Gay v. Johnson , 32 N.H. 167 ( 1855 )

Perley, C. J.

Several suits were brought against the partners in the firm of Johnson & Wentworth, to recover debts due from the firm. The debts were of the same character, being all contracted in the name and for the benefit of the partnership, and all liable, so far as Lemuel Johnson was concerned, to his personal defence of infancy. To some of these suits he set up that defence, and was discharged; in the others, he allowed judgment to go against him jointly with the other partner. The ground taken by the plaintiffs is, that the debts, for which judgments have been rendered against both the partners, are to be regarded as partnership debts, and the partnership funds primarily liable for their payment; but that the debts, in actions where Lemuel Johnson pleaded his infancy, and was discharged from his personal liability, the judgments being against John A. Went-worth alone, are become his private and individual debts, and must be postponed, in the application of the partnership property attached, to subsequent suits in which judgments have been rendered against both the partners.

As a general rule the contract of an infant is not void, but voidable at his election. Conn v. Coburn, 7 N. H. 368. And an infant may be a partner, and will be entitled to all the benefits of the partnership, although not personally responsible for the debts of the firm contracted during his infancy. Goode v. Harrison, 5 B. & A. 147.

It is to be observed that in this case there has been no attempt by the infant partner to disaffirm his contract of partnership. He has set up his infancy as a personal defence to some of these suits, but the case of the plaintiffs goes on the ground that Lemuel Johnson is still a partner, and chargeable at his election for the partnership debts. Lemuel Johnson has yet done nothing which would prevent him from calling on Wentworth, the other partner, for an account, and for his share of the profits, if it should turn out that the business has been successful. If an infant partner can repudiate his contract of partnership, and call for a return of his share in the capital, without regard to the account of profit and loss, it must be upon some proceeding instituted for that purpose, and on which the rights of the other partners, and of creditors of the firm, may be considered and protected.

In this case there were but two partners, and judgment in the actions where infancy was pleaded was against one partner only. But the effect upon the rights of partnership creditors must be the same where there are any number of partners, and one is discharged from his personal liability on the plea of infancy. If in this case there had been three partners, or any larger number, and in a suit against them all to recover a partnership debt, one had been discharged on the plea of infancy, the judgment against the other partners, to maintain the position of the plaintiffs, must be regarded as an individual debt against the other partners, and not as a partnership debt.

It would follow, from the ground taken by the plaintiffs, that if Lemuel Johnson had set up the defence of infancy, and been personally discharged in all the suits against the firm, this would have changed the character of all the debts, from partnership to individual debts of the adult partner, and discharged the partnership property from the claims of the creditors of the firm to have their debts first satisfied out of it.

Where one of two partners dies, suits at law for partnership debts must be against the surviving partner alone ; but in that case the partnership property still remains as a separate fund for the payment of partnership debts, and cannot be diverted from that object by the surviving partner to the payment of his individual debts. Hutchinson v. Smith, 7 Paige 26, 33 ; French v. Lovejoy, 12 N. H. 461.

In England the bankruptcy of one partner, though it causes a dissolution of the firm, does not make the other partners nor the partnership bankrupt. 1 Cooke’s Bankrupt Laws 80.

But the personal discharge of a bankrupt partner does not affect the right of the partnership creditors to have the partnership property applied to the payment of their debts. Btory on Partnership, § 375.

In these analogous cases, where, on account of one partner’s death, or his discharge on the ground of some personal defence, judgment for a partnership debt is rendered against a single partner, the demand does not lose its character of a partnership debt, but still remains a charge on the partnership property.

It is said, in argument for the plaintiffs, that in this case Lemuel Johnson owed several debts to different creditors, and had the right to prefer such of his creditors as he chose to favor, and has exercised that right by pleading his infancy to some of the demands, and allowing judgment to go against him for the others. But to give the debtor this right of preferring one creditor to another, the debts must be of the same order and class; and if one class of debts have a legal preference, the debtor cannot deprive the creditors thus preferred in law, of their rights. Ferson v. Monroe, 1 Foster 462.

There being in this case a partnership, and partnership property, and debts contracted on the credit of the firm by which the property of the firm has been increased, these creditors would seem to stand on the same footing of equity, as to their right of having their debts satisfied out of the partnership property, though the infant partner has set up his personal privilege of infancy to discharge his individual liability. The fact that these creditors have been deprived of the personal liability of one partner for the security of their debts, by the plea of a personal exemption, would seem to be no good reason for taking from them their other security on the partnership property. In mercantile transactions, the creditor trusts to the property more than to the personal liability of his debtor. Merci magis quam mercatori oreditur.

All the reasons upon which the equitable right of partnership creditors to a preference for the satisfaction of their debts in the application of the partnership funds, has been established, apply with undoubted force to a case like this, where an infant partner has been discharged in a suit by his plea of infancy, and judgment has been rendered for the partnership debt against the other partner. The creditor trusted to the partnership funds ; the debt was contracted to increase those funds, and the personal discharge of one partner can have no effect to impair the equitable rights of the creditor over the partnership property. The property is still partnership property, and the debt does not lose its character of a partnership debt.

We are of opinion that the officer who is summoned as trustee is bound to apply the money realized from the sale of the partnership property attached, to all the executions in his hands, according to the order of the attachments, and that in this case he must be discharged.

There is another ground on which, as the case now stands, the trustee would be entitled to his discharge. He has not yet made any application of the money in his hands on the executions. He holds the money under the attachment, and the general property is still in the defendants, subject to the lien of the attachments. The money does not belong to the attaching creditor until it has been applied on his execution. The judgment is still in force, and unsatisfied, and may be paid with other funds.

Trustee discharged.