In re F. Dobert & Son

• Decision Date: 18 December 1908
• Docket Number: 472.
• Citation: 165 F. 749
• Parties: In re F. DOBERT & SON.
• Court: U.S. District Court — Western District of Texas

165 F. 749

In re F. DOBERT & SON.

No. 472.

United States District Court, W.D. Texas, Austin Division.

December 18, 1908

Mrs Albertina Dobert, for herself and children, has filed a petition to review the order of the referee, declining to set aside to them, as the widow and children of Frank Dobert deceased, certain statutory allowances. The following opinion of the referee, Franz Fiset, Esquire, embodies the material facts of the case:

'An involuntary petition in bankruptcy was filed on February 3 1908, against the firm of F. Dobert & Son, and against Frank Dobert and Joseph Dobert, its members, as individuals. On February 5th the said partnership, and its members as individuals, filed a voluntary petition. Frank Dobert died on February 6, 1908. On February 13, 1908, an adjudication of the firm and its members was had on the voluntary petition. Albertina Dobert, the widow of Frank Dobert, deceased, seasonably filed an application for an allowance for herself and minor children for one year's support, and, in behalf of herself, minor children, and an adult unmarried daughter residing with the family, for an allowance in lieu of certain personal property exempted by the laws of Texas to a family, but not on hand at the time of the death of Frank Dobert.

'In addition to the foregoing, the following facts are pertinent to the disposition of said application: The partnership owns assets, but wholly insufficient to pay the partnership debts. Joseph Dobert has no individual estate, aside from exemptions. Frank Dobert left no individual estate except a homestead exempt by the laws of Texas, and certain of the personal property also exempted by the laws of Texas. Such exempt personal property as he did not own is of the reasonable value of $500. Frank Dobert at the time of his death left surviving him, as constituent members of and residing with the family, Albertina Dobert, his widow, and their four children: Frank, age 21 years on April 21, 1908 Will, 18 years old; Lillie, 16 years of age; and Bettie, age 24 years and single.

The widow, by the death of her husband, became entitled to $9,000 from life insurance, $3,000 of which has been collected at the time of filing of the application for allowances. At the hearing that part of the application praying for a year's support for the widow was abandoned.

'Will Dobert owns a wage priority claim against the bankrupt firm of $150, and an unsecured claim for $182.10. Otherwise the children own no individual property. Frank and Will Dobert had been clerking prior to the death of their father, and were emancipated from his control over their earnings. The sum of $25 per month for the support of Will Dobert, and $30 for Lillie Dobert, is a reasonable amount. Frank Dobert, it is agreed, is only entitled to support to the time of his majority on April 21, 1908; and $25 per month to that time is reasonable. The application prays for an allowance of $500 in lieu of exempt property, and for support as above indicated.

'The application for said allowances is based on section 8 of the bankruptcy act, which reads: 'The death or insanity of a bankrupt shall not abate the proceedings, but the same shall be conducted and concluded in the same manner, so far as possible, as though he had not died or become insane: Provided, that in case of death the widow and children shall be entitled to all rights of dower and allowance fixed by the laws of the state of the bankrupt's residence.' The probate laws of the state of Texas with reference to allowances require that the court shall fix an allowance for the support of the widow and minor children of the deceased of not exceeding $1,000, but in an amount sufficient for their maintenance for a term of one year from the time of the death of the testator of intestate (articles 2037, 2038, Rev. St Tex. 1895), and that it be paid in preference to all other debts or charges against the estate, except the funeral expenses and expenses of last sickness of deceased. * * * Article 2044, Rev. St. Tex. Under articles 2046 and 2047, Rev. St. Tex., it is the further duty of the court to set apart for the use and benefit of the widow and minor children and unmarried daughters remaining with the family of the deceased all such property of the estate as may be exempt from execution or forced sale, and to make a reasonable allowance in lieu of such of the specific articles so exempted which are not among the effects of the deceased.

