Case ID: ark_9/html/0518-01.html
Source: Caselaw Access Project
Author: {"author": "JonwsoN, C. J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

McGuire et al. vs. Ramsey.
    To create a resulting trust, there must be an original agreement creating the trust at the time of the purchase, or when the contract for the purchase takes effect: and no resulting trust can arise in contradiction to the terms of the deed.
    .Resulting trusts, or trusts created by operation of law, are expressly excluded from the operation of our statute of frauds, and it is manifest that parol evidence is admissible to establish them: such evidence is not to establish a fact inconsistent with the deed, but to engraft a trust upon the legal estate.
    Where real estate is purchased and paid for with partnership funds, but conveyed to one of the partners alone, a trust results in favor of the other partner.
    Lapse of time is allowed to prevail sometimes in equity, but only in analogy to the plea of the statute of limitations at law: and cannot be allowed in favor of one partner in possession of real estate against the other, for the possession of one is the possession of both.
    Where the proof shows that a part of real estate held in partnership had been divided, and the division evidenced by deed between the parties, and no evidence, written or parol, is offered to show a division of the residue, the presumption is that no division was made of the residue.
    A part of partnership property being sold hy the guardian of the heir of the partner in possession, the administrator of such heir, after his death, is a proper party— the estate being liable to the co-partner, and the administrator of the heir receiving the money, liable to pay the co-partner his portion of the receipts.
    This was a bill filed in the Independence Circuit Court in Chancery, by Allen D. Ramsey, against the administrator de bonis non of Charles Kelly, and the administrator and heirs of James DeWitt Clinton Kelly, and determined by the Hon. Wm. C. Scott, judge.
    The bill states that, on the 24th February, 1821, Charles Kelly and William Ramsey were partners in the purchase and sale of goods and real estate, and, with others, purchased a part of the lands upon which the town of Batesville is located: that the interest of said Kelly and Ramsey in such purchase was one-fourth part; that the same was purchased on partnership account and paid for with the funds of the partnership, but that the deed was executed to said Charles Kelly, and the other purchasers, without including his said partner therein: that afterwards a portion of said land was laid off into town lots and a division thereof between Kelly and the other purchasers, and afterwards a division between Kelly and Ramsey of the lots so awarded to Kelly, and deeds of release as to the lots so divided: that Charles Kelly departed this life, leaving James DeWitt Clinton Kelly his only heir at law, and that William Ramsey hath departed this life, leaving the complainant his only heir at law: that, after the death of said Kelly and Ramsey, a division of the residue of the land so purchased, and remaining undivided, was made between the heir of Charles Kelly and the other owners, and a part of the land awarded to James DeWitt Clinton Kelly had been sold by his guardian, and the money paid over to him. The bill makes exhibits of the various deeds of purchase and division alleged, and prays for a decree in favor of complainant against the administrator and heirs of said James DeWitt Clinton Kelly, who hath also departed this life, for one-half of the rents and profits of the undivided part of said land, for one-half of the purchase money so received by the guardian on said sale of lots, and for a division of the residue of the lots remaining unsold.
    The answer admits a partnership between Charles Kelly and William Ramsey, and the purchase of the land, by Kelly, on' which the town of Batesville is located; but the defendants allege that they are ignorant that it was paid for in partnership funds, and aver that it was purchased by Kelly in his individual right: they aver that a full and complete settlement was made by Kelly and Ramsey, in their lifetime, of their partnership affairs, and a full division of the partnership property, and that mutual deeds were passed: they do not know that Kelly held the residue of the land, as charged, for himself and Ramsey, and aver that Ramsey had no interest whatever in said residue: admit that the complainant is the heir of Ramsey.
    The deposition of John Simpson, a witness on the part of the complainant, stated that he was ,personally acquainted with Charles Kelly and William Ramsey in their lifetime, and intimately acquainted with their business;' that they were in partnership in merchandizing, buying, and selling lands,' negroes, and keeping tavern: that purchases and sales of lands, negroes, &c., were generally made in the name of Kelly: that Kelly and Ramsey both told him that they had purchased the undivided fourth part of the tract of land upon which the town of Bates-ville is now situated: that the purchase was made by Kelly, for himself and Ramsey, and the deed made to Kelly: that the payment was made by Kelly with the funds that belonged to the firm. A short time after the purchase, a part of the tract was laid off into lots, and one-fourth allotted to Kelly. He understood that Kelly and Ramsey divided the lots, but did not divide the residue; both told him they were equally interested in the town lot, share and share alike. A short time before Ramsey’s death, Kelly said he wished that Ramsey would come on so that they could finish dividing their property: that Ramsey, soon after, died, and the division was never made.
    John Ruddell testified that he was present when Kelly, Hall, • Searcy and Hardin made the purchase of the tract of land: that, shortly after the purchase, a part ,of it was laid off into ■ town lots: that both Kelly and Ramsey told him they were equally interested in the purchase made by Kelly: that'they commenced dividing their property in 1824: he understood that a part of paid tract, which had been laid off into town lots, had been divided, and he understood and believes that the residue of said trapt had not been divided: they had not completed the division of their partnership property at the death of Ramsey.
    Robert Bates testified that he understood, from both Kelly and Ramsey, that they were equally interested in a tract of land on which the town of Batesville was laid off, or the interest .that Kelly had purchased.
    Joseph H. Egner, a witness on the part of the defendants, tes^ tified that he lived at the house of Kelly and Ramsey, and understood, from both of them, that they were in partnership in the purchase of the town tract: in the latter part of 1824, they dissolved and commenced dividing their property; they divided that part of the town tract that had been laid off into lots, and said that they had divided all their town property: they drew writings passing the title to the town lots: after the division heard Ramsey say that they had divided all their property.
    The circuit court rendered a decree in favor of the complainant, in accordance with the prayer of the .bill; and ,the defendants appealed .to this court.
    Bevens & Fairchild, for the appellants.
    Parol testimony is not admissible to establish the trust charged in the bill. Askew vs. Poyas, 2 Dessau. 145. Henderson vs. Hudson, 1 Munf. 51.0. Forster vs. Hale, 3 Yes. Jr. 707. 3 Dessau. 152. 1 Ves. Jr. 241. 1 Dessau. 333. Id. 345. 2 id. 190. Brodie vs. St. Paul, 1 Ves. Jr. 234. Movan vs. Hays, 1 John. C. R. 339.
    The purchase of the land by Kelly did not raise a resulting trust for the firm. The bill would not lie .against an agent unless supported .by written acknowledgments or manifestations of. trust. (Story’s Eq. Juris., sec. 1201, a. Bartlett vs. BickersgiU, died 
      
