Blodgett v. City of Muskegon

Morse, J. This is an action in assumpsit to recover taxes paid upon personal property assessed to “ Blodgett & Byrne,” the same having been paid under protest after levy. The firm of Blodgett & Byrne (before the death of Byrne) were doing business, and had a saw-mill and office, in the city of Muskegon. Byrne died in January, 1882, and the taxes for that year were assessed in Muskegon in the name of Blodgett & Byrne, and were paid without any demur or protest. There is no showing in the record as to the taxes of 1883. In 1884 the real estate in Muskegon was assessed to “ Blodgett & Byrne,” but there is no complaint made as to this. There was also an assessment in the name of “ Blod — 586 — gett & Byrne,” as follows: “ Personal, lumber, lath, logs, and slabs,” at the value of $105,000, which the board of review increased to $150,000. The tax upon this assessment was $5,105.62, which the plaintiff paid under protest. Some of this tax, being for personal property admitted to be situate in the city of Muskegon at the date of the assessment, was assumed to be legal. The amount claimed to be illegal was $4,697.11. This was the amount of the tax upon the value of the personal property outside of the city of Muskegon, as claimed by plaintiff, when the assessment was made. This he claims should have been assessed to him as surviving partner and at Grand Rapids, where he resided. The judgment in the court below, upon a verdict of a jury, was for the defendant, and the plaintiff brings error. The protest filed at the time of the payment of the tax by plaintiff set forth a large number of reasons why the tax was claimed to be illegal, but upon the trial in the circuit, and on the argument in this Court, the errors relied upon as to the admission of evidence and the instructions to the jury are reduced to three propositions, namely: First. The enlarging of the amount of the assessment by the board of review was illegal. Second. The property was not liable to assessment in the partnership name (the copartnership was dissolved by tlm death of Byrne, and the legal title became at once vested in the plaintiff, the survivor, to whom it should have been assessed). ¡ Third. The court erred in allowing evidence as to whom the tax was assessed in 1882, and the payment of it, and in instructing the jury that, if they found that an arrangement had been entered into by plaintiff and Byrne’s executor to continue the old copartnership, or to form a new one, in accordance with the desire expressed in the will of Byrne, for the period of twelve years from his death, then the assessment might be sustained as made; and in admitting the will of Byrne, and some other evidence tending to show such an arrangement. We think the action of the board of review was valid. Indeed, this alleged error does not seem to be relied upon in — 587 — this Court. The agent of the plaintiff, his son, appeared before the board, and admitted that it was not more than the value of the property assessed, but demurred to their action on the ground that the property was not liable to assessment in the city of Muskegon. W e are also of the opinion that the property was rightfully assessed in the city of Muskegon, and in the name of Blodgett & Byrne. Instead of simply closing out the business upon the death of Byrne, the plaintiff’s own evidence shows that the business of cutting logs and manufacturing the timber went on after the death of Byrne the same as before. A logging railroad of considerable extent was built; a stoi’e at Roscommon was run in the name of Blodgett & Byrne ; the company books were kept as before ; the checks in payment of expenses were drawn upon the bank-account in the name of the old firm; the old signs were retained ; the profits in lumbering were treated as partnership profits; in fact, the business was being operated and carried on precisely as it was before the death of Byrne, saving his pres ence and management. Blodgett testifies: “ Question. Has the business been carried on since Mr. Byrne’s death in any different manner from what it was when he was alive ? Answer. I was thinking how to answer the question. It is a difficult matter. Q. You can answer that question by ‘yes’ or‘no,’ I think. A. Yes, sir; it has been carried on in a different manner if I have got to answer that ‘yes’ or ‘no.’ Q. In what respect ? A. Before Mr. Bryne’s death we were adding to our stock, — buying timber. Since Mr. Byrne’s death, I have been closing this up, — cutting off the timber, and paying for it as it matured. Q. Is it different in any other respect ? A. Yes, sir. Q. In what ? A. I have taken the management of it. Mr. Byrne was the manager of it during his life, and I was a sort of silent fellow, and frequently said I stood at the back of it. — 588 — Q. Is it different in any other respect % A. I don’t know that it is. I don’t think of anything now. Nothing that I can recollect.” He admits that the saw-mill has run just as it did before Byrne’s death, and he don’t know but they have been sawing for other parties, and that the accounts with parties with whom they had been dealing were made in the name of Blodgett & Byrne. The whole tenor of the testimony is in the same direction. If the business is being carried on in the name of Blodgett & Bryne in every detail, why should not the assets and property of the business be assessed and taxed in the same name ? The statute under which the assessment was made provides : “For the purposes of assessing property and collecting taxes, a copartnership shall be treated as an individual, and whenever the name of the owner or occupant of property is required to be entered upon the assessment roll, if such property is owned or occupied by a copartnership, the firm name shall be used. A copartnership shall be deemed to reside in the township where its business is principally carried on. Each partner shall be liable for the whole tax:” Section 5, Tax Law 1882 (How. Stat. App. 1266). It is not pretended that plaintiff paid any tax .upon this property elsewhere. It seems like a desire to avoid the payment of any tax upon the property of Blodgett & Byrne by the use of technicalities in terms which do not exist, and have no foundation in principle. It is true that the courts say that the legal title to copartnership property vests in the survivor at once upon the death of the other partner, but it does not mean that the property becomes his absolutely by any means. While he holds the technical legal title, it is only for the purpose of winding up and closing out the partnership business. The property belongs in equity to the partnership business, the same as it did before, and he must render a fair and just account of it to the heirs or legal representatives of his deceased partner, who have an equitable interest in the property. The surviving partner is a trustee, and bound to manage and dispose — 589 — of the property for the best interests of his deceased partner’s estate: Heath v. Waters, 40 Mich. 457; Pars. Part. (2d. Ed.) § 440, p. 458-9; Case v. Abeel, 1 Paige, 398. ■ At the time this tax was levied the affairs of the copartnership had not been wound up. Whatever tax the plaintiff paid on account of* the partnership property would not be paid out of his own pocket, but out of the assets of the firm. Under a statute nearly like our own in Massachusetts, and where a copartnership had been dissolved by its members, and after such dissolution, but before the business was wound up, the property of the partnership was taxed in the firm name, the court held the tax valid, on the ground that such dissolution did not exempt the firm property from taxation. It did not work a division or separation of the property, so that the share of each partner could be taxed to him. The court also held that, for the purposes of taxation, the firm continued to exist until its affairs were closed up, or the firm property disposed pf: Oliver v. Lynn, 130 Mass. 143. It appears very plainly to me that this business, running and managed entirely in the name of Blodgett & Byrne, and thus kept entirely distinct and separate from plaintiff’s other property and business, as it properly should have been considering the fiduciary character of his legal ownership of it, was legally taxable as the property of Blodgett & Byrne ; and the policy and principle of the statute in relation to the taxation of partnership property where its principal office is located, and its books kept and attainable by the assessor, is best subs erved by such a holding. It is really partnership property. The tax is laid upon and to be paid out of the partnership funds, and the mere fact of the technical legal title, for the purposes of closing out the business, being in the plaintiff by reason alone of his survivorship, should not be allowed to furnish an avenue through which to escape taxation, or even to remove from the city of Muskegon, where the business is done, the benefits of the revenue to which it is justly entitled. In this view of the case it becomes unnecessary to discuss — 590 — the other allegations of error, as the verdict and judgment should have been for the defendant upon the plaintiff’s own showing, without reference to the question of the formation of a new copartnership, or the continuance of the old one by an arrangement with Byrne’s executor. The judgment is therefore affirmed, with costs. Sherwood, J. concurred.