Case Name: Edward Winslow and Wife and others, vs. Thomas P. Chiffelle, and others
Court: South Carolina Court of Appeals
Jurisdiction: South Carolina
Decision Date: 1824-03
Citations: 1 Harp. Eq. 25
Docket Number: 
Parties: Edward Winslow and Wife and others, vs. Thomas P. Chiffelle, and others.
Judges: Chancellors Dessausstire and James, concurred.
Reporter: South Carolina Equity Reports
Volume: 5
Pages: 25–34

Head Matter:
Edward Winslow and Wife and others, vs. Thomas P. Chiffelle, and others.
I. A. conveyed to T. C. the undivided moiety of half of a lot of land, which he had held in common with complainants, and of which partition had been made. In 1817, complainants conveyed to I. A. and C. the other half of the lot, and took in payment two notes. 1. A. and T. C. afterwards erected a steam mill on the part of the lot of which the moiety had been first conveyed by I. A. using the other part as appendant thereto The business of sawing lumber was carried on jointly; bills for lumber were made out in the name of “A. &/• C.” and they sued and ivere sued as “A. C.” In 1820, A. 8f C. became insolvent, and the bill was filed to by complainants, to obtain payment of the notes mentioned, out of the mill and lot, as partnership property, in preference to the separate creditors of I. A. & T. C.
A certificate of I. A. and T. C. dated 1822, declaring that they had held the mill and lot. as partnership property, was offered in evidence and held to be admissible.
It was held that the circumstances were sufficient to establish that the mill and lot were partnership property, and that complainants were entitled to payment, in preference to separate creditors of the partners: subject however, as to the moiety of A. to the claims of creditors who had obtained judgments against him before his conveyance to i . who were bound nevertheless, first to'exhaust A’s. private estate.
On the seventeenth of April, 1817, James Ancrum conveyed to Thomas P. Chiffelle, the undivided moiety of half a lot of land in Charleston, which he. had held in cpmmon with the complainant, Mrs. ^inslow, and of which partition hat} been made. On the twenty-fourth of April, 1817, the complainants, Winslow and Wife, conveyed to James H. Ancrum and Thomas P. Chiffelle the other half of the s&id lot;, and for the purchase money took two notes, one of Ancrum endorsee' by Chiffelle, the other of Chiffelle endorsed by Ancrum. After this purchase, Ancrum and Chiffelle erected a steam mill on that part of the lot of which Ancrum had conveyed a moiety to Chiffelle, the other half being used as appendant thereto; and carried on the business of sawing lumber. In 1820; both Ancrum and Chiffelle became insolvent, and Ancrum assigned all his .property for the benefit of his creditors. This bill was filed by Winslow and wife against Chiffelle, the assignees of Ancrum, and certain private judgment creditors of Chiffelle, to establish their notes above mentioned as a partnership debt, and to obtain payment from the mill and lot as partnership property, in preference to the private creditors of Ancrum or Chiffelle,
On the trial, in addition to the facts stated, the proof was, that while the business of sawing was carried on, bills for lumber were made out in the name of “Ancrum .& Chiffelle,” that they sued and were sued as “Ancrum &t Chiffelle.” A certificate, signed by James H. Ancrum and Thomas P. Chiffelle, dated 30th April, 1822, declaring that the whole lot and .mill 'were held by them as partnership property, was offered in evidence, but objected to and overruled by the court.
Chancellor Gaillard. — The defendants have failed in establishing the copartnership between Ancrum and Chiffelle, Bills of lumber were sawed and sold by them in the name of An-crum and Chiffelle, and they sued and were sued as An-crum and Chiffelle, but whether they were to share equally os-in what proportions, the profits of the mill establishment, or what were the terms of the copartnership, if any existed, does not appear. But supposing the existence of a copartnei ship, there is nothing to shew that the lands were copartnership property. The titles produced shew on the contrary that they were private property. They must therefore be so considered. Th$ injunction is dissolved and the bill dismissed with costs.
From this decree complainants appealed, on the' ground that the evidence did establish a copartnership in the business of sawing lumber; and that all property necessary thereto was a copartnership fund, and liable in the first instance to complainants.
Roomer, for appellants.
The questions afé, whether there was sufficient proof of a partnership, and whether the lot and mill were partnership property. As to the first point there can be ho doubt; they carried on the business of the mill jointly, their books were kept in the name of “Ancrum & Chiffelle,” they sued and were sued as a firm. The circumstances are amply, sufficient to establish a partnership. 5 Ves. 308.
