In Re Taub

U.S. Court of Appeals for the Second Circuit
In Re Taub, 4 F.2d 993 (2d Cir. 1924)
1924 U.S. App. LEXIS 2370

In Re Taub

Opinion

HOUGH, Circuit Judge

(after stating the facts as above). It is proven, and

was we think admitted, that Small and Taub were joint adventurers in the enterprise of procuring fruit in the vicinity of Yakima and marketing it in New York. The relation is now legally well known; it implies an agreement, but that agreement may not only be shown by parol (Burkardt v. Walsh, 49 App. Div. 634, 64 N. Y. S. 779); it may be implied in whole or in part from the conduct of the parties (33 C. J. 847, citing eases). The form of agreement is immaterial. It is the nature of the enterprise undertaken by a plurality of persons that controls. Reid v. Shaffer, 249 F. 553, 161 C. C. A. 479.

The relationship once established, the legal rights and obligations of the several adventurers in respect of their enterprise are substantially those of partners. In re Kessler (D. C.) 174 F. 906; Nestor v. Joseph (C. C. A.) 265 F. 246; Irvine v. Campbell, 121 Minn. 192, 141 N. W. 108, Ann. Cas. 1914C, 689.

This particular adventure grew out of a visit paid by Taub to the neighborhood of Yakima some considerable time before the occurrences which gave rise to this suit. The inference is necessary that what was done as above set forth was the result of an agreement to do it made between Small and Taub. That agreement was that Small was to use the property acquired for joint account — i. e., the fruit—as a means of borrowing money; that is, negotiating drafts on Taub upon the faith of the bills of lading. As Small drew the drafts, he remained personally liable to the trust company or any subsequent draft holder. Therefore Small was authorized- or empowered to borrow for the joint enterprise; such power is one coupled with an interest, and subject to no revocation. The Seattle, 170 F. 284, 95 C. C. A. 480. That he borrowed in his individual name bj *995 •drawing Ms individual draft does not show that the borrowing was for Ms individual benefit. Gutman v. Schreiber, 173 App. Div. 670, 160 N. Y. S. 243, aff'd Gutman v. Livingston, 226 N. Y. 582, 123 N. E. 868.

We thus conclude that, when Small discounted his drafts with the trust company, he did so substantially as one partner might Lave done for tbe benefit of a partnership ; he did it by authority of Taub, and for the benefit of Taub, as well as himself— i. e., for the joint business. His individual liability to pay for the fruit, or to pay the trust company, which had in effect paid for the fruit, was in the nature of an advance made, as it was certainly a liability incurred for the benefit of the joint business. And one joint adventurer, having made advances and having in Ms possession property of the joint enterprise, may retain it until Ms lien for advances is discharged. Burhans v. Jefferson, 76 F. 25, 22 C. C. A. 25.

When Small shipped the fruit to Taub under a straight bill, he unquestionably put the legal title in Taub, but equitably tbe fruit was joint property, and Small still had the interest of a partner in it. The transfer of the straight bills from Small to the hank gave the bank tbe same right in the goods evidenced by the bills that Small himself had possessed. Hinrichs v. Standard, etc., Bank (C. C. A.) 279 F. 382, at page 385.

Thus Taub was, at date of bankruptcy, conducting a business in New York in Ms own single name; but be had as a side interest this joint adventure or quasi partnership with Small. The latter had an interest in the joint assets, which authorized Mm to use them for the joint benefit; e. g., as collateral. For his own advances, or otherwise to protect Ms rights, he, like a partner, had a lien, enforceable in equity on the partnership assets. In re Kessler (D. C.) 174 F. 906. If the amount due to any adventurer is unliquidated, a bill in equity will lie, as for a liquidation of partnership affairs. O’Hara v. Harman, 14 App. Div. 167, 43 N. Y. S. 556; Reid v. Shaffer, supra.

Small, by his discount of drafts and delivery of bills of lading, transferred Ms rights to the trust company, and, bankruptcy being equity, the questions are: (1) Whether the bare legal title outstanding in Taub changes the rights of any party; and (2) whether the trustee in bankruptcy stands in any better position than Taub himself. No reason is or can he suggested why the vesting of legal title in Taub, per so, changed the equitable rights of those who had cooperated with Mm, in conducting a lawful business.

A bankruptcy trustee, ever since the amendment of June 25, 1910, to section 47 (Comp. St. § 9631), in cases unaffected (as here) by any fraud of the bankrupt toward creditors, takes the property in the same plight and condition in which the bankrupt held it, and subject to all equities and rights imposed upon it when in the bankrupt’s hands. Rem. § 1402, citing eases.

We will assume that, notwithstanding the diversion orders, Taub held legal title to these 42 carloads of fruit; no holding is necessary on the point. But, even with such assumption, his equitable title, Ms right as a joint adventurer, was no more than what would be coming to or due by him on settlement of joint account. Therefore, since no creditor or creditors acting through the trustee have shown any superior equity or lien, the lion of the trust company in succession to Small must prevail. The interest of the estate in bankruptcy extends only to a surplus after reimbursing Small—i. e., the trust company—and there is no surplus. In re McConnell (D. C.) 197 F. 438; In re Kessler, supra.

On October 16th last we passed an order herein, on the motion of the Yakima Trust Company, requiring petitioner to print certain additional documents and testimony as a portion of the record. The order provided that, in the event of our considering said documents, etc., unnecessary, the cost of printing the same should be imposed upon respondent trust company., We do think such printing unnecessary, and accordingly impose the costs of printing upon the respondent trust company.

After due allowance is made for the foregoing expense, order affirmed, with costs.

Reference

Full Case Name
In Re TAUB. Petition of DALZIEL
Cited By
11 cases
Status
Published