60 Ala. 218 | Ala. | 1877
Money was borrowed separately from two persons, each transaction having its inception about the same time — January, 1874. The evidence of the indebtedness was in each case renewed from time to time, and mortgages given as security on the same property — the borrower’s interest in the “ Times” newspaper and its property. In the case of Mrs. Benagh’s loan, the first mortgage was executed directly to her, on the same date as the loan, January 8th, 1874. This mortgage was renewed every three months.
The relation between partners is one of generous confidence. In the absence of special agreements to the contrary, the law constitutes each the agent of the other, and the representative of the firm in the conduct of all the ordinary business of the partnership. The act of one is the act of all. If it be a mercantile partnership, a sale by one is a sale by all. And a payment to one member of the firm discharges the debt, although that member may misapply or squander the money. It is not unfrequently the case, that one partner becomes more indebted to the firm than another. He may use more of the income and effects in his personal and private affairs, — may overdraw his share, or may anticipate future receipts and emoluments, sometimes with, and sometimes without his co-partner’s knowledge or permission. In either case, his share of the profits, or of the capital, if needed, will stand incumbered by a lien, to make good such deficit to his co-partner ; and that lien will be paramount to the right of any alienee or creditor of his. “ In general, when a sum of money is advanced to a partner, or a partner is permitted to take it as a loan, and there are no express
If, instead of borrowing the firm’s credit to raise money on, Mr. Taylor had used its money, or had hypothecated its bills-receivable, and thus realized the sum of them on his private account — and this, either with or without Mr. Warren’s consent — the rule above declared would have applied in all its force, and Mr. Warren would have held a lien. So, if there had been a partnership debt of Taylor & Warren, and Mr. Warren had paid it out of his private funds, this would have given him a claim and lien against Taylor’s interest in either profits or capital of the partnership, paramount to the rights of creditors of, or purchasers from Taylor. And such creditor or purchaser would have no right to complain: for he would realize, by the transaction, all that Taylor could claim. He would be entitled to no more. In other words, Mrs. Benagh, in this suit, can claim what Taylor could claim, if he were suing Warren; no more. She purchased no other right.—See Donelson v. Posey, and other authorities supra. She cannot complain of this; for, purchasing a partner’s interest in partnership effects, it was her duty to inquire of the other partner, how the account stood between them.
It will be seen that we have placed Warren’s superior claim on the lien which the law gave him as a partner. Hence, it was not necessary for him to take a mortgage, or, taking it, to have it recorded. When he incurred the liability for Taylor, by allowing him to pledge the credit of the firm, he had no knowledge or notice of Mrs. Benagh’s claim. We need not, and do not decide, that his claim would prevail over Mrs. Benagh’s, if, before the firm became bound to Fitts & Co., he had been notified of the conveyance to her.
We hold that, after taking a proper account between the partners, charging Taylor with the sum paid Fitts & Co. and interest, as so much paid to and for him by Warren, the business manager; and charging to each partner all proper debits, and allowing to each all proper credits, if a balance be found due to Warren, he has a first lien on the partnership effects, income and capital, for its payment. This is his share in the partnership effects, and he is entitled to it, before Mrs. Benagh can take any thing by her mortgage. Any balance to be equally divided between Warren and Taylor, the interest of the latter, as far as necessary, to be applied to the payment of Mrs. Benagh’s mortgage, and interest
The decree of the Chancery Court is reversed, and a decree is here rendered, in accordance with the principles declared above. Costs of appeal to be paid by the appellees.
It is referred to the register to take proof, and report an account to the Chancery Court, being governed in the matter of taking the testimony by directions of the chancellor in his decree rendered in this cause. All other questions, including the costs of the original suit, to be determined by the chancellor.