6 Bosw. 123 19 N.Y. Super. Ct. 123

Daniel L. Pettee, Assignee, &c., Plaintiff and Appellant, v. John Orser, Sheriff of the city and county of New York, Defendant and Respondent.

1. Where a copartnership consists of four members, two of whom are absent from the State on business of the firm, the other two partners cannot, without the assent of the others, make a valid assignment of all the copartnership property [in trust,] for the payment of the creditors, giving preference to some over others.

2. An assignment so executed, and not ratified but dissented from by the absent partners, is void as against the creditors of the firm, and the assigned property may be levied upon and taken by the Sheriff under an execution issued on a judgment against the firm.

3. The Sheriff, when sued by the assignee, may justify his taking by proof of such judgment and execution, and such an assignment will be held void as to him.

4. The insolvency of the firm, when the assignment is made, will not authorize two of the parties to make the assignment.

5. When the assignee, in such case, is one of the preferred creditors, he cannot, for that reason, retain the assigned property or any part of it to apply it to his own debt. He cannot claim, that the assignment is, as to him, an application of the firm’s property to the payment of his particular debt, which any, even one, of the partners might make.

(Before Bosworth, Ch. J., and Hoffman and Moncrief, J. J.)

Heard, December 7th, 1859;

decided, January 28th, 1860.

*124This is an appeal-from .a judgment for the, defendant upon a .dismissal of the complaint, and also -from an order denying a motion for .a new trial.

Thé action was tried before Mr-. Justice-SLOSspur and a jury, on the 12th day of May, 1858. It was brought by the plaintiff, as assignee,- to recover the possession of' fourteen marble mantles, which were, prior to the 31st of January, 1855, the property of William Crumbie, Henry Randall, Alexander Crumbie and James McLean, copartners,, doing business, in the city of New York under the firm name of W. A A. Crumbie & Randall, who, on the day last named, made.an assignment to the plaintiff of all their property in trust for the benefit of. their creditors. The said mantles being thereby assigned, the plaintiff took possession thereof, and afterwards the defendant took the same from the plaintiff’s possession, and refused to return the same, and wrongfully detained and still detains the same, &c.

The answer, so far as it is material to state it, denied the assignment to the plaintiff; alleged that the instrument under which the plaintiff claims purporting to be an assignment was executed by William Crumbie and Henry Randall only, and without authority from Alexander Crumbie and James McLean, or either of them, and that the same was never assented to, or ratified, by them,, but they expressly dissented, as soon as they.had, notice or knowledge of its existence. -That the trusts..in the said assignment were illegal, fraudulent and void.

And the defendant therefore justified the taking and detention averring a judgment against the said members of the firm of W. & A. Crumbie & Randall, and an execution théréón addressed to him as Sheriff, by virtue whereof, he levied upon and took the property in question.

On the trial, the articles of copartnership between the four parties above named were put in evidence. There was nothing therein which was claimed to give any special, peculiar or extraordinary power or authority to either of the partners,

The plaintiff gave evidence ¡tending to prove, and claimed that he had shown, that on the 31st day of January, 1855, the firm was insolvent. '

On the day last named, Alexander Crumbie was absent from the State of New York on his way to California-upon business *125of the firm; and James McLean, the other partner, was also absent from the State of New York, in the Island of Cuba, for and on business of the firm. On that day the two partners who were in New York, William Crumbie and Henry Randall, executed an assignment to the plaintiff in the name of the firm, affixing a seal, and also signing and sealing the same in their individual names. The plaintiff at the same time accepting, signing and sealing the instrument.

This assignment, after reciting an indebtedness of the firm which they are at present unable to satisfy, purported to assign, transfer and set over to the plaintiff, all the stock in trade, fixtures, tools and property of the firm used in or about the business, and all their choses in action, accounts, claims and demands, and all and singular, every and any other property belonging to the said firm.

In Trust. First, to sell and collect, &c.

Second, to pay all reasonable fees, costs and charges which the firm now owe or have been put to for legal advice and services, including the making of the instrument and other papers necessary to carry the object thereof into effect and the costs and expenses allowed by law.

Third, to pay any costs, charges and expenses to which the plaintiff “may be put or rendered liable in originating, prosecuting and defending the suits, or otherwise in aid and furtherance of the object and execution of the intention of this indenture.”

