Case Name: Bird vs. Morrison and others
Court: Wisconsin Supreme Court
Jurisdiction: Wisconsin
Decision Date: 1860-06
Citations: 12 Wis. 138
Docket Number: 
Parties: Bird vs. Morrison and others.
Judges: DixON, C. J., did not sit in this case, having presided at the trial in the circuit court.
Reporter: Wisconsin Reports
Volume: 12
Pages: 138–163

Head Matter:
June Term, 1860.
Bird vs. Morrison and others.
Where it was stipulated, in a written agreement for a mercantile copartnership, entered into in March, 1838, “that a lot should be purchased for the concern, and a store be erected thereon,” it may be shown, by parol evidence, that a lot, afterwards (in the same year) conveyed by absolute deed to one of the partners, and upon which a store was erected, and for the pwrtnei'shvp husmees, was purchased and improved with the partnership means, and is partnership property.
It seems that if the written agreement had not contained any such stipulation, such evidence would have been admissible under the rule of equity then recognized, that a trust in real estate resulted in favor of the party who paid the purchase money therefor.
An agreement for a partnership in dealings in real estate, is within the statute of frauds, and void unless in writing. The fact that the parties making such agreement are engaged at the time in a mercantile partnership, does not take it out of the statute.
Where A, B, C and D, were the members of a mercantile copartnership, and D received conveyances from his copartners, by absolute deeds, of divers pieces of real estate, upon which improvements were afterwards made under his direction, as ostensible owner, but which were neoe>' meet for my of the part- nershyp purposes, it is not competent for>his copartners to show that such real estate is partnership property, or held upon any trust for their benefit, by proving a parol agreement with I), at the time said conveyances were made, that he should hold said real estate (with other real estate previously owned by him) as partnership property, to be improved by their equal contributions, aud should reconvey their undivided shares of said property to them upon request; and that the improvements were made with the means of the partnership, or by the equal contributions of its members; the admission of such evidence being contrary to the statute of frauds.
Such an agreement, if proved, did not constitute the parties thereto copartners in the real estate thus conveyed. A mere community of interest in land does not make men partners; there must be some joint adventure, and an agreement to share in the profit and loss of the undertaking.
APPEAL from the circuit court for Dane county.'
This was a suit in equity, commenced in March, 1854, Toy the complainant Bird, for the purpose of dissolving an alleged copartnership between himself and' James Morrison, John F. O'Neil and James D. Doty, and for an accounting, and distribution of the partnership effects, &c.
The bill alleges, that on the 19th of March, 1838, the complainant, and said Morrison, O'Neil and Doty, entered into partnership in the mercantile business in Madison, Wisconsin, under a written agreement, which recited that said Morrison should be the acting partner, and should conduct the business in the name of “James Morrison & Cor" that the capital stock should be twenty thousand dollars, of which each partner should supply his equal proportion as required; that a stock of merchandize, which said Morrison then had at Helena, should be removed to Madison, and received at cost and charges; that said business should be continued until the 1st day of January, 1840, unless sooner dissolved by mutual consent, and “ that a lot in said town should be purchased for the concern, and a store and other necessary buildings erected thereon.”
The bill also alleged, that in the- spring of 1838, in pursuance of said agreement, said partners opened a store of merchandise in said town, each contributing his share to the capital stock from time to time when required, said Morrison taking the management thereof, as the acting partner, and “ that soon thereafter, in the same year, the said copartners agreed and entered into an arrangement to extend the business ^1®1, sa^ copartnership, so as to embrace dealing in and improvements of certain real estate in said town of Madison, by eaob 0f Said partners agreeing to contribute and put in, as capital stock for that purpose, an equal share of real estate, consisting of lots in said town, and to, contribute an equal amount of means required to improve the same, and more especially for the construction of a hotel and the necessary buildings and improvements connected therewithand that during the same year, in accordance with said agreement, and without any other consideration whatever, “ the said James Morrison and the said John F. O'Neil being the joint owners of lots 5, 6 and 7, in block 101, and the said Doty and the complainant being the equal joint owners of lot 8, in block 101, and of lots 1, 2 and 3, in block 104, and the said Doty being the sole owner of lots 1, 2,3 and 4, in block 262, all in said town, they (said Bird, O'Neil and Doty) caused the said lots to be deeded to the said James Morrison in fee, to be used and treated as the capital stock of said copartnership in real estate, with the understanding and agreement by and between all of said copartners, that the said James Morrison should thereafter reconvey to each of the other copartners, his just share of said lots, consisting of an undivided one-fourth of the same, with ■ the improvements thereon, when he, said Morrison, should be requested so to do by all or either of said copartners.”
The bill also states, that after the conveyance to said Morrison, of said lots, the same and the improvements that were being made thereon, were treated ostensibly as the property of said Morrison alone, and the business appertaining thereto, ostensibly conducted in his name, and “ that said real estate was greatly improved and enhanced in value, by the erection of valuable buildings thereon, by the use of the means and the capital of the said copartnership,” the complainant contributing for the use and benefit of said copart-nership, in money and personal property and labor, the sum of ten thousand dollars and upwards, “ by placing the same in the hands and control of said Morrison to be used by him for that purpose.”
The bill also alleges, that the copartnership has never been dissolved; tbat large profits were made in tbe said mercantile business, and large rents and incomes bave accrued tbe said real estate, all of wbicb bave been received by said Morrison, wbo, though often requested, has refused to any settlement of tbe affairs of said copartnership; tbat said Morrison hás conveyed said real estate to one Dean, (wbo is also made a defendant,) without any valuable consideration therefor, and with full notice of tbe equitable rights of tbe complainant and O'Neil and Doty in tbe same. Prayer, tbat tbe partnership be declared dissolved, an account taken of tbe partnership dealings, and am equitable distribution made of tbe effects of said copartnership, &c.
