Hart v. Hiatt

Townsend, J. The appellant (plaintiff below) has assigned six specifications of error. The first error assigned is that the court erred in sustaining appellees’ (defendant below) exceptions to the third, fourth, fifth, sixth, seventh, eighth, and ninth findings of the commissioner. The second, third, fourth, and fifth assignments of error are the alleged error of the court in refusing to make findings of fact in writing, separateifrom his conclusions of law; refusing to make declaration in the case, and to reduce his conclusions of law to writing, separate and apart from his conclusions of fact; refusing to make finding of fact as requested by appellant in two interrogatories propounded to the court; and refusing to make declarations of law on six propositions requested by appellant. The sixth assignment of error is that “the court erred in holding that the undivided one-third of the wheat in question could be claimed as exempt. ’ ’ The evidence in the case has not been brought up by the bill of exceptions, and all we can know about that evidence is what the commissioner has set out in his report. There is no exception filed to either the first or second findings of the commissioner; hence we are to presume that they are admitted to be a correct statement of the facts. They are as follows: “First. That W. F. Hiatt, E. Z. Hiatt, and Arthur Hiatt had been for several years, prior to the levy of attachment in these cases, engaged in the business of raising wheat, and contributing to the business, and sharing the losses arid profits and that the same relation between them existed at the time the attachment went into the hands of the marshal, and were levied. Second. I find that the property levied upon by the marshal in these cases — 253 — was property which had been contributed by one or the other of W. F. Hiatt, E. Z. Hiatt, and Arthur Hiatt, to the joint enterprise they were engaged in at the time they so engaged in it, or that it was the increase or product thereof, and particularly that the crop of wheat levied upon was the result of such joint enterprise. ” The first exception sustained by the court is to the third finding of the commissioner, which is as follows: “Third. 1 find that there was a partnership existing of which W. F. Hiatt and E. Z. Hiatt were members, each having an equal one-third interest in such partnership,” Was this a correct finding, under the admitted facts, set out in the first and second findings of the commissioner? ‘ ‘Whether an agreement creates a partnership or not depends on the real intention of the parties to it. * * * But an agreement to share profits and losses may be said to be a type <?f a partnership contract. Whatever difference of opinion there may be as to other matters, persons engaged in any trade, business, or adventure, upon the terms of sharing the profits and losses arising therefrom, are necessarily to some extent partners in that trade, business or adventure; nor is the writer aware of any case in which persons who have agreed to share profits and losses have been held not to be partners. ” 1 Lindl. Partn. pp. 9, 10. ‘ ‘The most unmistakable, and perhaps the most common, form of partnership, is where two or more persons agree to contribute both capital and labor, and to share in both profit and loss, equally or in certain specified proportions. Such an agreement being executed, there can be no question as to the existence of a complete partnership.” T. Pars. Partn. (4th Ed.) § 65. ‘ ‘It is not requisite to the constitution of a strict partnership that each partner should, as between themselves, be liable to share indefinitely in the losses of the concern. It is sufficient if they are to share in the profits and in the losses so far as they effect the capital advanced. Nor is it — 254 — necessary that the partners should be proportionate joint owners of the capital. It is enough that they are jointly interested in the profits and losses.” 1 Colly. Partn. § 45. The foregoing text writers seem to concur that the sharing of profits and looses constitutes a partnership, and this is what the commissioner found in this case. It is probable that the true test of a partnership is the intention of the parties. As between themselves, this is unquestionably the case. In the case at bar we have no information as to their intention, except what may be found in the findings of the commissioner. The appellees say in their brief that the court found that appellees were tenants in common, but the record does not show what view the court took of that question. We are of the opinion that the exception to the third finding of the commissioner should have been overruled. The next important question in this case, in our view of it, is raised by the ruling of the court in sustaining appellees’ exception to the fourth finding of the commissioner. Can a partner have exemption out of partnership assets when the same is levied upon under legal process? A learned author, after discussing this question and the decisions of different courts, says: “But it will not be necessary to enlarge this discussion — First. Because the subject has been gone over in the preceding subdivisions; and, second, because the courts have, by a very decided weight of authority, settled the doctrine that those statutes do not contemplate the setting apart of exempt property out of partnership assets. ’ ’ Thomp. Homest. & Exemp. § 194. Another author says: “There are cases recognizing the exemption of partnership property, but ordinarily the statutes favor the individual representing a family, or the follower of an avocation; and