Reeves, Stevens & Co. v. Ayers

Citations

• 38 Ill. 418

Syllabus

<p>1. Partnership property—of the relative rights of creditors of the firm and creditors of individual members of the firm. It is undoubtedly true, as a general proposition, that when a partnership and its members are insolvent, and the firm has been dissolved, an equity exists in favor of the creditors of the firm, in respect to lands of the firm purchased with partnership funds, superior to that of creditors of the individual partners.</p> <p>2. But cases may, and do, arise, where an equal or superior equity may be created in favor of a creditor of an individual member of the firm, as, where one has furnished to one of the members, before the partnership was formed, the capital upon which the business was commenced.</p> <p>3. So, where the money of a creditor of one of the partners, contributed alone to the purchase of lands belonging to the firm, natural justice would say that the claim of such creditor for reimbursement out of the lands, was superior to any equity of creditors of the firm.</p> <p>4. Partners have a lien on the joint property for the discharge of the firm debts, when such lien has not been parted with. And when the lien exists, the equities of creditors of the firm attach to, or unite with, the lien of the partners, and are thus rendered availing to them.</p> <p>5. This equity of the creditor is not a lien, but something approaching to it, of which, with the assent of the partners entitled to the lien, they may avail themselves in a court of equity, against the partnership effects.</p> <p>6. But this rule only relates to the rights of creditors after a dissolution, and to property undisposed of, and to which prior liens have not attached.</p> <p>7. The creditors of a solvent firm have no lien upon the partnership property for the payment of their debts. A solvent firm may convey or mortgage the property of the partnership, in payment or for the security of ah individual debt of one of the partners.</p> <p>8. Partnership lands—conveyance thereof b