Conroy v. Woods

Nortoít, J. — The proofs taken in this action sustain the material allegations of the complaint, and the final decree must be governed by the principles announced in deciding the motion to dissolve the injunction and the demurrer to the complaint. The sale of Brooks and Moore to Bell, was of their interest in the copartnership property of the firm of Bonney, Brooks ‡ Moore, subject however, to all its, the said firm’s legal liabilities. This same interest was then transferred to JE. B. Bonney, in whose hands the property in question was attached by the contesting parties in this suit. It is not material to consider whether the equitable right of copartnership creditors to be paid out of the copartnership property in preference to the individual creditors, is wholly founded upon the equities existing between the partners, or is a distinct right of the creditors to be enforced in equity after they have acquired a lien by seizure of the property. Practically the relief in equity is given upon the application of the creditors after their rights have matured. While the copartnership continues and before a specific lien has been acquired, the partners by mutual agreement may make any bona fide disposition of their property. Greenwood v. Brodhead, 8 Barb. 593, and Story Bq. Jwr., §1253. But in this case no such mutual agreement to apply this property to the payment of Bonney’s individual creditors has been made. On the contrary, it is only the remaining interest or surplus after the firm debts are paid which Brooks and Moore sold. It is their equity as well as that of their creditors which will be worked out by this action. In truth JH. B. Bonney might be treated as a trustee for these creditors as to the shares of Brooks and Moore, under the authority of the case of Sedam v. Williams, 4 McLean 51. The 65 propriety of interfering before the property has passed into the hands of purchasers at the sheriff’s sale, and of making an equitable distribution of the proceeds instead of following the property in the hands of the purchasers, is asserted by Mr. Story on obvious reasons, 1 Story JEq. Jar. §678, and is sanctioned by the practice of the courts. Washburn v. Bank of Bellows Falls, 19 Vermont 278; Place v. Sweetzer, 16 Ohio 142; Snodgrass v. Appeal, 13 Penn., 471. The distribution of the proceeds of the particular property attached without taking a general account of the copartnership affairs is sanctioned by the case of Washburn v. Bank of Bellows Falls, 19 Vermont 278. There must be a decree for the distribution of the fund between the plaintiffs and the intervenors pro rata in proportion to their respective debts, and the surplus, if any, first to the defendant Woods,, and then, to defendant F. B. Bonney.