Hargadine-McKittrick Dry Goods Co. v. Belt

Mr. Justice Bigelow delivered the opinion oe the Court. A number of errors have been assigned, but none are relied upon, except those in reference to the giving and refusing instructions. The evidence relied upon by appellant to show that appellees fraudulently disposed of their property, is that of four acts: First, that Cook’s individual note of $200 was paid with money belonging to the firm; second, that Belt’s note was paid in the same manner; third, that Cook paid the workmen on his dwelling house with the firm’s property; and fourth, that Belt admitted that goods had disappeared from the store while he was absent in Kentucky. As to the last piece of evidence it was fully submitted to the jury by the third and sixth instructions given for appellant, and we are satisfied with their finding. We are not prepared to hold appellees’ second instruction correct, but in the view we take of the casé it could have done appellant no harm. On the entire evidence appellant could only have made its attachment good by having the jury instructed as prayed for in its refused instructions, which are as follows: “You are instructed that where two or more individuals combine their capital for the purpose of jointly conducting and carrying on a business as a firm or copartnership, and such firm, in the transaction of their said business, contract copartnership debts, such debts are binding upon the assets and property of such firm; and should a member of such firm use the assets or a part thereof, while said firm were so indebted,-for the payment of his individual indebtedness, to the detriment or exclusion of the creditors of such firm, then such act would be an act in fraud of creditors of said firm. “ The court instructs you that any disposition of partnership effects by the firm or any. member ■ thereof,. which operates to defeat the right of joint creditors, and to give individual creditors priority over them, is regarded as showing an intent to defraud them, which will support an attachment, charging the fraudulent disposition of partnership assets, so as to hinder and delay the creditors of the firm. “ You are instructed that the appropriation by a debtor, of money belonging to Lis firm to the payment of his individual debts, is a fraud upon creditors of the firm, and will support an attachment wherein it is charged that the assets of said firm have been fraudulently disposed of, to the injury of the creditors of such firm.” The principles that govern the powers of copartners to appropriate the firm property in payment of firm debts, or in payment of individual debts, or in the sale of the common property, either to one of the partners or to third parties, have been so fully passed upon and determined by the Supreme and Appellate Courts of this State, that we feel it unnecessary to attempt to add anything further. Hapgood v. Cornwell, 48 Ill. 65; Rainey v. Nance, 54 Ill. 29; Goembel v. Arnett, 100 Ill. 34; McIntire v. Yates, 104 Ill. 491; Young v. Clapp, 147 Ill. 191; Williamson v. Adams, 16 Ill. App. 564; see also Waiton Fraud. Conv., 3d Ed., 388. From these authorities, as well as upon principle, we are of opinion that a partnership firm has the same powers over the firm property as an individual has over his property. Each partner has, however, a right as against his copartner, to have the firm property applied in payment of partnership debts, from which equity, results the rule that partnership creditors shall be paid out of the firm’s assets, when for any reason a court comes into possession of them to administer. For one partner, without the concurrence of his copartner, to apply the assets of the firm in paying his individual debts, is a wrong against, the copartner, but it is not a wrong against any firm creditor, since the law of this State recognizes no lien or equity in the firm creditor on the firm assets. It is á wrong that the non-consenting partner only may redress. The partnership creditors, so long as the firm, whether solvent or insolvent, is in control of its property, may not take upon themselves to redress the wrongs that the law deems to have been suffered only by the unconsenting partner. Of course these powers must be honestly exercised. If the individual notes of Belt and Cook had represented fictitious claims, the fraudulent intent would have followed from their payment, if the firm were insolvent at the time the notes were paid. It can not, then, be affirmed that when a firm, or any member thereof, honestly devotes the firm property in any other way than in payment of firm obligations, that such acts show a fraudulent intent. The only case in this State relied on by appellant in support of the refused instructions, is Keith v. Fink, 47 Ill. 272. The question of actual fraud was not raised in that case. What the court would have held, had it been raised, we can not tell; but we know what it has since said in Weare Commission Co. v. Druley, 156 Ill. 25, and in Wadsworth v. Laurie, 164 Ill. 42, where the question was raised, and upon the authority of these cases, we must hold that an attachment can not be maintained under the law of this State, unless fraud in fact is shown, and that the question of fraud is one of fact, to be passed upon by a jury. The Circuit Court did not err in refusing to give to the jury the instructions asked by appellant, since, had they been given, the question whether appellee had committed fraud in fact, would have been taken from the jury. Finding no error in the record, the judgment quashing the writ of attachment is affirmed.