Creighton v. Murphy, Neal & Co.

• Decision Date: 11 April 1879
• Citation: 1 N.W. 138,8 Neb. 349
• Parties: JOHN A. CREIGHTON, ADMINISTRATOR OF THE ESTATE OF EDWARD CREIGHTON, DECEASED, PLAINTIFF IN ERROR, v. MURPHY, NEAL, & CO., DEFENDANTS IN ERROR
• Court: Nebraska Supreme Court

1 N.W. 138

8 Neb. 349

JOHN A. CREIGHTON, ADMINISTRATOR OF THE ESTATE OF EDWARD CREIGHTON, DECEASED, PLAINTIFF IN ERROR, v. MURPHY, NEAL, & CO., DEFENDANTS IN ERROR

Supreme Court of Nebraska

April 11, 1879

ERROR from the district court for Douglas county. The opinion states the case.

AFFIRMED.

Woolworth & Munger, for plaintiff in error.

I. At the common law a partnership debt cannot be collected from the estate of a deceased partner, unless the survivor is shown to be insolvent.

1. The assets of a partnership must be applied to pay partnership debts, and the estate of an individual member thereof must be applied to pay his debts. Partnership debts cannot share in the estate of the member until all his personal debts have been paid, and his personal debts cannot share in the partnership assets until all its debts have been paid. Filley v. Phelps, 18 Conn. 294. United States v Hack, 8 Peters, 275. Murril v. Neil, 8 How., 414.

2. The death of a partner invests the survivors with the exclusive right of possession and management of the whole partnership property, free from any interference therewith by his representatives. Having the assets, and being charged with the administration, their duty is to pay the partnership debts to the full extent of the means placed by the law in their hands.

3. Accordingly, actions for the recovery of partnership debts can only be maintained against the survivors; no proceeding for the purpose can be maintained against the representatives of the deceased partner, at least not until the remedies against the survivors have been exhausted, or have been shown to be unavailing. Lange v. Keppele, 1 Binn., 123. Wilder v. Keeler, 3 Paige, 167. Sturges v Beach, 1 Conn. 507. Alsop v. Mather, 8 Ib., 554. Voorhees v. Child's Executor, 17 N.Y. 354. Pope v. Cole, 55 Ib., 124. Hubble v Perrin, 3 Ohio 287. The Trustees, etc., v. Lawrence, 11 Paige, 80. S. C. on Appeal, 2 Denio, 577. Troy, &c., Factory v. Winslow, 11 Blatch., 513. Bloodgood v. Bruen, 8 N.Y. 362. Van Reimsdyke v. Kane, 1 Gal., 371.

II. This rule of the common law has not been changed by the statute of Nebraska. The provision of the statute invoked in this behalf, in support of the decisions of the county and district courts, is not applicable to partnership contracts; and if it were, does not justify an allowance of the claim and order for its payment. A partnership debt does not arise on a joint contract in the sense in which those terms are used in the statute. Parsons on Part., sec. 356.

John D. Howe (Mayne & Key and Sapp & Lyman with him), for defendants in error.

I. The amended answer sets up nothing but what should have been pleaded and relied on in the original case. If the decedent, or the administrator, had any confidence in the matters now alleged herein, they should have insisted on them before judgment. It is now too late. The administrator was in privity in law with the decedent, and the judgment has the same effect as it would have had had E. Creighton survived the final judgment, and it had been rendered against him. (See 45 Ia. 179, where this case is reported, also case at p. 149.) And the judgment of a sister state is protected by peculiar sanctions. U.S. Const., art. IV., sec. 1. Act of Cong., 26th of May, 1790. Stacy v. Thrasher, 6 How. U.S., 44. Dykes v. Woodhouse, 3 Rand., 287. 3 Wash. C., C. 17. 16 Curtis, 596. O'Hagen v. O'Hagen, 14 Ia. 267-8, 16 Mass. 71. 1 Pet., 692.

