Jones v. Thompson

12 Cal. 191 | Cal. | 1859

Baldwin, J.,

delivered the opinion of the Court—Terry, C. J., and Field, J., concurring.

Several errors are assigned by Burton and Blake, who are the appellants here. They are met, however, at the threshold, by the objection that they have no standing in Court, because the respondents’ counsel say they are not parties to the record. We think the objection is not good. The petition was certainly a very irregular way to get them into the cause, but it is an irregularity of which the respondents cannot complain. The petition, though not entitled of the cause, was filed among the papers as a part of the record related to the subject matter of the suit, and was acted on by the Judge as a portion of the pleadings, and the final decree refers expressly to the injunction granted on the petition and in pursuance of its prayer, and makes that injunction perpetual. Being affected directly by the judgment, it certainly does not lie in the mouth of the plaintiff below to say the defendants, Burton and Blake, are not parties to it and have no right of appeal.

It is contended that the cattle, etc., of the partnership is not the subject of levy and sale by the Sheriff, on an execution against Thompson,one of the partners. We think the rule is otherwise. The interest of one partner in partnership property is such an estate under our statute as may be sold for his debts ; it is a legal estate in chattels. It is true that, as between the partners, the interest of each is only the residuum of the property left after the settlement of the firm debts; and that the rights of firm creditors and the several partners are paramount to the claims of separate creditors of the firm.

But this interest of the partner thus defined, is held by the weight of authority subject to levy for his debts. Story on Partnership, (sec. 263) thus states the rule : “ In cases of this sort, therefore, the real position of the parties, relatively to each other, seems to be this : The partnership property may be taken in execution upon a separate judgment and execution, against one partner ; but the Sheriff can only seize and sell the interest and right of the judgment partner therein, subject to the prior rights and liens of the other1 partners and the joint creditors therein. By such seizure the Sheriff acquires a special property in the goods seized; and the judgment creditor himself may, and the Sheriff, also, with the consent of the judgment creditor, may file a bill against the other partners for the ascertainment of the quantity of that interest, before any sale is actually made under the execution. The judgment creditor, however, is not bound, if he does not choose, to wait until such interest is so ascertained, but he may require the Sheriff immediately to proceed to a sale, which order the Sheriff is bound by law to obey. In the event of a sale, the purchaser at the sale is substituted to the rights of the execution partner, quoad the property sold, and becomes a tenant in common thereof; and he may file a bill, or a bill may be filed against him by the other partners, to ascertain the quantity of interest which he has acquired by the sale.”

Chancellor Kent held in Moody v. Payne, (2 Johns. Ch. 548) that an injunction should not be granted to restrain a sale by the Sheriff, upon the ground that no harm is thereby done to the other partners; and the sacrifice, if any, is the loss of tlie judgment debtors only. Mr. Justice Story, (on Part. sec. 261) remarking upon this decision, says: “ This does not seem to be a sufficient ground upon which an injunction should be denied. If the debtor partner has, or will have upon a final adjustment of the accounts, no interest in the partnership funds, and if the other partners have a lien upon the funds, not only for the debts of the partnership, but for the balance ultimately due to them, it may most materially affect their rights whether a sale takes place or not. For it may be extremely difficult to follow the property into the hands of the various vendees ; and the lien of the other partners may, perhaps, be displaced, or other equities arise by intermediate bona fide sales of the property in favor of the vendees, or other purchasers without notice; and the partners may have to sustain all the chances of any supervening insolvencies of the immediate vendees. To prevent multiplicity of suits and irreparable mischiefs, and to insure an unquestionable lien to the partners, it would "seem perfectly proper, in cases of this sort, to restrain any sale by the Sheriff.”

But this doctrine has no application to this case. The petition makes no case fit for the rule here laid down. It may safely be conceded that if the judgment debtor be indebted to the firm, or the firm be so indebted that on a settlement the debtor partner would not be entitled to any share of the common property, that the other partner might intervene to prevent a sale of the partnership assets. But it would be a great hardship, and would lead to enormous frauds, if, merely because the account was unsettled and something due, however small the amount, the creditor should be postponed until an account was taken. No man with a small debt against such debtor, could afford to prosecute his claim; and the effect would be, in almost every case, to prevent or postpone a sale at the suit of the separate creditor.

The petition does not show any facts upon which the injunction was properly granted.

The decree shows a balance of some |7,000 due from the defendant to the plaintiff; but this balance the decree itself shows is wrong. The amount is given as the excess of receipts of firm money over expenditures ; but for this excess the defendant was only responsible to his partner for one-half, not for the whole. The bill shows a great num ber of cattle, sheep, etc., of a value largely exceeding this compara tively small debt due the plaintiff. The appellants are interested in correcting this error, as the property, if sold by them, would be subject to this claim.

The decree is also erroneous in ordering a private sale of the firm property. The selling property of this sort in this way, is dangerous as a precedent, and liable to great abuse in practice. Only so much of the property as is necessary to pay the firm debts should be ordered to be sold, and the balance divided.

These principles being decisive of this case on the merits, it is not necessary to notice minor points.

The decree of the Court below is reversed, the order for injunction dissolved, and the cause remanded for a decree in pursuance of this opinion.