Fourth, to pay the several creditors mentioned in schedule A., and annexed thereto, among whom the plaintiff was himself named as a creditor to the amount of $1,291.50.

And, Fifth, after satisfying the preceding trusts to pay all the rest and remainder of the creditors of the firm, so far as the proceeds of the assigned party should be sufficient and pro rata.

The said assignment never was executed nor ratified nor assented to by Alexander Crumbie and James McLean, or either of them, but was dissented from by them as soon as they received notice or had any knowledge that it had been made.

It was proved that the plaintiff took possession under the assignment, among other things, of the mantles in question which had theretofore belonged to the firm, and that the defendant took *126the mantles from the plaintiff and refused to return them on his demand. And in justification of the taking, the defendant proved the judgment and execution mentioned in his answer, and that his taking was as Sheriff under such execution by levy of the same on the said mantles.

The plaintiff also showed that the debt mentioned in the assignment as due to him and therein preferred with others named in the schedule annexed, arose for goods sold by him to the firm and used by them in their copartnership business.

Upon these pleadings and proofs, the defendant moved for a dismissal of the complaint on two grounds:

First. That the assignment was not the act of the firm, nor signed by Alexander Crumble nor James McLean, but that they expressly dissented therefrom, and therefore the plaintiff had no title.

Second. That the assignment was fraudulent and void by reason of an illegal and unlimited discretion given to the assignee to originate suits, and use the funds in about the same without limit.

The motion was granted, and the complaint dismissed.

Erom a denial of a motion for a new trial, and also from the' judgment when entered, the plaintiff appealed.

William Curtis Noyes, for the plaintiff (appellant).

I. The assignment was not invalid or fraudulent by reason of the provision in its third clause; as it only expresses the legal effect of the instrument itself, except as to the expenses of preparing the assignment and the assignor’s liabilities for fees, &c., for legal advice and services.

1. It was lawful to prefer these fees, &c.

2. If there is any uncertainty as to the creditor, then the clause in that respect is simply void and does not affect the other parts of the assignment.

II. The assignment is valid, although not executed by all the members of the firm :

1. Being joint tenants one or more of the partners, without the assent of all, may lawfully dispose of all the partnership property. (Gow, on P., 51; Collyer, § 395; Smith’s Merc. Law, 79; Fox v. Hanbury, Cowp., 445; Mills v. Barber, 4 Day, 428; 5 Cranch, 289.)

*1272. He may mortgage it for an old debt or on a new consideration ; and to secure a particular debt. (Tapley v. Butterfield, 1 Metc., 515.)

3. He may sell and convey it without the knowledge or consent of the others. (Sale v. Dishman’s Ex’rs, 3 Leigh, 548; Mabbett v. White, 2 Kern., 442.)

4. He may give a lien upon it, or assign it to pay debts, even when the firm is insolvent, and in so doing in the absence of his partners, so that they cannot act, may give such lawful preferences as all combined could have given. (Pickstock v. Lyster, 3 M. & Sel., 371; Harrison v. Sterry, 5 Cranch, 289; Mills v. Barber, 4 Day, 428; Anderson v. Tompkins, 1 Brock R., 456; Robinson v. Crowder, 4 McCord R., 519; Hodges v. Harris, 6 Pick., 360; Egberts v. Wood, 3 Paige, 517; Havens v. Hussey, 5 id., 30; Deckard v. Case, 5 Watts, 22; Kirby v. Ingersoll, 1 Doug. [Mich.] R., 477; Kemp v. Carnley, 3 Duer, 1; Burrill on Assts. Ch., 4, p. 36, 1st ed.; Robinson v. Gregory, Kelly et al., Supreme Court, General Term, N. Y., MS. Opinion of Roosevelt, J.)

He can employ an attorney and confess a judgment in a suit at law, which will bind the firm. (McCredie v. Senior, 4 Paige, 378; 9 Wend., 437; 19 J. R., 137; 17 id., 525; 1 Hoff. Ch. R., 534; Collyer on Part., § 439, and note, Perkins’ ed.; id., § 119.)

