In re Stevens.

and such would no doubt be the law independently of this provision. 1 Gray, 633; 5 Cush. 613.

The case, therefore, provided for by the statute, is evidently one where one partner becomes bankrupt while the others remain solvent—and it is their liability which it is intended to preserve.

In the case at bar no proceedings can be taken under the thirty-sixth section and general order No. XVIII. The partnership has ceased to exist, having been dissolved by the death of one of its members. It is not insolvent, for it is admitted that the deceased partner's estate is sufficient to satisfy his debts, joint and separate. Nor, if it were otherwise, are there any means of bringing in his executors, or of taking possession of his separate estate, which is in the course of administration in the probate court.

But all the joint assets are in the hands of the surviving partner, who holds the same for all purposes of administration until the debts are paid. The debts due the partnership must be collected in his name, and he alone can be sued by the firm creditors.

If, then, while clothed with these rights and charged with these duties, he commits an act of bankruptcy, I see no reason why the creditors cannot invoke the aid of a court of bankruptcy to take out of his hands the joint assets as well as his separate estate, and distribute them among his creditors. If in respect to his separate estate, he had made a fraudulent assignment, given a preference or suffered his commercial paper to be dishonored, there can be no doubt that he could be adjudged a bankrupt in his capacity as an individual. It would be a strange analomy if on such an adjudication, where the debts owed by him as a partner are his own debts as much as those contracted by him separately, and where the firm assets in his possession are his own property to the extent of his interest in the firm, that the court should have no power to take possession of the joint assets, but must leave them in his hands to be disposed of in fraud and absolute defiance of the provisions of the bankrupt act.

In re Stevens.

Under the Massachusetts insolvent law, on which the bankrupt act is based, no doubt seems to have been entertained as to the right of a surviving partner to institute proceedings in bankruptcy which will include the estate of the firm. Adams Bank v. Rice, 2 Allen, 480.

In Durgin v. Coolidge, 3 Allen, 544, the court says: "The surviving partner is entitled to have possession of all the partnership property. During the lifetime of the partners either of them might make application to the court of insolvency, upon which legal proceedings might be instituted and pursued against the estate of the partners. It is, therefore, quite clear that upon the death of one of the partners, the survivor may rightfully apply to the court of insolvency by petition, and that thereupon the proceedings may be had for the sequestration of the partnership property and the payment of the debts due the partnership creditors."

But the warrant will not authorize the seizure of the separate estate of the deceased partner. If this proceeding can be taken by the surviving partner, it necessarily follows that when he had committed an act of bankruptcy, the same proceedings can be taken against him by either a joint or separate creditor.

The apprehension expressed by counsel that the discharge of the surviving partner might operate to release the estate of the deceased partner from liability, seems entirely groundless.

Such a result would be in direct contravention of the provisions of the thirty-third section of the act; nor could the terms of the discharge bear any such interpretation, for the decree would merely declare that Russell Stevens was discharged from all his debts provable under the act.

Some question was made at the hearing as to whether the act charged in the petition was an act of bankruptcy under the law.

It appears that the firm had been engaged in the business of manufacturing lumber. The surviving partner gave to a creditor of the firm a draft or bill of exchange on its

In re Krogman.

agents, which, on presentment, was dishonored and remained unpaid for more than fourteen days. The draft was undoubtedly "commercial paper" within the meaning of the law. It was paper governed by the rules which are founded on the custom of merchants. In re Chandler, 4 N. B. R. 66. Nor do I think that the circumstance that the manufacturing firm had been dissolved by the death of a partner, and that the survivor was engaged in settling its affairs and closing up the business, divested the latter of his character as manufacturer, especially when the debt which formed the consideration of the draft was a debt contracted by the firm in the course of its manufacturing business.

It was stipulated on the hearing that if the court should be of opinion that the objections raised by the demurrer were untenable, an adjudication should be entered without a reference to the register to ascertain the facts. The adjudication will therefore be made, and the warrant will direct the messenger to seize the separate estate as well as the estate of the firm in the hands of the bankrupt.

