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the payment of its debts, and thereafter the turning over to the representa. tive of the deceased partner his share of the surplus. Such representative, therefore, has the same right that his decedent had to insist upon the appli. cation of the firm property to the discharge of its obligations: Hoyt v. Sprague, 103 U. S. 613; and the creditors of the firm continue to have a like right, and an appropriation of the firm property to other than partnership purposes is, as against them, unlawful, and they are entitled to such remedies as may be necessary to prevent it: Egberts v. Wood, 3 Paige, 517; 24 Ain. Dec. 236; Emerson v. Senter, 118 U. S. 3; Gable v. Williams, 5 Md. 46; W'atkins v. Fakes, 5 Heisk. 185; Moody v. Downs, 63 N. H. 50; Wilson v. Soper, 13 B. Mon. 411; 56 Am. Dec. 573; Hutchinson v. Smith, 7 Paige, 26; and to compel the application of the partnership assets to the discharge of its obligations: Saunders v. Wilder, 2 Head, 577; Goldsmith v. Eichold, 94 Ala. 136; 33 Am. St. Rep. 97; Silverman v. Chase, 90 III. 37; Benson v. Ela, 35 N. H. 402; Luwrence v. Trustees, 2 Denio, 577; Voor his v. Childs, 17 N. Y. 354. As the surviving partner has the legal title to the firm person. alty, and is charged with the duty of closing its business, he may make such dispozition of the property as may be necessary to the execution of his trust. He may, it is generally conceded, make an assignment for the benefit of the creditors of the firin. Whether in so doing he may prefer some of those creditors to others is doubtful. As in creating such a preference he is only exercising a power possessed by the partnership, and his act cannot preju. dice the representatives of the decedent, there appears to be no reason for denying his power to make such preferences: Emerson v. Senter, 118 U. S. 3; Wilson v. Soper, 13 B. Mon. 411; 56 Am. Dec. 573. Nevertheless, the majority of the cases upon the subject deny the existence of the power, and regard its attempted exercise as in some way inimical to the trust devolved upon him by the death of his copartner: Salsbury v. Ellison, 7 Col. 167; 49 Am. Rep. 347; Anderson v. Norton, 15 Lea, 14; 54 Am. Rep. 400; Hutchinson v. Smith, 7 Paige, 26. It is beyond question that he has no right to make an assignment which will prefer his individual credit. ors, or entitle them to any part of the partnership assets: Gable v. Williams, 59 Md. 46; Case v. Abeel, 1 Paige, 393; Hutchinson v. Smith, 7 Paige, 26; Tiemann v. Molliter, 71 Mo. 512. The surviving partner may purchase of the representative of the decedent the latter's interest in the partnership assets, and then the question arising is, Do they by this purchase cease to be charged with the partnership liabilities, and acquire the characteristics of the individual property of the purchaser? The only decision we have seen involving this subject declared that such sale had precisely the same effect as if it had been made by the decedent in his lifetime, and therefore destroyed the right of his representatives and of the partnership creditors to insist upon the application of the partnership property to the payment of its debts: Wilson v. Soper, 13 B. Mon, 411; 56 Am. Dec. 573. It seems to us that this decision is based upon a misconception of the transaction in ques. tion. As the assets of a partnership are always subject to the payment of its obligations, and as the interest of a deceased partner is only his share of what will remain after the settlement of the affairs and the payment of the obligations of the partnership, and as a sale by a personal representativo involves no warranty, and is but a sale of the mere interest of the decedent, such a sale would naturally be made by both parties upon the assumption that the property sold was only what might remain after the payment of the firm debts, and it is certainly disappointing the intention of the parties to hold that the property thus sold may be entirely withdrawn from the
crcditors of the partnership, and the estate of the decedent thereby left answerable for the whole of the partnership obligations.