      in 4 Burr.'2255.) A partner, in liis partnership dealings, holds only the relation of agent to his co-partners. Story on Part., sec. 1, 94, 104.
    The evidence is not sufficient to establish a trust — consisting of parol testimony, repetitions of conversations that happened twenty years ago, and being confused, inconsistent and contradictory. How courts regard such testimony, and receive parol testimony to raise a trust, vide Bollsford vs. Burr, 2 John. Ch. R. 405, 409, 411, 414. 3 Phil. Ev. (Cowen & Hill) 1489. Boyd vs. McLean, 1 John. Ch. 586. Dupree vs. McDonald, 4 Dessau. 209. 4 ib. 432.' 10 Ves. 517. Foote vs. Calvin, 3 John. 222. Sugden on Ven. and Pur. (1 Amer. Ed. from, 7 Bond. Ed.) 616.
    It does not appear that payment was made by Ramsey when the trust commenced: and payment after the purchase is completed will not raise a trust. Bollsford vs. Burr, 2 John. Ch. R. 413. Sheer vs. Shenk, 5 John. Ch. R. 1.
    Fowlek, also for the appellants.
    Parol evidence is not admissible to establish the trust. (Movan and wife vs. Hays, 1 John. Ch. R. 341. Sug. on Ven. 444,) (and the authorities cited by Bevens & Fairchild to this point.) Such evidence is admitted with great caution, (Boyd vs. McLean and wife, 1 John. Ch. R. 586,) and must be very clear where the trust does not arise on the face of the deed. (Sug. on Ven. 444, 446.) If parol evidence is admissible, the testimony in this case is too indefinite and uncertain. The affirmative testimony of Egner cannot be overturned by the negative testimony of the other witnesses. (1 Stark._ Ev. 516.) A witness, testifying according to his knowledge or belief, must show whence his knowledge was derived or belief induced. Cla-son vs. Morris, 10 John. Rep. 531. Smith's heirs vs. Frost, 2 J. J. Marsh. 426.
    The complainant’s claim is barred by lapse of lime. Lapse of time is often applied and operates in equity by analogy to the statute of limitations. (Baker vs. Biddle, 1 Báldw. C. C. R. 419. Sug. on Ven. 271. Moore vs. Cable, 1 John. Ch. R. 387. Peyton et al, vs, Stith, 5 Pet. R. 494. Story on Eq. PI. sec. 503. Lewis et al. 
      
