October 1, 2012

Green, Huffaker & Co. v. Taylor & Son, Pulaski, 1895

Green, Huffaker & Co. v. Taylor & Son.

COURT OF APPEALS OF KENTUCKY

98 Ky. 330; 32 S.W. 945; 1895 Ky. LEXIS 52

November 21, 1895, Decided

PRIOR HISTORY:  [***1]  APPEAL FROM PULASKI CIRCUIT COURT. 

DISPOSITION: Judgment reversed, and cause remanded, with directions. Affirmed on cross appeal. Reversed on original appeal.

COUNSEL: WILL C. CURD FOR APPELLANTS.

1. Defendants, having held themselves out as partners, are now estopped to deny the existence of the partnership. (17 Am. & Eng. Enc. of Law., 879; Markham's Ex'or v. Jones, 7 B. Mon. 456; Walrath v. Viley, 2 Bush 478.)

2. Exemptions are not allowed either to the partnership as a body or to the individual members out of the partnership assets. (17 Am. & Eng. Enc. of Law, 1335.)

O. H. WADDLE FOR APPELLEES.

1. Partners are entitled to exemptions out of partnership assets. (Thompson on Homestead and Exemptions, secs., 211-216; Freeman on Executions, sec. 221; Stewart v. Brown, 37 N.Y. 350; Burns v. Harris, 67 N. C., 140; In re Young, 3 Nat. Bank Reg., 440; In re Rupp, 4 Nat. Bank Reg., 95; Blanchard, Williams & Co. v. Paschal, 68 Ga., 32; s. c., 45 Am. Rep., 474; State v. Kenan, 94 N. C., 296.)

2. Even through a partner is not entitled to exemptions out of partnership assets, the permissive use by E. R. Taylor of his infant son's name in his business as a matter of convenience does [***2]  not create such a partnership as will authorize the application of the principle. 

JUDGES: JUDGE GUFFY. 

OPINION BY: GUFFY 

OPINION

 [*330]   [**945]  JUDGE GUFFY DELIVERED THE OPINION OF THE COURT.

This action was instituted in the Pulaski Circuit Court by Green, Huffaker & Co. against E. R. Taylor & Son to recover judgment on a claim of $ 286.35; and plaintiffs also sued out an attachment against the property of the defendants, which attachment was levied on a lot of merchandise as the property [**946]  of the defendants. The appellant, E. T. Thistler, about the same time brought suit in the police court of Burnside, in said county, against the defendants, and also procured a levy of an attachment on the same property, which suit was transferred, as provided by law, to the Pulaski Circuit Court, and consolidated with the suit of Green, Huffaker & Co. against defendants. An order of sale was obtained and the attachment property was sold and proceeds held subject to the final order of the court. The defendant, E. R. Taylor, answered and substantially alleged that he alone constituted the firm of E. R. Taylor & Son, and was the individual owner of the goods levied on; that his son, R. I.  [***3]  Taylor, was a boy under twenty-one years old, and was clerking for him, and by this means only was identified with him in the business. He also controverted the grounds of the attachment, and averred that he was a bona fide housekeeper withe a family, and that he had no provisions on hand to sustain his family for one year or any length of time, and that the goods levied upon were the only personal property that he owned out of which he could receive property in lien of said provisions not on hand, and prayed that the attachment be dismissed, and that he be allowed the money realized from the sale of the attached property. Plaintiffs, in their reply, averred in substance that at the time defendants purchased the goods mentioned in their accounts the defendants represented to them, plaintiffs, that they were doing business as merchants and partners under the firm name of E. R. Taylor & Son, and believing said representations to be true, and not knowing that R. L. Taylor was under twenty-one years of age, did, upon the faith of said representation, believing that they were partners, give them credit and sell them the goods, the price for  [*332]  which is now sued for; that said [***4]  defendants held themselves out to the world as partners, and that if they, plaintiffs, had known defendants were not partners they would not have sold the goods, and pleaded the said representations as an estoppel; also traversed all the material averments of the answer, and deny that any exemptions can be legally allowed defendant out of the proceeds of the said property. Appellants further charge that defendant retained in his hands and converted to his use and that of his family notes and accounts more than sufficient to cover the amount allowed a housekeeper with a family.

The material averments in the reply were denied by the defendant in his rejoinder. The court, upon final hearing, rendered judgment in favor of the plaintiffs against E. R. Taylor & Son for the amount of their claims sued on, the same not being controverted, and sustained the attachments, but also adjudged that defendant, E. R. Taylor, was entitled to the money realized from the sale of the attached property in lieu of provision for himself and family. The defendants excepted to the judgment sustaining the attachment, and plaintiffs excepted to the judgment adjudging the fund aforesaid to E. R. Taylor, and to [***5]  reverse same the plaintiffs prosecute this appeal, and appellees have taken a cross appeal from the judgment sustaining the attachment.

We have carefully read the evidence in support of the attachment, and we think that it sustains the judgment as to the attachment, and the same is affirmed.

Appellants insist that the court erred in adjudging the proceeds of the sale of the attached property to E. R. Taylor. Appellee's contention is that E. R. Taylor was entitled to hold the goods levied on, under the statute allowing certain exemptions in lieu of provisions not on hand, and that, the property having been sold, appellee was entitled to the  [*333]  money realized by the sale. It is also claimed that the son, R. L. Taylor, was under twenty-one years of age, and in fact, only a clerk in the store, and in fact, had no interest in the goods, and that the firm name was only used as a matter of convenience. The proof, however, is conclusive that the appellees held themselves out to the world as partners and purchased the goods, the price of which is sued for, from these plaintiffs as partners, and also brought suits in the firm name of E. R. Taylor & Son for debts due them as such,  [***6]  hence they must be held and considered as a firm, so far as this action is concerned, whether or not they were in fact partners. There was some claim that appellees had about $ 600 in notes and accounts, but that claim is not well proven, so the only question to be decided is whether or not one member of a firm can claim and hold partnership property under and by virtue of the exemption laws.
It is true that there is considerable conflict of authority on this subject, but so far as we are advised this question has never been decided by this court.

Mr. Thompson, in his work on Homesteads and Exemptions, discusses the question at some length, and refers to numerous decisions, some allowing the exemption and others disallowing the same, and, in conclusion, says in substance that the preponderance of authority is against allowing such claim of exemption. (See section 216.)

This question is also discussed at length in Freeman on Executions, and, in conclusion, it is said: "But the tendency of the recent decisions to deny altogether the right of exemption out of partnership property, or out of partnership assets, is unquestionable, and, we think, irresistible." (1 Freeman on Executions,  [***7]  section 221.)

The exemptions given by the Kentucky Statutes manifestly refer to and mean property owned by the individual  [*334]  debtor. In case of a partnership, neither member has title to firm property, but the title is in the firm. It seems to us that our statutes, the weight of authority and public policy all require the rule to be that partnership property can not be claimed and held by any member of the firm as exempt from execution. It results, therefore, that the court below erred in directing the receiver to pay over to E. R. Taylor the money realized from the sale of the attached property. That [**947] judgment is, therefore, reversed, and cause remanded, with directions to set aside that judgment and to adjudge that the said money be paid to the plaintiffs on their debts pro rata, or according to priority of liens, if there be any priority, and for proceedings consistent with this opinion.

Affirmed on cross appeal. Reversed on original appeal.

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