Case ID: va_29/html/0438-01.html
Source: Caselaw Access Project
Author: {"author": "CARR, J. CABELL, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

*Linney’s Adm’r v. Dare’s Adm’r &c. and Others.
    April, 1831.
    (Absent Coalter and Green, J.)
    Chancery Jurisdiction — Partnership Bonds — Complete Remedy at Law — Case at Bar. — M. and D. merchants and partners, contract debts to L. for which M. in the name of the firm of M. & D. with R. as surety, execute bonds to L. in 1799 and 1801: D. dies: M. lives till 1818, and then dies insolvent, the principal of the debts due L. with interest from 1816 remaining- unpaid: R. the surety is perfectly solvent: in 1821 L. without bringing suit on the bonds against R. the surety, exhibits bill in chancery, against the representatives of D. the administrator of M. the surviving partner, and R. the surety, to charge D.’s estate with the debts, or to have payment of them from the parties, according to their respective liabilities. Held, that L. had a clear and complete remedy at law, by action on the bonds against R. the surety, and. therefore, the court of chancery has no jurisdiction to entertain such a bill.
    
      Linney exhibited a bill in July 1821, in the superiour court of chancery of Fredericks-burg-, setting forth that the mercantile house of Murray & Dare having become indebted to him, in the course of trade, in the sum of ¿£254. a bond for the debt was executed to him, on the 16th November 1799, by Murray, in the name of the house of Murray & Dare, and by James Ross, in the name of the mercantile house of Colin & James Ross, as surety for Murray & Dare ; and that Murray & Dare having contracted a farther debt to Linney of ^440. and Dare having afterwards died, a bond for this debt also was executed to him on the 1st May 1801, by Murray as the surviving partner of that house, and James Ross in the name of the house of C. & J. Ross, as the surety. That the interest was regularly paid by Murray, upon the first debt, till the 1st December 1816, and on the last, till the 1st January 1817, but the whole of the principal of both debts, with interest thereon respectively from those dates, remained due. That Murray afterwards died insolvent, and administration of his estate with his will annexed was granted to Warren Ashley. That Dare died intestate ; and administration of his estate was committed to Lewis Halliday deceased, then sheriff of Spottsylvania; to whose hands there came assets of Dare’s *estate, derived from the social effects of Murray & Dare, to a larger amount than the debts due to Linney, a great part of which assets he distributed and paid over to Dare’s widow and children, his distributees ; but there were funds of Dare’s estate remaining in his hands at his death, of which he had rendered no account, and which had either been converted by him to his own use, or came to the hands of Waller Halliday his executor. That administration de bonis non of Dare’s estate was committed to Hugh Mercer sheriff of Spottsylvania. And that Colin Ross of the house of C. & J. Ross was dead, and James Ross was his administrator. The bill made Waller Halliday the executor of Lewis, Mercer the sheriff and administrator de bonis non of Dare, the distributees of Dare, Ashley the administrator with the will annexed of Murray, and James Ross as administrator of Colin Ross, and as surviving partner of C. & J. Ross, parties defendants ; and prayed, that the defendants, or some of them, according to their respective liabilities, might be decreed to pay the plaintiff the debts due to him with the interest thereon ; and general relief.
    The defendant Ross, in his answer, stated, that he joined in the bonds to Linney, as surety for Murray & Dare, who had jointly contracted the debts, that house being at the time perfectly solvent; that Lewis Halliday, the first administrator of Dare, received of Murray, the surviving partner, about 5000 dollars of the partnership funds, part of which he distributed to Dare’s widow and children, and retained the residue in his hands till his death ; and that Murray had died insolvent. And he insisted, that Dare’s estate was still liable in equity for the debts due to Linney, and ought to be applied to the payment of them, in exoneration of the surety.
    The defendant Waller Halliday answered, that though it was true, that administration of Dare’s estate was committed to his testator Lewis Halliday, as the then sheriff of Spottsylvania, yet he took no part personally in the administration ; it was confided to and conducted by Stapleton *Crutch-field, one of his deputies ; and as no part of Dare’s estate was ever in fact in his testator’s hands in his lifetime, so none of it came to the hands of the defendant his executor.
    The defendant Ashley answered, that his testator Murray died insolvent, and that he had fully administered the effects he left.
    The distributees of Dare, in their answer, alleged that Ross, the surety in the bonds held by Linney, was perfectly solvent, and objected to the jurisdiction of the court: that the plaintiff’s case was not proper for relief in equity. And they declared their belief, founded on circumstances which they stated, that the debts due to Linney, were not the social debts of Murray & Dare, but the individual debts of Murray, and that Ross joined him in the bonds, not as surety for Murray & Dare, but for Murray individually. But, if these were the social debts of Murray & Dare, yet they insisted, that Dare was not bound by the bonds which Murray executed for them in the name of the house ; that the bonds, however, extinguished the simple contract debts for which they were given ; but, supposing they did not, Linney must rest his claim, as against Dare’s estate, on the original assumpsit of Murray & Dare ; and against such claim upon the original assumpsit, they pleaded the statute of limitations.
    As to Mercer, thé sheriff and administrator de bonis non of Dare, the bill was regularly taken pro confesso.
    There was proof, that the debts due to Lin-ney, for which the bonds of the 16th November 1799 and the 1st May 1801 were executed by Murray and Ross, were the social debts of the house of Murray & Dare ; that Murray was regarded as solvent as late as November 1817 ; that he had retained in his hands, out of the social funds of Murray & Dare, upon settling the accounts of that concern, ample means to satisfy the debts due to Linney, and it was owing to Linney’s indulgence, that payment was not early obtained of him ; that he died insolvent; and that Ross the surety was perfectly solvent.
    *And it appeared, that Lewis Halli-day the first administrator of Dare, obtained a decree of the county courts of Spottsylvania in March 1810, against Murray the surviving partner of - Dare, for ,£1468. with interest &c. The accounts upon which this decree was founded, shewed, that this was Dare’s share of the surplus of the partnership effects, over and above the debts due from the house ; and, particularly, after crediting Murray for the amount of the debts due to Linney, for which Murray was liable though he had not paid them, which credit was allowed him by the commissioner, who stated the account, expressly “on the presumption that Dare’s representatives would be absolved from any responsibility for those debts to Linney.”
    Linney died pending the suit, and it was revived in the name of his administrator.
    The chancellor dismissed the bill with costs, without prejudice to any claim which the plaintiff could maintain at law against rfhe defendant Ross of against Dare’s administrator.
    Binney’s administrator appealed to this court.
    The cause was argued by Johnson for the appellant, and by Stanard and Harrison for appellees.
    The first question was, whether the case was proper for relief in equity ? and upon the supposition that it was so, many other points were raised and discussed at the bar ; but the cause was decided upon the point of jurisdiction.
    
