Haskins v. Alcott & Horton

Puck, J. Alcott & Horton having obtained judgment in Wood common pleas against the firm of Haydns, Roller & Haskins, under the provisions of section 1 of the “ act regulating suits by and against companies and partnerships ” (S. & C. St. 1188), authorizing suits by and against companies and associations, formed, for the purpose of carrying on any trade or business within the State of Ohio, by the usual and ordinary name of such firm, and being unable to make the amount of the judgment out of the joint effects, sought, in the petition filed in Wood common pleas, to subject the individual property of the persons composing said firm to its — 213 — payment, as authorized by section 4 of the act above referred to. The persons composing the firm of Haskins, Roller & Has-kins answered in bar of the petition, that prior to the filing thereof, the firm, and the individuals members thereof, had, jointly and severally, made legal and valid assignments of all their joint and separate property to Samuel Johnson, for the benefit of all the creditors of said firm, including said plaintiffs. That Johnson had accepted the trust and was then fulfilling its duties, under the order and direction of the probate court of said Wood county ; but that the claim of the plaintiffs had not been filed or offered to be filed with said assignee, nor had it been rejected by him. A demurrer was sustained to this answer in the court of common pleas, and the principal error relied on for reversal of the judgment in the district court, was the sustaining of that demurrer. The answer assumes, that the mere execution of a' legal and valid assignment by the debtor firm and its several members, of all the joint and separate property, for the benefit of all its creditors, and its acceptance by the assignee, deprives the creditors of such firm of all the remedies previously open to them, for the collection of their claims; or at least suspends all such remedies, until the trust created by the assignment has been discharged by the realization and distribution of the trust fund. The general principle certainly is, that a debtor can not change his relation to his creditors by a voluntary assignment to them. Burrill on Assignments, 340. To have this effect there must have been an assent, amounting to an acceptance, of the assignment, by the particular creditor whose right of action is thus barred or suspended. This assent may be manifested not only by the written or verbal acceptance of the creditor, but also, it is said, by actually receiving the benefit, or by claiming such benefit, or by taking legal measures to obtain it. Burrill on Assignments, ;340, 341, and cases cited. It is very questionable, however, whether the mere receipt — 214 — of partial payment, from tbe assignee out of the trust fund,, where the terms of the assignment or of the statute do not expressly bind the creditor to delay suit, will bar the creditor from suing until the trust is terminated. Bank of Bellows Falls v. Deming, 17 Vermont (2 Washburn), 366. The bar, if any, must arise out of a contract or statutory inhibition express or implied. There is, confessedly, no express provision in the deed of assignment, nor in the statute regulating its administration, which prohibits suits against the assignor pending proceedings under it, and while an implica tion to restrain proceedings by creditors agaijist the property assigned would, if at all necessary, be reasonable and proper; such an implication, which-would also prevent the subjection of the subsequent earnings and acquisitions of the debtor, not embraced in the assignment, would be unreasonable and unjust. It would lead to great abuses, and might be resorted to for the mere purpose of protracting the collection of just debts, and securing immunity for months or years, while the debtor is engaged in lucrative and profitable operations, and perhaps able to liquidate all his liabilities. “A legal and valid assignment” devotes all the property covered by it to the creditors presenting their claims in pursuance of the statute, which appropriation can not be disturbed noi varied by a dissatisfied creditor; but to give it a more extended operation, so as to protect, even temporarily, subsequently acquired property, would be productive of much mischief. The future earnings and acquisition's of insolvent debtors should be always open to their creditors. An enforced delay of a few months, or days even, may render a. subsequent suit profitless and unproductive. The apprehended hardship of subjecting insolvent debtors to increased costs, consequent upon suits by creditors during, the progress of the assignment, is entitled to but little weight, and is inore than compensated by the power which it confers over their subsequent acquisitions. It may, after all, be safely committed to the self interest of the creditor to not increase, unnecessarily, the embarrassments of his insolv^it — 215 — debtor, and at tbe same time preserve bis claim in a condition to participate