12 Wis. 138 | Wis. | 1860
By the Court,
We think the court below properly found the existence of the original agreement of partnership set forth in the complaint. ■> The answer of the defendant Morrison, admitting the execution of the agreement, and that, in pursuance of it, he brought his stock of goods to Madison, and opened the store, as the acting partner, and opened books in the name of the company, establishes this branch of the plaintiff’s case in the first instance, and devolves upon Morrison the burden of showing that such partnership ceased after having been so entered upon.’ His counsel insist that it was abandoned in fact, without ever having been entered upon at all. But we do not think this position is sustained, either by his answer or by the evidence. The answer itself only asserts, on information and belief, that Doty and O'Neil had never contributed their shares of the capital, or any part thereof, and then adds, that if they had done so, and had not been satisfied by said Morrison, “the courts of equity were open to them,” &c. This kind of denial is not calculated to free the mind from a suspicion that the party denying had quite a distinct impression that the fact might possibly be otherwise. And it does not go far to support the theory that the partnership agreement was abandoned. The evidence also, though not
But the most difficult question in the case grows out of the alleged subsequent agreement, by parol, to extend the partnership to dealing in real estate, and the allegation that, in pursuance of it, the other partners conveyed to Morrison divers lots by absolute deeds, upon an understanding that he was to hold them in trust for the partnership, and to rccon-vey to each his interest when required. The question at once arises, whether this agreement is not within the statute of frauds.
In the case of Rasdall's Administrators vs. Rasdall, decided at the last term, (9 Wis., 379,) we held that parol evidence
These cases and those mentioned in them, are of two classes; those where the real estate was purchased with partnership funds, and those where the parties, by their written agreements, had clearly established the partnership character of the land in question. So far as the first class is concerned, we can see nothing more in the doctrine they hold, than an application of the ordinary rule respecting implied or resulting trusts. That rule is, that a trust results in favor of the party who pays the consideration. Therefore, where a partnership pays the consideration, a trust results in favor oi that. But those trusts are not within the statute, and therefore no question arose under it.
In the other class of cases, there was no dispute as to the partnership character of the real estate. In most of them the parties owned it jointly, so that there was no question as to the title. And in such cases, the courts have held that it was to be treated as partnership property, so far as the payment of the debts of the partnership was concerned, though for other purposes it was governed by the rules ordinarily
There is still another class of cases which establish the proposition that real estate may be regarded as an incident to'a trading or manufacturing business, and that a partnership in the business being shown, the. law implies that the one holding • the legal title to such real estate, holds it in trust for the partners. Some instances of this kind are given in the case in 10 Cushing. The case of Forster vs. Hale, 5 Vesey, 308, is of the same character. The Lord Chancellor said that the partnership in carrying on the colliery being proved as a fact, the lease of the land was an incident to the business, and although the title was in one, there would be a resulting trust in favor of the partners.
These cases, therefore, go no further than to establish three propositions:
1. Where real estate is bought with partnership funds for partnership purposes, there is a resulting trust in favor of the partnership, though the title be taken in the name of one.
2. Where the title is held by all the partners jointly, so as to be entirely consistent with the character of partnership property, the fact of partnership may be shown by parol, and that the property was held for partnership purposes, and from these facts the law will imply its partnership character, and such trusts as result therefrom.
3. A partnership in any branch of trade or business may be shown by parol as an existing fact, and then, whatever real estate is held for the purpose of such business, is regarded as an incident thereto, and the law will imply a trust in favor of the partnership where the legal title is not in all.
Now, without examining whether any of these propositions stand among the many successful invasions upon this statute, it is obvious that none,of them goes to the extent of saying, that a bald parol agreement for a partnership in real estate as such, may be shown, to create a trust in land held
This brief extract clearly exposes the fallacy of the proposition ; and yet the Yice-Ohancellor went on to sustain it, upon the ground of authority. But we do not think any that he cited support the doctrine, or go further than those we have before alluded to. On the other hand, there is an elaborate opinion by Judge Story, in Smith vs. Burnham, 3 Sum., 435, in which he holds such an agreement to be clearly within the statute of frauds and void. See also Oollyer on Partnership, § 3, note; Henderson vs. Hudson, 1 Mun., 510. If the authorities, therefore, were equally divided upon the point, we should be inclined to follow those which uphold the law, rather than such as admit that they repeal it, for we are unable to understand by what authority courts can repeal a statute.
And what safety would there be, if the proposition were once established, that by alleging a partnership, the statute of frauds is entirely avoided, and the parties may then prove whatever interest in land they please by parol, against the absolute title of the deeds ? What would hinder the separ
We are of opinion, therefore, that even if the allegations in the complaint, respecting the subsequent agreement as to dealings in real estate, should be held to show a partnership, yet the absolute title of Morrison, under his deeds, could not be changed into a trust estate by virtue of such verbal agreement. But although this point was not made upon the argument, we are satisfied that the allegations of the bill are not sufficient to show a partnership in respect to any of the real' estate, except such as was acquired for the store. True, it alleges that the partnership was extended to dealing in real estate, but it then proceeds to state, specifically, what such dealing was to consist in, and what was the actual agreement with respect to the lots conveyed by the other partners to Morrison. And these specific allegations must control the general words, and if they do not show a part
How, what constitutes this a copartnership? We are unable to perceive. Standing alone, it is nothing more than a conveyance of certain lots by three persons to another, with an understanding that they were to be jointly improved, and he was then to reconvey to each his share. The element of risk, and of profit and loss in conducting the business, is lacking. Eor a joint interest in the increase of value of real estate, either by its rise, or by improvements put on by parties jointly owning it, does not constitute a partnership. Otherwise all joint owners would become partners, for they are always jointly interested in the profit of increased value as well as in the loss by depreciation. But, to make a partnership, there must be a dealing in the article for the purpose of making profit from the dealing, and that is not provided for here.
