Savings and Loan Corp. v. Bear

• Decision Date: 12 September 1930
• Citation: 155 Va. 312
• Court: Virginia Supreme Court
• Parties: SAVINGS AND LOAN CORPORATION v. E. S. BEAR.

Page 312

155 Va. 312

SAVINGS AND LOAN CORPORATION v. E. S. BEAR.

Supreme Court of Virginia, Staunton.

September 12, 1930.

Absent, Holt, Hudgins and Gregory, JJ.

1. JUDGMENT LIENS — Bankruptcy and Insolvency — Order of Priority of Judgment Liens. — Neither the bankrupt act (11 U.S.C.A.) nor section 4359(40), paragraph "i," Code of 1924, has the effect of nullifying or disturbing the order of priority of judgment liens against a partner acquired more than four months prior to the adjudication in bankruptcy.

2. PARTNERSHIP — Priorities between Partnership Creditors and Separate Creditors of Partners — Section 4359(40), Paragraph "h," Code of 1924. — Section 4359(40), paragraph "h," Code of 1924, makes statutory the long established rule in equity that when partnership property and the individual properties of the partners are in the possession of the court for distribution, partnership creditors have priority on partnership property and separate creditors priority on individual property; but it expressly saves to lien or secured creditors their rights "as heretofore," that is, as under the application of said rule in a court of equity independent of the statutory enactment thereof.

3. JUDGMENT LIENS — Statutory Lien — Section 6470 of the Code of 1919. — The lien upon real estate of a judgment is a statutory lien provided for by section 6470, Virginia Code 1919, which provides: "Every judgment for money granted in this State * * * shall be a lien on all the real estate of or to which the defendant in such judgment is or becomes possessed or entitled" on or after the date of such judgment, or such other time as the section fixes for the attachment of the lien.

4. JUDGMENT LIENS — Legal Lien. — A judgment creditor who comes into a court of equity to enforce his lien upon land is not asserting an equitable right or seeking equitable relief. His judgment is a legal lien.

5. PARTNERSHIP — Judgment against Partners on Partnership Debt — Lien against Partnership and Each Partner. — A joint judgment against partners on a partnership debt is a judgment against the partnership and each partner, and its lien, together with its order of priority as between it and other judgments, becomes fixed on partnership real estate and on the individual real estate of each judgment debtor when the judgment is rendered.

6. PARTNERSHIP — Administration of Partnership and Individual Assets — Enforcement of Legal Liens. — In the administration of partnership and individual assets equity follows the law and recognizes and enforces legal liens according to their priorities.

7. PARTNERSHIP — Joint Judgment against Partners on a Partnership Debt — Judgment Lien of Partner's Individual Real Estate. — A joint judgment against the several partners of a partnership on a partnership debt is a lien upon the partnership real estate and also upon the individual real estate of each of the partners. As to the individual real estate of each partner such partnership judgment has the same effect and priority as if such judgment were a judgment against that partner alone on his individual debt, and takes priority over subsequent judgments rendered on the individual debts of that partner.

8. PARTNERSHIP — Judgment against Individual Partner on Individual Obligation — Subordinate to Junior Judgments of Partnership Creditors. — In the absence of the interference of the recording acts or other statutory provisions, a judgment against an individual member of a partnership on an individual obligation is, as to partnership real estate, subordinate to junior judgments of partnership creditors. This is true whether the legal title to the partnership real estate be held in the partnership name, as it may be under the uniform partnership act (section 4359(8), Code, Va. 1924), or be vested in the partners jointly, or in the partner against whom the prior individual judgment was rendered.

9. PARTNERSHIP — Interest of Partner in Partnership Assets — Application of Assets to Payment of Partnership Debts. — At common law, as well as under the uniform partnership act (section 4359(36), Code, Va. 1924), the interest of a partner in the partnership assets, real and personal, is his share of the profits and surplus after the payment of all partnership debts, including those due to the other partners; and each partner is in equity and under the uniform partnership act entitled to have the partnership assets, real and personal applied primarily to the payment of partnership debts.