Lands may be the subject of copartnership. (Vais, on Part. 72, 73. This is not to make all lands held by joint owners partnership property. The distinction is between agriculture and commerce; collieries, breweries, &c. are subjects of partnership. 1 Ves. 130. Partnerships frequently relate to real estate. Wats. 73. 1 Pr. Wms. 138; 3 Ves. 696; 2 Eq. Re. 471 (Richardson vs. Wyatt.)
Lance, for one of the creditors of Chiffelle.
The title to lot is a legal one and bound by the prior judgments. The legal character of the property must prevail, unless there is clear proof to bring it within the equity principle. The conveyance to Ancrum & Chiffelle affords no evidence of its being partnership property, and their dealings with other people could not change the nature of their title. If Ancrum had died, would the property have vested in Chiffelle? It seems formerly to have been held that lands purchased for the use of the the partnership should be distributed as personality; but it is now clear that partnership agreement, to alter the nature of the property, must be express. In all the cases quoted, the enquiry is, ■whether the purchase was made with partnership funds; that was the case of Richardson fy Wyatt.
Gadsden, for a creditor of Chiffelle.
At law, there can be no partnership of land; and in this court, land cannot be considered partnership stock, without a clear and express agreement. . The power of every partner .to dispose of the common stock is the leading characteristic of partnership; 4 Mass. Re. 424, (Chancellor Desaussure. The general proposition is not disputed. The argument is, that where land is purchased for partnership purposes, the character of partnership property attaches to it. Gadsden. There is no such rule at law. 15 Johns. 159,161.) The creditors then have a legal lien on property not the subject of partnership. The partnership creditors have no more lien on partnership property than the private creditors on separate property; but in favor of partners, the court will prevent the property of one from going to pay the debts of the other. There was in fact, no evidence of the lands being held as partnership property. To convc.t the mill ana lot into stock, it should have been shewn, either that there was an express agreement so to hold it, or that it was necessary for the partnership business. There is no proof of agreement, and nothing but the use. of the mill was necessary for the business. There is no more necessity for considering the land as stock, than for holding ship owners to be partners. 4 Johns. 522.
Petigru, for the assignees of Ancrum.
Admit that there was a copartnership of the land, the lumber and all the transactions, still the complainants cannot establish their claims., The creditors of the individual partners have liens, which the court is asked to destroy, in favor of the copartnership creditors who have no liens. There is but one case in the books in which such an attempt has been made, and that failed. The equity which secures partnership property for partnership creditors, is the equity of the partners and not of the creditors: the creditors have no equity whatever. The creditors of the copartnership having no lien, obtain a preference over the separate judgment creditors, only on account of the equitable right of the copartner to have an account and a balance struck. The creditors can file no such bill; it is only the partner or his representatives.' The copartnership creditor, who has no equity, will not be allowed to interfere with the legal lien; the-separate creditor, v/ho has a lien, has an equity too, which cannot be shaken.
A judgment to a large amount, that of Wightman, was obtained against Ancrum before he conveyed to Chifielle, and before any pretence of a partnership. This bound all his prq. property, part of which was the half of the lot on which the mill establishment was built. Another judgment was obtained a few clays before the complainants conveyed to Ancrum and Chiifelle. There were judgments too, against Chiifelle, before the copartnership or any of its transactions. Cited, 4 Johns. 526, (Nichol, vs. Munford;) 3 Bos. and Pul. 6 Ves, 119; 11 Ves. 3; 2 Johns. Ch. Ca. 540; (Moodie, vs. Payne.) The last stated to be the only case of a bill like this.
Priolaau, in reply.
The principal creditor in this case is Winslow; who sold the land out of which he seeks to obtain payment, for which he took' the notes. A creditor who takes no security on the sale of lands has a lien. 2 Ves. and Beames, 306; 1 Madd. 346. To shew cases in which land has been regarded as personal property, cited Wyatt, vs. Richardson; 5 Ves. 193; 7 Ves. 453; 3 Br. Ch. Ca. 199; 1 Atk. 59; Wat. part. 54; 1 Ves. 491; 2 Ves. and Beame. 242; 4 Johns. 526. There can be no doubt in fact, that the lands was pm-chased for partnership purposes. There was indeed an express declaration of trust for the copartnership. The certificate of Ancrum and Chiifelle gave a true statement of the transaction. The judgment of Wightman was in 1816; and Chiifelle coming in under an adverse title, is protected against him by the statute of limitations. Further cited, 4 Br. Ch. Ca. 199; Amb. 409; Wats. 75; 3 Ves. 696.

