Case Name: Waln surviving partner of Waln against Hewes executor of Anthony
Court: Supreme Court of Pennsylvania
Jurisdiction: Pennsylvania
Decision Date: 1820-01-08
Citations: 5 Serg. & Rawle 468
Docket Number: 
Parties: Waln surviving partner of Waln against Hewes executor of Anthony.
Judges: 
Reporter: Reports of cases adjudged in the Supreme Court of Pennsylvania (Sergeant & Rawle)
Volume: 5
Pages: 468–472

Head Matter:
Waln surviving partner of Waln against Hewes executor of Anthony.
Saturday, January 8.
Query, Whether after a verdict against the defendant as executor, the can on motion be allowed to set-off against the amount a debt, due to him personally by the plaintiff, for which he has obtained judgment.
Where a surviving partner has obtained judgment, being insolvent and having previously made an assignment, and the state of the partnership accounts does not appear, the defendant will not be allowed to set-off a debt due to him by judgment obtained against the plaintiff personally.
After the payment of the partnership debts, the plaintiff’s share of the residue is liable to his separate creditors, and might perhaps be subject to such set-off.
THIS was a suit brought by Robert Wain, surviving Partner Jesse Wain against Josiah Heroes and others, executors of yoseph Anthony deceased, in which a verdict been found for the plaintiff against Heroes, for the sum 970 • dollars 39 cents, and judgment had been entered thereon. A motion was now made on behalf of Heroes, for a fule on the plaintiff to shew cause, why the amount of the juc%ment this case should not be defalked out of a judgment obtained by Heroes against Robert Wain, in a suit in this Court to the present Term, for the sum of 5143 dollars 73 cents. Heroes was the only executor of An- • * thony who had assets, and he had paid them all over to the legatees of Anthony, at a time when there was not the least expectation of claims by creditors, without taking security, , r ...... ,, The ground or recovery against him m this as well as in ot^er suits to a large amount, was an alleged fraud committed by Anthony, on several insurances of a ship in the year 1795. The plaintiff, Robert Wain, had executed a general assignment: in trust for his creditors, on the 13th September, 1809.
Meredith and Levy, in support of the motion,
cited 6 Bac. Ab. 137. Set-off, C. Baker v. Braham. 1 H. Bl. 23. Schermerhorn v. Schermerhorn. Devoir v. Boyer. Cole v. Grant. Purd. Dig. 127. 1 Sm. L. 53, and particularly relied on Roberts v. Biggs. They observed, that the circumstance of the judgment being against Hewes as executor, could make no difference as to the right of set-off, because ultimately he must become personally liable for the amount of the iudgment. Nor was it any objection that the . , Tr, , J ° . . , V , , suit by Wain was as surviving partner, because a debt due from a surviving partner in his individual character, may be set-off against his claim as such surviving partner. If Hewes had an equitable right of set-off against Robert Wain, before his assignment, the latter could not prejudice it by his assignment : nor have the creditors of Robert Wain more equity than he had himself.
Tilghman and Binney, contra,
submitted, that part of the judgment in this case belonged to Jesse Wain’s estate, and his representatives were entitled to the protection of this Court, when the appeal was to be founded on principles of equity. There was no legal set-off. No case could be shewn where in a suit by A and B against C, A being insolvent, the Court has permitted C to set-off a debt due to him from A. As the representatives of Jesse Wain were entitled to one-half, so the assignees of Robert Wain were entitled to the other half, as trustees for their creditors whose equity is stronger than the individual equity of Hewes. They cited 6 Bac. 137. Doe v. Dornton. To shew that no set-off is allowed where the demand is en autre droit, they cited Medlicott v. Bee.
2 W. Bl. 869. 3 Wils. 396. S. C.
3 Caine's, 190.
3 Johns. 237.
2 Caine’s, 195.
Bull. N. P. 330.
9 East, 150.
1 Ves. 207.

Opinion:
The opinion of the Court was delivered by
Gibson J.
