
    Richards, Crumbaugh & Shaw v. Haines et al.
    
    1. Partnership! liability of partnership property: statutory proceeding. The proceeding provided for by section 3291 of the Revision, where partnership property has been levied upon to satisfy the individual debt of one of the partners, was not intended to change the common-law rule respecting the primary liability of partnership property to the claims of .creditors of the firm, and to those of copartners for the amount of their respective shares, or for moneys advanced.
    2. -The principal object of the proceeding is, to determine the extent of the interest of the execution defendant, that of co-partners for the amount of their shares or money advanced, and the amount of the indebtedness of the firm to creditors, and to protect the interests of all by declaring and enforcing their respective rights.
    3. Exemption! waiver of right. If an execution defendant voluntarily surrenders property levied upon without claiming its exemption, he is thereby estopped from afterward asserting such claim.
    
      Appeal from Jones District Court.
    
    Friday, January 27.
    This is an equitable proceeding instituted under section 3291 of the Revision.
    Defendants are copartners in business, and plaintiffs had recovered a judgment against one of them, Haines, upon which he caused an execution to be issued, and levied upon certain personal property belonging to the firm. Thereupon the other partner, Lewis, gave notice to the sheriff of Ms claim thereto, under section 3287 of the Revision. The plaintiffs then filed their petition, instituting this equitable proceeding, under section 3291. The petition, by sundry amendments, was made to conform in its averments to the requirements of sections 3287-3291. Both partners were made defendants in this action. In separate answers they admit the judgment, execution and levy, and aver that a part of the property had been sold by the firm and partly paid for long before the levy. The other articles of property are averred to be the tools, by the use of which the partner debtor earns his living, and are, therefore, claimed to be exempt from execution against him. The cause was referred, and the referee reported the following facts, which are alone necessary to be stated in order to present the questions involved in the case:
    1. The facts of the judgment, execution, levy and notice of the interest of Lewis are found as alleged in the pleadings.
    2. The property levied upon belonged to the firm.
    3. Lewis had advanced $1,100 to the firm.
    4. The value of the real estate of the firm is $25,000, and of the personal property is $1,800.
    5. The property seized was delivered to the sheriff by Haines without making any claim that it was exempt from execution.
    6. Haines has no other property, individual or copartnership, subject to execution.
    7. The property alleged by defendants in their answer to have been sold, the referee finds to have been in fact disposed of, but does not state the date of the sale. The evidence, however, fixes the sale of a part of it before the levy.
    8. By the evidence it seems that the defendants were equal partners.
    As conclusions of law, the referee reported as foEows:
    1. That the. property, having been voluntarily surrendered by Haines upon tbe execution, cannot be claimed as exempt on account of being tools, etc.
    2. Lewis, having a lien upon tbe real estate and personal property of tbe firm for bis advances, is sufficiently secured, and is not, therefore, entitled to any protection as to tbe property levied upon.
    3. Tbe rights of creditors of tbe firm are not to be affected by these proceedings, nor are tbe creditors to bo bound thereby, “ unless (in tbe language of tbe referee) it be after a sale.”
    4. Tbe property levied upon is liable to be sold to satisfy tbe execution issued upon tbe judgment.
    5. Tbe firm is responsible for one-half tbe value of tbe property alleged to have been sold in default of tbe firm delivering to tbe sheriff like property of equal value.
    Tbe report of tbe referee was confirmed by tbe court. Defendants appeal.
    
      G. It. Scott and T. It. Ereambrack for tbe appellants.
    
      E. Keeler for tbe appellee.
   Beck, J.

It is provided by tbe Revision, chapter 125, that when an execution is levied upon partnership property to satisfy the separate debts of a partner, and another partner asserts an equitable or other claim thereto, and notifies in writing the officer bolding tbe execution of such claim, tbe sale upon tbe execution shall be suspended, and the officer shall not deprive tbe parties of possession of tbe property, except for tbe purpose of making an inventory thereof and having tbe same appraised. Tbe execution shall be returned with tbe inventory and appraisement to tbe office from which it issued, and tbe return shall state tbe facts connected with the levy and tbe claim set up by the partner. Tbe execution creditor bolds a lien upon tbe property levied upon, which continues until the levy is disposed of. IJpon the execution being so returned, “the execution creditor may proceed in an action by equitable proceedings to subject to the satisfaction of his execution the interest of the debtor so levied upon.” §§ 3287-3292.

