An exception to this rule was said to exist where the action arises in respect of their common interest in land, where all ought to be joined; but this distinction was not continued under the English Partnership Act.48

§ 339. No action against firm as such, except by statute.As in the preceding subdivision, no action for a tort lies against the firm as such, except by statutes; but under the Georgia statute, for example, it has been held that the partnership as a separate entity may be held liable for a tort.49

III. SET-OFF IN ACTIONS BY AND AGAINST THE PARTNERSHIP.

§ 340. Set-off of individual and of partnership claims.-The question whether in an action by or against the partnership there may be a set-off of individual against partnership demands and vice versa, is one which frequently arises, and seems to be somewhat related to the question of parties which has just been considered. The question of set-off in general is the question whether the defendant in an action may avail himself in his defense of a claim which he has against the plaintiff who is suing him, instead of bringing a separate action to enforce it. If the claim in question is one for a reduction or allowance arising out of the very transaction upon which the plaintiff sues, it is usually a matter for recoupment rather than set-off; if it

Cent. R. Co. v. Ross (1892), 142 Ill. 9, 31 N. E. 412; Creed v. Hartmann (1864), 29 N. Y. 591, 86 Am. Dec. 341; Wood v. Luscomb (1868), 23 Wis. 287; Fletcher V. Ingram (1879), 46 Wis. 191, 50 N. W. 424; Howe v. Shaw (1868), 56 Me. 291; Hess v. Lowrey (1890), 122 Ind. 225, 23 N. E. 156, 7 L. R. A. 90, 17 Am. St. R. 355, Mechem's Cas. 400; Hyrne v. Erwin (1885), 23 S. Car. 226, 55 Am. Rep. 15; Rice v. Van Why (1910), 49 Colo. 7, 111 Pac. 599.

When the action, though in form

in tort, is really founded upon the breach of a partnership contract, (e. g., the liability of a firm of physicians under their implied contract to use skill,) the liability is joint: Whittaker v. Collins (1885), 34 Minn. 299, 25 N. W. 632, 57 Am. Rep. 55; Hess v. Lowrey, supra; Hyrne v. Erwin, supra.

48 Lindley on Partnership (7th ed.), 320.

49 See Page v. Citizens Banking Co. (1900), 111 Ga. 73, 36 S. E. 419, 78 Am. St. R. 144, 51 L. R. A. 463, Mechem's Cas. 954.

arises independently and out of other transactions, it is a matter for set-off. The common law did not permit set-off in actions at law but left each party to enforce his own claim by separate legal action. This condition, however, has now been very widely changed by statutes, which permit set-off under the conditions prescribed by the statute, though the statutes differ somewhat in terms and their interpretation is not always uniform. Before these statutes, courts of equity permitted set-off in equitable actions under certain circumstances, and a distinct equitable jurisdiction of this sort is still recognized.

§ 341. Under the statutes of set-off the claim sought to be set off and the one sued upon must, in general, be mutual: they must arise between the same parties and be due in the same right. Consequently in an action by the partners, upon a partnership demand, a debt due from one partner only, or from any number less than all, cannot ordinarily be set off.50 To do so, moreover, is to pay the individual debt of the partner out of the partnership assets, and this may not be done without the consent of the other partners. They might give such consent, in many cases, expressly or by implication,51 though they would not be free to do so if the partnership were insolvent.

For similar reasons, if a partner sues for a debt due to him individually, the defendant may not set off a debt due him from the partnership, without the plaintiff's consent,52 except where

50 See Cannon v. Lindsey (1887), 85 Ala. 198, 3 So. 676, 7 Am. St. R. 38; Meeker v. Thompson (1875), 43 Conn. 77; Rush v. Thompson (1887), 112 Ind. 158, 13 N. E. 665; Jones v. Steamboat Co. (1897), 90 Me. 120, 37 Atl. 879; Payne v. O'Shea (1884), 84 Mo. 129; McDonald v. Mackenzie (1887), 24 Oreg. 573, 14 Pac. 866.

Same, where an assignee or representative of the partnership is suing: Boykin v. Persons (1891), 95 Ala. 626, 11 So. 67.

One partner alone cannot, by his agreement, change the rule: Cowen

v. Hardware Co. (1891), 95 Ala. 324, 11 So. 195.

