Appeal of Clarke

107 Pa. 436 | Pa. | 1884

Mr. Justice Paxson

delivered the opinion of the court January 5th, 1885.

The only question here is one of jurisdiction. The court below dismissed the plaintiffs’ bill upon the ground that their proper remedy was by an action at law. From that decision this appeal was taken.

The bill sets forth, inter alia, that the complainants were at one time members of a copartnership known as “The Pittsburgh Savings Bank of Pittsburgh;” that under said articles any partner had the right to sell and assign his interest in said partnership at any time, the assignee of such interest succeeding to all the rights and liabilities of the assignor; that when any partner sold his interest, and the same was transferred upon the books of the firm to the purchaser, the remaining partners and said purchaser were bound to exonerate him from all debts then or thereafter contracted, and to apply the assets of the firm, so far as required, to the payment of the then existing liabilities; that the plaintiffs had sold their respective interests in the firm at various dates, as shown by Exhibit B attached to the bill, and the same were transferred upon the books of the firm to the purchasers thereof; that the assets of the firm were sufficient to pay the debts of the firm existing at the time plaintiffs transferred their interests therein, but the defendants (being partners in said firm) misapplied the same and converted them to their own use; that the defendants did not pay the debts of the firm, and plaintiffs were obliged to pay nearly $23,000 thereof. The prayers for relief are : 1st, that an account may be taken of all the claims against said firm which have been paid, by complainants ; 2d, of ■ all claims against said firm which are still unpaid, and of the relative liability of said defendants, and each of them, and to each other; that the defendants be ordered to repay to the plaintiffs, and each of them, all moneys paid by them, and to exonerate said plaintiffs from all claims and demands against said partnership ; 3d, that an account be taken of the assets of the firm as the same existed on the 1st day of January, 1872, and the disposition made of the same, and that defendants be required to deliver the said assets to the receiver of said partnership; and 4th, general relief.

The answer of the defendants avers, inter alia, that a bill in equity was filed at No. 150 of January Term, 1880, of the Court of Common Pleas No. 2 of Allegheny County, by J. T. Stockdale, Trustee, v. M. Maginn et al., praying a settlement of the partnership affairs of the Pittsburgh Savings Bank, and an adjustment of the accounts of the various co-partners as between each other; that B. C. Christy, Esq., was appointed receiver of the assets of said firm, and is now in possession and custody thereof as such officer of the said Court of Common Pleas No. 2; and that the controversy in both suits is legally and substantially the same.

If this were a partnership bill it would clearly come within the jurisdiction of a court of equity, but it is not. We have merely the case of a partner who has sold out his interest in the firm, with an agreement that he shall be exonerated from all the firm debts, present and future, who has been compelled to pay certain debts of the firm, and who files a bill claiming to be reimbursed for such payment. That there are a number of partners in the same position can make no difference in the principle.

I take it to be clear that when one partner sells out in this manner he ceases to have any interest in the assets of the firm, or any right to control them. His assignee and the remaining partners have full dominion and control over the partnership property, and may apply it in the conduct of the business as the exigencies thereof may require. What the retiring partner has is his contract, or agreement of indemnity, as the case may be. If he is compelled to pay a debt of the firm he may sue at law upon such indemnity, and the precise measure of his damages is the amount he has been compelled to pay. For this he needs no account; it is no affair of his what any other retiring partner has been compelled to pay, and he has no standing to call for an account between the members of the firm remaining after he parted with his interest. Discovery is not needed, and is not prayed for. There are no mutual accounts which need to be sifted; hence tlie principle cited from Gloninger v. Hazard, 6 Wright 389, that there is no doubt of the concurrent jurisdiction of equity with courts of law, “ in matters of account where the accounts are mutual and complicated, and also where they are all on one side but discovery is sought and is material to the relief,” has no bearing. The law is good, but there are no facts to apply it to.

Aside from this there was a partnership bill pending when this bill was filed, which is still undetermined, and the assets of the firm are now in the hands of a receiver. Under that bill an account will or maybe taken, and all equities between the partners and rights of creditors adjusted in an orderly manner. It would bo an anomaly in equity practice to sustain this as a partnership bill with that bill pending.

An attempt was made to sustain this bill upon the ground of trust, and Peters v. Horbach, 4 Barr 134, and Guillou v. Peterson, 7 W. N. C. 268, were cited in support of this proposition. Neither case sustains it. Peters v. Horbaeh was an action of account vender, and it appeared that a dividend had been declared by a partnership, and the partner holding the share of an absent member under a resolution of the company paid it over in extinguishment of a debt due the company by another partner, who promised to settle with the absent partner, and it was held that all the members present not dissenting from the resolution were jointly liable for the amount of the dividend. Guillou v. Peterson was a case of a partnership to whom a trustee, who was also a partner, fraudulently loaned the assets of the trust estate, which were lost by the firm in the course of its business, and it was held that the partnership were liable to the trust estate for the value of the securities so lost, the partners having knowledge that the securities belonged to the trust estate.

This brief reference to those cases is sufficient to show that they are not authority for the contention of the appellees. The latter may perhaps be said to be trustees in the same sense that the maker of a promissory note is a trustee for the holder thereof, but these are not the kind of trusts which give jurisdiction to courts of equity in Pennsylvania. In all suck trusts the remedy at law is ample.

The position of appellants is that of creditors, not of partners : Scott’s Appeal, 7 Norris 173; Frow’s Estate, 23 P. F. S. 459 ; and in Bullitt v. Methodist Episcopal Church, 2 Casey 108, it was held that whore the retiring partner stipulated that the remaining partner should pay the debts of the firm, a suit at law on the contract was his appropriate remedy.

We are of opinion that the plaintiffs have an adequate remedy at law: as was said in Clark’s Appeal, 12 P. F. S. 447, “ It was never intended to take away the common law right of trial by jury where a wrong done by a party can be redressed by it.”

The court below was right in denying its jurisdiction.

The decree is affirmed, and the appeal dismissed at the costs of the appellants.