200 F. 638 | S.D. Ohio | 1912
This case is submitted on the demurrer and plea of the receivers to the intervening petition and the amendment thereto of the Western Wheeled Scraper Company. The first question for decision is this: Under the Ohio statute, is a conditional sales contract void as against partnership creditors, if executed by a partnership in the firm name and filed by the vendor in the county only in which such partnership has its usual place of business; one of the partners being a resident of such county and the other a resident of another county in such state?
Frederick R. Jones, a resident of Franklin county, and G. A. Jones, a resident of Hamilton county, were, on and prior to September 12, 1910, and ever since have been, partners engaged in business as railroad and general contractors, under the firm name and style of Jones Bros. On that date the partnership and the intervener entered into a conditional sales contract, entitled a “car lease,” and signed, “Jones Bros., by G. A. Jones,” whereby certain cars, designed for use in construction work, were hired and leased to the Jones Bros. The cars, the title to which was retained by the lessor, were sold and delivered at Aurora, 111., and shipped to and used in Ohio, until November 12, 1911, and thereafter in Indiana. The Jones Bros, executed and
The lease, duly verified, was filed November 1, 1911, with the recorder of Franklin county, in which, the intervener alleges, the “partnership resided and had its principal place of business”; but it was not filed with the, recorder of Hamilton county. On December 6th, on complainant’s bill and application, receivers were appointed by this court for the Jones Bros, as individuals and as a partnership. The receivers returned the cars to Ohio and sold them under an order of court about the time of the filing of the intervening petition. The intervener asks for a delivery of the cars, or for the payment of the above-mentioned notes. Its position, which is controverted by the receivers, is that under the law merchant a partnership is a quasi corporation; that the statute which permits a partnership to sue and be sued in its firm name (section 11,260, Ohio General Code) has constituted it an artificial person, or distinct entity, like a corporation; that as such it has a residence at its usual or principal place of business; and that h> maintain the vendor’s priority it was not necessary to file the contract elsewhere than in the county in which the partnership had its usual place of doing business.
"A partnership is not, in our judgment, a legal entity, having, as such, a domicile or residence separate and distinct from that, of the individuáis who constitute it. To what extent residence may he affirmed of a partnership as such was considered hy the court in Fitzgerald v. Grimmell, 64 Iowa, 261 [20 N. W. 179]. In the dissenting opinion there is much force, and we cite the same with our concurrence: ‘Residence * * * in my opinion can be predicated only of a person, natural or artificial. A partnership, as distinguished from the members composing it, is neither. Besides, it appears to me that, in any view, the mere fact that a partnership maintains for the transaction of its business an established agent in a county where neither partner resides cannot constitute the partnership a resident of such county. There is no pretense that an individual would become a resident of a county by merely transacting business therein through an established agent, and I am not able to see that a different rule should be applied to a partnership.’ * * * It may perhaps he urged that, although the individual partners composing a firm reside in another state, the partnership is to be deemed resident in a state where it has a ‘usual place of doing business.’ But the statute, in prescribing (he maimer o£ service and return of summons, recognizes both a place of residence and a place of business. And the one is not to be regarded as identical with the other.”
The provision in section 11,260 that a partnership formed for the purpose of carrying on a trade or business in (Ohio, or holding property therein, may sue or be sued hy the usual or ordinary name which
“The remedy provided by the statute which authorizes suits to be brought by and against partners in their firm name is not a substitute for the remedies previously existing, but is in addition thereto. * * * It follows that partnership liabilities may be enforced by action brought under this statute, and "pursuant to its provisions, or by suit against the partners by their individual names, as before the statute, at the option of the plaintiff. *• * * The purpose of this statute was to give to every partnership of the kind which it describes a status in court as a person — an artificial or ideal person, it is true, but still the status of a person — who is regarded as the owner of the partnership property and rights in action, and is responsible for the partnership debts and liabilities of every kind. To render the administration of justice more convenient and easy, this statute authorizes suits to be brought by and against this ideal person in the name which the partners have seen fit to give it, and authorizes judgments which may be rendered against it to be satisfied by executions to be levied only on the partnership property.”
See, also, Byers v. Schlupe, supra; Haskins v. Alcott, 13 Ohio St. 210, 216; Bates on Partnership, § 1059.
