1876.] Opinion of the Court--Hoffman, J. to engage in the trade were unable to obtain at Mazatlan, La Paz, and Cape St. Lucas, hides at the price at which these goods were invoiced. The explanation of this fact, given by the defendant's witnesses, is that the trade in hides is at these places in the hands of a small number of persons who enter into contracts with the rancheros to take all their hides, of whatever quality, at a fixed price, and to make advances to them on the credit of the hides to be subsequently delivered. They thus have, it is said, a kind of monopoly which not only enables them to secure hides at a lower rate than that which a foreigner would be obliged to pay, but also to advance the prices at the ports of shipment. It is also testified that when "culls," or damaged hides, bull hides, etc., are taken into account, an average price of one dollar and fifty cents is not an unfair statement of the cost, although selected lots might be worth much more. A large number of witnesses testify to these facts, among them three ex-consuls of the United States, who are acquainted with or have been engaged in the trade. What conclusion should be reached after a careful consideration of all the testimony, I have not determined, and it is unnecessary now to decide. I advert to the state of the proofs merely to show that the undervaluation, if any, was not so gross and indisputable as to justify the belief that it was notorious to all engaged in the trade, and consequently was known to the defendant. On the issue, therefore, upon which, by the terms of the act, I am required to pass as a distinct and separate proposition, I find that it is not proved that the acts alleged in the complaint were done with an actual intention to defraud the United States. Judgment must, therefore, be entered for the defendant. Opinion of the Court-Hoffman, J. [April, R. F. OSBORN v. H. E. MCBRIDE. DISTRICT COURT, DISTRICT OF CALIFORNIA. 1. FIRM PROPERTY SOLD ON JUDGMENTS AND EXECUTIONS AGAINST THE PARTNERS SEPARATELY.--Where judgments had been obtained before the commencement of proceedings in bankruptcy against each of two partners in trade by a separate creditor of each, and the firm property had been sold under executions issued on the separate judgments, and purchased by an agent of the plaintiff in the separate suits: Held, that neither he nor his assignee was entitled to hold the property as against the assignee in bankruptcy of the firm. Before HOFFMAN, District Judge. S. P. Hall, solicitor for complainant. J. W. Winans, solicitor for defendant. HOFFMAN, J. The facts as admitted by the parties at the return of the rule to show cause are as follows: On the ninth day of October, 1875, Isaac Pollard and Alexander A. Cook filed their petition praying to be adjudged bankrupts individually and as a firm, and on the same day were so adjudged. On the fifth day of October, three days previously to the commencement of the proceedings in bankruptcy, judgments were obtained against Pollard and Cook, respectively, in two several suits instituted against them by a separate creditor of each. The interest of each in certain leasehold property described in the bill was levied on by the sheriff, and subsequently sold under the several executions. The sale took place subsequently to the proceedings in bankruptcy. No order enjoining the sale had been obtained. The plaintiff in each of the suits was the same person. The property was bid in by his agent. The interest of Pollard was sold for $252.14, and that of Cook for $127.70. The execution against Pollard was for $207 with interest and costs. That against Cook was for $85.65 with interest 1876.] Opinion of the Court-Hoffman, J. and costs. Certificates of sale were duly issued to the purchaser at the execution. These certificates are alleged to have been subsequently assigned to one J. S. Lutz, a bona fide purchaser for value, and without notice of any irregularity or invalidity in the sales. They were subsequently assigned to the defendant who, the bill avers, has since collected rents of the sub-tenants, and has sued one of them who declines to pay. The complainant avers that the leasehold property thus sold was the property of the firm and constitutes a part of the joint assets. I do not deem it necessary at this stage of the proceedings to consider the question how far the right of a judgment creditor to sell property of the debtor, levied on before the commencement of proceedings in bankruptcy, is affected by the fact that such proceedings have been instituted, and the title of the bankrupt divested before the sale is actually made. I will assume that the purchaser, at the execution, acquired all the right and title which each of the judgment debtors separately had in the property sold. And that the present defendant has succeeded to those rights. But if the property levied on was firm assets, what was the interest of each partner, which his separate creditors could levy on and apply to the satisfaction of their claims? Evidently his interest in the firm, i. e., his share of the surplus that might remain after all the partnership debts were paid. Mr. Collyer, in his work on