Majority
p. 613WILLIAM GREGORY, Plaintiff and Respondent, v. SARAH GREGORY, Executrix, and CYRENUS BLOODGOOD, Executor, &c., of JOHN GREGORY, deceased, Defendants and Appellants. Before Barbour, C.J., Jones and Fithian, JJ. [Decided October 30, 1869.]
Headnote
A receiver will not be appointed over specific property alleged to belong to a partnership without proof satisfactory to the court that such specific property is in fact property of the partnership.There are two orders appealed from: one dated November 2, 1868, and entered December 26, 1868 : one dated January 15,1869.
As to first order:
This appoints a receiver over the specific real estate described in the complaint, and therein averred to belong to a partnership therein alleged to have existed between William and John Gregory, as well as generally of debts due that copartnership.
The appeal papers show, among other things, that by an order dated November 2,1868, and entered the same day, a receiver was appointed of the property, assets, effects, and credits of said firm mentioned in the complaint; that on the 25th of November, 1868, an order was made, on the application of the receiver named in the order entered November 2, 1868, requiring the plaintiff and defendants to this action to show cause, at the chambers of this court, why the said order, entered November 2,1868, should not be amplified as to the description and location of the property in this action, the same as mentioned in the complaint; that the proceedings initiated by this order to show cause terminated in the order first appealed from; that the' complaint specified a number of parcels of real estate which it alleged were purchased by the copartnership alleged in the complaint to have
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existed, out of the avails and profits thereof, and now constitute a part of the partnership property; that the answer of the above-named defendant and of Sarah Gregory individually, she' then being a defendant in her individual as well as in her relative capacity, denied the existence of such alleg’ed copartnership, and also denied that the said real estate was purchased with the avails and profits of the alleged partnership or any partnership, and that the same now are or ever were a part of the property of said alleged partnership or of any partnership, and alleged that the whole purchase-money was furnished by their testator; out of his individual estate and property. The appeal papers further show that the issues formed by the complaint and this answer, and also formed by the complaint and the general answer of the infant children of John Gregory, who were then parties defendant) were tried at a Special Term before a single judge (Justice Hoffman), who decided and decreed that the plaintiff, William Gregory, was a partner with the deceased John Gregory, in the business mentioned in the complaint, from the 19th of November, 1842, until the 31st of December, 1848, when the partnership was dissolved ; that from the 15th of February, 1850, to the 2d of April, 1858, the plaintiff was in the employ of the said John as clerk, and entitled to a compensation for his services as such; that there was due said plaintiff on said partnership account §14,756.25, and for his services as clerk §5,541.10; that plaintiff recover from the executrix and executor of the will of John Gregory the sum of §20,277.35 out of the property of said John in their hands, or which might come to their hands, with costs; that as to the other defendants, and the said Sarah Gregory, in her individual capacity, the complaint be dismissed, with costs. The appeal papers also show that judgment was entered in accordance with this decision, and from this judgment the executrix and executor appealed.
But the present appeal papers do not show what was the result of this appeal, nor whether the plaintiff appealed from any part of the judgment, nor whether the defendants (other than the executrix and executor) appealed. The counsel, however, con
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ceded, on the argument, that neither the plaintiff nor any of the' defendants (other than the executrix and executor) appealed from the judgment- or any part thereof, and that on the appeal taken by the executor and executrix the General Term reversed the judgment below.
"'he present appeal papers, however, do show (in addition to the matters above referred to) that, after this j ndgment by the Special Term and the appeal taken therefrom by the- executor and executrix, the plaintiff moved to have issues settled and tried by a jury; that issues were settled and were tried by a jury, who found, in response to the questions submitted to them, that William and John Gregory were copartners in the business of tin and copper smiths, and dealing in stoves, and tin and sheet-iron ware, and iron and tin kitchen and household utensils and furniture ; that such partnership commenced in April, 1837, and continued until the death of John; that they were unable, from the evidence, to decide what each of the partners contributed to the capital and stock-in-trade of the firm; but that each partner contributed his time, skill, and industry to the business, and all the proceeds and property of the business resulted from such joint contribution of their skill and industry, and that each of such partners is entitled to one half of all the proceeds, profits, and assets of said partnership, whether invested or existing in real or personal estate.
