Case Name: Thomas N. Gadsden vs. Elisha Carson, Charles M. Furman, and W. W. Harlee
Court: South Carolina Court of Appeals
Jurisdiction: South Carolina
Decision Date: 1857-01
Citations: 9 Rich. Eq. 252
Docket Number: 
Parties: Thomas N. Gadsden vs. Elisha Carson, Charles M. Furman, and W. W. Harlee.
Judges: 'Wakdlaw, Oh., concurred.
Reporter: South Carolina Equity Reports
Volume: 30
Pages: 252–269

Head Matter:
Thomas N. Gadsden vs. Elisha Carson, Charles M. Furman, and W. W. Harlee.
The individual creditors of a partner have not such exclusive right to he paid out of his individual property, as to render fraudulent an assignment of it for the benefit of the creditors of the firm. Semble.
Partnership creditors having two funds — the property of the firm and the private property of the partners — to which they can resort, and individual creditors of the partners having but one — the private property of the debtor (including any balance which may remain to him from the firm, after its affairs are settled) — such individual creditors have an equity to compel the partnership creditors to resort first to the partnership assets; but after they are exhausted, the partnership creditors have as good right to be paid out of the private property of a partner as his individual creditors.
Where a debtor, assigning for the benefit of his creditors, includes but a part of his property, a clause in the assignment, exacting a release from the creditor as a condition of his receiving benefit, is fraudulent, and vitiates the assignment.
Where one partner assigns, a clause requiring creditors to release to the firm, as well as to himself, is, it seems, unfair and unjust to the creditors.
BEFORE DARGAN, OH , AT CHARLESTON, JUNE, 1856.
The case will be sufficiently understood from the Circuit decree, which states all the facts, and is as follows:
Dargan, Ch. The plaintiff charges that Elisha Carson is (at the time of filing his bill) indebted to him, and, as he is informed and believes, divers other persons, on his private and individual account, separate and distinct from any partnership agreement into which he may have entered, or for which he may be liable. That he is, or has been, connected in business with his son, James M. Carson, under the name and style of Elisha-Carson'& Son; and this copartnership is also indebted to divers persons. That be is, or bas been, connected in business with bis son, James M. Carson,' and Laurence H. Belser, under the name and style of Carson, Belser & Co., and this copartnership is also indebted to divers persons. That the said Elisha Carson is indebted to him, the plaintiff, in bis individual and separate capacity, in the sum of nineteen thousand dollars, besides interest; and other sums of money for which he (the plaintiff) is liable, in consequence of his indorsement of certain notes of the said Elisha Carson, for the accommodation of the said Elisha Carson, and which said notes have been protested for non-payment, and this plaintiff sued at law for the same.
The plaintiff further charges, that the said Elisha Carson is possessed, in his own right, of a considerable estate, real and personal, consisting of one or more plantations, and a considerable number of negroes. He further charges, that the copartnership of Elisha Carson & Son has made an assignment of its assets, for the benefit of the creditors of that copartnership. That the said Elisha Carson has, moreover, by his own deed, bearing date the 15th day of May, A. D. 1855, conveyed and assigned to Charles M. Eurman a large amount of property, part only of which is particularly described in the said deed. . <
The plaintiff further charges, that the said Elisha Carson has, by his said deed to Charles M. Eurman, attempted to divert the property from the purposes for which the said property, or its proceeds, should be held by the said Charles M. Eurman. That the said Elisha Carson, in his said deed, after providing for the payment of the expenses incident to the execution of the trusts therein created, has set forth as a class numbered one, to be paid from the property so by him transferred and assigned to the said Charles M. Eurman, certain claims amounting to seventeen thousand eight hundred and nine dollars of principal, of which the sum of one thousand four hundred and nine dollars is alone the private and sepa rate debt of tbe said Carson; tbe balance, amounting to oyer sixteen thousand dollars, being tbe debt of the partnership of Elisha Carson & Son, or of Carson, Belser & Company. That in class number two, á part of the debts are the private and separate debts of Elisha Carson, and a part are the debts of E. Carson & Son; and in.this class are also set forth a number of debts, concerning which there is nothing in the deed to indicate whether they are the separate debts of Elisha Carson, of E. Carson & Son, or of Carson, Belser & Company; and that, in class number three, are set forth certain private and separate debts of the said Elisha Carson to the plaintiff amounting to the principal sum of fourteen thousand dollars besides interest, costs, and other expenses. None of the facts above stated, as charged in the bill, are denied in the answer of Elisha Carson, nor are they disputed by any of the parties. They must be assumed to be true.
