Tracy v. Tuffly

• Citation: 10 S.Ct. 527,134 U.S. 206,33 L.Ed. 879
• Parties: TRACY et al. v. TUFFLY
• Decision Date: 03 March 1890
• Court: United States Supreme Court

10 S.Ct. 527

134 U.S. 206

33 L.Ed. 879

TRACY et al. v. TUFFLY.

March 3, 1890.

The principal questions in this case arise under the laws of Texas relating to limited partnerships, and to assignments for the benefit of creditors. Before examining those laws, the facts out of which this litigation arises will be stated.

Prior to March 26, 1884, R. W. McLin and W. T. Tuffly were partners doing business at Houston, Tex., under the name of R. W. McLin & Co. On that day McLin died, his widow and two minor children surviving him. No administration was had upon his estate. At the time of his death the firm was largely indebted to various individuals and partnerships. Among the latter were Morrison, Herriman & Co., Dunham, Buckley & Co., and W. H. Lyon & Co., who are plaintiffs in error. After consultation with the agent of many of the creditors,—the firms just named among the number,—the surviving partner and the widow determined to form a limited partnership under the name of 'W. T. Tuffly,' which should assume the debts of R. W. McLin & Co., in consideration of the release, by creditors of the old firm, of the estate of R. W. McLin from liability for their debts. From a trial balance of the accounts of the old firm which Tuffly caused to be made, it appeared that after the payment of its debts the share belonging to R. W. McLin's estate was $6,419.36. Mrs McLin having sold and transferred to Tuffly all the goods and merchandise belonging to the old firm, they executed the following certificate of the formation of a special partnership:

'State of Texas, County of Harris:

'We, W. T. Tuffly and Mrs. Christine E. McLin, hereby certify that we have formed a copartnership, under the firm name of W. T. Tuffly, under which firm name the business of such copartnership shall be conducted.

'The general nature of the business intended to be transacted is a general retail, and wholesale, if they see proper, fancy and staple dry-goods and notion establishment, in the city of Houston, Texas. W. T. Tuffly is and will be the general partner of such partnership, resident of the city of Houston, Texas; and Mrs. Christine E. McLin is and will be the special partner of such partnership, whose residence is also in said city of Houston, Texas.

'The said Mrs. Christine E. McLin has contributed the sum of six thousand four hundred and nineteen and 36-100 dollars to the common stock. The said partnership is to commence on the 16th day of April, 1884, and to continue for the space of two years, to end on the 16th day of April, 1886.

W. T. Tuffly.

'CHRISTINE E. McLin'

This certificate was duly acknowledged by Tuffly and Mrs. McLin on the day of its date, before a notary public of the county, who certified the fact under the seal of his office. And on the same day, as appears from the official certificate of that officer, W. T. Tuffly, as the general partner named in the certificate of partnership, certified, under oath, that Christine E. McLin, the special partner therein, 'has contributed to the common stock of said partnership the sum specified in said certificate, and the said sum has in good faith actually been paid in cash.' The record also contains the certificate of the county clerk, under the seal of his office, to the effect that the certificate of partnership, with the certificate of its authentication, was filed for registration in his office on the 25th day of April, 1884, and was duly recorded on the 26th day of May of the same year.

In conformity with the direction of the clerk of the county court, the following notice was published in a designated newspaper for six successive weeks from April 26, 1884: 'The undersigned give notice that they have formed a copartnership under the firm name of W. T. Tuffly, having the following terms, as will appear by their executed and recorded certificate: W. T. Tuffly is the general partner. Mrs. Christine E. McLin is the special partner, and has contributed to the common stock the sum of six thousand four hundred and nineteen 36-100 dollars. W. T. TUFFLY. CHRISTINE E. MCLIN.'

On the day of the formation of this partnership, April 24, 1884, numerous creditors of R. W. McLin & Co.—among the number, Morrison, herriman & Co., Dunham, Buckley & Co., W. H. Lyons & Co. executed cuted a written release in these words: 'The undersigned creditors of the late firm of R. W. McLin & Company, in consideration of the assumption of all the indebtedness of said late firm by the firm of W. T. Tuffly, composed of W. T. Tuffly, general, and Christne E. McLin, special, partner, as appears by the certificates by them signed, hereby release the estate of R. W. McLin, deceased, from any and all liability on account of the obligations of said firm of R. W. McLin & Co., either by note or open account or otherwise.'

