In September 1974 defendants formed a partnership for the practice of the law. To obtain working capital they borrowed the sum of $25,000 from the Springfield State Bank, plaintiff's predecessor, on an unsecured note. The note, dated December 20, 1974, became due March 20, 1975. It was executed by all three partners with the name of the borrower designated as "Podvey, Sachs and Witherington." The partnership dissolved as of February 11, 1975.
A new note dated March 20, 1975 was signed by all three defendants. Subsequent notes for the same debt were signed only by defendant C. David Witherington. The principal issue is whether the note dated September 19, 1975 binds defendants Podvey and Sachs, judgment having previously been entered against defendant Witherington.
Upon the dissolution of their partnership, Podvey and Sachs agreed to assume a loan to the partnership from Peoples Trust Co. in the principal sum of $50,000. Witherington, who had been a customer of Springfield State Bank before the partnership was formed and who had other business with that bank, agreed to assume the loan in question. As to these loans, the parties agreed:
In the event that the parties cannot pay the notes when due, and it becomes necessary to seek extensions for payment, Robert L. Podvey and Franklin M. Sachs agree to use their best efforts to have C. David Witherington removed as a consigner, co-maker, guarantor or endorser of the note due to Peoples Trust. C. David Witherington agrees to use his best efforts to have Robert L. Podvey and Franklin M. Sachs removed as cosignors, co-makers, guarantors or endorsers of the note due Springfield State Bank. Robert L. Podvey and Franklin M. Sachs agree to hold C. David Witherington harmless and indemnify him from any claims of Peoples Trust of New Jersey with regard to said note. Said indemnification shall include the payment of reasonable attorneys' fees. C. David Witherington agrees to hold Robert L. Podvey and Franklin M. Sachs harmless and indemnify
them from any claims of Springfield State Bank with regard to the said note. Said indemnification shall include the payment of reasonable attorneys' fees. In the event the removal of the respective parties as co-signers, co-makers, guarantors or endorsers cannot be obtained * * * from the respective banks, the parties agree with each other to sign renewal notes when requested by the banks. Such signatures will not, however, affect the indemnification as set forth above.
Defendants take the position that with the dissolution of the partnership on February 11, 1975 the partnership could not be bound thereafter by subsequent renewal notes signed by only one of the former partners.
N.J.S.A. 42:1-30 of our Uniform Partnership Act provides:
On dissolution the partnership is not terminated, but continues until the winding up of partnership affairs is completed.
N.J.S.A. 42:1-35 provides:
After dissolution a partner can bind the partnership * * * [By] any act appropriate for winding up partnership affairs or completing ...