Emerson v. Senter - 118 U.S. 3 (1886)
U.S. Supreme Court
Emerson v. Senter, 118 U.S. 3 (1886)
Emerson v. Senter
Submitted March 9, 1886
Decided April 12, 1886
118 U.S. 3
A sole surviving partner of an insolvent firm, who is himself insolvent, may make a general assignment of all the firm's assets for the benefit of all joint creditors, with preferences to some of them, and such assignment is not invalidated by the fact that the assignor fraudulently withheld from the schedules certain partnership property for his own benefit without the knowledge of the assignee or of the beneficiaries of the trust.
This suit was commenced by the defendants in error as plaintiffs, creditors of the firm of A. Butler & Co. One Moores, sole surviving partner, was defendant, and property which had belonged to the firm was attached. The plaintiff in error interpleaded, setting up title to the attached property under an assignment from Moores for the benefit of the creditors of the firm. Judgment for plaintiffs, to review which the interpleading creditor sued out this writ of error. The facts are stated by the Court as follows:
Butler and Moores constituted a mercantile firm doing business
in the State of Arkansas under the name of A. Butler & Co. The former died on the 17th day of December, 1881, and thereafter, February 23, 1882, Moores, as surviving partner, executed a deed of assignment to Emerson, the plaintiff in error. The deed recited the death of Butler, the insufficiency of assets to discharge the partnership debts, and the desire of Moores, as surviving partner, to provide for their payment, so far as in his power, "by an assignment of all the property belonging to him as such surviving partner." The grantor, for the purposes named, and in consideration of one dollar paid by the grantee, transferred and assigned to Emerson, his successors and assigns,
"all the stock in trade, goods, wares, and merchandise, debts, choses in action, property, and effects of every description, belonging to the said firm of A. Butler & Co.,"
or to the grantor, "as such surviving partner, mentioned, contained, or referred to in the schedule hereunto annexed." The conveyance was in trust that the assignee take possession of the property described, "sell the same as provided by law, and, with all reasonable dispatch," collect the debts and demands assigned, and apply the proceeds 1. to pay all the just and reasonable expenses, costs, and charges of executing the assignment, and carrying into effect the trust thereby created; 2. to pay in full, if the residue of the proceeds is sufficient for that purpose, all the debts and liabilities then due, or to become due, from Moores, as surviving partner, with interest thereon, to certain preferred creditors, among whom were the defendants in error, Senter & Co.; 3. to apply to balance to all other debts and liabilities of A. Butler & Co., or of Moores, as surviving partner; 4. to repay the latter, as surviving partner, whatever may remain after meeting the costs and expenses of the trust, and the amounts due respectively to other creditors.
The deed invested the assignee with all the power and authority necessary to the full execution of the trust created by it. It was accepted by Emerson and by some of the preferred creditors therein mentioned.
The debts of the firm largely exceeded its assets, and Moores, individually as well as surviving partner, was insolvent when he made the assignment. In addition to the recitals in the deed of a desire to make an assignment of all the property in his hands as surviving partner, Moores represented to his creditors that he had done so. Nevertheless, for the purpose of hindering and cheating his creditors, he omitted from his schedule five hundred dollars worth of goods which belonged to him as surviving partner, and with like intent, left out of the schedule and withheld from his assignee one thousand dollars in cash and other property which he held as surviving partner, appropriating to his own use the property so omitted from the schedule.
Neither the assignee nor the preferred creditors who accepted the deed had any knowledge of the alleged fraud of the grantor until after their acceptance of its provisions. Upon an issue formed between Emerson, asserting the validity of the deed, and Senter & Co., who as creditors of the firm attached the assigned effects as the property of the surviving partner, the deed of assignment was held to be void and the claim of the assignee denied.