National Biscuit Co. v. Stroud

C.N. Stroud and Earl Freeman formed a general partnership to sell groceries under the catchy name "Stroud's Food Center." National Biscuit Company sold the store bread.

Stroud didn't like the bread, so he told National Biscuit "that he personally would not be resonsible for any additional bread" that they sold the store. But Freeman kept ordering bread, and the store kept selling it.

Eventually, the store went bust, and Stroud and Freeman dissolved the partnership. They agreed that Freeman could keep the rotisserie, a truck and some machinery. Stroud got everything else. This included a commitment that "Stroud will be responsible" for all the partnership debts "without demand upon Freeman for any contribution in the discharge of said obligations." In other words, Stroud would pay off the store's creditors and whatever was left would be his share.

Freeman told Stroud that the store owed about $7,800 and was owed about $8,000, so Stroud should have walked away with about $200 if everything worked out. Everything didn't work out.

Freeman had overestimated the store's assets and underestimated its debt. Not only was there nothing left over, Stroud paid over $7,700 of his own money to the partnership's creditors. And then there was that bread bill.

The partnership owed National Biscuit $171 for bread. Bread that Stroud had insisted they not deliver. He refused to pay, and the breadfolk sued.