The deed will speak for itself. It bears date 15th May, 1855, and purports tm convey to Charles M. Eurman all the grantor’s “ right, title, interest and estate in a certain plantation or tract of land, containing four hundred acres, in Sumter District, having such description,” &c.; “ also his right, title and interest in a certain plantation near Midway, in Barnwell District, more fully described,” &c.: “ also, all his right, title and interest in certain choses in action, in the said schedule set forth and mentioned, and hereunto annexed and made a part of this deed, and also any resulting interest I may have in any other property or estate which may now he under mortgage.” The trusts declared are, after discharging costs and expenses incident thereto, that the assignee shall apply the residue of the “ trust moneys in and towards the payment and satisfaction of the several debts and sums of money, and to each of the following persons and corporations, for the following causes of indebtedness, that is to say — First, the notes in the Bank of the State of South Carolina, as follows:
Drawers. Indorsers. Amounts.
Elisba Carson & Son, W. W. Harlee, $12,900 00
Elisba Carson & Son, W. W. Harlee, 5,000 00
Carson, Belser & Co., W. W. Harlee, 5,000 00
Elisba Carson & Son, Th. R. Waring, Casb., 3,500 00
E. Carson, Th. R. Waring, 1,400 90
Second, the following notes, also in the same Bank, to wit:
Drawers.
Indorsers.
Amounts.
E. Carson & Son, E. Carson,
E. Carson,
Tbos. N. Gadsden, $2,000 00
Tbos. N. Gadsden, 5,000 00
Samuel Cante y, 2,500 00
Peter Carson’s two notes, one of twenty-eight hundred dollars, and one of seven hundred dollars.
J. D. Baxley’s note of two thousand dollars, and S. D. & J. N. Hays’ note of fifteen hundred dollars.
Third, the following notes in the Bank of South Carolina:
Drawers. Indorsers. Amounts.
E. Carson, Thos. Ni Gadsden, $8,500 00
E. Carson, Thos. N. Gadsden, 1,500 00
and a note in the Bank of Charleston for nine thousand dollars, whereof E. Carson is the drawer, and Thomas N. Gadsden is indorser. Provided always, nevertheless, and it is the true intent and meaning, and it is made a condition of the same, that the persons named in the foregoing classification, and for whose benefit this assignment is made, shall, on or before the day of June next, by the hour of two o’clock in the afternoon by the clock of St. Michael’s, Charleston, execute a full release to the said Elisha Carson, James M. Carson and Laurence H. Belser; and such as shall not execute the said release and discharge, shall be debarred from all benefit of this assignment; and if the said debts should be paid, and a surplus should be left, pursuant to this agree- merit, that then the said Charles M. Eurman, his executors or administrators, shall pay the same rateably to all the creditors of the said Elisha Carson, who may prove and establish their demands to the satisfaction of the said Charles M. Eur-man,” &c. |
To this bill, Carson has answered. He denies none of the principal allegations of the bill. Eurman, the assignee, has answered. He accepted the trust, was willing to execute its provisions, but has been enjoined by the order of the Court. W. "W". Harlee has also answered. He states his claims very much as the defendant, Carson, has stated them in the deed of assignment. He has accepted the terms of the assignment, and has executed a release. He is the only creditor who has done so. His release will be the subject of remark hereafter.
The plaintiff contends, that if the assignment prevails, all the creditors named in the three first classifications come in pari passu for a participation of the assigned effects; and that if these be insufficient to satisfy them all, they must be paid ■rateably. My construction is otherwise. The deed of assignment is, in many respects, very inartistically drawn, but the meaning is sufficiently clear, that the fund arising from the property assigned was intended to be applied, in the first place, to the satisfaction in full of the claims of the persons named in the first class, before any part of the said fund should be applied to the claims of persons named in the second class. And so as respects the second and third class.
