Court Opinion

ID: 6637336
Source: CourtListenerOpinion
Date Created: 2022-07-20 20:42:10.029941+00
Date Added: 2024-06-11T15:59:05.937322
License: Public Domain

"Wade, C. J.,
concurring. The question presented by this record is, whether or not, if two or more persons enter into a verbal agreement of copartnership in the business of prospecting for and discovering quartz claims, and when discovered, to acquire title thereto for the mutual benefit of the copartners, such contract, not being in writing, is within the Statute of Frauds and void.
Congress has granted to the citizens of the United States, and to those who have declared their intention to become such, the privilege of entering upon and exploring the public domain for the purpose of discovering valuable mineral deposits therein. The business therefore of searching or prospecting for quartz lodes or placers is entirely legitimate, largely engaged in in this Territory, and may be conducted either individually or in partnership. All hinds of property may be held in partnership. Quartz claims by our statute are made real estate, and there can be no question that it is entirely legitimate for parties to enter into a partnership for the purpose of trading, dealing and speculating in real estate. Clagett v. Filbourne, 1 Black, 346; Fall River W. Co. v. Borden, 10 Cush. 458; Pars. on Part. 37; 3 Kent, 24, 28. The inquiry before us, however, has to do with the proposition as to how the existence of such a partnership shall be evidenced and established. Our statute has .been cited by Mr. Justice Blaee, ante, 19.
Did this verbal agreement of copartnership create, grant or declare any interest in real estate at the time it was entered into % Evidently not, for at that time, as to this copartnership there was no real estate in existence; neither of the partners then owned or had any interest in a quartz claim; such claim was yet to be searched for and found. There was nothing upon which *23the agreement could operate. It created and declared the title to nothing at all. A quartz claim is not real estate until discovered and located, and a verbal agreement concerning an undiscovered and unknown claim is not and cannot be an agreement creating or disposing of an interest in real estate, and if not, such agreement is not within the statute.
This agreement contemplated that the parties would search for and find quartz claims, and when found, that they would comply with the provisions of the act of congress, whereby title could be acquired. But the agreement in and of itself did not create or declare a title to any property whatever. If by this agreement the parties had attempted to make a parol or verbal conveyance of land, or any interest therein, they would have utterly failed, for at the time the agreement was made they had no lands to convey. Evidently then it was not the object or purpose of this agreement to create, grant or declare any interest in real estate. How are the titles to quartz claims acquired, created or declared? First, a valuable mineral deposit must be found; second, it must be distinctly marked and located; third, $500 worth of work must have been performed upon the claim before a patent can be granted; fourth, after finding the lead, locating it, and performing the necessary amount of labor, an application may be filed in the local land office for a patent, and after publication of notice for sixty days, as the law requires, and no adverse claim being interposed, a patent may issue. But at the time of this agreement none of these things had been accomplished, no lead had been found, and it seems, therefore, reasonable to follow that the agreement did not attempt to create, grant, assign or declare any interest in real estate and is not within the Statute of Frauds.
We think the following authorities conclusively determine the proposition that a partnership may exist in reference to acquiring title to the sale and ownership of real estate, and that such partnership may be created by parol agreement.
In Dale v. Hamilton, 5 Hare, 369, the bill of the plaintiff alleged the parol agreement of copartnership with the defendants for the purpose of speculating in lands. The vice-chancellor in *24deciding tbe case said: “ When the proposition was first advanced by the plaintiff, I confess, it appeared to me, that to admit the argument to the extent contended for, would be virtually to repeal the Statute of Frauds, or nearly so.” But upon a further examination of the authorities he held that the plaintiff might first prove, by parol, the existence of the partnership as an independent fact, and that being established, he might then show, by the same evidence, his interest in the lands, considered as the substratum or stock of the partnership. Pars, on Part. 7, n. d.