      
      Chancery Jurisdiction — Partnership Debts. — See principal case distinguished in Sale v. Dishman, 3 Leigh 550, in which case it was held that a court of equity has jurisdiction to subject the estate of a deceased partner to the payment of a partnership debt where the surviving partner proves insolvent. As to chancery jurisdiction, see generally, mono-graphic note on “Jurisdiction” appended to Phippen v. Durham, 8 Gratt. 457.
      Partnership — Bond of Individual Partner for Partnership Debt — Effect In Equity. — Unless it appear that the note or bond of an individual partner is designed to be accepted in discharge of the partnership, it will not have that effect in equity. Thus, if a judgment be obtained against a surviving partner, on notes of the firm, the judgment is, at law, an extinguishment of the original notes (for, transit in rem adjudicatani); and so in case of a bond, it would be. at law, an extinguishment of the simple contract; yet, in both cases, it would be in equity a partnership debt still. This principle, I unders land, to be distinctly recognized by this court in Williams v. Donaghe, 1 Rand. 300, and in Linney v. Dare, 2 Leigh 588. Tucker, P., in Sale v. Dishman, 3 Leigh 555, 556. See also, opinion of Oarb, J., in same case (551).
      Same — Death of One Partner — Liability of His Estate for Partnership Debt. — A court of equity has always looked upon the representatives of a deceased partner in the light of a surety for the partnership debts, as chargeable only in the event of the insolvency of a surviving obligor. Galt v. Calland, 7 Leigh 601, citing principal case, and Sale v. Dishman, 3 Leigh 448, 551, 557. To the same effect, the principal case was cited in Jackson v.King, 12 Gratt. 505, and foot-note to Galt v. Calland, 7 Leigh 595 (containing extract from Jackson v. King, 12 Gratt. 507).
      The right to charge the estate of a deceased partner for the debt of the firm is a creature of the court of equity, and it will be administered only upon its own terms and according to its general rules and principles. And, it may be waived by the creditor, or it may be lost by the course and conduct which he adopts; and thus the equity which he would otherwise have had, will be entirely repelled. This is recognized as the law by J. Cabe in Linney v. Dare, 2 Leigh 588, 595, and by J. Tuckeb in Sale v. Dishman, 3 Leigh 538, 557. Lee, J., delivering the opinion of the court in Jackson v. King, 12 Gratt. 507. And the creditor, by his laches, may put an end to his equity against the estate of deceased partner. Jackson v. King, 12 Gratt. 514, citing principal case.
      Same. — On the subject of partnership, see generally, monographic note on “Partnership” appended to Scott v. Trent, 1 Wash. 77.
    
