59 Mass. 224 - Dearborn v. Keith — 59 Mass. 224

Albion Dearborn vs. Robert Keith. If one of several partners becomes an insolvent upon his own petition, setting forth that he is individually and as a partner insolvent, and an assignment is accordingly made of his separate estate, and of his interest in the joint estate of the partnership after payment of the debts of the firm, he cannot afterwards institute proceedings in insolvency against the firm, on a petition alleging the insolvency of the partnership, unless he allege also that the partners are individually insolvent. This was a petition, filed at the present term, under the equitable jurisdiction of the court in matters of insolvency, from which and the papers accompanying, the following case appeared: — The petitioner, in August, 1846, then and ever since of Quincy, in the county of Norfolk, entered into a copartnership with Robert Keith, of Boston, for the purpose of carrying on the business of dealing in lumber in Quincy, under the firm and style of A. Dearborn and company, and went into business accordingly. On the 20th of September, Keith presented a petition to the commissioner of insolvency for this county, describing himself as a member of the said firm ; representing that he was individually and as a copartner indebted in divers large sums of money, amounting in the whole to not less than $200, which he was -inable to pay in full; and expressing a wish to surrender all his individual and partnership property, as aforesaid, for the benefit of his individual and partnership creditors. The commissioner thereupon issued a warrant, directing the messenger to take possession of “ all the joint and separate estate, real and personal,” of the insolvent; and subsequently, upon the choice of an assignee, conveyed to him “ all the interest of said debtor, being the balance which may be due to him on the settlement of the partnership estate, and all the separate estate, real and personal, of the said debtor.” The petitioner, from thenceforward, continued the business of dealing in lumber, and proceeded in the sale of the partnership effects, and in the adjustment of the affairs of the firm, for the purpose of employing the assets thereof in paying their debts. On the 13th of November, 1849, Keith presented a petition to the commissioner, in which he alleged that he was a co-partner in trade with Dearborn, under the firm of “ A. Dearborn and company” ; that the firm was indebted in divers sums of money, amounting in the whole to not less than two hundred dollars, which they were unable to pay in full; and that he desired to surrender all the firm’s property for the benefit of their creditors. On this petition, the commissioner issued a warrant directing the messenger “ to take possession of all the estate, real and personal, of the said insolvent debtors.” The petitioner alleged, that by the proceedings upon the _ .rst petition, the partnership was entirely and absolutely dissolved, and that any right, title or interest, which Keith previously had in the partnership assets, became thereby vested in his assignee. He also alleged, that the commissioner had no jurisdiction in the premises, and that the proceedings under the second petition were illegal and void; wherefore he prayed, that the warrant issued thereon might be superseded, and the commissioner directed to proceed no further under the same. Ml S. Clarke, for the petitioner. Wl G. Russell, for the respondent. — By the Court. (majority) By the Court. The twenty-first section of the act or 1838, c. 163, upon which the question arises, in the present case, has been the subject of much consideration; and though plain enough as to those cases which clearly come within it, is very difficult of construction in its application to those in which it is doubtful whether they are embraced by its provisions. The power of one partner, under this section, to affect the separate estate of his partners, as well as the property of the firm, has been brought before the court in several cases. In the case of Parker v. Phillips, 2 Cush. 175, it was held, that if one partner, after a dissolution, had authority to institute proceedings in insolvency, upon which a warrant might issue against his separate property and the property of the firm, this could only take place when both the firm and the individual partner were insolvent, and so alleged to be in their petition ; but, whether one partner had the authority in question, was not decided. In the present case, without deciding whether one partner has the power referred to,or not, it is sufficient to say, that it is not alleged and does not appear, by the petition to the commissioner, that the partners individually were insolvent. The petition alleges merely' that the firm was insolvent, and that the petitioner desired to surrender all the property of the firm for the benefit of their creditors. The first petition did not allege, that the firm was insolvent, but only that Keith the petitioner, one of the partners, was insolvent; it did not consequently extend to the property, either separate or joint, of Dearborn, the other partner; and such was the understanding of the commissioner, who issued his warrant accordingly against the separate and joint estate of Keith only. The effect of the first proceedings was to dissolve the partnership, and throw upon the solvent partner the duty of closing up the business, at least so far as the insolvent was concerned; and if a second proceeding could now be instituted against the firm, without superseding and annulling the first, great inconvenience, leading to a confusion of rights and powers, might result. We are of opinion, for the reasons suggested, that the proceedings under the second petition must be superseded, and the property taken by the messenger, under the warrant issued thereupon, be restored. This case was decided before that of Thompson v. Thompson, 4 Cush. 127, in which it was held, that it is in the power of one partner, after a dissolution, to institute proceedings in insolvency, so as to affect not only his own property and the property of the firm, but also the separate estate of his partners.