Duhring v. Duhring

RylaND, Judge, delivered the opinion of the court. 1. It' will not be necessary, in our opinion, to consider all the-points and questions raised by the parties on this record. Both — 178 — parties complain of the judgment of the court below, and both bring the case here. The plaintiff alleges that the court erred in regard to the mortgage, and insists that she is entitled to dower in one undivided half of said premises, independent of the mortgage, and that she should not be required to redeem the-same. She alleges that the right to set up said mortgage is barred by the statute of limitations, and that the defendant has no right to be substituted in the place of Bouju. The defendant insists that plaintiff has not, and never had any right to dower in the lot, because it was purchased by the firm of Williams & Duhring as partnership property; was used as such; paid for, in part, by the cash of the firm, and the notes of the firm given for the balance of the consideration. There can be little doubt that the purchase was made by the firm of Williams & Duhring. They were partners, doing business as merchants in St. Louis, in 1834, and were so engaged in 1836, when they bought the lot of Bouju. The deed from Bouju to them shows the purchase by the firm. The witness, Williams, says it was a purchase by the partnership ; says, “ the purchase took the shape of a partnership transaction on the books of .said firm. There was a property account, and this lot was entered into that account. The cash paid was entered into the cash account, and the notes' given for the purchase, were entered into the books under the head of “ bills payable.” There were two stores on the lot; one was rented out by the firm, the other was occupied by it. He says “the lot was bought as an investment, to keep until we closed business.” The partners, Williams & Duhring, executed a mortgage, which was also signed and executed by the plaintiff, the wife of Duhring, to Bouju, to secure the payment of the balance of -the purchase money, being seventeen thousand five hundred ■dollars. The plaintiff was a minor when this mortgage was executed by her. The firm of Williams & Duhring being largely indebted to Henry Duhring, the defendant, sold him the lot in 1839, and — 179 — made a deed to him, which was also signed by the plaintiff and acknowledged by her. The. consideration was the sum of $24,500 — $7000 of which was then due and owing to Henry Duhring, by the firm; and he agreed to pay off the debt due ■under the mortgage to Bouju. The firm never paid any more of the original purchase money to Bouju than the first payment of $5000. The balance was paid by Henry Duhring. The plaintiff was a minor when she executed, with the partners, Williams & Duhring, the deed in 1839, to Henry Duhring. The firm of Williams & Duhring became insolvent, wholly unable to pay the debts of the firm. Some of these debts still remain due and unpaid. The firm was insolvent when the deed ■ was made to Henry Duhring in 1839. Now is the widow entitled to dower in real estate bought by the firm, paid for with the funds of the firm, and bought for the use of the firm ? If she is not, it will be useless to consider any other question in this case. I lay out of consideration the fact that there were two store houses on the lot, one of which was rented out by the firm ; and the remark of the witness, that the lot was bought as an investment, to keep until the close of the concern. These, taken together, cannot warrant the court in saying it was not partnership property — was not bought for the use of the firm. It was purchased for the stand or store of the firm ; and renting out a part of the real estate, not necessary for the immediate occupation of the firm, did not and cannot change the nature or design of the purchase. I will remark further, before I proceed to consider this question, that the court below was not warranted in finding “ that the purchase was regarded by the parties, at the time of making the same, as a mere investment, with the view and intention of ultimately keeping the same.” There is nothing preserved in the record to warrant this finding. It would be a strange conclusion that, if a mercantile firm should buy a lot for the purpose of carrying on their business as merchants in a city, some thirty or fifty feet front, running a hundred and fifty feet back, and there should happen to be a store house on the front — 180 — of the lot and an ice bouse in tbe rear, and tbe merchants should rent out tbe icé bouse, that their renting out the ice' bouse should render half tbe lot purchased no longer partnership property. . Tbe main question, however, must now be considered. Is the widow dowable in real estate belonging to the firm', which' was purchased by the partners for partnership purposes, with partnership funds’? There is no question here between heirs,' personal representatives and widow. The debts of the firm would have swallowed up the partnership 'property here, and still demanded more. I answer that the widow, in this case, is not entitled to dower. The real estate purchased by the partners must be considered, so far as is necessary to pay the debts of the firm, partnership stock, and liable to the rules and regulations incident to personal property. It was held in Thornton v. Dixon, 3 Brown’s Ch. Rep. 199, that real estate, used for purposes of a partnership trade, shall go to the heir, and' not to the executor. This case and some others, more modern, (this casé was decided' in 1791,) (see Bell v. Phyn, 7 Vesey, 453. Balmain v. Shore, 9 Vesey, 500,) militate against the' rule above laid down, that such estate becomes partnership stock. But the authority of these decisions has been much questioned. The