Martin v. Mallery — 38 N.Y. St. Rep. 54

Majority

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George B. Martin, Resp’t, v. Franklin Mallery et al., App’lts.

(Supreme Court, General Term, Third Department,

Filed May 21, 1891.)

Headnote

Partnership—Effect of purchase of firm assets by a single partner.

W. H. H. sold goods to F. M. and S. H., as partners prior to their dissolution, after which event P. M. succeeded to the interest of the firm. Subsequently W. H. H. recovered judgment against both, issued execution against F. M , and levied upon and sold the partnership stock. The plaintiff brought this action upon a note of F. M., endorsed by S. H. and another, and severed in entry of judgment even as against F. M. and S. H. The plaintiff alleging that his debt, if not a partnership debt, was the debt of the partners, applied to have the sheriff pay him, upon his executions, the moneys realized upon the execution of W. H. H, Held, that the purchase by F. M. from S. H. vested the former with the absolute title to the property, and that the execution of W. H. H. was entitled to be paid first.

Appeal from order directing the sheriff to pay upon plaintiff’s judgment moneys realized by him on an execution against the same defendants in favor of one Hollister.

J. W. Palmer, for app’lts; George H. Martin (Edward T. Brachett, of counsel), for resp’t.

This is an appeal from an order directing the sheriff to pay on the aforesaid judgment moneys raised by him from a sale on execution upon a judgment in favor of William H. Hollister Franklin Mallery.

The plaintiff Martin commenced an action on a promissory

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note made by Franklin Mallery, and endorsed by Stephen Holland and Rachel Mallery. In that action he recovered judgment against Franklin Mallery May 13, 1890, and against Stephen Holland and Rachel Mallery June 10, 1890. An execution on the judgment against Franklin Mallery was issued June 23, 1890, and returned nulla bona August 21, 1890. An execution upon the judgment against the other two defendants was issued June 23,1890, and returned nulla bona August 23,1890. This execution is in form against each and all of the defendants.

William H. Hollister commenced an action against Franklin Mallery and Stephen Holland, and recovered a judgment against Franklin Mallery June 20, 1890, on which he issued an execution that day, by virtue of which execution the plaintiff levied on the interest of Franklin Mallery in “the Panama store.” This execution was satisfied by sale July 8, 1890.

Martin, the above named plaintiff, moved upon notice dated the 18th of July, an affidavit, and on the judgment rolls and execution in his action, to require the plaintiff to pay his execution before that of Hollister; which motion was granted July 29, and Hollister appeals.

The affidavit of Martin avers that his judgment was for a debt owing by the firm of Mallery & Holland, composed of Franklin Mallery and Stephen' Holland, and that the judgment of Hollister was against Franklin Mallery alone. The answering affidavit of Hollister denies that Martin’s judgment was on a firm debt, and refers to the complaint in Martin's action. He avers that his own debt was for goods sold to Franklin Mallery and Stephen Holland as partners prior to their dissolution; that they dissolved partnership about May 27, 1890, and that Franklin Mallery succeeded to all the interest of the firm.

It is plain that the judgment roll in Martin’s action does not show a partnership debt It is on a note of Franklin Mallery endorsed successively by Stephen Holland and Rachel Mallery. All of the defendants were served the same day, but the plaintiff severed his judgments, instead of taking a judgment against them as joint debtors. He even severed as against Franklin Mallery and Stephen Holland.

Martin, however, relies on the doctrine of Saunders v. Reilly, 105 N. Y., 12 ; 6 N. Y. State Rep., 452, and of Davis v. D. & H. C. Co., 109 N. Y., 47 ; 14 N. Y. State Rep., 38. He urges that even if his debt was not a partnership debt, yet as it was a debt owing by all the partners his execution had priority over an execution previously levied against one partner. We think that those cases do not sustain his position; and indeed are rather contrary to it In the latter case the general term had given priority to a partnership debt owing by the partners individually. But the court of appeals reversed that decision and held that a prior judgment against the several partners had priority over a later judgment on a prior debt The other case is similar. Under these cases Martin’s execution against both partners individually if first levied would have taken the firm property (assuming that the property still belonged to the firm) in prefer

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ence to a subsequent execution against the firm. But that is not this case; Martin’s execution is the subsequent, and Hollister’s the prior. Martin, therefore, attempts to assert that benefit of being a creditor of the firm over individual creditors which was denied in those cases.

But there is another view which may make it unnecessary to decide this last point. Hollister alleges that about May 27, Franklin Mallery bought out Stephen Holland and succeeded to all the interests of the firm. There is nothing to contradict this. How in Saunders v. Reilly, ut supra, at p. 18 this subject is discussed; and it was held on the authority of Stanton v. Westover, 101 N. Y., 265 , that such a purchase vests the purchasing partner with the absolute title to the corpus of the partnership property, as if it had always belonged to him. How this rule may be qualified in the case of fraud, we need not inquire. Under that rule the purchase from Holland by Mallery gave him the absolute title. And necessarily the execution against him, being first levied, must be first paid.

So far as the equity of the case goes, Hollister’s affidavit shows that his judgment was for a firm debt. So that he is committing no injustice when he levies on property formerly belonging to the firm, and now,, since Mallery’s purchase, belonging to him.

We think the order should be reversed, with ten dollars costs and printing disbursements, and motion denied, with ten dollars costs.

Landon and Mayham, JJ., concur.