35 Fla. 357 | Fla. | 1895
On the 5th day of December, 1885, Robert E. Byrd filed a bill against John B. Roche for the purpose of dissolving a partnership alleged to exist between them under the firm name of J. B. Roche & Co., and for settling up the same according to the rights of the respective partners. In accordance with a prayer for that purpose, a receiver was appointed to take charge of the partnership affairs, and after making a sale of the partnership property reported the money realized therefrom to the court. The partnership was largely in debt at the time the bill was filed for its dissolution,, and a controversy arose among the creditors of the firm, among whom a distribution of the money arising from the sale had been ordered by the court, as to the right of some to share in the funds in the hands of the receiver. The questions presented on the present appeal relate solely to the decision of the court as to the-right of the State Bank of Florida to share in the distribution of the partnership funds, and in disposing of the questions it is not necessary to refer to the allegations of the bill and answer filed in the case.
So far as the record informs us, no further proceedings were had od the bill to dissolve the partnership aftér replication was filed on the part of the partners, and it is likely that this part of the case was arrested by the proceedings of the creditors to get possession of the partnership funds. No question is raised as to-the manner in which the creditors got before the court, or as to the manner in which an issue was presented by them as to who was entitled to share in the funds.
It is our judgment that the entire amount due on the-two notes, as well as the additional sum of $284.28 presented by the bank, should have been allowed as proper-claims to be paid out of the partnership assets in the-hands of the receiver, and that it was error to direct the value of the mortgaged property, and the sum of" $221.62 alleged to have been deposited with the bank,, to be deducted from the bank’s claim before they
About thirty days before the bill was filed by Byrd to dissolve the co-partnership of J. B. Roche & Co., there was in the State Bank of Florida the sum of 38221.62 to the credit of said partnership firm, on account, and at that time Roche informed the bank that he was going to dissolve his partnership relation with JByrd, and directed that the funds in bank be placed to his credit. Byrd then informed the bank that he was unwilling to a dissolution of the firm unless satisfactory arrangements were made with him, but it appears that the bank opened an account with Roche, •and transferred the sum of $221.62, standing to the credit of Roche & Co., to this account, and that Roche drew on the bank for enough to exhaust the sum mentioned, and to the extent of $284.28 more. This last ¡sum is the amount presented by the bank, together with the notes for payment out of the partnership assets, and which was not allowed by the court. The testimony shows that when the two notes for $1,000 •each were executed by Roche & Co. to the bank, Roche and wife executed a mortgage on the wife’s property to secure the notes and any other sums that the bank might honor for the firm. At the time the hank account was changed to one between the bank and Roche, the partnership had not been dissolved, and there was no dissolution during the time that the account was increased to an indebtedness of $284.28 in addition to the notes in favor of the bank. This indebtedness was incurred by Roche in carrying on the partnership business, and it is shown that all the ¡money he obtained from the bank was expended in
The remaining question presented, on the decision of the court is one of law. There is no dispute about the fact that the bank held a mortgage for $3,000, but it was intended to secure the two notes of $1,000 each, ,and such further sums as the bank might advance to the firm of Roche & Co. The property described in this mortgage is shown to be that of Mrs. Roche, and there is nothing to indicate that she was in any way connected with the business of the firm of Roche & Co. The testimony tended to show that the mortgaged property was worth some fifteen hundred dollars, and
It is a doctrine of equity, based upon natural justice, that if a party has two funds to which he can resort in collecting his debt, he will not be permitted by his election and caprice to disappoint another creditor who can go upon one of the funds only, and the latter will be allowed to take the place of the former, or to compel him to resort to that fund which can be reached by him only. Sheldon on Subrogation states the raleas follows, viz: “Where one creditor holds security upon two funds or estates, with perfect liberty to resort to either for the payment of his demand, and another creditor holds a junior security upon one only of these funds, equity will compel the former creditor to exhaust the fund which he alone can hold as security, before coming upon the latter fund, and thereby depriving the latter creditor of his security.” This is the law as declared by this court as well as others. Ritch vs. Eichelberger, 13 Fla. 169; Cheesebrough vs. Millard, 1 Johns. Ch. 409, S. C. 7 Am. Dec. 494; Jones vs. Zollicoffer, 2 Hawks (N. C.), 623, S. C. 11 Am. Dec. 795. The partnership had not been dissolved when the account was made with the bank, and, as it was shown to be a partnership debt, should have-shared in the assets. Schleicher, Schumm & Co. vs. Walker, 28 Fla. 680, 10 South. Rep. 33. But while the rule stated is well sustained, it can never be invoked by one creditor against another in cases where it would injuriously affect the rights of the prior creditor or third persons. The creditors favored by Laving-two securities to look for payment can not be compelled to resort to property, though pledged to pay his debt,, that belongs to another than the common debtor. The rule is one of equity, and will not be enforced where
The court was in error in the rulings made, and the decree will be reversed. Ordered accordingly.