in a distribution of tbe property assigned. We do not perceive anything in tbe “ act regulating tbe mode of administering assignments,” which conflicts, in any respect, with tbe views here expressed. It regulates tbe administration of tbe assets assigned, and points out the mode in which a participation therein may, and indeed must, be sought. If a creditor does not acquiesce, his claim, and his remedies thereon, still remain, save that he can not appropriate the assigned property to its payment, except in the manner and proportions therein prescribed. There is not, in the act, any express prohibition of independent suits by creditors, while proceedings under it are in progress, and for the reasons already assigned,, we think, such prohibition should not-be implied. 2d. It is claimed that the petition is substantially defective, and that even if the answer is not of itself a legal bar to the action, it is nevertheless good enough for such a petition. The particular defect relied on, is, that the suit is brought in the name of a firm — Alcott & Horton — without averring the state of facts which, under the statute, authorizes the bringing of a suit in the name of a firm. Section 1 of the “ act in aid of the law regulating suits by and against companies and partners ” (S. & C. Stat. 1188), enacts : “ That any company or association of persons formed for the purpose of carrying on any trade or business, or for the purpose of holding any species of property within the State of Ohio, and not incorporated as such, may sue or be sued in any of the courts of this state, by such usual or ordinary name as such company, partnership or association may have assumed to itself or be known by,” etc. The petition, so far as relates to the character and capacity in which the plaintiffs sue, is in these words : “ The plaintiffs say that they are a firm doing business under the name and firm of Alcott & Horton.” The Christian names of the partners are not stated. Nor is it stated that they are a company formed for the purpose of carrying on any trade or business within the State of Ohio, nor that they are or were doing — 216 — business under that name within the state, and there is no averment from which such a state of facts can fairly be inferred. The construction of this section, owing to the punctuation, is somewhat obscure; but a reference to the second section, which provides for “ service of process against such company or firm under the provision of the act,” by a copy left at their usual place of doing business within the county,” shows that the company or firm suing or being sued, must be one doing business within the state, and clearly indicating an error in the punctuation of the first section as above quoted. This construction has been generally followed and approved by the courts of the state. Brownson v. Metcalfe et al., 1 Handy Sup. Ct. Rep. 188. It is an elementary principle in pleading, that where a statute, upon certain conditions, confers a right, or gives a remedy, unknown to the common law, the party asserting the right, or availing himself of the remedy, must, in his pleadings, bring himself, or his case, clearly within the statute. A suit by or against a company not incorporated by its firm name, without disclosing the names of the several partners, could not be maintained at common law. It lacked the certainty deemed essential to judicial proceedings. 1 Chitty PI. (10th ed.) 256, and cases cited. This somewhat inconvenient rule, has been modified in part by the statute above referred to, but the act, as we construe it, only permits this to be done by and against unincorporated companies doing business within this state. It would, therefore, seem to follow, that the averment that the plaintiffs are a firm doing business by that name, without superadding “ within this state,” or other equivalent words, would not entitle them to maintain an action in the name of the firm. The plaintiffs ¿o not bring themselves within the statute creating the exception. It is more difficult to determine how the defendants are to avaikthemselves of the omission. Is it to be regarded as an averment imperfectly made, to be remedied only by a motion to make the petition in this respect more certain and specific; — 217 — or is it properly subject to a demurrer for want of legal capacity in the plaintiffs to sue ? It is not perhaps of much practical importance to determine this question in the present suit, as the result would be the same in either case. But in view of the rule at common law, above alluded to, and the fact’that the objection appears upon the face of the petition, we incline to the opinion, that the objection should have been taken by demurrer as not showing that the plaintiffs had a legal title to the character in which they sue. Yan-santvoord, in his recent treatise on pleadings, under the code of New York (2d ed. 668), says: “Objections to the person of the plaintiff that he has not legal capacity to sue, are: 1st. That the plaintiff is not entitled to sue by reason