Jones, McDowell & Co. v. Fletcher , 42 Ark. 422 ( 1883 )

OPINION.

By the third section of an act of the Legislature entitled J ® “an act to define the boundaries of Pulaski and other . , counties, approved December 7,1875, the lands embraced in this controversy were detached from Pulaski and added to the territory of Saline County. It will be seen from the date of the filing of the complaint that these lands were notin Pulaski County when the suit was commenced. It is again urged by the counsel for appellants, after the overruling of the motion to dismiss for want of jurisdiction, that the Pulaski Chancery Court could not entertain jurisdiction on the facts stated in the complaint. The argument on the jurisdictional ground is pressed upon us with so much zeal and ability that we feel constrained to go somewhat at length into a further consideration of this question. The facts material and important to a proper determination of the question are : The defendants were served with process in Pulaski County. The mortgagees, under the power contained in the mortgage, were about to sell the lands in this county. The principal object of the plaintiff’s suit, as disclosed by his original complaint, was to have an account stated of the balance, if anything, due on the mortgage, and to redeem in part, or the whole, as might be directed by the Chancellor; to enjoin the sale as to the half interest, and to-set aside certain deeds made to hinder and delay him in the collection of his debt, and the recovery of the lands in his action at law.

Looking at the pleadings as a whole, on the part of the plaintiff, it is argued, that the chief or principal object of this suit was the recovery of real property, or of an estate or interest therein within the meaning of section 4532 Gantt’s Digest, which is as follow's:

“Actions for the following causes must be brought in the county in which the subject of the action, or some part thereof, is situated:

“I. Por the recovery of real property, or of an estate or interest therein.

“II. Por the partition of real property.

“III. Por the sale of real property under a mortgage, lien, or other incumbrance or charge.

“IV. Por an injury to real property.”

'When the suit was commenced the Circuit Court of Saline County was the proper and only forum in which these lands or of an estate or an interest therein could have been recovered. But the first and most important question to be determined, is, was the main or leading object of the plaintiff’s suit, as indicated by the scope 'and purposes of his original complaint, the recovery of these lands, or of an ■estate or an interest therein ? It is certainly true that the claim of the plaintiff was and is, that he is legally and equitably entitled to an undivided half interest in these lands, and it is conceded that no part of them are in Pulaski County. It is very clear that the Legislature intended, in the adoption of section 4532 Gantt’s Digest as apart of our code procedure, to make all actions, whether at law or in equity, where the judgment or decree is to operate directly upon the estate or title, local, and to restrict the remedy to the proper tribunal of the county where the subject of the action, or some part’ of it, is situated. All such actions, whether by name foreclosure, partition, ejectment, or without any special designation as to title, whether expressly mentioned in the statute or not, are local, within the meaning of this section. The courts will look to the effect of such judgments and decrees, and endeavor to give full force to the statute, and carry out the defined policy of the legislative department in limiting the remedy to the proper courts of the county where the land lies.

The chief question is, and must be, in its ultimate form and effect: Does the decree appealed from operate directly and primarily upon the estate or title, or does it operate alone upon the persons of the appellants, and only indirectly and incidentally upon the estate or title? To determine this question it is important to ascertain when, how, and for what purposes the court acquired jurisdiction, if at all. It will be seen that until the coming in of the amendment to the complaint, no direct effort was made by any allegations in the original complaint or prayer for judgment in which a recovery of the lands, or of an estate or an interest therein, was sought. The plaintiff alleged that he had succeeded, through a judicial sale, to all the rights of O. R. Vaughan, one of the mortgagors, in a mortgage which was about to be carried into effect by a sale in Pulaski County. That the mortgage had been paid oft; or, if not fully paid, he would redeem as to the balance found due-upon an accounting. He sought to have certain conveyances set aside and canceled on account of their having-been made to hinder and delay creditors, and especially himself. He prayed that the sale be enjoined, as to an undivided half interest in the lands, until his equities could be inquired into. The defendants were served with process in Pulaski county, and answered the complaint on the merits, reserving exceptions by way of demurrer to the jurisdiction of the court. But it is suggested by counsel for appellants, that the plaintiff elected to amend his complaint, and to enlarge the scope of his remedy, so that the suit as a whole was an action to recover real property, or of an estate or an interest therein, brought in a county where no part of the subject of the action was situated.

