perhaps, have the right to restrain the separate creditors by injunction if the firm is insolvent.1 When the separate interest of each and every partner is levied upon and sold for individual debts, the purchaser will take the whole interest, and the partnership creditors can subsequently have no claim. The equities of all the partners being swept away by the sale, the rights of the firm creditors necessarily fall with them. But if before such sale another levy is made under a partnership judgment, the purchase-money under such a levy will be applicable in the first instance to the payment of the partnership debts.3 523. It is said that another instance in which equity affords relief in partnership cases where no remedy exists at law, is to be found in those cases in which there is a creditor firm and a debtor firm having a common member. It is well known that in such a case no common law action would lie, as no person can be both plaintiff and defendant in the same suit. "But there is no difficulty" (it has been observed by a writer of the highest authority)" in proceeding in courts of equity to a final adjustment of all the concerns of both firms in regard to each other."4 This is undoubtedly true when the affairs of either partnership have for any reason been brought into chancery for settlement. But it may be doubted, with due deference to the distinguished authority just cited, whether any remedy would exist even in equity for the simple collection of a debt due by one solvent firm to another having a common member.5 The difficulty has in some States been removed by statute. 524. It has been said, in a learned work, that there is a jurisdiction in equity similar to that exercised in cases of partnership, where mines and collieries are owned and worked by several persons in common. But it would seem that where there is a joint undertaking to work a mine, that would be a partnership as to such working, though not as to the land, and would fall under the ordinary jurisdiction in partnership cases." And so, 1 See Am. note to Silk v. Prime, 2 Lead. Cas. Eq. 337, 338, where the subject is discussed. 2 Doner v. Stauffer, 1 Pen. & Watts, 198. 3 See Coover's Appeal, 5 Casey, 9. Story's Eq. Jurisp., 680. 5 See Article in American Law Review, vol. v. p. 47 (October, 1870). 6 Adams's Doct. Eq. 247. 7 See Decker v. Howell, 42 Cal. 642. also, where there was evidence that the whole property was intended to be used in the business, then the partnership would extend to the land. In the absence, however, of such an understanding there would appear to be no jurisdiction apart from that which exists between tenants in common.1 CHAPTER VI. CREDITORS' BILLS AND ADMINISTRATION SUITS. 525. Creditors' Bills; are of two classes. 532. Origin of the doctrine. 526. Creditors' Bills against a debtor during lifetime; inefficiency of com- 533. Silk v. Prime. purchase. 527. Nature and effect of the Equitable | 536. Covenant to settle, and subsequent remedy. 528. Creditors' Bills of the second class; 537. Covenant to pay, and subsequent intestacy. Administration suits. 529. Not of great importance in this 538. Satisfaction; of debts by legacies. 539. Of legacies by legacies. country. 530. General course of proceeding in an 540. Of legacies by portions; of portions by legacies. administration suit. 531. Equitable Assets; doctrine of comparatively little importance. 525. CREDITORS' bills are bills filed by creditors for the purpose of collecting their debts out of the real or personal property of the debtor, under circumstances in which the process of execution at common law could not afford relief. This equitable remedy may be made use of during the lifetime of the debtor, or after his death. Creditors' bills filed against the estate of a decedent, generally, though not necessarily, partake of the nature of administration suits, and will be considered in that connection. Creditors' bills of the first class-i. e., against a debtor during his lifetime are now to be noticed. 526. Creditors' bills of the first class may be defined to be bills filed by creditors who seek to satisfy their debts out of 1 See Roberts v. Eberhardt, Kay, 148. some equitable estate of the defendant, which is not liable to levy and sale under an execution at law, or out of some property which has been put beyond the reach of ordinary legal process.1 They may be also made use of for the purpose of obtaining discovery of the debtor's property." Bills of this description had their origin in the limited scope of the ordinary writs of execution. These writs, being common law writs, were confined in their operation to legal interests. Equitable interests could be reached, if reached at all, in equity alone. It is true that the Statute of Frauds3 gave legal execution against the real estate of which every person was seized in trust for the debtor at the time the execution was sued out. But this exception was obviously very limited in its operation, for it did not extend to chattels real, to trusts under which the debtor has not the whole interest, to equities of redemption, or to any equitable interest which had been parted with before execution sued out. This narrowness of the common law remedy, naturally led to a jurisdiction in equity to afford the necessary relief. 527. Upon a bill being filed in a proper case, the equitable property will be taken into the possession of the court by the appointment of a receiver; the party holding the legal estate will be restrained from interfering with the prosecution of the creditor's remedy; and in the case of an equity of redemption, the judgment creditor is suffered to redeem." Bills of this description are still made use of in England, although the efficacy of the common law writs of execution has been much increased by legislation; and they are of very frequent occurrence in many of the United States. The threefold advantage of reaching property otherwise exempt, of setting aside fraudulent conveyances, and of discovery, renders a I See Newman v. Willetts, 52 Ill. 101. See, also, Botsford v. Beers, 11 Conn. 369; Weed v. Pierce, 9 Cowen, 722; Spader v. Davis, 5 Johns. Ch. 280; 20 Johns. 