Fayette National Bank of Lexington, &C., v. Kenney's Assignee

• Decision Date: 27 November 1880
• Citation: 79 Ky. 133
• Court: Kentucky Court of Appeals
• Parties: Fayette National Bank of Lexington, &c., v. Kenney's assignee.

79 Ky. 133

Fayette National Bank of Lexington, &c., v. Kenney's assignee.

Court of Appeals of Kentucky.

November 27, 1880.

APPEAL FROM FAYETTE COURT OF COMMON PLEAS.

BRECKINRIDGE & SHELBY FOR FIRST NATIONAL BANK OF LEXINGTON.

GEO. W. DARNALL FOR FAYETTE NATIONAL BANK.

M. C. JOHNSON AND C. H. STOLL FOR APPELLEE.

JUDGE PRYOR DELIVERED THE OPINION OF THE COURT.

The First National and Fayette National Banks at Lexington discounted, each, certain notes signed by the firm of H. Gilbert & Co., Thomas Mitchell, and S. P. Kenney. The notes read:

                "$10,000.           LEXINGTON, KY., Dec. 11th, 1877
                

"One hundred and twenty days after date we, or either of us, jointly and severally, promise to pay to the order of the Fayette National Bank ten thousand dollars, with interest at the rate of eight per cent. per annum, from date until paid, without defalcation, for value received, negotiable and payable at the Fayette National Bank of Lexington, Ky.

                              (Signed),           "H. GILBERT & CO
                                                  "THOS. MITCHELL
                                                  "S. P. KENNEY."
                

Thos. Mitchell and S. P. Kenney, whose names appear to these notes, were both members of the firm of H. Gilbert & Co. S. P. Kenney, on the 11th of March, 1878, executed a deed of trust to the appellee, J. H. Shropshire, for the payment, pro rata, of his creditors "in the order and with the preference only prescribed by law as to the liens of individual and partnership creditors." About the same time the firm of H. Gilbert & Co., becoming embarrassed, by an agreement with creditors, assigned to the appellee the firm effects in trust, for firm creditors. In making a distribution of the assets of the firm of H. Gilbert & Co., the appellants, the Fayette National Bank and others, presented their claims, and received a pro rata dividend amounting to 31 per cent. The trustee Shropshire (appellee) having filed his petition in equity for the settlement of these trusts, the appellants, after receiving their dividends of the firm assets, presented their claims, and demanded of the assignee, Shropshire, their pro rata dividend of S. P. Kenney's assets in the distribution to be made to his (Kenney's) individual creditors. It is admitted that the individual estate of Kenney will only pay about 30 per cent. upon the claims against it, and as the appellants had received from the firm of H. Gilbert & Co. a greater dividend, the individual creditors of S. P. Kenney insisted that appellants could take nothing from Kenney's individual assets until the individual creditors had received as great a dividend as had been paid the appellants out of the firm assets. The chancellor below adjudging in favor of the individual creditors, the case is here on an appeal from that judgment.

It is insisted by counsel for the appellants, that as the individual signatures of Mitchell and Kenney appear to these notes, that the obligation imposed on them both a partnership and an individual liability; "that the holders of the notes possess all the equities of both partnership and individual creditors." This is the single question to be considered in this case.

We are met at the threshold of the investigation with the suggestion that the purpose of requiring the individual signatures of two of the members of the firm of H. Gilbert & Co. to the notes was to create both a partnership and an individual liability, so that the appellants could assert all the equities belonging to both classes of creditors. What the intention of the parties was at the time these notes were executed is to be gathered alone from the face of the instrument, and an agreement to the effect that the individual estate of the members of the firm should be liable will not be permitted to affect the equities of either partnership or individual creditors. If in a firm liability the firm creditor has received his part of the firm assets, the chancellor will close the hands of such a creditor until the individual creditor is made equal with him; so the question at last is, was this, as between the parties to the paper,...