It is also urged that the jurisdiction of the court over the subject of the action, if acquired at all, must have been in consequence of the primary and principal object of plaintiffs suit, not as a mere incident to an asserted jurisdiction in personam„ but as an original jurisdiction in revi. It would seem to be clear, if we consider the entire pleadings as stating plaintiff’s whole case, that the principal or chief" object of his suit was the recovery of an estate in lands lying in Saline County. But appellee contends that the court having properly acquired jurisdiction over the persons of the defendants and the cause of action for a personal judgment or decree, that jurisdiction over the lands attached as incident to the principal or primary objects of his suit.

We are referred, by appellant’s counsel, to the case of Jacks v. Moore, 33 Ark., 31, as authoritatively settling'the question of jurisdiction raised here. That was an action of trespass brought in the Circuit Court of Phillips County for a trespass committed on lands lying in Lee County, in “cutting timber growing thereon, and otherwise injuring the land.” The court says : “ The action ought to have been brought in Lee County where the land is situated. The language of the code is unequivocal. The injury and the action is local, and was so at common law, and the code simply follows the common law.” That case fell directly and palpably within the very terms of the statute, and no question is made but that it was correctly decided. We are, however, unable to perceive any analogy between this case and that. Nor are we disposed to follow counsel in his speculations and possible deductions flowing from it. This suit is not founded upon any claim even remotely connected with an injury to real property. If any argument or reason as applied to this, can be deduced from that, it is against rather than favoring the position of appellants. That case declares that the code provision follows the common law, and is simply declaratory of what the law was before.

It is verjr well known that the section of our statute above quoted is an exact copy of a corresponding code provision in the Code of Kentucky, in force there when we adopted ours.

It is important to ascertain what interpretation has been placed upon this provision by the courts of that State, and, if sound, to adopt it as the true construction of ours.

Mr. Newman, in his Pleadings and Practice, commenting on this provision, says: “Actions for the recovery of real property, or of an estate or interest therein, or for an injury done to it, as specified in the section of the code above quoted, are subjects belonging mostly to the common law courts, or ordinary proceeding, Avhile the partition of real property and the sale of it under a mortgage lien, or other incumbrance or charge, belong chiefly to a court of equity.” (Newman Pleading and Practice, page 19.) At page 38 he says; “But, in the absence of any statutory ■enactment, the general rule is perhaps still to be observed, that where the judgment or decree is for the doing of an act which may be done anywhere, the person of the defendant, wherever he may be served with process, gives jurisdiction to hear and determine the controversy. All actions, therefore, for the recovery of money, settlements of accounts between partners or others, the specific execution or rescission of contracts for land, or compensation for its deficiency, and also bills of discovery under the former practice, and actions to cancel deeds or other instruments of writing, where not otherwise provided by statute, are transitory. Even an injunction to stay proceedings on a judgment, as it operates on the person enjoined and not directly on the judgment itself, nor on the court that rendered it, would be transitory, were it not for the express requirement of the statute.” Citing Dunn and Wife v. McMillan, 1 Bibb, 409; Mason v. Chambers, 4 J. J. Marsh, 407; Sharp v. Pike’s Admr., 5 B. Monroe, 157; Cowan v. Montgomery, 7 J. J. Marsh, 299; Care Trabue, 2 Bibb, 444; Owings v. Beall, 3 Little, 103; Lewis v. Morton, 5 B. Monroe, 3; Williams v. Burnett, 6 Me., 323; Parrish v. Oldham, 3 J. J. Marsh, 535; Dickens v. King, Ib., 591; Taylor v. Bate, 4 Dana,, 198; Walker’s Exrs. v. Ogden, 1 Dana, 247; Kendricks v. Wheatley, 3 Dana, 34; Austin’s Heirs v. Bodley, 4 Monroe, 434.

