Allen v. Erie City Bank

The opinion of the court was delivered, by Thompson, C. J. This controversy results' from proceedings on an execution attachment, issued by the bank against the firm of J. & R. Carter, with service on the surviving partners ■ of the firm of Carters & Allen, and summons of them as garnishees. Subsequently, and before the issue on the sci. fa. was tried, John Carter, another of the firm, died, Avhich left Lucien II. Allen as surviving partner of the firm.’ John and Richard Carter, composed a mining and coal dealing firm, by the firm-name of J. & R. Carter; and John and Richard Carter and Lucien H. Allen composed another and distinct firm, under the firm-name of Carters & Allen, and carried on a foundry and machine shop at Tamaqua, Schuylkill county. These firms were entirely distinct in their objects and business, although composed in part of the same members. The plaintiff beloAv believing the latter of these firms to be — 136 — indebted to the former, issued their execution attachment as already stated, and attached the debt in the hands of the surviving member of that firm, Lucien H. Allen. The answer of Allen to the interrogatories propounded to him, not being satisfactory as to the existence of the alleged indebtedness of his firm to the firm of J. & R. Carter, the attaching creditor proceeded on the sci. fa. to establish it. The defendant pleaded nulla hona, and a special plea, alleging the dissolution of that firm, its insolvency, the application of all its assets to its debts, and that there were no assets, goods, chattels, rights and credits of J. & R. Carter in his hands. As we consider the case, it was tried on the plea of nulla hona without much reference to the special plea, which I presume was regarded in substance the same thing as the short plea, and a special verdict was rendered for the plaintiff for the sum of $6523.31, and that the indebtedness of the garnishee’s firm to the firm of J. & R. Carter, at the date of the attachment, was $16,034.06, and that it was insolvent at the time. Judgment was subsequently entered in favor of the plaintiff for the sum of $6523.31, “subject to be cancelled or discharged wholly or in part ;by the order of the court, aecordingto the result of any bill filed in any court of equity having jurisdiction of the case, by which the equities between the said L. H. Allen, and his late partners shall be ascertained, as the same existed at the time of the attachment levied.” This is an outline of the history of the case, so far as is necessary to be stated, in order to understand the exceptions which are now to be considered. As to the first specification of error, which is to the answer of • the learned judge to the defendant’s 3d point, we think it is not sustained. The firm of J. & R. Carter were not chargeable with the amount of notes, drafts and accounts due the firm of Carters & Allen in their hands, unless they were shown to have received them as money, or at some stipulated price, or had received the money on them, or that they had been received as a credit on their claim. This was what the learned judge charged and left as questions for the jury. There was no error in this: Nor was there error in the second specification.. The honesty of the transfer of Carters & Allen to William T. Carter, would not constitute the latter, the debtor of J. & R. Carter, unless they agreed to aecept him as such. That they had so accepted him, was not alleged in the point. If that fact had appeared, and the transfer honest, it would have greatly aided the defendant; for his firm might then have been free from responsibility for the debt, another having undertaken to pay and been accepted by the creditor before the attachment issued. Relying on the assignment made on the same day by J. & R. Carter to W. T. Carter, by which their claim against Carters & Allen passed, it was only necessary that the last-named assignment should be honest to give — 137 — full effect to the transfer of the liability of Carters & Allen to him. In that case the debt would be extinguished, William T. Carter being the party entitled to receive -what he was bound by the assignment of the Carters & Allen firm to pay. But unfortunately for the defendant, the jury found that the transfer of J. & R. Carter to William T. was fraudulent and void; and the effect expected, if the transfer of the Carters & Allen firm was honest, was defeated, and the case was left to stand on the naked agreement of William T. Carter to pay the debts of the 'firm of Carters & Allen, without any proof of acceptance by J. & R. Carter to receive him as their debtor instead of the firm. This no doubt accounts for the absence of proof, or an attempt to prove, an acceptance of W. T. Carter as the debtor of J. & R. Carter. It is possible also, that it was not attempted for want of testimony. There is no error in the answer of the court declining to charge as requested in the defendant’s 4th point. There was certainly no error in the charge on the question of the bona tides of the alleged transfer by J. & R. Carter to William T. Carter. It was assailed on the ground of fraud; that it was intended to delay, hinder and defraud creditors. Whether it was secret, depended on the inference the jury might draw from the facts, which were submitted to them with unexceptionable instructions. The defendant gave the evidence'olf this alleged assignment, which if valid was a transfer of the debt due J. & R. Carter from Carters & Allen, before the attachment was served. If a. garnishee may set up such a defence, and Sinnickson v. Painter, 8 Casey 284, is an authority that he may, it follows that it may be contested. It was only in affirmance of this position that the learned judge submitted the facts to the jury to say whether the transaction was honest or fraudulent. That there was evidence on this point, was the fault of the defendant in setting up the assignment. Plaintiff was certainly not wrong in trying to show