Court Opinion

ID: 6505208
Source: CourtListenerOpinion
Date Created: 2022-07-19 18:17:31.022571+00
Date Added: 2024-06-11T15:54:42.994541
License: Public Domain

GOLDTHWAITE, J.
-The caso made by the bill is, that the complainants, Collins and Langworthy, and the defendant, Owens, being in co-partnership in the keeping of a livery stable, made an agreement to purchase certain lots adjoining the ono occupied by them in carrying on their business, for the joint benefit of all the partners ; that certain moneys in the hands of Owens, belonging to Collins, amounting to about four hundred dollars, were by his direction appropriated to the purchase, and that the balance of the purchase money was paid by Owens out of the co-partnership funds, and the titles taken by him in his own name.
Regarding the directions of Collins, in relation to the appro*842priation of his separate funds, as an advance pro tanto to the firm, it is perfectly clear that the investment of these funds, with other moneys realized by the firm from the co-partnership business, under the agreement as charged, would create a trust in favor of the individual members of the firm, which would be enforced in a court of equity, in which court the person holding the legal title would be held as the mere trustee, and the partners as the cestuis que trust.—Hoxie v. Carr, 1 Sum. Rep. 103; 2 Story’s Eq. § 1207.
The purchase of the lots is admitted ; and while we regard the evidence as sufficient to establish the fact that the money belonging to Collins in the hands of Owens was used by the latter in part payment of the consideration, we think it equally clear from the evidence that the balance of the purchase money was paid by Owens from his individual funds.
We also regard it as a clear proposition, that if Collins merely authorized Owens to use his money in the purchase of the lots, for the benefit of the firm, he had the right at any time before the appropriation was actually made to change his intention, and make a different application of the funds. The money remained his until the investment was made, and until then it would be under his control.—Williams v. Everett, 14 East 582; Scott v. Procter, 3 Merivale 652. This being the law, it follows necessarily, that if the funds of Collins were before their appropriation, by his direction, withdrawn from the purpose for which he had originally intended them, the subsequent use of these funds by Owens, if it created any trust at all, raised one in favor of Collins alone.
' In the last argument of this case, it was insisted that there was no evidence that Collins had withdrawn his funds in the hands of Owens, from the use for which he had at one time designed them, that is, as an advance to the firm for the purpose of purchasing the lots in question. We have again carefully examined the testimony upon this point, and are confirmed in the correctness of the conclusion expressed in our first opinion.— It is to be remembered, that the funds to be used in the purchase were the proceeds of a draft or order given by Collins to one Coster, for money which was coming to the former, amounting to about four hundred dollars; and it is not pretended that Owens St $»y time had in his hands of the individual moneys of *843Collins any other than the proceeds of this draft. On the 9th of August, 1846, and before the purchase, which was made in September of the same year, Collins writes to Owens, and after detailing with some degree of particularity the various and unsuccessful efforts he had made to raise funds from different sources, he makes a different appropriation of a. portion of his funds in the hands of Owens, and directs him “to hold on to the remainder of the draft, in case any thing should happen, that it may be come at at any time,” assigning as a reason for these directions, “that they had been in a strain so long as to make them feel unpleasant;” and again, in the conclusion of his letter, he refers to this draft in connexion with Mr. Coster. What draft did he refer to 1 We hear of but one, and with that one Coster was connected. There can be but one construction placed on the letter to which we have referred. The draft which is there spoken of, was the same that was to have been appropriated to the purchase of the lots; this purpose was abandoned by Collins in consequence of unexpected disappointment : not obtaining the money from Powers, and failing to effect a loan from Steele, to both of which circumstances he refers in his letter. Regarding this evidence as conclusive of the change of direction, or the withdrawal of the funds of Collins, in the hands of Owens for the purchase, it is clear that, after these directions were received, these funds could not be considered either as an advance to the co-partnership, or as held for the joint benefit of the complainants ; and if, under these circumstances, any trust was raised by the bare use of this mon - ey by Owens, it could result in favor of the person to whom the mom y belonged, and to him alone. It is entirely immaterial in this aspect, whether v/e regard the bill as filed to enforce a trust growing out of the co-partnership relations between the parties, or to enforce a joint trust in favor of the complainants. If it can enure to the benefit of Collins alone, and is outside of, or disconnected with the co-partnership, it is not the case made by the bill; and the rule is well settled, that the case proved must be substantially the same as that which is stated upon the record.—Dan. Ch. Pr. 1000; Wilkins v. Judge, 14 Ala. 135.
