Court Opinion

ID: 7286664
Source: CourtListenerOpinion
Date Created: 2022-07-25 20:28:10.61652+00
Date Added: 2024-06-11T16:19:09.656969
License: Public Domain

The Chancellor.
The equity of the complainant’s bill rests on the well settled principle, that joint creditors have priority of right to payment out of the joint estate over the creditors of the individual partners, and that a separate debt of one partner shall not be paid out of the partnership property, till all the partnership debts are paid. The allegations of the bill, that the complainant is a creditor of the firm of Smith & Reutzel, that the partnership property has been seized and taken by virtue of an execution issued upon a judgment at the suit of Walters against Smith, one of the partners, and that there is no other partnership property sufficient to satisfy the demand of the complainant, are facts not denied by the defendants in such mode as to entitle them to a dissolution of the injunction. In fact, no answer has been filed by Reutzel, one of the partners. But, conceding these facts, the execution creditors who are defendants, rely for a dissolution of the injunction, on the allegation of their answer, that, although their judgment is confessed by one of the partners, and is therefore ostensibly the individual debt of such partner, it was nevertheless, in reality, a debt of the partnership, which Smith, who had taken the partnership property, assumed to pay. Admitting that this fact would, if duly established upon the final hearing, constitute a valid defense to the bill, it cannot, I think, avail the defendant upon the present application. It is the averment of a new substantive fact, not a denial of any of the material allegations of the bill. But it is unnecessary to express any decisive opinion upon this point, inasmuch as the injunction must be dissolved upon another ground.
*262The bill itself is radically defective. The complainant has no standing in court, and no right to call in question the validity of the defendant’s claim to the partnership property. He has no judgment or execution against the firm of Smith & Reutzel. He is a general creditor only,
A creditor at large, or before judgment, is not entitled to the interference of this court, by injunction, to prevent his debtor from disposing of his property in fraud of the creditor. In order to enable him to contest the validity of encumbrances of the debtor’s property, he must have some specific claim or lien on such property. As to real estate, he must have a judgment; as to personal property, he must have perfected his lien by execution. Edgar v. Clevenger, 1 Green’s Ch. R. 258, and cases cited in note; Melville v. Brown, 1 Harr. 364; Dunham v. Coxe, 2 Stockt. 437. A bill filed by a creditor of a firm, to restrain an execution creditor of an individual partner from enforcing his lien upon the partnership property, forms no exception to the general rule. A partnership creditor, before judgment, has no such quasi lien on the partnership property, as to entitle him to the aid of the court in protecting and enforcing his claim, either against the individual partners, or against a creditor of a partner. Young v. Frier, 1 Stockt. 465.
The doctrine, that a separate debt of one partner shall not be paid out of the partnership property till all the partnership debts are paid, does not apply until the partners cease to have a legal right to dispose of their property as they please. It is applicable only where the principles of equity are brought to interfere in the distribution of the partnership property among the creditors. McDonald v. Beach, 2 Blackford's R. 55.
The complainant has no such title to, or lien upon, the property in question, as entitles him to call upon the court to interfere in its distribution. The case falls directly within the authority of Young v. Frier, and must be controlled by it. That case was decided after full argument and *263deliberation; and an extended examination of the adjudicated cases, leaves no room to doubt that it is in accordance both with principle and authority.
The inj unction must be dissolved and the bill dismissed.