under an execution or attachment against him, it is more difficult to protect the partnership creditors against the acts of the partners themselves. While the partnership is in the active management of its affairs its members acting as a partnership have a very general power to dispose of its effects, and there is no question that they may appropriate the firm assets to the satisfaction of the partnership obligations, and, in so doing, may prefer one of their creditors to others, or may, in the absence of statutory prohibi tion, execute a formal assignment for the benefit of their creditors, in which Bome of such creditors may be preferred to others: Bulger v. Rosa, 119 N. Y. 459; Jones v. Smith, 31 S. C. 527. The partnership creditors have no lien on the property of the firm while the partners are administering its assets and lawfully conducting its affairs: Tillinghast v. Champlin, 4 R. I. 173; 67 Am. Dec. 570. It follows that they may sell the property on such terms as to them seem best, provided there be no fraudulent intent, and may devote the proceeds to any lawful purpose, and that the creditors can. not reclaim them.

Partner's Disposal of Property for Individual Debts. It has been insisted with much force that an appropriation of partnership property to the pay. ment of the debts of an individual partner is, in effect, a gift to him, and must, at least, when the partnership is not able to pay its debts, naturally tend to hinder, delay, and defraud its creditors, and therefore that a lien created against the firm property to secure a debt due from one of its members, or any payment or appropriation of such property in satisfaction of such debt, or any assignment for the benefit of creditors which shall give preference to individual creditors or authorize the payment out of the proceeds of such assignment to any of such creditors before the partnership obligations are fully satisfied, is fraudulent and void as against the creditors of the partnership, and therefore subject to be treated as any other fraudulent transfer or lien: Wilson v. Robertson, 21 N. Y. 587; Patterson v. Seaton, 70 Iowa, 689; Boose v. Marion, 129 N. Y. 536; Atlas Nat. Bank v. More, 40 Ill. App. 336; Bernheimer v. Rindskopf, 116 N.Y. 428; 15 Am. St. Rep. 414; Menagh v. Whitwell, 52 N. Y. 146; 11 Am. Rep. 683; Rothell v. Grimes, 22 Neb. 526; Edwards' Estate, 47 Mo. App. 307; Heineman v. Hart, 55 Mich 64; McIntire v. Yates, 104 Ill. 491; Arnold v. Hagerman, 45 N. J. Eq. 186; 14 Am. St. Rep. 712. If, however, the partnership is at the time solvent and able to pay its debts, there can be no doubt of the power of the partners to devote the firm property to the payment of the separate liabilities of any member, and that the partnership creditors have no cause of action, either at law or in equity, though it may subsequently turn out that their ability to collect their partnership demands has been substantially impaired by the appropriation thus made for the benefit of the creditors of a single partner: Hage v. Campbell, 78 Wis. 572; 23 Am. St. Rep. 422; Woodmansie v. Holcomb, 34 Kan. 35; Jewett v. Meech, 101 Ind. 289. On the other hand, there may be cases in which the partnership property has been devoted to the payment of the debts of a single member of the partnership under such circumstances that the court may be of the opinion that the transaction was tainted with actual fraud, and may, therefore, grant relief to the partnership creditors: Pool v. Gramling, 88 Ga. 653. The more difficult question has reference to those cases in which the separate creditor of an individual partner has received partnership property in satisfaction of his demand, or has had such property pledged to him to secure such debt, or there has been made an assignment by the partners of the property, either preferring their individual creditors, or directing payment to them, or some of them, before