These statutory provisions in no manner affect the rights of the partners or the creditor; they simply provide for the manner of the enforcement of a remedy before secured by the law against a partner for his separate debt. No relief can be given the creditor in the equitable action provided for, other or different than he would have been entitled to in such an action, before the statute, prosecuted by himself in a proper case, or by the partner of his debtor, or by the debtor himself, when either could resort to a court of . chancery to settle their respective interests in a case where the debtor partner’s interest is taken on an execution against him. The questions to be determined, and the relief to be granted in the equitable action, contemplated by the statute above cited, are those that relate to the interest of the debtor partner in the property seized upon execution, and the satisfaction, in a way authorized by the law, of the judgment by the sale of such property. By the proceeding the interest of the debtor partner in the property levied upon must be determined. His interest is measured by the rights of his copartner, who has a lien upon the property for the amount of his share and for moneys advanced by him beyond it for the use of the firm. Pearce v. Wilson, 2 Iowa, 20. His interest is also dependent upon the rights of the creditors of the firm, for they are entitled to be first paid from the partnership funds. Pierce v. Wilson, supra; Hubbard v. Curtis, 8 Iowa, 1.

The interest of the debtor partner can only be ascertained by determining the rights of the copartner and the indebtedness of the firm, which, it is evident, must be done in this proceeding. This, in the case of a levy of an execution against the debtor partner upon the firm property, is within the ordinary jurisdiction of equity, which is necessary to be exercised for the protection of all parties concerned, the creditors, the partners and the purchaser upon the execution. 1 Story’s Eq., § 678. In this proceeding it is very clear that the court must, in order to determine the interest of the debtor partner, ascertain the interest and claims of his copartner and the indebtedness of the firm, and, in order to do so, may require necessary parties to be brought in and answer in the .proceeding. Having acquired jurisdiction of the matters involved and of the persons interested, in order to avoid multiplicity of suits, the court may proceed, after having declared the interest of the debtor partner, to grant full relief to all parties by declaring and enforcing their respective rights. It may direct the sale of the property levied upon and en-' force the delivery of its possession to the officer. The interest to be acquired by the purchaser maybe determined and all other matters settled, to the end that justice may be done and future suits prevented. In cases demanding it, the .partnership may be fully settled and wound up, though this may not be necessary in all cases. In short, the court is authorized to ascertain the rights of all the • parties interested and, by its decree, do justice between them.

The conclusions of the referee, which were adopted and confirmed by the court, are not in accord with the foregoing views. The interest of the debtor partner was not determined farther than that he was an equal partner with Lewis, and entitled to one-half interest in the property levied upon. No finding appears as to the debts of the firm, a matter very necessary to determine the real interest of Haines. The decree in no manner settled the rights of creditors of the firm, or the interest a purchaser would acquire in the property. It left all those matters just as unsettled and uncertain as they were before the proceed-hogs were instituted. It appears from the record of the evidence that the partners refused to state the amount or character of the indebtedness of the firm. The court possessed the power to draw from them evidence upon this point, and should have exercised it.

The conclusions of the referee, that the voluntary surrender of the property by Haines upon the execution preeludes him from setting up that it is exempt because it is of the character of tools with which he earns his living, in our opinion is correct.

The conclusion of fact concerning the property levied upon, which is claimed to have been sold before the levy, cannot be supported. The evidence discloses the fact that a part of it at least was sold before the levy, and it is difficult to see how the firm could have been held liable therefor. The creditor acquired a lien upon the property levied upon, which belonged to the firm; the court may properly enforce that li’en, and doubtless, th% firm, if by its act the lien was defeated and the property lost or put beyond the reach of the lien, would be liable for its value.

The decree is reversed and the cause remanded to the district court for proceedings not inconsistent with this opinion. The cause wifi be tried anew and the parties, if they so elect, will be allowed to amend their pleadings.

Reversed.  