partnership, states, as undoubted law, that where the separate creditor of one partner has taken partnership property in execution for his separate debt, the other partners may file their bill against the separate creditor, the debtor partner and the sheriff, praying a general account of the partnership and payment of what is due to them, and that the creditor and sheriff may be enjoined from proceeding under the execution and selling the stock and effects; and a court of equity will give relief accordingly. (Section 831.) And the same relief is given in favor of the assignees in bankruptcy. (15 Vesey, 599; 4 Vesey, 396.) In Moody v. Payne, 2 Johns. Ch. R. 548, Mr. Ch. Kent Opinion of the Court-Hoffman, J. [April, refused to enjoin an execution and sale until the partnership accounts were taken and liquidated, on the ground of the absence of precedents. But Mr. J. Story considers this an insufficient reason for denying the injunction, and Mr. Ch. Kent admits in his commentaries (vol. 3, p. 65, 5th ed in nota) that the more fit and suitable rule of practice would seem to be to have the adjustment of the partnership accounts precede the sale. In Douglas v. Winslow, 20 Main 92-3, Mr. Justice Weston, speaking of the right of a separate creditor to attach the interest of one partner in the goods of the firm, says, "This right has been repeatedly exercised and has never been defeated so far as the cases have come to our knowledge, unless in behalf of partnership creditors." So in Tappan v. Blaisdell, 5 N. H., 193, it is said by Richardson, C. J., to be well settled that partnership property cannot be holden to pay the separate debt of an individual partner until all the partnership debts are paid. All that can be taken is the interest of the debtor in the firm-not the partnership effects themselves, but the right of the partner to a share of the surplus that may remain after all the debts are paid." In Vermont the partnership creditors are in equity preferred to separate creditors, out of the partnership assets of an insolvent firm, notwithstanding the separate creditors have first attached those assets. (Washburn v. Bk. of B. F., 10 Law. Rep., 269; Bardwell v. Perry, id. 257.) Mr. Ch. Kent states the rule to be "that partnership effects cannot be taken by attachment or sold on execution to satisfy a creditor of one of the partners only, except it be to the extent of the interest of such separate partner in the effects of the settlement of all accounts: The sale is made subject to the partnership debts, and is, in effect, only a sale of the undefined surplus interest of the partner defendant, after the partnership debts are paid." He adds in a note, "the doctrine of moieties is now exploded, and the creditors under execution or process of foreign attachment, or assignees of a partner or purchasers at sheriffs' sales, can take only the interest of the debtor in the partnership 1876.] Opinion of the Court-Hoffman, J. funds, subject to the accounts of the partnership. That interest, and not the partnership effects is sold, and that interest is merely the share found to belong to the debtor upon an adjustment in equity of the partnership accounts." (See Story on Partn., sec. 261. 262.) Mr. Gow, on Partn., sec. 365, says "The levy under the execution transfers no part of the joint property. It merely gives the right to an account." I do not understand that these general and, indeed, elementary principles are denied. But it is contended that the purchaser at the executions, or his assignee, may now hold the partnership property bought by him freed from the claims of the joint creditors, because the interest of both parties has been levied on and purchased by him, and this accounting is not now asked for by either partner. No authority is cited for this position. The rights to be protected are those of the joint creditors; and perhaps those of the separate creditors might be involved if the plaintiff in the two suits against the individual partners is allowed to appropriate all the joint assets. The Bankrupt Act explicitly directs that the joint assets shall be first applied to the payment of joint debts, and the separate assets to the payment of separate debts. The right thus given to these classes of creditors, respectively, is absolute, and must be enforced by the court. It is conferred by law, and is not evolved out of, or through the equity of the partners, which is by some supposed to be the only foundation of the analogous rule of the Court of Chancery. The sale on execution of either or both the partners' interest in the joint assets in satisfaction of a separate debt gave to the purchaser, as we have seen, only an interest in the assets which might remain after the payment of the partnership debts. The fact that he purchased the interest of two of the partners sold on separate executions, can have no effect to enlarge the interest of either acquired on the separate sale of that interest. He took merely a right to an account, and can now hold, the partnership assets only subject to that account, and in entire subordination to the claims of the joint creditors. If, upon the settlement of the joint estate, any surplus should |