Dunn v. Arnold — 38 N.Y. St. Rep. 617

Majority

p. 617

John Dunn et al., App’lts, v. Frank G. Arnold et al., Resp’ts.

(Supreme Court, General Term, Fourth Department,

Filed May 8, 1891.)

Headnote

Partnership—Right to follow assets of a former firm.

Pratt & Arnold, partners and solvent, were indebted to plaintiffs upon a

p. 618

note. Thereafter, with Arnold’s consent, Pratt sold out to Eaton. Pratt & Arnold agreed to pay all the liabilities of their firm. Eaton & Arnold continued the business until Arnold sold out to his father. Neither of the sales by Pratt nor by Arnold were fraudulent. The plaintiffs obtained judgment on their note and then sought to reach the assets of Pratt & Arnold. The referee dismissed the complaint as to Eaton and as to the father of Arnold. Held, correct.

Appeal from a judgment entered upon the report of a referee in Onondaga county. Plaintiffs-are judgment creditors of Charles-A. Pratt and Frank G. Arnold, who constituted the firm of Pratt & Arnold, and made their promissory note on the 3d day of January, 1889, to the plaintiffs for an indebtedness then existing ; subsequently the plaintiffs recovered a judgment upon that indebtedness and issued an execution which was returned unsatisfied, and they bring this action to reach the assets of the partnership existing at the time the debt was contracted. ‘The referee held that the complaint should be dismissed on the merits as to defendants John D. Arnold and Carl S. Eaton, with one bill of costs against the plaintiffs. Plaintiffs appeal from the judgment entered on the referee’s report No other parties appeal.

J. William Wilson, for app’lts; William E. Hobby, for resp’ts.

The referee found “ That on or about the 12th day of January, 1889, it was agreed between said Pratt and Frank Gr. Arnold that said Pratt should sell an undivided one-half interest of all the merchandise of said firm to one Andrew J. Eaton for twenty-two hundred and fifty dollars ($2,250.)”

Thereafter negotiations were had between Pratt and Dr. Andrew J. Eaton with the knowledge, with the assent and concurrence of Frank Gr. Arnold, and that resulted in an agreement that for the price of $2,250, to be paid to Pratt, the said Andrew J. Eaton should become the purchaser of one-half of the firm goods and fixtures. It was understood that Andrew J. Eaton made the purchase for and in behalf of his son, Carl S. Eaton, to whom, immediately after acquiring an interest, he made the transfer, and the son entered into business with Frank Gr. Arnold, and he and Carl S. Eaton thus became the owners of the property.

Pratt and Frank Gr. Arnold agreed to pay all the liabilities of the firm of .Pratt & Arnold, and Frank Gr. Arnold was to raise outside of the business $1,500, to be used in paying the debts, which he subsequently did, applying the same to the payment of the debts of the firm of Pratt & Arnold. It is also found that Carl S. Eaton and Frank G. Arnold, having formed a copartnership for the purpose of carrying on a business, “ took possession of said merchandise and continued to carry on said business, selling from said stock of goods and adding to -the same in the regular course of business, until the 15th day of July, 1889, when said copartnership dissolved;" and on the 15th day of July, 1889, Frank Gr. Arnold assigned and transferred to his father, the defendant John D. Arnold, all his right, interest and property in and to the assets of the firm of Arnold & Eaton.

The referee also found as matter of fact, viz., “ that neither the-said sale by said Pratt nor the said sale by Frank G. Arnold was-

p. 619

fraudulent or made with the intent to hinder or delay or defraud creditors, nor was either of them made upon any trust"

A careful perusal of the evidence found in the case has led us to the conclusion that the referee was warranted in his findings of fact. It appears that Arnold & Eaton became the owners of the property, and as such they were entitled to carry on the business which they did for some period of time, and to make sales thereof. Dimon v. Hazard, 32 N. Y., 65 ; Stanton v. Westover, 101 id., 268. The evidence very clearly shows that Frank G. Arnold knew of the negotiations made and of the terms agreed upon for the transfer of one-half interest in the stock of goods to Eaton; he became bound thereby; he was in no situation to complain of the transfer. Saunders et al. v. Reilly, 105 N. Y., 20 ; 6 N. Y. State Rep., 452.

We think the question made as to whether the transfers were with fraudulent intent were questions of fact and not of law. Bulger v. Rosa, 29 N. Y. State Rep., 679.

(2) We think no error was committed by the referee in refusing to find that the firm of Pratt & Arnold was insolvent at the time of its dissolution, nor that the transfer made with the assent of both members of the firm to Dr. Eaton was not for his son Carl S.; nor in refusing to find that Eaton only acquired an equitable interest in the property of Pratt & Arnold; both members of that firm assented to the transfer to Eaton, and, as before-observed, it was made without any fraudulent intent; nor do we think the evidence required a finding on the part of the referee that Arnold & Eaton should account for “any excess of the value of the said property over the pretended considerations;” on the contrary, we are of the opinion that the plaintiffs obtained all the relief they were entitled to at the hands of the referee, and his direction that the complaint should be dismissed as to John D. Arnold and Carl S. Eaton, on the merits, was correct and should be sustained.

Judgment affirmed, with costs.

Martin and Merwin, JJ., concur.