
    Ebenezer W. Perry v. Thomas B. Spencer.
    
      Bond of indemnity; What will satisfy condition of. In an action upon a bond given to one of a firm upon tbe sale of his interest in the copartnership, conditioned for the payment of the debts and liabilities of the firm, and to indemnify the partner so selling therefrom, proof of the payment of debts and Habilites of such firm to the amount of the penalty of the bond, though made by the purchaser of such interest, in conjunction with the other member of such firm, will prevent a recovery.
    
      Heard April 29.
    
    
      Decided May 2.
    
    Error to Saginaw Circuit.
    A statement of facts will be found in tbe opinion.
    
      John J. Wheeler, for plaintiff in error.
    
      G. U. Gage, for defendant in error.
   Graves, J.

When this cause was before us on a former occasion {18 Mich., 894), it was settled that voluntary payments to the amount of the penalty of the bond would discharge it. The case has since been tried again and is now brought here upon an objection to the finding of the court which presents a different question. In order to understand the point now raised it is necessary to refer to some of the facts. The defendant in error and George K. Newcomb were owners in common of a planing-mill, and occupied and carried it on as copartners, under the name of “Spencer & Newcomb.” Spencer sold out his interest to Perry, who gave his bond to Spencer in the sum of six thousand dollars, by the condition of which he was to pay or cause to be paid the debts and liabilities and claims against the former firm of “ Spencer & Newcomb,” and indemnify Spencer against them.

“Perry & Newcomb” then proceeded to carry on the business together as copartners for a few months, when Perry bought out Newcomb on the same terms on which he had purchased Spencer’s interest.

Perry at different times paid a large amount of the debts of “Spencer & Newcomb,” and a considerable portion of this amount was paid by Perry during the continuance of the firm of “Perry & Newcomb,” some of which was in cash but the principal portion was settled by giving the notes of “Perry & Newcomb.” Before these notes matured, the sale from Newcomb to Perry occurred, and by an arrangement between them Perry assumed the payment of these notes, and subsequently paid them. The debts of “Spencer & Newcomb,” paid by Perry in cash up to the time when he purchased Newcomb’s interest, were charged by him to the firm of “Perry & Newcomb.” The right to recover was made' to turn in the court below upon the effect to be given to the payments by Perry, which were charged in the books to “Perry & Newcomb.” If the whole sum of those payments was reckoned against the bond, then it was admitted that the bond was satisfied; but defendant in error contended that as the sums so paid were charged in the firm books of “ Perry & Newcomb,” they were in effect payments by that firm, and that as against his bond Perry could only claim the half of such payments, and the circuit judge so found. This we think was error. The obligation assumed by Perry was to pay or cause to be paid of the old company debts, an amount not exceeding six thousand dollars, and if he complied with his obligation, either through the credit or resources of the firm of “Perry & Newcomb,” or by the aid or assistance of any one else, the effect upon the bond was precisely the same as though Perry had paid the like amount in cash obtained by his individual industry. The essence of the arrangement was that Perry should procure the extinguishment of the old firm liabilities to an amount not exceeding six thousand dollars, and if he had borrowed the money of Newcomb or received it as a gift from his wife, and applied it. in satisfaction of the old firm debts, Mr. Spencer would have had no reason for inquiring into the sources from whence the funds were derived. The state of the accounts in- the firm of “Perry & Newcomb,” or the nature of the arrangement between Perry and Newcomb, by which Perry was enabled to cause the extinguishment of debts of the first firm was a matter exclusively for Perry and Newcomb to settle, and could in no manner add to, or detract from, the sum actually applied under the condition of the bond for the benefit of Perry.

The judgment must be reversed with costs.

Campbell, Oh. J., and Ohristiancy, J., concurred.

Cooley, J., did not sit in this case.  