Tbe answer of tbe defendant James Morrison, admits tbe making of tbe written agreement referred to in tbe bill, for a mercantile copartnership between himself, tbe complainant Bird, and said 'O’Neil and Doty, but denies tbat tbe complainant, Bird, ever contributed bis share, or any part thereof, in money or otherwise, to tbe capital stock of said company ; and denies also, according to tbe best of bis remembrance, information and belief, tbat said O'Neil and Doty ever contributed their share of tbe capital stock of said company, or any part thereof, in money or otherwise, adding, tbat if said O'Neil and Doty “ ever did so, and they bave not been fully satisfied by tbe defendant James Morrison, tbe courts of equity are open to them, to bave their rights established against him.”
Tbe answer further states, tbat in June, 18S8, tbe said Morrison brought to tbe town of Madison, tbe stock of merchandise belonging to him at Helena, referred to in tbe agreement of partnership, and supposing tbat tbe complainant, Bird, and said O'Neil and Doty, would, within a reasonable time, pay their respective shares of tbe cost and charges of said merchandise, so as to constitute tbe same capital stock of said company, according to tbe terms of said agreement, commenced business and opened books in said company’s name, be, said Morrison, being tbe acting partner; but after waiting for some length of time, tbe said complainant and O'Neil and Doty failed entirely to take an account of said stock and pay him then respective shares of tbe cost and c^ar^es thereof, although, required so to do, and supposing that they had abandoned said agreement, be proceeded thereafter to trade on and dispose of his said merchandise, in his own name and for his own use and benefit.
The answer also expressly denies the agreement alleged in the bill, to extend the business of the alleged copartnership “so as to embrace dealing in and improvements of real estate in said town of Madison, by each of said partners agreeing to contribute and put in as capital stock for that purpose, an equal share of real estate, consisting of lots in said town, and to contribute an equal amount of the means required to improve the same.”
The answer also expressly denies, that the complainant, Bird, and said O'Neil and Doty, caused the lots described in the bill to be deeded in fee to said Morrison, to be used and treated as the capital stock in said copartnership in real estate, with the understanding and agreement by and between all of said copartners, that he should thereafter recon-vey to each of them his just share, being an undivided fourth thereof, with the improvements, when requested to do so by all or either of said copartners; and denies that said O'Neil and himself were, in 1838, the joint owners of said lots 5, 6 and 7, in block 101, or that said Doty and Bird were joint owners, in 1838, of said lot 8, in block 101, and said lots 1, 2 and 3, in block 104, or that said Doty was the owner of said lots 1, 2, 3 and 4, in block 262, after the 8th day of May, 1838 ; but on the contrary, alleges, that he, the said Morrison, was in 1838, the sole owner of said lot 8, in block 101, and of lots 1, 2 and 3, in block 104, under a deed executed to him for a valuable consideration, by said Doty, as the trustee of the Four Lake Company, dated December 1st, 1836, and was also the sole owner of lots 1, 2, 3 and 4, in block 262, under a deed executed to Mm for a valuable consideration, by said Doty, as such trustee, dated May 8th, 1838, all of which property he purchased with his own means, and not otherwise.
The answer admits that said lots have been greatly improved by the erection of valuable buildings thereon, but avers that these improvements were not made with the means of said copartnership, but with, the private means and funds of said defendant Morrison, with the exception of four and five hundred dollars, which the complainant contributed towards building what was known as the American Hotel, on lot 8, in block 101, as a subscriber to a joint stock company for the erection thereof, and alleges that no one having contributed anything towards said building but himself and the complainant, he repaid to the complainant the amount so contributed by him, and received from him a release of all his, the complainant’s, title and interest in said lot and building, by deed dated Oct. 5th, 1839. The answer denies that said Bird ever paid or furnished any other money, personal property, or labor, for the benefit of said alleged copartnership.' The answer admits that no formal dissolution of copartnership between the complainant and Morrison, O’Niel and Doty, was ever declared, because the copartnership never was consummated.
The answers of Doty and O'Neil substantially admit all the material allegations of the bill.
The answer of the defendant Dean, alleges that he purchased the real estate referred to in the bill for a valuable consideration, without a knowledge of any claim of Bird, Doty or O'Neil to any part thereof, or any notice that said Morrison held it in trust for them or either of them.
The complainant filed a general replication to the answers.
On the healing of the cause, no evidence was offered of any written agreement to extend the alleged partnership between said Bird, Morrison, O'Neil and Doty, so as to embrace dealing in and improvement of real estate, or of any written agreement that lots conveyed by either of said parties to Morrison, should be used as the capital stock of a copartnership in real estate, but the complainant, who was sworn as a witness, testified, that the agreement between the parties in reference to the alleged partnership in real estate, was a verbal one.
The deeds which Morrison held for the real estate referred to, were absolute on their face.
The record contains a large amount of testimony upon the disputed questions of fact, whether the partnership in regard to the mercantile business was ever consummated; whether the alleged agreement was made to extend the partnership so as to embrace dealing in and improvement of real estate; whether any real estate was conveyed to Jamison under such agreement; whether improvements were made thereon with partnership funds; and whether Dean purchased the real estate with notice, &c.; but as the evidence is referred to in the opinion of the court, so far as is necessary to an understanding of the legal principles involved, any further statement of it is omitted.