The plaintiff, with more of reason and equity on his side, complains that the defendant, Elisha Carson, being insolvent, has, by his deed of assignment, diverted his private and individual estate from its proper application, and has devoted it to his partnership debts, to the exclusion of his private and individual debts. And such is the incontestible and admitted fact.
In equity, it is a clearly established principle, that partner- sbip property is first applicable to tbe payment of partnersbip debts; and tbe private property of tbe several partners is first applicable to their individual debts. If tbe partnersbip property is more than sufficient to satisfy tbe partnersbip debts, tbe shares of tbe different partners will be applied to tbe satisfaction of their individual debts. So, if tbe private estate of a partner is more than sufficient to satify bis individual debts, and the partnersbip assets should be insufficient to satisfy tbe demands upon them, tbe residue of tbe private estate may be called into requisition. I do not think it necessary to adduce authorities in support of these propositions. This misappropriation by the defendant, Carson, of bis private assets, to tbe payment of bis copartnership debts, to tbe postponement, and practically to tbe entire exclusion of bis individual debts, is in violation of the equitable rights of tbe plaintiff, who is a large separate creditor. To this extent, if no further, be would be entitled to relief. But tbe plaintiff contends further, that tbe deed itself should be set aside, and vacated in toto, as fraudulent, null, and void, upon tbe various grounds taken in tbe bill. Surely no one can doubt that a debtor, in paying bis debts, may prefer one creditor to another. Tbe right to do so results necessarily from tbe absolute dominion which tbe proprietor has over bis estate. If be is permitted to alienate it at bis will, why may be not dispose of it to a creditor in satisfaction of a debt ? And where is tbe policy that would forbid this ? Tbe right of giving preference, when all cannot be paid, does oftentimes lead to abuses. But an attempt to restrict tbe privilege, which is not unfrequently exercised in tbe most conscientious and honorable manner, would lead to greater evils than those intended to be remedied. It is to be exercised subject to tbe control of tbe Court. An assignment, giving such preferences, must be fair and Iona fide; and if it be otherwise, it will be vacated. “ Preferences fairly given are allowable.” Nor qan it be doubted, since Niolan vs. Douglas, 2 Hill, Cb. 448, that a condition inserted in tbe deed of assignment, by which a release is exacted from tbe creditors wbo accept tbe benefits of 'tbe preferences given them, for any further demands-against tbe debtor, does not, per se, vitiate tbe assignment and render it illegal and'void. If in other respects it be fair and equitable, such a condition would not destroy its efficacy. I apprehend that it would be unwise and unsafe to say that such a condition should be allowed to stand, unless tbe debtor surrendered and assigned tbe whole of bis estate, as an insolvent debtor is compelled to do, when be obtains bis discharge. In this instance, tbe assignor did not affect to transfer tbe whole of bis estate to tbe assignee, but only bis interest in certain lands, and certain cboses in action. He must have bad other property. He was a member of tbe firm of Carson, Belser & Company. They must have bad assets. Yet no mention of these is made in tbe assignment, nor any account or explanation given on tbe trial. Tbe insolvent debtor, in giving pre-. ferences, and exacting releases, should not impose harsh and onerous conditions upon bis creditors. In my opinion, tbe exaction of a release to James M. Carson and Laurence H. Bel-ser, when no part of tbe assets belonging to tbe firms of which they were members was included in tbe assignment, was a harsh and onerous condition on tbe creditors from whom it was required. Tbe assignment should be explicit. It should contain a fair and intelligible description of tbe property assigned or set apart for tbe creditors, so that they may judiciously, and with tbe proper information, elect to accept or reject tbe terms of tbe assignment. In these characteristics, this assignment is especially deficient. Tbe failing debtor, inter alia, assigns “ any resulting interest he may have in any other property which may now he under mortgage.” Can any thing be more vague and unsatisfactory ? Is there any thing here to inform tbe creditors as to tbe subject matter of this part of tbe assignment? He does not say that be has any other property or estate, or that it is under mortgage, or that be has a resulting interest in it, (by