Opinion
08-21-1900
JONES v. BEEKMAN et al.
David Harvey, for complainant. Chauncey G. Parker, for defendants Beekman and others. Charles Harvey, for defendant Stewart.
Suit by Clara M. Jones against Isabella L. Beekman and others. Rights of parties determined, and rendition of decree postponed.
David Harvey, for complainant. Chauncey G. Parker, for defendants Beekman and others. Charles Harvey, for defendant Stewart.
EMERY, V. C. On April 1, 1896, a deed for lands in Asbury Park, on which a hotel or boarding house was erected, was made to three grantees,—Charles A. Jones, since deceased; the complainant, then Clara M. Dymock; and the defendant Charlotte B. Stewart. The question raised by the bill is whether the interest of the defendant Stewart in these lands was held in trust for the said Charles A. Jones. The trust is alleged tohave been a resulting trust arising from Jones' payment of the entire purchase money. Subsequent to this deed, and on August 12, 1896, Charlotte B. Stewart, by deed of that date, conveyed, or attempted to convey, her interest in the lands to Jones, but the deed was ineffective as a legal conveyance, Mrs. Stewart being then a married woman, and her husband not joining in the deed. This deed was made by Mrs. Stewart to Jones immediately after service upon her of a summons in a suit brought by the defendants Beekman and others, in which suit judgment was entered on September 4, 1896. The complainant, then Clara N. Dymock, joined as grantor in the deed of August 22, 1896, to Jones, and on September 25, 1896, Jones conveyed to her one-half of his interest in the premises. Miss Dymock was at that time, and for some time previous had been, engaged to be married to Jones, and married him in November, 1896. Jones died in February, 1897, having devised his one-half interest in the property to complainant by will bearing the same date as his deed to her (September 25th), and of which will complainant is the executrix. The bill is filed by complainant to establish a trust in the one-third interest of the lands of which the legal title is still in Charlotte B. Stewart, and to restrain the sale under execution issued on the judgment. The trust is alleged to be a resulting trust, arising by reason of Jones' payment of the entire purchase money. The purchase (as is admitted by the pleadings) was made for the purpose of carrying on the business of a boarding house in partnership by the three grantees under the name of C. B. Stewart & Co., and it is alleged in the bill that the purchase was made by Jones for the purpose above mentioned, and that the names of all were inserted as grantees in the deed at Jones' request, under the impression on his part that it was necessary, because they were to conduct the boarding-house business together. The deed by defendant Stewart is alleged to have been given for the purpose of carrying out the trust upon which Mrs. Stewart held the interest conveyed to her. The answer denies the existence of the trust and the consideration and bona fides of the Stewart deed, and a cross bill seeks to set this deed aside as fraudulent against creditors. The purchase price of the premises in question was $20,500, of which $6,000 was paid in cash on or before the delivery of the deed, and the balance, $14,500, was secured by the joint bond and mortgage of the three grantees. It is not disputed that of the $6,000 paid at least $5,500 was paid by Jones; and as to the other $500, which was paid by Mrs. Stewart, I am satisfied that the payment was made by her from money received from Jones, for which she gave him a receipt, now produced.
The question, on the evidence, is whether the payment by Jones alone and the conveyances to the three grantees in common was made under such circumstances as to show a resulting trust in favor of Jones against the other grantees. Defendants claim that the advances of the purchase money made by Jones were intended on his part as gifts to both Miss Dymock (to whom he was then engaged to be married) and to her sister, Mrs. Stewart. Without going through the evidence in detail, I will state the conclusion I reach, which is based mainly upon the written evidence relating to the nature of the transaction, showing how it was regarded at the time it took place, and upon the subsequent dealings with the property up to the time when the transaction now assailed took place. The agent of the owners, who had the property for sale, first applied to Mrs. Stewart, who had previously carried on a successful boarding house at Asbury Park, to buy the property. She was then at Yonkers, keeping a boarding house in which her sister, Miss Dymock, besides giving her the use of the furniture, assisted her, and Mr. Jones, then engaged to Miss Dymock, boarded with her. Jones was a business man in New York of some means, and above 60 years of age. Mrs. Stewart referred the agent to Mr. Jones, and the result of the negotiations of the agent with Tones was that an agreement was made to sell the property to Jones and Mrs. Stewart. This agreement to convey to Jones and Mrs. Stewart was put in writing on October 4, 1895, and signed by the vendors, on which date Jones paid $500 of the $1,000 which was to be paid on signing the agreement and on the same date a receipt for the $500 was indorsed on the agreement, with the statement that the balance of the $1,000 was to be paid by Mrs. Stewart on October 5, 1895. On the evening of October 4th, Mrs. Stewart received, as she says, from Mr. Jones, $500 in money to make this payment. She gave him a receipt as follows, bearing that date: "Received from Mr. C. A. Jones the sum of $500 (five hundred dollars) for a payment on the property at 307 6th Ave., N. Asbury Park." Mrs. Stewart procured a certified check with this money, and sent this on October 5th, by her nephew, to the vendors, who on that day indorsed on the contract of sale a receipt for the check as the balance due on signing the contract, "Received