86 Va. 421 | Va. | 1889
delivered the opinion of the court.
R. P. Robertson, R. M. Leftwich, and W. H. Stiff, early in the year 1885, entered into partnership under the firm name of R. P. Robertson & Co. in the town of Liberty, Bedford county, Virginia, for the manufacture and sale of chewing and smoking tobacco, &c. In October, 1885, R. P. Robertson died, and the said partnership was dissolved, ipso facto, by his death,
The partnership assets, at the date of dissolution by the death of the partner, B. F. Bobertson, consisted of a large number and amount of debts due to the said firm, and also a large quantity of unmanufactured tobacco, manufactured tobacco, and machinery and furniture used in the business—all personalty; no realty.
The surviving partners, Leftwich and Stiff, began to wind up the partnership affairs; but finding, in the course of liquidation, that the partnership liabilities were greater than the assets would pay, the said Leftwich and Stiff, as said surviving partners, on the 6th of February, 1886, made an assignment to P. L. Saunders, trustee, of all the partnership assets of the late firm of B. F. Bobertson & Co. in trust, to pay, first, two negotiable notes of the said firm held by the Liberty Savings Bank, one for $2,500, payable to and endorsed by McGhee & Hurt, dated--, and the other for $2,000, payable to and endorsed by McGhee, Hurt & Co., dated--. Second—To pay two other negotiable notes of said firm held by the said Liberty Savings Bank, one for $2,000, payable to and endorsed by Wesley Peters, dated--, and the other for $1,000, payable to and endorsed by Jeter & Hewsom, dated-. Third—To pay all other indebtedness due the said Liberty Savings Bank by the said late firm; and, lastly, to distribute the surplus, if any. .
On the 9th of December, 1887, James D. Patton, a creditor of the late firm, instituted this suit—a creditor’s suit—in the circuit court of Bedford county, against the said Leftwich and the said Stiff, surviving partners, Saunders, trustee, the Liberty Savings Bank, and the administrator of B. F. Bobertson, deceased. With his said bill, J. D. Patton filed a copy of the said assignment and schedule,'and exhibits, the evidences of
The complainant, Patton, charges in his bill that the said surviving partners, Leftwich and Stiff, had no rightful power or authority in law to make an assignment of the assets of an insolvent firm, which had been dissolved by the death of a partner; nor to give preference to the bank, or to any one or more of the creditors of tlie firm, over the other creditors of the firm, of equal dignity. And the prayer of the bill is, that the assignment of Leftwich and Stiff of February 6th, 1886, as surviving partners of the late firm of R. F. Robertson & Co. be annulled and set aside, and that accounts be ordered and taken of the partnership assets in the hands of the trustee and assignee, and of all other social assets, if any, not included in the said assignment; of the debts due by the said late partnership; of the notes discounted and held by the Liberty Savings Bank, and of the application made of the proceeds of said discounts; and of the individual property of R. F. Robertson, deceased, and of Leftwich and of Stiff.
On the 9th of December, 1887, the circuit court of Bedford county, by its final decree, simply dismissed the bill, with costs to the defendants. From this decree Patton obtained this appeal.
The bill charges fraud, and collusion of fraud; but the answers are fully and explicitly responsive, and they deny the allegations and specifications of fraud made in the bill, and there is no proof whatever, or even an attempt to prove the fraud charged. Indeed the petition for appeal and the briefs of counsel for appellant do not present the question of fraud. There is no dispute as to the facts in the case. The question presented for adjudication, and the one on which the case turns, is purely and simply one of law, as to the powers and
The question submitted is one of very great- importance, affecting large interests and rights in the commercial world; and yet it has never, it is believed, been presented before this court in this definite form. But the supreme court of the United States has adjudicated the precise question and the exact point at issue here. (Fitzpatrick v. Flannagan, 106 U. S., 654; Emerson v. Senter, 118 U. S., 3.) In this last-mentioned case the supreme court- of the United States says: “As, with the concurrence of all the partners, the joint property could have been sold or assigned, for the benefit of the preferred creditors of the firm, the surviving partner (there being no statute forbidding it) could make the same disposition of it. The right to do so grows out of his duty, from his relation to the property, to administer the affairs of the firm so as to close up its business without unreasonable delay; and his authority to make such a preference—-the local law not forbidding it—
Bates on partnership, 2 vol., sec. 732, says: “As the surviving partner has the entire title and sole control of the property, and represents the power of all the former partners, and
The cases of Fitzpatrick v. Flannagan, 106 U. S., 648, and Case v. Beauregard, 99 U. S., 119, are cited in the recent case decided by this court of Robinson v. Allen, 85 Va., 721. See the case of Beste v. Berger, 17 N. E. Rep., 734.
Even real estate, bought with partnership funds, the title of which is taken in the name of the deceased partner, is so completely in the control of the surviving partner, that where he assigned to a trustee, and the trustee sold, the purchaser of this equitable title can, in equity, compel the heirs of the deceased partner to convey the legal title to him. (Shanks v. Kline, 104 U. S., 18.)
The cases referred to in the brief of counsel for appellant, Salisbury v. Ellison, 7 Colorado, and Anderson v. Norton, 15 Lea, (Tenn.), are rested on the ground, that the surviving partner is a trustee for the benefit of the. firm’s creditors, and is governed by the rules applying to ordinary trustees ; and that, as in the cases of ordinary trustees, “ equality is equity.” The surviving partners being trustees, cannot give any preference among the creditors. But surviving partners are not trustees, in the ordinary sense, though they are loosely so called by some judges and law writers. Lord Chancellor Westbury, in Knox v. Rye, L. R., 5 H. L., 656 and 675, cited 2 Pomeroy, p. 618, note 2, says, that the trust of a surviving partner is limited by the extent of his obligation; and that it is most important to mark this, again and again, for there is not a
"We do not think it was error in the circuit court of .Bedford county to dismiss the bill, when there was no proof of its allegations, nor to refuse to order the needless costs and delay of accounts, when the trustee had reported that the assets were all in hand and were insufficient to satisfy even the preferred debts.
The judgment of this court is, that the decree appealed from is right, and that it is affirmed.
Richardson, J., dissented.
Decree affirmed.