Opinion:
Chancellor Waties,
delivered the opinion of the Court.
The bill in this case was brought to establish a copartnership in certain lands, held by 1. H. Ancrum and T. P: Chiffelle, on which they erected a mill for the sawing of lumber. It was proved that the mill was always called "Ancrum & Chiffelle's;" that bills of lumber were sawed and sold by them in the name of Ancrum &i Chiffelle; that they sued and were sued, and their accounts were kept in that name. The question made in the case is, whether the lands so used in the business of the mill, were copartnership property or not.
There can be no doubt that land may be the subject of a partnership concern. This has been repeatedly decided. In Lake, vs. Craddock, 3 P. W. 158, several persons purchased a tract of land, with intent to drain it, aud the purchase was made by them as joint tenants in fee; bufas they had contributed rateably to the purchase, they were held to be tenants in common, by reason of the partnership. The master of the rolls declared "that an undertaking upon the hazard of profit or loss, was in the nature of merchandizing."'
So in the case of Foster, vs. Hale, 3 Ves. 696, and 5 Ves. 508, in which there was a lease to three persons of a colliery. The court held that as the partnership was established, the premises necessary for the purposes of that partnership were, by operation of law, held for those purposes. In Thornton, vs. Dixon, 3 Bro. c. r. 199, Lord Thurlow said, he had always understood where partners bought land for the purpose of a partnership concern, it was to be considered as part of the partnership fund, and he was at first disposed to think that this would make it distributable as personal estate; he determined however afterwards, that it should result to- the heir at law, as the agreement of the partners was not sufficiently expressed to change its legal nature. But whether land assumes the character of real or personal estate in becoming partnership property, is immaterial, as it affects the right of the joint creditors of a partnership; for if land under either character becomes partnership property, it must, upon principle, be necessarily liable to partnership debts. The rule on this subject has been fully settled. Where there are different classes of creditors, witli respect to the joint and separate estate of copartners, each estate shall be applied exclusively in the first instance to the payment of its own creditors, and neither the joint creditors shall come upon the separate estate, nor the separate upon the joint, but only upon the surplus of each that shall remain, after each has fully satisfied its own creditors.
It is only necessary then, in the present case, to enquire whether the lands used for the purposes of the mill became a partnership fund; and this fact appears to be fully established. It is admitted by the answer of Mr. Chiffelle, the surviving partner, and both the partners have declared it by a written instrument, executed after they had both become insolvent, which re moves all objection to it on the ground of interest. But this evidence would otherwise be properly admissible. In Foster, vs. Hale, before cited, it was iield that under a lease for a term of years to one partner in his own name, a trust would be raised by implication in favor of copartners,'from letters and a paper referred to by them, in the hand writing of the partner, though not signed or dated; and the partner in whose name the lease was taken, was decreed to hold the premises for himself and his co-partners in equal'shares. In that case too, great stress was laid on the circumstance that the land was necessary for carrying on the colliery,_ and the lease was held to be an incident to the partnership for that reason. So in the present case, the lands must be •regarded as partnership property, although not so declared in the conveyances. But the partners have declared that they were brought into the partnership fund for the erection and use of the mill, and it is evident that they were necessary for those purposes; the notes also which have been given to the complainant, Winslow, manifest very strongly the joint interest of the partners in the transaction. The creditors then of the partnership have a right to be paid out of this fund, in preference to the separate creditors of the partners; but they cannot exclude the prior liens of the separate creditors of the copartner, Ancrum, who bad obtained judgments against him before he conveyed his share of the land to the use of the partnership. It is just however that these creditors should first resort .to his seprate estate, before they are allowed to come on the partnership fund.
It is therefore ordered and adjudged, that the decree of the circuit court be reversed, and that the proceeds of the sale of the mill, establishment of Ancriim &. Chiffelle, be paid to the complainants in rateable proportions to their demands, as creditors of the partnership of A. & C. subject however as to the moiety of Ancrum, to the legal liens which his separate creditors may have obtained thereon, before his conveyance of the same to the use of the said partnership: provided that the said creditors shall have first exhausted the separaté estate of the 'said Ancrum, which may be liable to their demands.
Chancellors Dessausstire and James, concurred.