5. The cases which seem to establish a different rule are overruled, or are distinguishable from the present. Dickinson v. Legate, (1 Dess., 539,) is overruled in Robinson v. Crowder, (4 McCord, 519,) Harrison v. Jackson, (7 D. & E., 209,) is explained by Chief Justice Marshall in Anderson v. Tompkins, supra; in Deming v. Colt, (3 Sand. S. C. R., 284,) the other partners were present and capable of acting; Kirby v. Ingersoll, (1 Doug. [Mich.] R., 477,) was like Deming v. Colt; Dana v. Lull, (17 Vt., 390,) was decided on the ground of the fraud generally; in Hitchcock v. St. John, (1 Hoff. Ch. R., 511,) the partners resided in different cities and carried on their business, each conducting different branches.

III. The objection of want of authority to make the assignment in any number of the partners less than the whole cannot be made by creditors or the sheriff, it can only be made, if at all, *128by the partners themselves. (Robinson v. Gregory & Kelly, MS., supra.)

The judgment should be reverse'd, and a new trial ordered.

Aaron I. Vanderpoel, for the defendant (respondent).

I. The general principle is settled, that the power of part of the copartners to execute a general assignment to a trustee,-for the benefit of creditors, is not conferred by the act or relation of partnership.

1. In conformity with this principle, it has been adjudged, in a large number of eases, and' cannot be regarded as an open question, that one partner cannot make a general assignment' of the property of the firm, either with or without preferences, where the other copartner is present and capable of acting, but does not consent and concur.

In the following cases the assignments were without preferences: Hayes v. Heyer, (3 Sandf. S. C. R., 293,) Deming v. Colt, (id., 284,) Fisher v. Murray, (1 E. D. Smith, 341,) Kirby v. Ingersoll, (1 Har. Ch. R., 172,) S. C., (1 Doug. [Mich.] R., 477,) Bull v. Harris, (18 B. Monroe, 198, 199,) Wetter v. Schliepper, (4 E. D. Smith, 707,) Hughes v. Ellison, (5 Mo., 463,) Drake v. Rogers, (6 id., 317,) Kemp v. Carnley, (3 Duer, 1,) Dickinson v. Legare, (1 Dess., 537.)

With preferences: Havens v. Hussey. (5 Paige, 30.) (See also 1 Abb. Pr. R., 167; 19 Barb., 592; Haggerty v. Granger., 15 How. Pr. R., 243; 3 Kent Com., 49; 19 J. R., 137.)

2. In all, or nearly all, of the cases above cited, the Court recognized the right of one partner to sell and dispose of all of the property of the firm, directly to a creditor, or to any other person, against the wishes of his copartner. But they declare that there is a very broad distinction between that right and the right to create a trustee of the partnership property with the power to' dispose of it, in the discharge of whose duties and responsibilities the partners have a continuing interest. The one is .the exercise, the other is the delegation of partnership powers,

3. Under some circumstances the effect, so far as it works a dissolution of the firm, may be the same, whether the assets are disposed of by a sale or by assignment to a trustee; but in the one case the dissolution is the consequence of an act legally *129within, the partner’s power, and in the other case it results from an act not authorized by the partnership relation. (Mabbett v. White, 2 Kern., 442.)

4. An assignment to a trustee, ipso facto, works a dissolution, destroys the -business, puts the non-consulted partner but of all his rights. Except by the grace of the assignee, he, one of the chief parties in interest, can neither advise, negotiate, nor aid in settling the partnership affairs. He must bear the burden of all the errors or negligence of the trustee.

It is a delegation of partnership rights and duties which ought not to be encouraged.

III. The fact that two of the copartners were absent from the State and from their residence on the business of the firm, did not give the other two copartners a right to execute this assignment. There was no implied power, and no pretense of any express power. Nor did the absent partners ratify the act, but, on the contrary, they expressly dissented from it as soon as they received notice of it. (Hitchcock v. St. John, Hoff. Ch. R., 511; Havens v. Hussey, 5 Paige, 30; Deming v. Colt, 3 Sand. S. C. R,. 284; Dana v. Lull, 17 Vt., 390; Pearpoint v. Graham, 4 Wash. C. C., 234; Wetter v. Schleipper, 4 E. D. Smith, 707; Deckard v. Filbert, 3 Watts & Serg., 454.)