At page 45 Mr. Newman says: “Other cases may .arise in which jurisdiction of one court in personam draws to it the local jurisdiction in iem of another. It may often happen that the courts having local jurisdiction of the controversy in part, will dispose of the whole transaction, notwithstanding it involves the exercise of a jurisdiction which in part belongs to another tribunal.” And m support of this position cites Webb v. Wright, 2 Bush. (Ky.), 126. See, also, Butler et al. v. Buckley et al., 13 Ohio St., 519; Owens v. Hall, 13 Ohio St., 571; Hubbell v. Sibley, 4 Abb. Pr. R., U. S., 403; Coufman v. Sayre et al., 2 B. Monroe, 202; Breckenridge Heirs v. Ormsby, 1 J. J. Marsh, 256.

In order to sustain the jurisdiction over the lands another general rule is sought to be applied here, which is, that a court of equity, when it proper]}’ acquires jurisdiction over a cause for one purpose will usually retain it and decide all questions presented. Estes, Ad., v. Martin, Ad., 34, Art., 410; Crawford, Auditor, v. Carson et al, 35 Ark., 565; Price v. State Bank, 14 Ark., 50; Heilman v. Martin, 2 Ark., 168; Robertson v. Thompson, 3 Ind., 190; Morgan v. Morgan, 2 Wheaton, 290; Coway et al., ex parte, 4 Ark., 302.

In further support of the jurisdiction, the case of Denton v. Roddy, 34 Ark., 648, is relied upon. In that case J ustiee IS a KiN said : “ If the complainant can successful]}' attack the decree upon any ground recognized in equity, she will have the right to do so in the Woodruff court, as incident to and connected with the principal end of her bill, to wit, to be endowed of lauds in Woodruff County. The jurisdiction of the court for that purpose, will draw to it the. jurisdiction to remove the impediment of a fraudulent decree of auother tribunal.”

EakiN, J.,

in Dyer r. Jacoway, ante, 186, says: “The suit wras properly brought in the forum of the administration. It is competent to the court, having the parties before it, to do full justice, and to that eud it may make orders affecting real estate lying out of the district. The two districts of Yell County are as distinct counties. This by special statute.”

This was a suit by creditors of an estate against the administrator, his sureties, and the wife of the administrator, to set aside for fraud the settlements made by the administrator to hold the sureties liable, and to subject real estate of the wife of the administrator, to any decree rendered. The real estate was in the Dardanelle District of Tell County, and the suit was brought in the Danville District, the forum of the administration, etc.

In Walker's Exrs. v. Ogden, 1 Dana, 247, Chief Justice Robertson, in speaking of the power of a Chancellor to award restitution of lands to a vendor, said: “Restitution is, per se, a matter of local jurisdiction, and if it could be entertained by the Circuit Court of Bourbon, it must be so sustained only as incidental to, or in consequence of, some other matter which gave jurisdiction to that court over the parties and their contract.

In Kendricks et al. v. Wheatley, 3 Dana, 34, it was held that a suit for the rescission or specific execution of a contract for land, the venue was not local but transitory, and that the defendant must be summoned in the county or enter his appearance, to give jurisdiction. Fictitious allegations, as of a lien upon land, with a prayer to enforce it by sale, though such matter is local, will not confer jurisdiction when it appears from the whole bill that no decree can be rendered on such allegations.

Morgan & Hoggins v. Masterson, 11 B. Monroe, was a bill Sled in the Madison County Circuit Court to impeach and set aside an alleged fraudulent and fabricated will of one Mrs. Shackelford, who was domiciled in Lincoln County at the date of her death, owning property there, in which county the alleged forged will was admitted to probate. The plaintiffs claimed as heirs to Mrs. Shackelford, and also under the will. The defendant, Masterson, was the executor of the will and a devisee. The testatrix died owning lands in Madison County from which Masterson had collected rents as executor. The objects of the bill were to set aside the will and to annul its probate in Lin-coin County; to charge Masterson with the rent of lands in Madison County, and to have partition of the lands in that county. Defendant set up the will and its probate in Lincoln County and demurred to the jurisdiction of the court.

