Myers v. Tyson
Myers v. Tyson
Opinion of the Court
The opinion of the court ivas delivered by
This action was brought in the district court of Riley county by Peter Tyson to recover of J. M. Myers various items of personal property, consisting of a stock of agricultural implements, horses, wagons, buggies, and harness. Myers ivas at the time of the commencement of the action sheriff of Riley county, Kansas, and had levied upon the property in controversy by virtue of a writ of attachment issued out of said district court in favor of the St. Joseph Plow Company against the firm of Leach & Tyson, a copartnership consisting of Thomas Leach and P. B. Tyson. Prior to the issuance of the writ, Leach & Tyson had been engaged in business in Randolph in the sale of agricultural implements. The members of said firm, Thomas Leach and F. B. Tyson, were respectively the son-in-law and son of Peter Tyson, plaintiff in the court below. The plaintiff claimed to
Myers brings the case here for review, alleging error in the giving of certain instructions to the jury and in overruling the motion for new trial. The record discloses that for some time prior to the sale to Peter Tyson, which occurred about the 15th day of October, 1890, the firm had been in business in Randolph, and the management thereof had been principally with the partner Leach, Tyson having been engaged in other pursuits ; tb at as a firm and individually they had borrowed money from Peter Tyson, and their indebtedness to him up to the time of the sale had not been paid ; that at about the time this sale was made, or shortly before, the firm, being satisfied' that they could not meet all their obligations, concluded to make a preferred creditor of Peter Tyson, and made a proposition to him to buy their stock of implements, offering to sell the same to him for the sum of $500, which offer was by him accepted. Whether all the property sought to be recovered in this action was included in the sale or not, we are unable to tell from the record, as all of the testimony upon that proposi
The plaintiff in error complains of the giving of a certain instruction by the court, No. 8, which reads :
“I further instruct you, that if you believe from the evidence that the plaintiff came into the possession of the property in controversy by a sale, or sales, made in good faith and for a sufficient consideration, in payment of an honest debt or debts owed to him by F.*468 B. Tyson and James Leach jointly, or individually, or both, without any knowledge of fraudulent intent on their part (if in -fact such intent existed), was in possession of said property, either in person or by agent, before the defendant levied upon the same by virtue of a writ of attachment under which he claims the right of possession thereto, then jmu should return a verdict for the plaintiff,”
And insists that the rule is: “Partnership creditors have a priority over the separate creditors of individual partners in the payment out of the partnership property, and have a quasi lien upon the property to enforce such payment.” We cannot concur with counsel upon this proposition.
‘ ‘ While the firm is in existence its property may be sold by either partner, and will be followed by no claim, in law or equity, by the creditors of the firm if sold to the purchaser in good faith. ■. . . The law does not provide that partnership debts may be first enforced against the joint property of the firm in preference to the individual debts of the partner, on the ground of any equity held by the creditors, but this relief is granted to tfie creditor on account of the equities of the partners, each one of them having the right to demand that the firm property shall be devoted to the payment, of the firm debt, and shall be first exhausted before the individual estates are taken.” (King v. Sutton, 42 Kan. 600.) See, also, City of Maquoketa v. Willey, 35 Iowa, 323.
In Woodmansie v. Holcomb, 34 Kan. 35, Mr. Justice Johnston, in delivering the opinion of the court, says :
“ While it is true as a general rule that, as between partners, and also as between firm and individual creditors, the partnership debts have priority over individual debts as against partnership property, yet the simple contract creditors of a partnership have no lien upon its property until it is acquired by process of law. They have what has been termed a quasi lien, but this arises and is derived solely through the*469 equitable lien of the partners. Each partner has the right to have the firm assets applied in the discharge of the firm liabilities, and to the payment of whatever may be due him when the firm indebtedness is discharged and the partnership closed up. This equitable claim of the partners may in many cases, with the assent of the partners, be made available to the creditors, but as no such claim or equity exists in the creditors independent of the partners, a bona fide transfer of the partnership property, made with the consent of all the partners, places it beyond the reach of the firm creditors.” '
In support of this he cites Story on Partnership, § 258. While the partnership remains in existence and is solvent, we think it has the right, with the consent of all its members, upon a bona fide consideration, to sell and transfer the firm property in payment of the individual debt of one of the firm. No such circumstances about the transaction can be held to be a fraud upon the firm creditors. The decisions of the courts have gone further than this, and although not unanimous, the weight of authority seems to be that mere insolvency, where no actual fraud intervenes, will not- deprive the partnership of its legal control over the property and its right to dispose of it as it may choose, and where the separate creditor purchases from the firm in good faith (and individual indebtedness is a fair price for the property purchased), such purchase cannot of itself be held fraudulent as against the general creditors of the firm. (Sigler v. Knox County Bank, 8 Ohio St. 511; Schmidlapp v. Currie., 55 Miss. 597; Case v. Beauregard, 99 U. S. 119; National Bank v. Sprague, 20 N. J. Eq. 13; Wilcox v. Kellogg, 11 Ohio, 394; Gwin v. Selby, 5 Ohio St. 96; Allen v. Center Valley Co., 21 Conn. 130; Rice v. Barnard, 20 Vt. 479; Haben v. Harshaw, 49 Wis. 379; White v. Parish, 20 Tex. 688;
We do not think tliat the court erred in giving this instruction. We have carefully examined the record and evidence submitted at the trial of this case, and even were it admitted that there was any fraudulent intent upon the part of Leach & Tyson as against their creditors, Peter Tj^son did not participate therein, or have the slightest knowledge thereof, and in cases of this kind, where the sale made is alleged to be fraudulent, there must be participation in the fraud on the part of the grantee, or at least knowledge of the intended fraud of the grantor must be shown, or the sale will be upheld. This is the doctrine laid down by the supreme court of this state, and we cannot say that.any prejudicial error was committed at the trial. There was evidence submitted tending to prove every material fact found by the jury that authorizes the verdict that was returned, and the question having been passed upon by the jury, and its findings approved by the trial court, this court cannot disturb the judgment. We must hold, in accordance with the established princijfies and repeated decisions, that the general finding and judgment include every material fact necessary to sustain such judgment, and that in legal contemplation there is a finding by the jury that the sale of the property in question was made in good faith, upon a sufficient consideration, and that Peter Tyson was a bona fide purchaser thereof and entitled to its possession. ( Weil v. Eckard, 37 Kan. 700; Morris v. Trumbo, 1 Kan. App. 156.)
The judgment in this case will be affirmed.
Case-law data current through December 31, 2025. Source: CourtListener bulk data.