ancy in common, so far as the mere legal title is concerned, may, in equity, be treated as personalty, is well established by numerous authorities. But precisely what circumstances in regard to its use or acquisition will authorize such treatment, and whether, when authorized, the treatment shall continue for all purposes, or for some only, are matters upon which the decisions are not in full harmony. We shall first consider what realty, of which the legal title is held by two or more in undivided interests, may, in equity, be regarded as, for any purpose, withdrawn from the law of cotenancy; and, next, for what purposes, and to what extent this withdrawal may affect the control, enjoyment, and final disposition of the property. 114. Mere Purchase by Partners does not convert Realty into Personalty. The fact that the tenants in common of the legal title are also copartners does not of itself invest the realty with any of the characteristics of personalty. Nor is the fact that payment for such real estate was made out of the partnership funds, decisive of the question. The partners may have intended to draw that amount out of their firm business, and to invest and hold it as cotenants. Partners may, like other persons, join in a purchase of realty independent of their partnership, intending to hold their interests severally. Whenever such an intention exists, the property, though paid for out of the moneys or effects of the firm, retains in equity as well as at law the character of real estate. "When the price of land conveyed to the partners is paid by copartnership money or effects, or it is taken in satisfaction of a debt due the concern, the real estate becomes partnership property, or is individual property according to the legal effect of the conveyance, as the intention of the purchasers shall appear to have been. It may be either the one or the other."2 1 115. Presumption arising from Purchase with Firm Assets. Though the intention of the partners, rather than Hunt v. Benson, 2 Humph. 459; Dyer v. Clark, 5 Met. 562; Smith v. Smith, 5 Ves. 193; Coder v. Huling, 27 Pa. St. 88. Collumb v. Read, 24 N. Y. 513. the means of payment, is the criterion by which to determine whether the realty acquired by them has been converted into the personal estate of the firm, still the fact that payment was made out of the firm assets, has been regarded as raising a presumption that it was intended to form a part of the partnership property. Such seems to be the conclusion of Judge Denio, as will be seen by the following quotation from an opinion written by him and approved by the other Judges of the New York Court of Appeals: "Prima facie, I should say that, where the land was taken in payment of a debt, it might be considered, in equity, as property of the same class as that which was parted with in making the purchase. So much of the undisputed property of the partnership has been exchanged for the land; it may possibly have been thus invested in order to pay a dividend to the several partners, to whom the land is conveyed; but the stronger probability would always be, in such a case, that it was taken as an expedient for collecting a debt. A conclusion which is to be adopted in the place of precise proof should always be in favor of the theory which is the most probable; and it is upon this rule that the burden of proof is most usually adjusted."1 But the weight of the authorities sustains the proposition that the mere fact that payment is made out of the partnership funds is not even prima facie proof of the conversion of real into personal estate. It must be shown, in addition to this fact, that the purchase was connected with the firm business, or was in pursuance of some agreement, express or implied, that it should be held for the benefit of the concern.2 2116. Realty acquired outside of Partnership Business.Realty acquired by the partners as cotenants, prior to the formation of the partnership, as well as that acquired by them in common during the partnership, but independent of their partnership relations, and without the use of their partnership funds, may afterwards be appropriated to the use of the firm. The question then arises whether this appropriation impresses this real estate with the character of firm property. Collumb v. Read, 24 N. Y. 513. * Smith v. Jackson, 2 Edw. Ch. 28; Cox v. McBurney, 2 Sandf. 561; Wooldridge v. Wilkins, 3 How. Miss, 360. In one case, the answer has been made that it does not, because the resulting trust cannot arise in favor of the firm, without any writing, where the partnership has not contributed any portion of the purchase money.' But the question is, no doubt, one of intention merely. If the parties intended to bring this realty into their business, and thereby to increase their partnership assets, and their intent was consummated by an appropriation of the property to partnership purposes, then it should be regarded as a contribution to the stock in trade, and, as such, subjected to the law of copartnership. But this intention is not to be inferred from the mere fact that the property, even in pursuance of an agreement so to do, has been used by the firm, or for the firm purposes. There must be evidence sufficient to raise the presumption that they intended not only to use the property but also to contribute it to their joint capital in trade. "There can be little doubt that the purchase of land by the partners, for the purposes of the partnership, and subject to an express or implied agreement that it shall be held for the benefit of the firm, will render it partnership property, even when the whole of the consideration is furnished by the partners individually, and no part of it comes from the assets of the partnership." a 117. When Lands will be treated as Personalty."If land, in addition to being paid for out of partnership funds, is brought into the partnership and used for partnership purposes, there is no doubt that it will, in equity, be treated as partnership stock, unless there is some agreement to the contrary or 'the price is charged to the partners respectively in their several accounts with the firm.'" "If in 'Deloney v. Hutcheson, 2 Rand. 183. Frink v. Branch, 16 Conn. 261; Brooke v. Washington, 8 Gratt. 