3 Paige Ch. 517 | New York Court of Chancery | 1831
Several questions were raised on the argument" of this case, which probably are not material to the decision of the present motion. It is urged, in behalf of these complainants, that upon the dissolution of a copartnership by the death of one of the partners, the survivors became trustees for all the creditors of an insolvent firm, and have no right to pay one creditor to the exclusion of another, but that all must be paid rateably. If the principle contended for is correct this suit is not properly instituted for the purpose of carrying that principle into effect. It is alleged in the bill that there were other creditors, not provided for in the assignment, to the amount of $25,GOO, including what is due to these complainants. To have enforced the principle of equality
Where an express trust is created for the benefit of creditors without any authority to the trustee to give a preference to any, it is, both at law and in equity, a trust for each' of the creditors rateably. And even in the case of implied trusts, where one of the creditors comes into this court to enforce the performance of the trust, except in those cases where he has acquired a specific lien by his superior vigilance, or where he is entitled to a legal preference, this court will act upon its favorite maxim that equality is equity. But although the principle of equality has always been a favorite with this court, it has not heretofore been adopted as a principle of the common law. On the contrary, by the common law, the property of an insolvent decedent in the hands of his personal representatives ás trustees for the payment of his debts, was in the first place to be applied to satisfy the demands of certain classes of privileged creditors to the exclusion of all
As the decision of this question in favor of the defendants is sufficient to dispose of the motion now before me, it is not necessary that I should go further at this time. But as it has been requested by the counsel of one of the parties and may save the expense of talcing testimony and of further litigation, that I should express an opinion upon some of the other questions which were discussed on the argument, I will proceed to examine them.
I do not think the partnership articles will bear a construction that the business of the firm was to be continued for the benefit of the original partners and their representatives, after the death of one of the members of the firm. The clauses relied upon by the defendants’ counsel to support that construction are the clause which relates to the continuance of the partnership, and that which provides for the distribution of the profits of the concern, upon a dissolution of the fir mi It appears from the articles that this was a partnership of a peculiar character. Lush & Vandenburgh were already in partnership, as merchants, in a particular business; for the continuance of which an express provision was made in these articles. The new company purports to have been formed bétween Edwin Jessup of the one part, in whose name the business was to be conducted, and of Lush & Vandenburgh in their copartnership character of the other part; and provision • is made for the division of the surplus profits of the concern during the existence of the copartnership, the one half thereof to Jessup, and the other half to Vandenburgh & Lush, jointly. The capital of the company also appears to have been furnished in the" same proportions. The provision, as to the continuance of the company, is as follows : “ Which partnership is to continue from the date of these presents during and until the same shall be dissolved and put an end to, by and with the mutual consent of both the parties to these presents.” There is nothing in this clause from which an intention to continue the business of the firm after the death of one of the parties could be inferred. And the fact that it was a partnership between Jessup of the one part, and the pre-existing company
It appears to be the better opinion, that one of the partners at any time during the existence of the partnership, may assign the partnership effects, in the name of the firm, for the payment of the debts of the company, although by such assignment a perference is given to one set of creditors over another. In the case of Dickinson v. Legare and others, cited, by the complainants’ counsel from the equity reports of South Carolina, (1 Dessaus, R. 537,) the court of chancery of that state decided against the validity of an assignment of all the partnership effects, made by one of the partners without the knowledge or consent of the other, to pay the debt óf a particular creditor. Chancellor Matthews, who delivered the opinion
In this case, however, the partnership was actually dissolved before the assignment by the death of one of the partners. The effect of that dissolution, as to this assigned property which consists of debts and choses in action only, was to vest the legal title to the whole in the surviving partners as joint tenants under the law merchant; that is, subject to the equitable right of each of those partners and of the representatives of the decedent, to have the proceeds applied in the first place to the satisfaction of the partnership debts, and to have-the surplus, if any, distributed rateably among the surviving partners and the representatives of the deceased partner, according to their several interests in the firm. The Legal interest in all the assigned property was in the surviving partners, and at law they alone were chargeable with all the debts of the firm. They had therefore the right, with
I do not see, however, that the establishment of that fact would aid the complainants in this case. The assignment of one of the surviving partners for the payment of the partnership debts would transfer his moiety or share both of the legal and equitable interest in the fund to the assignee, so that the assignor would no longer have any interest in the property. Even by an assignment under the bankrupt act, upon a sep
The' injunction so far as it affects the rights of D. & B, B-, Wood, as the assignees of Jessup, must be dissolved.