Chase v. Steel

Terry, C. J., delivered the opinion of the Court—Burnett, J., concurring. This was an action for a dissolution of a partnership and account. From the record, it appears that plaintiff, under contract with the Empire Mill Company, furnished material and performed labor, in building a race and flume for their use, and that the company were indebted to him, on account of such labor and material, in the sum of $4,580; that the Empire Mill Company was composed of plaintiff, and defendants Steel, Gould, and Til-den, plaintiff and Steel owning each one-third interest, and defendants Gould and Tilden owning one-third; that the interest of Gould and Tilden had been purchased from one Porter, and was mortgaged to him to secure the purchase-money. The Court decreed a dissolution of the partnership, and a sale of the property; and that, after payment of costs, the proceeds of the two-third parts of the property, belonging to plaintiff and defendant Steel, should be applied to the payment of plaintiff’s demand; and that the remaining one-third interest, belonging to defendants Gould and Tilden, be reserved for the future decision of the Court as to priority of liens. This portion of the decree was erroneous. The debts of a partnership must be discharged from the joint-property, before any portion of it can be applied to the payment of the individual debts of the partners. “ Until the affairs of a copartnership are wound up and settled, the claim of a partner is, strictly speaking, merely equitable; for, until then, no action can in [67] general be maintained at law, by one partner against another/’ etc. Williams v. Henshaw, H. Peck, 79. ■ The fact that Porter held a mortgage on the interest of Gould and Tilden was immaterial; they could convey only such interest as they had, which was merely an undivided third of the property which should remain after the debts of the firm were discharged. “ At common law, a partnership stock belongs to the partnership, and one partner has no interest in it but his share of what is remaining, after all partnership debts are paid, he also accounting for what he may owe to the firm.” Consequently 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 the payment of any of his private debts; and a creditor to one of the partners cannot claim any interest but what belongs to his debtor, whether his claim be founded on any contract made with his debtor, or on a seizure of the goods on execution. (6 Mass., 243 ; Coll, on Part., § 126:) That portion of the decree which directed the plaintiff’s claim to be satisfied out of the proceeds of the shares of Chase and Steel, is erroneous. But inasmuch as the case appears to have been fairly tried, and the judgment in other respects to be fully sustained by the facts, as disclosed by the record, it is not necessary that a new trial should be had. Judgment reversed, and the Court below directed to enter a decree in conformity with this opinion.