Hoerle v. McIlhargy — 46 N.Y. St. Rep. 249

Majority

p. 249

Justus Hoerle, Pl’ff, v. Joseph McIlhargy, Def’t. In the Matter of the Application of The McFarlan Carriage Co., App’lt.

(New York Superior Court, General Term,

Filed May 2, 1892.)

Headnote

Partnership—Receiver—Priority.

A creditor who brings action against partners after a receiver has been appointed in an action for dissolution of the partnership does not by his judgment and execution obtain a lien on the firm assets, and an application for payment of said judgment by the receiver is properly denied.

Appeal by the McFarlan Carriage Company, a creditor, from an order made at special term, denying an application to compel the receiver to pay a judgment recovered subsequent to the appointment of the receiver.

William King Hall, for app’lt; Michael Jacobs, for resp’t.

The action is for a dissolution of a partnership, and for an accounting. In it a receiver had been duly appointed, and had taken possession of the partnership property. After this the appellant began ah action against the partners for a partnership indebtedness, and recovered judgment in the sum of $90. On these facts, the appellant made petition to the court below that the receiver pay out of the funds in his hands the amount of the judgment. The court denied the application, and this appeal is taken from that denial. The decision was correct There was no legal lien on the property through the judgment and execution. The property was in custody of the law and was inaccessible to an execution or its usual consequences. The sheriff to levy, would be obliged to ask the leave of the court to that end. As the receiver had not taken possession after the execution had issued, the court would not be pressed by the consideration that there was a legal lien. In a case like this the court should look into the whole case, and find whether substantially the applicant had a right to a preference. If the estate were certainly solvent, leave might be given. But if insolvent and there was nothing in the nature of the claim that should give priority, the court should deny the application. In this case, there was no reason why the applicant should not share equally with other creditors.

Order affirmed, with ten dollars costs.

Sedgwick, Ch. J., and McAdam, J., concur.