554; Bayard v. Hoffman, 4 Johns. Ch. 450; Webster v. Folsom, 58 Maine, 230; Warner v. Moran, 60 Id. 227; Dodge v. Griswold, 8 N. Hamp. 425; Barry v. Abbott, 100 Mass. 396; Lillard v. McGee, 4 Bibb, 165; Trippe v. Lowe, 2 Kelly, 304; Thurmond v. Reese, 3 Id. 2 Newman v. Willetts, 52 Ill. 101. 4 See Adams's Doct. Eq. 129. creditors' bill a very effective instrument for the collection of debts. The leading authorities upon the subject in the United States may be said to be Spader v. Davis' and Bayard v. Hoffman.2 In these cases Chancellor Kent, basing his opinion upon some early English decisions,3 held that in cases of fraudulent alienation courts of equity ought to interfere, whether the property could be reached by execution at law or not. Since the time of these decisions the equitable remedy by creditors' bill has been extensively used in many of the United States, and its efficiency has been much increased in several States by statute; and in some instances the remedy is expressly specified in the grant of chancery powers to the courts." As this remedy is based upon the incapacity to obtain relief at common law, it is incumbent upon the complainant, as a general rule, to show that he has exhausted his common law remedies before resorting to equity. This is generally done by showing that he has obtained a judgment, has issued execution, and that there has been a return thereon of nulla bona. these facts must be alleged in the bill to give the court jurisdiction, for otherwise it would not appear but that the party had a complete remedy at law. This rule, though a stringent one, is nevertheless not without exceptions. And The filing of a creditors' bill, and the service of process, cre 15 Johns. Ch. 280; on appeal, nomine Hadden v. Spader, 20 Johns. 554. 2 4 Johns. Ch. 452. Taylor v. Jones, 2 Atk. 600; King v. Marissal, 3 Id. 192; Horn v. Horn, Ambl. 79. Of this last case, Lord Thurlow is reported to have said: "The opinion in Horn v. Horn is so anomalous and unfounded that forty such opinions would not satisfy me." Grogan v. Cooke, 2 Ball & Beat. 233. The reasoning of Lord Thurlow prevailed in the English law; and the consequence was, that it subsequently was found necessary to make choses in action liable to execution by statute. 4 See Introduction, ante, pp. 18 to 22. 5 Newman v. Willetts, 52 Ill. 101; Hall v. Joiner, 1 S. Carolina (N. S.), 186. 6. See Beck v. Burdett, 1 Paige, 305, 308; Brown v. Long, 1 Ired. Eq. 190; McNairy v. Eastland, 10 Yerg. 310, 319; Stone v. Manning, 2 Scam. 530; Manchester v. McKee, 4 Gilm. 511; Miller v. Davidson, 3 Id. 518; Reese v. Bradford, 13 Alab. 837; Webster v. Clark, 25 Maine, 313; Tappan v. Evans, 11 N. Hamp. 312; Allen v. Montgomery, 48 Miss. 106; note to Sexton v. Wheaton, 1 Am. Lead. Cas. 54, 55, 7 Newman v. Willetts, 52 Ill. 101. 8 See Turner v. Adams, 46 Missouri, 95; Botsford v. Beers, 11 Conn. 369; Stephens v. Beal, Id. 319. ates a lien in equity upon the effects of a judgment debtor. It has been aptly termed an "equitable levy." It may be filed by one creditor alone, or by one on behalf of himself and all others who choose to come in. Bills of this description are sometimes employed for the purpose of subjecting the separate property of married women to the payment of their debts." 528. Creditors' bills of the second class-i. e. those which are filed after the death of the debtor-generally result in an administration of his estate, because the executor or administrator does not generally admit assets in his answer. If, however, assets are admitted, the debt of the creditor who files the bill will be collected, but there will be no decree for the general administration of the estate. In most cases, however, there is no admission of assets, and the court then goes on to ascertain what the assets are, to get them in, and to distribute them properly among creditors, legatees, and other parties interested. When bills for getting in and distributing the estate of a decedent are filed by legatees, they are termed administration suits. The principles which govern the action of the court in administration suits, and in creditors' bills where no assets are admitted, are the same, and may be considered together. A bill for administration may also be filed by an executor or administrator, who (in England) could only obtain complete exoneration by having his accounts passed in chancery, and was, therefore, entitled to insist upon that protection.3 529. Bills for the administration of the estates of decedents are of much less importance, and of much less frequent occurrence, in this country than in England, as the distribution of such assets is, in most States, vested by statute in Probate or Orphans' Courts, or similar tribunals. In some States, however, the jurisdiction of chancery by administration suits is expressly conferred upon the courts; and in some instances the equitable remedy has to be invoked in order to meet cases which cannot 1 Tilford v. Burnham, 7 Dana, 110; Miller v. Sherry, 2 Wal. 249. 2 See Lillia v. Airey, 1 Ves. Jr. 277; Methodist Episcopal Church v. Jaques, 1 Johns. Ch. 450; Todd v. Lee, 15 Wis. 365; Kerr on Receivers, 53 (1st Am. ed.). 3 Adams's Eq. 257. See, also, Brown v. McDonald, 1 Hill C. R. 300; Adams v. Dixon, 19 Georgia, 513. 4 See Introduction, ante, p. 19 et seq. |