Trustees of the Leake & Watts Orphan House v. Lawrence , 11 Paige Ch. 80 ( 1844 )

The Chancellor.

There is no doubt of the fact that this debt, if due at all, was a joint debt due from the firm of A. H. Lawrence & Co. Whatever may have been the private arrangement of the two members of the firm as between themselves, as to the persons who dealt with them they were general co-partners, and were holden as such. The counsel for the appellants are right in supposing that a judgment recovered against a ¡surviving copartner, in a suit to which the representatives of the deceased copartner were not parties, is not evidence against such' representatives of the indebtedness of the decedent; That was decided by this court in the case of Smith & Barlow v. Ballantine & McNaughton, (10 Paige’s Rep. 101.) Here, however, one of the executors of the deceased copártnef was himself the defendant in the suit at law. What effect that fact might have upon the case, it is not necessary to considéf; for; independent of the judgment, I have no doubt of the existence of the joint indebtedness of both members of the firm at the death of J. G. Leake. The other evidence in the case is perfectly satisfactory to my mind, upon that point. The assistant vice chancellor having, in his written opinion, referred to the testimony to establish the fact of indebtedness, it is not necessary for me to do more than to state the conclusion of fact at which I have arrived. The balance due to Leake, therefore, on the 13th of January, 1827, instead of being $7,407,87, as falsely carried to the new account which was undoubtedly opened after the death of Leake, was $57,407,87, and interest on $50,000 of that amount from the 1st of July, 1826, at 5 per cent.

I am satisfied that there is no error in the decree, of which the appellants have a right to complain, in relation to interest. If the false entry in the books was made, for the purpose of defrauding the estate, very soon after the death of Leake, as I think it was, that was of itself a sufficient breach of the previous agreement, to allow interest at five per cent, to entitle the executors of Leake to claim seven from that time. And certainly the debtors had no right to claim the benefit of the agreement as subsisting at the time from which the assistant vice chancellor has allowed seven per cent interest to be computed. Again; if the interest is to be computed upon the basis of the agreement of five per cent, it should be compounded; for that was undoubtedly the understanding between the parties.

The only question which remains to be considered is, whether this suit was barred by the statute of limitations. For if there is no statute which is a flat bar, the delay in commencing the suit in this court until after the determination of the action at law against the surviving copartner, is not sufficient to induce this court to refuse relief.

Had the executors of Leake neglected to pursue their remedy •at law against the surviving copartner, who was perfectly responsible when the right of action accrued, until such right of action was barred, there might be some doubt whether they ought not to.be precluded from coming into this court to obtain satisfaction out of the estate of his deceased copartner, even if the survivor had subsequently become insolvent. But that question does not arise here. For the executors of Leake commenced their action at law against A. N. Lawrence in 1830, while he was solvent and responsible, and prosecuted that action to judgment and execution. The six years’ limitation might have been applicable to the case, if there had been a concurrent remedy in this court and at law for the recovery of the debt against the copartners immediately upon the death of Leake, and such concurrent remedy had continued without interruption. But so far as relates to the $50,000, at least, the representatives of Leake could not have had a pretext for coming into this court for an account immediately upon his death; as that was a liquidated sum left with the bankers upon a special agreement and at a given rate of interest. The remedy to recover it, therefore, was at that time at law only,pnd this court had no jurisdiction which was concurrent, so as to make the six years’ limitation applicable to the suit here.

The ten years’ limitation, therefore, is the only one which is applicable to the case in this court. And if the ten years commenced running immediately .upon the death of A. H. Lawrence, in September, 1828, the bill was filed within the time allowed by law; whether the provisions of the revised statutes are or are not retroactive in their operation in cases where this court has exclusive jurisdiction.

The question whether a creditor of a copartnership firm, one member of which has died, can file a bill in this court, against the representatives of the decedent and the surviving members of the firm, for payment, without averring in his bill that such surviving members are insolvent, appears to be one in which the decisions in this country are in conflict with some recent decisions on the subject in England. The weight of authority, however, is in favor of the principle that, as the remedy at law survives, the creditor is bound to resort to his legal remedy against the surviving debtors, unless he can show some ground of necessity for coming into this court for relief against the estate of the deceased debtor. And l am not disposed to follow these recent cases in England, and to extend the jurisdiction of this court to a case to which it has never yet been extended by any adjudged case which is binding here as authority. My own opinion of the law on this subject has always been that the estate of.a deceased copartner, or joint debtor, in the hands of his personal representatives could not be reached by a suit in this court, without stating in the complainant’s bill a sufficient excuse for not proceeding at law against the surviving debtors to obtain payment; but that where the debt was joint and several the rule was otherwise. And I was not aware that any doubt existed on the question until I saw the recent decisions in the English courts to which I have before referred. The examination of the cases on this subject, and the reasons of the rule, satisfy me that my former understanding of the rule was correct.

There never was, therefore, any right of action, or of suit, against the executors of A. H. Lawrence for'the recovery of this debt, either at law or in equity, until after the failure of the surviving copartner ; which failure could not have been earlier than 1834. And as the right of action as against him has been kept alive by the commencement of a suit at law and the prosecution thereof to judgment, the remedy of the complainant in this court as against the estate of his deceased copartner,'was not barred by any act of limitation at the time this bill was filed, in June, 1838.

The answers of the defendants admit a sufficiency of assets; and there is no pretence th at any of the defendants were ignorant of the facts upon which this claim is based, previous to the commencement of this suit. There was no reason, therefore, for excusing them from the payment of the costs to which their refusal to pay the debt had subjected the adverse party. And there is no error in that part of the decree. The decree appealed from is therefore affirmed with costs; and with interest on the amount of the decree of the assistant Vice chancellor, as damages for the delay and vexation caused by the appeal.^(a)

(a) Affirmed upon appeal to the court for the correction of errors. (2 Denio’s Reports, 577.)