111 272 123 53 123 530 111 272 128 84 128 386 Thompson v. Lowe. course pursued by the widow. If she elected to take under the will, then it may be that she released her right to the statutory allowance. Langley v. Mayhew, supra. Whether she did release her right to the allowance depends upon the facts, and is a conclusion of law to be drawn by the court. It was the duty of the pleader to state the facts, and not the conclusions of law. Looking to the facts, it can not be said that any necessity is shown for resorting to the land. Judgment reversed. Filed June 21, 1887. No. 12,570. THOMPSON v. LOWE. PARTNERSHIP.-Adjustment of Partnership Accounts. When One Partner May Maintain Action.--As a general rule, no action can be maintained by one partner against the other respecting particular items of account pertaining to the partnership business until the accounts of the partnership are finally adjusted, or until the affairs of the firm are so far settled as that nothing remains except to ascertain the final state of the account between the partners. SAME.-Sale of Partner's Interest.-Promissory Note Set-Off-Where one SAME. A sale by a partner of his interest in the assets of a firm does Thompson v. Lowe. that the value was increased or diminished in proportion as he was found the debtor or creditor of the firm. SAME.-Promissory Note Executed by Firm to Member.-A note governed by the law merchant, payable by a firm to one of its own members, may be enforced against the firm, if endorsed to an innocent holder before maturity, regardless of the state of the account of the member to whom it was made payable. But such note in the hands of one who stands in the place of the original payee can not be made the basis of an action at law against the firm, or the remaining partners, it being nothing more than an acknowledgment that the partner named therein had paid into the firm either in property or money the amount specified in the note. PRACTICE.-Appeal.-Reversible Error.-Overruling Demurrer to Bad Answer. -The overruling of a demurrer to a bad answer is a reversible error, even though there be other good answers under which the same evidence is admissible. From the Shelby Circuit Court. T. B. Adams, L. T. Michener, B. F. Love, A. Major and H. C. Morrison, for appellant. J. S. Scobey, E. K. Adams and L. J. Hackney, for appellee. MITCHELL, J.-This suit was to recover the amount of a promissory note, bearing date May 11th, 1874, calling for eight hundred dollars, and interest, executed by W. W. Lowe & Co., and payable to O. M. Thompson. At the time the note was executed the firm of W. W. Lowe & Co. was composed of William W. Lowe, Oliver M. Thompson and Daniel M. Lovett. The payee of the note was one of the partners. After the execution of the note, Lovett transferred his interest in the partnership assets to Lowe & Thompson, the latter assuming all the partnership debts. Subsequently, Lowe & Thompson dissolved partnership, Lowe agreeing to take all the books and accounts of the firm, and to assume and pay all the partnership debts. Thompson was to receive certain property in lieu of his interest. Thompson assigned the note in suit to the plaintiff, Alfred Thompson. The complaint sets out the foregoing, among other facts, and alleges that the note, which is payable at a bank in this State, was assigned by endorsement to the plaintiff before VOL. 111.-18 Thompson v. Lowe. maturity, and that Lowe, by reason of his agreement to pay all the partnership debts, is primarily liable for the payment of the note. In his seventh paragraph of answer, Lowe set up that the note sued on was assigned to the plaintiff after maturity, and that prior to the execution and assignment of the note, Thompson, the payee, was indebted to the firm of W. W. Lowe & Co. to the amount of fourteen hundred dollars, for the balance due for his share of the capital of the firm, which amount, it was alleged, remained due and unpaid. The answer alleged further, that Thompson had become indebted to the firm of Lowe & Thompson to the amount of eight hundred and ninety-eight dollars, for money paid by the firm to one King, on account of a debt due the latter from Thompson. These several sums, it is alleged, remained due and unpaid to the several firms at the time the latter transferred his interest in the partnership property and books and accounts to Lowe. It is averred that Lowe became the owner of these debts, owing by Thompson, by the transfer of the books and accounts by the latter to the former under the terms of the articles of dissolution. This answer is assailed on the ground that it does not appear therefrom that the partnership affairs had been settled up and adjusted. The argument is, that the indebtedness of Thompson can not be set off against the note in suit, until it does so appear. It is undoubtedly true