In re Allen

• Decision Date: 02 October 1889
• Citation: 41 Minn. 430
• Parties: In the Matter of EDGAR ALLEN and others, Insolvents.
• Court: Minnesota Supreme Court

41 Minn. 430

In the Matter of EDGAR ALLEN and others, Insolvents.

Supreme Court of Minnesota.

October 2, 1889.

Appeal by Edgar Allen, Abram Levinson and Henry T. Sattler from an order of the district court for Ramsey county, Simons, J., presiding, appointing a receiver in insolvency of the property of appellants Allen and Levinson, and of one Benjamin J. Ettelsohn. The petition for a receiver charged that all the debtors were general partners in the firm of E. Allen & Co., and that the assignment to appellant Sattler, mentioned in the opinion, was made in fraud of the insolvency act and with a view to give a preference, etc. The appellant Ettelsohn is a non-resident of the state, residing in Chicago.

Rogers, Hadley & Selmes, for appellants.

Harvey Officer and John B. & W. H. Sanborn, for respondent, (the receiver.)

VANDERBURGH, J.

The matter in question here is the validity of the assignment, made under chapter 148, Laws 1881, by Allen and Levinson, members of the partnership of E. Allen & Co. The ground of its alleged invalidity is that one Benjamin Ettelsohn was also a member of the partnership, and, while he assented to the assignment, which undertook to convey to the assignee all the partnership property, he did not convey and bring into court his individual property, for distribution with the assets of the partnership and the individual assets of the other partners named. The parties intended to form a limited partnership, with Allen and Levinson as general partners, and Ettelsohn as special partner; and the partnership agreement purports to be a limited partnership, and the proceedings for the formation thereof appear on their face to be in conformity with the statute. But it appears that the amount contributed to the capital stock by the special partner was not paid in cash, as the statute requires, but in property. The statement in respect to such payment in the affidavit filed was therefore untrue in fact, and Ettelsohn is liable as general partner for all the partnership engagements. In such case the partnership is as to creditors legally fraudulent in its inception.

The assignment was made by the general partners, and assented to by the special partner. In form it was an assignment by the general partners in the exercise of their powers as such under the terms of the limited partnership; that is to say, in connection with the assignment and transfer of their individual property, it transfers and assigns "all property and assets of every kind of the said E. Allen & Co.," and this is ratified and confirmed by the special partner two days after the execution of the assignment, by an instrument in writing, duly executed and acknowledged by him. Undoubtedly the assignment was executed upon the assumption that the special partner was not liable beyond the partnership assets, which, under the assignment, would be applied first to the satisfaction of the partnership debts, and that, upon the surrender of all the individual property of the general partners, with all the partnership assets, the assignment as made would be authorized by the insolvent act.

As respects the partners themselves, the partnership must be considered a limited partnership, according to their agreement, and its affairs will be adjusted between them on that basis; but in respect to their liability to creditors it must be treated as if all were general partners from the beginning, and the assignment in this case must be...