delivered the opinion of the Court. In regard to the stock belonging to the company at the dissolution by the death of Tucker, it was rightfully in the possession of the surviving partners, subject to disposition by sale, they being jointly accountable to the administrator of Tucker for the amount of his interest therein. They could not discharge themselves of this joint liability without the consent of the representative of Tucker, and such representative, if he did consent, would immediately become chargeable with the amount to Tucker’s estate. The act of John Kent in thus appropriating the stock was his private act, and did not bind the estate of Tucker ; therefore in the settlement of the account it was right to charge the stock on hand at the death of Tucker to the firm. The disposition they made of it amounting to a sale by them to each one, it was a joint disposition ; and then it became the joint property of the three survivors, who put it into the stock of the new firm. They remained indebted to the estate of Tucker for his portion, and are rightly
In regard to the claim of commissions by the defendants, we think they are precluded by the indenture of copartnership from supporting this claim. On the dissolution the survivors are to make a true, just and final account of all things relating to the firm, and well and truly adjust the same. This includes payment of debts and collection, so far as respects the personal services of any of them. And it was mutual, all being bound to do the same. Actual expense and charge attending the settlement would not be included.
As to interest: The survivors became indebted to Tucker’s estate for the capital, on his death. Time should be allowed them to settle the affairs, collect and pay debts, after which they ought to be charged with interest. Eighteen months were allowed, during which time they are not charged with interest. We think the time fixed by the master for interest to commence, is reasonable.
The next question relates to the advance upon the rent. The lease was taken by the active partners in their individual names, but for the use of the firm of which Tucker was one. He therefore had a joint interest in it, and we see no reason why he should not have his proportion of its value, above what was paid to the lessor.
With respect to the bad debts arising from the continuing of the business of the firm, the report requires some revision. Strictly speaking, there was no authority to trade on account of Tucker’s estate after his death. But if the profits have gone to swell the debt to the copartnership, an equa sum should be deducted from the charge of bad debts. The whole transaction should be adopted or .repudiated.
The exception to this part of the master’s report is allow ed ; the other exceptions are overruled.
On December 21, 1829, a petition was filed by John Bainbridge and Thomas Brown, of London, surviving partners of George Bainbridge, representing that the copartnership of
To this petition, Washburn, the plaintiff, filed an answer.
Fletcher and Ayhoin, for the petitioners, contended that the Court had general equity jurisdiction of the subject cf the p.aintiff’s bill, by virtue of St. 1823, c. 140, § 2, authorizing them to “ hear and determine in equity all disputes between copartners, joint tenants and tenants in common, and their legal representatives, in cases where there is no adequate remedy at law that the Court could not decree on the rights of the partners, without inquiring into the debts and credits of the
S. Hubbard and Washburn, contra. The Court have not jurisdiction of this application, under St. 1823, c. 140, because the petitioners are not partners of any of the parties to the bill ; and because the petitioners have an adequate remedy at law (unless they have lost it by their own laches) by assumpsit against the surviving partners of the original firm of Goodman, Saville & Kent, and against the representatives of the deceased partners; St. 1799, c. 57; Hoar v. Contencin, 1 Bro. C. C. 27 ; Mitf. Pl. 89 ; Brinkerhoff v. Brown, 4 Johns. Ch. R. 679 ; Williams v. Brown, 4 Johns. Ch. R 682; Hadden v. Spader, 20 Johns. R. 567 ; Donovan v. Finn, Hopkins, 59 ; Stone v. Hobart, 8 Pick. 464.
delivered the opinion of the Court. As we understand the counsel, a single question only is now intended to be submitted to our determination. Other questions have been introduced, and remarked upon, but as to these our opinion will be suspended until the parties shall be fully heard.
The question now is, whether we have jurisdiction over the subject matter of this petition.
By the St. 1823, c. 140, this Court has equity jurisdiction in all disputes between partners and their legal representatives. The petitioners, not being partners with the parties in the principal suit, could not sustain an original, independent bill, as creditors of the partners, to obtain satisfaction for their debt from the partnership effects ; their only remedy is by action at law, unless they can intervene in the principal suit between the partners. Whether they can obtain satisfaction in this form, is a question to be determined by the construction of the stat
The question then would be, whether a court of chancery ii England, on a bill for an account between partners, after a dissolution of the partnership, and after the disposal of the joint property, the proceeds being in the hands of a receiver, would permit a creditor to intervene by petition, for the purpose of obtaining satisfaction of a debt due from partners in the course of their partnership dealings.
