Court Opinion

ID: 6541503
Source: CourtListenerOpinion
Date Created: 2022-07-19 22:16:03.894324+00
Date Added: 2024-06-11T15:55:50.737388
License: Public Domain

DISSENTING OPINION. MARTIN, Special Judge. I regret that I can not concur •with my brother judges, altogether, in the able and exhaustive opinion delivered by the court in this case. In so far as the opinion holds that the court below had jurisdiction, under the peculiar circumstances, to enjoin the sale made under the Jones, McDowell & Co. mortgages, to take au account as to the extinguishment thereof, and to settle the equities growing out of the partnership alleged in the defendant's answer, it has my concurrence. It seems to me, however, on this branch of the case, that, having all the. parties before it, the court below would find it very embarrassing to make any satisfactory decree without going forward to make a final settlement of all matters, and a decree, if necessary, for the possession of the property in controversy. The court having in the first instance taken jurisdiction as to the injunction account and partnership, the other is necessarily drawn to it, as incidental, though independently, beyond its jurisdiction. As well expressed by Chief Justice Watkins, in Price v. State Bank, 14 Ark., 56, “a court of chancery having taken jurisdiction of a cause for one purpose, and having all the parties in interest before it, will do complete justice between them and end litigation by disposing of all questions in the cause.” Estes v. Martin, 34 Ark., 410; Dyer v. Jacoway, ante, 186. Part n cm hi]). It seems to me the doctrine as stated by the court, or rather as applied to the facts of this case, is not sustainable either on principle or by the authorities. In my endeavor to convince myself that my brothers were correct, I have given a careful examination to all the cases cited in the opinion, so far as I am advised, in support of that doctrine. And, without discussing them separately, it may be said of them all, they simply lay down the rule to be, that where1 two partners holding partnership property agree to and do divide the property, or one conveys to the other, the conveyance severs the partnership claim, and the grantor or vendor, who has parted with his interest, has no further interest in the property, or equity to have the property so convened away by him subjected to the debts of the firm. The language of the courts, I am aware, in some of the cases, is very broad ; but when applied to the facts of the cases under consideration, the above is a fair statement of the rule as applied, and beyond that it becomes mere dicta. Now a very slight glance at the facts in this case will serve to show that such a rule has no operation here. .For the purpose of discussing this branch of the ease, it is necessary to advert to only a very few of the prominent facts. And, in view of the manner in which the question is raised here, it may be assumed, as is conceded in the argument on this point, that the partnership is established, and the land mentioned was partnership property. While such partnership property, Fletcher recovered a judgment in Pulaski Circuit Court against Crad. Vaughan. This, bylaw, became a lien on all his real estate in the county, the land being then in Pulaski. Crad. Vaughan, one of the partners, subsequent to recovery of this judgment, conveyed to "William R. Vaughan, his partner, “ all his right, title and interest” in the lands. W. R. Vaughan in a few days conveyed to English, in settlement of a claim against the firm. English conveyed to Rozelle, and Rozelle to-Adams. The lands, it may be stated, were bought in the names of William R. Vaughan and Craddock R. Vaughan, as though they were held as tenants in common, and so the records showed the title. This I think, however, and we are agreed on that proposition, cuts no figure in the case. The decisions are abundant that equity will, as in favor of a viere execution purchaser, only inquire into the actual interest, and not what appears by the record of land titles or otherwise. 22 Ark., 580; 27 Ark., 101; 31 Ark., 258 ; 29 Ark.; 34 Ark., 92. The question which we have now to settle here is, simply, what interest in this land did Fletcher take by virtue of his execution. It is evident, and not controverted by any of the able counsel, if the transfer from Crad. Vaughan to William R. had been made before the recovery of the judgment, Fletcher would have taken nothing. Then it must be by virue of the lien thus by the judgment fixed on the property, that he can recover, if at all. The proposition of the court, speaking through the majority in this case, is, that this lien held the half interest of Crad. Vaughan, subject only to the equities growing out of the partnership, and of'firm creditors tobe first satisfied ; that by the conveyance of Crad. Vaughan all equities of creditors was destroyed by a severance of the estate. Thence Fletcher is let into this full half interest, acquit of all such equities, and as though Orad. Vaughan were then a tenant in common of one half interest in the land. Respectfully deferring to the good judgment of my brothers, I can not subscribe to this doctrine, and submit that a careful examination of the real question will show it not well founded. The question for solution, is, what did Fletcher get by his sale? He got what was fastened and saved by the lien.' "What ivas that ? Mr. Freeman, in his excellent work, says : “ The judgment is a lien only on the interest of the debtor, whatever that may bo; therefore, though he seems to have an interest, if he have none in fact, no lien can attach. The rights of a lien owner can not exceed those which might be acquired by & purchaser from the defendant, with full notice of all existing legal or equitable rights belonging to third parties. The attaching of the lien upon the legal title forms no impediment to the operation of all equities previously existing over the property. Freem. on Judgment, secs. 357-357a. In Parsons on Partnership, *350, the rule is laid down thus: “The first point, therefore, is to adopt no theory and no conclusion that will oiler to an attachment or execution anything more or anything else than the debtor has. * * One partner may sell to his copartner, but no such arrangement liberates his share from the debts of the firm. (Ib., *p. 473) Real estate, while partnership property, fulfills all the functions of personalty; irhen divided between them the character of real estate remains. Iu Tallman v. Forly, 1 Barb., 280, Tallman sold a lot- to Forly, Fofly, at the time of conveyance, executing a mortgage for the purchase money, and also