1. Cases have occasionally arisen, attended with the circumstance that the conduct of the absent partner had been such as to show an abandonment by him of the business, and the investing of the other partner with the entire control and disposition of the property. (Kemp v. Carnley, 3 Duer, 1; Robinson v. Crowder, 4 McCord Law R., 519.)

2. Two cases have declared that the execution of a general assignment, with preferences, when executed by one partner, in the absence of his copartner, is valid.

But each contained the feature that the absent partner had invested his copartner with the entire control and management of the business. (Anderson v. Tompkins, 1 Brock., 456; McCullough v. Sommerville, which was based upon Anderson v. Tompkins, 8 Leigh, 436.)

These cases have not met with the approval or sanction of the courts. The inconsistency of the arguments presented by Chief Justice Marshall, in Anderson v. Tompkins, are apparent. (Fisher *130v. Murray, 1 E. D. Smith, 341, 343; Hayes v. Heyer, 3 Sand. S. C. R., 297; Pearpoint v. Graham, 4 Wash. C. C., 234; Story on Part., 101. As to the case of Harrison v. Sterry, 5 Cranch, 300, see Havens v. Hussey, 5 Paige, 32.)

3. The assent of, or a subsequent ratification by the absent partner, will not be presumed. It must be affirmatively established by those claiming under the instrument. (Hitchcock v. St. John, Hoff. Ch. R., 511.)

4. Preferential assignments do not meet with the favor of the courts, and will not be protected or allowed to stand where the courts can redress the wrong. (Nicholson v. Leavitt, 4 Sand., 280; Barney v. Griffin, 2 Comst., 371; Nichols v. McEwen, l7 N. Y. R., 22.)

IV. The assignment is void by reason of the third trust.

1. He who accepts under an assignment, ratifies each trust contained in it, and is not at liberty to call in question- the conduct of the assignee so long as he acts within the letter of the instrument. (Olmstead v. Herrick, 1 E. D. Smith, 310; Litchfield v. White, 3 Seld., 443; Edgell v. Hart, 5 id., 213; Dunham v. Waterman, 17 N. Y. R., 9.)

2. The second clause had provided for all the expenses necessary in the discharge of the trust, including the costs and expenses allowed by law. Whatever was done by the assignee under this second clause, was completely under the control of the Court.

The third clause was unnecessary, for any proper or legal purpose. It is not subject to any limitation. (McEwen v. Nichols, 17 N. Y. R., 22; S. C., 21 Barb., 65; Mead v. Phillips, 1 Sand. Ch. R., 83.)

The judgment should be affirmed.

Hoffman, J.

The learned counsel of the plaintiff has adopted for his premises, as an incontestible proposition, that the power of disposition, as well as the power of acquiring and of binding, is fundamentally inherent in each partner, by the very constitution of a partnership. All these attributes of power follow the relation. His argument, on this basis, is forcible and logical. Everything of restriction and modification of this absolute authority must be rigorously established, either from positive con*131vention or express judicial authority precisely to the point. The assumption is of entire authority. The exception must be exactly and strictly limited to what has been expressly declared to be an exception.

But the premises of the learned counsel are far from possessing that entire legal verity which his deduction assumes. Looking only to the ordinary and superficial statement of the relation of partners found in the elementary treatises, his position may appear plausible, if not certain. But, looking to the origin of the law of this relation, and the source from which England, and we after England, have obtained it, its accuracy may be questioned.

The law of England as to partners is derived from the lex mercatoria, and from the civil law. The Abridgments of Brooks and Fitzherbert have no such title. Even in Viner’s Abridgment there are no cases cited prior to the reign of Charles II.

Lord Coke says that the lex mercatoria, or the law merchant is part of the law of England, (Coke Litt., 11 b.;) and Sir William Grant, in Devaynes v. Noble, (1 Mer., 563,) observes, that the common law, although it professes to adopt the lex mercatoria, has not adopted it throughout, in what relates to partnership in trade.

In Molloy’s Treatise Be Jure Maritimo, page 488, (book 3, ch. 7, § 14,) it is stated: “If two joint merchants occupy their stock, goods and merchandise in common, one of them, naming himself a merchant, shall have an account against the other, naming him a merchant, and shall charge him as receptor denariorum ipsius B., ex quacunque causa et contractu ad communem utilitatem ipsorum, A. & B. provenient. .... sicut per legem, mercatoriam rationabiliter monstrare potent.” He cites 10 Henry VII, 16 a.; Fitzherbert Natura Brev., 117 D.

