4 Del. Ch. 445 | New York Court of Chancery | 1872
The interrogatory would be admissible so far as it seeks the declaration of Hollingsworth, or of any member of the firm in his presence, tending to establish a trust, but is clearly objectionable in inquiring for declarations made by Harvey, or any other member than Hollingsworth not in his presence. A trust may in this State, where the Statute of Frauds on that subject is not in force, be established by paroi, but subject to the general rules governing the admissibillity of testimony, and which exclude declarations of a party in his own favor, or of third persons not in the presence of the parties to be affected.
The exception is sustained so far that any testimony as to declarations of Harvey or any other person than Hollingsworth, not made in his presence, will be expunged.
EXCEPTION was also taken by defendant to portions of the testimony of Joshua S. Valentine, who- had been a clerk for the firm of Hollingsworth & Co. and its predecessors, Pierson, Hollingsworth & Harvey ; to the whole of his answer to the Fourth interrogatory, viz : “I believe “ the complainant had an equal interest with the other “partners in the firm of Pierson, Hollingsworth & Har“vey. ” In answer to the Eighth interrogatory the witness stated that he was acquainted with several members of the firm, and who they were, and that “ Mr. Hollings- “ worth was the financier always, so far as I have knowl- “ edge, and gave attention to the books. It appeared to “be Mr. Harvey’s business to attend to the work in the “shops. I dont believe he knew anything more about the “ finances than I do.”
The exception was to so much of the above as stated the witness believed Harvey knew nothing about the finances.
To the Tenth interrogatory, the witness replied. “Achilles Hollingsworth, one of the firm about the time “ last inquired abdut, was dependent on the business of “ the firm for his support, and had no other visible means, “&c. I do not now recall any specific facts.”
The answers to the fourth and eighth interrogatories are admissible. The witness appears by his testimony to have been a clerk of the firm, familiar with thé business and the relations and interests of the parties. His general knowledge on these points is admissible. His stating his belief is not objectionable; it goes to show the degree of positiveness of his knowledge and effects the weight of his answer. His whole answer is subject to cross-examination as to grounds of knowledge. That is a sufficient protection, if he speaks without due grounds.
The tenth interrogatory calls for a general fact, a man’s means of support, It may be answered in general terms by one standing in a relation giving him a general knowledge of the person inquired of subject to cross-examination. Though he could not then recall specific facts, that does not exclude his general statement, though it greatly reduces its weight. Exceptions overruled.
On THE part oí complainant, Mr. Rodney offered in evidence as exhibits a letter from Charles I. Robb to John V. Rice, dated March 31, 1870. Robb had been a bookkeeper for the firm of Hollingsworth, Harvey & Co., and after the dissolution of the firm by the death of Hollingsworth had been employed in connection with winding up the business of the firm. John V. Rice had been engaged
objected.
1. It is res inter alios acta, a correspondence between third parties.
2. It is only one letter of a series ; though all are stated in the list filed.
3. It seeks to raise a collateral issue, in order- to impeach Robb’s testimony.
4. It is not competent to use it to discredit Robb, unless it has been first shown to him. 1 Green, on Ev. Section 463.
The bill and answer recognizes Robb and Rice as the representatives of the parties in the transaction involved in the issue. It is not necessary to produce their letters, except where they are referred to or shown to be connected with this case. The letter is admissible to show a statement different from that which Robb has made as a witness. It is not necessary to show witness the letter.
Robb was the principal witness, in of the defendants, and the letter was offered on the ground that the correspondents were the representatives of the plaintiffs, and for the purpose of discrediting Robb’s testimony.
This letter is objected to as being res inter alios acta. It is such on its face, and is within the rule excluding evidence of that sort unless shown to be within some exception. It is offered as being an exception to the rule in two respects.—First, that Robb, the writer, was the agent
Another objection to the admission of the letter was that it is a single letter selected from a series, and cannot be offered without accompanying it with the whole correspondence. I do not find the rule laid down so broadly as this ; but it is held that if the letter offered in evidence purports to be a reply to one referred to in it, the one in reply to which it is written must be called for, and if produced put in evidence with it.
The letter in question is not admitted.
Mr. Rodney offered the receipt of Victor DuPont for $11.99 to A. H. Harvey as surviving partner, dated November 3, 1866 for costs on judgment of John Rice against Hollingsworth, Harvey & Co.; and for costs on judgment against Hollingsworth. The receipt was offered as evidence tending to show a payment by the firm on the judgment referred to, which had been a lien upon the real estate in controversy.
objected.