from Mrs. C. B. Stewart." On January 2, 1896, Jones made another payment of $2,000 on the contract, which was indorsed as received from him, and on April 1, 1896, the balance of the cash payment was made by Jones, and the deed then made to Jones, Miss Dymock, and Mrs. Stewart, who all attended at the transaction for the purpose of executing the joint bond and mortgage for the purchase money. Up to the time of the introduction of Miss Dymock's name in the purchase the transaction disclosed by the writings was a purchase by Jones and Mrs. Stewart, in which they were jointly and equally interested, Jones having, however, a claim against Mrs. Stewart and her share for the amount he had advanced on the purchase above her advances. I see no reason forholding that the advance of the $500 by Jones to Mrs. Stewart was intended as a gift to her. The written evidence of the receipt was Jones' protection against such claim, and, on the other hand, the receipt is evidence against Jones of an advance of money to Mrs. Stewart to make payment as her own money. Shortly before the date fixed for the delivery of the deed, an agreement was made between the three persons who afterwards became grantees in the deed, to carry on as partners the business of keeping a boarding house on the premises under the name of C. B. Stewart & Co., the name of Mrs. Stewart being used in order to secure the good will of her previous business In Asbury Park. Under these circumstances, Jones, on April 1st, personally advanced the balance of the cash payments, and the deeds to the three grantees, with their bond and mortgage, were executed. After the conveyance the business was carried on by the grantees as partners on the premises. Mr. Jones purchased (on his individual credit apparently) a considerable part of the supplies in New York, and Miss Dymock purchased on the credit of the firm at Asbury Park, while Mrs. Stewart managed the house. The interest on the mortgage and the taxes and insurance on the property were paid by Mr. Jones. The purchase of the property for $20,500 (as appears by the agreement) included also the furniture of the hotel or boarding house, and a chattel mortgage for $10,000 (as appears by the evidence of Mrs. Stewart, taken on supplementary proceedings) was given to the vendors upon this furniture. This furniture was used in carrying on the business. These are the substantial facts disclosed by the evidence in relation to the nature of this purchase up to the time when the suit against Mrs. Stewart was commenced, and these are the facts upon which the conclusion as to the true character of the purchase must be based, rather than the subsequent acts and the parol evidence of the parties. The pecuniary interest of the survivors, complainant and Mrs. Stewart, is manifestly now different from what it was at the time of the purchase. The fair conclusion to be drawn from these facts and from the entire evidence in the case is that this real estate and personal property were purchased with the intention of making it partnership property, and that, as between the grantees, it was partnership property, to be purchased for and used in the partnership business. The taking of the joint bond and mortgage of the parties at the time of the purchase for the payment of the balance, which bond is still outstanding, is irreconcilable, in my judgment, with the existence of a resulting trust in favor of Jones as the sole equitable owner.
The vital question is the intention of the parties at the time of the execution of the deed; and, although the payment of the entire purchase money by one grantee might raise a prima facie presumption of resulting trust in his favor, the fact that less than a third of the entire purchase money was paid, and that all of the grantees became jointly bound for the unpaid purchase money, goes far to rebut this presumption, if it does not entirely destroy it. This fact, taken in connection with the limited use to which the property could be put, and the intention of the parties to form a partnership for the purpose of this use of the property, in which partnership they were to be equal partners in the profits, which they all expected to make, makes the inference strong, if not irrestible, that the purchase was a partnership transaction, and the property was intended to be partnership property. Mrs. Stewart's name and services in running the business, and the additional credit given to the firm and business by its ownership of the property, were natural and sufficient considerations for giving her the benefit of the purchase, as a recognized partner and joint owner of the property, and continuing her original joint interest in the purchase. I cannot, therefore, conclude, on the evidence, that this purchase in the name of Mrs. Stewart was,, as is claimed in the bill, in trust for Jones. Nor, on the other hand, do I see any fair basis for the inference that Mr. Jones intended the purchase as a gift to Mrs. Stewart. I am not at all convinced that the evidence will warrant the conclusion that Jones, at the time of the deed, intended a gift even to Miss Dymock; and as to Mrs. Stewart there is, in my judgment, no evidence from which it can be fairly concluded that at the time of the deed Jones intended to give her any of the purchase money. In the absence of satisfactory evidence of such intention, the inference from the whole evidence as to the rights of the parties in the purchase is that the property was intended to be purchased as partnership property, and that Jones did not intend to relinquish his claim to be reimbursed for his advances for the purchase of the partnership property. Where land is originally acquired for the purposes of a partnership, and is afterwards used solely for the purpose, the fair inference that the land was intended to be co-partnership property, and not separate estate, is justified, unless other evidence in the case is strong enough to overcome this presumption.
