Sturdevant v. Farmers & Merchants Bank. done, and caused the cashier to be removed. Silence while ignorant of the facts was no ratification (Western Nat. Bank v. Armstrong, 152 U. S., 346); if silence could in any event be treated as a ratification of such an act. German Nat. Bank v. First Nat. Bank, 55 Nebr., 86.` Nor do we think that, had the facts been known, silence could be held to work an estoppel in a case of this kind, since the undertaking was so clearly outside of the bank's powers that no one had any cause to be misled thereby or to suppose that he was doing more than take his chances of per formance. 5 Thompson, Corporations, sec. 6009; Lucas v. White Line Transfer Co., 70 Ia., 541, 30 N. W. Rep., 771. The principle that a corporation, which has entered into a contract in excess of its powers and received the fruits or benefits thereof, will not be permitted to set up want of authority is not applicable to this controversy. The cases coming under that principle will be found to be those wherein the corporation has "acquired money or property by means of a contract in excess of its powers, and then, when the other party contracting seeks to enforce against the corporation the obligation which it has assumed therein, pleads that it had no power to enter into the contract, and at the same time keeps the money or the property." 5 Thompson, Corporations, sec. 6018. With respect to the indemnity bond taken by the cashier when he executed the replevin undertaking, it may be observed that the bank is not asserting, nor has it asserted, any rights under that bond. Nothing whatever has accrued to the bank's advantage by reason of it. Furthermore, no act of the directors adopting or accepting such indemnity is shown. In this respect German Nat. Bank v. First Nat. Bank, supra, is analogous. It is said also that the bank is estopped to claim that the act was beyond its powers because the property replevied was taken away from the now plaintiffs by virtue of the undertaking. But the bank did not deprive the plaintiffs of any property. The sheriff was not bound to and should not have delivered the property upon such an undertaking. Grotte v. Weil. The parties should not have acquiesced in his so doing by failure to except as required by law or to make objection at any time. The insufficiency of the surety on the undertaking was palpable, and the sheriff and the plaintiffs herein are fully as much to blame as the bank. Having themselves to blame for resting so long upon such doubtful security, plaintiffs may not invoke the rule as to incidence of liability where one of two innocent parties must suffer. We recommend that the judgment be affirmed. SEDGWICK and OLDHAM, CC., concur. By the Court: For the reasons stated in the foregoing opinion the judgment of the district court is AFFIRMED. CHARLES GROTTE V. SAMUEL N. WEIL & COMPANY. FILED JULY 10, 1901. No. 10,241. Commissioner's opinion, Department No. 3. 1. Retiring Partner is Liable for Debts of Firm, Unless Released by Creditors. A retiring partner remains liable for all the existing debts of the firm to the same extent as if he had not retired. The agreement between him and the remaining partner, that the remaining partner will assume and pay all existing debts of the firm while valid as between themselves, can not change their relation to the creditors, unless the creditors become parties thereto. 2. Diligence is Required on the Part of Creditor. The creditor of the firm, after notice comes to him of the retirement of one partner and the assumption of the firm debts by the other member, should deal with reasonable diligence in the management of any securities in his hands for the payment of his claim, and exercise due caution in seeing that no advantage is taken of the retiring partner; but this is all that can be required. ERROR from the district court for Douglas county. Tried below before DICKINSON, J. Affirmed. Grotte v. Weil. O'Neill & Gilbert, for plaintiff in error. E. G. McGilton, Montgomery & Hall and C. A. Goss, contra. DUFFIE, C. Charles Grotte, the plaintiff in error, and Katy Grotte were partners engaged in the wholesale liquor business in the city of Omaha, and in July, 1895, the partnership became indebted to Weil & Co., of Cincinnati. On October 2, 1895, Charles Grotte sold his interest in the business to his copartner, Katy Grotte, she on her part agreeing to pay all outstanding liabilities of the firm and to hold him harmless from the same. October 3, 1895, what appears to be a circular letter was sent to Weil & Co. in which it was stated that Charles Grotte had retired from the firm and had no further interest therein, and that the new management had assumed and would pay all indebtedness. This letter was received by Weil & Co. in due course of mail. On October 4, Charles Grotte wrote a personal letter to Weil & Co. in which he stated that he had retired from the firm of Grotte & Co., and soliciting employment as traveling salesman for them. To this letter Weil & Co. replied on October 6, in which letter they called attention to