The papers also contain an extract from the opinion of Justice Hoffman, delivered on the decision of the cause by him, as follows :
“ I have concluded that the amount which shall thus be ascertained to be due to William shall be deemed. a debt, as so much money left in the hands of John, up'on which interest shall be charged. It may be true that William may be looked on as occupying the position of a retiring partner, and the general rule is that such partner has an election between interest and profits (Collyer, 324, and note). But it is conceded that the profits are now exhibited in the real estate purchased, and I doubt whether, after a dissolution, when the title is taken by the
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continuing party in Ms own name, there is any right to any lien upon such real estate. It may be said it is the partner’s money which in part makes up the consideration-money. The statute (1 R. S., 728) may be an answel to this view. Neither do I think that John would stand in such a situation, as trustee, as to make any of the cases, giving the cestui q%ie trust a right to trace Ms funds into a purchase and make it available, applicable.”
As to the second order appealed from :
This arose thus : Defendants’ attorney, claiming that the order entered December 26,1868, first appealed from, was obtained by taking his default, and that the recital therein that it was made after hearing Mr. Lockwood, of counsel for defendants, was erroneous, obtained an order requiring plaintiff and the receiver to show cause why the order entered December 26 should not be set aside, resettled, reformed, or amended to correspond with the facts in its recital, or be vacated ;■ and why the defendants’ default upon the motion, whereon said order, entered December 26, was made, should not be opened, and they be allowed to come in and read and file their affidavits and exhibits (copies of which were annexed) in opposition, and be heard on the merits. This order to show cause was founded on the pleadings in the action, the decision of Justice Hoffman at Special Term, the decree of Justice Hoffman made in that decision, the judgment entered on that decree, the issues as settled for trial by the jui‘y} and the finding of the jury thereon; the first order for a receiver, the order amplifying the order for a receiver (being the order first appealed from), and an extract from the opniion rendered by Justice Hoffman on the decision made by him; all of which papers were before the court when the above-mentioned order, amplifying the' order for a receiver, was made, and have been sufficiently referred to in the abstract of the facts out of' which the first appeal arose. It was also founded on these additional papers, viz.: Issues as proposed for settlement, two affidavits of the managing clerk of the defendants’ attorney, one of the defendants’ attorneys, and one by Sarah Gregory, one of the defendants. The only material matters in these affidavits are as
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follows : In the first affidavit of the managing clerk, he swears that Mr. Stoughton was retained by defendants as their counsel before the motion to amplify the order for a receiver; that two affidavits, and the exhibits thereto annexed, were prepared by defendants’ attorneys in opposition to the motion to amplify; that these affidavits and exhibits, and the papers served for the motion, were handed to Mr. Stoughton about December 1, and he was then instructed and employed to argue and defend the motion; that the hearing of the motion was adjourned from time to time until December 18; that Mr. Stoughton was unable,, by reason of sickness, to attend on that day, and he (the deponent) was unable to procure the opposing papers, but attended court and requested an adjournment, which was opposed by the counsel for the receiver, who insisted upon submitting the motion at once, which course the court directed, informing the deponent that the motion would he held open a few days to enable Mr. Stoughton to hand in his papers; that Mr. Stoughton continued ill and confined to his house until December 25, when he was called away to attend thé fatal illness of Ms nephew, who died on the 26th; that on the 26th the court, without having heard argument, and without defendants’ affidavits or other papers in opposition, granted the motion and made the order first appealed from ; that the effect of the order is to give the receiver possession and control of all the real estate whereof John Gregory died seized, amounting in value to $100,000; that it has never been pretended that the estate of John Gregory is insolvent, or otherwise than perfectly able at all times to pay any judgment that may be obtained in this action, or that there was or is any waste or danger of plaintiff losing his claim by reason of said real estate being held and controlled by defendants.
In his second affidavit the managing clerk swears that neither Mr. Lockwood nor any other counsel was heard on behalf of the defendants on the motion to amplify the order for a receiver.
The exhibits referred to by the managing clerk, in the first affidavit, as having been intended for use in opposition to the motion to amplify, were all before the court on that motion, and
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have been above referred to and their contents sufficiently abstracted, except the proposed issues. The only difference between the proposed issues and the issues as settled is, that the proposed issues contained'the following question, which was not contained in the issues as settled: “ Did any (and if any, what) real estate at any time, and what time, and for what period of time, constitute any part of the capital or investment of the said copartnership ?”