   CARR, J.

There were many questions raised in the argument at the bar and ably discussed: but the first, necessarily, was as to the jurisdiction of a court of equity to relieve in such a case. It was objected to the jurisdiction, that Murray and Ross having executed bonds to Binney for the debts in question, and Ross the surety being proved, and admitted on all hands, to be perfectly solvent, Binney had a plain and complete remedy at law, and therefore, could not be entertained in equity. We have decided over *and over again, that equity will not entertain jurisdiction, where the remedy at law is clear and complete : the general doctrine, indeed, is too well settled to be discussed. The case of Hoare v. Contencin, 1 Bro. C. C. 27, seems to me exactly like the present, so far as the question of jurisdiction is concerned. It was thus : the defendants being concerned in a speculation in tea, r borrowed, by their broker, a large sum of money from the plaintiffs, who filed a bill, against two of the principals who were alive and solvent, the assignees of one who had become bankrupt, and the representatives of the other who had died ; contending that they were all bound (though not named) by the act of their broker, and stating the whole as a partnership transaction. It was objected, for the defendants, that this was a matter merely at law; that the plaintiffs, upon their own shewing, ought to have brought their action against the two surviving and solvent partners who were liable to the whole demand. The plaintiffs’ counsel contended, that the bill was well brought ; and, among other arguments, urged, that, it would prevent circuity of action, for if a recovery was had at law against the solvent partners, they must go into equity, to recover against the assignees of the bankrupt, and' the representatives of the deceased partner. Bord Thurlow said, “If is of great consequence, that it should be understood, what are the bounds between the jurisdiction of courts of law and courts of equity ; because, otherwise, much difficulty will arise from parties being put to a great expense, to try here what should be tried at law ; and, what is worse, a party would be permitted to go on here, for legal consequences, although the court must send it to law, to try the legal right. " The question is, whether this case differs an iota from the common case of an action at law. What do you desire ? Distribution ? Do you not contend, that you have a right against all and each of these parties ? Here all the equity is, that if one party cannot pay, the other shall; the question is merely between the defendants. Can the plaintiff bring all the parties before the court, to try the right *between them, when he has1 nothing of his own to try ? It is true, that where he has an equitable demand, the plaintiff must bring all the parties interested before the court.” After several other remarks, he concluded: “It would have been tried at Jaw, at the expense of about ^JIOO. Here is an immense quantity of pleadings and depositions, an enormous expense, to bring in question a demand which is merely at law.” And he dismissed the bill with costs. Bet us' see, for a moment, how aptly this case fits the one before us. Binney had a complete and plain remedy at law : he had only to sue Ross on his bond, get a judgment, and his money was made; for all admit that Ross is wealthy. Instead of this suit at law against one, he files a bill against numerous parties, whose responsibilities, if established, are several and various. He resorts to the expensive and cumbrous machinery of a suit in chancery, with bills, and answers, and depositions, and reports, and exceptions &c. instead of an action of debt on a plain bond. And the case has already been in court ten years, instead of as many months which it might have taken to get judgment on the bond. For this change of forum, the bill does not assign the semblance of a reason. But several were given in the argument. It was said, that it was to save circuity of action, and to put the burden at once where it ought to lie. But lord Thurlow tells us, it is no part of the plaintiff’s business to be anticipating the equities which may arise between others, in consequence of his recovery at law ; that he can come into equity, for no such reason ; but must pursue his legal remedy, and leave it to those concerned, to fix the debt where it ought to rest. Again, it was said, that though the plaintiff might sue at law, he had an equal right to pursue Dare’s representatives in equity ; as a party, having a bond with surety and a mortgage for the same debt, may sue the surety at law, or go into equity to enforce his