Smith v. Riddell

Citations

• 87 Ill. 165

Syllabus

<p>1. Measure of damages—contract of partner to pay debt for which firm property was liable. Where one partner agrees with his co-partner, who has just acquired an interest in the property used by them as a distillery, to pay a certain tax due the United States, so as to save the property from seizure and sale, and gives personal security for such payment, and afterwards pays such tax out of the partnership funds, charging himself with the amount, the other can not, in an action at law, recover more than nominal damages until the partnership accounts are settled.</p> <p>2. Where a promissory note is given by one partner, with sureties, to his co-partner, as a guaranty that the interest of the latter in the firm shall not suffer by reason of the failure of the first to pay certain indebtedness for which ‘he firm property is liable, upon breach of the contract the payee of the note can only recover on the note such damages as he has sustained as a partner, and this can not be ascertained in a court of law. A final settlement of the partnership accounts is an essential basis for a measure of damages in such a case.</p> <p>3. Same—in an action upon guaranty to pay. Where a promissory note is given, absolute on its face, and the payee gives the makers a writing, showing for what the note is given, and providing that on payment of a certain tax by one of the makers the note shall be void, but if the payee has to pay the tax, or is troubled by the same, the note is to be in full force, and the makers agree to pay the same, the measure of damages on a breach of the condition in no event can exceed the tax referred to and interest thereon.</p> <p>4. Contract—real intention governs. Courts look at the substance rather than the form of contracts, and seek for the real intention of the parties, as gathered from all its parts; and this, when ascertained, is the essence of the contract, and to this legal effect is given.</p> <p>5. Same—by one partner to pay tax—what is a performa