| Mont. | Aug 15, 1877
Lead Opinion
The action of the court below in sustaining the demurrer of the respondents to the complaint of the appellant is before us for review. The following facts appear in the complaint and must be taken as true upon this hearing. Hirbour, the appellant, and Needing and Gassert, the respondents, entered into a verbal contract of copartnership in April, 1873, at Eocker City in this Territory, “ for the purpose of prospecting for, locating, recording, pre-empting, developing and mining quartz lodes and other mining property in Montana Territory.55 Each party was to have an undivided third interest in said lodes and property, and pay for one-third of the labor and other expenses incurred in carrying on the business of the copartnership. Under this contract, the Silver Girdle lode was discovered by the
The respondents demurred to the complaint upon the following grounds:
That the contract of copartnership was within the Statute of Frauds of this Territory and void; and that the complaint was ambiguous in failing to state the amount of the work which was done by the appellant upon the lode, or its value, or the time when it was done. The court below sustained the demurrer, and judgment was afterward entered for the respondents.
The respondents claim that the allegation of the complaint respecting the amount of the work performed by the appellant on the property is ambiguous, but we think that it should be deemed an averment that the appellant performed his part of the conditions of the contract of copartnership. When this allegation is controverted by the respondents, the appellant must establish on the trial “ the facts showing such performance.” Civ. Pr. Act, § 68. Therefore the examination of one question will enable us to determine this appeal. If the contract of copartnership is valid we are of the opinion that the complaint contains the allegations that are necessary to empower the court to enter a decree
“ No estate or interest in lands other than for leases for a term not exceeding one year, or any trust or power over or concerning lands, or in any manner relating thereto, shall hereafter be created, granted, assigned, surrendered or declared, unless by act or operation of law, or° by deed or conveyance in writing, subscribed by the party creating, granting, assigning, surrendering or declaring the same, or by his lawful agent thereunto authorized by writing.” Cod. Sts. 393, § 6. “The term ‘lands,’ as used in this act, shall be construed as co-extensive in meaning with land, tenements, hereditaments and possessory land claims to public lands; and the terms Estate’ and ‘interest’ in lands shall be construed to embrace every estate and interest, present and future, vested and contingent, in lands as above defined.” Cod. Sts. 391, § 22; 389, § 1.
It does not appear that the respondents have acquired the title of the United States to the property. Their interest in the lode may be lost or forfeited by abandonment, or a failure to comply with the laws of the mining district, the Territory or the United States. Counsel for both parties concede, what we consider a sound proposition, that the lode in dispute is real estate. Melton v. Lambard, 51 Cal. 258" court="Cal." date_filed="1876-07-01" href="https://app.midpage.ai/document/melton-v-lambard-5438945?utm_source=webapp" opinion_id="5438945">51 Cal. 258. We must apply to the contract set forth in the complaint the legal principles that govern copart-nerships for the purchase and improvement of real property.
A partnership may be formed without any written articles between the parties. “ After some question it seems to be settled that there may be a partnership for the buying and selling of land.” Pars, on Part. 37, n. f. According to the weight of the authorities which are conflicting upon the question, the contract of such a partnership need not be reduced to writing to make it valid. Pars, on Part. 7, n. d. We do not intend to review the cases in which this subject has been examined, but will refer to a number of the most recent decisions which we have read.
In New York, the same views are announced in Chester v. Dickerson, 54 N.Y. 1" court="NY" date_filed="1873-03-05" href="https://app.midpage.ai/document/chester-v--dickerson-3599040?utm_source=webapp" opinion_id="3599040">54 N. Y. 1, and Fairchild v. Fairchild, 64 id. 471. Chief Justice "Wade in his concurring opinion quotes from the opinion of the court in Chester v. Dickerson, supra, and this reference is therefore sufficient.1 The same matter is considered in Traphagen v. Burt, 67 N.Y. 30" court="NY" date_filed="1876-09-19" href="https://app.midpage.ai/document/traphagen-v--burt-3623516?utm_source=webapp" opinion_id="3623516">67 N. Y. 30, and the court comments on the case of Levy v. Brush, 45 id. 589, which is relied on by the respondents, and says: “ In the case cited (Levy v. Brush, supra), the plaintiff had done no act of performance, advanced no money, nor parted with anything under the contract, nor had the land been accepted, possessed and treated as joint property, nor improvements made upon the same accordingly, and the contract regarded as carried into effect. * * * Where a party has partly performed or parted with valuable property upon the faith of the contract, equity will not allow another party to retain property obtained upon the faith of a verbal contract to consummate a fraud by retaining the property and refusing to perform the contract.”