This is a motion on behalf of Josiah Hewes, the executor against whom the judgment is rendered, for a rule to shew cause why the amount should not be defalked out of a judgment previously obtained by him against the plaintiff for a separate debt. It is admitted, that the plaintiff is in embarrassed circumstances, and that he executed a general assignment, in trust for the use of his creditors, on the 13th September last. It is plain, the defendant's judgment could not have been set-off at the trial, because he was sued as exe¿ cutor, and because his co-executor, who had nothing to do with any claim against the plaintiff, was, until the verdict, also a party to this suit; and there can, under our defalcation act, be no set-off, unless both debts are respectively due between, exactly, the same parties. Wain indorsee v. Wilkins et al. 4 Teates, 461. At present, however, Hewes stands as the only defendant. But it is objected, he is answerable to the plaintiff only en autre droit, and that the debts must also be due in the same right. It has been remarked by a very learned and respectable English Judge, that he could never discover any good reason why the judgment against an executor should not, in the first instance, be de bonis propriis; although he at the same time acknowledges, that the doctrine of the executor not being personally answerable, but only in respect of, the goods is, at this day, too firmly established to be controverted. At the trial, therefore, where there can be no such thing as an equitable set-off, an executor cannot defalk a debt due to him in his own right. The present case, however, is an extremely hard one. The defendant parted with the assets without obtaining the proper security from the legatees, at a time when nobody dreamt of the present or any other claim against the estate j and although where a claim cannot be defalked at the trial, we certainly will not, as a matter of course, give it effect in another shape, by turning the party round to this equitable sort of application, yet I will not say that the debt here due, might not, as there is no doubt of a devastavit having been actually committed, be by a little liberality of construction, considered as due by the defendant substantially in his own right. But regarding this, as the case rests on other grounds, we are to be understood as intimating no opinion. The judgment now-attempted to be defalked, was obtained against the plaintiff, not as a surviving partner, but for his separate debt. At law, it is clear, the remedy to recover on choses in action belonging to the partnership, survives; and the surviving partner may, therefore, set-off a debt due to him as such, against a demand on him in his own right. Slipper v. Lane, 5 Term Rep. 493: so the defendant may set-off a debt due by the plaintiff as surviving partner, against a demand due to him in his own right. French v. Andrade, 6 Term Rep. 528. So far the rights of the representatives of the deceased partner, and of the partnership creditors, are not affected. Where the surviving partner is a defendant he may set-off a partnership claim, because as respects the plaintiff he may treat it as his own: so where a person who is a surviving partner sues for his separate debt, the defendant may set-off a partnership debt against it. But there is no case to shew, that where the suit is for a debt due to the partnership, the defendant can set-off a debt separately due by the plaintiff: for though a surviving partner may chose to treat a partnership debt as due to him in his own right, it does not follow that a defendant sued for a debt separately due has a correspondent right; and even if he had such a right at law, I have no doubt chancery would, if the surviving partner were insolvent, interfere to prevent it from being exercised ; and this on the same ground that it interferes to prevent an insolvent surviving partner from disposing of the stock, or getting in the outstanding debts; as was done in Hartz v. Shrader, 8 Ves. jun. 317. Equity, I know, will, under special circumstances, allow a set-off where none can be at law, as in Ex parte Stephens, 11 Ves. jun. 24, and we find some chancellors have been disposed to go a good way in cases not very unlike the present. In Ex parte Edwards, 1 Atk. 100, Lord Hardwicke inclined, under circumstances of extreme hardship, to suffer the separate debt of one of the partners to be defalked from a debt due to both jointly: but what finally became of the cause does not appear, and we therefore cannot tell what terms he had in view. And in Ex parte ¡Quinten, 3 Ves. jun. 248, a separate commission having issued against one of the partners, and the other having paid the joint debts, a debtor to the partnership, who was also a creditor of the bankrupt, was permitted to set-off against the bankrupt's share of the joint debt, and to prove for the residue of his demand, the solvent partner consenting to receive only his proportion of the debts due to the partnership. But in Ex-porte Twogood, 11 Ves. jun. 5*87, this case was, as I take it, over-ruled, where set-off was denied under circumstances in all respects similar, except-that the solvent partner had not paid the joint debts ; but the effect of that circumstance was, in Ex parte Quinten, removed by the assent of the solvent partner to dispense with any right arising from it. However, be that as it may, equity will never allow a set-off of this sort without taking special care that no injury shall, in any possible event, happen to the rights of any one having a claim on the partnership ; and in doing so, chancery has facilities by directing the accounts to be taken between the partnership and its creditors, and between the partners themselves, which this Court has not. A chancellor can call all the parties in interest before him, and bind them by a decree, that will do complete justice to every one : our equity means are limited, and for some purposes miserably deficient. Here we can impose no conditions, but must allow the set-off absolutely if at all j and to do so, might be to pay a debt due by the plaintiff out of the estate of his solvent partner, or out of the property of the general creditors. It does not appear, whether the joint debts are paid, or whether, if the accounts were settled, the plaintiff would be in advance to the concern. He insists he is ; but that is denied by the representatives of the deceased partner, and on a motion of this kind we cannot settle the account. But the plaintiff does not say the partnership creditors are paid, and until that be done it is impossible to say how the balance may fall. Were it even certain the partners stood in all respects equal, still no more than the half of this judgment would belong to the plaintiff, and be a subject of equitable defalcation by his separate creditors. As it is, the money recovered here will go into the hands of the plaintiff's assignees, subject, in the first instance to all the rights of the partnership; and when the joint debts are paid and the partnership account is settled, but not till then, the separate creditors will have a claim on it: whatever may then remain as a share of the plaintiff, will be subject to his separate debts ; but at this stage of the business, we cannot interfere. This being an application to our discretion, we must take care so to exercise it, as not to invade the rights of third persons. The defendant's case is a very hard one; but the motion must be denied.
Motion denied.