64 Iowa 180 | Iowa | 1884
I. The petition alleges that in 1866 a co-partnership, styled Kline & Johnson, became indebted to plaintiffs in the sum of $7,000, for money borrowed and personal property purchased. It is shown that Kline & Johnson were engaged in the brewery business, and the money so borrowed was used by them in payment for certain real estate devoted to the prosecution of their business, being the same property covered by the mortgage sought to be foreclosed in this action. The personal property was used in the same business. In 1871 Johnson died, and Kline continued the business as a surviving partner or successor of the firm, in which he is still engaged. The real property, whereon the brewery is situated, which is the property covered by the mortgage, constituted the greater part of the assets of the firm. No part of the indebtedness to plaintiffs has been paid. The widow and heirs of Johnson are made defendants, and it is shown that the widow is the executrix of his estate. In 1877 the defendant, Kline, the surviving partner, for the purpose of extending time upon the notes given by the firm to plaintiffs, with his wife, executed the notes and mortgage which are the foundation of this action. It is alleged that defendant, Kline, is insolvent, and that there are no assets of the firm of Kline & Johnson, except the real estate covered by the mortgage, out of which plaintiff’s claim can be made. Certain incumbrancers and creditors of the firm are made defendants, but no question arises in the case touching their interests. The petition prays for a foreclosure of the mortgage and for general equitable relief.
The widow and heirs of Johnson, in an answer and cross-bill, admit the co-partnership existing between Kline &
It will be observed that the controlling questions of fact and law in the case involve the existence of the partnership, its ownership of the mortgaged property, the dissolution of the firm, the settlement of its affairs by Kline, the continu • anee of its business by Kline as a surviving partner, and the validity and effect of the mortgage in suit, executed by him. We will now proceed to the determination of these questions.
II. First. The evidence in our opinion quite satisfacto
Second. The evidence tends to show that, prior to his death, Johnson withdrew from the partnership, and that the business was afterwards prosecuted by Kline alone. But, if there was no dissolution of the partnership by agreement of the parties, it was surely dissolved by the death of Johnson.
Third. The affairs of the firm were left in the hands of Kline for settlement and for the payment of its debts. We need not, in the view we take of the case, inquire into the existence of the lease of the interest of Johnson in the brewery property by Kline, and whether, as plaintiffs claim, it ■was canceled upon an agreement between Kline and the executrix of Johnson’s estate. Conceding the continued existence of the lease, our conclusions will not be affected thereby.
Fourth. The evidence, we think, shows that Kline held the property of the firm for the payment of Es debts and the settlement of its affairs. We think this wás known by all the parties interested in this appeal. So far as the interests and rights of the, parties before the court upon this appeal are concerned, we need not inquire how Kline administered the affairs of the firm, what property he received and what debts he paid. It is shown that he did not j>ay plaintiffs, and that the property of the firm covered by the mortgage is all the co-partnership property now in existence.
Fifth. The notes and mortgage in suit were executed for the identical debts contracted by the firm, and were intended to extend the time and secure the payment thereof.
From the foregoing statement of facts we have this case: Kline, as surviving partner, and the successor to the business of the firm, held possession of the real estate in question and other property of the firm, for the purpose of
III. The defendants, the widow and heirs of Johnson, stand in his shoes, and possess no other or different rights than he would hold, were he before this court resisting the enforcement of the mortgage.
A few familiar principles of the law will direct us to the just determination of the case.
IV. The debts of a co-partnership may be enforced against property owned by the firm. Whether the property be real or personal, it is subject to the debts of the firm, and a partner cannot hold it exempt therefrom. And this is so without regard to the rights and liabilities existing between the partners. The possession of the property, whether it is in the hands of :i6ne partner or the other, and without regard to their dealings, with the firm or with one another, does not limit or affect the rights of a creditor of the firm to subject the property to his claim.
In this action, plaintiffs, alleging and proving that they hold a claim against the firm of Kline & Johnson, to secure which Kline executed a mortgage upon real estate of the ■firm, the title to which was in him and Johnson, pray that the mortgage be foreclosed as against Kline and the heirs of Johnson, and also for general equitable relief. Under the rules of the law, the whole property is subject to their debt as against the widow and heirs of Johnson, who can make no resistance to plaintiffs’ claim which would be forbidden to him were he alive and party to the suit. Now, let it be admitted, for the purposes of the case, that Kline had no
There are no creditors or others, save the widow and heirs of Johnson, objecting to the decree. It must, therefore, stand as against all the parties to the suit. The facts of this case distinguish it from The City of Maquoketa v. Willey, 35 Iowa, 323, wherein the contest was between one of the partners and a creditor of another partner, who had received the property through the distribution of assets, upon the dissolution of the firm. . It is also distinguishable by like facts from George et al. v. Wamsley et al., decided by this court this day. (See ante, p. 175.)
Y. Counsel for defendants insist that the note originally executed by Kline & Johnson, for plaintiffs’ debts, was paid by the note in suit, and, indeed, by a prior note and mortgage executed by Kline and the executrix of the estate of Johnson. But the positive evidence of plaintiffs and others, and certain circumstances which we- need not repeat, convince us that the note and mortgage upon which this action is based was not intended, and cannot be regarded, as payment of the prior notes. The same may be said of the former note and mortgage just referred to by. us.
YI. If we rightly understand counsel for defendants, they insist that the foreclosure of the mortgage in suit against Kline is the ground of defense in favor of defendants. This action, in the shape it is presented to us, (defend
YII. The statute of limitations will not avail defendants, for the reason that, as we have shown, the debt was removed from the bar by the extension and renewal of the notes in the manner we have indicated. The long time the debt was permitted to run, without enforced payment, is explained by the fact that plaintiff, Kline, defendant, Kline, and the widow of Johnson, are brothers and sister. For this reason plaintiffs extended indulgence to the debtors.
YIII. Defendants’ counsel, in their argument, insist that judgment upon their cross-bill against defendant, Kline, should have been for a sum greater than was found due by the court below. As defendants have not appealed from the decree granting them relief upon the cross-bill, serving no notice of appeal on defendant, Kline, and, as he has not appealed, we cannot review the judgment of the court against him.
The foregoing discussion disposes- of the controlling questions in the case. In our opinion, the decree of the district court ought to be
Affirmed.