Fitzpatrick v. Flannagan

• Decision Date: 18 December 1882
• Citation: 1 S.Ct. 369,106 U.S. 648,27 L.Ed. 211
• Parties: FITZPATRICK v. FLANNAGAN and another
• Court: U.S. Supreme Court

106 U.S. 648

1 S.Ct. 369

27 L.Ed. 211

FITZPATRICK v. FLANNAGAN and another.

December 18, 1882.

A. B. Pittman, for plaintiff in error.

Jeff. Chandler, for defendants in error.

MATTHEWS, J.

This is an action of assumpsit commenced by the defendants in error by the issuing of a writ of attachment, according to the practice as prescribed by the laws of Mississippi, the plaintiffs below being citizens of Missouri. The process of attachment was founded on an affidavit, which set forth that the plaintiff in error, as the surviving partner of the firm of Fitzpatrick Bros., composed of himself and his brother, James C. Fitzpatrick, deceased, was the legal owner of the partnership property; that the defendant, as such survivor, was indebted to the plaintiffs in several sums, evidenced by partnership obligations, as well as in a sum of $6,000, for a debt contracted by James C. Fitzpatrick and Eugene A. Forbes, then partners under the name of Forbes & Fitzpatrick, and which had, on the dissolution of that firm, by the retirement of Forbes, been assumed by the firm of Fitzpatrick Bros., which debt was evidenced by the promissory note of Forbes & Fitzpatrick, held by the plaintiffs. The whole indebtedness, for which suit was brought, was alleged to amount to $15,936.55. The affidavit then charged that 'the said John J. Fitzpatrick has property or rights in action which he conceals, and justly refuses to apply to the payment of his debts, and that he has assigned or disposed of, or is about to assign or dispose of, his property or rights in action, or some part thereof, with intent to defraud his creditors, or give an unfair preference to some of them; and that he has converted, or is about to convert, his property into money or evidence of debt, with which to place it beyond the reach of his creditors.' And suggesting that John McGinty, Edward McGinty, and George M. Klein, cashier of the Mississippi Valley Bank, are indebted to the defendant, or have property of his in their hands, etc., the affidavit prays for a summons against them as garnishees.

The statutory bond having been given, a writ of attachment was issued, which the marshal returned as served by levying upon and taking possession of certain personal property, according to an inventory attached, as the property of the defendant; and that afterwards Edward McGinty, having made claim that he was the owner of the property attached, and the same having been valued, and a claimant's bond given and accepted, he had turned said goods over to said McGinty, and had summoned the defendant and the garnishees.

The defendant below then, in due time, filed a plea in abatement to the writ of attachment, denying the several grounds thereof as alleged in the affidavit; and on the same day the plaintiffs, by leave of court, filed an amendment to the affidavit, setting forth 'that the firm of Fitzpatrick Bros., composed of defendant and James C. Fitzpatrick, deceased, and of which he is the surviving partner, fraudulently contracted the debt or incurred the obligation for which suit has been brought.' The granting of this leave to amend the affidavit was objected to by the defendant, and is the subject of an exception and assigned for error. But section 1483 of the Code of Mississippi of 1871 expressly authorizes amendments to defective affidavits, and we see no objection on principle, under such a provision, to an amendment adding a new ground for the attachment. There was no claim on the part of the defendant of being taken by surprise or put to any disadvantage by reason of the amendment, and we fail to perceive how in any way he could have been prejudiced. In point of fact, he immediately filed his plea in abatement to the amended affidavit, traversing the additional allegations, and the cause being at issue upon the pleas in abatement, was submitted to a jury, according to the practice authorized by the statute. There was a verdict finding 'that the attachment herein was rightfully sued out,' and the defendant thereupon had leave to plead to the merits, and filed with a plea of non-assumpsit several special pleas, which it is not necessary now to notice. The cause having been tried to a jury upon these issues, there was a verdict and judgment for the plaintiff. The present writ of error brings up for reveiew these proceedings and judgment, errors having been assigned upon bills of exception duly taken to the rulings of the court upon both trials.

