#### D. F. Fleming, et al., *vs.*Billings & Belk, et al.

Copartnership creditors are first to be paid out of tbe copartnership fund, and if that prove insufficient, then they are to come in with the private creditors (respect being had to liens,) as against the individual property of the copartners.

If, after paying copartnership creditors, there is' a balance left of the copartnership fund, that balance is to be applied to the individual creditors of the copartners, but in such manner that the creditors of each shall only go against their debtor’s share.

TJpon a question between creditors as to the amount paid by the copartnership and the amount paid by each copartner for a lot and buildings — . the object being to ascertain how much of the value of the lot should be treated as copartnership assets and how much as the individual estate of each *copartner:*— held, that the copartners, they being parties to the bill, were incompetent witnesses to prove how much each had paid out of his individual funds.

Tbis case was first beard before Jobnston, CL, at Lancaster, June sittings, 1854, wbo pronounced tbe following decree:

Johnston Ch. Tbe plaintiffs are creditors of tbe mercantile firm of Billings & Belk, tbe defendants, wbo carried on business of a very general ebaracter at Lancaster.

It appears that tbe defendants, some years ago, bought a village lot from Mr. Clinton, at tbe price of five hundred dollars, for which be agreed to execute titles to them jointly by their individual names; and upon receiving tbe price agreed on, actually made a deed to them jointly.

They are now insolvent, both as partners and as individuals.

One of them, Belk, has confessed two judgments, one to tbe defendant Cousart for about twelve hundred dollars, and *150the other to Mrs. Belk, Ms mother, for about one thousand dollars.

The defendants had built a store house on part of the premises purchased by them, and on another part they erected a dwelling house. About the time of the confession of the two judgments by Belk, the plaintiffs brought suits at law on their demandé against the firm. Under these circumstances a division of the lot by private arrangement was made between the parties, in which the store house with part of the premises was allotted to Belk, and the dwelling house with another portion of the lot to Billings.

An execution of an individual creditor of Billings has been levied on his portion, which has been sold under the levy for twenty-five dollars; but under such circumstances that the purchaser has not complied with the terms of sale nor taken titles.

The execution of Oousart has been levied on the store lot, treating it as the individual property, of Belk, and also upon some parcels of lumber lying on the premises.

' The bill is to have the lot (I mean the original lot bought from Clinton without regard to its subdivision) declared to be partnership property, and liable to partnership debts.

The proof is that a very considerable portion of the purchase money was paid to Clinton by discounting demands which the partnership held against him. It also appears that a large portion of the work for erecting the buildings was paid for in the same way, and that the lumber was to a considerable extent contracted and settled for in the same manner, and orders from the firm were produced, directing a delivery of lumber by the saw mill.

Without stopping to enquire whether the premises are, by the terms of Mr. Clinton’s conveyance, made partnership property, or whether the manner in which they were employed constituted them such property, I think this case may be decided upon another principle.

*151It is undoubted that a very large portion of the purchase money, both for the lot and its improvements, had been paid out of the partnership assets, thus abstracting from the partnership creditors, property properly liable to their demands. It is impossible, as matters now- stand, to pronounce, with certainty, what portion of the purchase money, if any, has been furnished out of the private funds of the partners.

But if a party confounds his rights of property with those of a third person he must bear the consequences of the confusion which he has himself produced, and on a like principle I suppose, if partners commingle their partnership property with their individual property, the partnership creditors are not to suffer loss in consequence.'

In this case, were no third persons concerned but the partnership creditors, and the individual partners, I should hold that the creditors would be entitled to relief, let the consequences to the private property of the partners be what they may. But on the other hand, I am to consider the rights of the private creditors. They should not lose.

In the case I have just put, where none but the partners -themselves are to be affected by that wrongful act, I should have held, that the burden was upon them to shew, what portion of their private funds entered into the purchase of the property. This would have been right in such a case, because it would be proper to lay the burden of proof upon them, who were familiar with their own conduct and affairs, rather than upon creditors who must necessarily be without such a clear knowledge.

But in this case where there are not only creditors of the firm, but private creditors, it is as much impossible for the latter as for the former to accurately unravel the transaction. In such case I suppose it is the reasonable course to direct a general enquiry, with such proofs as the parties may be able to furnish

It is ordered, that the private creditors of ea,ch partner, as *152. also tbe partnership creditors, be called in, by a time to be fixed by tbe Commissioner, by three months publication, to .render and establish their demands.