It is well settled, that creditors have a primary claim on the partnership funds, and that a partner cannot be compelled to account and divide the property, until he is first discharged of his liability for the partnership debts. ' In the case of Camp
The principle is, qui sentit commodum, senlire debet et onus The partnership property therefore must be first applied to the payment of the partnership debts, before it can be divided between the partners without their consent. Before a division of the partnership effects, the court must first ascestain whether any partnership debts are outstanding ; and this question is commonly raised by the pleadings, on a bill for an account and division of the partnership property ; and two sets of accounts are to be taken ; the accounts of the outstanding debts, and the accounts inter se. Either party, therefore, in the principal suit, has a right to insist on the creditors being called in ; and their claims being proved, the partnership effects or their produce must be first applied in liquidation of such outstanding debts, before either partner'can claim his share.. It is iinmeterial therefore whether the petitioners have an adequate remedy at law or not ; for their equity is made effectual through the equity of the partners ; and the court must inquire into the validity of their claim, before the plaintiff can have any final decree in his favor on his bill. We see therefore no objection to the petitioners coming in by petition, for the purpose of proving their claim and receiving satisfaction from the funds in the hands of the receiver. It is admitted that a small part of the petitioners’ debt originated during the life of the plaintiff’s intestate, and now remains due ; and this is clearly a charge on the partnership funds. Whether the petitioners
Ihe petition of Bainbridge and Brown, and the answer thereto by Washburn as administrator of Tucker, with the other papers tn the case, were referred to the master, in order that he might ascertain and report, among other things, the amount of money, if any, due to Bainbridge and Brown from the first firm of Goodman, Saville & Kent.
On March 19, 1832, the master reported, that in December 1823, the first firm purchased a quantity of racoon, bear and beaver skins, which were shipped to London, and consigned to Bainbridges & Brown. On May 8, 1824, before Tucker’s decease, they shipped all the bear and beaver skins; on December 16, 1824, the surviving partners shipped a part of the racoon skins; and on April 16, 1825, the new firm shipped the rest of the racoon skins. An account of these shipments was kept in the books of the old firm. The bear and beaver skins were sold by Bainbridges & Brown, at the times and for the sums following .
1824, Oct. 26, bear and beaver skins.......$1055-23
1826, July 26, racoon skins ....... 470-81
1827, Feb. 5, do. do........... 429-81
$1955.85
Bills of exchange were drawn on Bainbridges & Brown on account of these consignments, as follows :
1824, May 10, by the old firm for £120 and £130 paid
Aug. 17, 1824 $1111-11
1825, Jan. 28, by the new firm, for £225, paid May 5,
1825 1000-00
1825, May 21, by the new firm, for £650, paid Aug. 22, of which £250 is now charged by Bainbridge and Brown to the old firm.........1111-11
$3222-22
Bainbridges & Brown kept but one account of all their
The proceeds of these several bills went into the funds of the old firm, and appear by the books to have been applied to pay the debts of the old firm ; and Goodman, at a former hearing, testified to the fact. The funds of the old firm were not kept separate and distinct from those of the survivors, who from time to time took moneys belonging to the old firm, and charged it to themselves, and who, in the same books, kept accounts of large money transactions, in which it does not appear that Tucker’s estate had an interest. There was no evidence that J. Kent, administrator of
Tucker, did or did not object to the shipment of the skins, or to the drawing of the bills of exchange.
The whole amount of bills now charged by Bainbridge
and Brown to the old firm is £725.......$3222.22
Commissions, interest and charges of sale..... 204-22
"3426 44
The old firm is credited with the proceeds of the shipments as above stated........... 1955-85
Leaving a balance claimed by Bainbridge and Brown,
March 6, 1827 .............. 1470-59
The bills sold before Tucker’s decease amounted to . . 1111-11
The proceeds of skins shipped before his decease were 1055-23 Leaving a balance due Bainbridge and Brown, if the dealings of the parties had terminated here, of.....55-88
After Tucker’s decease, and after the formation of the new firm, Goodman, Saville & Kent drew bills on Bain-
bridges & Brown on account of the consignments, for 2111-11 They incurred liabilities for commissions, interest, &c. a
part of which is chargeable to the balance of $55-88 204.22
Add that balance .............55-88
2371-21
They consigned skins purchased in the lifetime of Tucker
and invoiced at $1329-68, which produced .... 901 62
Leaving a balance claimed wholly of the old firm, of . . $1170-59
The first transaction of the surviving partners with Bainbtidges & Brown, was a shipment of skins, belonging to the old firm, to New York, thence to be transshipped to London. On December 16, 1824, they write to Bainbridges & Brown, that they had sent the skins to New York, and should probably draw for about $250 ; but in a subsequent letter of January 28, 1825, they write that “ in consequence of having drawn for more than the net amount of sales of beaver and bear,” they should draw for $225 only. The skins had been actually shipped to Bainbridges & Brown, and according to the usual course of transmission, Bainbridge & Brown must have received the invoice and bill of lading, before the bill for $225 was presented for acceptance.
The master was of opinion, that the balance due from the old firm to Bainbridges 8c Brown, at the time of Tucker’s decease, was $55-88, and that this balance was paid in the subsequent dealings of the surviving partners with Bainbridges & Brown, that the surviving partners had a right to ship the skins to London for sale, and that Tucker’s estate was chargeable with his proportion of the loss on such shipments.
