Sternberg Dredging Co. v. Sternberg's Estate

• Decision Date: 24 January 1957
• Docket Number: Gen. No. 34165
• Citation: 10 Ill.2d 328,140 N.E.2d 125
• Parties: STERNBERG DREDGING COMPANY, Appellant, v. ESTATE of William F. STERNBERG, Appellee.
• Court: Illinois Supreme Court

Page 125

140 N.E.2d 125

10 Ill.2d 328

STERNBERG DREDGING COMPANY, Appellant, v. ESTATE of William F. STERNBERG, Appellee.

Gen. No. 34165.

Supreme Court of Illinois.

Jan. 24, 1957.

Oris Barth, Urbana, and Lawrence R. Hatch, Champaign (Thomas S. McPheeters, Jr., St. Louis Mo., of counsel), for appellant.

Claude M. Swanson, Paxton, and M. H. Scott, Piper City, for appellee.

DAVIS Justice.

On July 5, 1950, the claimant, a Delaware corporation, filed its claim totaling $16,715.61, against the estate of William F. Sternberg. The claim was based upon two promissory notes, dated January 27, 1943, due two years after date, with interest at 6 per cent per annum, signed 'C. H. Sternberg Heirs by W. F. Sternberg, Agent.' Numerous defenses were interposed to the claim in the course of this litigious proceeding. The county court allowed the claim in full. On appeal, the circuit court of Ford County held that the claimant could not maintain the suit because its authority to do business in this State had been revoked for failure to pay franchise taxes and file annual reports, and entered judgment against it. Claimant then appealed to the Appellate Court, which reversed the judgment, remanded the cause to the circuit court, Sternberg Dredging Co. v. Estate of Sternberg, 351 Ill.App. 514, 115 N.E.2d 557, and held that the action should have been continued or abated until such time as the corporation should again qualify to transact business in Illinois, if it saw fit to do so. Thereupon the claimant paid the taxes and filed the reports, and the cause was reinstated. On May 9, 1955, the circuit court allowed the claim in full in the amount of $20,040.05, as a claim of the seventh class to be paid in due course of administration, and remanded the cause to the county court with judgment certified for payment. It held that William F. Sternberg had authority to execute the notes on behalf of the C. H. Sternberg heirs; that he was one of such heirs and liable, as principle, on said notes, which were legal obligations of his estate; that the relationship between the C. H. Sternberg heirs was not that of partners; and that the obligation was joint and several and could be enforced by action against any one of them, and therefore against the estate of William F. Sternberg.

On appeal by the estate to the Appellate Court, the judgment was reversed and the cause remanded. In re Estate of Sternberg, 10 Ill.App.2d 258, 134 N.E.2d 663. The Appellate Court held that there was a legal obligation and debt owing to the claimant; that the C. H. Sternberg heirs were partners and the notes were given in the course of partnership business; and that the obligations, being those of a partnership, should be jointly paid, and could not be enforced solely against the estate of William F. Sternberg. On claimant's motion and affidavit, pursuant to the provisions of section 75(2)(c) of the Civil Practice Act, (Ill.Rev.Stat.1955, chap. 110, par. 75(2)(c),) the remanding order of the judgment was stricken, and we allowed claimant's petition for leave to appeal.

The defendant does not challenge that part of the Appellate Court opinion which holds that the notes constitute a legal obligation owing to claimant. The questions argued are: (1) Was there a partnership between the C. H. Sternberg heirs, including William F. Sternberg? (2) If so, does that preclude the allowance of the claim in the William F. Sternberg estate? Since we conclude that the existence of a partnership between the Sternberg heirs would not preclude the allowance of this claim, we need not determine whether such relationship existed. Therefore we will consider only the latter question and will not restate the facts, since the opinion of the Appellate Court contains a statement of facts which claimant does not contest and which we deem adequate.

Section 15 of the Uniform Partnership Act provides: 'All partners are liable (a) Jointly and severally for everything chargeable to the partnership under Sections 13 and 14. (b) Jointly for all other debts and obligations of the partnership; but any partner may enter into a separate obligation to perform a partnership contract.' (Ill.Rev.Stat.1953, chap. 106 1/2, par. 15.) Sections 13 and 14 pertain to the liability of the partners for wrongful acts or omissions of one of their number and the misapplication of property of third persons, and they have no application here. Prior to the passage of the act, this court had consistently held that in an action at law the contractual liability of living partners was joint, and not joint and several; that an action at law to enforce a partnership obligation must be brought against the partners jointly, if living; and that section 3 of the Joint Rights and Obligations Act did not apply to partnerships but only to contracts, obligations and covenants made jointly by persons in their individual capacities. Fleming v. Ross, 225 Ill. 149, 80 N.E. 92; Sandusky v. Sidwell, 173 Ill. 493, 50 N.E. 1003. We had also held that a joint action at law could not be maintained against surviving joint obligors and the personal representative of a deceased joint obligor. Moore v. Rogers, 19 Ill. 346, 347; Powell v. Kettelle, 1 Gilm. 491; Ballance v. Samuel, 3 Scam. 380. These cases pointed out that under the common law when one joint obligor dies all right of action as against his estate is gone; and that in such cases a judgment could not be joint because the survivors were liable personally, the judgment against them being de bonis propiis; while the personal representative was liable only in that capacity to the extent of the assets in his hands, the judgment against him being de bonis testatoris.

However, it appears that from earliest times the rule in equity was that partnership debts were joint and several. Thus in Doggett v. Dill, 108 Ill. 560, at page 565, this court quotes with approval section 362 of Story on Partnership: 'The doctrine formerly held upon this subject seems to have been, that the joint creditors had no claim whatsoever in equity against the estate of the deceased partner, except when the surviving partners were at the time, or subsequently became, insolvent or bankrupt. But that doctrine has been since overturned, and is now held, that in equity all partnership debts are to be deemed joint and several, and consequently the joint creditors have, in all cases, the right to proceed at law against the survivors, and an election also to proceed in equity against the estate of the deceased partner, whether the survivors be insolvent or bankrupt, or not.' And in Tandrup v. Sampsell, 234 Ill. 526, 532, 85 N.E. 331, 333, 17 L.R.A.,N.S., 852, this court said: 'In case one joint obligor dies, the joint obligation survives against the remaining obligors. The several obligation only survives against the personal representative. In other words, the death of a joint obligor dissolves the joint liability at law which continues against the survivors (1 Chitty's P1, 50), but the estate of the deceased obligor is liable upon the several liability.'

The rule announced in Doggett v. Dill, 108 Ill. 560, has not been overruled, Henry v. Caruthers, 196 Ill. 136, 63 N.E. 629; Union Trust Co. v. Shoemaker, 258 Ill. 564, 101 N.E. 1050, and appears to be in accord with the weight of authority elsewhere. Annotation, 61 A.L.R. 1410 et seq.; 68 C.J.S., Partnership, § 284 b. The case of Henry v. Caruthers, 196 Ill. 136, 63 N.E. 629, further held that the findings of fact by the Appellate Court, under the provisions of paragraph 90 of the Practice Act which was similar to section 92(3)(b) of our present Civil Practice Act (Ill.Rev.Stat.1955, chap. 110, par. 92(3)(b)) were not conclusive in this court, and 196 Ill. at page 141, 63 N.E. at page 630 stated: 'As the claims of the defendant in error against the personal representatives of the deceased partners is enforceable only upon equitable principles, and not by an action at law, the adjudication of the claim in the probate ...