general principle now declared in the English law is, that real estate, acquired for the purpose of a trading concern, is to be considered as partnership property, and to be first applied-in satisfaction of the demands of the partnership. In Fereday v. Wightwick, 1 Russell & Mylne, 45, the Master of the Rolls, Sir John Leach,' said: “The general principle is, that all property acquired for the purpose of a trading concern, whether it be of a real or personal nature, is to be considered as partnership property, and is to be first applied accordingly in satisfaction of the demands of the partnership. It is true, á mining concern differs, in some particulars, from a common partnership ; the shares are assignable, and the death or bank — 181 — ruptcy of the bolder of shares does ñot opérate as a dissolution ; but it has been repeatedly held to' be in the nature of a trading cone'ern." In Phillips v. Phillips, 1 Mylne & Keen, 649, it was held that real estate, purchased with partnership capital, for the purposes of the joint trade, is' personal estate, and in respect of the share of a deceased partner, retains that character, as between his real and personal representatives. The Master of the Rolls said in this' caso, “that, with respect to the question, whether freehold and copyhold property, pur-’ chased with the partnership capital, and conveyed to the two partners and their heirs, for the purposes of the partnership trade, is to be considered as personal estate only, for the payment of the partnership debts, or is generally to be considered' to the extent of a moiety, as personal estate of a deceased partner. I confess I have, for some years, notwithstanding older authorities, considered it to be settled that all property, whatever might be its nature, purchased with partnership capital for the purposes of partnership trade, continued to be partnership capital, and to have, to every intent, the quality of personal estate. In the case of Fereday v. Wightwick, 1 Russ. & Myl. 45, I had no intention to confine the principle to the payment of the partnership demands. Lord Eldon has certainly, upon several occasions, expressed such an opinion, and general convenience requires that this principle should be adhered to.” This case was decided in 1832, It was held in Broom v. Broom, 3 Mylne & Keen, 443, decided in 1834, that real estate, purchased with partnership' capital,' and applied to the purposes' of the trade, was, in a court of equity, to be considered as personalty, and that, therefore, the infant heir of a deceased partner, upon whom the estate had descended, was a trustee for the widow and administratrix of the deceased partner. Professor Parsons, in his treatise on contracts, (chap. 12, sec. 2,) says: “All kinds of property may be held in partnership ; but real estate is still subject, to a certain extent, to the rules which govern that kind of property. There is some' conflict and perhaps uncertainty as to the rights and remedies — 182 — o£ partners and creditors in respect to real property which belongs to the partnership, both in England and in this country. But we consider the prevailing and just rule to be, that when real estate is purchased with partnership funds, for partnership purposes, it will be treated as partnership property, and held like personal property, chargeable with the debts of the firm, and with any balance which may be due from one partner to another, upon the winding up of the affairs of the firm. But it seems to be the prevailing rule in this country that, as between the personal representative and the heirs of a deceased partner, his share of the surplus of the real estate of the partnership, after all its debts are paid, and the equitable claims of its members are adjusted, will be considered and treated as real estate.” He continues : “It has been held that the real estate of a partnership does not acquire the incidents or liabilities of personal estate, unless there be an agreement of the partners to that effect, and that then this change in the legal nature of the property results from this agreement; but we doubt the accuracy of this ruling.” Eor this last doctrine, making an agreement necessary to change the nature of the partnership real property to personal, the author cites Coles v. Coles, 15 John. Rep. 159 ; the case from Brown’s Ch. Rep. of Thompson v. Dixon; Bell v. Phyn; Balmain v. Shore, above cited by me in this opinion, and the case of Smith v. Jackson, 2 Edwards Ch. Rep. 28. This last ease is the principal authority on which the plaintiff relies. But, with Professor Parsons, I greatly doubt the accuracy of the ruling in that case. Parsons says, “the widow has her dower in the estate after the debts are paid, but not until then.” See p. 128, Treatise on Contracts. In Hoxie s. Carr, 1 Sumner, 183, Justice Story said : “A question often arises whether real estate, purchased for a partnership, is to be deemed, for all purposes, personal estate, like other effects. That it is so as to the payment of the partnership debts, and the adjustment of partnership rights, and winding up the partnership concerns, is clear, at least in view of a — 183 — court of equity.” Again, in the same case, be said: “ The question here is not whether real estate, when it is partnership property, becomes, to all intents and purposes, in cases of intestacy and wills, personalty ; but whether it is to be so treated in equity, as between the partners themselves and the creditors of the partnership. It seems to be the established doctrine of courts of equity, that it is to be treated as personalty, as between the partners and their creditors, in whose name soever it may stand on the face of the conveyance.” The Court of Appeals of Maryland, in the case of Goodburn and