Morrison v. Blodgett

Parker, J. The first question which has arisen in this case, and one which it may be well to have settled, is whether a sheriff may seize and hold partnership property, by attachment, or on execution, upon a demand against one of the partners. The practice, which formerly prevailed, of selling on execution an undivided interest of the debtor partner, in such specific portion of the partnership property as the creditor saw fit to seize, it seems to be conceded cannot be supported under the views, now very generally taken, of the rights and liabilities of partnership creditors and partners. But in Scrugham vs. Carter, 12 Wend. 131, where the sheriff had seized and removed the goods of a partnership, upon an execution against one of-the partners, it was held that an action of replevin could not be maintained against him, at the suit of the other partners, or those standing in their stead. One of the reasons suggested for this, is, that each partner is entitled to the possession of the partnership property ; and if one excludes the other, no action at law lies- — the remedy is in equity.” — .Whether replevin will lie, or not, it must not be overlooked that the right of one partner to the possession, is, to hold for the purposes of the partnership, and the benefit of the whole, and not a right to sever any specific portion, and hold it for his own use, without the consent of the other partners, and against their interest. If it be true, that in case one partner does take a — 245 — portion of the partnership property, and hold it against the other partners, no action of trespass or replevin can be maintained against him, it will not prove that such partner has a legal right so to do ; but only, that by reason of the general control given him over the goods, by the constitution of the partnership, such remedy at law cannot be sustained for a violation of his duty as a partner. This, however, will not show that an action might not well be maintained against any third person who should seize the goods on execution, for the debt of an individual partner, and exclude the other partners from the possession ; when no right existed to hold them in pledge for the debt, or to apply them to the payment of it by a sale on the execution. Such seizure and possession is not within any rights of the debtor^ partner to exclude the other partners from the possession, nor in furtherance of the purposes of the partnership, but in direct, contravention of the rights of the other partners. Formerly it was, undoubtedly, the practice to levy an execution against one of several partners upon all or a part of the goods which belonged to the partnership. Various cases arc found, showing the practice at law to seize the specific property, and sell a moiety, or undivided share, of it. 1 Salk. 392, Heydon vs. Heydon; 2 Ld. Raym. 871, Jacky vs. Butler; 1 Shower, Bachurst vs. Clinkard; Comyn's Rep. 277; do. 619; 3 Bos. and Pul. 288, Parker vs. Pistor; do. 289, Chapman vs. Koops; do. 254; 11 Vesey 85, Barker vs. Goodair; 1 Gallison 368, Lyndon vs. Gorham and trustee. The language of some of these cases would indicate that the undivided share of the debtor partner, in the goods seized, was sold, without any reference to the debts of the partnership, although Lord Hardwieke understood the cases in Salkeld and Ld. Raymond as holding, “ that judgment and execution against one partner, for “his separate debt, does not put the other in a worse condition, for he must have all the allowances made him before “ the judgment creditor can have the share of the other “applied to him.” 1 Vesey, sen’r, 241, West vs. Skip. — 246 — Cases hare certainly existed in which a partnership was treated, at law, as a tenancy in common, without reference to a partnership account, so far as it respected such seizure and sale — and as a tenancy in common of each chattel which belonged to the partnership ; for in many instances only a part of the goods have been seized, and the undivided share in separate articles has been sold to different individuals. 17 Ves. 205; 2 Ves. and Bea. 301; 1 Story's Eq. 629. Some of the early cases speak of a seizure of all the goods of the partnership ; but this, evidently, has not been regarded as necessary to the validity of the proceeding. Probably no more was intended, than that the sheriff could not divide off and seize a moiety of the goods, and sell all which he seized. 