of some personal disability; or, 2d. That the plaintiff has no title to the character in which he sues.” The objection here is, that the plaintiffs, upon the showing made in the petition, are not in law, entitled to sue as a firm. If this be true, the objection is waived, no demurrer for that cause having been filed. Code, secs. 87, 88 and 89. The question is one of much importance, and we have thus far considered it as a question arising under the first section of the act above quoted, where a recovery is sought by one firm against another firm, and in which, we conceive, the averment spoken of should be made ; but being a proceeding under the 4th section of the act, to charge the separate property of the persons composing the debtor firm with the payment of a judgment already recovered against their firm and in favor of the plaintiffs, suing in that action as a firm, the question assumes a different aspect. The recovery in the first action established the light of the plaintiffs to sue and have judgment in the name of their firm. The record is conclusive in the second action of the regularity of the judgment-in the name of the firm. No averment on the part of the plaintiffs is necessary to sustain it, and the individual members of the debtor firm would not be permitted to disprove it. Lastly, it is said the court of common pleas erred in rendering judgment for ten per cer. t. interest, on the judgment — 218 — specified in the petition, and that the district court for that reason, also erred in its affirmance. It is claimed that the court of common pleas, as appears from the record, rendered its judgment solely upon the allegations of the petition, which contains no averment that the judgment against the firm of Haskins, Roller & Haskins, bore that or any other rate of interest. The petition, in setting forth the recovery, does not, it is true, state the rate of interest it was to bear; but after averring recovery of a judgment against the firm for $1675.27, its subsisting obligation and the names of the persons composing the firm, it demands judgment against the individual partners, “ for the amount of said judgment for $1675.27, with interest thereon at 10 per cent, from November 29, 1859.” And the entry of judgment, after stating the sustaining of demurrer to the answer — the failure of defendants to amend or reply — the making of the assignee a party by consent and the entry of his appearance, is in these words : “ and thereupon this cause is submitted to the court, and neither party requiring a jury and the court being fully advised in the premises, do find the facts set forth in the plaintiffs’ petition to be true. It is therefore ordered, etc., that the said Collister, Haskins, etc., pay to the said plaintiffs said sum of $ — , etc., with interest at the rate of 10 per cent.,” and execution is awarded thereon in case of default. It will be perceived from this entry, that the record does not necessarily exclude the presumption, that testimony in regard to the rate of interest, was heard and considered by the court, and such evidence was, we think, admissible. There were two acts regulating interest upon judgments in force when that cause of action arose : 1. The amendatory law of March 14,1850 (2 Curwen, 1569), authorizing persons, other than banking institutions, to stipulate in written contracts for the payment of interest, at any rate not exceeding ten per cent., and providing that interest upon judgments, rendered upon such contracts, should' be computed at the same rate. 2. The law of January 19,1824, which fixed the rate of interest upon judgments at six per cent., and which — 219 — was applicable to all cases, where no- other rate was specified-in the contract. In many portions of the state, it has not been customary to embody the increased rate of interest in the judgment ; and this was doubtless the usage in Wood common pleas,, though 'we think the better practice is to embody the increased rate of interest in the judgment itself. Interest is. but the incident, and to be assessed in conformity with the-statute. ' The rate depended upon the terms of the contract in suit in the original action; and these were not disclosed by the record as set forth, nor is the rate expressed in the body of the judgment. The demand for the increased rate-of interest, is not, therefore, inconsistent with the record declared on, and though not strictly traversable, notified the-other party and the court that the plaintiff claimed the judgment was entitled to the increased rate, and this demand, in. the absence of any motion to strike out or make more specific, was, we think, sufficient to warrant'the introduction of proof. Every reasonable intendment must be made to support the judgment of a court having jurisdiction of person, and subject matter; and we, therefore, presume such proof was received, inasmuch, as it does not affirmatively appear that no such proof was introduced. Judgment affirmed. Sutliee, C. J., and G-holson, BRInkeehoee and Scott, JJ.,, concurred.