Stein v. LaDow

| Minn. | Jul 15, 1868

Berry, J.

By the Court As to the power of one partner, without the concurrence of his co-partner, to assign the whole property of the firm to a trustee to pay the partnership debts, there is no little conflict of opinion among Courts and text writers. 1 Parsons' Contracts, 178 ; 1 Am. L. Cases, 444.

On the one hand it is said by Oh. J. Marshall, that the right of one partner to bind another in this way results from his general power over the partnership property, and one partner may sell the whole property for money, or on credit, no good reason can|be given why he may not assign the whole in trust for the paymeut of the debts of the firm. Anderson vs. Tompkins, 1 Brock., 456.

On the other hand it is said that the assignment is a virtual dissolution of the partnership ; that it ‘is no part of the ordinary business of a partnership to appoint a trustee of the *415effects of tbe concern, for tbe purpose oí selling and distributing tbe proceeds of sale among the creditors; that it takes the property and business of the firm out of the hands of its members, and subjects them to the control of a third person, and that under ordinary circumstances there is nothinginthe nature of the contract of partnership from which the assent of the non-executing partner to such a transaction can be implied. Burrill on Assignments, Ch. 4 ; Wells vs. March, 30 N. Y., 349.

We are of opinion that the latter is the most rational view of the subject.. It is however in general admitted, that while a single partner may not, under ordinary circumstances, without the assent of his co-partner, assign the firm property to a trustee for the benefit of the creditors, yet if an extraordinary emergency occurs in the affairs of the partnership, and the non-assigning partner can not be consulted on account of his absence, under circumstances which furnish reasonable ground for inferring that he intended to confer upon the assigning partner authority to do any act for the firm which could be done with his concurrence if he were present, such an assignment if fairly made, will be presumed, prima facie¡ to be valid. And the existence of circumstances justifying such assignment by a single partner has been recognized where the firm being involved, pressed, and unable to meet its engagements, the non-executing partner was, at the time when the assignment was made, absent from the place Of partnership business, in another and distant State, or in a foreign country, residing permanently in such State or country, or employed there in the affairs of the firm, and entrusting the active management of the partnership concerns at its place of business to the assigning partner, or expecting to be' absent for a considerable length of time, or has absconded leaving the assigning partner to bear the burdens of the firm, *416and to make bis way out of its embarrassments as best he can'. See cases referred to in Burrell on Assignments, Ch. 4; 1 American L. Cases, 444.

But we are of opinion that the case at bar presents no circumstances which can be held sufficient to support the assignment in this instance.

"While it appears that the firm of La Dow & Isaacs, the principal defendant, was deeply in debt beyond its assets, and that some of its creditors were urging the payment of their claims, it further appears that at the same time when Isaacs executed the assignment, La Dow, who was the most active member of the partnership, was in the State Wisconsin, temporarily absent from their ¡olace of business; that his abL sence was unexpectedly protracted; that his return was daily looked for, and that he did return within three or four days after the execution of the assignment. We find no case in which it is held that such a state of things is sufficient. We think it could not reasonably be inferred that La Dow’s absence was of such a character as to show that he intended to invest Isaacs with the extraordinary power which the latter attempted to exercise in this instance, or to raise the presumption of a necessity so pressing as to authorize Isaacs to make this assignment without consulting his partner. It is, however, insisted that the case is relieved of all difficulty by the subsequent ratification of the assignment by La Dow. That the non-executing partner may ratify an assignment made by his co-partner without his concurrence, and thereby render it valid, is generally agreed. Burrill on Assignments, 42; Welles vs. March, 30 N. Y., 351. But the ratification cannot be permitted to relate so as to destroy rights which have accrued intervening the time .of the original execution of the assignment, and the time of its subsequent ratification. Bradford vs. Tappan, 11 Pick., 76; Bagley vs. Bryant, 24 *417Pick., 198. The ratification in this case, then, cannot take away the rights of the plaintiffs, since the assignment was executed on the 13tll day of November, the garnishee summons served upon the assignee and appellant Baldwin on the 17th day of November, and the assignment ratified by La Dow on the 22d day of the same month. From the foregoing views it follows, that as against the plaintiffs the assignment was void, and the judgment appealed from must be reversed.