I am unable to concur in the affirmance of this judgment. The action was brought for a final settlement of the accounts of the *424firm of McCafferty & Buckley, composed of the plaintiff and Robert McCafferty, who died on the 11 tli of February, 1905. The question ph this appeal is between the. heirs at- law and the fhninistrators of the estate of Robert McCafferty, as to whether certain' real property which ivas vested in Robert McCafferty is to be treated as personalty and goes to his personal representatives, or as rea] estate descending to his heirs at law. The referee found that the plaintiff and McCafferty formed a copartnership- in, the month of -Novem- . her, 1887-, fór the purpose of buying real property and the improvement and sale thereof,-and-such was the business carried on by said firm from the time of inception to the date of Robert McCafferty’s death; that thisagreement.was verbal and. was never modified after it was originally made in the year 1877 ; that by the terms of the agreement between the partners, the -firm was to purchase real property for their joint and equal ■benefit ? that the lands so purchased should be improved and sold, and the proceeds should be employed in the further purchase of lands in like 'manner, which shoti-ld be sold,-and that the partners should be'entitled to receive one-half of the profits arising from the transactions; .that it was further agreed that upon the dissolution of the firm, or in case of any disagreement between the partners, all real property then remaining on hand should be sold and the proceeds thereof divided among the partners; that pursuant to said agreement, the said firm from the time of its formation to the date of McCafferty’s death, bought, improved and sold large quantities of real property in the city of New York and elsewhere, and the profits arising from such sales Were either reinvested in lands or personal property or divided between the several partners; '“ that the title to land's purchased by the firm Avas taken, as amatter of convenience, sometimes in the name of the firm and sometimes in the ñame of one. or other of the partners.” In relation to this finding,'an examination, of the record shows that some of the conveyances of the real property were to Robert McCafferty - and Richard W. Buckley, but so' far as appears, the name of the firm was not expressly used, the conveyances'being to the two individuals, Avho thereby became tenants in common of the property so conveyed. Other conveyances were taken either to. —the plaintiff or to McCafferty individually.' p The referee found as a conclusion of Jaw that'the plaintiff, as *425surviving partner of the firm of McCafferty & Buclcley, upon the death of Robert McCafferty held title to all the partnership lauds in the first instance as trustee for the creditors of said firm and, after the satisfaction of debts, as trustee for those entitled to participate in the estate of Robert McCafferty, deceased; that the lands described in the complaint were copartnership property belonging to the firm of Mc.Cafferty & Buckley, which at the time of the death of McCafferty should be deemed to be equitably converted into personalty, and that the share thereof to which McCafferty would have been entitled should be paid to his administrators, to be by them administered upon and distributed in accordance with the Statute of Distributions.
Upon the trial it was proved that McCafferty was taken sick about two years prior to 1902; that after November 12, 1902, there were no new copartnership enterprises undertaken, and the last conveyance of property to either of these copartners seems to have been on June 16, 1899. This was the Eighty-second street property. The work of construction on that property was practically finished in 1902, and all that was done after that was some alterations in the houses erected thereon. In the year 1902 some of the real property which had been purchased by the parties to this copartnership stood in the name of McCafferty & Buckley, soine in the name of Buckley, and some in the name of McCafferty. At that time McCafferty called the defendant Doig, who was the bookkeeper and confidential man of the firm, and requested him to have deeds prepared so that the interests of himself and Buckley could be divided. “ He' said he wanted the interest divided and his half interest conveyed from him to Mr. Buckley and from Mr. Buckley" to him, where necessary, in order that each party might have one-lialf interest in each piece of property. - * * 11 am in very poor health indeed, and can’t tell what will happen, and would like to have these titles straightened, so that each will have a half interest on the records.’ ” At this time the buildings upon all the property were substantially completed, and after that date the joint operations consisted in getting what rents could be obtained from the properties in hand and selling properties from time to time as opportunities offered, taking care .of the properties, paying taxes and other carrying charges,, and paying debts.