This is a transaction between Harvey and DuPont, by which Harvey, by professing to act as surviving partner, makes evidence for himself. Hollingsworth was not a partner to it, and not to be affected by it.
First, as to Partnership account.
The law that real estate bought with partnership funds is, in equity, partnership property, is indisputable. The payment for the land with such funds raises a trust for the partnership. 2 Sto. Eq. Jur. Sec. 1206.
The Statute of Frauds does not apply to resulting trusts, and such a trust may be proved by paroi. Browne on Frauds, 79, 90; Boyd vs. McLean, 1 Johns. Ch. R. 584; 1 Johns. Cases 155; Fawcet vs. Whiteheuse, 1 Russ. & Myl. 132; 2 Edw. Ch. 373; Perry on Trusts, 127.
A trust results upon the payment of the money.
The fact that Harvey paid this money and that he paid it in the character of surviving partner is a fact admissible to be proved in the case ; but not by the receipt of Mr. Dupont. If proved by Mr. Dupont, he should have been examined as a witness.
The receipt is not admitted.
The argument of the case on the merits then pro-ceded, and was mainly devoted to the questions of fact arising in the case, upon which the testimony was complicated and conflicting. The principles of law involved were subject to little controversy.
The admissions of Hollingsworth in his lifetime are admissible, though proved after his death. Sugden on Vendors, 617.
Whatever effect is to be given, in equity, to the Statute of Limitations, it can have no application to this case, for the property has been held by Hollingsworth, Harvey & Co., and enjoyed as their own.
The case rests solely upon the doctrine of resulting trusts, which in this State are as at common law ; the English Statutes not having been re-enacted, 1 Am. Lead. Cases in Eq. 225.
It is true that a partner holding legal title holds for the firm the property bought for its use and. with its money. But there must be no doubt. Payment by a party through an agent cannot be proved by paroi. Steere vs. Steere, 5 John 20; Bartlett vs. Pickersgill, 1 Eden 515; Willis vs. Willis, 2 Atkins 71; Faringer vs. Ramsay & Ehrman, 4 Md. Ch. 33.
Resulting trusts of questionable policy are cautiously admitted, and strong proof required after much time has elapsed. 1 Lead. Cases in Eq. 273.
The trust must arise by an original payment of the purchase money, or a part of it. It is settled that no subsequent payment of the purchase money raises a trust. Botsford vs. Burr, 2 Johns. Ch. 405; 1 Lead. Cases in Eq. 275; Browne on Frauds, 87; White vs. Carpenter, 2 Paige,
The utter absence of any claim on the part of Harvey from August [849 to December 1869, no bill being filed until August 1871, a period of over twenty years, presents a case of loches or staleness of claim which is a defense in equity. The Statute of Limitations is obligatory upon courts of equity, with respect to corresponding interests to those barred at law. Hovenden vs. Ld. Annesley, 2 S & L. 630; Strimpfler vs. Roberts, 6 Harris Pa. 283; Stear vs. Bradford, 2 Pa. 394; Foulk vs. Brown, 2 Watts, 214—15; Carey vs. Callan, 6 Beavan 44; Enos. vs. Hunter, 4 Gilman's Ill. R. 211.
The fact that the claim was left to sleep until after the alleged trustee’s death renders it one of more disfavor, as stated by C. J. Black in the case of Strimpfler vs. Roberts. Saunders on Uses and Trustees, 353.
Another objection to the complainant’s claim is the uncertainty of his interest. There is no proof that he was an equal partner ; no evidence but Valentine’s belief referring to the period of 1841. To raisé a trust the contribution must be of a definite part. Sayre vs. Townsend, 15 Wend. 651; 1 Lead. Cases 277; Baker vs. Vining, 30 Me. 121; Brown on Frauds, Sec. 86.
There are undoubtedly cases opposed to the rule that paroi proof is admissible ; but the true rule would be to follow the middle course, that such proof is admissible under special circumstances, such as sudden death, disabling the claimant from getting a conveyance without loches. In this case there has been gross neglect, and it should stand upori the old rule. Roberts on Frauds, 99; Clalk vs. Downes, 1 Ch. Cases 110; Enos vs. Hunter, 4 Gilman 211; Lloyd vs. Spillet 2 Atk 150.
Another principle is that no resulting trust will be raised against the declaration of the party advancing the
It will be convenient to consider, first, the”prayer for relief with regard to the réal estate.
