Court Opinion

ID: 5548310
Source: CourtListenerOpinion
Date Created: 2022-01-10 21:23:09.604844+00
Date Added: 2024-06-11T08:34:59.115234
License: Public Domain

The Chancellor.
The first assignment in this case, though void as against creditors who chose to disaffirm it, was undoubtedly valid as between the assignor and assignee, in favor of those creditors who were provided for therein and who should think proper to insist upon their rights against the assignee, who had assumed a trust for their benefit. If these complainants, therefore, were claiming under the first assignment, the assignee might be estopped from denying the validity thereof, except so far as it had been impeached or disaffirmed by other creditors; and might be compelled to account for the assigned property according to the terms of the first assignment, notwithstanding the subsequent voluntary surrender of that assignment to the assignor. The present bill, however, is not filed for any such purpose ; as the complainants seek to disaffirm both assignments, and to reach the property in their character of judgment creditors of the assignor, after the return of an execution unsatisfied. Or, in any event, they make no claim whatever under the first assignment as a valid transfer of the property. So far as the complainants rights are concerned, therefore, the voidable assignment which they repudiate might lawfully be surrendered up to the assignor, so as to revest the property in the limited partnership. And if a valid assignment was thereafter made for purposes authorized by the statute, before the complainants had acquired any legal or equitable lien upon the fund, or any right of preference, they would have no right to impeach it on account of any illegality in the first assignment. This question was examined and decided by the vice chancellor of the first circuit in the case of Hone v. Woolsey, (2 Edw. Ch. Rep. 289;) and I fully concur in the conclusion at which he arrived in that case. If the last assignment had been intended as a mere confirmation of the first, and had been made for the purpose of securing to those who had come in under the first the fraudulent preferences therein declared in their favor, the result would undoubtedly have been different. In the present case, if the last assignment is valid, the property is legally vested in the appellant for the benefit of all the creditors ; and the injunc*582tion, so far as ■ it restrains him from selling the assigned property and collecting the assigned debts should be dissolved. That question I will next proceed to consider.
The statute relative to limited partnerships has prohibited either the general or special partner from giving any preference, .either by assignment of any part of the property or otherwise, after the firm has become insolvent, or in" contemplation of insolvency. But there is nothing in the statute which authorizes the acting or- general partner to make an assignment of all the partnership effects to a trustee, for the payment of the partnership debts rateably, or otherwise. There may, therefore, be some doubt as to the right of the general partner to make any assignment of all the partnership effects to a trustee, for any purpose, without the express or implied assent of the special partner; unless provision is made for such an assignment, in case of insolvency, in the articles of copartnership. (Havens v. Hussey, 5 Paige’s Rep. 30.) It is not alleged in this case, however, that the assignment was made without the authority and against the wishes of the special partner. And as the assignment upon its face purports to be for his benefit his assent thereto may be presumed.
There is another provision of the statute relative to limited partnerships which has been violated in this case,* and which rendered the second assignment, as well as the first, invalid as against these complainants and other general creditors of the firm who may think proper to repudiate the same. By the twenty-third section of the title of the revised statutes relative to limited partnerships, (1 R. S. 767,) it is declared that in case of bankruptcy or insolvency of the partnership, no special partner shall, under any circumstances, be allowed to claim as a creditor until the claims of all other creditors of the. partnership shall be Satisfied.. Yet in this assignment, which upon its face purports to be an assignment of all the copartnership property and effects, it is expressly provided that in case the fund is not sufficient to pay all the debts, that is in case the partnership is insolvent, the debt of $519 due to the special partner as endorser shall be paid rateably with those of the *583complainants and of the other creditors. And this provision will be binding upon all the creditors who may elect to come in under the assignment and affirm this disposition which has been made of the partnership effects. The assignment being in direct violation of this statutory provision, is fraudulent and void as against the other creditors; as it deprives them of a part of the means of payment secured to them by the statute in case of the insolvency of a limited copartnership firm, and delays and hinders them in the collection of a portion of their respective debts.
The order appealed from is therefore affirmed with costs.