Willis v. Barron

• Decision Date: 29 March 1898
• Parties: WILLIS v. BARRON.
• Court: Missouri Supreme Court

45 S.W. 289

143 Mo. 450

WILLIS v. BARRON.

Supreme Court of Missouri, Division No. 2.

March 29, 1898.

PARTNERSHIP — INDIVIDUAL TRANSACTIONS — LEGAL AND EQUITABLE REMEDIES — ACCOUNTING — SET-OFF.

1. Under Rev. St. 1889, § 2384, providing that all contracts only joint at common law shall be construed as joint and several, and section 2387, providing that, in all cases of joint obligations of co-partners or others, suit may be prosecuted against any one or more of those so liable, the common-law rule that a partner could not sue his firm at law on a note executed by the firm to himself does not apply.

2. If a partner sue on a note executed to him by the firm, an unsettled partnership account cannot be pleaded as a counterclaim.

3. In an action on a note by a partner against his firm, the answer averred that there had never been an accounting between plaintiff and the firm, and that plaintiff had drawn out partnership assets in excess of his share, and prayed an accounting. Held, that it was not a sufficient pleading of an equitable defense to oust a court of law of its jurisdiction.

Case certified from Kansas City court of appeals.

Action by Anna B. Willis, executrix of R. T. Willis, deceased, against P. J. Barron. Judgment for plaintiff. Defendant appealed to the Kansas City court of appeals. Upon a division of opinion, it certified the cause to the supreme court. Affirmed.

J. H. Cupp, for appellant. H. S. Booth and W. W. Fry, for respondent.

GANTT, P. J.

This is an action by the executrix of R. T. Willis, deceased, to recover one-half of the amount of two notes and interest executed by the firm of Willis & Barron (composed of R. T. Willis and P. J. Barron) to R. T. Willis in his lifetime. The petition alleged the partnership of Willis & Barron in 1890, the execution of the notes, the death of Willis in 1891, the qualification of plaintiff as executrix of the estate of R. T. Willis, an administration of the partnership estate of the firm, its insolvency, and the final settlement thereof, and discharge of plaintiff as administratrix thereof, and concluded with a prayer for judgment for one-half of the amount of said notes and interest. Defendant admitted the partnership, the execution of the notes, and the appointment of plaintiff as executrix, but averred there had never been an accounting between defendant and R. T. Willis, and charged that Willis had drawn out partnership assets in excess of his share to an amount greater than the notes, and prayed for the appointment of a referee and for an accounting. The reply was a general denial of the answer. There was a judgment for plaintiff in the circuit court, from which defendant appealed to the Kansas City court of appeals. That court, upon a division of opinion, certified the cause to this court.

Appellant insists upon two propositions to reverse the judgment: First, that an action at law cannot be maintained by one partner upon a promissory note executed to him individually by the partnership of which he is a member; second, that the court erroneously excluded evidence tending to show that R. T. Willis in his lifetime drew out of the partnership funds, in excess of his share, more than enough to pay off his share of the notes sued on.

1. At common law, partnership contracts were construed to be joint only, not joint and several. As a consequence of this rule, in actions by or against partners it was necessary that all the partners should join as plaintiffs, or be joined as defendants. A further consequence of this doctrine was that a partner could not sue a firm of which he was a member on a note executed by the firm to himself, and, if a person were a member of two firms, one of said firms could not sue the other at law, as the names of all the members of the firm, whether appearing in the firm name or not, must be set out in the declaration or petition, and likewise the names of all the partners of the firm sued must all be set out, and the result would be a party suing himself, which the law would not tolerate. 1 Chit. Pl. pp. 47, 48; 1 Daniel, Neg. Inst. § 354. The remedy in such cases was in equity. This difficulty of suing at law ceased, however, when a negotiable instrument passed to a third party, because in such case the indorsee could sue all the makers. Although one partner could not sue his firm, or a firm having a common partner with another firm could not sue the other, at law, no difficulty was found by the courts of chancery in enforcing notes given by a firm to one of its members, or by one firm to another firm, having a common partner; for equity treated the different firms, for the purposes of substantial justice, precisely as if composed of strangers, or were corporate companies. 1 Story, Eq. Jur. §§ 679-681. All the law writers and all the adjudged cases place the disability of one partner to sue his firm upon its note to him upon the ground that a man cannot contract with himself, and because it was deemed absurd to permit a party to be both a plaintiff and defendant in the same action, and for the further reason that until the partnership affairs were adjudged, and the balance struck, it could not be said one partner was indebted to another. Judge Bliss, in his Code Pleading (section 91), says: "At common law, where there was a joint obligation or undertaking, in an action upon it all who thus join must be made defendants. * * * Thus contracts made by partners with third persons are joint, and all must be joined in an action." Recognizing that this rule existed at common law, and the grounds upon which it was based, we are confronted with our statute (Rev. St. 1889, § 2384) which provides that "all contracts which, by the common law, are joint only, shall be construed to be joint and several," and section 2387, which further provides that, "in all cases of joint obligations and joint assumptions of copartners or others, suits may be brought and prosecuted against any one or more of those who are so liable." Now, the partner holding the firm's note payable absolutely to himself at common law was under no disability to sue his firm, save only that, the note being a joint promise, he was necessarily compelled to sue himself; but since the statute now makes the note the several contract of each member of the firm, and makes each partner liable in solido, the payee is no longer under the necessity of suing...