Statement of case. 14, 1886, reversing in part a decree of the surrogate of the county of Orange, upon settlement of the accounts of Lewis E. Carr, as administrator of the estate of Charles B. Gray, deceased. (Reported below, 42 Hun, 411.) Upon the accounting Sarah B. Lockwood, who held a joint and several note, executed by the decedent, C. G. Lockwood and herself, payable to the order of H. H. Farnum, presented the same as a claim against the estate. It appeared that the makers, Gray and Lockwood, composed the firm of Gray & Lockwood; that the note was given for a loan made by said Farnum for the benefit of the firm; that said Sarah B. Lockwood signed it for the benefit and accommodation of the other makers and was compelled to take it up; that Lockwood, the surviving member of the firm, was insolvent, and there were no firm assets. There were not sufficient assets of the estate to pay the individual and the firm creditors. Mrs. Lockwood claimed the right to share equally with the individual creditors in the distribution. This the surrogate refused, holding that the claim was a firm debt and so must be deferred until the individual claims were paid in full. The appeal was from this portion of the decree. Lewis E. Carr for appellant. The claimant is a creditor of the firm of Gray & Lockwood, as to her entire claim, and was entitled to such, and only such, remedy against the estate of Gray, one of the partners, as creditors of partnerships are entitled to against the separate estates of individual partners. (Edwards on Bills [3d ed.] §§ 722, 723, 764; Corey v. White, 3 Barb. 12, 16; Dillenbeck v. Dygert, 97 N. Y. 303, 307, 308; Lindley on Partnership [5th ed., Notes by Wentworth], 375; Ganson v. Lathrop, 25 Barb. 455; Robinson v. Robinson, 1 Lans. 117, 119; McCarthy v. Fitts, 20 Week. Dig. 225; Wells v. Miller, 66 N. Y. 255; Kirby v. Carpenter, 7 Barb. 373, 378; Morgan v. Skidmore, 3 Abb. N. C. 92, note 93, 94; In re Gray, 42 Hun, 411, 413.) The claimant may not have her claim paid out of the estate of Gray until his individual. creditors have been paid in full. (3 Kent, marg. p. 65; Payne Statement of case. v. Mathews, 6 Paige, 19, 20; Jackson v. Connell, 1 Sandf. Ch. 348, 350; Wilder v. Keeler, 3 Paige, 167, 171, 172; Egbert v. Wood, 3 id. 517, 527; Meech v. Allen, 17 N. Y. 300, 301; Morgan v. Skidmore, 3 Abb. N. C. 92; McCulloch v. Dashield's Ad., 18 Am. Dec. 271, 281; Stewart's Case, 4 Abb. Pr. 408; 4 Brad. 254; Kirby v. Carpenter, 7 Barb. 373, 378; Ganson v. Lathrop, 25 id. 455; Scott v. Guthrie, 10 Bosw. 408, 416; Wilson v. Robertson, 21 N. Y. 587; Menagh v. Whitwell, 52 id. 146; Hewitt v. Northrup, 75 id. 506, 509; In re Rieser, 19 Hun, 202; 81 N. Y. 629; Pope v. Cole, 55 id. 124; Richter v. Poppenhausen, 42 id. 373.) The judgment, on the reference of Mrs Lockwood's claim, under the statute, did not prevent the application of this rule marshaling assets. First. Because the judgment does not profess to direct as to the manner of distribution of Gray's estate. Second. Because the referee and court there had no jurisdiction of the subject-matter of the distribution of the estate of Gray, or of the individual creditors to be affected by such a decree. (Radley v. Fisher, 24 How. 404; Boyd v. Bigelow, 14 id. 511; Caro v. R. R. Co., 2 Civ. Pro. Rep. 371; People ex rel. Banta v. Kent, 58 How. 407; Campbell v. Seaman, 63 N. Y. 568, 586; Kenney v. Apgar, 93 id. 539, 548; Roe v. Boyle, 81 id. 305; Mowrey v. Peet, 88 id. 453, 456; Young v. Cuddy, 23 Hun, 249; Code of Civ. Pro. 3333, 3334; Hatch v. Stewart, 42 IIun, 164; 3 R. S. [7th ed.] 2300, §§ 36, 37; Woodley v. Bagley, 13 Wend. 453; Wilder v. Keeler, 3 Paige, 167; Code of Civ. Pro. $ 2729, 2730, 2742; Weeks v. Weeks, 16 Abb. N. C. 143; McArthur v. Scott, 113 U. S. 340; People v. Sturtevant, 9 N. Y. 263; Elliott v. Piersol, 1 Pet. 340; Wilcox v. Jackson, 13 id. 511; State of R. I. v. State of Mass., 12 id. 718; Thompson v. Taylor, 71 N. Y. 217; Burr v. Bigler, 16 Abb. Pr. 177; Brower v. Bowers, 1 Abb. Ct. App. Dec. 219; Case v. Reeves, 14 Johns. 