The circuit court found as facts, that on the 19 th of March, 1838, the complainant Bird, and the defendants Morrison, O'Neil and Doty, entered into a copartnership in the mercantile business, under the written agreement set forth in the bill of complaint; that in June of that year, in pursuance of that agreement, the said Morrison removed his stock of goods therein referred to, from Helena to said town of Madison, and put them into a store provided by the partners for that purpose, and commenced the mercantile business in the name of James Morrison & Co., he being the acting partner; that each of said partners, at or about the commencement of said co-partnership business, contributed towards the capital stock of the same; that said partnership business was carried on under the management of Morrison as the acting partner, until some time in the year 1841 or 1842, when the merchandise belonging thereto was entirely sold and disposed of; that “ on or about the 8th day of May, 1838, the said partners entered into a verbal agreement to extend the business of said copartnership, so as to embrace therein dealings in and improvements of certain real estate, to wit: town lots in said town of Madison, and each of them agreed to put in and contribute for that purpose an equal share of lots in said town, and to contribute equally the means required to improve the same, particularly for the purpose of building a hotel, and the necessary buildings and improvements connected therewith, as alleged in the complaint;” that “in pursuance of said last mentioned agreement, the defendant James D. Doty, on the said 8th day of May, caused lots 1, 2, 8 and 4, in block 262, in said town of Madison, to be con veyed to said James Morrison in fee, for tbe use and to be treated as a part of tbe real estate of said copartnership; that during the summer of 1838, the defendant James Morrison acquired'the title to and became the owner in fee, of lots 5, 6 and 7, in block 101; but whether he owned the same in his own right solely, or for himself and the defendant O'Neil, equally, does not appear from the proofs; that on the 13th day of October, 1838, the complainant Bird, and the defendant Doty, pursuant to said last mentioned agreement, by a deed executed by Doty, as trustee of the Eour Lake Company, to said Morrison, dated the 1st day of December, 1836, but in fact executed, acknowledged and delivered on the said 13th day of October, 1838, caused lot 8, in block 101, and lots 1, 2 and 3, in block 104, as described in the complaint, to be conveyed in fee to the said Morrison, to be used and treated as part of the cajoital stock of said ñrm; that said complainant Bird, and defendant Doty, caused said conveyances of said lots to be made to the defendant James Morrison, as and for each of their undivided fourth parts of the capital stock of said firm in real estate, to be by each of them contributed, with the understanding on their part, that the defendants James Morrison and John F. O'Neil were then equal owners of lots 5, 6 and 7, in block 101, described in the complaint, and that the same then became and were to be the property of said copartnership, as the shares put in and contributed by said Morrison and O'Neil, and with the further understanding and agreement, that the said James Morrison should thereafter reconvey to each of said partners his just share of said real estate, consisting of an undivided one-fourth thereof, with the improvements, when he should be requested to do so by said partners; that after the conveyance to said Morrison of said real estate, “ the same, with the improvements made thereon, remained in the exclusive possession of, was managed by, and treated as the property of said Morrison, and the business appertaining thereto conducted ostensibly in his name;” and “that said real estate was improved by the erection of a hotel and other valuable improvements thereon, by use of the means and capital stock of said firm, and the contributions of said partners.”
Tbe court further found as facts, that on the 16th of July, 1839, said James Morrison, for a valuable consideration, conveyed said lots 5, 6, 7 and 8, in block 101, and lots 1, .2 and 3, in block 104, to one Lewis Morrison, who purchased without notice of the rights or interests of said copartners in and to the same, and on the 26th of May, 1851, the defendant Dean, with full knowledge of the rights and interest of said partners, purchased said lots from said Lewis Morrison, and received a conveyance therefor; that on the 1st day of May, 1851, the said Dean, with full notice of the equitable claims of the said Bird, O'Neil and Doty, received from the defendant James Morrison a conveyance of said lots 1, 2, 8 and 4, in block 262, by which the legal title thereto was, and still is, vested in him; and that said copartnership has never been dissolved, but remains in full force in respect to the property and effects of said firm.
The conclusions of law announced by the circuit court were: That the defendant N. W. Dean is entitled to hold and retain, as his sole property, lots 5, 6, 7 and 8, in block 101, and lots 1, 2 and 3, in block 104, free from all equitable claim on the part of the plaintiff Bird, and the defendants O'Neil and Doty; and that he holds the legal title to lots 1, 2, 3 and 4, in block 262, subject to the equitable claims of said Bird, O'Neil and Doty, and that the same are liable to distribution between the said plaintiff and O'Neil and Doty, according to their respective interests, as above found and set forth; that said copartnership be dissolved by the judgment of this court; that an account of all the copartnership dealings, business and property, both in the mercantile and real estate business, and of the rents, issues, profits and losses of said business, and of the amounts paid in and drawn out by each of said partners in said business, be taken and stated in the usual manner; that a referee be appointed to take and state such account; that interlocutory judgment be entered in accordance with the said finding of facts and conclusions of law.
The defendants Morrison and Dean severally filed exceptions to so much of the finding of the court as to facts, and its conclusions of law, as were adverse to their respective in- ierests, and an interlocutory judgment being entered in ae-cordance with such, finding of facts and conclusions of law, tbe said Morrison and Dean appealed to tbis court.
Ghauncey Abbott, for appellants,
after an argument on tbe questions of fact involved in tbe case, said: It remains to enquire and determine wbat was tbe character of tbe alleged agreement between tbe complainant and Morrison, Doty and O'Neil, relating to tbe real estate, and wbat is tbe law by wbicb tbat agreement, and tbe testimony offered to prove it, must be governed and controlled.
