not think so. To demand payment, and notify the guarantor that it is not made, and that, consequently, he is holden, is the diligence, which, we think, ought to be used. Such demand, with a certain knowledge that notice of failure will be given to the guarantor, is calculated to have more effect in stimulating to an effort to make payment, than the prospect of a suit and judgment and execution, at a future day. It enables the guarantor to look more effectually to his secu rity, and is, therefore, safest for all concerned. As this demand and notice is neither averred in the declaration, nor admitted, as a fact in the case, we consider it also, a decisive ground against the plaintiff's recovery. Judgment must be for the defendants.

SMITH v. LORING.

Where one of two partners, without the knowledge of the other, substitutes the partnership for his individual endorsement on an accommodation note, he is individually accountable to his copartner for any consequent loss.

The recognition and payment of such endorsement to the creditor, does not change the liabilities between the partner.

An agreement to adandon such claim against his co-partner, though made for good consideration, may be relieved against under circumstances of unfairness and imposition.

This case was reserved for decision here by the Supreme Court in Hamilton county. It was a bill in chancery brought by one partner against another for an account, and settlement of the partnership concern.

The bill stated that the complainant and defendant entered into partnership as merchants, in the year 1817, and continued to deal as partners until December, 1821, when the partnership was dissolved by mutual consent. It alleged that the affairs of the company remain unsettled. But as the controversy related entirely to a single item of account between the parties, it is unnecessary to state more of the case than embraces that item.

The bill charged that amongst the unsettled business of the firm was a cluim set up by Loring to charge the complainant with one half the amount of a partnership liability incurred by Loring for his own account.

It stated that one William Harlow, being in good credit, had obtained an accommodation loan, at the bank of the United States, in Cincinnati, for sixty-three hundred dollars, upon the endorsement of Whipple and Washburn, and Oliver Fairchield. That on the 4th day of May, 1819, David Loring substituted his individual name, upon the note, for that of Fairchild, and the note so endorsed was discounted, and on the 6th of July and 7th of September following, notes for renewal were endorsed by David Loring with Whipple and Washburn, and discounted: That in the mean time the credit of Harlow had very much declined, and on the 9th of November, Loring, without the consent or knowledge of Smith, endorsed the note with the name of Smith and Loring, instead of David Loring, and it was discounted, and the proceeds applied to take up the note en. dorsed by David Loring alone. And when this note became due, it was protested for non-payment.

The bill further charged that when the transaction came to the knowledge of Smith, he objected, but was assured by Loring that a full indemnity had been

obtained from Harlow, which induced the complainant to rest easy. It charged that the indemnity was altogether insufficient, and that in March, 1824, in settling the concerns of the firm of Smith and Loring, the complainant was charged with, and actually paid one half the sum of sixty-three hundred dollars, upon account of said endorsement. The bill prayed a general and final account, and that Loring should be charged with the amount paid by Smith, upon this endorsement.

The answer admitted the endorsements of the note of Harlow, as stated in the bill, and insisted that the name of Smith and Loring was substituted for that of David Loring, in good faith, and in conformity to the power of one partner to endorse the name of the firm. That Whipple and Washburn were endorsers for Smith and Loring, and that the endorsement was made for their common advantage to preserve the credit of all. It alleged that immediately after the endorsement, Smith was informed of it and did not object.

The answer further alleged that Smith had acquiesced and made no complaint until difficulty arose between them in respect to a transaction, at New Orleans, in which an award had been made against Smith. It further insisted that at the time of making the adjustment with the bank, Loring refused to go into any adjustment or settlement unless Smith would agree to abandon all claim against him for this endorsement. That Smith did make this agreement, and upon that being done Loring went into the settlement and it was completed to the mutual advantage and satisfaction of the parties. Further, the answer charged that Smith was justly responsible to Loring, for endorsing the name of the firm upon a note of one P. A. Sprigman, without the consent of Loring, all claim for which, Loring abandoned at the settlement. It denied that Harlow's circumstances became worse in the summer of 1819, and denied all fraudulent design or intention.

A voluminous mass of testimony was taken, and filed in the cause, from an analysis of which, the following facts resulted.

