Court Opinion

ID: 6130472
Source: CourtListenerOpinion
Date Created: 2022-02-04 21:02:55.035599+00
Date Added: 2024-06-11T08:53:22.495079
License: Public Domain

Smith, P. J.:
The appellant’s counsel invokes the well established rule of equity that in marshaling the assets of an insolvent partner the individual creditors shall be first paid out of the individual assets of their debtor before the partnership creditors can claim anything. (Story’s Eq. Jur., § 675.) That rule is inapplicable to the proceeding under review, the object of which is not to marshal the assets of the insolvent debtor Andrew J. Pierce, but to distribute the solvent estate of the testatrix Sophia Pierce. The only question is whether in ascertaining the amount to be paid to the assignee of Andrew J. Pierce, as a legatee under the will of the testatrix, the claim of the •executor against the legatee, as surviving partner of the firm of Jerome Pierce & Co., may -be retained or set off against the legacy.
That it may be set off, even at law, seems clear. Such right of set-off results from the common-law rule that a debt due to partners is due to them jointly, and upon the death of one, the sole right survives to the other. Although the survivor collects partnership debts under a liability to account, yet at law he is the sole creditor, .and has the sole power to collect the debt and to maintain a suit to recover it. (Holbrook v. Lackey, 13 Metc., 132).
As legal consequences resulting from this rule, it has been held that the survivor in suing may join a separate debt of his own. (Hancock v. Haywood, 3 T. R., 433). In a suit against him for a separate debt of his own he may-set off a debt due to him and his deceased partner jointly (Slipper v. Stidstone, 5 T. R., 493), and a debt due from the plaintiff, as surviving partner, may be set off against a ■debt due from the defendant to the plaintiff severally. (French v. Andrade, 6 T. R., 582; Holbrook v. Lackey, supra.) Most of the cases above cited are referred to approvingly in Miller v. Receiver of Franklin Bank (1 Paige, 444), and Nehrboss v. Bliss (88 N. Y., 600). The rule established by them has not been changed by our statutes providing for the set-off of mutual demands. A debt *108legally due from the plaintiff to the defendant, at the time of the commencement of the action, is a proper subject of set-off under the statute. (2 R. S., 354, § 18, sub. 7; old Code, § 150; new Code, § 501.)
The circumstance that the present claimant is the assignee of the legatee does not affect the right of the executor to set off or retain-the amount unpaid upon the note, inasmuch as at the time of the assignment the note was held by him and was then past due. (Martin v. Kunzmuller, 37 N. Y., 396.)
The debt in question would be a proper set-off in equity, if not at law. In general, equity requires that cross demands be set off against each-other, if, from the nature of the claim or the situation of the parties, justice cannot otherwise be done. (Smith v. Felton, 43 N. Y., 419; Coffin v. McLean, 80 id., 560.) It would be inequitable to the estate of the testatrix to compel the payment of the full amount of the legacy and remit the executor to his action, against the insolvent debtor. .
The appellant’s counsel cites the case of Hodgson v. Fox (9 Ch. Div., 673; S. C., 26 Eng. R. [Moak’s Notes], 431). In that case it-appeared .that a week before the d^ath of a testatrix, a debtor to her, who was one of the residuary legatees under her will, dated several years previously, became bankrupt. The debt was never-proved by the testatrix or by her executors, nor had any dividend been declared in the bankruptcy. It was held by Yice Chancellor Hall that the executors were not entitled to set off or retain the amount of the debt due to the testatrix against the share of the bankrupt, nor, under the circumstances, any amount in respect of dividends on such debt. The question of the right to set off the debt underwent no discussion, the vice chancellor merely remarking that he followed the case of Cherry v. Boultbee (2 Keen, 319; S. C., 4 My. & Cr., 442).
In Cherry v. Boultbee the legacies were given in a form apparently intended to exclude the claims of creditors, and stress was laid upon that fact. Here there is nothing of that tenor in the will. Had the claim of the executor been against the legatee individually, instead of being against him - as the survivor of the firm, the right of set-off could hardly be doubted. If the views above expressed are correct, the right is the same against him as survivor.
*109The part of tbe decree appealed from should be affirmed, with costs to tbe respondents.
Tbe respondents suggest that separate bills of costs should be allowed. We have not tbe facts before us necessary to a disposition of that claim. Leave is granted to present it by motion at Special Term on notice.
Barker, Haight and Bradley, JJ., concurred.
Tbe part of tbe decree appealed from affirmed, with costs to tbe respondents. Leave to' move for separate bills of costs at Special Term granted.