Francisco v. Fitch

By the Court, Johnson, J.

The statute, under which the reference in this case was had, is broad enough to include unliquidated claims by a surviving partner, against the estate of a deceased partner, growing out of the partnership. (2 R. S.,88,89.) By § 34, the executor, or administrator, may give notice to all persons having claims against the deceased, to exhibit the same "with the vouchers thereof. By § 35, upon any claim being presented against the estate, the executor or administrator may require satisfactory vouchers, in support thereof, and also the affidavit of the claimant.' And by § 36, if such executor or administrator doubt the justice of any claim so presented, he may enter into an agreement to refer the matter in controversy, to three disinterested persons, to be approved by the surrogate. Upon filing this agreement, and approval of the surrogate, a rule is to be entered, referring the matter in controversy to the persons so selected. It is made the duty of the referees thereupon, to proceed to hear, and determine, the matter, and the same powers are conferred upon them, as if the reference had been made in an action in which such court might by law direct a reference.

A part of the plaintiff’s claim, in this case, was for moneys paid by him upon partnership debts, after the death of the intestate, and it was a part of the subject matter referred. And, in my opinion, it was in the power of the referees to hear and determine it. It was, manifestly, a claim which the defendant, as administrator, had the power to settle, and adjust, with the plaintiff. And in an action brought by the plaintiff, for an account, the defendant would necessarily have been the party defendant. It has been held that the surrogate has power, upon the settlement and distribution of the estate, to liquidate equitable as well as legal demands. (Payne v. Mathews, 6 Paige, 19.) It is clear that an action of assumpsit, in a court of law, could not have been maintained by the plaintiff to recover money thus paid, upon partnership debts, without at least a settlement and balance struck. ( Westerlo v. Evertson, 1 Wend. 532.) But I think the object of the statute was to allow a reference of all claims against an estate, whether of a legal or an equitable nature, which the executor or administrator was competent to settle and adjust, and thus save the expense and trouble of litigation. I am not aware that this question has ever been determined. I have not been able to find any case in which it has arisen, and none has been cited by counsel.

This being so, however, there was no sufficient evidence, before the referees, to justify the allowance of any thing to the plaintiff on account of payments on partnership debts, or of moneys advanced by him, as capital, to the copartnership. If he could recover a claim of this nature at all, upon such a reference, he could do it only on the principle of a full accounting and settlement of all the partnership accounts and transactions. The plaintiff was the surviving partner, and as such, on the death of his copartner, became exclusively entitled to all the property, choses in action, accounts and books, with the evidences of debt which belonged to the copartnership. And it became his duty to dispose of the partnership property and effects remaining on hand, to collect the debts due, and pay the demands owing, by said firm. (Murray v. Mumford, 6 Cowen, 441.) He was liable to account to the defendant, as representative of the deceased partner, and alone was liable to be sued by the creditors of the copartnership. And even in equity, a creditor could not have maintained an action against the defendant to recover a partnership debt, without alleging the insolvency of the plaintiff. (Lawrence v. Trustees of the Leake and Watts Orphan House, 2 Denio, 577.) The claim here, if any existed in the plaintiff’s favor, was of an equitable and not a legal nature, as there is no pretense that there was ever any settlement, and balance struck between the partners, It was for the plaintiff, therefore, who made the claim, to show that in equity and good conscience it ought to be paid. This was not shown, by proving the payment of partnership 'debts, or the amount contributed by the plaintiff to the partnership funds. Because until all the partnership concerns are ascertained, and adjusted, it is impossible to know whether a particular partner be a debtor or creditor of the firm. {Story on Part. § 221.) For aught the referees could know, from the evidence before them, the plaintiff, notwithstanding these payments, was still a debtor to the partnership. He became by these payments a creditor of the firm, to the extent of the payments. But whether he could have any claim upon the estate of the deceased copartner, on that account, would depend entirely upon the debits of the firm against him. In short, there could be no recovery in respect of the partnership accounts, without affirmative proof that these payments, as between the partners, were more than the plaintiff was bound to pay. And this would involve proof of the agreement, the capital paid in by each, and the whole transactions between the partners. There was no proof upon this subject. It was not even shown when the intestate died, nor any thing relating to the condition of the partnership, at his decease. The judgment must therefore be reversed, and a new trial granted, with costs to abide the event.

[Monroe General Term, September 7, 1857.

Johnson, Welles and T. R. Strong, Justices.]