which, I suppose, is meant tbe equity of redemption.) In respect to tbis property, tbe assignment, to be fair, should have set forth a particular description of the property — its situation and supposed value, together with the amount, and nature of the liens upon it, and to whom those claims belonged. Erom all that appears in the assignment, it may have been a large estate, with little or no incumbrances upon it. To the Court who tried the cause, it has not been made to appear of what this estate consists; what is its value; what is the nature and amount of the incumbrances; or whether there be any. I cannot shut my eyes to the fact, that there has been evasion and concealment in regard to this matter. The bill expressly charges, “that the said Elisha Carson, as your orator is informed and believes, is possessed, in his own right, of considerable estate, real and personal, consisting of one or more plantations, and a considerable number of negroes.” He is called upon and required “to set forth and discover whether he is not seized and possessed of other property, in addition to that set forth in the deed made by him to Charles M. Eurman; and whether such other property is not of great value; and that he may set forth and discover all necessary particulars concerning such property: if land, where located; if negroes, the age, number, and name; and further, in whose name, and under what title, such property is now held; and if mortgaged, at what time such mortgages were executed; to whom, and upon what consideration.” These interrogatories are all very intelligible, and readily admit of an explicit answer. They were answered as follows: “This defendant, answering, admits that he has in possession lands and negroes in Sumter District, but that the same are under mortgage to divers persons, for loans made at different times; statements of which have been filed with the deed of assignment referred to in the bill, and of which the complainant had notice.” This is the whole answer to that important part of the bill, and to those interrogatories that admit of no misconstruction. It is evasive, and shows a disposition for concealment. Even now the Court is possessed of no information as to tbe nature, extent, an.d value of tbat property; whether it be mortgaged, and to whom, or for what amount. The allegation that a statement of the mortgage, or mortgages, affecting this property, was filed with the deed of assignment, was not proved, nor was it pretended at the trial that such a statement was, or had ever been in existence. I have already mentioned that W. W. Har-* lee was the only creditor who had accepted the terms of the assignment, and affected to give a release. But in my opinion his release is not a compliance with the requirements and condition of the assignment. These were, that before he should be entitled to the benefits therein conferred on him, he should execute “ a full release, not only to Elisha Carson,” but also to “James M, Carson and Laurence H. Belser.” It is declared, “ that such as shall not execute said release and discharge, shall be debarred of all benefit of the assignment.” How can Harlee come in under the assignment, having failed in the performance of the conditions on which his right depended ? If the assignment should stand, there would be no preferred creditor who would be entitled. What is to become of the funds which were appropriated to the preferred creditors, provided they released? The assignment does not provide. It is a casus omissus. The deed declares, “if the said debts (meaning the preferred debts) should be paid, and a surplus should be left, pursuant to this agreement, that then the said Charles M. Furman shall pay the same (the surplus) rateably to all the creditors of the said Elisha Carson, who may prove,” &c. The assignor did not contemplate and provide for the case of a refusal to accept, on the part of the preferred creditors. It is only the surplus that is left, after the payment of the preferred claims, that the assignee is authorized to apply to the general creditors. What then is to become of the fund which was devoted to the preferred creditors, but which, as the event is, neither they nor the general creditors can claim? A trust must result in favor of the assignor himself. This reinvests bim witb tbe power and control over tbe fund. This result is accidental, but it places tbe assignor precisely in that position, and gives a feature to the transaction, for which deeds of assignment have been set aside. It has been repeatedly held, that if tbe debtor secures to himself any benefit or control, or reserves to himself a power of revocation, and appointment to new uses, tbe assignment is fraudulent and void.
