Werner v. Iler

Irvine, O. Henry Voss and William Voss were partners as Voss Bros., in the wall-papering business. May 29, 1893, Henry Voss signed the firm name to two notes drawn iu favor of Peter E. Iler, and signed also by G. A. Ackerman and B. C. Voss. The consideration of these notes did not move to the firm, but, on the other hand, they were given in payment of rent of a building occupied by B. O. Voss and Ackerman and used in another business. Judgment was rendered against the firm on one of the notes August 12, 1893, and on the other October 24. Subsequently judgments against the firm were recovered by Werner 577 and Henry Lehman, both on debts incurred by the firm of Voss Bros, in the prosecution of its business. Executions on the Iler judgments were levied on the firm property, and later executions on the Werner and Lehman judgments were levied on the same property, subject to the prior levies. Then Werner and Lehman brought this suit to require the proceeds of the sale of the firm property so levied upon to be first applied to the satisfaction of their judgments. Their theory was that the debts represented by their judgments being strictly partnership debts, were entitled to satisfaction out of the partnership property before the debt of Her, which did not originate out of the partnership business, and which was, it is claimed, created by Henry Voss without authority. The property levied upon was, by order of the district court, sold and the proceeds paid into court to await the-event of this suit. On final hearing the court found for Iler and ordered the fund in court to be applied on the Iler judgments. The plaintiffs appeal. The plaintiffs assert that. Henry Yoss, being without authority to bind the firm on matters outside the scope of its business, the debt must be treated as his individual debt, notwithstanding the judgment against the firm, and they then invoke the doctrine of equity, that partnership assets are to be first applied to the payment of partnership debts. The facts do not call for an application of that doctrine. It has been held that such doctrine is not based on the theory that a partnership creditor has a lien on the partnership assets, for, merely as a general creditor, he has no such lien. It is based on the presumption that credits have been extended to the individuals on the faith of their individual assets, and to the partnership on the faith of the partnership assets. (Richards v. Le Veille, 44 Neb. 38.) The right to require such application is, indeed, not a primary right of the creditor, but a derivative right, traced through the primary right of the partner not.liable for the debt as a partner, to have such application made. It is not averred or proved that when the 578 Iler debts were incurred the partnership was insolvent. It does not appear then that the firm owed a dollar. Even when the Iler judgments were recovered none of the debts to plaintiffs had been incurred except about $40 to Lehman. While there is evidence that Wiliam Yoss did not authorize Henry to sign the Iler notes and did not then know of them, he might ratify the act, at least unless such ratification would operate as a fraud on partnership creditors. There is no pretense that the Iler judgments were not obtained on due service of process and with perfect regularity, and there is no charge of collusion or fraud. If William Yoss desired to repudiate his brother's acts he should have done so in the suit brought on the notes. Suffering judgment then to go against the firm precluded him from thereafter questioning the debt. Without setting aside those judgments for irregularity, fraud, or some equally potent cause, he could not thereafter assail them. As the plaintiffs were not existing creditors, and there is no charge that the debts to Iler were incurred or the judgments suffered in contemplation of creating debts, the plaintiffs can assert no rights which William Yoss did not possess. It follows that the debts to Iler, if they were not in the first instance firm debts, became so on the rendition of the judgments against the firm. They are now1' as much so as the debts to the plaintiffs, and all must be satisfied in the legal order of priority of liens. The consideration for the creation of the debts, or the application of that consideration to partnership business, does not, under the facts of the case before us, become material. Affirmed.