These rules have been applied to the settlement of questions arising concerning quartz lodes. The case of Murley v. Ennis, 2 Col. 300, is directly in point. Mr. Justice Wells says in the opinion: “ If two or more go into the public domain together to search and explore for mines, with the agreement to occupy and develop such discoveries as may be made for the joint benefit, and such discovery, development and joint occupation follow, it is clear that, while each explorer becomes invested with his due
In Welland v. Huber, 8 Nev. 203" court="Nev." date_filed="1873-01-15" href="https://app.midpage.ai/document/welland-v-huber-6668384?utm_source=webapp" opinion_id="6668384">8 Nev. 203, three persons and Huber, in December, 1871, entered into a verbal agreement to prospect for and locate mines. All the parties were to be equal owners. In 1872, Huber located the Huber lode, 1,000 feet in length, and recorded in the name of each partner 200 feet and in his own name 400 feet. In the decision Mr. Justiee Belenap says: “ If Huber located the 400 feet in his own name in pursuance of the alleged partnership, he did so under an implied promise to convey to the complainants their interest in it upon request. The complainants at once acquired a right to a specific performance, and that right could he enforced in equity without a previous request.”
In Gore v. McBrayer, 18 Cal. 582" court="Cal." date_filed="1861-07-01" href="https://app.midpage.ai/document/gore-v-mcbrayer-5434786?utm_source=webapp" opinion_id="5434786">18 Cal. 582, Gore, McBrayer and others verbally agreed to prospect for quartz.- The court held that the Statute of Frauds which requires an instrument in writing to create an interest in land, does not apply to the taking up of mining claims, and that a writing is not necessary to vest or divest title on locating mines. In Settembre v. Putnam, 30 Cal. 490" court="Cal." date_filed="1866-10-15" href="https://app.midpage.ai/document/settembre-v-putnam-5436102?utm_source=webapp" opinion_id="5436102">30 Cal. 490, it is decided that, if mining partners, under a verbal agreement, claim and develop a lode upon the land of another, and authorize one of their number to buy the same for the benefit of all, and he procures a deed in his own name, he holds the legal title of the interests of his partners in trust for them.
After examining these cases we conclude that the contract of copartnership made by the appellant and respondents is valid and can be enforced. The name of the property in controversy, which may be called the Silver Girdle lode, or the Burlington lode, is immaterial. It was acquired and developed by the labor of the appellant and respondents under the contract, and is the property of the parties to this action. The transaction between the respondents and Young and Bouderbush, by which the same estate under another name was conveyed to the respondents, does not affect the rights of the appellant to his interest. The legal
The demurrer to the Complaint should have been overruled.
Concurrence Opinion
concurring. The question presented by this record is, whether or not, if two or more persons enter into a verbal agreement of copartnership in the business of prospecting for and discovering quartz claims, and when discovered, to acquire title thereto for the mutual benefit of the copartners, such contract, not being in writing, is within the Statute of Frauds and void.
Congress has granted to the citizens of the United States, and to those who have declared their intention to become such, the privilege of entering upon and exploring the public domain for the purpose of discovering valuable mineral deposits therein. The business therefore of searching or prospecting for quartz lodes or placers is entirely legitimate, largely engaged in in this Territory, and may be conducted either individually or in partnership. All hinds of property may be held in partnership. Quartz claims by our statute are made real estate, and there can be no question that it is entirely legitimate for parties to enter into a partnership for the purpose of trading, dealing and speculating in real estate. Clagett v. Filbourne, 1 Black, 346" court="SCOTUS" date_filed="1862-03-24" href="https://app.midpage.ai/document/clagett-v-kilbourne-87473?utm_source=webapp" opinion_id="87473">1 Black, 346; Fall River W. Co. v. Borden, 10 Cush. 458; Pars. on Part. 37; 3 Kent, 24, 28. The inquiry before us, however, has to do with the proposition as to how the existence of such a partnership shall be evidenced and established. Our statute has .been cited by Mr. Justice Blaee, ante, 19.
