102 Ga. 350 | Ga. | 1897
Johnson & Harris were a partnership engaged in business at Macon, Georgia. Johnson died April 14, 1893, and Harris was left as surviving partner. The partnership was insolvent; Harris was insolvent; the estate of Johnson was sufficient to pay his individual debts, but insufficient to pay both these and the firm liabilities remaining after applying to the latter the firm assets. On the death of Johnson, J. S. Rodgers as his administrator took charge of his estate.
At the time of Johnson’s death he was indebted to the Macon Fire Insurance Company. This indebtedness was represented by two notes, each of which was secured by a deed to a separate piece of land. These notes were each in the usual form of a note secured by collateral, and recited that it was secured by such deed, describing the deed given to secure it. Each note contained a clause stating that the collateral securing it should also secure any other debt due from Johnson to the insurance company. The firm was also largely indebted to the Exchange Bank of Macon, which indebtedness was partially secured by the pledge of certain shares of stock of the Planters Real Estate & Warehouse Co., the individual property of Johnson, delivered to the bank. After Johnson’s death, Harris as surviving partner transferred to the bank as further security for its debt nearly all of the choses in action due. to the late firm. With the approval and by order of the ordinary of Bibb county, and by direction of a decree of the superior-court, Rodgers as administrator made a settlement with Harris, the
On March 11, 1895, Gordon as administrator de bonis non and individually, with the Macon Fire Insurance Company and four other creditors of the firm of Johnson & Harris, brought an equitable suit to marshal assets, and for direction to the administrator in the payment of debts. The contentions and claims made at the trial, which are material to be here considered, were:
1st. Mrs. Johnson’s contention that the sum of $20,931.55 received by her in lieu of dower should ,be augmented by the rents and profits (or interest on the sum assigned to her) from Johnson’s death to November 22, 1895, less $6,500.00, the value for rent of the mansion.
2d. The claim of the individual creditors of Johnson that they should be fully paid out of the individual assets before the firm creditors should be paid anything; or, if this was not allowed, that they should be paid on individual debts a sum equal to the amount received by the Exchange Bank pro rata upon its claims, before firm creditors should participate.
3d. That the Exchange Bank should receive nothing from Johnson’s estate until the individual creditors had received an amount pro rata on their claim, equal to what the Exchange Bank had received from its collateral on its debts.
4th. The claim of the Macon Fire Insurance Company based upon the notes and security-deeds held by it.
The presiding judge, who by agreement tried the case without the intervention of a jury, overruled the contentions of the widow and of the individual creditors. He held that the sum allowed in lieu of dower was in full of all of the widow’s claims, and that she should receive nothing for rents and profits or interest. He decided that all of the creditors, both individual
It is however insisted in this ease, that as the widow received a sum of money absolutely in lieu of dower, or property of equal value, which was the same thing, and as the value allowed her was a sum equal to the value of the dower-estate from the time of the' husband’s death, taking her expectancy of life from that period, she has received, in the sum allowed, the cash value of the income of the dower lands during the time elapsing from the husband’s death until the setting apart •of the lands taken in lieu of dower. In this view we can not concur. The dower right being one which accrued immediately on the death of the husband, courts of equity proceed upon the principle that the right of the widow to have her •dower assigned to her immediately after the death of her husband, draws after it the right to an accounting of the profits from that date. Austell v. Swann, supra; Woodward v. Woodward, 2 Rich. Eq. 28. In the case last cited, the Court of Appeals of South Carolina said on this point: “It is insisted in argument that the plaintiff’s right to interest or mesne profits is concluded by the commissioners having assessed a gross .sum in lieu of dower; but the right for an admeasurement of dower conferred on them no authority to take an account of the mesne profits or to commute them for money, nor has the •court any warrant in law to delegate such a power to them, .and upon referring to the return it will be seen they did not .assume it.” In the case at bar the agreed statement of facts shows that the jury, before whom the question of finding a gross sum in lieu of dower in this case came, did not include rents and profits from the husband’s death, nor interest from .such death on the sum allowed.
