Appeal of the Second National Bank ( 1877 )

Mr. Justice Gordon

delivered the opinion of the court, January 2d 1877.

This appeal is from the decree of the Court of Common Pleas of Crawford county, confirming the auditor’s report making distribution of «the proceeds of the-sheriff’s sale of real estate of E. T. Hall and H. C. Bosley.

The defendants, previously, and up to to the time of the sheriff’s sale, had been, and Avere, doing business under the name of Hall & Bosley. The appellant owned several judgments against these parties jointly, and one against E. T. Hall alone. This latter judgment Avas entered to April Term 1873, on a note to H. M. Hall, dated August 30th 1872, and was assigned to the bank July 18th 1873. The auditor finds, that the partnership was formed July 1st 1870, that the real estate, from which the money now for distribution was made, was purchased, and that the buildings thereon erected were paid for with partnership funds, and that said property Avas used for partnership purposes. He finds, however, that the deeds by Avhich they held the premises were executed to Henry C. Bosley and EdAvard T. Hall as tenants in common, without any reference to the partnership, and that they were recorded prior to the 28th of August 1872; that, at the time when Hall & Bosley determined to build on the lots thus deeded, the appellant loaned them money on their notes, endorsed by H. M. Hall; that said endorser and G. C. Hyde, the cashier of the bank, knew for what purpose this money was to be used, and that the lots were used as partnership property.

The auditor, thus -finding that the bank had notice that the premises were held and used as the property of the firm of Hall & Bosley, refused to allow the individual judgment against .E. T. Hall to participate in the fund, but gave preference to a subsequent one of The American Buttonhole, Overseaming & Sewing Machine Co. against Hall & Bosley. This was erroneous. As to creditors the deeds fixed the status of the property, and that status could not be altered by parol. As was said by Mr. Justice Agnew, in Ebbert’s Appeal, 20 P. F. Smith 79, “Partners, being the owners of the money which pays for the title, have the power of directing its application to suit their own purposes, and can, if they choose, always secure the identity of its character in the kind of title they ‘take for it. If, therefore, they take title to themselves, as tenants in common, instead of as partners, they, by their own election, stamp the character of the title as to those1 who afterwards deal with them.”

We cannot see, therefore, how the bank could be affected by knowledge that this property was purchased with partnership funds or used for partnership purposes; for, as we learn from the case cited, whether it shall bear the character of partnership or individual property, depended not on the funds or purposes with or for which it was purchased, but upon the will of the partners themselves. When, therefore, they took the conveyances to themselves as tenants in common, they did that which it was lawful for them to do, and so it mattered not whether their creditors knew or did not know that the property was purchased with partnership funds, for, as to them, the deeds, which were of record, determined its character unalterably.

Decree reversed and a re-distribution ordered. It is further ordered that the appellee pay all costs.