      vs. Marshall et al., 1 McLean’s R. 17. 6 Pet. R. 66 et seq.) And equitable rights affected and barred by time in the same 'mannér as legal estates are barred by the statute of limitations. - Svg. on Yen. 271. Miller’s heirs vs. The Mclnlires, 1 McLean’s R. 87. 2 Marsh. R. 145. 1 John. Ch. R. 316. 1 McLean’s R. 160. Story's Eq. PI. sec. 751, 756. Reeves vs. Dougherty, 7 Yerg. 233. Coulson vs. Walton et al., 9 Pet. R. 82. Cooper’s Eq. 251. Elemendorff vs. Taylor, 6 Cond. R. 56. 6 Pet. R. 66.
    Statutes of limitation, or length of time, may be pleaded in bar between parties or their representatives. (Waggoner vs. Gj'ay’s ad., 2 Hen. & Munf. Rep. 609. Atwater vs. Fowler, 1 Edw. C. R. 422. Coretant vs. Peaks, 2 id. 333. 3 Pet. R. 52.
    Independent of statutes of limitation, and in cases where those will not apply by analogy or otherwise, as in cases of trust, &c., the principle of the lapse of time is applied by a court of equity, under its oivn rules, where a party has slept upon his own rights. (Ware’s heirs vs. Brush, 1 McLean’s R. 538. Thomas vs. Harhie’s heirs, 6 Cond. R. 416. S. C. 1 McLean’s R. 164. Story’s Eq. PI. sec. 756,757, 813. 6 Pet. R. 66.) Even in cases of express trust if the parties have long ceased to act upon or recognize them, equity will not interfere to enforce them, (Story’s Eq. PI. sec. 756, 813. Prevostvs. Gratz, 5 Cond. R. 154. Cooper’s Eq. 254. 3 John. Ch. Rep. 135. Beckford, Sfc. vs. Wade, 17 Ves. Jr. 95, 99,) and after a long possession of lands in severalty, will presume-a deed of partition. 1 McLean’s Rep. 489.
    There is no resulting trust in this case: it therefore comes within the statute of frauds, and the whole of the parol testimony is inadmissible. “ An express trust, although by parol only, will prevent the resulting trust, and require other than parol evidence to establish it.” Bug. on Yen. 446. Lady Bellasis vs. Compton etal., 2 Yern. R. 294.
    The decree against McGuire, as administrator, for one half of the money received for the lands sold by the guardian of his intestate, and for one-half of the rents, &c., without any allegation in the bill, admission in the answer or any evidence that either the administrator or his intestate received the money, is clearly erroneous. The money may still remain in the hands of the guardian. The allegata and probata must correspond; arid no decree can stand unless based upon an allegation and sustained by proof. Barraque et al. vs. Manuel, 7 Ark. R. 519. Boone vs. Chiles, 10 Bet. R. '208. Piatt vs. Vatlier et al., 9 Pet. Rep. 415. Scott vs. Evans, 1 McJaean's R. 489. Cowan vs. Price, 1 Bibb's R. 175. Bibb vs. Prather et al., ib. 316.
    • Byers & Patterson, contra.
    The deed to Kelly created a resulting trust, — the property having been purchased with partnership funds for the joint benefit of Kelly and Ramsey, and the deed made to Kelly alone.
    A trust resulting by operation of law is not within the statute of frauds, and may be established by parol evidence. 2 Story's Eq. secs. 1206, 1207, and authorities there cited.
    
