and 121 New York State Reporter

as fully and completely as could the partners themselves. Being sc vested with the legal title, the cause of action was in him solely and exclusively. He alone could enforce the collection of choses in action, pay debts, and liquidate the affairs of the firm. Such relation is not that of trustee of the personal representatives of the deceased copartners, although it partakes somewhat of that nature. The personal representatives of a deceased partner have an equitable right to have the assets of the partnership applied to the payment of firm debts, and to the distribution of any surplus. Williams v. Whedon, 109 N. Y. 333, 16 N. E. 365, 4 Am. St. Rep. 460. It is stated in the syllabus of that case, "The time, manner, and mode of paying the firm's indebtedness, however, is under the exclusive control of the survivors." This is, perhaps, too broad a statement of the law, because, if the survivor had absolute control as to the time when he would liquidate, he could not be called upon to account. The right is of a reasonable time in which to liquidate the affairs of the firm. In Preston v. Fitch, 137 N. Y. 41, .33 N. E. 77, this case is cited with approval, and the rights of the representatives of the estate of a deceased partner as against the surviving partner are stated. So stated, it is the right of the personal representative to call the surviving partner to account. Undoubtedly an action, upon a proper state of facts, will lie against the surviving partner at the instance of the representatives of a deceased partner for an accounting, not as to any specific or particular thing, but as to all of his transactions as surviving partner and liquidator. The complaint in this case, however, is not based upon such theory. The theory of this complaint is that a cause of action exists in favor of Secor, as surviving partner, against the persons who have possessed themselves of this fund without right to hold the same as against him; and the plaintiff seeks to place himself in Secor's shoes, and enforce this cause of action, based upon the theory that Secor has refused to bring such an action, has released the claim without consideration, and that thereby this fund will be lost to the partnership of which he is the survivor unless the right to maintain this action is upheld. We think he must fail, for the reason that he does not show himself possessed of any beneficial interest in this fund, and he therefore has no standing to maintain the action to enforce a cause of action which is vested solely and exclusively in the surviving partner. The interest, and the sole interest, of the personal representative, is in the surplus which remains of the firm's assets after the payment and discharge of all of its obligations to creditors. Until that time arrives, he has no beneficial interest whatever in the property. In order to secure his right in this respect, he may have an action against the surviving partner, calling him to account, but he has no right to enforce claims and maintain actions to reduce to possession the assets of the partnership. It may be that an action can be maintained, based upon averments showing fraud, wasteful mismanagement, and disregard of the rights of deceased partners. In such case personal representatives may maintain an action for an accounting, and obtain the appointment of a receiver of the partnership assets, and upon the appointment of such receiver a cause of action may be vested in him to enforce the claim which is sought to be enforced in this action; but the plaintiff, as personal representative, has

no such right. The complaint is destitute of any averment showing that the property of the firm is sufficient to pay all the debts and obligations of the copartnership, and, until such event occurs, plaintiff has no interest whatever as the personal representative of a deceased partner, as he has no more interest in the property of the copartnership which is required to pay the debts of the copartnership than any other stranger, so that it nowhere appears that he has the slightest beneficial interest in this fund. In the face of this fact, plaintiff asks that an accounting be had of the specific fund, that it be decreed upon such accounting the sum to which the surviving partner would be entitled, and that it be paid over to the plaintiff. If this should be granted, it would not settle the copartnership affairs. There would be no liquidation of the firm's accounts, and the liquidator would not be authorized to receive the fund. And this may be the result, although the personal representative has no interest whatever in this fund. Evidently the plaintiff is vested with no such right, and consequently the complaint fails to state a cause of action. This is for two reasons: (1) That he has no right to maintain an action which is solely vested in the surviving partner; (2) that he has not shown himself entitled to an accounting against the surviving partners. Such is not his action, nor such the theory of the averments. If he could, in any view, maintain this action, he would be required to show some beneficial interest which he has in this fund; and that will only arise when it is shown that there are no creditors of the copartnership remaining unpaid, and that there is a surplus, for which the surviving trustee should account. In that surplus, and in that alone, he would have a beneficial interest.

The interlocutory judgment should therefore be reversed, and, as it is evident that plaintiff cannot succeed in this action, the complaint should be dismissed, with costs to the appellants. All concur.

(92 App. Div. 262.)

NATIONAL PARK BANK OF NEW YORK v. CLARK et al. (Supreme Court, Appellate Division, First Department. March 11, 1904.) 1. ATTACHMENT-LIEN-SUBSEQUENT APPOINTMENT OF RECEIVER OF DEBTOR

EFFECT.

The lien acquired by a beneficiary in a life policy whose claim has been allowed by the insurer, a foreign corporation, by attaching property belonging to the insurer found in New York, is not defeated by the subsequent appointment in New York of a receiver of the insured.