It cannot be questioned that the law of England upon this subject has been drawn primarily from the civil code. As trade and commerce arose, partnerships and societies and corporations grew up; and the resort of the untrained lawyers of the age must have been to those sources which the civil law, in its plenitude of legislation, opened to them. Yet I know of no author, except Mr. Watson, who has noticed this fact. (On Partnership, Introduction, xxv.)

*132Two questions then occur: First. Does the relation of co-partners imply the existence of a power in each partner, in contemplation of a disposition, to transfer the whole property to the custody and control of a stranger ? Second. Did the civil law, from which England derived the system, recognize such an absolute power of disposition ?

It cannot be said, that there is an inherent necessity for the existence of such a power in order to accomplish the purposes of a partnership. It would be strange to say, that what is done in view of a destruction, or produces a destruction of the relation, springs from such relation, or the powers it logically or reasonably implies. The power is justly implied to do everything which tends to aid, to strengthen, and protect. Many of the leading objects of a partnership—the augmentation of capital —the combination of the varied skill of different persons—the increase of the power of labor, and the expansion of effort and enterprise can be attained, (perhaps less efficiently) without the transmission of the whole authority of the firm to each member, for either the acquisition or disposition of property. In short, whatever tends to preserve, may well be deemed inherent and essential; what presupposes, or produces dissolution, is not merely not inherent, but really repugnant to the abstract idea of a partner’s power. The union of will created the relation: the union of wills seems necessary to destroy it.

And if we find this view sustained by the civil law, we may venture to be assured of its justness, and be emboldened to found our reasoning upon it.

The civil law did not deem such an authority essential to the nature of a partnership. I may go further, and say that the power of absolute disposition of capital stock resided only in the body of the firm, the corpus societatis.

The text of the civil law is as follows: Nemo ex sociis plus parte sua potest alienare, etsi totorum bonorum socii sint, 1. 68, ff. pro. soc., 1. 17, eod. The text of Domat, as translated by Dr. Strahan, is as follows: “Partners, even those who are in partnership of their whole estate and goods, can alienate only their own share of the common stock, and cannot, by their deed, bind the community, except in so far as it has empowered them.”

*133So Voet (Com., tome I., p. 610, pro socio) says: “Finally, (and to this, the action pro socio is suitable,) that the partner should allow the other partner to use the common property for those purposes, for which it was originally furnished by the will of the partners, and conversely, should abstain from all dealings with the common stock which are new, and repugnant to the primary destination of the partners.”

The President Favre, in his treatise upon the Pandects, (quoted by Troplong, DeSociété, tome 12, p. 83,) says: “Sicenimintellige ut qui societatem etiam universalem et in perpetuam contrahit, rem suam communicet socio et in earn partem dominii transferat, non in perpetuum, sed quamdiu tantum durat societas.”

The learned author, Troplong, whom I have quoted, in his commentary upon the 1860th article of the Code of France, observes: “ It is then the society alone, and not one of its members (without a mandate) which can dispose by sale or pledge, of what belongs to it. Even more, the preservation of the social capital is a point so important that the majority cannot force the minority of the partners to sell the property not vendible, (venales,) which composes it.”

This word venales (which I have translated vendible) means either things held or procured to be sold, or things necessary to be quickly sold, from their perishable character. (Troplong, art. 746, tome 13, p. 229.)

The learned author again says, in commenting upon article 1859, (tome 13, p. 203, n. 714,) this tacit authority (given by each, to each other’s partner) comprehends everything which is common in a procuration general; the power to purchase; to pay; to'receive; to hire or to let; and to sell vendible articles. So in the remarks on article 1860, he quotes a civil law writer as follows: “Ñeque alienare potest nisi fructus, aut alias res quce facile corrumpipossuntf and observes, (N., 474,) “And in this, civil part nerships agree perfectly with the commercial partnerships, en nom collectif in which every partner has the tacit authority to manage. Every day we see one partner selling the merchandise, the traffic of which sustains the business. But in commercial partnerships this power of the right of administration is more apparent and more frequent, because they comprise a far greater number of things vendible, and that the incessant traffic of the merchandise *134is there a condition of existence. But neither in the partnerships of commerce, en nom collectif, nor in civil partnerships, can one partner dispose of things not vendible.” ’

Once more he observes that the 1860th article extends to a prohibition of a sale by one partner alone of movable as well as immovable, and a violation of it will subject the partners to an action pro socio; but this concerns the partners between themselves. In relation to third persons to whom sales or pledges have been made, the articles 1862, 1863 and 1864 prescribe the rules.