Bainbridge and Brown took several exceptions to this report ; among others, because the master was directed to report the amount of money, if any, due to Bainbridge and Brown, from the copartnership of Goodman, Saville & Kent, whereof Tucker was a partner ; nevertheless the master has limited his report to the expression of an opinion of the amount due at Tucker’s death, although he states that the surviving partners had a right to ship the furs in question to London for sale, and did so ship the principal part of them, on which the loss .lappened, after Tucker’s death, when by the exercise of such right on the part of the survivors and by drawing upon Bainbridges & Brown on account of the shipments and in advance of the sales, and applying the amount, in the course of the winding up of the partnership concerns, to the payment of
Bainbridge and Brown further excepted, because the master should have reported, that as the name of the firm continued the same after the death of Tucker as before, and as no notice of his decease appeared in the letters of the survivors, Bainbridges & Brown had a right to presume that no change in the partnership had taken place, and that the shipments and drafts were on account of the persons constituting the firm at the commencement of these transactions ; and consequently that such persons and their legal representatives, concurring in these acts, had a right to bind and in fact did thereby charge the funds of the firm with the payment of the advances made on the faith of the consignments, in the event which happened of the proceeds of the sales falling short of the advances.
They further excepted, because the master has stated that he is of opinion that the balance due to them from the old firm at the time of Tucker’s death was $55-88, and that this balance was paid in the subsequent dealings of the surviving partners with Bainbridges & Brown ; whereas he should have reported that notwithstanding Bainbridges & Brown kept bul one account of the different shipments in question, the petitioners had a right, upon being informed that these shipments belonged to different concerns, to elect under the circumstances stated in the report, whether they would or would not continue the credit as originally given, and having by their petition claimed to separate the different interests, that this was a seasonable election, and well entitled them to withdraw the same credit, and maintain their claim as if the proceeds of -he subsequent shipments had not been originally.passed to '.lie credit of the general account in their books.
Fletcher and Aylwin, in support of the exceptions, cited in respect to the authority of the surviving partners after the death of Tucker, Ex parte Williams, 11 Ves, 5 ; Crawshay v
S. Hubbard and Washburn, contra. The estate of Tucker, or his interest in the partnership funds, cannot be charged with a debt contracted by the surviving partners. Fisher's exec. v. Tucker's exec. 1 M‘Cord’s Ch. R. 169 ; White v. Union Ins. Co. 1 Nott & M‘Cord, 557 ; Kilgour v. Finlyson, 1 H. Bl. 155 ; Burrill v. Smith, 7 Pick. 291. Any assent which Kent may have given to the transactions with the petitioners, was given by him as a partner ; he could not, as administrator, assent so as to bind Tucker’s estate. The petitioners d" 3 not give credit to Tucker, for they did not know that he was a partner ; but even if they had known that fact, notice of his death was not necessary in order to prevent a new contract from operating on his estate. Thacher v. Dinsmore, 5 Mass. R 299 ; Forster v. Fuller, 6. Mass. R. 58 ; Jones v Brewer, 1 Pick. 314 ; Pemberton v. Oakes, 4 Russ. Ch. R. 154 ; Newsome v. Coles, 2 Campb. 617 ; Hackley v. Patrick, 3 Johns. R. 536 ; Sanford v. Mickles, 4 Johns R. 224; Whitman v. Leonard, 3 Pick. 177. Admitting that after the death of Tucker the surviving partners had a right to ship
Wilde J. delivered the opinion of the Court. The pe titioners have taken several exceptions to the report of the master, which, considering the facts reported, we think are well taken, and ought to be allowed.
It appears that before the death of Tucker a large quantity of racoon, bear and beaver skins were purchased by the old firm ; some of which were consigned to the petitioners for sale during the life of Tucker, and the residue after his decease by the surviving partners. Bills were drawn on account of these consignments, and the proceeds went into the funds of the old firm, and appear by the books to have been applied to pay the debts of that firm. After the death of Tucker the surviving partners continued to do business as usual (Kent having been appointed administrator on Tucker’s estate), until January 1, 1825, when they formed a new copartnership under the same name, and took all the old stock, except the skins, to the amount of $18,609\31, and gave their notes to the old firm for the amount. It does not appear that John Kent the administrator ever objected to the shipment of the furs, or the drawing of the bills, as mentioned in the report of the master ; and his assent must be inferred, as he was an acting member of the firm, and the proceeds of the bills drawn were from time to time credited in the books of the firm to the “ shipment of furs.” On these and other facts stated in the master’s report the petitioners claim to charge the assets of the old firm with the payment of the bills
We are of opinion, therefore, that the master erred in rejecting the claim of the petitioners. That claim, as stated in the report of the master, with interest, is accordingly allowed,
Exceptions to the master’s report as to ¡he petitioners’ claim allowed.
Note. A final decree was passed on April !, 1836.
