
    Joseph Frederick White, Assignee of the Survivor of John P. White and E. Ives, Copartners in Trade, v. Union Insurance Company.
    After the dissolution of copartnership (by the death of one of the copartners} the surviving copartner assigned over the effects, debts, &c. of the firm, to enable him to take the benefit of the Insolvent Debtor’s Act, the firm being insolvent; the assignee commenced an action against the Union Insurance Company for dividends on stock of that company belonging to the copartnership, which had accrued after the dissolution of the copartnership; the Union Insurance Company offered as a discount the amount of a bill of exchange, endorsed by the surviving partner after the dissolution of the copartnership, which had been discounted by the Union Insurance Company and returned protested. Held, that the discount was inadmissible, 
    
    The effects of a copartnership ought to go, in the first place, to the payment of the copartnership debts, and if there be a surplus, then to the payment of the private debts of each copartner in proportion to his share in the joint funds.
    
    A surviving partner may assign the effects, debts, &c. of the copartnership to a third person, in the name of the copartnership, for-the purpose of paying and settling the debts of the firm.
    Assumpsit for two dividends of shares in the Union Insurance Company, for seven hundred and forty-four ^dollars, held by the copartners, during the existence of copartnership, and assigned by the survivor for the benefit of creditors.
    The main and principal defence set up by the Company, was an indorsement upon a bill of exchange, by John P. White, one of the copartners, which had been discounted by said Company, for account of Bailey and Waller, on a Mr. Satterthwaite, in New York, and which had been returned protested.
    This case came before the Circuit Court, upon a special verdict, which substantially stated, “ that J. P. White and Eli Ives, were copartners in trade and merchandise, under the firm of “ J. P. White & Co.that on the 25th June, 1807, they were stockholders in the books of said Company, for twenty shares; that afterwards, and while they held the said stock, to wit, on the 29th June, 1807, Eli Ives departed this life, whereby the copartnership was dissolved. That at the time of the death of the said Eli Ives, the copartnership was insolvent, and behind hand in about the sum of twenty-five hundred dollars. That after the dissolution of the copartnership aforesaid, to wit, on or about the-day of-, the said John P. White indorsed a bill of exchange, drawn by Bailey and Waller, on Thomas Satterthwaite, of New York, in favor of, and indorsed by, James Scott, the drawee, for five thousand dollars, which bill was discounted by the Company, for Bailey and Waller, and was returned protested on the 16th March, 1808. That on or about the 16th March, 1808, a dividend was declared by the President and Directors of the said Union Insurance Company, of thirty dollars on each share, making, at that time, on twenty shares, six hundred dollars, and that on the 16th July following, another dividend was declared of ten dollars on each share, amounting to another sum of one hundred and forty-four dollars, which said dividends were, when declared to be due, demanded by the said J ohn P. White, survivor of the said Eli Ives, for the benefit of the creditors of the said John *P. White & Co., and payment refused by the said Union Insurance Company, on the ground, that the said John P. White was indebted to the said Insurance Company to the amount of the said bill of exchange, by reason of his indorsement aforesaid. That on the 10th August, 1810, the said John P. White, as survivor aforesaid, assigned to Joseph Frederick White, the plaintiff in the present action, all the property, real and personal, belonging to the said copartnership, and all the debts owing to the same, (the said dividends aforesaid being then unpaid,) in trust for the benefit of the creditors of the then late copartnership of the said John P. White & Co. That afterwards, to wit., om or about the 5th J uly, 1811, the said J ohn P. White, survivor as aforesaid, was arrested and in the custody of the sheriff of Charleston District; and in order to be liberated, took the benefit of the insolvent debtors’ act, and the said-Joseph Frederick White, the plaintiff in this suit, was appointed assignee under said act. The special verdict then concludes in the usual manner, submitting the point of law to the judgment of the Court, and, if the law: should be in favor of the plaintiff, finding for the plaintiff seven hundred and forty-four dollars, with interest on the dividends from the time they were declared. But if the law should be in favor of the defendant, then for defendant, with costs of suit. (
    
      
      
        Lansing v. Gaines, et al., 2 John. Rep. 300. Sanford v. Mickles, 4 John. Rep. 224. Kilgore v. Finlayson, 1 H. Black. 155.
    
    
      
      
         Pierce v. Jackson, 6 Mass. T. R. 246. R.
      See 2 McC. 26.
    
   The opinion of the Court was delivered by

Bat, J.

This special verdict appears to me to bring two important points before the Court:

1. Whether this assignment by the surviving copartner was valid or not ? And if so,

2. Whether the defendant had a right to set off the amount of these dividends against the survivor, upon his endorsement on the bill of exchange, returned protested, or not ?

Under this first head, I take the law to be very well settled at this day, (as was properly observed by the ’’'plaintiff’s counsel in the argument,) that the copartnership effects ought to go to the payment of the copartnership debts in the first place, and if there be a surplus, then to the payment of the private debts of each copartner afterwards, in proportion to his share in the joint funds. And this principle holds equally good whether the partnership subsists, or dissolved by mutual consent, or by the death of one of the copartners. They are all bound to take care and see that the copartnership debts are first paid off and discharged. Another well established principle in the law of partnership is, that upon the death of one of the copartners, the partnership is dissolved, (as laid down in Watson, 358,) and the joint effects are cast upon the survivor afterwards, for the purpose of paying off the joints debts, and then for an equitable distribution afterwards, if any surplus remain. And for this purpose, the survivor has a right to sell and dispose of all the remaining stock of the copartnership, and such sale is unquestionably good and valid in law.

