A decree adjudging that a partnership existed between two of the parties to the action, and that another partnership existed between one of them and another party to the action, each partnership embracing all business and property, both real and personal, of the parties, and deciding that the one partnership is subject to the other, and directing an account to be taken, there being other parties to the action representing the interest of one of the partners in each partnership, is interlocutory, and not final.
Such a decree does not ascertain the specific sum due to any of the partners, nor direct the disposition of the partnership property. It does not settle the present condition of the partners, but only the original terms of their partnership.
In the “Act to regulate the settlement of the estates of deceased persons,” the words claimant and claim are used as synonymous with the words creditor and legal demand. It was not the scope and purpose of this action to establish claims against the estate, to be paid out in due course of administration.
A surviving partner being entitled to the possession and control of the partnership effects, can proceed directly in the District Court to obtain the control, and to have a partition of the real estate belonging to the partnership, but standing in the name of his deceased partner,
It was necessary to file this bill, and make the administrator, the widow, and the infant, parties, to rebut the presumption of ownership on the part of the estate, arising from the fact that the real estate stood upon the record in the name of the deceased, and the administrator had possession of the personal property. These objects could only be accomplished by proceedings in the District Court, as the Probate Court did not possess the judicial means of giving relief.
Where there is but one clerk in the office of a public newspaper, his affidavit of the publication of summons, or notice, in said paper, is sufficient, and it is unnecessary for the affidavit to describe him as principal clerk.
The requirement of the statute being positive that in actions against a minor under the age of fourteen years, personal service of summons must be made, in cases where he resides out of this State and his residence is known to plaintiff, such residence should be stated in the affidavit for publication.
The failure to deposit in the post-office a copy of the complaint and summons, directed to such minor, is not cured by the appearance of the mother in her own behalf.
The Court has no right to appoint a guardian ad litem until the infant is properly brought into Court.
A partnership may exist in the purchase and sale of lands, but such a partnership can only exist where the contract is reduced to writing. It is not necessary that the partners should be jointly concerned in the original purchase, where the interests of the partners are afterwards mingled; but they must be jointly concerned in the future sale.
Burnett, J., delivered the opinion of the Court—Terry, C. J., concurring. The learned counsel for the appellants has made several" points, some of which apply to both causes, and others to only one.
But before we proceed to examine the points made by the appellants, we must first dispose of the motion made by the plaintiffs to dismiss the appeal upon the ground that it was not taken within the time limited by the statute. The fate of the motion depends upon the question whether the decree rendered twenty-seventh of October, 1855, was interlocutory or final. If, final, the appeal was too late. If interlocutory, the appeal was in time.
. The decree adjudges that a partnership existed between Eaton and the deceased, and a different partnership between [635]William H. Gray and the deceased; each partnership embracing all business and all property, real and personal, of the parties; and decides that the partnership of William H. Gray was subject to that of Eaton. The decree settled the proportionate interest of each partner, and directed an account of the partnership transactions to be taken by a commissioner appointed for that purjDOse. It was also ordered that when the commissioner shall have made his report, and the same shall have been passed upon by the Court, the commissioner should proceed to sell all the real and personal property of the. partnership, allowing all of the parties to become purchasers if they chose.
In the case of Ray v. Low, 3 Cranch, 178, it was held that a decree for a sale of mortgaged premises, upon a bill to foreclose, was a final decree. The same doctrine is held in the case of Whiting et al. v. The Bank U. S., (13 Peters, 6.) So, in the case of Travis v. Waters, (12 John., 500,) it was held that a decree on a bill for a specific performance on the coming in of the Master’s report as to the quantity of land to be conveyed and the payments made, directing the balance due to be paid, and the conveyance to be executed, was a final decree. So, in the case of Field v. Ross, (1 Mon., 133,) it was decided that a decree ascertaining the amount of complainant’s demand, directing a sale and ordering the payment of costs, was final. The Court said that the sale “ was only a ministerial act, to effectuate what was decreed.”
But it will readily be seen that these cases do not come up to the circumstances of this case. In the cases mentioned above, the sum due to the party was specifically ascertained, and certain specified property directed to be sold. The acts necessary to carry the decree into full effect were clearly ascertained and specifically stated. In the present case, the fact of partnership, and original proportion of each partner in the partnerships, were settled; but the partnership accounts had to be taken, and the question, whether any of the real estate should be sold, and what portion, remained open. The decree had not ascertained any specific sum as due to any one or more of the partners. It was evidently not a final decree, but merely interlocutory. This decree was necessary before any accounts could be taken, and the present relative rights of the parties determined. The decree did not settle their present condition; but only the original terms of the partnership. It might tu?n out, upon the accounts being taken, that Eaton and William H. Gray had received their full share, conceding that the decree was correct as to the original terms of the partnership. In such case, no appeal would be necessary. (1 J. J. Marshall, 498; 4 Sum., 495; 6 How. U. S. C., 209 ; 8 Wend., 219; 1 Ral. V. R., 20; 2 Com., 571; 10 Whea., 502.)
