On appeal from the Supreme Court.
For the appellants, McDermott, Enright & Carpenter.
For the respondent, Pitney, Hardin & Skinner.
The opinion of the court was delivered by
HETFIELD, J. This appeal is from a judgment of nonsuit entered in the Supreme Court, Essex Circuit, in an action to recover the sum of $27,328.21, alleged to be due the plaintiffs from the defendant, individually and as executrix of the estate of Henry J. Riedel, deceased, under the terms of a certain agreement entered into by the plaintiffs with the defendant's testator and others. The pertinent facts as disclosed by the record, show that the plaintiffs' testator, together with Gustav A. Feddersen and Henry J. Riedel, were general partners, and Pepita Schiller, a special partner, in a partnership engaged in international trade, under the firm name of Thomsen & Company; that in 1917 the firm had an outstanding account of $220,000 against one Gamba, which was reduced to judgment in 1918, and was pending an appeal in the courts of the United States of Brazil at the time of the death of plaintiff's testator, on February 27th, 1918. The plaintiffs duly qualified as executors of the estate, and as such instituted suit in March, 1922, in the Supreme Court of the State of New York against the surviving partners of Thomsen & Company, for an accounting of the assets of the partnership, and of the interest of the plaintiffs' testator therein. This suit resulted in an agreement of settlement dated October 29th, 1923, entered into by the plaintiffs, as executors and beneficiaries under the Thomsen will, with Riedel and Feddersen, the two surviving general partners of Thomsen & Company. This instrument provided, in substance, that in consideration of the plaintiffs surrendering and releasing all partnership interests, except as otherwise provided, which their testator held in Thomsen & Company, to Riedel and Feddersen, the latter, among other things, jointly agreed to pay to the plaintiffs the sum of $16,250 in cash, and also to deliver two notes of $8,125 each, payable January 26th and April 26th, 1924, respectively, with interest
at the rate of six per cent. per annum. Under the terms of said agreement the plaintiffs retained an interest in the Gamba claim, and that part of the document which relates to this reservation, reads as follows:
"Third: The parties of the third part agree to pay to the parties of the first part forty per cent. (40%) of whatever may be collected out of the so-called Gamba claim according to the terms of the Partnership Agreement, as, if and when collected, after deduction of legal expenses, court costs and such other expenses as may be necessary in order to effect collection. It is understood by the parties hereto that H. John Riedel and/or Gustav A. Feddersen shall have continuing authority as liquidating partners to collect said debt, and immediately upon the collection of the said Gamba account or any part thereof, the parties of the third part will pay to the parties of the first part forty per cent. (40%) thereof."
After the death of the plaintiffs' testator, a new partnership which assumed the old firm's name, was formed by Riedel, Feddersen and others. Riedel died on September 26th, 1929, and by the terms of his last will and testament, which was probated in Essex county, New Jersey, his widow, the defendant, Maria Riedel, was the sole beneficiary, and also executrix of the estate. It appears that the Gamba judgment was settled on or about September 26th, 1930, and the firm of Thomsen & Company which continued to transact business subsequent to Riedel's death, received the sum of $188,759.57 in cash, and the balance in promissory notes; and on or about the 21st day of January, 1931, the plaintiffs, by reason of said settlement, received the sum of $46,789.65 in cash, and several of the promissory notes given by Gamba. The plaintiffs alleged that the amount received by them did not represent forty per cent. of the Gamba net collection, and instituted suit for the difference, on the theory that Riedel and Feddersen were jointly and severally liable to carry out the terms of the third paragraph of the agreement, and consequently, the Riedel estate was liable under the provisions of the third section of "An act concerning obligations." 3 Comp. Stat.,
p. 3777. It appears that Feddersen, being in Germany, and therefore not available for service of process, was not made a party to the suit.
The action of the trial court was based upon the grounds that the agreement with respect to the Gamba claim charged Riedel and Feddersen, as surviving partners, that since Riedel died prior to the collection of the said claim, and there being no evidence to show that either he or his estate participated in the collection or disbursement of the money, there was no liability on the part of the defendant, individually, or as executrix.
The sole question presented for the determination of this court, is whether Riedel and Feddersen undertook the collection of the Gamba claim as liquidating partners, on behalf of the old partnership, or jointly ...