Holloway v. Turner

Bryan, J., delivered the opinion of the Court. The parties to this suit were formerly partners, doing-business under the name of J. J. Turner and Company. After many years of successful business, they-dissolved their partnership and divided between themselves the greater portion of their assets. Some disputes arising between them, Turner filed a bill in equity in the Circuit Court of Baltimore City, for an account of the unsettled affairs of the partnership, and for the appointment of a receiver to take charge of the undistributed assets of the firm.

Receivers were duly appointed, and after an answer by Holloway, a decree for an account was passed. Among the property of the partnership, there was a farm in Baltimore County, and one in Prince George’s County. The case was referred to the auditor in the usual way, and after taking a good deal of testimony, he stated ten accounts. To these accounts both parties filed exceptions.

We will state the matters embraced in these exceptions. First. It appears that during the existence of the partnership one Douglass had charge of the farm in Prince George’s County; and one Button had charge of the farm in Baltimore County. After the dissolution of the part ²²⁰ nersliip these men received contradictory orders from the late partners.

Turner required them to remove from the farms, discharging them from his service ; and Holloway ordered them to remain, and to continue their care of the farms. Button’s dismissal was in January, 1879, and Douglass’ was in October of the same year. The partnership was dissolved on the nineteenth of March, 1878, and the receivers were appointed on the twentieth of October, 1879. On the tenth of November, 1879, the Court below passed an order authorizing the receivers to pay all expenses theretofore incurred, or thereafter to be incurred for the wages of the employes on the said farms.

The receivers continued the employment of Douglass and Button until sometime in February, 1880. Although the partnership was dissolved, these farms were still partnership property, and either partner had a right to incur reasonable expense in protecting them, from injury; and the services of Douglass and Button enured to the benefit of the partnership by the express command of one of the partners. Certainly the receivers had authority under the order of Court, of November the tenth, to employ them and to pay them for their services, past as well as future. It has been argued in behalf of Turner, that Doxiglass and Button have no right to file their claims in this proceeding, and that their remedy is only by an action at law.

But it must be remembered that this is a bill to settle the affairs of the partnership, and that, under it, the partners have a right to insist that the partnership creditors shall be paid. The partners have a lien on the partnership property for the payment of the partnership debts; and it is in consequence of this lien that the joint creditors are paid, and not by reason of any independent right which such creditors possess. It is not material to inquire on this head, whether a partnership is solvent or insolvent; the rights of the partners do not depend on such question. They each have a right to be freed from all responsibility ²²¹ for the partnership debts, so far as this can be accomplished by applying the partnership property to their payment.

It is only in subordination to this right of the partners that the claims of the creditors are permitted to be presented. The learned Judge below sustained the claims of Douglass and Button, and we concur in his decision. Second. Luchesi was the book-keeper of the firm during its existence.

After the dissolution, Turner continued to employ him for the purpose of keeping the books while the liquidation of the business was in progress. It was necessary that some one should keep the books, and no reason has been shown why the former book-keeper should not have been employed for this purpose. The auditor allowed two hundred and fifty dollars for this service. The Court below overruled an exception by Holloway to this allowance, and in this decision we concur.

Third. Holloway collected, after the dissolution, several thousand dollars, which he kept in the German American Bank. It appeal's that he placed in the bank for collection notes belonging to the firm, and that this money was the proceeds of these collections. The money remained deposited in the bank, and no portion of it was ever used for his own personal benefit.

It was set apart as the money of the firm, and was capable at any moment of complete and ready