the partnership obligations shall be entirely satisfied. It is clear, we think, that the majority of the courts do not agree in the view that the appropri ation by a partnership of its property to the discharge of an individual debt of one of its members is necessarily a fraudulent transfer. It is conceded that a partnership creditor does not as such have any lien on the partnership assets. It seems to follow from this concession that such assets must be subject to such contracts and liens respecting them as may have received the assent of all the copartners: Spratt v. First Nat. Bank, 84 Ky. 85; Sickman v. Abernathy, 14 Col. 174; Smith v. Smith, 87 Iowa, 93; ante, p. 359; and, therefore, the courts sustain liens created against partnership assets for the payment of an individual debt of any member with the concurrence of the others, and also such payments as may have been made by a like concurrence out of the firm funds for the satisfaction of an individual debt, as well as assignments for the benefit of creditors and other transfers by which an individual creditor may have been preferred to the partnership creditors: Goddard P. G. Co. v. McCune. 122 Mo. 426, 431; Schmidlapp v. Currie, 55 Miss. 597; 30 Am. Rep. 534; Huiskamp v. Moline W. Co., 121 U. S. 310; Purple v. Farrington, 119 Ind. 164; Coffin v. Day, 34 Fed. Rep. 687; Winslow v. Wallace, 116 Ind. 317; Fisher v. Syfers, 109 Ind. 514; Allen v. Grissom, 90 N. C. 90; Sigler v. Knox County Bank, 8 Ohio St. 511; Rice v. Barnard, 20 Vt. 479; 50 Am. Dec. 54; Carver Gin etc. Co. v. Bannon, 85 Tenn. 712; 4 Am. St. Rep. 803; Hanover Bank v. Klein, 64 Miss. 141; 60 Am. Rep. 47. Contra, Anderson v. Norton, 15 Lea, 14; 54 Am. Rep. 400. We had understood the supreme court of Iowa to dissent from this rule. It appears, on the contrary, to have fully adopted it in the principal case, at least, so far as may be necessary to protect individual creditors dealing with a partnership in good faith and without notice of its insolvency.

Partner's Application of Firm Property to His Personal Debts.-Each partner in the transaction of partnership business is an agent for and authorized to represent the firm. He has not, however, an implied authority to apply the property of the firm to the satisfaction of other than firm obli gations, and hence is not justified in making a payment of his individual debts out of the firm funds or by a transfer of the firm property: Cannon v. Lindsey, 85 Ala. 199; 7 Am. St. Rep. 38; Davies v. Atkinson, 124 Ill. 474; 7 Am. St. Rep. 373, and note; Janney v. Springer, 78 Iowa, 617; 16 Am. St. Rep. 460; Farwell v. St. Paul, 45 Minn. 495; 22 Am. St. Rep. 742. If an individual creditor received firm money or property with notice that it was partnership assets there is no doubt that he has no right to retain it either as against the partners or the partnership creditors. Whether he may retain it when it was received by him in good faith and without knowl edge of the source whence it came is a question respecting which the authorities are somewhat evenly divided, the one side insisting that his good faith is a protection to any proceeding against him to recover the money or property so received: Locke v. Lewis, 124 Mass. 1; 26 Am. Rep. 631; Davies v. Atkinson, 124 Ill. 474; 7 Am. St. Rep. 373; Johnson v. Crichton, 56 Md. 108; Stegall v. Coney, 49 Miss. 761; Carter v. Galloway, 36 La. Ann. 730; and the other that "his right depends not upon his knowledge that it was partnership property, but upon the fact whether the other partners had assented to such disposition of it or not": Rogers v. Batchelor, 12 Pet. 221; Cannon v. Lindsey, 85 Ala. 198; 7 Am. St. Rep. 38; Liberty S. B. v. Camp bell, 75 Va. 534; Caldwell v. Scott, 54 N. H. 414; Ackley v. Staehlin, 56 Mo. 558; Janney v. Springer, 78 Iowa, 617; 16 Am. St. Rep. 460.