the general rule is that partnership property is not exempt when not expressly made so. * * * The question has been much discussed, but it — 255 — seems clear that a partner cannot claim as exempt to him property which he does not own. The firm is an artificial person, of which he is a part; but its property is not his. Therefore there must be statutory authorization before he can rightfully claim any portion of the partnership property, other than such authorization, as that which exempts certain property to individual debtor-owners.” Wap. Homest. p. 904. “It does not appear that, at the time of the attachment, the plaintiffs had dissolved partnership, or had divided their joint property, or had a general settlement and winding up of their business. We agree with the plaintiffs’ counsel that the statute is humane and beneficial in its purpose and operation, and fairly entitled to as liberal a construction as can be given it, consistently with its true and just interpretation. There are many difficulties, however, in the way of applying it to the case of co-partners and joint owners, and these difficulties we find to be insuperable. Property purchased with the joint funds of the firm, and constituting a portion of its capital, must necessarily be subject to all the incidents of partnership property. On the decease of one member of the firm, it would go to the surviving member, and he would have a right to hold it, to be used in settling the affairs of the concern, and paying its debts. In the case of numerous partners, can it be said that each would have the right to claim, as exempt from attachment for the joint debts, one hundred dollars’ worth of tools and implements and another hundred dollars’ worth of materials and stock; or is the whole firm to be considered as one debtor only? Does the exempted property in that case belong to the partners jointly, or does each take a separate share? It appears to us that the statute is intended to apply only to the case of a single and individual debtor, The exemption which it gives is strictly personal. The statute speaks in the singular number throughout, unless possibly the clause as to fishermen (Gen. St. c. 133, § 32, cl. 9) be an — 256 — exception. Its apparent object is to secure to the debtor the means of supporting himself and his family, by following his trade or handicraft with tools belonging to himself. It also provides that his family are to be secured in the enjoyment of certain indispensable comforts and necessaries, out of his property. But property belonging to the firm cannot be said to belong to either partner as his separate property. He has no exclusive interest in it. It belongs as much to his partner as it does to him, and cannot in a whole or in part be appropriated (so long as it remains undivided) to the benefit of his family. It may be wholly contingent and uncertain whether any of it will belong to him on the winding up of the business and the settlement of his account with the firm. The exemption, in our opinion, is several, and not joint. It- applies to the debtor in the singular number, and is personal and individual only.” Pond vs Kimball, 101 Mass, 106. In Thurlow vs Warren, 82 Me. 164, the agreed state of facts was as follows: It appeared that, at.the time the plaintiffs were adjudged insolvents, they were the sole owners, in their co-partnership capacity, of a pair of oxen; that they were the owners of no other oxen, either as co-partners or as individuals; and that they subsequently re-plevied them from their assignee, the defendant, to whom the oxen had been delivered by the messenger of the court of insolvency. It was agreed that, if judgment should be for the plaintiffs, they were to recover nominal damages, with full costs, and, if for defendant, he was to - have judgment for two hundred dollars, with interest and full costs.” The court say that, “although in some jurisdictions the contrary view is taken, still the great weight of deliberate and well-considered cases hold that individual, and not partnership, property is exempt,” — citing Pond vs Kimball, supra; Bonsall vs Comly, 44 Pa. St. 442; Guptil vs McFee, 9 Kan. 30; In re Handlin, 3 Dill, 290, Fed. Cas. No. 6,018. The latter case arose under the bankrupt act (sections 14 and 36), — 257 — and constitution of the state of Arkansas of 1868 (article 12 § 1): “Bankrupts who are co-partners are not entitled to separate or individual exemptions out of the partnership effects.” Under the exemption laws of Arkansas as they existed in 1871, $2,000 was exempt to “any resident” of the state from execution or other final process. The partners, Handlin and Venny, claimed the amount of their individual schedules, and, in addition, a sufficient amount of the partnership assets to give each $2,000. The assignee refused the exemption out of the partnership assets. On appeal to the district court the assignee was reversed, and it was appealed to the United States circuit court, before Judge Dillon, and the court says: ‘ ‘The general principles of the law are against the allowance of ths exemption claimed. Where, as in this case, the partnership and all its members are declared bankrupt, the firm is treated as being dead, except to close up its affairs. There is no exemption to the firm as such; nor is.it contended that there can be. But each of the partners claims an individual exemption to the amount of two thousand dollars out of the firm property, and at the expense of the firm creditors; and, if the claim is valid, it would be equally so if there were six partners, instead of two. It is a claim not depending