Pendelton v. Beyer

• Decision Date: 22 September 1896
• Citation: 68 N.W. 415,94 Wis. 31
• Parties: PENDELTON v. BEYER ET AL.
• Court: Wisconsin Supreme Court

94 Wis. 31

68 N.W. 415

PENDELTON

v.BEYER ET AL.

Supreme Court of Wisconsin.

Sept. 22, 1896.

Appeal from circuit court, Fond du Lac county; N. S. Gilson, Judge.

Action by Charles T. Pendelton against George Beyer and William K. Smith. From an order overruling a demurrer to the answer of defendants, plaintiff appeals. Affirmed.

The action is brought for the settlement of the accounts of a partnership which has already been dissolved. It is not stated whether there are any firm creditors. The plaintiff alleges that on settlement there will be found a large sum due him. He demands judgment for the recovery of such sum as may be found due him on such settlement. The answer denies that anything will be found due the plaintiff on settlement, and alleges that plaintiff is insolvent, and sets up by way of counterclaim several claims against the plaintiff, owned by the defendants severally; some relating more or less to the transactions of the partnership, and some growing out of matters entirely independent of the partnership transactions. The answer asks that these several claims be set off against whatever sum may be found due the plaintiff, and judgments in favor of the defendants severally for any balance in their favor. The plaintiff demurred to that part of the answer which sets up these alleged counterclaims, on the grounds that such counterclaims are not proper to be pleaded in such an action, and do not show a cause of action against the plaintiff. The demurrer was overruled, and the plaintiff appeals.F. F. Wheeler and Bouck & Hilton, for appellant.

O. F. Trudell and Greene & Vroman, for respondents.

NEWMAN, J. (after stating the facts).

This case is anomalous. Strictly speaking, and in the ordinary sense of the word, the plaintiff has no claim to enforce against his co-partners, or either of them. If the defendants owe anything, they owe it to the partnership, and not to the plaintiff. If anything is due from them, it is due to the partnership, and not to the plaintiff. Sprout v. Crowley, 30 Wis. 187;Smith v. Diamond, 86 Wis. 359, 56 N. W. 922. Hence the plaintiff has, strictly, no claim against the defendants, or either of them. The credits of the firm are to be collected and applied to the payment of its debts, and the residue, if any, is to be distributed among the partners in proportion as they are entitled under the partnership agreement. This is usually done through the instrumentality of a receiver. Not until after the payment of firm debts and the ascertainment of the residue can any claim arise in favor of any partner. The plaintiff, then, would not be entitled to a judgment against the defendants, or either of them, for his share is not due from them, but from the partnership fund. It is a fund in court, to be distributed under direction of the court. So, too, if a partner owes an individual debt to his co-partner, that in no way concerns the firm, and, under ordinary circumstances, a claim for such a credit can have no place in an action to dissolve a partnership and settle up its affairs. Smith v. Diamond, supra. It is manifest that the claims against the plaintiff which the defendants propose to set off against this problematic claim of the plaintiff are not such claims as are authorized to be set off by either the statute of set-offs or counterclaims. Rev. St. §§ 2656, 4264. They are, at least, not claims “existing in favor of a defendant against a plaintiff between whom a several judgment may be had in the action.” But, while set-off is altogether of statutory origin, equity had a well-established jurisdiction and practice regulating set-offs before any statute on the subject was passed. In general, the right was limited to matters “connected with the subject of the action,” and could only be founded upon...