44 W. Va. 163 | W. Va. | 1897
Lead Opinion
Ella G, Stealey appeals from decrees of the Circuit Court of Pleasants county in the chancery cause of C. I. Conaway’s' administrators against James Stealey cl al. The facts are as follows:
On the 2nd day of November, 1887, Joseph Porter, a merchant, sold his stock of merchandise situated in his storeroom in the town of St. Marys, in said county, to James Stealey and H. M. Bookman, afterwards carrying on said business as Stealey & Bookman, taking-as part consideration therefor their two several promissory notes bearing date the day of sale, each for one thousand three hundred and forty-two dollars and eighty-six cents, with interest, payable, respectively, on the 1st day of November, 1889, and the 1st day of November, 1890, and signed by the members of the firm and their respective wives, Ella G. Stealey and R. P. Bookman, as their sureties. To secure these notes, a lien was retained on the stock of merchandise by a deed of trust duly executed and recorded strictly in accordance with the statutory laws of the State. This deed is as follows: “This deed, made this 2d day of November, 1887, by and between James Stealey and H. M. Bookman, of Pleasants county, and State of West Virginia, of the first part, and J. C. Noland, trustee, of the county and state aforesaid, of the second part,witness-eth that for and in consideration of the sum of one dollar cash in hand paid, the receipt whereof is hereby acknowledged, and for the further stipulation and agreements which is hereinafter set forth, the party of the first part doth hereby grant, sell, and convey to the party of the second part their entire stock of general merchandise situated in the storehouse of Joseph Porter, in the town of St. Marys, and on the corner of George and Second streets, Pleasants county, West Virginia; to have and to hold to himself, the said J. C. Noland, trustee, party of the second part, his heirs and assigns, in trust to secure Joseph Porter in the payment of five several promissory notes,
The firm took possession of the goods, and carried on the business of merchandising, selling and replenishing .until the 11th day of January, 1889, when-the following contract of dissolution was entered into — Bookman to retire and Stealey to continue the business: “This contract and sale agreement made and entered into this 11th day of January, 1889, by and between H. M. Bookman, of the one
On the 12th of March, 1889, Stealey paid seven hundred dollars on the Porter note, and Porter released the separate property of R. P. Bookman, and to secure H. M. Book-man for his liability on said notes Stealey executed to Book-man a note for eight hundred and three dollars and ninety-three cents, with Ella G. Stealey as surety, the collection of which was conditional on failure of Stealey to pay the balance due Porter. Stealey continued the business in his own name until June, 1889, when he absconded. His individual creditors, C. E. Sarber, Robert H. Browse, and Charles I. Conaway, now deceased, and represented by his administrators, levied on the stock of goods by virtue of attachments and executions. Other individual creditors also levied attachments on the same property. The creditors were all convened -before the court, and on a final hearing- of the cause, by the several decrees complained of, the court adjudged the deed of trust given on the stock of goods to secure the purchasemoney invalid, held the property covered thereby not subject to the partnership debts of the firm of Stealey & Bookman, and distributed the same among the individual creditors of James Stealey according to their attachments and executions; and decreed the sale of the property of H. M. Bookman and Ella G. Stealey to pay the debt of Joseph Porter. Ella G. Stealey is the sole appellant, and she here insists that the circuit court erred in holding the purchase-money trust deed invalid, and that the stock of goods was not first liable to the payment of the firm debts to the exclusion of the individual debts of James Stealey, and in not thus applying them to the relief of her property. If she is right as to these propositions, there being sufficient firm assets, including the individual property of HI M. Bookman, to pay off and satisfy the firm indebtedness, amounting to about three thousand three hundred dollars, all other questions raised in the case become unimportant. A determination of these points in her favor would render further litigation unnecessary.
The vital question, then, is as to whether the purchase-
There is another reason why this deed of trust is not invalid as to those attacking it. It was given on partnership property, by the members of the firm, to secure the purchase money due thereon, being the primary indebtedness of the partnership, and individual creditors of James Stealey alone assail it. Social assets are primarily liable for social debts, and a partnership, in securing such debts by conveyances of such assets, could not be guilty of fraud against the individual creditors of members of the firm; for it is a legal duty for them to do so. And individual
In Story, Partn. § 97, the law is stated to be “that no separate creditor of any partner can acquire any right, title, or interest in the partnership stock, funds, or effects, by process or otherwise, merely in his character as such creditor, except for so much as belongs to that partner as his share or balance after all prior claims thereon are deducted and satisfied.” And in Conroy v. Woods, 13 Cal. 626, it is held that: ‘ ‘Partners may make bona fde sale of their property at any time before the creditors acquire a lien; but a sale, directly or indirectly, to one of the partners, with a stipulation that he will pay the firm debts, is not such bona jidc sale, so as to devest the property of its character as firm property primarily liable for firm debts.” Nor have the creditors of James Stealey the right to force the debt of Joseph Porter onto the property of Mrs. Book-man and Mrs. Stealey, so as to permit them to take the partnership assets. They are merely sureties for the debt, and by reason thereof creditors of the partnership, with the right to insist on the payment of the same out of the social assets to the relief of their separate properties.
There are other questions presented in this case which are eliminated by this conclusion. The decrees complained of are reversed, and this cause is remanded to the circuit court, with directions to apply the partnership assets first, and the proceeds of the individual property of H. M. Bookman second, to the extinguishment of the trust lien of Joseph Porter, to the relief of the separate properties of H. P. Bookman and 'Ella G. Stealey, and to further proceed therein according to the rules and principles of equity.
Rehearing
The arguments advanced by counsel are fully met by the opinion in this case, and it is wholly unnecessary to repeat the same. The deed of trust was executed more as a security for Mrs. Stealey and Mrs. Bookman, than to secure Bookman. And the fact that Nolan and Porter considered it fraudulent£er se cannot make it so. The legal ignorance of lawyers or others cannot make law, render a valid instrument invalid, or divert social assets to the payment of individual debts. The ill-considered determinations of courts of last resort may sometimes have such an effect, but not outside opinion. For, if ignorance made law where now it does greatly abound, it would then be at a premium, and would fully substantiate the old ad^ge that, “If ignorance is bliss, it is folly to be wise.” Some of the parties thereto may have labored under the impression that a deed of trust for the purchase money of social assets would be invalid as to individual creditors of a firm ; yet this would not make it so, although sustained by the most learned of legal advisers, as they are liable to err. As heretofore directed, the decrees complained of will be reversed, and cause remanded.
Reversed.