Upon the trial of the issues of fact arising upon the pleas in abatement, evidence was introduced, as appears by the bill of exceptions, by the respective parties, tending to prove the following state of facts:

That in March, 1878, defendant had purchased the interest of Forbes in the firm of Forbes & Fitzpatrick, wholesale grocers, forming with the latter the partnership of Fitzpatrick Bros., who, by the terms of the purchase, assumed the liabilities of Forbes & Fitzpatrick, including, among others, about $15,000 due to the plaintiffs. These liabilities, as was afterwards ascertained, exceeded the value of the assets of the original firm. James C. Fitzpatrick died in September, 1878, leaving in the hands of the defendant, as surviving partner, the partnership property, and the concern insolvent. The defendant continued the business, sold out in part the old stock, pur chased other goods to replenish it to the amount of more than $12,000, partly on credit, partly for cash, putting the goods indiscriminately in stock with those on hand. During the existence of the firm of Fitzpatrick Bros the firm paid part of the debt due to the plaintiffs, assumed by them, and contracter other indebtedness with them for goods bought and money loaned for about the same amount as that paid. The deceased partner, before his death, had drawn out of the partnership more than his interest therein and was indebted to it. On December 3, 1878, the defendant being very much pressed to pay some maturing bills of the firm to the Mississippi Valley Bank, being debts created by the firm of Fitzpatrick Bros., borrowed $5,700 from John McGinty, giving his note at one day's date, verbally promising to repay the smount speedily out of the assets of the late firm. This money was used by the defendant in paying partnership debts. Fitzpatrick Bros. owed John McGinty, besides, two notes, one for $2,500 and one for $5,200. Being unable to repay the borrowed money to John McGinty the defendant on December 19, 1878, sold to Edward McGinty, a relative of John McGinty, his entire stock of goods, amounting to $6,633.46, at cost and 10 per cent. added, and the partnership accounts, amounting to $10,222.06, for which Edward McGinty paid $8,200 in cash and assumed to pay obligations due in part from Fitzpatrick Bros. and in part from Fitzpatrick, the surviving partner, for commercial debts contracted by him since the death of his partner, to the amount of $6,974.16. This price was a full and fair value for the goods and accounts, and, in fact, Edward McGinty paid out several thousand dollars more on the debts assumed than he had collected out of the assets transferred.

This sale to Edward McGinty was made with the knowledge of John McGinty, who, in fact, advanced the money to complete it, Edward being without means, and upon an understanding that the money should be paid to John McGinty on account of the debts due to him; and accordingly the $8,200 cash was returned to him in payment of the two notes for $2,500 and $5,700 respectively. Immediately after the sale Fitzpatrick was employed by Edward McGinty as a clerk to carry on the business at a salary of $2,500 per annum, and shortly afterwards a partnership between them was advertised. The assets of the firm of Fitzpatrick Bros. on hand at the time of the death of J. C. Fitzpatrick, together with after-acquired goods and moneys, were applied indiscriminately by the defendant to the payment of debts of the firm and of those contracted by him in the subsequent course of business, and it appeared that he had paid as much at least on account of partnership debts as he had realized from partnership assets, and that he had applied all the proceeds of the business, after paying its necessary expenses, to the payment of the debts of the late firm and of his own, contracted in carrying on the business as surviving partner.

The second issue, upon the pleas in abatement, was upon the allegation of the affidavit that 'the defendant had assigned and disposed of, or was then about to assign or dispose of, his property or rights in action, or some part thereof, with intent to defraud his creditors, or give an unfair preference to some of them.'

Upon the first branch of this issue—whether the defendant had disposed of any of his property with intent to defraud his creditors—the court charged the jury as follows:

'If you shall find from the evidence that the defendant sold or transferred any of the property or assets of the late firm of Fitzpatrick & Brothers, with intent to prevent the creditors of the firm of Fitzpatrick & Brothers, or any of them, from collecting their debts, such sale or disposition will sustain this ground of attachment. It was the duty of the defendant, as such surviving partner, to apply all of the assets of the firm to the payment of the debts due by the firm, and if he appropriated any part of them to the payment of his individual debts, it was a fraud upon the firm creditors, whether he so considered it or not, and if established by the proof, will sustain this ground of attachment, as the law will presume that he intended the natural result of his act. The defendant, being liable for the debts of the firm, could not, by borrowing the money and paying the debts of the firm, create himself a creditor of the firm, or subrogate himself to the rights of the creditors as paid.'

And to the giving of this instruction an exception was taken.

The ground on which this part of the charge appears to rest is...