Field v. Chapman , 24 How. Pr. 463 ( 1863 )

Leonard, J.

Each member of a copartnership may require the assets of the firm to be applied to the satisfaction of the partnership debts. Each member may also dispose of his interest in the partnership property in good faith, and for a valid consideration, unless some creditor has acquired a lien thereon. The right of the creditor is subordinate to this power of the partner to make a bona-fide disposition of the property until it is subjected to the creditor’s lien. (3 Kent's Com., 65, and note; Story's Eq. J., §§ 675,1243,1253; Story on Partnerships, §§ 373, 402 ; Gow on Partnerships, 275 ; Exp. Rowlandson, 1 Rose, 416; Greenwood a. Brodhead, 8 Barb., 593 ; Crippen a. Hudson, 13 N. Y., 161; Sage a. Chollar, 21 Barb., 596; Ketchum a. Durkee, 1 Barb. Ch., 480; Kirby a. Schoonmaker, 3 Ib., 46.)

In the present case Hunt transferred to Julia M. Chapman all his interest in the partnership assets. There is no allegation that this transfer was fraudulent. No creditor had any lien to prevent it. Hunt has made no stipulation for the benefit of the creditors of the firm requiring Julia to pay the partnership debts, and she came under no obligation to her partner Hunt to apply those assets to any particular purpose, or to indemnify him against the partnership liabilities. The creditors have no equities here to be worked out through the retiring partner. That partner reserved none for' them or for himself. His disposition of the assets was absolute and complete, and Julia became vested with the entire and separate ownership thereof.

This property so transferred cannot be reached by execution on a judgment recovered against the firm composed of Hunt and Julia M. Chapman, where she has not been personally served with process. The property belongs to her individually, and the execution to be issued on such judgment must direct the sheriff not to levy on her separate property.

It is quite clear that in such a case the remedy at law has not been exhausted as against Julia, and that creditors having judgments recovered by the service of process on Hunt only, with executions thereon, cannot maintain an action to inquire into or set aside any transfer made by her of such partnership property or assets as were conveyed to her by her former partner Hunt in the manner above-mentioned.

The order appealed from should be affirmed.

Ingraham, P. J.

There can be no doubt that the judgment in this case would not be sufficient to warrant an execution against the defendant Chapman, who was not. served,.so as to reach her individual property.

hi or would it form the foundation of an action against her if she had been sued upon it; that would only furnish the amount of recovery after her liability was established by other evidence. (Mervin a. Kumbel, 23 Wend., 293; Oakley a. Aspinwall, 4 N. Y., 513.)

Hor would it be a cause of action upon which an attachment against the debtorAot served could be issued. (Ib.)

In the Commercial Bank, &c. a. bleach (7 Paige, 448), the chancellor held that upon a joint-judgment against several defendants, some of whom were not served with process, all must be made defendants in a creditor’s bill, to enable those whose property was taken to satisfy the debt, to claim contribution against their co-defendants; and in Howard a. Sheldon (11 Ib., 558), he held that in an action on a judgment against joint-debtors, where process was not served on one defendant, but an execution issued against the joint property of all and the separate property of the one served, the creditor had not by such execution exhausted his remedy at law so as to entitle him to file a creditor’s bill against the defendant, who was served with process in the last suit.

In that case it was also held, that the complainant had not exhausted his remedy at law for the recovery of his debt until execution had been issued against each of the defendants as to their individual property as well as the joint property of the firm.

This rule, applied to the present case, shows that the order appealed from was correct. (See, also, Child a. Brace, 4 Paige, 309.)

There is no force in the objection, that the execution was returned before sixty days had expired. All the judges in this district have held that it was not necessary. The chancellor, also, so held in Platt a. Cadwell, (9 Ib., 386).

Bajutaed, J.—concurred.

Order affirmed.