Drucker v. Wellhouse

• Decision Date: 09 November 1888
• Parties: DRUCKER et al. v. WELLHOUSE et al.
• Court: Georgia Supreme Court

8 S.E. 40

82 Ga. 129

DRUCKER et al. v. WELLHOUSE et al.

Supreme Court of Georgia

November 9, 1888

Syllabus by the Court.

Though a firm or partnership is not a person, it is a legal entity and for some purposes is recognized as a quasi person, having powers and functions exercisable by one of the partners severally or all of them jointly. It may be a debtor or a creditor, within the meaning of a statutory enactment.

Statutes which relate to voluntary assignments by "insolvent debtors" for the benefit of creditors, and require sworn schedules of assets and creditors to be prepared and attached to the deed or instrument of assignment by "the person firm, or corporation" making such assignment, and provide that "in case of assignments by firms" the required oaths may be made by any member of the firm, assume the right of insolvent firms to assign the partnership property for the benefit of their creditors, though the partners themselves, as individuals, may be solvent. It follows that the individual property of the partners respectively, need not be assigned in order to render the assignment valid.

Where the schedules required by statute are in fact attached to the deed of assignment, and there is no reason to conclude or even suspect that they were not attached at the time the assignment was executed, failure of the writings to declare expressly on their face that they were then attached is of no consequence.

That one of the preferred debts was a due-note payable to the attorney who drafted the assignment, and was given to him by the firm "for services rendered in drawing this deed of assignment, and for advice and counsel in reference thereto, and services to be rendered hereafter for the purpose of protecting and upholding this assignment," does not render the assignment void per se. If there was actual fraud, the fraud is matter for proof aliunde; and if no fraud was intended, but the amount of the note is more than the services rendered and to be rendered are worth, or if the assignee should not accept the attorney as his counsel in behalf of the creditors, or should not need his services, a proper deduction from the amount can be made, and the note be left to stand good against the assets for the balance only.

Error from superior court, Fulton county; MARSHALL J. CLARKE, Judge.

Bill filed by Wellhouse & Sons against Drucker & Bro., to set aside a deed of assignment. Judgment for plaintiffs, and defendants bring error.

J. C. Jenkins and Malcolm Johnson, for plaintiffs in error.

Weil & Brandt, for defendants in error.

BLECKLEY C.J.

1. "Partners are called, collectively, a firm. Merchants and lawyers have different notions respecting the nature of a firm. Commercial men and accountants are apt to look upon a firm in the light in which lawyers look upon a corporation, i. e., as a body distinct from the members composing it, and having rights and obligations distinct from those of its members. Hence, in keeping partnership accounts, the firm is made debtor to each partner for what he brings into the common stock, and each partner is made debtor to the firm for all that he takes out of that stock. In the mercantile view, partners are never indebted to each other in respect of partnership transactions, but are always either debtors to or creditors of the firm. Owing to this impersonification of the firm, there is a tendency to regard its rights and obligations as unaffected by the introduction of a new partner, or by the death or retirement of an old one. Notwithstanding such changes among its members, the firm is considered as continuing the same, and the rights and obligations of the old firm are regarded as continuing in favor of or against the new firm as if no changes had occurred. The partners are the agents and sureties of the firm; its agents for the transaction of its business; its sureties for the liquidation of its liabilities, so far as the assets of the firm are insufficient to meet them. The liabilities of the firm are regarded as the liabilities of the partners only in case they cannot be met by the firm and discharged out of its assets. But this is not the legal notion of a firm. The firm is not recognized by lawyers as in any way distinct from the members composing it. In taking partnership accounts, and in administering partnership assets, courts have to some extent adopted the mercantile view, and actions may now be brought by or against partners in the name of their firms; but, speaking generally, the firm has no such legal recognition. The law ignoring the firm looks to the partners composing it. Any change among them destroys the identity of the firm. What is called the 'property of the firm' is their property, and what are called the 'debts and liabilities of the firm' are their debts and their liabilities. In point of law, a partner may be the debtor or the creditor of his copartners, but he cannot be either debtor or creditor of the firm of which he is himself a member. A member of an ordinary partnership is at law, as in commerce, the agent of the firm for the purpose of transacting its business, but he is not the surety of the firm. Every member of an ordinary partnership, however numerous the partners may be, is liable to have his property seized for a partnership debt, whether the firm has assets to pay it or not; and not only so, but the property of the firm is liable to be seized for the private debts of any of the members composing it. This non-recognition of the 'firm,' in the mercantile sense of the word, is one of the most marked differences between partnerships and incorporated companies." 1 Lindl. Partn. (4th Ed.) 207; Dicey, Parties, (by Truman,) 169, 183. "Upon the same principle, namely, that the firm is not distinguishable from its members, and that the name of the firm is only a conventional name for those members, if a firm is appointed by its mercantile name to any office, e. g., the office of trustee, guardian, or executor, the partners in the house at the time of its appointment to the office are the persons who, in point of law, are considered as filling it. De Mazar v. Pybus and Knudson v. Pybus, 4 Ves. 649. The firm, as such, cannot hold an office, nor can rights, personal to the members of a given firm, be exercised by new members who may be introduced into it. See Barron v. Fitzgerald, 6 Bing. N.C. 201, 37 E. C. L. 582; Stevens v. Benning, 1 Kay & J. 168." 1 Colly. Partn. (6th Ed. Wood's Notes,) 288, note. "Partnership is but a relation.

It is not a person,-it is not a legal being. The real owners of partnership property are the partners." Harris v. Visscher, 57 Ga. 229. "It is not a being distinct from the members which compose it." Chambers v. Sloan, 19 Ga. 84. "As among partners, the extent of the partnership is determined by the contract and their several interests. As to third persons, all are liable, not only to the extent of their interest in the partnership property, but also to the whole extent of their separate property." Code, § 1888. The foregoing quotations are more than ample to show that in contemplation of law there is no merger or fusion of the several persons composing a partnership into a common or comprehensive person including them all. A firm adds nothing to population, and in this respect is unlike a corporation which arguments population in the legal, though not in the natural, world. Still the law does take note, on a wide scale, of partnership as a legal entity, and regards it as a unit both of rights and obligations. Judgment may be entered and execution issue for or against it. Code, §§ 1899, 3576. Attachment may issue against it as non-resident, ( Chambers v. Sloan, 19 Ga. 84; De Leon v. Heller, 77 Ga. 740;) or as absconding, (Hines v. Kimball, 47 Ga. 587.) It may be served with process. Peel v. Bryson, 72 Ga, 332. It may be taxed, ( Mayor v. Hines, 53 Ga. 616;) and see many provisions in the Session Laws imposing taxes. It may be insolvent. Code, § 1918; B...