2. LIFE INSURANCE-FUND DERIVED FROM ASSESSMENTS-DEPOSIT IN BANKRIGHT TO ATTACH.

The fund of a life insurance company was derived from assessments for the payment of death claims, but was not expected to be used for the payment of any particular claim, being collected for the payment of approved claims generally. The fund was deposited in a bank, payable to the company, or its order, on demand, and was the property of the company. Held, that the relation between the bank and the company was that of debtor and creditor, and hence a beneficiary in a life policy whose claim had been approved had a right to attach the fund in the bank, so as to acquire a lien thereon which would not be defeated by the subsequent appointment of a receiver of the company.

1. See Receivers, vol. 42, Cent. Dig. § 142.

and 121 New York State Reporter

Appeal from Special Term, New York County.

Bill of interpleader by the National Park Bank of New York against Cyrus J. Clark and others, receivers of the Supreme Council of the Order of Chosen Friends, and against Lizzie G. Brown. From a judgment for the receivers, Lizzie G. Brown appeals. Reversed.

Argued before VAN BRUNT, P. J., and HATCH, PATTERSON, INGRAHAM, and LAUGHLIN, JJ.

James S. Darcy, for appellant.

William L. Mathot, for respondents.

Thomas Cooper Byrnes, for respondent Clark.

HATCH, J. The plaintiff, a national banking association, brought this action in equity, in the nature of a bill of interpleader, in order that it might pay into court the amount of a deposit of $7,067.32, carried on its books to the credit of the "Supreme Council of the Order of Chosen Friends Relief Fund." The plaintiff asked that upon payment it be discharged from further liability, and that the defendants settle among themselves their conflicting claims to the fund. The relief sought upon the part of the plaintiff was granted, and upon payment of the money into court the plaintiff was dismissed from the action by an interlocutory judgment entered therein. The appellant claimed a lien upon the fund to the extent of $1,800 by virtue of an attachment levied thereon. The respondents claim the entire fund by virtue of their appointment as receivers of the corporation to which the fund belonged. The issues raised by the conflicting claims of the defendants were thereafter tried, and resulted in a judgment in favor of the receivers. The facts are undisputed, and, so far as material, are as follows: The Supreme Council of the Order of Chosen Friends was a fraternal, beneficiary corporation, incorporated under the laws of the state of Indiana, and had its principal place of business in Indianapolis, in that state. The corporation in all its branches was controlled by a board known as the "Supreme Council." A grand council was organized in each state where the corporation did business, and this grand council had jurisdiction over the local councils of that state. The corporation had articles of association, a constitution and bylaws, regulating the business and the control of its members. It issued a certificate or policy of insurance to its members, which provided that upon the death of a member in good standing it would pay to the beneficiary named therein the amount called for in the certificate. The funds requisite for the payment of these obligations were obtained by the corporation through assessments levied upon the members, collected by the local councils and transmitted to the corporation. Ninety per cent. of the money thus realized was devoted by the corporation to the payment of its certificate obligations, and this money was deposited in a fund known as the "Relief Fund," the remaining 10 per cent. being devoted to the general expenses of the corporation. The assessments were not levied to pay particular claims, but to pay claims generally. The relief fund money of the corporation was deposited in various banks throughout the country, and the plaintiff bank was one of such depositories, and had on deposit, at the time this action was commenced, the sum of $7,067.32. Checks in the form of a warrant were

issued by the corporation in payment of the approved claims, and such checks were paid by the bank as presented, without regard to the order in which they were issued by the corporation. On the 1st of July, 1900, Mary C. Vandervoort died, a member in good standing, the appellant, Brown, being her daughter, and the beneficiary named in her certificate of insurance for the amount of $2,000. The appellant's claim was duly approved by the corporation, which paid $200 on account of the claim upon July 16, 1900, and the balance of $1,800 still remains unpaid. On December 15, 1900, the appellant being a resident of Kings county, N. Y., began an action at law in the Supreme Court of that county against the corporation to recover the said sum of $1,800. In that action a warrant of attachment was issued on the ground that the defendant was a foreign corporation, and the warrant was duly served upon the bank by the sheriff of New York county, and the same has never been vacated. Other attachments on similar claims were levied upon the fund, but none of those attaching creditors have appealed. On December 14, 1900, the defendant Clark was appointed temporary receiver of the corporation by the Supreme Court of Indiana, on the ground that the corporation was, and had long been, insolvent, and on December 18, 1900, the respondent Clark made a demand upon the bank for the sum deposited therein, payment thereof was refused, and upon December 19, 1900, Clark began an action in the Supreme Court to recover said amount. In May, 1901, Clark was appointed permanent receiver of the corporation by a judgment of the Supreme Court of Indiana, by which judgment dissolution of the corporation was also decreed. On December 22, 1900, the respondent Martin was appointed temporary receiver of the assets of the corporation within the state of New York. On December 27, 1900, the bank instituted the action of interpleader, and the court ordered that the fund be paid into court, subject to all the existing liens. It is the contention of the defendant receivers that the fund should be paid to the New York receiver, and, after his fees and expenses are deducted, that it should then be paid over to the Indiana receiver, and by him disbursed to all the creditors of the corporation pro rata; the court below so held, and from the judgment entered thereon this appeal is taken.

