Sobernheimer v. Wheeler

• Citation: 18 A. 234,45 N.J.E. 614
• Parties: SOBERNHEIMER v. WHEELER et al.
• Decision Date: 16 August 1889
• Court: New Jersey Court of Chancery

18 A. 234

45 N.J.E. 614

SOBERNHEIMER

v. WHEELER et al.

Court of Chancery of New Jersey.

Aug. 16, 1889.

(Syllabus by the Court.)

On order to show cause why an injunction should not issue and a receiver be appointed.

Mr. Carrow and Mr. Crandall, for complainant. S. H. Grey, for defendants.

PITNEY, V. C. The bill is filed by a receiver of the assets of a partnership to establish his title to certain chattels which he claims are part of those assets. He was appointed receiver on the 3d day of April, 1889, by the court of common pleas of the city of Philadelphia, in a suit commenced by one of the partners against the other for a dissolution of the partnership and a settlement of its accounts. The firm was composed of John P. Eyre and Joseph S. Allen, one of the defendants herein, and was formed in the year 1885, under the firm name of J. P. Eyre & Co., for the purpose of carrying on the business of building wharves and bridges and that of general contractors, and was to continue for five years. The partners resided, and the business was carried on, in the city of Philadelphia. The suit in the Philadelphia common pleas was commenced by Eyre against Allen on the 24th day of March, 1888, and the bill in that suit alleges that the partnership was dissolved by mutual consent on the 22d day of February, 1888, and that all the assets were at that date, and continued to be, in the hands of and under the control of Allen. The defendant Allen, in his answer in that suit, denies that the partnership was dissolved at that time, but admits that the assets were left in his hands, and alleges that Eyre abandoned the business on the 22d of February, 1888, and compelled the defendant to continue the same alone, and to carry out and fulfill divers large contracts, which the partnership had undertaken, and which were incomplete at the date last mentioned. He alleges a dissolution on July 1, 1888. The bill in this cause sets out that at the time of the alleged dissolution the firm was possessed of a large amount of logs, timber, and lumber lying at Cooper's Point, in Camden county, in this state, of the value of $25,000, and that the complainant is informed that Marvin D. Wheeler, the defendant herein, claims to own the same by pretended purchase from Joseph S. Allen, one of the partners, and the other defendant herein, for the price of $6,780, which the complainant alleges is entirely inadequate, and that such sale was and is fraudulent and void as against the complainant, and prays that the sale from Allen to Wheeler may be declared void, and complainant's title to the lumber established by decree of this court, and for the appointment of a receiver, and an injunction against the defendant's disposing of the property. On the presentation of the bill (with four affidavits annexed) on the 1st of May, at Camden, an order to show cause why a receiver should not be appointed and an injunction be issued with an interim restraining order was made, returnable on the 20th of May. On the return-day the defendants asked for further time to prepare their answers and affidavits, and, on that or a subsequent day, leave was given to the complainant to serve upon the defendants additional affidavits. This was done as one of the terms upon which further time was granted to the defendants, and for the further reason that at the time the original bill was prepared and presented to the court a practice prevailed in that equity district for both parties to examine witnesses orally on the return of such an order, and it was shortly afterwards announced that that practice would not be further pursued, but that the proofs must be presented in the shape of written depositions. Additional affidavits on the part of complainant were served on defendants on June 22d. Further postponements were allowed to the defendants from time to time until the 15th of July, when the matter was finally heard. The answers and depositions in behalf of the defendants were served on complainant's solicitor just four days before the hearing, and complainant's solicitor served on defendant's solicitor several rebutting affidavits two days before the hearings. Objection was made to the reading of such rebutting affidavits on the ground, among others, that they were not served four days before the hearing, but no request was made to postpone the hearing, which would have been the proper motion to make. However, 1 incautiously, and, as I now think, improperly, granted defendants leave to put in, after the hearing, further surrebutting affidavits in reply to complainant's rebutting affidavits. This leave they have taken advantage of by handing up a further batch (being the fifth) of affidavits. The defendants, Allen and Wheeler, have answered separately, though appearing by the same solicitors, and they severally set up a sale by Allen to Wheeler of all the timber and lumber owned by the partnership in the month of March, 1888, consisting of a large and miscellaneous assortment of logs lying in the river at Cooper's Point, near Camden and a raft of logs lying at Bordentown, for the sum of $6,780, which they say was a full and fair price for the same, and the best that could be obtained at that time.

