Court Opinion

ID: 7045053
Source: CourtListenerOpinion
Date Created: 2022-07-24 06:54:11.702978+00
Date Added: 2024-06-11T16:11:29.963224
License: Public Domain

Dissenting Opinion.
Woods, J.
I am not able to concur in the decision made, and think a rehearing should be granted.
Passing by the questions, argued with great force by counsel for the appellant, whether the clause in the articles of co-partnership, relied upon as creating the alleged lien in favor of Sims, created any lien at all, and, if so, whether it extended to any property acquired after the making of the articles, I am clear that the lien was not such as third parties were bound to take notice of. The quotations from Collyer and Hardwicke and from Lindley are doubtless accurate statements of th.e law, but when it is said that “ Each partner has a special lien on the partnership stock for moneys advanced by him more than his share, for the use of the co-partnership, and the lien of each partner exists not only as against the other partners, but also against all other persons claiming through them or under them — Lindley on Partnership, 681,” reference is had to the lien which grows out of the relation of partners to each other, and which is given by law irrespective of any express provision therefor in the articles of copartnership. Of such lien the world is bound to take notice. Knowledge *289of the existence' of the partnership imports and is knowledge •of the partnership lien, when the word is used in its proper ■sense.
But when it is undertaken, by special agreement incorporated in the articles of copartnership, to stipulate for a lien in favor of one of the copartners, which would not arise by •implication of law from the fact and nature of the partnership, without a stipulation therefor, it seems clear to me that the law ought to be, and is, that such lien should not affect the rights of a bona fide third purchaser for value. Unless he has notice to the contrary, he has the right to presume that each partner’s interest, or tenure, if that is the preferable word, is subject to no liens except for the discharge of partnership liabilities, and that when these have been discharged, his share of the net surplus is his own, as absolutely as any other form of property, and subject to the imposition of incumbrances in the same way, and only in the same way. That a partner may mortgage his interest before its ascertainment, and while the partnership continues, can not be doubted. The prevailing opinion concedes as much.
Now the doctrine is familiar ana elementary, that the power • of a partner to deal with the partnership property, and to bind the firm by contracts made in the partnership name, can not be limited by restrictions in the copartnership articles, unless the restriction is known to the party with whom he deals; and still stronger is the reason for saying that the ■power of the partner to deal with his own interest in the partnership property — his share of the net surplus which ;shall remain after the payment of partnership liabilities — can not be restricted by a stipulation in the articles for a lien which is not a partner’s lien, but is for the securing of obligations, which, in a legal sense, are separate from, and independent of, the partnership transactions, and for which, as is conceded in the prevailing opinion, there would be no lien •“in the absence of some express agreement.”
*290The following is the language of Mr. Lindley, p. 325:
“ By law every member of an ordinary partnership is the' agent of the firm, so far as is necessary for the transaction of' its business in the ordinary way, and to this extent his authority to act for the firm may be assumed by those who know nothing of the real limits of his authority. If his copartnershave restricted his authority to narrower limits (which they are perfectly at liberty to do), still they will be bound to alii persons dealing with him bona fide without notice of the restriction, so long as he acts within the wider limits set by law as above explained.”
Again, at page 326, the author says:
“ Restrictions placed by the partners upon the powers which each shall exercise do not affect non-partners, who act 'bona fide and without notice of the restriction.”
And again, at page 682, the following:
“The lien of partners on the partnership property extends, as has been stated, to whatever is due to or from the firm, by or to the members thereof, as such. It does not, however,, extend to debts incurred between the firm and its members, otherwise than in their character of members. It has therefore been held that if a partner borrowed money of the firm for some private purpose of his own, and then became bankrupt, his assignees were entitled to his share in the partnership, ascertained without taking into account the sum due from him to the firm in respect to this loan; and that the solvent partners were driven to prove against his estate in order to obtain payment of the money lent.”
These doctrines are elementary, and of course may be found in the books of all the text-writers on the subject.
All I desire to add is expressed in the following extracts,, taken from the appellants’ brief:
“Now, if third persons are not bound to take notice of restrictions on the powers of partners which may be inserted in articles of copartnership, how can they be required to take *291notice of a contract lien for a private debt disconnected from the partnership, which one of the parties may give to the other by a clause in the articles of copartnership ? In case of the supposed restriction, the restriction has relation to the partnership business, and is properly made a part of the articles of copartnership, but still is not binding on third persons, in the absence of actual notice. In case of the supposed lien by one partner on his interest in the firm to secure to another partner a private debt, the matter has no connection with the partnership, and yet it is held that because it is in the articles of copartnership the world must take notice of it. Surely this is not the law, and ought not to stand as the decision of this court.
“ The lien which one partner has on the property and effects of the firm for money advanced to the firm, or to a member thereof, to carry on the business of the firm is not the creature of any stipulation in the articles of copartnership, but it is the creature of the law and is incident to the partnership relation. It exists equally where no articles of co-partnership are entered into as where they are. Now if one partner may have a lien as against third persons on the interest of another partner in the partnership property by so providing in the articles of copartnership, why may not such a lien be reserved in a parol contract of partnership ? There is no law requiring a contract of partnership to be in writing, and this court has ruled that a contract of partnership may be formed without writing, even where the object of the partnership is to buy and sell real estate. Holmes v. McCray, 51 Ind. 358.
“ If partners, in forming their copartnerships, may verbally reserve liens on the interest of one of the partners in the partnership property, of which liens third persons are bound to take notice, the statute law of the State providing for the making and recording of mortgages of personal property would seem to have been repealed without legislative ■intervention.
*292"¥e submit that the true rule on this subject is that possession of partnership jmoperty by a firm is notice to everybody of the partnership rights of each partner of the firm in the property so possessed, but that it is no notice of any contract right, which one partner may have acquired in the contingent residue of another partner after the partnership shall have been wound up and the. partnership debts shall have been paid.”