It was conceded in argument in that case, that the jurisdiction to determine the principal question was in the Lincoln, and not in the Madison Circuit Court, according to the authority of McCall and Wife v. Vallandingham, 9 B. Monroe, 449. But two grounds were insisted upon in favor of the jurisdiction: First — That the objection to the jurisdiction had been waived. Second — That the Madison Circuit Court had jurisdiction to settle with the executor for rents and profits of the land, and to decree partition thereof among the claimants; and having jurisdiction for these purposes, and especially to decree partition which is also local, that it thereby acquired jurisdiction to inquire into the validity of the will, that being necessary to be done before partition could be made.

SimpsoN, Judge,

in delivering the opinion, after showing that the objection to the jurisdiction had not been Waived in disposing of the other ground, said: “ If the admixture of subjects concerning which the court had jurisdiction, could operate to transfer the jurisdiction as to the others, from the court to which they properly belonged, and impart it to the court where the suit was instituted, there ■would be no difficulty in effecting a change of jurisdiction in almost every case in which there might be a contest about a will. The real question presented by complainant’s bill is in relation to the validity of the will. All the other questions are subordinate to that one, and to a great degree dependent upon it. That question ought to have been tried and determined in the proper court, and when that had been done, a suit for partition in the county where the laud is situated might have been brought there.”

The Supreme Court of the United States, in Hart v. Sansom, a recent case, published in No. 8, vol. 29, Albany L. J., uses the following language: “Generally, if not universally, equity jurisdiction is exercised in personam, and not ¿a rem, and depends upon the control of the courts over the parties, by reason of their presence or residence, and not upon the place where the land lies in regard to which relief is sought. Upon a bill for the removal of a cloud upon the title, as upon a bill for the specific performance of an agreement to convey, the decree, unless otherwise expressly provided by statute, is clearly not a judgment in rem establishing a title in lands, but operates in person-am only.” See, also, Massie v. Watts, 6 Cranch, 148; Orten v. Smith, 18 Howard, 263; Vandever v. Freeman, 20 Tex., 334. Our statute on this subject is as follows: “In all cases where the court may decree the conveyance of real estate, or the delivery of personal property, they may by decree pass the title of such property, without any act to-be done on the part of the defendant, where it should be proper, and may issue a writ of possession if necessary to put the party in possession of .such real or personal property ; or may proceed by attachment or sequestration.” Section 2640 Gantt's Digest.

It will be seen that, in the case of Hart v. Sansom, supra, the court says that the decree, unless otherwise expressly prodded by statute, is clearly not a judgment in rem establishing title in land, but operates in personam only. The language of our statute is: “Where the courts may decree the conveyance of real estate, they may by decree pass the title of such property without any act to be done on the part of the defendant, when it shall be proper, and may issue a writ of possession.” The decree in this case did vest title in the plaintiff without any act to be done on the-part of the defendant. It was made in strict conformity to the statute, and if it be not a judgment in rem, it is difficult to conceive an instance in which such an effect can be given under a judgment or decree.

Jurisdiction: Acquired by service of process, and not ousted by amendment of local jurisdiction.

We can not say, in the face of this statute and the decree as found in the record, that it is a judgment in personam only. Nor was it the exercise of a merely incidental jurisdiction in ran. If the court acquired jurisdiction for the purpose of decreeing title, and passing the estate in the lands to the plaintiff'and awarding him a -writ for its possession, as prayed in the amendment to the complaint, the incident became at once the chief or principal object of the suit. All of the grounds for the interference of a court of equity set up in the original complaint were subordinate to the claim of title and the right to be put into possession. These were from that time forward the chief objects of the suit. To hold that jurisdiction was acquired as an incident to the other grounds stated for a purely personal judgment, would, in our opinion, contravene not only the letter, but the spirit of the section of the statute in question. Nor can the old equity doctrine found in Penn v. Baltimore, 1 Vesey, 444 Anglasie, Ex., v. Maschamp, 1 Vern., 75; Massie v. Watts, 6 Cranch, 148 be appealed to for the purpose of sustaining the jurisdiction. The judgments in these cases were in personam. The power of the court was exerted through the person of the defendant. Our statute has modified that rule as to lauds situated in this State. But it does not follow from what has been said that in no ease would the incidental jurisdiction arise.