mortgage, or pursue his remedies in both courts at once, if he choose. It is certain he may do this : he proceeds, in each case, on the deed of the debtor, and the bill is to enforce the *real security. But is the case before us like that? Murray & Dare owed these debts by simple contract to Binney : Murray with Ross as surety, executed two bonds for the debts : these bonds, at law, extinguished the simple contract debts : the execution of them, and the death of Dare, threw on Murray the whole legal responsibility. Dare’s representatives could not be touched at law ; and though, in equity, neither the giving of the bonds, nor the death of Dare, discharged them from the debt, yet it materially changed their situation. Their liability was, now, neither immediate nor absolute. Watson says, “At law the executor of the deceased partner is not liable to be proceeded against by the partnership creditors. But if they find the surviving partner not responsible, they may come upon the deceased partner’s estate in equity.” Gow also lays it down, that the surviving partner must in the first instance be called on ; and it is settled he says, that upon the insolvency of the surviving partner, the representative of the deceased may be resorted to in equity. Wats. on Part. 368; Gow, 460. And lord Eldon has said, (ex parte Kendal, 17 Ves. 527,) “that in many cases the representative may he entitled to say to the creditor, who chooses to make the demand, that justice requires the surviving partners to pay the debt : they are to be considered the principals: he is merely a surety.” These authorities shew, that the two remedies do not exist simultaneously, but the creditor must first resort to the surviving partner, and on his insolvency, to the representative of the deceased partner. In all my examinations (and they have been laborious) I have not found one single case, where the creditor has been permitted to pursue the representative of the deceased partner in equity, until he had sued the surviving partner at law, and shewn a defect of assets, or such partner had been declared bankrupt. But it is said, that Murray is dead insolvent ; and though Ross is bound in the bonds, he is only a surety. I answer, this does not authorise a resort to equity : while Ross is solvent, the remedy at law is clear and complete ; nor does *the fact of his being a surety alter the case. There are thousands of bonds given with sureties, sometimes one, sometimes many : ifethis doctrine were correct, whenever the principals died, the obligee might file his bill in equity, either to make the representatives of the principal pay, or to settle the equities, and equalize the contribution between the sureties : but who ever heard of such a course ? Einney, then, I think, with the bond of Ross in his hands, on which he had brought no suit, had no right to file this bill in equity against the representative of Dare. But, supposing this difficulty removed, we are told this right to pursue the representatives of the deceased partner, may be lost: that it is “ a demand in equity only, and to be enforced only upon equitable principles and “ the right standing only on equitable grounds, if the dealing of a creditor with the surviving partners has been such, as to make it unequitable that he should go against that fund ” (the estate of the deceased partner) “ he would not, upon general rules and principles, be entitled to the benefit of that demand per lord Eldon, in ex parte Kendal. [And judge Carr went into an examination of the peculiar circumstances of this case, and, upon the merits, declared his opinion to be, that Einney had no well founded claim in equity, against Dare’s representatives ; but, as the other judges concurred with him in declining the jurisdiction, his remarks on the case, in the other point of view, are not reported.]

CABELL, J.

If Einney had pursued his legal remedy on the bonds in the proceedings mentioned, without being able to obtain satisfaction of his debts ; or if it appeared that Ross, the surety to those bonds, was insolvent, as well as Murray ; then he would have an equity to claim satisfaction from the estate of Dare, the deceased partner, unless that equity should be rebutted by circumstances sufficient to produce that effect. But as no suits at law have been prosecuted on those bonds, and as it is certain that Ross, the surety, is solvent, I am of opinion that Einney had no right *to come into a court of equity against the representatives of Dare. Upon this ground, without deciding any other question arising in the cause, or discussed at the bar, I am for affirming the decree.

BROOKE, J., concurred.

Decree affirmed.