Public-domain · open source
OpenJurist

81 Pa. 377

Foster v. Barnes

Supreme Court of Pennsylvania

Decided May 8, 1876

Supreme Court of Pennsylvania · decided 1876-05-08

<p>1. S. and II., partners in a bakery, owned real estate which was used for partnership purposes ; they sold one-third of the interest in the firm to B., and afterwards conveyed to him one-third of the real estate. W. afterwards entered a judgment against B. S. died, and in proceedings in' equity by his administrators, against II. and B. as surviving partners, an account was decreed and a receiver appointed ; he petitioned the court, showing that the personal property was not sufficient to pay the debts, and asking for an order to sell the real estate, which was made, describing it as the property “ of the late firm of S., II. & B.under it the real estate was sold to 1?. Under W.’s judgment B.’s interest in the real estate was sold by the sheriff to W., the jury found that it was not partnership property. Held, that the sale by the receiver did not pass B.’s separate interest in the real estate discharged of W.’s judgment, but that he took that interest under the sheriff’s sale.</p> <p>2. On a judgment at law against a partnership for a firm debt on'a decree in equity for the payment of money, the separate property of each partner may be sold and the purchaser will take a title clear of the lien of judgments.</p> <p>3. As to the members of the firm — they being parties to the bill — the decree was conclusive that the real estate was partnership property; and the sale would pass whatever interest each had in it.</p> <p>4. The decree would not bind an adverse title nor would the title of one not a party to the proceeding be divested by the receiver’s sale.</p> <p>5. A recorded agreement by B. that his interest in the real estate was partnership property, would have affected only subsequent creditors; after the entry of thejudgment, he could not change the character of the real estate so as to affect the lien.</p> <p>6. For all partnership purposes, (except conveyance under the Statute of Frauds) making the real estate partnership property, changed it to personalty.</p> <p>7. As to all persons not parties to the proceedings in equity and not bound by the decree it remained an open question whether the real estate sold by the receiver was the property of S., H. & B.</p> <p>8. It is the equity which each partner has to have the partnership assets applied first to partnership debts that he may be relieved from individual liability, which gives partnership creditors priority of payment.</p> <p>9. W. would have had no right to participate in the fund raised from the receiver’s sale : it must have gone to the payment of firm debts.</p>

Good law ✅— No negative treatment on recordhow we know

Decided 1876-05-08

How this case has been cited

Cited by 4 later decisions — most recently December 1935

2 federal appellate · 2 state decisions

101876188018901900191019201930decided

Later decisions citing this case, by decade. The current decade is in progress, and our corpus holds fewer opinions from the most recent years, so the latest bars are undercounted — not a real decline.

View the full empirical analysis of this case →

Mr. Justice Sharswood

¶1delivered the opinion of the court,

¶2*384The verdict of the jury, under instructions from, the court, in which we find no error of which the plaintiff has any right to complain, has established that the premises never were the partnership property of Schlager, Hillers & Barnes. This dispenses with the necessity of considering either that question or the knowledge or notice of the plaintiff.

¶3The question in the cause is then reduced to this, whether the sale by the receiver under the order of the court did pass the separate interest of Wesley D. Barnes, to the purchaser, clear and discharged of the lien of the judgment, in favor of the plaintiff below.

¶4Undoubtedly on a judgment at law against a partnership for a firm debt, the separate property of each partner may be levied upon and sold, and the purchaser will take a title clear of the lien of judgments. The same result must follow in a sale under a decree of a court of equity for the payment of money. By the Act of Assembly of March 29th 1859, Pamph. L. 289, it is declared, “ that decrees in equity for the payment of money, shall be and constitute a lien on the real estate of the defendants or debtors named in the decree, in the manner, for the like period, and with the same force and effect as the lien of judgments rendered by and in the common-la,w courts of this Commonwealth.” But the decree for the sale by the receiver in this case was special, “ the following described property of the late firm of Schlager, Hillers & Barnes.” As to the members of the firm who were parties to the bill, that decree was conclusive that the premises were partnership property. They could have been heard in opposition to the decree and to the confirmation of the sale. They would be estopped from alleging as against the purchaser that it was 'not partnership property, and the sale would of course pass whatever interest each one of them had in it. But how are the rights of the plaintiff below, whose judgment was a lien upon the undivided third of the property of one of the partners, held by him according to the paper title, and as the verdict establishes, as a tenant in common, to be affected ?' It is not pretended that it could have bound an adverse title. The title of a third person not a party to the proceeding could not have been divested by the sale. When the judgment of the plaintiff below was entered, its lien attached upon the title of Wesley D. Barnes, as a tenant in common of real estate. No act of Wesley D. Barnes, after that, could change its character so as to affect or injure the lien. If he had agreed and put it upon record, that the land should be partnership property, that could only affect subsequent creditors who w;ould have constructive notice of it. For all purposes connected with the partnership, e-xcept sale and conveyance under the stringent provisions of the Statute of Frauds, that change is from real to personal property. As to all third persons not parties to the proceeding *385in equity, and not therefore bound by the decree, it remained an open question whether the premises sold under the order were or were not “ property of the late firm of Schlager, Hillers & Barnes.” The bill was merely for an account of the partnership business “ and to pay over to the complainant whatever may be justly due them therefrom, and that a receiver may be appointed to take charge of and wind up ,the said business.” It is the equity of each of the partners that the partnership assets shall be applied in the first instance to the payment of partnership debts, that they may be relieved from their individual liabilities for those debts, which gives partnership creditors any right to priority of payment. The fund raised by the sale under this order must have gone to the payment of firm debts. William H. Barnes, the plaintiff below, would have had no right to participate in the fund. So far as he was concerned it was the same thing as if the sale had been of the right, title and interest of an entire stranger. The estoppel upon the parties to the bill, which concludes them from averring anything against the force and effect of the decree, does not close his mouth. On the whole, then, we find no error in this record.

¶5Judgment affirmed.

/81/pa/377 · .json · Public domain