Geo. W. McAlpin Co. v. Finsterwald
Geo. W. McAlpin Co. v. Finsterwald
Opinion of the Court
On December 27, 1893, plaintiff in error filed in the court of common pleas of Athens county, against John Finsterwald its petition setting forth that it was a corporation under the laws of this state, that said John Finsterwald was sheriff of said county of Athens; that on October 5, 1893, the First National bank of Athens, James D. Brown and Samaria H. Palmer, each recovered by confession in the court of common pleas of Vinton county, Ohio, a judgment against Palmer & McGrath, a partnership; the first named for $4,783.50, the second for $2,117.64, and the third for $489.07; that each of said three parties caused executions to be issued on their respective judgments, and delivered to said sheriff, and by him levied on a stock of dry goods, etc., belonging to said firm, and found in said county of Athens all which was done on the day the judgments were confessed; that on the following day, the plaintiff, itself, and John P. Dana, each recovered by confession in said court of common pleas of Vinton county a judgment .against said firm; the plaintiff’s judgment being for $4,047.32 and John P. Dana’s for $150.00, and that they severally caused executions to be issued on their judgments directed to said sheriff, and that the said sheriff on the same day (Oct. 6, 1893) levied the same on said stock of goods. That
At the ensuing term of the Athens court of common pleas, upon the application of the defendant, that court found “that the personal property in the petition described was taken by the defendant, as sheriff of Athens county under an execution' in favor of the First National Bank of Athens, and James D. Brown, now * * * it is ordered that said First National Bank of Athens, and James D. Brown, upon their giving- security for costs, be and they are hereby substituted as parties defendant in this action” * * *
Thereupon, after their respective demurrers to the petition had been filed and overruled, each of these substituted defendants, filed an answer and cross-petition, wherein they admit the rendition of the plaintiff’s judgment and their own, the issuing and levying of the executions and the sale of the partnership property as set forth in the peti
(2) “On the 5th and 6th days, of October, 1893, and long prior thereto, the said James A. Palmer and one Charles D. McGrath were partners for the purpose of, and they were, carrying on business in the state of Ohio, under the firm name of Palmer & McGrath; on said 6th day of October, 1893, said James A. Palmer, in Athens, Ohio, executed and delivered to the plaintiff a promissory note for the sum of $4,047.32, payable on demand with 8 per cent, interest, which promissory note had a warrant of attorney therein written, authorizing any attorney of any court of record in the state of Ohio, to appear in any court of record in said state and confess judgment against said James A. Palmer and said firm of Palmer & Mc-Grath for the whole amount appearing due on said note, with interest and costs, and to release all errors and right of appeal. Said note and warrant of attorney were signed by the said James A. Palmer individually and purported to be also signed by said firm of Palmer & McGrath; said firm of Palmer & McGrath, however, did not sign or execute the same, but the said James A. Palmer, without the authority, knowledge or consent of said Charles D. McGrath, or of said firm or partnership, signed the name of said firm or partnership to said note and warrant of attorney as joint and several maker thereof with himself. At the time said James A. Palmer signed the name of said firm of Palmer & McGrath to said promis ■ sory note and warrant of attorney, said Charles D. McGrath was absent from the state of Ohio, and
At the time of the rendition of said judgment and ever since, the said James A. Palmer, Charles D. McGrath and said firm of Palmer & McGrath have been and are insolvent, and the goods and chattels described in the plaintiff’s petition and the proceeds of the sale thereof were and are all the property then or now owned by them out of which said judgments of this defendant and the First National Bank of Athens, or any part therefore can be collected.
This defendant further answering says that by reason of the premises said alleged note and warrant of attorney given by the said James A. Palmer to plaintiff, the judgment rendered thereon and the writ of execution levied thereunder and the seizure of said goods and chattels under said writ, were all null and void, and of no effect so far as the same relate to or affect said firm of Palmer & McGrath, the goods and chattels aforesaid and the proceeds of the sale thereof; if said judgment, execution and levy are permitted to stand and the
The defendant avers that by reason of the premises it and the First National Bank of Athens have the first and best lien upon said fund and that their liens thereon are equal.
