J. Gibson McIlvain & Co. v. James L. Leeds Co.

Opinion by Mr. Justice McCollum, A copartnership was entered into between James L. Leeds [640] and Henry C. Elliott, to commence on the 1st of March, 1897, and continue for the full term of ten years from that date unless sooner dissolved by mutual agreement or the death of one of the copartners. The articles of copartnership contained the following provision: “Neither copartner shall without the written consent of the other enter into any deed, covenant, judgment, bond, obligation or promissory note, affecting said firm, or become bound as bail, surety or guarantor, or give or endorse any note for his individual account or for the benefit of any third person without the consent and approval of the other co-partner.” On November 3,1897, Leeds, without the knowledge or consent of Elliott, confessed, in the firm name, a judgment to Mcllvain & Company for $8,193. The judgment included individual indebtedness of Leeds contracted before the creation of the partnership, and indebtedness arising from transactions of the firm. On November 4, an execution was issued on the judgment and levied on all the property of the firm, and at the same time attachments in execution were issued on it and duly served on the debtors of the firm as garnishees. On November 15, 1897, Elliott applied to the court for a rule to show cause why the judgment should not be stricken off or opened, and the execution set aside as to the firm and its property. On the hearing of the rule and consideration of the testimony taken to support it the court opened the judgment and set aside the execution and attachments. It may be stated in this connection that Mcllvain & Company made no answer to the affidavit on which the rule to show cause was obtained, and offered no evidence to contradict it or the testimony introduced to support it. To this we may add that the promissory notes given by the Leeds Company on account of its indebtedness to Mcllvain & Company, were not due when they were canceled and the judgment was substituted for them. Besides it may be fairly inferred from the testimony that Mcllvain & Company knew of the restrictions in the partnership articles before they accepted the judgment in place of the promissory notes. In view of the affidavit and the testimony we are not prepared to say that it was error to open the judgment. But we think the court erred in setting aside the execution and attachments. The liens created by the levies made on the writs should have been preserved pending the proceedings to determine the [641] issues involved in the opened judgment. We therefore reinstate the execution and attachments together with the liens created by the levies and to this extent we modify the judgment entered by the court below. The judgment as modified is affirmed.