Tbe case of JRasdall's Administrators vs. Basdall, 9 Wis., 379, fully covers tbis part of tbe case, and obviates tbe necessity of any appeal to other authorities. Tbat case decides: First. Tbat in case of a deed absolute on its face, parol testimony cannot be admitted to prove a trust. Second. Tbat tbe refusal of tbe grantee, in a deed absolute upon its face, to apply the property to tbe purposes verbally agreed upon, between him and tbe grantor, before or at tbe time .sucb deed was executed, and an appropriation of sucb property to bis own use, is not in law a fraud, tbat warrants tbe admission of parol testimony to establish a trust. Third. Parol testimony can only be allowed where fraud was used in procuring tbe deed, and tbat a verbal agreement to use tbe property in a particular way wbicb tbe grantee afterwards refuses to comply with, is not sucb fraud. Fraud in procuring tbe deed must be alleged and proved. In many particulars tbe case cited is parallel with tbe one at bar. In each case it is alleged tbat tbe deed was made by mutual agreement and understanding of tbe parties. No fraud is alleged in procuring tbe deeds in either case. In each case tbe trust is denied by tbe defendant, and in each case sought to be proved by parol testimony. In many respects, tbat case is much stronger, and goes much farther in excluding parol testimony to establish a trust, than is demanded in tbis case. Nor is tbe case at bar relieved in any way by tbe allegation tbat tbe real estate in controversy is partnership property, and put in by tbe partners as capital stock in tbe alleged company. Tbe plaintiff offers no. testimony wbicb tbe law can admit, in support of tbis allegation. Tbis court, in tbe case above referred to, speaking of parol testimony, says: “The law forbids ns to be informed that, there was a trust, by this kind of testimony.” We are not unmindful that it has been held in several states, that real estate, purchased with partnership funds, for partnership purposes, and so used and treated by the partners, will be held to be partnership property, as capital stock, and liable to be treated as personal property. It is not necessary to controvert that position in this case, or to determine whether that rule shall prevail in this court. In all the leading cases on that subject, the controversy was about the rule of law that should prevail, and not about the facts. The question was, admitting that real estate be purchased with partnership funds, used and regarded as partnership property, what character does that impress upon it ? Does it go to the administrator or heir ? Is the widow entitled to dower ?
In the case of Hoxie vs. Carr, 1 Sumner’s Rep., 178, it was admitted that the property was paid for with partnership funds, and was used for partnership purposes; it was conveyed to the partners as tenants in common; they were a manufacturing company, and the property was a cotton mill. The deed being to the partners as tenants in common, gave rise to the question whether the mill was part of the partnership property. Ho question about parol testimony arose in the case. The judge remarks, page 188: “And I further agree that as a general rule, a resulting trust cannot arise in contradiction to the terms of the deed. But it does not seem to me that the resulting trust asserted in the present case, is liable to any exceptions on either of these grounds.” The deed itself and the written articles of copartnership were the evidence upon which the court based its opinion and judgment in that case. The same is true of all the other cases on this subject. The leading facts, that the property was purchased with partnership funds, and used and treated as partnership property, were either admitted by the pleadings or became a matter of construction on the deeds and other written evidence. This is equally true in the case of Pierce vs. Trigg's heirs, 10 Leigh, 406; Burnside vs. Merrick, 4 Met, 537; Howard vs. Priest, 5 Met., 582; and /Sigourney vs. Mwm, 7 Conn., 11. The rule of evidence as to permitting parol testimony to establish a trust or vary the terms of a deed, is the same, ■whether the parties be partners or not. The rule of evidence cannot be changed, and the the statute of fraud evaded, by an allegation and proof of a partnership If the evidence of the alleged agreement relating to real estate rests in parol, it is within the statute of frauds, and the agreement cannot be enforced.
A. D. /Smith and J. Gr. Knapp, for the respondent, Bird:
A. L. Gollins for Doty, and By an & Orawford for O'Neil:
The appellants have excepted to both the finding of the facts and the conclusions of law. So far as the exceptions to the findings of fact are concerned, they cannot avail the appellants, because they did not move for a new trial. Hutchinson vs. Baton, 9 Wis., 226; Davis vs. Judd, 11 Wis., 11; Hayioard vs. Ormsbee, id., 3. So far as the store and lot for the place of business of the copartnership is, or was concerned, it was provided for in the articles of agreement, and whether the title was in Morrison or not, when procured, it was partnership property, and must be treated according to the law regulating partnerships, as assets of the partnership. Coll, on Partnership, § 135, and notes; Dyer vs. OlarJc, 5 Met., 562; Hoiuard vs. Priest, 5 id., 582; Sigourney vs. Munn, 7 Conn., 11; Pierce vs. Trigg's heirs, 10 Leigh, 406; Story’s Eq, Jur., §§ 252, 256, 674, 768 and 1265; Phillips vs. Phillips, 1 Mylne & Keene, 649; Broom vs. Broom, 3 id., 443; Hoxie vs. Oarr, 1 Sumner, 173; Houghton vs. Houghton, 11 Sim., 491; 3 Kent. (4th edition), 36-39. Story’s Eq. Jur., §§ 674, 675, 1207; Cary on Part., 27, 28.
The defendant Morrison cannot object to testimony in this case, “ because it tends to establish an interest in lands by parol.” The complainant has no occasion to rely upon parol agreements simply, to take the case out of the statute of frauds. The relation between the parties gives character to theix transactions, and raises up out of. their transactions, such a trust as no statute of frauds can put down, but just such a trust as courts of equity always enforce when appealed to. Jenldns vs. Bldredge, 3 Story’s C. C. Rep., 181; Story’s Eq. Jur., §§ 1207, 980.
"We might safely admit the doctrine, that no trust resting in parol, can he set up in opposition to the deeds to Morrison, which are absolute on their face. The trust, we claim, grew out of the relations of the parties, and is clearly deducible from the nature of the business and enterprise in which they were engaged; and the placing of the title in Morrison yiras entirely consistent with the relations and business of the parties. 3 Story C. C. Rep. 288.
