Shafer's Appeal ( 1884 )

Mr. Justice Clark

delivered the opinion of the court,

From the year 1864 to 1867, Thomas Beck, Joseph Shaffer, Nathan Hall and Stephen Shaffer were associated as partners, doing business under the name and style of Beck, Shaffer, Hall & Co., and were engaged in the construction of several sections of the lower division of the railroad of the Lehigh Coal and Navigation Company. On the 9th February, 1866, Joseph Shaffer, who had title to a certain slate quarry, by deed conveyed four undivided fifth parts thereof to his said co-partners, as tenants in common. The quarry was subsequently sold, the proceeds passing into the hands of Joseph Shaffer or his representatives. The claim of Thomas Beck, in this distribution, is for his share of the proceeds of that sale, also for the share of Nathan Hall, assigned to him. To the allowance of this claim it is objected, that the quarry was partnership property, that “it was purchased so that each was to have a share and to be owned by the same firm,” and that if the parties so agreed, and the property was in fact brought into the partnership stpck, it would be subject to the general account between the partners, as other firm assets; further, that the Orphans’ Court having no jurisdiction to state the partnership accounts, the claim of Thomas Beck cannot be allowed.

The title was not obtained with the firm’s money, nor is it in the firm’s name ; it was to the parties, individually; it contained, upon its face, no assertion that the lands or quarry was to be treated as partnership property. If the question were one affecting purchasers or lien creditors, this fact would be conclusive: Ridgway, Budd & Co.’s Appeal, 3 Harris, 177; Lancaster Bk. v. Myley, 1 Harris, 544; Lefevre’s Appeal, 19P. F. S., 122; Ebbert’s Appeal, 20 P. F. S., 79; Holt’s Appeal, 2 Out., 257; Nat. Bk’s. Appeal, 2 Norris, 204; Geddes’ Appeal, 3 Norris, 482. But as the case involves simply the relations of the partners to each other, in respect to the partnership property, it is evidential only as to their intent: Abbott’s Appeal, 14 Wr., 238; Erwin’s Appeal, 3 Wr., 535. As between partners themselves, real estate may in some cases be shown to be firm property, notwithstanding the title may be-to one of them only, or to all in form as tenants in common.

As the slate quarry was not paid for with the firm’s money, and the deed is not in the firm name, whether it shall be considered partnership property depends largely upon the intention of the partners; that intention may be shown by parol; it may be manifested in the acts and declarations of the parties. It is true, that from the date of the purchase, the quarry was actually operated by the firm, but it was operated by the firm under a different name, that of Beck, Shaffer, Hall, Harper & Co; the transactions of each operation although entered in the same books, were kept entirely distinct and separate from those of the other. It by no means follows, however, that real estate, used for partnership purposes, is partnership property. A contrary presumption prevails, when the title is not in the firm, and to rebut that presumption, it must appear either, that it was paid for with the firm money, or was by agreement actually brought into the common stock.

It is the testimony of one witness, that, at the time of the purchase, it was agreed, that the quarry should be partnership property; this may, perhaps, have been the intention of the parties at the time, but, in view of the admitted facts — that the title was taken in the individual names of the partners, for interests which do not correspond with their respective partnership shares; that these interests were never equalized, or made to conform with their rights under the partnership ; that no conveyance was ever made to the firm; that the firm operations in the quarry were conducted under a different name, and were kept distinct from its other business, it is difficult to conclude that this design of the parties was ever consummated.

But, even if it be true, as alleged, that this slate quarry was by agreement brought into the common stock of the partnership, it was equally within the power of the partners to withdraw it, and to re-convert it into the separate property of the individual partners. Such a re-conversion would not only be binding, as between the partners themselves, but in the absence of fraud, upon their joint and respective several creditors.

The work of the quarry was abandoned on the 17th March, 1869, when the individual partners by a deed, in which they all joined, conveyed the lands and quarry to Anton Frick, accepting for the purchase money a judgment note, in their individual names, for $8,000. This note, the payees by an assignment, in which they likewise all joined, transferred to William J. Benkert; the share of Nathan Hall in this purchase money having been set over to Thomas Beck, Benkert gave to Thomas Beck, Joseph Shaffer and Stephen Shaffer his own notes for $5,000, covering the consideration of the assignment. The Benkert notes were afterwards paid; $2,000 thereof to Joseph Shaffer, in his lifetime, and $3,000 to his administrators, after his death. Joseph Shaffer died in the year 1877, and Stephen Shaffer afterwards transferred his interest in the Benkert notes to the administrators of his estate. Under these respective transfers, Beck is entitled to A, and Joseph Shaffer’s estate to the remaining of the Benkert’notes. None of the securities, representing the purchase money, in each of these several transactions, was taken in the name of the firm, in none of them, nor in the conveyance, is the property referred to as partnership property. Nathan Hall assigned his interest in this specific fund to Thomas Beck, and Stephen Shaffer assigned his to Joseph Shaffer’s estate — all of the parties, therefore, have recognized the individuality of the fund; the transfer of a single asset is altogether inconsistent with its forming part of a common or partnership stock. Assuming therefore that during the continuance of the operations of the firm, the quarry may have been regarded as partnership property, can it be doubtéd that as soon as it was sold and ceased to be used for partnership purposes, the proceeds were withdrawn from that common stock? No express agreement to that effect has been shown, but from the acts of the partners, such an intention is fairly inferred; their conduct subsequent to the sale is inconsistent with any other supposition than that the purchase money was the individual estate of the partners. It is admitted, that -the Benkert notes were received partly by Joseph Shaffer, in his lifetime, and partly by his administrators since his death, that the fund is in the accountant’s hands and is embraced in the balance for distribution.

We are well satisfied that the claim of Thomas Beck is not involved in the general account of the firm of Beck, Shaffer, Hall & Co., and that the Orphans’ Court has full jurisdiction to ascertain its amount, and direct its payment out of the fund for distribution.

We are of opinion also that the court was right in refusing to allow additional compensation to the accountants.

The decree is affirmed and appeal dismissed at the cost of the appellant.