Hannon v. O'Dell , 71 Conn. 698 ( 1899 )

Torrahce, J.

McCrillis and Co. attached the interest of William H. Cryne in all the tangible property of the New Britain Grain Company, a partnership of which Cryne was a member. Subsequently William J. O’Dell, Margaret Cryne and Colista L. Noble, claiming to comprise said copartnership, brought an action of replevin against McCrillis and Co. and the officer who attached the goods, and by virtue of the writ issued in said action obtained possession of the attached goods. In the action of replevin judgment was rendered in favor of the defendants therein, for a return of the goods and for costs. The present action was brought upon the bond given in the replevin suit, for a breach thereof in not returning the goods upon demand and in not paying the costs. In the court below in the present action the defendants suffered a default and the case was heard in damages.

Upon the hearing the plaintiffs introduced the files and records in the original attachment suit, and in the replevin suit, and then rested. The defendants, in mitigation of damages, then offered evidence to show that the interest attached in the original suit was only that of a copartner in copartnership property, and that such interest had become worthless by reason of the insolvency of the copartnership'since the attachment. The plaintiffs claimed that the judgment in the replevin suit had established, in their favor, the title to the attached property, the amount of Cryne’s interest therein, and the amount of the judgment to which the plaintiffs were entitled, and that this judgment was conclusive upon the defendants in the present action. The court, against the objection of the plaintiffs, admitted the evidence offered by the defendants, and overruled the claim of the plaintiffs, and one of the important questions in the case is whether the court erred in so doing.

The complaint in the replevin suit alleged, in substance, that William J. O’Dell, Margaret Cryne and Colista L. Noble constituted the copartnership known as the New Britain Grain Company; that they as such copartners owned the attached goods; that they were entitled to the immediate possession of them, and that the defendants named in said complaint wrongfully detained said goods from them.

The first defense in the replevin suit was a general denial, which put in issue all of these allegations. The second defense, however, was special, and alleged among other tilings, in substance and effect, that Margaret Cryne was not a partner in the Grain Company, but that William H. Cryne her husband was such a partner with O’Dell and Colista L. Noble. We think this is the fair import of the second defense; for it does not deny that O’Dell and Colista L. Noble were such partners, and it does in effect allege that William H. Cryne was a partner with them. In the reply the plaintiffs denied this allegation. In the replevin suit, then, under the second defense, the parties were at issue upon the question whether or not William H. Cryne was one of the partners in the co-partnership called the New Britain Grain Company, the defendants therein asserting that he was, and the plaintiffs therein asserting that he was not, such partner. All the issues joined in the replevin suit were found in favor of the defendants therein. The court thus found, in effect, that the property attached did not belong to a copartnership composed of William J. O’Dell, Margaret Cryne and Colista L. Noble, but did belong to a copartnership composed of O’Dell, Colista L. Noble and William H. Cryne ; finding also, in substance,-that the interest of William H. Cryne in the copartnership goods had been lawfully attached, and that the plaintiffs in the replevin suit were not entitled to retain the goods replevied.

Under these circumstances, while it may be conceded that the judgment in the replevin suit, as between parties bound by it, determined conclusively that William H. Cryne was a partner in the New Britain Grain Company, and that all his interest in the tangible property of said copartnership had been lawfully attached in the McCrillis suit, yet it did not determine at all the amount or extent of that interest. That question was in nowise in issue in that case, and its decision is not in any way involved in the judgment therein rendered. That question, in the present suit, was still an open one, and under our practice the defendant was at liberty to offer evidence of the amount and extent of that interest in mitigation of damages. Allen v. Woodford, 36 Conn. 143; Vinton v. Mansfield, 48 id. 474; Jackson v. Emmons, 59 id. 493; Fielding v. Silverstein, 70 id. 605. In admitting the evidence objected to, and in overruling the claim of the plaintiffs upon the point in question, we are of opinion that the trial court committed no error.

At the time of the attachment in July, 1896, the copartnership was solvent, and the interest of William H. Cryne therein was of a value greater than the amount of the judgment ren- ' dered by the court below. It continued to do business from that time until November, 1897, when "it became insolvent, and Cryne’s interest became of no value. The debts which it owed in July, 1896, were paid in the due course of business and other debts were from time to time contracted. During this period its debts and its assets were constantly changing.

Upon the facts found, the plaintiffs claimed that they were entitled to judgment for at least the amount of Cryne’s interest in the goods attached at the time of the attachment. This claim the court in effect overruled, and this ruling is one of the errors assigned upon this appeal.

