MITCHELL ET AL.
v.
HAMPEL ET AL.
AI-generated. These summaries, headnotes, and key points are machine-generated and may contain errors or omissions. Always verify against the full opinion text below. Not legal advice.
When banking partners in Texas were adjudicated bankrupt after defaulting on bonds securing county deposits, the question arose whether the county could prove its claim against both the partnership estate and the individual estates of the partners who had signed the bonds both as firm principals and as individual sureties. The Supreme Court held that the county could pursue claims against both the partnership and individual estates on equal terms, rejecting the Circuit Court of Appeals' view that the Bankruptcy Act implicitly prohibited such double recovery by reserving individual estates solely for individual debts. The Court ruled that a partner may lawfully create separate contractual liability against his individual estate in addition to firm liability, and creditors who negotiated for such additional security have no obligation to share it equally with firm creditors who did not.
© FLexlaw, Inc. — AI-generated enrichments are proprietary. All rights reserved.
Mr. Justice Holmes delivered the opinion of the Court.
J.
H. P. Davis &' Co. of Fort Bend County, Texas, partners, were adjudicated bankrupts both as a firm and individually. They were hankers and depositories of County funds. As such they had given two joint and several bonds both signed by the firm in its firm name as principal and by some of the members of the firm individually, with others, as sureties. The County sought to prove its claim, not only against the firm but also against the separate estates of the surviving members, all of whom had bound themselves severally as well as jointly. The double proof was allowed by the District Court but was disallowed by the Circuit Court of Appeals on the ground that the Bankruptcy Act, § 5f, by appropriating the individual estate of a partner to his individual debts, excluded by implication debts that were also debts of the partnership from sharing with the former on equal terms. Act of July 1, 1898, c. 541, 30 Stat.
548. C. Tit. II, c. 3, § 23. 18 E. (2d) 3.
We are of opinion that the District Court was right. Except so far as the statute may prevent it, a solvent man dealing with another for money to be advanced to or deposited with his firm may determine the security to be given as he and the other may agree. He may mortgage his private estate, and we perceive no reason why he may not create a claim against it in bankruptcy by a separate contract of his own. The firm creditors know that they will be postponed to individual creditors, and that they have no voice or knowledge as to who the individual creditors shall be, or what the amount of their claims. The only real equity is not to disturb the equilibrium established by the parties. Those who take less security have no claim to be put on a footing with those who require more. It is not necessary to go into nice speculations as to what a partner can add to the liability already incurred when he offers a separate contract in addition to that which is made by his firm. We may assume that by the firm contract he is bound to the uttermost farthing — but he is bound only as a member of the firm, and therefore subject to the bankruptcy rule. His creditor may require more, and we can see nothing to hinder his putting himself in the position of a separate debtor also. Certainly we find no prohibition in the bankruptcy law. Myers v. International Trust Co., 273 U. S.
380. By making a separate contract, although in the same instrument, he calls the separate liability into being, as presumably he intends to and as he has ,a right to do. Robinson v. Seaboard National Bank of New York, 247 Fed. 667, 668, 669, Ibid, 1007. The intent and transaction are not illegal in Texas. Their specific effect depends on the Bankruptcy Act.
We have dealt with the only question which induced the granting of the writ. It does not appear to us necessary to go into further details.
Decree reversed.
Cases With Similar Vibessemantic neighbors from the corpus
Citator
Cited By
-
In re Hurley Mercantile Co. v. Atascosa Cnty. State Bank of Jourdanton, 56 F.2d 1023 (5th Cir. 1932)…pends on who got the benefit of it if there is not an express contract. Schall v. Camors, 251 U. S. 239, 40 S. Ct. 135, 64 L. Ed. 247. If there is an express contract, those persons "are liable who contract to be. Mitchell v. Hampel, 276 U. S. 299, 48 S. Ct. 308, 72 L. Ed. 582. The note here in question is the express contract of the firm alone, and is a partnership debt. It was properly proved as such. Although for some administrative purposes it may have been provable in the individual bankruptcies (see…1 / 2
-
The NEW York v. DOX, 249 F.2d 572 (1st Cir. 1957)…33, 69 L.Ed. 212; Baltimore & Ohio R. R. Co. v. Groeger, 1925, 266 U.S. 521, 45 S.Ct. 169, 69 L.Ed. 419; Missouri Pacific R. R. Co. v. Aeby, 1928, 275 U.S. 426, 48 S.Ct. 177, 72 L.Ed. 351; Kansas City Southern Ry. Co. v. Jones, 1928, 276 U.S. 303, 48 S.Ct. 308, 72 L.Ed. 583; Atlantic Coast Line R. R. Co. v. Davis, 1929, 279 U.S. 34, 49 S.Ct. 210, 73 L.Ed. 601; Chesapeake & Ohio Ry. Co. v. Mihas, 1929, 280 U.S. 102, 50 S.Ct. 42, 74 L.Ed. 207; Pennsylvania R. R. Co. v. Chamberlain, 1933, 288 U.S. 333, 53…
-
Rochelle v. United States, 521 F.2d 844 (5th Cir. 1975)…’s liability has matured are to be treated as individual debts under § 5g, the government says it should be permitted recovery against both estates, so-called double proof,8 and cites in support thereof § 5h, 11 U.S.C. § 23h, and Mitchell v. Hampel, 276 U.S. 299, 48 S.Ct. 308, 72 L.Ed. 582 (1928). Under this argument if a partnership and a general partner both bankrupted and each estate paid 50 cents on the dollar, the partnership creditors would be paid in full, getting 50 percent from each estate, while i…
Previewing 3 of 9 citing cases — full citator treatment, depth of discussion, and citing context are member features.
Join FLexlaw to unlock all legal intelligenceAuthorities Cited
- Hiscock v. Varick Bank of N.Y., 206 U.S. 28 (U.S. 1907)
- Schall v. Camors, 251 U.S. 239 (U.S. 1920)
- Myers v. Int'l Tr. Co., 273 U.S. 380 (U.S. 1927)
- Hampel v. Minkwitz, 18 F.2d 3 (5th Cir. 1927)
- Holland Furniture Co. v. Perkins Glue Co., 275 U.S. 512 (U.S. 1927)