Coe v. Whitbeck

11 Paige Ch. 42 | New York Court of Chancery | 1844

The Chancellor.

This case must be decided upon the facts stated in the original bill, on which the orders appealed from were based. I cannot therefore notice the fact, subsequently stated by way of amendment to the bill, that the bankrupt had assigned his interest in the judgment, recovered in the names of himself and of the complainants, previous to the institution of the proceedings for his discharge under the bankrupt act. For the purpose of ascertaining whether the decisions of the vice chancellor were correct, therefore, it must be .taken as an admitted fact that the judgment belonged to thé partnership at the time the decree in bankruptcy was pronounced; and that the beneficial interest of the bankrupt, in that debt, if any such he had, belongs to his assignee in bankruptcy. The question first to be considered then is, whether the assignee in bankruptcy was a necessary party to the suit, in this court, to reach the property of the defendant and have it applied in satisfaction of that .judgment.

Where a debt is due to a copartnership at the time of the bankruptcy of one of the individual members of the firm, an action at law to recover the debt must be brought in the joint names of the solvent copartners and of the assignee of the bankrupt; as the legal title to the debt is vested in them jointly, by operation of law. (2 Walf. on Parties, 299.) But the solvent partners have the right to bring the action in the names of themselves and the assignees of the bankrupt, without the consent of such assignees, upon giving them an indemnity against costs. (Broom on Part. 65. Whitehead v. Hughes, 2 Cromp. & Mees. Rep. 318.) And in this court I think the assignee of the bankrupt copartner is a^necessary party to a suit brought to recover a debt due to the firm at the time of his bankruptcy ; where such assignee takes a beneficial interest in the partner•ship effect®) as a trustee for the separate creditors of the bankrupt copartner under the proceedings in bankruptcy. But where the bankrupt is discharged froqi his debts, and it distinctly appears that the copartñeíship is insolvent, so that the assignee in bankruptcy has no interest in the effects of the firm, but the solvent partners must necessarily apply the whole of the copartnership property to the payment Of the debts of the firm, and make up the deficiency of those debts out of their individual property, and where that fact is distinctly stated in the bill, I can see no good reason for making the assignee of the bankrupt partner a party to a suit in this court to obtain payment of a debt due to the firm.

The objection, however, that the amount of the judgment in the supreme court is not sufficient to give the court of chancery jurisdiction, and that the complainants have not exhausted their remedy at law as to the justice’s judgment, appears to have been well taken. The vice chancellor considers the fact that the execution upon the judgment in the supreme court, which was issued against the real as well as the personal estate of the defendant, had been returned unsatisfied, as equivalent to an allegation in the complainant’s bill that the defendant had no real estate which could be reached by execution, at the time such bill was filed. But he has overlooked the fact that the execution upon the judgment in the supreme court was returnable •as early as the fiist of February, 1843, five month's previous to the recovery of the judgment before the justice, and eleven months before the return day of the execution issued upon that .judgment against the defendant’s personal property merely. The returns upon both executions, therefore, may be perfectly true, and yet the defendant may have acquired real estate sufficient to have satisfied the justice’s judgment after the-return day of the execution issued out of the supreme court 5 and which could not, for that reason, be sold by the sheriff.

Where a judgment is recovered in a justice’s court, and the defendanfihas no real estate whatever, the filing of a transcript in the office of the county clerk for the purpose of obtaining an execution against real as well as personal estate might perhaps be considered as an useless expense. But to entitle the plaintiff in the judgment to file a creditor’s bill, upon the return of an execution which has been issued against the personal estate merely,' unsatisfied, there should at least be a distinct averment in the bill, that the defendant had not, either at the time of the issuing of such execution, or at the time of filing the bill, any real estate or chattels real which could have been reached ^and sold upon execution, if the judgment had been entered and docketed in the county clerk’s office, and an execution issued thereon against both real and personal property of the defendant.

The orders appealed from must therefore be reversed. The motion to dissolve the injunction must be granted, and the motion to appoint a receiver must be denied with $ 10 costs; but without prejudice to the right of the complainants to apply to renew the injunction and to appoint a receiver, upon a new, or an amended bill.