Upon the death of Mrs. Vandervoort the appellant, Brown, became entitled to receive from the corporation the amount represented by the beneficiary certificate. The claim thereunder having been approved by the corporation, it became a liquidated claim for that amount, and Mrs. Brown thereupon became a creditor of the corporation. The obligation resting upon it was to pay the claim, and, failing in that, it was guilty of a breach of contract, and Mrs. Brown became vested with a cause of action against the corporation upon such breach (Matter of Equitable Ass'n, 61 Hun, 299, 16 N. Y. Supp. 80); Strasser v. Staats, 59 Hun, 143, 13 N. Y. Supp. 167; Anderson v. S. C. of O. of C. F., 135 N. Y. 107, 31 N. E. 1092. This is the recognized rule of law in the state where the corporation was created. Elkhart Mut. Aid & B. Ass'n v. Houghton, 103 Ind. 286, 2 N. E. 763, 53 Am. Rep. 514. Being thus invested with a cause of action, Mrs. Brown had the right to resort to any remedy authorized by the law of this jurisdiction to

and 121 New York State Reporter

enforce her claim. The defendant corporation having property and funds within this state, and being a foreign corporation, a remedy by attachment in favor of the creditor came into existence. Code Civ. Proc. §§ 635, 636. Under such circumstances an attachment regularly issued creates a right in the creditor to the fund or property upon which the same is levied, superior in right to the claim of a receiver of the corporation appointed in the home jurisdiction, even though such receivership is prior in point of time to the levy of the attachment, if it be levied prior to the appointment of a receiver in this state. Hammond v. Nat. Life Ass'n, 58 App. Div. 453, 69 N. Y. Supp. 585; Barth v. Backus, 140 N. Y. 230, 35 N. E. 425, 23 L. R. A. 47, 37 Am. St. Rep. 545; Mabon v. Ongley Electric Co., 156 N. Y. 196, 50 N. E. 805. It is said, however, that this rule conflicts with the decision announced by the Appellate Division in the Second Department in Popper v. Supreme Council, 61 App. Div. 405, 70 N. Y. Supp. 637, which case was cited with approval in Hallenborg v. Greene, 66 App. Div. 590, 73 N. Y. Supp. 403. The most cursory examination shows that this contention is without foundation. In the Popper Case the question arose upon a demurrer to a complaint in an action brought by a creditor of the corporation in this state, on behalf of himself and others similarly situated, for the purpose of having a receiver appointed, to the end that the assets of the corporation might be equally distributed among the persons entitled thereto, and the court therein simply passed upon the sufficiency of the complaint as stating facts sufficient to constitute a cause of action, and reached the conclusion that it did. It did not, however, undertake to determine, nor did it decide, as to the rights of attaching creditors which had become fixed prior to the appointment of a receiver in this state, or prior to the institution of the action therein, the subject of consideration. On the contrary, the court expressly said:

"We are not now concerned with the question of the distribution or disposition of the funds in the manner adopted in that case [referring to People v. Granite S. P. Ass'n, 41 App. Div. 257 (58 N. Y. Supp. 510)], but simply with the question of jurisdiction, and whether the complaint states facts sufficient to constitute a cause of action."

Undoubtedly, the court had jurisdiction to entertain such an action, and to appoint a receiver in this jurisdiction, so that the fund might be secured for the benefit of the persons equitably entitled thereto, and thereby save the same from waste, through provisional remedies or otherwise. It does not affect the question, however, as to the right of a creditor to levy an attachment upon the funds of the corporation within this jurisdiction, nor does it militate against the right secured thereby, if it be in all respects regular. The right to impound the fund at the instance of all the creditors presents quite a different question from the right of a creditor to enforce his claim by attachment levied prior to the appointment of a receiver within this state, or the institution of an action which seeks to preserve the fund for the benefit of all. The principle decided in that case was approved in the Hallenborg Case, but the court took occasion to say, in the prevailing opinion: "If the court in Arizona should appoint a receiver, its order would not operate upon the fund belonging to the Cobre Company now in this