256; Thornton v. Dixon, 3 Bro. C. C. 199; Balmain v. Shore, 9 Ves. 500; Cookson v. Cookson, 8 Sim. 529; Ware v. Owens, 42 Ala. 215; Pecot v. Armelin, 21 La. An. 667. 1 White & Tudor's Lead. Cas. 241; Roberts v. McCarthy, 9 Ind. 16. Howard v. Priest, 5 Met. 582; Burnside v. Merrick, 4 Met. 537; Jarvis v. Brooks, 7 Foster, 67; Overholt's Appeal, 12 Pa. St. 222; Moderwell v. Mullison, 21 Pa. St. 259; Chaplin v. Tillinghast, 4 R. I. 173; Ludlow v. Cooper, 4 Ohio St. 1; Moreau v. Saffaran, 3 Sneed, 595; Lime Rock Bank v. Phettleplace, 8 R. I. 59; Robertson v. Baker, 11 Fla. 192; Buffum v. Buffum, 49 Me. 108; Mauck r. Mauck, 54 Ill. 281; Matlock r. James. 2 Beas. Ch. 126; Bryant r. Hunter. 6 Bush, 75; National Bank r. Sprague, 20 the conveyance the grantees should be described as tenants. in common, it would be a circumstance bearing on the question of intent, though perhaps it might be considered a slight one; because those words would merely make them tenants. in common of the legal estate, which, by operation of law, they would be without them." "If the tenants in common are at the same time copartners, and the land was purchased with partnership funds, and for partnership purposes, it is deemed in equity converted into personal property, and is liable to be administered as such in winding up the affairs of the firm." "Where real estate is purchased with partnership funds, for the use of the firm, and without any intention of withdrawing the funds from the firm for the use of all or any of the members thereof as individuals, I believe it has never been doubted in England that such real estate was, in equity, to be considered and treated as the property of the members. of the firm collectively, and as liable to all the equitable rights of the partners as between themselves. And for this. purpose the holders of the legal title are considered, in equity, as the mere trustees of those beneficially interested in the fund, not only during the existence of the copartnership, but also upon the dissolution thereof by the death of some of the copartners or otherwise." The same principles of equity which direct the administration of real estate, the legal title of which is held by the members of the firm as tenants in common, operate with like force and effect when this legal title is held by one partner only, or even by a third person, if it be held for the use and benefit of the firm jointly.* N. J. Eq. 13; Willis v. Freeman, 35 Vt. 44; Lang v. Waring, 25 Ala. 625; Duhring v. Duhring, 20 Mo. 174; Davis v. Christian, 15 Gratt. 11; Holland v. Fuller, 13 Ind. 195; Phillips v. Philips, 1 Mylne & K. 649; Broom v. Broom, 3 Mylne & K. 443; Moran v. Palmer, 13 Mich. 367; Fowler v. Bailey, 14 Wis. 125; Ciley v. Huse, 40 N. H. 358; Arnold v. Wainwright, 6 Minn. 358. Dyer v. Clark, 5 Met. 562; Matlock v. Matlock, 5 Ind. 403; Abbott's Appeal, 50 Pa. St. 238. *Collumb v. Read, 24 N. Y. 509; Meily v. Wood, 71 Pa. St. 488. 3 Chancellor Walworth, in Buchan v. Sumner, 2 Barb. Ch. 199. • Nicoll v. Ogden, 29 Ill. 323; Uhler v. Semple, 20 N. J. Eq, 288; Jarvis v. Brooks, 7 Fost. 37; Pugh v. Currie, 5 Ala. 446; Deveney v. Mahoney, 8 C. E. Green, 247; 12 Am. L. Reg. 63. 118. For what purposes Realty treated as Personalty. Whether the conversion of partnership realty into personalty prevails for all purposes or for some only is a question which Judge Story "considered as open to many distressing doubts."1 The doubts are no less distressing now than when they first perplexed the learned Judge, but, by considering the number of the adjudications, in the two countries, it will be readily ascertained where the weight of the authorities in both England and America rests; and the results thus ascertained in regard to the two countries, will be found to be in irreconcilable conflict with each other. The earlier English decisions were in favor of the proposition that the conversion of realty into personalty extended no further than was necessary to an equitable adjustment of the claims of the firm creditors, and of the rights of the members of the firm between themselves. Subject only to those claims and rights, the real property continued to be distinguished by its ordinary legal incidents, and liable to disposition according to the rules of law. It therefore passed to the heirs or devisees.2 But this construction of the law of copartnership is now certainly overthrown in England. After fully considering the decisions then existing, the Vice-Chancellor, in a leading case on this subject, thus summed up his own reasons and the result to which those reasons, as well as the prior adjudications, led him: "I should, therefore, feel no hesitation in coming to this conclusion, that the mere contract of partnership, without any express stipulation, involves in it an implied contract, quite as stringent as if it were expressed, that, at the dissolution of the partnership, all the property then belonging to the partnership, whether it be ordinary stock in trade, or a leasehold interest, or a fee-simple estate in land, shall be sold, and the net proceeds, after satisfying all partnership 1 Story on Partnership, sec. 93. Thornton v. Dixon, 3 Bro. Ch. R. 199; Bell v. Phyn, 7 Ves. 453; Balmain v. Shore, 9 Ves. 501; Cookson v. Cookson, 8 Sim. 529. 3 Essex v. Essex, 20 Beav. 442; Ripley v. Waterworth, 7 Ves. 425; Houghton v. Houghton, 11 Sim. 491; Broom v. Broom, 3 Mylne & K. 443; Phillips v. Phillips, 1 Mylne & K. 649; Fereday v. Wightwick, 1 Russ. & M. 45; Crawshay v. Maule, 1 Swanst. 495; Kirkpatriek v. Sim, 5 Pat. Scotch App. 525; Selkrig v. Davies, 2 Dow, 230; Townshend v. Devaynes, 1 Mont. Partn. note 2 A, Appx. 96; Morris v. Kearsley, 2 Young & C. Ex. 139; Holroyd v. Holroyd. 7 W. R. 426. |
