Court Opinion

ID: 6667831
Source: CourtListenerOpinion
Date Created: 2022-07-20 21:07:22.502123+00
Date Added: 2024-06-11T16:00:23.918768
License: Public Domain

RESPONSE TO PETITION EOR REHEARING}.
Opinion by
Beatty, C. J., Lewis, J.,
concurring.
We granted a rehearing in this case mainly because the principal points in the case, on which our first decision rested, had been scarcely noticed by counsel in their arguments or briefs.
The proper construction to be put on See. 32 was one important question which we were anxious to have fully discussed. That dis*308cussion has, however, only confirmed us in our views, heretofore expressed, in regard to that section of the Practice Act.
The object seems to have been to make all partnerships or joint associations, so far as their joint property was concerned, answerable on judgments obtained by the service of summons on a single member, the service on one member having the same effect on the company as service on a proper officer of a corporation has on such a body. Keeping this object of the law in view, many of the objections raised by appellant to this judgment seem to be very readily disposed of.
The first objection raised by appellant is that defendant Frothingham pleads that the title to the property in controversy, when Shiverick executed his mortgage, was held jointly by A. J. Sperry, N. Shiverick, E. P. Whitmore, and Thomas McFarland, composing the firm of Sperry & Co., while the findings show that only three of those parties compose that firm. Therefore the answer and findings, being at variance, do not support the judgment for defendant. That if the proof does not support the allegation of the answer, the defense must fail.
A trifling variance between the probata and allegata is not material. Here the variance was of no manner of importance. In the suits of Ruhling & Co. and Hickok & Co. four parties were sued, the complaint alleging they all four composed the firm of Sperry & Co. One of the four parties (confessedly a member of that firm) is served, and being so served, the law makes him answer for all his partners. They are (to the extent of the partnership funds) just as much bound by his action as they would be by the action of an attorney employed by them jointly. Now Sperry confesses (and in confessing for himself he confesses for all his partners) that the firm was composed of the four members charged in the complaint of Ruhling & Co., as forming that association. So far, then, as that company is concerned, it is admitted Whitmore is a partner; and no member of that company, nor any person claiming under them, can be permitted to say he was not a partner. With regard to E. P. Whitmore himself, of course the thing would be different. He, not being a member, would not be affected by the admissions of parties with whom he was not connected.
*309The real defense here set up by Frothingham was, that the property, when Shiverick executed his mortgage, belonged jointly to Sperry & Co., and was bound for their joint debts, etc. The fact that he was mistaken as to the number of persons composing that firm was of no importance whatever.
Appellant contends that if this was partnership property, held jointly by the partnership firm of Sperry & Co., still each partner might mortgage his individual share, and the mortgage would be good against all persons, except partners and creditors of the firm. That is true. But in this case it is claimed that a creditor sold this property under regular proceedings against the firm. If so, the entire title passed, and Frothingham holds under the claim of a creditor.
The clerical error of the Judge in writing J. A. Sperry for A. J. Sperry is certainly a matter of no importance. Nor is it of any importance that the Judge, in speaking of the judgments against Sperry & Co., spoke of the plaintiffs as Ruhling & Co. and Hickok & Co., instead of mentioning the names of the persons composing such firms. These objections are rather too technical to be seriously considered.
Nor is the objection that no judgment eo nomine could be entered against Sperry & Co. any more tenable than the other. The judgment in this case, so far as it was a personal judgment, was only against Sperry, the defendant served ; but it was also a sort of judgment in rem. against the partnership effects of Sperry & Co. The debt was contracted by the firm of Sperry & Co., and all the joint property owned by the members of that firm was bound for it. The counsel for appellant seems wholly to lose sight of the distinction between “ defendants jointly indebted” and defendants jointly sued. In this action, four defendants were jointly sued, but it turns out that only three of them were jointly indebted. Now this judgment, which is in the nature of a judgment in rem., is only effective against the joint property of three of the defendants sued, for it seems Whitmore was not bound by the joint contract. If in fact there had been joint property held by'Sperry, Shiverick, Whit-more, and McFarland, and it ha'd been sold under this execution, Whitmore could certainly, by a proper proceeding, have set aside *310the sale, or at least recovered his fourth of the property, by showing he was not a member of the firm of Sperry & Co.; for he not being a partner of Sperry, nor a joint contractor with him, was not bound by his silencé or his confession. But the other three being actual partners in the firm of Sperry & Co., they were, in the language of the statute, “ defendants * * jointly” indebted, and as such their joint property was bound.