The two affidavits referred to in the first affidavit of the managing clerk, as having been prepared to oppose the motion to amplify, are those of Sarah Gregory and of one of defendants’ attorneys. These affidavits set forth, in addition to the matters set forth in the other papers, as follows:
The additional matters set forth by the affidavit of Sarah Gregory are, that all the debts due in the business conducted in the names of John Gregory, William Gregory, and J. & W. Gregory, to persons other than the plaintiff, have long since been fully paid, and all claims and demands due said business, which were collectable, have long since been collected that there are no subsisting assets, chattels, credits, or effects of said business; that all the stock, furniture, and chattels of said business have been sold and converted into money; and all the choses in action, claims, and demand of any value have been collected, and all the moneys thus realized have been used and applied in the payment of debts due in said business, and by said John Gregory, and in current expenses.
Those set forth in the affidavit of the defendants’ attorney are, that the executor and executrix alone appealed from the judgment rendered on the decision of Justice Hoffman; that they appealed only from so much of the judgment as was rendered against them; that neither any of the other of the then defendants nor the plaintiff appealed from any part of that judgment; that since the entry of the judgment on the decision of Justice Hoffman the action has proceeded against the executor and executrix alone; that there is no evidence in the case that any particular piece of real estate mentioned in the complaint was pur
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chased or paid for in whole or in part with money or property belonging to or arising out of the property, assets, or effects of the business which is mentioned in the complaint, and which is the subject-matter of the action; and that the aforesaid question, contained in the proposed issues for trial by jury, was not contained in the issues as settled, because it was stricken out by the court, on the objection made by defendants’ attorney; that the ground of objection made and stated to the court was “that the widow, in her individual capacity, and the heirs-at-law of John Gregory, deceased, who were also his devisees, were seized of the fee of all the real estate of which John Gregory died seized; that they were no longer parties to this action; that by the judgment of this court, which then stood, and still stands, it was adjudicated and adjudged that this action be discontinued as to said widow individually, and as to said heirs-at-law and devisees, and that they recover their costs against the plaintiff, upon the very ground that the plaintiff did not have, and could not have, any lien upon or interest in any of the real estate of which John Gregory died seized; and that no question as to the title to said real estate could be litigated so as to affect the rights of said widow and children therein, in a suit in which they were not parties; ” that the court sustained the objection thus made to the form and substance of the proposed issue, and disallowed it.
The affidavit of Mrs. Gregory contains several allegations other than those referred to, tending to show the absence of any necessity for the appointment of a receiver, and the hardship that would arise to her and her children from such appointment; but it is unnecessary to refer to them, as the receiver was appointed by the order of November 2, which has not been appealed from or sought to be disturbed in any way.
The defendants’ motion, founded on the above-mentioned order to show cause, having come on to be heard, it was opposed on the affidavit of the attorney for the receiver, who swears that, after several adjournments, the motion for the amplified order was finally set down peremptorily for December 18,1868; tliat on that day the managing clerk of defendants’ attorney
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appeared and handed up his papers, and the motion was finally submitted on both sides, the judge stating that he would hold the matter open for two or three days, in case the said clerk wished to hand in any further authorities; or in case Mr. Stoughton wished to be heard, he would hear him at his house any evening within that period.
Upon these papers, the motion to open default and be allowed to read the additional papers above set forth, &c., was heard before the judge who heard and decided the motion to amplify, and he denied it, and the order of denial, dated January 15, 1869, is the one that is secondly appealed from.
Mr. E. W. Stoughton for appellants.
This court, hy its judgment and decree entered on the 18th day of September, 1861, adjudged in this action, so that it has become, and mast remain, res adjudicata, that the plaintiff has no legal or equitable right, title, or interest in, or Hen upon the real estate mentioned in the complaint, the title to which was talcen in the name of John Gregory, and of which he died seized. Hence the order appointing a receiver in respect to such real estate was, and is, entirely unauthorized and void.
If John Gregory was alive and the defendant in this action," dr if the widow and heirs-at-law and devisees of John Gregory were parties to it, and the judgment of September 18,1861, had not been entered, and the court had authority to appoint a receiver in respect to said real estate, such authority could only extend to the appointment of a receiver of half the rents and profits of the real'estate. As to one half, there-is no pretence that it did not belong wholly to John Gregory in his lifetime, or that it does not now belong wholly to the heirs-at-law and devisees of John Gregory. It was only as to the other half that the plaintiff ever made any legal or equitable claim.
