Court Opinion

ID: 7937228
Source: CourtListenerOpinion
Date Created: 2022-09-08 23:10:54.346305+00
Date Added: 2024-06-11T16:33:35.071400
License: Public Domain

Montgomery, J.
(dissenting J. Plaintiffs sued out an attachment against the defendants, alleging that the defendants, comprising a copartnership which consisted of Ward H. Jennings and Ward L. Jennings, fraudulently incurred the indebtedness for which suit was brought. The writ of attachment was levied upon the property of Ward H. Jennings, and he filed an application to dissolve the' writ, which was allowed. The sole question is whether the allegation in the writ that the indebtedness was fraudulently contracted by the defendants was made out.
The evidence is abundant that Ward L. Jennings made false and fraudulent representations as to the standing of the defendants and as a basis for the credit which was extended at the time the goods in question were sold. It is contended, however, that the defendant Ward H. Jennings’ individual property cannot be made subject to attachment by the fraud of Ward L. Jennings. This question must be determined by ascertaining whether the institution of the proceedings was justified as against the two defendants.
The affidavit very properly alleges that the defendants fraudulently contracted the debt, not thar one of the defendants did so. Each partner was, in the matter of the contracting of the indebtedness, the agent of the partnership; and the fraud of the agent in contracting snoh indebtedness is the fraud of the principal, as was held in May v. Newman, 95 Mich. 501. The statute in terms provides the remedy by attachment against the defendant, when it is shown “that he fraudulently con*524tracted the debt or incurred the obligation respecting which the suit is brought.” Who is to be' said to have fraudulently contracted the debt or incurred the obligation? Obviously, the purchaser of the goods; not Ward L. Jennings alone. Both members of the firm incurred the obligation simultaneously, and both contracted the indebtedness.
Section 8015, in my judgment, has no application. That provides that,—
“When two or more persons are jointly indebted as joint obligors, partners, or otherwise, and an affidavit shall be made, as provided in section two of this chapter, so as to bring one or more of such joint debtors within its provisions, and amenable to the process of attachment, then the writ of attachment shall issue against the property and effects of such as are so brought within the provisions of said section.”
This section gives no support for the suggestion that one partner may not, when representing the firm, fraudulently contract a firm indebtedness. Nor is the case of Edwards v. Hughes, 20 Mich. 290, relied upon by defendants, in point. In that case, it is true, it was said, construing the section just quoted:
“It will be seen from this section that when the plaintiff is able to make a case against one of several debtors, whether they are indebted as partners or otherwise, he is not to allege a joint wrong by them all, but must set forth his case in the affidavit according to the facts. There is good reason and plain justice in this statute, since otherwise the party who has the misfortune to be joined in the same legal obligation with a dishonest person may himself be subjected, not only as to his property owned jointly with the other, but as to his individual property also, to -all the inconveniences and rigorous treatment to which he could have been made liable if personally guilty of the like dishonesty.”
But the misfortune of the present defendant Ward H. Jennings does not arise from his having joined in the *525legal obligation oí Ward L. Jennings, a “ dishonest person." His liability grows out of the fact that the firm of which he was a member fraudulently incurred an obligation. In Edwards v. Hughes the fraudulent act of the copartner consisted of transferring his individual property in fraud of the creditors of the firm. It is perfectly apparent that he could not, by an act thus disconnected from the business of the firm, subject the. property of his copartners to the extraordinary process of attachment. But, in the case under consideration, the act of Ward L. Jennings was the act of the firm. Any other view of this statute results in this: that a partner having a nominal interest may incur indebtedness on behalf of the firm fraudulently, and no process can issue against either the copartnership property or the property of his copartners. The extent to which the creditor could go would be to issue his process against the interest of the nominal partner. This is plainly not the purpose of the statute, in my judgment.
I think the case falls within the principle in May v. Newman, and the order dissolving the attachment should be reversed, with costs.
McGrath, O. J., concurred with Montgomery, J.