mortgage to DeAlfero to secure him for moneys advanced in improving the property. Judgments were then outstanding against Forly. Tallman afterward foreclosed, and the property was sold for more than enough to satisfy the claim for purchase money, and the 'prior judgment creditors applied to have surplus turned over to them. The court held the surplus went to mortgagors, and said: “Judgment creditors are entitled only to such rights as the debtor has. * * If the creditors could find a 'moment of time when the debtor had a right to sell in preference to secured mortgagees, they might find some aliment on which their claim might feed.” In Watkins v. Wassell, 15 Ark., this court say: “The interest of the creditor in the real estate of the debtor is limited to the actual interest of the debtor at the time the lion (of the judgment) attaches.” In 27 Penn. St., 212, Jones v. Jones, thus: “When the interest of one partner passes to another it is immaterial whether by sale, descent, execution., or assignment in bankruptcy, in all these cases the person coming in by right of the partner, comes into nothing more than an interest in the partnership, which can not be tangible; can not be made available or delivered but under an account between the partnership and the partner, and it is an item in the account that enough must be left for debts.” In Northern Bank of Kentucky v. Keiser, Ky., the rule is thus stated: “No individual creditor of any of the partners can subject his debtor’s interest otherwise than cunt onere, or, in other words, could not make his debtor’s interest available until all partnership debts shall hare been paid.” Mr. Waits states it thus (6 Waits’ Arts and Defenses, pp. 745-6): “ The purchaser must accept the debtor’s position as to liabilities, legal or equitable, existing either as incum-brances oras incidents to the title.” And, further, at page 753: “ The right of a separate partner in the corpus of the firm property, is simply his proportionate share after the firm debts are paid,” with a large number of authorities cited. Sutcliff v. Derhman, 18 Ohio, 182; 8 N. H., 251; 41 Iowa, 39; Offert v. Scott, 32 Ala., 167; 71 Penn., 488; 35 Vt., 44; 28 Ala., 629. The books are full of authorities on this point, and to the same effect. That is, that the creditor can not take by his judgment lien, or execution, more than the debtor might, at the time it attaches, or is enforced, sell or convey. Now it does seem to me, my brother judges can not, in consistence with this plain principle, hold that Fletcher’s judgment lien, or sale under it, can possibly take more than Crad. Vaughan’s interest, subject to the debts of the partnership. There might be more reason for holding that he, as judgment creditor of William R. Vaughan, would have fastened his lien on the property. But how it is to be sustained as to Crad, Vaughan’s interest is difficult to comprehend. Before Crad.’s conveyance to Wm. R., Fletcher had a lien, if anything, on his equitable right to an account from the partnership for his surplus. The corpus of the firm property belonging, as Mr. Parsons says, to the partnership as distinguished from either partner separately. When Crad. Vaughan conveyed, “whatever interest, right and title” he had, went to William R., subject to this lien. Lien for what? Evidently a right to have his debt satisfied out of Crad. Vaughan’s surplus in the «property — only this, and nothing more. But, it is argued, when the Vaughans made this transaction, they severed the partnership and opened it up to all creditors alike. The most that any of the authorities have held in this direction is, that when such conveyance is made the property is subject to the individual debts of the separate partners to whom the conreganee is ¡nade. The court has considered the result precisely the same as if'William R. and Crad. Vaughan had divided the estate, each conveying to the other a one-half interest. This might well be claimed to have the effect of giving a new vitality and extended sweep to Fletcher’s lien, by which he could take all that Crad. got by the conveyance, as well as what he had before. But here we have adopted the simple legal proposition that a conveyance away from the debtor to a third party has vastly enlarged the interest he had before, and thereby enabled his execution creditor to take instead of a mere empty “equity for an account,” an estate worth thousands of dollars. If the deed of Crad. Vaughan was efficacious to sever the joint estate of the partnership, that effect could only succeed the cause which produced it. The severance would take effect after the transmutation of the estate passed thereby, and hence after the vesting in William R. Vaughan of all the estate it was possible for Crad. Vaughan to convey. And hence after the conveyance it simply left Fletcher in an attitude by virtue of his lien (if worth anything) to demand that the interest Crad. Vaughan had before his transfer, his claim to the surplus, should be subjected to the payment of his debt. And he might have brought all parties in interest into a court of equity and had an accounting to show what he could take by that right. This, it seems to me, is all that he could possibly claim by virtue of his lien, if, as I said, he had any lien at all. There are many authorities denying that any lien attaches in such cases to partnership property. -That is, that any lien would attach until the severance of the estate; and here the severance was affected by a transfer of all interest he could transfer from Fletcher’s debtor to the other pai'tner. It is very certain there was never any time in which Crad. •Vaughan could himself have conveyed a half interest in these lands to a third party. Eor these grounds, briefly stated, I can not assent to so much'of the opinion as relates to the effect of this transfer. I think that W. R. Vaughan had an obvious equity to appropriate this property to the payment of partnership debts, and, having done so, the most in any court Eleteher could demand, would be to have it uncovered to satisfy his lien, and that only on payment of the debt which this interest went to satisfy. William R. Vaughan, through the conveyance to himself and from himself to English, simply accomplished his equity to have the assets applied to payment of firm debts. He no longer, after the conveyance by C. R. Vaughan, required any lien to support- his conveyance to English, for he had the legal estate all vested in him, and nothing remained except as above stated, possibly the equity of Orad. Vaughan passed to Eleteher by his purchase, to have an account taken and get the surplus after payment of all firm debts.