Court Opinion

ID: 8687327
Source: CourtListenerOpinion
Date Created: 2022-11-26 00:30:50.045597+00
Date Added: 2024-06-11T16:57:39.459857
License: Public Domain

STORY, Circuit Justice.
This cause has been exceedingly well argued on both sides. Many important topics have been discussed, upon which it is unnecessary to express any opinion, as my judgment proceeds upon grounds far more limited and narrow. The bill is not only for an injunction to a suit brought by the defendant against the plaintiff in this court, but also for the payment of the balance of an account due from the firm of Dimond, Phil-brook & Co. of Port au Prince in Hayti, to the plaintiff’s intestate (Vose), the defendant’s intestate (Philbrook), having been a partner in that firm. There is no suggestion in the bill, that the surviving partners are not solvent; and the main claim in the bill against the firm is for the amount of a debt due from one William Cole, of Port au Prince, for goods of the plaintiff’s intestate, consigned to and sold by the firm, for and on account of the plaintiff’s intestate, which debt the bill impliedly admits has not been in fact received by the firm; but has been detained by Cole, on account of a supposed demand, which he has against Dimond, one of the partners of the firm. The bill, in effect, charges (for it is not very expressive in its language, and on this very account is open to objection), that- the debt due by Cole has not been collected, owing to the misconduct or negligence of the firm, when, as Cole is admitted to be solvent, it might have been punctually collected and remitted; and thereby the firm have made it their own debt. The accompanying documents referred to in the bill, and made a part of it, are relied on to explain the trae nature of the transaction. The bill admits, that a consignment was made by the defendant’s Intestate (Philbrook), to the plaintiff’s intestate (Vose), of a certain parcel of mahogany, on Phil-brook’s account, and to be. placed to his credit, which was duly sold by Vose, and the proceeds are in the hands of the plaintiff, and she claims the right to deduct the same from the balance due from the said firm; in other words, she claims a right to deduct the same by way of set-off, or by way of lien, as chargeable with the payment of the debt of the firm due to her intestate. It does not appear from the actual structure of the bill, whether -the defendant has taken out administration in Massachusetts, or whether there are any assets of her intestate here, capable of being applied to the discharge of the debts of the firm, or of *1297Philbrook; nor, indeed, is the citizenship of the plaintiff, or of the defendant, stated in the bill (see Chappelaine v. Dechenaux, 4 Cranch [8 U. S.] 305), as properly it should be. But these are, at most, mere formal omissions, which might easily be cured by an amendment, and therefore, not material to be considered by the court. I advert to them only as elements in cases of this nature, which might in certain aspects of this case, be of some significance.
The first question, which meets ns upon the demurrer is, whether, upon the structure of the bill, the claim for the late debt is or can be treated, as strictly a debt of the firm, for which relief lies in equity against the defendant. If it were unequivocally stated to be a pure debt of the firm, and not a mere liability, founded in negligence or omission of duty, the demurrer would, by admitting the facts, clear away the difficulty. But the bill does not so state the case of a pure debt, but mixes it up with a supposed liability, grounded upon the agency; and the demurrer must be taken to admit only the facts as stated, and so far as they are well pleaded. If part of the present claim were a pure debt, and part were founded upon any negligence of the firm, they could not be mixed up together, without being open to the double objection of making the bill multifarious, as well as being founded in part upon a claim properly remediable at law. For it is perfectly clear, that a court of equity has no right to maintain a bill for redress, in cases of loss or injury occurring to the principal, by the negligence or omission of duty, of his agent. The appropriate remedy is at law for damages; a subject of which equity takes no direct cognizance, and deals with only as incidental to other relief. It appears to me, that the debt due from Cole has, in no just sense, become the debt of the firm, so as to be a matter of money due on account; but it is strictly a demand, arising from malfeasance, or nonfeasance, and sounds merely in damages. It appears to me, therefore, that no suit can be maintainable in equity, in such a ease, unless the claim has first been reduced into a debt, by an appropriate judgment against the firm, or at least against the individual, against whom it is sought to be enforced in equity.