It does not matter in whose name the real estate is held; he is only a trustee for the partnership j and for the purpose of disposal and distribution, it is to be treated as personal estate.
This beifig the true character of partnership real estate, the surviving partner has an equitable lien upon it for his indemnity against the debts of the firm, and for the balance due him.
There may be a dormant partnership in the purchase and sale of real estate as between the partners themselves, but as between the partners and third persons, the law in regard to dormant partners will not apply.
Parties may form a universal partnership, but the same would not be held to exist, unless the intention was clearly expressed. The evidence to establish such a partnership, after the death of one of the alleged partners, should be clear and full, and not subject to doubt.
Coming, then, to the points made by the appellants, the first [636]objection urged, by them is, that the plaintiffs were holders of claims against the estate of Franklin 0. Gray, deceased, and could sustain no suit in the District Court, unless they had averred and proved that they were presented to the administrator for approval or rejection. This was not done, and it is insisted that the District Court had no jurisdiction. This objection is fatal, if it be true that the plaintiffs were holders of claims against the estate.
The word claim is certainly a very broad term, when used in certain connections, and in reference to certain matters. Lord Coke truly says, that “ the word demand is the largest word known to the law, save, only, claim; and a release of all demands discharges all right of action.” Chief Justice Nelson says: “ the word claim is of much broader import than the word debt, and embraces rights of action belonging to the debtor, beyond those which may appropriately be called debts.” 2 Hill B., 223.
But however broad may be the general meaning of this term, we must look to the statute to ascertain the sense in which it is there used.
The Statute to “ Eegulate the Settlement of the Estates of Deceased Persons ” requires the executor or administrator to give “ notice to creditors of the deceased, requiring all persons having claims against the deceased to exhibit them.” (§ 128.) “ That every claim presented to the administrator shall be supported by the affidavit of the claimant that the amount is justly due, that no payments have been made thereon, and that there are no offsets,” etc. (§131.) That “ every claim,” when allowed, “shall be filed in the Probate Court, and be ranked among the acknowledged debts of the estate, to be paid in due course of administration.” (§ 133.) That when “ any claim shall be presented to the administrator or the Probate Judge, and he shall be willing to allow the same in part, he shall state in his endorsement the amount he is willing to allow. If the creditor refuse to accept the amount,” etc. (§ 139.) So, if the executor or administrator is himself a creditor, his claim shall be duly authenticated. (§ 149.) He is required to return a statement of all claims against the estate which have been presented to him; and “ in such statement he shall designate the name of the creditors, the nature of each claim, when it became due, or will become due, and whether it was allowed by him. (§ 147.) In other sections of the act the word claim is used in the same manner. (§§ 150, 220, 222, 228 to 249.)
It would seem to be clear, from the different sections of the act, taken and construed together, as well as from the nature and reason of the case, that the words claimant and claim are used as synonymous with creditor and legal demand for money, to be paid out of the estate.
But it was not the scope and purpose of these suits to establish [637]claims against the estate to be paid out of it in due course of administration. Conceding the allegations of the complaints to-be true, the surviving partners were entitled to the possession and management of the partnership effects; and the only interest that the heirs could have in the partnership assets, was the net interest of their ancestor, after the partnership debts were all paid. It was necessary to file the bills, and make the administrator, the widow, and the infants, parties, for the reason that the real estate stood upon the record in the name of the deceased. In the theory of our system the estate of the ancestor, personal and real, vests in the heir, subject to the possession and lien of the administrator for the payment of debts and the expenses of administration. As the real estate was held in the sole name of the deceased, and the administrator had possession of the personal property, the whole belonged, prima facie, to the estate. To rebut this prima fade ownership and right to possession, and legally vest the property in the partnership, it was necessary to bring these suits. The primary object was to obtain the control of the partnership property, and the sale of so much of it as would be required to pay the partnership debts and for a partition of the remainder of the real estate, if any. These complex objects could only be accomplished by proceedings in the District Court. The Probate Court had no judicial means to do this.
The second objection made by the appellants is, that the Court had no jurisdiction of the person of Eranklina C. Gray. In the case of Gray v. Eaton and others, the affidavit of publication was made by “ L. Humphreys, clerk in the office of the Placer Times and Transcript,” when the statute requires the affidavit to be ' made by the principal clerk. But this objection is not well taken,; as it is clear from the affidavit that there was but one clerk in ' "the office. When there is but one clerk his affidavit must be sufficient, and it is unnecessary for him to improperly describe himself as principal clerk.