1 East 367, Smith vs. Stokes. Although it seems that in Eddie vs. Davison, Doug. 650, the whole interest in the goods seized was sold, and the sheriff was ordered to pay a share of the money levied to the assignees of the other partner. Comyn says, “ If A, B and C are partners, and judgment and execution ‘ is sued against A, only his share of the goods can be sold. ‘It is true, the sheriff may seize the whole, because the ‘ share of each, being undivided, cannot be known; and if ‘ he seize more than a third part he can sell only a third of ‘ what is seized, for B and G have an equal interest with A ‘ in the goods seized ; but the sheriff can sell only the part ‘of him against whom judgment and execution was sued.” Com. Rep. 619, The King vs. Manning. Proceedings at law would have been more simple, and easier conducted, had this practice been continued; but when the courts of equity adopted the position that the partnership property was a fund, in the first instance, for the payment of the partnership debts — that the interest of each partner in the partnership was only his share of the surplus remaining after the obligations were discharged,' — and that the vendee on such sale took cum onere, subject to the equities of the other partners, and the creditors (1 Gallison 369)— — 247 — it became very nearly a matter of necessity for courts of law to change the practice in relation to such sales, although Lord Eldon seems to have expressed something like surprise that they should attempt to administer equity upon the subject. 2 Ves. and Bea. 301, Waters vs. Taylor; 17 Ves. 206. If the several vendees of an undivided moiety of specific parcels of goods became not only tenants in common with the solvent partner, but held the share of the debtor partner in those goods subject to a partnership account, and entitled, instead of the definite share of the goods which they had purchased, only to a share of a surplus which might exist in favor of the debtor partner upon the taking of such account, if any there happened to be, or to nothing, if no surplus existed, as the case might be; and were liable to a bill in equity, in which these matters were to be adjusted ; there was certainly no propriety in any longer attempting to sell an undivided share of the specific chattels on an execution at law. The reason and necessity for a change is apparent. The sheriff could no longer convey a specific share of particular goods. If he attempted to sell it, the purchaser, through the intervention of a court of equity, might find that he had taken nothing by the sale. But if the partnership was not in fact insolvent, so that a purchaser might take something, to wit. the debtor’s interest in the surplus, that interest was not an undivided interest in any particular goods separated from the mass of the partnership effects ; and there would be not only the evils suggested by Mr. Justice Story, as reasons why an injunction should be granted to restrain the sale, (1 Story’s Eq. 629) but a question might also arise whether, in case the goods remaining in the hands of the solvent partner were insufficient to pay the debts, the several vendees of the separate portions of the goods, sold at different times, on several executions, were to .contribute to make up the deficiency, or whether the vendees under the prior execution and sale were entitled to hold the goods, in which they — 248 — had purchased a contingent interest, until those which had been delivered to subsequent vendees had been exhausted. And if this were decided in favor of the vendees under the prior execution, a similar question might arise among them respecting a priority in the sales to themselves. There must have been a constant collision between the principles of the courts of law thus administered, and the courts of equity, in relation to this subject, had the former continued to authorize the sale of an absolute undivided interest in specific portions of the partnership goods upon execution; and it has even been thought that such sale by the sheriff ought to be restrained by injunction. Vide 1 Story’s Eq. 629; 2 Johns. Ch. Rep. 548; Gow on Part. [252] 278. If the courts of law are unable to carry out the principles of equity fully, by distributing the joint and sepiarate effects among the joint and separate creditors, respectively, it may be well that they have been disposed to follow the principles established in chancery, so far as the nature of their proceedings will admit, leaving the equity jurisdiction to supply, as well as it may, the deficiency. The principle that the partnership effects are a fund, to be applied in the first place to the payment of the partnership debts, and that the interest of each partner is only his share of the surplus after they are discharged, has accordingly been very generally recognized as a sound principle of law, and has been of very easy application where the separate and the partnership creditors were at the same time striving to satisfy their dem’ctnds by a sale upon execution. Precedence has been given in such cases to the creditors of the partnership. 