Did this verbal agreement of copartnership create, grant or declare any interest in real estate at the time it was entered into % Evidently not, for at that time, as to this copartnership there was no real estate in existence; neither of the partners then owned or had any interest in a quartz claim; such claim was yet to be searched for and found. There was nothing upon which
This agreement contemplated that the parties would search for and find quartz claims, and when found, that they would comply with the provisions of the act of congress, whereby title could be acquired. But the agreement in and of itself did not create or declare a title to any property whatever. If by this agreement the parties had attempted to make a parol or verbal conveyance of land, or any interest therein, they would have utterly failed, for at the time the agreement was made they had no lands to convey. Evidently then it was not the object or purpose of this agreement to create, grant or declare any interest in real estate. How are the titles to quartz claims acquired, created or declared? First, a valuable mineral deposit must be found; second, it must be distinctly marked and located; third, $500 worth of work must have been performed upon the claim before a patent can be granted; fourth, after finding the lead, locating it, and performing the necessary amount of labor, an application may be filed in the local land office for a patent, and after publication of notice for sixty days, as the law requires, and no adverse claim being interposed, a patent may issue. But at the time of this agreement none of these things had been accomplished, no lead had been found, and it seems, therefore, reasonable to follow that the agreement did not attempt to create, grant, assign or declare any interest in real estate and is not within the Statute of Frauds.
We think the following authorities conclusively determine the proposition that a partnership may exist in reference to acquiring title to the sale and ownership of real estate, and that such partnership may be created by parol agreement.
In Dale v. Hamilton, 5 Hare, 369, the bill of the plaintiff alleged the parol agreement of copartnership with the defendants for the purpose of speculating in lands. The vice-chancellor in
In Smith v. Tarlton, 2 Barb. Ch. 336" court="None" date_filed="1847-10-25" href="https://app.midpage.ai/document/smith-v-tarlton-5549651?utm_source=webapp" opinion_id="5549651">2 Barb. Ch. 336, the bill stated' that by the copartnership agreement, which was by parol, the complainant and the defendants entered' into a partnership which was to continue three years, the business of which was to purchase a water privilege and site for a foundry in the village of Platts-burgh and to erect an iron foundry, or furnace thereon, and to carry on the business of manufacturing iron castings, etc., and that each of the copartners was to contribute a certain amount of funds to the capital of the firm; that the parties all contributed money to the capital, and a site was procured and a foundry erected thereon by the copartners, but that the title to the laud was taken in the name of the defendants only. The chancellor in the course of his decision said : “ I cannot see that there is any validity in either of the objections raised by the counsel of the defendants to the parol agreement of copartnership. This was not, as the counsel supposes, an agreement which was not to be performed within one year, so as to require it to be in writing under the Statute of Frauds; but it was the formation of an immediate partnership between the parties, which partnership was to continue three years unless sooner dissolved by the consent of such parties. In this State no written articles are necessary to constitute a copartnership which is to take effect immediately, although a written agreement might be necessary to bind the parties to enter into a future copartnership to commence after the expiration of a year. But even where there was a parol agreement to enter into a copartnership at a future day and specifying the terms of such copartnership, I apprehend that, i f the parties went into copartnership at the prescribed time with
“Nor is the objection well taken that this partnership was invalid becanse a part of the business of the firm was to purchase real estate as a site for the foundry, and to erect a building thereon for the purpose of making iron castings, etc. The case of Henderson v. Hudson, 1 Mumf. 510, referred to by the defendants5 counsel, was not a case of partnership, or of land purchased with partnership funds for the use of the copartnership firm. It was merely an attempt to create a trust by parol in lands purchased by an individual in his own name and with his own funds. JBut real estate purchased with partnership funds for the use of the firm, although the legal title is in the member or members of the firm in whose name the conveyance is taken, is in equity considered as the property of the firm for the payment of its debts and for the purpose of adjusting the equitable claims of the copartners as between themselves.” The motion to dissolve the injunction for the reason that the bill did not state a cause of action was therefore denied.
