Bean v. Cabbaness

GOLDTHWAITE, J. It is said, the principle which should govern this case, is identical with that presented in Yon Pheel v. Connelly, [9 Porter, 452.] There the plaintiff was the assignee of a note due to one partner, and it was attempted to enforce as a set-off, a debt due to the defendants, from a firm of which he was a member. However the argument to sustain that decision, may support the rejection of the set-off here, it is clear, the facts have little resemblance. Although, under our statute, which per 344 mits the assignments of promissory notes, the transfer is clogged with the sets-off then held by the maker, yet, in general, the right of set-off is given in all cases where there are mutual demands; in other words, it subjects the plaintiff to this claim whenever he would be individually liable to an action at the suit of the defendant. In such a case, there is no reason for the expense of two suits, for all the matters in controversy can as well be determined by one. If then the suit was by Simpson, it cannot be denied that the set-off ought to be allowed; and the right of the defendant to insist on it, would arise out of the liability of Simpson to an individual suit on the demand against the partnership. [Pitcher v. Patrick, Minor, 321; Traun v. Graham, 9 Porter, 456; Carson v. Barnes, 1 Ala. Rep. 93.] We do not well see how the fact of bankruptcy, and the assignment consequent upon it, can affect this right of the defendant. [Lord Lanesborough v. Jones, 1 P. Wms. 326.] It is said, however, that the individual assets of the bankrupt are to be first applied to the discharge of his individual debts, but we apprehend a debt due from him as the member of a firm, is as much an individual debt as any one he can owe. It is true, there is an equitable rule which would compel the partnership funds to be exhausted for partnership debts, but before an individual creditor can claim any benefit from it, he must show that there are such assets which can be pursued. Here there is no proof to warrant the belief of the existence of such assets, even if a court of law was competent to arrest their due application. We are satisfied the defendant was entitled to his set-off, and therefore, the judgment of the circuit court must be reversed, and the cause remanded.