“A dowress is considered in regard to her title as being in possession of lands assigned to her by her husband. Her estate is a continuation of her husband’s, and upon the assignment of her dower in legal contemplation she is in from the death of her husband.” Austell v. Swann, supra. This being so in law, this widow is considered as having been, in con-
It is admitted in this case that the widow has received in the use and occupation of the mansion-house the sum of $6,-500.00, for which she is accountable. Of course, in an accounting between the widow and the estate she must account-for all sums received therefrom, which are properly chargeable against her, and this will be deducted from the gross amount
While for the purpose of administration of estates a difference is frequently recognized between firm debts and individual debts, yet every firm debt is also the debt of each general partner, and his entire property is as much bound for its payment, so far as he is concerned, as it is for the payment of any individual debt of the same character; so much so, that the bankrupt rule recognized by the English law, which became the rule in courts of equity for the administration of estates of insolvent firms having insolvent partners, has been'frequently questioned so far as it sought to apply individual assets to the payment of individual debts 'to the exclusion of partnership debts; and while prior to the adoption of the code in this State the rule as laid down by the English courts was thoroughly recognized, where the proceeding was in equity, it was yielded to rather unwillingly by Chief Justice Lumpkin in the case of Cleghorn v. Insurance Bank of Columbus, 9 Ga. 319, and was held not to control or take away a right acquired by judgment and execution at law on the part of firm creditors against the separate estate of a partner. Chief Justice Lumpkin criticised the rule, upon the ground that its alleged foundation, viz., that firm creditors extended credit on the faith of firm assets, and individual creditors on the faith of individual assets, was not true in fact; that credit was extended in both instances in accordance with the creditor’s
The Civil Code, §2627, speaking of partners, declares, “As to third persons- all are liable, not only to the extent of their interest in the partnership property, but also to the whole extent of their separate property.” If, therefore, the estate of Johnson while sufficient to pay his individual debts is not sufficient to pay the balance of the partnership debts not discharged by the partnership assets (it being conceded that his estate must respond for such balance), then the deceased partner, Johnson, is insolvent within the meaning of the Civil Code, §2660. The deceased partner, Johnson, being insolvent, within the meaning of the code, the case presented is one where the partnership is insolvent, and one of the partners is. deceased insolvent, and falls therefore within the very language of the Civil Code, §2660, which provides: “When a partnership is insolvent, and one of the partners is deceased insolvent, the creditors of the partnership, in equal degree with individual creditors, can not claim to share in the individual assets of the deceased partner until the individual creditors shall have first received upon their debts such a percentage from the individual assets as such partnership creditors have received from the partnership assets.” It will be noted that this státute varies the English rule, which existed in the State up to the adoption of the code (see Toombs v. Hill, 28 Ga. 371, decided in 1859), and introduced a new rule for ascertaining the funds which in the case of an insolvent partnership and a deceased insolvent partner were to be applied respectively to the individual and firm debts. So far as we know, the only State having a similar rule of distribution is the State of Kentucky. See Fayette National Bank v. Kenney, 79 Ky. 133, a case in which thé rule is laid down, that where partnership creditors exhaust the firm assets without being paid in full,
The law of this State, for the distribution of the estates of a partnership and a deceased insolvent partner, varying the rule of equity which exists in the absence of statute, little aid is to be derived in its interpretation from decisions of other jurisdictions. In our own decisions on this subject, the questions raised in this case do not seem to have been presented. The object of the code seems to have been to alter the rule to the extent of preventing the individual debts from exhausting individual assets before partnership debts could participate therein. It recognizes the two as distinct classes, and directs as between the two that when the partnership assets have been applied to partnership debts, the same percentage shall be set apart from the individual assets, as a fund for individual debts as a class, as the partnership assets will pay upon its debts so considered. For example, if the total partnership assets are $10,000, and the partnership debts aggregate $30,000, 33|* per cent, of the aggregate individual debts shall be set aside out of the individual assets, before the firm debts can participate. When this percentage is so set aside, the residue of such assets are to be divided pro rata between both classes of debts.