Waiver of Partner's Lien Destroys Equity of Firm Creditors.—As a gen

eral rule, if either partner places himself in such a position that he has no right to insist that the partnership assets be applied to the discharge of its obligations in preference to those of individual creditors, then the partnership creditors also lose their right to insist upon such application: Case v. Beauregard, 99 U. S. 119; Arnold v. Hagerman, 45 N. J. Eq. 188; 14 Am. St. Rep. 712; Holloway v. Turner, 61 Md. 217; Couchman v. Maupin, 78 Ky. 33; Wiggins v. Blackshear, 86 Tex. 665; Goldsmith v. Eichold, 94 Ala. 116; 33 Am. St. Rep. 97; Carver G. M. Co. v. Bannon, 85 Tenn. 712; 4 Am. St. Rep. 803; Farwell v. Huston, 151 Ill. 239; 42 Am. St. Rep. 237; Hapgood v. Cornwell, 48 Ill. 64; 95 Am. Dec. 516. In other words, if there be any thing in the nature of a lien against the partnership assets pledging them to the payment of its obligations, it is a lien in favor of the partners and of each of them. Therefore, if with the assent of the partners they cease to be such assets, as where one of the partners sells his interest therein to the other, the former has no longer any equitable lien thereon entitling him to insist that such assets be applied to the payment of the partnership indebtedness, and the loss of such lien carries with it the right of the partnership creditors to insist upon such application, and the property is therefore subject to the individual debts of the partner to whom it has been transferred, and also to such liens as he shall create thereafter, and to such transfers as he may choose to make, provided always that he does not act with the purpose of defrauding the partnership creditors: Norris v. Rumsey, 54 Mo. App. 143; City of Maquoketa v. Willey, 35 Iowa, 323; Coover's Appeal, 29 Pa. St. 9; 70 Am. Dec. 149; Brown v. Miller, 11 Col. 431; Schleicher v. Walker, 28 Fla. 680; Scudder v. Delashmutt, 7 Iowa, 39; 71 Am. Dee. 428; Hanford v. Prouty, 133 Ill. 339; Baker's Appeal, 21 Pa. St. 76; 59 Am. Dec. 752; Wilson v. Soper, 13 B. Mon. 411; 56 Am. Dec. 573; Ladd v. Griswold, 4 Gilm. 25; 46 Am. Dec. 443; Bardwell ▾. Perry, 19 Vt. 292; 47 Am. Dec. 687. The latter qualification must be made upon the right to transfer the property of the partnership to one of the partners. If the purpose of the transfer is to defraud the creditors of the partnership it will not be permitted to have the intended operation; and, in those states in which a partnership is not allowed to transfer property to indi vidual creditors of one of its members in payment of his debts, if a transfer is made when the firm and all its members are insolvent, and this condition of its affairs is patent to them, such transfer may be adjudged fraudulent as against the partnership creditors: In re Cook, 3 Biss. 122; Arnold v. Hagerman, 45 N. J. Eq. 186; 14 Am. St. Rep. 712.

A Transfer of the Interest of One Partner to a Third Person does not deprive the other members of the firm of their right to insist that the partnership property be applied to the payment of the partnership debts. Hence the creditors of a partnership have the same right to pursue the property as before the transfer was made: Brown v. Beecher, 120 Pa. St. 590; but if, after one partner has sold his interest, the other also sells to the same purchaser, the property ceases to be partnership assets, and cannot be subjected to the payment of partnership debts in the absence of a fraudulent purpose on the part of the vendors and purchaser: Kimball v. Thompson, 13 Met. 283.

The Transfer of Interest Resulting from the Death of One of the Partners does not affect the right of the firm creditors to the payment of their claims. The legal title to all of the property of the firm vests upon the death of any member in the survivor or survivors, but it vests in trust for partnership purposes, to wit: the settlement of the affairs of the firm,

the payment of its debts, and thereafter the turning over to the representative 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 Am. Dec. 236; Emerson v. Senter, 118 U. S. 3; Gable v. Williams, 5 Md. 46; Watkins 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. 116; 33 Am. St. Rep. 97; Silverman v. Chase, 90 Ill. 37; Benson v. Ela, 35 N. H. 402; Lawrence v. Trustees, 2 Denio, 577; Voorlis 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 disposition 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 firm. 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 prejudice 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 question. 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 representative 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

creditors 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 concerned: 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. 165; 47 Am. Dec. 305; Baca v. Ramos, 10 La. 417; 29 Am. 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; Masser v. Messer, 59 N. H. 375; Rust v. Chisolm, 57 Md. 376. We shall not undertake 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 course, the fact that the grantees in the deed happen 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. Read, 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, 3 How. (Miss.) 360; Cox v. McBurney, 2 Sand. 561; Smith v. Jackson, 2 Edw. Ch. 28. Contra, Collumb v. Read, 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 under 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. If, in addition to being paid for out of partnership funds, lands are purchased by persons who were then partners or who contemplate becoming 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 partnership 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. 625; 60 Am. Dec. 533; Baird v. Baird, 1 Dev. & B. Eq. 524; 31 Am. 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 him in trust for the firm and under such circumstances that even in the absence of any