GORHAM v. INNIS, 115 N.Y. 87 (1889)

21 N.E. 722

AUGUST S. GORHAM, on behalf of himself, etc., Appellant, v. AARON INNIS, as Assignee, etc., Respondent.

Court of Appeals of the State of New York.Argued May 2, 1889
Decided June 4, 1889

Page 88

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Page 90

Henry S. Bennett for appellant.

Henry M. Taylor for respondent.

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Page 92

PECKHAM, J.

There was no partnership since 1859 in which George Innis had been engaged. Since that date he had carried on the business in which he alone was interested, but under the name of a firm which had not existed for many years. All his debts in existence at the time when he made the assignment in August, 1884, were, therefore, in one aspect, individual debts. But there were some which had been contracted by him while engaged in transacting business under the firm name, and the plaintiff represents judgment-creditors who obtained judgments against Gifford and Innis upon transactions or obligations of a firm nature, although actually incurred by Innis alone. All those, who were made preferred creditors in the assignment, represented and were the owners of debts which arose out of precisely similar transactions or obligations as those represented by the plaintiff herein. In other words, they were all firm as distinguished from individual creditors.

It thus appears that the appellant’s claim that the individual creditors of the assignor have been made preferred creditors of the assignment is a matter of fact which has been found adversely to such claim by the referee, and we think there is sufficient evidence to sustain the finding. The statement of the manner in which the debt to Ella Burger was incurred is somewhat loose, but from all the evidence we think it is a fair inference that the money was loaned by her to the firm as distinguished from the individual, and the firm certainly had the benefit of it. The appellant claims to come within the principle decided in the case of Kelly v. Scott (49 N.Y. 595).

Page 93

We think not. In this case, although there was in fact no partnership, yet, nevertheless, those creditors who became such by reason of dealing with the so-called firm, and who might, therefore, be called the firm creditors, have been preferred in the assignment as such creditors, and hence the equitable lien upon the partnership property which might have resulted to the partnership creditors if there had been a partnership, such as this was held out to be, has been recognized in the assignment, and they have the equitable lien upon the partnership funds or property which they would have had if such partnership had in fact existed. If that be not the case with all the firm creditors, the natural effect of it would be that a preference would be given to some of the partnership creditors over others of the same class, and an insolvent firm has the undoubted right to prefer certain of its creditors over others.

The order for an extra allowance was, we think, within the discretion of the trial court, and although subject to review by the General Term, we have no such power.

The judgment of the Supreme Court should, therefore, be affirmed, with costs.

All concur.

Judgment affirmed.