Page:Federal Reporter, 1st Series, Volume 1.djvu/818

 810 FEDERAL REPORTBR. �the expenses and disbursements, the net proceeds of the joint stock s hall be appropriated to pay the creditors of the copart- nerehip, and the net proceeds of the separate estate of each partner shall be appropriated to pay his separate creditors." �The section contains a further provision that in case there is a' surplus, after payment of the debts peculiar to each part- ner or the individual member, it shall be paid to the creditors of the other. This section is a subsfcantial embodiment in statutory form of an equitable principle, which has long obtained both in England and this country, to the effect that partnership assets must go, primarily, to pay partnership creditors, and individual assets to individual creditors. In England, however, where the general rule originated, it is Bubject to certain well established exceptions, one of which is that, if the partner has fraudulently converted property or money of the firm to his own use, proof on behalf of the joint estate is allowed in respect of such property against his separate estate, and in competition with his separate credit- ors. Liadley on Partnership, 996, 1004, 1007; Lodge v. Fendall, 1 Yes. Jr. 166 j Ex parte Harris, 2 Ves. & B. 210; Ex parte Young, 3 Yes. & B. 34; Ex parte Smith, 6 Mad. 2. �It is insisted, however, in opposition to the proof of debt in this case, that the exceptions mentioned to the English rule ought not to be incorporated into our bankruptcy System, and cannot stand, in the face of the express provision of section 6121, above quoted. There are some cases which undoubt- edly lend support to this theory. In the Somerset Potiers' Works V. Minot, 10 Cush. 592, it was held by the supreme court of Massachusetts that under the insolvent law of that state, which contained a provision simUar to that of the bank- rupt act, the net proceeds of the separate estate of each part- ner must be first appropriated to pay his separate creditors, and that this rule was not subject to any exceptions which would be admitted in England. It was said in that case that "if there be no joint property the creditors of the firm cannot, under the statute, share in the separate property pari passii with the separate creditors," although it was admitted that in ��� �