35 Mich. 42 (Mich. 1876)
Allan Shelden and others
Supreme Court of Michigan
October 17, 1876
Heard October 4, 1876
Error to Wayne Circuit.
Judgment reversed with costs, and a new trial ordered.
C. & W. N. Draper and C. I. Walker, for plaintiff in error, to the point that a partner, by taking the firm assets and agreeing to pay the liabilities, becomes, as between himself and his former partner, the principal debtor and bound to pay the debt, and the retiring partner is a surety merely, cited: Morse v. Gleason, 2 Hun. 31; Kinney v. McCullough, 1 Sand. Ch., 370; that a note given by one partner in the name of the firm, after dissolution, and without authority from the other partner, is the sole note of the partner giving it: F. & M. Bank v. Kercheval, 2 Mich. 518; Pars. on Part.; Pars. on Notes, 145-312; that such a note payable in the future operates as an extension of time to the continuing partner and no suit can be brought against him or the firm till the note becomes due and payable: 2 Pars. on Cont., 683-4; 3 Lead. Cases in Eq., 561; Glun v. Smith, 2 G. & J. (Md.), 496; 2 Mich. 518; that it is well settled that giving time to a principal without consent of his surety will discharge the latter, and the length of time given, or whether the surety has been benefited or injured by such arrangement, is wholly immaterial: 3 Lead. Cases in Equity, 534, 535, 561; 1 Parsons on Notes and Bills, 241; Miller v. Steart, 9 Wheat. 680; Commissioners of Berks v. Rap, 3 Binn. 520; Fellows v. Prentiss, 3 Denio 512; Bringham v. Wentworth, 11 Cush. 123; 6 English Rep., 663; that notwithstanding parties may appear to be joint makers of the promissory note, and the holder thereof may have purchased the same believing them to be such, either may show by parol that he signed as surety, and the holder will be affected by such relation from the time he has notice of it: Hubbard v. Gurney, N. Y. Court of Appeals, Albany Law Journal, April 15, 1876, page 267; Bank v. Haye, 6 Ohio 17; Graflon Bank v. Kent, 4 N. H., 221; Harris v. Brooks, 21 Pick. 195; Carpenter v. King, 9 Metc. 511; Mariner's Bank v. Abbott, 28 Me. 280; Wilson v. Green, 25 Vt. 450; Averend, Gurney & Co. v. Oriental Financial Co., 1 Eng. 469; 3 Lead. Cases in Equity, 570-2; that where one partner turns over the assets of the firm to his co-partner and retires, and the continuing partner assumes and agrees to pay all the debts, and the creditors are notified of such arrangement, the liability of the retiring partner is changed from that of principal to surety: Emmons v. Drummond, 4 Esp. 90; Oakeley v. Pashellar, 4 Cl. & Fin., 207; Stone v. Chamberlain, 20 Geo. 259; Colgrove v. Tallman, 2 Lans. 97; Wilson v. Lloyd, 6 Eng. 642; Millerd v. Thorn, 56 N. Y., 402
Meddaugh & Driggs, for defendants in error, argued that nothing short of an express agreement by creditors will discharge retiring partners: Pars. on Part., 421; Story on Part., §§ 154-6; Collyer on Part. (5 Am. ed.), §§ 487, 563; that the promissory note of a third person taken for an antecedent debt is not a payment unless by agreement: Johnson v. Eard, 9 Johns. 310; Foley v. Barber, 5 Johns. 68; Jaffrey v. Cornish, 10 N. H., 505; Davison v. Bridgport, 8 Conn. 472; taking the notes of another than the debtor is an extinguishment of the debt only when so agreed: Jewett v. Plenk, 43 Ind. 368; Devlin v. Chamblin, 6 Minn. 468; Hotchin v. Secor, 8 Mich. 484; Dudgeon v. Haggart, 17 Mich. 273; and on the relations existing between a retiring partner and creditors of the firm cited: Pars. on Part., 421-2; Story on Part. (2d ed.), 154-6; Collyer on Part. (5 Am. ed.), 487, 554-70; that a note of a surviving member of the firm, given in adjustment of a creditor's account against the firm, will not be deemed a payment of the account unless such is shown to have been the agreement: Leach v. Church, 15 Ohio St., 169; Bowen v. Still, 49 Penn. St., 65; Scholenberger v. Seloonridge, 1 Ired. 83; Van Epps v. Billage, 6 Barb. 244; Spear v. Atkinson, 1 Ired. 262; Thompson v. Briggs, 28 N. H., 40; Powell v. Charles, 34 Mo. 485; Keel v. Bridgers, 16 Miss. 612; Sneed v. Wiester, 2 A. K. Marsh., 277; Rayburn v. Day, 27 Ill. 46; Tyner v. Storps, 11 Ind. 22; Bonnell v. Chamberlin, 26 Conn. 487; Smith v. Rogers, 17 Johns. 340; that the mere acceptance of the promissory note of a less number than all of the joint debtors will not discharge the joint liability: Drake v. Mitchel, 2 East. 251; Foley v. Barber, 5 Johns. 68; Johnson v. Reed, 9 Johns. 310; and on the general subject they cited: Thompson v. Percival, 5 B. & Ad., 925; Reed v. White, 5 Esp. 122; Evans v. Drummond, 4 Esp. 192; Harris v. Farwell, 15 Beav. 31; Stevens v. Thompson, 28 Vt. 77; Harris v. Lindsey, 4 Wash., C. C., 98; Moulden v. Whittock, 1 Cow. 290; Rosseau v. Call, 14 Vt. 83; King v. Lowrey, 27 Barb. 532; Thurber v. Corbin, 51 Barb. 215; Wilson v. Lloyd, 6 Eng. 642; Daniel v. Cross, 3 Ves. Jr., 277; Millerd v. Thorn, 56 N. Y., 402; Brown v. Clark, 14 Penn. St., 469; Robinson v. Taylor, 4 Barb. 242.
Cooley, Ch. J.
The legal questions in this case arise upon the following facts:
Prior to June, 1867, Eldad Smith, Isaac Place, and Francis B. Owen were partners in trade under the firm name of Place, Smith & Owen, and as such became indebted to defendants in error in the sum of nine hundred and sixty-nine dollars on book account.
In the month mentioned the firm was dissolved by mutual consent, Place purchasing the assets of his co-partners and agreeing to pay off the partnership liabilities, including that to the defendants in...