Penniman v. Loney

Robinson, J., delivered the opinion of the Court. On the first day of January, 1871, a co-partnership in the hardware business was formed under the name of F. B. Loney & Co., consisting of Francis B. Loney, Irwin Neale, Jerome W. Price, Richard B. Gunn, John J. Hoof and B. Gordon .Thomas. In the latter part of the same year the firm became embarrassed and failed. Upon the petition of B. Gordon Thomas, one of the partners, a receiver was appointed to take possession of the effects, and collect the outstanding debts due the firm. Petitioning creditors were then admitted as parties, and a subsequent order was passed, with the assent of the creditors, directing the receiver to convey to the appellant, upon the payment of sixty thousand dollars, all the stock, assets, and property of the firm, as set forth in the receiver’s report. [475] After these proceedings, to which no objection was made, a dispute arose between the appellant and the appellee in regard to what constituted the assets of the firm. It appears that prior to the formation of the partnership of January 1st, 1871, a firm had existed of the same name, in the same business and at the same place, composed of Loney, Findlay & Roberts, of which the appellee had become the sole proprietor, by purchase of the interests of Findlay & Roberts, the other partners. The question in controversy was, whether certain debts due to this antecedent or old firm of the estimated value of $2500, passed to the appellant, under his purchase and deed from the receiver. In the former appeal, this Court decided that these debts did not constitute part of the assets of the new firm of January 1st, 1871, and did not therefore pass to the appellant, under the receiver’s deed. The cause was remanded for further proceedings, and on the 19th of July, 1873, the Court below passed an order directing the appellant to return all books and property taken possession of under the receiver’s deed, and which did not constitute a part of the assets of the firm of January 1st, 1871. In the meantime, while the former appeal was pending in this Court, the appellant collected from the debts due the old firm, and to which by the decision of this Court, he ivas not entitled, the sum of twenty-five hundred dollars, and against this sum now in his hands due to the appellee, he claims to set-off an alleged indebtedness of the old firm of Loney & Co., to the new firm, and which passed under the receiver’s deed to him. Courts of equity are governed by the same rules in regard to set-off as Courts of law, and to entitle a party to set-off, the debts must be mutual, and exist between the parties in the same right. A separate debt cannot be set-off against a joint debt, nor a joint debt against a separate debt. In Hall’s Admr. vs. Creswell, 12 G. & J., 51, on [476] appeal from a Court of equity, this Court said, “the right of set-off is reciprocal, and mutual claims and such as are in the same right, can alone be‘ set-off.” According to these well settled rules, it is very clear that the set-off claimed by the appellant was properly disallowed. He admits in his answer and petition, that he had collected twenty-five hundred dollars, which, in the former appeal, it was decided belonged to the appellee. For this amount, he was individually indebted to the appellee. Now against this indebtedness, he claims to set-off not an indebtedness of the appellee to Mm, hut an alleged indebtedness of the old firm of Loney & Co., to the new firm of 1871. The assets of the old firm are not now, nor have they been before this Court, except so far as to enforce the delivery of its hooks and papers, which the appellant through mistake had taken possession of, under the receiver's deed. Its assets, whatever they may he, constitute a fund, to he applied first to the payment of the partnership debts. The appellant being individually indebted to the appellee as the representative of the old firm, for money had and received, cannot set-off in this proceeding against this indebtedness, an alleged indebtedness of the old firm to the new firm of 1871. The claims are not reciprocal, nor do they exist in the same right. (Decided 24th June, 1874.) If there were no other objections to the set-off claimed hy the appellant, we think on these grounds, it was properly disallowed, and the orders of July 19th, 1873, and August, 1873, will he affirmed. Order affirmed.