Dunklin v. Kimball

B. F. SAFFOLD, J. The plaintiff and John and Samuel [254] Pinney were equal partners as merchants. The firm became insolvent, when the two Pinneys made a deed of assignment, conveying all the partnership assets to the defendant, Dunklin, for the benefit of all the partnership creditors, by agreement with the creditors. The partnership name was signed to the deed, but without the consent or concurrence of the plaintiff, who was absent at the time. The defendant sold the stock, and the plaintiff sued him for one third of the proceeds, not exceeding one thousand dollars, claiming it as exempt under the Constitution and laws from the payment of his debts. The questions presented are: 1st, whether the assignment made by the two partners divested the right and title of the third to the joint stock; and 2d, whether the plaintiff could claim exemption against debts of property which he had thus put ip to the partnership. There was a third question; a question of fact, whether the plaintiff had ratified the assignment. The evidence in respect to the ratification was very positive, and very contradictory ; and it seems to us to be equally balanced. As the burden of proof was on the side of the affirmation, we do not feel authorized to find error in the verdict. 1. Whether one partner may assign all the property in trust to pay creditors, the firm being insolvent, is an unsettled proposition, siipported on each side by able authorities. Parsons and Story, in their works on Partnership, state the doubt, and refer to numerous authorities for and against the right, without undertaking to say on which side they suppose the weight of argument to be. Chief Justice Marshall, in Anderson v. Tompkins, 1 Brock. R. 456, contending for the power, thought that such disposition, if fraudulently made, could be set aside, and, if done in good faith, was, a proper appropriation of the stock. Would not the other partners be needlessly injured by being required to establish the fraud ? Is not the authority of each partner restricted to such acts as are not inconsistent with the existence and purpose of the.partnership, and forbidden from such as kill the partnership ? One partner may have contributed his personal services against the other’s money, for an equal division of the profits. The partnership might become insolvent, while tbe wealthy partner would be able to pay the debts out of other resources, and desirous of doing so. An assignment made by the other, without his knowledge or consent, would unnecessarily break up the business, injure his credit, and be a gross violation of the spirit of their contract. Without attempting an elaborate argument of the subject, we decide that such an assignment, to be valid against all of the partners, must be executed by all of them. 2. There is no doubt that the plaintiff’s claim of exemption [255] is good against his individual creditors. None, that it is so, against the partnership creditors per se, because their demands have no greater element of lien or right than the former. Between the partners, each has a specific lien on the partnership stock, for the amount of his share, for moneys advanced by him for the use of the partnership beyond that amount, as also for moneys abstracted by his partner beyond the amount of his share. Collyer on Part. § 125. This means that, between the parties themselves, each one is entitled individually to whatever property he contributes. This being so, what claim can the partners have on each one’s share, more than to devote it to the payment of the partnership debts ? How is such a claim superior to that of the partnership creditors themselves ? One of two partners may have as much individual property as he could claim under the exemption law, and it would be safe from all of his creditors. The other may, in addition to an equal share contributed, have advanced beyond that amount his entire private property, equal to wbat he could claim as exempt. Shall the former, secure in his exemption, say that the other shall have no exemption, because of obligation to him to pay partnership debts? Shall he assign his partner’s rights and specific lien away, on account of any lien he has ? Partnership debts are only debts. A partner’s property is no less his when put into his partnership. The Constitution and the statute both give notice to all the world of the extent of his exemption, and his privilege of selecting it. No principle of the law of partnership subjects partnership property to the payment of partnership debts more absolutely than the general law devotes individual property to the payment of individual debts. McKercher v. Pettigrew, 8 B. R. 409. The judgment is affirmed. BRICKELL, J.