the indebtedness of Grotte & Co., and said, "You are aware you are responsible to us for this debt." March 9, 1896, the indebtedness due Weil & Co. had been reduced to $296.80, and on that date Katy Grotte executed her note to Weil & Co. for the amount, Matthew A. Hall becoming surety thereon. This note was taken by the law firm of McCabe, Wood, Elmer & McGilton, to whom Weil & Co. had sent the account for collection. We wish to remark here that the plaintiff in error insists that Weil & Co. took this note in payment of the account, while defendants in error claim that the note was taken as collateral security and without prejudice to the right of Weil & Co. to sue the account any time. The note, when received by Weil & Co., Grotte v. Weil. was discounted at a bank in Cincinnati, and at its maturity the Cincinnati bank sent it to Omaha for collection, where it was protested for non-payment, returned to the Cincinnati bank and taken up by Weil & Co. The account of Grotte & Co. was credited with the amount of the note when received, and the account closed, but upon the note being protested and returned to Weil & Co., the account was charged with the amount of the note. On again coming into possession of the note Weil & Co. sent it to their attorneys in Omaha for collection, and when payment was demanded of Hall, the surety, he requested the attorneys to commence suit on the account, promising when judgment was obtained to purchase the judgment. At a later date, and as testified to by Hall and McGilton, who had the note in charge, Hall gave his personal check for the amount of the note, not as payment, nor to be sent to Weil & Co., but as an evidence of his good faith in agreeing to purchase any judgment that might be obtained against the members of the firm of Grotte & Co. on the account, it being understood that McGilton was to hold the check in his own possession until after the trial of the cause. Suit was brought on the account in the county court against the firm of Grotte & Co. and the individual members thereof, and judgment entered for the plaintiff in said action. Charles Grotte appealed to the district court, and the court, after the evidence was closed, directed the jury to return a verdict for the plaintiff, and from a judgment entered on this verdict the plaintiff in error has brought the case to this court. After the entry of judgment in the county court, Hall borrowed money from one Montgomery, with which he purchased the judgment from Weil & Co. and took an assignment thereof to Montgomery Several errors are assigned, but the material question for our consideration is whether the court erred in directing a verdict for the plaintiff. If the court was right in directing a verdict, the other errors assigned and arguel are immaterial. The plaintiff in error is undoubtedly right in his contention that after a sale of his partnership Grotte v. Weil. interest to Katy Grotte, one of the considerations of which was that she should assume and pay the firm indebtedness, she, as between themselves, became the principal debtor, and he a surety. Did Charles Grotte occupy the relation of a surety to Weil & Co.? At the time Grotte & Co. purchased from Weil & Co. the goods on account of which this indebtedness was contracted the firm of Grotte & Co., Charles Grotte and Katy Grotte, the individual members of the firm, were each and all primarily liable for the debt, and the question is, can two parties, each being primarily responsible to a creditor for the payment of a debt, change the relation of one of them by some agreement among themselves and to which the creditor is not a party, in such a way that one of those shall become a surety only for the payment of the debt and change the relation existing between them and the creditors so as to require the creditor to deal with that party as though he had been a surety only at the inception of the account? This is still an open question in this state, and as the courts of the country are divided, we are at liberty to adopt the rule that we see fit, and one which we think is the better rule. The following cases hold that partners, by an agreement among themselves, may make one partner a surety for the payment of the firm creditors and compel the creditors, in the collection of their claim, to deal with him upon the strict rules applicable to the rights of a surety: Stone v. Chamberlin, 20 Ga., 259; Hoopes v. McCan, 19 La. Ann., 201; Barber v. Gillson, 18 Nev., 89; Bell v. Hall, 5 N. J. Eq., 477; Millerd v. Thorn, 56 N. Y., 402; Colgrove v. Tallman, 67 N. Y., 95; Gates v. Hughes, 44 Wis., 332. The cases holding a contrary doctrine are: Mason v. Tiffany, 45 Ill., 392; Williams v. Boyd, 75 Ind., 286; Aiken v. Thompson, 43 Ia., 506; Rawson v. Taylor, 30 Ohio St., 389; Whittier v. Gould, 8 Watts [Pa.], 485; Morton v. Richards, 13 Gray [Mass.], 15; McCoy v. Jack, 34 S. E. Rep. [W. Va.], 991. The general rule relating to all contracts is that the parties thereto can not change their relation to each other except by a new contract to that effect based upon some |