Substantially, this is an effort to determine the title to land on a motion to appoint a receiver. The order appealed from violates every principle of law and equity, for the reason, among
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others, that it strips the heirs-at-law and devisees of John Gregory of all their income and all control over this real estate, the legal title to which is in them, without any charge of fraud or Waste, when not the least necessity is shown, and when plaintiff’s claim to-airy ¡legal or equitable interest in the land is not only denied, and has not been established, but right in the face of the judgment of the court that he has no such interest.
The real estate is not in any way the subject-matter of this action. If it should be said that the jury have found that the plaintiff had some interest in this real estate, or that the same was in any sense partnership property, the answers to such an assertion are brief but conclusive; to- wit:
They did not so find. They found that plaintiff was entitled to half the proceeds, profits, and assets of the partnership, ■“ whether invested or existing in real or personal estate.” The last nine words are mere surplusage. They are the equivalent of the words “ however -invested.” The jury did not find, as a fact, that there was any investment in real estate. The unmeaning words above quoted contain the only allusion to real estate in the verdict.
But if they had so found, such finding would have no effect, because no such issue was framed, or tried by, or submitted to, or passed upon by the jury.
Ho such issue could have been, with any sort of propriety, tried, or passed upon by, or submitted to the jury unless all the heirs and devisees of John Gregory were before the court.
The issues tried by the jury were simply: Did a partnership exist? When did it begin and end? What capital did each partner contribute, and to what share of the profits was each partner entitled ? There was no issue which authorized the jury to inquire into or find'the amount or nature of the copartnership assets or investments.
If the" real estate in question had been purchased by John Gregory and the plaintiff as partners, with partnership moneys <md for partnership purposes, and the title had been taken in the name of both of" them, they would have been seized of it as
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tenants in common, and not, as partnership property is held, as joint tenants. There would have been no survivorship which would have entitled either, on the death of the other, to hold and control the land as against the heirs or devisees of the deceased partner, but the latter would take by descent or devise the legal estate of their ancestor or devisor, of which they would be seized as tenants in common with the survivor (Coles v. Coles, 15 Johns. R., 161; Smith v. Jackson, 2 Edw. Ch., 28 ).
A receiver is never appointed in favor of a pan'ty having only an equitable lien, unless the property is being wasted or destroyed, or in some way mismanaged, to such an exteut that its value as a security will be lost unless the court interpose. There has never been any pretence in this case, and there is not the least foundation whatever for any pretence, that there has been any waste, destruction, mismanagement, or danger of loss. On the contrary, the real estate is well managed, and is constantly growing in value. The appointment of a receiver in such a case is an unprecedented proceeding.
Assuming the allegations in the- complaint to be true, the surplus profits of the business were invested in the real estate in question. But it has never been held in this country or in England that real estate purchased by partners with partnership funds, as an investment of realized profits, is impressed with any attribute of partnership property, or that land so acquired is subject to any legal or equitable lien or claim in favor of creditors' of the firm, or in favor of eitherpa/rtner, or that any trust in the grantee can be thus created.
The statute in respect to uses and trusts (sec. 51, art. 2, tit. 2, chap. 1, part 2, R. S., vol. 1, page 728) proves an insurmountable obstacle to any legal or equitable claim of the plaintiff to any interest in the real estate in question. While it may be true that since that statute there might be a resulting trust, or an equitable lien in favor of creditors, in respect to lands purchased by partners with partnership funds and for partnership purposes (not as an investment of realized profits), where the conveyance is made to one of the partners, with the knowledge and consent of the
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other partner, there cannot be any such resulting trust or equitable lien in favor of the latter (Garfield v. Hatmaker, 15 N. Y., 475 ; Davis v. Graves, 29 Barb., 480 ; Wright v. Douglass, 10 Barb., 97 ; Lounsbury v. Purdy, 18 N. Y., 515 ).
Mr. John E. Parsons for respondent.
