5 F. 349 | S.D.N.Y. | 1881
This is an application by a judgment creditor for payment of his judgment out of the proceeds of real estate sold by the assignee under the order of the court. The ground of the application is that the judgment was a lien on the real estate at the commencement of the bankruptcy proceedings.
Prior to March, 1872, the five bankrupts and their father, Henry Lawrence, were partners in business under the firm name of Henry Lawrence & Sons. The real estate in question then stood in the name of Henry Lawrence, but was, in fact, partnership property. By his will Henry Lawrence devised it to his five sons, the bankrupts, who continued to hold the legal title as tenants in common till their bankruptcy in May, 1878, except so far as it may have been affected, if at all, by the general assignment hereinafter referred to. After the death of Henry Lawrence the five bankrupts continued the same business under the same firm name, till their failure, using and treating the real estate as part of their partnership assets, taking all the assets of the old firm, and assuming all its liabilities, arranging with the executors of Henry Lawrence to have his interest and capital in the concern, or a large part of it, remain as a loan to the new firm. The old firm of Henry Lawrence & Sons had dealings with the firm of Merrifield & McDowell, holding notes of that firm, and having a balance of account against them for goods sold. In 1874 the bankrupts sued the firm of Merrifield & McDowell, joining as defendant one Edward L. Merrifield, claiming that
On the twenty-ninth day of April, 1878, before Merrifield’s judgment was docketed, an instrument was executed, which is now relied on by the assignee in bankruptcy to defeat this application, as being a general assignment by the firm for the benefit of creditors. The parties named in the paper as parties thereto are the five bankrupts, “copartners in trade, doing business, etc., under the style, etc., of Henry Lawrence & Sons, parties of the first part, and Ezekiel Y. Bell, etc., party of the second part.” It recites the insolvency of the parties of the first part, and purports to assign, transfer, and set over all the property, including real estate, of the parties of the
Upon this state of facts it is objected by the assignee in bankruptcy that the judgment was not docketed against the bankrupts individually or as an existing firm, but was recovered and docketed against them as survivors of a former firm; that, inasmuch as the real estate was not the real estate belonging to them as survivors, but real estate which they owned in their own right, the judgment is not a lien. I think there is nothing in this objection. The description of the plaintiffs in the complaint and in the judgment is mere description, and nothing more. Galling them survivors did not make them, and them alone, any the less plaintiffs in their individual right and capacity. It is unlike the describing of a plaintiff as an executor, which purports to define the capacity in which he sues, and therefore is inconsistent with his prosecution of the action in his own right and individual capacity. Describing a person as survivor is merely describing, not the capacity in which he sues, but the mode in which his title is derived. As a description it is immaterial and
It is next objected that the firm was insolvent at the time the judgment was docketed, as shown by the general assignment executed four days before; that in such a case the real estate of the firm, as this was, is required to pay the firm debts, and is, in equity, personalty, and therefore, as the judgment lien is only on the actual existing interest of the judgment debtors in the land, neither of these judgment debtors individually had any interest which a creditor could take on execution, or to which the statute lien would attach. The general principle hero invoked against these petitioners, that in equity the real estate of a firm is, for some purposes, treated as personalty, and that an individual creditor of one of the partners gets a lien by his judgment on the interest of his debtor in the land, subject to the equitable rights of the copartners against the same for the payment of the partnership debts, is not controverted. If, therefore, this were a judgment against one or several of the partners, less than all, and not against them all, and upon a firm debt, there might be ground for the objection. But the claim sued on was an alleged chose in action belonging to the firm. The judgment recovered is clearly an obligation of the firm. The property on which the lion is claimed was the property of the firm. The legal title to the property was in the judgment debtors individually, and is subject to the lien, unless the superior equity of some other party or parties prevents the attaching of the lien for the protection of such superior equity.
In the ease of a judgment on an individual debt against one partner, that which prevents the attaching of the lien according to the legal title is saeh a superior equity of his copartners to have the land devoted to the payment of the partnership debts rather than to the debts of one of the partners. In this case the copartners have no such superior equities to be
Lastly, it is objected that under the general assignment of the twenty-ninth of April the title to this real estate, or, at any rate, an equitable interest in it,-passed to the assignee named therein, and that this defeats the lien of a judgment afterwards docketed. It is insisted, however, by the petitioners that the general assignment was void and inoperative for any purpose of vesting a title or an equitable interest under the law of New York. And I think this view is correct. The statute regulating general assignments for the benefit of creditors, (St. 1877, c. 466,) provides that every such assignment “shall be in writing, and shall be duly acknowledged before an officer authorized to take the acknowledgment of deeds.” This, it seems to me, necessarily implies that the assignment, in case of a firm, shall be signed, executed, and acknowledged by all the members of the firm as a deed of real estate is required to be executed and acknowledged, and that an assignment not so executed is inoperative. Two of ■the partners did not sign this instrument, nor was there any proof whatever of the authority of Seabury Lawrence, who purports to have signed it as attorney in fact for the firm, to sign it on their behalf, if, indeed, a signature in the firm name, with authority from them, would be equivalent to a signature in their names. This requirement of the act of-1877, that all the partners should join in the assignment, was in accordance with the established rule of law as held in the state of New York before the passage of that act, that copartners have no authority as such to bind each other by a general assignment of the firm property to a trustee for
Whatever might be the effect of this general assignment, however, there is another ground on which the assignee cannot avail himsolf of it to defeat these petitioners. It appears by the statement of facts that the land has been sold by the assignee in bankruptcy under the order of this court, and he holds in his possession the proceeds. It would seem, therefore, clear that, as to this real estate at least, the assignment was inoperative, and never sought to he enforced by the parties in interest. It does not appear that the assignee in bankruptcy ha,s recovered it in a suit in equity to set the assignment aside, or that his claim to it, notwithstanding the assignment, has ever been questioned or resisted. Sucli facts, if they existed, could have been shown by the assignee, and they cannot be presumed in the absence of evidence. The assignee, therefore, stands in the position of having received this property, by virtue of his right as assignee in bankruptcy, as property vested in the bankrupts upon the filing of the creditors’ petition. He has received all the benefits of such title, and of courso he took it subject to its burdens, among which is this lien then existing. I think, under these circumstances, the assignee is estopped to set up this general assignment to defeat the petitioners’ lien.
The sureties of the judgment debtors, who have paid part of the debt, are entitled to the benefit of the lien which the petitioner Merrifield had at the time they made the payment to him.
An order will be entered directing the assignee to pay the claim of the petitioners out of the moneys in his hands, with interest and costs.