That the name of Smith and Loring was endorsed by Loring in place of his own, without the knowledge of Smith, and that the fact was not known to Smith until after the note was discounted. That at the time the note was protested, or shortly after, an indemnity was given, which was then thought sufficient, and that Smith joined with Loring in a negotiation with the bank to take this indemnity and discharge the endorsers. That in the settlement with the bank, the property of Smith and Loring, though divided between themselves, was given to the bank at a joint valuation, and each of them received a credit for half the value. At the time of the division, Loring had agreed to give Smith, two hun. dred dollars, for his choice, which was unpaid, and which Smith was induced to relinquish at the settlement: that Loring had made most improvements, and that when the property was given to the bank, Loring's part rented for one hundred and fifty dollars per annum more than Smith's. That at present the rents were about equal, and the property esteemed of about equal value.

That at the time of this settlement Smith manifested great anxiety to effect it. That for the Sprigman endorsement, there was a judgment against Smith, and an execution levied on his property, but no judgment against Loring. That Smith, through the negotiation of friends, agreed to give up his claim for the Harlow endorsement, and that Loring agreed to give up his claim for the Sprig

man endorsement, in respect to which it appeared that it had been originally made by Loring, and not by Smith, but with his assent. That subsequently an agreement was made that Sprigman should obtain other endorsers, but not being able to effect this, Smith endorsed a note for renewal, and to prevent a protest, and that Loring subsequently endorsed another note to be renewed, but it was not discounted, and the protest and suit were had upon the note endorsed by Smith. That the circumstances of Harlow were bad in May, 1819, but it was not so well known as it was in the autumn of the same year.

N. Wright and Hammond, for complainant.
By the COURT.

Storer and Benham, contra.

There is no difficulty about the facts material to the decision of this cause. It is clear that Loring originally endorsed Harlow's note with his own name, and upon his own account, and that he afterwards substituted that of the partnership without the knowledge, authority, or consent of Smith.

We entertain no doubt, but upon this state of facts, Loring was accountable to Smith for any loss sustained by the partnership. The making use of the partnership name to remove his own, was an application of the partnership credit to his separate use. And, if pecuniary loss followed, its consequence was an application of the partnership funds to the individual benefit of one of the partners. The power of the partner to do this, by no means includes the right to do it, without being accountable. Wherever a partner binds the partnership for his own private advantage, he is liable to the partnership. No principle is better settled, and it is impossible to conceive how a court of justice could adjudge otherwise.

We can conceive of no course of reasoning, by which an individual endorsement, can be distinguished from an individual note. Both create an individual liability, for some legal consideration received by the party that incurs it, and the discharge of that liability must be for the benefit of the party liable. The firm of Smith and Loring derived no benefit from their endorsement of Harlow's note, more than they would from paying any other debt due by Loring. The benefit resulted wholly to Loring, the prejudice to the firm.

It is attempted, in argument, to distinguish the two cases, by alleging that it was equally the interest of both partners to sustain Harlow's credit, and that therefore the endorsement was for the benefit of both. But this argument would more strongly apply to an individual debt of Loring's. The firm would be deeply interested in preserving the credit of one of its members; and this might form a reasonable apology for a temporary application of partnership credit, or funds to that purpose. But it could be no legal ground for exempting the partner, whose debt was paid, from accounting to the firm for the amount.

It is urged that if the endorsement was made, without authority from Smith, it did not bind him, that the payment was, therefore voluntary on his part, and he cannot now recover it back.

As between Smith and the bank, upon the state of facts in this case, there is no doubt, this argument would be conclusive. It would be equally so, had the supposed liability been created by Loring, for money, which he actually re

ceived and applied to the purchase of a private estate. In that case, we presume, it would scarcely be resorted to. A partner borrows money and gives for it the note of the firm. With this money he buys a farm, and takes the title to himself. The lender of the money was fully apprised of the fact, that it was obtained for private investment, consequently this co-partner was not legally liable. Nevertheless, to avoid controversy, he pays the debt, and takes up the note. Can in be for a moment supposed, that in a settlement between the partners, a court of justice would permit the maker of the note to exempt himsolf from accountability, by proving that, in point of law, the payment was voluntary, though made upon a liability of his own creating, and in payment of money that he had received and invested? As we view this case the argument of voluntary payment is the same, as it would be in the case supposed.

Upon the whole proof it is clear, that when the settlement was made with the bank, Smith agreed to relinquish his claim against Loring, upon account of this endorsement. And this presents the real, and only diffiult point in the cause. If this agreement was made upon a good consideration, with a knowledge of his rights, and in circumstances that gave Loring no unfair advantage, it must conclude Smith.