If the trust in Morrison was a naked trust simply, to be established by his parol declaration or promise to convey to the plaintiff and the defendants Doty and O'Neil, the case would stand on entirely different grounds. But it is a trust coupled with an interest — Morrison holding as well for himself as for Bird, Doty and O’Neil; a trust not to be established by proof of Morrison’s parol agreement to convey, or his parol declaration of trust, but an implied or resulting trust, not within the statute of frauds; a trust not simply deducible from the relations of the parties, and the circumstances attending the conveyances to Morrison, but actually forced upon the mind on viewing the relations of the parties and their business transactions. Jenldns vs. JEldredge, supra, 286-9 ; Story’s Eq. Jur. § 980. The relation of the parties before the conveyance to Morrison, supplied the contract to hold in trust, &c., and makes this a part of the original undertaking partly performed, and wholly so as to Bird, &o., by their several conveyances to Morrison.
The statute of frauds does not apply to resulting or implied trusts, and cannot be made to reach the case at bar. Story’s Eq. Jur. §§ 674, 972, 980, 1198.
The whole of the property and real estate mentioned in the bill of complaint, was partnership property, and held, used and treated as such by Morrison, as well as- by Bird and the others. It can make no difference in law or in equity, whether the property was put into the concern by the individual partners as capital stock, or was purchased with money contributed by the partners, as capital stock for company uses and jrarposes. If the former was in effect the transaction in this case, and the title was placed in Morrison accordingly, a trust resulted in favor of the partners, and resulting trusts and implied trusts are not affected by the statute of frauds. Story’s Eq. Jur. §§ 674, 972-980,1198; Oo. Litt., 290 b, Butler’s Notes §8; Bac. Abr. Trusts (0); Lamplugh vs. Lamplugh, Pr. Wins., 112, 113.
In cases of resulting and implied trusts, the law raises the promise or declaration of trust, for the very reason that there is no express trust created by writing, and this promise or trust must be supported by the situation and circumstances of the parties to be affected by it. And these relations and circumstances may be established by parol evidence or otherwise. Goodwin vs. Gilbert, 9 Mass., 510; Jaclcson vs. Matsdorf, &c., 11 Johns, 91; Jaclcson vs. Sternbergh, 1 Johns. Cas., 153; Foot vs. Colvin, 3 Johns., 216; Jaclcson ex dem. Whitlock vs. Mills, 13 Johns., 463:
June 19.

Opinion:
By the Court,
Paine, J.
We think the court below properly found the existence of the original agreement of partnership set forth in the complaint. > The answer of the defendant Morrison, admitting the execution of the agreement, and that, in pursuance of it, he brought his stock of goods to Madison, and opened the store, as the acting partner, and opened books in the name of the company, establishes this branch of the plaintiff's case in the first instance, and devolves upon Morrison the burden of showing that such partnership ceased after having been so entered upon.' His counsel insist that it was abandoned in fact, without ever having been entered upon at all. But we do not think this position is sustained, either by his answer or by the evidence. The answer itself only asserts, on information and belief, that Doty and O'Neil had never contributed their shares of the capital, or any part thereof, and then adds, that if they had done so, and had not been satisfied by said Morrison, "the courts of equity were open to them," &c. This kind of denial is not calculated to free the mind from a suspicion that the party denying had quite a distinct impression that the fact might possibly be otherwise. And it does not go far to support the theory that the partnership agreement was abandoned. The evidence also, though not of the clearest or most satisfactory character, goes to show that it was continued and not abandoned. The testimony of Seymour is positive, that quite a large amount of goods belonging to Bird, were put into the store. After the business had been conducted for a considerable time, Morrison still gave receipts in the name of Morrison & Go. Goods came to the store marked in their name. It is true, there are some circumstances apparently conflicting with either theory of the case. Thus it is somewhat singular that Bird, Doty and O'Neil should have so long remained silent, without calling for an account, or inquiring particularly into the progress or success of the enterprise. This may perhaps be explained by the relation in which they stood to the building of the capi-tel, and the fact that workmen were paid out of the store. On the other hand, there is no evidence that Morrison ever called on either of the other parties to contribute anything, or ever made any inquiries why they did not, or whether they proposed to abide by the agreement as made. And this is about as singular as their course. The probability is, that the parties were not very desirous of giving publicity to their connection, and that this is to account for an absence of much on both sides that would otherwise be expected. But the making of the agreement lieing explicitly admitted, as also the fact that it was entered upon, we think the answer fails to show that it was abandoned, and that the evidence shows such a continuation of it, as entitles the plaintiff to an account, as to the mercantile partnership provided for by the written agreement.
But the most difficult question in the case grows out of the alleged subsequent agreement, by parol, to extend the partnership to dealing in real estate, and the allegation that, in pursuance of it, the other partners conveyed to Morrison divers lots by absolute deeds, upon an understanding that he was to hold them in trust for the partnership, and to rccon-vey to each his interest when required. The question at once arises, whether this agreement is not within the statute of frauds.
In the case of Rasdall's Administrators vs. Rasdall, decided at the last term, (9 Wis., 379,) we held that parol evidence was inadmissible to establish, an express trust in land conveyed by an absolute deed. And the appellants' counsel contend that this case depends on the same principle and must be governed by that decision. We are unable to why this result does not follow, unless, as claimed on the other side, the fact that there was a partnership here, makes the case an exception and takes it out of the statute. We have carefully examined the authorities cited, and such others as we could find upon the- subject, and we do not think they go to that extent. It is only held that where real estate is purchased by partners with partnership funds, for partnership purposes, it is subject to an implied trust in favor of the partnership debts, including those due the individual partners, and this whether the title be taken to the partners jointly, so that they would at law be tenants in common, or whether it be taken in the name of a part only. Story Eq. Jur., § 1207, and cases cited in note 2; Coder vs. Huling, 27 Penn. St., 84; Matlock vs. Matlock, 5 Ind., 403; Dyer vs. Clark, 5 Met., 562; Fall River Whaling Co. and others vs. Borden, 10 Cush., 458.