The said judgment rendered in favor of this defendant and against said firm of Palmer & Mc-Grath as aforesaid was rendered upon a promissory note executed and delivered by said firm to this defendant for a debt and liability of said firm or partnership, said property levied upon and sold as aforesaid was the partnership property of said firm.
Wherefore this defendant prays that said pretended judgment, execution, and levy in favor of the plaintiff, as aforesaid, may be vacated and can-celled and held to be null and void so far as relates to said partnership, said chattel property and said fund derived from the sale thereof; that the plaintiff may be held and adjudged to have no interest in or lien upon said fund; and, that the same may be distributed pro rata between this defendant and the First National Bank of Athens, and for all other equitable relief to which this defendant may be entitled.”
To this attack on its judgment, the plaintiff in error replied by making a similar attack on the judgment of the bank, and on that of James D. Brown. These two judgments, it alleges, were founded on promissory notes, and warrants of attorney to confess judgments in all respects like the note and warrant of attorney on which its judgment rested; and that those two promissory notes and warrants of attorney were executed by the
The two last named judgment creditors not having been made parties to the action, were, of course, not bound by any judgment that might be rendered therein. The plaintiff below, The Geo. W. McAlpin Co., appealed the action to the circuit court and that court, upon the motions of the bank and James D. Brown dismissed the appeal on the ground that the action was for the recovery of money only and therefore not appealable. Thereupon the plaintiff in error, The Geo. W. McAlpin Co., brought- the cause on error to this court to reverse the judgment of dismissal. It then instituted proceédings in error in the circuit court to reverse the judgment of the court of common pleas thus rendered in favor of James D. Brown and the bank, and that judgment being affirmed by the circuit court, it brought the cause here by another proceeding in error, the object of which is to obtain a reversal of that judgment of the circuit court which affirmed the judgment of the court of common pleas.
Two distinct proceedings in error, are before us both, however, arising out of the same original
1. It will have been observed that the defendants in error, The First National Bank of Athens and James D. Brown, on certain grounds set forth by them, in their respective cross-petitions assailed the validity of the judgment recovered by the plaintiff in error in Vinton county, and that the plaintiff in error in turn on substantially the same grounds assailed the validity of the judgments, that the bank and Brown had respectively recovered there. The cause was tried upon these pleadings in the court of common pleas and judgment recovered by the defendants, the bank and Brown. This judgment necessarily implies that the court found that the judgments recovered by Brown and the bank in Vinton county were valid and that th¿ judgment recovered there by the plaintiff in error was invalid, no bill of exceptions was taken, so that neither the circuit court nor this court was informed concerning the evidence introduced at the trial in the court of common pleas respecting the validity of any of these judgments. The plaintiff in error made its attack on the judgments of the bank and Brown, in a pleading, denominated a reply, and which was filed in answer to the cross-petition of those two defendants. It was treated by the court, and all parties, as the last pleading allowable under our code of civil procedure and its averments, therefore, under section 5081, Revised Statutes, should be “deemed controverted.” This, of course, cast upon the plaintiff in error the burden
We must also, for the same reasons, presume that every allegation made by Brown and the bank, in their respective cross-petitions, assailing the validity of the judgment recovered by plaintiff in error in Vinton county was sustained by evidence. The only question, therefore, before this court, or that was before the circuit court respecting this branch of the case, is the sufficiency of those allegations.
The pleadings disclose that Palmer & McGrath was a mercantile partnership consisting’ of James A. Palmer and Charles D. McGrath, engag’ed in business at Athens, Ohio; that on the 6th day of October, 1893, McGrath was absent from the state; that his copartner, Palmer, being left in chargé of the business, executed in his own name and in the name of the firm for a valid obligation of the firm, a promissory note to The Geo. W. McAlpin Co., plaintiff in error; that said promissory note had written thereon a warrant of attorney, authorizing any attorney of any court of record in this state, to appear in any court of record herein, and confess judgment against said James A. Palmer and said partnership for the amount due on the note, with interest and costs and to release all errors and rights of appeal; which warrant of attorney was executed by said Palmer individually and by him on behalf of the firm, and that this execution
These cases go very far towards establishing the general doctrine, that one partner has no implied authority to bind his copartner by a warrant to confess judgment, and that if he attempts to do so, relief against the judgment will be granted to the non-assenting partner, upon his own application made in the action to the court that rendered the judgment, but they afford very little aid in determining whether upon that ground he can attack the judgment collaterally, or whether the creditors of the firm upon that ground alone can attack it at all. Nor do these cases necessarily deny that a power of the character under consideration may not be inferred from the circumstances under which a managing partner of a concern has exercised it.
