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Opinion of the Court, per CHURCH, Ch. J.
able review of the general subject, has suggested a further modification in the same direction assimilating partnerships more nearly to corporations, and it is not improbable that the growing importance of the relation may induce the adoption of some change by which the rights and equities of partnership creditors shall be more certain, and independent of the action of the partners themselves. Mendall and Palmer never had this equitable lien, because by the original arrangement between them and Shawhan he was the absolute owner of the property with power of disposition. Their legal position was that of surety for Shawhan, without any of the rights of a partner, and having no such rights, they could transmit none to creditors. It would follow that the property in the hands of Shawhan was individual property and passed to his assig nees. Upon this ground the referee found for the defendants, and found correctly, if the facts which actually existed are controlling.
But there is another view of the case which I think deserves attention, and that is, whether Shawhan himself, or his assignees, are in a position to deny to the partnership creditors all the rights which they would have had if Mendall and Palmer had been actual partners. Can he deny that they were partners in fact, not merely to the extent of personal responsibility, but also as possessing the equitable right necessary to enable partnership creditors to secure their just preference. Shawhan advertised to the world that they were partners. The attachment creditor dealt with them as such. Had he not a right to rely not only upon their personal responsibility, whatever it was, but upon this equitable security upon the partnership effects; and are we not bound to assume that he did so rely?
It may be said that they could at any time have transferred to Shawhan their whole interest, and thus deprived the partnership creditors of this right. If the transfer had been made in good faith such might have been its effect, and the creditors could not lawfully complain. But this was not done. A transfer in contemplation of bankruptcy, or one
Opinion of the Court, per CHURCH, Ch. J.
made with intent to deprive the creditors of their equitable lien, would have been void. It is only in case of insolvency or dissolution that the lien attaches. While the business continues and the firm is solvent, neither the partners nor creditors have any lien except by the ordinary process of judg ment and execution. Nor would an original contract, I apprehend, be allowed to stand against partnership creditors, which provided, in case of bankruptcy, that one of the partners should own the whole property, and thus expose it in advance to individual creditors. (Id., § 358.) The question is, what did Shawhan assert by his acts and declarations in respect to Mendall and Palmer, and what had the attaching creditor a right to understand that he asserted? Was it that they were nominal partners merely, or that they had invested him with the absolute title to all property owned or to be purchased? There is not a circumstance in the case to favor such an inference. On the contrary they appeared to be partners possessing the ordinary rights and subject to the usual obligations. It is to be presumed that Shawhan intended the public should so understand, and that the attaching creditor did so regard them. It may be urged that such an arrangement might lawfully be made, and consequently that all persons dealing with the firm did so with a knowledge of it subject to this right. This is the most plausible view for the defendants, but I do not regard it as conclusive. The point is, in what position did Shawhan place Mendall and Palmer by his acts and declarations? It is not what possible contract they might have made, but from Shawhan's acts how had the public a right to regard them? I think that the fair and reasonable inference which any business man dealing with the firm would draw from the acts and conduct of Shawhan, would be that he had admitted Mendall and Palmer as partners, with the ordinary rights and subject to the usual obligations incident to that relation. If so, we cannot say that the attaching creditor did not deal with the firm, and give them credit partly on the supposition that he would be entitled to the preference which he is now seeking to enforce.
Opinion of the Court, per CHURCH, Ch. J.
It is not unusual to give a firm credit, when the same credit would be withheld from either of the individuals composing it, because of this known right of preference to partnership effects. If I am right in translating the acts of Shawhan as a deliberate and definite representation that Mendall and Palmer were partners, with the usual rights and obligations, and that the attaching creditor properly so regarded them, and gave the firm credit upon the faith of it, it follows as a necessary legal sequence that he cannot be permitted to deny it to the injury of the creditor upon the principle of an estoppel in pais. It is conceded that no right could be derived through the nominal partners, because they possessed none, and whether they claim or renounce all partnership rights is of no consequence. The rights of the attaching creditors, must rest upon the legal inability of Shawhan to deny that they possessed the rights requisite to sustain the creditors' claim to this money.
