Court Opinion

ID: 9864379
Source: CourtListenerOpinion
Date Created: 2023-09-25 12:55:16.89417+00
Date Added: 2024-06-11T12:11:03.272369
License: Public Domain

■Butler, J. (on rehearing). Appellant earnestly insists, in his brief on petition for rehearing, that this court overlooked, in the opinion rendered October 26, 1936, the contention made that the case should be reversed for defect of parties. It is insisted that the widow of O. C. Sutton, deceased, Mrs. Florence Sutton, and Miss Elizabeth Sutton, his heir, should have been made parties to this suit by service of process upon them and that no such service was ever had, nor did they make any appearance in the litigation; also, that Mr. Lesser, the surviving partner, died intestate in August, 1935; that the case should have been revived against his heirs at law, and that this was not done. It is suggested that these parties had such an interest in the subject-matter of the litigation as to render any order of the trial court relating thereto void as to them since they had not been made parties to the litigation. This court did not overlook this question, but the writer of its opinion failed to mention or discuss it because it was deemed unimportant. We now hold this question immaterial. The record conclusively shows that the partnership was hopelessly insolvent and that the heirs of O. C. Sutton and M. Lesser could not hope to recover anything from the partnership assets which might have been the reason no suggestion of the death of M. Lesser was made or any intervention filed by the heirs. It is well settled that the heirs and distributees of the property of the deceased member of the partnership have no interest in the property until the affairs of the partnership are terminated and its debts paid. Lenow v. Fones, 48 Ark. 557, 4 S. W. 56; Welch v. McKenzie, 66 Ark. 251, 50 S. W. 505; Bonner v. Coburn, 163 Ark. 274, 260 S. W. 28; McLerkin v. Schilling, 192 Ark. 1083, 96 S. W. (2d) 445. On the death of one of the partners the surviving partner holds the partnership assets as trustee and, as- such,-is the representative of all parties who have, or may have, any interest in such assets. As the representative of all parties in interest, and subject only to the exercise of good faith and reasonable business judgment, he may deal with the assets as he pleases for the purpose of accomplishing the termination of the affairs of the partnership including the payment of its debts. It is his right, even his duty, to gather in and make available all the assets of the firm for the purpose of satisfying firm creditors, adjusting- partnership equities, and to hold the residue,' if any, for distribution to those entitled thereto. In the exercise of his duties he may sell partnership lands without consulting those entitled to distribution in the surplus after the partnership affairs are settled. Hill v. Draper, 54 Ark. 395, 15 S. W. 1025; Coolidge v. Burk, 69 Ark. 237, 62 S. W. 583; Gain v. Mitchell, 179 Ark. 556, 17 S. W. (2d) 282. ... Prom a consideration of the principles announced in,the cases, supra, it follows as a necessary corollary that neither the personal representative nor heirs of the deceased partner are necessary parties to proceedings arising in the courts during the administration of the partnership affairs by the surviving partner. 47 C. J. chapter on Partnership, § 693; French v. Vanatta, 83 Ark. 306, 104 S. W. 141. . The action against M. Lesser as surviving partner was-commenced during his lifetime and his duties before his .death were taken over by the chancery court acting-through its receiver. Thus, M. Lesser passed out of the litigation. It was, therefore, unnecessary on his death to revive against his personal representative or heirs even though they might have otherwise been proper parties. 1 C. J. chapter Abatement and Revival, § 494, p. 916. The next contention urged by appellant in his brief on petition for rehearing- is that the decree of the trial court should have been reversed for its error in partitioning the real estate belonging to the partnership, among the creditors. In our original opinion we held that the trial court erred in decreeing partition in kind, but we refused to reverse on the theory that appellant had not been prejudiced by tbe method of distribution. Wé now reconsider that part of the original opinion having-reached the conclusion that we erred in so holding. The decree of the trial court was clearly erroneous and made over the objection of appellant duly preserved in the record. Therefore, the just rule appears to us to be, not that he was prejudiced, but that he might have been, and that he be required to affirmatively show the prejudice resulting would be to place an unwarranted burden upon him. The trial court had no jurisdiction to make 'the order of partition. It is only where lands are held in joint tenancy, in common, or in coparcenary that partition may be had and not then where it appears the partition will result in prejudice to the owner. In that state of case, the proper method is to order a sale of the property with division of the proceeds to those entitled thereto. Section 8091, Crawford & Moses’ Digest. This is but a restatement of the common-law rule. 47 C. J. 295, § 73; London v. Overby, 40 Ark. 155. The judgment in favor of the several creditors did not create any interest in the lands in their favor so that it may be said they held in joint tenancy, in common, or in coparcenary, but created a lien only against the lands for the payment of their several judgments. Therefore, they had no interest which would entitle them to partition. Roy v. Abraham, 207 Ala. 400, 92 So. 792, 25 A. L. R. 101; Fullerton v. Stortz Bros., 190 Ark. 198, 77 S. W. (2d) 966. The decree of the court below will, therefore, be affirmed in all things except as to that part which makes partition in kind among the creditors. As to that part it is reversed, and the cause remanded with directions to the trial court to order sale of the property and that the proceeds therefrom, less costs, shall be paid to the creditors as their interests may appear.