Court Opinion

ID: 5191767
Source: CourtListenerOpinion
Date Created: 2022-01-06 15:37:15.31851+00
Date Added: 2024-06-11T08:26:56.174322
License: Public Domain

Laughlin, J.:
The trial court has held that the real estate did not become copartnership property, but that it is held by the parties as tenants in common, and should not be sold in this action. The correctness of this decision is challenged by the appellant, and that is the only question upon the appeal. Both parties ask in their respective pleadings for a dissolution of the firm and the liquidation of its assets. It is distinctly alleged that the real estate has, by the acts of the parties in dealing with it, become partnership property. The plaintiff ¡irays for the appointment of a receiver and asks that the entire property, including good will, trade marks, choses in action and real estate, be sold in bulk as a going concern.
The defendant ¡pleaded that the real estate was held by the parties as tenants in common, and she contends that the copartnership assets only should be liquidated, except that she asks that the good will and trade marks be not sold, but that both parties be permitted to avail themselves of the same. Upon the trial the defendant moved for the appointment of a receiver. The plaintiff claims that the copartnership assets, consisting of buildings, beer casks and kegs, horses, harness and wagons, pumps, ice machines, machinery, hose, utensils and furniture of the value of more than a million dollars, will be largely sacrificed by a sale separate and apart from the realty and good will; and that unless the property is sold in bulk as a going concern, a loss aggregating millions will result. The assets of the firm exceed $4,000,000. The defendant claims that the loss on buildings which appear on the books of the firm at *439avalué of $324,615.08 will be offset by a large gain from new buildings and the rise in real estate values of recent years in the vicinity of the present site and that the other property will yield as much, if not more upon liquidation, if sold apart from the land as if sold with it. As has been seen, there were no rights of creditors involved nor is there any equity in favor of either" party as against the other to be adjusted. The real estate was acquired by the parties as tenants in common, and there is not sufficient evidence to indicate that the parties ever considered it the property of the firm. The copartnership articles either expressly provided or fairly contemplated that the lands and all erections thereon were to be and remain the property of the parties in their individual right.
The appellant now contends that the action can be sustained as •one for dissolution and also for partition. The complaint was not framed in partition, but as has been seen upon the theory that the realty has become copartnership property. The action was tried as suit for dissolution and voluminous evidence was introduced by the plaintiff in an effort to show an equitable conversion of the realty into partnership assets. It does not appear from the record that the claim was made upon the trial that the action could be maintained as for partition and the relief sought granted on that theory. Apparently the plaintiff’s only claim was in accordance with his complaint that the land had been treated and dealt with as partnership property in such a way as to create an equitable conversion thereof. The complaint does not pray for partition. Bernheimer may have a wife and, if so, there would be a defect of parties. There has been no reference to determine liens and there was no proof, by search, of their non-existence as required in partition. 'There is no allegation that the parties did not own other lands in common. On the contrary, it appears that they did own other lands in common, both here and in Hew Jersey, but which were acquired and held for partnership purposes. It is sought to have these lands .sold in this action, but they are not described by metes or bounds or with common certainty as is required in partition actions. Again, pai’tition actions are triable by a jury. If the complaint was both for dissolution and partition, the defendant might have demurred and raised the objection that the causes of action were improperly joined on the ground that they did not arise out of the same trans*440action and were not connected with the same subject of action. In the state of this record it is unnecessary for us to determine whether both causes of action could be joined if objection were raised ; and it was raised in this case by the answer. (See Briges v. Sperry, 95 U. S. 401.) If the claim had been made below, the defendant would have been entitled to a jury trial. It is too late now to present that question.
Ho evidence other than the plaintiff’s offer to buy or sell was presented to show that there was any market value for the brewery as a going concern, or that there was any probability that third parties would bid on the property if sold in bulb. The Special Term held in effect that, regardless of gain or loss to the parties themselves, the court would not compel the sale of their individual freehold estates with the partnership assets. A receiver was appointed, and' an interlocutory judgment decreeing an accounting and liquidation of all the copartnership affairs was accordingly directed.
In the absence of partnership liabilities to creditors or to members of the firm, there is no reason for the application of the rule of equitable conversion. That rule is only applied where it is necessary to adjust obligations of the firm. In other cases, lands still remain realty and descend to the heirs of the copartners.
The decision and interlocutory judgment did not expressly determine whether the title to the buildings is in the parties as tenants in common; but, as has been seen, the title to the buildings follows the title to the land, and that is the effect of the decision and judgment.
Ho question is presented with reference to those provisions of the decision and judgment which authorize the receiver to continue the business until final judgment.
The judgment should be affirmed, with costs.
Patterson, O’Brien, Ingraham and Hatch, JJ., concurred.
Judgment affirmed, with costs.