upon the amount of capital which the partner making the claim contributed to the firm, nor upon the state of the accounts between him and his co-partners. He may never have put a dollar of capital into the firm or he may have drawn out all of his.capital and owe the firm, and yet it is insisted that, not only as against his co-partners,but as against the creditors of the firm, he may in default of not possessing individual estate, lay his hands upon two thousand dollars of the joint estate, and appropriate it as exempt. This, I am sure, he could not do before bankruptcy without his co-partner’s consent; and after the bankruptcy the co-partner is incapable of giving any consent to affect rights fixed by that event. The pretension set — 258 — up in this case, whether considered with reference to the rights of co-partners or the rights of the firm creditors, cannot be maintained. The case might be different as to mere ownership where no partnership relation existed, but it is not neccessary to consider this point. While the adjudged cases relating to the question under consideration are not uniform, a careful examination of all of them justifies me in saying that they are.quite decisively against the proposition that individual exemptions can be allowed out of the partnership estate, at the expense of the joint creditors. Pond vs Kimball, 101 Mass. 105; Guptil vs McFee, 9 Kan. 80, a well-considered case, following Pond vs Kimball, and disapproving Stewart vs Brown, 37 N. Y. 350; Burns vs Harris, 67 N. C. 140; Bonsall vs Comly, 44 Pa. St. 442, 447; In re Blodgett, 10 N. B. R. 145, Fed. Cas. No. 1,555; In re Hafer, 1 N. B. R. 547, Fed. Cas. No. 5,896; Amphlett vs Hibbard, 29 Mich. 298; In re Price, 6 N. B. R. 400, Fed. Cas. No. 11,410; Wright vs Pratt, 31 Wis. 99. Contra: In re Young, 3 N. B. R. 440, Fed. Cas. No. 18,148; In re Rupp 4 N. B. R. 95, Fed. Cas. No. 12,141; Stewart vs Brown, 37 N. Y. 350; Radcliff vs Wood, 25 Barb. 52; In re McKercher, 8 N. B. R. 499.” In Richardson vs Adler, 46 Ark. 48, the court say: “The members of an insolvent firm are not entitled to the exemptions, allowed by law, out of the partnership property after it has been seized to satisfy the demands of creditors of the firm. This proposition is well settled both upon reason and authority. The interest of each partner in the partnership assets is his portion of the residum after all the liabilities of the firm are liquidated and discharged. Property belonging to the firm cannot be said to belong to either partner as his separate property. It is contingent and uncertain whether any of it will belong to him on the winding up of the business and the settlement of his accounts with the firm. ‘Joint property is deemed a trust fund, primarily to be applied to the discharge of partner — 259 — ship debts, against all persons not having a higher equity. A long series of authorities has established this equity of the joint creditors, to be worked out through the medium of the partners, that is to say, the partners have a right, inter sese, to have the partnership property first applied to the discharge of the partnership debts, and no partner has any right, except to his own share of the residue; and the joint creditors are, in case of insolvency, substituted in equity to the rights of the partners as being the ultimate cestuis que trustent of the fund to the extent of the joint debts.” an! partnership propert From quite an extensive examination of the authorities, we are of the opinion that partnership assets are not exempt to the individual partners and that the exception to fourth finding of the commissioner should have been overruled. The view we take of this case makes it necessary to discuss the other assignments of error filed by appellant. The appellees suggest that the appeal in this case was premature. The first, second and third subheads of section 1265, Mansf. Dig., are as follows: “First. In a judgment in an action commenced in the inferior courts, and, upon the appeal from such judgment, to interview any intermediate order involving the merits and necessarily affecting the judgment. Second. In au order affecting a substantial right made in such action, when such order in effect determines the action, and prevents a judgment from which an appeal might be taken, or discontinues the action; and when such order grants or refuses a new trial, or when such order strikes out an answer, or any part of an answer, or¿any pleading in an action; but no appeal to the supreme court from an order granting a new trial, in a case-made or bill of exceptions, shall be effectual for any purpose, unless the notice for appeal contains an assent on the part of the appellant that, if the order be affirmed, judgment absolute shall be rendered against the appellant. — 260 — Third. In a final order affecting a substantial right made in a special proceeding, or upon a summary application in an action after judgment, and upon such appeal, to review any intermediate order involving the merits and necessarily affecting the order appealed from.” The judgment appealed from seems to be a final order affecting a substantial right made in a special proceeding, or upon a summary application in an action after judgment. We think the appeal was proper, but that the judgment of the court below in sustaining the exceptions to the findings of the commissioner, and overruling the motion of appellant to quash the writs of supersedeas issued by the clerk of the court, was erroneous, and the same .is hereby reversed, and the case remanded for further proceedings. Reversed Fnfaforder. Clayton, J., concurs.