13 Cal. 626, Conroy & O'Connor v. Woods

Citation:13 Cal. 626
Opinion Judge:BALDWIN, Judge
Party Name:CONROY & O'CONNOR v. WOODS et als.
Attorney:Geo. F. & W. H. Sharp, for Appellant. Cyril V. Grey and Joseph Simpson, for Respondents.
Judge Panel:JUDGES: Baldwin, J. delivered the opinion of the Court. Terry, C. J. concurring.
Case Date:July 01, 1859
Court:Supreme Court of California

Page 626

13 Cal. 626

CONROY & O'CONNOR

v.

WOODS et als.

Supreme Court of California

July, 1859

Page 627

[Syllabus Material]

Page 628

Appeal from the Twelfth District.

The facts are substantially stated by the Court. At the time of filing this suit, the Sheriff was about to sell the property in question, under the execution issued on the judgment of Woods against Bonny alone. The bill prays that plaintiffs have precedence over Woods and all others, on the ground that the property is partnership property; and also prays that the claim of Alison, as owner of a portion of said property, and the judgment of Woods, be declared fraudulent and void. Upon affidavit of the insolvency of the Sheriff and his bondsmen, the Court below ordered the proceeds of the sale to be deposited in Court, subject to the further order of the Court.

Woods demurred to the interventions filed, on the ground that the intervenors had no interest in the success of either party, and did not state facts sufficient. Demurrer overruled.

The intervenors had attachment liens at the date of their interventions, and, before trial, had obtained judgment.

The case was tried before the Court, and a decree rendered that the property was partnership property, and subject first to the judgments of plaintiffs and intervenors. Woods alone appeals.

COUNSEL:

Geo. F. & W. H. Sharp, for Appellant.

I. The Court below erred in overruling the demurrer of Woods. (Mody v. Payne, 2 Hill, 47, and note a; Phillips v. Cook, 2 John. Ch. 548; Walsh v. Adams, 24 Wend. 389; 3 Denio, 125-128; Pr. Act, Sec. 217-220; Meyer v. Larkin , 3 Cal. 403; Nugent v. Locke , 4 Id. 318; Mason v. Tipton , 4 Id. 276.)

II. The pleadings and proofs do not show a case of equitable cognizance. (Cases cited above.)

III. Conceding that this action is one of equitable cognizance, when Woods' attachment was levied, this property, by the sale and delivery of the property itself, became the individual property of the debtor in that suit. (Ex parte Ruffin, 6 Ves. 127; Marguand v. The N.Y. M. Co. 17 John. 525; Mody v. Payne , 2 Id. 548; 3 Kent's Com. 65.)

IV. If these plaintiffs had any lien whatever, it must be by force of the clause in the bill of sale; and they had none under it. (Pr. Act, Sec. 120; Stat. 1850, 267, Sec. 15.)

V. Woods advanced his money upon the strength of the property in question being the individual property of George Bonny, his debtor, and much of the money went to pay debtsof the firm.

VI. The claim of Alison to this identical property was good against the property, because they could not have invoked the want of a change of possession; and with full knowledge on this point, they allowed Woods to justify his taking under his attachment against E. B. Bonny, individually; hence, they are estopped from asserting the contrary, especially after Woods had been put to the expense of defending this identical property, and after a return thereof is made to answer his debt alone.

VII. The intervenors are interlopers in this action, without right or authority of law; at any rate, they are in no better position than the plaintiff.

VIII. Their claims were included in the mortgage to Alison; consequently, the doctrine of election and res adjudicata apply, so far as Woods is concerned.

Cyril V. Grey and Joseph Simpson, for Respondents.

This is a case of equitable cognizance.

The answers do not deny any of the material allegations of the complaint and interventions, which must therefore be taken as true. (Davy v. Bowman , 8 Cal. 149; Osborn v. Hendrickson , 8 Id. 32; Thompson v. Lee , 8 Id. 275; Humphreys v. McCall , 9 Id. 59; Curtis v. Richards, Id; Gerke v. Cal. St. Nav. Co., Id. 215; San Francisco Gas Co. v. The City, Id. 453.)

The complaint and proofs show that the property in question was the partnership property of Bonny, Brooks & Moore, for the sale by Brooks and Moore operated only as a dissolution of the partnership as between the parties, leaving the property, as before, subject to the partnership debts. Bell became a tenant in common with E. B. Bonny, and could do nothing inconsistent with the primary duty of winding up the concern. (Kent's Com. 7th Ed. Side, 8, 59, 60, 63; Story on Part. Secs. 307, 308, 261, and Note; Collyer on Part. Sec. 110 and Note, 121, 125, 127, 166; Marguand v. N.Y. Manuf'g Co. 17 Johns. 525; Necoll v. Munford, 4 Johns. Ch. 5, 22; Rodriguez v. Hefferman , 5 Id. 417, 428; Crawsbrey v. Maule, 1 Swans. 507.)

Bell could not, and did not, transfer to E. B. Bonny (who knew all the facts) any higher or other right than he, Bell, possessed.

The partnership property could only become the individual property of one of the partners, and subject to his individual debts, after a notice of the dissolution of the partnership, andsubsequent open and notorious possession of the goods by the surviving partner, and his carrying on the business in his own name and being trusted on the strength thereof. Ex parte Ruffin, 6 Ves. 119; Ex parte Till , 10 Id. 347; Ex parte Williams , 11 Id. 3; La Collyer on Part., Sec. 884; Story on Part., Secs. 159-163, 308; Bissel on Part., 71; Gow. on Part., 2d Ed. 261; 3 Kent's Com. 7th Ed. Side, 8, 66, 7; Johnson v. Totten , 3 Cal. 347.)

The complaint and interventions set out, and the proof, sustain two distinct grounds for the relief sought; either of which is sufficient, and will entitle plaintiff and intervenors to relief in a Court of Equity.

I. That the plaintiff and intervenors are partnership creditors of Bonny, Brooks & Moore, and having established a lien by attachment, followed by judgment and execution upon the partnership assets, they claim a preference over defendant, Woods, who is an individual creditor of one of the partners, E. B. Bonny.

II. That the judgment of Woods is fraudulent and intended to hinder, delay, and defraud creditors

Either of the grounds is sufficient to authorize the interference of a Court of Equity. (1 Sto. Eq. Jur., Secs. 678, 1253, and cases cited; Washburn v. Bank Bellows Falls , 19 Vt. 278; Place v. Sweetzer, 16 Ohio, 132; Snodgrass Appeal, 13 Penn. 471; Jackson v. Cornell, 1 Sandf. Ch. 348; Robb v. Steans, 1 Clark's Ch. 191; Chase v. Steele, 1 Sandf. Ch. 348.) A Court of Equity will also interfere in cases of fraud, even if founded on the express provisions of statutes, and especially to guard against the fraudulent acts of a debtor. (Sto. Eq. Jur. Secs. 349, 377; Heyneman v. Dannenberg , 6 Cal. 376; Adams v. Woods , 8 Id. 156.) And also interfere where the plaintiff has a remedy at law. (People v. Houghtaling , 7 Cal. 348; Heyneman v. Dannenberg , 6 Id. 376.) And especially to enjoin the fraudulent disposition of partnership property in favor of individual creditors of the separate partners. (Jackson v. Cornell, 1 Sandf. Ch. 348; Deveau v. Fowler, 2 Paige, 400; Topliff v. Vail, Harr. Ch. 340; Candler v. Pettit, 1 Paige, 168; Heath v. Hand , 1 Id. 329; Eager v. Price , 2 Id. 333;...

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