Haggerty v. Granger

Mitchell, Justice. In Havens agt. Hussey, (5 Paige,) it was decided that one partner could not, against the will of another, make an assignment of the partnership property to a trustee, for the benefit of creditors, giving preferences. In Deming agt. Colt, and in Hayes agt. Heyer, (3 Sandf. Superior Ct. Reports,) it was held that such assignment could not be made, even if no preferences were given. These cases were referred to and approved in Everson agt. Gehrman, &c., (10 How. Pr. R. 301,) at the general term of the supreme court, in this district. That, however, was not the point then precisely before the court. The decisions thus far made in this state have been on the ground that one partner has no authority, express or implied, from his copartners, to make such an assignment. It clearly is not within the express authority, and to repeat what was said in Everson agt. Gehrman, “ no [247] power can be implied, unless it can be inferred that the parties intended to grant it.” Certainly the parties did not intend that one should have the power to do for them an act which their general obligations did not require them, to do, if the others objected to it, and its effect would be, not to continue, but to dissolve the partnership. It is because the general obligations of law require partners to pay their debts, that-one of them may, without the concurrence of the others, and against their will, deliver either the money or property of the firm directly to a creditor in payment of his debt, although their other creditors are postponed; he does in this no more than the law would do to the one who first levies an execution. But there is no Obligation of law for the firm to transfer their property to trustees, much less is there any implied authority in one to select his own trustee against the will of the others, and give to him the whole control of the property. If one may thus assign the partnership property to one trustee, there is no reason why the other partners may not assign each to a different trustee, unless the one first assigning thereby superseded the power of the others. Then there would be three or more trustees, each under a separate appointment, and each entitled to an absolute control over the property a position of things which shows that neither can have the control, or the power to make such an assignment. If the assignment first made is to be held controlling, then it is implied that partners intend, in all cases, that if they become insolvent, the one who will be first in the race to make an assignment, shall alone, and against the wishes of the others, control in the selection of the trustee, and that he can make an assignment when the other partners may all believe that one is not necessary, and that they could personally arrange with their creditors. The parties never could have intended to grant such an authority, and there is no obligation of law from which it is to be inferred. In this case Van Cott assigned his share of the partnership property to the trustee. If this meant only the share that would belong to him after payment of the debts of the firm, [248] then, it did not make Wyckoff a trustee for the creditors, nor vest him with the partnership property, but only with the right to call the other partners, and those claiming under them, to an account. The assignee then would not stand in the way of the creditors of the firm, and could not object to their taking any legal process to collect their claims. But if it meant (as is to be inferred from the provision in the assignment, that the assignee should, out of the property of the firm, pay its debts,) to transfer the property itself to the assignee in trust to pay the debts, then it is subject to the objection before stated, that it assumes a power not given either expressly or by implication. ¡Nor does it make a difference that the assignment purports to pass only Yan Oott’s share, and not that of the other partners, assuming that this means the one undivided third in the property itself; then the confusion before pointed out would result, that each partner could appoint a separate trustee, bound to employ the property assigned to him to pay all the debts, but with this difference, that neither would have control over more than one undivided third (or other aliquot) part of any piece of property, or of any chose in action; neither could do any act towards the disposition of the property, without the concurrence of the others; neither to sell a piece of goods, or to collect a debt; all must unite; yet each would claim under a separate title, and not as joint trustees. A power leading to such confusion, and which would manifestly tend to delay creditors, is not to be implied. Nor is there any imperfection in the law, which makes it necessary to imply this power. As soon as a firm is insolvent, (especially if as in this case, it was not to continue for a specified time,) any partner may apply for a decree of dissolution and account, and for an injunction to prevent his copartners from disposing of the property, and for a receiver. The property will then be distributed rateably among the creditors without preferences, and each will be heard as to who the receiver should be. The difference between that case and this is, that in this, one partner alone attempts tó vest his own trustee with the whole power, against the wishes of those who [249] have an equal voice with himself, while in that all are heard, and all, through the court, make the appointment; in this, the one alone adjudges of his own independent will, that a trustee and assignment are necessary ; in that, all (through the court) pass upon that question. The assignment by Yan Cott is void as to the partnership property, not on account of any fraud, but for want of power, and the assignment by his two copartners giving preferences, is void for the same reason. The trustee was right when brought into court by the plaintiffs, to present the question as to the extent of his power for decision, and has caused no litigation which was not necessary for this purpose ; he, there fore, should have his costs. Both assignments cast a cloud over the title, so as to make it proper for the plaintiffs to come into this court to have that cloud removed as to them. The assignment by the two copartners is void entirely for want of power; the assignment by Van Cott is good as to all except the partnership property, and it is not therefore to be declared void ; it is enough if the assignee be declared unauthorized to interfere with that property, and enjoined from doing so, and the receiver be authorized to take and sell, or collect all the partnership property, notwithstanding such assignment, and pay the creditors in the order in which their actions were commenced, (the great bulk of the property consisting of choses in action,) and bring any surplus into court to abide the further order of the court. The plaintiffs will also be entitled to their costs in the same order of priority. It is proper to notice that in the cases quoted, the assignments by one partner were held bad on a bill filed by the co-partner, and that in this case, the copartners make no such application. ' The creditors, however, may come into court and show that there is an assignment in the way of their execution, under which the assignees profess to have a priority over them, and that such assignment is defective for want of any power to execute it. If defective for such a cause, it is as a nullity to any one claiming by operation of law, to have a right to the property of the firm. It is voidable not only [250] as against the copartners, but also as against the creditors of the firm, unless the non-assenting partners had, before their actions were commenced changed their mind and assented to it. That which is void for want of power cannot constitute an effectual obstacle to any one who is entitled to be paid out of the property'of the constituent. The judgment will be drafted accordingly, and submitted to defendants’ attorneys.