that it was not a bond; fide transaction, and the court was right in submitting the evidence on the point to the jury. The next complaint of the charge is without foundation also. It was the sale, or assignment of J. & R. Carter to William T. Carter, which the court thought important, and which, if found to be honest and fair, would put an end'to all further necessary-inquiry by the jury. Nothing could be truer than this, for it would be a transfer and assignment for value of the debt in suit before the attachment issued. This we have already noticed. It was therefore entirely proper to say that the assignment, if good, would be a bar to the plaintiff’s recovery, and that that made by Carters & Allen, if honest, would be no bar. The reason for this we have given. ' There are several specifications of error based on the rejection — 138 — and admission of evidence. As.to the first, the court allowed the witness to testify that there were other account-books of J. & R. Carter, showing accounts and charges against that firm, and in favor of Carters & Allen not present, but declined to allow him to speak of their contents. The party had not put himself in the position to give secondary evidence, without showing something entitling him to it, such as a notice to produce the books, and therefore the court ruled the point of evidence properly. The next complaint of error is to the admission of evidence to show the insolvency of J. & R. Carter by the record 'of judgments in the Common Pleas of Schuylkill county, to be followed by the evidence of the assignments to William T. Carter, with the knowledge of the defendant that the firm was insolvent. This was evidence on the question of the bona fides of that sale, and proper to be received. It is complained that it ought not to affect Rucien II. Allen, as he was not a party to it. Neither should it, but as he claimed to show that the debt for which he was attached passed out of J. & R. Carter before the attachment issued, and was vested in William T. Carter, and was therefore extinguished, it was important to the other side to show that it was fraudulent and void. We see no error in this. The next exception stands so nearly on the same principle, that we think we need not discuss it to show that there is no error in it. The succeeding error !& assigned upon the rejection of an offer by the defendant to show that the firm of Carters & Allen, was insolvent at the date of the service of the attachment. The special verdict finds that. But the purpose of the evidence as given was to show, that there was consequently no indebtedness to the firm of J. & R. Carter, who were members of the firm of Carters & Allen, subject to attachment; the partnership creditors of Carters & Allen being entitled to priority of payment over the claim of J. & R. Carter, and that the attachment, which was in the nature of an execution, could hold nothing but a mere right to an account against the firm of Carters & Allen, or the garnishee Allen. Although we think that at some stage or other an opportunity must be afforded to settle the equities between the parties composing the defendants’ firm, yet it could not be easily done under the provisions of the Act of Assembly of 14th April 1838, in an action at common law between the firms directly. The plea of nulla Iona was really the .only issuable plea in this case. The question under that obviously was, Avhether there was a debt due by the defendants’ firm to the plaintiff's firm. The Act of Assembly referred to, authorizes suits by one firm against another, composed partly of the same persons; it directs that the trial shall proceed as if the firms were composed of different persons. If there had been entirely different persons in these two firms, it will not admit of a doubt that the proposed testimony would have been — 139 — entirely irrelevant. Want of assets or insolvency would not have been a bar to a judgment, whether it would avail anything would depend on other considerations. On the pleadings, we think the rejection of the offer was inevitable. If I understand the argument of the counsel for the plaintiff in error on this point, it proceeds on the idea that J. & R.. Carter, and consequently the plaintiff below, who occupies their position, are not creditors of the firm of Carters & Allen, but claim merely as members of that firm, and must be postponed to creditors of the firm. I can make only this out of the argument. But this overlooks what was neither disputed nor attempted to be disproved, viz.: that these firms were distinct, and that the plaintiff was a creditor, and in a condition to attach property and effects belonging to the firm of J. & R. Carter whenever it could find it. There is no room for complaint on the ground that the exclusion of this evidence prevented the defendant from proving the insolvency of the firm of Carters & Allen at the date of the service of the attachment. That the verdict finds. We think this assignment of error is not sustained for these and other reasons. The 5th exception on the subject of testimony was to the rejection of the defendant’s offer to prove the existence of prior attachments against the firm of J. & R. Carter, served on the defendant as garnishee, but whether as surviving partner or not of Carter & Allen is not stated, nor whether the debt in controversy was attached on either of them. These things do not appear in the offer. We see not, under the pleadings, how the evidence could have been received. Conceding that it might possibly have been evidence under the plea of nulla bona with notice of special matter, notice was not given. The plea without this, we think, only put in issue the question of goods and effects in the hands of the garnishee. This is not only reasonable in itself, but seems to be supported by Flanigan v. Wetherill, 5 Whart. 