Peoples' Bank v. Shryock

Brent, J., delivered the opinion of the Court. The appellees, having obtained a judgment against William H. Trego, issued upon it an attachment by way of execution. This attachment was laid in the hands of the People’s Bank of Baltimore, to bind the interest of the defendant, Trego, in a sum of money standing upon the books of the bank to the credit of the firm of Trego -& Kirkland, of which firm Trego was a partner. The question then arises, is a debt due to a co-partnership liable to attachment at the suit of a creditor of one of the partners ? If the attachment had been laid upon the tangible effects of the firm, there would be no doubt of the right to do so, for all the authorities concur that the property of a firm may be sold for the debt of one of the partners. When sold the vendee purchases and is substituted to nothing more than the interest of the partner, which afterwards becomes the subject of ascertainment by a proper adjustment of the respective interests of the partners. The rights of co-partners and creditors of the firm' are not thereby sacrificed or disturbed. But where a debt is the subject of attachment, the judgment, if obtained against the garnishee, changes the right to the fund without any settlement of partnership accounts, and vests in the attaching creditor an absolute claim to the payment over to him of so much money. In Drake on Attachment, sec. 567, the author says, “The attachment of a debt due to a — 434 — co-partnership, in an action against .one of the partners, is justly distinguishable from the seizure on attachment or execution of tangible effects of the firm for the same purpose.” He refers to the case of Winston vs. Ewing, 1 Ala., 129, and this case is a very strong one upon the question now presented for our decision. There it was sought to subject the debt due to a firm to an attachment issued against one of the partners. The Court held that this could not be done. The property of the partnership, it was conceded, was liable to execution and sale for the separate debt of a partner, the vendee under such sale becoming tenant in common with the other partner. But it was otherwise held in regard to a debt due. The Court says, “it has been expressly adjudged that the interest of one partner in a debt due to the partnership cannot be subjected by process of attachment, to the satisfaction of the separate debt of that partner, without showing from the state of the partnership accounts, as between the partners and with reference to the indebtedness of the partnership, what the right or interest claimed amounts to.” The authorities cited are 6 Mass., 276; 1 Gall., 361; 2 Conn., 514, and 4 Conn., 540, and they conclusively show that an attachment like the present would not be maintained in the Courts of either Massachusetts or Connecticut. In Lyndon vs. Gorham, 1 Gallison, 361, decided by Judge Story; that learned Judge says, “In order to adjudge the trustee responsible in this suit, it must be decided that the funds of one partnership may be applied to the payment of the debts of another partnership, upon the mere proof that the principal debtor has an interest in each firm. If this be correct, it will follow that a separate creditor of one partner will have greater equitable as well as legal rights than the partner himself has. The general rule undoubtedly is, that the interest of each partner in the partnership funds is only what remains after the partnership accounts are taken; and unless upon such an — 435 — account the partner be a creditor of the fund, he is entitled to nothing.” In Johnson vs. King, 6 Humph., 233, it is said, “The question in this case is, whether an execution creditor of one member of a partnership, is entitled to a judgment in a garnishment proceeding, against a debtor to such partnership. This question we decide in the negative. Such debt belongs to and is assets of the partnership, primarily liable to the satisfaction of partnership debts. If a judgment were given at law, upon the garnishment proceeding against the debtor to the partnership, to satisfy the separate liability of one of the partners, it would unjustly abstract a portion of the fund primarily belonging to the objects and purposes and creditors of the concern. And in such garnishment nothing can be done but to give or refuse the judgment. The Court has no power to impound the debt, until by the adjustment of all the partnership affairs, it shall appear whether the separate debtor of the execution creditor has any and what interest in the general surplus, or in the particular debt so impounded. Such proceedings cannot take place at law.” We have quoted at length from this case, because the views there expressed seem to he specially appropriate to the case before us. The proceeding of attachment in this State is essentially a legal proceeding and in no way appropriate to ascertain and settle the equitable rights between the garnishee and defendant, or to ascertain by adjusting the partnership affairs, the true interest of the defendant in the fund attached. The only judgment which could be given against the garnishee would be for a proportion of the money due the partnership, — that proportion to be measured by the number of the members composing the firm, — the amount due the attaching creditor. This would certainly be against the weight of authorities in this country, and in most cases productive of the greatest injustice. In the cases of Sheedy vs. The Second National Bank, Garn., 62 Missouri, 18, and Myers vs. Smith, et al., 29 — 436 — Ohio, 120, both decided in 1876, it was held that partnership demands, cannot be garnished for the separate debt of one of the partners. And to the same effect are the decisions in Vermont, New Hampshire, New York, Louisiana and Mississippi. See Drake on Attachment, (4th edition,) sec. 570, and notes. The exception to this rule is, where equity powers have been conferred by statute upon the common law Courts, and when by virtue of such powers, they can compel a settlement of the partnership for the purpose of ascertaining whether one of the partners has such an interest in a particular debt due the firm, as to justify its appropriation to the