Case Name: Mary Johnson versus Nathaniel F. Ames
Court: Massachusetts Supreme Judicial Court
Jurisdiction: Massachusetts
Decision Date: 1828-03-06
Citations: 6 Pick. 330
Docket Number: 
Parties: Mary Johnson versus Nathaniel F. Ames.
Judges: 
Reporter: Massachusetts Reports
Volume: 23
Pages: 332–336

Head Matter:
Mary Johnson versus Nathaniel F. Ames.
Where a claim filed by the plaintiff before commissioners of insolvency upon the estate of an intestate, was rejected because he was a dormant partner of the intestate, and so liable to the other creditors, but he did not thereupon give notice, within twenty days, of his intention to prosecute an action at common law, and it afterwards appeared that the assets were more than sufficient to pay the other creditors, it was held that he could .not maintain an action of assumpsit against the administrator for the general balance due to him.
But it seems that he would have a remedy by a bill in» equity.
Whether the commissioners might not have received the claim and reported the special circumstances of it, so that it might be allowed or not, as the situation of the estate would justify, quaere.
Whether a dormant partner is entitled, upon the death of the active one, to take possession of the partnership effects and settle the partnership concerns, quaere.
Assumpsit. The fourth count alleges that Seth Johnson, the plaintiff’s testator, and Ezra Hyde, the defendant’s intestate, on the 21st of October, 1809, entered into an agreement as copartners, by which it was agreed that Johnson should advance to Hyde, 5000 dollars, to be used in trade, that such trade should be carried on for their joint benefit in the name of Hyde alone, and that Johnson should receive from Hyde, in addition to the sum advanced by him, one half of the profits of the trade ; that Johnson did advance to Hyde 5000 dollars according to the agreement, and thereby became the dormant partner of Hyde ; that Hyde engaged in trade and continued in it fourteen years, and made great gains, amounting to 10,000 dollars ; that on the 1st of January, 1823, the partnership was dissolved by mutual consent, and by virtue of the agreement Hyde became liable to pay to Johnson, after payment of aL debts and obligations incurred in the trade, the sum of 5000 dollars, as well as his proportion of the gains ; that m the course of the trade Hyde contracted large debts, and which remained unpaid at the time of his death ; that a commission of insolvency was issued on his estate ; that many creditors to whom Hyde became indebted, in the prosecution of the trade, to the amount of 60,000 dollars, proved their debts; that Johnson submitted his claim to the commissioners for allowance, and that its allowance was objected to by the other creditors, on the ground that the debts proved by them became due from Hyde during the course of the trade and whilst Johnson was a dormant partner, and that he ought not to have his claim allowed or returned by the commissioners, or to claim any of the assets of the estate of Hyde, until their debts were fully paid,—whereupon for these reasons the commissioners rejected the claim of Johnson, — of all which the defendant had notice ; that on the return of the commission to the judge of probate, Johnson gave notice to the defendant, that after he should have collected assets sufficient to pay the other debts due from Hyde, if any further sum should come to his hands, he (Johnson) should hold the defendant liable to account with and pay to him his proportion of the capital stock and profits, or such part thereof as the assets so received should enable the defendant to pay ; that the defendant, on the day of the purchase of the writ, after collecting assets enough to pay all the debts due to other creditors as above mentioned, had received the further sum of 5000 dollars ; whereupon he became liable, and in consideration thereof &c. promised, &c.
March 6th
The plea to the foregoing count, protesting that the claim of Johnson was not rejected for the reasons above assigned, simply sets forth the commission of insolvency, the presentment and rejection of the claim of Johnson, the adjudication of the judge of probate that the estate was insolvent, and an order to pay all the creditors, who had made out their claims, in proportion, and that Johnson did not within twenty days give notice at the probate office of his intention to have his claim settled at the common law.
To this plea there was a general demurrer.
Slaw and Morse, in support of the demurrer.
The ques tians are, whether the plaintiff has any remedy for the amount due to the testator, and if so, whether it is by an action at common law. Johnson was a partner as well in regard to Hyde as to third persons, but being a dormant partner, and moreover, the partnership having been dissolved before Hyde’s death, he had no right to take any specific property into his possession as surviving partner ; he had only a personal claim against^Hyde’s estate. We are aware that a party is not at liberty to omit filing his claim before the commissioners and then to bring his action ; but that principle applies only to cases where the debt is of such a nature as to be capable of being filed and allowed. This claim could not be, for the liability of the administrator was contingent, depending on the assets being sufficient to pay all the partnership debts in full. It could not arise until after the commission should be closed. Hyde may be considered as not strictly a debtor, but as a trustee for Johnson to pay to him such share as should be due after all the debts of the firm were paid and a surplus found, and a bill in equity would lie under a recent statute, if there were no remedy at law. Ferry v. Henry, 4 Pick. 75. But if the court can administer the same justice at law as upon a bill in equity, they will do it. Here the partnership accounts have been settled, and in this action, which is for money had and received, the same facts can be presented to the court as upon a bill in equity, and the same justice may be done Fanning v. Chadwick, 3 Pick. 420.
