State ex rel. Bredell's v. Baldwin

Richardson, Judge, delivered the opinion of the court. This suit was not brought to recover the distributive share coming to the estate of the deceased partner on a final settlement of accounts after the payment of all partnership liabilities, but it is to recover a debt alleged to be due to the estate of the deceased partner by the late firm of which he was a member, on the ground that the surviving partner has partnership assets in his hands subject to be appropriated to the payment of the debt. One partner may be the creditor of a firm of which he is a member, and has a right to require payment out of the partnership assets like other creditors before they are divided and before either of the partners can claim any right thereto. Until all the partnership debts are paid neither partner has a right to withdraw any thing on account of capital or profits, but all that remains, after the payment of the claims of other creditors, will be charged in equity with a lien for the payment of any debt due to either of the partners. One of the conditions of the bond required to be executed by a surviving partner who undertakes to wind up the partnership affairs is, that he will apply the assets to the payment of the partnership debts; and no reason [107] is perceived why the personal representative of a deceased partner, who is a firm creditor and whose debt is properly ascertained, may not sue upon the bond for a breach of this condition. The settlement which the defendant made with the probate court was ex parte; no notice was given as required as in case of administrators; and as the court had no means of knowing, except from the defendant’s statement, that all the debts had been paid, it would be unjust to give to such a settlement the effect of silencing every unpaid creditor. In ordinary cases of administration the creditors are required to. prove their demands before the court, and all claims are barred which are not presented within three years, so that when an administrator, after giving notice of his intention to make a final settlement, appears for that purpose, the record would show every creditor of the estate, and the court has the means of knowing, before making an order of distribution, that all the debts have been paid. But not so in a case like this, for the law does not require partnership demands to be allowed by the court; the surviving partner is not required to give notice of his intention to make a settlement, and the court has no means of knowing by proof or otherwise that all the debts have been paid. The instruction therefore which the court gave that the settlement made by the defendant was final and conclusive upon the exeeutor of the deceased partner, we think, was erroneous, and for that reason the judgment will be reversed and the cause remanded. The other judges concur.