'The estate of Frank Dobert has no assets out of which any of the statutory allowances above mentioned and now applied for might be made. The partnership of Frank Dobert & Son, bankrupts, owns a sufficiency of assets to pay the amounts prayed for, but only at the expense of, and to the serious detriment of the partnership creditors. The surviving partner, Joseph Dobert, bankrupt, agrees, by instrument filed, that the allowances may be made out of the firm assets.

'The only question to be determined is, whether or not the assets of the firm of Frank Dobert & Son, bankrupts, may be resorted to for the purpose of making the allowances in the application contended for. The statutes of the state of Texas are silent on the subject, and it does not appear that any judicial decision has ever directly settled the point involved, although it has been held that allowances must be raised solely from the estate of the decedent, and from no other estate. Hoffman v. Hoffman, 79 Tex. 189, 14 S.W. 915, 15 S.W. 471.

'The fundamental law, as recognized in Texas, concerning partnership property, and particularly its status at the time of the death of one of the partners, will indicate where the ownership of that property lies, and what rights, if any, the heirs or representatives of the deceased partner may assert against it. Bates on Partnership says: 'A partner has no specific interest in any particularly chattel or asset or part of the property of the firm; his only interest is in a proper proportion of the surplus of the whole after payment of debts, including the amounts due the other partners.' Bates, par. 180. ' The capital, in whatever shape contributed, becomes at once the property of the firm, and is no longer individual property.' Bates, par. 256. ' A partner owns the partnership property, and all of it, but subject to a like ownership on the part of all the other partners.' Bates, par. 274. This doctrine is recognized in Texas in the case of Moore v. Steele, 67 Tex. 435 (439) 3 S.W. 448; Warren v. Wallis, 38 Tex. 228. The individual exclusive dominion over property ceases on the formation by the owner of a partnership to which it is contributed, and each partner is then given the same right in and dominion over all the partnership property that the respective owners had prior to the time it became partnership property.

The notion of a partnership as a distinct entity clarifies the peculiar character of possession and ownership, as we readily understand from it that the original individual rights to property are yielded up to the new entity, the partnership. While the formation of a partnership creates the ownership and dominion as stated, yet during the life of all the partners the ownership of the property does not, under all circumstances, remain so inflexibly. The partnership exists under and by virtue of a contract, and such contract, like any other, may be changed, and property may be added to or taken away from the firm assets. To this inherent right of the partners inter sese we will refer again presently. When a partnership is dissolved by the death of a member, other distinct fundamental principles are, eo instante, brought into operation. As the original formation of a partnership is based on the delectus personarum, the law provides that on the death of one partner no heir or legal representative of the decedent shall take his place in the partnership, but the surviving partner for the purpose of winding up its affairs is at once vested fully and completely with the legal title and ownership of all the property theretofore owned by the partnership. The duty of the survivor is to take exclusive, sole possession of all the partnership property, to realize on it, and to apply its proceeds first to the payment of all partnership debts, and then to account to the representatives of the deceased partner for the share of the decedent in the net surplus of the property, based on the original net interests of the partners in the firm. The right of the survivor is to perform these obligations untrammeled by the interference of probate court, heirs or legal representatives. The only right of the heirs and legal representatives against the surviving partner is to have an accounting after the payment of all debts. The above propositions are those of the text-books, and are approved by the courts generally, including those of Texas. Bates on Partnership, par. 718-731; Woerner's American Law of Administration, par. 124; Rogers v. Flournoy, 21 Tex.Civ.App. 556, 54 S.W. 386; Akin v. Jefferson, 65 Tex. 137 (144); Crescent Insurance Co. v. Camp, 64 Tex. 521 (527, 528); Shields

v. Fuller, 4 Wis. 102, 65 Am.Dec.p. 293, and note on page 295; Bush v. Clark, 127 Mass. 111.

'Applying the foregoing to the case at bar: Joseph Dobert, as surviving partner, succeeded to the title and the possession of all the partnership property for the purpose of paying all partnership debts and accounting to the representatives of the deceased partner for the pro rata of the surplus, if any was due them. The assets as such, prior to the payment of debts and prior to the accounting, are no part of the estate of the decedent. Neither are claims for allowances in any sense debts against the firm. Consequently, no allowances can be made out of the partnership assets prior to...