Court Opinion

ID: 6423450
Source: CourtListenerOpinion
Date Created: 2022-06-25 12:01:54.641153+00
Date Added: 2024-06-11T15:51:52.810055
License: Public Domain

C. Allen, J.
The note in suit was given by a partnership to one of its members, who indorsed the same to the plaintiff. It is plain that an action at law could not be maintained upon the note by the original payee. In the first place, such action would be defeated by the formal objection that the payee was also one of the promisors, and that he could not bring an action against himself. This formal objection is removed by the indorsement of the note to a third person.. Pitcher v. Barrows, 17 Pick. 361. Thayer v. Buffum, 11 Met. 398. Temple v. Seaver, 11 Cush. 314. But there is also an objection of substance. As was declared in Stoddard v. Wood, 9 Gray, 90, “The difficulty of maintaining an action by a partnership against one partner is not merely a matter of parties, arising out of the difficulty of bringing suit; it lies much deeper. A promise by a partner to the partnership is a promise to pay himself with other persons; and it cannot be said that anything is due until the whole is settled, until all the assets are collected, and all debts paid. Until then, it cannot be known whether there is any balance due ; still less, what that balance is.” The same principle applies where the *299promise is by the partnership to one of its members. ‘ The note in suit would be evidence of one item of indebtedness of the firm to the individual member, but ordinarily such a note is not to be treated as a promise, to be adjusted separately from the other partnership affairs. Thompson v. Hale, 6 Pick. 259, 261. Other items must be taken into account; for example, what each partner has contributed to or drawn from the partnership assets. The partnership may be indebted to its other members in amounts equal to or greater than that shown by the note in question. All that any particular partner is in law entitled to take from the partnership assets is his share of the surplus remaining after all the partnership debts have been paid; and a claim in his favor against his firm cannot ordinarily be enforced at law until it has been ascertained that there is such a surplus, and that he is entitled to a share of it upon a fair accounting between himself and his partners. Story, Part. § 221. Duff v. Maguire, 99 Mass. 300. Couilliard v. Eaton, 139 Mass. 105, 109. And ordinarily it makes no difference in this respect that the claim is represented by a promissory note, unless for some reason the holder of such note is entitled to stand better than the partner to whom it was orginally payable. Stoddard v. Wood, 9 Gray, 90. Thompson v. Hale, 6 Pick. 259. Portland Bank v. Hyde, 11 Maine, 196, 199. Simrall v. O'Bannons, 7 B. Mon. (Ky.) 608. Thompson v. Lowe, 111 Ind. 272.
In the present case, there had been no settlement of the partnership concerns, the firm had failed, the partnership creditors had not been paid in full, and there was no surplus to divide among the members of the firm. The original payee of the note was therefore entitled to nothing. The plaintiff stands no better than the original payee. There was no bona fide indorsement for value to the plaintiff, but the indorsement was merely in order to enable him to sue, for the joipt benefit of the payee and of himself. The merely technical difficulty alone was removed. In all other respects, the case stands upon the rights of the original payee, which are nothing as against his partners.

Exceptions overruled.