It was properly asserted in Dyer v. Jacoway, supra. The court acquired jurisdiction over the parties by service of process in this county and by their appearance to the action, and to the extent of granting relief in personam, it was properly exercised. The Pulaski Chancery Court had jurisdiction to enjoin the sale, to have an account stated of the balance due on the mortgage, to cancel the conveyance, and to inquire into the partnership matters brought before it. Tlie filing of the amendment did not oust the court of a jurisdiction already acquired, but it had none to decree the title and award the writ of possession, and it was error to do so.

2. Execution: Partner's interest in land, subject to. 3. Partnership: Equity of partnership creditors to asset: How lost.

It will be seen from the statement of facts that the appellants insisted in their answer that the plaintiff acquired no lien upon the lands by the judgment against C. R. Vaughan, although at that time the lands were in Pulaski County, because they belonged to C. R. and William R. Vaughan, not as tenants in common, but as partners; that they were purchased with partnership funds and used for partnership purposes, within the terms of the partnership; that the partnership and the partners were insolvent at the date of the rendition of the judgment and have been ever since. It is further argued that the proof fully sustains the claim.

Without going fully or minutely into the evidence, it becomes important to ascertain and determine -whether or not the consequences must follow of a denial of all right to the appellee under his purchase. It is not denied that within less than a month after the recovery of the Fletcher judgment against C. R. Vaughan, and while such interest as he might have had in the lands, whether that of an undivided half, as a tenant in common with his brother "William R., or his contingent or possible share after the payment of all partnership debts, still whatever interest he had, it was an interest in lands lying in the county where the judgment was rendered, and was bound by the lien of that judgment. Fletcher clearly had a right to levy upon and sell the lands if they belonged to C. R. Vaughan as a tenant in common. He had also a right to levy upon them if they belonged *o the partnership. In the former ■case be would acquire a title to a half interest in the property thus purchased. In the latter he took the place of the debtor partner, subject only to the demands of partnership creditors, whose claims will be preferred to that of an individual creditor, provided the property remains the joint estate of the partners, in such condition as to enable the partners to assert their equities for the benefit and protection of that class of creditors. If, however, the joint •estate was severed by the act of the partners in such manner as to cut off the right of the partners to assert their •equities over the partnership estate, the equity of the partnership creditors is also gone.

C. R. Vaughan, by deed of November 7, 1873, conveyed all the interest he had in the lands, crop, stock, etc., to William R. Vaughan for five thousand dollars, which he received in the way of credits on debts due by him to Rozelle.

This dissolved the partnership to the extent of these lands, crop, stock, etc. lie thereby parted with all right, interest and power of control over this property. It was not conveyed in trust or in any way bound for the payment of any debt or charge except such as might be lawfully asserted. He bad no right thereafter to insist, in a court of equity, that the firm owed partnership debts, and to have the lands applied to their payment. His equity as a partner was gone. The Chancellor found that the conveyance was made in good faith and for value. It is true that the bona fidea of the sale was attacked by the complaint, but there is perhaps little or no proof to sustain the allegations. The plaintiff’ purchased at a sale under his judgment, and procured a sheriff’s deed in regular form. Assuming the partnership to have been proven (of which we entertain some doubt) what estate or interest did Eletcher buy at the sale ? Did he buy subject to an accounting between the partners and to the partnership debts, or did he buy whatever interest or estate C. R. Vaughan had, with the superior claim of the partnership creditors cut off by the act of the partner in selling, or did the sale in any manner affect the power of the other partner to dispose of the property in payment of a partnership debt, and thereby defeat the lien of plaintiff’s judgment, and cut off all further remedy on the part of Fletcher to subject the estate of G. R. Vaughan to the payment of his debt?

Creditor's equity enforced only through equity of the partners.