Counsel for defendants in error have cited many other cases bearing on this question of implied authority. Hopper v. Lucas, 86 Ind., 43; Rathbone v. Drakeford, 6 Bingham, 375; Christy v. Sherman, 10 Ia., 535; Edwards v. Pitzer, 12 Ia., 607; Eversson v. Gehrman, 1 Abb., (N Y.) Prac., 167; Shedd
Some well-considered cases have held, that the creditors of the firm would not be heard to impeach a judgment confessed against a firm by one member thereof. “A creditor of a given firm cannot raise the point that one partner did not authorize another partner to sign a power of attorney to confess judgment upon a note given to another creditor.” Farwell et al. v. Cook et al., 42 Ill. App., 291. “If one partner confess a judgment against-the firm for a partnership debt, another creditor of the firm can interpose no objection to the.judgment on that account.” Grier & Co. v. Hood, 25 Pa., 430.
An actual, but irregular judgment entered on the records of a court without authority, can only be reversed on a writ of error, or set aside in the court below on motion, but only at the instance of the defendant.
Other cases hold that while judgments confessed in the name of the firm by one partner for a firm debt will not bind the other partner in respect of his separate estate it will bind the firm property. This doctriue is asserted by the courts of Pennsylvania in a number of cases. “One partner has power to confess a judgment against the firm for a partnership debt, but such judgment will not affect the persons or separate estate of the other partners, Grier & Co. v. Hood, 25 Pa., 430: “The interest of all the partners in the partnership property may be sold under an execution upon a judgment confessed by a single partner in the name of the firm and for a firm debt.” Ross v. Howell, 84 Pa., 129; Boyd v. Thompson & Coxe, 153 Pa., 78; Franklin v. Morris et al. (Supreme Court of Pennsylvania, 1893), 26 Atr. R., 364; Kneib v. Groves, 72 Pa., 104.
The appellate court of Illinois held that such judgments were not void, but only voidable at the election of the non-assenting partner. “While a partner is not authorized to sign the firm name to a power of attorney to confess judgment, a judgment entered under such a power is not void, but voidable only as to and at the instance of him whose name has thus been unwarrantably made use of. ’ ’ Uhlendorff v. Kaufman et al., 41 Ill. App., 373.
The question of the right of one judgment creditor of a firm to impeach, collaterally, or at all, a judgment rendered against the firm in favor of another firm creditor, upon a warrant of attorney executed in the name and on behalf of the firm by one partner only is before us for the first time.
If only voidable, and free from any taint of fraud, it would seem both on principle and authority that it could be impeached only by an application addressed to the court in which it was rendered, and by the non-assenting partner himself. None of the large number of cases cited by defendants in error, go to the extent of expressly holding that a judgment confessed against a firm on a warrant of attorney executed by one partner is void as to the partnership property; most of them simply holding that a judgment thus confessed would be set aside on the motion of the non-assenting partner; and in a considerable number of those cases, fraud and collusion between the creditor and confessing partner, or a mistake as to bhe amount due, was alleged as additional ground for relief and was the real basis on which it was made to rest.
The Supreme Court of Pennsylvania in a number of cases has sustained the validity of judgments thus recovered as against the property of the partnership, though liable to be impeached by the non-assenting partner in respect of its operation on his separate property. Ross v. Howell, 84 Pa. St., 129; Boyd v. Thompson, 153 Pa., 78.