These cases and those mentioned in them, are of two classes; those where the real estate was purchased with partnership funds, and those where the parties, by their written agreements, had clearly established the partnership character of the land in question. So far as the first class is concerned, we can see nothing more in the doctrine they hold, than an application of the ordinary rule respecting implied or resulting trusts. That rule is, that a trust results in favor of the party who pays the consideration. Therefore, where a partnership pays the consideration, a trust results in favor oi that. But those trusts are not within the statute, and therefore no question arose under it.
In the other class of cases, there was no dispute as to the partnership character of the real estate. In most of them the parties owned it jointly, so that there was no question as to the title. And in such cases, the courts have held that it was to be treated as partnership property, so far as the payment of the debts of the partnership was concerned, though for other purposes it was governed by the rules ordinarily applicable to real estate. Cookson vs. Cookson, 8 Sim, 529; Peck vs. Fisher, 7 Cush., 386. Tbe question was not under tbe statute of frauds, but simply bow far real estate owned by a partnership was to be regarded as personal property, and bow far it was to be treated as other real estate held by joint title. Thus it will be seen in tbe case in 10 Cushhig, before cited, that tbe court explicitly states, that "there is no question between competing claimants of tbe land as land, and of course no controversy as to title, or as to tbe relations of tbe statute of frauds to any collision of interest in real estate." It is true, tbe court bad before remarked, that " tbe relation of tbe subject to tbe statute of frauds" was tbe "straining point in law of tbe whole inquiry." But tbe point then under consideration was, whether tbe partnership could be proved by parol, so as to attach to tbe real estate tbe character of partnership property, tbe actual condition of tbe title being entirely consistent therewith. Now it appeared in tbe case, that tbe " cost of tbe purchase went into tbe partnership accounts, that tbe estates were entered in tbe company books as company property, and that as portions were sold for profit from time to time, tbe proceeds were merged in tbe general funds of tbe copartnership." I am unable, therefore, to see any substantial distinction, so far as tbe question of tbe statute of frauds is concerned, between this case and that of Dyer vs. Clark. The title being joint, tbe fact of partnership may be proved by parol, and that tbe parties acquired tbe property as partners and treated it as such, and then, upon these facts, tbe law attaches to it tbe character of partnership property, and implies whatever trusts that character requires. And if we properly understand tbe cases that have sanctioned tbe admissibility of parol evidence of partnership, to attach to real estate a trust character in favor of tbe firm, it has been placed upon tbe ground of implied trusts, so that it was without tbe statute of frauds. Yet this case in Ousbing seems to leave it uncertain, whether it was assumed to be within tbe statute, and tbe written evidence sufficient, or without tbe statute, and no written evidence necessary. It does not state very clearly any definite rule upon which it proceeds, but we do not understand it as an authority to go further than this, that where the title to real estate is entirely consistent with the fact that it is held as partnership property, the fact that it was acquired as such, and was so held, may be shown by parol to give it that character.
There is still another class of cases which establish the proposition that real estate may be regarded as an incident to'a trading or manufacturing business, and that a partnership in the business being shown, the. law implies that the one holding • the legal title to such real estate, holds it in trust for the partners. Some instances of this kind are given in the case in 10 Cushing. The case of Forster vs. Hale, 5 Vesey, 308, is of the same character. The Lord Chancellor said that the partnership in carrying on the colliery being proved as a fact, the lease of the land was an incident to the business, and although the title was in one, there would be a resulting trust in favor of the partners.
These cases, therefore, go no further than to establish three propositions:
1. Where real estate is bought with partnership funds for partnership purposes, there is a resulting trust in favor of the partnership, though the title be taken in the name of one.
2. Where the title is held by all the partners jointly, so as to be entirely consistent with the character of partnership property, the fact of partnership may be shown by parol, and that the property was held for partnership purposes, and from these facts the law will imply its partnership character, and such trusts as result therefrom.
3. A partnership in any branch of trade or business may be shown by parol as an existing fact, and then, whatever real estate is held for the purpose of such business, is regarded as an incident thereto, and the law will imply a trust in favor of the partnership where the legal title is not in all.
Now, without examining whether any of these propositions stand among the many successful invasions upon this statute, it is obvious that none,of them goes to the extent of saying, that a bald parol agreement for a partnership in real estate as such, may be shown, to create a trust in land held by one of the parties, under, a deed absolute on its face. Nor do we think that such, is the law. We have found only one case that affords any sanction for such an idea, which is that of Dale vs. Hamilton, 5 Hare, 269. But it was the opinion only of the Yice-Ohancellor, and he admits, virtually, that his decision would be a repeal of the statute. He says, " When the proposition was first advanced by the plaintiff, I confess it appeared to me that to admit the agreement to the extent contended for, would virtually be to repeal the statute of frauds, or nearly so; for if a party, by alleging an interest in land of any specific kind, can escape from that safe-guard against fraud and perjury which the statute has provided, it remains only that those who are prepared by fraud and perjury to invade the rights of another, shall make that specific interest (to which, it is said, the act does not extend) the ground of their claim, and the statute is at once evaded. Thus, if A alleges that B agreed to give him an interest in land, the statute applies; but if he adds that the land was to be improved and resold at their joint risk, for profit and loss, the statute does not apply."
This brief extract clearly exposes the fallacy of the proposition ; and yet the Yice-Ohancellor went on to sustain it, upon the ground of authority. But we do not think any that he cited support the doctrine, or go further than those we have before alluded to. On the other hand, there is an elaborate opinion by Judge Story, in Smith vs. Burnham, 3 Sum., 435, in which he holds such an agreement to be clearly within the statute of frauds and void. See also Oollyer on Partnership, § 3, note; Henderson vs. Hudson, 1 Mun., 510. If the authorities, therefore, were equally divided upon the point, we should be inclined to follow those which uphold the law, rather than such as admit that they repeal it, for we are unable to understand by what authority courts can repeal a statute.
