Griffith v. Buck

Eccleston, J., delivered the opinion of this court. From the bill and other proceedings in this cause, it appears-that the defendant, Felix V. Durst, was at one time a member ©f the firm of Durst & Appier, carrying on the business of paper hangers- in Baltimore. That firm was dissolved, by mutual consent, on the 13th of May 1864, Appier retiring from,, and Durst retaining, the concern, he being solely and only authorized to settle the affairs of the firm. On the same day, Durst and John Edward Buck, the complainant; entered into articles of co-partnership; the business tobe carried on in the same warehouse or store, which had been occupied by the preceding firm.

Among other things it was agreed, that this second, co-partnership should commence and continue from the previous 28th of January 1854. The stock, good will and fixtures, being valued at the sum of $2607.09, the said Buck agreed to pay Durst $1303.54|-,'for one-half interest in the said concern; $1000. of said sum to be paid in cash, and a note-for the balance, payable in four weeks, to be given. The bill alleges, that Buck paid $818, in part of the $1000, and Durst admits the same. On the 30th of August 1854, Durst and Buck each, signed a written agreement, dissolving their co-partnership by mutual consent.

On the 1st day of September, in the same year, Buck executed the following instrument, to wit: “For and in consideration of five hundred dollars paid me. ¹⁰⁷ I have on this first day of September, eighteen hundred and Efty-four, sold to Felix V. Durst, all my interest and claim in the concern of Durst & Buck, doing business at the store No. 110, West Baltimore street. (Seal.) J. E. Buck.” “Witness — J. B. Vogt.” Upon the same first day of September, Durst executed a bill of sale in favor of G. S. Griffith, Michael & Bro., which firm consists of the defendants, Goldsborough S. Griffith, Henry Michael and Alexander Michael. The consideration stated is §2579.25, and the instrument on its face is an absolute bill of sale for all F. Y. Burst’s “right, claim and interest, in and to the stock of paper hangings, upholstering goods, window shades, Venetian and various other kinds of blinds, •and every article manufactured, or materials for manufacturing, all books of accounts, debts and notes due him, or the firm of Durst & Buck, also including all fixtures, tools, &c., contained in store, cellar and brick shop, of warehouse No. 110, Baltimore street.” Upon the dissolution, Buck withdrew and Durst remained. The day after the date of the bill of sale, the grantees named therein, took possession of the store and goods, &c.

On the fourteenth-of the same month, (.he complainant filed this bill, in which it is alleged, that the terms of the dissolution between Durst and Buck, provided that the former was to pay the latter or secure to him the sum of §818, brought by bim into the •concern, and the further sum of §200, for his profits, and that Durst should pay ail the debts which had been contracted by said firm, out of the stock of goods on hand and debts due to the firm, and take the said stock and debts for said purpose, and for his part of the partnership effects. That for the purpose of carrying out this agreement of dissolution, Durst obtained the note of G. S. Griffith, Michael & Bro., for §500; •and passed the same to Buck, payable six months after date, which note was obtained on the 1st of September 1854, in addition to which Buck also received from Burst his two promissory notes, one for §150, and the other for §250, payable at 730 days and four months respectively, he agreeing to pay Buck •the further sum of one hundred dollars in cash. The bill also ¹⁰⁸ alleges, that immediately after passing the note for $500, G, S. Griffith proposed that Durst should secure him against loss by reason of giving the note, by executing a mortgage upon the said stock of goods. But desiring to carry out his contract of dissolution with Buck, (with the terms of which contract Griffith was fully acquainted at the time of making the same,) Durst represented to Griffith, that the said stock of goods was responsible for the debts of the firm, and that he could not therefore encumber the same; that Griffith thereupon stated to Durst, that he should go ahead with the business, and that he, Griffith, would see that the said debts were paid, and thereupon Durst agreed to execute a mortgage; that he procured a mortgage bill of sale to be prepared, and presented it to Griffith, Who objected to it because there was an error in the names, and he then undertook to have an instrument properly prepared; which when written was presented to Durst, to be executed by him, and without reading it he did execute the same, supposing it to be a mortgage, and did not know to the contrary until the next day, when he discovered it to be an absolute bill of sale.

The bill alleges, that this instrument was fraudulent as well against Durst as against Buck. The prayer of the bill is, that J. S. Griffith, H. Michael and A. Michael, shall be restrained by injunction from selling, disposing of, or in any Way interfering with the said stock of goods, or from collecting the debts due the firm of Durst & Buck; that a receiver should be appointed to take charge of the same; that a decree should be passed setting aside the said bill of sale; and that such further and other relief might be granted as the court might deem proper. An injunction was issued and a receiver appointed, the same day on which the bill was filed. After the answers came in, a commission issued, and considerable testimony was taken under it.

