In re Bjornstad. ciples laid down by RYAN, C. J., in Russell et al. vs. Lennon, 39 Wisconsin, 570. If, as is said in that case, each member of a partnership is, in proper cases, entitled to his separate exemption of the partnership property, and that the partnership property, after levy, may be severed by the partners, so that each partner may have his several exemptions, it would seem to follow as a consequence of this doctrine, that if the partnership is dissolved and the partnership stock transferred to one of the partners, that it is no longer partnership property, and the right of exemption on the part of the owner of the property attaches. But it is claimed that the joint creditors have a lien on the partnership property for the payment of the joint debts, and this is true in a certain qualified sense. It is clear law that, as between the joint creditors of the partnership and the separate creditors of the individual partners, the joint creditors are entitled to priority of payment from the partnership funds and the individual creditors from the individual funds of the partners. And, in this sense, they are said to have a lien on the partnership property, so that one partner cannot sell out his interest to a third person and prevent the payment of the joint debts; and such transfer conveys only to the purchaser the interest of the partner in the surplus after payment of the partnership debts.1 But the lien is not a lien in the same sense that a mortgage or an execution levied is a lien, by any means. It is not a lien that transfers any title to the property, or any actual interest in it. The partnership creditors have just as much of a lien, and no other or greater on the partnership property, as the creditor of an individual debtor has on his property. 2 There is, in short, nothing in such a lien to prevent one 1 Menagh vs. Whitwell, 52 New York, 146. Burns & Smucker vs. Harris & Allen, 67 North Carolina, 140 In re Bjornstad. partner from selling his interest in the goods to his copartner and conferring a good title, if done in good faith, and with no intent to place the property beyond the reach of creditors. It is true that at the time of the dissolution, the partnership was in debt, and their liabilities by far exceeded their assets. But there is nothing else tending to show fraud, and this of itself, is not enough. If there had been any attempt to withdraw the funds and put them in a homestead or otherwise, beyond the reach of creditors, the case might come within the principle of Sauthoff & Olson, 7 Bissell, 167. But, nothing appears to show the transaction was not bona fide. And, upon the whole, I think the exemption should be allowed. A partner withdrawing firm assets, upon dissolution, as his interest in the partnership, takes them subject to the rights of the firm creditors, if the fund remaining is insufficient for the payment of their debts. This is true, even though no fraud is intended, and the partners believed the remaining assets to be ample. And if the retiring partner invest the assets thus withdrawn by him, in a homestead, a court of equity will compel its surrender for the benefit of the creditors. In re Sauthoff & Olson, vol. 8 of this Series, page 35. Partnership assets are a trust fund for the payment of the creditors of the firm, and no exemptions can be set apart from them to the individual partners, until all the partnership debts are paid. In re Croft Bros., Id. 188. See, also, Ex parte Robinson, 7 id. 125. Since the date of the above opinion by Judge BUNN, the Supreme Court of Wisconsin has held in Wicker vs. Comstock, 52 Wisconsin Reports, that subdivision 8, section 2982 of the Revised Statutes of Wisconsin, which exempts from execution "the tools and implements, or stock in trade, of any mechanic, miner or other person, used or kept for the purpose of carrying on his trade or business, not exceeding two hundred dollars in value," applies to a stock of goods on sale by a merchant. [Reporter. In re Gorham. In re SELDON H. GORHAM. DISTRICT COURT-NORTHERN DISTRICT OF ILLINOISNOVEMBER, 1878. 1. BANKRUPTCY OF A FIRM.-A firm may be adjudicated bankrupt so long as there are undistributed partnership assets, and partnership debts and liabilities. 2. RIGHTS OF COPARTNER.-The right of one partner to have the firm adjudicated bankrupt is co-extensive with the right of the firm creditors or of another partner. 3. ESTOPPEL.-One copartner, as between himself and the firm creditors, cannot estop himself by any dealings with the other partner from claiming partnership assets. 4. RIGHT OF COPARTNER TO BE MADE PARTY TO PROCEEDINGS.