II. The position of plaintiff in error--that actions for the recovery of partnership debts can only be maintained against the survivors--is unsound. Nor is it necessary to show that the survivors have been pursued to insolvency. Even the cases that he cites in support of his main proposition show that insolvency of the survivors may be shown at law. 17 N.Y. 354. 55 N.Y. 124. It is true that the rule relied on by counsel is supported by eminent authority. Where the question is an open one, it is difficult, not to say impossible, to see why it should be held to. A line of thoroughly reasoned cases holds the contrary rule. Camp v. Grant, 21 Conn. 41. Coll. on Part., secs. 584, 580, 623, 337 to 347, 68 to 76. Story's Part., sec. 379 n. secs., 363, 362, 377. Allen v. Wells, 22 Pick., 452-3-4. Ex parte Hayden, 1 Bro. C. C., 454. 17 Ves., 207. Sparhawk v. Russell, 10 Metc., 305, 307. 7 Smedes & M., 280. Wilkinson v. Henderson, 1 Myl. & Keene, 582-3. Lammersley v. Lambert, 2 J. Ch., 508- 511. 3 Kent Com., 64 (4th ed.) Belknap v. Abbott, 11 Ohio 411. Belle v. Newman, 5 Serg. & R., 78. Findly v. Hosmer, 2 Conn. 352.

OPINION

MAXWELL, CH. J.

On the twenty-fifth day of January, 1874, the defendants in error commenced an action in the district court of Pottawattomie county, Iowa, against Edward Creighton to recover the sum of $ 2,800.23, with interest and costs. The action was founded on a breach of contract, the contract having been made in 1871 between the defendants in error and The Far West Freight Company, a copartnership of which Edward Creighton was a member. Personal service in Iowa was had upon Creighton and in August, 1874, he filed an answer to the petition in said cause, denying all of the facts stated therein. On or about the fifth day of November, 1874, Edward Creighton died, being at that time a resident of this state. On the tenth day of that month the plaintiff was appointed special administrator of the estate, and on the twentieth day of March, 1875, he was appointed administrator of said estate by the probate court of Douglas county. On the sixteenth day of December, 1874, the plaintiff applied to the circuit court of Pottawattomie county, Iowa, asking to be appointed administrator of said estate, alleging as ground therefor the pendency of the above action. He was appointed such administrator, and on the eighteenth day of November, 1875, filed an answer denying the facts stated in the petition, and also denying the jurisdiction of the court. The district court sustained its jurisdiction, which judgment was affirmed by the supreme court of that state. Final judgment was rendered against said plaintiff, administrator of said estate, in November, 1877, for the sum of $ 2,678.73, and costs, and said administrator was directed to pay the judgment, interest, and costs, out of the assets of the estate. A transcript of the judgment being filed in the county court of Douglas county was allowed as a claim against said estate. The plaintiff appealed to the district court of Douglas county. As cause why the claim should not be allowed, the plaintiff filed the following answer: "The Far West Freight Company was a copartnership doing business in this state and the territories west thereof, whereof the said intestate and Charles M. Ellias and James F. Aglar were the members. The said partnership was formed and commenced its business on or about the fifteenth day of December, 1869, and existed undissolved at the death of the said intestate, having large and valuable assets over and above its debts and liabilities, all of which, at the death of the said intestate, came to the hands of the said survivors, and have been administered by them as surviving partners of said co-partnership, and they, as such surviving partners, still have the same in their hands ready to be applied to the payment of the said debts; that the estate of the intestate remains unsettled in the county court of this county, its debts not yet all paid, and its assets not yet all collected; that during the life of the said intestate, an accounting was had between him and his said partners to a certain day, whereby it was ascertained and agreed that after the payment of all the debts of the said partnership, a large sum, to wit, $ 3,000 and over, was justly coming to said intestate from said partnership after the payment of its debts; and the said survivors of the said intestate promised and agreed to pay all of said debts, and also said sum so coming to said intestate, all of which matters were well known to the said claimants before they commenced the action in which they recovered the judgment aforesaid; that the claims whereon the said action and judgment were grounded accrued to the said claimants in the course of their dealing with the said partnership, and are justly chargeable...