The rule above laid down is simply a rule for the division of the assets, firm and individual, into proper funds to be applied respectively to firm and individual debts. The rights and priorities of these several debts in and to payment out of these funds is in nowise affected by this rule of division of the estate into such funds. The rights and priorities remain the same as they were under the old equity rule, and in distributing the fund to such creditors such rights and priorities must be observed and the funds distributed in accordance therewith.
In this case the assets both firm and individual were brought into hotchpotch by the decree rendered, and distributed pro rata among all of the creditors without distinction. . Such distribution, while it might assign to each class a proper propor
As already shown, primarily, firm assets should be charged with the payment of firm debts, and individual assets should not be called on until they are exhausted, and then only after
Should, however, there remain a balance of indebtedness due the Exchange Bank, which is not discharged after the application of the proceeds of its collateral, the question next recurs, what are its rights to participate with the other creditors in the assets of Johnson, deceased? The individual creditors of Johnson having been advanced to a percentage equal to that received by the firm creditors, the general rule of law would be that all firm and individual creditors should now share pro rata in the balance of his estate. But, in the event last supposed, the Exchange Bank will have already received through its pledge of these shares of stock a large percentage out of
Applying these rules, therefore, we hold that the Exchange Bank should not be allowed to participate with the other creditors after receiving the proceeds of its pledge, until such other creditors shall have been paid out of the remaining' individual assets a percentage equal to the percentage paid upon such
The property in question was sold by the administrator at. administrator’s sale, by an agreement with the creditors, who-consented that the administrator should sell it free from their claims; it being provided, in behalf of the Macon Fire Insurance Company, that in no event should any title pass to the .purchaser at said sale until the debt due the Macon Fire Insurance Company, principal and interest, was fully paid off and discharged, and that such sale should not affect the right, title or interest of the said Macon Fire Insurance Company in such property until the payment of its debt. By a verdict taken in this cause upon a portion of the issues therein, in November, 1895, it was found by the jury that the sale made of such property by Gordon, administrator, should be confirmed, and that the title should vest absolutely in the purchaser on the payment of the debt of the Macon Fire Insurance
Without regard to the effect of such verdict and decree, it is a well-settled principle of equity, in the absence of statute, that, except as against purchasers without notice, equity will look to the intention of the parties, and where the purpose to create a security for a debt upon particular property can be gathered, will give it effect. Professor Pomeroy states the general doctrine deduced from the authorities to be as follows: “The doctrine may be stated in its most general form, that every express executory agreement in writing, whereby the contracting party sufficiently indicates an intention to make some particular property real or personal, or fund, therein described or identified, a security for a debt or other obligation, or whereby the party promises to convey or assign or transfer the property as security, creates an equitable lien upon the property so indicated, which is enforceable against the property in the hands not only of the, original contractor, but of his heirs, administrators, executors, voluntary assignees, and purchasers or encumbrancers with notice. . . . The ultimate grounds and motives of this doctrine are explained in the preceding section; but the doctrine itself is clearly an application of the maxim; equity regards as done that which ought to be done.” 8 Pom. Eq. Jur. .§1235. See also Ketchum v. St. Louis, 101 U. S. 306, where the authorities are fully reviewed. Fourth St. Bank v. Walker, 165 U. S. 654.
This court has fully recognized the above doctrine. In the case of English v. McElroy, 62 Ga. 413, while holding that a deposit of deeds as collateral did not create such a lien as could, be foreclosed at law, it held that in equity, as between the parties, “the complainant should be decreed to have a lien upon the land as a security for the payment of the money borrowed, and that the same be enforced by a sale thereof under .a decree of the court.” We see no difference in principle between this last case and the case at bar. The insurance company clearly had, under the terms of its notes and the deposit of the deeds, an equitable lien upon the land not specifically conveyed to secure the particular note, but embraced in the
Except in the particulars mentioned in this opinion and in the headnotes, we see no error in the judgment of the court below. We therefore reverse the judgment in these particulars, and affirm it in all other respects, and direct that there be a rehearing in the light of the law applicable to this case, as herein laid down.
Judgment reversed in part; and in part affirmed, with directions„