In the case of Eaton v. Palmer and others, the affidavit of Ea-' ton states that Mrs. Gray and child were residents of the State of Mew York, but does not state in what portion of the State they resided, nor that the affiant was not informed of, or did not know the fact. In the amended complaint of Wm. H. Gray, im ' the case of Gray v. Eaton and others, the fact is stated that Mrs. Gray and child resided in Brooklyn, in the State of Mew York. The plaintiff Eaton then had notice of the place of residence of the two defendants, and should have so stated in his affidavit. The result of his failure to state this fact, was that the Court did not direct a copy of the complaint and summons to be deposited in the post-office. This defect was not cured by the appearance of the mother in her own behalf. The twenty-ninth section of ' the Practice Act requires the service of the summons when the 1 [638]suit is against a minor under the age of fourteen, to be made by delivering a certified copy of the summons and complaint to the infant personally, and also tó his father, mother, or guardian. When the infant is over the age of fourteen, the service is only to be made upon him, as he may choose his own guardian. As the statute requires personal service of the summons upon the infant, although under the age of fourteen, it is clear that a copy should have been put into the post-office directed to the infant in the same manner as if over the age of fourteen. The Court had no right to appoint a guardian ad litem until the infant was properly brought into Court.
We are compelled to give the twenty-ninth section of the Code this construction, although there may seem to be no good reason for requiring personal service upon a minor under the age of fourteen. The language of the second subdivision is too clear to admit of any doubts; and it is not our right to make, but only to construe, the statute. (Sed. on Construction, pp. 293, 395, 306, 309, 311, 379.) In the New York Code, the service was only required to be made upon the guardian when the minor was under the age of fourteen. (§113, First Rep. of Com., 134.) In the act of April 22,1850, (Statutes of 1850,430,) the same provision as that contained in the twenty-ninth section of our Code is found, with a slight difference in the grammatical structure of the sentence. So, in the Practice Act of 1850, personal service was required upon a person of unsound mind, as also upon his guardian; while in our present Code, the personal service upon the lunatic is dispensed with. These facts show that the provsion requiring personal service upon the minor under the age of fourteen, and also upon his guardian, is not the result of a misprint or a clerical mistake, but the deliberate will of the Legislature. As such, it is our duty to carry it out.
The third objection made by the appellants is, that the com- ■ plaints do not allege the existence of such a partnership as to entitle the plaintiffs to file a bill as partners; and it is questioned whether there can exist such a relation as a universal partnership.
The question in this case regards the rights of partners as between themselves. A partnership, as between the partners themselves, may be defined to be a contract of two or more persons to unite their property, labor, and skill, or some of them, in the prosecution of some joint and lawful business, and to share the profits in certain proportions.
In most partnership agreements there is a stipulation to share the profits and bear the losses, in certain proportions. But if parties are so disposed, they are competent to agree that all the partners shall participate in the profits, while a portion shall bear all the losses of the original capital. If, for example, A, B, and C, should agree that A and B should put in the sum of $10,000 each, and C, the sum of $20,000; and that all the partners should [639]give their personal attention to the partnership business, and share the profits in equal proportions, but in case of any loss of any portion of the original capital, that loss should alone fall on A and B, there would seem to be no dóubt of this being a partnership.
There can be no doubt, at this day, that a partnership may exist in the purchase and sale of lands. (Story on Partnership, § 83; Collyer, § 51, note.) But such a partnership can only exist where the contract is reduced to writing. (Story, § 83.) And it is not necessary that the partners should be jointly concerned in the original purchase, where the interests of the partners are afterwards mingled. But the partners must, by the contract, be jointly concerned in the future sale. (3 Kent, pp. 25, 26.
In reference to this subject, Mr. Justice Story remarks : “Mor is there in reality, as between the parties themselves, any difference whether the partnership property, held for the purposes of trade or business, consists of personal or moveable property, or real or immoveable property, or of both, so far as their ultimate rights and interests are concerned.”
This language is very clear and distinct. As between the partners, the partnership property may consist either of real or personal estate, or of both, and in each case their ultimate rights are the same. And it does not matter in whose name the real estate may be held, he is only a trustee forthe partnership, and the real estate, for the purpose of disposal and distribution,is to be treated as personal estate. An exception may be stated, as where there are no partnership debts to pay, in which case the real estate should be partitioned, if practicable. (§§ 92, 93.) And this being the true character of partnership real estate, the surviving partner has an equitable lien upon it for his indemnity against the debts of the firm, and for the balance that may be due to him from the firm. (Collyer on Part., § 135, and note.) For the same reason, the widow and heirs have only an interest in the net partnership property, after all the partnership debts are discharged.