Very great confusion and conflict of judicial opinion may be found on this and other questions of a similar character growing out of the respective rights and remedies of .individual and partnership creditors against the property of insolvent partners. The general rule undoubtedly is, that a creditor of one of the partners buys at an execution sale with the rule caveat emptor before him, and that he must take notice of all equities, whether liens, strictly speaking, or not, and -that at such purchase he buys only the share or interest of the debtor partner. In Allen v. McGaughey et al., 31 Ark., 252, the court said: “ The defendant claims as purchaser at an execution sale, to which the rule caveat emptor applies. - Hetgets no warranty of title by his deed, but takes the estate incumbered with all the equities upon it, at the time of his purchase, such, only, as the defendant in the execution had, charged with all the equities that might be asserted against him.”' See, also, Byers v. Fowler, 12 Ark., 286; Miller v. Fraly, 21 Ark., 22; Pindall et al. v. Trevor & Colgate, 30 Ark., 249. The contention in this case is, that at the time Fletcher purchased, the lands were affected with a trust or lien in favor of the partnership creditors of C. R. and W. R. Vaughan.

The trust or equity of the partnership creditors against , ...... . property ot the partnership is not a lien or trust, such as a °f equity can recognize and enforce except through the partners, to whose equities they are, under some circumstances, subrogated. If, therefore, at the time the superior claim of the partnership creditor is asserted by him, the partners are not in a condition by reason of any act of theirs to assert this right, the derivative equity in favor of the partnership creditor will be lost. They can not stand in a higher or more favorable position than that of the partners. The equity of the partnership creditor is worked out by and through that of the partners.

In Case v. Beauregard, 99 U. S., 119, Justice Strong, delivering the opinion, said: “No doubt the effects of a partnership belong to it, so long as it continues in existence, and not to the individuals who compose it. The right of each partner extends only to a share of what may remain after the payment of the debts of the firm, and the settlement of its accounts. Growing out of this right, or rather included in it, is the right to have the partnership property applied to the payment of partnership debts in preference to those of any individual partner. This is an equity the partners have as between themselves, and in certain circumstances it inures to the benefit of the creditors of the firm. The latter are said to have a privilege, or preference, sometimes loosely denominated a lien, to have the debts due to them paid out of the assets of a firm in course of liquidation, to the exclusion of the creditors of the several members. This equity, however, is a derivative one. It is not held or enforceable in their own right. It is practically a subrogation to the equity of the individual partner, to be made effective only through him. Hence, if he is not in a condition to enforce it, the creditor of the firm can not be. It is indispensable, however, to such relief that the partnership property should be within the control of the court, and in the course of administration, brought there by the bankruptcy of the firm, or by an assignment, or by the creation of a trust in some mode. So, if before the interposition of the court is asked, the property has ceased to belong to the partnership, if by a bona fide transfer it has become the several property, either of one partner or a third person, the equities of the partners are extinguished, and consequently the derivative equities of the creditors are at an end. It is, therefore, always essential to any preferential right of the creditor, that there shall be property owned by the partnership when the claim for preference is sought to be enforced.” See, also, Ex Parte Ruffin, 6 Ves., 119; Price v. Bernard et al., 20 Vt., 479; Appeal of the York County Bank, 32 Penn. St., 446.

The only exception or qualification to this rule is, that of the malafides of the retiring partner. Kimball v. Thompson, 13 Metc. (Mass.), 283; Allen v. The Center Valley Company et al., 21 Conn., 130; Ladd v. Griswold, 9 Ill., 25; Smith v. Edward, 7 Humph., 106; Robb et al. v. Mudge and another, 14 Gray, 534; Baker's Appeal, 21 Penn. St., 76; Sigler Richey v. Knox County Bank, 8 Ohio St., 511; Wilcox v. Kellogg, 11 Ohio, 394.

In such case the joint estate is converted into the separate estate of the assignee by force of the contract of assignment. And it makes no difference whether the retiring partner sells to the other partner or to a third person, or. whether the sale is made by him, or under a judgment against him. In either case the equity is gone.