Aside from the main points at issue raised upon the bill and answer, the defendants’ solicitor took in argument several collateral objections not entering into the merits of the case ; but these I shall not find it necessary to consider.
The objections referred to were :
1st.—The uncertainty, on the proof, of the extent of the complainant’s interest, whether or not he was an equal co-partner.
2d.—The want of sufficient parties: since a trust of the real estate, if any there were, included Rice as one of the firm at the time of the purchase, and yet the bill sought to establish the trust in favor only of the latter firm of Harvey & Hollingsworth :
3d.—The further ground that after the death of the legal owner, Hollingsworth, a trust of the property cannot be established by paroi; and
4th.—The objection that there had been loches on the part of the complainant, in making • no claim until more than twenty years after the trust, if any, was created; connected with which, also, it was argued, that the settlement with Hollingsworth’s executor, recognizing as it did, Hollingsworth’s title to the real estate, was in effect a waiver or abandonment of any trust which might originally have attached to this property.
I pass by all these objections and confine myself to the main question, i. e. whether the purchase by Hollings
And first, was there a resulting trust ? It will greatly simplify our investigation on this point to observe at the outset several well settled principles in the law of resulting trusts. One is this : That to raise a trust of this nature there must have been actual payment of the purchase money or liability incurred for it, on the part of the cestui que trust. A resulting trust is an equitable ownership raised directly out of the payment of the purchase money, such payment being the sole consideration and ground of the trust, and not any agreement or understanding of the parties ; so that, from the very nature of the trust, actual payment of the purchase money, or what is equivalent, an obligation assumed for it, is indispensable ; and without this no agreement of parties for a trust or proof that the property was in fact purchased by one for another, can establish a resulting trust, whatever other equities may arise out of such agreement or understanding.
Another principiéis that the payment of the purchase money must, in order to raise a resulting trust, have been made, or the liability for it incurred as part of the original . transaction of purchase, and not pursuant to any subsequent agreement or arrangement between the parties ; for a resulting trust must have been coeval with the -purchase and have attached to the legal estate when it was taken under the deed, 1 Lead, cases in Eq., 176-7, Am. note to Dyer v. Dyer; Bottsford v. Burr, 2 John, Ch. 405; Rogers v. Murray, 3 Paige, 398.
Besides these two rules which have respect to the nature of a resulting trust there is another,—one very important to be observed,—which concerns the measure of paroi proof required to establish such trusts. With respect to the kind of paroi evidence admissible to prove the payment of the purchase iponey by the party claiming
I now propose to take up the decisive question, viz., does it appear by evidence “ clear, full and satisfactory ” that the firm of Harvey, Hollingsworth & Co. did, on their own account as purchasers, and as part of the original transaction of purchase, or as an obligation springing out of the original transaction, pay the purchase money for these premises or an aliquot part of it ?
The purchase money was $10,040. Of this sum 10 per cent., or $1,004, was received by the Sheriff from Hollingsworth. Some expenses connected with the purchase, added to the 10 per cent., made $1083.38, which was the sum actually paid upon the property at the time of the purchase. The whole real estate purchased was, before the purchase, subject to sundry liens, to which the purchase money was applicable, but no money over and above the 10 per cent, was, in fact, paid to the sheriff and applied to the liens. Instead thereof, Hollingsworth on the
The bonds and mortgages thus given by Hollingsworth were as follows :
1. To the Wilmington Saving Fund Society, for .................. $2,400 00
2. To Ann Billany for............... 700 00
3. To the Delaware Fire Insurance Company for...................... 450 00
4. To the Farmers’ Bank, afterward assigned to the Saving Fund Society, for.................. 2,100 00
5. To McDaniel & Harvey, afterward... assigned to Jesse Lane, for..... 1,800 00
6. To John Rice, a judgment bond for. 1,595 64
Total,........................ $9,045 64
There was also a mortgage of $600 of Teas and wife to the Wilmington Fire Insurance Company, covering part of the real estate ; but the premises covered by it were sold subject to it, and hence it followed the property, and no account was taken of it in settling for the purchase money.