79; Marsh v. Masterson, 50 Sup. Ct. Rep. 187, 193; Miller v. Manice, 6 Hill, 114, 122; Steinbach v. Ins. Co., 77 N. Y. 498, 501; Barth v. Burt, 17 Abb. Pr. 349; Burdick v. Post, 12 Barb. Statement of case. 168; Campbell v. Consalus, 25 N. Y. 613; N. Y. & H. R. R. Co. v. Kyle, 5 Bosw. 587; Royce v. Burt, 42 Barb. 655; Rem. Paper Co. v. Dougherty, 81 N. Y. 474; Durant v. Abendroth, 97 id. 132; Lorillard v. Clyde, 99 id. 196; Westervelt v. Westervelt, 46 Supr. Ct. Rep. 298; Ferris v. Van Vechten, 73 N. Y. 113; Perry v. Dickinson, 85 id. 345; In re Hood, 98 id. 363; Pittman v. Johnson, 35 Hun, 38; 15 Abb. N. C. 472; Belden v. State, 103 N. Y. 1; Acker v. Leland, 109 id. 519.) C. E. Cuddeback for respondent. The administrator was trustee for all persons interested in the personal estate, whether creditors, legatees or distributees. (Wager v. Wager, 89 N. Y. 161; Redfield on Surrogates, 428; 2 R. S. 87, § 27; Laws of 1858, chap. 314, § 1; Buckhout v. Hunt, 16 How. Pr. 407; Fisher v. Banta, 66 N. Y. 468, 481; 1 Greenl. on Ev. § 523.) The Special Term had jurisdiction of the matter passed on by it. (2 R. S. 91, § 37.) It was one of the questions for the court to decide whether the report of the referee was proper and authorized by the law under which he was appointed, and the motion to confirm might properly have been opposed on this ground upon the report itself and without making a case. (Godding v. Porter, 17 Abb. Pr. 374.) The rights of Mrs. Lockwood as against the individual creditors of Mr. Gray were thus regularly before the Supreme Court for its determination. (Fisher v. Hepburn, 48 N. Y. 41; Wilcox v. Jackson, 13 Peters, 511; Bangs v. Duckinfield, 18 N. Y. 592, 597; In re Canal and Walker Streets, 12 id. 406; Judson v. Rossie Galena Co., 9 Pai. 600.) Where the plaintiff can prove the insolvency of the survivor and thus show that he has no legal remedy for the collection of his debt against him, he may proceed to enforce payment from the estate of a deceased partner or other joint debtor without bringing an action against the survivor. (Pope v. Cole, 55 N. Y. 129; Forbes v. Childs, 17 id. 354; Richter v. Poppenhusen, 42 id. 373.) Mrs. Lockwood had a right to share as an individual creditor of Mr. Gray as to the $2,000 note, irre Opinion of the Court, per ANDREWS, J. spective of the effect to be given to the judgment of the Supreme Court. (Wilder v. Keeler, 3 Paige, 167; Meech v. Allen, 17 N. Y. 300, 301; Stewart's Case, 4 Bradf. 254.) Mrs. Lockwood, the surety, upon payment of the notes, was subrogated to all the rights of the original holder. (Cuyler v. Ensworth, 6 Paige, 32; Speiglemeyer v. Crawford, 6 id. 254; Clason v. Morris, 10 Johns. 525, 601; Hays v. Ward, 4 Johns. Ch. 130; Matthews v. Aiken, 1 Com. 595; Lewis v. Palmer, 28 N. Y. 271; Goodyear v. Watson, 14 Barb. 481; Alden v. Clark, 11 Hun, 209; Townsend v. White, 75 N. Y. 425; White and Tudor's Lead. Cas. in Eq. [4th ed.] 137; Watts v. Kinney, 3 Leigh. 272, 294; Powell v. White, 11 id. 309; Wheadey v. Calhoun, 12 id. 265, 274; Lidderdale v. Robinson, 12 Wheat. 