United States v. Hack - 33 U.S. 271 (1834)
U.S. Supreme Court
United States v. Hack, 33 U.S. 8 Pet. 271 271 (1834)
United States v. Hack
33 U.S. (8 Pet.) 271
The priority of the United States does not extend so as to take the property of a partner from partnership effects to pay a separate debt, due by such partner to the United States, when the partnership effects are not sufficient to satisfy the creditors of the partnership.
It is a rule too well settled to be now called in question that the interest of each partner in the partnership property is his share in the surplus after the partnership debts are paid, and that surplus only is liable for the separate debts of such partner.
The United States instituted an action of assumpsit against the defendants in the Circuit Court of the United States for the District of Maryland. The defendants pleaded nonassumpsit, and the case was submitted to the court by the counsel for the plaintiffs and the defendants on the following statement of facts agreed.
"It is agreed between the parties in this case by their counsel that John Stouffer is largely indebted to the plaintiffs on sundry judgments rendered against him on custom house bonds; that the said John Stouffer was, at the date of the said bonds and of the rendition of the said judgments, a partner in trade with his brother Jacob Stouffer, and so continued until the execution of the deed of trust hereinafter referred to; that the said John and Jacob Stouffer, becoming embarrassed and insolvent in their affairs, on 19 May, 1832, executed a deed of trust to and in favor of the defendants, of all their joint and partnership property for the benefit of their joint and partnership creditors, having no private or undivided estate; that the said property is not sufficient for the payment of all said creditors, but that the said John Stouffer's undivided half, now in the possession of the said trustees, amounts to $974.71."
"It is also agreed that the amount of the unsatisfied judgments of the United States against the said John Stouffer is at
this date, $2,100 and upwards, after exhausting his private and individual estate. And the amount now in the possession of the aforesaid trustees, being the proceeds of the said partnership estate, is $1,949.42, one-half of which is $974.71."
"Upon the foregoing statement of facts, the district attorney contends that the plaintiffs are entitled to receive from the defendants the sum of $974.71, being the proceeds of John Stouffer's undivided half of, in, and to the aforesaid partnership estate, to be applied to the satisfaction of the aforesaid judgments recovered against the said John Stouffer."
"The counsel for the defendants contends that the plaintiffs are not entitled to receive anything from the defendants in this action, on the ground that the money in their hands is the proceeds of partnership property, the whole of which is inadequate to the entire payment of the partnership debts, and that the plaintiffs are creditors of John Stouffer only, and not of the said partners. The question submitted to this Court is whether the plaintiffs are entitled to recover from the defendants in this case the said sum of $974.71, being one-half of the aforesaid partnership estate. It is finally agreed that all errors in pleading be mutually released, and that either party shall have the privilege of prosecuting a writ of error to the Supreme Court of the United States."
The circuit court gave judgment for the defendants, and the United States prosecuted this writ of error.