Shepherd v. Reeves & Co.
Shepherd v. Reeves & Co.
Opinion of the Court
This is a bill by creditors of a partnership to subject to the payment of their demands a lot of land which, it is alleged, was purchased by one of the partners with partnership funds, the conveyance being made to his wife, and a house built thereon by the husband also with funds belonging to the partnership. W. PI; Shepherd, it is alleged, was the member of the partnership who so diverted its assets ; and in respect of him and'such diversion, the bill contains the following averments: “That said Shepherd was the business manager of the partnership and acted as salesman, collector, purchaser, &c., and, in fact, managed" and controlled the business in all respects and handled the cash thereof; and that said Shepherd, whilst said firm was indebted to complainants, but before judgment for the debts had been rendered, well knowing that the assets of said firm were wholly insufficient to pay its debts, and that said firm was in fact insolvent, took funds and effects of said firm from the general assets thereof, and therewith built and erected a two story residence for himself and family to live in, worth at least two thous- and dollars, upon a lot which he purchased and paid for with such funds, taken, as aforefaid, from the assets of said firm, with intent thereby to hinder, delay or defraud said creditors and complainants out of their just rights, and satisfaction of their just demands out of said funds so abstracted, as aforesaid from said business ;■ and complainants state and charge that they and said other existing creditors were entitled to and had a lien upon said funds for the payment of partnership debts which was superior to any right which said Shepherd had or could have acquired by reason of his appropriation thereof, as aforesaid, for the purchase of said lot and the erection of said dwelling house and other appurtenances; and, therefore, whatever might have been the intent upon the part of said Shepherd, with which he so appropriated said funds, the same legal effect would and did result or flow therefrom, that is to say, it is a transaction which the law condemns as fraudulent as against your orators
Both W. H. Shepherd and his wife, Martelia Shepherd, admit in their answers and depose as witnesses that money to purchase the lot and money and materials to build the house thereon was supplied by or came from the partnership, and out of its funds and effects ; and the answers and testimony exclude the idea that any money or effects of W. H. Shepherd individually were used either in the purchase or improvement of the lot. They aver and depose, however,-• that the partnership was indebted to her in the sum of $600, and the money and material supplied by the firm was in the way of payment of this indebtedness to her. So that the issue is brought down to this : Was the firm indebted to her in the amount of funds or effects belonging to it which went into this property, and were such funds or effects paid or delivered to her on this indebtedness? In the first place, W. H. Shepherd purchased the lot of land from Mrs. Berry in his own name, had a deed drawn and signed purporting to convey it to himself and wife, and paid for it in part by crediting an account which Mrs. Berry owed the firm, and in other part with money ■which must have come from the same source, as Shepherd testifies that none of his own money was so used, and Mrs. Shepherd claims neither that she furnished the money thus paid directly, nor that it was paid by the firm, for her as a credit on its indebtedness to her. Indeed, while she testifies that the residence on the lot was built with her money, she nowhere says that the lot was paid for with her money. So much, for the moment, as to the purchase money of the lot. In respect of the money with which the house was built, it appears from
Whatever may be the present value of the house and lot, we do not find that any money or material entered into the purchase of the one or the erection of the other which did not belong to the partnership ; and there is, therefore, no merit in the suggestion that in any event the compainants are entitled to only so much of the proceeds of a sale of the property as will equal the amount of partnership assets affirmatively and certainly traced into it.
Affirmed.
Case-law data current through December 31, 2025. Source: CourtListener bulk data.