MacFarlane v. MacFarlane — 63 N.Y. St. Rep. 589

Majority

p. 589

William D. MacFarlane, App’lt, v. Robert F. MacFarlane et al., Resp’ts.

i<Supreme Court, General Term, Third Department,

Filed December 4, 1894.)

Headnote

1. Partnership—Firm property.

Devisees of premises and the business conducted thereon, who elect to carry on the business together, using the real estate for such business, become partners, and the real estate is firm property.

2. Partition—Partnership real estate.

In such case, one devisee cannot maintain an action for partition against the other as to such real estate, where there has been no adjustment of the firm accounts.

Appeal from a judgment dismissing the complaint' in an action for partition.

p. 590

Jerome W. Echer, (Henry G. Neviit, of counsel), for app’lt; Montignani, Mallory & Elmendorf {John F. Montignani, of coun sel), for resp’ts.

Robert MacFarlane, the father of the parties to •this action, for many years carried on the business of dyeing at No. 24 Norton street, in the city of Albany. He died on the 20th day of December, 1885, leaving a last will and testament, the second, third and sixth clauses of which read as follows: “2d. I do hereby give and bequeath to my beloved wife, Annie, the sum of seven hundred dollars annually, to be paid in monthly or quar-" terly installments during the term of her natural life. 3d. I give and bequeath to my sons Robert F. and William D. MacFarlane my house and property No. 24 Norton street, Albany, N. Y., with all the implements, mechanism and fixtures, and interest connected with and in the dyeing and scouring business, to be inherited equally, share and share alike.” “ 6th. My wife’s annuity shall be obtained from the rents of my houses and if these are not enough the remainder shall be made up by my sons from the proceeds of the dyeing-and scouring business.”

In July, 1892, the plaintiff commenced an action for a partition of the premises No; 24 Norton street. Issue being joined, the action was referred to a referee to hear and determine. The referee, among other things, found that the plaintiff and the defendant Robert F. MacFarlane were copartners, and as such copartners were the owners of No. 24 Norton. street, and the business, good will, implements, fixtures, and interests connected with and in the dyeing and scouring business formerly belonging to and carried on by Robert MacFarlane, deceased. The referee dismissed the plaintiff’s complaint, and from the judgment entered upon his report the plaintiff appeals to this court.

I think the judgment should be affirmed. The two sons, Robert F. MacFarlane and William D. MacFarlane, upon the death of their father, entered into possession of the premises No. 24 Norton street, and continued the business that had been conducted by him in his lifetime, dividing the profits thereof equally between them, until about July 18, 1890, when an arrangemant was made between them by which the business was to be conducted under the sole management of William D. MacFarlane ; he to receive two-thirds of the profits thereof, and the remaining one-third to be paid to Robert F. MacFarlane. That arrangement continued down to the time of the commencement of this action. There has never been any accounting or settlement of the business between them. The taxes, assessments, insurance and other charges upon the real estate, No. 24 Norton street, were paid out of the proceeds of the business, and charged to the expense account of said business. A portion of the annuity of the widow of Robert MacFarlane, deceased, was annually paid out of such business. ■ The plaintiff, in his testimony, speaks of the business there carried on as copartnership business. Although it does not appear from the case that there was any specific agreement, either oral or written, entered into between them, it seems to me that from the manner

p. 591

that they received the real estate in question, with the apparatus, machinery and appliances thereon, the evident intention of the testator, as evidenced by the sixth clause of his will, that they should continue the business as theretofore carried on by him, and the fact that they thereafter carried on said business together, dividing the profits thereof equally between them, constitutes, in fact and in law, a copartnership, as completely as if written articles of copartnership between them had been signed. The mere fact of the bequest to them, by will, of the real estate in question, and of the business, did not constitute them partners, but merely made them joint owners; but their election - to continue business, each contributing thereto his share of the property so bequeathed to him, rendered the relation between them that of copartners, and the property copartnership property. Real estate used in the business of a copartnership, although the right and title is in the name of the individual members of the copartnership, may be just as much copartnership property as personal property,and for all copartnership purposes, the payment of debts, and the adjustment of accounts between the copartners themselves, is treated as personal property. When purchased by partnership funds to be used in the partnership business, and actually appropriated to and used in the partnership business, it becomes copartnership property, although the real estate be in the names of the individual members of such copartnership, or of one of them. 17 Am. & Eng. Enc. Law, 944 et seq.; Hiscock v. Phelps, 49 N. Y. 97 ; Fairchild v. Fairchild, 64 id. 471; Greenwood v. Marvin, 111 id. 423; 19 St. Rep. 612 . Copartners can contribute an interest in real estate to the capital stock of a copartnership, as well as money or other personal property ; and, being so contributed, it becomes a part of the copartnership assets. At the moment of their father’s death, William and Robert MacFarlane became joint Owners of the real estate in question ; and by electing to carry on the business together, using such real estate for the business, it was a contribution by each of his interest in such real estate to the copartnership, and rendered it copartnership property.

Again, the bequest to them was of the real estate, implements, mechanism and fixtures, together with the business as a whole. They were bound together, and the plaintiff elected to so treat them for a number of years, treating the real estate as much a part of the copartnership property as any other of the property or business bequeathed to him. The evident intention of the testator, coupled with the acquiescence therein of the legatees, and their conduct in relation to such real estate for a series of years, renders such real estate copartnership property. Jackson v. Jackson, 9 Ves. 591; Waterer v. Waterer, L. R. 15 Eq. 402. As co-partnership property, it is personalty; and not until the copart: nership creditors are paid, and the interests of the copartners adjusted, does it resume its character of real estate. Fairchild v. Fairchild, supra; Greenwood v. Marvin, supra. Being a part of the partnership property and assets, it cannot,, in the absence of any accounting between the copartners or adjustment of the co-partnership accounts, be separated from the rest of the copartner

p. 592

ship property, and made the subject of a separate action to divide the same or the proceeds thereof between the parties.

The judgment should be affirmed, with costs.

All concur.

Cases cited

Hiscock v. Phelps 49 N. Y. 97 N.Y. 1872-04-02 p. 591