The fact that on such original purchase one of the partners advances all the cash payments made will not, of itself, be sufficient to overcome the presumption of partnership property, for as a partner he has a lien on the partnership property to repay the advances. Mr. Wood, in his notes to 1 Colly. Partn. (6th Ed.) p. 184, states, as the result of the examination of the cases, that original acquisition for the partnership, and subsequent use, seem to be sufficient to make the property partnership, and not separate, property; while it is otherwise as to property not so originally acquired for the partnership use, but previously belonging to the partners Jointly, and after wards used for the partnership. If this conclusion as to the property in question beingpartnership property is correct, then as such property it would, under the ordinary equitable rules, be subject to claims in favor of Jones as a partner, who had advanced the purchase money for the benefit of the firm, and on a settlement of the partnership accounts would be entitled to reimbursement for what remains due on this account in preference to a judgment creditor of a single partner. The general rules are well settled in this state that the real estate of a partnership is chargeable with the debts of the firm, and any balance that may be due from one copartner to another on the winding up of the affairs of the firm (Campbell v. Campbell, 30 N. J. Eq. 415 [Runyon, Ch.; 1879]); that a Judgment against one partner is subject to the lien of partnership debts (Uhler v. Semple, 20 N. J. Eq. 288; Harney v. Bank, 52 N. J. Eq. 697, 29 Atl. 221); and that for a claim of one partner for a balance due him from his copartners after payment of the firm debts, the lien of the partner is also superior to the lien of a separate creditor (Standish v. Babcoek, 52 N. J. Eq. 628, 632, 29 Atl. 327 [Van Fleet, V. C; 1894], approved on appeal on this point. Id. [1895] 53 N. J. Eq. 376, 382, 33 Atl. 385). So far as the deed of Mrs. Stewart to Jones, executed in August, 1896, operated as an equitable conveyance to Jones of her interest in the land, over and above the amount with which it, along with the other partnership property, was properly chargeable, it is inoperative and void as against the defendants, her Judgment creditors. To the extent to which her interest was chargeable in favor of Jones, it, has a valid equitable consideration against her creditors, and to this extent the lien of creditors would be subsequent, even if the deed conveyed the legal estate, inasmuch as the evidence fails to show that Jones, in taking the conveyance for the repayment or restitution of his advances towards the purchase of the land, acted dishonestly, or with the actual intent of defrauding the creditors of Mrs. Stewart. Demarest v. Terhune (Err. & App. 1867) 18 N. J. Eq. 532, 540; Muirheid v. Smith (Err. & App. 1882) 35 N. J. Eq. 303, 311; Bank v. Jones, 50 N. 1. Eq. 244, 249, 24 Atl. 928 (Pitney, V C; 1892). affirmed on appeal. Lake v. Bank, 50 N. J. Eq. 486, 27 Atl. 636. This would have been the result if no deed of her interest had been executed, and this is the limit to which a decree can be made on the defendant's cross bill seeking to charge their, judgment as a lien upon the legal estate in one-third of the lands still remaining in their judgment debtor. Mrs. Stewart. The case was argued at the hearing upon the part of the complainant as presenting a case of resulting trust only, and upon the part of the defendants as a case in which there was no resulting trust in Jones on the purchase in the name of Mrs. Stewart, but a gift of the purchase money by Jones to Mrs. Stewart, and an absolute one-third interest on her part. By neither counsel was there any presentation of views as to the effect of the existence of a partnership property in the lauds on which Jones, at the time of the conveyance in question, had a lien as partner for ultimate repayment; and it is obvious that my conclusion that this was the true nature of the transaction as disclosed by the proofs will give rise to questions as to the form of the decree which should be further argued. I will hear counsel as to the proper decree to be entered in the cause, on my findings of fact, and at the same time will hear either party on application to amend the pleadings, if deemed necessary; notice specifying the amendments desired by either party, if any, to be given.