Lovejoy v. Bowers

We are of opinion that one partner cannot sell, or mortgage, an undivided interest in a specific part of the property belonging to the partnership. The property constitutes a fund, or capital, to carry on the business of the partnership,and to pay partnership creditors ; and the separate interest of each partner is an interest in the surplus. 8 N.H.Rep. 338, Morrison vs. Blodgett.

If it had appeared that the mortgage, in this case, comprised all the partnership property, it might perhaps be considered as a mortgage of the share of Frederick Lovejoy in the surplus. But in that view, it cannot avail against the defendant, because the property is all appropriated to the payment of partnership creditors.

The distinction between prior and subsequent creditors, taken in the argument, cannot be supported.

If a mortgagee of the entire interest of one partner, in the *407partnership, might, by virtue of the mortgage, require the partnership then to be dissolved and closed, (which we do not decide,) the plaintiff, even if his mortgage covered all the property, did not do this, and the partnership having continued, his right, if any, could be only a right to what remained when the dissolution took place. The partnership having continued, we have no means of ascertaining what the surplus might have been when the mortgage was made. There might then have been nothing. All the property now taken by the subsequent creditors may in fact have been supplied by them, or have been derived from profits on contracts made with them, and in that case they have taken nothing to which the plaintiff would have been entitled at the time his mortgage was made.

Considered as a mortgage of the interest of one partner in the partnership property ; and admitting that such a mortgage might be valid as between the parties ; the mortgagee, having permitted the mortgager to continue the business, could only be entitled to such surplus as might remain after the payment of the partnership debts, whether contracted before or after the execution of the mortgage. He could stand in no better situation than the mortgager in this respect.

Verdict set aside, and judgment for the defendant.