85 Wis. 50 | Wis. | 1893
It is not claimed that the land in question, purchased, as it is charged, with partnership funds, was purchased for partnership uses or purposes, nor that dealing in real estate was in any sense within the scope of the partnership business. The theory of the case on both sides seems to be that Mr. Bosworth was never consulted and did not concur in or authorize the purchase, or have any" knowledge that it had been made, and that the Hopkins brothers intended the purchase’ for their own personal use and benefit, and not for the use and benefit of the partnership. The testimony shows very clearly that no other intention in point of fact can be imputed to them. It was contended on behalf of the appellants that a trust m in-vitum should be implied or raised against the Hopldns brothers, on the ground of a wrongful or fraudulent use of the funds of the firm in making the purchase, and that they should be held as trustees ex maleficio of the title thus acquired for the benefit of the firm; and this is in fact the case made by the complaint. But it was'also insisted that, as the purchase was made with partnership funds, without the knowledge or consent of Bosworth, a trust on this ground alone would result in favor of the firm, independent of any question of wrongdoing or fraud, by reason of such use of the partnership funds. But we are of the opinion, upon the facts, that there can be no resulting trust in favor of the firm in respect to the premises by reason of the purchase having been made with partnership funds, and that the title.or claim of the partnership in or to the lands depends wholly upon raising an implied trust against the defendants, the holders of the legal title, and on the ground that they purchased the lands by a wrongful or fraudulent use of the funds of the firm, so that a court of equity would impute to them, by reason of their wrongdoing and as a means of doing justice, an intention directly opposite to-that which they plainly had, namely, that they purchased
The statute of this state (oh. 96, R. S.) wrought some very important changes in the law of uses and trusts as it existed before it was adopted in 1850. The sweeping provision of sec. 2071, that uses and trusts, except as authorized and modified in ch. 96, were abolished, did not extend “ to trusts arising or resulting by implication of law.” This would have left trusts resulting from the ownership of moneys paid on the purchase of lands, in a case like this, as before the statute. Secs. 2077-2079 provide, in substance, that when a grant for a valuable consideration shall be made to one person, and the consideration shall be paid by another, no use or trust shall result in favor of the person by whom such payment is made, but the title shall vest in the person named as alienee in such conveyance; but every such conveyance shall be presumed fraudulent as against the creditors of - the person paying the consideration, and, when a fraudulent intent is not disproved, a trust shall result in favor of such creditors to the extent it may be necessary to satisfy their just demands; but these provisions do not extend to cases where the alienee named in the con-vejmnce shall have taken the same as an absolute conveyance in his own name, without the knowledge or consent of the person paying the consideration, or when such alienee, in violation of some trust, shall have purchased the lands so conveyed, with moneys belonging to another person. The purpose of the statute, which was taken from that of New York, was to prevent a debtor from defrauding his creditors by buying lands and paying for them with his own money, and taking the title in the name of another, for by doing so under this statute he fakes the risk of losing all claim to the land, and creates a trust therein in favor of, and enforceable by, his creditors. Kluender v. Fenske, 53 Wis. 122; Garfield v. Hatmaker, 15 N. Y. 475. Sec. 2077 does
The question, then, to be determined is whether the purchase in question was made by and through a wrongful and fraudulent application of the partnership funds, and without the implied consent of Bosworth resulting from the knowledge fairly to be imputed to him of all the facts and circumstances of the case, or an implied acquiescence on his part in the appropriation. In Kelley v. Greenleaf, 3 Story, 101, Story, J., declared the law to be “ that if a partner fraudulently or improperly, without the consent of his partners, applies the partnership funds to his own private purposes, or for his own private profit or emolument, or invests the same improperly in his own name and for his own use, the other parties have a right, if they can distinctly trace the investment, and elect so to do, to follow the partnership funds into the investment, and treat it as trust property held by that partner for the benefit of the firm.” In Shaler v. Trowbridge, 28 N. J. Eq. 595, it is held that the misappropriation must be fraudulent to give rise
The purchase of the property in question not being within the scope of the business of the partnership, and not having been made with the previous knowledge or consent of all the partners, it cannot be maintained that there was any breach of good faith or of any legal or equitable duty in the defendants in making it; and the sole question is whether, under the facts and circumstances appearing in evidence, the drawing and use of the moneys of the partnership to make the purchase in question, and the entry thereof on the books of the partnership, as hereinafter stated, considered in connection with the habit and course of business of the firm, vested the sole beneficial interest in the property purchased in the. defendants, or whether any trust can be implied in favor of the firm against the property so purchased, by reason of any secret or fraudulent use of the money of the firm for that purpose.
