Sherrod v. . Mayo

It is the doctrine of the English courts that, as (148) between partners and their heirs and representatives for the purposes of the copartnership, real estate will be treated as personalty if the partners have by the articles of copartnership so treated it and impressed upon it the character of personalty.

There is no doubt that in this country copartners may be articles of copartnership provide that the firm's real estate may be treated as personalty and sold by the surviving partner for the settlement of the copartnership.

In the absence of any such stipulation it was a vexed question for a long time whether, after the dissolution of the firm by the death of one of the members, the debts being paid, the share of the deceased partner should be treated as personalty and pass to the surviving partner for the settlement of the copartnership, or descend to his heirs at law as real estate.

Judge Story refers to the great diversity of judicial opinion upon this subject. The question was considered by this Court in Summey v. Patton,60 N.C. 601, and it was then decided that "Where land is purchased by partnership, with partnership funds, and used for partnership purposes, upon dissolution of the firm by the death of one of the partners, his share of the land descends to his heir at law as real estate, and does not pass to his representative as personalty, in the absence of any agreement in the articles of copartnership."

This case was approved and followed in Stroud v. Stroud, 61 N.C. 525, where it is held that real estate belonging to a copartnership is subject to dower of the widow of a deceased partner, subject, of course, to the payment of the partnership debts, in the absence of any provision to the contrary in the articles of copartnership. Patton v. Patton, 60 N.C. 572. These cases are all cited and approved in Mendenhall v. Benbow, 84 N.C. 650.

These decisions have settled the question in this State, and they are in accord with the great weight of authority in this country.

In Shearer v. Shearer, 98 Mass. 107, the subject is elaborately discussed and what is regarded as the American rule is embodied in the opinion, the substance of which is that the change of character of real to personal estate is worked, if at all, only for the purpose of (149) adjusting and settling the affairs of the partnership, and when the debts are paid the interest of the deceased partner will descend to his heirs.

The following authorities support the decisions of this Court: George on Partnership, pp. 126-127; Story on Partnership, sec. 92, p. 146; Way v.Stebbins, 47 Mich. 297, in which it is said: "Partnership lands are to be equally divided among survivors and the heirs of a deceased partner when there are no partnership debts to be satisfied." Foster's Appeal, 74 Pa. St., 392; Yeatman v. Woods, 27 Am. Dec., 452, and note, 454; notes to 86 Am. Dec., p. 454.

So it has been held that upon the dissolution of a firm real estate may be divided by compulsory partition, when it is shown that it is not required to satisfy the liability of the partnership. Pepper v. Pepper, 24 Ill. App.?,? 316; Strong v. Lord, 107 Ill. 25;Long v. Waring, 25 Ala. 525; 60 Am. Dec., 533; Shearer v. Shearer,98 Mass. 107; Scruggs v. Blair, 48 Miss. 406; note to 27 L.R.A., 353.

The fact that the son and heir of the deceased partner claims his father's interest in a portion of the lands by deed instead of inheritance makes no difference. He is entitled to the deceased partner's share of the land after the debts are paid, whether he takes by purchase or by descent.Wells v. Mitchell, 23 N.C. 489.

The judgment is

Affirmed.

No. 143 — DEFENDANT'S APPEAL, SAME CASE.

THE defendants excepted to so much of the judgment of the Superior Court as required the surrender by them to plaintiff, as surviving partner, of the personal property in their possession belonging to the copartnership.

It is well settled that the surviving copartner has the closing up of the partnership affairs, the reduction of its personal property to cash and the settlement of the partnership affairs. George on Partnership, p. 135.

The reasons which in this country are regarded as sufficient to (150) forbid the sale of real estate, except when necessary to pay the debts of the copartnership, or for its proper settlement, do not apply to personalty. The title to that vests at once in the survivor and not in the personal representative of the deceased partner, and he is entitled to its possession. Revisal, sec. 1579; Walker v. Miller,139 N.C. 448; Weisel v. Cobb, 114 N.C. 22; Hodgin v. Bank, 128 N.C. 110.

Purchasers of the share of an individual partner can only take his interest. That interest and not a share of the partnership personal effects is sold, and it consists of the vendor's share of the surplus which remains after payment of the partnership debts and the settlement of accounts between the partners; and if, upon the winding up of the firm, the transferring partner's interest has no pecuniary value, the transferee takes nothing by his transfer. Cyc., vol. 30, p. 458; Daniel v. Crowell,125 N.C. 519; Ross v. Henderson, 77 N.C. 170. The judgment is

Affirmed.