286, McCormac v. Hancock, 2 Barr 311, and Sergeant on Attachments 90. That notice of special matters should have been given in a case where the plea was nulla bona, and the offer was to "show a lien for freight due the garnishees, was held in’ Wood v. Roach, 1 Yeates 177. Without further discussion, we think there was no error in this part of the case. Indeed, in Kase v. Kase, 10 Casey 128, it was ruled that such evidence would not bar the plaintiff, but might be considered in the judgment. The last exception is to the refusal of the court to receive evidence that all the assets of the firm of Carter & Allen had passed out of the hands of the surviving partners of that firm, prior to the service of the plaintiff’s attachment; that before that day they had been applied to firm debts ; that there was' a large amount of debts still unpaid, and that J. & R. Carter were .indebted to the said L. H. Allen in large sums, which said Allen had — 140 — paid out for said firm of Carters & Allen, which the said Carters were bound to contribute to. Under the pleadings, and in the existing form of action, we think the testimony was properly rejected. We have given our views on a point similar to this in a preceding portion of this opinion,, and need not repeat it here. Tassey v. Church, 6 W. & S. 465, is in its material features like this case.. One firm sued and recovered judgment against another, both composed in part of the same members. The plaintiffs’ judgment was over $13,000. There was no joint property belonging to defendants, as the sheriff’s return of nulla bona showed. One of the defendants sued out a writ of error, and at the same time filed a bill in the equity side of the court, alleging the indebtedness of one or more of the members of the plaintiffs’ firm, who were also members of the defendants’, praying an account and injunction against issuing execution. The judgment was affirmed, but before that the court stayed execution, and the plaintiffs took a writ of error to that, and this court held the stay right and proper until the equities of the partners in the defendants’ firm could be adjusted. The opinion of Gibson, C. J., refers largely and -justly to the anomalous condition in which partners may be placed under the Act of 1838, and the mode by which injustice might be prevented when there is insolvency in the debtors’ firm. He said: “ The action authorized by the statute may readily be conducted to judgment; but how it could be thought that a writ of execution might be applied to the separate estate of the individuals who compose the debtor firm, without doing injustice to some of them, or producing some whimsical absurdity, it would require all the ingenuity of the person who framed the act to explain.” He goes on to say that the action by one firm against the other, authorized by the act, was doubtless intended only to settle the question of indebtedness between them, and that to subject the joint effects to seizure was perhaps all that was contemplated. The statute, however, goes further than this, as this case concedes, by holding it to have been a proper exercise of judicial power, in that case, as there were no joint assets, to restrain execution until it could be ascertained how the equities stood between the members of the firms composed in part of the same persons; whether the private estates of partners in a defendant firm, should be sold to pay a firm debt on which they were plaintiffs before their liabilities to each other were ascertained. The levy was set aside and execution stayed until the equities should be settled between the members of the defendant firm. In the case now before us, John and Richard Carter were members of the defendant firm with Allen. Their representatives, or estates, are substantially plaintiffs by reason of the attachment proceedings, and before their creditors can — 141 — stand where they stood and can claim what they could have claimed and be subject to the equities which would have affected them, there should be a settlement of accounts to ascertain if Allen, the survivor of the firm of Carters & Allen, is owing to his .copartners any money, or how much; in other words, whether their estates as well as his are not equally bound to pay the debts. If they are, it would be great injustice to call on him to pay their creditors, when on settlement it might appear their estates ought to contribute. The learned judge attempted to provide for this by a condition in the judgment on the special verdict. This was modified when the ease was brought before us by the defendant in error in this writ. . The judgment is now unconditional against Allen, the surviving partner, and as there are no firm assets as it stands, his private estate would be ultimately liable. In order to reach the equities between those who constituted the firm of Carters & Allen, we think there ought to be a stay of execution granted until this is •ascertained by proceedings in equity, or otherwise, to be instituted by one or other of these parties, to ascertain the extent of Allen’s liability, if any. What effect the action of the firm of Carter & Allen, composed of William T. Carter and Lucien II. Allen, may have on the inquiry which will ensue in the proceedings, we do not say, but it does appear by the special verdict that William T. Carter took an assignment of the assets of the firm of Carters & Allen, and agreed to pay all their debts; that Lucien H. Allen became a partner with him, and that they paid all the debts of the firm with the exception of the debt due the firm of J. & R. Carter, amounting to $16,034.06, and that that remains unpaid. Whether by becoming a member of that last firm, his position will be changed, we will not now say, but this will be a question in that investigation undoubtedly. Pursuing the course adopted in Tassey v. Church, supra, we will affirm the judgment, and let the defendant apply for a stay of execution until proceedings shall be instituted by him, within a reasonable time, in the name of proper parties, to ascertain the rights and equities of the parties. Judgment affirmed accordingly.,