The utterances of the English courts are in harmony with the foregoing, as will appear from Re Beauchamp Bros., [1894] 1 Q. B. 1, 7, and Western National Bank of the City of New York v. Perez, [1891] 1 Q. B. 304, 314, in which latter case it is said:
“When a firm name is used, it is only a convenient method for denoting those persons who compose the firm at the time when that name is used, and a plaintiff who sues partners in the name of their firm in truth sues them severally, just as much as if he had set out all their names.”
As regards the doctrine of partnership entity, it may be observed that one conception of a partnership, arising out of the agreement on which it is founded, is that it is an aggregation of persons associated together to share its profits and losses, owning its property and liable for its debts. Another conception is that it is an artificial being, a distinct entity, separate in estate, in rights, and in obligations, from the partners who compose it. Re Bertenshaw, 157 Fed. 363, 365, 85 C. C. A. 61, 17 L. R. A. (N. S.) 886, 13 Ann. Cas. 986. The intervener adopts the latter conception, and relies on Curtis v. Hollingshead, 14 N. J. Law, 402, 409, 410, Pooley v. Driver, R. R. 5 Ch. D. 458, and Parsons on Partnership (4th Ed.) § 184, to which may be added the discussion in Bates on Partnership, c. 8, § 170 et seq., and authorities cited in Re Telfer, 184 Fed. 224, 106 C. C. A. 366 (C. C. A. 6). In West v. Valley Bank, 6 Ohio St. 168, 173, a firm is characterized as an ideal mercantile person. This is the mercantile conception of a partnership. Gilmore, Part. 114 et seq. The legal conception, however, is quite different. Gilmore, Part. 117; Bates, Part. § 170. In Byers v. Schlupe, 51 Ohio St. 314, 38 N. E. page 121, 25 L. R. A. 649, the attitude of
“Tile members of a partnership do not form a collective whole, distinct from the individuals composing it; nor are they collectively endowed with any capacity of acquiring rights or incurring obligations. The rights and liabilities of a partnership are the rights and liabilities of the partners. 1 I.iiul. Part. 5. It is not a creation in which the identity of the individual members is merged and lost, in seeking to enforce against them the obligations of the firm.”
The doctrine of partnership entity, in the sense that a partnership is an ideal artificial person or being distinct from the individuals composing it, and in which the identity of the individual members is merged and lost, does hot obtain in Ohio. Nor does the judicial recognition of the doctrine of partnership entity change the established rule fixing the substantive rights either of the creditors of the partnership or of its individual members. Re Telfer, 184 Fed. 230, 106 C. C. A. 366. The partnership entity, after the enactment of the remedial statute permitting it to sue or be sued in the firm name, remained precisely the same as that prior to its passage, plus the remedial right thereby conferred. Such enactment does not affect the application of the statutory requirement that a chattel mortgage shall be filed with the recorder of the county where the mortgagor resides at the time of its execution. The same rule consequently applies as to the filing of such an instrument ■ in Ohio as in those states, in which the common-law rule is in force— the rule that actions affecting partnerships must be brought in the name of or against the individuals composing the same.
“Although made in the name of the partnership, it is the individual act of each member, and when the statute so specifically provides for the filing in the township where a partner resides who is a resident of the state, we think it should be followed.”
Granger v. Adams is like the case at bar in that the mortgage was executed by one partner in belialf of the firm. Elliott, J., in deciding the case, said:
*644 “The fact that the mortgage is executed by a partnership composed of several members does not change the rule. All the partners are mortgagors, and, as the firm can have no place of residence, the residence of the mortgagors must be that of the individuals composing the partnership. In ordinary legal proceedings, the partnership is reached through the individual partners. If an action is brought against partners, process must be served upon each member of the firm; if actions are instituted, it must be in the name of all the members. The act of the partnership is the act of all the members, the firm representing them in the act. * * * It seems clear upon principle that a mortgage of goods executed by a partnership must be recorded in the counties where the partners reside, and so the authorities declare.”
