Case ID: ohio-cc-dec_27/html/0614-01.html
Source: Caselaw Access Project
Author: {"author": "HENRY, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

PARTITION — PARTNERSHIP.
    [Lake (7th) Circuit Court,
    September 30, 1907.]
    Laubie, Cook and Henry, JJ.
    (Judge Henry, of the 8th circuit sitting in place of Judge Burrows.)
    Frank C. Moody v. Albert E. Powers, Trustee.
    Partition of Lands Held in Cotenancy by Dissolved Partnership Decreed.
    Where all the partners ask for the termination of a partnership and a winding up of its business, the court will treat the residuum of real estate, after paying all partnership debts, as held by the partners in cotenancy and decree a partition.
    [Syllabus by the court.]
   HENRY, J.

In 1887 D. Powers & Sons, Henry L. Lamb and Everett Case, of Lansingburg, N. Y., and Ralph K. Paige, of this county, entered into a partnership agreement “to buy, develop and sell certain lands,” near the mouth of the. Grand river, to which said Paige and one Elbert E. Powers, of said firm of D. Powers & Sons, were to take title as trustees. As such, Paige undertook to attend to the purchase, care and sale of such lands as might be agreed upon by the parties from time to time; and Powers, with the other parties, were to give such assistance as might be required.

D. Powers & Sons agreed to finance the undertaking. They had a half interest; Paige a third interest, and Lamb and Case each a twelfth.

In 1894 Paige having failed, the plaintiff herein, with the consent of the other partners, took his plaee in the copartnership, “in all respects” and assumed all obligations to D. Powers & Sons that had accrued against Paige’s interest in the enterprise, amounting, as agreed among the parties, to $16,965.23, payable in installments beginning April 1, 1895, and ending April 1, 1900, with interest.

The new agreement incorporated all the provisions of the old one, except as expressly modified, and provided, “that said lands, as well as any other lands purchased by said parties under said original memorandum of agreement, shall be held, managed and controlled by Albert E. Powers, sole trustee for all the parties interested.” It further provided for the application of proceeds, “upon the sale of any of said lands by said trustee.”

In 1903, Powers, as such trustee, sold a large part of the partnership lands to the Lake Erie, Alliance & Wheeling Coal Company, controlled and owned by the defendant, the Lake Shore & Michigan Southern Railway Company, and it is this sale which the plaintiff here seeks to impeach for want of power to make the same without his concurrence and for gross inadequacy of the price paid. An accounting is also sought and various charges sought to be imposed by the trustee upon the trust are resisted and complained of. The case comes into this court on appeal from the judgment of the court of common pleas.

The power to hold, manage and control expressly conferred upon the trustee, is of itself, under the strict construction which must be given in such eases, insufficient under the authorities, to authorize a trustee to make sales. Blandin v. Mayer, 58 Texas 422; Watson v. Cleveland, 21 Conn. 542; Ure v. Ure, 185 Ill. 216 [56 N. E. Rep. 1087]; Gray v. Parke, 162 Mass. 584 [39 N. E. Rep. 191].

Construing, however, the whole agreement and the refer-enees therein contained to sales of lands by the trustee, we think the intent and purpose of the parties, as expressed therein, was to commit to the trustee full authority to consummate the express object of the agreement in this behalf, and we can not say from the evidence in this case that the land in question was sold at so inadequate a price as to give rise to any presumption of fraud in the exercise of the power granted. On the contrary, taking all the evidence together, it is far from clear that the trustee’s action was not an entirely reasonable exercise of his discretion.

The discrepancy of 100 feet between the nominal frontage of the property measured at right angles to its side lines, and the actual frontage following the meandering of the Grand river, is, in our opinion, immaterial. There was no mistake upon this subject, and both parties to the sale knew exactly what they were doing, the description of the frontage being the same that had been used in the copartnership agreement, to which plaintiff was a party.

The main transaction being thus, in our opinion unimpeachable, nothing remains but the matter of accounting between the parties. Under the agreement with them, we think that the trustee is not authorized to make any charges for personal services rendered and such charge as he has made, must be stricken from his account. The commission paid to F. J. Jerome for negotiating the sale is attacked upon the ground that he was, a,t the time, general counsel for the grantee, a fact of which the trustee was kept in ignorance. If the evidence sustained this claim, we should agree with plaintiff’s contention, but examination of the evidence leads us to the conclusion that Mr. Jerome’s relations to each party were well known to the other. Having earned his commission by consummating the sale, there is no reason in law or morals why it should not be paid to him as agreed.

"With regard to the mortgage which was an encumbrance upon land that Paige had agreed to contribute to the enterprise, the plaintiff claims that he is entitled to credit for having paid it. Without going into the intricacies in this question it is sufficient to say that it was Paige’s duty to have relieved the property of this encumbrance, a duty which he had partially discharged when his place in the copartnership was taken by-plaintiff. In the language of the new agreement plaintiff has taken “the place of Ralph K. Paige in said copartnership in all respects, and accounts due from Frank C. Moody to D. Powers & Sons on account of moneys advanced for the benefit of his interest have been adjusted and agreed upon, and the sum was on the first day of April, 1894, $16,965.23.”

The plaintiff is thus in no position to claim that he has succeeded to the benefits but not to the burdens of his predecessor in the copartnership; he can not shift this burden from his own shoulders to those of the copartnership.

The computation of interest upon the advances made by D. Powers & Sons for plaintiff and the credits to be made for previous sales made by the trustee, seem to have been erroneously made by the trustee. The provisions of the contract in this behalf are not very clear, but they seem to mean and to have been interpreted by the parties themselves to mean that both principal and interest thereon when in default shall bear interest at the rate of 8 per cent per annum, payable semiannually. "When, however, an installment of interest accruing at 8 per cent falls into arrears, simple interest at the legal rate of 6 per cent may be computed thereon. Credits in this account should be made to the plaintiff for his part of the undivided and unexpended proceeds of all sales made by the trustee. The application of these credits should be first to the satisfaction of the interest accrued upon interest; secondly, the interest upon the principal, and thirdly, to overdue installments of principal, if any, and fourthly, to installments of principal not yet due, together with accrued interest. Upon the subject of counsel fees charged by the trustee and expenses of Mr. Lamb, one of the copartners representing him at the trial, and the costs in this case, we think that they are entirely proper, and that they should be paid out of the trust fund and thus be borne by the parties in the ratio of their respective interests therein.

In employing an attorney to defend the trust from the attack Upon his administration thereof in the matter of this sale, the trustee was acting nú thin Ms lawful powers, unless such attack were well founded. That the controversy has extended to matters of accounting, not strictly in defense of the trust, is not a matter which we can weigh with nice balance in apportioning the expense of the whole litigation when it does not appear that the trustee has been wilfully unjust or dilatory in the matter.

Upon the question of the partition desired by the plaintiff as to the remaining lands, it is claimed by the defendant that under the rule in Ohio, lands are to be deemed as having been equitably converted into personalty, and therefore, not the subject of partition. Whatever may be the doctrine with regard to partnership property under other circumstances, we are perfectly clear that in this case, where all the parties asked for a termination of the partnership and a winding up of its business, the court is authorized to treat the residuum of real estate, after paying all partnership debts, as held by the partners in cotenancy. We can see no reason whatever for holding that because a partnership has in fact existed, the rule as to partnership property should still be applied when it ceases to exist. The partition will, therefore be decreed.

Laubie and Cook, JJ., concur.