Brown v. Beecher

15 A. 608, 120 Pa. 590, 1888 Pa. LEXIS 514

• Court: Supreme Court of Pennsylvania
• Decided: October 1, 1888
• Docket: No. 297
• Status: Published

Opinion

Opinion,

Me. Justice Claek :

The contract of February 3, 1882, between Comen and Marsh, is not a mere license as in Funk v. Haldeman, 53 Pa. 229, for in that case the words of the grant amounted neither to a lease nor a sale of the land, nor of any of the minerals in the land. Funk’s right was therefore declared to be a license to work the land for minerals, a license coupled with an interest which the licensor could not revoke. Nor does the contract of February 3, 1882, import a sale of all the oil, gas and other minerals in the land, absolutely; the cases of Caldwell v. Fulton, 31 Pa. 476; Sanderson v. City of Scranton, 105 Pa. 469, and others involving the same principle, do not therefore have any application.

The contract referred to was a lease of the lands for a specified term, and for a particular purpose, at a fixed rent or royalty reserved out of the production. As to the legal force and effect of this writing there can, we think, be no doubt: it conveyed an interest in the land; in this respect, it is distinguished from a license. It is similar to the lease in Stoughton’s Appeal, 88 Pa. 198, but the lease in that case was executed by a guardian, and it was held, that although a guardian might lease his ward’s land from year to year in the usual form for ordinary purposes, he could not, without the decree of the Orphans’ Court, bind his ward by a lease of the land for oil purposes for twenty-one years; for that was practically the sale of the oil. But altliough the writing of February 3, 1882, is a lease, it conveyed to Marsh an interest in the land, a chattel interest, however; the lease was a chattel real but none the less a chattel: Duke v. Hague, 107 Pa. 57; Titusville Novelty Works’ Appeal, 77 Pa. 103; Kile v. Giebner, 114 Pa. 381.

On the part of the defendants, it is contended that when Marsh transferred an undivided half interest in the lease to John A. Brown, they were and for some time before that had been partners, in the business of boring wells and producing oil; that the lease, being a chattel merely and used and operated for partnership purposes, was part of the partnership property; that when John A. Brown subsequently assigned his moiety to the plaintiff, the latter must be assumed to have taken it subject to the equity of Marsh, to have the partnership debts first paid out of the partnership assets ; and that as the Beecher & Copeland judgment was for a partnership debt, a levy and sale thereon passed the entire leasehold to the purchaser.

At the trial, after the testimony was taken, a juror was withdrawn by consent, and the 'cause was submitted to the court upon the evidence under the provisions of the act of April 22, 1874. The facts found by the court, where there is evidence to support them, are conclusive here; the case must be disposed of thereon as upon a special verdict: Sweigard v. Wilson, 106 Pa. 207,

The court finds that on April 20, 1882, Marsh assigned the undivided one half of the two leases to John A. Brown, and that this assignment was pursuant to an arrangement between Marsh and Brown existing at the time Marsh obtained the leases; that Marsh and Brown were partners, engaged in the business of prospecting for and producing petroleum, and upon and before March 15, 1883, were operating and developing the premises in controversy as partners, and that the leases mentioned were part and parcel of the partnership property used in carrying on the partnership business. It is contended however, that the court cannot find a fact upon evidence which is insufficient to justify a submission to the jury, and that there is no evidence sufficient to support this finding. The testimony on this subject is substantially as follows: Mr. Marsh testifies, that he obtained the lease in February or March, 1882; that John A. Brown acquired his interest in the property from the commencement; that Brown wished Marsh to take the property and buy the goods in his name, as Brown had some debts standing against him in Kittanning; that they were to be equal owners in the property, and share the profit and loss; that when they began developing the property he understood they were to go in partnership. He further testifies, that the transfer of the one half of the lease to John A. Brown was at the instance of J M. Brown, who said that the debts in Kittanning would not interfere with John’s owning the property in his own name now, and that if he was a partner lie ought to have the property conveyed to him. Mr. Copeland, in corroboration of Marsh, says that Brown and Marsh dealt jointly with Beecher & Copeland since the fall of 1881; that they drilled three wells at Clarendon, two in Glade, one in Kings Hollow and one at Slator’s in Limestone; that they bought oil well supplies, tubing, casing, drive pipe and such material; that the accounts were originally in the name of Marsh, but about the middle of March, 1882, John A. Brown’s interest became manifest, when the account was merged into Marsh & Brown; he says Brown acknowledged owning half the property and that he was a partner with Marsh; that the indebtedness for which the note was given was incurred in the name of Brown & Marsh, and the purchases were made sometimes by one and sometimes by the other. It is further shown that the business was conducted by them as partners, that the production in oil was applied to the firm debts, debts in connection with the Comen lease, and that they were sued in the firm name of Brown & Marsh, for debts arising out of the same lease, and that the process was served in this form without objection of either.

