adopted in New York, Mississippi, Illinois, and [except so far as quali fied by what is said in Gadsden v. Carroon, 9 So. Car. Equity 267, and Wilson v. Mc Connell, Id. 500, in South Carolina also.(1) But the same *481] exception is established, as in *cases of bankruptcy in England, that the joint creditors will not be postponed where there is no joint estate and no living solvent partner.(2)

The Supreme Court of the United States in Murrill et al. v. Neill et al., 8 Howard, 414, recognized as applicable to cases of insolvency, the general rule in equity, "That partnership creditors shall in the first instance be satisfied from the partnership estate; and separate or private creditors of the individual partners from the separate and private estate of the partners with whom they have made private and individual contracts; and that the private and individual property of the partners shall not be applied in extinguishment of partnership debts, until the separate and individual creditors of the respective partners shall be paid ;" and the excepted cases were here spoken of as eccentric variations, difficult to be reconciled with the reason or equity of the rule. [The rule established in this case would appear to be the rule in Maine, New Hamp shire, Iowa, Indiana, and Ohio,(3) and, perhaps, in South Carolina.(4)]

The general equitable rule, and this exception to it, were extensively discussed in the recent case of Ladd v. Griswold et al., 4 Gilman, 25; and it was there held, that joint creditors come upon the separate estate pari passu with the individual creditors, if there is no joint estate and no surviving solvent partner, and that the case of there being no joint estate arises where one partner has, during his life, transferred his entire interest in the partnership effects to the other. In Ladd v. Griswold et al., C. and R. had been partners; but the partnership had been dissolved by consent, and C. had taken all the effects of the firm and agreed to

(1) Wilder v. Keeler, 3 Paige, 168; Egberts v. Wood, Id. 518, 527; Payne v. Matthews, 6 Id. 20; Robb and others v. Stevens and others, 1 Clarke, 192; Jackson v. Cornell and others, 1 Sandford, 348; Murray v. Murray, 5 Johnson's Chancery, 60, 72; Robbins v. Cooper, 6 Id. 186, 191; Burtus v. Tisdall, 4 Barbour's Supreme Court, 572, 588; Averill v. Loucks, 6 Id. 471, 477; Kirby v. Carpenter, 7 Id. 373, 378; Arnold & Pinckard v. Hamer et al., 1 Freeman's Chancery, 509, 516; Oakey & Co. v. Rabb's Executors, Id. 546; Ladd v. Griswold et al., 4 Gilman, 25, 36; Woddrop v. Executor of John Price, 3 Desaussure, 203; Tunno v. Trezevant, 2 Id. 264, 269, 270; Hall v. Hall, 2 McCord's Chancery, 269, 302; see also In re Warren, Daveis, 320, 326.

(2) Wardlaw et al. v. Adm'rs and Heirs of Gray, Dudley's Equity, 85, 94, 113; Grosvenor & Co. v. Austin's Adm'r, 6 Ohio, 103; Sperry's Estate, 1 Ashmead, 347; and see Pahlman v. Graves, 26 Ill. 407.

(3) Crooker v. Crooker, 46 Maine, 261; Jarvis v. Brooks, 3 Foster, 146; Holton v. Holton, 40 N. H. 78; Hubbard v. Curtis, 8 Iowa, 15; Weyer v. Thornburgh, 15 Indiana, 129; Rodgers v. Meranda, 7 Ohio State, 179; commenting on Grovesnor v. Austin, 6 Ohio, 103; and denying its dicta. But in Ohio the rule was not held to give the individual creditors a right to come on the partnership property for money lent by one partner to the firm.