In Smith v. Tarlton, 2 Barb. Ch. 336, the bill stated' that by the copartnership agreement, which was by parol, the complainant and the defendants entered' into a partnership which was to continue three years, the business of which was to purchase a water privilege and site for a foundry in the village of Platts-burgh and to erect an iron foundry, or furnace thereon, and to carry on the business of manufacturing iron castings, etc., and that each of the copartners was to contribute a certain amount of funds to the capital of the firm; that the parties all contributed money to the capital, and a site was procured and a foundry erected thereon by the copartners, but that the title to the laud was taken in the name of the defendants only. The chancellor in the course of his decision said : “ I cannot see that there is any validity in either of the objections raised by the counsel of the defendants to the parol agreement of copartnership. This was not, as the counsel supposes, an agreement which was not to be performed within one year, so as to require it to be in writing under the Statute of Frauds; but it was the formation of an immediate partnership between the parties, which partnership was to continue three years unless sooner dissolved by the consent of such parties. In this State no written articles are necessary to constitute a copartnership which is to take effect immediately, although a written agreement might be necessary to bind the parties to enter into a future copartnership to commence after the expiration of a year. But even where there was a parol agreement to enter into a copartnership at a future day and specifying the terms of such copartnership, I apprehend that, i f the parties went into copartnership at the prescribed time with*25out agreeing upon any new terms, the former parol agreement would be presumed to constitute the terms on which such partnership was entered into and carried on.”
“Nor is the objection well taken that this partnership was invalid becanse a part of the business of the firm was to purchase real estate as a site for the foundry, and to erect a building thereon for the purpose of making iron castings, etc. The case of Henderson v. Hudson, 1 Mumf. 510, referred to by the defendants5 counsel, was not a case of partnership, or of land purchased with partnership funds for the use of the copartnership firm. It was merely an attempt to create a trust by parol in lands purchased by an individual in his own name and with his own funds. JBut real estate purchased with partnership funds for the use of the firm, although the legal title is in the member or members of the firm in whose name the conveyance is taken, is in equity considered as the property of the firm for the payment of its debts and for the purpose of adjusting the equitable claims of the copartners as between themselves.” The motion to dissolve the injunction for the reason that the bill did not state a cause of action was therefore denied.
In the case of Chester v. Dickerson, 54 N. Y. 1, the question was again decided. Counsel in their briefs in that case made the point that the lower court erred in holding that the partnership of the defendants in the lands in question could exist by parol, and cited authorities to support the proposition, to which the adverse counsel replied, citing authorities, and the court was called upon directly to decide the question, and by Eael, J., the court say “ it cannot be questioned that two or more persons may become partners in buying and selling lánd. There is nothing in the nature or essence of a partnership which requires that it should be confined to ordinary trade and commerce, or to dealings in personal property. Story on Part., §§ 82, 83 ; Collyer on Part., §§ 3, 51; Dudley v. Littlefield, 21 Me. 418; Sage v. Sherman, 2 N. Y. 417; Mead v. Shepard, 54 Barb. 474; Pendleton v. Wambersie, 4 Cranch, 73; Thompson v. Bowman, 6 Wall. 316; Hoxie v. Carr, 1 Sumner, 173. Kent says: £A partnership is a contract of two or more persons to place their *26money, effects, labor and skill or some one or all of them in lawful commerce or business, and to divide the profit and share the loss in certain proportions, and that it is n t essential to a legal partnership that-it be confined to commercial business. It may exist between attorneys, conveyancers, mechanics, owners of a line of stage coaches, artisans or farmers, as well as between merchants and bankers ’ (3 Kent’s Com. 24, 28), and why may it not exist between dealers and speculators in real estate.”
