Isaacs v. Jones

California Supreme Court Jun 24, 1898 No. Sac. No. 250Published

Before: Beatty, Harrison

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Holding. A creditor of an individual partner does not have a sufficient interest in a partnership dissolution and accounting action to intervene, as the court's jurisdiction is limited to settling partnership affairs rather than adjudicating individual debts.

Issues

Whether a creditor of an individual partner has a right to intervene in a partnership dissolution and accounting action.
Whether the appointment of a receiver or a guardian is subject to collateral attack by a third-party creditor.

Disposition. affirmed

Quotations verified verbatim against the opinion

“The interest here referred to must be direct and not consequential, and it must be an interest which, is proper to be determined in the action in which the intervention is sought.”

“Neither of these matters is properly a subject to be litigated in this action, and neither of them gives any ground for an intervention by the appellant.”

Synopsis

Settlement of Partnership—Receiver- -Intervention.—The right of a third person to intervene in an action for the settlement of partnership affairs is not enlarged or diminished by the action of the court in appointing a receiver, nor by his conduct after such appointment. Whatever error may have been committed by the court in the exercise of its jurisdiction to appoint the receiver, or in not controlling his conduct, can only be corrected at the instance of the parties to the action, and does not confer upon a stranger the right to intervene in the action.

Id.—Incompetent Partner—Order Appointing Guardian — Collateral Attack.—The action of a court of competent jurisdiction in appointing a guardian of an incompetent partner is not open to collateral attack, and, in the absence of a direct attack, the order therefor will be presumed to have been correctly made.

Id.—Right of Intervention—Attachment of Partner’s Interest.—An applicant for intervention in an action, in order to avail himself of the right conferred by section 387 of the Code of Civil Procedure, must have a direct interest either in the matter in litigation, or in the success of one of the parties to the action, or against both of them, and such interest must not be consequential, and must be one which is proper to he determined in the action. A creditor of an individual partner, who has merely an attachment upon his interest in the partnership, has no such interest in an action to wind up the affairs of the partnership as to entitle him to intervene.

Id.—Rights of Attaching Creditor.—The attaching creditor who has levied upon the interest of an individual partner in the partnership assets has no right to' delay the action to wind up the affairs of the partnership until the recovery of judgment in the attachment suit; but if he shall obtain judgment and sell the interest of the individual partner, such sale will entitle the purchaser to receive from the court whatever may be found to belong to such partner.

Id.—Fraudulent Mortgages.—If the partner whose interest is attached has made fraudulent mortgages upon the attached property, their invalidity is to be determined when the purchaser of the property under execution shall become clothed with title thereto, and the question can give no ground for intervention by the attaching creditors in the suit to settle the partnership.

Id.—Conspiracy to Defeat Attachment Suit.—If the partners have conspired to defeat the attachment suit, the resistance to such conspiracy must be made in that suit, and not by intervention in the suit to settle the partnership.

Opinion — Harrison

HARRISON, J. The plaintiff and the defendant Bernhard Isaacs formed a partnership in the town of lone, in 1873, for business purposes, and continued to conduct business under their partnership relation until some time in 1895, when the defendant Bernhard became legally incompetent of contracting and by •an order and judgment of the superior court of Amador county was adjudged to be an incompetent person and unfit to manage his property; and the defendant Morris Jones was appointed the .guardian of his estate, and letters of guardianship were duly issued to him. Plaintiff thereupon determined upon a dissolution of the partnership, and has brought the present action to wind up it affairs, including an accounting and determination of the respective.rights of the parties hereto, and such distribution of the proceeds of the partnership property as may be proper and just. The complaint alleges also that it is necessary that a receiver of the partnership property be appointed “to take charge thereof, and to collect the demands due to said partnership, and to pay off the claims against the same, and deliver to the parties ■entitled their respective shares, after the same is determined by .an accounting and judgment of this court.” Upon the filing of the complaint and petition therefor a receiver was appointed. After the present action had been commenced, and after the appointment of the receiver, the Bank of Yolo commenced an action In the superior court of Yolo county, against the defendant Bern-hard Isaacs, upon a promissory note made to it by him in June, 1895, and caused a writ of attachment to be issued in said action, which was levied by the sheriff of Amador county upon certain real estate in said county, and under which garnishments were served upon the receiver and upon the plaintiff and the guardian ■of Bernhard. Thereafter the Bank of Yolo presented its petition [260]to the superior court of Amador county for leave to intervene in the present action “as a creditor of the defendant Bernhard Isaacs, one member of said firm, and to appear therein for and in behalf of itself and said Isaacs, as against the other parties to the action, and for all other persons similarly situated.” In its petition it set forth that it had commenced the action against. Bernhard, and the proceedings under the writ of attachment issued therein, and avers that it has thereby acquired a lien upon all of said property' of the partnership, and upon the interest of said Bernhard in the real estate levied upon. It also stated that Bernhard is reasonably worth not less than fifty thousand dollars, and that the officers of the petitioner “have been informed” that he intended to defraud it out of said debt, and that “said hank verily believes” that he has entered into a conspiracy with the plaintiff to defeat the bank in the collection of the note-The petition also alleges that the application for the appointment of the guardian of Bernhard was insufficient to support the order, and that- the facts alleged in the petition for said appointment were not sufficient to give the court jurisdiction to make the order, and that since his appointment the guardian has not properly discharged his duties; and also that the order appointing a receiver was not authorized either by the facts alleged in the petition therefor, or the manner in which the appointment was sought, and that the person appointed is unsuitable for that office. Upon these averments the petitioner asked, in addition to being permitted to intervene, that the parties to the action show cause why the order appointing a receiver should not he revoked, and all property belonging to Bernhard, or in which bebas an interest, be delivered to the sheriff, and why the sheriff should not proceed to sell and dispose of it under his writ of attachment. A citation was issued to the parties to the action, and their demurrer to the petition was sustained by the court, and an order made denying the petition. From this order the-Bank of Yolo has appealed.

Isaacs v. Jones

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Synopsis

Opinion — Harrison

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