as testified to by Mr. Kissler, who was the chief witness for the respondent. Upon these facts the lower court found, that the transaction between Miller and the creditors of Kissler & Zier was a composition between the copartnership of Kissler & Zier and their creditors; that the agreement between Kissler and Wyman, Partridge & Company, without the knowledge of the other creditors, was a fraud upon the creditors, and vitiated the composition; that Kissler and Zier were partners at the time, and that knowledge of Kissler was imputed to Zier by reason of the copartnership; that Miller not being then a partner, and having no knowledge of Kissler's conduct, was not liable for the balance due on the claims. The court, upon substantially these findings, entered a judgment dismissing the action as to Miller, and entered a judgment against Zier for the amount sued for. Kissler having defaulted in the action, a judgment for the same amount was entered against him.

We think that the trial court was in error in holding that the knowledge of Kissler was imputed to Zier and that the agreement of the creditors with Miller was a composition between the firm of Kissler & Zier, and its creditors. It is the rule that each partner is the agent of the partnership, within the scope of the partnership business. 22 Am. & Eng....