But it is insisted that there can not be a dormant partnership in the purchase and sale of real estate. This objection would not seem to be well taken, as between the partners themselves there can be no difference, whether the business is commercial or dealing in real estate. As between the partners and third persons, the law in regard to dormant partners will not apply) (Pitts v. Waugh, 4 Mass. R., 424) 3 Kent, 31, note a ;) and we can see no reason why parties should not be competent to form a universal partnership. There is nothing impracticable in it, or against morality or public policy. Of course such a universal partnership would not be held to exist, unless the intention was clearly expressed.
It is also insisted by the learned counsel for the appellants, under his third point, that though it be conceded that Gray has [640]stated a case of partnership in his complaint, Eaton has not. The instrument claimed by Eaton to constitute articles of co-partnership is set out in his complaint; and must constitute the sole evidence of the relation existing between him and the deceased. (Lee v. Evans, 8 Cal. R., 424.)
The effect of this objection depends upon the true construction of the instrument. The instrument is in an unusual form for partnership articles, and is only executed by the deceased. It purports, in the first part of it, to sell to Eaton one-fourth of all the real and personal property then owned by the deceased, or that might be owned by him within the next two years, or within the time the connection should continue, should it continue beyond the time specified. It was evidently an executory and not an executed contract. Eaton, on his part, was bound to remain with the deceased for two years; at the expiration of which period a division of all property, real and personal, was to be made, unless the parties should wish to continue longer. Among other conditions to be performed were these : “ 2. That Eaton should unite all the funds he may hereafter become possessed of, in the joint fund, for the purpose of accumulation. 3. All outstanding debts shall be paid out of the joint fund held against the party of the first part.” Taking the different portions of the agreement together, and we must conclude that the relation created by it was a partnership. 1. The contract was executory. 2. Gray put in all his property. 3. Eaton was to put all his future property into the joint fund, and also his time. 4. These were to be all put into the concern “for the purpose of accumulation.” 5. The debts were to be paid out of the “joint fund.” 6. A division of all the property was to be made—the one-fourth to Eaton, and the other three-fourths to the deceased. 7. The property to be divided consisted of that put in, with its accumulations.
The fourth objection urged by the appellants is that the decree was against the weight of evidence. This objection only applies to the case of Gray v. Eaton and others.
It is alleged by William H. Gray that written partnership articles were executed by the deceased and himself, but that the same were destroyed by the fire in June, 1851, in the city of San Francisco. It is certain, from the proof, that the two brothers were in partnership in a mercantile house in San Francisco. But this fact renders it the more probable that the partnership was confined to that house; and that the recollection of the witnesses had relation to that concern, and not to the alleged universal partnership. There is only one witness to prove the contents of the partnership articles, and his recollection does not seem to have been very distinct. The evidence to establish such a partnership, after the death of one of the partners, should be clear and full, and not subject to doubt. The circumstances, all [641]taken together, leave the greatest room, for doubt. We have examined the testimony carefully, and we can not resist the impression that the evidence did no't warrant the decree. It would be a greater labor than we can perform, consistently with the other business of the Court, to review the evidence in full in this opinion.
The other points made by the appellants are not important. Our conclusion is, that the decree in the case of Eaton v. Palmer and others, so far as it affects the rights of the infant Eranklina C. Gray, should be reversed, and that the decree in the case of Gray v. Eaton and others, should be reversed as to both the appellants, and cause remanded for further proceedings.
AI Brief
AI-generated · verify before citing
Holding. The court held that the initial decree was interlocutory rather than final, that the statutory requirements for presenting claims against an estate do not apply to suits to establish partnership interests, and that the lower court lacked jurisdiction over the infant defendant due to improper service of process. Furthermore, the court found the evidence insufficient to support the finding of a universal partnership in the case of Gray v. Eaton.
Issues
Whether the decree was final or interlocutory for the purpose of appeal.
Whether the statutory requirement to present claims against an estate applies to suits to establish partnership property rights.
Whether the court acquired jurisdiction over the infant defendant through the provided service of process.
Whether the evidence was sufficient to establish the existence of a universal partnership.
Disposition. reversed and remanded
Quotations verified verbatim against the opinion
“It was evidently not a final decree, but merely interlocutory.”
“The words claimant and claim are used as synonymous with creditor and legal demand for money, to be paid out of the estate.”
“The Court had no right to appoint a guardian ad litem until the infant was properly brought into Court.”