Abbott's Appeal , 1865 Pa. LEXIS 155 ( 1865 )

The opinion of the court was delivered, by

Read, J.

“Land,” says Chief Justice Tilghman, in McDermot v. Lawrence, 7 S. & R. 441, “except for the purpose of erecting necessary buildings, is not naturally an object of trade or commerce. Yet there is no doubt that, by the agreement of the partners, it may be brought into the stock, and considered as personal property, so far as concerns themselves and their heirs and personal representatives. It was so decreed by Lord Eldon, in Ripley v. Waterworth, 7 Ves. Jr. 424. But if a conveyance of land is taken to partners as tenants in common, without mention of any agreement to consider it as stock, and afterwards a stranger purchases from one of the partners, it would be unjust if without notice, he should be affected by any private agreement.”

It was considered material in this case that the conveyance to the partners was as tenants in common, and that no purchase-money could have been paid out of the partnership funds. So, in Kramer v. Arthurs, 7 Barr 165, Chief Justice Gibson held that a joint stock company to deal in land is essentially a partnership, and land purchased by it as an article of trade is not subject to judgment and execution at the suit of a separate creditor. So in Overholt’s Appeal, 2 Jones 222, Judge Rogers held that where land has been purchased for partnership purposes and was so held, judgments for partnership debts are payable out of the proceeds in preference to judgments against partners individually.

In Erwin’s Appeal, 3 Wright 535, Judge Strong says, “ It (the lot) was purchased and paid for with the money of the firm, and it was used by the firm until the time of the sheriff’s sale,” and the court in that case decided the proceeds of the sale of it should be applied to the payment of judgments against the firm for partnership debts in preference to judgments against the partners individually. It is true he says, p. 537, “ Had the title been taken to both Imhoff 'and Myers, without any assertion on its face that it was treated by them as partnership property, under the ruling in Hale v. Henrie, 2 Watts 143, and several subsequent cases, they would have been but tenants in common. The absence of such an assertion would have been evidential that the partners did not intend to bring the property into partnership stock, but that they intended to take separate interests. But the legal title was conveyed to Jacob Myers alone. We are now looking for the use.” But the cases of Hale v. Henrie, Ridgway, Budd & Co.’s Appeal, 3 Harris 181, and the language of Coulter, J., in Lancaster Bank v. Myley, 1 Hands 549, all relate to purchasers and creditors, and not to the partners themselves, considered simply as members of the firm. Our recording act affects purchasers and creditors, but does not, independent of them, disturb the actual relations of the partners to each other in respect to partnership property, whether real or personal.

In The North Pennsylvania Coal Company’s Appeal, 9 Wright 181, we held that a purchase by one partner in his own name, and secured by his own bond and mortgage, did not bind the firm, or make it a firm-debt, although it appeared by the firm books to have been bought on firm account. A declaration of trust was afterwards executed by the purchaser, but not recorded, declaring that the money paid was partnership funds, and that the land was held by him in trust as partnership property, which land was afterwards sold, and the partnership creditors were held alone entitled to share in the proceeds.

In the present case, the deed was made to the four partners in their individual names, and the bond and mortgage were executed in the same way. The contract for the purchase was made by Mr. Griffin, at that time the manager of Reeves, Abbott & Co., who, as partners, were engaged in the manufacture of iron at Safe Harbour, in Lancaster county, and the purchase-money paid previously to the sale by the sheriff was paid out of the funds of the firm and by its agents. The receipts on the bond corroborate this statement of the auditor, who finds the object of Messrs. Reeves & Abbott, in making this purchase, to have been to obtain for the use of their furnace iron-ore, which it was supposed would be found in this property ; iron-ore was found there, and was raised for the use of the furnace.

The business of the firm, dissolved by the death of George Abbott, has never been finally settled, and it is alleged by the appellees that the firm is still largely indebted.

Under these circumstances, we think, therefore, with the auditor and the court below, that this land was partnership property, and that the proceeds of it, or rather the balance remaining in court, should be paid to the remaining partners of Reeves, Abbott & Co. The law has been well and correctly stated by the auditor.

Decree affirmed.

Strong, J., dissented.