The Assignment of Stewart & Aiman

62 Iowa 614 | Iowa | 1883

Beck, J.

I. the evidence shows that the assignors borrowed of the bank the amount of money secured by the chattel mortgage. At the time the loan was effected, notes were given, one of which — for $1,500 — was signed by the parties individually, and endorsed by another person. The other notes were signed by the firm. Fifteen hundred dollars of the amount so borrowed were applied to the payment of an individual debt of one of the partners, Stewart, the other partner assenting thereto. "With this sum Stewart was charged upon the books of the firm. The officer of the bank, with whom negotiations were made for the loan, understood the purpose for which the parties intended to use the money. There is no evidence that the firm was insolvent at this time. Subsequently the notes first given, including the note for $1,500, were taken up, and the firm notes were given in their place, which were secured by the chattel mortgage. The creditors insist that the notes, to the extent of $1,500 and interest thereon, ail amounting to $1,700, constitute a personal indebtedness of Stewart, which ought not to be paid by the assignee until the creditors of the firm have been paid.

II. That the firm became bound for the amount in controversy cannot be doubted. That the notes, both those first given and subsequently executed, were executed with the consent of both partners, is not denied. That they are based upon a sufficient consideration, and are not tainted with fraud, must be admitted; and that tbe firm could not successfully resist their payment will not be claimed. If the claim and secui’ity therefor were valid against the assignors, they may be enforced against the assignee. Upon the payment of the money to Stewart’s creditors, Stewart became bound for the amount to the firm, and, as we understand the record, he is charged with that amount upon its books. If' the transaction was in good faith — with no purpose to defraud the firm’s creditors — it must be upheld. The knowledge possessed by the bank officer of the purpose of the partners as to the appropriation of the money, in the absence of notice of the firm’s insolvency, does not affect their rights, for, as we have said, the note in question was valid as against the firm. In our opinion the circuit court rightly ruled in overruling the objections to the assignee’s report, and in entering an ordei approving it.

Affirmed.