*426' I entirely concur with fiie learned referee in his statement of the law. He says the American ruléis “that partnership real estate (unless otherwise expressly or impliedly agreed) retains its character as realty between the partners themselves, and also between' the. surviving partner and the personal representatives of the deceased partner, except to the extent that it may be required -to pay partnership obligations or. to pay any balance found due from one partner to another. To the extent that partnership real estate is required for these purposes, the share of each is embraced in a trust implied by law, which equity in enforcing treats as converted into personalty,” and he then cites1 from the opinion of Chief Judge Andrews in Darrow v. Calkins (154 N. Y. 515) as follows : “.It is, however, generally conceded that the question whether partnership real estate shall be deemed absolutely converted into personalty for all purposes, or only con vertedero tanto for the purpose of partnership equities, may be controlled by the exjwess or implied agreement of the partners themselves, and that where.by such agreement it appears that it was the intention of the partners that the lands ' should be treated and administered as-personalty for all purposes, effect w.ill be given thereto.” The referee then cites Barney v. Pike (94 App. Div. 199) as decisive of the case at bar in favor of the proposition that the partners did intend-that- the real estate owned in common should be treated as personalty for all purposes. In that case, after an. examination of the authorities, it was held that “-the authorities in this State, therefore, go to the . extent of holding that the question of whether partnership real estate shall be deemed absolutely converted into personalty -for all purposes, or only converted jpro tanto, may be controlled by the express or implied agreement of the partners themselves, and it remains for us to determine whether, upon the submitted facts, an agreement, express or implied, has been shown under which the lands purchased by the partners were to be deemed personal property because, in the absence of such an agreement, under the general rule they would preserve their incidents and characteristics—except for partnership purposes —of real estate.”
Whatever the understanding between these- partners as to the way that this real property should be treated prior to the year 1902, I suppose the question here is to be determined upon the understand*427ing' between the partners at or immediately prior to the death ■ of McOafferty. It is time that from the time the business was commenced down to the yeár 1902, the property purchased on the joint account of these partners, whether the title was taken as tenants in common or in the name of one of the individual partners, was treated as copartnership property. The property was not purchased for investment nor intended to be used in any way except for the purposes of improvement and sale, and when sold the profits realized were equally divided. If the property had continued in this condition without further action by the partners I should be quite willing to concur in the conclusion of the referee. But it seems to ihe that an entirely different situation was created by the act of the parties in dividing among themselves the copartnership real property in the year 1902. McOafferty had been sick for about two years. He then instructed the bookkeeper of the firm to prepare deeds of the property so that there should -vest in each partner an undivided half of the real property belonging to the firm, and deeds to carry out this intention were prepared and executed by the partners. After that time each partner was the owner of an undivided half of the firm realty. This, it seems to me, worked a change in the nature of the holding of each partner, so- that the real property which had before belonged to the firm was divided and thenceforth each partner held, not an undivided interest in the property as firm property, but an undivided interest in this realty that had belonged to the firm, as a tenant in common. In other words, the status of the property was'changed from firm property to the individual property of the respective partners. Prior to that time, it might have been said that all of the property was held as property of the firm, and thus, under the rule to which attention has been called, all the realty being property of the firm, the interest of each partner was an interest in the assets of the firm, and, therefore, the interest of each individual was to be deemed personalty. But after this significant transfer by which all of the firm real property was vested in the members of the firm as tenants in common, it seems to me that it was the intention of the partners that the property was to lose its character as firm property and vest in the individuals as tenants in common. In equity, the interest of botli partners would be subject to have the.property charged with the payment of *428■tlie firm indebtedness,-or the interest of either partner charged with the payment pf any amount due from him to the other partner. But the debts of the firm having been paid and the balance from one partner to the other settled, the real property would preserve its characteristics of real estate. McCafferty said when instructing his bookkeeper to prepare these deeds that his object was to divide the property and to give to each partner a half, interest in each parcel. This: would have been unnecessary if it had' been the intention of the parties to continue to treat the property as partnership ¡iroperty so that each partner’s interest should be an interest in the-assets of the firm, instead of an interest in the specific property in which the assets of the firm were invested, and when we see the partners, in pursuance of this intention, dividing- the property among themselves so that each shall have his specific interest in these firm assets, instead of an interest in the firm assets,, it seems •to me that the conclusion is irresistible.that it was the intention to "Inake a division as toAhe real property by dividing, it -among the partners, so that the interest of each in these particular pieces of real property should become an interest in specific real estate.. I agree with-the referee that there was no intent to dissolve the firm, or .'to settle its affairs, or to'divide all of the firm property; but 1 think the intent was to vest these'specific pieces of real estate in the members of the firm as an individual interest. All of the property, not thus distributed remained firm property, which included the mortgages and other personal .property.
For these reasons, 1 think the judgment should be modified by. directing that the title of McCafferty in the real- property held in common with the plaintiff descended lo his heirs at -law, and that all provisions in relation to the sale of such property and the distribution of. the proceeds' thereof should be eliminated- from the judgment. ’