Cowan v. Their Creditors

Belcher, C. C. W. W. Cowan and Thomas Scott were partners engaged in the business of farming and frúit-raising in the county of Santa Clara. In September, 1885, they filed in the superior court of that county a petition, asking to be adjudged insolvents, and discharged from their debts. All of the property men*, tioned and described in the petition and schedule was partnership property, used in carrying on the business of the firm, and all the debts were partnership liabilities. In due time each of the petitioners applied to the court to have certain parts of the property set apart for hig use and benefit, on the ground that such parts were by law exempt from execution. Subsequently, Scott withdrew his petition, and after a hearing the court denied the petition of Cowan, upon the ground that he “was not entitled to have any part of the property claimed by him, and heretofore described by him, set apart to him, for the reason that the whole thereof is partnership property, and therefore not exempt by law*from execution.” Cowan appealed from the order, and the only question is, Was the court right in its conclusion as to the law.applicable to the matter?

Section 690 of the Code of Civil Procedure provides for the exemption from execution of property belonging to a judgment debtor, and names the kinds and amount of property which shall be treated as exempt.

Section 35 of the Insolvent Act of 1880 provides that two or more persons who are partners in business may be adjudged insolvent, “in which case an order shall be issued in the manner provided by this act, upon which all the joint stock and property of the partnership, and also all the separate estate of each of the partners, shall be taken, excepting such parts thereof ás may be exempt bylaw.” And section 60 of the act declares that “it shall be the duty of the court having jurisdiction of the proceedings to exempt and set apart for the use and [405]benefit of said insolvent such real and personal property as is by law exempt from execution.”

If the petitioner had been the sole owner of the property in question, there can be no doubt that it would have been exempt from execution, and the duty of the court to set it apart for his use and benefit. Did the fact that it was partnership property change the rule in this regard, and make it subject to seizure and sale by creditors ?

:The authorities upon the question are sharply conflicting, and a majority of the cases hold that partnership property is not exempt. (See Thompson on Homesteads and Exemptions, secs. 194-216, where the eases are very fully collected and reviewed. See also Freeman on Executions, 2d ed., sec. 221.) ■ ■