Court Opinion

ID: 9868787
Source: CourtListenerOpinion
Date Created: 2023-09-26 18:57:49.933878+00
Date Added: 2024-06-11T07:45:55.606280
License: Public Domain

ON MOTION FOR REHEARING.
Mrs. Hargrove,
in her motion for rehearing, again assails
our ruling on the admissibility of evidence which we discussed in our original opinion and calls our attention to her contention seasonably made in her answer to the application for the writ of error to the effect that the trial court properly directed a verdict in her favor even though there was error in excluding the preferred testimony. She takes the position that, conceding a partnership existed between John Hargrove and Thomas C. McLean (which she vigorously denies) under the evidence in this record title to the land in suit is shown in John Hargrove both by paper title and by adverse possession under the five and ten years statutes of limitation as a matter of law.
*242We have reconsidered the first question stated and believe that we properly disposed of it in the original opinion.
We cannot agree with the second contention. If Hargrove and McLean were partners during the material times in question and acquired the title to this and other lands, upon the death of Thomas C. McLean the title to such property became vested in the surviving partner, John Hargrove. He had the authority and duty to wind up the partnership business and distribute the proceeds to those entitled thereto.
“The surviving partner holds title to the firm assets in trust to wind up the business and account to the decedent’s estate or heirs.” Akin v. Jefferson, 65 Texas 137.
The estate of the decedent acquires no right in the firm assets, but only a right to an accounting and to the amount of the decedent’s interest, if any, in the firm after liquidation and settlement. Ramon v. Ramon, 10 S. W. (2d) 584. In the case before us the sale was made after the partnership, if any, was dissolved by the death of Thomas C. McLean, therefore Hargrove was the sole representative of the partnership estate. He had full authority to sell all or any part of the partnership property for the purpose of paying debts of the firm. His power in this respect is comparable to that of a community survivor.
“Where the partnership has no funds on hand with which to meet existing obligations and the same must either be renewed or the property of the partnership sacrificed through forced sale, the surviving partner, under his power to preserve the estate, is fully authorized to execute necessary renewal of existing indebtedness.” Martin v. Dial, 57 S. W. (2d) 75, 89 A. L. R. 571.
If there was a partnership its assets consisted of land, including the land in suit and about four hundred acres more situated near by and some twelve hundred dollars cash in bank, with only one partnership indebtedness, which was permitted to be foreclosed on the land here involved. No showing was made that John Hargrove at the time could not have renewed such indebtedness nor is there any showing that he could not have sold other partnership property and paid off the lien and thereby saved the land without a foreclosure proceeding. The land in suit being sold at a foreclosure of a partnership debt *243and lien to John Hargrove, the surviving partner, for a consideration of $4,600.00 on the 4th day of December, 1923, when, according to the evidence in this record the land was worth from twelve to sixteen thousand dollars, such purchase would enure to the benefit of the trust estate, burdened with the rights of contribution for the pro rata portion of the purchase price on favor of the person furnishing the purchase money. Under such a state of facts equity creates a constructive trust.
“It is said in the books that trusts of this character are created by a- desire of equity to enforce honesty and fair dealing. It is thus raised to prevent fraud or to prevent willful violation of fiduciary relations, or which are actually or constructively fraudulent, and is called a trust ‘ex maleficio.’ The party perpetrating the fraud is made a trustee ‘in invitum,’ and the defrauded party the ‘cestui que trust.’ Miller v. Himebaugh, 153 S. W. 338, (writ refused).
Thus John Hargrove held the title to the land in suit as a trustee for the benefit of the partnership, and his possession of the property since 1923 would not become adverse to the heirs of the deceased member of his personal representative until he repudiated the trust. Howard v. Stubblefield, 79 Texas 1, 14 S. W. 1044. Ordinarily the question as to repudiation is one for the jury’s determination. Leonard v. Cleburne Roller Mills Co., 239 S. W. 605, (Com. App.).
Mrs. Hargrove relies on the case of Evans v. Carter, Í76 S. W. 749. Since the application for writ of error in that case was dismissed by the Supreme Court, it is not necessary to either approve or dissaprove the rulings made therein. It will suffice to quote enough from that opinion to show that it has no application in the present case:
“The evidence in this case tends to show that Evans (the complaining partner) refused to recognize Carter (the purchasing partner) as in any sense his partner, representative or agent, but that he repudiated such relationship. * * * Evans having so treated the relationship, we can see no duty upon Carter other than that one man owes to another. The trust relationship was repudiated by Evans long before the sale and the evidence shows that both parties so recognized the repudiation. * * * Can a partner, or a tenant in common, buy in such: title when sold under order of court at public sale, for his *244individual use and profit? When he does so, does he hold it in trust for his cotenant or the partnership? * *
After concluding that the first question must be answered in the affirmative and the second in the negative, with quotations from the leading case of Starkweather v. Jenner, 216 U. S. 524, 30 Sup. Ct. 382, 54 L. Ed. 602, 17 Am. Cas. 1167, it is further said:
“It appears to us from this record that Evans refused to take resopnsibility or risk and refused to aid in any way in making the property bring the debt. Carter was required to bring the suit, pay the attorney’s fees, procure abstracts and the money to discharge the previous lien, which was over $4,000. After all the burden had been so assumed by Carter, Evans demands half of the profit in the land so purchased. We think, since he was unwilling to go into his own pocket to discharge the- prior lien or assist in doing so, and the other necessary expenses, and assenting to and showing a willingness that his equity in the land be sold, that he is now in no position to say, when it was sold by order of the court publicity and openly, with full notice to him of the time and place of sale that Carter’s purchase should inure to his benefit. By his acts he clearly evidenced a purpose not to purchase the land, or to be in any way responsible in paying the necessary charges and the prior lien thereon.”
Neither do we think the rule applicable which is stated in the case of Allen v. Gillette, 127 U. S. 589, 8 Sup. Ct. 1331, 32 L. Ed. 271, to the effect that “The principle that a trustee may purchase the trust property at a judicial sale brought about by a third party which he had not procured and over which he could not have had control, is upheld by numerous decisions of this court and other courts of this country,” in which the Supreme Court cited the following Texas cases: Erskine v. De la Baum, 3 Texas 406, The Howards v. Davis, 6 Texas 174, Scott v. Mann, 33 Texas 725, and Goodgame v. Rushing, 35 Texas 722. During the days of the Republic of Texas there was no statute which prohibited a personal representative from purchasing property belonging to the estate of his decedent. Erskine v. De la Baum, 3 Texas 406. Such a purchase is now condemned by statute. Vernon’s Annotated Revised Civil Statutes, 1925, Art. 3579. See Fortune et al v. Killebrew, 70 Texas 437, 7 S. W. 759. In any event, the rule stated is not applicable in this case because Hargrove as surviving partner owed the duty to use at least ordinary discre*245tion in preventing the equity belonging to the partnership from being foreclosed and lost.
It must be remembered that our discussion of the law arises upon facts which are raised by the evidence in the record before us and may or may not be found to exist when submitted to a trier of facts, as we have stated the trial court directed a verdict in favor of Mrs. Hargrove.
The motion for rehearing is overruled.
Opinion adopted by the Supreme Court June 10, 1942.