The motion to set aside the order of December 26,1868, specifying the rents and profits of the real estate, as embraced in the receivership, was wholly irregular. That order was made on a submission of the motion by counsel on both sides, after numerous postponements, at the request of defendants, and after defendants had obtained leave to submit further papers within a few days. They allege the absence of counsel as the reason for not doing so; but as they did not'inform the court of that reason, they are in no condition to complain that, after waiting a week, he should decide the motion.
The defendants have disproved the pretence that that order was by default by appealing from it.
The court has undoubted power to appoint a receiver in a partnership case. It is in just such cases that the power is most frequently exercised. The propriety of its exercise in this case is not questioned. From the order appointing a receiver the defendants did not appeal. The practical reason may have been their supposition that they had got rid of every thing of which the receiver could take possession; but that very circumstance makes conclusive the necessity of the appointment.
On Judge Hoffman’s decision, that the partnership only extended from November 19,1842, to December 31,1848, there was found to be due the plaintiff $20,297.35.
This was on the basis that he had no interest in the advance on the real estate investments. The jury have found that the partnership extended from April, 1837, to April 2,1858. On any theory plaintiff must recover a much larger amount on the verdict of the jury. The real estate is the only source form which it can be paid. That it should be protected for the pay
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ment of such claim is most manifest, especially in view of the fact that defendants have used all of the personal assets.
The verdict of the jury remains in full force. The papers do not disclose that defendants have in any way even assailed it.
By it the plaintiff is entitled to half the profits existing in the real estate. Until that verdict shall be got rid of, it certainly cannot be claimed that the plaintiff may not be able to reach his share of the real estate; and in the mean time his rights should be secured ,and protected. If the real estate shall be lost, and the defendants have a full power of sale, the plaintiff is remediless.
Judge Hoffman’s position proceeded upon the idea that after the dissolution John Gregory had invested the firm money in real estate. He held that the plaintiff in that case, perhaps, could not follow the investment. -
It is needless to discuss whether he was right or wrong. The jury have held that it was during the partnership that the firm moneys were so used; and that plaintiff is entitled to his half if' invested in real estate.
Equity does not permit so great a cheat as where real estate of the firm has been taken to the name of one partner, to suffer him to appropriate the advance (Story’s Eq. Im., sec. 614, and cases cited; Collyer on Part., sec. 160).
Much is made of the fact, that as to the devisees the complaint stands dismissed.
An examination of the will will show that the defendants hold the real estate in trust, so that the devisees were unnecessary parties. However this may be, the receivership only operates upon the present defendants, and they cannot claim that, as against the devisees, it should not be maintained.
By the Court:
The order denying the motion to open the alleged default must be affirmed. The papers presented a disputed question of fact, as to whether defendants suffered a default to be taken against them, or appeared and submitted the motion on the merits. The judge below decided this question of fact against the
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defendants, holding that they appeared and submitted the motion on the merits. I see no cause to disturb such finding; in de,ed, I think it is correct.
The order amplifying the order appointing a receiver should be reversed.
That order is based on the alleged ground that the real estate described in the complaint belonged to the copartnership composed of William and John Gregory. Of this there was not the slightest evidence before the court. Whether it did belong to that copartnership or not, is distinctly put in issue by the pleadings ; and it devolved on the plaintiff to prove that it did. He offered no evidence whatever in support of his allegations.
It may be urged that the denials and allegations in the answer, that tins real estate did not belong to that copartnership or to any copartnership, are based on and incident to the principal denial of the existence of a copartnership between William and John, and that upon the falling of this principal denial by the verdict of the jury, the incidental denial, falls with it. The answer does not, however, expressly thus limit these denials; and, I think, they cannot be thus limited by implication merely. It may well be that although the firm did ex;ist, yet that no part of the real estate belonged to it. The defendants were entitled to put both matters in issue; the answer appears to have been framed to that end, and, I think, fully accomplishes it.
Reliance may also, perhaps, be placed in the following expression in Justice Hoffman’s opinion: “ But it is conceded that the profits are now exhibited in the real estate purchased.”
A statement of a fact contained in an opinion of a judge or a referee is not evidence either in favor of or against a party. To have that effect, it must be embodied as a decision in an order, judgment, or findings of fact.
But, even giving this expression weight as evidence, it does not determine how much or what part of the real estate mentioned in the complaint belonged to the partnership.
Ho costs of appeal to either party.
FrraiAn, J., dissented.