Freedman v. Holberg

89 Mo. App. 340 | Mo. Ct. App. | 1901

GOODE, J.

We will first notice the assignment of error on account of excluding evidence to show Nathan’s claim was bogus. Unfortunately for the appellants, they are estopped to urge this contention by the recital of the judgment that their attorney stipulated and agreed in open court that the Nathan attachment should be sustained and judgment entered in his favor. The attempt to break the force of this estoppel of record by proving the appellants were no parties to the Nathan suit was abortive. A judgment may be impeached by the judgment roll, hut in this case the roll has no such tendency. The judgment does not find the plaintiffs were parties to the action, but does find that their attorney in open court agreed Nathan might have judgment on his demand. Their counsel had full power to bind them by his solemn admissions and agreements in court, and that he did so agree, the entry is conclusive. It can only be impeached by the roll itself, which does not impeach it. ' The judgments in the several attachment suits seem to have been rendered by the consent of all parties in interest. As their interests in the property were conflicting, they were privileged to make stipulations to adjust them if they saw fit. Eor aught that is shown, plaintiffs’ counsel may have been apprised of the facts concerning Nathan’s demand,, when he consented to the entry, in which ease, undoubtedly, it was inadmissible for him to prove them afterwards in a collateral attack. Rudolf v. McDonald, 6 Neb. 163.

II. As has been indicated, the evidence is unsatisfactory about the dissolution of the Mississippi partnership, or the formation of the new one in Missouri, or whether there ever was a dissolution; but both sides treat the questions at issue as though !the Aurora firm were a new one. The application to have Ereedman Brothers’ lien postponed was made by the defendants as well as by the other attaching creditors. A member of a firm has the right to have the partnership assets used to discharge its debts rather than the individual debt of some partner. Goddard-Peck Gro. Co. v. McCune, 122 Mo. 426; Sexton v. Anderson, 95 Mo. 373; Hundley v. Farris, 103 Mo. 78; Julian v. Wrightsman, 73 Mo. 569. Each member has a lien upon the firm’s assets to that extent. From this prerogative of the partners, the firm’s creditors have derived the equity of a preference over the creditor of an individual in obtaining satisfaction of their debts from the partnership property, which is to be worked out, it is said, through the lien 'of the members. Sexton v. Anderson; Goddard-Peck Gro. Co. v. McCune, supra; McDonald v. Cash, 57 Mo. App. 536; Edwards v. Rosenheim, 74 Mo. App. 621; Reyburn v. Mitchell, 106 Mo. 365. It is customary to deny that the firm’s creditors are per se entitled to priority; but an examination of the cases, in my opinion, will make it doubtful whether such remarks are well advised. It is true, creditors have no lien which will prevent all the partners acting in concert from appropriating the firm’s property to other purposes than the payment of its debts. Sexton v. Anderson; Goddard-Peck Gro. Co. v. McCune, supra. Nevertheless, if this has not been done and the firm becomes insolvent, the superior right of its creditors is always- upheld. It is sometimes said, in explanation of this fact, that they have a preference in assignments, or proceedings of a chancery nature, where the court has hold of the partnership estate for the purpose of winding it up. But this seems an unimportant observation. The right of preference is grounded in conception of justice peculiar to equity, and enforced, so far as I have discovered, whenever equity has jurisdiction or its procedure is applicable, as it usually is under the code practice and pleadings. The rules of the common law have been so modified by the percolation of equitable principles that in this, as in many other instances, they have been practically adopted. The priority of the firm’s creditors was sustained against the right of the widow of a deceased member to an allowance out of the partnership assets (Julian v. Wrightsman, 73 Mo. App. 569), and given precedence to demands presented ,for allowance against the estate of a deceased member. Hundley v. Harris, supra. In the last case, the opinion approves the doctrine laid down by Chancellor Kent, that “the basis of the general rule is that the funds are to be liable upon which the credit was given.” The equity can be enforced in a proceeding of this kind. Sufficient chancery power can be exercised, under the statute allowing the court to settle the question of priority and good faith of attachments, to postpone one for fraud; then why not for any other sound equitable reason ?

But appellants urge that their claim is one against both the defendants — a joint obligation — and, hence, as the equity of firm creditors is derived from the privilege of a member to see that the assets are first used to pay the firm debts for which he is liable and as both are liable for this debt, so that neither can have any interest in preventing it from being paid out of the common property, the reason of the rule fails. If we adhere strictly to the doctrine that the firm creditors have no superior right expept on that far-fetched theory, there is much reason in this contention. But it can not be reconciled with the decisions, any more than the theory in its rigor can be. The precise point has been decided adversely to the appellant’s position. Dunnica v. Clinkscales, 73 Mo. 500. In that case, the partnership of Morehead Brothers had made an assignment for the benefit of their creditors. Plaintiff presented, for allowance, notes given by the two members of the firm in settlement of a partnership business which they had previously conducted in the State of Iowa. It was held these notes ought not to be allowed against the assets of the new firm in Missouri. Similar rulings were made in Forsyth v. Woods, 78 U. S. 484; Page v. Carpenter, 10 N. H. 77; Buffun v. Seaver, 16 N. H. 160; Bartlett v. Gro. Co., 45 S. W. 1063.

It follows that- the action of the trial court in giving precedence to the junior attachment liens was correct. The judgment is affirmed.

All concur.