Of the securities thus given, there were paid off in Hollingsworth’s life-time—by whom is a point in issue— the following :
Ann Billany’s mortgage for........... $ 700 00
On account of the McDaniel & Harvey mortgage for 1800, held by Lane, 800 00
The Rice judgment for................ 1,595 64
Total,........................ $3,095 64
The Delaware Fire Insurance Company’s mortgage for................. $ 450 00
On account of the Farmers’ Bank mortgage for $1,100 held by the Savings Fund,................ 500 00
And the balance due on the McDaniel & Harvey mortgages of $1,800, 1,000 00
Total,...................... $1,950 00
There remains yet unpaid :
The Wilmington Savings Fund mortgage for........................... $2,400 00
Balance due on the Farmer’s Bank Mortgage, also held by Saving Fund, 1,600 00
Total unpaid,................ $4,000 00
The controversy as to who paid the purchase money can of course have no application to the balance of $4,000.00 still unpaid, nor to the $1,950.00 paid out of Hollingsworth’s estate since his death, making in all $5,-950.00. The claim is that the firm paid the residue of the purchase money, embracing the 10 per cent., or $1,00400, and the several sums amounting to $3,095.64, which were applied in Hollingsworth’s life-time to the securities given for the purchase money. Connected with this is also the claim that the firm kept up the interest on all the securities until Hollingsworth’s death—from all which is deduced by complainant’s solicitors the conclusion that the purchase money, though from necessity secured in the name of Hollingsworth, he holding the legal title, was in fact the debt of the firm.
There is much controversy upon the question whether • Rice’s judgment for $1595.64 was paid by the firm. This judgment was satisfied after Rice’s death under the direction of his executor, as having been settled in Rice’s lifetime, but by whom or how it was settled, does not appear by any direct evidence. The complainant’s case on this point is that the debt secured by this judgment was also represented by a promissory note of the firm to Rice’s order for $1500, which was renewed from time to time, the last renewal being by a note for $1500, dated October 12, 1861, at 60 days. This note was, at. its maturity, held by the Union Bank of Delaware, was protested for nonpayment, taken up by John Rice, came into the hands of his executors and was collected by their attorney from the firm of Hollingsworth, Harvey & Co. But it is clear from the evidence that this note did not represent the judgment, and had no connection with it whatever. It is ón its face an accommodation note, discounted by the Union Bank to the credit of the firm, and will be found, on examination of the firm’s bill-book, to have been the last of a long series of ac
We have traced the history of this note so far as to be certain that it has no connection with the judgment.
The conclusion then at this point is that there was applied out of the partnership funds towards payment of the purchase money, first the 10 per cent, being $1004 ; then the amount of Mrs. Billany’s mortgage, being $700 ; and also $800.00 on account of the McDaniel & Harvey mortgage, making in all of principal $2,504; in addition to which the interest was mainly if not wholly drawn from the partnership funds during Hollingsworth’s lifetime. I have not deemed it necessary to ascertain the exact amount of the interest so paid.
But the material question still remains ; i. e,, did any trust result to the firm from this part payment of the purchase money ? After great deliberation, I think not ; for the evidence leaves me with the conviction that these were not payments made by the firm on their own account, as the original purchasers of the real estate, which is a condition essential to raise a resulting trust; nor were they even payments made under any subsequent agreement that the firm should take the' real estate from
The character of these payments out of the partnership funds, whether they were purchase money payments by the firm or loans to Hollingsworth, was a question so earnestly discussed that it is due to the learned counsel to state my reasons for treating these payments as money loaned.
In the first place, is the great and it seems to me the invincible fact, that on the books of the firm Hollingsworth was from time to time, from the date of the purchase in 1849, to October 1865, after his death, charged as a debtor for sums drawn from the partnership funds in the part payment of the purchase money and interest, as also for various other expenses paid by the firm on this real estate, such as insurance, repairs and faxes ; and also he
The first of these charges was made Dec. 31st, 1849, just after the purchase was completed,—Journal of 1849, p 1030. The entry is headed thus.
“ Achilles Hollingsworth (for Real Estate) Dr. to “Cash.” The first item of the charge is for the 10 per cent, in these words, viz :
“ For $1004, which he paid to Isaac Grubb, Sheriff, in “ Oct. last being 10 per cent, of the purchase money on the “property late of James Hollingsworth and Joseph Teas, “ which he purchased at Sheriff’s Sale in August last,$1004.”
Then follows a charge of $10 for interest in favor of the firm on the 10 per cent, so advanced,—also of some expense connected with the completion of the title, the care of the property and an item for interest paid on Mrs. Billany’s Mortgage.
Following this first entry respecting the real estate, there appear on the Journals, between 1849 and, 1865, not less than 92 separate entries of debit and credit as between the firm and Hollingsworth respecting real this estate.