JOACHIMSEN & HUNT for petitioner.

J. B. SOUTHARD, for assignee.

December 27, 1870.

UNITED STATES DISTRICT COURT-E. D. MICHIGAN. A demurrer to the petition of the bankrupt's assignee, to recover property fraudulently conveyed by one who claims the property by virtue of a voluntary assignment of the debtor, will not be sustained simply on the ground that more than two years have elapsed since the cause of action accrued, and that therefore, it is barred by section two of the present bankrupt act. Respondent required to pay the cost of the demurrer, and allowed time to put in an answer to the assignee's petition.

In re P. H. KROGMAN.

Petition of Henry M. Duffield, assignee, against Gardner K. Grout to recover certain property and books of account alleged to have come to his possession under a fraudulent and void voluntary assignment for benefit of creditors, and

In re Krogman.

on account of which Krogman was adjudged a bankrupt. Assignment to Grout alleged to have been made October fourteenth, eighteen hundred and sixty-seven. Petition for adjudication of bankruptcy filed in January, eighteen hundred and sixty-eight, and adjudication passed February third, eighteen hundred and sixty-eight, and assignee appointed February twenty-eighth, eighteen hundred and sixty-eight, who resigned, and resignation was accepted, and the petitioner was appointed assignee in their stead No⚫ember twenty-eighth, eighteen hundred and seventy. This petition was filed February first, eighteen hundred and seventy-one, more than two years after appointment of assignee.

Grout demurs to this petition on the ground that, more than two years having elapsed since the cause of action accrued, the same is barred by section two of the bankrupt act.

LONGYEAR, J.-The petitioner contends that the limitation provided by section two does not apply, because

I. This is not a suit, a "suit at law or in equity," within the meaning of said section two, and

II. Grout is not a "person claiming an adverse interest touching the property and rights of property" "of said bankrupt transferable to or vested in the assignee," within the meaning of said section.

FIRST. As was held by this court in re Norris, 4 N. B. R. 10, the assignee has his option, in a case like the present, to proceed in the bankruptcy court, in the district court or in the circuit court. Now, if he had proceeded in either of the two last mentioned courts, the forms of proceeding would necessarily have been such that there could have been no question as to its being a "suit" within the meaning of section two. I think it can make no difference with the application of the limitation provided by section two, because the assignee has chosen to proceed in the bankruptcy court, and has thereby necessarily adopted a different form of proceeding. It is a "suit at law," nevertheless, within the

In re Krogman.

spirit and meaning of said section, and therefore, so far as that question is concerned, the limitation applies.

SECOND. So far as appears by the allegations in the petition, and that is all the guide we have in the present aspect of the case, all the claim set up by Grout is

I. That the amount claimed by the assignee is much larger than what he is liable for, and

II. That he sets up a claim for services which the assignee disputes. Nowhere in the petition does it appear that Grout in any manner sets up any interest touching the property itself, or the rights of property of the bankrupt, adverse to the assignee.

What Grout disputes is simply the amount, and not the assignee's interests and rights touching the property. Neither could he as voluntary assignee under a void assignment, have or claim, merely as such, any such adverse interest as against the assignee in bankruptcy; and Grout's claim for services is clearly not a claim of interest, adverse or otherwise touching the property, &c. It is simply a personal claim of indebtedness against the estate, and can in no event constitute a lien upon the property and books of account in his hands, under the circumstances of this case as developed in the petition. See also Sedgwick, assignee v. Casey, 4 N. B. R. 161, recently decided in southern district of New York, in which the above views are confirmed.

The cause of action is therefore not such an one as falls within the scope of the limitation proved in section two, and for that reason the demurrer is not well grounded.

The demurrer is overruled with costs, and the respondent Grout, is given - days to put in his answer to the petition. HENRY M. DUFFIELD, petitioner in person.

MR. GRIFFIN, (ot Moore and Griffin,) for Grout.