Davis v. Megroz

• Decision Date: 18 July 1893
• Citation: 55 N.J.L. 427,26 A. 1009
• Parties: DAVIS v. MEGROZ et al.
• Court: New Jersey Supreme Court

26 A. 1009

55 N.J.L. 427

DAVIS

v. MEGROZ et al.

Supreme Court of New Jersey.

July 18, 1893.

(Syllabus by the Court.)

Action in attachment by Wade B. Davis' against Henri Megroz, Louis Megroz, Henri Portier, Julius C. Schlachter, and Herman Leeman, partners trading in the name and style of Megroz, Portier, Schlachter & Co. Heard on motion to expunge from the record an appearance entered by one of the defendants in behalf of the other defendants. Motion granted.

Argued February term, 1893, before DEPUE, LIPPINCOTT, and ABBETT, JJ.

Talcott & Meyers, for plaintiff.

Joseph A. McCreary, for defendant Julius C. Schlachter.

Guild & Lum and John R. Hardin, for Henri Megroz and Louis Megroz.

Wm. A. Lewis, for an applying creditor.

George C. Conkling, for defendant Herman Leeman.

DEPUE, J. A writ of attachment issued out of this court October 22, 1892, and directed to the sheriff of the county of Morris, was executed by attaching real and personal property at Stirling. The affidavit on which the writ issued set out a debt due the plaintiff in the sum of $48,019 from the defendants as partners under the firm name of Megroz, Portier, Schlachter & Co. The property attached was appraised at $122,000. On the 4th of November, 1892, George E. Conkling, an attorney of this court, entered an appearance in the attachment suit in behalf of all the defendants. Application is made by Schlachter and by Henri Megroz and Louis Megroz to expunge from the record the appearance of Conkling in their names. Although the appearance purports to be for all the defendants, Mr. Conklingstyles himself as attorney for Herman Leeman. He was retained by Leeman, and it is admitted that be had no authority from the other parties to use their names. The attachment act provides that, where a defendant in a suit commenced by attachment enters an appearance without giving bond for the return of the personal property attached, the suit shall proceed in all respects as if commenced by summons; the lien of the attachment continuing. Revision, p. 48, § 38. A judgment recovered by the plaintiff in a suit commenced by attachment, where the defendant appears to the suit without giving bond, has a twofold effect: First, the property, personal as well as real, seized and taken under the attachment, may be sold to satisfy the judgment; and, secondly, a judgment recovered after such appearance has the force and effect of a judgment in personam. Without an appearance by the defendant, the attachment proceedings are strictly in rem, and the judgment is available only against the property attached. Thompson v. Eastburn, 16 N. J. Law, 100; Miller v. Dungan, 36 N. J. Law, 21.

The facts that gave rise to this controversy are somewhat complicated. The firm of Megroz, Portier & Co., composed of Louis Megroz, Henri Megroz, Henri Portier, Herman Leeman, and Mrs. Gabriette Portier, was engaged in the business of importing and selling domestic goods. Their principal house was in Paris, and the firm branch houses in Lyons, Roubaix, Berlin, Zurich, Vienna, Trieste, and New York. The business in the city of New York was carried on in the firm name of Megroz, Portier, Schlachter & Co. The latter firm was composed of the persons who were the members of the Paris firm, with the addition of Schlachter. Leeman was a member of both firms; Schlachter was a member of the New York firm only. Schlachter resides in Brooklyn; the other members of the New York firm reside in Paris. The New York firm was established by articles of partnership dated August 22, 1890, for the transaction of a wholesale commercial and commission business in New York, in the name of Megroz, Portier, Schlachter & Co., to be under the management of Schlachter. The firm was to continue from July 1, 1890, to July 1, 1896. In the articles of partnership the Paris firm of Megroz, Portier & Co. is described as the party of the one part and Julius C. Schlachter of the other part. Of the capital of the Now York firm $400,000 were to be furnished by the Paris firm and $200,000 by Schlachter. The Paris firm was established by articles of partnership forming a partnership to continue from April 1, 1890, to July 1, 1896. In the articles of partnership the Paris firm of Megroz, Portier & Co. is described as the party of the one part and Julius C. Schlachter of the other part. Of the capital of the New York firm $400,000 were to be furnished by the Paris firm, and $200,000 by Schlachter. The Paris firm was established by articles of partnership forming a partnership to continue from April 1, 1890, to July 1, 1896. The business for which the Paris firm was established was designated as a wholesale silk business in Paris, with branches in the cities already named, including the city of New York. In July, 1891, the Paris house became embarrassed, and by articles of dissolution dated July 20, 1891, the firm was dissolved by mutual consent, and two of its members, Henri Portier and Herman Leeman, and M. La Pierre, one of its employes, were made liquidators, with a view to a settlement with their creditors. The articles of dissolution expressly mentioned the interest of the Paris firm in the New York branch, and transferred that interest, with the other assets of the firm, to the three persons named as liquidators. The liquidators formed a special liquidating firm under the name of La Pierre & Co., and the assets of Megroz, Portier & Co. were passed over to the liquidating firm with the consent of creditors, and the firm of Megroz, Portier & Co. ceased business. The contention is that the assignment of the Paris firm operated to dissolve the New York firm.

It has been held that an assignment by one partner of all his interest in the copartnership for the benefit of his creditors, like an adjudication in bankruptcy, is ipso facto a dissolution of the firm, whether the partnership be at will or for a definite term. Marquand v. Barton, 17 Johns. 525, 529, 535; Lindl. Partn. 583. The principle on which this doctrine rests is, on the one hand, that new partners cannot be introduced into the firm without the consent of all the other partners; and, on the other hand, that the creditors of the partner taking his property by assignment cannot be involved against their consent in the responsibility of the continuance of the partnership business. This doctrine is firmly established where the partnership is for an indefinite term, but it has not been received without dissent where the partnership is for a definite term. Under such a contract the withdrawal of capital contributed by one member of the firm would be a violation of the contract of partnership, and might prejudice the interests of other members of the firm. Under such an arrangement it has been held that an assignment by one partner of his interest in the partnership property is a cause for dissolution (it may be on equitable terms) and an accounting on the application of the assignee, and is ipso facto a dissolution of the partnership at the option of the other partners. See Lindl. Partn. 363, 364, 583,584; Story, Partn. (7th Ed.) § 308, note 1. We think that Schlachter, as the only member of the New York firm not a party to the assignment, had a right to treat the assignment as a dissolution of that firm. The question arises then as to the effect of the dissolution of a partnership upon the powers and responsibilities of the partners inter sese. The dissolution of a partner ship...