92 A. 775 | Md. | 1914
On the eleventh of April, 1907, John Singleton and John Real entered into a written agreement, in which it was recited that Singleton had purchased from Mrs. Mary Meeter for a consideration of $7,000.00 a piece of real property, in Westport, Baltimore County; and that the parties had agreed that Real should have a half interest in it, but that Singleton was then able to contribute but $2,000.00 towards the purchase *348 money. The agreement then makes the following provisions, that the title to the lot should be taken in the name of John Singleton alone; that Singleton should contribute towards the purchase money $2,000.00 and Real $5,000.00, of which $3,500.00 was to be for his share of the purchase money, and $1,500.00 as a loan to Singleton; and that the property was to be held for "the joint and equal benefit of the parties."
Five days later, on April 16th, the purchase was consummated by the execution of the deed. In legal effect the situation was then this: Singleton was the holder of the legal title, the beneficial interest being in himself and Real in accordance with their agreement, the law raising a constructive trust in favor of Real to the extent of his contribution to the purchase money of the land. They were thus practically in the relation of tenants in common of the property in proportion to their contributions and in accordance with the agreement entered into.
About two years after this purchase had been made Singleton and Real became partners in the manufacture of barrels and baskets, carrying on this business under the name of the Westport Veneer Barrel and Basket Company. The manufacturing was done on the property bought in 1907, and continued so to be till October, 1913. There were no written articles of partnership, and the verbal arrangement was apparently very indefinite, the record not containing any statement as to the terms and provisions of the partnership agreement. On October 15, 1913, a bill was filed by Real for a dissolution of the partnership, the appointment of receivers and the winding up of the partnership business. Insolvency was not alleged, but the relief was asked because of irreconcilable differences. There was a consent answer filed at the same time, and upon these a decree was passed appointing receivers. This was followed on the 17th of October by an application in the U.S. District Court to have Singleton declared a bankrupt and on the 20th an adjudication of bankruptcy was entered. *349
The receivers appointed by the Circuit Court for Baltimore County proceeded promptly to make sale of the effects of the partnership, including the land acquired from Mrs. Meeter and standing in the name of John Singleton. A sale having been reported the Trustee in Bankruptcy intervened and excepted to the sale, and it is from the ruling of the Court upon such exceptions, and the rulings of the Court upon certain questions of evidence reserved during the hearing, that the case comes before this Court.
The important question in the case is whether the land involved was the property of John Singleton, individually, in which case it would of course pass to his trustee in bankruptcy; or whether it was the property of the partnership, in which case it would pass to the receivers; or whether at the time that John Singleton was adjudicated a bankrupt it was the property of John Singleton and John Real as tenants in common, in which case only the individual interest of Singleton would pass to his trustee in bankruptcy and the remaining undivided interest would remain in John Real.
There is great conflict among the decisions upon questions of this character, and an excellent collection of them will be found in two elaborate notes, one to be found in Robinson Bank v.Miller, 27 L.R.A. beginning on page 449 and the other inMarcum v. Terry, 37 L.R.A. (N.S.), page 889.
In Pennsylvania the doctrine of the common law is more rigidly adhered to than in any other State, and is to the effect that under all circumstances the record title conclusively controls (see Gwinner v. Union Trust Co.,
The 1st, 2d 3rd, 4th, 5th and 8th exceptions all arose from rulings of the Court on tenders of evidence to show statements made by Singleton to different parties that he was the owner of the real estate in question. The agreement of the parties of the eleventh of April had already been offered in evidence and the sole purpose of these offers must have been to contradict the agreement of the parties as set out in that paper; moreover none of these offers were pretended to have been made in the presence of Real, and it is a well established rule of evidence that declarations of a party favorable to himself are not admissible unless made in the presence of the other party, or as a part of the res gestae, or in contradiction of evidence previously given. Williamson v. Dillon, 1 H. G. 444; Hagan v.Hendry,
There was therefore no error in the rulings of the Court which were called in question by these exceptions. It is perfectly clear that as between Real and Singleton the latter could not have successfully claimed sole and exclusive ownership of the property, and since a trustee in bankruptcy is not a purchaser for value (In re Sup. Drop Forge Manufacturing Co., supra,) he cannot maintain any greater claim than the bankrupt could have done.
Is then the property bought from Mrs. Meeter in 1907 to be treated as partnership property, so as to pass to the receivers? It was not such at the time of the purchase for no partnership then existed, it did not become such by conveyance to the firm for none was ever executed, and there is no evidence of any agreement to that effect as one of the terms of the partnership. In the cases where property held or acquired *351 by persons who were or subsequently became partners, is deemed and adjudged to have been the property of the firm and not of the individuals, that result has followed as the result of certain acts with regard to it. The acts which are most frequently held as bringing this about are where the property is purchased with partnership funds and used for partnership purposes, or where it is entered upon the books of the firm as one of the assets of the partnership. In the present case the property was not bought with money of a partnership which did not come into existence till two years later, it never was entered upon the books of the firm in any manner at all, but it was used for partnership purposes, and for the use of which no rent apparently was paid. A small shanty on one part of the lot was rented, and the rent so received went for the payment of taxes and expenses. Some improvements were erected for storage and use as a factory, which were paid for in part from money of the firm and in part from money contributed by Real, and the same seems to have been the case with the machinery installed. A wharf was also built and this the testimony shows was paid for by the wharfage collected.
Under this state of facts what is the rule of law applicable? Without citing the very numerous cases, the unmistakable trend of opinion is that which was announced by the Supreme Court inThompson v. Bowman, 6 Wall. 316, that in the absence of proof that the real estate has been purchased with partnership funds, for partnership purposes, the property is deemed to be held by the parties as joint tenants or tenants in common. See alsoTaber-Prang Art Co. v. Durant,
In line with this is the decision of this Court in Union Bank
v. Mechanics Bank,
The 6th and 7th exceptions were reserved to the rulings of the Court by which the witnesses Ulman and Real were permitted to state the source from which the money was derived with which the improvements on the property were made. From what has already been said, it will be apparent that no error was committed in either of these rulings. The 9th exception was to the refusal of the Court to permit the witness Singleton to answer the question: "Do the agreements as set forth in that paper (the agreement of April 11, 1907) still hold good?" This was calling on the witness to express an opinion upon a question of law, which the witness was clearly not competent to answer, and the ruling of the Court was correct.
Order reversed, and case remanded for such further proceedingsas may be appropriate, the costs to be paid one-half by eachparty. *354