First National Bank v. Cochran

8 Ohio N.P. 696
CourtCourt of Common Pleas of Ohio, Hamilton County
DecidedJuly 1, 1901
StatusPublished

This text of 8 Ohio N.P. 696 (First National Bank v. Cochran) is published on Counsel Stack Legal Research, covering Court of Common Pleas of Ohio, Hamilton County primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
First National Bank v. Cochran, 8 Ohio N.P. 696 (Ohio Super. Ct. 1901).

Opinion

Pfleger, J.

Thomas C. Pearce, Harry T. Atkins and Henry Pearce carried on two kinds of business-in this city — one for the’ manufacture of warp and cotton goods, under the firm name of Henry Pearce’s Sons, and the other for the manufacture of articles of harness, etc., under the firm name and style of Pearce, Atkins &r Co. The concern of Henry Pearce’s Sons consisted of the Deercreek Mills, located at Fifth and Lock streets, and was purchased after that of Pearce, Atkins & Co., from the firm of Gould, Pearce & Co., which had been in existence since 1847. The mill of Pearce, Atkins. & Co. was located at Plum and Canal streets. Each establishment had its separate employes. All three partners were equally interested in both concerns. One of them was assigned to one concern and the other two to the other business. The offices of both firms were kept in' the same building and- in the same general room; they employed the same janitor at the office and the same bookkeeper, and divided their expenses, but the books of account were kept separate • and distinct, not only for the purpose of ascertaining how they stood at the-end of each year, but as different ventures, having a separate set of creditors and customers. Sometimes cash balances and small merchandise or small supply bills would appear between the firms, without interest being charged or credited thereon;- some few transactions in real estate took place between the partners and the different firms, and some machinery belonging to one firm was used by [697]*697the other without any charge being made f6r the use thereof. None of these items, or indeed all of them together were, in the judgment of the court, of sufficient frequency, to indicate or warrant the finding, as a matter of fact, that the partners, among themselves, recognized and in fact did business as one concern.

There certainly was no concealment on the part of the three partners as to their connection with and the fact of their interest in the two partnerships. Their object and intent evidently was to keep them separate and distinct.

Both concerns failed on the same day joining in one deed and making an assignment to W. C. Cochran in behalf of the three individuals and in behalf of each of said firms. The assignee at some trouble and expense has kept the assets and liabilities separate, and has declared dividends separately:

The First National Bank of this city purchased notes amounting to $1,223.16, signed Pearce, Atkins & Co., and $23,312.88, signed Henry Pearce’s Sons, and filed its claims for both sums against each concern, demanding, however, d dividend on these two sums once only, but upon all the assets of both concerns. In other words, the bank sought to have the assets of both concerns put into one fund, and have all the creditors of both establishments share equally with the others. If distributed separately, the assets of Pearce, Atkins & Co. will probably pay forty-five cents, and those of Henry Pearce’s Sons about fifteen cents on the dollar. The assignee allowed or was willing to allow as valid claims these notes signed respectively, but rejected them as credits against both concerns jointly. Thereupon instead of raising the question on distribution the First National Bank demands the assets ■of the two concerns jointly.

The question at issue is whether a creditor who took commercial paper signed in the name of one firm can share pari passu with the creditors who dealt exclusively with the other firm.

Strange as. it may appear, few cases can b,e found involving the exact point. Many have been cited by counsel on both sides as throwing some light upon the question, and after an examination of these and other cases certain contentions have been made which may be •disposed of briefly.

A person may by adopting a firm or individual name separate his business into .parts or branches, keeping it absolutely distinct as to the nature and kind of traffic carried on, the places where the same is located, and yet because these assets can only be reached by an action against him, this division and separation will not affect creditors, no matter what may have been his intention or his conduct (Ex parte Wilson, 7 Ch. App., 490; Bates on Partnership, section 107).

So it is true of the two firms which have members in common, but which are not entirely constituted of the same persons, having either one more or one less than the other, no matter how close may have been the relations between them, as long as there is no different holding out, they are in fact and in law separate and distinct concerns, having separate creditors entitled to the funds of the partnership which they trusted respectively. Lewis v. U. S., 92 W. S., 618; In re Vetterlein, 44 Fed. 61; Adams v. Brown, 16 Ohio St., 75; Bates on Partnership, Sec. 108; Cushing v. Smith, 43 Tex., 261; Moore v. Gano, 12 Ohio, 300; Bullock v. Hubbard, 23 Cal., 495.

And where such firms openly conduct business in the same name and with, a common member or agent it may be shown by the creditors that the credit was obtained upon the faith of one of the two firms (Fosdick v. Van Horn, 40 Ohio St., 459; Mechanics Bank v. Dakin 24 Wend., 411; Hastings v. Hibbard, 48 Mich., 452).

And two firms composed of exactly the same members may do business under different firm names and in different places; yet if one is a branch of the other, or one business is dependent upon the other, they are in fact and in law one concern ( In re Williams, 3 Woods, 493; Campbell v. Colorado Coal Co., 9 Col., 60).

It must be conceded that the mere separation of assets, the engagement of separate employes, the keeping of separate establishments and separate books of account, or the mere intentions of the parties, can not alone make them separate and distinct concerns, although these facts collectively may aid in arriving at the other conclusion. Nor can the acts of the assignee, subsequent to the dealings of the contracting parties, change in any way the relations of such parties.

The greatest difficulty in determining the question arises by reason of the construction placed on the partnership relation by the common law. The common law recognized but •two kinds of persons — the one created by nature and the other created by the sovereign. A conventional being, such as a partnership, being created by the agreements of the persons, although a commercial necessity, was never authorized and never recognized. It was not considered a thing distinct from the members composing it, but a mere name or description of a species of mutual agency having a convenient symbol or abbreviation to include all (Chambers v. Sloan, 19 Ga., 84).

[698]*698Actions by and against the firm were brought by and against the partners and executions for firm debts were levied upon the j separate property of the partners without re- . sorting at first to the partnership assets (Hughes v. Gross, 166 Mass., 61; Alexander v. Jones, 90 Ala., 474; Bates on Part., sec. 171, 5 Am. Law Review, 918).

Therefore at common law a partnership was not regarded as a legal being or entity but a ' mere relation of the partners and one which could not sue or be sued in its firm name. (Glasscock v. Price, 92 Texas, 273; Harris v. Visher 57 Ga., 232; Hughes v. Gross,

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Bluebook (online)
8 Ohio N.P. 696, Counsel Stack Legal Research, https://law.counselstack.com/opinion/first-national-bank-v-cochran-ohctcomplhamilt-1901.