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Partnership Assignments

An assignment must have the consent, express or implied, of all the partners, and the fraudulent intent of one of the partners renders it void. A firm cannot prefer individual debts, or prefer debts due to partners but after providing for the payment of firm debts, individual debts may be preferred out of individual shares.

The property of one partner must not be appropriated to the payment of the debts of another, in making an assignment.

A partner may appropriate his individual property to pay firm debts, but it is void as to his individual creditors.

When the firm and individual property is assigned, the surplus cannot be reserved to the assignors, to the exclusion of individual creditors; but a firm assignment may be made for the payment of the firm debts, without providing for the individual debts. An insolvent limited partnership cannot create preferences, or provide for a pro rata payment to a special partner.

A judgment creditor must bring action to set aside the assignment before the discharge of the assignee; but a creditor having assented to the assignment cannot afterwards attack it as fraudulent. The sheriff may levy on property that has been fraudulently assigned, but not on its proceeds.

A creditor, under the code of New York State, may sue to compel the discovery of property; and he may attach property in case the debtor intends to make a general assignment with fraudulent intent. But an assignment may be invalid without showing fraudulent intent. Actual fraudulent intent must be shown to render the assignor liable to arrest. An action may be brought by an assignee in bankruptcy to compel the turning over of the property to him, if the assignment is voluntary, and is deemed fraudulent and void.