Court Opinion

ID: 9829805
Source: CourtListenerOpinion
Date Created: 2023-09-01 19:38:24.932541+00
Date Added: 2024-06-11T12:04:25.181930
License: Public Domain

On Rehearing.
In its motion for rehearing appellee insists that this court erred in holding that MeCulley and Clancy were innocent purchasers from Weatherly and Jones of an interest in the partnership of the Hereford Sheet Metal & Plumbing Works, and submits these propositions: “Where one buys an interest in a partnership or buys out the interest of a former partner, no interest is acquired by the purchaser, except such as would exist after the payment of all the partnership debts.” “Creditors of a partnership have a right to have the partnership property applied to the payment of partnership debts before it is distributed among the several partners.” In the first place, McCul-ley and Clancy did not buy an interest in the partnership of Jones and Weatherly, but they bought the entire business, including the tools described in the mortgage. In the second place, appellee seems to have lost sight of the nature of the case which we decided. This is not a suit against members of a ijart-nership, either solvent or insolvent, seeking to set aside a fraudulent conveyance, and through the partners themselves asking for the enforcement of the quasi lien which each partner has upon the assets for the payment of firm debts before the assets are applied to the payment of individual creditors. This is a suit for conversion of property upon which the appellee bank claims to have had a mortgage. This is the case clearly made out by the plaintiff’s petition. The evidence was confined to the issues arising under the allegations.
*1194[6] When a partner conveys his interest in the firm property to his copartner, thereby dissolving the partnership without in any manner preserving the quasi lien of the firm creditors, such quasi lien is lost. Willis et al. v. Satterfield et al., 85 Tex. 301, 20 S. W. 155; Willis v. Heath (Sup.) 18 S. W. 801; White v. Parish, 20 Tex. 689, 73 Am. Dec. 204. Prior to the time appellee’s mortgage was registered, Weatherly had sold his interest in the firm business to Jones, McCulley and Olancy, and on the 19th day of August Jones sold his interest to McCulley and Olancy, and in so doing a new firm existed, which had acquired all the assets of the old firm without any knowledge of appellee’s debt, and without having assumed to pay any debt except that in extinguishment of which appellant acquired the property for the conversion of which he is being sued. It is held that a partnership creditor, as such, has no lien, either legal or equitable, upon partnership assets. Schuster et al. v. F. & M. Bank, 23 Tex. Civ. App. 206, 54 S. W. 777, 55 S. W. 1121, 56 S. W. 93. Neither member of the old firm is a party to this suit, and this quasi lien, upon which appellee has predicated its motion for rehearing, would not support an action for conversion. The rights of partnership creditors to have partnership property subjected to th,e payment of their debts has been productive of much litigation, and while this right is not doubted, under favorable circumstances, to contend that they have a lien upon the property which gives them the same interest in the property as if a specific lien existed thereon, and the same remedies to enforce it, is not supported by the authorities.
[7] On the contrary, it is well settled by the great weight of authority that simple partnership creditors have no specific lien, either legal or equitable, upon the partnership property. Stansell v. Fleming, 81 Tex. 294, 16 S. W. 1033; Wiggins v. Blackshear, 86 Tex. 665, 26 S. W. 939; Johnston v. Shoe Co., 5 Tex. Civ. App. 398, 24 S. W. 580; Waples-Platter Co. v. Mitchell, 12 Tex. Civ. App. 90, 35 S. W. 200.
[8] Not having recorded its chattel mortgage prior to thé complete acquisition of the property by McCulley and Clancy, appellee was a simple partnership creditor and subject to all the infirmities and disabilities attending that position. Parsons on Contracts, § 246, holds that creditors of a firm have an equitable preference or right which courts of equity will enforce, but the right to enforce this preference must arise through the partners themselves, and in a case where the partners are parties to the controversy. Jones on Liens, § 788. Waples-Platter Company v. Mitchell, supra, holds: “If the partnership property passes into the custody of the court for administration at the instance of one of the partners, as in cases of bankruptcy or assignment, made by an insolvent firm, then the courts will administer it as was the right of the several partners to have it administered while controlled by themselves. In such cases the court’s action is based as fully upon the rights of the partners, as between themselves, as upon the rights of the creditors.
[9] So long as a partnership is an acting concern, it is entitled to transfer its property, and such a transfer to an honest purchaser for value is not impeachable. It cannot be successfully contended that McCulley and Clancy did not pay value for the business which they purchased from Jones and Weatherly, and nowhere in this record does it appear that a transfer was made for any fraudulent purpose. The rule is stated in 30 Cyc. p. 545: “A valid sale of the partnership property by the firm to one or more of its members, or to a new firm, in which some of the firm partners are members, puts an end to the old partnership title and destroys the lien of the partners thereon, as well as the preference of the old partnership creditors therein over the individual creditors of the purchasing partner.” And the case of Willis v. Thompson, 85 Tex. 301, 20 S. W. 155, is correctly cited as one of the many authorities sustaining the rule. It will thus be seen that the authorities cited by appellee are not applicable to this case.
[10] Appellee also contends that we committed an error in holding that the trial court should have permitted the introduction in evidence of the record of Jones’ second lien. Reference to appellee’s brief shows that the objection insisted upon in the motion for rehearing was not the objection urged in the trial court, and we cannot consider it here now.
Nor do we think that there was error in holding that notice to Jones was not notice to McCulley and Clancy, and we adhere to that part of the original opinion. 30 Cyc. 530, 531; 22 Am. & Eng. Encyc. of Law (2d Ed.) 139, 140; Bates on Partnership, § 391.
We have not held, and do not hold, that the bank’s debt is unenforceable against Jones and Weatherly, who constituted the firm at the time the note was executed, because we think its rights as against them as original partners is unimpaired, and, if their mortgage had been duly registered, they would have been in position to have maintained this suit against appellant for conversion. Said mortgage not having been registered by express provision of the statute is void as to McCulley and Clancy and to their vendee, appellant herein, and they do not occupy any such position with reference to the property or to appellant that would authorize them to maintain a suit for conversion.
The motion for rehearing will therefore be overruled.