The Ohio cases do not combat this view of the subject. True, they do not directly speak • to it, but in so far as they go, their utterances are in harmony with this doctrine. . Lessee of Matthews v. Thompson, 3 Ohio, 272; Douglas v. McCoy, 5 Ohio, 522; Critchfield v. Porter, 3 Ohio, 518-522; Huntington et al. v. Finch & Co., 3 Ohio St., 445; Martin v. Trustees of Belmont Bank of St. Clairsville, 13 Ohio, 250. In McKee v. Bank, 7 Ohio, 522, the
The court in this opinion seems to have regarded the judgment thus confessed as one irregularly or improperly obtained only, for if the court had supposed it to have been absolutely void, that might well have been assigned as a ground, also, for denying relief in equity, at least where there was no complaint that the judgment was a cloud upon the title of complainant’s real estate. If the judgment had been void, the sheriff would be a trespasser whenever he seized the property of complainant by virtue of an execution issued on the
In the case before us no question arises respecting the operation of the judgment, thus confessed, upon the separate property of the non-assenting partner, nor, even, respecting the right of such partner to set aside the judgment as to the firm’s property; the attack upon the validity of the judgment is not made by him, but by creditors of the partnership, who seek its cancellation, because if not cancelled the execution which was issued on it will withdraw from the operation of their judgments and executions a portion of the fund in controversy.
The judgment thus assailed was taken in good faith upon a promissory note and warrant of attorney executed by that member of the firm who was engaged in the active management of its affairs, the other partner was absent from the state and could not be consulted; it is not assailed for fraud or collusion between the creditor and the partner by whose authority it was confessed; it must under those circumstances be taken to represent a sum of money actually due from the firm to the judgment creditor. The absent partner may not have expressly authorized his copartner to execute the warrant of attorney in question, nor has he since its rendition either assented to or repudiated it. The power of attorney was executed in the name and purported to be the act of the firm. The statute of Ohio, section 5324, Revised Statutes, that regulates a confession of judgment upon warrant of attorney, requires the warrant to be produced to the court before which the judgment is confessed. When thus produced, it becomes evidence of the authority of the attorney to confess the judgment,
This court, recently, has had occasion to consider the authority of one partner, in the absence of a copartner, over the affairs of the concern, in a connection bearing some analogy to the question under discussion.
In Holland et al. v. Drake et al., 29 Ohio St., 441, this court held that: ‘ ‘One of the members of an insolvent firm cannot, either before or after dissolution of the partnership, make a valid assignment of all its effects for the benefit of creditors, against the will of a copartner, or without his assent when he is present or accessible.” This principle respecting the rights of a partner who is present or accessible, was recognized and approved by this court in McGrath et al. v. Cowen et al., decided at the present term of this court. Notwithstanding the recognition of this principle in those cases, this court held in the case of The H. B. Clafflin Co. et al. v. Evans et al., 55 Ohio St., 183, that: “A managing partner intrusted with the sole charge of the business and effects of the firm, may, in case of its insolvencjq make a valid assignment of its property for the benefit of its creditors, without having obtained the consent of a co-partner who is a nonresident of the state where the business is carried on, and absent therefrom; the assent of the absent partner to the assignment, in such case will be presumed.”
That case in no way conflicts with our conclusions in the case under consideration. In that ease the attack on the judgment was made by the defendant himself, and was regarded by this court as a direct attack; while in .the 'Case under consideration, the judgment is collaterally assailed by strangers.
2. The plaintiff in error sought to recover its proportion .of a sum of money that was in the hands of Finsterwald as sheriff, it made him alone, defendant to the action brought by it for that purpose; the action was against him as an individual and not as sheriff. ■ The petition disclosed that the fund in the defendant’s custody was the proceeds of the sale of a stock of merchandise sold by the defendant as sheriff; that the merchandise sold by him was seized and sold as the property of Palmer & McGrath, and that neither the firm nor its members had any other property. The sum realized was $6,000.00; that five judgments had been recovered against the partnership, by as many different creditors, at the same term of the court of common pleas, and that executions had been issued on each judgment within ten days after the close of the term of court at which they had been rendered; that these judg'ments aggregated nearly $12,000.00.
By virtue of section 5382, Revised Statutes, each of the five judgment creditors, was entitled to a pro rata share of the fund in the hands of the sheriff.
