4 S.W. 831 (Tenn. 1887), Carver Gin & Machine Co. v. Bannon
|Citation:||4 S.W. 831, 85 Tenn. 712|
|Opinion Judge:||CALDWELL, J.|
|Party Name:||CARVER GIN & MACHINE CO. v. BANNON and others.|
|Attorney:||Wm. M. Randolph, for complainant. Gautt & Patterson and H. C. Warinner, for defendant.|
|Case Date:||May 17, 1887|
|Court:||Supreme Court of Tennessee|
Appeal from chancery court, Shelby county.
Under the firm name and style of F. J. Bannon & Co., Albert Paine and F. J. Bannon were partners in the ownership and operation of a cotton-gin in the city of Memphis. In the course of the business, for partnership purposes, and in the name of the firm, they contracted certain debts with the Carver Gin & Machine Company, evidenced by several acceptances. Subsequently Albert Paine, F. J. Bannon, and Margaret Bannon, in their individual names, executed their two joint notes to M. Gavin for $750 each, and on the same day Paine and Bannon conveyed their partnership property in trust to Sullivan, to secure the judgment of the two notes to Gavin. Some 10 months thereafter the Carver Gin & Machine Company filed this bill to set aside the trust conveyance as a fraud upon the partnership creditors, and to subject the property herein described to the payment of said obligations. There is no proof of an intention to defraud the creditors of the firm, and we think the conveyance is not fraudulent in law, as against such creditors. It is true that the effect of the conveyance is to appropriate copartnership assets, in the first instance, to the satisfaction of other than copartnership liabilities; but such appropriation is not unlawful, being made in good faith. The creditors of the firm have no lien upon the firm property. It is the partner who has the lien or equity, and the partnership creditors, by appropriate proceedings in court, may avail themselves of that equity through lien, but not otherwise; and if, by any means, that equity is extinguished as to the partner, its benefit is lost to the partnership creditors. No equity is left to either of the partners in this case, for each of them has joined in a conveyance of the firm property, without reservation in behalf of the creditors of the firm.
Speaking upon this subject, Mr. Kent says: "But creditors have no lien upon the partnership for their debts. Their equity is the equity of the partners, assenting to the payment of the partnership debts. These are just and
obvious principles of equity, on which we need not enlarge, and they have been...
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