101 Mass. 482 | Mass. | 1869
The plaintiff, as creditor of the separate estate of John Felton, asks that the defendants, assignees of the joint and separate estates of the partnership of John Felton & Company, may be directed to appropriate the net proceeds of certain lands in Chicago, held by them as assignees, first towards the payment of the separate debts which have been proved against the separate estate of John Felton, because such proceeds, it is alleged, are assets of his separate estate.
These instruments in form vested the legal interest in John Felton individually. The partnership is nowhere named. Large payments were in fact made upon them, but at the time of the insolvency several instalments required by each contract were in default.
Upon this state of facts alone, there can be no doubt that whatever interest the assignees may realize, after paying advances made by them, would belong under these contracts to the separate estate of John Felton ; to be first applied, according to the provisions of the Gen. Sts. c. 118, § 109, to the payment of his individual creditors.
The assignees insist, however, that, under the peculiar circumstances of this case, the proceeds of this real estate should be treated as assets of the joint estate.
1. It is said that the interest in these contracts, though standing in the name of Felton, originally belonged to the firm, and was contracted for in his name for convenience. If such were the fact, equity would impress a trust upon the proceeds, and require their distribution as joint assets in insolvency. The basis of this equitable lien or trust is to be found in the inten tian and agreement of the partners, express or implied.
The defendants, to sustain their position in this respect, must bring themselves, upon the facts, within the scope of these principles. Without going into the evidence, or the reasons which influence us in determining this and the other questions of fact which arise in the cause, it is sufficient to say that no express agreement of the partners that these contracts should be considered the property of the firm appears. And though it be conceded that the money paid on them was wholly or in part drawn from the partnership funds, yet there is no evidence that it was so appropriated with the purpose of making them the property of the firm, or at least none which should control the positive evidence of both partners to the contrary. 1 Am. Lead. Cas. (4th ed.) 481.
2. It is claimed that these contracts, at the time of the insolvency, had become forfeited by a failure to make the required payments, and, if otherwise, that there were no funds in the hands of the assignees, belonging to the separate estate of Felton, which could be used to complete the payments; and so the assignees, with the funds of the joint estate, and for the use of
We find nothing in the case to justify the inference that John Felton employed the funds of the partnership in bad faith, in this transaction, and with a purpose to deprive the joint creditors of their priority in the company assets. The creditors have no equity to prevent partners from transferring their property to each other, or of changing its character from joint to separate property, provided it is done in good faith. Howe v. Lawrence, 9 Cush. 553. Harmon v. Clark, 13 Gray, 114.
3. To constitute an implied or resulting trust in favor of the copartnership on the ground of the payments made, it must appear that they were made for the purpose of making the purchase by the firm and for its use. The payments or advances must have been made before or at the time of the purchase, for it is said the trust arises out of the circumstance that the money of the real and not of the nominal purchaser formed at the time the consideration of the purchase, and became converted into land. The trust, says Chancellor Kent, in Botsford v. Burr, 2 Johns. Ch. 405, results from the original transaction at the time it takes place, and at no other time; and it is founded on the actual payment of the money, and on no other ground. It cannot be mingled or confounded with any subsequent dealings whatever. And it was held in Forsyth v. Clark, 3 Wend. 638, 651, that, if one of two partners buys in his own name, and gives his own bond and mortgage, and afterwards pays out of the partnership funds, a resulting trust will not be thereby created unless it unequivocally appears that there was an agreement at the time of the purchase that the funds should be so appropriated. All trusts of this description, as they arise from equitable presumption, may be rebutted by paroi evidence that it was the intention of the parties that the person to whom the conveyance was made should take for his own benefit.. Upon the facts as we find them in the case at bar, the defendants fail, in our opinion, to establish an implied or resulting trust in favor
4. The strong equity which it is said exists in favor of the partnership estate by reason of the indebtedness of Felton to the firm, cannot be permitted to defeat the distribution in insolvency which the statute declares shall be made of these assets, The rule given is simple, easy of application, and in the large majority of cases promotes substantial justice. Like all general rules, it sometimes works harshly, but it would be unwise to disregard its provisions in order to meet the apparent hardships of particular cases, or to create exceptions to it in ^the delusive hope of meeting the equitable considerations that may be urged in every case. Somerset Potters’ Works v. Minot, 10 Cush. 592. Harmon v. Clark, 13 Gray, 115. Decree for the plaintiff.