I am not able to concur in the judgment. I think that under the provisions of our Insolvent Law the value of appellant's mortgage was properly deducted from its claim for dividends. In my opinion, where several persons acting together as partners commence voluntary proceedings in insolvency, each of them is a "debtor" within the meaning of section 48 of the statute, and that, within its meaning, property mortgaged by either to secure partnership debts is "property of the debtor." In case of persons who are partners applying for a discharge in insolvency, who are the petitioners, and who are the debtors? Clearly the natural persons who are associated as partners. A partnership is really not a legal entity. It is not a "person"; and the use of the partnership name is of no value except as it represents natural persons. This is recognized by the Insolvent Law; for its provision on the subject is, that "two or more persons who are partners . . . . may be adjudicated insolvent," either upon their own petition or upon that of creditors (Stats. 1895, p. 144, sec. 39); and the section further provides that all the joint property "and also all of the separate property of each of the partners shall be taken." Of course, there is a difference between the joint and individual obligations of partners, and the statute reserves this distinction, so far as it is necessary, by providing that separate accounts shall be kept of the two kinds of obligations, and that, if there be creditors of an individual partner, they shall be satisfied out of the separate property of such partner. But it is provided that, "If there be any balance of the separate estate of any partner after the payment of his separate debts, such balance shall be added to the joint stock for the payment of the joint creditors," and there is a similar provision that such a balance of joint property shall go to the payment of separate debts. It seems to me, therefore, that the statute clearly contemplates that each partner is a "debtor," and that all the property of the partners *Page 359 is "property of the debtor" within its meaning. In the case at bar there were no debts of the partner who executed the mortgage, and therefore no questions arise as to conflicting rights of joint and several creditors. In such cases the separate property of a partner is "added to the joint stock for the payment of the joint creditors." This view seems to me to follow from the very nature of the insolvent proceeding when applied to partners; for the natural persons associated together as partners are those who are discharged from their debts — not the "partnership," which is a mere name having no legal entity distinct from the persons who use that name.
I do not think that the fact that the mortgaged premises were by the court set apart to the debtor as a homestead changes the aspect of the question. The property was still the property of the debtor, and the statute makes no distinction in this regard between property exempt from execution and that not exempt. The statement in the majority opinion, that the release by appellant of its security would not add to the fund available to partnership creditors, is, I think, unwarranted. Section 44 of the Insolvent Act (Stats. 1895, p. 145) provides that the release or conveyance of the claim must be to the assignee, not to the debtor. Under the terms of that section appellant, before being allowed to prove his whole debt, must either deduct the value of the property held by it as security, or convey its claim to the assignee, and in either event the fund available to partnership creditors would be increased by six thousand dollars — the admitted value of the property held as security. As the facts appear in the transcript, the debt of the appellant was reduced to the extent of six thousand dollars; and it is substantially in the same position that it would have occupied if the six thousand dollars had been actually paid it in cash. I think, therefore, that the order appealed from should be affirmed.
Angellotti, J., concurred with McFarland, J.