But though there is no separate estate, separate creditors cannot come against the joint estate until the firm debts are paid, after which they may resort to the partners' interest in any surplus remaining ; 3 B. & P. 288, 289; Nixon v. Nash, 12 Ohio St. 647, SO Am. Dec. 390; Tenney v. Johnson, 43 N. H. 144.
As a general rule partnership creditors, after they have exhausted firm assets, can not share equally with individual creditors in the individual assets; Clafiin v. Behr's Adm'r, 89 Ala. 503, 8 South. 45; Peters v. Bain, 133 U. S. 670, 10 Sup. Ct. 354, 33 L. Ed. 696; Hundley v. Farris, 103 Mo. 78, 15 S. W. 312, 12 L. R. A. 254, 23 Am. St. Rep. 863 ; some cases hold that they can; Camp v. Grant, 21 Conn. 41, 54 Am. Dec. 321; Petty john's Ex'rs v. Woodruff's Ex'r, 86 Va. 478, 10 S. E. 715. In Kentucky they share the separate assets equally with the separate creditors after the latter have received the same dividend from the separate estate that the firm creditors have received from the firm estate; Fayette N. Bk. v. Kenney's As signee, 79 Ky. 133. It has been said not to be settled that, at law, the partnership cred itors may not lqok to the several funds at once, in common with several creditors, but that the law is now tending towards the adoption of the rule to that effect which pre vails in equity ; Pars. Part. § 383.
If two firms having one or more common members, are both bankrupt, there can be no proof by one against the other ; Pars. Part. § 381. Various explanations have been offered for this rule. Sometimes it is called a "rule of convenience"; sometimes a funda mental principle of equity; Ewell's Lind. Part. *692 ; Allen v. Wells, 22 Pick. (Mass.) 450, 33 Am. Dec. 757; Murray v. Murray, 5 Johns. Ch. (N. Y.) 60; Story, Part. § 377; Appeal of Black, 44 Pa. 503. Sometimes it is said to depend on the principle of destina tion ; the partners by gathering together a firm fund have dedicated it to the firm cred itors. Upon this theory, the partnership stock becomes a trust fund. The firm cred itors occupy a commanding position and re strain even the partners in dealing with the property ; In re Cook, 3 Biss. 122, Fed. Cas. No. 3,150; Menagh v. Whitwell, 52 N. Y. 146, 11 Am. Rep. 683. Usually it is declared to
be the outgrowth of the partner's equity, i. e. his right to have firm funds applied first to the payment of firm debts; Shackelford's Adm'r v. Shackelford, 32 Gratt. (Va.) 481; Black v. Bush, 7 B. Monr. (Ky.) 210. con sequently, where the partner gives _up this right, the firm creditor loses his priority; Case v. Beauregard, 1 Woods, 127, Fed. Cas. No. 2,487; Shackelford's Adm'r v. Shackel ford, 32 Grdtt. (Va.) 481. The rule does not apply where a partnership creditor has ac quired a lien by contract ; Spratt's Ex'x v. Bank, 84 Ky. 85. If insolvent partners divide the firm fund among their separate creditors in proportion to the interest of each in the partnership, firm creditors can not Object ; McNutt v. Strayhorn, 39 Pa. 269 ; Atkins v. Saxton, 77 N. Y. 195.
As a general rule, insolvency fixes the po sition of the different funds. A debt to a partner by the firm cannot be collected for the benefit of separate creditors; a debt of a partner to the firm cannot be collected for` the benefit of firm creditors; because a man. cannot prove against his own creditors; Ridgely v. Carey, 4 H. & McH. (Md.) 167. What one partner owes his co-partner inde pendently of the firm can be collected from the separate estate of the debtor for the benefit of the separate estate of the creditor : but this will not be allowed unless the situa tion is such that the firm creditors can de rive no benefit even indirectly from the en forcement of the claim, i.. e. there must be no surplus to go to them; 4 De G. J. & S. 551; contra, where both partners owe the firm one-half of the excess of one debt over the other, it is payable to the firm creditors out of the estate of the greater debtor ; Ap peal of McCormick, 55 Pa. 252. Partners, before insolvency, .may, by an executed agreement, change firm into separate prop erty. Firm creditors have no lien to pre vent the alteration ; e. g. where one partner sells out to the others, the fund becomes primarily liable for the claims of the cred itors of the new firm ; National Bk. of Me tropolis v. Sprague, 20 N. J. Eq. 13; Howe v. Lawrence, 9 Cush. (Mass.) 553, 57 Am. Dec. 68; Maquoketa v. Willey, 35 Ia. 323 ; 6 Ves. 119.