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King agt. Stafford and Maxwell.'
do; and it certainly would seem to be a very idle ceremony, to file with the clerk proof of the personal service of the summons and complaint in a suit where the defendant has appeared and put in a demurrer; although this seems to be required by section 269, in all cases where a judgment is given for the plaintiff on an issue of law. An assessment of damages by the clerk in such cases, would be a proceeding decidedly more proper. In many cases, as where there are endorsements on the note, an assessment by the clerk would be necessary to prevent injustice to the defendant. I do not think that the provisions of the Revised Statutes in relation to assessment of damages in an action on a promissory note, where judgment is given for the plaintiff on demurrer, are necessarily inconsistent with the Code. If they are not, they remain in force (Code, § 468). Section 247 of the Code, which declares that where an application for judgment on the ground of the frivolousness of a demurrer, is granted, judgment may be given accordingly, does not necessarily require judgment to be immediately entered by the clerk on the decision of the judge for the sum mentioned in the complaint, without any assessment of damages, or proof as to the amount due to the plaintiff. This would work gross injustice, especially in cases where the action was in tort, or on contract for unliquidated damages. The idea that judgment is to be immediately entered in such cases for the amount claimed, is negated by $ 269. By that section, if judgment is for the defendant upon an issue of law, a reference is to be ordered, or writ of inquiry issued, wherever the taking of an account or proof of any fact is necessary to enable the court to complete the judgment. A reference or writ of inquiry is equally necessary in like cases, where judgment is for the plaintiff on an issue of law, although no provision is expressly made for either in the code. Section 269, adopting the meaning conveyed by a literal reading, requires only, where judgment is for the plaintiff on an issue of law, that proof of personal service of the summons and complaint on the defendant and that no answer has been received, should be filed with the clerk before the entry of judgment. And this would seem to be all that is required by that
King agt. Stafford and Maxwell.
section, in any case, where judgment is for the plaintiff, although the action be in tort or on contract for unliquidated damages, and although the complaint is not sworn to. This is wholly incongruous with the proceedings to obtain judgment on a failure of the defendant to answer (Code, § 246). Where a demurrer of the defendant to the complaint is overruled, there is a failure to answer, and the like proceedings ought to be had as in cases where the defendant neglects to put in either an answer or demurrer to the complaint. In the present case the complaint is not sworn
And in such a case, the Code, where the defendant fails to answer, requires an assessment by the clerk before judgment can be entered (Code, s 246). According to the old practice, the proceedings in case of judgment for the plaintiff' upon demurrer, were the same as in case of judgment by default (Gra. Pr. 261, 285, 2d ed). It can not be in accordance with the general intent of the Code, or the intention of the legislature, that in all cases of judgment for the plaintiff on demurrer, judgment should at once be entered by the clerk for the amount mentioned in the complaint, without any proof being taken by the court or au assessment by the clerk or a jury, or without a reference to enable the court to complete the judgment.
I shall therefore hold that, as in this case, the defendants have appeared in the action, their attorney was entitled to notice of the assessment of damages, or of the amount due the plaintiff, by the clerk. And as such notice was not given by the plaintiil, the judgment was irregularly entered. The plaintiff did not even proceed as required by section 269. He did not file with the clerk proof of the personal service of the summons and complaint, before the entry of the judgment. The judgment entered by the plaintiff in this action must therefore be set aside for irregularity. But as the questions arising under the Code, involved in the motion, are new and doubtful, I shall grant the motion of the defendants, without costs to either party.
6 How. 35-OVERRULED, 13 N. Y. 161, 167.
Dillon agt. Horn and Moring.
Dillon agt. Horn & MORING.
A general creditor of insolvent general partners, may, on complaint and answer,
where the debt is not denied, have an injunction to protect the partnership
property and assets, and a receiver appointed. It seems that the principle asserted by the Chancellor in the case of Innes vs.
Lansing, 7 Paige, 583, sustaining a bill and injunction upon the application of a creditor against insolvent limited partners, on the ground that the partnership effects were a trust fund for the benefit of all the creditors, should apply equally to an insolvent general partnership.
New York Special Term—January, 1850.
