George v. Derby Lumber Co. ( 1902 )

Terral, J.,

delivered the opinion of the court.

We think the decision of the chancery court should be reversed and the injunction restored. Before a sale is made under the deed of trust of the Derby Lumber Company to secure W. M. Hyde & Co. his debt against that firm, it should be purged of all items of the individual indebtedness of M. J. Brown to him contained therein. We take it that W. M. Hyde & Co. has no right, as against other firm creditors of the Derby Lumber Company, to charge the Derby Lumber Company with items of individual indebtedness of M. J. Brown, one of the members of the Derby Lumber Company ; for, before W. M. Hyde & Co. is paid, out of the assets of the Derby Lumber Company, the separate and individual debts of one of the members of said firm, the firm creditors of the Derby Lumber Company should first be paid. And A. H. George & Co. is here seeking to have its claim against the Derby Lumber Company to be preferred, as to the assets of said firm over the claim of W. M. Hyde & Co., against Brown, one of the firm merely, and that, it seems to us, is a proper subject of equity interference. Otherwise partnership assets could be applied in payment of the individual debts of the separate members of the firm to the total exclusion of the partnership debts, and that equity regards with disfavor. In other words, A. H. George & Co., a creditor of the firm of the Derby Lumber Company, here claims a right to be paid out of the assets of the Derby Lumber Company its firm debt before W. M. Hyde & Co. is permitted to be paid, out of said assets, the debt-of M. J. Brown only. The contention is equitable, and cannot be worked out except by purging W. M. Hyde & Co.’s account against the Derby Lumber Company of the individual indebtedness of M. J. Brown to him. Code of 1892, § 570, and the cases decided by this court thereunder. We think complainant should have been allowed to amend his bill as desired, and to have the decision of the matter postponed to the final hearing.

The judgment dismissing complainant’s MU is reversed, the inju/nction is reinstated, and the case is remanded.