Court Opinion

ID: 3656899
Source: CourtListenerOpinion
Date Created: 2016-07-06 06:09:46.823168+00
Date Added: 2024-06-11T14:29:06.531802
License: Public Domain

(105)   The heirs of Donaldson and of McMillan, and also the persons beneficially interested in the declaration of trust made in the deed to Strange and Winslow, were made defendants, and either filed formal answer or disclaimers. The bill was taken pro confesso as to Thorburn. The defendant the Bank of Cape Fear admitted in its answer the conveyance of McMillan to Strange and Winslow, and that it was in trust to secure a debt due it; that some of the property thereby conveyed was originally assured to Donaldson, McMillan  Co.; but as to the fact that any part of that assured to McMillan was purchased with the funds of the copartnership, they denied any knowledge thereof, and put the plaintiff to the proof of it; and they insisted that they were purchasers for value and without notice. The defendant Strange, in his answer, insisted upon the same facts, claimed no beneficial interest in the property, and submitted to such a decree as should indemnify him.
This bill is filed by one who claims to be a creditor of the firm of Donaldson, McMillan  Co., and also the assignee of Thorburn, the surviving partner of that firm. Its object is to reach certain real estates, mortgaged or conveyed in trust by McMillan, one of the partners, to secure an individual debt, before that time owing by him, to the defendant the Cape Fear Bank. It alleges, and it is admitted in the answers, that some of the land was held by the copartnership under legal titles vesting the estate in it. The bill also alleges that there were other lands, the legal title whereof was in McMillan, but that he held them in trust for the firm, having purchased them with the copartnership funds and for its benefit. The defendants put the plaintiff upon proof of this trust, and allege that if there was one, they are purchasers for value and without notice.
(106)   As to that part of the property the legal title of which is in the company, the defendant has not the shadow of a claim until the debts of the firm are paid. Property thus situated is entirely unlike an ordinary joint tenancy. The partners have no moieties; the property resides in the company, not in the individual copartners. Each has only a contingent right to a part after the debts are paid and the *Page 71 
copartnership ended; and therefore the transfer of one of the partners only passes that contingent right. The copartnership takes the entirety. To pass anything but the contingent right — that is, to pass the estate — the first must convey, for that is the owner. It is something like an estate granted to husband and wife; they take by entireties, and not by moieties. If the husband grants one-half, or the whole, nothing passes but by estoppel; and if the wife survives him, she takes the whole, notwithstanding the grant of the husband, for she is not bound by his estoppel. If, therefore, McMillan is indebted to the firm to the value of this property, the defendant can claim nothing until the debt is satisfied. If the land, the legal title to which vested in McMillan, was not held in trust by him for the copartnership, very clearly the plaintiff has no right. If it was so held, the defendant took it subject to that trust, unless he discharges himself from it. He says that he is a purchaser for value without notice. From the case as it appears at present I am inclined to think that the defendant the Bank of Cape Fear is not a purchaser for value, but a mere encumbrancer. For what value did the bank pay for the trust? Nothing; it was to secure a debt contracted before the trust was contemplated. As regards expenditure, the bank stood after as it did before the deed. Had the bank purchased with an antecedent debt, and no matter how old (I use the word purchased in its vulgar sense), the extinguishment of the debt would have been value sufficient. Here the debt remains as it was before the conveyance. Had the bank even released endorsers, I presume it would have been sufficient.
But the Court cannot decree for the plaintiff as a creditor,      (107) because he had not obtained a judgment; he cannot pursue the property in the hands of the bank without obtaining a lien upon it. He appears as a mere creditor, and nothing is clearer than that a mere creditor cannot pursue his debtor's property in the hands of a third person. Nor can he sustain his claim as assignee to McMillan's part of the property, held by the copartnership, without showing that McMillan was indebted to it. However strong the evidence of this fact may be, unless the personal representatives of McMillan are before the Court, we cannot examine into it. His insolvency and intestacy will not do in a case like this, for upon his indebtedness depends the plaintiff's right. Neither is the defendant prepared for a hearing. It is quite probable — indeed, I am almost satisfied of the fact, from the uniform practice — that the bank had endorsers for McMillan's debt, who were discharged upon taking the trust or mortgage. I am unwilling, therefore, in a case so important as this finally to decide it, in its present state, but would recommend that it be remanded for the purpose of making amendments and preparing proofs. *Page 72 
PER CURIAM. Let the cause be remanded to the court below, each party paying their own costs in this Court.
Cited: Bethell v. Wilson, 21 N.C. 613; Holderby v. Blum, 22 N.C. 52;Brittain v. Quiett, 54 N.C. 330; Potts v. Blackwell, 56 N.C. 454; McKoyv. Gilliam, 65 N.C. 133; Ross v. Henderson, 77 N.C. 173.
(108)