Court Opinion

ID: 8009251
Source: CourtListenerOpinion
Date Created: 2022-09-09 01:56:22.198284+00
Date Added: 2024-06-11T16:36:00.422567
License: Public Domain

Black, J.
Plaintiffs sued out this writ of error to review the judgment of the circuit court in sustaining a demurrer to- the amended petition. Aaron McPike,. one of the plaintiffs, recovered a judgment against Edward C. Murray, Archibald M., William M., and Walter J. YanHorn, partners, doing business under the firm name of YanHorn, Murray & Company, for some-fourteen hundred dollars in the year 1870. The other: *28plaintiffs, Sarah. C. Lyons and the Bank of Pike County, obtained judgments against Murray, the former for one hundred and forty-two dollars, and the latter for forty-seven hundred and forty dollars. Thereafter, and in 1870, William M. VanHorn died, and Murray gave bond •as surviving partner and administered upon the partnership effects. In 1882, Murray died and the defendant became the administratrix of his estate. The plaintiffs then had their judgments allowed by the probate court and classed as demands against the Murray estate.
The petition makes these further allegations: 'That, in 1870, William C. Luce had demands allowed 'by the probate court against the firm assets, amounting to $12,566 ; that, prior to the fourteenth of November, 1879, Murray sold and delivered to Luce all of his individual property, real and personal, in payment and in •satisfaction of these firm debts held by Luce ; that, on the last mentioned date, Murray filed a settlement in the probate court, showing a balance of firm money in his hands of $10,875 ; that he then procured an order of the probate court, directing him to pay forty-two per cent, -of the demands allowed in favor of Luce out of the firm moneys ; that Murray, with intent to hinder, delay, ■ and defraud his creditors, and to cover up his property, paid;to Luce out of the firm moneys on these allowed demands the sum of $8,972; that the previous payment of the same debts by Murray out of his individual property ■rendered him insolvent; that the other members of the firm of VanHorn, Murray & Company are insolvent; •and that in equity the $8,972 belonged to Murray, and ■should, in the hands of Luce, be subjected to the payment of the debts held by the plaintiffs against the Murray estate. Luce died' pending this suit, and ■defendant qualified as his executrix. The petition, it will be seen, is in the nature of a creditor’s bill, seeking to .reach money in the hands of Luce.
d. - The point made by the defendant that this suit *29cannot be maintained, because the plaintiffs have not exhausted their remedy at law by execution-, is not well taken. They have had their general judgments allowed by the probate court, against the Murray estate. Murray, the debtor here pursued, being dead, no execution can be issued on those general judgments, as against his estate, and that estate being insolvent,. no> further proceedings at law are required to lay a foundation for equitable relief against a fraudulent grantee. Merry v. Fremon, 44 Mo. 518; Pendleton v. Perkins, 49 Mo. 565.
2. The plaintiffs insist that, where one partner voluntarily pays debts of the firm with his individual means, he thereby becomes a creditor of the firm for the amount thus paid, and is entitled to be subrogated to all of the rights of the creditors whose debts he paid, and hence, in equity, the $8,972 was the money of Murray. But under our law a partnership debt is joint and several. Murray was bound, individually, for the payment of these partnership debts held by Luce, and his individual property could have been taken on executions therefor, and this, too, though the partnership was dissolved and in liquidation by reason of the death of YanHorn. When Murray paid these partnership debts he did not stand in the shoes of the creditors. He could not,- with these debts paid by him, come in competition with the other firm creditors. He had the right, however, to-bring these payments into his accounts, and after the payment of the other partnership debts, the amounts thus paid by him would go to his credit in a settlement as between the partners. Neither he nor his individual creditors could demand more than his proportionate share of the residue on a balance and settlement of the accounts as between the partners. Coll. on Part. [6 Ed.] sec. 109, and notes by Wood; 20 Pa. St. 45; 82 Pa. St. 152. But for the amount due him on final settlement, augmented as it would be by the payments made to Luce, he had *30what is now called a lien on the firm assets. Coll. on Part., sec. 109; 2 Lindley on Part. 680. He had aright to hold the money in his hands as surviving partner and pay what was due to himself on such balance of accounts. To the extent, therefore, that he fraudulently disposed of his interest in this surplus, to that extent he defrauded his individual creditors.
