Brown v. Brown

140 N.E. 754, 1 Ohio Law. Abs. 845, 107 Ohio St. 228, 1923 Ohio LEXIS 283

Opinion

ALLEN, J.

Epitomized Opinion

W. A. Brown and J. Brown, brothers, entered into a farming and stock raising partnership whereby W. A. was to furnish the land and J- was to do the work, and each was to buy one-half the stock- To raise money J- borrowed from- his sister, and delivered to her a note and chattel mortgage upon his undivided half of the property. At the time of the formation of the partnership W- A. advanced to J. money and the latter executed a note therefor. W- A. instituted an action against J., alleging the unpaid note, the agreement of J. to pay it out of the proceeds of the partnership, and had a receiver appointed. By cross-petition the sister set up her mortgage upon the interest of J. in the partnership property. The Common Pleas Court found in favor of the -sister, but the Court of Appeals reversed this finding upon the ground that W. A. had a, lien upon -the funds in the hands of the receiver superior to the lien of the sister. In reversing the judgment of the Court of Appeals the Supreme Court held:

1- “Where a partner borrows money on his individual credit from another partner, and later gives a note as evidence of such loan, such borrowing does not create a partnership debt, though the mioney be applied to partnership purposes.”

2. “A -separate creditor, who holds a valid chattel mortgage upon the interest of a partner 'in a partnership, has a lien upon the surplus due the partner after add partnership debts are paid,- which lien -is superior to a claim for an individual debt due from the partner to his co-partner-” Citing 12 OS. 647.