It is contended that this property could not pass under the section of the Practice Act heretofore referred to, because that only refers to joint property, and partners cannot hold real estate as joint owners; and in support of this proposition we are referred to the case of Howard v. Priest, and Dyer v. Clark, 5 Met. Mass., and Sec. 135 of Collyer on Partnership. These cases do not, in our opinion, sustain any such proposition. At law, partners, like any other persons, may take a conveyance of real estate to themselves, either as joint tenants or tenants in common.
To show that such was the opinion of the Court in the case of Dyer v. Clark, just referred to, we need only quote the following language of Chief Justice Shaw in delivering the opinion in that case: “ Should the partners take their conveyance in such mode as to create a joint tenancy, as they still may, though contrary to the policy of our law, still it would not accomplish the purpose of the parties.” In the foregoing quotations the italics are our own.
Then in truth, partners may hold real estate, so far as the legal title is concerned, like any other persons, either as joint tenants or tenants in common. But when property has been acquired with partnership funds and for partnership purposes, whatever the legal tenure may be, Courts of equity will treat it as partnership property. Or, as Courts sometimes say, they will treat it as personal property. Of personal property, partners are admitted to .be joint tenants. Yet Courts of equity, in speaking of real estate held by partners, always say that in equity it will not be treated as joint property, but as held in common, each tenant in common holding his interest in trust for the partnership. They say they cannot hold it to be joint property, otherwise, the jus aecrescendi would intervene in case of the death of one of the parties, to the great detriment of trade. But the jus aecrescendi applies as well to personal property as to real *311estate, yet the Courts have no hesitation in calling the personal property of partners joint property.
Now the truth is, that phrase, jus aecresoendi, when applied to real estate, seems to have frightened Courts into all sorts of absurd and contradictory expressions. It does not seem to have done any harm so far as results were concerned, but merely led to confusion of expression. As regards personal estate, the phrase seems to have been very harmless. Judges could deal with it without being frightened out of their propriety.
Chief Justice Shaw, in delivering the opinion of the Court in the case of Dyer v. Clark, (5 Met., p. 576) uses this language: “ Such, indeed, is the result of the application of the well known rules of law, when the partnership stock and property consist of personal estate only. And as partnerships were formed mainly for mercantile transactions, the stock commonly consisted of cash, merchandise, securities and other personal property; and therefore the rules of law governing that relation would naturally be framed with more especial reference to that species of property. It is therefore held that on the decease of one of the partners, as the surviving partner stands chargeable with the whole of the partnership debts, the interest of the partners in the chattels and choses in action shall be deemed so far a joint tenancy as to enable the surviving partner to take the property by survivorship, for all purposes of holding and administering the estate, until .the effects are reduced to money and the debts are paid ; though, for the purpose of encouraging trade, it is held that the harsh doctrine of the jus aecresoendi, which is an incident of joint tenancy at the common law, as well in real as in personal estate, shall not apply to such partnership property ; but, on the contrary, when the debts are all paid, the effects of the partnership reduced to money, and the purposes of the partnership accomplished, the surviving partner shall be held to account with the representatives of the deceased for his just share of the partnership funds.” In plain' English, personal property of partners is joint property with only a qualified right of survivorship. Real estate is in law common property or joint property, just as the deeds of the conveyance make it. In equity, all real estate acquired with partnership funds and used for partner*312ship purposes, is, like personalty, joint property, with only a qualified right of survivorship.
The- answer of Prothingham in this case alleges that the property which was sold under the judgments of Ruhling & Co. and Hickok & Co., was the joint property of Sperry & Co. The finding of the Court in reference to this matter is that the property was the copartnership property and assets of the firm. It would have been more satisfactory if the finding had been more explicit as to the tenure by which this property was held. An Act, however, passed by the Legislature of this State, approved March 11th, 1865, in relation to appeals, contains the following section:
“ In cases tried by the Court without a jury, no judgment shall be reversed for want of a finding, or for a defective finding of the facts, unless exceptions be made in the Court below to the finding or to the want of finding; and in case of a defective finding, the particular defects shall be specifically and particularly designated ; and upon failure of the Court below to remedy the alleged error, the party moving shall be entitled to his exceptions, and the same shall be settled by the Judge, as in other cases; provided, that such exceptions to the finding shall be filed in the Court within five days after the making of the finding or decision to which exception is made.”
In this case it seems to us, if the plaintiff thought this finding not sufficiently specific as to the tenure by which Sperry & Co. held this property, he should have excepted to this finding, pointing out its particular defects. In the absence of such exceptions, we think it sufficient to support the judgment. The judgment of this Court will be in accordance with the opinion heretofore filed.
Johnson, J., not having joined in the order granting a rehearing, does not participate in this decision.