In considering those articles (tome 12, p. 239,) he recognizes the great power of one to bind the whole in general partnerships, and states, “ these principles are affected by modifications. One is, that the act must not plainly transcend the objects of the union. Suppose one associate sells, in the- partnership name, all the immovables without which the firm cannot be carried on is it not clear that the buyer cannot pretend to have the partnership considered the seller, when he has cooperated in an act destructive of the partnership.” (Tome 13, p. 294.)

It may be added, that the law of France has provided in the fullest manner for the method of winding up a dissolved partnership. It is customary to name a liquidator in the articles. If this has been omitted, he can only be appointed by the unanimous choice of the partners; although a custom exists in many places giving a majority this power. (Troplong, tome 13, p. 484.) If an arrangement cannot be made, the Courts are applied to. (Id.)

The-1859th and 1860th articles of the Code Civile of France, are adopted verbatim into the Code of Louisiana. (Art. 2841, Civil Code, Louis., ed. 1825, p. 588.) 1. The partners are supposed to have given reciprocally to each other, the power of administering one for the other. What one does is valid,, even for the share of his partners, without their approbation, saving the right which they or every one of them has to oppose before it be concluded.

2. Every partner may make use of the things belonging to the partnership, provided he employs the same to the uses for which they are intended (d la destination fixíepar l'usage,) and that he does not use them so as to prevent his associates using them according *135to their rights, nor against the interests of the partnership. 3. Contribution to expenses. 4. One partner can neither dispose of nor make any change in the real property of the partnership, although to its benefit, without the consent of the other partners. 5. In other than commercial partnerships, a partner cannot, as partner only, and if he has not the administration, alienate or engage the things which belong to the partnership.

Article 1860 of the French Codeis: “ The associate who is not the administrator, cannot alien or pledge the things, even movables, (mobiliers,). which belong to the partnership."

The law of Scotland follows in the footsteps of Roman jurisprudence. (Bell’s Com., vol. 2, pp. 615, 616.) That of Holland is equally guided by it.

I am justified, I think, in adopting the language of Troplong. “ The maxims of the Roman lawyers, imitated by Domat, Pothier and others, and expanded by commercial custom, have laid the true foundations of the law of partnership. This was the fruit of long experience, and of the wise observation of important facts.”

It results from this review that in general there was no power as between partners themselves, in one of them to dispose of the common stock absolutely, without the consent of the others; that the unrestricted authority to bind the association was limited to partnership purposes, during the duration of the firm, for the object of carrying it on; that an act exceeding this limited power by one, might give rights to an innocent purchaser; but if he took the whole property, implying that the partner was destroying the means of carrying on the business, he was not innocent; and lastly, that for the purpose of winding up a partnership, the assent of all to a liquidator was necessary, or the tribunals of justice must be resorted to.

In considering the question as affected by the decisions now binding upon this Court, we find some positions, so settled as not' to be open to discussion here.

Deming v. Colt, (3 Sandf. S. C. R., 284,) decided that one partner could not, without the consent of the other, and without consulting him, although present and actively engaged in the business, make a general assignment to a trustee for the benefit of the creditors without preferences. The principle of the court in that *136case was, that each partner has a. great and powerful interest to see that a proper person is selected to wind up the affairs of the concern ; as the judicious administration of the estate will beneficially affect the extent of the liability of each for the debts remaining undischarged, as well as the prospect of an ultimate surplus.

It was treated as settled law, that an assignment, under such circumstances giving preferences, was void. Havens v. Hussey, (5 Paige, 30,) is referred to, and fully sustains the decision.

In Hayes v. Heyer, (3 Sandf. S. C. R., 293,) heard before the three other Judges of the Court, it was announced that the decision in Deming v. Colt might be considered as expressing the unanimous opinion of all the Justices of this Court, that a partner can in no case make a general assignment to a trustee for the benefit of creditors, against the consent or without the concurrence-of his copartners, the latter being present and capable of acting in the matter.

