Opinion
September Term, 1862
John L. Talcott, for the appellant.
L.B. Porter, for the respondent.
It having been settled in the case of Mabbett v. White (2 Kern., 442), that a single partner has power, in the absence of fraud, notwithstanding the dissent of his co-partner, to transfer all the property of the copartnership in payment of one or more debts of such copartnership, I see no ground upon which the defence in this case can be sustained. The question of fraud, either against the copartner, or against creditors, was not available to the defendant under his answer. He merely denied the plaintiff's title to the goods, and his own taking and conversion, or detention of them, without claiming any rights himself either as purchaser or creditor. As a stranger, he could not question the validity of a transaction between other parties on the ground of fraud. That objection is available only to parties and privies. ( Jackson v. Eaton, 20 John., 478.) The defendant does not, by his pleading, show himself to be either creditor or purchaser, and for that reason the evidence which he offered, of a title derived from Wagner and Graser, was properly rejected. (14 Barb., 541; 20 id., 473; 3 Comst., 510; 5 Duer, 392.)
The delivery of the goods by William Wagner to the defendant was proved without objection, and if that evidence is available, notwithstanding the defect in the pleadings, to show such a privity between the defendant and the copartnership as to entitle him to insist that the sale to the plaintiff was fraudulent, which is at least doubtful (24 Wend., 291; 2 Comst., 361, 506), it will not aid the defendant here, for the reason that he did not ask to have the question of fraud submitted to the jury. ( Plumb v. Cattaraugus County Ins. Co., 18 N.Y., 392; Winchell v. Hicks, id., 558.) No such distinction in this respect, as that contended for by the defendant's counsel, between questions of fraud in general and those in regard to fraudulent conveyances, which are made by statute questions of fact for the jury "in all cases," has ever been made, and I should not think it wise to adopt it, if the case required a decision upon that point. That question, however, is not presented, as the defendant has not in his answer claimed any interest in the goods as creditor; and the plaintiff's proof, if that were available to him without pleading, only shows him to be a creditor at large, and as such he could not dispute the validity of the transfer to the plaintiff on the ground that it was designed to defraud creditors. ( Andrews v. Durant, 18 N Y, 496.)
The case of Mabbett v. White ( supra), shows that the sale made by Graser to the plaintiff, its good faith not being denied, was valid. In that case, the sale was made to a creditor of the copartnership, but he was not a creditor to the full value of his purchase. For upwards of $1,700 he gave his note, which was turned out by the partner making the sale to another creditor. The engagement of the plaintiff in this case to pay the debt of the firm to Stellwagen, was equivalent to giving his note for that purpose, and I see no material distinction, therefore, between this and the former case. The principle having been settled that one partner may transfer the entire assets of a copartnership in payment of a part of its debts, or to provide means for their payment, without the consent and in face of the protest of his copartner, it would be unwise and lead to great confusion if nice distinctions should be introduced in regard to the particular manner in which it should be done, where no question of good or bad faith is involved.
The judgment should be affirmed.
DENIO, Ch. J., DAVIES, WRIGHT and GOULD, Js., concurred.
In my opinion, the transaction by which Edward Graser undertook to transfer to the plaintiffs' intestate, Valentine Graser, the entire stock in trade of his firm, without the knowledge or consent of his partner, cannot be upheld, and ought not to be sanctioned by this court.
On the 8th of May, 1858, the partnership was formed, to continue three years: on the 12th of May, the greater portion of the goods in question were bought by the firm for partnership purposes of the defendant, the firm giving therefor to the defendant their two promissory notes, one dated May 12th, 1858, for $467.79, payable three months after date, and the other dated May 10th, 1858, for $1,618.59, payable two years after date, and at the same time Valentine Graser and Hartman Wagner executed their joint bond to the defendant to secure the payment of these notes. Now, on the 25th of August, 1858, Edward Graser, without the knowledge or consent of his partner, William Wagner, and without consulting him, although he was at the place of business of the firm, undertook to sell and transfer to Valentine Graser, for the purpose of indemnifying him for his liability on the bond, and in consideration of his agreeing to pay the defendant for the goods so bought of him, the goods for the possession of which this action is brought, the greater portion of them being the goods so bought of the defendant and being the entire stock in trade of the firm, and thus to break up and end the business of the partnership within about three months after it was formed, without any alleged change of circumstances to justify it, and without even the excuse of insolvency.
In my opinion, Edward Graser had not the power to make the sale and transfer to Valentine Graser, without the knowledge or consent of his partner, which he undertook to make.
Mabbitt v. White (2 Kern., 442), does not show that he had the power to make the sale, for the sale was not made to pay or to secure the payment of a partnership debt owing to Valentine Graser. The firm was not indebted to Valentine Graser at the time of the sale. It does not appear that, either before or after the sale, Valentine Graser had paid anything on the notes of the firm given to the defendant for the goods. The large note was not due, but had more than eighteen months to run. The small note had been mostly paid, it is to be presumed, by the firm.
Edward Graser had no express power to make the sale. On the contrary, he took care to make it without the knowledge of his partner. If he had power to make it, the power must be implied from the partnership relation. But ought such power to be implied from that relation, to enable him thus to destroy, not only the partnership agreement but the partnership business, not only without any excuse, but with the most apparent bad faith towards his partner? I think not.
In my opinion, the judgment of the Supreme Court should be reversed, with costs.
ALLEN and SMITH, Js., also dissented.
Judgment affirmed.