In Vosper v. Kramer et al., 31 N. J. Eq., 420, in speaking of the lien of the partner, the Chancellor used the following language: “ This lien may be lost by the unqualified sale and transfer by the partner of his interest in the partnership to his copartner, whereby the property before that time held by them jointly, becomes the several property of the latter.” To the same effect see Giddings v. Palmer, 107 Mass., 269; Robertson v. Baker, 11 Fla., 192; Croone v. Bivens, 2 Head., 339; West v. Chasten, 12 Fla., 315; Griffith v. Buck., 13 Md., 102; Lindley on Part., vol. 2, pp. 683-4. The answer of the defendants denies the charges of fraud made in the complaint, and alleges that the conveyance made by C. R. to W. R. Vaughan was in good faith, and for value, and the Chancellor so finds as a fact. The bona fides of that sale is not now called in question on this appeal, and, for the purpose of disposing of this'question, we will treat it as a sale made in good faith. "Whatever may have been the objects or purposes had in view by O. R. Vaughan in selling, and W. R. in buying, it is quite clear that C. R. Vaughan had a legal right to sell such estate as, under the rules of law applicable to the condition of the property, he might own at that time. No superior le-ga! title Í3 shown in any other person. Nor was the Fletcher judgment anything more than an incumbrance upon the title. The fee was in the partnership, which was composed of the grantor and the grantee, and we can not question the operative effect or efficacy of the deed to pass the title to William R. Vaughan, subject to the outstanding liens of Jones, McDowell & Co. and Thomas Fletcher. Both the Vaughans say in their depositions that the partnership ceased in the latter part of 1873. When, therefore, this suit was instituted, no such partnership was in existence. It had been dissolved for more than two years.

When 0. R. Vaughan conveyed to William R., and when William R. conveyed to E. II. English, the lien of the Fletcher judgment was in force and bound such interest as C. R. Vaughan had to the extent of creating a lien for the amount thereof. It was a valid transfer for the purpose of severing the joint estate, and did have that effect, as between the partners.

This disposes of the defense based upon the partnership, unless the Marshal’s deed held by Rozelle, under the sale by Allen & Co., on their judgment in tbe United States Court, shall be deemed a superior title to that of Fletcher.

Without repeating the facts, it is sufficient to say that Allen & Co. recovered a judgment in tbe early part of 1874, in the United States Circuit Court for the Eastern District of Arkansas, against the Vaughans jointly, and proceeded to levy upon and sell the plantation in question to satisfy that judgment. Rozelle bought at the sale, and procured a deed which is exhibited and relied upon as a superior title to that of the appellee, because it springs out of a partnership debt, and that, as a partnership creditor has a preferential right to satisfaction out of partnership assets, his title, although junior in point of time, is superior in equity. The point just ruled confronts us again, for it is only another mode of stating the claim for preference.

The indebtedness upon which Allen & Co. recovered their j'udgment, was an obligation dated January 1, 1874. The debt may have accrued during the existence of the partnership, but the evidence of it was made to bear date after the dissolution of the firm.

The partnership had been dissolved and a considerable portion of tbe assets had been sold, and this plantation had become the property of two different purchasers who held it in severalty, when the note was given, and the judgment recovered. Had Allen & Co., immediately after the recovery of their judgment, filed a bill to marshal tbe assets of the late firm, and in that proceeding had attempted to assert the former lien of the partners, it will be seen, by an examination of the authorities above cited, that the joint estate in these lands having been severed by the deed, the lien of the partner was gone, and with that the derivative equity of the creditor founded upon it.

In a recent decision of the Court of Appeals of Kentucky this subject was very thoroughly discussed. It was said in that case, that “ no act of an execution defendant, •while execution is in the hands of an officer, can defeat the lien acquired upon his property by delivery of the writ.” It was also declared that creditors of a partnership have no lien upon partnership property except such as is derived through the partners — and that, where partners from any cause are in a position that they can not assert their lien upon the partnership effects, the creditors of the firm are equally unable to do so. Couchman’s Admr. v. Maupin et al., Rodman’s R., 78 Ky., 36, and authorities there cited.

It can make no difference whatever that one of the partners did what it is possible a court of equity would have compelled both partners to do, had-the firm remained in business or in existence at the time the partnership creditor attempted to seize and sell what had before that time been partnership property. Nor could either party have defeated this equity in behalf of partnership creditors by any act done mala fides. To hold otherwise would certainly place many embarrassing restraints upon the alienation of property, and charge it with secret liens without any compensating good results. As the law now stands the favor shown partnership creditors over individual creditors of a partner is well recognized and enforced. But the creditor of one partner, in cases like the present, if he is sufficiently diligent, may be permitted to reap the fruit of his vigilance.