5 N. H. Rep. 190, Tappan vs. Blaisdell, and cases there cited; 9 Conn. 410. But this is not enough. Having established this principle, there seemed to be no longer any ground for authorizing the sheriff to seize and sell an undivided interest in specific portions of the goods of the partnership, upon an execution against an individual partner, — 249 — even where no execution against the partnership is interposed ; and the later authorities hold that he is to sell the interest of the debtor partner. Mr. Justice Story, in his Commentaries on Equity Jurisprudence, says, “ It is well ‘known, that at law an execution for the separate debt of ‘ one of the partners may be levied upon the joint property ‘of the partnership. In such a case, however, the judg- ‘ ment creditor can levy, not the moiety, or undivided share ‘ of the debtor in the property, as if there were no debts of 1 the partnership, or lien on the same for the balance due ‘ to the other partner; but he can levy the interest only of ‘ the judgment debtor, if any, in the property, after the ‘ payment of all debts and other charges thereon. In ‘ short, he can take only the same interest in the property ‘ which the judgment debtor would have upon the final ‘settlement of all the accounts of the partnership. When, ‘ therefore, the sheriff seizes such property upon an execu- ‘ tion, he seizes only such undivided and unascertained ‘ interest; and if he sells under the execution, the sale con- ‘ veys nothing more to the vendee, who thereby becomes a ‘ tenant in common, substituted to the rights and interest of 1 the judgment debtor in the property seized. In truth, the ‘ sale does not transfer any part of the joint property to the ‘ vendee, so as to entitle him to take it from the other part- ‘ tiers ; for that would be to place him in a better situation ‘ than the partner himself. But it gives him properly a right ‘ in equity to call for an account, and thus to entitle himself ‘ to the interest of the partner in the property which shall ‘upon such settlement be ascertained to exist.” 1 Story's Eq. 626; vide, also, 17 Vesey 206, Dutton vs. Morrison; 2 Ves. and Bea. 303; Gow on Part. [246] 271; 1 Wendell 313, Crane vs. French; 12 Wend. 133; 2 Conn. Rep. 516, Church vs. Knox; 9 Green. 28, Commercial Bank vs. Wilkins; Gibson vs. Stevens, Hillsboro’, Dec. T. 1834.* — 250 — This seems to be a necessary result, from the adoption of ⅛⅝ principle before stated. It has been repeatedly said that the creditor can have no greater right than the debtor had ; and if “ he can take only the same interest in the property which the judgment debtor would have upon the final settlement of all the accounts of the partnership/’ such interest is not an undivided interest in any particular portion of the partnership property, to be reduced into possession to the exclusion of the other partners, or sold to others. 15 Vesey 557, Young vs. Keighly. One partner has no right to convert the partnership goods to his own purposes. 16 Johns. 34, Dob vs. Halsey; 1 East 48, Shirreff vs. Wilks; 4 Johns. 251, Livingston vs. Roosevelt; 5 Cowen 489, Gram vs. Cadwell. Although there may be objections to sustaining an action at law if he do so. 9 Barn. & Cres. 532, Jones vs. Yates. Nor is it an interest which may be subdivided by the partner, and sold out to divers persons, by a sale of his interest in particular portions of the goods belonging to the partnership, and a delivery of the goods. He has no authority to make such sales, and thereby constitute his several vendees tenants in common with his co-partners in different portions of the goods. He has no authority, by an assignment of liis interest, to take from the creditors, or the other partners, the right to have their claims against the partnership satisfied out of the property. 4 Johns. Ch. Rep. 525, Nicholl vs. Mumford. Nor to make his assignee a partner in his stead, without the consent of his copartners. 14 Johns. 318, Murray vs. Bogert; 7 Pick. 238, Kingman vs. Spurr. Such assignment operates as a dissolution of the partnership. 17 Johns. 525, Marquand vs. N. Y. Man. Co. In cases where a partner may sell his interest, it would seem that he must sell it entire, and without excluding his copartners from the possession ; and if the sheriff sells he must sell, generally/the interest of the debtor in the whole concern, and not his interest in any separate portion of the property. It is admitted, 12 Wend. 131, that the sheriff cannot sell the goods. — 251 — If the sheriff cannot sell an interest in specified portions of the goods of the partnership, there seems to be no reason why he should levy upon those goods, and deliver them to the vendee, or why he should in fact reduce them into possession. If “ in truth the sale does not transfer any part of the joint property so as to entitle him,” (the ven-dee,) “ to take it from the other partner,” (1 