Hahn & Co. v. Allen

Lumpkin, Justice.

1. In Harris et al. v. Visscher et al., 57 Ga. 229, this court decided that each member of a partnership could take a homestead in partnership land, the same being assigned to them severally in separate parcels; and that a prior creditor of the partnership, on reducing his debt to judgment, could not enforce it over the homestead right. The correctness of this decision will readily appear when it is remembered that, under our system, the title to land owned by a partnership vests, not in the partnership itself, but in the partners individually as tenants in common.

In Blanchard, Williams & Co. v. Paschal, 68 Ga. 32, this court went a step further, and decided that one partner was entitled to an exemption set apart out of the personal property belonging to the firm, the idea upon which the decision was based being that the assets of a partnership belonged to the individuals composing the firm. We are aware that this decision is not in harmony with the decisions of other courts upon this question, but we are content with the law as it has been settled by this court. After an elaborate' discussion of the whole matter, Judge Thompson, in his work on Homesteads, upholds the view taken by our court. He says: “We have, then, in favor of the rule of allowing either to a partnership firm or to the individuals composing it the exemption fixed by statute, out of the partnership assets, in case there are not sufficient personal assets, a principle of construction which seems obvious and irrefutable, namely, that, if the debtor has any interest in property, be it real or personal, which, under the general law, the creditor can subject to the satisfaction of his debt, the statute of exemptions will step in and secure a defined portion of it to the debtor. Against this plain principle we have a rule of convenience merely, supported by a preponderance of authority, but confessedly ‘ based upon the idea that the exemption here under consideration is several, personal, and individual, as well in regard to the property to which it applies as to the right conferred; and also upon the impracticability of giving it the application sought, growing out of the nature of partnership property and the relation of partners to each other and to creditors,’ — an impracticability which, in the belief of the writer, is more fanciful than real.” Thompson on Homesteads and Exemptions, §216.

This court, however, has never yet decided that where one member of a mercantile partnership, in due course of the partnership business, executes and delivers in the name of the firm a promissory note waiving therein all rights of homestead and exemption, such waiver is not binding on all the members of the firm, so far, at least, as the personal property belonging to the firm is concerned. Ve think such a waiver is binding on all the members, and that no one of them is entitled to an exemption out of the personal assets of the partnership, or the proceeds of the same, as against a judgment or decree founded on a note of this kind. Any member of a partnership, unless restricted by the terms of the partnership contract, has a right, for the purpose of securing a debt due by the partnership, to mortgage its goods, or to execute a bill of sale to the same; and it is also the right of any member to sell outright the goods of the firm, either to raise money to pay its indebtedness, or for any other purpose arising in due course of the partnership business. First National Bank of Gainesville v. Cody et al., last term (ante, 127). The authority of a partner to thus dispose of the personal property of the firm grows out of the doctrine of agency. Each active partner is necessarily an agent of his copartners for the transaction of the lawful business of the firm. The general rule on the law of agency, and the exceptions to it, are thus stated by Mechem: “It may be stated as a general rule that an agency may be created for the transaction of-any lawdul business, and that whatever a person might lawfully do, if acting in his own right and in his own behalf, he may lawfully delegate to an agent. In dealing with this general rule, two principles are important to be considered. One of them results as the direct and natural effect of the rule itself; the other is an exception to it. These are, 1. That authority cannot be delegated to do an act which is illegal, immoral or opposed to public policy; and 2. That the performance of an act which is personal in its nature cannot be delegated.” Mechem on Agency, §§18,19. "We see no reason why this general rule, which is often more tersely stated: quifaeü per alium facitper se: may not, subject to the exceptions stated, be applicable in case of a partnership. Assuming it to be so, our question becomes free from much of the difficulty apparently involved in it. If an individual sells his property outright, it is absolutely certain that he has no longer any shade of right to an exemption out of the property sold; or if he executes a bill of sale to secure a debt, he cannot have an exemption out of the property covered by the bill of sale, as against that debt. If, then, a pai'tner, by reason of his relations to the firm and of his agency for his copartners, may divest the partnership of its title to its personal assets, and thus defeat the rights of himself and his co-partners to an exemption out of the same, why. may he not do likewise by waiving the exemption right in that property,both of himself and them? The greater power necessarily includes the less. If he can put the property absolutely beyond the control of the partnership and all its members, we think he certainly has the right to bind each member of the firm by a contract made in its behalf not to claim the benefit of an exemption out of it. In making the waiver, he does nothing illegal, immoral, or opposed to public policy. Nor is the authority necessarily delegated to him by virtue of the partnership authority for the performance of an act personal in its nature. He has the right, within the scope of the partnership business, to deal with the personalty just as if it were his own. He has a personal undivided interest in every item of which it consists, and in dealing with it, may put it beyond the reach, not only of himself, but also of his copartners, so far as any right to exemption is concerned.

In the present case, the goods of the firm having been properly sold by a duly appointed receiver, neither member of the firm was entitled to an exemption out of the money in the receiver’s hands as against judgments founded on promissory notes of the firm 'Containing waivers of the kind above described.

2. As against j udgments not founded on debts of this kind, the exemption would be good. Whether, in the case at bar, after the satisfaction of the judgments based on “waiver notes,” and of all other claims entitled to priority as to the fund in the receiver’s hands, anything would be left, we are unable to say. This will have to be determined by an administration of that fund in accordance with the rules laid down in this opinion. A claim for a portion of the money in the receiver’s hands is made by the ordinary by virtue of an exemption allowed one of the partners, and the claim is made for the purpose of investment under the provisions of section 2016(a) of the code. It must not be overlooked that the property itself from which this money resulted was never exempted, but the exemption specifically covers the money itself after the receiver realized it from the sale of the pai’tnership ^oods. We therefore entertain no doubt that, before any exemption could be allowed out of this fund, it is chargeable with all the expenses necessarily and properly’ incurred in raising the fund by converting the property into cash; and these expenses, in our opinion, include reasonable fees and clerk hire for the receiver, and also reasonable fees of the attorneys by whose services the fund was brought into, court. The fund itself having been created by the services of the receiver, his clerk and the attorneys, their claims upon it are of the highest dignity, and entitled to recognition in preference to the claim of the ordinary, based upon the exemption. Indeed, there is no fund upon which the exemption can take effect, until these several charges shall have been satisfied.

Judgment reversed.