Court Opinion

ID: 8047222
Source: CourtListenerOpinion
Date Created: 2022-09-09 04:00:42.407674+00
Date Added: 2024-06-11T16:37:32.698215
License: Public Domain

Doe, J.
The question is whether the plaintiff or the claimant can hold the fund which is in the hands of the trustee. The plaintiff is a creditor of the defendants — the original firm. The claimant is a credi*191tor of Sibley who was a member of all the firms. The fund is the balance belonging to Sibley as a member of the last of the firms who succeeded the defendants. Neither the plaintiff nor the claimant is a creditor of the last firm, from whose property came the fund in controversy.
Whatever may be the number of successive partnerships, the property in the hands of the last survivor is held by him as survivor of the several firms, and all that is necessary in order to enable the different classes of partnership creditors to enforce their priority, is, that the property can be traced through the successive partnerships. Benson v. Ela, 85 N. H. 402. The plaintiff’s right of priority, as a partnership creditor, depends upon his ability to trace the fund from his debtors to the trustee. The case does not show that the fund was derived from the property of the defendants, and therefore the plaintiff cannot hold it by virtue of any superior right as a creditor of the defendants.
But the attachment of the fund in this suit being prior to the attachment in the claimant’s suit, the plaintiff will hold the fund by his attachmeht, unless the claimant has preference as a creditor of Sibley. A creditor of Sibley & Conner would be entitled to the fund as against both the plaintiff and the claimant: but no such creditor appears.
The,, plaintiff contends that the claimant has no prior right as a creditor of Sibley, because the fund is partnership property. But we think that any creditor of Sibley, and any creditor of any firm of which he was a member, might, by foreign attachment, hold this fund subject to the preferences recognized by law.
The plaintiff further contends that the claimant has no priority because the general principle of priority does not apply to this case, — that the reason of the rule is that the fund should first go to pay the debts by means of which it was created or augmented, — that there is no more evidence or presumption that the partnership property of Sibley & Conner was augmented by means of the claimant’s debt, than there is that it Avas augmented by the plaintiff’s debt, — and that, therefore, betAVeen the plaintiff and the claimant, the equities are equal, and the plaintiff’s prior attachment must prevail. But the rule of priority is one not applied in a special case in Avhich it is made to appear, by evidence, that the fund Avas, in fact, augmented by a particular debt, or in which it is proved that a creditor expected to be paid out of a certain fund; it is a general rule established upon an absolute and conclusive presumption that property acquired by a partnership, in good faith, in the ordinary course of business, increases the partnership property, and that property acquired by a member of the firm, in'the same manner, increases his private property, and' that credit is given with reliance, in the one case, upon the partnership property, and, in the other case, upon the private property. If the entire original capital stock of a firm is created by money obtained by the members on their individual and several credits, that stock is liable to partnership debts subsequently contracted in preference to the claims of the private creditors whose money became the capital stock. Ferson v. Monroe, 21 N. H. 462. There is a conclusive presumption that private creditors know that upon private property *192their claims are superior and preferred, and that, upon partnership property, they are inferior and subordinate.
In this case we cannot inquire whether the property of Sibley, or the property of the defendants, or the property of Sibley & Conner, was, in fact, augmented by the claimant’s debt. The case must be determined by the general rule of priority, which, upon the facts found here, has regard merely to two classes of property, — one which can be traced and distinguished as belonging, or having belonged, to a partnership whose creditors claim it, — and the other which cannot be so traced and distinguished. The first class is first applied to pay such creditors, and the other class, being all other property of an individual, is first applied to pay his separate creditors. Property derived by a member from a partnership which owes no debts, is as much his private property subject to the claims of his creditors in preference to creditors of an insolvent partnership of which he is, or was, a member, as dividends due to him from a corporation, or a legacy due to him from an executor. The rule recognizes but two sources of property — one, partnership — and the other, individual. Partnership creditors may have preference when they trace property to the firm of which they are creditors ; in all other cases the separate creditors have preference.
It is probably immaterial whether the first firm, or the defendant, Weaver, had any estate. It is doubtful whether it would be expedient to adopt any of the exceptions recognized in bankruptcy cases. A question of this kind cannot arise, under our practice, unless there are two classes of claims, and when they appear, the rule applies whether there are two classes of property or not. If there were no preference when there is no partnership property, there should be no preference when there is no separate property. It has not been understood in this State that the rule of priority applied only when there were two classes of property.

Exception overruled.