Opinion
March Term, 1865
Charles H. Smith, for the appellant.
Samuel E. Lyon, for respondent.
Upon the facts found by the court, and those we have the right to assume it found, to sustain this judgment, the judgment appealed from must be affirmed. All questions of fraud, in fact, in relation to the assignment sought to be set aside, are found adversely to the plaintiff, and there is nothing on the face of the assignment which would lead to setting it aside as void in law.
Nothing remains for consideration but the question whether the circumstance that the bulk of the property assigned had belonged to the partnership of Eagle Hazard, although sold and transferred to Hazard individually some months before he made the assignment, could lawfully be assigned by Hazard for the payment of his individual debts. It is to be observed that there is no finding by the court which raises the objection now taken. In the absence of any finding of fact which would authorize this court to reverse the judgment, we are to assume the court found all such facts as are necessary to sustain it. The general conclusion of the court or referee is to be construed as involving a finding upon all the material questions, though such a finding be not expressed in terms. ( Grant v. Morse, 22 N.Y., 323.) We are authorized, therefore, to assume that the court found that the transfer by Eagle to his copartner Hazard, was bona fide, and that the assumption by the latter of the partnership debts, was a sufficient consideration therefor. These facts being proved, or assumed to be proved, the court correctly decided, as matter of law, that such transfer made the partnership property of Eagle Hazard, the separate property of Hazard, and that he could lawfully assign and transfer it in payment of his individual debts. This precise point arose in the case of Bullitt Faithome v. The Chartered Fund, c. (26 Penn., 108). Treadwell, one of the firm of Boswell Co., retired from the firm, and assigned all his interest in the firm property to Boswell, the other partner. He made an assignment of the same property, in payment of his individual debts. It was argued that as to the claims in controversy, being part of the assets of Boswell Co., Boswell had no power to assign them in payment of a debt due from himself. But the court said, it is a sufficient answer to this that the partnership between Boswell Treadwell had been dissolved long before the assignment, the outgoing partner had a right to demand that Boswell should pay the debts of the firm, for such was the contract. The creditors of Boswell Co., had a right to demand that the assets of the firm, as well as the separate property of the remaining partner, should go to the satisfaction of their just claims, but they had no specific lien on either which would enable them to follow it into the hands of a bona fide purchaser. When one of two partners retires from business, relinquishing to the other all his interest in the partnership property, the remaining partner has the same dominion over it as if it had always been his own separate property.
A similar question was adjudicated in Howe v. Lawrence (9 Cush., 555). The question there was, whether the property which belonged to the partnership of Shaw Gardner, and which, upon the dissolution of the partnership, was sold and transferred by Shaw, to Gardner, was to be treated as the separate estate of Gardner, and to be appropriated as such, to the payment of his separate debts, or whether, notwithstanding the sale and transfer by one partner to the other, it was still to be regarded as joint estate, and to be applied to the payment of the debts of the partnership accordingly. The court said that the right of copartners, upon dissolution, to transfer the joint property to one of the firm, is clear and unquestionable. The effect of such transfer, as between the partners, is to vest the legal title to the property in the individual partner with a right to use and dispose of it as his separate estate. That it would seem to follow as a necessary consequence, that the creditors of the firm, after such conveyance, would have no right to look to the property transferred, as joint property, upon which they had any specific claim or lien; that if, in such transfer, there is no fraud or collusion between the copartners, for the purpose of defeating the rights of joint creditors, and the transaction is made in good faith, upon dissolution, and for the purpose of closing the affairs of the partnership, the joint property thereby becomes separate estate with all the rights and incidents, both in law and equity, which properly attach thereto, and the court correctly remarked that the only limitation upon this right, is that it shall be exercised bona fide, and without any intent to defraud the creditors of the firm or to deprive them of their legal or equitable claims, upon the joint estate, in case of insolvency; and, as the result of the reasoning of the court, it was held, that if the transfer has been made honestly, and for a valuable consideration, the property has thereby become separate estate, wholly free from any claims of joint creditors. These principles are fully sustained by the authorities cited. (Coll. on Part., §§ 174, 894, 903; Story on Part., § 358; ex parte Ruffin, 6 Ves., 127; ex parte Fell, 10 Ves., 347; ex parte Williams, 11 Ves., 3; ex parte Rowlandson, 1 Rose, 416; Campbell v. Mullet, 2 Sw., 575; Allen v. Center Valley Co., 21 Conn., 130, 137; Ferm v. Monroe, 1 Fost., 462, 469.)
The cases also recognize it as a well settled rule, that joint estate is not, so far as the rights of creditors are concerned, that which was such at the time of the dissolution, but that in which the partners are jointly interested for the purposes of the partnership and the settlement of its concerns, at the time of the institution of proceedings against the firm.
A like principle was enunciated in the case of Robb v. Mudge (14 Gray, 534), where the court held that, by the terms of the agreement of dissolution, the joint estate of the firm was converted into the private estate of Fain, the remaining partner, so that it could be applied only in payment of debts which were payable out of his private estate. That the sale and assignment of the property and assets of the firm by the retiring partner was made in good faith, and that they could not, in marshaling the assets in insolvency, be treated as joint estates, or applicable to the payment of joint debts. The court observed, that this point was adjudicated on full and careful consideration in Howe v. Lawrence (9 Cush. supra). The same doctrine has received the sanction of our Supreme Court in Sage v. Chollar (21 Barb., 596), where Judge HARRIS said, upon a voluntary dissolution, one partner may agree that the partnership property shall belong to his copartner. When such an agreement is made in good faith the property will be held by the partner to whom it has been transferred free from any lien or equity in favor of partnership creditors.
Assuming, therefore, as we are authorized to do, that the transfer by Eagle to Hazard, of his interest in the partnership property, was made in good faith, it vested in Hazard the partnership property, as his private estate, free from any lien or equity in favor of the partnership creditors. The doctrine of the case of Wilson v. Robertson ( 21 N.Y., 587), has no application to the case at bar. Here, there has been no appropriation of partnership property to the payment of the individual debts of one of the partners, and it is unobjectionable, as in the present instance, that individual property has been appropriated to the payment of partnership debts. It certainly does not become those who are the beneficiaries under such an appropriation to complain of it. Upon the facts developed in this case, the creditors of the copartnership are mistaken in the assumption that partnership property has been appropriated to the payment of individual debts. The disposition of this question renders an examination of the others which have been argued unnecessary.
Judgment should be affirmed.
Judgment affirmed.