The Right of the Creditors of a Partnership to Pursue its Real Property deserves special consideration. At law there is no such a thing as a partnership in real property, and, if the title stands in the names of the partners, it is vested in them as individuals in so far as the legal title is con. cerned: Freeman on Cotenancy, sec. 112; Coles v. Coles, 15 Johns. 159; 8 Am. Dec. 231; Andrews v. Brown, 21 Ala. 437; 56 Am. Dec. 252; Buchan v. Sumner, 2 Barb. Ch. 167; 47 Am. Dec. 305; Baca v. Ramos, 10 La. 417; 29 Ain. Dec. 463; Baker v. Wheeler, 8 Wend. 505; 24 Am. Dec. 66. In equity, however, real property, though held in joint tenancy or by a tenancy in common, so far as the title is involved, will in equity be treated as partnership property under certain circumstances and for certain purposes: Freeman on Cotenancy and Partition, sec. 113; Dirine v. Mitchum, 4 B. Mon, 483; 41 Am. Dec, 241; Næser v. Messer, 59 N. H. 375; Rust v. Chis. olm, 57 Md. 376. We shall not nndertake to inquire in detail what are the tests by which to determine whether real property standing in the name of copartners must be regarded as partnership assets, at least to the extent necessary for the protection of the partners themselves, and of the creditors of the partnership. Of conrse, the fact that the grantees in the deed happeu to be partners does not prove that the property acquired is partnership property, nor is the payment of the purchase price out of the partnership funds conclusive, for the partners may have intended to withdraw those funds from the partnership, and to hold them and the acquisitions made therewith as cotenants, and, if such intent existed, the lands acquired with such funds are not partnership estate: Wheatley v. Calhoun, 12 Leigh, 264; 37 Am. Dec. 654; Holmes v. Self, 79 Ky. 297; Collumb v. Rrad, 24 N. Y. 513; and perhaps, in the absence of any proof of the intent of the partners, the presumption is that lands acquired by them, even though paid for with partnership funds, are not partnership property: Freeman on Cotenancy and Partition, sec. 115; Wooldridge v. Wilkins, How. (Miss.) 360; Cox v. McBurney, 2 Sand, 561; Smith v. Jackson, 2 Elw. Ch. 28. Contra, Collumb v. Reud, 24 N. Y. 513. On the other hand, the fact that payment was made out of the separate funds of the several partners is not conclusive that the real property is not partnership assets, for it may have been purchased ander an express or implied agreement that it should be held for the bene. fit of the firm, and the moneys thus paid by the several partners may be a mutual contribution by them to the partnership capital, in which event, if the property is subsequently held as firm property and devoted to firm uses, it is just as much partnership assets as if paid for out of partnership funds: Roberts v. McCarty, 9 Ind. 16; 68 Am. Dec. 604. lf, in addition to being paid for out of partnership funds, lands are purchased by persons who were then partners or who contemplate becoining such, and with an intention to use them in the partnership business, and they are thereafter held and used in and for such business, then beyond question they will be treated as partuership assets so far as may be necessary to the satisfaction of partnership obligations: Freeman on Cotenancy and Partition, sec. 117; Tillinghast v. Champlin, 4 R. I. 173; 67 Am. Dec. 510; Lang v. Waring, 25 Ala. 6:25; 60 Ann. Dec. 533; Baird v. Baird, 1 Dev. & B. Eq. 524; 31 Ain. Dec. 399; Buchan v. Sumner, 2 Barb. Ch. 165; 47 Am. Dec. 305. Nor is it essential that the title shall stand in the name of the several partners. It may have been taken in the name of one only to be held by hiın in trust for the firm and under such circumstances that even in the absence of any
agreement upon the subject such trust is implied, and, in such event, it may, if necessary, be subject to the satisfaction of the partnership obliga. tions: Shanks v. Klein, 104 U. S. 18; Nicoll v Ogden, 29 Ill. 323; 81 Am. Dec. 311; Uhler v. Semple, 20 N. J. Eq. 288; Diggs v. Brown, 78 Va. 295; Wiegand v. Copeland, 7 Saw. 442.
