Hemm v. Juede , 153 Mo. App. 259 ( 1910 )

CAULFIELD, J.

(after stating the facts). — I. We are met in the beginning by the fact that plaintiff preserved no exception to the action of the trial court in overruling his motion for a new trial. The case must stand then as if there was no motion for a new trial; and we cannot review the court’s action in sustaining the petition of the trustee in bankruptcy if the error assigned should have been brought to the attention of the trial court by such a motion. [Kolokas v. R. R. Co., 223 Mo. 455, 122 S. W. 1082.] But we are convinced that the assignment of error we are called upon to review is not in that predicament. From an early day it has been uniformly held that for all the purposes of a review in this court the rulings of the trial court on motions made after final judgment stand on a different footing from those made during the progress of the cause. This court will review the action of the lower court on a motion to quash an execution, pay over money on execution, set aside a judgment for irregularity, set aside execution sale and the like, though there is no motion for a rehearing or new trial. A motion for a new trial is unnecessary in such cases. [City of St. Louis v. Brooks, 107 Mo. 380, 383, 18 S. W. 22.] And it does not change the rule that the judgment entered in the case does not affirmatively show the ground of the court’s judgment, or that evidence was taken on the motion. Such circumstances merely necessitate a bill of exceptions in order to advise this court of the nature of the motion and the evidence adduced. It does not necessitate a motion for a new trial. [City v. Brooks, supra; Aultman v. Daggs, 50 Mo. App. 281.]

But there is another class of motions which are treated as independent proceedings, where a motion for a new trial is required in order to authorize a review by us. [Lilly v. Menke, 92 Mo. App. 354, 358.]

In Erskine v. Lowenstein, 82 Mo. 305, which was a motion for judgment against a stockholder of an insolvent company it was held that it took the place under the statute, of a suit in equity; and in Steele v. Steele, 85 Mo. App. 224 on a motion for alimony, the court ruled that a motion for a new trial was necessary in order to have a review of the facts on appeal. In such cases a motion is akin to a petition in an original cause and really begins a new proceeding. It is proper therefore that the same rule in regard to moving for a new trial should apply to such a motion as would be applied to any original independent cause. Such would probably also be the rule in an interpleader upon attachment or where a third person intervenes, claiming property or money in the custody of the court adverse to the parties.

The paper filed by the trustee in bankruptcy in the case at bar, while taking the form of an intervening petition, is in effect nothing more than a motion, and it is undoubtedly a motion filed after final judgment. The decree of August 30, 1908, dissolving the partnership, appointing the receiver, etc., was a final decree, and left nothing to do but execute it by administering the estate. [State ex rel. v. Woodson, 161 Mo. 444, 453, 61 S. W. 252; Shulte v. Hoffman, 18 Texas 678.] The motion of the trustee came after that and we do not consider its filing the commencement of an independent proceeding in the sense we are discussing. The trustee merely stood in the shoes of the bankrupt, and could have asserted no right except such as he derived from the bankrupt defendant. No new issue and no new right was asserted by his intervening petition. He was necessarily limited in his requests to what the bankrupt partner was entitled to. We see no material distinction between the action of the court in sustaining such a motion and the action of the court in sustaining a motion to quash an execution and ordering the sheriff to pay over money in his hands to the defendant, as was done in Slagel v. Murdock, 65 Mo. 522, where it was held that a motion for a new trial was unnecessary.

We will then review the trial court’s action in sustaining said petition.'

II. In order to discharge himself from the liabilities to which he may be subject as partner, a member of a firm lias a right to have the partnership property applied in payment of the debts and liabilities of the firm. [Rock Island Imp. Co. v. Corbin, 83 Mo. App. 438, 440.] This right exists not only against his partner, but against all persons claiming through him and therefore against his trustee in bankruptcy. [Lindley, Partnership, p. 389.]

Where, however, the partners have the possession and control of their own property, they have the right to make any honest disposition of it they see fit. Each may waive his- equitable lien, and one of them may apply the property of the firm, with the consent of the others, to the payment of his individual debts. [George Partnership, p. 277; Rock Island Imp. Co. v. Corbin, supra; Sexton v. Anderson, 95 Mo. 373, 8 S. W. 564.] And our attention has been called to the following at page 391 of Lindley on Partnership: “Further, a partner’s lien on partnership property is lost by the conversion of such property into the separate property of another partner. Therefore, if on a dissolution it is agreed between the partners that the property of the firm shall be divided in specie among them, and that the debts shall be paid in some specified manner; and if the property is accordingly divided, but the debts remain unpaid, the lien which each partner had on the property before its division is gone.” “Upon the same principle, if two partners consign goods for sale, and direct the consignee to carry the proceeds of the sale equally to their separate accounts without any reserve, and this is done, neither partner has any lien on the share of the other in those proceeds.” (The italics are our own.)