There is another circumstance arising upon the case, which deserves notice, and in respect to which the bill is silent. It is this, that even if the claim was a debt due by the firm, it was a debt contracted by the firm in Hayti, and that being a foreign country, of whose laws the court cannot judicially take notice, it cannot be affirmed by the court, that partnership debts are held to be joint and several in that country, although they now are in courts of equity in England and America. I may conjecture, that the law of Hayti, is the French law, in which each partner in a commercial partnership is liable in solido, for the whole debt, so that in effect, each is held jointly and severally liable therefor. This, however, in the French law, is confined to commercial partnerships, and does not apply to other partnerships; for m the latter, each partner is liable only for his visible share. Poth. de Société, notes 103, 104; Code de Commerce, art. 22. But still, as the court cannot judicially know, what the law of Hayti is, and it is a case which must upon this point be governed by the lex loci contractus, it ought to have been expressly averred in the bill, what that law is. However, for the sake of the argument, I will assume that the rule of the law of Hayti is the same as that of the common law; and also will assume, that the same rule prevails as to set-off by that law as prevails at the common law'. Now, by the common law. it is wrell settled. that no set-off can be made of several debts, against joint debts of the contracting parties. And the same rule is followed in courts of equity, unless some peculiar equities intervene in the particular case, the rule being, that equity on this subject follows the law. So the doctrine was laid down in Vulliamy v. Noble, 3 Mer. 593, 618; and it was fully recognized in the supreme court of the United States at the last term, in the case of Dade v. Irwin’s Ex’r, 2 How. [43 U. S.] 383, 390, 391. See 2 Story, Eq. Jur. §§ 1435-1437. I am not aware, that a different rule prevails either in the Roman law, or in the French law, as to this particular point, although the doctrine under the name of compensation is therein recognized to a much larger extent than in our law; for still, as a general rule, the debts must be between the same parties, and due in the same right; and in no just sense, is a partnership debt due in the same right as an individual and separate debt. The interests of the other partners may be essentially concerned in the matter, if the debt is due to them, and the interest of the separate partner sued may in like manner be concerned, if the debt is due by the partnership. It is upon this very ground, that in cases of partnership, where a bill in equity is brought to recover the debt out of the estate of a deceased partner, the surviving partners are necessary and proper parties; for they have an interest in taking the accounts. Thorpe v. Jackson, 2 Younge & C. Exch. 553; Wilkinson v. Henderson, 1 Mylne & K. 582, 589; and Burwell v. Mandeville's Ex’rs, 2 How. [43 U. S.] 560, 575,—are directly in point on this subject. See Poth. Obl. notes 628-633 ; 2 Story, Eq. Jur. § 1442. It is true, that where, as in the present case, the other partners are out of the jurisdiction, a court of equity may dispense w’ith their being made parties; but then it is a matter, in the sound discretion of the court, whether under all the circumstances, it ought to do so or not; for if the case be one involving important rights of the absent partners, and a fortiori, if they are the only persons within whose knowledge the facts lie, and they, are resident in the foreign country where the transactions took place, and are most material parties to explain them, it would be doing great injustice to affect the separate estate of the partner here with a claim, of the nature and character of which *1298his administrator could scarcely be presumed to have any knowledge or full means of establishing in proof. Even under the Revised Statutes of Massachusetts, if the laws of that state could govern the case, it seems exceedingly doubtful whether a set-off of a partnership debt can be made against the separate debt due to one of the partners, except in eases of a dormant partnership. Rev. St. 1835, c. 96, § D. But if it can be done, it can be done only at law. and is not properly remediable in equity.
What has been already said, applies to a debt strictly so called; and a fortiori, if the claim be unliquidated, as the present claim is, adhuc I sub judice, and not only in controversy, but resolutely controverted, there would seem to be the strongest reason to remit the plaintiff to the proper forum to litigate her right, I mean to the tribunals of Hayti, the country where the transaction took place; for there, | and there only do they seem capable of being ! with all the attendant circumstances, properly adjusted and adjudicated. But it is sufficient to say, that the present claim is a mere claim of set-off, and the remedial justice is asked, not of a court of law, but of a court of equity. In such a case, some peculiar equity must be shown, to entitle the party to have her suit entertained. None appears to me, to be shown. On the contrary, the structure of the bill presents very mixed considerations, and involves as doubtful equities as could well be discussed in a court of justice. I have not thought it necessary to go into the consideration of the doctrine ot lien, as applicable to the present case. It is not set up in the bill as a matter | of lien; and if it were, it would not avail the plaintiff for several reasons. First, it is a claim sounding in damages, which is not a subject of a general lien. Secondly, it is not a lien created in the course of the factorage transactions of the plaintiff’s intestate. Thirdly, it is a case where the proceeds were to be carried to the separate account of Philbrook; and fourthly, it is a case, where the claim is not strictly between the same parties,—the claim being founded upon a partnership transaction, and the debt due to Philbrook upon a separate and sole transaction. Upon these points nothing more is necessary than to refer to the authorities cited in Story, Ag. §§ 362, 364, 365.
Without going farther into the details of the ! case, my opinion is, first, that the claim of the : Cole debt, set up in the bill, is not a liquidated debt due from the firm, and therefore, not a fit subject of set-off; and secondly, that a partnership debt is not, independent of other peculiar equities, entitled to be set-off in a court of equity, against a separate debt due to one of the partners. I am also of opinion, and accordingly direct, that interest be allowed upon the principal sum due from the second of March, 1838. up to the time of the judgment, that being the period when Thomas Vose, by his letter of that date, fixed the balance, and showed by that letter, that he intended to appropriate the amount as a set-off to the debt stated in that letter pro tanto. The bill in equity affirms this intent. The bill must, therefore, be dismissed with costs.