Gwin v. Selby

Kennon, J., delivered the opinion of the court. Upon a hearing upon bill and answer, the answer will be taken as true in all points; and such answer cannot be contradicted, except as provided in section thirty-one of the chancery act. When a bona fide sale is made of the property of a firm by its members, before any proceedings, either in law or equity, are instituted by a creditor of the firm, such creditor cannot, by any subsequent proceeding, acquire a lien upon the property thus disposed of. [101] As a general rule, a creditor of a firm has no lien upon the partnership property until acquired by process of law. Where one member of a firm purchases goods or borrows money for the firm on his own credit, giving surety for the payment of the money, or for the goods, and such money or goods go into and are used by the firm, and the surety has to pay as such, the firm may convey the goods of the firm to such surety in satisfaction for the money thus paid; and a creditor of the firm cannot set aside such conveyance merely because he was, at the time of such conveyance, a creditor of the firm. The bill must be dismissed with 'costs, saving such rights as the complainants may have to any surplus arising from the assets in the hands of the defendants, Frazee and Salmonds, after fully indemnifying themselves.