Rumsey-Sikemeier Co. v. Bank of Aurora ( 1909 )

COX, J. —

The first question to be determined on this appeal is as to the right of the plaintiff to pursue the partnership property, and subject the same to the payment of its debt to the exclusion of the creditors' of the individual partners under the circumstances mentioned in this case. A partnership creditor has no independent right to follow the partnership property and require that his debt be paid therefrom to the exclusion of debts of the individual partners. His right, in that respect, when it exists at all, is a derivative right only, and results from the fact that the partners have the right as between themselves to require that the partnership assets be applied to the liquidation of the firm debts in order that they may be protected from personal liability for the same, and when a creditor of the partnership is permitted to pursue the partnership assets and require them to be applied to the satisfaction of his debt to the exclusion of the creditors of the individual partners, it is done, primarily, for the protection of the partners — not the firm creditors. It is manifest then that this right of the firm creditor, being a derivative right only, which is given him, not for his own benefit, but for the protection of the individual partners, is always, in the absence of fraud, subject to the will of the individual partners whose interests'are to be protected through him, and if the individual partners shall waive or forfeit this right by contract or otherwise, the right of the creditor fails. [Reyburn v. Mitchell, 106 Mo. 365; Gordon Peck Grocery Co. v. McCune, 122 Mo. 426 and other cases there cited.]

Applying this principle to this case, it is apparent that if the plaintiff can follow the assets of these partners in the hands of the Bank and Alice Miller, they must do so upon the theory that it is necessary in order to protect the interest of Struby, the absconding member of the firm; and if Struby has waived his right to have this done, then plaintiff’s right is gone. Whether or not Struby has waived this right will depend upon what effect shall be given to his absconding. The evidence shows that he has absconded and that his whereabouts is unknown. We, therefore, can only conclude that he has gone, never to return, and by doing this, without leaving any direction as to his interest in the partnership, he has necessarily cast upon Miller, the other member of the firm, the entire burden and responsibility of the business; and, since he has placed himself in a position where he cannot be consulted, he must be held, in the absence of fraud, to have given full authority to Miller to dispose of the partnership effects as he wished, and as long as Struby sustains the attitude of having wholly deserted the partnership he has no equities to protect, hence, there is no foundation upon which plaintiff can base its right to interfere in the disposition of the partnership assets.

The remaining question in this case is as to whether plaintiff’s claim should have been reduced to judgment before instituting this action. The general rule is that a claim must be reduced to judgment before an action of this kind will lie. This rule has its exceptions, but we think this case comes under the general rutó. The reason of the rule is that it may be judicially determined that the debt exists and is a partnership debt, so that the question to be determined in this case, to-wit: the right to follow the partnership assets in the hands of a third party may affect all the parties to the suit, and not require a part of the defendants — in this case, the Bank and Alice Miller — to stand idly by and endure the suspense of waiting until plaintiff shall litigate his debt with the partners before they can know whether they shall be called upon to defend at all, for if plaintiff should fail to establish his debt as a partnership debt, the defendants — Bank and Alice Miller, should be discharged even though it might appear that Charles M. Miller was personally liable. Again, plaintiff must fail in this action for the reason that before this property can be subjected to the payment of its debt, as asked, and an execution awarded to sell it for that purpose, a judgment must first be obtained against all the partners: for a judgment against one partner only, would, as far as the judgment is concerned, be the individual debt of that partner, and to subject partnership assets to the payment of this judgment would put the court in the anomalous position of holding that this property must be applied to the payment of partnership debts, and then by execution subject it to the payment of a judgment against one partner alone. This, the court would not do. Although Struby has absconded, yet, before this claim of plaintiff can ripen into a judgment that can be denominated a judgment against the partnership, so that partnership, property, as such, can be reached under it, Struby must be brought into court in some way, so that the judgment when rendered, will bind all the partners. For the reasons stated, the judgment below was for the right party, and is, therefore, affirmed.

All concur.