There is another ground also, which is equally decisive of the case, at least so far as Collins is concerned. Regarding the evidence as sufficient to show that the funds of Collins were not *844advanced to the firm, and conceding for the purposes of argument, what we think may well bo questioned, that a trust resulted in his favor from the bare use of the money, the law is clear, that a trust of that description may be waived or discharged by parol; and, indeed, the rule applies to all trusts, express or implied, which are created by parol.—Walker v. Walker, 2 Atk. 98; Bottsford v. Burr, 2 Johns. Ch. R. 445; Phillips v. Crammond, 2 Wash. C. C. R. 445. The testimony shows, that after the money in the hands of Owens, belonging to Collins, had been withdrawn by the latter from,Jhe purchase of the lots, a portion of these funds were loaned to a third person, apparently with tho consent of Collins ; and in the latter part of October or the first of November, 1846, he tells the witness, Brooks, that he did not wish to make an investment in these lots, referring, as witness states positively and unequivocally, to the lots in question; and that Owens at the same time, by the direction of Collins, invested a portion of his money in the purchase of a note, Collins remarking that he preferred buying such paper to investing in the lots. This occurred in the City of Montgomery, where the lots were located, and after the purchase had been made, and amounted in law to a waiver or discharge of the trust.
in considering the case thus far, we have treated the equity of the complainants as based upon a trust, resulting from the use of the money of Collins by the defendant, Owens, without reference to any agreement between the parties. That there was some understanding between them at tho time of the sale, we do not doubt. This is established by the letter of Owens, written by him on the 9th September, 1846, after the instructions of Collins, and by the reservation of one third of the lots for the complainants; but the difficulty on this branch of the case is, that the evidence leads the mind to no certain or definite conclusion as to the terms or character of this understanding. That Collins did not intend that his funds received by Owens from Coster should be invested on bis account, is fully and clearly shown by his letter before referred to, written apparently upon the fullest consideration; and tho complainants have entirely failed to establish the charge, that the- balance of the purchase money was paid out of the co-partnership funds, or that any new agreement was made of the character as charged. This being the *845case, if we consider Owens as the agent of the firm, and buying for the benefit of the co-partnership, we still do not see how the decree can be sustained. Apart from any influence which the statute of frauds might exercise, it is conceded that, where a purchase of lands has been made out of the joint funds of the co-partnership, and for co-partnership purposes, it is wholly immaterial, in the view of a court of equity, in whose name the purchase is made ; it is there regarded as the property of the firm.—Hoxie v. Carr, supra.
But the charge of the bill is, in effect, that the lots were purchased with the co-partnership funds, that is, with the money of Collins advanced to the firm, and the proceeds of the business of the co-partnership, and the evidence does not sustain this allegation-, as it shows a state of facts inconsistent with the idea of an advance by Collins to the firm; in other words, although the testimony may show clearly, that the purchase was made on account of the firm, it does not establish the fact that it was with the money of the co-partnership. There is, it is true, one witness who details a conversation of Owens, in which he said that the complainants had left money in his hands to buy the lot. This conversation was had before the sale, but at what time does not appear ; so that it may have been before the funds were diverted from the purpose for which they had previously been intended by Collins, and may be reconciled with the directions given by him in his letter of the 9th August.
If the purchase was not made with the co-partnership funds, or with the money of Collins under the agreement as charged, the case is varied from the one which is made by the bill, and a new case made, which involves, so far as the action of the Chancellor is concerned in giving relief, principles very different from those which would govern him upon the case which the bill presents. If a bill was filed against an agent, alleging that he had purchased lands with the money of his principal, upon an agreement to that effect, for the purpose of enforcing the trust in favor of the latter, would it be doubted that, in ease it was shown by the evidence, that the agent had paid his own money, relief must be denied for the want of correspondence between the allegata and probata. The same principles apply in their full force in the present case. Owens may have made the purchase-as the agent of the firm; but if it was made with the in*846dividual funds of Collins, not advanced to the firm, and the money of Owens, and Collins has waived the trust so far as he was concerned, the other complainant is not entitled to relief in this suit, for the want of harmony between the allegations and the proof.
It follows that the decree of the Chancellor, vesting the title to a portion of the lots in the complainants, and directing possession of such portion of them to be delivered to them, was erroneous ; that the bill as to these lots must be dismissed, and retained to take an account of the co-partnership. The conduct, however, of the plaintiff in error has not been such as to entitle him to costs in this court, which must be paid, one half by him, and the other half by Collins ; and the case must be remanded to be proceeded with upon the matters of account referred.