(4) See 8 Richardson, 9, 13, 15.

discharge all its liabilities. C. then died insolvent, leaving many of the partnership debts unpaid, and subsequently R. died insolvent; and the question arose as to the right of the partnership creditors to come upon R.'s separate estate equally with R.'s separate creditors. The court, after recognizing the general doctrine that the partnership effects are appropriated to the partnership creditors, and the separate estate to the individual creditors, said, "It may, however, be necessary to look into the foundation and extent of this equitable rule, and see if it is applicable to the present case. In the case of a partnership, there is a community of interest and responsibility. Each partner has a concurrent title to the whole of the partnership property, and he is individually liable for all of the partnership obligations. He has the specific right to have the joint property faithfully applied to the payment of the joint debts; and after the debts are satisfied, he is entitled to a share of the surplus. These rights and liabilities continue, in most cases, after a dissolution of the partnership. In the case of a dissolution by the death of one of the partners, the surviving partner succeeds to the management and control. of the affairs of the partnership; but the personal representatives of the deceased partner are still responsible for the debts and entitled *to [*482 participate in the surplus; and they may compel the survivor to make such a disposition of the partnership effects, as will relieve them from responsibilty, and enable them to receive their portion of the surplus. While the partnership is progressing, the joint creditors have, strictly, no equity against the partnership effects. They have only a cause of action against the partners, on which they may obtain judgment, and then satisfy the judgment out of the joint property, or out of the private property of the partners. The right in equity of the joint creditors to seek payment out of the partnership effects to the exclusion of the separate creditors of deceased or insolvent partners, results solely from the right of the partners or their representatives, to have the joint estate thus applied. The rule is for the benefit and protection of the partners themselves. They may part with their right to have the joint property applied to the payment of the joint demands; and when they do so, the equity of the creditor is at an end. This is done, when one partner sells out his entire interest in the concern to his copartner. such case, the purchasing partner takes the property fully discharged from the lien of his copartner; and the equity of the creditors being subordinate to the lien of the partners, the property is wholly freed from the claims of the joint creditors. What before was joint property, now becomes the separate property of one of the partners. There is no longer any joint fund for the payment of the debts, to which the joint creditors may resort through the equities of the partners. . . . If there is no joint fund to which the creditors can resort, and no solvent partner from whom payment can be enforced, they should be allowed to participate

In

equally with the private creditors, in the estate of the deceased partner." This circuitous reasoning, to take the case out of the rule, might have been avoided, by observing that the case never fell within the rule; inasmuch as the person, whose estate was in dispute, was the surviving partner, against whose representatives and estate, of course, the joint creditors had, at law, the same direct right as the individual creditors. In Reese & Heylin v. Bradford et al., 13 Alabama, 838, also, it was held, that after a transfer of all the partnership effects by one partner to the other, the lien of priority on the part of the joint creditors upon what had been partnership property, was extinguished.

In some othes States, this principle of marshalling the assets, so as to give separate creditors a priority as to the separate estate, is not received. It seems to be denied in Tennessee, (1) and doubted in New Jersey.(2) [In Connecticut also the denial seems to prevail; since it appears to be established that a creditor of a partnership, may on the death of one partner, come immediately against the estate of that partner, and have his claim allowed by the commissioners, though there be a surviving solvent partner *within the jurisdiction of the court.(3)] In *483] Pennsylvania, in Bell v. Newman, 5 Sergeant & Rawle, 78, one partner had died before the other, and the survivor being indebted on partnership account, and also on private account, his administrator had in his hands some joint and some separate assets; and it was decided, partly on a ground of equity, and partly under a statute directing equality of distribution, that the separate creditors should first receive out of the separate estate as much as the joint creditors would receive from that partner's share in the joint property, and then that the separate property should be divided among both classes equally pro rata. In Sperry's Estate, 1 Ashmead, 347, the very able opinion of King, President, inclines against the general principle, further than as obliging the joint creditors to exhaust their fund before they come upon the separate estate but the point decided was, that the separate and joint creditors should be paid ratably out of the separate estate, in the hands of an administrator, where there is no joint fund and no solvent partner. But neither of these decisions is conclusive as to the non-existence of the general principle of equity; for Sperry's Estate came within a recognized exception, and Bell v. Newman, was not a case within the application of the principle (as that principle is explained in McCulloh v. Dashiell, Wilder v. Keeler and Arnold and Pinckard v. Hamer et al.); the estate to be distributed being the estate of the surviving partner, against which the claims of the joint creditors were as purely legal as those of the

(1) White v. Dougherty et al., Martin & Yerger, 309, 321.