The proof admits of no doubt, that the promissory note for $500, given by G. S. Griffith, Michael & Bro., and passed by Durst to Buck, constituted part of the consideration mentioned in the bill of sale. There is also strong evidence on ¹⁰⁹ the part of the grantees in said instrument, that the remaining portion of the consideration, consisted of an account due to them which Durst examined and said was correct, much the larger part thereof being due by Durst and Buck. VVe believe from the evidence, that Durst knew the contents of the bill of sale before it was executed; that Buck was acquainted with the whole arrangement; that after its completion he was satisfied with it, and that whilst it was in progress, both Durst and Buck were anxious to have it carried into effect. We do not consider it necessary to make a more minute examination of the evidence, in reference to the bona fides or the validity of the bill of sale.

There is no appeal on the part of the' complainant, and we agree to the correctness of that portion of the opinion of the judge below, in which he says: “The bill filed in this case, seeks relief upon the ground, that this bill of sale was not intended or understood by the said Durst to be an absolute bill of sale, but only an assignment by way of mortgage. I do not think that the evidence sustains this position, and cannot therefore grant any relief on this ground.” After this the judge says, “relief is also sought upon the ground, that the complainant Buck, is entitled to have the debts due by the firm of Durst & Buck, paid out of the partnership effects of that firm, transferred as aforesaid to said Griffith, Michael & Brother. I have no doubt, from what this case discloses, that it was the intention and agreement of the parties, that the note for $500, loaned by Griffith, Michael & Brother to Durst, to enable him to pay in part, to Buck, the consideration that he Durst had promised to pay Buck, upon the dissolution of their partnership, for his interest in the effects of the firm, should be secured by a transfer, of some kind, of the partnership property of that firm, taken by Durst under the terms of the dissolution, and I am of opinion that these effects should be applied to that purpose.” And the balance of these effects, the judge holds, are to be applied to the payment of the debts due from the firm of Durst & Buck. And a decree was passed in accordance with these views.

It will be seen, that neither the opinion nor the decree impugns ¹¹⁰ the bona fides of the transfer of Buck’s interest in the effects of the firm to bis partner Durst. On the contrary, the validity of the transfer is conceded, when those effects are made applicable, in the first place, to the payment of the note of $500, with interest. Which application is likewise a recognition of the validity of the bill of sale, qualified, however, as to the extent of its operation as a transfer or conveyance of the property included therein, by what the court considered to be a lien of Buck upon the same, for the payment of the debts of Durst .& Buck, under and by virtue of the terms of dissolution and sale by Buck to Durst. No part of this decree can be objected to by the complainant, he not having appealed.

The defendants, G. S. Griffith, Henry and Alexander Michael, are the only appellants; and they, of course, do not object to any portion of the ruling of the court, which is consistent with their own views. They ■do, however, object to the granting of an injunction, the appointment of a receiver, and to that portion of the decree . which directs any part of the proceeds of the property mentioned in the proceedings, shall be distributed among or applied toward the payment of the creditors of the firm of Durst & Buck. In this state of the case, it becomes necessary to ascertain whether, according to the terms of the dissolution between .Durst and Buck, and the sale or transfer of the interest of the .latter, in the joint effects, to the former, the latter retained a .lien, or quasi lien, upon the partnership property or effects, for the payment of the joint debts of the firm. The judge thought .that such a lien was retained by Buck; that G. S. Griffith, Michael & Brother knew it; that they also knew the debts of Durst & Buck were not paid; and that Durst took the effects of the concern, under an arrange-' ment to pay the debts of the firm; and the grantees in the bill of sale having taken these effects, with such knowledge, they were, with regard to them, in no better condition than Durst was before he gave the bill of sale.

And after considering the debts of Durst & Buck, as liens upon these effects, in the hands of Durst, prior to the execution of the bill of sale, the ¹¹¹ judge then says, these debts “are equally, under the circumstances of this case, a lien upon them in the hands of Griffith, Michael & Brother.” After stating what, according to the terms of the dissolution, was to be paid to Buck by Durst, the bill says, that he agreed “to pay all the debts which had been contracted by the firm of Durst & Buck, out of the stock of goods on hand, and debts due the firm, and take the said stock and debts for said purpose, and for his part of the partnership effects.” G. S. Griffith, H. Michael and A. Michael, in their answer, “deny that it was ever intimated to them, that the stock proposed to be sold, was responsible for the debts of said Durst & Buck, and that said Durst could not encumber it.” They also aver that they solemnly repudiated all responsibility for the debts and engagements of said firm; that Buck presented to them a paper, to be executed by them, purporting to bind them for said debts, but they utterly and wholly declined to have any thing to do with it. Durst filed his answer as a defendant. He was likewise examined as a witness, under an order of the court allowing his examination. The only evidence which professes to state the particular terms of the agreement, by which Durst became bound to discharge or pay the debts of Durst & Buck, is derived from Durst and J. II.

Vogt. Seeing, however, that the statements made by Durst, in regard to several matters relating to this case, have been so flatly contradicted by other witnesses, and in some respects, are so unreasonable and improbable,