Penn Bank v. Furness - 114 U.S. 376 (1885)
U.S. Supreme Court
Penn Bank v. Furness, 114 U.S. 376 (1885)
Penn Bank v. Furness
Argued March 31, April 1, 1885
Decided April 13, 1885
114 U.S. 376
A, B & C, being partners in business, and all believing the firm to be solvent, C withdraws. A & B pay C a fixed sum as his capital and continue the business. They borrow money of a bank on the notes and responsibility of
the new firm, part of which is used to pay to C his capital, and then fail, owing the money so borrowed. It turns out that the old firm was insolvent at the time of the dissolution, and C contributes toward the discharge of its liabilities an amount in excess of the amount of capital so drawn out by him. In a suit in equity by the bank to charge the old firm with the money loaned to the new firm, held that this could not be done, as the transaction was entirely between the bank and the new firm.
Bill in equity. The facts which make the case are stated in the opinion of the Court.