29 N.J. Eq. 490 | New York Court of Chancery | 1878
The complainants, assignees under an assignment made to them by James M. Andrews under the act “to secure to
On or about the 20th of the -same month, Bennett and Andrews together made an assignment to the complainant Davis, under the act above mentioned, of all their partnership property, for the benefit of the creditors of the firm. Bennett is also insolvent, individually. Under an execution
The complainants insist that the judgment was recovered for a debt due from the firm, and that therefore Teel should be prevented from making any part thereof out of the individual property of their assignor until after the individual debts of the latter shall have been paid.
They claim the relief which they seek on the ground that, in equity, the creditors of a partnership have a preference to have their debts paid out of the partnership funds before the private creditors of either of the partners;' and, on the the other hand, the separate creditors of each partner are entitled to he first paid out of the separate effects of their debtor before the partnership creditors can claim anything. They allege that Teel put in his claim under the assignment of Bennett and Andrews, as partners, and they insist that he thereby waived any lieu he might have been entitled to under his judgment and execution thereon.
Teel, by his answer, admits that he did so put in his claim, hut says that it was expressly (and that it was so stated in the verifying affidavit) put in as a claim on the
In National Bank, &c. v. Sprague, the partners had given mortgages to secure individual debts. The chancellor (Zabrislde) held that the principle, though applicable in the administration of partnership assets to be administered here, was not applicable to liens created by the partners upon the partnership property before it came -into this court. He said: “ The partners, while the partnership property is still under their control, have the power to appropriate it to pay or secure their individual debts; as against them the mortgage is good. These claims are for debts due by them individu
In the course of administration of assets, courts of equity follow the same rules in regard to legal assets which are adopted by courts of law, and give the same priority to the different classes of creditors which is enjoyed at law, thus maintaining a practical exposition of the maxim, Equitas sequitur legem. . Story’s Eq. Jur., § '553.
In this case there is no allegation of fraud. The simple question presented is, whether a judgment recovered for a partnership debt is, in case of the insolvency of the firm and the partners, before it is collected, in equity, to lose its hold as a lien upon the separate property of. the partners; whether the vigilant creditor in such a case is to be held to have no advantage from the diligence which, but for the insolvency of the partnership, would, through the lien of his judgment, have secured him his debt out of the separate property of his debtor.
The injunction will be dissolved, with costs.