Court Opinion

ID: 3549627
Source: CourtListenerOpinion
Date Created: 2016-07-05 23:02:51.492474+00
Date Added: 2024-06-11T14:22:42.107362
License: Public Domain

It must now be considered as the settled American doctrine, that real estate purchased with partnership funds for the use of the partnership, and employed in the partnership business, is in equity regarded as assets of the partnership, and will be applied to the liquidation of partnership in preference to individual liabilities. Nor does it seem to be material in what manner or by what agency the land is bought, or in what name it stands. If it be established that it belongs to the partnership, equity will hold the one in whom is the legal title as trustee for the partnership. Pars. Part. 364; Fairchild v. Fairchild, 64 N.Y. 471; Dyer v. Clark, 5 Met. 562; Jarvis v. Brooks, 27 N.H. 37, 67; Cilley v. Huse,40 N.H. 358, Parker v. Bowles, 57 N.H. 491, 495; Jones Mort., s. 119. From the written articles of copartnership, executed by Shepard and Messer at the time of the formation of the partnership, it appears that the capital of the firm was $21,000, of which sum $19,000 was to be invested in the purchase and improvement of real estate and machinery for the use of the firm, and the remainder to be used in the general business. A portion of the real estate in controversy was purchased on the day of the signing of the articles of copartnership, and the remainder at three different times within four months after; and in one of the conveyances the grantees are described as copartners. It is apparent, therefore, from the copartnership agreement, that the partners then under stood and intended that the real estate should be regarded as a part of the capital or assets of the firm. It was purchased expressly for and used exclusively in the business of the firm, and had been so used for nearly two years prior to the date of the plaintiffs' mortgage. The partner Shepard testifies that he and Messer *Page 378 
bought the real estate together as partners, and that it was paid for with the money of the partnership. The plaintiffs' exception to this evidence, on the ground that it tended to contradict the articles of copartnership, is not well founded. Instead of contradicting, it is in harmony with them, and shows that the partners invested their capital as contemplated by the partnership agreement. The evidence was competent. Jarvis v. Brooks,27 N.H. 37; Collumb v. Read, 24 N.Y. 505. In the present case, the three essential elements necessary to make the real estate partnership property are united, namely, purchase with partnership funds, purchase for partnership use, and use in the partnership business; and the plaintiffs' mortgage is invalid as against the creditors of the partnership.
Bill dismissed.
FOSTER, J., did not sit: the others concurred.