But it is said the petition does not show that Murray had any interest in this fund, for it may be, for aught that is stated, that he owed it all to his partners, and there would be nothing due to him on final settlement of the accounts as between the partners. It is shown by the petition that the firm debts, aside from those held by Luce, amounted to only twenty-one hundred and thirty-four dollars ; that they have been paid except the fourteen hundred dollars due to plaintiff, McPike. Murray was entitled to a credit of $12,566, as between the partners, which he did not claim, but took a credit for $8,972 for a fictitious payment, so as to absorb the funds in his hands. These facts, with the allegation that this last amount in equity belonged to Murray, sufficiently show an individual interest in the fundas against a general demurrer, pointing out no specific objections to the petition.
3. But aside from any lien to be worked out through the partnership, the petition states a cause of action. It must be taken that Murray paid the debts to Luce after they had been allowed by the probate court against the firm assets. This he did with his individual property, real and personal. He then procured the order to pay to Luce on the same debts, from the firm ■assets, $8,972. This it is alleged he did to defraud the plaintiffs. It may be that this second payment was a fraud on the other partners, for it is possible that Murray should have paid this money to them besides having paid the firm debt held by Luce, but the record shows no such case. Besides, the partners are making no *31complaint; and it is a most remarkable position taken by the defendant to say that the Lnce estate is not liable to the plaintiffs because some other persons may have been defrauded. It is no answer to the fraud charged in the petition to say that the partners of Murray were .also defrauded.
4. It is true the petition does not in terms state that Luce received the last payment to aid Murray in defrauding his creditors, nor is it alleged that Luce had any notice of the intended fraud. The second payment, however, was without any consideration' whatever, and Luce occupies no other position than that of a voluntary donee. Murray, being largely indebted, was bound to pay his debts before he could, as against his creditors, give away his property. As to existing creditors, the ■donee in such cases occupies no better position than the donor; the transfer of property, under such circumstances, is as to both fraudulent in law.
5. Finally, the executrix of the Luce will intrenches herself behind the order of distribution made in the partnership estate, and insists that this order is in ■effect a judgment and is conclusive evidence of the validity of the payment of the forty-two per cent, to Luce. For the purposes of this case, let it be conceded that the ■order is to be regarded as a judgment, and that it is conclusive as between the parties thereto and their privies •and cannot by them be attacked for fraud, except by appeal or a direct proceeding to vacate the order for fraud. But do the plaintiffs stand in any such relation to that order? Bigelow says the doctrine of the English cases is, that no one who was a party to the former proceedings, or who might have intervened or appealed from them, can, in a collateral proceeding, allege that the judgment was obtained by fraud; while the contrary is true as to persons who could not have thus intervened or appealed. Bigelow on Estoppel, 148. Now when this •order was procured' and the money paid pursuant *32thereto, Murray was alive; his individual estate was uot in liquidation, and his individual creditors had nothing to do with the partnership settlements and proceedings, in the probate court. Even as to the deceased member of the firm, the allowance of partnership demands, against the partnership estate, would not bind the individual estate. R. S., sec. 65. Murray’s individual creditors had no right to appear in the partnership proceedings and take appeals or object to the judgments of the court. In no sense can it be said the individual creditors were parties or privies to the order of distribution. If A should fraudulently confess a judgment in favor of B, and that judgment should come into collision with other creditors of A, they may, in a collateral proceeding, show that the judgment was collusive a,nd fraudulent as to the creditors of A, and as to them void. The judgment will, as to the parties thereto, stand as valid ; but as to the other creditors it will be void. It is, therefore, not essential to the plaintiff’s right to follow the money fraudulently paid to Luce that the order of distribution should be set aside.
It may be said that one of the plaintiffs is a' partnership creditor, but as no question is made of a defect of parties, we will not stop to consider what, if any, effect, that has as to him.
The judgment is reversed and the cause remanded.
Ray, J., absent, the other judges concur.