(2) Wisham v. Lippencott, 1 Stockton's Ch. 353.

(3) Camp v. Grant et al., 21 Connecticut, 41.

separate creditors. [And though in Walker v. Eyth, 25 Penna. State, 216, the court spoke distinctly of it as a rule of equity "that where there are partnership and separate creditors, each estate shall be applied exclusively to the payment of its own creditors-the joint estate to the joint creditors and the separate estate to the separate creditors"—yet that point was left " undecided," and the case put upon another equity. See also Overholt's Appeal, 21 Id. 225.] The general principle, therefore, in a case proper for its application, as where the estate of the partner first deceased, is in question, and there is some joint property, or a solvent partner living, is perhaps still open in Pennsylvania. The opinion of Gibson, C. J., in Bell v. Newman, was in favor of the general principle as founded in equity. See also, Snodgrass's Appeal, 1 Harris, 471.

In Virginia(1) this principle was much discussed, and the court was equally divided upon the question of its adoption as a general rule in equity. See 2 Leading Cases in Equity, Part I. p. 224.

In certain States statutes have cut the knot. In Mississippi the principle was decided(2) to be abolished in that State by the operation of two enactments, one of which provides that the estate of deceased insolvents shall be distributed among all the creditors in the proportion of their claims, and the other declares all contracts and liabilities of copartners, joint and several.

In Massachusetts, a statute(3) enacts as the rule for distributing insolvent estates, that the net proceeds of the separate estate shall go to the separate creditors, and of the joint estate to the joint creditors. In Louisiana,(4) it has been decided that the new code of Louisiana, while it established the superior equity of the joint creditors, as to the joint property, abolished the principle recognized in the civil code, of a superior equity in the separate creditors as to the separate estate.

(1) Morris's Adm'r v. Morris's Adm'r et als., 4 Grattan, 294. (2) Dahlgren v. Duncan et al., 7 Smedes & Marshall, 280.

(3) Act of 1838, c. 163, cited in Allen v. Wells, 22 Pickering, 456.

(4) Morgan v. His Creditors, 8 Martin, N. S. 599 (4 Condensed Louisiana, 631).

*484] OF REAL ESTATE HELD BY A COMMERCIAL PARTNERSHIP.

MARY COLES, ADMINISTRATRIX OF STEPHEN COLES, v. WILLET COLES.

In the Supreme Court of New York.

JANUARY TERM, 1818.

[REPORTED 15 JOHNSON, 159-161.]

At law, when real estate is held by partners, for the purposes of the partnership, they do not hold it as partners, but as tenants in common, and the rules relative to partnership property do not apply in regard to it; therefore, one partner can sell only his individual interest in the land, and when both partners join in a sale and conveyance, and only one receives the purchase money, the other partner may maintain an action against him for his proportion.

ASSUMPSIT for money had and received.

It was proved, on the part of the plaintiff, that in January, 1813, Stephen Coles, deceased, and Willet Coles, the defendant, sold, and conveyed to one Meinell, two lots of ground in Ferry street, in New York, for $9,000, of which sum the purchaser paid $7,000 into the hands of the defendant, and with the remaining $2,000 paid off a mortgage on the premises, which had been given for the individual benefit of the defendant. The plaintiff, also, gave in evidence the following letter from the defendant to the intestate.

DEAR FATHER,

"New York, December 29, 1812.

Brother Stephen has returned and informs me that he left the deed that you gave him for the house and still-house, with you: to make the conveyance lawful, it is absolutely necessary that the deed should be recorded here. I have no other object in wishing the property conveyed to Stephen, than to secure you a comfortable maintenance. The failure of H. F. may put it out of my power to do so in any other way: please, therefore, to send the deed by the first opportunity. I have had an ap plication to buy the still-house, for $9,000; if you *think it best, I will do so, and put the money in bank stock; you may rely on

*485]