Harris v. . Murray , 28 N.Y. 574 ( 1863 )

There is no finding by the court, nor was any evidence offered to warrant the conclusion that the sale was made on any understanding as claimed by the plaintiff. Such understanding and alleged agreement is denied by Murray in his answer, and if the plaintiff expected any benefit therefrom, evidence to prove the same should have been offered.

The main question in the case is, whether the sale under the executions was valid. The property sold was "the right, title and interest of Harris, which he had on the 31st of August, 1854, or at any time afterwards, in the goods, chattels, assets and accounts of the firm of N. Dougherty at No. 101 Water street."

The plaintiff presents two grounds of objection to the sale. 1st. That the sheriff could not sell under an execution an interest in choses in action. 2d. That the sheriff could not sell personal property under an execution unless the same was in view at the time of sale, and then he should have sold the same in parcels.

It must be remembered that this was not a general partnership, but was formed under the statute authorizing limited partnerships, and the interest sold was that of one of the limited partners. This statute prohibits any interference by the special partner with the management of the property of the firm, or the withdrawal of any part of the original capital and even of the receipt of interest on his advances, if such payment would reduce the original amount of such capital.

As the special partners can not interfere with the property or take the control from the general partners, it follows that the sheriff on an execution has no such power. He can not, on an execution against such partner, do any thing with the partnership property that the special partner could not do. He therefore would have no authority to take from the general partners the partnership property, for the purpose of selling the interest of the special partner in the property and assets of the firm; nor could he, as in the case of other partnerships, sell the interest of one partner in the property of the firm and deliver the property in which such interest is sold to the purchaser. All that the sheriff, under such circumstances, could sell would be the interest of the special partner, if such interest could be sold under an execution. This question was fully examined in this court in Stief v. Hart, (1 Comst. 20,) in regard to property pledged by the debtor, so far as related to the right of the sheriff to take the property out of the possession of a party entitled to the exclusive possession of it. In that case the property was pledged by the judgment debtor. The sheriff levied upon the interest of the pledgor, and took the possession of the property from the pledgee, who brought replevin. The circuit judge charged in favor of the right of the sheriff to take such possession. The judges of this court were equally divided upon the question, and the judgment below was affirmed. Those judges who sustained the right of the sheriff to take the possession did so upon the ground that the 20th section of the statute (2 R.S. p. 366) expressly authorized a levy on and sale of the right and interest of the pledgor in the goods pledged, and that the 23d section required the same to be present at the time of sale. From the opinions delivered by the judges, I think it may fairly be inferred that none of them held the rights of the sheriff to take the property out of the possession of a party having the exclusive right of possession would have existed independent of the authority conferred by the 20th section, and as that authority is limited to the case of goods pledged, the law as to taking such property out of the possession of a party entitled solely thereto remains unchanged.

And in Mattison v. Baucus, (1 Comst. 295,) GARDINER, J. while admitting that the interest of a mortgagor in personal property was subject to levy and sale under an execution, placed his decision upon the ground that the right to the possession for a limited period was in the mortgagee. But where by the express terms of the mortgage the mortgagee was entitled to the possession, he held the interest of the mortgagor to be a mere chose in action, not the subject of levy and sale under execution. (See also Marsh v. Lawrence, 4 Cowen, 467.) InHull v. Carnley, (11 N.Y. Rep. 501,) the same distinction is recognized, and the cases which hold that possession in such cases is necessary to give validity to the levy are approved.

It must be conceded that under the law as it was before the code, mere choses in action were not the subject of levy and sale under execution. The interest of Harris in the property of a limited partnership can hardly be said to be an interest in the property of the firm. He advanced to the firm a sum of money which he is entitled to receive back with interest at the termination of the partnership. He is also entitled to a share in the profits. But he is to no further extent the owner of the property. Upon payment of these claims the property would belong to the general parties.

By the 291st section of the code the existing provisions of law relating to property liable to sale on execution are made applicable to the executions issued by virtue of that act, except when in conflict therewith. There is nothing in the code which would be in conflict with the law on this subject. The code, it is true, (§ 234,) provides for a levy by attachment on all species of personal property, but the 235th section prescribes the mode of enforcing such attachments; and the 237th section directs how choses in action are to be applied to the payment of judgments by the sheriffs. In no case does it specifically provide for the sale of any such right of action.

There are many reasons why such a sale should not be sanctioned. The value of such an interest can never be known or disclosed to purchasers at the time of sale, and if the law directs that personal property shall not be sold under execution, except the same is present and can be seen by the purchasers, surely the same principle requires a different mode of disposing of an unsettled claim against a firm than to sell it by sheriff's sale. No purchaser, unless one interested in the partnership, could know or ascertain its value, and such a mode of disposition would be a sacrifice of an interest in a firm very inconsistent with a due administration of justice.

It is said, however, that whether the sale was regular or irregular is immaterial, because the executions were valid. That would undoubtedly be so if it was a mere irregularity in the sale, and the remedy would be by motion to set aside the sale. But that rule does not apply where the sale has been made of something which the sheriff had no authority to sell. In such cases the attempt to obtain possession of the thing sold may be resisted by showing that the sheriff had no authority to make the sale. The one is a want of jurisdiction; the other a mere irregularity.

It is also insisted that Harris was estopped from objecting to the validity of the sale because he was present and suffered the sale to proceed without objection. There are two sufficient answers to this objection. The one is that Harris had no knowledge which he withheld so as to induce others to act who would not have done so if he had communicated the same at the sale. It was apparent on the face of the sheriff's notice. He was selling an interest in partnership property. The purchaser ought to have known, as well as Harris, that such sale was illegal; and it was therefore unnecessary for Harris to give any notice. The other reason is that Murray, who seeks to avail himself of the sale, was a partner, and had all the knowledge which Harris had. There was nothing to communicate to Murray on this subject, which would have prevented his action, in purchasing at the sale, and which was not known to him at the time.

Nor did the fact of a levy having been made under the attachment deprive Harris of his interest in the firm. There had been no appropriation of that interest by the sheriff. The accounting would of course be subject to any claim which the sheriff could make upon it, but did not deprive Harris of his interest, or prevent him from collecting any surplus over such claims as the sheriff had upon it.

I am of the opinion that the judgment should be reversed, and a new trial ordered; costs to abide the event.