Case ID: sc-eq_2/html/0239-01.html
Source: Caselaw Access Project
Author: {"author": "Chancellor Marshall", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

[Present, Chancellors Rutledge, Marshall and James.]
    M’Cauly and others, Executors of Edgar Wells, vs. M’Farlane and Player, and their Assignees.
    
      A copartner talcing money out of the funds of the copartnership, and carrying it into a new concern or trading house, and that becoming bankrupt, the fund cannot be followed specifically, so as to give the former copartnership apriority over the other creditors of the bankrupt house.
    THIS was a bill filed to recover certain sums of money from the defendants, which M’Farlane, when a copartner in the house of M’Farlane & Wells, hut trading under the firm of Alexander M’Farlane, had taken out of the funds of that concern, and carried with him into a new concern in trade, formed by him with Mr. Player, under the firm of M’Farlane & Player. The latter had since become bankrupt, and had assigned all their estate and effects to assignees, who are made defendants. The complainants claim a priority of payment out of the bankrupt estate, which claim was resisted by the defendants.
    JUNE, 1804.
    At the hearing the evidence was as follows : That Wnen M’Farlane entered into copartnership with Wells* the former was active and industrious, but had no funds. iatter ¡rd¿ funds. By the articles of copartnership, the business of the concern was to be confined to shop keeping. It was a prosperous concern and made money.
    It was acknowledged by Mr. Player that some -of the copartnership funds of A. M’Farlane and E. Wells, were brought by M’Farlane, into the stock of the new concern of M’Farlane and Player. But it was in money, not in goods. Certain sums were ascertained also by evidence.
    It was contended by Mr. Baxley, for the complainant,
    that the funds taken by M’Farlane out of those of M’Farlane and Wells, and carried into those of M’F. & Player, could be pursued and made liable specifically. That the new concern held as a trustee for Wells, and are accountable even for the profits made from that fund. He cited 1 Ves. 240,2. 2 Cowp. 445. Coopers Bank Law, p. 129.
    It was argued for the defendants by Mr. Pringle,
    that admit it to be proved that M’F. had carried the funds of M’F. & Wells into the house of M’F. & 'Player, it was not stock in trade, which could be specified and traced, but money which has no ear mark. That stock must be capable of specification. That a lien cannot attach, but on specific goods of the first stock. 1 Ves. jun. 166. That even if goods be taken put of the company stock by one of the partners, his separate estate only is liable. 3 Ves. jun. 240.
    There is no evidence that an atom of stock ivas carried into the new concern by M’F.
   Chancellor Marshall

delivered the decree of the court,

The object of the bill in this case is, that complainants should be permitted to follow certain funds which were taken by Alexander M’F. from the copartnership of M’Fariane & Wells, trading under the firm of Alexander M’F. and carried by him into a partnership, subsequently entered into, of M’F. & Player, and since that, transferred by their bankruptcy under the law, to their assignees.

It has been contended for the complainants, that they, as the representatives of E. Wells, the copartner of A. M’F. have a right to follow these funds so taken; that they have a lien on them, and can claim them in the hands of the assignees, preferably to their other creditors. It has been also contended, that the taking of these funds by M’F. (being an act done as a partner) was to all purposes a trust- which attached to them, throughout their whole subsequent progress, and protected them from the effect of M’F. Sc P’s.-bankruptcy. The only evidence which clearly and distinctly proved the taking or appropriation of any of the funds of M’Fariane and Wells, by Alexander M’F. and carried into the copartnership of M’F. & P. related to three sums, viz: one of 693/. 4s. 10d. proved by the answer of Player, one of the defendants, and the books of Alexander M’F. to have been brought by Alexander M’F. into the partnership of M’F. & P. also the sum of 482/. received by one Peitring, from J. Tunno of London, in consequence of a letter of credit from Alexander M’F. ■(M’F. & Wells,) on J. Tunnó, which sum he received, and afterwards paid the amount to M’F. & P. who never remitted the same to J. Tuqno, but appropriated it to their own use, leaving the estate of the copartner Wells, answerable to Tunno. The last sum is that of 1864 received by M’F. & P. of Carpenter and Smith, of Camden. This debt was due to the partnership of Alexander M’F. (and Wells,) but was appropriated by M’F. 8c P. to their own use. The single question then is, have complainants under the circumstances of this case, the right contended for, or must they, as is insisted on by defendants, come in as other creditors for a dividend of the estate of M’F. 8c P. It was proved at the hearing of this case, that what was taken from the partnership of M’F. & W. & carried by him into that of M’F. Sc Player, was in money.

Sailet and Desaussure and FoRD for complainant.-

Pringle for defendant.

This has no ear mark, by which it can be traced or de-' signaled. No lien can specifically attach upon it. it ^ not tangible as goods or the like. It has not been proved, that M’F. ever took the copartnership goods of. M’F.g. Wells, and carried them into the* stock' of M’F. &. P« The sums appropriated by M’F. were in money, ready cash, which it is impossible to identify in the funds of M’F. & P. M’F. & P. have become bankrupts, and their estate has passed into the hands of assignees, -and as the case stands, we cannot say that complainants have a higher equity than their other creditors. They can only come in on the footing of general creditors of M’F. & Player.