A large mass of evidence was taken both before and after reference to the Master. So much as may be necessary to determine whether or not the appellant's exceptions to the Master’s report should have been sustained, will be looked into.

Jeff Fletcher, introduced on behalf of the plaintiff, testified that he was well acquainted with the Workman place. That he had resided in the same neighborhood for many years; had been engaged in planting or farming for twenty-five years on lands of a similar kind to that of the Workman place. That he had owned and cultivated from one-hundred and fifty to six hundred acres near this place, and in short had every possible opportunity for knowing the true rental value of the lands for the years 1876 to 1881 inclusive, covered by the final report of the Master. This-witness places the rental value, where the lessee or tenant keeps the lands in repair, at from five to six dollars per-acre, and says that he would not give over five dollars for auy land. Isbell, sworn on behalf of the defense, now occupying under a purchase from Adams, says that it is worth about five dollars per acre. Reynold places the value at about seven dollars an acre, but thinks five or six high enough where tenant makes annual repairs. The Master made a sort of average and fixed the value at seven dollars per acre. We think this more than the proof shows the land to be worth, and that the exceptions of the-defendants should have been sustained. There is a wide difference also as to the number of acres of land fit for cultivation and in a fair state of. improvement, when Rozelle,. the mortgagee, took possession. He says there was not to-exceed two hundred and fifty acres fit for cultivation in 1874, when he took charge of the place, and that when he left, at the end of the second year, about'four hundred and fifty acres.

3. Mortgager: Not liable for rents or improvements made by himself, and entitled to credit for necessary disbursements.

R. II. Rozelle, who had charge of the place for George Rozelle, says that, it contained between two hundred and seventy-five and three hundred acres when he first went to it, and that by actual survey, made by George Merrick, Rozelle cleared up and put in cultivation ninety-eight acres. He says that about twenty-five acres more at different times, he thinks, were added to it by Rozelle. Some witnesses speak of this added land as having been once cleared up or “ deadened,” and that it was in a rough state of improvement when Rozelle went in, but that it had grown up in cane. From what is shown in an account attached as a part of the deposition of R. H. Rozelle, it appears that George F. Rozelle expended a considerable-sum of money in making judicious and valuable improvements on the place. He is shown to have cleared up and put in cultivation ninety-eight acres. He built houses and made many improvements and thereby enhanced the value of the property. It was error to charge Rozelle, or those who claim under him as a mortgagee in possession, for rents of land put into cultivation by himself at his own cost. Somebody must have kept the taxes down and made repairs. No credit seems to have been given or estimate made of these necessary and proper disbursements. A mortgagee’s account, as stated by Jones on Mortgages, is as follows : “ Upon the redemption of the mortgaged premises by any one interested in them, he is obliged to state an account of his receipts from the mortgaged property, and he is entitled to allowances for all proper disbursements made by him in respect of the premises. The mortgagee in possession takes the rents and profits in the qn.a.4 character of a trustee or bailiff of the mortgagor. And in equity he must apply them as an equitable set-off to the amount due on the mortgage. It depends, however, upon the result of the accounting, upon equitable principles, whether any part of the rents and profits received shall be so applied. The mortgagee is entitled to have them applied in the first instance to reimburse him for taxes and necessary repairs made upon the premises, for sums paid by him upon prior incumbrances upon the estate and the cost in defending it; and if he has made permanent improvements upon the land in the belief that he was. the absolute owner, the increased value may be allowed him. Jones on Mortgages, vol. 2, secs. 1114-15.

The defendant’s exceptions to the Master’s report ought for these reasons to have been sustained. The decree of the Pulaski Chancery Court is reversed for the errors herein indicated, and the cause remanded to that court to be proceeded with according to the rules of that court, and according to this opinion, with directions to strike out plaintiff’s first amendment to his complaint and to limit-the relief to the other matters contained in the pleadings and embraced in the general or special relief prayed.