Now these entries have the exact force of so many distinct admissions,—admissions unequivocal, often repeated, and extending through a period of 16 years,—to the effect that the firm had no interest in this real estate. For, treated as the real estate of the firm, and not of Hollingsworth alone, these entries were simply a series of ■ absurdities, stultifying all concerned in them. Plainly the firm could riot be both the owner of the real estate and Hollingsworth’s creditor for payments made on account of it. Had it been considered the real estate of the firm, there could have been no occasion for any account respecting it, expect the usual real estate account of a partnership kept for the purpose of ascertaining its cost and profit to the firm.
-It may as well be remarked that these drafts upon the partnership funds for payments on Hollingsworth’s account and their being charged to him present no such incongruity with the general course of business of the firm as on that ground to raise any doubt that such was the real nature of the transactions referred to in the entries. For the books show that the partners drew, from time to time, at will, upon the partnership funds for a great variety of personal uses, including the payment of their individual liabilities,—the partner drawing being charged accordingly in his personal account.
It should be further observed that the force of these entries of debt and credit to Achilles Hollingsworth on account of real estate is not at all affected by the question, whether the advances for purchase money made by the firm, were ever repaid to it either in a general settlement with Hollingsworth’s executor or otherwise.—That was a question of fact very much discussed. I do not, however, find it necessary to consider the question in de
Thus far I have considered the' effect of the book entries alone upon the question of a resulting trust, exclusive of all collateral testimony. These entries, taken thus on their face, oppose very cogent evidence, to say the least, against the theory of a resulting trust. But the case does not rest here,—for concurring with the natural import of the book entries, are the transactions between the parties after Hollingsworth’s death, as detailed by the witness, Robb. His testimony, if credited, establishes these points :—that the executor, Pennypacker, and the surviving partner, Harvey, met ; and that in the presence and with the assistance of the witness, who had- been book-keeper for the firm, an examination was made of the accounts of the co-partners. What was the precise purpose of this, as contemplated by the respective parties, whether for settlement or for arriving at the basis of one, is not here material; it is enough to take now the uncontroverted fact, that the accounts were brought under an examination, and that if no settlement was in fact made, at least the principles of a settlement were discussed. In this examination,—so the witness states,—it was well understood that Hollingsworth was in his lifetime the sole owner of the real estate, [pp. io-i i] that in discussing the principles of a settlement “it was all the time understood and talked about, that all the expenditures On “account of real estate were to be charged to Mr.
Now, Mr. Robb’s detailed statements of these transactions may be disposed of by this general observation,— that although the witness is evidently friendly to the defendants, and as a biased witness his impressions upon points which could be the subject of any misconception ought to be received with caution, yet the specific statements above extracted from his testimony are such as he could not through mere bias be mistaken about. They cannot be rejected, or in any way so qualified as to neutralize their effect, without impeaching his veracity as a witness. That has not been done by evidence and I cannot do it without evidence. Nothing in the manner or substance of his testimony draws even under suspicion his general integrity, and making all due allowance for mere, bias of feeling as to points on which that sort of influence could affect his impressions and also- making allowance for inaccuracies of recollection, not uncommon as to matters of detail, still there remains in the witness’s statement, to be unavoidably accepted, a large amount of proof which is at utter variance with the theory that the firm and not Hollingsworth, were the real purchasers of this property.
The transactions on the part of Mr. Harvey specifically before stated, touching his claim to interest on the 10 per cent, his allowance for rent of the premises, his
Let me add, before leaving this branch of the case, that I have considered how far the force of the book entries respecting the real estate, as admissions of Hollingsworth’s exclusive ownership, may be impaired by the fact, brought out in evidence and commented upon in argument, that Hollingsworth managed the finances of the firm and had the supervision of the books, while Harvey took charge only of the shop. Such is the proof; and it additionally appears that up to the year 1858, Hollingsworth kept the books and made the entries, at least for the most part. After the year 1858 Robb was the bookkeeper and made the entries. From an examination of the journal entries prior to 1858, in comparison with the handwriting of Hollingsworth proved to papers in the cause, it is quite clear that the entries respecting thé real estate, as well as the book entries at large, were, during that period, made by Hollingsworth. After 1858 the entries appear in a different handwriting, which is presumably that of the book-keeper, Robb. Now, the making of these entries by Hollingsworth prior to 1858, appears to have been in the due course of his duties as a co-partner at that period. Even then if this fact stood alone, it would be insufficient to discredit the entries. But whatever force it could be supposed to have, must certainly be neutralized by the clear and unequivocal recognition on
I leave now the question of a resulting trust, arising by operation of law, and proceed to inquire whether, though Hollingsworth paid the purchase money, the real estate may not be charged with an express trust arising out of the circumstances under which the property was bought.
