Court Opinion

ID: 6508670
Source: CourtListenerOpinion
Date Created: 2022-07-19 18:20:25.299099+00
Date Added: 2024-06-11T15:54:48.509150
License: Public Domain

B. F. SAFFOLD, J.
[After stating the facts.] The main question for decision is, whether, in the absence of special covenants between the parties, or where the buying and selling of real estate is not the object of the partnership, the principles and rules of law applicable to partnerships, and which govern and regulate the disposition of the partnership property, apply to real estate purchased out of the joint funds, and conveyed to the partners as tenants in common, and held by them for the purposes of the partnership; or, whether they would hold their individual moieties in separate and independent' titles, and the same would go, on the insolvency of the firm, or on the death of either, to pay their respective creditors at large. The current of authority undoubtedly is, that generally, on clear proof of the fact, such real estate would be held, in equity, to be sub*295ject to the partnership debts between the partners and their creditors, and against their separate creditors and subsequent purchasers with notice. Real estate has always been regarded as property of higher order and dignity than personalty, and will, perhaps, continue to be so esteemed. Its permanent character seems to require different regulation in view of monopolies, perpetuities, and confusion of title. At law, it is deemed to belong to the persons in whose name the title by conveyance stands. As the presumption of ownership is always in favor of those in whom the legal title is vested, and the contrary has to be proved, it occurs to me as not necessary, in this-case particularly, if in any, in order to sustain the bill, to divest the real estate of its distinctive features, and to stamp it wholly as personal property. If it be held to be personalty only, then it passed by the conveyance of J. R. Abrams, as effectually as did the unquestionable personal assets of the firm. The province of equity would be completed in simply determining that the circumstances and purpose of its acquisition converted it into personal property. On the other hand, as the heirs can take nothing until the debts of the decedent are paid, and his administrator is interested to the extent of his accountability to all of the creditors generally, equity is capable of dealing with the realty as such, declaring the rights and priority of creditors, and divesting the title out of parties, either for the purpose of sale, or of vesting it in others. The full difficulty of the question made by the parties would come up in a case like Bell v. Phyn (7 Vesey, 453), where the disposition of the property depende’d entirely on its character of realty or personalty, without regard to controlling rights of parties, as in matters of dower and devises and legacies. I do not understand that real estate may not, as such, be the subject of partnership; and that equity may not, when the necessities of the partnership will admit, dispose of it agreeably to its distinctive characteristics, or leave it to be so disposed of by the law courts.
In Andrews v. Brown (21 Ala. 437), the surviving partner recovered against the heirs and administrators of the deceased partners, real estate standing in the name of the decedents, for the purpose of paying the debts of the firm., on the ground that it belonged to the firm as partnership property, and was so treated by all the members of the firm. It was held that the heir had the legal title in trust to pay the debts ; and as the survivor was charged with the duty of paying them, his deed would convey this equity to his purchaser, and through it the heir could be compelled to convey the legal title. In Lang’s Heirs v. Waring (25 Ala. 625), it was held that, as the surviving partner could not make an effectual disposition of such *296property without the aid of equity, the confirmation should not be given if the transaction was unfair, inequitable, or unauthorized. This case supports what we have said above, that the legal title ought not to be disturbed, except so far as may be necessary to protect the equitable rights of the respective parties.
Note by Reporter.. -=- On a subsequent day of .the term, in response to an application by the appellees for a rehearing, the following opinion was delivered : —
SAFFOLD, J. — The appellees ask fora rehearing, because they say this suit improperly withdrew from the probate court the due administration of the estate of H. S. Abrams. The probate court had no jurisdiction to determine whether the land in controversy was the partnership property of J. R. & H. S. Abrams. The chancery court so holds it to be, and finds that H. S. Adams was insolvent. If J. R. Abrams, as surviving partner, had made the assignment for preferred creditors in good faith, the only remedy of other creditors would have been to get it declared a general assignment. This it was. The property was disposed of as the law required.
A rehearing is denied.
The authorities are abundant and conclusive, that when real estate ought to be treated as partnership property, equity will so decree it, at the suit of any one who shows a beneficial interest in having it so declared. They are scarcely less agreed on the doctrine, that it becomes partnership effects when purchased with the joint funds, for partnership purposes, and so held by the partners. Story on Partnership, pp. 127, 128; 1 Story’s Eq. Jur. § 674; Collyer on Partn. b. 2, ch. 1, pp. 82, 88, 2d ed.; 3 Kent’s Com. § 43, p. 37; Smith v. Smith, 5 Vesey, 189; Ripley v. Waterworth, 7 Vesey, 424.
The equity of the bill is shown in the necessity of having the real estate decreed to be partnership property, the disposition made of it by the surviving partner, conveying his own interest, and whatever rights the partnership had to the complainants, his insolvency, and the priority which the partnership creditors are entitled to. Emanuel v. Bird, 19 Ala. 596; Lucas v. Atwood, 2 Stew. 378.
The decree is reversed, and the cause remanded.