In re Voluntary Assignment of Hoge

Opinion by Mr. Justice Dean, In the year 1885 Lantz, Braden, Spragg, Montgomery, Dowlin, Inghram, and this assignor, Abner Hoge, seven in all, residents of Greene county, formed a parol partnership to buy and sell real estate and to buy, raise, feed and sell cattle; each was to have an equal interest in the business and share equally in profits and losses. By consent of all, Lantz, who was cashier of the Farmers’ and Drovers’ National Bank of Waynesburg, acted as general manager of the business. There was no fixed partnership capital. Six of the partners, leaving out Inghram, [530] borrowed on their joint and several judgment notes from John Buchanan, $3,400 and from Henry Grimes $6,000 which amounts were put hito the partnership business. Inghram paid into the partnership $2,500 in cash and cattle. In the course of business the partnership purchased what was known as the “ Huffman farm,” in Greene county, for $17,615; payment was made by conveying to the grantors, Huffman and wife, Nebraska land belonging- to the partnership at the value of $10,920; the partnership also assumed a mortgage of $5,000 on the Huffman farm; the balance, $1,695, was paid to Huffman in cash out of partnership funds. The business proved financially disastrous; Buchanan and Grimes entered of record their judgment bills; every one of the partners, except Inghram, became insolvent and ■ made assignments for benefit of their creditors. The Huffman farm was sold on executions against the partnership for $11,000. After satisfying the $5,000 mortgage, there remained $5,291.01 which was distributed to partnership creditors, $1,215.01 going to the Buchanan and $2,194.33 to the Grimes judgment. In distributing the assigned estate of Dowlin, $2,590.61 was given the Buchanan, and $4,122.84 to the Grimes judgment; no part of the other assigned estates went to these judgments. In distributing the balance on the account of Hoge’s assignee, the auditor found that Buchanan and Grimes were partnership creditors, and could not come in on the fund raised on the individual estate of Abner Hoge, to the exclusion of his individual creditors. Dowlin’s assignees having presented a claim as eoobligoi” of Hoge on the ground that Dowlin’s estate having paid $6,713.45, the assignees were entitled to subrogation to the extent of half this payment, it was rejected by the auditor for the reason that no partnership account had been settled, and until such settlement the right to subrogation could not be determined. He therefore distributed the whole balance, after deducting costs and liens, to wit: $2,966.58, pro rata among the unsecured individual creditors of Hoge. After hearing, the court of common pleas set aside the report, saying in its opinion: “We agree with the auditor that the evidence discloses a partnership between the parties named; it may further be conceded that the money obtained by six of these partners, and for which the notes were given to Colonel Buchanan and Henry Grimes, was obtained by the makers of these [531] notes for the purpose of being used and was used in the business of the partnership. Beyond this, we cannot agree with the auditor in his findings. We have failed to discover any evidence that would warrant the auditor or the court in finding that this money was borrowed by the makers of these notes on behalf of and for the partnership, or that there was any authority given by the partnership to obtain this money as a loan. On the contrary, the evidence shows that the money was borrowed by the individuals whose names are signed to the notes, for themselves to put into the partnership, and not as a partnership fund tó be used by the partnership.” We entirely concur in this fihding of the court; there is an entire absence of evidence tending to show that the lenders parted with their money on the credit of the partnership, or that the borrowers received it as a loan to the partnership. Without any bad faith to the lender they might have divided the money among them, and each have used his share for such purpose as suited his inclination ; or they might have agreed among themselves to use it for the purchase of lumber, coal or iron. By the instruments they were simply joint and several obligors for repayment of the amount borrowed to the lenders. • And this is all they were ; in equity as between themselves each was bound to equal contribution in payment, and if one paid more than the others, those who had paid less were bound to contribute so as to equalize the payments. But we think the learned judge of the court below was not warranted in this conclusion: “ We are of opinion that the assignees of John Dowlin should be subrogated and allowed to participate in the distribution of the fund to the amount paid out of the estate of John Dowlin on the Buchanan and Grimes judgments.” It appears that the Buchanan and Grimes judgments sought and obtained distribution from the money realized from the Huffman farm, on the ground that they were partnership debts, and the fund was a partnership asset; then they claimed distribution from the fund realized from the Dowlin assignment, and are now paid in full. It is immaterial whether the awards from these funds were properly made; none of the parties to this appeal appear to have objected then, nor do they here deny the lawfulness of those distributions. We have then the case of Dowlin a co-obligor contributing more than his share [532] to the payment of the debt, and his individual creditors asking to be subrogated to the rights of Buchanan and Grimes on the joint and several obligations on this fund raised from the individual estate of a co-obligor. The fund here for distribution is raised wholly from the estate of Hoge, and in equity belongs to Hoge’s creditors. If there be any superior equity in the creditors of Dowlin, entitling them to have refunded the one half of the amount contributed by Dowlin’s estate, the right of subrogation would exist. But we see no such equity. There were six obligors in these judgments; as concerned the obligees, they could collect from either one the whole debt, and if they did so, that raised an equity in favor of the one so paying against his co-obligors which he could assert by action against each for one sixth; but if all were insolvent, as here, and a large part of the obligation had been paid by one to the disadvantage of his individual creditors, that gives the latter no equity to insist on contribution of one half, to the prejudice of individual creditors of another co-obligor. It was their misfortune that their debtor had signed an obligation subjecting his estate to legal liability for the whole debt; they now ask that the individual creditors of another obligor shall halve the misfortune with them, although there was no superior obligation on part of Hoge to pay the half, that any other paid. As is said in McCormick’s Admrs. v. Irwin, 35 Pa. 117, “ The reason why subrogation is not allowed to one partner against his copartner or to one merely a joint debtor against his codebtor, is because, that as between them, there is no obligation to pay the debt resting upon one superior to that which rests upon the others.” It is argued that a clearly implied obligation, as between the obligors themselves, was that as each was bound to pay one sixth, each by reason of the joint obligation was practically a surety for the others to that amount, and the obligation of each to pay the one sixth for the others was a superior one, and therefore as to him who involuntarily paid it for another, he was to that extent entitled to subrogation. We think equity will sustain subrogation that far, but no further. And one sixth of the sum paid Buchanan and Grimes out of the Dowlin funds should be refunded out of the Hoge fund, and the decree of the court below with this modification is affirmed.