wife v. Stevens et al., 5 Gill’s Rep. 28, says : “ The doctrine that real estate, purchased with partnership funds, for its use and on its account, is to be regarded in a court of equity as the personal estate of the partnership, for all the purposes thereof, stands upon a familiar and just principle. It is the clear case of an implied or constructive trust, resulting from the relation which partners bear to each other, and from the fact that the estate was brought into the firm, or purchased with the funds of the partnership, for the convenience and accommodation of the trade. For this reason, in whose name soever the legal title may reside, the estate is held, in the eye of a court of equity, for the use of the partners as the cestui que trust, and if a partner dies, the legal estate, of which he was Seized as a tenant in common, passes to his heirs or devisees, clothed with a similar trust in favor of surviving partners, until the purposes for which it was acquired have been accomplished.” Chanceller Kent, (3 Com. 37,) says : “If partnership capital be invested in land for the benefit of' the company, though it may be a joint tenancy at law, yet equity will hold it to be a tenancy in common, and as forming a part of the partnership fund ; and the better opinion would seem to be, that equity will consider the person in whom the legal estate is vested, as trustee for the whole concern, and the property will be entitled to be distributed as personal estate. In the case of Sigourney v. Munn, (7 Conn. Rep. 11,) the English and American authorities were fully examined, and the subject discussed, and — 184 — the doctrine declared, that real estate purchased'with partnership funds, for partnership purposes, would be regarded in equity as partnership stock, and liable to all the'incidents of partnership property. It was' also declared that it might, by agreement of the parties, be regarded as personal stuck. Chancellor Kent, in á note on page 88 of the third' volume of his Commentaries'on this'subject, quotes the remark of Chief Justice Shaw, in Burnside v. Merrick, 4 Metcalf, 541, that the prevailing judicial opinion now is, that real estate, purchased by partners, with partnership funds, for partnership purposes, though at law it may be held by them as tenants in common, yet, in equity, it is considered as held in trust as part of the partnership property, applicable, in the first place, exclusively to pay the partnership debts.” After citing Dyer v. Clark, and Howard v. Priester, (5 Met. 562, 582,) and Divine v. Mitchum, (4 Ben. Monroe, 488,) he says : “ The prevalence' and correctness of this doctrine appear to be incontestable.” The Vice Chancellor in New York, in Smith v. Jackson, (2 Edwards' Rep. 28,) already cited in this opinion, after reviewing all the conflicting cases on the point, follows the Supreme Court of New York, and holds that, though real estate be purchased with joint funds, for partnership purposes, there is" no survivorship as to the real estate, and the share of a deceased-partner, as a tenant in common, descends to his heirs, unless there be an agreement among the partners that the lands so purchased shall be considered' as personal property; and that then, upon the foot of that agreement, and not without it, equity would apply the lands to pay partnership debts. Nay, he gives the wife her dower in the partnership share of the husband so descended. “ The decisions maintaining this doctrine appear to me,” says the author, “to be a sacrifice' of a principle of policy, and, above all, of a principle of justice, to a technical rule of doubtful authority. There is no need of any other agreement, than what' the law will necessarily imply' from the fact of ah' investment of partnership' funds by the firm in real estate for partnership purposes. If the partners — 185 — mean to deal honestly, they cannot have any other intention than, the appropriation of the investment, if wanted, to pay the partnership debts.” In Richardson v. Wyatt, (2 Dessaus. 471,) the widow of a deceased partner, in South Carolina, was denied her dower in lands purchased with partnership funds and held in the names of all the partners. In Pierce, v. Trigg, (10 Leigh, 406,) Judge Tucker, in pronouncing the opinion of the court, laid down the doctrine, that lands purchased by partners, with partnership funds, for partnership purposes, and used as a part of the stock in trade, are to be regarded in equity as partnership property, and though, if the conveyance has been made to both partners, there will, upon the death of one, pass to his heirs a legal title, yet the whole beneficial interest devolves upon the survivor, and he may sue the heirs, compela sale, and dispose of the proceeds as he would' of the personal estate of the firm. I know that there have been some decisions to the contrary, which gave the wife dower to land, but from a very general and careful review of the various decisions, from that of Thornton v. Dixon, down to the present time, I come to the conclusion, that the policy of the law and principles of justice are against the right of the wife to dower in such lands, where they are necessary to pay the demands of the firm, and the weight of authority, both English and American, is decidedly against such right. I could have contented myself with reference to the views of this court, lately expressed in the case cf. Carlisle’s Adm’r v. Mulhern & Keyser, (19 Mo. Rep. 56.) The principles of that decision mainly settle this case. The court below having declared the plaintiff, as widow of Andrew Duhring, entitled to dower in one half of the lot, upon certain terms, its decision upon the facts found is erroneous, and its judgment is reversed, with the concurrence of the other judges.