51 Thus in Clark v. Taylor (1880), 68 Ala. 453, it is said that such a set-off may be allowed where a usage of the firm is proved establishing a clear and uniform practice to allow such set-off, or where the consent of all the partners is satisfactorily shown, citing Hood v. Riley (1835), 15 N. J. L. 127. See, also, Morgenthau v. King (1890), 15 Colo. 413, 24 Pac. 1048.

52 See Ingols v. Plimpton (1887), 10 Colo. 535, 16 Pac. 155; Houston v. Brown (1861), 23 Ark. 333;

partnership debts are made joint and several,58 or where the plaintiff, by assumption or otherwise, has become individually liable to pay the claim so offered as a set-off.54

In an action against one partner for a debt due from him. individually, he may not set off a debt due from the plaintiff to the partnership,55 unless that debt has been assigned to him,56 or his copartners consent that he may so use it, and the rights of third persons will not be prejudiced thereby.57

In an action against the partners for a partnership debt, they may of course set off any claim which the partnership has against the plaintiff, but it is held that they may not ordinarily set off individual claims which they or any of them may separately have against the plaintiff; 58 though, mutuality aside, there seems to be no good reason why a partner should not thus use his individual credits to pay the partnership debts if he so desires and if his own creditors are not thereby injured, and under some statutes it has been permitted.59

Where there is a dormant partner that fact will not ordinarily be permitted to defeat a set-off good against the ostensible partners.60

The question of set-off in actions by and against the surviving partner is considered in another section.61

Jones v. Steamboat Co., supra; Jackson v. Clymer (1862), 43 Pa. 79.

53 See Allen v. Maddox (1874), 40 Iowa 124 (but see Hoyt v. Murphy (1858), 18 Ala. 316; Drennen v. Gilmore (1901), 132 Ala. 246, 31 So. 90, 90 Am. St. R. 902); Rust v. Burke (1882), 57 Tex. 341; Moody v. Willis (1867), 41 Miss. 347.

54 See Hoyt v. Murphy, supra. 55 Jones v. Blair (1876), 57 Ala. 457; Western Coal Co. v. Hollenbeck (1903), 72 Ark. 44, 80 S. W. 145; Olson v. Lamb (1898), 56 Neb. 104, 76 N. W. 433, 71 Am. St. R. 670; Wrenshall v. Cook (1838), 7 Watts (Pa.) 464.

56 See Hall v. Allen (1883), 80 Mo. 286.

57 See Collins v. Campbell (1902), 97 Me. 23, 53 Atl. 837, 94 Am. St. R. 458.

58 See Wilson v. Runkel (1875), 38 Wis. 526; Pinckney v. Keyler (1855), 4 E. D. Smith (N. Y.) 469; Cooley v. Sears (1861), 25 Ill. 613, (501); Beauregard v. Case (1875), 91 U. S. 134, 23 L. ed. 263.

59 See Donnell v. Portland, etc., R. Co. (1884), 76 Me. 33.

60 See Bryant v. Clifford (1854), 27 Vt. 664, Gilm. Cas. 246; Dixon Livery Co. v. Kane (1915), 117 Va. 656, 86 S. E. 106, L. R. A. 1916 A 1211; Willey v. Crocker Nat. Bank (1904), 141 Cal. 508, 75 Pac. 106. 61 See post, § 402, note.

§ 342. -Set-off in equity is, in general, governed by the same principles of mutuality as those which prevail at law, but courts of equity will at times allow a set-off which the statutes would not permit, especially where the plaintiff is shown to be insolvent and the defendant would therefore probably not be able to collect the demand in question if he is driven to a separate action.62

62 See Watts v. Sayre (1884), 76 Ala. 397; West v. Kendrick (1872), 46 Ga. 526; Hall v. Kimball (1875), 77 Ill. 161; Chamberlin v. Stewart (1837), 6 Dana (Ky.) 32; Dubrenil

v. Gaither (1904), 98 Md. 541, 56 Atl. 965; Spofford v. Rowan (1891), 124 N. Y. 108, 26 N. E. 350; Seligmann v. Heller (1887), 69 Wis. 410, 34 N. W. 232.