Goudy v. Werbe

• Decision Date: 30 January 1889
• Docket Number: 12,347
• Citation: 19 N.E. 764,117 Ind. 154
• Parties: Goudy v. Werbe et al
• Court: Indiana Supreme Court

19 N.E. 764

117 Ind. 154

Goudy v. Werbe et al

No. 12,347

Supreme Court of Indiana

January 30, 1889

From the Marion Superior Court.

Judgment affirmed, with costs.

H. J Milligan, for appellant.

H. C Allen, for appellees.

OPINION

Olds, J.

This is an action of replevin brought by appellee Werbe against appellant and appellee Plummer. Plummer filed a disclaimer in the court below and is only a formal party.

The court made a special finding of facts, and stated conclusions of law thereon. Appellant excepted to the conclusions of law and filed a motion for a new trial, which was overruled, and judgment entered for appellee Werbe. The facts found by the court are as follows:

On November 27th, 1883, Henry Schnull and William A. Krag recovered three several judgments against appellee Werbe and one Ruth Domauget, before Charles B. Feibleman, a justice of the peace, in Indianapolis, as follows: One for $ 166.40 and costs; one for $ 181.64 and costs, and one for $ 167.25 and costs. It being made to appear by affidavit that delay would endanger their collection, on the same day executions were issued on said judgments and placed in the hands of the appellant, Goudy, as constable. On the same day appellant, as constable, levied said executions on the property described in the complaint as the property of the firm of E. F. G. Werbe & Co., composed of appellee Werbe and Domauget, and took possession of the property.

At the time of said levy, and for a long time prior thereto, appellee Werbe was a married man and a householder, residing in the city of Indianapolis with his family.

On November 21st, 1883, the firm composed of Werbe and Domauget were carrying on the business of retail grocers in the city of Indianapolis, and being indebted to Schnull & Krag for groceries theretofore sold them, they executed to Schnull & Krag their three promissory notes in settlement of said indebtedness, payable one day after date, signed by the firm name of E. F. G. Werbe & Co., and it was upon these three notes that the judgments were rendered. The suits on the notes were commenced November 24th, 1883, and summons served the same day, returnable on November 27th, 1883, at nine o'clock A. M. After the service of said summons, to wit, November 26th, 1883, Werbe & Co., being indebted to Stephens & Co., of Cleveland, Ohio, in the sum of $ 400, settled with them by giving them part of the goods purchased of Stephens & Co., which constituted part of the stock of Werbe & Co., to the amount and value of $ 250, and for the balance of the debt to Stephens & Co., executed a chattel mortgage on the other goods and property of the firm. On the same day, November 26th, 1883, Werbe and Domauget entered into a written agreement dissolving the partnership existing between them, and in consideration of $ 200 paid Domauget by Werbe, and in consideration that Werbe assumed and agreed to pay all the debts and liabilities of the firm of every kind and nature, Domauget sold and transferred to Werbe all her right and interest in the firm business and all the property held and owned by them as such partners, of every nature and kind, particularly describing some portion of the property which was to be held and owned by Werbe in his own right exclusively; that Domauget was the mother-in-law of Werbe; she was sixty-five years old, was in feeble health, and was making her home with Werbe, having little or no knowledge of the business. In pursuance of the written contract, the firm was dissolved on the 26th day of November, 1883, and Domauget received $ 200 cash, and Werbe took the firm assets and assumed the firm debts. Werbe took exclusive possession of the property, including the property involved in this case, and thereafter held it.

At the date of the dissolution the assets of the firm consisted of merchandise of the value of $ 762.48, and small accounts, aggregating $ 1,396.95, but only of the value of $ 137.52, in addition to the $ 200 paid Mrs. Domauget.

At the date of dissolution the firm was indebted to various creditors in the sum of $ 800, after payment of Stephens & Co.'s debt. Werbe had no individual property, but was indebted on a judgment in the sum of $ 200. Mrs. Domauget had no property except her interest in the firm.

