Miller v. Bailey , 19 Or. 539 ( 1890 )

Strahan, C. J.,

delivered the opinion of the court.

In addition to the facts already narrated, it appears from the evidence that the defendant Bailey sent an attorney to Wadhams, who informed him that by then sueing Miller he could collect the amount due from Bailey & Miller, and shortly afterwards the defendant himself called on Wadhams and prompted him to sue Bailey & Miller, and at the time said to Wadhams that there was a judgment to be entered up agai nst him in favor of Miller or Miller’s wife, and he would rather that Wadhams should have it as the balance of his claim against Bailey & Miller than that Miller should get it.

Before proceeding to consider the ruling of the court in ordering a non-suit, -it is proper to ascertain some of the duties which Bailey owed Miller by virtue of the terms of the agreement of dissolution. By that agreement he was to pay all debts of every kind then due by Bailey & Miller with one exception; and at all times thereafter to save, keep harmless and indemnify Miller against all and every person whomsoever to whom Bailey & Miller were indebted (except one claim) in relation to said partnership, and of and from all charges, actions, damages, costs, etc., whatsoever, and what has heretofore or shall at any time hereafter arise and come against said Miller for or by reason of any matter or thing respecting or relating to said partnership. If the contract be to pay the debts it is broken by mere non-payment, and the outgoing partner can maintain a suit without having paid anything himself. This is like a contract of indemnity, for it is affirmative. So is the covenant to pay the debts and save harmless. Here are two stipulations — one to pay, and one to save harmless or indemnify, and the former is not merged in the latter, and the obligee can rest upon either. And the covenant to pay is broken by non-payment, and a suit lies though the obligee has not actually paid. 2 Bates on Partnership, § 636. Bailey, then, being bound by the terms of the dissolution agreement to pay the Wadhams debt and to hold Miller harmless, could not relieve himself by making a composition agreement with Wadhams, including other creditors, and keep the terms secret. If that agreement operated to discharge both Miller and Bailey from their obligation to Wadhams, Bailey was bound, especially when he and Miller were sued for the same debt by Wadhams, to make known to Miller the terms of the agreement so as to enable Miller to plead it as a defense to the action. This Bailey neglected to do. Not only so, but, contrary to his agreement with Miller, he prompted and instigated Wadhams to sue Miller for the express purpose of compelling Miller to pay the debt which Bailey had covenanted to pay and to indemnify Miller against. Bailey did not even plead the agreement in his own defense when jointly sued with Miller, but allowed that action to go by default as to him. Under these circumstances we do not consider or decide whether the composition agreement discharged Wadhams’ claim against Miller or not. Bailey would not plead that discharge against Wadhams when he had the opportunity, and when it was his duty to have done so, and he shall not now rely upon it for the purpose of defeating Miller’s claim. The circumstances estop him.

This view of the case requires a reversal of the judgment of the court below and that the cause be remanded for a new trial, on principles not inconsistent with this opinion.