National Union Bank v. National Mechanics' Bank

Citations

• 80 Md. 371
• 30 A. 913
• 1895 Md. LEXIS 1

Syllabus

<p>Assignmentfor Benefit of Creditors — Right of Creditor Holding Collateral Security — Partnership Real Estate — Creditor of Individual Member of Firm — Private Understanding of Partners as to Real Estate — Statute of Frauds — Estoppel.</p> <p>Where an assignment for the benefit of creditors has been made, a creditor who holds collateral security for the debt due him is not entitled to demand from the trustee a dividend on the wholé amount of his claim without deducting therefrom the value of such collateral security.</p> <p>A creditor who has sold the collateral held by him, after the assignment and before distribution by the trustee, is required to credit his claim with the net proceeds of such sale, and is only entitled to a dividend on the balance remaining due. „</p> <p>And if in such case the creditor does not sell the security held by him, the value thereof should be ascertained by proof and credited on his claim before distribution is made.</p> <p>When the assignment has been made by a firm, a party who is both a creditor of the firm and of the individual members is not estopped to claim that certain real estate is individual and not firm property, because he recommended to the Court the ratification of the sale of such real estate, when the person claiming such estoppel had induced the creditor to sign the recommendation by an assurance that his claim, .then filed against the real estate as individual property, would not be affected.</p> <p>When at the time a partnership was formed certain real estate was the individual property of the members, and nothing was afterwards done to transfer the same to the firm, except the making of entries in the firm books, by which the real estate was treated as firm property, and the fact that the copartners so considered it, then the proceeds ot the sale of such real estate will not be treated in equity as partnership assets, when the question arises between the creditors of the firm and those of the individual members.<