Court Opinion

ID: 6574737
Source: CourtListenerOpinion
Date Created: 2022-07-20 19:33:10.93983+00
Date Added: 2024-06-11T15:56:57.265655
License: Public Domain

Williams, J.
That the partnership creditors generally, have a right to the partnership effects, in preference to the creditors of an individual partner, has not been contested. It was settled by Lord Hardwicke, in West v. Skip, 1 Ves. 239. It was recognized in New- York, in Nicoll & al. v. Mumford, 1 Johns. Chan. Rep. 522; in Massachusetts, in Pierce v. Jackson, 6 Mass. Rep. 242. and by this court, in Brewster & al. v. Hammet, 4 Conn. Rep. 540.
But it is claimed, that as this partnership was a dormant one, and as the creditors did not know of its existence, they ought to stand upon the same ground as the separate creditors of Hutchinson, whom they all trusted. Now, if the partnership creditors had done any act to hold out Hutchinson as the sole owner of the goods, or if there was any fraud in the case, or even if they could be made responsible for the declarations of Kinne, there certainly would be some foundation for this argument. But no fraud is found ; and they cannot be responsible for Kinne’s declarations; nor have they done any act intend*41ing to give this man a false credit. The partners, therefore, must stand upon their rights, as recognized in a court of-equity.
And the right of the separate creditor depends upon the interest which each partner had in the partnership property ; and such creditor can have nothing but what his debtor had therein. King, ex parte, 17 Ves. 119. And neither partner has anything, separately, in the corpus of the partnership effects; but the interest of each is only his share of what remains after the partnership accounts are taken. Church & al. v. Knox & al. 2 Conn. Rep. 523. And therefore, if a separate creditor takes out his execution against the partnership effects, he must take the undivided share, in the same manner as the debtor himself had it, and subject to the right of the other partner. Taylor v. Fields, 4 Ves. 396. Now, if this be the correct principle, I see not why it is not applicable to this case, whether the company creditors knew of the existence of the partnership or not. They have the rights of the partnership; but the separate creditor has only the rights of an individual partner. Hamper, ex parte, 17 Ves. 407. The goods of the partnership creditors went to increase the partnership stock, while the claims of the separate creditor could only go to increase the individual property ; and in this particular case, his claim is founded merely on the suretyship of one of the partners, — when neither the company, nor the individual has received any benefit therefor. And the company property is here as much increased as if the partnership was not a dormant one. I see not, therefore, why the rights of the creditor should not be the same, in the absence of all fraud.
Here no fraud is found ; nor is there any evidence that there was any design to keep the connexion secret. At first, the concern was as public as its limited nature would admit. A short time satisfied them, that its business was not sufficient to employ both ; and one returned to his farm ; and he represented, that he had no interest in the goods. Whether he did this by mistake, or fraudulently, does not appear; — nor are the rights of the creditors of that firm to be bound by this representation.
The English cases cited by the defendant, are cases arising under the statute of 21 James; as Smith v. Watson, 2 Barn. & Cres. 401. Enderby, ex parte, 2 Barn. & Cres. 389. *42W^ere Possess'on remaining with the bankrupt gives the assignees a right to the goods ; or cases arising under the statute of set-off; as George v. Claggett, 7 Term Rep. 359. But no case is cited where the question arose between the creditors of an insolvent firm, one of whom was a dormant partner, and a creditor of the individual partner, except the case of Lord v. Baldwin, 6 Pick. 348.
That was an action against the sheriff, for neglecting to levy the plaintiff’s execution against John Brown, on goods attached by the plaintiff, as his property and his stock in trade. Brown transacted business in his own name; and these goods were also attached, by other creditors. The defendant, as an officer, afterwards attached the same goods, in a suit brought by Bogart & Co., against Aaron and John Brown. Bogart & Co. obtained a judgment, and notified the defendant to retain the proceeds to satisfy this judgment.
This Aaron Brown was a dormant partner with John. But all the goods sold by these creditors were furnished for the co-partnership thus unknown. Bogart & Co. claimed priority, as their suit only was against the firm.
The court very properly decided, that they had no such priority. And it is to be observed, that to make that case compare with this, the plaintiff’s debt should have been a debt due from John Brown only, but it really was due from John and Aaron; and being so, the court held, that the plaintiff had the same right to the fund as that creditor, who discovered that there was a dormant partner, and obtained judgment against both. The facts, then, in this case, do not warrant the inference that the court in Massachusetts would have put the separate creditor on an equality with the co-creditors, though their reasoning may seem to imply it. That case, therefore, though from a court whose opinions are entitled to great respect, cannot con-troul this. The result in that case is perfectly compatible with the decision in this ; and it is apparent, that the court meant only to decide the case before them; for they say : “ Whether a private creditor of his could seize property so situated, and hold it against the ostensible owner, is a question of a very different nature.” p. 351. It is believed, then, that no authority justifies the position taken by the defendants.
It is, however, objected, that the partnership creditors agreed to look only to the partnership effects, and discharge Kinne. *43Now, this agreement, made to procure a note and save much expense, was, as between them, a fair and proper one ; and unless the defendants can show, that it was injurious to their interests, they cannot complain ; and if the partnership stock was the proper fund for partnership creditors to resort to, the defendants cannot complain any more of an agreement by those creditors to resort to it, than if they had actually resorted to it; much less can they complain, that they have discharged Kinne from any part of the debt; as Kinne was not their debtor, and, they have no interest in his affairs. Hutchinson could not complain of this ; because if he pays it, he can look to Kinne, notwithstanding this agreement; and the defendants have only Hutchinson's rights. Besides, it is found, that the company and Hutchinson had no other property.
It is also objected, that there is adequate remedy at law. It is true, that this plaintiff may sue the officer, and recover; and then Richards may bring another suit ; and as he would not be bound by the verdict in the first cause, he may also recover. It is admitted, that this state of things would give the officer a right to file his bill in chancery; but it is said, this plaintiff cannot do it. Now, it seems to me, that if these facts shown by the officer could give this court jurisdiction, the same facts shown by another person interested, would give the same jurisdiction : in other words, that the jurisdiction depends rather upon the facts shewn than the person who shews them.
Here is a fund for which several persons are struggling. One only can obtain it. While winding their way through a court of law, the fund may be almost exhausted. It seems to me peculiarly proper, that these conflicting parties should be brought before a court of chancery, where all may be heard, and their several rights determined ; and that this is the only adequate remedy. It is the very mode recommended in England, by the common law judges, who say : “ The safest line of conduct for the sheriff to pursue, was, to put some person in possession of the defendant’s share as vendee, leaving him and the parties interested to contest the matter in equity, where a bill might be filed, stating that he had taken possession of the property, and praying that it might not be disposed of until all the claims were arranged.” Parker v. Pistor, 3 Bos. & Pull. 289.
*44I would, therefore, advise the superior court to grant the prayer of the bill.
The other Judges were of the same opinion, except ChuRch, J., who was not present when the case was decided.
Decree for plaintiff.