Tbe answer of Harlee brings to view another assignment, executed by E. Carson, in favor of Eobert Harlee, S. E. Gibson, and ¥m. W. Harlee, bearing date tbe 1st April, 1854. Tbe consideration expressed in this deed is, that “ Eobert Har-lee and S E. Gibson bad become liable as guarantors for tbe copartnership of Elisha Carson, David Carson, and Thomas Harlee, and trading under tbe name and firm of Carson, Har-lee & Company ; and W. W. Harlee, liable for tbe said Elisha Carson and James M. Carson, trading under tbe name of Elisha Carson & Son; and for Elisha Carson, Laurence H. Belser, and James M. Carson, trading under the name of Carson, Belser & Company.” The deed recites, that it had been agreed “ that the said Elisha Carson shall assign all his interests in certain accounts and liabilities due the said partnerships respectively, and the said Elisha Carson individually, a schedule and list of which is particularly set forth, and is hereunto annexed and made a part of these presents, with the signature of the said Elisha Carson thereunto affixed, the said amount of accounts, notes, dues and assets, before referred to as assigned as aforesaid, amounting to the sum of forty-five thousand dollars in the aggregate.” The assignor, Elisha Carson, after these and other recitals, assigns to Eobert Harlee, S. E. Gibson, and W. W. Harlee, “ all his right, title and interest in and to the said debts, notes, dues and accounts, and the several sums of money due thereon, amounting to forty-five thousand dollars, their executors and administrators, so that the whole, or so much thereof as may prove necessary, shall be applied in full liquidation on, and discharge of, the liability and indebtedness,” &c., of the said Harlee, Gibson & Harlee.
At the foot of the deed, under the signatures and seals of the parties, is appended the following statement: “ A list of notes and securities above referred to, including the names of parties, the modes of indebtedness, and the amounts respectively:
Date.
Date.
J. D. Baxley,
J. D. Eoxworth, W. C. Grier,
J. H. McKnight, W. M. Sanders, W. H. Burgess, Jno. B. Cannon, L. J. Dinkins, W. S. Spann,
W. Webb, $
W. W. Benbow,
Est. Hilton,
H. L. Benbow,
Est. W. 0. Guery,
J. & E. McCrary,
Wil. & Man. B. B. Com’y, Sarah McKnight,
B. M. Harrison,
This is the only schedule or description of the securities assigned, or intended to be assigned. It is obvious that the deed is imperfect and unfinished. It does not appear on its face, nor is it proved, that it was ever delivered; and though it is signed by the parties, it is not witnessed. This assignment, as such, seems to me to be void for uncertainty, and for want of a sufficient description of the securities and choses intended to be assigned. But the defendant, Harlee, does not affect to set it up now. He introduces it for another purpose. He says that the said Carson, afterwards, with his (defendant’s) consent, transferred a portion of the said “ debts and securities to other persons, and afterwards agreed with the said Harlee to make an assignment of his estate, real and personal, in such way as should secure him against loss or responsibility, by reason of his said indorsements.” There is no proof of this agreement, nor of the circumstances on which it is said to have been founded, save the answer of this defendant. The agree ment to assign is stated to Lave been made upon a consideration. The defendant, Harlee, assented to the diversion by Carson, to other objects, of a portion of the assets which had been devoted to his indemnification; and Carson “ subsequently agreed with the said Harlee, to make an assignment of his estate, real and personal, in such way as should secure him against loss or responsibility, by reason of his said indorsements. If I understand the object for which this deed is introduced on the present trial, it is for the purpose of showing an additional consideration for the deed of assignment to Furman. Carson, with Harlee’s consent, had appropriated funds to which the latter was entitled. Subsequently, he promised to assign his real and personal estate for Harlee’s indemnity. The deed to Furman is in execution of that promise, which gives it validity. This is the argument. But the deed of assignment is not impeached, nor is it impeachable for want of consideration. The consideration existing, and set forth in the deed itself, is sufficient in law and equity. It has also the sanction of a moral obligation. To the strength of these, I do not perceive that the agreement, recited in the defendant’s answer, adds anything.
It is ordered and decreed, that the said deed of assignment, executed by Elisha Carson to Charles M. Furman, bearing date the 15th day of April, A. D. 1855, be set aside and vacated, so far as concerns the disposition of the securities (or their proceeds), therein described and assigned; but that the said Charles M. Furman remain the assignee and receiver thereof, and vested with the legal title or estate, as he is or was intended to be by the said deed of assignment; and that he do account for the proceeds of the said securities and choses, in this Court, as is now or may be hereafter ordered and directed.