“But as it is claimed that the partnership in this case existed by parol before the execution of the written agreement, dated November 28, 1864, it is necessary to inquire whether a partnership in reference to lands can be formed and proved by parol. Upon this question there is considerable conflict in the authorities. On the one hand it is claimed that a parol agreement for such a partnership would be within the Statute of Frauds which provides that no estate or interest in lands shall be created, assigned or declared unless by act or operation of law, or by a deed or conveyance in writing subscribed by the party creating, granting, assigning or declaring the same; (the New York statute being in this regard the same as our own) and to this effect is the case of Smith v. Burnham, 3 Sumner, 345. On the other hand it is claimed that such an agreement is not affected by the Statute of Frauds, for that the real estate is treated and administered in equity as personal property for all the purposes of the partnership. A court of equity having full jurisdiction of all cases between partners touching the partnership property, it is claimed that it will inquire into, take an account of and administer upon all the partnership property whether it be real or personal, and in such cases will not allow one partner to commit a fraud or a breach of trust upon his copartner by taking advantage of the Statute of Frauds, and to this effect are the following authorities: Dale v. Hamilton, 5 Hare, 369; Essex v. Essex, 20 Beav. 449; Bunnell v. Taintor, 4 Conn. 568. A full discussion of the question is found in Dale v. Hamilton, and the reasoning and review of the cases there by Vice-Chancellor ~VV a OR.AM are quite satisfactory. The general doctrine is there 'laid down “ that a partnership agreement between A. and B. that they *27shall be jointly interested in a speculation for buying, improving for sale and selling lands may be proved without being evidenced by any writing signed by, or by the authority of the party to be charged therewith within the ótatute of Frauds, and such an agreement being proved, A. or B. may establish his interest in the land, the subject of the partnership, without such interest, being evidenced by any such writing.’ I am inclined to think this doctrine to be founded upon the best reason and the best authority. .But whether it is or not is not very important to decide in this case. Host of the conflict in the authorities has arisen in controversies about the title to the real estate after the dissolution of the partnership or the death of one of the partners. But suppose two persons, by parol agreement, enter into a partnership to speculate in lands, how do they come in conflict with the Statute of Frauds? No estate or interest in land has been granted, assigned or declared. When the agreement is made no lands are owned by the firm, and neither party attempts to convey or assign any to the other. (As in the case at bar when the agreement was made no quartz claims had been discovered, none were owned by the firm, and neither party attempted to assign or convey to the other.) The contract is a valid one, and in pursuance of this agreement they go on and buy, improve and sell lands (as in the case we are considering, in pursuance of the agreement the parties go on and discover, and locate0 quartz claims). While they are doing this do they not act as partners and bear a partnership relation to each other ? Within the meaning of the statute in such case neither conveys or assigns any land to the other, and hence there is no conflict with the statute. The statute is not so broad as to prevent proof by parol of an interest in lands; it is simply aimed at the creation or conveyance of an estate in lands without writing. If there was a parol agreement in this case before the written one, it was just like the one embodied in the writing, to wit, a partnership to purchase, lease and take the refusals of land and then sell, lease or work them for the joint- benefit of the parties. This is not a controversy about the title to any of the lands taken or owned by the partners but it simply relates to the conduct of the defendants while they *28were acting as partners, and in such a case the Statute of Frauds certainly can present no obstacle to relief.” The court then go on to find as a matter of fact from the evidence, that there was a partnership existing between the parties; that such partnership was evidenced by a parol agreement; that the same was a valid partnership, although formed for the purpose of buying, selling and speculating in lands, and adjust the rights of the parties accordingly.
The ease of Traphaqen v. Burt, 67 N. Y. 30, is to the same effect. In that case the plaintiff and defendant made an oral agreement to engage in the business of buying and selling farms for their mutual benefit and at their joint risk. Under this agreement defendant bought two farms and took the deeds to himself and plaintiff jointly. He afterward purchased the farm in question but took the deed to himself alone, refusing to admit the plaintiff to any participation in the ownership, the facts being very similar to the case in hand, except in the case we are considering the plaintiff discovered the quartz lead and the defendants obtained the title thereto, and refused to admit the plaintiff to any participation in the ownership thereof. In deciding the case, which was an action brought to establish a trust in the defendant, Burt, in favor of the plaintiff, for one undivided half of the farm in question, the court say: “ It is established by abundant authority in this State that a partnership may exist in reference to the purchase, sale and ownership of lands, and that it may be created by a parol agreement.”
Upon these authorities and the reasons therefor, I rest the opinion that the complaint in this action contained a cause of action, and that the demurrer thereto should have been oven-ruled.