Parker v. Merritt

Citation1883 WL 10129,105 Ill. 293
PartiesDAN PARKERv.HENRY C. MERRITT.
Decision Date31 January 1883
CourtSupreme Court of Illinois

OPINION TEXT STARTS HERE

APPEAL from the Appellate Court for the Second District;--heard in that court on appeal from the Circuit Court of Henry county; the Hon. JOHN J. GLENN, Judge, presiding.

Messrs. LANPHERE & BROWN, and Mr. CHARLES K. LADD, for the appellant:

Under the agreement between the partners, the creditors of the firm could sue Parker alone for the firm debts without making Merritt a party, and levy on the goods in controversy to satisfy the judgment against Parker alone. Snell v. Ives et al. 85 Ill. 279; Eddy v. Roberts, 17 Id. 505; Brown v. Strait et al. 19 Id. 88.

The firm being solvent, the partners could divide the assets as they saw fit, and if one retained the assets, and agreed to pay the firm debts, that did not give the other a lien on the assets. Story on Partnership, secs. 329, 358, 359.

Where possession is given to one partner, who is allowed to act as sole trader, he will have all the credit as such, and all persons dealing with him may treat the property as his. Ex parte Williams, 11 Ves. 3.

The contract of Parker to pay the firm debts took the place of the lien Merritt had on the firm goods, and Parker took them free from the lien to pay the firm debts. Story on Partnership, sec. 359; Ex parte Ruffin, 6 Ves. 119; Ex parte Williams, 11 Id. 3.

The law does not give to firm creditors any equities over the individual creditors for payment from the partnership assets. Hapgood et al. v. Cornwell et al. 48 Ill. 64.

To charge a stranger to a trust fund, it must be shown that he had notice of its character, and its misapplication. Fifth National Bank v. Hyde Park, 101 Ill. 595; Ladd v. Griswold, 4 Gilm. 25.

Mr. C. C. WILSON, for the appellee:

Whether the creditors of the firm could sue Parker alone, depends upon whether there was an absolute sale of the goods to him, or whether he was a trustee for the creditors. If these goods were set apart to pay debts of the firm, then Merritt, or any of the creditors interested in having the debts paid, might ask the aid of a court of equity to prevent the misapplication of the trust fund. Ward v. Lews, 4 Pick. 518; First Congregational Church v. Trustees, 23 Id. 148; Fitch v. Waikman, 9 Metc. 517.

If Dan Parker had notice of the trust, or even had the means of knowing of the trust, and took the goods in payment of an individual debt of the trustee, then any person having an interest in the goods might follow them in his hands. Cott v. Lossner, 9 Cow. 320.

Mr. JUSTICE CRAIG delivered the opinion of the Court:

This was a bill in equity, brought by Henry C. Merritt, against appellant, to reach certain goods in his possession, and have the proceeds applied in payment of the firm debts of Parker & Merritt.

It appears from the record that Parker & Merritt were engaged in business as partners in a general store, from February 1, 1874, until September 10, 1878, when the firm was dissolved by mutual consent. The controversy in the case mainly grew out of the construction to be placed upon the contract of dissolution executed by the parties at the time the firm was dissolved. The contract provides: “First, a full and complete invoice at cost, and last invoice price of the stock, goods, fixtures and assets of said firm, shall be taken, as soon as the same can reasonably be done without injury to the trade and business of said firm; second, a schedule of the debts and liabilities of said firm shall be made; third, the amount of said firm indebtedness shall be deducted from the amount of said inventory or invoice, and the balance of said invoice and assets shall be divided as follows, viz:” Then follows a detailed statement of the manner in which the assets shall be divided between the partners. Then comes the fourth clause in the agreement, which declares: “The accounts due said firm, and not disposed of as aforesaid, and the goods to an amount sufficient to meet the liabilities of said firm as aforesaid, shall be retained by said Parker, and in consideration thereof the said Parker agrees to pay the debts of said firm as aforesaid.” The last part of the agreement contains the following: “It is also agreed that the schedule indebtedness of said firm, except the amount due the People's Bank, shall be paid within six months of the final decision herein named, and as rapidly as the assets herein set apart for their payment can be realized upon; and the indebtedness owing to the People's Bank shall be paid within one year.”

Under the contract an inventory was made, which showed the resources of the firm to be $29,513.49, as follows:

+-----------------------------------------------------------------------------+
                ¦Left in Parker's hands to pay the amount of the firm's debts, in  ¦$16,724.77¦
                ¦goods,                                                            ¦          ¦
                +------------------------------------------------------------------+----------¦
                ¦Parker drew out to pay note to Merritt,                           ¦1,500.00  ¦
                +------------------------------------------------------------------+----------¦
                ¦Parker took poor notes and accounts,                              ¦1,507.60  ¦
                +------------------------------------------------------------------+----------¦
                ¦In merchandise,                                                   ¦3,602.57  ¦
                +------------------------------------------------------------------+----------¦
                ¦Merritt drew out in poor notes and accounts,                      ¦1,507.60  ¦
                +------------------------------------------------------------------+----------¦
                ¦In merchandise and fixtures,                                      ¦4,670.95  ¦
                +------------------------------------------------------------------+----------¦
                ¦Total,                                                            ¦$29,513.49¦
                +-----------------------------------------------------------------------------+
                

After this settlement between the partners, Henry Parker continued the business in his own name, in the same building which had been occupied by the firm. The goods, amounting to $16,724.77, which were left with Parker to pay the debts, were mingled with other goods purchased, and the retail trade carried on until June 16, 1879, when Dan Parker, appellant, levied upon the goods in the store, on an execution in his favor, against Henry Parker, and on the same day, but after the levy, Henry Parker made an assignment, under the statute, to Howlett, for the...

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