The same result was obtained in Bueb v. Geraty, which was decided under a New York statute which to all intents and purposes is the same as that of Ohio. Stewart v. Platt, 101 U. S. 731, 25 L. Ed. 816, which also arose in New York, was heard on appeal from the decision of Mr. Justice Hunt, 19 Fed. Cas. 852, Fed. Cas. No. 11,220. Mr. Justice Harlan said:
“The question thus presented is within a very narrow compass, and is not free from difficulty. Its solution depends upon the meaning of the word ‘reside’ employed in the statute. It is to be regretted that we are not guided by some direct controlling adjudication in the courts of New York construing the statute under examination. But no such decision has been brought to our attention. With some hesitation we have reached the conclusion that a chattel mortgage, executed by a firm upon firm property, is void, under the New York statute, as against creditors, subsequent purchasers, and mortgagees in good faith, unless filed in the city or town where the individual members of the firm severally reside. The statute upon its face furnishes persuasive evidence that its framers intended to make a sharp distinction between the place where the property might be at the time of the execution of the mortgage and the place of the mortgagor’s residence. If he be a nonresident of the state of New York, the mortgage may be filed in the town or city where the property shall be at the time of the execution of the mortgage. If he be a resident, then his residence, not the actual situs of the property, governs. If these instruments be executed by several resident mortgagors, the statute would seem to require that the mortgage be filed in the towns or cities where the mortgagors at the time respectively reside.”
The conclusion reached is that the conditional sales contract here in. question, like a mortgage executed in the firm name, should have been filed in both of the counties in which the members of the firm respectively reside. The reasons justifying such a statute as exists in Ohio are well stated in Morrill v. Sanford, 49 Me. 566, De Courcey v. Collins, 21 N. J. Eq. 357, and Bueb v. Geraty.
“Tlie effect of the appointment, and the seizure of the property by the receiver. was to fasten the claims of the creditors upon it and to give that «nicer control over it for the benefit of creditors, and in this respect Ills relation to it was, for all practical purposes, the same as that which an as-signee would have had. The property thus sequestered ivas held by the receiver as effectually as an assignee could have held it, or as creditors could have held it by attachment or levy. In no other way than through him could tlie rights of creditors be worked out, and, in this aspect of the case, he represents tlie creditors rather than the debtor.”
It therefore follows, as was held in the Hamilton and the Cincinnati Equipment Company Cases, that the cars were as effectually seized by this court for the benefit of the vendees’ creditors as if taken by attachment or upon execution. Especially is this true because citizens of Ohio are creditors of the vendees and are interested in the outcome of this proceeding.
The liability of property to he sold under legal process issuing from the courts of the state where it is situated must be determined by the law there, rather than that of the jurisdiction where the owner lives. This rule rests on the ground that every state has the right to'regulate the transfer of property within its limits, and that whoever sends property to it impliedly submits to the regulations concerning its transfer in force there, although a different rule of transfer prevails in the jurisdiction where he resides. He has no absolute
Boyer v. Knowlton Co., 85 Ohio St. 104, 97 N. E. 137, 38 L. R. A. (N. S.) 224, is decisive. The contract of conditional sale in that case had not been filed. The vendor, a New York creditor, contested the right of a chattel mortgagee to seize the property, because his chattel mortgage, which had been filed, was not refiled as provided by the Ohio statute. It was argued that the unfilled contract of sale was good in New York and that rules of comity between the states should make it good in Ohio. The syllabus (which in Ohio states the rule of the case) is as follows:
“Written, contracts of conditional sale of personal property, situate in Ohio, although made in another state, must be made and verified as provided in section 4155 — 2, R. S., in order to preserve the title in the vendor, as against subsequent purchasers and mortgagees in good faith and creditors, even if such contracts are in accordance with the law of the state where entered into. The rule of comity between states does not supersede compliance with said section.”
The intervener lays stress on Lane v. Roach’s Banda Mexicana Co., 78 N. J. Eq. 439, 79 Atl. 365, and Hubbardston Lumber Co. v. Covert, 35 Mich. 254; but these cases are readily distinguishable from the present one. The Covert Case must be read in the light of Briggs v. Leitelt, 41 Mich. 79, 81, 1 N. W. 942, First Nat. Bank v. Weed, 89 Mich. 357, 373, 50 N. W. 864, Kane v. Rice, Fed. Cas. No. 7,609, Gilmore, Part. 116, 117, Bueb v. Geraty, and Jones on Chattel Mort-gagcis, § 259, note. In any event, we are not controlled by the decisions of other states.
The plea and demurrer are sustained, and the intervening petition and the amendment thereto are dismissed. The intervener may prove its claim as a common creditor.