It is further ordered and decreed, that so much of the said securities, choses and assets, mentioned in the said deed of assignment, and affected to be assigned for the benefit of par ticular creditors, and wbicb were of the individual estate of the said Elisha Carson, and also the individual estate generally of the said Elisha Carson, are subject, and are hereby declared to be subject to pay the demands of the individual or private creditors of the said Elisha Carson; and so much of the said securities, choses and assets, which were of the copartnerships of Elisha Carson & Son, and of Carson, Belser & Company, and the property generally of those firms,, are subject, and are hereby declared to be, subject to pay the copartnership creditors of those firms respectively. And it is ordered, that one of the Masters of this Court do enquire and report how much, and which of the said securities, choses and assets, are or were of the individual estate of the said Elisha Carson; and how much, if any, and which, belonged to the firm of Elisha Carson & Son, and to the firm of Carson, Belser & Co. And it is further ordered and decreed, that the said James M. Carson and Laurence H. Belser be made parties to this suit; and that all their partnership and private estate be made subject to the claims of their creditors, on the principles of this decree. And it is further ordered and decreed, that all the partnership and individual estate of the said Elisha Carson be made subject to the claims of his creditors, on the principles of this decree; including the plantation and negroes in Sumter District, which, in his answer, he admits himself to have in his possession. And it is further ordered and decreed, that the mortgagees of the said plantation and negroes, or the persons who have kens upon the same, be made parties defendants to this bill; and that they set forth in their answer the nature and amount of their demands, and the instruments by which secured. It is further ordered and decreed, that the said Master do advertise for all the creditors of the said Elisha Carson, of Elisha Carson & Son, and of Carson, Belser & Company, to> present and prove their demands before him, on or before the first day of January, 1857; and that the said Master do report tbereon, carefully discriminating partnership and individual debts.
It is also ordered and decreed, that the Master do report what funds and estate of the said Elisha Carson, James M. Carson, and of Laurence H. Belser, due, or belonging to them, as partners or individuals, are available for the payment of their debts.
The defendant, W. W. Harlee, appealed on the grounds, and in the following particulars:
1. Because his Honor has decided that a copartner in trade cannot assign his separate assets to pay his copartnership debts, until his own separate debts have been paid. Whereas, it is submitted, that although the copartnership assets must first be applied to copartnership debts, on the ground of intervening equities between the partners, yet that there is no analogous equity to control the general right of the debtor to apply his separate assets as he thinks proper among his creditors, whether, in so doing, he prefers one separate creditor to another, or a copartnership to a separate creditor.
2. Because his Honor has decided, that the assignment is to be regarded as fraudulent, on the ground that it does not convey all the assignor’s interest, which he infers from the absence of any general expressions in the deed to that effect, and from the presumption that he must have had property as a copartner. Whereas, it is submitted, that fraud will never be presumed, and that any fact from which it is to be inferred must be clearly proved.
3. Because his Honor has decided, that although he had a right to exact a release for himself, the stipulation for a release to his copartners, as well as himself, by the assignor, is such a harsh and onerous condition as should prejudice the assignment. Whereas, it is submitted, that a release to one copartner necessarily operates as a release to all, and therefore such a stipulation is supererogatory and inocuous, and should not affect the assignment.
4. Because his Honor has decided, that inasmuch as the assignor has not discovered other property, besides that assigned, in his answer to the bill, it is to be inferred that he has fraudulently concealed some of his property. Whereas, it is submitted, that 'no such inference, can be drawn, until some proof has been offered of other property.
5. Because his Honor has decided, that none of the preferred creditors are entitled to the benefit of the assignment,' on the ground that they have not executed such a release as is stipulated for by the assignor. Whereas, it is submitted, that not only is the'release of the defendant, Harlee, a sufficient compliance with the requisition of the deed, inasmuch as a release .to- oúé copartner is a release to all, but that, as the complainant in this suit filed his bill for an injunction to arrest any action, under the assignment, immediately upon its execution, and before the period allowed for the execution of releases had expired, the necessity for any act, except in the cause, was superseded; and creditors, consenting by their answer to release, are entitled to all the benefit of the assignment.-
6. Because, even if the general assignment were invalid, it is submitted, that the previous special assignment of certain debts, &c., by E. Carson, set up in the defendant’s answer, was sufficient to secure him a lien on such debts, which should have been protected by the decree, in providing for the appropriation of the assets.
