Strattan v. Tabb , 1881 Ill. App. LEXIS 7 ( 1881 )

Wall, P. J.

The mercantile firm of Hobbs, Tabb & Haynes, made a voluntary assignment for the benefit of creditors. The assignee reported among others the claim of the defendant in error, who was one of the partners, for services rendered to the firm. Exceptions were filed to this claim and upon a hearing' in the county court the claim was disallowed. An appeal was taken to the circuit court and upon a trial by jury the claimant was allowed the sum of $1,650, and a motion for new trial being overruled judgment was rendered accordingly. The case is brought here by the assignee. A question is made as to the jurisdiction, it being urged that this is a controversy between partners, and that a court of equity is the only tribunal competent to settle it. On the other hand it is insisted that the facts show such a case as would enable the claimant to recover in a court of law. The evidence shows that each member of the firm was equally interested in the stock, and that the claimant had general charge of the business giving it his whole time and attention while the other partner’s gave their attention mainly to other pursuits. This would not give claimant a right to special compensation unless there was an agreement to that effect, and he offers evidence tending to prove such an agreement though the amount of his compensation was not, according to his own statement, fixed by the supposed agreement; and therefore his demand if a just' one, was for the reasonable value of his services. There was no settlement by the parties, no balance agreed on, in fact, as has been said, the price to be paid never determined, and whatever may be due the claimant must depend upon an investigation of all his accounts with the firm. A court of law will not ordinarily undertake such an investigation, but the matter is one cognizable in a court of equity where ample and complete justice may be done; but this proceeding is under a special statute vesting jurisdiction in the county court to adjust the estates of those who may make voluntary assignments for the benefit of creditors, and while the statute does not divest courts of equity of jurisdiction in such matters, it may be that a fair construction of the act would authorize the county court to hear and determine all claims of whatever character, and adjust them according to equitable principles.

Assuming, then, without expressly deciding, that there was jurisdiction, let us inquire whether the claimant has a right to assert this as an absolute demand against the estate of the partnership. Each partner put into the concern one-third of the cost of the original stock, which was purchased from one Taylor for the sum of $8,113. The claimant took out goods at various times amounting in the aggregate to $2,125.69, and the assignee insists that this is a proper set-off against the claim of $1,650 for services rendered to the firm. To this set-off the claimant objects, because he says he put more than that amount into the business, and that on those two items there is a balance in his favor. This assumes that the amount put into the concern by the partners may be drawn out by' them and retained before the partnership debts are paid, and if the position is correct the entire stock in trade might be exhausted to satisfy the individual demands of the partners before the firm creditors are paid. Such, however, is not the law. The interest of each partner in the partnership property is his share of the surplus after the partnership debts are settled, and when a firm becomes insolvent the joint creditors have a primary claim upon the joint fund. 3 Kent’s Com. 37, 77. K"o one partner has any share or right in the partnership property except what remains thereof after the full discharge and payment of all debts and liabilities of the partnership, and each partner has a right to have the same applied to the due discharge of all such liabilities before any of the partners or his personal representative can claim any right thereto. It is a clear and well established rule that the individual partner cannot prove a claim against the joint estate in competition with the creditors of the firm, who are in fact his own creditors, and thereby take part of the fund to the prejudice of those who are not only creditors of the partnership but of himself. Story on Partnership, §§ 97, 390, 391; Glow on Partnership, page 290, 291.

If after the partnership debts are all paid there is a surplus, it belongs to the partners, and if hv reason of the alleged contract the claimant has a proper demand, he may enforce its payment out of the surplus, but he cannot urge it as a general charge against the estate to be paid in pari passu, with the demands of the partnership creditors. The judgment in this case is general for the amount of the verdict, and is to be certified to the county court for “payment in due course of settlement by the assignee,” and if so enforced would place the claimant on an equal footing with the creditors of the firm. He is not entitled to such a standing in the settlement of the estate, and the judgment is therefore erroneous. It is reversed, and the cause is remanded.

Reversed and remanded.