Speyer v. Desjardins

Mr. Justice Baker delivered the opinion of the Court: Appellees assume that, since the bill of complaint fails to affirmatively allege that the contract between appellant and Desjardins was in writing, therefore, under the primary rule of pleading that allegations must be taken most strongly against the pleader, it is to be regarded as sufficiently appearing upon the face of the bill that said agreement was not in writing, and rested entirely in parol. Appellees are wrong in this assumption. While in England, prior to recent changes by acts of Parliament, the presumption, that prevails in actions at law, that the statute of frauds has been complied with, did not obtain in suits in equity, and the complainants in such suits were bound either to aver compliance with its provisions, or allege facts that took the case out of the statute, yet, in this country, the doctrine is, both at law and in equity, that compliance with the statute is presumed, and the party plaintiff is not required to set out compliance in his declaration or bill. In Indiana and Iowa, and possibly in a few other States, special statutory requirements change or modify that which may be regarded as the American rule, but no such statute is in force in this State. See Am. & Eng. Ency. of Law, vol. 8, p. 745, and cases cited in note 7. The rule then is, that the benefit of the statute, as a defense, can be taken by demurrer only when it affirmatively appears from the bill that the agreement relied on was not evidenced by a writing duly signed. Here the allegation simply is, that the complainant and Desjardins “ entered into an agreement to purchase” certain designated lots and real estate, and “to erect thereon” certain specified buildings. It must be presumed from these averments that the agreement was in writing and properly signed by the parties. This being so, and there being no question but that the bill, if based on an agreement made in conformity with the requirements of the statute, states a case for equitable relief clearly within the jurisdiction of a court of equity, it necessarily follows that it was error to sustain the demurrer and dismiss the bill for want of equity. To simply reverse the decree and remand the cause for the error stated, without any expression of opinion in regard to the principal matter of contention between the parties, would be unadvisable. It would likely be of little benefit in the future progress of the cause upon the remandment, that the decree was reversed on a point which only incidentally arose, that which is evidently the real controversy being ignored. The theory of the bill is that there is a partnership between appellant and Desjardins, and that the lots and the buildings erected thereon are partnership property; and the claim of appellant is that the statute of frauds has no application to such a case. It is well settled that an oral contract by two or more persons to purchase real estate for their joint benefit is within the statute. But it has been a mooted question whether a partnership can be created by parol for the purpose of buying and selling lands for profit. There is a very considerable conflict j-in the cases upon that question, but the decided weight of authority seems to have answered it in the affirmative. That an.agreement for a partnership, for the purpose of dealing and trading in lands for profit, is not within the statute, and that the fact of the existence of the partnership, and the extent of each party’s interest, may be shown by parol is now quite generally accepted as the established doctrine. Dale v. Hamilton, 5 Hare, 369; Essex v. Essex, 20 Beav. 449; Holman v. McCrary, 51 Ind. 358; Richards v. Grinnell, 63 Iowa, 44; Chester v. Dickerson, 54 N. Y. 1; Black v. Black, 15 Ga. (449; Fall River Whaling Co. v. Borden, 10 Cush. (Mass.) 458; 1 Bunnel v. Taintor, 4 Conn. 568; Pennybacker v. Leary, 65 Iowa, 220; Gibbons v. Bell, 45 Texas, 417; Perronette v. Pyme, 34 N. J. Eq. 26. It is useless to restate the arguments pro and con bearing on the point under consideration; and if is hardly probable that we could now make any suggestion that has not already been fully considered. The leading and more important cases are discussed or referred to in Browne on the Statute o£ Frauds (4th ed.), section 259 et seq. and notes, and are also cited in notes to pages 700 to 704 of vol. 8 of Am. &' Eng. Ency. of Law. The cases we have cited, and many others, proceed upon the theory that the real estate of a partnership is treated and administered in equity, as between partners and for all the purposes of the partnership, as personal property and partnership assets. From its status in equity, of being stock in trade and partnership assets, it is readily deducible that it is immaterial whether the legal title to the partnership land is in all the partners, or in one, or in some number less than the whole; that it is not material whether the partnership was already established and engaged in its business when the land was acquired and brought into the partnership stock, or whether the partnership was established and the land acquired and put in contemporaneously, or whether the partnership was established for the express and special purpose of dealing in and making profit out of the very land itself which is in question; and that the facts of the existence of the partnership, and that the lands were acquired and used for partnership purposes, being shown by parol, it is immaterial whether such partnership was formed by written articles or by parol. Browne’s Stat. Frauds, sec. 261a. The doctrine of the cases we have cited, so far as it involves the provisions of the statute of frauds, seems to proceed upon the ground of a trust implied from the relation of co-partnership. The matter here at issue is a close question and beset with difficulties whichever view is taken. It seems difficult to demonstrate, to a certainty, that the doctrine above stated should prevail and take partnership agreements and partnership property out of the statute, and equally difficult to satisfactorily demonstrate that such agreements are within the statute, as held in Smith v. Burnham, 3 Sumner, 437; Bird v. Morrison, 12 Wis. 138, and other cases. Upon the whole, we are inclined to follow the view which seems to obtain in England and in most of the States of the Union, that partnership agreements and partnership lands, as between the partners and for all partnership purposes, are not within the statute. The bill in the case at bar shows that the parties agreed to purchase the five lots and erect buildings thereon, each, party contributing one-half of the money necessary for the enterprise, the lots and buildings then to be sold, and the profit or loss arising from the enterprise to be divided equally between them. This was manifestly a partnership agreement. The bill then shows that the parties purchased the lots “in pursuance of the agreement,” and that, at the- same time and as a part of the same transaction, money was raised by placing mortgages on the lots and the purchase price of the lots paid with such money. Whose money, then, was it that was applied in payment of the lots ? It is admitted that, by the terras of the partnership agreement, all liabilities that the partners, or either of them, should create in furtherance of the enterprise, were to be, as between the partners, treated and considered as joint liabilities to be met and shared by them in equal shares. This would seem to stamp the money that was received on the mortgages and paid on the lots as partnership money. Since, then, the money, by force of the agreement, was partnership-money, it follows that, when $3750 of it was, at the time of the purchase, paid as the purchase money of the lots, a resulting trust at once arose by operation of law, out of the transaction, in favor of the partnership. See Wallace v. Carpenter, 85 Ill. 590. Our conclusion, therefore, is that, without regard to the-question whether or not the partnership agreement mentioned in the bill of complaint was in writing, a proper case for the interposition of a court of chancery was stated in the bill, and it was error to sustain the demurrer and dismiss said bill. The decree is reversed, and the cause is remanded with directions to overrule the demurrer. Decree reversed.