Jackson v. Clymer

The opinion of the court was delivered, by Lowrie, C. J. It is very plain that the defendants have been sadly disappointed by the result of this transaction, and therefore we have been very earnest to find relief for them in the form of defence here presented; but we are unable to take any other view of the case than that taken by the learned President of the Common Pleas. Though there is a partial unity in the transaction, yet there is also a formal and substantial duplicity: one part relating to partnership debts, and the other to the private debts of one of the partners. The one compromise, therefore, resulted in two agreements for partnership and for private creditors respectively. Each is held in different rights ; and hence the right of legal set-off and defalcation is limited, so that the disappointment of one cannot be set off against the other or defalked from it as a matter of law. But this would not hinder an equitable defalcation, if there were not other considerations that would prevent it. It is prevented in this form, because to allow it would be to take the property of the private creditors and appropriate it to those of the partnership. If the parties to the arrangement were alone to be affected by the defalcation, we might possibly work it out. And possibly a bill in equity to rescind this part of the arrangement might have had some value, but we are not sure. We cannot find anyway of sustaining this defence. Judgment affirmed.