Evans, Fite, Porter & Co. v. Winston

74 Ala. 349

• Court: Supreme Court of Alabama
• Decided: December 15, 1883
• Status: Published

Opinion

STONE, J.

— Creditors have no lien on partnership property, for partnership debts. The lien, when worked out for the benefit of creditors, is the copartner’s right and lien, that partnership effects shall he first applied to the extinguishment of partnership liabilities. The creditor can not assert the lien, of his own mere will. The partner has a paramount right that all partnership debts shall be provided for, before individual creditors can possess themselves of his copartner’s interest in* the property of the firm; and when this right and lien are asserted, the creditor reaps the benefit.— Warren v. Taylor, 60 Ala. 218, and authorities thereiu collected. So, when equity administers the effects of an insolvent partnership, it applies partnership effects primarily to the payment of partnership liabilities, and individual property, to tbe payment of individual debts. — Sto. Part. § 363.

In Bank of Mobile v. Dunn, 67 Ala. 381, we recognized the right of an insolvent debtor, in making an assignment of all his property, to devote his individual property primarily to the payment of his individual debts. This was justifiable, and only justifiable, on the principle stated above — namely, that in the administration of a bankrupt, or insolvent debtor’s assets, equity will apply individual property, first, to the payment of individual liabilities, and partnership property, first, to the payment of partnership debts.

The claim of Evans, Fite, Porter & Co. was and is a debt due from a partnership. It was contracted and incurred, either by Reedy & Nail, or by Nail & Rand, or, possibly, by each firm in part. Each firm was engaged in a retail mercantile business, and the debt was incurred in the purchase of merchandise from the complainants, who, it is reasonable to infer, were wholesale dealers. The character of Winston’s claim is not very cleaidy defined. The testimony bearing on it is that of Mr. Nail, and none other, except the face of the bills single. They are made in the name of Nail alpne. Nail’s testimony, copying from his deposition, is, “ The consideration of the two-notes and the two mortgages executed to Edmund C. Winston, was for borrowed money from Winston, to invest, 1st, in firm of Reedy & Nail, and, 2d, in firm of Nail & Rand.” As we have said, this language is not very definite. It may mean that Nail’s object in negotiating the loan was to obtain funds with which to supply or replenish the stocks of the several firms. If this was so, then it would stand in the nature of a partnership liability. Rut this is notits necessary, or most natural meaning. To “ invest in,” is the language. To obtain, or purchase an interest in the several firms — in other words, to furnish his share of the capital stock, is its most natural signification ; and the fact that only Nail’s individual obligation was given for the repayment of the money, strengthens this view. It is not, however, necessary that the evidence in favor of this view should so far preponderate as to convince us. Evans, Fite, Porter & Co. being complainants, the onus of making out their case rested on them. Sufficient for Winston that the testimony was in equipoise. We may add, that we do not understand it to be controverted, that the debt to Winston is the debt of Nail alone, and that the property mortgaged was his individual property. This case, then, is brought directly within the influence of the case of Bank of Mobile v. Dunn, 67 Ala. 381.

The decree of the chancellor is affirmed.