594; Cheeseborough v. Millard, 1 Johns. Ch. 409, 413; Hines v. Keeler, 3 W. & S. 404, 491; U. S. v. Hunter, 5 Pet. 174.) ANDREWS, J. It is conceded that the right of Mrs. Lockwood to share in the distribution of the assets of the estate of Charles B. Gray, in the hands of his administrator, is governed by the rules by which courts of equity are guided in distributing the separate estate of an insolvent, as between his separate creditors and the creditors of a copartnership of which he was a member. The general rule in such cases is that the separate creditors are entitled to be first paid, on the ground that their debts were contracted on the credit of the separate estate, while partnership debts are contracted primarily on the credit of the joint estate. But as a partnership debt is regarded in equity as both joint and several, there is an apparent inconsistency in excluding in equity the right of the partnership creditor to share with the separate creditor, where, as in this case, there is no joint estate and the surviv ing partner is insolvent. But the doctrine stated is the settled law of this state, and is not open to question. The main debt of Mrs. Lockwood never in form, at least, was the copartnership debt of Gray and Lockwood. In February, 1875, Gray and Lockwood, in their individual names, and not in the Opinion of the Court, per ANDREWS, J. name of the firm, executed, together with Mrs. Lockwood, their joint and several promissory note for $2,000, payable to one Farnum, in consideration of a loan for that amount made by the payee to Gray and Lockwood at that date. Mrs. Lockwood signed the note at the request of the other makers for their accommodation, and as between themselves she was a surety merely. She was subsequently compelled to pay the note, which is the foundation of her principal claim against the estate. It is found that the money was procured for the use of the firm of Gray & Lockwood, and was used in the firm business, and that this was known to all the parties. Upon these facts is it a conclusion of law that the debt represented by the note was a firm debt, or that the claim of Mrs. Lockwood is to be ranked on the distribution of the separate estate of the decedent as a firm debt and excluded from participation until the concededly separate debts are paid? We are of opinion that no rule of marshaling assets requires such a determination. The payee of the note had a right to prescribe the security which he would accept for the loan. He chose to take the joint and several individual note of the parties, with the name of Mrs. Lockwood added. By the contract it was made the several debt of each of the makers, and we perceive no ground, in abstract justice, why Farnum, or his successor in interest, cannot have the benefit of the security according to its terms, and the right to prove the debt against the separate estate of the decedent, and share equally with the other separate creditors in the distribution. The fact that he knew that the money was borrowed for the use of the firm makes, we think, no difference. If he had required separate security by mortgage, or otherwise, on the individual property of one of the firm, there could be no doubt that it would be valid against the separate creditors of the individual partner, notwithstanding he knew for what purpose the money was borrowed. (Meech v. Allen, 17 N. Y. 300.) It is plain that Mrs. Lockwood has the same equity that Farnum would have had if he still owned the note and presented it as a claim against the SICKELS-VOL. LXVI. 52 |