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184 Ill. App. 66

Hoffman v. Stewart

Appellate Court of Illinois

Decided December 22, 1913

Appellate Court of Illinois · decided 1913-12-22

<p>1. Partnership, § 269*—persons liable as partners on contracts made prior to formation of partnership. Persons advancing money under an agreement to join with another in a theatrical business previously conducted by the latter, the parties having in contemplation the organization of a corporation which was never in fact organized, held liable as partners on a prior contract for the services of one of the players.</p> <p>2. Partnership, § 269*—rule as to liability of incoming partner on prior contracts. Though, as a rule, a person who enters into a partnership with another does not become liable to the creditors of his partner for anything done before he became a partner, there are exceptions to the rule. One is that where a contract made by a person or firm remains executory until a partnership is created or a new partner is admitted into the firm, and such contract, while it remains executory, is adopted by the incoming partner, who acquires all the benefit as if he had been a partner in the original transaction, a promise may he implied to assume the liability of the partner or firm on such contract.</p>

Key passage — most relied on by later courts

““It is true that a person who enters into partnership with another does not thereby become liable to the creditors of his partner for anything done before he became a partner, yet there are exceptions to the rule. One is that where a contract made by a person or firm remains executory until a partnership is created or a new partner is admitted into the firm, and such contract, while it remains executory, is adopted by the incoming partner, who acquires all the benefit as if he had been a partner in the original transaction, a promise may be implied to assume the liability of the partner or firm on such contract. Frazer v. Howe, 106 Ill. 563 ; Lucas v. Coulter, 104 Ind. 81 ; Watt v. Kirby, 15 Ill. 200 ; Hellsby v. Mears, 5 B. & C. 504, 11 E. C. L. 539; Ex parte Peele, 6 Ves. Jr., 602-604. “In this case Stewart and Marhoefer knew that Thompson had made contracts with plaintiff and other players and knew that she and they were playing at the Angelus Theatre for the benefit of themselves and Thompson, and we think that the court might properly find that they became liable with Thompson to pay her for her services.””

quoted by 1 later decision, including 17 Ill. App. 2d 346 - Magrini v. Jackson

Relies on Frazer v. Howe · Lucas v. Coulter · Watt v. Kirby

Good law ✅— No negative treatment on recordhow we know

Affirmed · Decided 1913-12-22

How this case has been cited

Cited by 5 later decisions — most recently April 1993

1 federal appellate · 3 state decisions

20191319201930194019501960197019801990decided

Later decisions citing this case, by decade. The current decade is in progress, and our corpus holds fewer opinions from the most recent years, so the latest bars are undercounted — not a real decline.

View the full empirical analysis of this case →

Mr. Presiding Justice Baker

¶1delivered the opinion of the court.

¶2From the evidence the trial court might properly find that the transactions between Thompson of the one part and Stewart and Marhoefer of the other part was not the lending of money hy the latter to the former, but was the purchase by each of an interest in the theatrical business conducted by Thompson under the name of the Thompson Opera Company, and that the parties had in contemplation the organization of a corporation, of which a specified amount of the capital stock should be issued to each of said parties and the remainder should be treasury stock. No corporation was ever organized and the parties to the contract from the time it was made must be held to have been partners. ' ¡

¶3It is true that a person who enters into partnership with another does not thereby become liable to the creditors of his partner for anything done before he became a partner, yet there are exceptions to the rule. One is that where a contract made by a person or firm remains executory until a partnership is created or a new partner is admitted into the firm, and such contract, while it remains executory, is adopted by the incoming partner, who acquires all the benefit as if he had been a partner in the original transaction, a promise may be implied to assume the liability of the partner or firm on such contract. Frazer v. Howe, 106 Ill. 583; Lucas v. Coulter, 104 Ind. 81; Watt v. Kirby, 15 Ill. 200; Hellsby v. Mears, 5 B. & C. 504, 11 E. C. L. 539; Ex parte Peele, 6 Ves. Jr., 602-604.

¶4In this case Stewart and Marhoefer knew that Thompson had made contracts with plaintiff and other players and knew that she and they were playing at the Angelus Theatre for the benefit of themselves and Thompson, and we think that the court might properly find that they became liable with Thompson to pay her for her services.

¶5We think the record is free from error, and the judgment is affirmed.

¶6Affirmed.

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