In the case of Chester v. Dickerson, 54 N.Y. 1" court="NY" date_filed="1873-03-05" href="https://app.midpage.ai/document/chester-v--dickerson-3599040?utm_source=webapp" opinion_id="3599040">54 N. Y. 1, the question was again decided. Counsel in their briefs in that case made the point that the lower court erred in holding that the partnership of the defendants in the lands in question could exist by parol, and cited authorities to support the proposition, to which the adverse counsel replied, citing authorities, and the court was called upon directly to decide the question, and by Eael, J., the court say “ it cannot be questioned that two or more persons may become partners in buying and selling lánd. There is nothing in the nature or essence of a partnership which requires that it should be confined to ordinary trade and commerce, or to dealings in personal property. Story on Part., §§ 82, 83 ; Collyer on Part., §§ 3, 51; Dudley v. Littlefield, 21 Me. 418" court="Me." date_filed="1842-06-15" href="https://app.midpage.ai/document/dudley-v-littlefield-4927626?utm_source=webapp" opinion_id="4927626">21 Me. 418; Sage v. Sherman, 2 N.Y. 417" court="NY" date_filed="1849-10-05" href="https://app.midpage.ai/document/sage-v--sherman-3599090?utm_source=webapp" opinion_id="3599090">2 N. Y. 417; Mead v. Shepard, 54 Barb. 474" court="N.Y. Sup. Ct." date_filed="1867-09-02" href="https://app.midpage.ai/document/mead-v-shepard-5461922?utm_source=webapp" opinion_id="5461922">54 Barb. 474; Pendleton v. Wambersie, 4 Cranch, 73" court="SCOTUS" date_filed="1807-02-27" href="https://app.midpage.ai/document/pendleton-and-webb-v-wambersie-and-others-84841?utm_source=webapp" opinion_id="84841">4 Cranch, 73; Thompson v. Bowman, 6 Wall. 316" court="SCOTUS" date_filed="1867-12-16" href="https://app.midpage.ai/document/thompson-v-bowman-87923?utm_source=webapp" opinion_id="87923">6 Wall. 316; Hoxie v. Carr, 1 Sumner, 173. Kent says: £A partnership is a contract of two or more persons to place their
“But as it is claimed that the partnership in this case existed by parol before the execution of the written agreement, dated November 28, 1864, it is necessary to inquire whether a partnership in reference to lands can be formed and proved by parol. Upon this question there is considerable conflict in the authorities. On the one hand it is claimed that a parol agreement for such a partnership would be within the Statute of Frauds which provides that no estate or interest in lands shall be created, assigned or declared unless by act or operation of law, or by a deed or conveyance in writing subscribed by the party creating, granting, assigning or declaring the same; (the New York statute being in this regard the same as our own) and to this effect is the case of Smith v. Burnham, 3 Sumner, 345. On the other hand it is claimed that such an agreement is not affected by the Statute of Frauds, for that the real estate is treated and administered in equity as personal property for all the purposes of the partnership. A court of equity having full jurisdiction of all cases between partners touching the partnership property, it is claimed that it will inquire into, take an account of and administer upon all the partnership property whether it be real or personal, and in such cases will not allow one partner to commit a fraud or a breach of trust upon his copartner by taking advantage of the Statute of Frauds, and to this effect are the following authorities: Dale v. Hamilton, 5 Hare, 369; Essex v. Essex, 20 Beav. 449; Bunnell v. Taintor, 4 Conn. 568" court="Conn." date_filed="1823-07-15" href="https://app.midpage.ai/document/bunnel-v-taintors-administrator-6573760?utm_source=webapp" opinion_id="6573760">4 Conn. 568. A full discussion of the question is found in Dale v. Hamilton, and the reasoning and review of the cases there by Vice-Chancellor ~VV a OR.AM are quite satisfactory. The general doctrine is there 'laid down “ that a partnership agreement between A. and B. that they
The ease of Traphaqen v. Burt, 67 N. Y. 30, is to the same effect. In that case the plaintiff and defendant made an oral agreement to engage in the business of buying and selling farms for their mutual benefit and at their joint risk. Under this agreement defendant bought two farms and took the deeds to himself and plaintiff jointly. He afterward purchased the farm in question but took the deed to himself alone, refusing to admit the plaintiff to any participation in the ownership, the facts being very similar to the case in hand, except in the case we are considering the plaintiff discovered the quartz lead and the defendants obtained the title thereto, and refused to admit the plaintiff to any participation in the ownership thereof. In deciding the case, which was an action brought to establish a trust in the defendant, Burt, in favor of the plaintiff, for one undivided half of the farm in question, the court say: “ It is established by abundant authority in this State that a partnership may exist in reference to the purchase, sale and ownership of lands, and that it may be created by a parol agreement.”
Upon these authorities and the reasons therefor, I rest the opinion that the complaint in this action contained a cause of action, and that the demurrer thereto should have been oven-ruled.
Dissenting Opinion
dissenting. I cannot assent to the opinion expressed by the majority of the court in this case and will present my views as briefly as I can for dissenting therefrom.
I do not deny but that a verbal partnership agreement may be formed for trading in real estate; but I contend that when one partner comes into a court and asks that real estate held exclu
I will now recur to the allegations of the complaint. It is alleged that the plaintiff and the defendants Needing and Gassert entered into a verbal contract of copartnership for the purpose of prospecting, developing and mining quartz lodes and other mining property. That each was to have an undivided one-third interest in all mines discovered, pre-empted, located, recorded or mined, and wrere to share equally and alike in the labor and expenses in carrying out said purpose. That the partnership was to remain in force until dissolved by mutual consent. There is no allegation to the effect that they actually commenced operations under this contract. It is not shown that this mine was discovered by their joint labor, or located by their joint labor, or recorded at their joint expense. It is not shown that plaintiff has fully performed his part of this agreement. It is true that it is alleged that the said parties, plaintiff and defendants Gassert and Needing, as such copartners, discovered what is now and was then known as the Silver Girdle lode. This is one of those allegations that may be and probably is a conclusion of law. It may be claimed that the plaintiff and defendants being partners, the act of one is the act of all.