There is abundant evidence upon which the facts- found by the court might have been submitted to the jury; not only so, it was clear, consistent and wholly uncontradicted. It was not required of the defendants to show by direct and positive proof the exact time, or by what means, the leaseholds were taken into the partnership or to introduce the precise act or ceremony by which it was done; it was sufficient if from all the evidence the fact was fairly inferable. The fact that there is a partnership may be established by the several admissions of those who are alleged to compose it, or by the admissions of one and the acts and declarations of the others: Reed v. Kremer, 111 Pa. 482. There was certainly evidence of a partnership and of these leases having gone into the partnership stock, which it would have been manifest error for the court to withdraw from the jury. The writings were in their individual names, but the property was a mere chattel, and if the parties by parol associated themselves as partners, for the purpose of developing and operating it for the production of oil, it might thereby be converted into partnership assets, for the payment of the partnership debts: Patterson v. Silliman, 28 . The cases cited by the plaintiff’s counsel, Ridgway’s Appeal, 15 Pa. 177; Holt’s Appeal, 98 Pa. 257; and Shafer’s Appeal, 106 Pa. 54, have no application to mere chattel interests in land, and are wholly inapplicable to this case. We think the court was right in holding that under the evidence these leaseholds had been treated as partnership property and were properly so considered;

It is clear, too, that J. M. Brown according to his own testimony knew Marsh and Brown to he operating the Cornen leases as partners, and that they were indebted as partners, not only to Beecher & Copeland but to other parties. He told Marsh if John was a partner, he ought to have the property conveyed to him and the conveyance was made accordingly. Upon this branch of the case the court says: “Whether the plaintiff actually knew, when he took the transfer of his brother’s interest, that the relation of partnership existed between his brother and Marsh, and that the property in suit was partnership property, does not appear by any direct testimony; but we find that he did so know, from the testimony of Marsh and the cross-examination of the plaintiff, taken- in connection with the fact that he - knew, or ought to have known, that the leases were bnt chattels, and that he had abundant opportunity to know the nature and character of the business in which Marsh and his brother were engaged, and abundant opportunity to learn the fact hereinbefore found, viz: that the property in suit was the partnership property of George W. Marsh and John A. Brown, and so used by them in carrying on their partnership business.”

The court further found, that “in operating upon and developing the premises in dispute with other property of the firm, Marsh and Brown incurved a partnership debt to the defendants, M. Beecher and W. H. Copeland, dealers, in the name of Beecher & Copeland, in hardware and oil well supplies, etc. This indebtedness was incurred in the firm name of Marsh & Brown and was a partnership debt.” The testimony upon which this finding is based has already been referred to. It is immaterial that the judgment of Beecher & Copeland was entered against Marsh and Brown, in their individual names; if the debt was in fact a partnership debt, Marsh would not be deemed to have waived his equity as a partner, by signing his individual name to a judgment note as a security for the debt.

The transfer by John A. Brown to his brother was made without the consent or even the knowledge of Marsh, and the property continued in the same custody and under the same management after as before. J. M. Brown will therefore, in the first instance, be presumed to have taken the transfer from his brother, John A. Brown, subject to the payment of the partnership debts; it was Marsh’s right to insist upon this, and this gives rise to the equity of the partnership creditors. The case is similar in most respects to Chamberlain v. Dow, 16 W. N. 532. The facts in that case run parallel with the facts here ; precisely the same questions of law are involved, if that case was rightly decided, the principles there declared must govern in the determination of this case upon the questions we have already passed upon.

There is, however, another feature of this ease to which we have not yet adverted. Wolford, who, on the 4th of July, 1882, at the instance of Marsh, became surety in the judgment of Beecher & Copeland, on the 11th of the same month, took an assignment from Marsh, inter alia, of all the interest in the Cor-non leases; the assignment purported to be on a sale for a money consideration. The plaintiff’s contention is, that Marsh by this means lost his dominion over the property and his status as a partner, and that therefore he had no equity, which either he or his creditors through him could set up at the time of the sheriff’s sale, to have the entire partnership interest sold for the payment of the partnership debts. The evidence would seem clearly to establish, however, and the court found, that the transfer was not an absolute one; that it was given as a security or indemnity merely, and that Wolford never took possession of the interest assigned and never assumed any management or direction of the business. On the contrary, the property continued in the same custody, and under the same management, after the transfer, as before; the assignment by Marsh did not convey to Wolford the property of the firm with any right or dominion over it; he pledged his interest, as it might ultimately appear, as an indemnity merely to Wolford against loss on his suretyship.

Marsh still retained his interest as a partner, and continued to exercise dominion and control over the property. Upon this subject the testimony is clear, explicit and unequivocal; it is wholly uncontradicted; there is not a single fact, outside the form of the deed, in conflict with this view of the case. It is immaterial that the instrument was not made in compliance with the legislation respecting leasehold mortgages. Although a deed in form, in effect it was only a pledge of Marsh’s interest, as it might appear on settlement of their accounts; Marsh could not, and therefore did not, deliver the possession of the lease, for it was part of the firm effects and so beyond his individual control. Under these circumstances we think he did not part with his equity, and that the firm creditors, afterwards working out that equity through him, had a right to, and did,sell at the sheriff’s sale, the entire title in the Cornen leaseholds for the payment of their debt.

The act of June 8, 1881, relating to and defining defeasances, etc., applies to deeds for real estate only. As we have already said, the leases from Comen conveyed an interest in land, but a chattel interest only. A lease for years is personal, not real estate; at the decease of the lessee it passes, not to the heir, but to the administrator, as personal assets for the payment of debts. Upon a full consideration of the whole case, we are constrained to say that the re-argument of this case has not changed our views, in regard to it, and therefore,

The judgment is affirmed.