M. C. Hawley & Co. v. Campbell

Boss, J.: No one of the cases entitled, respectively, Meyer v. Kohlman, 8 Cal. 44; California Furniture Company v. Halsey, 54 id. 315; Glenn v. Arnold, 56 id. 631; Freeman v. Campbell, id. 639, and In re Baker & Hamilton, 55 id. 302, went further than to hold that by the Insolvent Act of May 4, 1852, and the Act amendatory thereof and supplemental thereto, no provision was made for the relief - of an insolvent partnership, and, as a consequence, that the insolvency Court under those Acts could not administer partnership [447] property nor prevent partnership creditors from subjecting such property to the payment of their debts. In none of the cases mentioned was it held that, under the Acts referred to, an individual member of a firm could not be discharged from his individual liability from firm debts. Mor, in our opinion, does such result necessarily or logically follow from the doctrine of those cases. Inasmuch as the insolvency Court has, under the Act of 1852 and the Acts amendatory thereof and supplemental thereto, no jurisdiction of a partnership or of partnership property, the creditors of such firm can lawfully pursue the firm property regardless of the insolvency proceedings. As long as there remains any partnership property, it is primarily liable for partnership debts. When those debts are paid, if anything remains of the partnership property, it belongs to the partnership; and in this each of. the members of the firm have an interest. Such interest is liable for the individual debts of the individual members of the firm. But each member of the firm is also individually liable for all of the debts of the firm of which he is a member. When as an individual he seeks the benefit of the Act in question, he is required to execute an assignment of all of his property, and to file a schedule setting forth, among other things, a full, complete, and perfect inventory of all of his property, with a list of losses he may have sustained, giving the names of his creditors, if known, the amount due to each creditor, and the cause and nature of said indebtedness, and when it accrued. His individual interest in the residuum of the partnership property, if any, is included in this schedule and assignment; and when such assignment is made in good faith and without fraud, the insolvent debtor may, in our opinion, be discharged from all individual liability for partnership as well as other debts. The language of the statute is: “Every insolvent debtor may bo discharged from his debts,” etc. A partnership debt for which he is individually liable is as much “ his ” debt as is any other individual debt he may owe; and to hold that from the former he can not be discharged, would be to import into the statute an exception not there made; and not authorized nor indeed called for for the protection of the partnership credi [448] tors, since, as we have seen, they may pursue the partnership property without regard to the insolvency proceedings. Judgment affirmed. Thornton, Myrick, McKinstrx, and McKee, JJ., and Morrison, O. J., concurred. Sharpstein, J., dissented.