This branch of the complainant’s case encounters two difficulties.
First.—The evidence, upon a most careful consideration, does not satisfy me that in point of fact, the real estate was purchased on account of the firm under a prearrangement between the co-partners.
That is the case made by the bill for an express trust.
The material allegation on which this branch of the case must depend is, (paragraph 4,) that “it was ágreed ‘1 by the firm of Hollingsworth, Harvey & Co., to purchase
It thus appears that the case as one of express trust arising out of the alleged pre-arrangement for the purchase of the real estate on account of the firm rests upon no direct proof, but only upon circumstantial evidence drawn from the subsequent dealings of the parties with the property, and their acts, transactions and declarations respecting it.
In this body of circumstantial evidence relied on in the argument, first and chiefly, was the fact insisted upon, that it was the firm who paid the purchase money. But under the view already taken by the Court that the purchase money was paid by Hollingsworth, all the force of that consideration is against the theory of any sort of trust.
Then there is the other fact relied on,—that the firm at its own expense put substantial improvements upon the real estate ; and so the firm did; but the bearing of this transaction upon the question of the firm’s ownership of the real estate is turned against the complainant by the testimony of Mr. Robb,—testimony which I have no warrant to discredit,—that in the attempted settlement with the executor Mr. Harvey claimed that these im
I need hardly stop to notice the argument, drawn from Hollingsworth’s supposed want of means for such a purchase, against the probability of his undertaking it on his own account. For it is proved that the firm was in circumstances as little fitting them to buy as was Hollingsworth. The truth is that neither "he nor the firm were able to buy for cash. The purchase was only to a small amount for cash, the bulk of the purchase money having stood on a long credit, as it has resulted. This was contemplated in the purchase and it enabled Hollingsworth to carry the property ; so that the undertaking on his part was not so reckless as to be violently improbable.
Then we come to the other items relied upon as proving a trust. These are, the admissions of Hollingsworth, as insisted upon, to Teas ; the transactions with Mrs. ■ Patten ; and the written statement, under Hollingsworth’s hand, of the liabilities and property of the firm,, which included this real estate and the liens upon it. I have with much care weighed these parts of the evidence.
The conclusion to which these, and all the circumstances of the case have brought me is, that the purchase ' of this real estate did contemplate the benefit of the firm, to this extent, viz: that there was at the time of the purchase, and for some indefinite period afterward, an expectation on the part of Hollingsworth and his co-partners that at some time not definitely fixed, but when it should suit the convenience of the firm, portions of the property which the firm occupied would be taken by it—an expectation never realized, and which was finally abandoned,— tacitly abandoned in Hollingsworth’s lifetime,—and expressly so by Mr. Harvey after Hollingsworth’s death, in
This view alone harmonizes and satisfies all the evidence, and is in accordance with the natural probabilities arising from the situation of the parties and their relation to the property occupied.
It accounts for Mr. Teas’ impression,—for his testimony shows only an impression, vague and general, derived, he knows not from whom, whether James or Achilles Hollingsworth,—that the purchase was made for the use of the firm.
It may also, together with the fact that there seemed to have been no periodical and exact settlements between the firm and its members, account for the omission to credit Hollingsworth from year to year with rent for the shop which the firm occupied, while he seems to have been regularly credited with the rents which fell into the partnership funds from other parcels of the property.
This view also accounts for the fact that Hollingsworth so largely drew upon the partnership funds to aid his payments on account of the real estate ; being charged, however, for such payments, inasmuch as he was the real owner until the firm might take the property, should that result eventually be reached.
