Court Opinion

ID: 8195037
Source: CourtListenerOpinion
Date Created: 2022-09-09 23:18:16.179748+00
Date Added: 2024-06-11T16:40:44.435966
License: Public Domain

Stevens, J.
The trial court dismissed plaintiff’s complaint because it appeared that the defalcation had all occurred after the dissolution of the partnership. The court *107held that the withdrawal of one member of the partnership released the defendant surety from liability for any defalcation which occurred after the partnership was dissolved. In Standard Oil Co. v. Arnestad, 6 N. Dak. 255, 69 N. W. 197, upon which the trial court bases its judgment, the defalcations occurred after a new partner had been taken into the firm. Had a new partner replaced Mr. Huff, a different question might have been presented in this case. But here the defalcation was on the part of one of the individuals for whom the defendant company had, for a valuable consideration, become surety.
When the defendant company signed the surety bond in suit it became responsible for the acts of the two individuals who made up the partnership. When mirrors were shipped or consigned to this partnership an inchoate liability on the bond arose which was not discharged until the mirrors had been paid for as required by the contract. The bond assured the plaintiff that both of the individuals that made up the partnership would fulfil the obligations of their contract with the plaintiff by faithfully accounting for all mirrors consigned to them. Even if all the mirrors shipped after the dissolution of the partnership had been converted to his own use by Mr. Mitchell, there would still remain mirrors of a value much in excess of the penal sum of the bond which were shipped while the partners were acting as agents of the plaintiff and while Mitchell and Huff were still conducting the agency as partners, and the plaintiff had the right to rely upon the assurance given by this bond that the individuals that made up the partnership would fulfil their contract and that neither of the partners would wrongfully convert these mirrors to his own use.
From the fact that $9,800 in value of mirrors were converted, while only about $1,000 in value of mirrors were shipped after the dissolution of the partnership, it follows that mirrors in excess of $5,000, the penal sum of the bond, *108which were consigned to the partnership before dissolution, were among those wrongfully converted by Mitchell. The plaintiff is therefore entitled to recover on the bond the entire penal sum of $5,000 with interest thereon from November 22, 1923, the date of the commencement of this action.
By the Court. — The judgment is reversed, and the cause remanded with directions to enter judgment in accordance with this opinion.