Without attempting to further pursne the inquiry, what is partnership realty, we proceed to consider the rights of the creditors of the partnership in such realty as has been impressed wish the quality of partnership assets. In proceeding by attachment or execution against such realty the partner. ship creditors may, of course, levy upon and sell it, and thereby acquire the legal title standing in the name of the partners, or of either of them, at the date of the levy. If, however, they rest upon the levy and sale, and take no proceedings in equity for the protection of their interests, the title acquired by them must remain subject to the claim of dower on the part of the wives of the partuers, or of either of them, and to all transfers made or liens created by or against either of the partners. In equity the partner. ship realty will, in all cases, be treated as partnership assets so far as may be necessary to do complete equity between the partnership and its creditors, and between the several members of the firin. Hence, each of the partners has a lien thereon to secure the payment of any balance which may remain due him upon the final settlement of the partnership affairs: Roberts v. McCarty, 9 Ind. 16; 68 Am. Dec. 604; and neither can avoid this lien by compelling the partition of the property: Baird v. Baird, 1 Dev. & B. Eq. 524; 31 Am. Dec. 320; Flanner v. Moore, 2 Jones, 120. The rule prevailing as to per. sovalty, that even at law neither partner has any specific interest in the firm property, but only a right to share in the surplus after the debts are paid, does not apply with respect to realty. Therefore, if there be a levy upon the interest of a member of the firm in real property belonging to it, and a subsequent levy under a writ against the partnership, and sales thereunder, and the title of the different purchasers thereat is drawn in question in an action of ejectment or other proceeding at law, the writ first levied must be conceded precedence: Peck v. Fisher, 7 Cush. 356; Golden Stute etc. Works v. Davidson, 73 Cal. 389. In equity the rule is otherwise. “It is a well-known rule, governing the relation of partnership, that partnership property must first be applied to the payment of partnership debts, and that the true and only interest of each member in the personal stock is the balance found due to him after payment of all the partnership debts, and the adjustment of the partnershi accounts between himself and his copartners. And in equity, real estate forms no exception, but stands on the same footing in this respect with personal property, no matter in whom the legal title may be vested": Bopp v. Fox, 03 Ill. 540; Price v. Hicks, 14 Fla. 565. “Without entering at much length upon an examination of the English and American authorities upon the subject we may say that the doctrine is well established in America that real estate purchased by partners with partnership funds for partnership purposes is at law hold by them as tenants in common, but in equity is deemed as held in trust as a part of the partnership property applicable in the first place exclusively to paying the partnership debts": Duryea v. Burt, 28 Cal. 580; Jones v. Par. 8018, 25 Cal. 105; Aoxie v. Carr, 1 Sum. 173; Pierce v. Trigg, 10 Leigh, 406; Sigourney v. Munn, 7 Conn. 11; Divine v. Mitchum, 4 B. Mon. 488; 41 Am. Dec. 241; Pratt v. Oliver, 3 McLean, 27; Buffum v. Buffum, 49 Me. 108; 77 Am. Dec. 249; Hill v. Beach, 12 N. J. Eq. 31; Cilley v. Hure, 40 N. H. 338; Gordon v. Kennedy, 36 Iowa, 167; Lime Rock Bunk v. Phetteplace, 8 R. L
56. This rule prevails at law in some of the states. Thus, in New Hampshire, it has been held that an attachment of the firm realty at the suit of firm creditors takes precedence over a prior attachment at the suit of the individual creditors: Jarvis v. Brooks, 27 N. H. 37; 59 Am. Dec. 359.
If a widow of a deceased partner applies for an assignment of dower in the lands of the partnership it must be granted to her, unless withholding it is necessary to protect the other partners or the partnership creditors: Markham v. Merrelt, 7 How. (Miss.) 437; 40 Am. Dec. 76. If, on the other hand, she cannot be assigued such dower without prejudicing the surviving partner, or the partnership creditors, it may, if the proceeding is in equity, be denied her for that reason: Greene v. Greene, 1 Ohio, 535; 13 Am. Dec. 642; Sumner v. Hampson, 8 Ohio, 328; 32 Am. Dec. 722; Johns v. Johns, 1 Ohio St. 357; Loubat v. Nourse, 5 Fla. 350; Bopp v. Fox, 63 III. 540; Matlock v. Matlock, 5 Ind. 403; or the surviving partner or the firm creditors may resort to proceedings in equity to have the land sold free of the widow's right of dower: Dyer v. Clark, 5 Met. 562; 39 Am. Dec. 697; Andrews v. Brown, 21 Ala. 437; 56 Am. Dec. 252. The title to partnership realty, whether it remains in the partners in whose name it was originally taken, or has descended to their heirs at law, or remains partly in the surviving partners and partly in the heirs at law or other successors in interest of a deceased partner, or has been transferred, whether by voluntary or invol. untary transfer to some third person having notice that it was partnership property, is held in trust for partnership purposes, and due respect for and execution of that trust may be compelled at the instance of any person whose equities are dependent upon the faithful execution of the trust. The Inost usual procedure is by bill in equity, against all the persons in whom the legal title is vested, to have the realty in question decreed to be partnership assets, and that through the intervention of a receiver or otherwise it be taken possession of, and so much thereof sold as may prove necessary to sati-fy the partnership obligations, including any sum that may be due from the partnership to any of the partners: Buffum v. Bussum, 49 Me. 108; 77 Ain. Dec. 249; Murphy v. Abrams, 50 Ala. 293. If an attachment has been taken out against a member of the firm for his separate debt a suit may The maintained to declare that his lien is subordinate to the claims of the partnership creditors, or of the surviving partner, and he may be restrained from proceeding until the partnership obligations shall first be discharged: Crooker v. Crooker, 46 Me. 250; Buchan v. Sumner, 2 Barb. Ch. 165; 47 Am. Dec. 305; Willis v. Freeman, 35 Vt. 44; 82 Am. Dec. 619; Bowen v. Billings, 13 Neb. 439; Conroy v. Woods, 13 Cal. 626; 73 Am. Dec. 605; Schuster v. Rader, 13 Col. 329. If the lien has been created by one of the partners, as by giving a 'mortgage on his interest, and proceedings are instituted in equity for the foreclosure of such lien, the defense may be therein interposed that the property is partnership estate, and the foreclosure of the lien be refused or made subject to the equities of the partnership or of its creditors: Conant v. Frary, 49 Iud. 530; Jones v. Parsons, 25 Cal. 100.