Let us now test the circumstances of this case by the above principles of law, in order to see whether this transfer to the plaintiff was a legal one or not ? It is stated by the special verdict, and indeed it was admitted, that, on the 25th June, 1801, the copartnership of John P. White & Co., held twenty shares in the Union Insurance Company, and that, afterwards, on the 29th June, 1801, Eli Ives, one of the copartners, while they held said stock, died; that, at the time of this dissolution of the partnership, the firm of the house of John P. White & Co., were insolvent and 'behind hand to the amount of about twenty-five hundred dollars ; and in .order to satisfy the creditors of the concern, on the 10th August, 1810, 'the said John P. White, as the surviving copartner, assigned over all .the effects, both real and personal, and all the debts due to said partner-ship to the plaintiff in this action, towards payment and satisfaction of cre®ors, ln proportion to their demand. In the meantime,* however, between the death of the said Eli Ives, and the assignment of the surviving copartner to the plaintiff, the dividends stated in the special verdict became due, to the amount of seven hundred and forty-four dollars, on the shares held by the said copartnership in the said Insurance Company. And the principal question under this first head is, whether this assignment was or was not a legal transfer of those dividends, so as to authorize the plaintiff, Joseph Frederick White, to demand and have of the Insurance Company the amount of them or not ? And I am clearly of opinion, it was a fair and legal transfer, and that the surviving copartner did exactly what the law, in such cases, enjoined upon him to do, to provide for the payment of the copartnership debts in the first place, out of the copartnership funds. For it is expressly laid down in the case of Harrison v. Sierry, than an assignment by one partner, in the name of the copartnership, of the joint effects and credits, is valid. 5 Cranch, 289. Now, if this is good and valid by one partner, during the life time of the other, it is, a fortiori, good and valid when done by a survivor, and more particularlv in cases of insolvency. Wat. 448.

This brings me to the second point I proposed to consider. Whether the Insurance Company had a right to set off these dividends against John P. White, upon his endorsement of a bill of exchange ? And here I lay it down as settled law, that after the dissolution of a copartnership the surviving copartner has no right to enter into, or make any contract, which shall be binding on the former copartneship, or which may affect funds or effects of the copartnership, or those entitled to a share of the funds, after the debts are paid. The cases in the books are clear and decided on this point. One partner, after the dissolution of a partnership, cannot even endorse bills or notes given before to the firm, though he is authorized to settle the concerns of the firm. 4 John. Rep. 224. If one partner, after the dissolution of *the parternership, issues notes in the name of the copartnership, the other partner is not liable. The power of one partner to bind the partnership ceases with it. 2 John. Rep. 300. If one partner, who is authorized to adjust the debts, acknowledges a bill due from the-copartnership, it will not bind his copartner ; for the Court said, it was clear, that, after dissolution, the power of one party to bind the other ceases, and there is no reason why his acknowledgment should bind the other copartners, any more than giving his note in the name of the firm, or any other act. 3 John. Rep. 538. Cases, without number, might be cited to prove the same point. I shall, therefore, content myself with citing one more, and that, in our own Court. The case of David Lamb, survivor of Patrick Mair & Co., v. Saltus & Yates, argued in January term, 1809, in which is was determined, that every bill or note, drawn or endorsed by a copartner, after the dissolution of the copartnership, was to be considered as the private debt of the individual copartner making it, and by no means the debt of the company, nor were any of the partnership funds liable for the same.

I come now to the discount. It appears that the discount offered in this case was a bill of exchange, endorsed by John P. White, after the dissolution of the copartnership, not even on accouut of the concern, but for the accommodation of Bailey & Waller, no way connected with them, but strangers to the firm of J. P. White & Co., after the death of Mr. Ives, the other copartner, which was returned in March, 1808. It does not appear, when, or whether J. P. White ever had notice of this protest; for, until he had due notice, he was not even liable on his own endorsement. But, admitting he had this due notice, it can only amount to his own private endorsement on account of Bailey & Waller, which leaves all the copartnership funds free and unincumbered for the benefit of the copartnership creditors, agreeably to the assignment for that purpose. The cases quoted by the defendant’s* counsel, from Montague, 24, in which it is said, that “ a debt due to a company after the death of all the copartners, but one, becomes due to him, and may be set off.’1 I take that to be a case where the copartnership is solvent, and able to pay all its debts, otherwise it would be in the power of one or two of the creditors to run away with the whole of the copartnership effects, tp the prejudice of all the other creditors. At any rate, it is very distinguishable from the present case ; for this is a demand set up, not against the partnership, but against an individual, after the partnership was dissolved, and therefore can have no bearing against the copartnership, or its effects. The other cases quoted by defendant were to the same effect.

Upon the whole of this case, therefore, I am clearly of opinion, that this endorsement of the individual copartner cannot be set off against the dividends which belonged to the copartnership, and which had been assigned over for the payment of its debts, and that the postea should be delivered to the plaintiff to enter up judgment thereon.

King & Heath, for the motion. Drayton & Prioleau, contra.

All the Judges concurred. 
      
       See - v. Baum & Son, 11 Rich.; 8 Rich. 9, 13.
     
      
       4 Strob. 220-5.
     
      
       MS. 2 Rice Dig. 147, § 23.
     