Court Opinion

ID: 5231209
Source: CourtListenerOpinion
Date Created: 2022-01-06 16:56:46.563293+00
Date Added: 2024-06-11T08:27:40.008925
License: Public Domain

Kellogg, J. (dissenting):
In 1863 the dock property on one side of the river was conveyed to three men as tenants in common. In 1864 the dock property on the other side was conveyed to them. It does not appear that up to that time there was any copartnership or copartnership- property. Soon after, it does hot definitely appear when, they began to run a ferry boat between the docks, and in 1886 they obtained a charter to run a ferry at *297that place. (See Laws of 1886, chap. 178.) They are all dead and there is no evidence as to the agreement, the purchase of the property or the boat except as it is inferred from the fact that the deed is in their names and that they conducted the ferry and divided the net proceeds of the ferry business.
The complaint alleges that the plaintiff is the owner of an undivided one-sixth interest in the dock property, and asks- a partition. The answer denies the ownership and alleges, in substance, that the ferry business,1 including the dock property, boat and franchise, belongs to a copartnership in which the plaintiff "owns a one-sixth interest. It does not appear that there are any debts against the copartnership, or that the rights of the copartners as between themselves are such that a resort to the real estate may possibly be necessary in adjusting their respective interests. The question decided was purely one of law as to where the title to the docks is and whether the plaintiff has such an interest therein that she can maintain partition.
It is evident that a partnership existed in operating the ferry. It is also clear that at the time the deeds were given they vested title in the three men as tenants in common. The mere fact that the real estate was used in connection with the ferry does not deprive them of their rights as tenants in common or convert their real estate into personal property or merge its ownership with the firm assets. The English rule resulted from the law of primogeniture, and from the rule that real .estate is only liable for debts created by specialty, all partnership real estate is out and out converted into personal property, and the heirs of the partners ás such have no interest therein. By the American rule the property does not lose its character as real estate, except so far as it is necessary to protect the partnership creditors and to adjust the equities between the partners themselves. Mr. Reeves in his Real Property (Vol. 2, § 695) says: “ The creditors have the first right in the property; whether it is treated as personalty or as a trust fund held for them; and after they are satisfied, the firm members own the residue as tenants in common, with all the incidents of that form of concurrent ownership.”
Where property stands in the name of the partners, the *298mere fact that it is used in the partnership business does not alone deprive it of its character as real property or prevent its descending to the heir, subject of course, however, to the rights of creditors. (Darrow v. Calkins, 154 N. Y. 503; Gerard Real Estate [5th ed.], 328, 329; 30 Cyc. 184, 185.) And such property may be partitioned. (Levine v. Goldsmith, 83 App. Div. 399; Schleissner v. Goldsticker, 135 id. 435.)
Where a partnership was formed for the purpose of dealing in real estate, and the agreement of copartnership provided that in case of dissolution the holdings should be sold and the proceeds divided, it was held that the agreement showed an intent that the ordinary rule should not apply, but clearly indicated an intent to treat all the real estate as personal property, and that, therefore, it passed to the personal representatives and not to the heir. (Buckley v. Doig, 188 N.Y. 238.)
The prevailing opinion holds, as I understand it, that the heir of a partner "cannot maintain partition if the property stands in the name of the original partners as tenants in common, but was used and was necessary for the use of the firm, relying upon MacFarlane v. MacFarlane (82 Hun, 238). So far as that case purports to be an authority to that extent, it has been overruled by the recent decisions cited. There were, however, in that case the facts that the testator devised his “house and property, No. 24 Norton St., * * * with all the implements, mechanism and fixtures, and interest connected with and in the dyeing and scouring business ” to his two sons, with an annuity to his wife which was payable from the rents of real estate, but if such rents were not sufficient the remainder was to be paid by the sons from the proceeds of the dyeing and scouring business. The brothers carried on the business for some years when the defendant turned it over to the plaintiff, with the understanding that the plaintiff was to have the sole management of it and was to have two-thirds of the profits and the defendant one-third. It was held that the plaintiff, under the circumstances, could not maintain partition. Perhaps the fact that the payment of the annuity to the mother was charged upon the business and that the plaintiff had acquired the sole control of the property under the agreement may have had an important bearing in the decision of the case. *299The term during which the plaintiff was to control the property does not appear, and perhaps it might he inferred that one of the objects of the agreement was to take care of the annuity to the mother.
During the pendency of the action, by death and transfers, various changes have taken place with reference to the parties interested in the real estate. Now a lunatic and an infant each own an undivided interest. Each of these changes would bring about a dissolution of the partnership unless the old and new interests agreed to continue it. In the absence of an express agreement, one might be implied by the • act of the parties. No act upon the part of- the plaintiff is shown which would amount to an agreement upon her part to continue the partnership. During all the while, apparently, she has been doing what she could to terminate it. In the year 1906 no dividends were realized from the business; this action was brought January 15, 1907; there is nothing to show that any one will suffer if the partnership is not continued.
Undoubtedly, as this real estate has been used in connection with the partnership business, and in a way may be necessary thereto, the court might require, if facts are shown making it clear that the interests of all otherwise will suffer, that the personal property be sold with the real estate. But the defendants have not asked any such relief or shown any such facts. They took the broad position upon the trial, and here, that the plaintiff has not such an interest in the real estate as entitles her to maintain the action. The value of the business, the franchise, or the boat does not appear. It is alleged, without denial, that the real estate is worth $14,000. We cannot say but the real estate is the only thing of real value connected with the business. Perhaps every one will receive more if the real estate is sold separately from the boat and the franchise. The dock property may be more valuable for other purposes than for use in connection with the ferry; the ferry boat may be more valuable for other uses; there is an entire absence of proof upon these subjects. The intendments are all in favor of the judgment and the court should not assume facts not proven for the purpose of reversal. We are forcing upon the defendants a relief they do not ask. They have elected to stand upon *300the broad proposition that the plaintiff is not a tenant in common of the real estate and judgment properly passed against them upon the only question litigated. I favor an affirmance.
The judgment is reversed on law and fact and the action is directed to proceed as for a partnership accounting. Upon the final sale the real estate shall be offered for sale separately and the boat and franchise under which the business is conducted. Thereafter both the real estate and the boat and franchise shall be offered together upon the principle of an upset sale. The 14th finding of fact is reversed, and this court finds that the original parties and their successors have continued to the present time to run such ferry as copartners, and that said real estate, or the use thereof, has at all times been contributed to such copartnership by the owners thereof for copartnership purposes, and that a sale of said real estate apart from the ferry and franchise will be detrimental to the interests of the various owners, and that the offering for sale of the land and ferry and franchise separately and together upon the‘principle of an upset sale will be of material advantage to the owners thereof.