On the morning of November 27th, 1883, at 10 o'clock, Werbe and Domauget, without fraudulent intent, voluntarily entered their appearance to the actions that day filed against them before T. W. Pease, a justice of the peace, and by agreement judgments were entered in said cases upon the firm debts as follows: In favor of Blanton, Watson & Co. for $ 71.80, and costs; in favor of Byram, Cornelius & Co., $ 49.42, and costs; and in favor of Raschig for $ 55.80. Executions were at once issued on said last described judgments, and placed in the hands of Hiram Plummer, a duly qualified constable, who at once levied the executions upon all of the property turned over by the firm of Werbe & Co. to Werbe on the preceding day, and including the property in this case. Appellant Goudy levied his executions later in the day on the same property.

Before the day of sale, Werbe filed with said constables Plummer and Goudy his schedule of all his property of every nature, in due form of law, properly executed and verified, which schedule included the property involved in this case and claimed to be exempt. Werbe thereupon demanded that the property in question be set off to him as exempt, but Plummer took and sold upon his execution all the property save what was so claimed as exempt, and left for Goudy only the property claimed as exempt, the same being of the value of $ 524. Goudy refused to deliver said property to Werbe, but claimed it was firm property, and not exempt from execution, and after the commencement of this suit sold said property as the property of the firm of Werbe & Co.

At the time of the dissolution and transfer from Domauget to Werbe, neither said Domauget nor Werbe intended or designed to cheat, defraud or hinder or delay Schnull & Krag, or any other creditor, nor was the transfer made for the purpose of securing an exemption.

As a conclusion of law the court found for the plaintiff Werbe; that he was entitled to a return of the property so sold, to a personal judgment for the value thereof, the return of the property to act as a satisfaction of the judgment to be rendered. The judgment provided that Werbe was the owner and entitled to the possession of the property at the time of the commencement of this suit, and that Goudy unlawfully detained the same.

It is contended by counsel for the appellant that the facts found by the court entitled him to judgment in his favor, and if they do not, the evidence shows a state of facts different from that found by the court.

It is further contended by counsel, that the facts found by the court show such a disposition of the firm property by the firm of Werbe & Co. as operated as a fraud against the creditors, and that such transfer of the firm property from the firm to Werbe by Domauget selling her interest in the property to Werbe, when the firm was insolvent, in consideration of $ 200, and Werbe's agreement to pay the firm debts, is void as to the creditors; that this is true notwithstanding there was no moral turpitude on the part of the partners; that they are conclusively presumed to intend the natural consequences of their own acts, and are not relieved therefrom by reason of there being no moral turpitude on their part; that the finding of the fact by the court that neither of the partners intended or designed to cheat, defraud, hinder or delay Schnull & Krag, or any other creditor, and that the transfer was not made for the purpose of securing an exemption, only amounts to a finding that there was no moral turpitude on the part of the partners.

It is first important to determine whether the transfer made by the partners, Werbe and Domauget, severing the joint interest in the partnership property, and Werbe taking all the property and agreeing to pay all the debts, did operate as a fraud. By the terms of the sale of Domauget's interest in the firm property to Werbe, and Werbe agreeing to pay the firm debts, in the absence of fraud the property became the individual property of Werbe, and he was individually liable for the firm debts. The creditors might have availed themselves of the contract and sued Werbe individually, and if he had individual property, they could have subjected it to sale for the payment of their claims. They would have been placed on an equal footing with his individual creditors, and could not have been postponed from subjecting individual assets to payment of their debts until after the individual creditors were paid. In the absence of fraud they became his individual creditors; the property became his individual property. The firm creditors had no lien on the firm property. Warren v. Farmer, 100 Ind. 593.

It is asserted that there is no right of exemption out of firm property. That may be regarded as the settled law, and the weight of authorities is no doubt in support of this doctrine, though the case on which all the decisions in other later cases are based in this State is that of Love v. Blair, 72 Ind. 281, and the court in that case does not so hold. It is stated in the opinion that "The weight of authority is decidedly in favor of the proposition that one partner can not claim any part of the property of an existing partnership as exempt from sale upon execution against him." It is further said: "There is, indeed, considerable conflict upon this question, and many courts declare the rule different from that stated. But, however it may be as to the rule just stated, it is very clear that one partner can not claim as exempt ...