Roop v. Herron

• Decision Date: 13 November 1883
• Parties: JOSIAH ROOP, PLAINTIFF IN ERROR, v. NATHANIEL HERRON, DEFENDANT IN ERROR
• Court: Nebraska Supreme Court

17 N.W. 353

15 Neb. 73

JOSIAH ROOP, PLAINTIFF IN ERROR, v. NATHANIEL HERRON, DEFENDANT IN ERROR

Supreme Court of Nebraska

November 13, 1883

ERROR to the district court of Gage county. Tried below before WEAVER, J. The opinion states the case.

AFFIRMED.

J. E Bush, for plaintiff in error.

1. Partnership property is liable for partnership debts before a dissolution of partnership, but after a dissolution of the partnership and a transfer of the property by the firm either to a co-partner or to any other person, the creditors of the partnership lose that lien the law gives them upon a partnership property. Wilson v. Kellogg, 11 Ohio 394. Smith v. Howard, 20 Howard's Pr. Rep., 121. Hapsgood v. Cromwell et al., 48 Ill. 64.

2. When a bona fide sale is made of the property of a firm by the members, before any proceedings either in law or equity are instituted by the creditors of the firm, such creditors cannot by any subsequent proceedings acquire a lien upon the property when disposed of. Gwin v. Selby, 5 Ohio St. 97.

3. As the ordinary creditors of an individual have no lien on his property and cannot prevent him from disposing of it as he pleases, so the ordinary creditors of a firm have no lien on the property of the firm so as to be able to prevent it from parting with that property to whomsoever it chose. 2 Lindley on Part., 654, and cases cited.

4. A transfer by a firm to one partner bona fide and by him to a third person in a like manner for a valuable consideration passes both the legal and the equitable title to the property against the creditors of the firm. Belknap v. Cram, 11 Ohio 412.

5. When one of two partners retires from business, relinquishing to the other all his interest in the partnership property, the remaining partner acquires the same dominion as if it had ever been his own separate property. Smith v Howard, 20 How. Pr., 121. Story on Part., § 358. Hollis v. Staley, 59 Tenn. 167.

L. M. Pemberton, for defendant in error.

1. The insolvency of the partnership changes the rule contended for by plaintiff. Till's Case, 3 Neb. 261. Phelps v. McNeely, 66 Mo. 554; S. C. 27 Am. Rep., 378. Tenny v. Johnson, 43 N.H. 144. Deveau v. Fowler, 2 Paige, 400. Topliff v. Vail, Harrington Ch. (Mich.), 340. Menash v. Whitewell, 52 N.Y. 146. Conroy v. Woods, 13 Cal. 626. In re Cook, 3 Biss., 122. Ransom v. Van Deventer, 41 Barb., 307. Black v. Bush, 7 B. Mon., 210. Collins v. Hood, 4 McLean, 186. Hubbard v. Curtis, 8 Iowa 1.

2. All debts due from the joint fund must first be discharged before any partner can appropriate any part of it to his own use, or to pay any of his private debts, and a creditor of one of the partners cannot claim any interest but such as belongs to his debtor, whether his claim be founded on a contract with a debtor, or on a seizure of the goods on execution or attachment. 2 Lindley on Part., 1055, note 2, and cases there cited. Pars. on Part., 353. Bowen v. Billings, 13 Neb. 443. In case at bar, the firm being insolvent, Jones had no interest in the firm property that he could turn over to pay his private debts.

OPINION

MAXWELL, J.

This is an action of replevin brought by the plaintiff against the defendant to recover certain goods levied upon by the defendant, as sheriff, under an order of attachment. On the trial of the cause the court found in favor of the defendant. This cause is submitted upon the following stipulation: "It is hereby stipulated and agreed between the parties to this action that the following is a true statement of the facts:

"1st. That from January, 1882, John P. H. Jones and Omar DeLand were partners, doing business at Blue Springs, Gage county, Nebraska, under the firm name of Jones & DeLand.

"2d. That on the 25th day of March, 1882, said partnership of Jones & DeLand was dissolved by mutual consent, notice by publication in the Blue Springs Motor of said dissolution was given. Said Omar DeLand retired from said firm, and said John P. H. Jones continued the business in his own name, and kept all the goods belonging to said firm and agreed with the said DeLand to pay all the debts contracted by said firm.

"3d. At the time of dissolution of said firm of Jones & DeLand, and at the time of contracting the debts to and buying the goods of King Bros. & Co., and borrowing the $ 250 from plaintiff as hereinafter stated, said firm of Jones & DeLand was insolvent.

"4th. All the goods and property claimed by plaintiff in this action were purchased by said firm of Jones & DeLand in January, February, and March, 1882, from said King Bros. & Co., of Chicago, Ill. and from other creditors, and none of said goods have been paid for, and that they are all a part of the partnership goods received by said Jones from said firm of Jones & DeLand at the dissolution of said firm, and all of said goods were obtained from said King Bros. & Co., who were induced to sell said goods to said Jones & DeLand through fraudulent representations as to the amount of property owned by said firm of Jones & DeLand, and said false representations were made by said Jones for the purpose of obtaining said goods now claimed by plaintiff in this action, but this plaintiff knew nothing about said fraudulent representation.

"5th. The goods claimed by plaintiff in this action are held by the defendant, who is sheriff of said county, under and by virtue of an order of attachment issued out of the district court of Gage county, Nebraska, and levied by said defendant sheriff on said goods, at the suit of King Bros. & Co., which suit is brought in the individual names of members of said firm against John P. H. Jones and Omar DeLand, and all the property claimed by plaintiff except the tea, tea caddies, and the boots were purchased on or about March 1st, 1882, by said firm of Jones & DeLand from said firm of King Bros. & Co., and firm of Jones & DeLand is indebted to said firm of King Bros. & Co. in the sum of $ 801 for goods purchased by them of the said firm of King Bros. & Co. on or about March 1st, 1882, to obtain pay for which said attachment suit is brought.

"6th. Said John P. H. Jones, during the continuance of the partnership of said Jones & DeLand, to-wit, in the month of February, 1882, borrowed $ 250 from plaintiff, who took the individual note of said Jones for said debt. Said money was not used for the benefit of said firm of Jones & DeLand, but for the sole benefit of said Jones.

"7th. On or about the 4th day of April, 1882, after one of the creditors of said firm of Jones & DeLand had, with the plaintiff's knowledge and consent, taken possession of the goods sold by them to said firm of Jones & DeLand, in satisfaction of the purchase price of said goods, said John P. H. Jones, successor of said firm of Jones & DeLand, delivered to plaintiff in this action the goods claimed by plaintiff herein before they were attached by defendant sheriff at the suit of King Bros. & Co. in full settlement of plaintiff's claim of $ 250, and said plaintiff has no list of said property except that copied by him from officer's return in said suit.

"8th. The property so delivered to plaintiff by said John P. H. Jones, and herein claimed by plaintiff, is worth $ 493.95, invoiced at the cost price of said goods, without cost of carriage, and plaintiff herein, at the time said goods were delivered to him by said John P. H. Jones, knew that said goods formerly belonged to said firm of Jones & DeLand, and that said firm, and each of the members thereof, was insolvent. That some of the grounds for attachment alleged in the affidavit on which said order of attachment issued are true."

It will be seen from the admitted facts that Roop received this partnership property to the amount of nearly twice his claim, he at the time knowing it to be partnership property, and that the firm was insolvent. He was not therefore a bona fide purchaser.

The question here presented was before the court in Till's Case, 3 Neb. 261. In that case a firm doing business as William Till & Co. dissolved partnership and divided the assets of the firm...