The complaint alleged that defendants had been partners; had quarrelled, and dissolved the partnership; and that the effects of the firm had come into the hands of one of the firm, who was wasting them, and appropriating them to his own use. Plaintiff was a general creditor of the firm, but having no judgment against them, which, however, he sought in this suit.
There were other matters set out as to a joint adventure of plaintiff and defendants, which it is unnecessary to state.
Upon the complaint and answer, a motion was made to dissolve a preliminary injunction, and a counter motion to appoint a receiver of the partnership assets.
EDMONDS, Justice.—For the purposes of this motion, I must consider Horn and Moring as partners. The allegation of a partnership is, it is true, sufficiently denied, so far as Horn is concerned; but the facts adduced to show the existence of a connexion, are not sufficiently explained or done away with, to warrant me in the conclusion that, as to creditors, they were not partners.
Regarding them then as partners, the question arises, whether, at the suit of a general creditor, a receiver of the effects of the firm can be appointed?
The firm is bankrupt: not only have its notes been suffered to
Dillon agt. Horn and Moring.
lie over, but Horn avows that it will be unable to pay all its debts. A large amount is outstanding unpaid, and a large amount of property and assets yet remain to be disposed of. The members of the firm have severed their intercourse, and one of them has taken possession of all the effects, and ejected the other from all participation in its affairs. The member thus ejected, after obtaining an injunction against his copartner, and given notice of a motion for a receiver, has settled his suit, and withdrawn his application for a receiver. And now unless a receivership can be obtained on the application of a general creditor, these insolvent partners will have the entire management and winding up of the affairs of the concern. Nay more, the defendant Horn claiming that there was no partnership, and that all the assets belong to him individually, and of course may be disposed of by him in satisfaction of his individual debts, and having ejected the other partner from all control over or possession in the effects of the firm, may appropriate the whole of them to the satisfaction of his individual debts, to the exclusion of claims of the nature of the plaintiff's.
On the dissolution of a partnership, each partner has a lien on the partnership effects, as well for his indemnity as for his share of the surplus; but general creditors have no lien for their debts: their equity is that of the partners operating to the payment of the partnership debts.
Such being the general principle, upon what ground can this complaint and the injunction be sustained, so far as it relates to the debt owing to this plaintiff?
In Innes vs. Lansing, 7 Paige, 583, the Chancellor sustained the bill of a general creditor under similar circumstances, and refused to dissolve an injunction restraining the partners from receiving or disposing of the effects of the firm. He did this on the avowed ground that it was a special partnership; and that under the statute, the property of the partnership was a trust fund for the benefit of all the creditors.
It is difficult to see how it is any more a trust fund for the benefit of creditors, in the case of a special partnership, than in case of a general one,
Dillon agt. Horn and Moring.
In the latter case, no creditor of one of the partners can collect his debt out of the partnership property, until the partnership debts are paid; nor can a partner assert his claim to a surplus, until that event; so that partnership creditors have a prior claim to every body, and the property may well be said to be held in trust for them.
The fact that the members of an insolvent special partnership are forbidden by the statute to give any preferences, which is alluded to by the Chancellor, can make no difference, because a vigilant creditor is nowhere forbidden to obtain such preference by compulsory proceedings; and I am at a loss to see how the partnership effects are any more a trust fund in the one case than in the other, or in what respect new rights are conferred by the statute of limited partnerships.
I suppose that the real ground of the decision was the insolvency of the partnership, and the danger there was, from that cause, that the trust fund which exists equally in both cases, might be diverted from its legitimate purposes. The only difference between the cases, which the statute makes, is, that in case of a limited partnership, no assignment or disposition of the effects, with a view to a preference, can be made. That difference, however, was evidently not the ground on which the Chancellor entertained jurisdiction in that case; for there is no suggestion that the partners were aiming or intending to make such assignment or disposition: the injunction was not confined to those limits, but restrained the defendants from any receipt or disposition of the effects; and the final decision was retaining the injunction generally, and not merely as it forbid preferences, and allowing a receiver.
The decision was then, as I understand it, on the broad ground that the partnership effects were a trust fund for the benefit of creditors, and that the partners were insolvent. Both those elements are found in the case now before me; and the question arises whether they are sufficient, on the authority of that case, to sustain this complaint, and the application now made for a receiver.