Respondents claim that the decree of dissolution in this case, providing, as it does, that the receiver shall “distribute the proceeds of such sale (of partnership property), after deducting the costs of this proceeding, equally between the parties plaintiff and defendant”, works a conversion of the partnership property into the separate properties of each partner, and that therefore and. thereby plaintiff lost his right to have the partnership assets applied to the payment of partnership debts.

With this claim in mind, we have carefully read the text books and cases and we fail to find that a mere unexecuted agreement for conversion destroys the right of the partner and the derivative right of the partnership creditors, or that such a result can be accomplished at all by the partners after the partnership assets have come into the control of a court of equity. On the contrary, in the cases we have examined the conversion was complete before any question was raised about it and was accomplished while the partners were in possession and control of their own property and before it had •come into their custody of a court. In fact, it is said that in ordei; “that an agreement may have the effect of converting joint into separate estate, the agreement must be executed and not executory merely”; that, in such event, “the character of the property will not, in fact, have been changed at the time of the bankruptcy, and it must therefore, be distributed' as if the agreement had not been entered into.” [Lindley, Partnership, pp. 768, 769.] Again, “even if it has been agreed between partners that on a dissolution the continuing partner shall be entitled to the assets of the firm, still so long as these assets continue subject to the right of the other partners to have them applied in discharge of the joint debts, the assets will continue joint for the purpose of distribution in the event of bankruptcy. To convert them into separate estate the agreement between the partners must be inconsistent with the continuance of this lien.” “The mere fact that a partnership has been dissolved, or that a partner has retired, will not be sufficient evidence of an agreement for the conversion of the joint estate of the firm into the separate estate of the continuing partner.” [Lindley on Partnership, p. 770.]

And where the partnership assets are being administered by a court, the rule of equitable distribution is applicable to its fullest extent. [George, Partnership, p. 277.] No principle of law is better settled than that, in the administration of a partnership estate, the assets of the firm must be applied to the satisfaction of the firm creditors to the exclusion of the individual creditors of the individual partners. [Hundley v. Farris, 103 Mo. 78, 15 S. W. 312; Bank v. Brenneisen, 97 Mo. 145, 10 S. W. 884; Goddard-Peck Gro. Co. v. McCune, 122 Mo. 426, 431, 25 S. W. 904.]

“The doctrine that firm assets must be first applied to the payment of the firms debts is a principle of ad-ministration adopted by the courts when, from any cause, they are called upon to wind up the firm business, and find that the members have made no disposition or charge upon its assets.” [Goddard-Peck Gro. Co. v. McCune, 122 Mo. 426, 432, 25 S. W. 904.]

Now in the case at bar there is no pretense that the property was disposed of or charged prior to the institution of the dissolution proceedings. As we have stated, respondents rely upon the language of the decree for the destruction of Hemm’s lien. We doubt very much whether such a result could be accomplished by the decree as against creditors not parties thereto; but this we are not called upon to decide. But we are satisfied that the decree will not have such an unjust result unless the intent is clearly apparent upon its face. Here the decree discloses no such intent. It provides that the property shall be divided between the partners, but there is no intent disclosed to relieve the property from the lien. There is nothing inconsistent with the idea that if partnership creditors presented claims before'the funds were distributed, they should be paid. It would indeed be singular for the decree to present any other idea, to be drawn with intent to defeat partnership creditors.. All of the circumstances surrounding this decree repel such an inference. The prayer of plaintiff’s petition for dissolution mentions the payment of partnership debts as a condition precedent to division of assets between the partners; the stipulation for the decree did not mention division between the partners, and the receiver paid all of the ordinary partnership creditors to the extent of over eleven hundred dollars with the apparent acquiescence of the court and the parties. Apparently it did not occur to any of them that the decree made improper the receiver’s conduct in paying the honest debts of the partnership. Then, too, the conversion was incomplete in that the fund remained undivided; a common fund in the custody and under the control of the court, and subject to its proper orders. Its character as joint property remained in fact unchanged. We consider it unimportant that the receiver in his report stated the respective shares of the partners in the fund. That did not change the fact that he held the entire fund as a whole.

Our conclusion is that there is nothing in the decree or otherwise to justify the inference that the plaintiff has Waived or lost his equitable right to have the partnership assets applied to the payment of partner-, ship liabilities. As the trial court proceeded upon a different theory, and it is just and equitable that the fund be retained as long as there is any probability that the Riefling claim may be upheld as a partnership liability, the judgment sustaining the intervening petition of Juede’s trustee in bankruptcy will be reversed, and the cause remanded with direction to the circuit court to stay further proceedings upon said petition and to withhold distribution of the fund in the hands of its receiver, until the damage suit of Riefling, being diligently prosecuted, is finally disposed of. It is so ordered. ■

Reynolds, P. J., and Nortoni, J., concur.