Nichols v. Burcham

Bird, J. The complainant began this proceeding to have a land contract made with defendants Burcham specifically enforced, and to enjoin proceedings at law. The chancellor who heard the case made a decree agreeable to the prayer of the bill, and defendant Hicks has appealed. The land in question consists of 83 acres bordering on Long Lake in Iosco county. The real contest is between the complainant Nichols and defendant Hicks. It appears that both of these parties were nonresidents of the State, and that they began to bargain for the land at about the same time. The title to the land was held by defendants John and Albert Burcham as cotenants. John was living on the premises and Albert was in Illinois. On May 8, 1909, John Burcham gave complainant a written option in the name of Burcham Bros., to purchase the same for $1,000; a payment of $10 being made thereon. This option was duly recorded with the register of deeds for the county of Iosco on the 18th day of May, 1909. On the 19th day of May a land contract was executed by John Burcham in the name of Burcham Bros., agreeing to sell the land to complainant for $1,000, $250 to be paid down and the balance to be paid on or before the 8th day of November, 1909. The down payment was made by the complainant and the land contract recorded in the office of the register of deeds on the 21st day of May, 1909. On or before the day fixed in the contract for the final payment, the complainant made an effort to pay the balance due on the contract, but was unable to do so on account of the absence of the Burchams. The complainant took possession of the premises under his contract, and later a suit in ejectment was commenced against him — 603 — by Hicks, to recover possession of the same. Complainant then filed this bill to enforce his contract, and also to enjoin the prosecution of the ejectment suit. Defendant Hicks’ side of the controversy is that on the 3d day of May, five days before the option was given to complainant, John Burcham gave him a written option of purchase of the same premises, with certain lumber thereon for $943, on which he paid him $10. On May 22d John executed a deed of his interest in the premises to him, and on June 14th Albert did likewise, and Albert received one-half of the consideration on June 1st and John received his share on June 14th. It is the claim of the complainant that the defendants Burcham were copartners dealing in lands, and that the execution of the option by John Burcham in the name of the partnership was valid, and that the defendant not only had actual notice that he had made a contract for the purchase price of the land, but that he had constructive notice because of the fact that both the option and the land contract were on file in the register of deeds’' office for several days before he made any substantial payment upon the land. The defendant Hicks denies that the Burchams were copartners, and that if they were, the land was not copartnership property, and he denies that he had any actual notice before he purchased that complainant was negotiating for the land. For the purpose of establishing a copartnership between John and Albert Burcham, proof was made that the land was conveyed to them as cotenants, and that they either had it surveyed into lots, or contemplated doing so, and that they established an office on the premises for the sale of them. Upon this office building a sign was placed reading as follows: “Burcham Bros. General and Outing Lots for Sale.” The proofs also showed admissions by each one of the partners that he was in partnership with his — 604 — brother in the ownership and sale of these lots. It also appeared that they had entered into some business transactions as partners. The testimony tending to establish the partnership was not disputed by the proofs. No light was thrown on the questions by either one of the Burchams, as neither defended nor did either appear at the hearing. The testimony fairly leads to the conclusion that John and Albert were copartners as to this land. The more serious question is, however., whether, having established the fact of copartnership, the sale of the land made by John in the firm name was a valid sale as to his brother Albert. To show that John and Albert were partners would not establish the validity of the option as to Albert, unless it was further shown that the .copartnership was dealing in lands, and that the lands in question were part of them. Rovelsky v. Brown & Smith, 92 Ala. 522 (9 South. 182, 25 Am. St. Rep. 83); Ludlow v. Cooper, 4 Ohio St. 1; Frost v. Wolf, 77 Tex. 455 (14 S. W. 440, 19 Am. St. Rep. 761); Moderwell v. Mullison, 21 Pa. 257; Chester v. Dickerson, 54 N. Y. 1. (13 Am. Rep. 550); Thompson v. Bowman, 6 Wall. (U. S.) 316; Batty v. Adams County Com’rs, 16 Neb. 44 (20 N. W. 15); Robinson v. Crowder, 4 McCord (S. C,), 519 (17 Am. Dec. 762); 1 Bates on Partnership, §§ 298, 299; 17 Am. & Eng. Enc. Law (1st Ed.), p. 960. See, also, Moran v. Palmer, 13 Mich. 367. In Rovelsky v. Brown, supra, wherein the facts were very similar to the case under consideration, the rule is stated as follows: “ ‘When the partnership business is to deal in real estate, one partner has ample power, as general agent of the firm, to enter into an executory contract for the sale of real estate.’ Chester v. Dickerson, 54 N. Y. 1 (13 Am. Rep. 550). ‘When real estate is brought into the partnership business, it is treated, in equity, as personal estate, and a lease of it by one partner is — 605 — as much a partnership transaction as a sale of partnership goods by him would be.’ Moderwell v. Mullison, 21 Pa. 257. When land is purchased to be dealt in as a commodity, this would seem to be, for the purposes for such dealing, an out and out conversion of it into personalty, and- each partner can bind the firm by contracts for its disposition. Ludlow v. Cooper, 4 Ohio St. 1; Olcott v. Wing, 4 McLean, 15 [Fed. Cas. No. 10,481]; Pugh v. Currie, 5 Ala. 446; Frost v. Wolf, 77 Tex. 455 [14 S. W. 440, 19 Am. St. Rep. 761]; 1 Bates on Partnership, §§ 298, 299. Our conclusion is, that partnership real estate is, in equity and for partnership purposes, to be treated as personalty; and that one member of a partnership, engaged in the business of buying and selling real estate, can bind the firm by contract in the firm name for the sale of partnership land, and that such contract .should be specially enforced against all the partners. This conclusion does not involve a disregard of the rule laid down in Lang’s Heirs v. Waring, 25 Ala. 640 [60 Am. Dec. 533] ; for the conversion into personalty is only so far as may be called for to effectuate the purposes of the partnership; and when the partnership has come to an end, and its purposes have been fully accomplished, the real estate resumes its legal characteristics.” It is further said in the same opinion that: “If the several partners in a firm engaged in the business of buying and selling real estate cannot bind the firm by purchases or sales of such property made in the regular course of business, then, they are incapable of exercising the essential rights and powers of general partners, and their association is not really a partnership at all, but a several agency; the acts of each member being subject to ratification or repudiation by the other members, or by their wives, or, if they should die, by their widows, heirs, or devisees. In short, we are unable to discover any satisfactory reason for denying to a court of equity the power to treat real estate as personalty in order to make binding partnership obligations in reference to the particular subject-matter of the regular dealings of the firm, when that rule sought to be invoked to this end is readily applied to enforce the payment of ordinary — 606 — debts, or to secure a partnership division, which, as compared with the immediate and primary aim of carrying on the regular business of the concern, are the secondary and ultimate purposes to which the partnership property has been pledged or devoted. And authorities are not wanting to support the conclusion that the rule is not confined in its application by any such unreasonable distinction.” Applying this rule, in the law of partnership to the proofs in the case at bar, we think it should be held that John Burcham had the authority to make the contract with complainant, and that it should be enforced against both of the partners. The chancellor found as a fact that defendant Hicks had actual notice of complainant’s contract before he paid any substantial sum on his contract. We think this conclusion was justified by the testimony, notwithstanding it was denied by him. In addition to this, had the defendant taken the precaution to examine the records in the register of deeds’ office before he paid the purchase price for his deed, he would have been advised of the option and contract executed' by John to complainant. The defendant Hicks makes complaint because he was denied a rehearing. It appears that he was unable at the hearing to produce the written option given to him by John Burcham on the 3d of May. Subsequently it was found and made the basis of an application for a rehearing. The application was denied by the court because of the apparent lack of good faith in failing to produce the option on the hearing. The receipt reads as follows: “Long Lake, Iosco County, Michigan, “May 4, 1909. “Description of land purchased of John Burcham and Albert Burcham by Mott Hicks: Beginning thirty-two (32) rods north of the southeast corner of section five (5), thence west to Little Long Lake, then west along said lake and west side of town four (4), — 607 — then north to D. & M. Ry., then to lot three (3), then east to two hundred and fifty (250) feet, then north to Big Long Lake, then east along Big Long Lake to section line of section four (4), then south to point of beginning, all lands being situated in lot thirty-eight (38) of section five (5), town twenty-three (23) north of range five (5), east, containing eighty-three (83) acres of land more or less. Received ten dollars ($10) to apply on purchase price of said land, purchase price being nine hundred dollars ($900). [Signed] “John Burcham.” If we were disposed to disagree with the chancellor as to defendant’s right to a rehearing, it would be without profit to the defendant, as we are persuaded that the receipt is not sufficient to meet the requirements of the statute of frauds, in that it fails to fix a time when payment should be made. Gault v. Stormont, 51 Mich. 636 (17 N. W. 214); Ebert v. Cullen, 165 Mich. 75 (130 N. W. 185, 33 L. R. A. [N. S.] 84), and cases cited. The decree, canceling defendant Hicks’ deed, and providing for a specific performance of complainant’s contract, was a proper one, and it will be affirmed, with costs of this court to complainant. Steere C. J., and McAlvay and Kuhn, JJ., concurred with Bird, J.