as a general rule, that until the accounts of the partners are finally adjusted, or until the affairs of the firm are so far settled as that nothing remains except to ascertain the final state of the account between the partners, no action can be maintained by one partner against the other in respect to particular items of account pertaining to the partnership business. Courts will not ordinarily entertain matters relating to partnership accounts between partners, until by its judgment or decree a final adjustment of the partnership business can be effected. Lang v. Oppen Thompson v. Lowe. heim, 96 Ind. 47; Warring v. Hill, 89 Ind. 497; Meredith v. Ewing, 85 Ind. 410; Coleman v. Coleman, 78 Ind. 344; Crossley v. Taylor, 83 Ind. 337; Page v. Thompson, 33 Ind. 137; Briggs v. Daugherty, 48 Ind. 247. It may be taken as settled, too, that where one partner transfers his interest in the assets, including the books and accounts of the partnership, to a continuing member of the firm, or to another, and receives in payment for such interest the note of the purchaser, the maker of the note can not set off an account apparently due the firm from the member whose interest was transferred. A sale by a partner of his interest in the assets of a firm, does not, in the absence of a special agreement to that effect, imply that the purchaser becomes entitled to collect from the seller what may appear to be due from him on the firm books. Over v. Hetherington, 66 Ind. 365; Hasselman v. Douglass, 52 Ind. 252. The effect of such a sale is, to transfer to the purchaser whatever interest the seller has in the assets of the partnership after the payment of all the partnership liabilities. In the absence of anything to show the contrary, it will be presumed that the account of the retiring member was adjusted in ascertaining the value of his interest, and that the value was increased or diminished in proportion as he was found the debtor or creditor of the firm. Where the purchaser agrees to pay the partnership liabilities, and also to pay the retiring partner a specified. sum for his interest, the presumption will be, until the contrary appears, that the debts were ascertained, and that the sum agreed to be paid was the value of the retiring partner's interest, and that this included the adjustment of his own account with the firm, whether by such account he appeared to be debtor or creditor. Roberts v. Ripley, 14 Conn. 543. The feature of this case, which distinguishes it from the cases cited, and from those which fall within the general rule, is that the note sued on was executed by the firm of W. W. Lowe & Co. to one of its own members. The complaint avers that the note was endorsed to the plaintiff before ma Thompson v. Lowe. turity. The answer under consideration, however, alleges that the transfer and endorsement of the note were not made until long after it had matured. This being conceded by the demurrer, it follows that any defence which would have been available as against the payee, is equally available against the plaintiff. A note governed by the law merchant, payable by a firm to one of its own members, may be enforced against the firm if endorsed to an innocent holder before it is dishonored. Union Nat'l Bank v. Bank of Commerce, 94 Ill. 271; Kipp v. McChesney, 66 Ill. 460; Davis v. Briggs, 39 Maine, 304; Roberts v. Ripley, 14 Conn. 543; Walker v. Wait, 50 Vt. 668; Beacannon v. Liebe, 11 Or. 443; Pitcher v. Barrows, 17 Pick. 361; Thayer v. Buffum, 11 Met. 398. A note so issued and endorsed will be deemed to be a debt or liability of the firm, and will be enforceable in the hands of a bona fide holder and owner, regardless of the state of the account of the member to whom it was made payable. Such a note, however, in the hands of one who stands in the shoes of the original payee, can not be made the basis of an action at law against the firm or the remaining partners. As was said by SHAW, C. J., in Stoddard v. Wood, 9 Gray, 90, "The difficulty of maintaining an action by a partnership against one partner is not merely a matter of parties, arising out of the difficulty of bringing suit; it lies much deeper. A promise by a partner to the partnership is a promise to pay himself with other persons; and it can not be said that anything is due until the whole is settled, until all the assets are collected, and all debts paid. Until then, it can not be known whether there is any balance due; still less, what that balance is." The case cited is in no respect different in principle from that under consideration. In that case one partner had given his note to the firm as evidence of sums of money drawn out by him. Afterwards he sold and assigned his interest in the assets of the firm, including notes, accounts and other rights and credits. It was held that the assignment did not include |