Whether any trust is to be implied in favor of the firm from the alleged secret or fraudulent use of its funds in making the purchase depends entirely upon the facts as they existed November 29, 1875, when the purchase was made, and the subsequent withdrawal of funds of the firm and use of the same in payment of the part of the purchase money and interest remaining unpaid and the payment of taxes on and improvement of the land, cannot be regarded as material to the rightfulness of the purchase. Perry, Trusts, §§ 126, 133; French v. Sheplor, 83 Ind. 266; Forsyth v. Clark, 3 Wend. 651; Botsford v. Burr, 2 Johns. Ch. 405; Whiting v. Gould, 2 Wis. 552. And subsequent wrongful payments on the purchase price from the partnership funds, pursuant to a land contract, but subsequent and prior to the deed, will not be ground for an implied trust, though the firm might, if necessary, have a lien against the land for sums so paid. Conner v. Lewis, 16 Me. 274. The pay
The copartnership commenced March 1, 1866, and continued until the death of Bosworth, February 15, 1885,— a period of nearly nineteen years. The business carried on by them was a very extensive one, and most of the time had been a very profitable' one, amounting from $300,000
The evidence is clear, in our judgmént, that, when the $1,000 was drawn and used to make the purchase, the Hopkins brothers had undrawn profits standing to their credit on the books of the-firm in the sum of about $75,000. From 1866 down to the end of the business year 1876 the net profits of the business had averaged over $45,000 per an-num, and for the entire period of the partnership $35,000 at least. It appears that nearly every year after going to Europe Mr. Bosworth drew out moneys largely exceeding his share of the annual profits, and in some years more than $26,000 in excess thereof, so that his interest in the firm which stood on the books, March 1,1871, at $238,574.75, was reduced to $187,643.82 by March 1, 1879, and to $157,303.53 by the end of the partnership term, March 1, 1885, showing that he had not only drawn all his share of the profits, but that his stipulated capital was very considerably reduced below the sum mentioned in the partnership agreement. On the other hand, on the 1st of March, 1879, after final payment had been made for the land, the balance to the credit of the defendants was in excess of their capital as stipulated in the partnership agreement, and at the end of the partnership, term, was $80,998.83,— over $20,000 less. During the entire period of the partnership there appears to have been the most cordial and friendly feeling between the parties, each seeming to have the utmost confidence in the other, and at the end of each business year the defendants sent to Mr. Bosworth what is called in the evidence a “ miniature balance sheet ” of the affairs of the firm for that year, stating the footings of the personal ledger, and amounts due the firm, and amounts the firm owed, the gross sales, gross profits, expenses, net profits, bills receivable,
It is difficult, from all the facts and circumstances in
At the late day when this litigation was instituted, with all the light that ea,n be obtained from the evidence and the course of business and usage of the firm, and in the absence of any evidence or suggestion of complaint at or about the time, and when the evidence of the parties to these transactions cannot now be had, it cannot be said, we think, as an inference of fact, that the drawing out and using of the money of the firm to make the purchase in question, and to pay the deferred payments, interest, taxes, and improvements, was without due and lawful authority. It would be most unreasonable to say that the plaintiffs have shown
It was argued on behalf of the appellants that the drawing out of the $1,000 with which the purchase was made had been kept secre.t and concealed, and this furnished evidence of intentional wrong and improper and fraudulent use of the moneys of the firm, and' that the same state of facts is shown to be true as to the withdrawal of the subsequent moneys used to buy the notes used to pay the unpaid purchase money on the land, and to pay interest, taxes, and improvements. As to the $1,000, the fact is that this amount and a subsequent payment of interest, etc., were not entered upon the personal account of either of the defendants in the personal ledger of the partners, but was kept on a slip of paper in the money drawer or on the cash tickler until the 24th of the following April, when they were entered on the sales ledger of accounts with customers, under the head of “ W. of S. E. J, sec. 1, town 6, range 21, Mil. Co., Wis. B. B. & E. C. Hopkins, eighty acres, town of Greenfield, Wis.” This account was debited with the moneys drawn out and paid for the land, and was credited with whatever had been received from the land. It extends through five ledgers, and it is fair to presume that each of these had an index with which the account could be readily referred to. It would enter into every annual balance sheet as a part of the moneys due, and was in the form of an asset of the firm, though it would be in reduction of the general credits of the defendants, which were kept on the personal ledger. This is the Only joint account of the defendants on the'firm bookstand entries were regularly made on it of all items relating to the land, drawn or paid from the moneys of the firm. In relation to this account one of the defendants testified, in substance, that he never gave any directions to any bookkeeper in what ledger
Upon the death of Mr. Bosworth, his son, •Howard F. Bos-worth., one of the plaintiffs, succeeded to his interest in the firm in the manner already stated. There had been no examination into the separate interest of Mr. Bosworth in the affairs of the firm for nearly sixteen years, and none seems
By the Court.— The judgment of the superior court of Milwaukee county is affirmed.