39 N.Y.S. 527 | N.Y. App. Div. | 1896
It was undisputed upon the trial that the real property held by Daniel 0. Calkins, by virtue of the deed to him from Darrow and wife, was the property of the partnership of Calkins & Darrow, paid for with its funds. Consequently it is of little importance whether such deed be held in form to vest the legal title to the property in Calkins absolutely, or in trust for the partnership, or whether its effect is to create a power in trust, for in any event it could not operate to create a greater right in Calkins than equity would allow where the interests of all the parties are conceded, for the rule is that where real property is purchased for the partnership by partnership funds and for partnership purposes and is appropriated to that purpose, “ it is not material in what manner or by what agency the land is purchased, or in what name it stands. If it be established that it belongs to the partnership, equity will hold the one in whom is the legal title as trustee for the partnership.” (Fairchild v. Fairchild, 64 N. Y. 477.)
And if any title descends to the heir under these circumstances it is a mere naked title, which equity intervenes to divest at the instance of a purchaser. (Delmonico v. Guillaume, 2 Sandf. Ch. 405.)
This equitable title in and to the firm property is superior to: the rights of individual creditors, and also to the right of the representatives and heir. (Diggs’ Admr. v. Brown, 78 Va. 292; Mendenhall v. Benbow, 84 N. C. 646.)
These cases seem to contemplate that, for the purpose of paying debts and adjusting equities between the partners, an equitable title remains in the survivor. Some of the cases seem to hold that' the title, upon the death of a partner, descends to the heir, subject to the rights of creditors and the equities of the survivor (Wilcox v. Wilcox, 13 Allen, 252; Shearer v. Shearer, 98 Mass. 107), and claim is made that it never loses its character as real estate at any time.
It is uséless to attempt reconciliation of the authorities, nor is it needful that we should, for the rule in this State is quite firmly established that partnership property, whether personal or real property, remains and is subject to all the attributes of personal property until the final settlement of the partnership affairs, when, if there be any real estate left, it resumes its .-attributes of real property and descends to the heir. The rule is best stated by Church, Ch. J., in Fairchild v. Fairchild (64 N. Y. 477, et seq.).
The clear import of this decision is that the real property does not resume its character as real property until an actual adjustment of the partnership affairs has been had. It might perhaps have been claimed that such determination was not essential to a decision of the case. But this case is cited and upheld as an authority upon this point in the later case of Greenwood v. Marvin (111 N. Y. 423), where this point was essential to the determination which was reached. It was there held that real estate of a firm possessed the characteristics of personal property so long as the partnership affairs remained unsettled. And it was further held that the assignment of the interest in the real property of the plaintiff’s intestate was an assignment of “ a mere chose in action, subject, in respect to its mode of transfer, to the rules regulating the disposition of personal property.” The effect of these decisions would seem to be that the property of the partnership, whether real or personal, so far as the adjustment and liquidation of the partnership affairs is concerned, remains personal estate, and it is upon such liquidation and adjustment of the affairs of the partnership that any remainder which exists, if it be real property, descends to the heir, but that
Until, therefore, there was this final settlement and adjustment of the accounts the heirs of Darrow were not vested with the legal title to this real estate. What they were entitled to was an accounting of the partnership affairs and this is what they had through the representative of Darrow’s estate, who was competent to maintain an action for that purpose. Upon this accounting the court had jurisdiction to adjust the affairs of the partnership and to determine the question whether or not there existed any real property which would descend to the heir. It did not follow that, because there was in fact real property which equitably belonged to the partnership, that upon an adjustment of the equities between the members of the firm it would necessarily so remain and be set apart as property which would descend to the heir. But it was competent on such accounting for the court to determine, in adjusting the equities between the parties, .that when adjusted there remained no real property for distribution or descent; but that upon adjustment there remained a certain sum in money due to his estate. This, in effect, is what the court determined, and such is the effect of the decree. Having power to adjudicate upon the subject-matter in an action where the estate of Darrow was represented as a party, and possessing power to determine that there existed no real property of the partnership to which the estate of Darrow was entitled, and ■ having so determined, we see no reason why such adjudication is not conclusive of that question and constitutes a bar binding upon hjs estate and his heirs. If this view be correct, it follows, that there remains ho basis upon which this decree can be upheld. .
The motion for a new trial should be granted and the interlocutory judgment vacated and set aside, with costs to abide the event.
All concurred, except Cullen, J., not sitting.
, Motion for a new trial granted and interlocutory judgment. vacated and set aside, with costs to abide the event.