payment of his individual indebtedness. As no such powers have .been conferred upon the common law Courts of this State, the exception cannot be applied to an attachment here. The only eases in this country in which it is claimed a contrary doctrine is held, and to which we have been referred, are the cases of McCarty vs. Emlen, 2 Dallas, 277; Knox vs. Schepler, 2 Hill, 595, and Wallace vs. Patterson, 2 H. & McH., 463. The case of McCarty and Emlen is a very old one, having been decided in 1797. If it has not been expressly overruled, it certainly has been very much shaken. by the case of Knerr vs. Hoffman, 65 Pa., 126, in which the opinion of the Court was delivered by Judge Sharswood. So much so, that the doctrine it announces can hardly be considered as the present recognized doctrine of the Courts of Pennsylvania. And in this view we think we are strengthened by what is said by Judge Agnew in the case of Alter vs Brooke and Barrington, 9 Phila. Reps., 258. But apart from this, the doctrine announced in that case does not recommend itself to our judgment, and we are not disposed to adopt it. The case of Knox vs. Schepler, 2 Hill’s Reps., like the case in 22 Md., 30, is one where the defendant was the sole surviving partner of the firm of Gable, Cowell & Schepler. It therefore rested upon a different principle from — 437 — the case before us, in which the partnership is a continuing one at the time of the attachment. It is however said in the opinion of the Court ‘ ‘ that the interest of one partner may be taken in execution or may be the subject of attachment at the suit of a separate creditor of that partner.” But the rule laid down in regard to the disposition of the fund after judgment of condemnation, shows that under the law as recognized in South Carolina, the case is brought, at least within the equity of the exception to which we have above alluded. The judgment of the Court was, that the money should be paid over conditionally to the attaching creditor, — that is, it was “ to be held by him as the defendant had it, subject to the equities of the other partners and of the creditors of the firm,” and he was also to give bond “to answer any claim which might thereafter be made on such fund.” We are not disposed to quarrel with this rule, but cannot assent to hold it applicable to our Courts. The language of Ch. J. Swipt, in his opinion in Church vs. Knox, 2 Conn., is very appropriate to it. He observes on page 518, “ It is further said, if the plaintiffs have recovered more than the proportion of the defendant in this debt, and it should be wanted for the payment of partnership debts, the other partners may call them to account, and recover hack such money. At this rate a judgment may he rendered in favor of a man for a sum certain, with a liability to refund the whole, or a part of it, on some contingency. It is sufficient to state the proposition to show the absurdity of it. What right can a Court have to say, that a certain part of a debt due to a partnership may be taken to pay the private debt of a partner in a suit where the partners are not parties; and then, if wanted to pay the debts of the partnership, to oblige them to resort to the creditor ? ’ ’ But the case of Wallace vs. Patterson, 2 Harris & McHenry, 463, is relied upon to sustain this attachment. It is to be said of that case which was decided as far hack — 438 — as 1792, that no opinion of the Court was filed in it, and it is impossible from the report of the case to ascertain the true ground upon which the judgment was given. The case is altogether too unsatisfactory to be adopted as a binding authority. In the case of Berry, Garn. vs. Harris, Adm’r 22 Md., 30, the point was made, that the separate creditor of one partner can attach a debt due the partnership, and the case of Wallace vs. Patterson, was cited in support of the proposition. Although this case was decided upon the ground, that the defendant was a surviving partner, and that by virtue of his survivorship the legal interest in the debt attached was absolutely transferred to him and therefore liable to be attached for his separate debt, the general proposition contended for was noticed. And the Court then intimated in the strongest manner, that the case of Wallace vs. Patterson would not be considered a binding authority for the point to which it was cited. On page 40, Judge Bowie, who delivered the opinion of the Court, uses this language, “If this was a case of continuing partnership, we should have much difficulty in distinguishing it on principle from the case of Fisk and another vs. Herrick, 6 Mass., 271 ; Lyndon vs. Gorham, 1 Gall., 367, and the cases in Ala. and Tenn. ; but the case of a surviving partner, invested with the entire legal property, and control over the chattel, so broadly marks the line between them, that we are not at liberty to disregard the legal claims of the attaching creditor. The case of Wallace vs. Patterson, 2 H. & McH., 463, was the case of a domestic creditor, against one of several non-resident partners, whose firm as well as the debtor partner had become bankrupt. The distinction between attachments against tangible chattels and dioses in action belonging to the firm, and attachments issued during the existence of the firm, and after its dissolution, was not adverted to, and no opinion was given; we do not regard it therefore as decisive of the point to which it was cited.” — 439 — (Decided 26th March, 1878.) So satisfied are we upon the ground of reason and expediency, and the great weight of authority that the partnership credits of a continuing partnership should not be subjected, to the process of attachment at the suit of a separate creditor of one of the partners, that we cannot adopt the case of Wallace vs. Patterson to the extent which is claimed for it. In our opinion then, in a case like the present where-the partnership is a continuing one, and where there has been no adjustment of partnership affairs, a debt due the partnership cannot be taken by garnishment to pay the individual debt of one of the members of the firm. This judgment will therefore be reversed and judgment entered for the appellant. Judgment reversed, and judgment for appellant.