Glenn v. Gill

I dissent from so much of the opinion filed in this case as decides that the fund in controversy is the separate estate of E. M. Kerr, as against the creditors of Kerr fy Co. I do not consider that question as having been so determined on the former appeal. The creditors were not then before the court; Kerr and Potter were the only parties to the record; the dissolution of the firm and the technical insolvency of the partners were unknown to the court, although these facts had occurred pending the appeal. The court evidently intended to confine themselves to the case as then made by the record. In alluding to the case of Ex-parte Digby, 38 Eng.

Com. Law, 495, which had been relied upon in the argument, the ¹⁵⁶ court said, ( 6 Gill, 424 :) “That was a controversy between the representatives of the joint creditors on the one hand, and the separate creditors on the other. Now, as we have before stated, this is not a controversy between creditors, involving the question of joint and separate claims, but is simply one, involving the question whether Potter was the actual partner of Kerr, and had a lien on the stock and effects of the concern? If this were an application by a creditor, charging that Kerr and Potter were partners in trade, and that he was a creditor of the firm, the dissolution and the insolvency of the firm, and the improper appropriation of the funds of the firm, to the payment of the separate creditors, there might be some analogy.” And, as if for the purpose of excluding the conclusion now asserted by the appellant, the court also said: “ In this case we do not decide any question as to the rights of creditors.” It appears that the appellant, as trustee of Kerr, and sundry persons daiming to be creditors of the firm, have since become parties to the cause, and that the controversy has assumed the character ascribed, by the Court of Appeals, to the case of Ex-parte Digby, the contest now being between Kerr’s trustee and the partnership creditors of Kerr & Co. This ca.se is not precisely like any to which we have been referred, Under its peculiar circumstances, the preference asserted in behalf of the joint creditors may, in my judgment, be maintained, notwithstanding the principle upon which, in ordinary cases of partnerships, the rights of separate and joint creditors are ascertained and enforced.

If Potter had had any interest in the stock in trade, however trifling, he and Kerr would have been partners inter sese, and neither they nor the creditors of either, could have resisted the right of the joint creditors to be first paid out of the assets of the firm. It was, however, a partnership as to third persons—something ' more than a mere joint and several liability for all the debts of the concern—a relation which, in partnerships, unaccompanied by such private stipulations, confers certain rights on those dealing with them as partners, peculiar to that species ¹⁵⁷ of joint undertaking. Having, by signs, cards and otherwise, held themselves out as partners, and thereby induced others to deal with them as such, those who wTere thus misled should not be deprived of the piiorities to which they would be entitled but for this unknown agreement, unless their claim can be resisted on some stern and unbending rule of equity. But, then, it is said that this is a derivative equity, and cannot be enforced in thé present case, because Potter has no lien upon this property.

This is the general rule. But I apprehend that it applies to partnerships made and conducted in good faith, and cannot be invoked in aid of a party who has held himself out to his customers as a partner, when, in point of fact, no partnership existed as between him and the other advertised member of the firm. I do not perceive any reason why equity should not grant relief in such a case of misrepresentation, as well as in others