Rice v. McMartin

Seymoub, J. The defendant McMartin pleads a, discharge from all individual liability for the debt to recover which this action is brought. The plaintiff replies to this plea, that the discharge was executed in the state of New York, in pursuance of a statute of that state, enacting that it shalLbe lawful for one partner to make a separate composition with partnership creditors, which composition shall be a discharge of the debtor making the same, and of him only ; further replying that the release was made for the sole purpose of discharging McMartin from individual liability, and not to affect the right of the plaintiff to collect the debt out of partnership assets of the firm, and that this -suit is prosecuted for the sole purpose of securing payment out of a debt due to the copartnership from Styles & Chase, who are factorized as debtors of the company, and are in fact such. To this replication there was a demurrer, and the Superior Court rendered a special judgment in favor of the plaintiff, to be recovered only out of the debt due to the defendants from' Styles & Chase, the garnishees. The defendant McMartin seeks by motion in error to reverse that judgment. He claims, 1st, that it must be taken for granted that the copartnership of McMartin, Pearson & Co. was dissolved when the discharge was given, because the statute of New York (and our statute is substantially the same) applies to dissolved copartnerships only; and, 2d, that upon dissolution the interests of the several partners in the debt due from Styles & Chase became separate and individual [575] interests, in each member of the firm as a tenant in common with the others, and that consequently the effect of the judgment of the Superior Court is to collect the debt in part out of individual property of McMartin, contrary to the discharge- and in violation of the statute. The counsel for the defendant, in support of these views, cite a remark by Lord Kenyon in the case of Abel v. Sutton, 3 Esp., 110, that the moment the partnership ceases the partners become tenants in common of the partnership property undisposed of at that time. This proposition is reproduced by Oollyer in his work on partnership, page 317. "We think it is manifest that the proposition is not universally true. So long as partnership debts remain unpaid, partnership property continues such for the purpose of being applied to the payment of the debts. It is the right and duty of a partner to make such application, and that right and duty cannot be affected by a discharge under the statute of an individual partner by compromise, nor does the discharge impair the right of a creditor who gives it to insist upon the application of partnership effects to the payment of his debt. The judgment rendered by the Superior Court operates merely in rem, and it makes the precise appropriation which law and equity demand. The discharge was of the individual liability of McMartin. Neither his person nor his individual property are longer liable, but the copartnership property remains holden. Mc-Martin has no separate and individual interest in copartnership property until the copartnership debts are paid. Murray v. Mumford, 6 Cowen, 441; Canfield v. Hard, 6 Conn., 180. There is no error in the judgment complained of, and it is affirmed. In this opinion the other judges concurred.