Higgins v. Rector

Gould, Associate Justice. Under our laws and system, there can be no question that the holder of a claim against a partnership has a legal right to have bis claim established against the estate of the deceased partner, and that in the ordinary course of administration his claim will he paid pari passu with other claims of the same class, without regard to the distinction between partnership and individual debts. Certainly this ordinary and legal course of procedure wil^ not he interrupted so as to give a preference to the holder of a separate or individual claim, unless it he made to appear that equity requires such a course. Where the joint creditor had to resort to equity to reach the estate of the survivor, [364] the courts of equity would seek to secure equality amongst the creditors. But equity does not interfere with legal rights, even for the purpose of producing equality. (1 Am. Lead. Cases, 587, and ref.; 2 Lead. Cases in Eq., 315, and references.) If, indeed, the joint creditor, having a right to resort to two funds, attempts to use his legal rights against the separate estate in a way to cause unnecessary prejudice to the separate creditors, then the latter may have an equitable right to relief. (Id.) But the current of authority seems to be that where there is no partnership fund, and no solvent partner, the separate creditor is entitled to no preference, even where the assets are equitable. Parsons, who, in his work on partnership, advocates the rule that the joint creditors shall be confined to the joint fund, says: “This rule can apply only where there are matters to which it can apply, as where there are joint debts and joint funds, and also several debts and several funds. It is, therefore, not an exception to the rule, where there is no joint estate, or - no living solvent partner," or where there are no separate debts. These cases, which are sometimes called exceptions to the rule, should rather be thought to fall without the rule.” (Page 500, [483;] see also 1 Am. Lead. Cases, 588, [481;] Emmanuel v. Bird, 19 Ala., 593; Bardwell v. Perry, 19 Vt., 292; Sperry’s Est., 1 Ash., (Pa.,) 347; Ladd v. Griswold, 4 Gilm., (Ill.,) 25; Cleghorn v. Insurance Bank of Columbus, 9 Ga., 319; Rodgers v. Meronda, 7 Ohio St., 179; 5 Cranch, 35; Story on Part., sec. 363; Collyer on Part., sec. 584.) Such, it is said, is the well-settled rule in England. (2 Lead. Cas. in Eq., p. 323, and references.) In this case it is agreed that there is no partnership fund, and there is nothing in the record to show that there has been any such fund since the death of Grimes. Testing the action of the court by the rules which prevail in courts of equity, both as to when they will interfere with [365] legal rights and as to how they will distribute equitable assets, we think that the order made was correct. The position, that the separate creditor has in equity a right to he first paid out of the separate assets, is not one that commands our assent, and is not, in our opinion, the prevailing doctrine. Such being our views of the rule in equity, we do not feel called on in this case to decide whether, under our statutes, the established order for the payment of claims may be interfered with, for equitable reasons, or not. It will be time enough to dispose of that question when a separate or partnership creditor shall present a case which requires it. The judgment is affirmed. Affirmed.