Case Name: Daniel Gregg, Plaintiff in Error, v. James and Philips, Defendants in Error
Court: Illinois Supreme Court
Jurisdiction: Illinois
Decision Date: 1825-12
Citations: 1 Breese 143
Docket Number: 
Parties: Daniel Gregg, Plaintiff in Error, v. James and Philips, Defendants in Error.
Judges: 
Reporter: Illinois Reports
Volume: 1
Pages: 143–145

Head Matter:
Daniel Gregg, Plaintiff in Error, v. James and Philips, Defendants in Error.
ERROR TO MONROE.
Debts to be set off, must be mutual, and between the parties to the record.
A debt due individually by one co-partner, can not be set off in an action to recover a debt due the co-partnership.
A payment to one partner is payment to both, unless stricly forbidden.
A separate demand can not be set off against a joint one, nor can a joint debt be set off against a separate one. A demand to be set off must be owing from the plaintiff's to all the defendants. The demands must be mutual and between all the parties to the action. Hinckley v. West, 4 Gilm., 136. Burgwin v. Babcock, 11 Ill., 30. Hilliard v. Walker, id., 645. Ryan v. Barger, 16 Ill., 28. P. & O. R. R. Co. v. Niel, id., 269. Walker v. Chovin, id., 489. “ There may be an exception to this rule arising out of the agreement of the parties.” Walker v. Chovin, supra.
Payment to one partner is payment to the firm. Major v. Hawkes, 12 Ill., 299. Coll. on Part., sec. 638.
The giving a note payable to one of the partners individually, or the payment of a debt of an individual partner by a debtor of a firm, is not such a payment as is binding on the other partner, but is good as to the one to whom it is made. Granger v. McGilvra, 24 Ill., 152.
After a dissolution of a partnership, either partner may receive a debt duo the firm, notwithstanding an agreement between the partners, of which the debtor has notice, that one of their number or a third person, shall alone collect and pay the debts. Gordon v. Freeman, 11 Ill., 14.

Opinion:
Opinion of the Court by
Justice Smith.
This was an action of debt, on a sealed note, payable to James and Philips. Gregg, who was defendant in the court below, pleaded three pleas:
1. Payment generally.
2. That Philips and himself were mutually indebted to each other before the execution of the note ; that prior to the making of the note, they attempted a settlement of their respective claims, but Gregg, being unable then to establish his against Philips, executed the note in question to James and Philips, who had become partners in trade, it being given for the amount of Philips's claim against him, leaving his, against Philips, unadjusted.
3. That the note was given to James and Philips to secure a debt due to Philips only, and that before the commencement of the suit, he paid it to Philips.
To the first and third pleas, the plaintiff took issue, and de murred to the second; to which demurrer the defendant filed his joinder. The court below sustained the demurrer. On the trial, Gregg offered to give in evidence, an account of his against Philips, which existed anterior to the making of the note given to James and Philips, which the court refused to permit.
To this decision an exception was taken. Two points are presented for the consideration of the court: First, that on the issues joined, it was competent for Gregg to give in evidence any debt due to him from Philips: Second, that the second plea was a bar to the action, and the demurrer should have been overruled.
We have no hesitation in saying that on both the points, the court below decided correctly. Nothing is better settled than that debts to be set off, must be mutual and between the parties to the record. If the issue on the third plea had been what the counsel for Gregg supposes it is, it might, perhaps, vary the question. But it will be seen that his allegation, that the consideration of the note was for a debt originally due to Philips only, is not noticed in the replication, and issue is-taken on the single point of payment only. That part of his plea is treated as a nullity, and must be considered as surplus-age. The only inquiry is, was the debt alleged to be due by Philips, a debt which could be set off.
The note is payable to co-partners, and the debt offered to be given in evidence, is due, if at all, by only one of the co-partners. The rule is, that a debt due individually by one co-partner can not be set off in an action to recover a debt due the co-partnership. It is not a mutual debt, nor is it between the parties to the record. The offer, therefore, to prove a debt due by one of the co-partners, and that confessedly created before the making of the note, was foreign to the issue before the court. It was in no way pertinent thereto: it was not what the parties had made the issue, viz.: had Gregg paid the note to Philips, for a payment to one was a payment to both, unless strictly forbidden. This reasoning is directly applicable to the second plea. It was not competent for Gregg to plead a state of facts, which in themselves amounted to no more than a right of setting off a debt due by Philips alone.
This plea was certainly not good, for he could not plead that, which in law, could be no defense. The court have examined the authorities quoted by the plaintiff's counsel to support the positions assumed by him, but they are found to be in no way analogous. The demurrer was properly sustained. The judgment of the court below must be affirmed, and the defendants in error recover their costs,
Judgment affirmed.
Dealings between the parties to the record only, can be set off. 1 Johns. Cas., 169.