Court Opinion

ID: 8047890
Source: CourtListenerOpinion
Date Created: 2022-09-09 04:01:28.754414+00
Date Added: 2024-06-11T16:37:35.326527
License: Public Domain

Sargent, C. J.
The first question raised by this case is, whether the funds of a partnership can be rightfully applied by one partner to the discharge of his own separate preexisting debt, without the assent, express or implied, of the other partner; and whether it makes any difference, in such a case, that the separate creditor had no knowledge at the time that the fund thus appropriated to the payment of his debt was partnership property.
In Rogers v. Batchelor, 12 Pet. 221, 232, it is said that the true principle to be extracted from the authorities is, that one partner cannot *418apply the partnership funds or securities to the discharge of his owu private debt without their (the other partners’) consent; and that without their consent, their title to the property is not divested in favor of such separate creditor, whether he knew it to be partnership property or not. In short, his right depends, not upon his knowledge that it was partnership property, but upon the fact whether the other partners assented to such disposition of it or not.
In this case, it is found that Jewell did not consent that the groceries of the firm should go to pay Scott’s debt to the trustee; but we cannot fail to find that though he gave no actual assent to this arrangement, yet his assent may be, and we think must be, implied from the circumstances of the case, — for he sold out the whole of the company property to Scott, and that left him at liberty to do as he pleased with the property ; and before this trustee process was served, the whole debt had been adjusted, paid, and arranged between Scott and the trustee, so that no suit could be maintained by the firm against the trustee at the time service was made on him in this case; because, after the sale of all the goods to Scott by Jewell, Scott had in behalf of the firm settled this account and given a receipt for it in full, and, so far as appears, while there was company property sufficient to pay all the company debts.
This process against the trustee cannot be maintained, we think, on the ground that it was a fraud on Jewell, the other partner.
But a second question which arises is, Was this arrangement between Scott and this trustee a fraud upon the creditors of the firm ?
In French v. Lovejoy, 12 N. H. 458, it is held that a surviving partner, though he has the right to dispose of the goods of -the firm for a lawful purpose, lias no right to assign them for the purpose of paying his private debt to the prejudice of partnership creditors ; and in Tenney v. Johnson, 48 N. H. 144, it is held that where one partner retires from the firm and releases all his interest in the assets to the other partner, and receives from him an obligation to pay all the company debts, the right of priority still continues in the partnership creditors in respect to such assets. This case would seem to bear directly upon the question involved in the case now before us. See, also, Whitney v. Dean, 5 N. H. 249; Russell v. Convers, 7 N. H. 343; Weaver v. Weaver & Sibley, 46 N. H. 188.
Upon the weight of the New Hampshire authorities, we do not see how the trustee can avoid being charged in this proceeding, upon the ground that to allow the assets of the company to be applied to pay the private debt of this trustee would be a fraud upon the creditors of the firm.

Trustee charged.