10. PARTNERSHIP — Legal Title of Partnership Property Vested in Partner — Partner Holds Title in Trust for Partnership. — Where the legal title to partnership real estate is vested in the individual partners, or in any of them, each partner holds the legal title vested in him in trust for the partnership, at least, so far as may be necessary to pay the partnership debts and adjust the equities between the partners; and this equity of each partner to have such land applied primarily to the payment of firm debts is superior to any lien individual judgments may have thereon, except where the recording acts or other statutory provisions intervene to prevent.

11. JUDGMENT LIENS — Reach Only to Interest of Judgment Debtor. — If the recording acts or other statutory provisions do not interfere, the lien of a judgment reaches only such right as the judgment debtor has in the property, subject to all equities against it; and the judgment creditor can never get by his judgment more than his debtor really owns.

12. PARTNERSHIP — Judgment Liens — Partnership Property Conveyed to the Partnership in the Partnership Name — Priority between a Judgment against an Individual Partner on an Individual Debt and a Judgment against the Partners on Partnership Debts. — Where partnership real estate has been conveyed to the partnership in the partnership name, or where it appears from a duly recorded deed conveying the property that it was conveyed to the partners jointly as partners, or to them jointly, or to any one of them, as partnership property, there is nothing in the recording acts to prevent the application of the general rule as to the priority of a judgment against the partnership and one against the individual on an individual debt; in such case a judgment against an individual partner on an individual debt is, as to the partnership real estate, subordinate to judgments against the partners on partnership debts subsequently rendered.

13. TRUSTS AND TRUSTEES — Resulting Trust — Bona Fide Creditors and Purchasers for Value — Application of Section 5192 of the Code of 1919 to Resulting Trusts. — Section 5192 of the Code of 1919 which provides that contracts, not in writing, in respect to real estate, shall be void as to bona fide purchasers, has no application to resulting trusts. Where one holds a legal title to real estate which is impressed in his hands with a resulting trust, such trust may be enforced and is good against his judgment creditors. A different rule prevails where it is sought to set up by parol a resulting trust against subsequent purchasers for value and without notice.

14. PARTNERSHIP — Resulting Trust — Realty Conveyed to Partners Jointly without Reference to the Partnership Relation — Priority between Judgments against Individual Partner and Judgments of Partnership Creditors. — Where real estate purchased with partnership funds for partnership purposes is conveyed to the partners jointly by a deed which makes no reference to the partnership relation, there at once arises a resulting trust that the title shall be held in trust for partnership purposes in so far, at least, as may be necessary to pay the partnership debts and to adjust the equities between the partners. Therefore, in such cases also the general rule, that a judgment against an individual partner on an individual obligation is, as to partnership real estate, subordinate to junior judgments of partnership creditors, applies.

15. PARTNERSHIP — Individual Judgment Lien Subordinate as to Partnership to Lien of a Junior Partnership Judgment — Postponement of Right of Partnership Judgment Creditor to Resort to Individual Real Estate. — In the absence of facts creating some independent equity, a junior individual judgment creditor may not in equity postpone the right of a senior partnership judgment creditor to resort to the individual real estate of a partner for the collection of his debt by compelling the partnership judgment creditor to resort first to the partnership real estate, before having recourse to the individual real estate.

16. PARTNERSHIP — Subrogation — Senior Partnership Judgment Paid Out of Individual Real Estate of Partner. — If a senior partnership judgment is paid out of the proceeds of the individual real estate of a partner, the individual judgment creditor is not entitled in equity to be given priority as to partnership real estate over subsequent partnership judgment creditors by being subrogated to the lien of the partnership judgment against partnership real estate.

17. MARSHALLING ASSETS AND SECURITIES — Duty of Senior Lien Creditor to Resort to Fund on which He Alone has a Lien — Creditors of Same Debtor — Property or Funds of Same Debtor — Judgment against Individual Partner and Judgment against Partnership. — In order for a creditor who has a lien upon one fund to be entitled to substitution to the rights of a creditor who has a lien upon that and another fund, it is a necessary condition, among other things, that both funds upon which the prior creditor's claim is secured should be the property of the same debtor, and this condition does not exist where the assets of a partnership constitute one of the funds and the individual property of a member of the partnership constitutes the other fund, unless that partner has in equity become entitled to the partnership assets and become primarily liable for the partnership debts.

18. PARTNERSHIP — Partner not Surety for Payment of...