In re Fackelman

• Decision Date: 18 February 1918
• Docket Number: 2755.
• Citation: 248 F. 565
• Court: U.S. District Court — Southern District of California
• Parties: In re FACKELMAN.

248 F. 565

In re FACKELMAN.

No. 2755.

United States District Court, S.D. California, Southern Division.

February 18, 1918

Jas. G Pfanstiel, of San Diego, Cal., and Harry Archbald, of Los Angeles, Cal., for petitioning creditors.

F.L Richardson, of San Diego, Cal., for respondent.

BLEDSOE District Judge (after stating the facts as above).

The case is before the court on exceptions to the findings and conclusions of the special master to the effect that Fackelman, as surviving partner of Pomeroy & Fackelman, a copartnership, and individually, is and should be adjudged a bankrupt, and also on motion to dismiss the proceedings on the ground that the court is without jurisdiction to entertain the same, because Fackelman has not had his principal place of business, resided, or had his domicile within the territorial jurisdiction of the court for the greater portion of six months next preceding the filing of the petition, as required by Bankruptcy Act, § 2.

Under the law, there seems to be no doubt but that a member of a partnership may, in good faith, and for a valuable consideration, sell and transfer his interest in the partnership to a copartner. The insolvency of the partnership does not work a denial of this right. 30 Cyc. 540; Sargent v. Blake, 160 F. 57, 87 C.C.A. 213, 17 L.R.A.(N.S.) (N.S.) 1040, 15 Ann.Cas. 58; Mechem. Elements of Partnership § 298; Remington on Bankruptcy, § 2269. If such sale be to a sole copartner, the partnership is thereby dissolved, and, though the partnership creditors may not thereby be deprived of their right to proceed against either member of the previous copartnership, yet they proceed against them individually, and not in any sense as co-partners.

The rule of administration (Sargent v. Blake, supra) requiring the partnership property to be applied in satisfaction of the partnership debts in preference to the individual debts of the respective partners depends, however, upon the partnership being maintained intact; but "if, before the interposition of the court is asked, the property has ceased to belong to the partnership, if by a bona fide transfer it has become the several property either of one partner or of a third person, the equities of the partners are extinguished, and consequently the derivative equities of the creditors are at an end. It is therefore always essential to any preferential right of the creditors that there shall be property owned by the partnership when the claim for preference is sought to be enforced. * * * The joint estate is converted into the separate estate of the assignee by force of the contract of assignment." Case v. Beauregard, 99 U.S. 119, 125, 25 L.Ed. 370. In Fitzpatrick v. Flannagan, 106 U.S. 648, 655, 1 Sup.Ct. 369, page 375 (27 L.Ed. 211), in speaking of the case just cited, the court said:

"In that case it was held, in respect to a firm admitted to be insolvent, that transfers made by the individual partners of their interest in the partnership property converted that property into individual property, terminated the equity of any partner to require the application thereof to the payment of the joint debts, and constituted a bar to a bill in equity filed by a partnership creditor to subject it to the payment of his debt; the relief prayed for being grounded on the claim that these transfers

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