The order of the Philadelphia court appointing complainant receiver is as follows: "And now, to-wit, this 3d day of April, 1889, after hearing, it is ordered and decreed that Frederick A. Sobernheimer, Esq., be and he is hereby appointed receiver of all and singular the books, accounts, records, documents, and papers of the late firm of J. P. Eyre & Co., and the equipments, materials, tools, supplies, timber, money, choses in action, and property of every description belonging to or appertaining to the said firm of J. P. Eyre & Co., and to collect, take, and receive the same and all the assets of the said firm until further order of this court in the premises, with full power and authority to prosecute or defend, without the further order of this court, any and all actions, either in law or equity, which he may deem necessary and proper to commence or prosecute, and to defray the reasonable expenses thereof, and to pay the fees of counsel with whom he may consult in the discharge of his duties as receiver. It is hereby further ordered that John P. Eyre and Joseph S. Allen, and all persons under them or who may have possession, custody, or control of any property or assets of the said firm, shall deliver up and render to the said receiver all and singular the premises whereof he is appointed receiver as aforesaid." This order, I think, vests in the complainant all rights of the partnership relating to the property in question. There is no pretense in the case that there are any creditors of the partnership in this state, the fact being that there are substantially no outstanding debts against the firm. The complainant's standing in this court is therefore unimpeachable. Bidlack v. Mason. 26 N. J. Eq. 233; Hurd v. Elizabeth, 41 N. J. Law, 5.

The jurisdiction of a court of equity to set aside a sale of personal property on the ground of fraud, or other basis of equitable jurisdiction, is well established, and rests on the same grounds as that over conveyances of real estate. Smith v. Wood, 42 N. J. Eq. 568, 7 Atl. Rep. 881; 44 N. J. Eq. 603, 17 Atl. Rep. 1104, on appeal. The jurisdiction is concurrent with that of courts of law, and suits by creditors to set aside mortgages and sales of personal property are of frequent occurrence in this court. It is true, the rule, as usually expressed, applies to sales and conveyances in fraud of creditors, and it was contended on the argument that it goes no further, and does not include partners, and that this is, in effect, a suit by one partner for his own benefit, and not for that of creditors, and that the complainant's true and only remedy is either to seize the timber in controversy or bring trover or replevin for it. But it seems to me that this view is too narnow, even if we read the rule as applying only to creditors. Each partner is, of necessity, before the accounts are finally settled between them, a creditor of and a debtor to the firm. He is a creditor for whatever he has advanced to it as capital or otherwise, and he is directly interested in all its assets precisely as outside creditors are. Courts of equity have frequently interfered in cases like the present, (Sloan v. Moore, 37 Pa. St. 217; Kerr, Fraud & M. 332, and notes;) and every consideration in favor of exercisingju risdiction on behalf of creditors applies in favor of one partner against the fraudulent acts of his copartner. The remedy in equity is much the more effective, convenient, and complete in such cases. For instance, the complainant, as here, may be an officer of the court, and may find it very inconvenient, if not impossible, to give security in replevin. The claimant of the property, as here, may be a non-resident, and so not subject to process from a court of law. He may be insolvent. The complainant may not have such complete knowledge of all the facts as to enable him with safety to take decisive action in a court of law. A court of equity may give relief on terms, according as the facts may develop themselves at the trial, where such facts would defeat an action at law. In the case in hand the court may, in the end, hold the sale herein attacked to be a mortgage, and give the complainant the right to redeem. In many cases the remedy at law may prove to be incomplete and inadequate, and particularly as between partners, of whose disputes this court necessarily takes cognizance. But, independent of these various considerations, I can, after full consideration, see no difference in principle, so far as equity jurisdiction is concerned, between a suit to set aside a conveyance of realty and one to set aside a transfer of personalty, and know of no reason why a court of equity should not entertain the one as readily as the other. It is true that it may be...