Howard v. Priest

Shaw, C. J.

The principles and authorities on which we think this case must rest have been so fully presented and considered, in the case of Dyer v. Clark, (ante, 562,) decided at the present term, that we do not think it necessary to state them at large. We are of opinion, that the conclusion to which they lead is, that real estate purchased out of partnership funds, to be used and applied to partnership purposes, and considered and treated by the partners as part of the partnership stock, is to be deemed and considered, so far as the legal title is in question, as estate held in common, and not in joint tenancy ; but as to the beneficial interest, it is held in trust, each holding his property in trust for the partnership, until the partnership account is settled, and the partnership debts paid. It is a trust arising from the actual or implied agreement of the parties, and from the mutual relation in which they stand to each other. It shall not be construed a joint tenancy at law, because it would be contrary to the policy of the law, by giving a jus accrescendi at common law, in case of survivorship, when no such intent or purpose can be presumed. St. 1785, c. 62, § 4. The rule of holding it a trust estate, in regard to partners, is founded on the equity of the surviving partner, who, being made chargeable with all the debts of the firm, ought to have the control of all the partnership property, as assets, first, for the payment of the debts of the firm ; and secondly, for the restoration to himself, on settlement of the partnership account, of that part of the capital which has been contributed by him to the common stock.

The true and actual interest of each partner in the common stock is the balance found due to him after the payment of debts and the adjustment of the partnership account. There seems to be no reason in equity, why this first distribution of the common stock should be defeated, because, by mutual agreement, the partners, for their own use and convenience, have invested a part of that common stock in real estate. And as the widow and heirs can claim only in right of the husband and father, such derivative right, in equity, will extend no further in behalf of the wife and children, than that of the partner from whom it was derived. As this was real estate purchased by the partners, after *586the formation of the partnership, as it was paid for out of the partnership funds, purchased for partnership use, and entered in their books and otherwise treated as partnership stock, until the decease of one of the partners, we are of opinion that the surviving partner had an equitable lien upon the property of the deceased partner; that the heirs took the legal estate, subject to a trust and equitable lien in favor of the surviving partner ; and that the widow was not entitled to her dower, nor the heirs at law to the rents and profits, until this trust was fully executed and fulfilled. [See Burnside v. Merrick, 4 Met. 537, which was under consideration at the same time with the present case.]

Judgment for the defendants