    
      A purchase made for partnership purposes and on partnership account, is deemed partnership property, no matter to whom the deed is made. (2 Story's Eq. sec. 1207. Sug. on Yen. 434,435,438, 440, 441, 442. 4 Kent's Com. (5 Ed.) 305, 306, and note.) Such a resulting trust is not within the statute of frauds, and may be cstablishsd by parol proof. (Boyd vs. McLean, 1 John. Ch. R. 582. Snelling vs. Vtlerbach, 1 Bibb, 609. Bollsford vs. Burr, 2 John. Ch. R. 409. Foot vs. Calvin, 3 John. R. 222. Jackson vs. Slernbergh, 1 John. Gas. 153. Jackson vs. Matsdorf, 11 John. R. 91. Jackson vs. Mills, 13 John. R. 463. Jackson vs. Morse, 16 John. Rep. 197. McGuire vs. McGowan, 4 Dessau. Eq. R. 486.
    If one partner purchase lands with partnership funds a resulting trust will arise which may be established by parol proof. 2 Wash. Cir. Ct. Rep. 441. See, also, 4 Kent's Com. 305, 307. 2 John. Ch. R. 252. 1 Jjomax Dig. 200. 2 Fair/. 1. 1 Wash. Rep. 14. 6 llar. & John. 435. A John. Ch. R. 167. 1 Porter's Ala. R. 318.
    The land in controversy not having been divided, there was no adverse possession. Kelly’s possession was the possession of both, and the statute of limitations cannot begin to run. (1 Atk. 494.) When the nature of property does not admit of adverse possession, tbe statute does not run. (Ib.) The defendant, therefore, cannot take advantage of the lapse of time.
    If the guardian of Kelly sold a part of the lots, the receipt of the purchase money, by his guardian, was, so far as Ramsey is concerned, a receipt by Kelly, and his estate in the hands of his administrator is liable for it.
   JonwsoN, C. J.

The object of this bill was to establish a resulting' trust in one-half of certain lands therein described.

It is contended, on the part of the appellants, that the right of the appellee, in case it ever existed, is now barred by lapse of time, and that, if not so barred, it cannot be established by parol evidence. The 12th and 13th sections of the statute of frauds declare that “all declarations, or creations, of trust, or confidences, oí any lands or tenements, shall be manifested and proven by some writing signed by the party, who is or shall be by law enabled to declare such trusts, or by his last will in writing, or else they shall be void; and all grants and assignments of any trust or confidences shall be in writing, signed by the party granting or assigning the same, or by his or her last will in writing, or else they shall be void; ” and that “ where any conveyance shall be made, of any lands or tenements, by which a trust or confidence may arise or result by implication of law, such trust or confidence shall not be affected by any thing contained in this act.” (Digest, chap. 73.) In the case of Hoxie vs. Carr et al., 1 Sumner, Judge Stoey, when commenting upon the statute of frauds of Rhode Island, said: “Then again it is said, that the statute of conveyances and the statute of frauds of Rhode Island contain no exception in favor of resulting trusts, (as the statute of frauds in England and the corresponding statute of Massachusetts do,) and therefore such a trust cannot be varied by operation of law in favor of the partnership. But it does not appear to me that the statutes of Rhode Island vary the common rule, for they respect trusts created by the acts of the parties, and not trusts created by operation of law. My impression is that the exception in the statute of frauds in England and Massachusetts, as to resulting trusts, has been deemed merely affirmative of the general law, and not as creating a saving of resulting trusts, which would otherwise have been cut off unless in writing. But it is the less necessary to decide this point absolutely on this naked ground: for if the property were purchased with partnership funds, and for partnership purposes, and thus it became an executed contract between the parties, it would be a fraud upon the partnership afterwards to appropriate it to the private use of cither of the parties, without the assent of the others. And purchasers claiming under him with notice would bo in the same predicament as the partners so misapplying the funds. No one will doubt that a partner cannot shelter himself in a court of equity from responsibility for a fraud under cover of a statute to prevent fraud. That would be (as has been often said) to convert the very statute into an instrument of fraud.” It is laid down, as a general doctrine, in the books, that, to create a resulting trust, there must be an original agreement creating the trust at the time of the purchase, or at least at the time when the contract for the purchase takes effect, and is executed by an appropriation of it as partnership property. And it is also recognized as a general rule that a resulting trust cannot arise in contradiction to the terms of the deed. The question to be settled here is, whether the trust asserted in the present case is liable to any exception on either of these grounds. It most unquestionably does not contradict any of the terms used in the deed, nor has it a commencement posterior to the partnership purchase and appropriation.

The next question is, whether there is sufficient evidence to establish the fact that the property in controversy is property belonging to the partnership and purchased with partnership funds. The remark of Judge Story, in regard to the saving clause contained in the statute of Rhode Island, is equally applicable to our own. If any doubt could exist upon the question whether resulting trusts were embraced within the scope and operation of our statute in case there were no express exception, that matter is placed in a clear light by the words of the act itself. Resulting trusts, or trusts created by operation of law, being expressly excluded from the operation of the statute, it is manifest that parol evidence is admissible to establish them. The evidence, in such cases, is not introduced to establish any fact inconsistent with the legal operation of the words of the deed, but merely to engraft a trust upon the legal estate. The entire testimony taken in the cause concurs to establish the fact that one undivided fourth-part of the town tract, though nominally conveyed to Kelly alone, was in reality purchased with the joint funds of Kelly and Ramsey. It is apparent, therefore, that a trust resulted originally in favor of Ramsey for one-half of that portion conveyed to Kelly, and the only question now remaining is, whether Ramsey has been shown to have done any act which could legally deprive him or his heir of the benefit of it.