And what safety would there be, if the proposition were once established, that by alleging a partnership, the statute of frauds is entirely avoided, and the parties may then prove whatever interest in land they please by parol, against the absolute title of the deeds ? What would hinder the separ ate real estate of any partner from being converted into part-nersMp property, by proof of a mere verbal agreement What wonld binder tbe absolute title of any man, whether partner or not, from being changed into a trust estate in the same way ? Nothing whatever. For the statute assumed that there were those ready, as the Vice-Chancellor said, to invade the right of others by fraud and perjury. Let it be known, then, that a partnership avoids the statute, and all that would be necessary would be for the fraud and perjury to establish that also, and then every title would be open to attack. We do not feel called upon, even if we had authority, to overturn a statute for the purpose of exposing the title to real estate to such uncertainties. It may be urged, that the same evils may, to a certain extent, result from the rules before referred to in regard to implied trusts in favor of partnerships. But the facilities for fraud are not half so great ui^der them. They require proof of the partnership as an actual existing fact — a partnership doing business, having property and using it; and it is not so easy to establish this by false evidence, as it is to show a mere verbal agreement. And it may be remarked, that even the doctrine concerning resulting trusts, could not, perhaps, prevail as the law now is in this state, it having been very materially modified by statute.
We are of opinion, therefore, that even if the allegations in the complaint, respecting the subsequent agreement as to dealings in real estate, should be held to show a partnership, yet the absolute title of Morrison, under his deeds, could not be changed into a trust estate by virtue of such verbal agreement. But although this point was not made upon the argument, we are satisfied that the allegations of the bill are not sufficient to show a partnership in respect to any of the real' estate, except such as was acquired for the store. True, it alleges that the partnership was extended to dealing in real estate, but it then proceeds to state, specifically, what such dealing was to consist in, and what was the actual agreement with respect to the lots conveyed by the other partners to Morrison. And these specific allegations must control the general words, and if they do not show a part nership, then none is averred. The mode, then, bj which this partnership in real estate was to be established, was, according to the complaint, as follows: " By each of said partners agreeing to contribute and put in, as capital stock for that purpose, an equal share of real estate, consisting of town lots in said town of Madison, and to contribute an equal amount of means required to improve the same, and more especially for the construction of a hotel, and the necessary buildings and improvements connected therewith." Then, after averring that the other partners did accordingly convey to Morrison certain lots in fee, "as the capital stock of said copartnership in real estate," it proceeds to allege that it was "with the understanding and agreement, by and between all of said copartners, that the said James Morrison should thereafter reconvey to each of the other three copartners, his just share of said lots and real estate, consisting of an undivided one-fourth of said lots, with the improvements thereon, when he, the said Morrison, should be requested so to do, by all or either of the copartners."
How, what constitutes this a copartnership? We are unable to perceive. Standing alone, it is nothing more than a conveyance of certain lots by three persons to another, with an understanding that they were to be jointly improved, and he was then to reconvey to each his share. The element of risk, and of profit and loss in conducting the business, is lacking. Eor a joint interest in the increase of value of real estate, either by its rise, or by improvements put on by parties jointly owning it, does not constitute a partnership. Otherwise all joint owners would become partners, for they are always jointly interested in the profit of increased value as well as in the loss by depreciation. But, to make a partnership, there must be a dealing in the article for the purpose of making profit from the dealing, and that is not provided for here.
It may be admitted that dealing in real estate may be the proper subject of a copartnership agreement, though this has sometimes been held otherwise. Coles vs. Coles, 15 Johns., 159; Baker vs. Wheeler, 8 Wend., 505. It was there held that the title to real estate was of such a nature as prevented the application to tbat Mnd of property, of tbe rules of law applicable to partnership property. And as we have already seen, the joint acquisition by partners of real estate, with partnership funds and for partnership purposes, vests in them the title as tenants in common at law, and it is only by going into equity that it is made subject to the implied trust as partnership property. But it seems to be' now established, that real estate may be alone the subject of a copartnership. This point is considered in the case in 10 Cush., before cited, and in Collyer on Part., § 51, note 1. But to make it a partnership, there must be a dealing from which profit or loss may arise. Thus if the rule is as stated in Brady vs. Colhoun, 1 Penn., 140, that "a partnership in land may be limited to the purchasing only, the profit and loss being divisible as stock," this case does not come up to that, for here there was no purchasing, the agreement relating to lands which the parties then had. In the case of Ludlow vs. Cooper, 4 Ohio State Rep., this question arose. The court, after alluding to the rule where real estate is bought with partnership funds, and used for carrying on partnership business, proceeds as follows: " In the case now under consideration, however, the entries were not made with partnership funds, nor were the lands to be used as a means of carrying on any partnership business, other than the' purchase and sale of real estate. It is very clear that although the land was not purchased with partnership funds, but was to be purchased with separate funds of Goober and Ludlow in equal portions, the property was to be considered partnership property, so far as real estate could be so considered and treated; that it was, by the agreement, to be sold and converted into money, and each partner to share and share alike in the profits, and of course to share in the losses." And upon this ground, that by the agreement, which was in writing, the property was to be sold, and they were to share in the proceeds, the court held it a partnership. And the implication is that except for that, they would have held otherwise. If the bill had alleged that the partnership extended to the carrying on of the hotel business, that would have been a partnership, and might, so far as the hotel lots were concerned, have laid the foundation for applying the doctrine of implied trust to the real estate used for the hotel, as being incident to the business. But it only alleges that they were to build a hotel. And this does not make it a partnership more than it would if they had built a boarding house or a mill. In Sikes vs. Work, 6 Gray, 433, the parties had purchased a lot jointly, and one had built a boarding kousfe on it, with the consent of the other. They did not at the time contemplate going into business in it, but did actually form a partnership in keeping a boarding house, which was conducted for three years. The court said: "The evidence in this case fails to show a partnership in regard to the real estate owned by the parties. There was no agreement between them to share the profit and loss of the joint undertaking, which is the essential and distinguishing feature of the contract of copart-nership."