Put -the most favorable construction upon this allegation, and still it leaves out certain acts necessary-for the acquiring of title from the government of the United States. Por instance, there is no allegation that the plaintiff and defendants located this mine or recorded it, but that they discovered it. If A. and B. should discover a quartz mine, and A. should say to B., I want none of this lode, or should do nothing toward locating it, and B. should go on and locate it and record it, would it be possible that A. could come in and say, because we discovered this mine together, therefore I am entitled to one-half of it ? The reason that equity treats real estate purchased with partnership funds for partnership purposes, partnership property, is because a trust arises in equity in this
In the next section, he shows what these conflicting views are. They are the conflicting view;s between what may be termed the American rule and the English. The English rule treats partnership real property as personal property for all purposes. The American rule treats the real property of a partnership as personal property for the purposes of settling partnership accounts between partners, and the payment of partnership debts and no further. Pars, on Part.'382-385. Hence, according to the English rule, the partnership being once established, then all property acquired by the firm is treated in equity for all purposes as personal property and hence the Statute of Frauds does not apply. But under the American rule, it is only personal property for the purposes of settling partnership accounts and the payment of partnership debts. Hence, in order to treat real estate as partnership personal property, there must be accounts to settle between the partners or partnership debts, which I have shown does not appear in this case, and hence this real estate cannot be treated as personal property. I will now review for a short space the cases relied upon by the majority of the court.
It is only when an interest is sought to be created in land that such an agreement is within the Statute of Frauds. In this case, the court admits that all it said upon the subject of verbal partnerships was dicta and not necessary to the decision. The case of Bunnell v. Taintor, 4 Conn. 568" court="Conn." date_filed="1823-07-15" href="https://app.midpage.ai/document/bunnel-v-taintors-administrator-6573760?utm_source=webapp" opinion_id="6573760">4 Conn. 568, is not in point. That was a case of a partnership in the profits arising from buying and selling certain lands. The land was not to be considered as partnership property, but as the property of one member of the firm, and the partnership was to be confined to the profits of the sale. This certainly was not a parallel case. The case of Smith v. Tarlton, 2 Barb. Ch. 336" court="None" date_filed="1847-10-25" href="https://app.midpage.ai/document/smith-v-tarlton-5549651?utm_source=webapp" opinion_id="5549651">2 Barb. Ch. 336, was a case where real estate was purchased by a partnership with partnership funds, for partnership purposes, and used as such, and was but an incident to a manufacturing enterprise. The courts have generally held that such real estate was partnership property, no matter in whose name held. If in the
Judge Stoky, in the case of Smith v. Burnham, 3 Sumn. C. C. 435, expressly declares such a case without the Statute of Frauds. The case of Murley v. Ennis, 2 Col. 300, is relied upon. That was not a case where a title was sought to be created in land by virtue of a verbal contract of partnership to prospect for mines, and locate the same. The court holds that such a contract is not within the Statute of Frauds. This I do not controvert ; but when the court comes to discuss the right of Ennis to an interest in the mine discovered by Murley, it uses this language: Ci Nor does the interest or estate which is afterward acquired vest or inure by virtue of the agreement, but by the occupation and appropriation alone.” The point the court makes in that case is, that Murley acted as the agent of Ennis in discovering and appropriating the mine for which he was a competent agent. The case, it will also be observed, was not one where an interest in land was sought to be created by virtue of a partnership agreement, but an action to recover a debt; and it does seem that the right of Ennis to recover might have been placed upon different grounds from what the court did.
The only case I think that can be found which fully supports the views of the majority of the court is that of Holmes v. McCray, 51 Ind. 358" court="Ind." date_filed="1875-11-15" href="https://app.midpage.ai/document/holmes-v-mccray-7040911?utm_source=webapp" opinion_id="7040911">51 Ind. 358, and that I have shown is decided upon the authority of a dicta, in the case of Chester v. Dickerson, 54 N. Y. 1, and which was not a case in point; the case of Holmes v. McCray and this stand, in my judgment, by themselves, and are not supported by authority or sound reasoning.
Judgment reversed.