Wetter v. Schlieper — 6 Abb. Pr. 123

Majority

p. 123

WETTER a. SCHLIEPER.

New York Common Pleas ; Special Term,

March, 1858.

Headnote

Partnership Assignment.—Appointment of Receiver.

No power exists in any number of partners less than the whole to make a? general assignment to a trustee for the benefit of creditors, even without preferences.

Such an assignment, when made without the concurrence or consent of all the partners, is absolutely void.

So held, in an action brought by a non-concurring partner for a dissolution of an insolvent copartnership, and appointment of a receiver to close up its affairs.

Motion for appointment of a receiver.

In January, 1857, the plaintiff and the defendants Schlieper and Haarhaus formed a copartnership for the transaction of an importation and commission business, under the firm name of “ Wetter, Schlieper & Haarhaus,” to continue for three years. The place of business of the firm was at the city of Hew York, where the partners resided.

In May, 1857, the plaintiff went to Europe, temporarily,

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■on the business of the copartnership, to solicit consignments. While thus occupied, and on the 20th of October, 1857, the defendants Schlieper and Haarhaus wrote to him requesting his immediate return. This letter reached him in Germany, Hovember 9th, when he immediately returned to the city, coming by the way of Switzerland, and arriving here December 14, 1857. His intention to so return was communicated to his partners by a letter written about the 9th of Hovember, and which was received here about the 1st of December.

On December 5, 1857, the defendants Schlieper and Haarhaus, without the knowledge or consent of the plaintiff, executed and delivered to the defendant Bohnstedt, a general assignment of all the partnership property in trust for the benefit of the creditors of the firm. The assignee was a clerk of the firm, and .a resident of the State of Hew Jersey.

The plaintiff, on his arrival, repudiated the assignment, and never ratified it in any way.

On December 28, 1857, this action was commenced. The complaint alleged the facts above stated, and demanded a dissolution of the copartnership, an accounting, the appointment of a receiver of the partnership assets, and also that the attempted general assignment made by the defendants Schlieper and Haarhaus, be declared fraudulent and void.

A temporary injunction having been ordered, the plaintiff asked to have it continued until the final determination of the action, and also that a receiver of the property of the firm be .appointed.

The defendants by their answers denied the fraud alleged in the complaint, but conceded that the partnership was insolvent. ' »

A. F. Smith, for the plaintiffs.

Albert Mathews, E. V. R. Wright, and James Moncrief for the defendants.

When a copartnership has become insolvent, no ■doubt can exist as to the power of a court of equity, upon the .application of either partner by a proper complaint, to appoint a receiver to take charge of the partnership assets, and close ■up its affairs. (Adams' Doctr. of Eq., 241, 243; Story's Eq.

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Jur., §§ 672, 673 ; Law v. Ford, 2 Paige, 310; Egbert v. Wood, 5 Ib., 517, 525 ; Story on Partn., 228, 229 ; Hitchcock v. St. John, 1 Hoffm., 511 ; Martin v. Van Schaick, 4 Paige, 471.)

The motion, therefore, presents the question: Whether the execution and delivery of the assignment so made by the defendants Schlieper and Haarhaus, purporting to convey and transfer all the partnership assets to the defendant Bohnstedt, in trust for the creditors of the firm, can be considered an impediment to the exercise of this power of the court, and prevent its granting the plaintiff the relief he asks ?

During the existence of a partnership, each partner is clothed with and possesses an equal and general power and authority in behalf of the firm to sell, loan, pledge, or dispose of its effects and property in any manner within the objects of the partnership, or necessary or proper in the ordinary prosecution of its business.

By the act of copartnership, each partner has these powers communicated to him; but they are personal to himself, and cannot be delegated to another without the assent or concurrence of his copartners. (3 Kent’s Com., 40 ; Story on Partn., §§ 101, 102 ; Collyer on Partn., § 384; Egbert v. Wood, 3 Paige, 517, 525 ; Havens v. Hussey, 5 Ib., 30 ; Fisher v. Murray, 1 E. D. Smith, C. P. R., 341; Mabbett v. White, 2 Kern., 442.)

Ho other powers should be implied except, such as are sanctioned by the usages of the trade or business in which they may be engaged. (Hayes v. Heyer, 3 Sandf., 297 ; Hitchcock v. St. John, 1 Hoffm., 511 ; Fisher v. Murray, 1 E. D. Smith, C. P. R., 341, 344.)

Upon these views of the powers of. each partner, it has been frequently decided that an assignment made to a trustee, of all the partnership assets for the benefit of the creditors of the firm, but giving preferences to certain creditors over others, is void; unless made with the assent or concurrence of all the copartners ; on the ground that authority to make such an instrument is not implied by the act of copartnership or the copartnership relation, and consequently cannot be inferred or presumed. (Anderson v. Tompkins, 1 Brook., 456; Harrison v. Strong, 5 Cranch, 289 ; Havens v. Hussey, 5 Paige, 30; Demiming v. Cobb, 3 Sandf, 284 ; Fisher v. Murray, 1 E.D. Smith,

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C. P. R., 341; Kemp v. Carnley, 3 Duer, 1 ; Haggerty v. Granger, 15 How. Pr. R., 243; Everson v. Gehrman, 1 Abbotts' Pr. R., 167, S. C., 10 How. Pr. R., 301; Dana v. Lull, 37 Verm., 390 .)

How, if the power does not exist in any number of partners less than the whole to make such an assignment, giving preferences, by what process of reasoning can it be determined that any one partner can vest the entire partnership assets in a trustee by an assignment, as in this case, without preferences ?

By either assignment, if valid, the whole property of the firm is wrested from the non-concurring partners against their will, placed in the possession and under the sole control of a trustee in whose selection they have had no voice, the business of the firm wholly suspended, and the copartnership itself virtually dissolved.

A careful examination of the elementary works treating of the law of partnership, and of the decisions cited, fails to show that this power exists in either case.

Courts should not imply authority of this extraordinary character, unless the parties intended to grant it; and it never should be presumed unless the evidence of such intention be express and positive.

For the reasons thus briefly stated, I have arrived at the conclusion that the assignment by Schlieper and Haarhaus, without the consent or concurrence of the plaintiff, is absolutely void, asid no obstacle in the way of granting the plaintiff the relief sought by him in this action. It therefore follows that a receiver must be appointed of all the property of the partnership of Wetter, Schlieper & Haarhaus, and the injunction now existing continued until final judgment.

A reference to appoint such receiver will be taken to Hamilton W. Robinson, Esq., as referee.

Ordered accordingly.