Court Opinion

ID: 5548602
Source: CourtListenerOpinion
Date Created: 2022-01-10 21:23:35.305008+00
Date Added: 2024-06-11T08:34:59.754490
License: Public Domain

The Chancellor.
The objection to the assignment of the joint or copartnership property which is insisted upon as rendering that assignment fraudulent and void is, that by *302the last clause the assignees, after paying all the copartnership debts, are to return the surplus to the assignors; without making any provision for the payment of the individual debts of the partners. A short answer to this objection is that it no where appears that either of the assignors owed any individual debts at the time the assignment, of the 25th of March, 1841, was executed. And as fraud is not to be presumed, if the existence of such individual debts would have rendered the assignment fraudulent it lies upon the complainant to establish the fraud, by establishing the fact that the assignors, or one of them, did owe debts which were not provided for in that assignment. The counsel for the respondent relies upon the recitals in the subsequent assignment, to Remer, to establish the fact of such individual indebtedness on the part of Haight. Those recitals, however, are merely the admissions of Haight; and are not evidence against these appellants, to establish the fact that an assignment made to them nearly two months previous was fraudulent. Nor are they evidence as against Haight himself; as it does not appear by the assignment to Remer that any-of l.e individual debts, therein provided for, had been contracted in March, when the copartnership property was assigned.
Again ; if the fact had distinctly appeared in the bill, that Haight & Lanning owed individual debts at the time of their assignment of their partnership property in trust to pay the debts of the firm, the clause of that assignment directing the residue of the assigned property to be paid to them, would not render the assignment fraudulent. The co-partnership effects were the primary and natural fund for the payment of the debts of the firm ; and the individual property of each member of the firm was the natural fund for the discharge of his own private debts. It was, therefore, perfectly proper for the copartners, in making an assignment of the property and effects of the firm for the purpose of. discharging their joint debts, to direct the residue of the assigned property, if there should happen to be any, to be returned to them, so that it might be divided be*303tween themselves, according to their respective equitable interests therein as copartners ; leaving each to pay his private debts out of his own individual property. Had it been stated in the bill that the partnership property was much more than sufficient to pay all the joint debts of the assignors, and that they owed large individual debts which the separate property of each was wholly insufficient to meet, there might have been some grounds for supposing that they intended to delay and hinder their individual creditors in the collection of their debts, by creating a trust which would prevent those creditors from levying upon the surplus interest of Haight & Banning in the partnership property. Those facts, however, would not have rendered the assignment fraudulent per se; but they would, if unexplained, have been sufficient to have authorized thecomtto infera fraudulent intent on the part of the assignors. The inference would have been the same, if the assignment had contained no direction to pay the residue of the proceeds of the assigned property to the assignors, after paying the joint debts ; for the law itself would have created a resulting trust in their favor as to such surplus, after the debts of the firm were all paid.
The objection which is urged against the assignment to Remer, of Haight’s individual property, is that it does not provide for the payment of all the partnership debts out of the surplus which may exist after paying the private debts of the assignor ; inasmuch as the first class of debts specified in the assignment of the 25th of March are not to be paid out of such surplus. But upon looking at the assignment of the partnership property, it is evident Haight contemplated the payment of the whole of that class of debts out of the property of the firm, and therefore considered it wholly unnecessary and useless to provide for their payment the second time, out of his individual estate. It appears from the first assignment, that the creditors w7ho were entitled to a priority of payment out of the partnership property, were those who had already obtained liens on that property, in consequence of "Iheir having levied their *304executions thereon prior to the assignment; except the lessor of the store, who was by law entitled to a priority over those execution creditors, for the rent due at the time of the assignment.
The allegation in the bill that both assignments were made with the fraudulent intent to delay and hinder the creditors of the assignors in the collection of their debts, is undoubtedly sufficient to call for an answer upon that point; and to authorize the complainant to establish the allegation by proof, if it is true in point of fact. And in case it is admitted by the answers of the assignors, or is proved upon the hearing, he will of course be entitled to a decree setting aside the assignments as fraudulent and void. But neither of these assignments contained any provision which was illegal, or which would necessarily have the effect to defraud creditors, and the bill not being supported by the oath of any person who pretended to have any personal knowledge of the actual fraud charged therein, the injunction, so far as it related to the assigned property, was improperly granted by the injunction master. The decision of the vice chancellor was therefore erroneous, in denying the application to dissolve the injunction,» so far as related to the appellants, and to the partnership property and effects assigned to them.
The order appealed from must be reversed with costs ; and the injunction, to that extent, must be dissolved with costs.