Cleckler v. First Nat. Bank of Anniston

As a general rule, each individual partner is liable to creditors of the firm for the whole amount of every debt due therefrom. 22 Am. E. Enc. of Law, 172; Leinkauff v. Munter,76 Ala. 194. Nor is a creditor of the firm, except, perhaps, as to individual creditors of a member thereof, required to resort to the firm assets before looking to the individual property of the respective members of said firm for the satisfaction of his debt. 20 R. C. L. § 181, p. 1041; 22 Am. E. Enc. of Law, 173; Bowker v. Smith, 48 N.H. 111, 2 Am. Rep. 189.

The bill in this case seeks to subject the property of a member of the debtor firm to the payment of complainant's demand against said firm, and to cancel certain conveyances made by him to his wife as fraudulent or voluntary. No individual creditor of the respondent debtor is a party to the suit or is seeking a marshaling of assets so as to require this complainant to resort to or exhaust the firm assets before looking to the individual property of one of the partners, and this complainant is not, therefore, concerned in the accounting or settlement of the partnership between the respective partners, and the cross-bill is without equity as to it. The cross-bill charges that W. L. Little has illegally appropriated funds of the firm in settlement of his individual debts, and that it was through the bank as a depository, and that its officers had notice of his illegal and improper conversion of the assets of the firm. The bank was in no sense a guardian of the firm, and, whether it did or did not know that Little was misusing the funds of the firm, it was in no sense responsible unless it participated therein, and the only effort to charge a participation by the bank is that Little used or deposited with it large assets to secure the bank amounts on his individual indebtedness. If Little illegally used the firm assets to secure his individual indebtedness to the bank, and it knew of said illegal use, it would, of course, be required to apply it to the firm indebtedness before going upon the members individually, and which fact can be shown by this cross-complainant in defense of the original bill. But the cross-bill does not aver that the amount so paid the bank would have canceled its debt, and unless the amount so paid exceeded the firm indebtedness there would be nothing for the bank to pay over or account for to a receiver, and there would be no need for making the bank a party to a bill for a receivership or the settlement of the partnership affairs, and which is foreign to the present original bill. Unless Little turned over to the bank more than the firm owed, it could not be due a receiver anything; and, if the bank attempted to collect its debt from the firm, the receiver or the individuals, they can defeat a recovery pro tanto as to the misapplication of any illegal payments made by Little with assets belonging to the firm upon his individual account. The trial court did not err in sustaining the demurrer to the cross-bill, and the decree is affirmed.

Affirmed.

McCLELLAN, SOMERVILLE, and THOMAS, JJ., concur.