Winstanley v. Gleyre

Mr. Justice Bailey delivered the opinion of the Court': There can be no doubt, we think, that the contract set out in the pleadings created between the parties thereto the relation of partnership in the enterprise of subdividing, platting, advertising and selling the 200 acres of land belonging to Mrs. Winstanley. Mrs. Winstanley was to receive $50,000 out of the moneys first realized from sales, and the other four contracting parties were to defray the expenses incidental to the carrying out of the enterprise, and the five were to share equally in the moneys arising from sales, after the $50,000 were paid Mrs. Winstanley. This gave to each a community of interest in the profits of the enterprise. We think the court below was justified in holding that the conveyances of considerable portions of the land to Mrs. Fuchs and Mrs. Benshaw were fraudulent and void as against the other contracting parties, and in setting those conveyances aside and treating the lands thus conveyed as partnership assets. The prices at which those conveyances were made are clearly shown by the evidence to be much less than the actual market value of the lands conveyed, and the grantees are so related to the other parties in interest that they can not be permitted in that way to obtain an advantage over the other partners. Mrs. Fuchs is a party to the contract, and is consequently one of the partners, and Mrs. Benshaw is the wife of another partner, and a sister of Mrs. Winstanley. A partner is, by virtue of the partnership relation, incapacitated to purchase or deal in the partnership property for his own benefit, but his purchase must be held to be in trust or for the benefit of the copartnership. This principle alone, disposes of- the right of Mrs. Fuchs to claim title under the conveyance to her adverse to the other parties to the contract. Mrs. Renshaw, though not herself a party to the contract, is the wife of the managing partner. Her husband is shown to have been the chief adviser and principal agent of Mrs. Winstanley in making these as well as the other, conveyances of the lands in question. These facts, as well as her relationship to Mrs. Winstanley, necessarily subject her dealings with the partnership property to a very close and searching scrutiny, and even throw upon her the burden of showing good faith and an adequate consideration. We think the evidence clearly warrants the finding of the court below that her title was not acquired in good faith and for a sufficient consideration, and that she stands in no better plight than her husband would have done if he had taken the title in his own name. Counsel make the point that the partnership is only in the profits of the enterprise, and therefore that the firm has no interest in the lands themselves, and that the lands not being partnership assets, were subject to be disposed of by Mrs. Winstanley as she saw fit, leaving in the other partners the mere right to call- her to account by an action at law for a breach of her contract. In this view we are unable to concur. After the payment to Mrs. Winstanley of the $50,000 provided by the contract, the residue of the land remaining unsold became partnership assets. The partners then had the right, by the terms of the contract, to have the land so remaining sold, and upon such sale, to have the entire proceeds distributed as partnership profits. Under these circumstances, the land itself was in equity the property of the firm, and is to be treated in all respects as partnership assets, and the court properly decreed its sale and the distribution of the proceeds on that basis. We find no error in the decree of which the appellants have cause to complain, and it will accordingly be affirmed. Decree affirmed.