State ex rel. v. State Medical Exam- Union Depot St. Ry. & Transf. Co., 89 238 Upson, State v., (Io.) 173 915 27 238 256 241 Van Ness v. Hadsell, (Mich.). 585 Stephenson v. Cook, (Io.).. 182 Stevens, Kerrick Van Sickle, Buffalo Co. v., (Neb.).. 261 888 Van Staden v. Kline, (Io.). 3 Stewart, Ex parte, (Neb.). 255 Stewart, Collins v., (Neb.). 11 Veits v. Toledo, A. A. & G. T. Ry. 818 Stidger v. City of Red Oak, (Io.).......... Stillwater, City of, Campbell v., (Minn.) Stimson, Keenan v., (Minn.). Stodgill, Rippe v., (Wis.). 364 Vindquist v. Perky, (Neb.)....... 301 ..... 635. Stone v. Evans, (Minn.). 149 Vogel v. Osborne, (Minn.).. 129 Streitz, Holst v., (Neb.).. 307 229 Sture, Red River & Lake of the Sturtz v. Tanner, (Wis.). Wabash, St. L. & P. Ry. Co., White v., (lo.). Wagner v. Cheney, (Neb.) 815 Wait v. Sherman, (Wis.). 436 222 653 628 113 314 315 27 118 Walker, City of Lincoln v., (Neb.).. 538 1 Wamsley, George v., (Io.).. ... 557 Tallon v. Grand Portage Copper M. Warner, McClure v., (Neb.). 387 878 Wasey v. Mahoney, (Mich.). 901 Tanner, Sturtz v., (Wis.). 928 Washburn, In re, (Minn.).. 324 Waterman, Cleghorn v., (Neb.). 252 Territory ex rel. v. Nowlin, (Dak.,) -three cases.... Waterman, Cleghorn v., (Neb.). 636 430 Waterman, Cleghorn v., (Neb.). 577 Territory ex rel. v. Scott, (Dak.).... Tessier v. Crowley, (Neb.).. 264 Thayer v. Augustine, (Mich.). 898 Thomas v. Thomas, (Neb.)... Thomas, Bell v., (Wis.). 926 Wayne Cir. Judge, Moore v., (Mich.) 801 Weatherby v. Meiklejohn, (Wis.)... 374 846 Webber, Congregational Ch. of Ionia v., (Mich.) 542 Thomason, Ex parte, (Neb.). Timme, State ex rel. v., (Wis.)...... 915 312 Webster, Whorton v., (Wis.). 907 24 Week v. Bosworth, (Wis.). 657 627 THE Northwestern Reporter. VOLUME XX. SUPREME COURT OF IOWA. GEORGE and others v. WAMSLEY and others. Filed June 12, 1884. 1. FRAUD ON CREDITORS-TRANSFER OF PROPERTY TO PARTNER. Where the property of a partnership is transferred to one of the partners for his benefit for a valuable consideration, he may hold it free from partnership debts. 2 SAME CONSIDERATION. An agreement between the members of a partnership and one of their number that if he will remain in the firm they will pay his private indebtedness, shows a valuable consideration; and the payment to a bank of this indebtedness held not fraudulent as to creditors. 3. SAME-PAYMENT-RELEASE OF SECURITY. Where a debt is paid its securities are released. Appeal from Butler district court. Plaintiffs brought an action by attachment against defendants Wamsley & Hartness, and caused the Butler County Bank to be served with process of garnishment. The garnishee answered, denying indebtedness to defendants, and denying that it held any property of defendants. Issue was joined upon this answer, and upon the final hearing of the cause the garnishee was discharged. Plaintiffs appeal. The facts of the case appear in the opinion. Mills & Keeler and H. C. Hemenway, for appellants. Gibson & Dawson and C. A. L. Rozell, for appellees. BECK, J. 1. The answer of the garnishee was made before a commissioner, and in detail states and explains the transactions by virtue of which plaintiffs claim that it is liable in this proceeding, and in effect denies indebtedness to defendants, and liability as a garnishee. The plaintiffs filed a pleading controverting the answer of the garnishee, and showing facts whereon they base the claim of its liability in this proceeding. The pleadings of the parties need not be more particularly stated just now. The facts upon which the garnishee is sought to be charged are shown by the evidence to be as follows: The defendants were engaged in a general merchandise business upon a capital of $500, contributed in equal parts by v.20,no.1-1 each partner. Wamsley had no means other than the sum he put in the firm, and Hartness was entirely without means, and was indebted as a partner in a firm that had ceased to do business. He borrowed from the bank the money which he put into the business with Wamsley. He also owed the bank as a partner in the firm with which he had before been connected. Wamsley & Hartness became indebted to the bank in the course of their business. It is shown that Hartness, who had more acquaintance with and experience in business than his partner, proposed to retire from the firm and appropriate his interest therein to the payment of the debts he owed to the bank. He was induced to remain in the concern by an arrangement that the firm should pay his debts to the bank, amounting to less than $500. In pursuance of this arrangement the partners borrowed of Perrin, the vice-president and a director of the bank, a sum sufficient to pay the debts, both of the firm and Hartness, to the bank. This loan was secured by a chattel mortgage upon the stock of goods held by the firm, and the money realized by the loan was paid to the bank. The next day after the execution of the mortgage to Perrin, the firm made a bill of sale to Burton on account of an indebtedness to him. Burton took possession of the goods, and immediately the partners made an assignment of all their other property for the benefit of their other creditors, whose debts amounted to more than $3,500. The invoice value of the property assigned was about $1,200, and $575 have been realized therefrom. The evidence shows that the bank, at the time the money was borrowed and paid to it, had notice of the arrangement by which the payment was effected, and also had notice of the pecuniary condition of Iartness. It is not shown that the bank had knowledge of the indebtedness of the firm to other creditors besides itself and Burton, and of the value of its assets. The partners testify that they believed the device of borrowing the money of the bank to retain Hartness in the firm would enable it in the course of its business to pay all its debts, and it is shown that one or both of them so informed the bank. 2. The plaintiffs claim that the bank should be held liable in this proceeding for the amount of the individual debt of Hartness, paid to it by the firm. The grounds upon which this claim is based we understand to be: First, that the act of the bank in securing payment from the firm was fraudulent in fact as against other creditors of the firm; second, the payment of the individual debt of the partner from the firm assets is in law a fraud as against other creditors of the copartnership, being regarded as a voluntary payment. We do not understand counsel for plaintiffs to claim that the partnership debts are liens in law upon the firm property, but that they are enforceable as equitable liens. 3. We discover no evidence warranting the conclusion that the acts of the bank, connected with the transaction in question, were fraudulent in fact. It clearly appears that they were not devised for the purpose of defeating other creditors, but were done in good faith for the purpose of securing payment of its own claim against the firm and Hartness. The bank had no notice of the insolvency of the firm, and was authorized to believe the statement made by the partners that it would be able, through the arrangement by which Hartness was retained in the concern, to pay all its debts. With this information and belief based thereon, there could have been no bad faith upon the part of the bank. 4. We think the position of plaintiffs' counsel, which seems to have support in authorities cited by them, to the effect that the payment of the individual debt of Hartness out of the assets of the firm is in law regarded as voluntary and fraudulent as to the creditors of the copartnership, is not in accord with the law as settled by prior adjudications of this court. We have held that property of a firm may, for a valuable consideration, be transferred to a partner, and held by him free from partnership debts. City of Maquoketa v. Willey, 35 Iowa, 323. See, also, as bearing upon this point, Scudder v. Delashmut, 7 Iowa, 39; Hawkeye Woolen Mills v. Conklin, 26 |