Hargadine-McKittrick Dry Goods Co. v. Sappington & Renshaw , 105 Mo. App. 655 ( 1904 )

ELLISON, J.

The mercantile partnership of'Sapington & Renshaw became insolvent and they committed acts which caused several of their creditors to attach the partnership property. One .of these partnership creditors was plaintiff, the Hargadine-McKittrick Dry Goods Company. The defendant, Moniteau National Bank, was an individual creditor of Renshaw. The bank levied an attachment for Renshaw’s individual debt, on the partnership property prior to the levy made by either of the partnership creditors. The attachments were all confessed. The partnership had given a chattel mortgage on the property before any of these proceedings and it was about to be foreclosed at a great sacrifice and to the injury of creditors. The partnership attaching creditors then filed an application with the judge of the circuit court in vacation asking the appointment of a receiver, in which the defendant Moniteau National Bank was made a party. A receiver was appointed who took charge of the property and sold it. This contest is over the proceeds of that sale and involves a question of priority; that is, whether the defendant bank as individual creditor with prior attachment, can be preferred to a partnership creditor with subsequent attachment. The plaintiff Hargadine-McKittrick Dry Goods Co. were the last in point of time to levy their attachment and if the claim of defendant bank is to be preferred there will be nothing left for them; and hence the contest 'here is chiefly between them as partnership creditors and the bank as an individual creditor. The bank claimed that the greater part of the debt owing to it was used by Renshaw to purchase his interest in the partnership, and that therefore it had a lien for this purchase-money. The trial court, as near as we can gather from the somewhat imperfect record, took that view and ordered that the hank, under its prior attachment, he first paid. Plaintiffs appealed.

The bank makes a double claim: first, that having the prior attachment which passed into judgment, it is entitled to preference. This we reject as unsound. Bank v. Brenneisen, 97 Mo. 145. And second, that its claim being for money borrowed by the individual partner which he used in purchasing his interest in the partnership, it had a lien, or prior equity over a partnership creditor. We feel constrained to rule this point also against the defendant.

The law is not now disputed that a partnership creditor is preferred in his claim against the partnership property over an individual creditor of one of the partners. And that an individual creditor is preferred in his claim against the individual property of one of the partners over the claim of a partnership creditor on such property. Hundley v. Farris, 103 Mo. 78; Goddard-Peck Co. v. McCune, 122 Mo. 426; Level v. Farris, 24 Mo. App. 445. And an attachment against one partner alone levied on partnership property only binds the interest of that partner. Hill v. Bell, 111 Mo. 35.

A prior attachment of the partnership property by an individual creditor can not give him prior rights over the partnership creditor when all proceedings are pending at the same time, and the partnership creditors have set up their claim of priority, as in this case, by their proceeding for a receiver. The result of the view taken for defendant would be to-nullify the general provision of law giving priority to partnership creditors. For if mere priority of attachment determined priority of claim, such law could rarely find practical effect, since if the partnership creditor was prior in attachment he would not need the law, and if he was subsequent in attachment, he could not assert the law.

2. Defendants claim of a lien for the money borrowed by tbe individual partner, and that, too, before he was a partner, can not be upheld. It is sometimes permitted to be shown that what appears to be an individual debt is really a partnership debt, by some means, in the individual’s name. But here the debt owing to the bank was for money borrowed for the individual purpose of buying his interest in the partnership. And when he made such purchase, the property immediately became partnership property. It became the property of his copartners in common with himself. It became impressed with the rights of the other partners, prominent among which, is that of having it first applied to the discharge of the partnership’s debts, a right which the creditors can be subrogated to, or, as it is sometimes expressed, a right which gives the creditors a quasi lien which they can work out through the partner’s lien. McDonald v. Cash & Hainds, 57 Mo. App. 536.

The judgment will be reversed and cause remanded with directions to disallow the claim of defendant bank against the fund in the receiver’s hands.

All concur.