Fisher v. Murray, (1 E. D. Smith, 341,) in the Court of Common Pleas, is to the same point The learned Judge who delivered the opinion used the words, “ under circumstances rendering it impossible to consult the other partners,” instead of “ the latter being present and capable of acting.”

An assignment under such circumstances, giving preferences, would be even more clearly invalid, and so it was considered in Kemp v. Carnley. (3 Duer, 1.)

Dana v. Lull, (17 Vt., 390,) gives the express sanction to this point of two of the Judges.

In Ormsbee v. Davis, (5 R. I. R., 442, 1859,) a general assignment giving preferences, and mainly to,-the firm of which the assignee was a member, was held void when made by one partner, the other not being shown to have been away or incapable of being consulted, an attaching creditor impeached it..

In Kemp v. Carnly, (3 Duer, 1,) the decision was, that when a partner had absconded, and relinquished all control and management of the concern, an assignment by the other to a trustee, not giving preferences, was valid.

The case of Mabbett v. White, (2 Kern., 442,) involves the point that one partner, when the firm, is insolvent, may make a direct transfer of all the partnership property to a single creditor, to pay a debt, without the knowledge or consent of the other *137partner, though he was present, or could have been consulted, there being no fraudulent intent to defeat creditors.

The court declared that it was not necessary in the case to decide whether the partner could make an assignment to a trustee for that purpose.

Justices Denio and Johnson dissented, and the former examined the cases with care. I am authorized by one of the learned Judges who concurred in the judgment, (Judge Dean,) to say, that he should have come to a different result had the transfer been to a trustee, giving the creditor a preference.

This decision leaves the question which arises in the present case, open for our determination. It is to be remembered that the absent partners were away upon the business of the firm, and as soon as apprised of the assignment, repudiated it.

Upon the principal question, then, my own conclusion is, that an assignment without the concurrence of acting partners, of all the property of a firm, giving preferences, is void. It is void because the partners have never vested each other, by force of the partnership union, with such a power. It is invalid because it controverts the great object of a partnership, the true theory, and the most sacred bond of the connection, the furtherance of partnership objects, so long as they can be attained, and the equal power of each member to watch over and direct the application of the funds when insolvency overtakes the firm. It is not warranted in the present case by the absence of the other partners. That created no emergency which can justify it. The law will sanction an assignment distributing the property among all the creditors, because the law assumes that all the associates will unite in what equity dictates. The law opens another mode to the partner by throwing the administration of the funds into a court of equity.

It has been suggested, and the argument receives no slight strength from Mabbett v. White, that as the present assignee was a preferred creditor, (to an amount indeed of $1,291.50, out of about $1,620,) the transfer must be as valid as to his demand, as if the property had been directly delivered to him.

It may be answered:

If this may prevail, the rule regarding the concurrence of the partners is effectually defeated. Let all the preferred creditors *138be named trustees, and the object of the assigning partner will, in the great majority of cases, be attained.

Again, upon a direct transfer in payment of a debt, the partners are discharged, the debt is extinguished. This was the case, in Mabbett v. White, where a note of the purchasers was given for the balance. Here the partners will be left responsible for any deficiency.

Again, here is a trust created to sell the property, to collect the debts, to pay the expenses of the assignment, and yet more, to defray the costs and expenses of prosecuting or defending suits connected with the assignment.

In the case of Ormsbee v. Davis, before cited, a subsequent transfer of part of the partnership property to the creditor, in satisfaction, or even security for the debt, was supported. The line of distinction I have pursued in this argument is strikingly shown in that authority.

I conclude that on no ground can the transfer in question be sustained, and that the judgment appealed from must be affirmed.

Bosworth, Ch. J., and Moncrief, J., concurred in the propositions contained in the head note.

Judgment affirmed, with costs.

Pettee v. Orser
6 Bosw. 123 19 N.Y. Super. Ct. 123

Case Details

Pettee v. Orser
Decision Date
Jan 28, 1860

6 Bosw. 123

19 N.Y. Super. Ct. 123

New York



Nothing yet... Still searching!

Referenced By

Nothing yet... Still searching!