Conceding, however, that, if he joins issue with the plaintiff in such action on the facts, the issue is of right triable to a jury, because it arises in an action for the recovery of money only, it would not follow, necessarily, that an issue joined in such action between the plaintiff and other claimants of the fund, who had been substituted for the sheriff would be triable also by jury. If the substituted defendants by cross-petitions, sought, and set forth facts entitling them to distinct equitable relief, as a predicate to an order distributing the fund or a portion thereof to them, it would seem clear according to the doctrine announced by this court in Buckner v. Mear, 26 Ohio St., 514; and Gill v. Pelkey, 54 Ohio St., 348, the causes of action set forth in such cross-petitions would draw to
In Maginnis v. Schwab, 24 Ohio St., 336, this court held that where “an action was for the recovery of money and the original defendant caused a third party claiming the money to be made defendant in his place, and, depositing the money in court was discharged from liability therefor under said section (42) of the Code and an issue of fact was joined between the plaintiff and the substituted defendant material to the determination of the right of the parties to the money claimed by both;” it was held “that the action being for the recovery of money only, either party had a right under the Code, to demand a trial by jury * * • * and' that it was a case for second ‘trial’ * * * and not for appeal to the district court.” No cross-petition however was filed in this case by the substituted defendant calling for affirmative equitable relief; therefore, while it establishes the doctrine that the substitution of a new defendant, or perhaps defendants, for the original defendants does not of itself change the nature of the action, it in no way denies to such substituted defendant any right as respects pleading and mode of trial, that he could have exercised under our system of practice had he been an original defendant. A substituted defendant may bring forward any matter material to the assertion of his rights and pertinent to the cause, when he has done so, it would seem that his pleadings should be construed in the same way and an issue joined on them tried in the same manner as it would have been had he originally been made a party.'
It is necessary, therefore, to ascertain the state of the controversy when it was submitted to the
It appearing- to the court that the personal property in the petition described was taken by the defendant, as sheriff of Athens county, under an execution issued in favor of the First National Bank of Athens, and James D. Brown, now, on motion of said defendant and of the said First National Bank of Athens and James D. Brown, it is ordered that said First National Bank of Athens and James D. Brown, upon their giving security for costs hereiu, be and they are hereby substituted as parties-défendant in this action.
By this order the sheriff ceased to be other than a nominal party to the action. Thenceforward, the actual controversy was conducted by adverse claimants to the fund, between whom, in contemplation of law, the sheriff was neutral; he was simply the custodian of the fund, holding’ it subject to the order of the court. Indeed, as the record discloses no controversy over the amount of the fund, he might have paid it into court, in which case he would have been no loager subject to the orders of the court in respect of it.
The answer and cross-petition of James D. Brown (and that of the bank was in all respects the same) made no demand upon the plaintiff in error for money; nor did the plaintiff in error demand a judgment for money against either James I). Brown or the bank. Neither party had a money demand against the other, neither party was indebted to the other, nor had in his possession or under his control anything’ claimed by the other. Nor did the court render a jud gment for money against one party and in favor of the other.
“Wherefore this defendant prays that said pretended judgment, execution, and levy in favor of the plaintiff, as aforesaid, may be vacated and can-celled and held to be null and void so far as relates to said partnership, said chattel property and said fund derived from the sale thereof; that the plaintiff may be held and adjudged to have no interest in or lien upon said fund; and, that the same may be distributed pro rata between this defendant and the First National Bank of Athens, and for all other equitable relief to which this defendant may be entitled. ”
The court of common pleas granted this relief; it cancelled and set aside the judgment and execution of plaintiff in error. This was the gist of the controversy, and upon its determination the ultimate rights of the parties depended. The court having found for the cross-petitioners on this question, it ordered “As to the $6,000.00 now in the hands of said John Finsterwald, as sheriff of said county of Athens, Ohio, that he distribute the
This order was a mere incident that naturally followed and rested upon the cancellation of the judgment.and execution of plaintiff in error and could not have been made without such cancellation.
The causes of action set forth in the cross-petitions of Brown and the bank, were not, therefore; for the recovery of money only, but invoked the equitable powers of the court as a basis for an order distributing a fund in the custody of the law, and therefore ■ the parties were not entitled to demand a jury trial, and the cause was appealable.
Judgment reversed and cause remanded to the Circuit court.
Case-law data current through December 31, 2025. Source: CourtListener bulk data.