The principle of estoppel is too well understood and too firmly settled to require the citation of authorities. De Zell v. Odell (3 Hill, 215) is a leading authority in this State, but the principle has been repeatedly adjudicated since. The rule is always applied to enforce integrity and fair dealing in the business concerns of life. It prohibits one from denying his declarations to the injury of another who has acted upon the faith of them, and it applies as well to acts and conduct as to declarations. I think also that the application of the rule to a case like the present is in accordance with public policy, and is calculated to subserve the ends of justice. We cannot, of course, know what the facts of this particular case are, but it is palpable that a contrary rule might in many cases work great fraud and injustice. If secret agreements of an unusual character, creating relations directly at variance with those which are apparent, can deprive partnership creditors of that preference which the law declares just, and expose the property to the individual creditors of one of the partners, gross frauds could be committed not only, but the confidence of the commercial community would be impaired and the business SICKELS-VOL. IV. 76
Statement of case.
interests of the country suffer. All secret arrangements between partners to the injury of third persons are void.
Shawhan being estopped from denying the rights of the attaching creditor, his assignees are also estopped. They have no other or superior rights to him, and they are vested with the property subject to all equities against it in his hands. (2 Story R., 360, 630; James' Bankrupt Laws, 36; Benedict's U. S. Dist. Court R., 347.) It was admitted upon the argument that if Mendall and Palmer had been in fact partners, the defendants would have had no title. The same result must follow if they are in a position with reference to the property where they cannot deny the partnership. These views lead to a reversal of both judgments.
WILLIAM H. KISSAM, Surviving Trustee, etc., Appellant, v. HUBERT DIERKES et al., Respondents.
A condition attached to a power of sale contained in a trust deed, that the trustee shall only sell by and with the consent of the grantor, to be manifested by his uniting in the conveyance, is valid. It is an essential condition and cannot be dispensed with. If no provision is made for the execution of the power in case of the death of the grantor, it is extinguished by such death.
(Argued May 27, 1872; decided June 11, 1872.)
APPEAL from judgment of the General Term of the, Supreme Court in the first judicial department, affirming a judgment in favor of defendant Dierkes, entered upon the decision of the court at Special Term.
This action was brought to compel the specific performance of a contract made 10th of August, 1868, between plaintiff and defendant Dierkes, for the purchase and sale of a lot of land known as No. 25 Grand street, New York city, for
Statement of case.
the sum of $8,500. Dierkes refused to perform, upon the ground that the plaintiff had no power to convey.
Prior to 1856 Eliza B. Holsman was the owner of the premises. In September of that year she married Richard S. Howell. In October she and her husband joined in a trust deed of the premises to Catharine Holsman and plaintiff. The deed conveyed the land to the grantees in trust, to receive the rents and profits and apply them to the use of Eliza B. Howell, during her life, and, after her death, to the use of Richard S. Howell, during his life; or, in case said Eliza should leave issue surviving her, then to the use of said Richard and such issue during the life of Richard, and upon the death of Richard, the said Eliza B. Howell not having appointed the estate by will, remainder in fee to her legal representatives, as in the case of intestacy.
After making these provisions, the deed empowers the trustees, "whenever they shall deem it proper to do so, by and with the consent of said Eliza, manifested by her uniting with them in the execution of any conveyance, to grant, bargain, sell, assign and transfer, absolutely or conditionally, any part or portion of the estate."
Catherine Holsman died in 1863; Eliza B. Howell died intestate in 1864. The court held that after her death the trustees had no power to sell; that the power then lapsed.
Benjamin T. Kissam for the appellant. A grantor of a power cannot limit its execution by his own consent. (1 R. S., 736, § 122; Barber v. Cary, 11 N. Y., 397.) The power of sale is valid, and the surviving trustee can execute it. (1 R. S., 732; Belmont v. O'Brien, 12 N. Y., 394.) The rule of the statute in reference to powers is exclusive of all others. (Hawley v. James, 16 Wend., 137; Campbell v. Low, 9 Barb., 590; Jackson v. Edwards, 7 Paige, 399; Hoey v. Kinny, 25 Barb., 399.) Parties cannot agree upon any other mode of execution. (Lawrence v. F. L. and T. Co., 13 N. Y., 211.)
Osburn E. Bright and Edward Mitchell for the respond