Stone v. Manning , 3 Ill. 530 ( 1840 )

Smith, Justice,

delivered the opinion of the Court:

It is unnecessary in this case to do more than briefly state some of the facts disclosed in the complainant’s bill, to show that he is not entitled to the relief sought.

It appears that a copartnership originally existed between the complainant and Stone & Glover; the complainant being merely a nominal partner, and receiving an annual salary of $ 1500. That this copartnership was dissolved, and the effects of the firm carried and transferred to a new firm, under the name of Stone 8¿ Co., composed of Stone & Glover, and that the complainant took from Stone & Glover a bond of indemnity, to save him harmless against the debts due by the old firm. It also appears that Stone & Glover have assigned a part of their copartnership property to the defendant, Griggs, to pay certain debts. The complainant alleges that this assignment was fraudulent.

The complainant now seeks to have the effects of the new firm applied to the payment of his claim alleged to have originated by his payment of debts of the old firm, which he alleges he has paid, and for his expenses connected with his efforts to make settlement and payment of the debts alleged to have been extinguished by him ; such application of the effects of the new firm to be made to the payment of his claim, to the exclusion of other creditors of the firm of Stone & Co., for whose benefit the assignment made is intended, but which complainant alleges is fraudulent and void as to him.

In the consideration of the case, it will be apparent from the complainant’s statement, that he has no preference of payment, in equity, for the moneys he may have voluntarily paid on account of his liabilities under the old firm, out of the property of the new firm. Against the new firm he can have no possible claim, on account of previous transactions of the old firm. Even the effects of the old firm were merged in the new, and on these he has no lien whatever. If he has paid debts of the old firm, he is no more than a simple contract creditor of Stone & Glover, having paid moneys on their account, and to their use, and for which his remedy at law is ample and perfect. But it is still more clear, that he must first establish his claim against Stone & Glover, arising out of the alleged payment, by a judgment at law, and have made efforts to obtain satisfaction by execution, before he could ask the aid of a court of equity, to interfere, and set aside conveyances of the debtors, alleged to be fraudulent, to secure the payment of other creditors’ claims.

“ There are two classes of cases where a plaintiff is permitted to come into this court ⁽¹⁾ for relief, after he has proceeded to judgment and execution at law without obtaining satisfaction of his debt. In the one case, the issuing of the execution gives to .the plaintiff a lien upon the property, but he is compelled to come here for the purpose of removing some obstruction fraudulently or inequitably interposed to prevent a sale on execution; in the other case, the plaintiff comes here to obtain satisfaction of his debt out of property of the defendant, which cannot be reached by execution at law. In the latter case, his right to relief here, depends upon the fact of his having exhausted his legal remedies, without being able to obtain satisfaction of his judgment. In the first case, the plaintiff may come into this Court for relief immediately after he has obtained a lien on the property, by the issuing of an execution to the sheriff of the county where the same is situated, and the obstruction being removed, he may proceed to enforce the execution, by a sale of the property, although an actual levy is probably necessary to enable him to hold the property against other execution creditors, or bond fide purchasers.” ⁽²⁾

The same principles are recognised in Johnson’s Chancery Reports, ⁽³⁾ and numerous other English and American cases to which they refer.

The present is not a case of copartners asking to have an account taken of the copartnership effects and debts, and a settlement decreed between them, but of a person who was only a nominal partner in one firm, asking to have the property of a new and different firm applied to the payment of claims alleged to have grown out of previous liabilities of the old firm, without having first established any legal claim against the new firm, or indeed doing so against the partners, other than himself, of the old firm.

But it is most evident that the complainant is not without entire and adequate relief at law.

He has a perfect remedy on the indemnity bond, and although one of the obligors may reside out of the State, still he may proceed against those who reside here, and against those who may reside elsewhere, in the places of their residence, or he may proceed, under the attachment law, against such as are non-residents.

For these reasons we are of opinion that the judgment of the Circuit Court should be reversed, and the bill dismissed for want of equity on its face.

Judgment reversed.

Note. In this cause motions were made for a rehearing, and for leave to amend the bill, which were both overruled.

(1) Court of Chancery in New York.

(2) Beck v. Burdett, 1 Paige Ch. R. 308.

(3) 2 Johns. Ch. R. 144, 296 ; 4 Johns. Ch. R. 677.