CERTIORARI TO THE SUPERIOR COURT FOR THE COUNTY OF SUFFOLK, STATE OF MASSACHUSETTS.
Taft, Holmes, Van Devanter, McReynolds, Brandeis, Sutherland, Butler, Sanford, Stone
MR. JUSTICE SANFORD delivered the opinion of the Court.
This suit was brought by the International Trust Co. in a Superior Court of Massachusetts against Samuel A. Myers and Harry Myers, partners composing the firm of S. A. & H. Myers, to hold them individually liable upon certain notes that had been executed by the partnership, in the firm name, for a partnership obligation, and endorsed by them personally. The defense was that the individual liabilities of the defendants had been discharged
by a composition in a prior proceeding in bankruptcy. The Superior Court sustained this defense, and dismissed the plaintiff's bill. On appeal, the Supreme Judicial Court -- without entering judgment -- directed the Superior Court, by a rescript, to reverse its decree and enter a decree for the plaintiff. 252 Mass. 94. The Superior Court, pursuant to the rescript, entered a decree against the defendants in the respective amounts of their individual obligations as indorsers upon the notes.*fn1 This being, under the practice that was followed,*fn2 the final decree in the case and not appealable, Boston, Petitioner, 223 Mass. 36, is to be regarded as the final decision of the highest court of the State in which a decision could be had; and the writ of certiorari was therefore properly directed to the Superior Court. See Davis v. Cohen Co., 268 U.S. 638, 639.
The Bankruptcy Act*fn3 provides, in so far as pertinent here, that a partnership may be adjudged a bankrupt, § 5 a ; that a "bankrupt" -- including, as defined by § 1 a, a person against whom an involuntary petition has been filed -- "may offer, either before or after adjudication, terms of composition to his creditors," after filing "a schedule of his property and the list of his creditors," § 12 a, as amended; that upon the confirmation of a composition the consideration shall be distributed as the judge shall direct, § 12 e ; and that the confirmation "shall discharge the bankrupt from his debts," § 14c.
The proceedings in the prior bankruptcy case, shortly stated,*fn4 show that creditors of the firm of S. A. & H. Myers filed an involuntary petition in bankruptcy, praying that
it be adjudged a bankrupt. There was no prayer that the partners be adjudged bankrupts individually. A partnership schedule, signed and sworn to by the partners, was filed, showing the partnership property and listing the partnership creditors. In this the plaintiff's notes were listed as unsecured debts of the partnership, with no statement that they were indorsed; and each of the partners stated that he had no individual debts and no individual assets that were not exempt. Thereafter, before any adjudication, the partners offered terms of composition, at forty per cent., to the unsecured creditors. The consideration therefor was deposited in the court; the composition was confirmed; and the consideration distributed among the partnership creditors. The plaintiff, as a creditor of the partnership listed in the schedule, received its proportion of the consideration, which it credited on the notes before bringing the present suit.
No offer of composition was made to the creditors of the individual partners, who were not listed; no consideration was deposited for them; and none was received by the plaintiff on account of the individual obligations of the partners as indorsers on the notes.
We are not called upon to determine whether the discharge of the notes as debts of the partnership which resulted from the confirmation of the composition, carried with it the discharge of the defendants, as partners, from the liabilities on the notes as partnership debts which arose from their membership in the firm.*fn5 The Supreme Judicial Court ...