June 26th.
Aylwin and .Mason, contra,
said that in regard to the present claim, Johnson must be considered either as surviving partner, in which case he should have taken possession of the partnership property; or as an independent creditor, and then he should have filed his claim before the commissioners, and if it was rejected, should have given notice, within twenty days, of his intention to prosecute a suit at common law. Wilby v Phinney, 15 Mass. R. 122; Paine v. Nichols, ibid. 264; Boardman v. Smith, 4 Pick. 212. Contingent claims are provided for in St. 1821, c. 72.

Opinion:
Parker C. J.
delivered the opinion of the Court. The question is, whether the plea of insolvency, appointment of commissioners, presentation of the plaintiff's claim, its rejec tian, and the allegation that no notice was given at the probate office of an intention to prosecute a suit at law, is a sufficient answer to the plaintiff's demand, as set out in the fourth count in his writ.
This plea is a sufficient answer to the declaration, unless special circumstances stated in it take it out of the general principles as settled in the case of Paine, Judge, v. Nichols, 15 Mass. R. 264.
By the- express words of the statute, all suits are prohibited after the estate shall have been represented insolvent, unless prosecuted in the form therein provided. St. 1784, c. 2. It does not seem to be in the power of any creditor to an insolvent estate, by averment of special circumstances attending his claim, to avoid the effect of this direct provision of the statute; the intention of the legislature being, that all claims, of whatsoever character, should undergo an examination by the commissioners, and should be paid by a pro rat'i distribution founded on the commissioners' report. And it matters not whether the estate be eventually insolvent or not, as was decided in the case before cited, provided it is represented insolvent and the judge thereupon awards a commission.
If the creditor is dissatisfied with the doings of the commissioners in regard to his claim, he may prosecute it at law, but only on the terms and conditions provided in the statute, for otherwise he will disturb the whole course of proceedings under the commission.
And it is immaterial what are the reasons for which his claim was rejected; for being rejected, he must give notice of his intention to sue, within the time prescribed, in order that proceedings on the report of the commissioners may be stayed until the result of his suit shall be known, and if he recovers, the amount of his judgment is to be inserted in the report, on which the judge will order distribution.
Nor does the allegation that the defendant has recovered assets beyond what is required for the payment of debts, give a right of action, for the estate having been acted upon as insolvent, the course of the common law is stopped in regard to claims against the estate. This very point was decided in the case before referred to.
Whether the commissioners might not have received the plaintiff's claim and reported the special circumstances of it, so that it might be allowed or not as the situation of the estate would justify, may be matter of doubt, but it is clear, we think, that no action lies against the administrator.
The proper course would seem to have been, for Johnson to have taken possession of the partnership effects, paid off the partnership debts, and then claimed any balance due him against the estate of Hyde ; but of this there might be a question, as it not certain that a mere dormant partner would have this right. If it be true, as alleged, that there is a surplus m the hands of the administrator after paying the debts of Hyde, the plaintiff has an equitable claim to so much of it as will satisfy the just demands of her testator, but there is an insuperable difficulty in maintaining a suit at law for it, foi the reasons given.
We do not see why a remedy cannot be had on a bill in equity, under the statute providing that process for and against partners and their representatives. There seems to have been no remedy at law, the demand being of a nature not to be allowed by the commissioners, and if there had been a • suit under the statute, probably it might have been successfully defended on the ground that the partnership concerns were not adjusted. This however is a suggestion for the consideration of counsel, without intending to be bound by it.
Plea in bar to the fourth count adjudged good.
Se.s Todd v. Darling 2 Fairfield, 39.
It is now provided by the Revised Statutes, that no action shall he brought against an executor or administrator after the estate is represented insolvent, unless &e., or unless the assets should prove more than sufficient to pay all the debts allowed by the commissioners, c. 68, § 19, See also § 21, 22, 23, 24.
See Revised Stat. c. 81, § 8.