The same view also affords the only possible explanation of the paper A, the evidence most strongly relied on as an admission by Hollingsworth of the firm’s ownership of the real estate. That is a statement of liabilities and assets, showing on the one side, in connection with certain debts of the firm, the very liens given by Hollingsworth upon the real estate, and on the other side a valuation of the real estate added to the property and assets of the
I pass to "another item of the evidence relied on for the complainant,—the transactions between Hollingsworth and Mrs. Patton—These seem rather to disprove than to prove any interest of the firm in the house rented by her. It shows that in all Hollingsworth’s dealings with her he acted as sole owner of the house, the firm never being named or referred to as interested in it. He, in his own name and not for the firm, rented the house to her. He, in his own name and not for the firm, suggested the sale to her. His statement that he could not give a “clear title,”—he did not say “a good title, ”—had, according to the usage of that phrase, its natural and proper reference to the liens, and not to any defect or qualification of his ownership. Indeed this very statement shows that he was not, in that conversation, representing the firm ; because, had it been a sale for the firm which he was speaking of, its interest in the property would have offered no insuperable obstacle, since the firm’s release would so easily have perfected the title. Further—Hollingsworth’s suggestion to Mrs. Patton when he rented to her at $120.00 per annum, with respect to setting off the rent'against an equal sum due her annually from the firm for interest, that this arrangement might continue “so long as he remained in the firm, ” clearly implied an exclusive ownership in himself. Mrs. Patton’s testimony wholly fails of its purpose to prove an admission by Hollingsworth of an interest in the firm.
I have considered all the evidence relied on for the complainant. It warrants the conclusion that the sale may have contemplated,—probably did,—the benefit of the firm so far as to provide for its occupation of the shop,
Second. There is another fatal obstacle to the effort to set up an express trust based upon the alleged arrangement, previous to the sale, for thé purchase of the property by Hollingsworth on account of the firm. It is this :—Hollingsworth having purchased in his own name, taken the title and paid the purchase money, a trust could be raised against him only by contract, and such contract, under the statute of frauds, must be in writing. Now, were the alleged understanding for a purchase on the partnership account ever so clearly proved, and even if there could be raised out of the transaction a legal consideration giving it the force of a contract on the part of Hollingsworth to buy for the firm and not for himself, (as to which we need not stop to inquire,) still such a contract being for an interest in lands would be within the statute.
The application of the Statute of Frauds to cases of this nature seems quite well settled upon authority. It was distinctly so decided in Bartlett vs. Pickers gill, 1 Eden 516, where, upon a bill to compel a conveyance of an
The doctrine of that case is recognized as settled law in 2 Sugd. on Vendors, Ch. 20 Sec, 2, part 2 and 2 Story Eq. Jurs. 1201 a; and by Chancellor Kent in Botsford vs. Burr, 2 Johns. Ch. R. 409, and Justice Story in Smith vs. Burnham, 3 Sumn. 462.
Chancellor Kent in Botsford vs. Burr, says: “If, “ therefore, the party who sets up a resulting trust made “ no payment, he cannot be permitted to shew by paroi “ proof that the purchase was made for his benefit, or on “ his account. This would be to overturn the Statute of “ Frauds, and so it was ruled by Lord Keeper Henley in “ the case of Bartlett vs. Pickersgill" Justice Story in Smith vs. Burnham thus put the rule : “ I take it to be “ clear,” he says, “upon principle, that if one person con- “ tracts by paroi with another that he will purchase an ‘ ‘ estate for the latter, and he purchases the estate and “ takes the conveyance in his own name, and pays for it “ out of his own money, and not out of that of the other “ party ; that will not create a trust by implication of law “ in favor of the other party. The law in such case treats “ it as a paroi contract to purchase and hold in trust for the “ benefit of anotherP
These are dicta, it is true, but they come from high authority as exponents of the law. A direct decision on the point and in a very strong case, is that of Kisler vs. Kisler, 2 Watts, 323, where the bidder at a public sale declared that he purchased for another person, who was present and assented ; but the bidder afterward took the title in his own name and paid the purchase money. The Court, in an able opinion by C. J. Gibson, fully eluci
I do not forget that paroi trusts of lands, as distinguished from contracts for an interest in lands, are admissible under our Statute of Frauds, which has omitted the 7th section of the English Statute of Frauds,—the section requiring all trusts of lands to be evidenced by writing. But those paroi trusts which are prohibited by the English statute and tolerated by our own, are such as a grantor of the legal estate may declare in favor of a person not named in the conveyance, but who is the beneficial object of it. They do not include declarations of a grantee, set up to establish by their own force a trust against him of an estate which he holds as a purchaser for a consideration paid by himself. The difference is very material. If I convey land to A, declaring it to be in trust for B, that is in no sense a contract for an interest in land, such as the Statute requires to be in writing. It is a trust executed, not a contract executory ; and though a pure gift, it is nevertheless valid ; for against the grantor it is effectual as a gift executed, and against the grantee also it is effectual, because as to him the confidence reposed by the grantor in making the conveyance is a sufficient consideration to support the trust, and his refusal to execute fit is a fraud. It was to save trusts of this nature that our statute omitted the 7th section of the English statute. But declarations by the purchaser of land, who has paid the purchase money and holds the title, stand upon a different footing. No paroi declarations, or arrangement resting upon paroi evidence, can affect "him with a trust ; for any such arrangement, if without a consideration, is nudum pactum, while on the other hand if the arrangement rest upon a sufficient consideration, it becomes a contract for an interest in land within the prohibitory clause of the
The result seems to be that as against one purchasing lands in his own name and taking the legal title, a trust or interest in favor of a third person can be set up only in one of two modes, viz : either as a resulting trust, by operation of law, from the actual payment of the purchase money, or, where the claimant has not paid the purchase money; there must have been a contract in writing sufficient within the Statute of Frauds.