That they be enjoined from proceeding at law until further .order.

That the Commissioner do sell the premises (meaning the whole lot bought from Clinton,) but that he sell it in parcels corresponding to the division made by the partners, if he can .ascertain the boundaries of such subdivision. That this sale ■include the lumber as levied on by the sheriff and be made after at least twenty-one days notice by newspaper publication, and that the terms of sale be a credit of twelve months with interest from the day of sale, the purchasers to give bond with .at least two good sureties and a mortgage of the premises to secure the purchase money, and the proceeds of sale to .await further order. The sale tobe at Lancaster Court House, and on a sale day.

That the Commissioner, after ascertaining the proceeds of sale (deducting the costs therefrom) do report what portion of said proceeds are upon the principles of this decree applicable to the partnership debts, and what portion should stand as the private.property of the partners so that the different creditors may receive their proper demands. Under this head it is ■adjudged, that the partnership creditors are first entitled to be paid out of the proceeds considered to be partnership funds and if that is insufficient to pay them, then they are to come in with the private creditors (respect being had to liens) as against the proceeds regarded as private property. And on the other hand, if the partnership proceeds be more than sufficient to pay the partnership creditors, the residue of said .proceeds shall be liable to the individual creditors, respect being had to each partner, so that the creditors of each shall only go against his debtor’s portion. And let the Commissioner have leave to report any special matter.

. The demand of Cousart has been impeached. But the-evi-*153deuce, witb any other that may be produced, may be enquired of further by the Commissioner, on the reference.

The Commissioner, at June sittings, 1855, reported, that he had taken testimony under the order of reference contained in the foregoing decree; that the evidence showed, that nine hundred and twenty-nine dollars and forty-three cents had been paid out of partnership funds for the lot and buildings; that five hundred and ninety-seven dollars had been paid by Belk out of his individual funds, and two hundred and sixty-three dollars and ninety-six cents by Billings; that Billings and Belk had been examined to show the amount each had paid out of his individual funds, but regarding their testimony as incompetent for that purpose, in making up his judgment he had rejected their testimony.

He further reported that he had sold the two lots as directed ■ — the store house lot for eight hundred dollars, and the dwelling house and lot for one thousand dollars — and that there remained in his hands, after payment of costs and expenses, the sum of one thousand six hundred and six dollars and fifty cents, applicable to the demands of creditors; that of this amount nine hundred and twenty-nine dollars and forty-three cents should be applied to the partnership debts, and the balance to the individual debts of Billings and Belk.

He further reported the amount of debts established with the names of creditors.

The different parties filed exceptions to the report. The only legal question made by the defendants, in their exceptions, was as to the competency of Billings and Belk as witnesses.

WARDLAW, Ch. This case comes before me on exceptions to the report of the Commissioner under the decree of Chancellor Johnston of July 1, 1854. The exceptions are many and long but chiefly relate to small matters of detail as to which I am disposed to give to the Commissioner’s report *154tbe efficacy of a verdict. Tbe Commissioner’s report on tbe exceptions is satisfactory to me so far as it goes, bnt it contains no observation on tbe exceptions of Andrew Mayer wbicb were filed just before tbe bearing. It was only in relation to tbe last exceptions that counsel addressed tbe court. Mayer is not a nominal party on tbe record, but be bas made bimself a party under tbe former decree calling in tbe partnership and private creditors of Billings & Belle. I should have been content if tbe Commissioner bad not diminished tbe claim of Mayer upon Billings by tbe amount of twenty-five dollars, bid for a portion of tbe lot; but considering that tbe sale was at bis instance, with full notice that this bill bad been filed, upon mere speculation, and that it does not appear that be complied with tbe terms of sale, I shall not disturb tbe conclusion of tbe report.

It is ordered and decreed that all tbe exceptions be overruled and that tbe report be confirmed.

Tbe defendants appealed on tbe ground, that tbe Chancellor erred in overruling their exceptions to tbe Commissioner’s report, and especially their exception as to tbe competency of Billings and Belk as witnesses.

*Williams,*for appellants.

*Moore,*contra.

Per Curiam.

We concur in tbe Chancellor’s decree, and it is affirmed, and tbe appeal dismissed.

JOHNSTON, DüNKIN, and Wardlaw, CC., concurring.

Dargan, Ch., absent at tbe bearing.

*Appeal dismissed.*