10 How. Pr. 461 | New York Court of Common Pleas | 1855
The plaintiffs, being creditors of Lord and Brown, move for an injunction against the partnership property, and a receiver. The complaint shows the indebtedness ■ of the firm of Lord & Brown to the plaintiffs, upon a note of $1,073 50 ; that Lord & Brown formed a limited partnership in December, 1850, to continue five years, and that the other ■ defendant, Marks, was the special partner, having advanced
The right to grant such motion was settled in the case of Inness v. Lansing, (7 Paige, 584), and has been since followed by the supreme court, in Whitewright v. Stimpson, 2 Barb. S. C. R. 379, and the rule adopted in those cases as to limited partnerships was extended -by Judge Edmonds to a general partnership, in Dillon v. Horn, (5 How. P. R. R., 35). Whether the decision in the latter case can be sustained it is not necessary now to decide. And when it appears that a disposition was made, or to be made, of the assets, in giving a preference to one creditor over another in view of insolvency, the provisions of the 219th section of the Code are comprehensive enough to warrant such a proceeding.
In the cases, however, to which I have referred, the action was commenced not for the benefit of the plaintiffs solely, but of all the creditors of the insolvent firm. The appointment of a receiver in those cases would have secured the partnership funds and assets for the joint benefit of all, and upon a distribution of such assets, the creditors would have been entitled •equally to share in the proceeds 'thereof. There is a manifest propriety in requiring such a form of action before the property of the firm should thus be placed in the hands of the receiver. There is no equity in taking from a firm the whole of their property to pay or secure one individual creditor to the exclusion of others. The impropriety of thus placing in the hands of a receiver the whole of the assets of the firm to pay a claim of $1000, and thereby depriving other creditors having claims amounting to $64,000, of any proceedings against such assets until the first creditor is paid, is so manifest that it can require no argument to show that it ought not to be done. Even if the plaintiffs were judgment creditors, they could only have an order allowing a receiver to take sufficient of the assets of the firm to obtain the means of discharging their debt; and until they are judgment creditors there is no propriety in giving them a receiver, unless in a case where the effect of such receivership will operate to secure all the creditors of the firm.
I think, also, there is a difficulty in the present action which
It is not necessary for me to pass upon the questions argued before me as to the liability of Marks. His liability is denied. If it exists it is not admitted, so as to warrant me in granting this motion. If he is not liable, it can only be decided at the end of a protracted litigation, and- the funds and assets of an insolvent firm should not be tied up from all the creditors for the purpose of enabling one creditor to enter into such a controversy. The granting of an injunction and appointing of a receiver in cases of this kind is admitted by the chancellor to be an addition to the former powers of a court of equity, and it seems to me to be proper that the power should only be exercised where the claim ■ is undisputed, and where the property will as speedily as possible be applied to the use of the creditors.
An objection was made upon the argument, and it appears in the defendant’s answer, ■ that another action is pending in this court for the benefit of all the creditors, and that such action was commenced prior to the present one. The mere existence of such an action, although a prior one, has no effect upon this motion. "Whether prior or subsequent in its commencement, it affords no ground to stay proceedings in other actions, until after a judgment has been rendered in a case in which the other creditors can combine and make themselves parties. After such a judgment a motion could formerly be made to stay proceedings in other suits, so far as relates to the appointment of a receiver. This was settled by the chancellor in Inness v. Lansing, before referred to. (7 Paige, 583).