W. T. Tuffly entered upon the business contemplated by the partnership between himself, as general partner, and Mrs. McLin, as special partner, and continued in its prosecution until the 23d of March, 1885, when he executed a writing of assignment, upon the construction and legal effect of which the decision of some of the questions in this case depends. It is in these words:

'State of Texas, County of Harris:

'Whereas the firm of W. T. Tuffly, composed of W. T. Tuffly, the general partner, and C. E. McLin, as special partner, finding it impossible to pay its debts as they mature, and being desirous to have a distribution of all the property of said firm and the property of the said W. T. Tuffly, partnership and individual, and wishing to avail himself of the provisions of the general assignment law in such cases made and provided: Now, therefore, in consideration of the premises, and one dollar to me in hand paid, I. W. T. Tuffly, hereby assign and convey and deliver possession of all and singular my property and effects, of whatever name and nature, both personal and real, which I own as copartner and individually, and intend to include all property of which or in which I have any interest whatever, wherever the same may be, to Louis Tuffly, as assignee, for the purposes aforesaid, taking possession of the same and sell the same, collect and convert the same, and when so sold, collected, and converted, to appropriate the same ratably, or in full payment, as the case may be of all my debts, and the debts of the firm of W. T. Tuffly; said assignee to proceed under the law aforesaid. This assignment is intended for the benefit of all such of my creditors only as will consent to accept their proportional share of said property and estate so hereby conveyed, and discharge me, as aforesaid, from their respective claims; said assignee to take lawful compensation for his services herein, and expenses and counsel fees, necessary to aid him and enable him to carry out the purposes of this conveyance.

'Schedules are hereto attached, and made as particular as I can do at this time; but, in any particular where they may be incorrect or insufficient in detail, they will be corrected by me.

'In witness whereof, I hereunto set my hand, at Houston, this March 23d, 1885.

'W. T. TUFFLY.'

That deed of assignment was duly acknowledged, and to it were attached exhibits duly verified by the oath of W. T. Tuffly. These exhibits consisted of an inventory of the estate assigned and a schedule of the debts. In the latter appears a claim of Mrs. McLin of '$7,798, notes, borrowed money' Louis Tuffly, the assignee, indorsed his acceptance of the trust on the back of the deed, and gave bond as assignee, which was approved by the judge of the eleventh judicial district of Texas, March 23, 1885, on which day the deed of assignment and bond were filed for record in the proper office. The assignee took immediate possession of the stock of goods, wares, and merchandise belonging to the firm of W. T. Tuffly; also, of the furniture, shelves, counters, and stationery in the store-house. The assignment was accepted by creditors, exculuding Mrs. McLin, whose debts aggregated $7,116.26. It was not accepted by Morrison, Herriman & Co., Dunham, Buckley & Co., or W. H. Lyon & Co. The assignee remained in possession of the property until March 31, 1885, on which day, under attachments sued out from the circuit court of the United States for the eastern district of Texas by the three firms just named, against the property of W. T. Tuffly, they were levied upon and taken by Tracy, marshal of the United States for that district. The latter refused to make a levy, and did not levy, until indemnifying bonds were executed in behalf of the attaching creditors; the latter knowing, when they sued out the attachments, that the property was in the possession of the defendant in error in virtue of the above deed of assignment.

Under the order of the court, the attached property was sold, and the proceeds of sale were brought into court, and paid into its registry.

The present suit was brought by the assignee, in one of the courts of the state of Texas, against the marshal and the sureties on his official bond; the breach alleged being the illegal and wrongful seizure of the property in question, which was alleged to be of the value of $29,972.22. It was removed, upon the petition of the defendants, into the court below, upon the ground that their defense arose under, and involved the construction of, the constitution and laws of the United States. Bachrack v. Norton, 132 U. S. 337, ante, 106. The plaintiffs in the attachment suits were upon their motion made parties dee ndant, as were also the various parties who executed indemnifying bounds to the marshal.

The result of a trial before a jury was a verdict and judgment for $17,000 against Tracy and the sureties on his official bond, and against the attaching creditors. There was also a verdict and judgment in favor of Tracy upon the several in- demnifying bonds given to him by those creditors, for the following amounts: $2,500 against Dunham, Buckley & Co., and their sureties; $2,600...