Sauntry v. Dunlap

By the Court, Cole, J. It was very ingeniously argued by the counsel for the respondent in this case, in support of the judgment of the circuit court, that Sullivan and Harrington were not partners in the business of mining, but that they were really tenants in common; and that consequently the mineral or lead ore which was the product of this business, [366] was not partnership property, but was owned by them as tenants in common, so that each party could dispose of his own share of the same for the payment of his. individual debt. It must be admitted that there is considerable force in this view of the case, but still we do not think that it is the correct view, or the one sustained by the facts as disclosed in the evidence. The respondent testified that Harrington and Sullivan were partners in the diggings; Baxter states that goods for the diggings were charged to them jointly; while Harrington swore that he and Sullivan took and worked the ground, from which the mineral was taken, as partners; that they were to pay the debts and expenses against the diggings equally, and share the balance between them, &c. It is, however, said, that even upon this testimony, Harrington and Sullivan were not properly partners, but tenants in common, since it appeared they were to divide the mineral, and not the proceeds thereof after sale, and their relation is likened to that which exists between two persons who agree to work a farm on shares and to divide the crops, each taking his own share as a compensation for his labor. In the latter case the parties have been held to be tenants in common in the products, and not partners. Putnam and others vs. Wise, 1 Hill, 234; Dinehart vs. Wilson, 15 Barb. S. C. R., 595, and cases there cited. But we think a fair construction of the evidence shows that Harrington and Sullivan understood and supposed that they were carrying on the mining business as partners, that the expenses thereof were to be placed to their joint account, and that they contemplated a sale of whatever mineral they might discover, and a division of the proceeds. That a communion of profit and loss — the distinguishing characteristic of a partnership— may exist in a mining adventure, as well as in any other branch of business, probably will not be disputed or denied. (See Jefferys vs. Smith, 1 J. & Wal., 293.) That the parties so regarded the nature and incidents of this mining business, is equally clear from the evidence. Under the facts and circumstances of this case, therefore, we deem it fair to assume, that the mineral or lead ore which Sullivan mortgaged to the respondent, was partnership prop [367] erty, and tbe question arises, could be, without tbe knowledge or consent of bis co-partner, sell or transfer bis interest or sbaxe in tbat property, for tbe purpose of securing bis individual debt, and would tbe purchaser bold tbe property, as against tbe partnership or its creditors ? It seems to be well settled tbat tbe funds of a partnership cannot be rightfully applied by one partner to tbe discharge of bis own separate debt, without tbe assent, express or implied, of tbe other partner, and tbat to do so is equally injurious to tbe partners and tbe creditors of tbe firm. Tbe cases upon this subject are very fully collected in tbe note to Rogers vs. Batchelor, 1 American Leading Cases, 446. The creditors of tbe firm have tbe right to be first paid out of tbe partnership property, and when partnership stock has been applied in satisfaction of a private debt, due from one of tbe partners, it has been deemed fraudulent as to tbe creditors of tbe company. It seems tbe respondent was well aware tbat Harrington and Sullivan were partners in tbe diggings, and she must therefore have known tbat it was partnership property which tbe latter attempted to mortgage to her. Tbe mineral being partnership property, it follows tbat tbe joint creditors bad a primary claim upon it for tbe payment of their debts. Tbe appellant was garnisheed at tbe suit of a creditor of tbe firm of Harrington and Sullivan. He appeared and answered, and being indebted to tbe defendants in tbat suit for this mineral, judgment was rendered against him as garnishee for tbe value thereof, and this judgment was paid. Tbat certainly ought to be considered a sufficient answer to this action. It is true tbe appellant testified tbat there was an understanding between him and Sullivan and Mrs. Sauntry, tbat be was to pay tbe latter tbe value of one-balf of this mineral. He supposed then be was getting a good title to Sullivan’s share, and this was tbe consideration of tbat arrangement or understanding. But Sullivan having no authority to appropriate this partnership property to tbe payment of bis own individual debt, and a creditor of tbe firm ' pursuing tbat property in tbe bands of tbe appellant, it is very clear tbat tbe consideration of tbe promise, or under [368] standing with, tbe respondent, wholly failed. And having rightfully paid once for the mineral, he ought not to be compelled to pay again. The judgment of the circuit court must be reversed, and the cause remanded for further proceedings in accordance with this opinion.