It is, as we have already indicated, necessary, before subjecting a pur chaser or mortgagee from one of the partners, to partnership equities, that he purchased with notice thereof. Whether the notice with which he must be affected must include not only knowledge that the property is partner. ship assets, but also that it will be needed to satisfy partnership obligations, is perhaps not entirely free from doubt. It would seem that if he purchased or acquired his lien with notice that the property in question was, as between the partners, partnership assets, he should be deemed to
have accepted the title subject to the hazard of its being required to sato isfy partnership indebtedness: Jones v. Parsons, 25 Cal. 100; Cavandar v. Bultul, 29 L. T., N. S., 710; 'illinghast F. Champlin, 4 R. I. 173; 67 Am. Dec. 510.
If partnership realty has by any means been sold, and the proceeds brought before the court for distribution, and the court is either a court of chancery or a court which in the matter before it is entitled to be controlled by the principles of courts of equity, as where it is a court having jurisdic. tion of the estate of insolvents and bankrupts, it will, as in the case of parto nership realty, give a preference to partnership creditors: Fall River W. Co. v. Borden, 10 Cush. 458.
Form of Relief. It is not necessary to consider in detail the form of re. lief which may be granted in equity, for it is one of the most beneficial features of equity jurisprudence that it is but little restricted in the form or mode of adıninistering relief, and that, when the existence of an equitable cause of action in favor of the complainant is established, the court is rarely, if ever, when applied to in due time, unable to give him some adequate relief, either preventive or remedial. If a partnership creditor has an equity against its assets wliich is about to be endangered by a sale of the property by one of its partners, or under an execution or other writ against him, the court may enjoin such sale or disposition, or restrict its operation to the interest which may remain in the partner after the adjustment and settlement of the partnership affairs: Hubbard v. Curtis, 8 Iowa, 1; 74 Am. Dec. 283. If, on the other hand, preventive relief is not essential to the complainant, he may, on bringing before the court all the parties in whom the legal title is vested, have a decree for its sale and the application of the proceeds to the discharge of the partnership obligativns, and, as incident to the relief granted, may have a receiver appointed, if necessary, either for the preservation or disposition of the property, and such conveyances made as may be required to vest in the purchasers at such sale the legal as well as equitable title to the property sold.
Creditors of the partuership seeking relief of any character in equity are subject to the rules applicable to creditors' bills. In the first place, it is essential to a creditor’s bill that the complainant be without adequate rem. edy at law, and that he show either that he has exhausted his legal rem. edies or that further pursuit of them must necessarily be unavailing: Case v. Benureiud, 1 Woods C. C. 125; 101 U. S. 688; Smith v. Railroad Co., 99 U. S. 398. It is not sufficient that he is a creditor at large, for, as such, he has no lien on the property of the partnership. He must either by at. tachment, execution, or some other process, have acquired a lien on tho property, or he must have recovered judgment at law upon his debt: Green. wood v. Broadhe id, 8 Barl), 593; Rice v. Barnard, 20 Vt. 479; 50 Am. Dec. 51; Clement v. Foster, 3 Irel. Eq. 213; Reese v. Bradford, 13 Ala. 837; or the equities of his case must be such as to bring him within the exceptions to the general rule upon the subject. As, however, a creditor's bill, to reach either the assets of the partnership or other property which a partnership creditor is entitled to have applied to the satisfaction of his deinand, does not as to the status required of the complainant differ essentially from other creditors' suits, we forbear to discuss the subject further here, and refer the reader to note to Massry v. Gorton, 90 Am. Dec. 288–300; Quarl v. Abbett, 102 Inc. 233; 52 Am. Rep. 662, and note; Freeman on Executions, secs. 426-430.