Flower v. Their Creditors

The judgment of the court was pronounced by Slidell, J. The question presented to us in this case is, whether dividual creditors of William, Flower are entitled to be paid the full amKum their claims out of the assets surrendered by him; or whether the partners' creditors have a right to participate pari passu with the individual creditor the distribution of those funds. The district judge decided the question in favor of the partnership creditors, and the individual creditors have appealed. We have carefully perused the elaborate argument presented by the appellants, and are not insensible to the plausibility and force of the view he has taken of the case; but we are not at liberty to regard this question as an open one. The question first arose under the Code of 1825, in the case of Morgan v. His Creditors, 8 Martin N. S. 600. It was considered at length by Judge Martin, as the organ of the court. It was then held that the rule of law, as it existed previous to the adoption of the new Code, had been changed; that under the new Code partnership creditors are entitled to be paid by preference out of the partnership assets, because that preference is expressly declared by art. 2794; that they are entitled to share ■ rateably with the individual creditors in the distribution of the individual assets, because by article 3152 it is declared that privilege can be claimed only for those debts for which it is expressly granted. The court noticed the fact that, at the time the new Code was adopted, a Code of Commerce was contemplated, and was the subject of frequent reference in the Civil Code; but as the Code of Commerce was not adopted, it was the opinion of the court that the Civil Code, as adopted in 1825, was conclusive upon the question, and the right of partnership creditors to participate on an equal footing with the individual creditors in the distribution of individual assets was fully and solemnly recognized. [192] But it is said by the learned counsel for the appellants that, there can scarcely be a doubt that if the attention of the court, in the argument of the case of Morgan v. His Creditors, had been called to the 138th article of the Commercial Code, as prepared by the jurists commissioned for that purpose, although not adopted, the decision would have been different. It is correctly stated by counsel that the proposed Commercial Code did expressly grant the separate creditors a preference upon the separate estate, thus following the pre-existing law, and harmonizing with the jurisprudence of the other States of this Union, of England, of Spain, and of Rome; but the learned counsel has been misled in this particular by the meagre manner in which that case was reported. No argument of counsel was given by the reporter; but, upon examining the record, we find an elaborate brief, in which the proposed Code of Commerce is quoted, and the same argument substantially presented as has been deduced from the same source on the present occasion. In the case of Town v. Morgan’s Syndics, 2 La. Rep. 112, the doctrine recognized in Morgan v. His Creditors was repeated. The question then was, by which Code the rights of the holder of Morgan’s individual note were tobe controlled, the note having been endorsed by him whilethe Code ofl808 was in force, and having matured after the adoption of the new Code ; and it was then said, as in the former case, that by the old Code the creditor would be entitled to be paid by preference out of the individual estate; but that if the new Code were applicable he must share pro rata with the partnership creditor's. The point therefore was distinctly before the court. Again in Bernard v. Dufour, 17 La. Rep. 599, the rule was treated as the familiar and undisputed doctrine, upon the authority of Morgan v. Creditors, which was cited. The only cases cited by counsel which clash with the authorities above mentioned is, Hagan v. Scott, 10 La. Rep. 349. But it is impossible to consider the incidental dictum which that case presents as seriously impairing the authority of Morgan v. His Creditors. It could only have originated from a hasty reference to’the defective marginal note of the case, in which the rule under the old Code only is stated, and that under the new Code is entirely omitted, although expressly recognized by the court. The' rule which was, after careful argument deliberately adopted and declared as far back as 1830, and which our courts have since, as we believe, uniformly followed in the distribution of insolvent estates, has become a practical rule of property, and we do not feel at liberty to disturb it. The profession have acquiesced in it for many years, the public have acted upon it, and, though its correctness may be debateable, it certainly does not fall within the category of those gross errors which no length of time or right of authority are permitted to sanction. Judgment affirmed.