Court Opinion

ID: 7891871
Source: CourtListenerOpinion
Date Created: 2022-09-08 21:49:48.650522+00
Date Added: 2024-06-11T16:31:56.539803
License: Public Domain

Bowiü, C. J.,
delivering the opinion of the Court, after stating the case as on pp. 30 — 32 ante, said:
The appellant’s prayers affirm:
1st. That a separate creditor of an individual partner, cannot attach by way of execution, a debt d.ue to the partnership, of which that individual is a member, for his private debt, unless there has been a settlement of the partnership and the interests of the debtor partner first ascertained.
2nd. That this applies to the case of surviving partners as well as of living partners.
3rd. That only the actual interest of the debtor partner, after final settlement thereof, can be recovered by tbe attaching creditor.
4th. That there was no sufficient evidence in the cause of the quantum oí interest of John C. Dorsey in the partnership assets.
The rights of joint and separate creditors, during the existence of the partnership, differ materially from their rights, after the termination of the firm, and the estate has gone into Equity for distribution. In the matter of Smith, 16 Johnson Rep., 102, 109. McCullough vs. Dashiell, 1 H. & G., 96. 1 Am. Le. Ca., 472. The notes on these cases, show tbe tendency to confusion in deciding *38upon the relative rights of the two classes of creditors. It is well remarked: ' “Some judges and text writers by not distinguishing between solvency and insolvency, and between legal and equitable jurisdiction, have moulded a system on the subject, which through the departure from principles, is law sacrificed and equity not attained.” Justice Cowen, in the case of Phillips vs. Cook, 24 Wend., 393, 408, has elaborately examined and lucidly defined the limits of the jurisdiction of the Courts of Law and Equity on this subject. Keeping these distinctions steadily in view, we will examine the question before us, by the light of authority and reason. In the text of Collyer on Partnership, Book 3, sec. 822, it is said: “by the law of England, the creditor of any one partner may take in execution, that partner’s interest, in all the tangible property of the partnership.” The Editor, Mr. Perkins, refers in note 2, to this section, to a number of authorities^ English and American, to support this position, extending the doctrine to attachments, in those States where attachments on mesne process are allowed, by numerous citations of decisions in several States, upon which he builds this conclusion: “There seems to be no good reason for giving up the process of attachment at law in such cases, as it would probably in this mode be rendered equally as effectual and prompt as any other means of securing the interest of the debtor that might be devised. If a process in Chancery should be deemed more effectual, still it might be desirable also to retain a right of attachment at law.” Vide authorities there cited. The subject of execution and attachment there spoken of, is tangible property, and the remedy is supposed to be resorted to during the existence of the partnership. The learned editors of the American Leading Gases, in their notes on the cases of Ex-parte Smith, and McCullough vs. Dashiell, remark: “It is necessary, however, to reconcile the various cases, to distinguish between a Common Law execution against tangible chattels, *39such as a fieri facias and a foreign attachment, or proceeding in its nature, against a debt due to a firm, or property-belonging to it in the possession of the garnishee. The foreign attachment or proceeding in the nature of a foreign attachment against a debt or chose in action, and also against chattels in the possession of a garnishee, by its very nature, attaches only upon the separate beneficial interest of the partner in the debt or other subject in the hands of the garnishee; because, it is a part of the proceedings to measure and adjudge what is the interest of the partner in the hands of the garnishee. It cannot, therefore, be maintained, unless it bo proved that the partnership is solvent, and be shown what interest the partner has in the firm effects after all debts are paid;” referring to Fisk et al. vs. Herrick, 6 Mass., 271. Lyndon vs. Gorham, 1 Gall., 367. Church vs. Knox, 2 Conn., 514. Barber vs. Hartford, Bank, 9 Conn., 407. Winston vs. Ewing, 1 Ala., 129, 6 Humphreys, 233. The distinction drawn in these cases is, the difference between the Common Law process, and the foreign attachment, the essential faculty of the latter, being to measure the interest of the partner in the chose in action or chattel attached. Proceeding on the hypothesis that there was a continuing partnership, and several interests in the several partners, they determine that in such cases, the beneficial interest of the debtor must be ascertained, before it is subject to attachment, and in some it is affirmed, that this being impracticable at law, no attachment will lie.
These reasons do not apply to a case in which the partnership is terminated by the death of one of the partners. “The surviving partner is entitled to all the choses in action and other evidences of debt belonging to the firm. They must be collected in his name, and he is entitled to their exclusive custody and control. The right of action, in relation to all partnership demands is transferred to the surviving partner.” Barney vs. Smith, *404 H. & J., 485. Collyer on Part., sec. 666. Although he should expressly declare as surviving partner, he may include in his declaration, a count for a debt due to him in his own right. Collyer on Part., 674. Gow, on Part., 132. 5 T. Rep., 493.
Where the action is brought by a surviving partner, the defendant may set off a debt due from the plaintiff as surviving partner, against a debt due from himself to the plaintiff in his own right, and e converso. Collyer on Part., 764. 13 Metcalfe, 283. These authorities show that at law, the legal interest in choses in action of a firm, is so absolutely transferred by survivorship, that they may be merged in one action with choses in action due to the surviving partner, {ísuo jure,” or extinguished in whole or in part, by set off of claims against him individually.
If this was a case of continuing partnership, we should have much difficulty, in distinguishing it on principle, from the case of Fisk and another vs. Herrick, 6 Mass., 271. Lyndon vs. Gorham, 1 Gall., 367, and the cases in Ala. and Tenn.; but the case of a surviving partner, invested with the entire legal property and control over the chattel, so broadly marks the line between them, that we are not at liberty to disregard the legal claims of the attaching creditor. The case of Wallace vs. Patterson, 2 H. & McH., 463, was the case of a domestic creditor, against one of several non-resident partners, whose firm as well as the debtor partner had become bankrupt. The distinction between attachments against tangible chattels and choses in action belonging to the firm, and attachments issued during the existence of the firm and after its dissolution, was not adverted to, and no opinion was given; we do not regard it therefore as decisive of the point to which it was cited. The law having thrown the legal estate upon the surviving partner, we cannot deprive the creditor of the advantage thus attained, upon the presumption of equitable liens on the fund, in behalf of *41other partnership creditors, which may or may not exist. If there are any such, Courts of Equity are open to them and capable of giving adequate relief, and the representatives of deceased partners may be protected in the same Courts. For these reasons, we think the Court below was right in refusing the prayers of the appellant, and the judgment will be affirmed.
(Decided July 1st 1864.)

Judgment affirmed.