The interest of a copartner in the assets of the firm is the share to which he is entitled in the surplus of those assets after all the partnership claims and liabilities, including those of his copartners, have been satisfied; and for the purpose of having the copartnership property applied in satisfaction of those claims and liabilities, the copartners have an equitable lien upon that property, which takes precedence of any attachment or levy made by an individual creditor upon the share or interest of a copartner. Church v. Knox, 2 Conn. 514; Brewster v. Hammet, 4 id. 540; Barber v. Hartford Bank, 9 id. 407; Witter v. Richards, 10 id. 38; Filley v. Phelps, 18 id. 294; Frink v. Branch, 16 id. 260, 269; Allen v. Center Valley Co., 21 id. 130, 135; Staats v. Bristow, 73 N. Y. 264; George on Partnership, pp. 179, 283. The interest of a copartner in the tangible partnership property may, under our law, be attached by his individual creditor, and the attaching officer may take the property into his possession and hold it to respond to the judgment in the attachment suit. Stevens v. Stevens, 39 Conn. 474. In such case, however, only the interest of the copartner in the property is taken; the attachment is subordinate to the copartnership claims and liabilities, and is subject to the equitable lien of the • copartners. Witter v. Richards, supra; Trafford v. Hubbard, 15 R. I. 326. In such case, if the creditor subsequently levies his execution upon the property, he sells, not the goods attached, but only the interest of the debtor therein; the execution purchaser will stand in the place of the debtor to a limited extent, and the value of his purchase can only be ascertained upon a settlement of the copartnership affairs. Church v. Knox, Filley v. Phelps, supra.

In practical effect, about all that an attaching creditor or an execution purchaser acquires in such cases, is the right to call in some way for an account and settlement of the copartnership affairs, and the right to his debtor’s share in the attached property upon such settlement.

The question in what court and in what manner such a creditor or purchaser may proceed, in order to make his levy really available to him, has, in different jurisdictions, been much discussed and variously decided. In the absence of legislation upon the subject it is beset with difficulties. Of questions of this kind this court, in 1840, said : “ They are attended with great difficulty; have been the source of much perplexity and confusion; and are not settled in the books with such clearness as to furnish a safe practical guide ” ; and suggested that “ some plain and comprehensive legislative provisions on the subject ” were necessary “ in order to avoid the doubt and litigation to which it is constantly giving rise.” Johnson v. Sanford, 13 Conn. 461, 466. To provide a remedy, in part at least, for this condition of things, an Act was passed in 1849 which now appears as § 1316 of the Revised Statutes. This Act, in cases like that of the attachment suit of McCrillis against Cryne, gives to any party to the action, and to any member or members of the partnership, the right to file a complaint in the nature of a bill in equity, in the court where the attachment suit is pending; and in substance gives to that court upon such complaint power to make such orders in the premises “ as to equity shall appertain.” Under the provisions of this Act McCrillis and Co. might have had the interest which they had attached, ascertained, protected and made available as security. _ In the attachment suit aforesaid, none of the parties to it, and none of the copartners, availed themselves of the provisions of this statute. Failing to do this, if the copartnership continued to do business, the interest attached was a fluctuating interest, uncertain in amount until a settlement of the copartnership affairs was had; it was the interest of Cryne at the time when such interest was ascer-i tained and determined by a settlement of the copartnership claims and liabilities, including the claims of the other copartners against Cryne’s interest. This is so from the very nature of the interest attached in such cases, and from the nature of copartnership property under such circumstances.

The attachment did not of itself work a dissolution of the copartnership. The partners, notwithstanding the attachment, had the right to continue the business until an account was called for and a settlement was had. The property after the attachment continued to be partnership property, subject to copartnership claims and liabilities then, existing or thereafter coming into existence in due course of business, until the partnership affairs were in some way settled. Certainly the interest of the other partners in the attached goods were not holden by the attachment, and they were at liberty to deal with the goods as copartnership assets, until Cryne’s interest therein was ascertained and converted into his individual property in some way. If in cases of tins kind the attached goods remain in the possession of the attaching officer until execution issues, all that can be sold upon execution is the interest of the debtor as of the time when a settlement of the copartnership affairs is had between the execution purchaser and the copartnership. If at that time the copartnership is hopelessly insolvent, the execution purchaser takes practically nothing by his purchase, save the right to an account; and this is all that was secured by the attachment in such a case. If, then, in the case at bar, the goods attached had not been replevied but had remained in the officer’s possession, McCrillis and Co., upon the facts found, would in effect have taken nothing of value by their attachment. Does the fact that they obtained a replevin bond place them in any better position than they would have occupied if the attachment had remained? We think not. The bond was a mere substitute for the interest attached. It was given “to place the attaching creditor in as good a condition as he would have been, if his officer had continued in possession of the property. It is a security substituted for that which is taken away by the replevin.” Green v. Baker, 14 Conn. 431, 434.

Upon the facts found, if the attached goods had continued in the possession of the officer, the attachment, by reason of the intervening insolvency of the corporation, would have been rendered practically worthless; and the obligors in the replevin bond in this case were entitled to show this condition of things in mitigation of damages; and if shown, the plaintiffs were entitled to nominal damages only.

The other claims made in the case are involved and disposed of in the claims already considered.

There is no error.

In this opinion the other judges concurred.