64 Miss. 141 | Miss. | 1886
delivered the opinion of the court.
It is but the reiteration of well-settled principles, by no means peculiar to Mississippi, to affirm that the right of copartnership
In this view of the law, the decree below is readily affirmed. Appellants had no lien on the funds of the firm sought to be reached by the bill, and these funds had been converted by John A. Klein to his own use, with the knowledge and consent of his partner, before the bill was filed. These funds, therefore, did not then belong to the partnership, and neither of the partners could at that time have insisted that they should be applied to the satisfaction of firm debts. The equities of the partners as to the particular funds had been extinguished by their joint act, and consequently the derivative equities of creditors were at an end. There was nothing upon which the equities of creditors could then operate, and no case for the application of the rule invoked, unless the disposition of the funds was rendered invalid as to creditors by the alleged insolvency of the firm or the fraud of the parties.
There is no testimony as to the insolvency of John A. Klein or the firm until the failure in November, 1883. It is true that the insolvency of both prior to that time is alleged in the bill upon information and belief, but this is denied on information and belief in the answer of Mrs. Klein, and appellants were thereby put upon proof of the allegation. Whatever may be the value of such answer as evidence, it at least required proof by appellants. 1 Dan. Ch. Pl. and Pra. 844, note 7 ; 846, note 1; Buttrick v. Halden, 13 Met. 355; Dugan v. Gittings, 3 Gill. 138; Drury v. Conner, 6 Har. & J. 288; Watson v. Palmer, 5 Ark. 501 ; Lawrence v. Lawrence, 21 N. J. Eq. 317.
If it be said that the matter of the insolvency of the firm may
But the insolvency of John A. Klein, or the firm, or both, if shown, would not, on the facts of record, change the rights of the parties. An individual debtor, whether solvent or insolvent, may unquestionably, under the laws of the State, make preference among his creditors, or pay one or more, to the exclusion of the rest, if it is done in good faith, and without the reservation of any benefit to himself, or' make a bona fide sale of his property without violating the legal rights of creditors, and a partnership or the members thereof, whether solvent or insolvent, may do the same. The law imposes no restrictions on the power of a partnership or its members as to the acquisition or disposition of property which are not common to other persons. Schmidlapp v. Currie, 55 Miss. 597; Sigler v. Knox Co. Bank, 8 Ohio 511; Case v. Beauregard, 99 U. S. 119 ; Roach v. Brannon, 57 Miss. 490.
The application of the funds of the partnership by John 'A. Klein, with the consent of his partner, to the payment of premiums on insurance for the benefit of his wife, to whom, it is admitted, he was largely indebted, was prima facie valid, and it devolved upon appellants to show that it was fraudulent. Kimball v. Thompson, 13 Met. 283; Case v. Beauregard, 99 U. S. 119; Parkhurst v. McGraw, 2 Cush. 134. They failed to do this, and there was no cause for relief.
Affirmed.