At the time of the adjustment, when the separte property of the parties was made a common stock, and sold to the bank for their mutual and equal advantage, it would seem that Loring's part was of the greatest value. Though Smith gave some equivalent for this, in giving up his claim upon Loring for the original difference of exchange, still the difference in value, in favor of Loring, constituted some consideration. Under ordinary circumstances, the adequacy of the consideration is not to be taken into account. In the settlement of partnership affairs, where they settle upon equal terms, and mutually agree to share losses from motives of friendship, and a disposition not to scrutinize each other's conduct too closely, such settlements should not be disturbed, although the liabilities of one might greatly exceed those of the other. And for this reason: the inducement to settle, of itself constitutes a good consideration.

But in this case, and when this settlement was made, the parties were not upon equal terms. The property of Smith was under execution for a company debt, which it was equally the duty of Loring to pay. The property of Smith was bound, that of Loring was free. With this advantage in his favor, Loring refuses to make a settlement of the debts of the firm, which the testimony concurs in describing as advantageous to both Smith and Loring, unless Smith will relinquish this claim upon Loring's own terms. The conduct of Loring, throughout all the negotiations, is that of a man who feels that he has an advan. tage, and is determined to use it. Loring was, in any event, liable for Harlow's debt, and there could be no justifiable reason for refusing to settle it, and the other debts of the firm, to the mutual benefit of both, without an abandonment on the part of Smith, of his claim for compensation. There was a necessary connection between the payment of debts due from the firm, and a settlement of accounts between the partners. The only conceivable reason for connecting the two subjects would seem to be this: unless I can secure a certain residuum for myself, by a settlement, I will keep all, and let the creditors do their worst. It is, indeed, in proof that a threat, something in this character, was thrown

out.

In the course of these negotiations Loring steadily refuses to concede any thing. He would not give up the award in his favor, in the New Orleans affair. Smith was acquired to give up the debt due from Loring for the difference of exchange, and the liability of Loring for the Harlow endorsement.— For these concessions by Smith, Loring would exonerate Smith from an alleged liability in the Sprigman case, which, upon investigation, turns out to be totally groundless, and without color of justice. In the course of Loring, there was no equality or reciprocity of concession. The execution levied on Smith's property seems to have given Loring this advantage over him. It is evident that in the negotiations Smith did not contend upon equal terms. His great anxiety to effect the settlement is even alleged and insisted upon in the answer, as a ground why he should be concluded by it. Smith pressed the settlement: Loring insisted to clog it with conditions.

Every case of this kind must be decided more or less, upon its own circumstances. Three judges only, sit in this cause. Two of us are of opinion that connecting the situation of Smith, the conduct of Loring, and the inadequacy of consideration together, they present a proper ground for allowing the relief sought. Upon the first and second points, we all concur in opinion. It is only as to the effect of the settlement that we differ.

Judge Sherman, dissented. Judge Burnet, did not sit.

BANK UNITED STATES v. SCHULTZ.

A court of equity may enjoin a sale upon execution, when no title would pass to the purcha

ser.

The court equally divided upon a question of lien.

This cause was reserved for decision here, by the Supreme Court of Hamil. ton county. It was a bill in Chancery to enjoin the defendant from selling certain real estate, of which the complainants were in possession, upon an execution at law. The facts of the case were as follows:

On the 12th October, 1820, C. Schultz recovered a judgment against the Cincinnati Bank for two thousand six hundred and ninety-eight dollars. Execution was sued out November 8, 1820, and levied on real estate, appraised at four thousand four hundred and fifty-eight dollars; and returned not sold for want of bidders. The same return was made upon several writs of vendi. and on October 7, 1822, the valuation was set aside, and a new valuation being made, the property was finally sold, August 16, 1824, for three hundred and fifty-two dollars twenty-six cents. The plaintiff, in October, 1824, sued out a new fi. fa. and caused it to be levied on the property in question, which was owned by the Bank of Cincinnati, at the date of the judgment, and sold by them to the complainants, and conveyed on the 17th of October, 1820. The bill as sumed that, by the proper construction of the statute of Ohio, the defendant, Schultz, had lost his lien upon the lands, and prayed an injunction to prevent