Tootle, Hanna Co. v. Jenkins , 82 Tex. 29 ( 1891 )

This suit was brought by Thomas K. Hanna, as surviving partner of the firm of Tootle, Hanna Co., against H.J. Jenkins and M.M. Brooks, as administrator of the estate of J.F. Jenkins, deceased, to recover upon an account for merchandise.

J.F. Jenkins and H.J. Jenkins were merchants and partners transacting business, until the death of the former, under the firm name of J. F. Jenkins Bro. When their firm was dissolved, on the 12th day of October, A.D. 1885, by death, the firm was indebted, on an open account, to Tootle, Hanna Co. in the sum of $1531.90. After the death of his partner H.J. Jenkins continued the business, using the same firm name, and bought other goods upon a credit from Tootle, Hanna Co. to the amount of $1604.01, which the last named firm charged upon their books as one continuing account to J. F. Jenkins Bro.

It appears that Tootle, Hanna Co. did not have notice of the death of J.F. Jenkins until the month of January, 1886, and that in the meantime all correspondence and purchases of goods by the appellee H.J. Jenkins had been in the firm name J. F. Jenkins Bro. H.J. Jenkins had also up to that time continued to make remittances to be credited upon the indebtedness in the name of the firm, which had been entered as credits upon the account as a continuing one.

On the 19th day of January, 1886, H.J. Jenkins paid to an attorney of appellant the sum of $400, which the attorney receipted for as being paid on the account against J. F. Jenkins Bro., but nothing was said by the debtor as to the manner of its appropriation. The attorney sent the money collected by him to his clients, informed them of the death of J.F. Jenkins, and advised them to apply the remittance made by him to the credit of the account made by H.J. Jenkins subsequent to the death of his partner.

Accordingly Tootle, Hanna Co. then for the first time made a distinction between the indebtedness accruing before and after the death of J.F. Jenkins, and having applied all payments received by them previous to the remittance through Gilbert to the first indebtedness, they applied the payment so remitted, and all subsequent payments, as credits upon the debt created after his death.

The subsequent payments were all remitted by H.J. Jenkins in the name of J. F. Jenkins Bro. without any direction by him with regard to their application, but he testified that he intended and expected that they would be applied to the whole indebtedness as a continuing one, and so as to first extinguish the firm debt. Tootle, Hanna Co. acknowledged the payments as received to be credited upon their account against J. F. Jenkins Bro., and did not inform H.J. Jenkins of their application of the payments last made exclusively to the last indebtedness.

If all of the payments made had been applied to the first indebtedness they would have extinguished it. Applied as they were, there remained due upon the account as it existed at the death of J.F. Jenkins the sum of $502.90. The appellant presented a claim for this sum to the legal representative of J.F. Jenkins, and the claim having been rejected he brought this suit for its recovery against the legal representative and the surviving partner.

The cause was tried without a jury, and judgment was rendered in favor of the executor of J.F. Jenkins and against H.J. Jenkins.

In his findings of fact the judge states that, "It appears from all the evidence that the money (paid by H.J. Jenkins) was taken in the usual course of business. It is impossible to ascertain how much belonged to the old firm and how much to the new one."

We do not think that a correct decision of this controversy depends entirely upon the rule with regard to the application of the payments. If there had been different debts due by one and the same debtor, then unquestionably upon the failure of the debtor to direct the application of a partial payment it would have been the right of the creditor to apply it to either debt. Upon the death of J.F. Jenkins the partnership of J. F. Jenkins Bro. was dissolved, and the only power that H.J. Jenkins had as surviving partner was to wind it up. He had no power to create new debts against it. He had, of course, the right to conduct a business of his own, and to purchase goods, create debts, and pay them. It was wrong for him to mingle and confuse his own property and business with that of the firm. His continued use of the firm name did not, make his individual transactions less his own business. No doubt a remedy would have been applied in favor of either the firm creditors, if there were such, or the legal representatives of the deceased partner, if it had been applied for.

The facts show the existence of two separate and distinct debts against separate debtors. Without regard to the law of the application of payments, if it can be shown that any part of any payment made was the proceeds of the firm property, it should be applied to the credit of the firm debt. To whatever extent any payment was made out of the proceeds of property purchased by the surviving partner, or out of his private funds, however acquired, the law with regard to the appropriation of payments must be applied, and it requires in this case that the appropriation made by the creditors shall be protected. If the evidence fails to show that the payments that were applied to the indebtedness of J.F. Jenkins were made from funds or property belonging to the firm, we do not think that the application made of them by the creditors should be disturbed.

The judgment is reversed and the cause is remanded.

Reversed and remanded.

Delivered October 30, 1891.