
    Bates v. Halliday.
    A partner may, with the consent of his co-partner, make a valid arrangement with a creditor of the former, that a debt due by the creditor to the partnership may be discharged by deducting it as a payment as far as it will go, from the debt of the partner to him.
    A plea of payment contained also two items of set-off, one of which was clearly inadmissible as such. Held, that the plea was not bad, on general demurrer, on that account.
    
      Wednesday, December 3.
    ERROR to the Tippecanoe Court of Common Pleas.
   Smith, J.

Covenant on an agreement under seal, whereby Bates sold to Halliday his interest in a certain lot upon which was a distillery, &c., for 6,500 dollars. In consideration of said sale, Halliday bound himself to pay Bates said sum of 6,500 dollars in manner following, to-wit: “2,700 dollars of the said sum of 6,500 dollars is hereby, by the consent of the parties, applied in liquidation, as far as it will go, of the amount in which the said Bates is now indebted to the said Halliday; 500 dollars in merchandise, 50 dollars’ worth of which said merchandise is to be delivered at the expiration of each month from the 1st day of May next, until said sum of 500 dollars is paid; 650 dollars in barrels of rectified whisky, one-fourth to be paid in one month from the 1st day of May next, and another fourth at the expiration of each month thereafter, until the whole be paid; 800 dollars in barrels of high wines, one-fourth to be paid in one month from the 1st day of May next, and another fourth at the expiration of each month thereafter; 530 dollars by paying to Ells-worth that sum, being the balance due by Bates for the purchase-money of the premises ; (he had bought them of Ellsworth;) and the remaining 1,320 dollars in cash by two equal payments, in six and twelve months.” It was further agreed by the parties that a final settlement of all accounts between them should be had on or before the 1st day of May next, and, if it should appear that the present indebtedness of Bates to Halliday exceeded 2,700 dollars, with the claims which Halliday should then hold against Bates, the excess should be credited on the deferred payments, but Halliday should not, after the date of the agreement, purchase any outstanding claims against Bates, to offset against said payments; but that Halliday should have the right so to offset any payments he might make for the expenses and outlays of Bates, in fitting up and running said distillery.

This agreement was dated April 2d, 1848, and the suit was commenced on the 23d of June, 1848.

The plaintiff assigned the following breaches of the covenant:

1st. That the defendant refused to make a settlement on the 1st of May, and that, at the date of said agreement, as well as at said 1st day of May, there was due from Bates to Halliday only 100 dollars; wherefore the defendant was bound to pay to the plaintiff the residue of the sum of 2,700 dollars, to-wit, 2,600 dollars, which, it was agreed, should be applied in liquidation of the amount Bates was indebted to Halliday.

2d. The second breach is similar to the first.

Demurrers were sustained to these two breaches.

3d. That the defendant refused to settle, &c., and refused to pay said 2,700 dollars, though there was nothing due from the plaintiff to him.

4th. That the defendant refused to deliver the merchandise, whisky, and high wines, though demand was made, &c.

5th. That on the 23d of June, 1848, the plaintiff demanded of the defendant 50 dollars in merchandise, 162 dollars and 50 cents in whisky, and 200 dollars in high wines, then due under the agreement, and the defendant refused, &c.

6th. That the plaintiff was not indebted to the defendant in any sum on final settlement; and though he requested the defendant to settle on the 1st day of May, the defendant did then refuse, and has ever since refused, to settle, or to pay the plaintiff said sum of 2,700 dollars.

The defendant filed two pleas to the 3d, 4th, 5th, and 6th breaches. The plaintiff demurred generally to both pleas. The demurrer was overruled and the defendant had judgment thereon.

One of the pleas was as follows:

That at the date of the agreement set out in the declaration, the defendant and one Beach were partners in trade, and that, on the 15th day of May, the plaintiff was indebted to said firm, on the common counts, for goods sold, &c., 5,398 dollars and 93 cents, which said indebtedness the parties meant and intended should constitute an offset to said deferred payments; that, with a view to a settlement as stipulated in the agreement, on said 15th of May, the defendant furnished the plaintiff with a memorandum of the items of said indebtedness, and the plaintiff then admitted the amount was correct, and, with the consent of said Beach, said sum was then and there appropriated and accepted, by said Bates, in liquidation and payment of said sum of 2,700 dollars, and said other sums to be paid by the defendant as in said agreement mentioned, to the said amount of 5,398 dollars and 93 cents; which facts the defendant pleaded in bar of the suit.

The plea also avers an indebtedness of the plaintiff to the defendant upon a bill of exchange for 148 dollars and 92 cents, and that the plaintiff was indebted to one Rockwell, on the common counts, 2,000 dollars, which indebtedness had been assigned by Rockwell to the defendant; which items of indebtedness the defendant pleaded by way of offset.

No question need be examined as to the sufficiency of the first and second breaches, as the third and' sixth admitted proof of all the facts which could have been given in evidence under either of them, and, therefore, the plaintiff was not injured by the demurrer which was sustained.

The only question of importance presented, is, whether the plea above quoted was sufficient to bar the suit, on general demurrer. It is objected to the first branch of the plea that an indebtedness of the plaintiff to Beach and Halliday, is not a legal matter of set-off, in a suit by the plaintiff against Halliday alone; but we do not think this proposition is relevant to the facts averred. The plea alleges, in substance, as we understand it, that, in pursuance of a previous understanding of the parties, a portion of the debt due by the agreement set out in the declaration, and a larger amount of it than was due at the time this suit was commenced, had been paid by Halliday to the plaintiff, by means of an agreement whereby the plaintiff was released from the payment of a debt due by him to the firm of Halliday and Beach, and accepted such release in satisfaction of the debt due by Halliday to him. The partnership debt of the plaintiff to Halliday and Beach is not offered as a set-off, but the acceptance of the plaintiff of the cancellation of that debt as a payment of the debt due by Halliday to him, is pleaded in bar.

D. Mace, R. Jones, J. Pettit, and 8. A. Huff, for the plaintiff.

G. S. Orth, E. H. Brackett, and Z. Baird, for the defendant.

There seems to be no reasonable ground to doubt, that such an arrangement and payment of the debts due by Bates to the firm, and by Holliday to Bates, might be made, with the assent of Beach, or that it would be valid and binding on all the parties. One partner cannot, without the assent of the other members of the firm, transfer or sell the partnership effects for the payment of an individual debt, but, with such assent, he may. Coll. on Partn., 218.—Whitney v. Dean, 5 N. H. R., 190. We can see no reason, therefore, why such an agreement as is alleged in the plea, if actually executed as it is averred it was, should not be a bar to a subsequent action by Bates against Holliday for the debt thus satisfied.

The plea would have been objectionable, no doubt, on special demurrer. The debt alleged to have been assigned by Rockwell, was clearly inadmissible as matter of set-off, but, regarding all the plea but the first branch of it as surplusage, we think that, on general demurrer, it may be regarded as a sufficient plea of payment.

Per Curiam.

The judgment is affirmed with costs.  