Court Opinion

ID: 8046132
Source: CourtListenerOpinion
Date Created: 2022-09-09 03:59:35.358461+00
Date Added: 2024-06-11T16:37:30.024536
License: Public Domain

Eastman, J.
It was settled in Jarvis v. Brooks, 3 Foster 136, after a thorough examination of the question, that the *550separate creditors of a partner have a preference over the separate estate of their debtor, for the satisfaction of their debts; and that where land of one partner is set off on execution, for a debt due from the partnership, and afterwards the same land is set off on execution for a separate debt of the partner, the separate creditor of the individual partner will hold the land, and such must be regarded as the law in this State. The following among other authorities sustain that decision. Merrill v. Neill, 8 Howard’s Sup. Court 414; Morrison v. Blodgett, 8 N. H. 248; Bell v. Newman, 5 Serg. & Rawle 93.
In Jarvis v. Brooks the attachment on the partnership debt was made before that on the individual debt, and the set-off on the execution recovered in the former suit was made six months before that in the latter.
The rule laid down in that case goes to the extent to protect the separate property for the separate debts, until it shall be actually and legally appropriated for the partnership debts. The fact that a lien has been created by attachment in favor of a partnership creditor, does not give him any advantage over the separate creditor; for the latter may, notwithstanding the previous attachment, attach and hold the property on his debt. Until the property is actually and legally applied to the payment of the partnership debt, the separate creditor may interfere to prevent such application, and cause his own debt to be first satisfied.
In the present case, the attachment on which the plaintiffs’ title is founded was made on the 10th of October, 1842, on a partnership debt; and on the 21st of December following, before the action was entered in court, Peck, the debtor, was declared a bankrupt, and on the 28th of the same month an assignee was appointed. At any time between the attachment and the decree of bankruptcy, the separate creditors of Peck could have attached the property and held it against the attachment that had been made on the partnership debt.
The decree in bankruptcy took from the creditors the power of proceeding against Peck or his property to secure their debts. *551The only course then left to them was to prove their debts under the commission, and receive such dividend as might be made from the avails of his property.
The general rule for distribution in bankruptcy is, that partnership property shall pay partnership debts, and separate property separate debts. Such are the provisions of the bankrupt act of 1841, and such also are the authorities. Gray v. Chiswell, 9 Vesey 118; Murray v. Murray, 5 Johns. Ch. 72; Ex parte Cook, 2 P. Williams 500.
As the separate creditors of Peck by the decree of bankruptcy were deprived of all power to enforce the payment of their debts, and all power to stay the proceedings under the attachment, it would be inequitable to hold that the separate property attached on the partnership debt should be thus appropriated to the payment of such debt.
It is not to be doubted that had the attachment been made upon partnership property it would have created a lien valid by our laws and within the proviso of the bankrupt act. Kittredge v. Warren, 14 N. H. 509; Kittredge v. Emerson, 15 N. H. 237; Peck v. Jenness, 7 Howard 612. But is an attachment of separate property, founded upon a partnership debt, to be held thus valid against separate creditors ? We think not. The attachment does not prevent the right of property from passing to the assignee, for it is not a lien that could operate to defeat separate creditors before the bankrupt decree; and as against them it should have no more effect after than before the decree, as by the decree their power to proceed against the debtor is taken away.
We are, therefore, of opinion that the demandants cannnot sustain their suit by virtue of the attachment and levy. Can they do it upon the mortgage from Peck to Martha Cochran ?
At the time of the attachment Martha Cochran held a mortgage against Peck upon the premises, dated January 17,1839. This mortgage, on the 22d of December, 1845, was assigned to Mr. Yose. On the 24th of June, 1846, two days before the lien would have become perfected by virtue of the judgment obtained *552on the mortgage, the attaching creditors made a tender of the amount due on the mortgage to Mr. Yose, and the demandants claim to hold under that mortgage.
If there were no other difficulties surrounding the question, and the demandants had the legal right at the time to make the tender so as to stay the foreclosure, the title to the mortgage would have so far passed as to secure the rights of the creditors. Towle v. Hoit, 14 N. H. 61; Robinson v. Leavitt, 7 N. H. 100; Rigney v. Lovejoy, 13 N. H. 252; Wilson v. Kimball, 7 Foster 300.
But by the decree in bankruptcy all the right of Peck to the premises passed into the hands of the district court for the benefit, in the first instance, of Peck’s separate creditors. When he went into bankruptcy these premises were included in his schedule as his private property, and, upon the equity of redemption being sold by the assignee, the proceeds were decreed by the district court to be paid to his separate creditors, and were so paid. It was sold for their benefit and went to satisfy in part their debts. The district court was acting for them, and the same reasoning which proves that the attachment could not operate as a lien to defeat the rights of the separate creditors, shows, that as against them the tender of the partnership creditors could confer no title that would be paramount to that acquired by a purchaser at an assignee’s sale, made for the purpose of converting the property into funds to divide among the separate creditors. By the bankruptcy the property passed beyond the reach of the demandants, and they had no interest to protect by redeeming the premises.
As against the separate creditors and this tenant, who holds by a title derived from the district court, and founded upon the debts of the separate creditors, the demandants cannot prevail. In such a case neither their attachment nor their tender could give them a good title.
We are, therefore, of opinion that the ruling of the court below was correct, and that there must be

Judgment on the verdict.