-Where one member of a firm filed his petition in bankruptcy, scheduling the assets and liabilities of the firm, and also his individual assets and liabili ties: Held, that it was the right of the other member to be made a party to the proceedings thus initiated and to have the firm adjudged bankrupts on their own petition. Goudy, Chandler & Skinner, C. B. Lawrence and Wirt Dexter, for Seldon H. Gorham. M. W. Fuller and John Morris, for E. F. Hollister. BLODGETT, J.-This case comes up upon the petition of Hollister to be made a party to the voluntary petition of Gorham, to be adjudged a bankrupt. The facts, which are undisputed in the case, seem to be these: Hollister, Gorham and Dwight were partners from March, 1875, to March, 1878, under the firm name of Hollister & Gorham, and were engaged in the business of wholesale dealers in carpets, upholstery and furnishing goods in this city. Hollister and Gorham were general partners, and Dwight In re Gorham. a special partner, under the Illinois statute in regard to limited copartnership. On the second of March, 1878, the partnership expired by limitation, and Dwight and Hollister, by bills of sale, transferred their interests in the partnership assets to Gorham. At the same time an agreement was made between Hollister and Gorham, by which Gorham agreed to faithfully apply the firm assets to the payment of the firm debts; that the business should continue under the firm name of Hollister & Gorham, and that Hollister should be paid a salary of $150 per month from March 1, to July 1, 1878, and also be entitled to three-eighths of the profits of the business, if any, from January 1, to July 1, 1878. On the first of January, 1878, the firm was unable to meet its liabilities as they then matured, and obtained an extension from a portion of its creditors on their then pressing liabili ties until March and April last. At the time Gorham took the transfer of the interest of Hollister and Dwight, the financial condition of the firm as to assets and liabilities, remained about as in January, except so far as relieved by the temporary extension to March and April. After Gorham took the bill of sale he made purchases for the business in the firm name of Hollister & Gorham, to the extent of about nine thousand dollars, and paid from the sales of the stock and collections about the same amount of indebtedness of the old firm. On the 29th of April, Gorham made a voluntary assignment for the benefit of his creditors, to George F. Phelps, but nothing seems to have been consummated under it, and no particular steps were taken to carry that assignment into effect. On the 4th of May, Gorham filed his voluntary petition in bankruptcy in this court, scheduled the assets of the firm of Hollister & Gorham, or rather the assets which he had received from Hollister and Dwight, as the firm assets, about In re Gorham. $57,000, and liabilities about $73,000, which included his liabilities as a member of the firm of Hollister & Gorham and about $2,800 due to one Charles P. Thayer. On the 18th of May, Gorham amended his schedule and added about $6,000 to the assets, and an individual liability to his father, C. P. Gorham, of $6,000. On the 22d day of May, Gorham filed a petition for composition, and offered to pay his creditors 30 per cent, on their demands. This offer was rejected by the creditors at a creditors' meeting, and on the 6th of July, C. P. Gorham, the father of the bankrupt, filed proof of debt for $31,527, against the bankrupt individually, although the bankrupt in his schedule in bankruptcy, and in his composition schedule, had only put his father down as a creditor to the amount of $6,000. On the 18th of July, Hollister filed a petition, setting forth in substance the existence of the partnership up to March 2; that Hollister then retired from the firm, leaving assets in the hands of Gorham, with the agreement that they should be applied to the payment of the copartnership debts; that the copartnership debts amounted on the 1st of March to over $66,000, all or nearly all of which remained unpaid; that Gorham by his proceedings in bankruptcy, was seeking to apply the firm assets to the payment of his individual liabilities, to the prejudice of the firm creditors, and asked that he might be made a party to the bankruptcy proceedings, and that the firm might be adjudicated bankrupt to the end that the firm assets should be applied to the payment of the firm debts. To this petition the bankrupt, Seldon II. Gorham, objects, and objection is also made by and in behalf of the individual creditor of the bankrupt, Mr. C. P. Gorham. The petitions and objections were referred to the register to hear proofs and report, and he has reported against allow |