Court Opinion

ID: 6237271
Source: CourtListenerOpinion
Date Created: 2022-02-17 20:35:33.356287+00
Date Added: 2024-06-11T08:58:05.259936
License: Public Domain

Mr. Justice Paxson
delivered the opinion of the court, December 30th 1882.
The bond in suit was given by S. M. Smith to secure his partner, John Banks, for any sum that might appear to be due him upon a settlement of their partnership accounts. So much is plain from an examination of the condition of the bond. It is equally clear, that the object in giving the bond was to enable Smith to retain the property of the firm in his own hands, and to wind up the business. This is manifest from the order of the court under which the bond was given. The conclusion of the order reads : “And in case of the failure of the said Smith to file the approved bond aforesaid, within the time herein *461mentioned, then a receiver to be appointed as herein prayed for.” Smith was under no obligation to give this bond. The only consideration therefor, was that the assets of the firm should be left in his hands for administration and settlement, and to prevent the same going into the hands of a receiver. The bond was approved by the court on December 3d 1877, and Smith appointed ad interim receiver. On the 17th of the next month, Banks filed his petition in the court below alleging mismanagement on the part of Smith ; that he had no security from Smith for his share of the partnership property, and praying for the appointment of a receiver. The court on the same day appointed Michael Johnson receiver. It is now sought to hold the sureties upon Smith’s bond for the amount appearing to be due from Smith to Banks upon a settlement of the partnership accounts.
While this claim is not inconsistent with the condition of the bond, it is obvious, the consideration of the bond has failed in part, and it would be unjust to hold the sureties to the payment of the entire indebtedness of Smith to his partner, upon a settlement of the firm accounts. When the sureties entered into their-obligation, they had reason to suppose from the order of the court that Smith would be permitted to wind up the business. Their ultimate liability might depend to a considerable extent upon the care and skill with Which this was done. The court having, upon the application of Banks, taken the property out of Smith’s hands, the most that the sureties can be held for is the amount of money, if any, received by him between the date of the bond and the 17th of January 1878, when Johnson was appointed receiver.
It follows from what has been said that the evidence referred to in the first assignment ought to have been received. The third and fifth assignments are also sustained.
Judgment reversed, and a venire facias de novo awarded.