Mitchell, for appellant.
Magrath, Me Grady, for complainant.
Martin, for Furman and Carson.

Opinion:
Tbe opinion of tbe Court was delivered by
JOHNSTON, Ch.
Tbis Court is entirely satisfied with tbe' substance of tbe decree.
We are not prepared to say tbat tbe individual creditors of one wbo is a partner bave sucb an exclusive right to payment, out of bis individual property, as to render it fraudulent for bim to appropriate it, or a portion of it, to tbe payment of tbe debts of tbe firm with wbicb be is connected, and for wbicb be is bound. Our opinion on tbat subject is,-tbat tbe right of sucb creditor extends only thus far, viz: — inasmuch as his-claim applies only to tbe private property¡¡,of \bis 'debtor-' (including, as sucb, whatever dry balancfer^aáy.remáiii.to hjim out of tbe firm, after its affairs are compfietelytyound. ujo), while a partnership creditor has a right'ito be paid, not'b_n% out of tbe joint property of tbe firm, butjialsq. put of' ^be*p^-perty of tbe individual partners: tbe prii^t^j^editb^-^who has only one fund to resort to, has an equit^gj^ipel tbe partnership creditor, wbo has two, to resort first to tbe partnership assets, until be exhausts them. But after tbis is done, tbe partnership creditor has as good a right to be paid any balance still remaining unsatisfied, out of tbe private pro--perty of tbe partner, as any other of bis individual creditors.. Tbis is in conformity to tbe case of Wardlaw vs. Gray (Dud.-Eq. 113), with wbicb we see no reason to be dissatisfied.
But it is sufficient to condemn tbe assignment of Carson, tbat while be has required a release to himself, and to tbe firm of Carson, Belser & Company, be has not made a full-surrender of bis property. A debtor wbo surrenders only-part of bis property, has no right t to exact a release, as tbe condition of bis creditor's acceptance. What right can behave to exonerate bis unassigned assets from bis just debts? What right can be bave to retain part of bis property, and offer another part, and require tbat tbe latter be accepted, as full satisfaction ? Sucb a pretension has been too often and too explicitly condemned, to leave the law at all doubtful on this point.
It is not necessary to look particularly at the condition imposed, requiring a release to the firm as well as to himself. But it seems to be obvious, that such an exaction is unjust and unfair to the creditors of the assignor. Whatever debts of the firm are paid by the private property assigned, to that amount Carson becomes a creditor of the firm. Though it is said the firm has also made an assignment, it no where appears that there may not remain a balance sufficient to reimburse this partner for his advances. But after he is released, what is to prevent his putting this in his pocket, at the expense'of the releasing creditor? And as the partnership is also to be released, is not the creditor deprived of his right, by subrogation, to recover from the firm what his debtor has advanced for its benefit ?
It is needless to pursue this subject. The Chancellor was well warranted in his conclusion that the assignment was partial, and therefore fraudulent, and in setting it aside as such.
We regard the order, continuing the functions of Mr. Eur-man, divested of the power to apply the assigned assets to the purposes of the assignment, as an order appointing him receiver. No ground of objection has been taken to this, and therefore we see no reason to interfere with it.
The decree is 'therefore affirmed; with the modification, indicated in the foregoing opinion, as to the distribution of the individual and partnership assets; and the appeal dismissed accordingly. But we are disposed to enlarge the order, for the benefit of the defendant, Harlee. It is represented, in his answer, that he has some interests in virtue of a prior assignment made by Carson in 1854, or some other time. The Master will, therefore, enquire into the evidence of this, and include, in bis report, tbe nature and subjects of said prior assignment, and wbat said Harlee is entitled to under it, with any special matter. And it is so ordered.
'Wakdlaw, Oh., concurred.
Duhkin, Oh.
In respect to tbe invalidity of tbe assignment, I concur in tbe result; and I concur also in tbe modification of tbe decretal order.
Decree modified.
See Le^Prinoe vs. Guillemot, 1 Rich. Eq. 217-19; Jacob vs. Corbet, Cheves' Eq. 71.