Story's Eq. 626,) on what principle is the sheriff authorized to seize and hold, to the exclusion of the other partners, what his vendee, after a sale of the interest of the debtor is perfected, cannot take from them ? If the sheriff sells “ only the interest of such partner, and not the effects themselves,” (1 Wightwick's Ex. Rep. 50, cited 2 Johns. Ch. Rep. 549,) upon what ground shall he seize the effects which he is not to sell ? If “the creditors of the partnership have a preference to be paid their debts out of the partnership funds before the private creditors of either of the partners,” and this “is worked out through the equity of the partners over the whole funds,” (1 Story 625,) that equity should prevent them from being deprived of the means of payment by reason of such seizure by the sheriff, who can neither sell the goods, nor pay the creditors, and against whom they cannot proceed, so long as he may lawfully hold the goods. In Taylor vs. Field. 4 Ves. 396, Chief Baron Macdonald, in delivering the judgment of the Court of Exchequer, says, “ The right of the separate creditor under the execution ‘ depends upon the interest each partner has in the joint c property. With respect to that, we are of opinion that the ‘ corpus of the partnership effects is joint property, and ‘ neither partner separately has any thing in that corpus; 1 but the interest of each is only his share of what remains ‘ after the partnership accounts are taken.” And again he remarks, “ In law there are three relations; first, if a person ‘ chooses for a valuable consideration to sell his interest in the 1 partnership trade, for it comes to that; or if his next of ‘ kin or executors take it upon his death ; or if a creditor — 252 — ‘ takes it in execution, or the assignees under a commission í0f bankruptcy. The mode makes no difference; but 1 in all those cases the application takes place of the rule ‘ that the party coming in the right of the partner comes ‘ into nothing more than an interest in the partnership, which ‘ cannot be tangible, cannot be made available or be deliv- ‘ ered, but under an account between the partnership and ‘ the partner; and it is an item in the account that enough ‘ must be left for the partnership debts.” And he says further, “ If the partner himself therefore had nothing more ‘ than an interest in the surplus beyond the debts of the ‘ partnership upon a division ; if it turns out that at common 1 law that is the whole that can be delivered to, or taken by, ‘ the assignee of a partner, the executor, the sheriff, or the ‘ assignee under a commission of bankruptcy, all that is delivered to the creditor taking out the execution is the inter-1 est of the partner in the state and condition he had it,” &c. In 16 Johns. 106, Smith’s case, the court, after saying that the separate creditor takes the share of his debtor in the same manner as the debtor himself had it, and subject to the rights of the other partner, add, “ The sheriff therefore does ‘ not seize the partnership effects themselves, for the other 1 partner has a right to retain them for the payment of the ‘partnership debts.” And in Cram vs. French, 1 Wend. 313, Chief Justice Savage, after considering the subject, says, “ The sheriff therefore sells the mere right and title to the partnership property, but does not deliver possession.” Vide, also, 5 N. H. Rep. 193; 2 Conn. Rep. 516, 517. The conclusion, that the sheriff upon an execution against one partner is not to deliver to his vendee, and is not to seize the partnership effects, is sustained, therefore, not only by the reason of the thing, after the adoption of the general principle before stated, but by express authority. There is undoubtedly a difficulty in making a sale of the entire interest of one partner upon execution, without the*’ aid of equity in taking an account before the sale, because, — 253 — ordinarily, it cannot be known until an account is taken what is the value of the interest to be sold. But this difficulty cannot change the right of the creditor to have the interest of his debtor, whatever it may be, appropriated to the payment of his debt; and although, in the usual course of sales on execution, at law, no time can be given for such account after a seizure upon the execution, it is generally for the interest of both creditor and debtor that the full value should be obtained upon such sale, and this part of the matter may perhaps be well left to their superintendence and management. 2 Johns. Ch. Rep. 548, Moody vs. Payne. If the interest of the debtor partner only is to be sold, there can be no reason why equity should interfere by way of injunction to restrain the sale, on account of the interest of the other partners. There are other difficulties attending this subject, some of which cannot, perhaps, be fully obviated without legislation. It would seem that, like bankruptcy in England, such sale must operate, ipso facto, as a dissolution of the partnership, (17 Johns. 