Hundley v. Farris

• Decision Date: 02 February 1891
• Citation: 103 Mo. 78,15 S.W. 312
• Parties: HUNDLEY v. FARRIS.
• Court: Missouri Supreme Court

15 S.W. 312

103 Mo. 78

HUNDLEY v. FARRIS.

Supreme Court of Missouri, Division No. 1.

February 2, 1891.

PARTNERSHIP — FIRM AND PRIVATE CREDITORS.

On the death of a member of a firm leaving a partnership estate, the holder of a note, signed in the firm name, is not entitled to payment out of the estate of the deceased partner, until the individual demands against his estate are satisfied, though Rev. St. Mo. 1889, § 2384, provides that all contracts, which by common law are joint only, shall be construed to be joint and several. Distinguishing Shackelford's Adm'r v. Clark, 78 Mo. 491. BARCLAY, J., dissenting.

Appeal from circuit court, Buchanan county; JOSEPH P. GRUBB, Judge.

Rev. St. Mo. 1889, § 2384, provides that all contracts, which by common law are joint only, shall be construed to be joint and several; and sections 183, 209, that all demands against the estate of any deceased person shall be classified and paid as follows: "* * * (5) All demands legally exhibited within one year; (6) all demands thus exhibited after the end of one year, and within two years."

This cause originated in the probate court of Buchanan county, from whose judgment plaintiff appealed to the circuit court, where the cause was tried on the following agreed statement of facts: "That during the whole of the year 1882, and thereafter, up to the time of the death of Madison S. Farris, the said Madison S. Farris and Michael Farris were partners, doing business in the city of Saint Joseph and Platte county, Mo., under the firm name of M. S. Farris & Co. That during the time they were so in partnership, to-wit, on the 1st day of February, 1884, said firm borrowed from plaintiff, for use in their business as such partners, the sum of ten thousand dollars, and gave their note in their firm name therefor, payable to plaintiff one day after date, which note is on file with the transcript from the probate court of Buchanan county, sent up in this case. That on said note there was paid, September 4, 1884, $3,075.83, and on July 1, 1885, $1,234.70, which said payments were made by Michael Farris, as administrator of the estate of M. S. Farris & Co., and as dividends on claims allowed by the probate court. Said Michael Farris, as surviving partner of said firm, was appointed and qualified as administrator of said partnership estate within one year before January 30, 1884, and the balance due on said note, no payments having been then made, was duly presented and allowed by the probate court of Buchanan county, Mo., against said partnership estate. That John Farris was duly appointed and qualified as administrator of the individual estate of Madison S. Farris by said probate court, and within one year after the grant of letters of administration on said individual estate this said note was presented for allowance against said individual estate, subject to the dividend so paid. That said John Farris has already paid, of individual claims allowed against said individual estate, within said first year of his administration, other than the one in controversy, nearly all the money realized from the assets of said estate, and there is not sufficient of said assets to pay, in addition on the claim in contest, a per cent. thereof equal to the per cent. already paid on said other individual claims so allowed. That the individual estate is not sufficient to pay more than fifty cents on the dollar of the individual claims allowed within the first year against said individual estate, exclusive of the note or claim in contest in this suit. That the partnership assets have been about exhausted, and will not pay more than fifty per cent. on partnership demands. The partnership estate of said M. S. Farris & Co. is not sufficient to pay more than fifty per cent. of the claims allowed against said partnership estate. That this claimant has received his full pro rata of the assets of said partnership estate, the assets of said partnership estate being fully exhausted. That said Madison S. Farris died on the ____ day of ____, 1884." This was all the evidence introduced or offered in the case on either side. The note mentioned in the agreed statement of facts was not read in evidence, nor is a copy of it preserved in the bill of exceptions. There were no instructions or declarations of law asked or given. The court, on the agreed statement of facts, allowed plaintiff's claim against the individual estate of Madison S. Farris, deceased, but, finding it to be a partnership debt of M. S. Farris & Co., allowed it subject to the payment in full, first, of the individual debts theretofore allowed and proved in the probate court against the individual estate of said deceased, and rendered its judgment accordingly. The case was tried at the January term, 1886, of the circuit court, and at that term motions for a new trial and in arrest were filed by the plaintiff, overruled by the court, and the case appealed to this court.

James W. Boyd and A. D. Kirk, for appellant. B. R. Vineyard, for respondent.

SHERWOOD, J., (after stating the facts.)

Touching the principle involved in this litigation, Chancellor Kent remarks: "The joint creditors have the primary claim upon the joint fund, in the distribution of the assets of bankrupt or insolvent partners, and the partnership debts are to be settled before any division of the funds takes place. So far as the partnership property has been acquired by means of partnership debts, those debts have, in equity, a priority of claim to be discharged; and the separate creditors are only entitled in equity to seek payment from the surplus of the joint fund after satisfaction of the joint debts. The equity of the rule, on the other hand, equally requires that the joint creditors should only look to the surplus of the separate estates of the partners after payment of...