Court Opinion

ID: 6410572
Source: CourtListenerOpinion
Date Created: 2022-06-25 11:52:22.986147+00
Date Added: 2024-06-11T15:51:21.589606
License: Public Domain

Dewey, J.
1. The assignment of “ all the estate of the said insolvent debtors,” includes all the property held by them in any capacity, whether jointly or severally. Hanson v. Paige, ante, 243.
2. The principal question raised is upon the construction of our statutes of insolvency of 1838, c. 163, and 1841, c. 124, as to what acts constitute such preferences as may avoid a sale of property by a debtor. It is contended, on the part of the tenants, that if one of two copartners has private estate more than sufficient to pay all his private debts, he may properly convey to a private creditor, by way of preference, a portion of his private estate, in payment of his private debts, although the *542copartnership are insolvent, and unable to pay then debts, and the creditor, when accepting such preference, had reasonable cause to believe the copartnership insolvent.
This, in the opinion of the court, is not the proper view to be taken of the statutes on this subject. The insolvency of the copartnership carries with it the assumption that all the property of the individuals composing the firm, as well the private estate of each, as that of the copartnership, will be required to pay their debts. The liability of each partner requires the application of all his private property to that object; and such will be the result, unless defeated by the claims of his private creditors, who in the final distribution of the assets by the assignees have, by force of the statute, a preference over copartnership creditors.
The provisions of St. 1838, c. 163, § 21, very clearly lead to the result we have stated. They provide that in all eases where two or more persons who are partners in trade become insolvent, all the joint stock and property of the company and all the separate estate of each partner shall be taken and delivered to the assignees, who shall be chosen by the creditors of the company, and that the whole estate of the members of the partnership shall be administered by such assignees. In the final application of the assets, the net proceeds of the separate estate are first to be applied to the payment of the debts of the separate creditors, but the surplus to the payment of partnership debts. The entire system of the proceedings in insolvency, under our statutes, seems to require the broad application of the provisions for securing the creditors against preferences, as well to conveyances of the private estate, as to conveyances of property of the partnership. "The former, as well as the latter, is to be managed for the best interest of the partnership creditors. Hence it passes into the hands of the assignees, to be by them disposed of. But a conveyance to a private creditor by the debtor himself defeats that provision of the statute. The insolvent debtor, for he is really insolvent, if the whole property is insufficient to pay the partnership debts, although his private estate may be more than sufficient to pay his private debts, is not allowed to interfere with the statute provisions for securing most effectually the whole *543estate of the insolvent for the benefit of all his creditors. It is no sufficient answer to say that the debt thus preferred would have had a priority in the distribution of the assets by the assignees ; as that does not fully meet the difficulty. The claims thus to be paid are to be allowed and established like other claims, and to be paid out of the net proceeds of the separate estate, as ascertained by the result of the administration by the assignees of the effects of the insolvents.
3. The examination of Gibbs, the insolvent, before the commissioner, and his answers, were competent evidence to sustain this action as against Gibbs, who was one of the tenants, and who had united in a joint defence with Branning, the other tenant. The only plea was the general issue, unaccompanied by any specification of defence by way of disclaimer or non-tenure on the part of Gibbs.
4. The formal oath of Gibbs, administered in accordance with the statute, previously to his discharge, was properly excluded, on the objection of the demandant, as it appeared to have been taken at a previous time and on another occasion, from that of the examination already put in, and not as a part of that proceeding.
This disposes of all the questions understood to be raised at the trial, and as to these the rulings of the court are sustained. It is however now urged, on the part of the tenants, that the jury did not pass upon the question whether the conveyance was made by the debtor intending to give a preference to his grantee as a preexisting creditor, and the said creditor accepted such conveyance as a preference. It was supposed by the presiding judge that all parties understood that the fáet of the intention to prefer a preexisting creditor must be shown by the plaintiff, and that the only matter of law in controversy, and upon which a ruling was asked, was that already considered —the question whether taking a conveyance of the separate estate of one of the partners by way of preferring a separate creditor, when the separate estate was more than sufficient to pay all the separate debts, but when the partners were insolvent, was a preference, within the meaning of St. 1841, c. 124, § 3; *544and to that point instructions were fully given. Upon recurring to my minutes of the course of the trial, I do not find that this question of intent to prefer was distinctly submitted to the jury. This verdict may have been rendered for the demandant without the jury’s passing upon the question ■ whether the conveyance was made with the intention of giving a preference to a preexisting creditor. For this reason it has been deemed reasonable that the case should be again submitted to a jury.

New trial ordered.

A new trial was accordingly had at September term 1856, and resulted in a verdict for the demandant.