Neither does the agreement to share equally the expense of building the improvements make it a partnership. In Noyes vs. Cushman, 25 Vt., 390, the defendants had purchased a grist mill and privilege, under an agreement to rebuild it and share the expense equally. The court said: " Their mutual obligation to rebuild and repair does not necessarily constitute them partners, for, as observed by Judge Bronson, in Porter vs. McLure, 15 Wend., 187, 'they may or may not become partners in carrying on the milling business.' A mere community of interest in real or personal estate, does not constitute a partnership. But where a purchase of that character is made, and the premises are rebuilt or repaired for the purpose of prosecuting some joint enterprise or adventure, under an agreement to share in the profit and loss of the undertaking, the contract then becomes one constituting a partnership."
In the case alluded to in 15 Wend., the defendants owned a mill-site and had contracted for the erection of a mill. The court said: "The mill when completed, like the site which it occupied, would be real estate, and the defendants would hold it by the same tenure by which they held the land. Whatever that tenure might be, it would not constitute them partners; they might or might not become part ners in carrying on the milling business. A community of interest in land does not make men partners, nor does a community of interest in personal property. There must be some "joint adventure, and an agreement to share in the profit and loss of the undertaking."
Upon all these authorities, we think there was no partnership in the real estate, even according to the facts alleged in the bill It seems to have been nothing more than an agreement to convey the title to certain lots owned by the three, to Morrison; they were then to put certain improvements upon them, and upon those which Morrison was to, put in, and then he was to convey to each of' the others an undivided fourth part, on request. There was to be no purchasing of lands, no sale, nothing in which they were to share the profit and loss. The complaint excludes all idea that there was to be any sale of these lands for the put-poses of profit. Eor if such was the case, then all the allegations in respect to the purchase by Dean, and his notice, &c., are out of place. For if the property was partnership property, and the title was placed in Morrison for the purpose of dealing with it as such, then he could sell the whole interest; and though the purchaser had notice of such partnership he would undoubtedly take a good title. But the bill was framed upon the theory that there was to be no sale, but that the parties were to retain their respective interests, and have them reconveyed. There can be no doubt that this agreement respecting the real estate, standing alone, would not amount to a partnership. Does the fact that the parties were engaged in a mercantile partnership give it any different effect ? We are unable to see that it does. For certainly it cannot be said that wherever-a partnership exists, that changes the law with respect to agreements made by its members about real- estate outside of that partnership. We have already seen that a partnership may be made the ground of Implying certain trusts in real estate used in the business, or acquired with its funds. But this furnishes no reason for saying that where the members of a partnership make an agreement with respect to real estate which they own separately, the law applicable to such agpee- mei1^ *s anT different from wbat it would have been if suck partnership bad not existed.
In the case of Coder vs. Huling, 27 Penn. St., 84, tbe court say: "When two partners, engaged as such in a particular business specified in their articles, buy land not necessary for their business, but with views and purposes beyond and outside of it, such land is held by them as tenants in common ; it is not partnership property." And if such lands would be held to be outside of the partnership, so much the more would lands which the partners owned separately, and not used in anyway for the partnership purposes, be entirely unaffected by it, and any agreement they might make respecting it would stand upon the same footing as to its legal effect, as though such partnership did not exist. If such agreement would be void within the statute of frauds, such partnership would not prevent that effect. If it would not in law amount to a partnership as to such real estate, then the existing mercantile partnership would not make it so. Thus, suppose A and B each owns a lot. They agree that A shall convey his lot to B by an absolute deed; that they will make a joint dwelling house on the two, and then B shall reconvey to A an undivided half. This agreement would clearly be within the statute. It would clearly not amount to a partnership. But suppose A and B had been at the time partners in law, or in medicine, or in trade, would that vary the effect of this agreement as to the lots? We' cannot see how it could. The agreement concerning the real estate, as set up in the complaint, is entirely separate and distinct from the mercantile partnership. Each of the parties was to put in an equal amount of real estate, each to contribute equally in the improvement, and each to have an undivided one fourth reconveyed. It has, by its terms, no connection whatever with the trading partnership; and the general allegation that the latter was extended to this new arrangement, does not vary its legal effect.
Our conclusions may be thus stated : An agreement for a partnership to consist in dealings in real estate, is within the statute of frauds, and void unless in writing.
The fact that the parties making it are engaged at the time in a mercantile partnership, does not take it out of the statute. The alleged new agreement in respect to the real estate does not in law constitute a partnership therein, and the existing mercantile partnership does not give it that effect.
The case, therefore, with respect to this real estate, stands upon the same footing as the Easdall case, and is an attempt to show by parol an express trust in lands conveyed by deeds absolute on their face. We must hold such evidence inadmissible under the statute of frauds. The lot acquired for the store was clearly trust property. It would be so as incident to the mercantile business, within some authorities, but it is not necessary to rely-on that doctrine here, for the original agreement expressly provided for its purchase. Morrison will, of course, be liable to account for the proceeds of that, it having passed to Bean through a honafide,purchaser without notice, and for any part of the partnership funds or property which he may have applied to the improvement of real estate to which he had the title, as well as for the shares of the others in the mercantile business, and the profits, &c.
It follows, therefore, that the decree must be affirmed so far as it adjudges the existence of the mercantile partnership, and an account between the parties therein; and that it must be reversed so far as it adjudges a partnership in real estate, other than the store lot, and an account of such partnership; and also all that part of the decree from which the defendant Bean has appealed, is reversed. The order for reference will remain, but the accounting will extend only to the mercantile partnership.
DixON, C. J., did not sit in this case, having presided at the trial in the circuit court.