The first position is, that, even admitting that the trust once existed, it is now barred by the lapse of time. It is conceded that lapse of time is sometimes allowed to prevail in equity, but whenever such plea is allowed it is only in analogy to the plea of the statute of limitations at law. It being considered in the nature of the plea of the statute of limitations, can only be adopted to bar a right where there has been an adverse possession, and consequently where the party asserting his right is guilty of negligence. The charge of laches or neglect cannot be properly made against the complainant, nor his deceased ancestor, as neither Charles nor James DeWitt Clinton Kelly can be said to have held the land in dispute adversely to either. The purchase being in partnership and with joint funds, share and share alike, the possession of one was the possession of the other, and consequently neither could set up the lapse of time in prejudice of the other’s rights.

The next ground taken by the appellants is, that, previous to the death of Ramsey, he and Kelly dissolved partnership, and actually made partition of all their partnership effects. If this proposition be true, and sustained by the evidence, it must be conceded that the appellee had no right, and is, consequently, entitled to no relief. To determine this question correctly, recourse must necessarily be had to the testimony. The appellees introduced three witnesses, each of whom testified as to the existence originally of the trust estate. They derived their knowledge of the fact from both parties to the transaction, and their testimony is conclusive upon that point. Their testimony, in regard to the continuance of the estate down to the period of the death of the original parties, is as strong as it could possibly be under all the circumstances of the case. To show that the estate still continued necessarily involved a negative, it depending upon the question whether a division had been effected or not, and it would be difficult to conceive of a case where a nearer approach could be made to the entire establishment of a negative. Indeed we think that the testimony of the appellee’s witnesses, when taken in connection with the strong extrinsic evidence which pervades the whole, leaves no doubt that the property now in controversy remained in statu quo and undivided at the period of Kelly’s death. The fact that the property was purchased originally with partnership funds, is denied, it is true, by the answer, but this answer is completely overturned, not only by the appellee’s witnesses, but by the united testimony of both parties. Egner, the witness introduced by the appellants, is equally clear upon this point. There is no difference of opinion amongst them in regard to the division of that portion of the tract which had been laid off into town lots by the original proprietors, and the appellants’ own witness testifies that, as to that part, they executed deeds to each othe.r. He stated that, after they had divided the one-fourth of the lots so laid off, Ramsey told him that they had divided all their town property, and that subsequently he also told him that they had effected a division of all their property. The whole current of the testimony offered by the appellee is of an opposite character and tendency upon the subject of a full and final division. This case presents one very remarkable feature upon the supposition that an entire division had actually been made previous to the death of Ramsey. It has not been made to appear by any .exhibit in writing, nor has it been testified by any witness, wbat disposition was ever made of tbe residue of the land after the division of the town lots which were laid oif by the original proprietors. That residue is the subject matter of this suit. The utter absence of proof upon this point raises a most violent presumption against the idea that any division was ever made between the parties. The circumstance that in the division of their other real estate they were careful to preserve written evidence of their respective rights is strong, if not conclusive, in connection with other pregnant circumstances that the residue of the town tract remained undivided at the period of their deaths.

The answer indirectly admits that a partnership once existed between the parties, but insists that all the partnership property was divided before the death of Ramsey. This answer is clearly overturned by the testimony.^Tt is not only contradicted by one witness and strong corroborating circumstances, but it stands opposed by the concurring testimony of three witnesses, and that testimony corroborated and supported by the strongest possible circumstantial evidence. We are clear, therefore, that the trust asserted in the bill not only once had an existence, but that it still exists, and that the complainant is entitled to the full benefit of it.

It is also objected, against the decree, that it is rendered against the administrator of James DeWitt Clinton Kelly for one-half of the purchase money for which the lots had been sold by his guardian. We cannot perceive any error in this respect. The estate is liable to the complainant for the amount, and the administrator, having the custody of it, is the proper party to pay it.

We are, therefore, of opinion that the decree of the circuit 'court of Independence county herein rendered ought to be, in all things, affirmed. The decree is, in all things, affirmed with costs.