Court Opinion

ID: 7291448
Source: CourtListenerOpinion
Date Created: 2022-07-25 20:34:30.457269+00
Date Added: 2024-06-11T16:19:21.563279
License: Public Domain

Reed, V. C.
The important question arises under the third point taken in the demurrer:
Has a receiver, appointed to take charge of the property of a partnership which is insolvent, a right to file a bill in respect of the property which belonged to a member of the firm and which has been assigned by him to defraud the creditors of the firm ?
The question is not whether such a receiver can file a bill to reclaim firm property which has been fraudulently assigned or conveyed by one of the members of the firm.
There is no doubt that an assignee for the benefit of creditors, or the receiver of an insolvent corporation, can file a bill to *393cancel fraudulent conveyances or assignments of the property of the assignor, or of a corporation of whose property the receiver is trustee. But to extend this doctrine to the property which is the subject-matter of this suit it must appear that the present receiver is a trustee of the property. The receiver in this case was appointed under the general equity power of this court, and has no statutory authority. Insolvency of the firm was not a jurisdictional condition essential to his appointment. As receiver he is the curator of the property of the firm. His-duty is to keep the property, to gather in the assets and hold, the property of the firm as an officer of the court. His primary duty is to hold the property intact until the matters between the partnership shall be adjusted and wound up. A duty towards the creditors, as well as towards the partners themselves, may arise by the insolvency of the firm; but the duty is only to manage the firm assets in the interest of all these parties. His duty to the creditors, as well as to the partners, is executed when he executes his trust in respect to the assets of the firm. The individual property of the partners is not an asset of the firm. It may, indeed, be reached by the creditors of the firm after judgment and execution, but that fact does not make them firm assets.
It is to be observed that the right of the receiver to file this bill to cancel these conveyances of the property of the partner implies a right in the receiver to take possession of the property when recovered, and the same right if it had never been conveyed. It implies that every receiver of the property of a firm, by force of his appointment, becomes a curator of all the property of each partner. Such a view has never received countenance in any case, and is opposed to any sensible theory of the receiver’s functions. In the well-considered case of Wallace, Receiver, v. Milligan, Assignee, 110 Ind. 498, it was held that the right of a receiver of a partnership to take possession of property is confined to the firm assets, and that the individual liability of a partner to the creditors of the firm is not a firm asset, and cannot be enforced by the firm’s receiver.
It is perceived that it is only upon an assumed right- of a *394receiver to enforce the partner’s individual liability to the firm creditors that the right to follow the individual property of such partner can arise.
There must be a decree for the demurrant.