Case ID: ind_17/html/0406-02.html
Source: Caselaw Access Project
Author: {"author": "Worden, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Dean v. Phillips.
    
      A. had recovered a judgment for the foreclosure of a mortgage against B. and wife, for $986, and afterward two other judgments, amounting- to $1,014, wore recovered by other parties against B. and C., as partners. Executions upon the judgment of foreclosure, as well as upon the other judgments, were placed in the hands of the sheriff, who levied the latter upon the mortgaged premises, and having duly advertised the premises, sold the same upon the decree of foreclosure to A., for $2,105, who refused to pay the purchase money, a deed having been tendered. Motion, under § 476 of the code, for judgment against A. for the amount of his bid, and for damages thereon. Answer : that the premises sold wore the separate property of B. and wife, and that the debts for which the other judgments were recovered were the co-partnership debts of B. and C., and that said co-partners had sufficient partnership property in the county out of which to make said judgments; that defendant had tendered to the sheriff the costs due on the order of sale, and his, defendant’s, receipt for the amount due to him as plaintiff in said decree of foreclosure, and also the receipt of B. for the residue.
    
      Held, that the executions against B. and O. might lawfully be levied upon the property of either, and having- been levied upon the promises mortgaged to A., the overplus, after paying the mortgage debt, was applicable to the payment of the other executions, and hence the receipt of B. for such overplus was not a good tender to the sheriff.
    
      Held, also, that the premises having been sold upon the foreclosure of a mortgage, in the execution of which A.s’ wife had joined, her interest in the land was gone, and the surplus arising from the sale belonged to A., and was applicable to the payment of his debts.
    
      Held, also, that the creditors of a firm may collect their debts out of the property of the one partner, notwithstanding there may be joint property out of which the debt might be made, unless that partner has separate creditors who are entitled to be first paid out of such assets.
    APPEAL from the Wells Circuit Court.
   Worden, J.

This was amotion, by Phillips, as sheriff of Wells county, against Dean, under the provisions of § 476 of the code, for judgment against Dean for the amount of a bid made by him on property sold to him on execution, and damages thereon. The facts stated in writing as the ground of the motion are as follows: Dean had recovered a judgment for the foreclosure of a mortgage on certain real estate, against Robert G. Bennett and his wife, for about $986, and costs. Afterward, Lightfoot and others recovered judgment against Robert O. Bennett and William LI. Dean for. about $224. Bostwiele and others also recovered judgment against Bennett and William PL. Dean for about $790. These judgments were recovered subsequently to the execution of the mortgage foreclosed. An execution was issued upon the judgment of foreclosure, as also upon the other judgments, and placed in the hands of Phillips, as sheriff, for service, who levied them upon the mortgaged premises, and, having duly advertised the same, sold them on the execution issued upon the judgment of foreclosure. The defendant, John A. Dean, plaintiff in the foreclosure case, bid off the premises at $2,105, but fails and refuses to pay the purchase money, a deed having been tendered, <fcc.

The defendant answered by general denial, and by two special paragraphs, to which demurrers were sustained, and he excepted. The general denial being withdrawn, the plaintiff had judgment.

As the appellant relies upon only one of the special paragraphs of his answer, that alone will be noticed. That paragraph is as follows:

“ And for a third and furthei- answer the defendant says, that the premises in the notice named was the separate property of Robert G. Bennett and his wife; that the defendant is the same John A. Dean named in the order of sale as plaintiff, and that the debts due on the executions to Lightfoot and others, and to Bostwieh and others, named in the notice, are due from said Robert O. Bennett and William II. Dean as partners, under the name of Bennett Ah Dean; that Bennett & Dean had sufficient partnership property out of which said partnership debts could have been paid, within the bailiwick of said plaintiff, subject to levy on said executions named; that the defendant had the said land struck off to himself at the sum of $2,105, and the defendant paid the plaintiff, in money, the fees on said order of sale, amounting to $200, and tendered the plaintiff his, defendant’s, receipt, as plaintiff in said order of sale, for $1,000, part and parcel of said sum of $2,105, and tendered plaintiff said Robert C. Bennett’s receipt for $1,000, the residue of said purchase money, and demanded a deed from the plaintiff, which the plaintiff refused, and still refuses.”

Leaving out of view any questions as to the rights of the wife of Bennett, and as to the right of having partnership property first applied to the payment of partnership debts, there can be no doubt but that the sheriff was entitled to have the excess of the purchase money bid for the property, after satisfying the judgment on the mortgage, paid over to him, in order that he might apply it on the other executions in their order. Steele v. Hanna, 8 Blackf. 326. The defendant’s'receipt was good enough for the amount coming to him on his execution, but not so with the receipt of Robert O. Bennett. Had the overplus, after paying the judgment on the mortgage, not been liable to be applied upon the other executions, perhaps Bennett’s receipt would have been sufficient. The executions against Bennett As Dean might be lawfully levied upon the property of either, and having been levied upon the premises mortgaged, the over-plus, after satisfying the mortgage debt, was applicable to the payment of those executions. Hence Bennett’s receipt was of no consequence. But the appellant insists upon two points, one of which is, that as Bennett’s wife had an interest in the land mortgaged and sold, she was interested in the money arising from the sale, after paying the mortgage debt, and therefore it could not be applied to the payment of the other executions. The other point is, that the partnership property should have been first levied upon, and therefore no part of the money arising from the sale in question should have been applied to the payment of the other executions.

"We do not perceive how Bennett's wife had any interest in the residue of the money, after paying the mortgage debt. She executed the mortgage with her husband; otherwise, had she survived him, she might have been entitled to one third of the land. But the premises having been sold upon the mortgage, to which she was a party, her right to, or contingent interest in, the land was gone. The excess of the money arising from the sale, clearly, all belonged to Bennett, and not to his wife; hence it might properly be applied to the payment of his debts.

In regard to the second point, it may be observed that it is settled in equity that upon the dissolution of a partnership by the death or bankruptcy of one of its members, the joint creditors are entitled to priority of payment out of the joint effects, and the separate creditors of each partner out of the separate effects of the partner. Matlock v. Matlock, 5 Ind. 403; Holland v. Fuller, 13 Ind. 195; 1 Story’s Eq. Jur., § 675.

It may be doubtful, however, whether this principle is at all applicable in cases where the partnership still exists, (as it does, for aught that appears, in the present case,) and is not dissolved by death or bankruptcy. Vide Story on Part., § 361. But however this may be, it is clear that the principle has no application to the case at bar.

The creditors of a firm may collect their debts out of the property of one of its members, unless that member has separate creditors who are entitled to be first paid out of his separate effects. If there be no such separate creditors, no one’s equitable rights are interfered with by the levy on such separate effects. So far as the partner himself is concerned, his separate property is equally liable with the joint property, both in law and equity, for the payment of the joint debts. Partnership debts are regarded in equity as joint and several. The rule above stated was not established for the benefit of the partners, but for the benefit of their creditors. Now, in the case at bar, no creditors of Bennett áre asserting their to be first paid out of his separate property. Indeed, it does not appear that he has any separate creditors. The paragraph of the answer does not even allege that the defendant was the creditor of Bennett, and that he made the arrangement and procured Bennett's receipt in order to secure his debt.

M. JenJdnson, for the appellant.

We perceive no error in sustaining the demurrer.

Per Ouriam. — The judgment is affirmed, with 1 per cent, damages and costs.