I cannot base the present complainant’s claim upon either of these grounds.
I come now to consider, much more briefly, the second branch of the case,—the prayer for a partnership account to be taken under a decree of the Court.
There are no circumstances set forth in this bill which require the interposition of the Court for an account and settlement of the partnership affairs under its decree, except of course the alleged equitable ownership by the firm of the real estate, which is adjudged to be not sustained by proof.
A court of equity does not as <jf course undertake the winding up of the business of a dissolved partnership, by decreeing and superintending the taking of accounts and the distribution of the surplus. The settlement of the partnership affairs, in the absence of some special necessity for the aid of the court, is the duty of the co-partners ; and in the case of a dissolution by the death of one partner, this becomes the special duty of the survivor, who, for the very purpose of enabling him to perform it, is invested by law with the possession of the assets, books
It is in cases of a different class, as where several co-partners, all living and having like authority and control, are unable to agree as to the principles or mode of settlement, that it may become necessary for the court, if its aid be invoked, to direct a general account and settle
At the hearing of the cause certain checks were produced, drawn by Hollingsworth in the name of the firm, some to his own order. They were treated in the argu
Looking through the bill,and excluding the allegations as to the real estate there appears to be no hindrance whatever to the surviving partner, in proceeding to close the affairs of the partnership, except that the executor will not come to a settlement. The complaint is (page 12) “that the complainant has repeatedly applied to the said “William G. Pennypacker. as executor aforesaid, to “settle the partnership business according to the books “ and papers of the late firm, in order to ascertain the “balance to be divided between the complainant and the “ estate of the said Achilles Hollingsworth, which com“plainant and said Pennypacker could have easily made, “&c” No necessity for the interference of a court of equity arises here. If, as the bill alleges, a settlement can be easily made by the books, the surviving partner can proceed to realize the assets, pay the debts, state the proper account, according to the books, shewing the balance, if any, and how distributable ; if any portion shall be found payable to the executor, it can be tendered to him, if any sum ought to be refunded out of what the executor has received, it can be demanded of him. If at this point the surviving partner and the executor should disagree with respect to any elements entering into the
In point of fact, the real obstacle to a settlement will have been removed by the decree in this cause. That obstacle was the dispute as to the ownership of the real estate. Excluding this from the controversy, nothing else appears on the record to prevent the surviving partner from proceeding to a final account and settlement.
If, however, any difficulty should arise requiring the aid of this Court to the surviving partner,—as by a decree against the executor, for a discovery, or for the production of anything necessary to be in the surviving partner’s possession, or for the restoration of assets withdrawn from the partnership by Hollingsworth in his life-time, or by the executor since his death,—in any such case, properly brought before the Court and proved, the requisite relief will of course be given.
The bill must be dismissed with costs.
Note. Before the decision of the case of Harvey vs. Pennypacker, Ex'r, here reported, a bill was filed in the same Court by the administrator of James Rice, deceased, to establish a resulting trust in the same land, as to an equal third interest, to which it was claimed Mr. Rice was entitled as partner in the original firm of Hollingsworth, Harvey & Co., during the existence of which the purchase of the real estate in question was made. Before the testimony was taken in that case, the present decision was made and the proofs in the case begun by Mr. Rice’s administrator were amplified and rendered more complete, and the advantage derived, by the counsel in that case, of being able to meet the view of the evidence upon the question of a resulting trust, which had been taken in the foregoing opinion of the Chancellor. The result of the suit was a decree by the succeeding Chancellor, dismissing the bill, from which an appeal was taken to the Court of Errors and Appeals. At the June Term,1877, a decree of reversal was rendered, and the resulting trust was held, upon the proofs in that case, to be. established.
