Int'l Trust Co. v. Myers
Decision Date | 17 April 1925 |
Citation | 147 N.E. 591,252 Mass. 94 |
Parties | INTERNATIONAL TRUST CO. v. MYERS et al. |
Court | United States State Supreme Judicial Court of Massachusetts Supreme Court |
OPINION TEXT STARTS HERE
Appeal from Superior Court, Suffolk County; Marcus Morton, Judge.
Suit by the International Trust Company against Samuel A. Myers, Harry Myers, and S. A. & H. Myers, a partnership. From a decree of dismissal, plaintiff appeals. Reversed, and decree ordered entered for plaintiff.
J. R. Lazenby, of New York City, for appellant.
E. F. McClennen, of Boston (W. W. Johnson, of Boston, on the brief), for appellees.
This is an appeal from a final decree April 17, 1925, dismissing the plaintiff's bill to reach and apply the interest of S. A. Myers and Harry Myers in the partnership of S. A. & H. Myers to the payment of indebtedness arising out of their individual indorsements of a series of promissory notes. The defendants carried on business under the name of S. A. & H. Myers. The partnership gave 10 notes for $2,000 each, for money borrowed from the plaintiff; 10 of the notes were indorsed by Samuel A. Myers and 9 by Harry Myers.
On January 27, 1917, an involuntary petition in bankruptcy was filed in the United States District Court for the District of Massachusetts. The petition alleged that:
‘Samuel A. Myers and Harry Myers, both of Brookline in the county of Norfolk, copartners trading as S. A. & H. Myers, have for the greater portion of six months next preceding the date of filing this petition had their principal place of business at Boston, * * * and owe debts to the amount of $1,000;’ ‘that said Samuel A. & Harry Myers are insolvent,’ and had committed an act of bankruptcy.
The prayer of the petition was:
‘Wherefore your petitioners pray that service
‘Samuel A. Myers, of Boston, and Harry Myers, made upon Samuel A. & H. Myers, as provided, * * * and that he may be adjudged by the court to be a bankrupt within the purview of said acts.’
Schedules were sworn to and filed on February 10, 1917. The set filed is designated ‘Partnership Schedules.’ The schedule sets out that:
‘8samuel A. Myers, of Boston, and Harry Myers, of Brookline, respectfully represent: That they [are in the] clothing business; * * * have been partners under for firm name of S. A. & H. Myers, having their principal place of business at Boston * * * for the greater portion of the six months next immediately preceding the filing of this petition; that the said partners owe debts which they are unable to pay in full.’
They alleged that Schedule A contained ‘a full and true statement of all the debts of said partners'; that Schedule B contained ‘an accurate inventory of all the property * * * of said partners.’ The paragraph relating to Schedules C, D, E, and F, in which were to be set out the individual debts and assets, were stricken out, and each individual substituted the statement:
‘That he has no individual debts and no individual assets except household furniture and wearing apparel to the value of $300, claimed to be exempt under Revised Laws of Massachusetts, chapter 177, section 24.’
In Schedule A of the firm debts, the International Trust Company appears as a creditor for $20,000. But the trust company does not appear in any schedule as a creditor on account of the indorsements of each of the individuals.
On February 10, 1917, there was filed a petition for a meeting of creditors to consider an offer in composition of forty per cent. upon all unsecured debts. This petition was ‘In the Matter of Samuel A. Myers and Harry Myers,’ and was signed by Samuel A. Myers and Harry Myers. On March 3, 1917, an offer in composition was filed ‘in the Matter of Samuel A. & Harry Myers.’ The offer was addressed to the court and reads:
‘Respectfully represents Samuel A. Myers, of Boston, in the county of Suffolk, in said district, and Harry Myers, of Brookline, in the county of Norfolk, and district aforesaid.’
This offer alleged, among other things:
‘That they have filed in court a schedule of their property and a list of creditors to be filed by bankrupts, and that they now offer the following terms of composition before adjudication to creditors.’
On March 23, 1917, they applied for confirmation of the composition and alleged that they ‘have filed in court a schedule of their property and a list of their creditors, as required by law; they offered terms of composition to their creditors.’ On May 28, 1917, the composition was confirmed.
There was no adjudication of bankruptcy; the plaintiff proved the notes against the partnership for $20,000 and received the payment in composition. No payments were received on account of the individual indorsements on the notes. The indorsements on the notes by Samuel A. Myers and Harry Myers, created individual obligations, separate and distinct from the firm obligations. Fourth National Bank v. Mead, 216 Mass. 521, 523, 524, 104 N. E. 377, 378 (52 L. R. A. [N. S.] 225). See now the Uniform Partnership Act, St. 1922, c. 486, § 15:
‘Any partner may enter into a separate obligation to perform a partnership contract.’
The involuntary petition represented that the defendants, as copartners under the name of S. A. & H. Myers, were insolvent. It bore the indorsement, ‘S. A. & H. Myers, Debtors.’ The schedule filed by the defendants set out partnership assets and partnership debts. The individual liability upon which the action is predicted was not mentioned in the schedules or the composition as approved by the court.
In our opinion it cannot be said that because the offer was signed Samuel A. Myers and Harry Myers, and the confirmation of the compromise concerned ‘the matter of Samuel A. Myers and Harry Myers,’ it therefore affected the defendants' liability for their individual debts. Not only was the petition against the defendants as copartners ‘trading as S. A. & H. Myers,’ having the ‘principal place of business at Boston,’ but the only assets and debts listed in the schedule are those of the firm. They swore they had no individual debts or assets; the partnership schedules stating that the debtors named in the ‘foregoing petition’ make oath that the statements therein were true. The indorsement on the schedule reads:
‘Debtors' Schedules-Samuel A. Myers and Harry Myers, as S. A. & H. Myers.’
The offer in composition incorporated the schedule of creditors, and it was to those creditors who were listed in the schedule-that is, the partnership creditors-to whom the offer was made. The defendants made no offer of compromise to individual creditors, or to any creditors except those whose names were upon the schedule. The confirmation of the composition was based on the schedule of creditors filed.
A composition partakes of the nature of a contract. Cumberland Glass Manuf. Co. v. De Witt, 237 U. S. 447, 453, 35 S. Ct. 636, 59 L. Ed. 1042, citing In re Lane (D. C.) 125 F. 772, 773;Nassau Works v. Brightwood Co., 265 U. S. 269, 44 S. Ct. 506, 68 L. Ed. 1013;In re Adler (D. C.) 103 F. 444. ‘A law which compels a creditor, against his will, to accept in discharge of his debt just what the debtor sees fit to offer, should be strictly construed.’ In re Rider (D. C.) 96 F. 808, 809, 810. See In re Kinnane Co. (D. C.) 221 F. 762, 766;In re Goldstein (D. C.) 213 F. 115, 116. Under the Bankruptcy Act of 1874 (18 Stat. 178), it was decided by this court that:
‘A creditor, whose name or the amount of whose debt is not truly stated in the debtor's schedule, is not affected or prejudiced by the composition.’ Stone v. Simonds, 131 Mass. 457, 462.
See Hewes v. Rand, 129 Mass. 519; Exparte Trafton, 2 Lowell, 505, 506, Fed. Cas. No. 14,133.
If the composition was in the nature of a contract, the plaintiff was a party to it only to the extent in which its claim against the partnership was...
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