It may be admitted that dealing in real estate may be the proper subject of a copartnership agreement, though this has sometimes been held otherwise. Coles vs. Coles, 15 Johns., 159; Baker vs. Wheeler, 8 Wend., 505. It was there held that the title to real estate was of such a nature as prevented the
Neither does the agreement to share equally the expense of building the improvements make it a partnership. In Noyes vs. Cushman, 25 Vt., 390, the defendants had purchased a grist mill and privilege, under an agreement to rebuild it and share the expense equally. The court said: “ Their mutual obligation to rebuild and repair does not necessarily constitute them partners, for, as observed by Judge Bronson, in Porter vs. McLure, 15 Wend., 187, ‘they may or may not become partners in carrying on the milling business.’ A mere community of interest in real or personal estate, does not constitute a partnership. But where a purchase of that character is made, and the premises are rebuilt or repaired for the purpose of prosecuting some joint enterprise or adventure, under an agreement to share in the profit and loss of the undertaking, the contract then becomes one constituting a partnership.”
In the case alluded to in 15 Wend., the defendants owned a mill-site and had contracted for the erection of a mill. The court said: “The mill when completed, like the site which it occupied, would be real estate, and the defendants would hold it by the same tenure by which they held the land. Whatever that tenure might be, it would not constitute them partners; they might or might not become part
Upon all these authorities, we think there was no partnership in the real estate, even according to the facts alleged in the bill It seems to have been nothing more than an agreement to convey the title to certain lots owned by the three, to Morrison; they were then to put certain improvements upon them, and upon those which Morrison was to, put in, and then he was to convey to each of' the others an undivided fourth part, on request. There was to be no purchasing of lands, no sale, nothing in which they were to share the profit and loss. The complaint excludes all idea that there was to be any sale of these lands for the put-poses of profit. Eor if such was the case, then all the allegations in respect to the purchase by Dean, and his notice, &c., are out of place. For if the property was partnership property, and the title was placed in Morrison for the purpose of dealing with it as such, then he could sell the whole interest; and though the purchaser had notice of such partnership he would undoubtedly take a good title. But the bill was framed upon the theory that there was to be no sale, but that the parties were to retain their respective interests, and have them reconveyed. There can be no doubt that this agreement respecting the real estate, standing alone, would not amount to a partnership. Does the fact that the parties were engaged in a mercantile partnership give it any different effect ? We are unable to see that it does. For certainly it cannot be said that wherever-a partnership exists, that changes the law with respect to agreements made by its members about real- estate outside of that partnership. We have already seen that a partnership may be made the ground of Implying certain trusts in real estate used in the business, or acquired with its funds. But this furnishes no reason for saying that where the members of a partnership make an agreement with respect to real estate which they own separately, the law applicable to such agpee-
In the case of Coder vs. Huling, 27 Penn. St., 84, tbe court say: “When two partners, engaged as such in a particular business specified in their articles, buy land not necessary for their business, but with views and purposes beyond and outside of it, such land is held by them as tenants in common ; it is not partnership property.” And if such lands would be held to be outside of the partnership, so much the more would lands which the partners owned separately, and not used in anyway for the partnership purposes, be entirely unaffected by it, and any agreement they might make respecting it would stand upon the same footing as to its legal effect, as though such partnership did not exist. If such agreement would be void within the statute of frauds, such partnership would not prevent that effect. If it would not in law amount to a partnership as to such real estate, then the existing mercantile partnership would not make it so. Thus, suppose A and B each owns a lot. They agree that A shall convey his lot to B by an absolute deed; that they will make a joint dwelling house on the two, and then B shall reconvey to A an undivided half. This agreement would clearly be within the statute. It would clearly not amount to a partnership. But suppose A and B had been at the time partners in law, or in medicine, or in trade, would that vary the effect of this agreement as to the lots? We' cannot see how it could. The agreement concerning the real estate, as set up in the complaint, is entirely separate and distinct from the mercantile partnership. Each of the parties was to put in an equal amount of real estate, each to contribute equally in the improvement, and each to have an undivided one fourth reconveyed. It has, by its terms, no connection whatever with the trading partnership; and the general allegation that the latter was extended to this new arrangement, does not vary its legal effect.
Our conclusions may be thus stated : An agreement for a partnership to consist in dealings in real estate, is within the statute of frauds, and void unless in writing.
The fact that the parties making it are engaged at the time
The case, therefore, with respect to this real estate, stands upon the same footing as the Easdall case, and is an attempt to show by parol an express trust in lands conveyed by deeds absolute on their face. We must hold such evidence inadmissible under the statute of frauds. The lot acquired for the store was clearly trust property. It would be so as incident to the mercantile business, within some authorities, but it is not necessary to rely-on that doctrine here, for the original agreement expressly provided for its purchase. Morrison will, of course, be liable to account for the proceeds of that, it having passed to Bean through a honafide,purchaser without notice, and for any part of the partnership funds or property which he may have applied to the improvement of real estate to which he had the title, as well as for the shares of the others in the mercantile business, and the profits, &c.
It follows, therefore, that the decree must be affirmed so far as it adjudges the existence of the mercantile partnership, and an account between the parties therein; and that it must be reversed so far as it adjudges a partnership in real estate, other than the store lot, and an account of such partnership; and also all that part of the decree from which the defendant Bean has appealed, is reversed. The order for reference will remain, but the accounting will extend only to the mercantile partnership.