529, 535,) and several of the authorities before cited say that the purchaser becomes a tenant in common with the other partner, and takes the undivided share subject to the rights of the other partner. Cowp. 449, Fox vs. Hanbury; Gow on Part. [285,] 310, [365,] 391; 2 Swanst. 586, Skipp vs. Harwood. If the purchaser is to be regarded as a tenant in common, with the other partner, of. the partnership goods, he may perhaps have the ordinary rights of such tenant, and be entitled, like the assignees in bankruptcy, to hold such of the goods of the partnership as may come to his hands, subject to the account. 5 Johns. Ch. Rep. 70, Murray vs. Murray. There are, however, expressions in some of the cases indicating that such sale would give the purchaser no right to take possession of any of the goods, but only to demand an account. (16 Johns. 106, 109; 4 Johns. Ch. Rep. 525; 2 Conn. Rep. 517,) — 254 — an(J perhaps the same duties do not devolve on him as upon an assignee, or the same rights accrue to him. In other questions we have less of authority to aid us. The mode in which service of the writ is to be made, under our attachment laws, so as to secure to the creditor, in the best manner, the full value of the interest of his debtor, as then.existing, has never been determined. “ Chattels which cannot lawfully be seized on execution, cannot lawfully be attached.” 6 Mass. Rep. 243, Pierce vs. Jackson. Whether under our present laws the creditor can do more than return a general attachment of the interest of his debtor in the partnership, and summon the other partners as his trustees ; and what are the effects of such a service upon the rights and duties of the other partners, and of course upon the action of the debtor himself? — Whether it can suspend his right to interfere with the partnership property so long as the attachment exists, or whether he may proceed to act as partner until judgment and sale upon execution ? — And whether, after an attachment, the creditor or any of the partners may maintain a bill in equity for an account before a seizure and sale of the interest of the debtor on the execution? — are questions which may arise, but upon which this case does not call for an opinion. We might have declined to express an opinion upon the matters already considered. These defendants are in no situation to contest the right of a creditor of one partner to attach the partnership goods. Prior to the time when this attachment was made, the goods attached belonged to the firm of Dickinson & Blodgett, and the debt on which they were attached was a partnership debt due from them. Buf-fum, one of the defendants, purchased the interest of Dickinson, and agreed to pay his share of the debts, and indemnify him against them. Blodgett and Buffum — having continued the business as partners — being the persons who ought to pay the debt — and having the property which was formerly liable for its payment — and the sheriff having — 255 — seized that property — gave this receipt, undertaking to deliver the goods or pay the money, and the sheriff thereupon returned an attachment. There is no principle, equitable or legal, upon which they ought now to be permitted to set up this defence, and avoid their contract. It may be considered as equitably the partnership debt of the defendants. They are the very persons who ought to pay, and whose goods ought, in justice, to be taken, and the goods actually taken were those upon which the debt ought equitably to be charged. We should have hesitated long, under such circumstances, before holding that these goods could not lawfully be attached upon this demand, had no receipt been given. But when the defendants, instead of contesting the right of the officer to attach, assented to it — undertook to return the goods or pay the money — and the officer thereupon returned an attachment— all question upon the matter was put at rest. It is not competent for them under these circumstances to avoid this contract. In fact, it is not necessary for the plaintiff to rely upon the circumstances existing before the attachment. The authorities cited by his counsel show it to be well settled, that where an officer has made a nominal attachment, taking the receipt of a third person, and returning the goods as attached, the receipter is responsible, and cannot defend upon the ground that no goods were in fact seized, and that his contract was without consideration. 11 Mass. 219; ditto 319; 14 Mass. 195; 2 Vermont Rep. 212; 4 Vermont 505; Story on Bailment 95; 8 Wend. 614; 12 Pick. 144. Judgment for the plaintiff. Footnotes [*] 7 N. H. Rep. 358.