Dunlap v. Byers

67 N.W. 1067, 110 Mich. 109, 1896 Mich. LEXIS 656

• Court: Michigan Supreme Court
• Decided: July 8, 1896
• Status: Published

Opinion

Long, C. J.

In 1873 James Dunlap, through whom 'the complainants claim, and William J. Byers, through whom defendants claim, were engaged in the business of buying and selling lumber in Cincinnati as partners, -under the firm name of James Dunlap & Co. In addition to the property they held as partners, they acquired title to an undivided two-thirds of certain lands in Huron county, this State; some of the lands being held in the name of Dunlap alone, and some of them being held in the names of Dunlap and Byers. Afterwards complainant Lucius P. Mason, who owned ■an undivided one-third oj the lands, conveyed such interest to James Dunlap by two deeds, but as security for advances made by Dunlap & Co. to said Mason, and for moneys owing by him to said firm. It appeared then that the title stood as follows: An undivided two-thirds in James Dunlap and William J. Byers, or, as complainants claim, James Dunlap & Co.; an undivided one-third iñ James Dunlap, in trust, as security from said Mason; and the legal title in an undivided one-sixth of the lands described in Schedules 1 and % of the bill in the name of William J. Byers. While the lands were in this condition, certain parcels were sold, and contracts and deeds made therefor, by James Dunlap, in his own name; and complainants claim that the lands were sold for the firm, with the knowledge and consent of William J. Byers, and the proceeds of such sales credited on the books of the firm.

On December 19, 1885, James Dunlap filed a petition in the superior court of Cincinnati, Ohio, for dissolution ■of the firm of James Dunlap & Có., praying for an accounting' and settlement of the affairs of the partnership, and a settlement of the accounts of the individual partners as between themselves. That petition alleged that James Dunlap and William J. Byers had been engaged as partners, under the firm name of James Dunlap & Co., in buying and selling lumber, their place ■of business being in Cincinnati, and that in connection with the business of the firm they had acquired a large quantity of lands in the State of Michigan. The petition further alleged that the assets and property of the firm consisted of lumber on hand, and, among other property, the lands in the State of Michigan, and which lands were purchased with the partnership funds for partnership purposes. The plaintiff in the petition further alleged that’ the amounts to his credit for advances made to the firm, and undrawn profits, were more than equal to the excess of assets over the liabilities of the firm, and claimed that the defendant was indebted to the firm. A receiver was also prayed for. The defendant William J. Byers filed an answer February 4, 1886, sworn to by him personally. He denied that the credits of the plaintiff in the firm were more than equal to the excess of assets over and above the liabilities, and denied that the Michigan lands were assets of the partnership of James Dunlap & Co.

On December 21, 1885, an order was made by the Cincinnati court, appointing Andrew Jackson receiver of the property of the firm. As appears Jby that order, it was made with the consent and in the presence of the defendant. December 20, 1886, judgment was rendered by that court, in which/it was specifically found that, as a firm, James Dunlap & Co. had purchased for the business of the firm an undivided one-third of certain lands in PPuron county, Mich., and that afterwards other undivided interests in similar lands in Huron county, Mich., were purchased bjr said firm with the funds of the partnership, and for the purposes of its business, and that the conveyances, while in the names of Dunlap and Byers, were taken in trust for the firm. It was also found by that judgment that William J. Byers was indebted to the :fii’HlM3..''the sum of $5,815.23, that the firm was indebted to James Dunlap in the sum of $36,683.18, and that the interest of the firm in the lands in Huron county, Mich., was an' undivided two-.thirds held absolutely, and an undivided one-third held ;as security for whatever balance might be due from /Lucius P. Mason. The judgment further provided that, for the purpose of paying the debts of the firm, an undivided j two-thirds of said lands were partnership assets. The dissolution of the partnership was decreed, and the receiver was ordered to sell the interest of Dunlap & Co. in these lands, as well as all the remaining assets of the firm. The sale was made by the receiver on the 6th day of January, 1887, and the lands were bid in by James Dunlap for the sum of $6,500. The sale was duly confirmed by the court, and it was ordered that the receiver set over and convey, by bill of sale and instruments of conveyance, the purchase made by the purchaser at said sale; and William J. Byers was ordered to quitclaim to James Dunlap, by his deed, the legal title to an undivided one-sixth of the lands in Michigan. It appears by the receiver’s report that a part of the lands had been sold by Dunlap, or had been contracted to be sold, prior to the appointment of the receiver; and _the decree of the Cincinnati court also ordered James Dunlap and William J. Byers, severally, to quitclaim to such purchasers as soon as the- contracts were completed.

William J. Byers died February 31, 1890, without having obeyed the order of the court to quitclaim to James Dunlap the undivided one-sixth of the lands in Huron county, Mich. Since the death of William J. Byers, his heirs, the defendants in the present suit, have 'Commenced suits in ejectment against certain purchasers of certain of these lands, said heirs claiming to be the owners of an undivided one-sixth thereof. The complainants also claim that the heirs "of William J. Byers, in 1893, executed to Elbridge F. Bacon a mortgage covering a large number of the lands described in said bill, to 'secure him for his sew' as attorney for such heirs, but that .said Bacon was fully informed of the title to the lands, and was therefore not a bona fide purchaser. The bill was filed in -this cause to restrain the defendants ..from prosecuting these suits in ejectment, or commencing any further suits for the purpose of asserting claiir to the title to any part of said lands, and prays thai the defendants may be decreed to have no title or interest in or to any part of the premises described in the bill, and that they be decreed to release and convey to the complainants the undivided one-sixth of such lands, and that the mortgage to said Bacon be decreed to be void.v A decree was entered in the court below in accordance' with the prayer of the bill.

1. The contention of the defendants is that the decree of the superior court of Cincinnati, directing the lands to be sold, and the sale of such lands by the receiver in pursuance of the decree, were null and void, for want of power in the court to make such decree, and also that such sale did not of itself divest, or in any manner affect, the title of William J. Byers to the lands in question. It is also contended that these lands, being situate in the State of Michigan, could be sold by the court, or the receiver appointed by the court, only, if at all, in accordance with the laws of this State, and not under the laws of Ohio relating to the sale of lands. While it is not strenuously contended that the court at Cincinnati was not a court of general jurisdiction, yet it is claimed that it never acquired jurisdiction over the person or the subject-matter; while the complainants Contend that the superior court of Cincinnati was a court of general jurisdiction, with a limitation upon its territorial jurisdiction within the limits of the city of Cincinnati, and that the record shows that that court had jurisdiction of the parties to that action, as well as of the subject-matter of the suit.

William J. Byers appeared in that suit, and filed an answer to the petition; and the order appointing the receiver expressly states that the order was made with the consent of the defendant, and that the defendant, in open court, expressed his satisfaction and consent to the bond furnished by the receiver. It is well settled that, by appearing and pleading, the defendant submits himself to the jurisdiction of the court. Hayes v. Shattuck, 21 Cal. 51; Insurance Co. of North America v. Swineford, 28 Wis. 257; Evans v. Iles, 7 Ohio St. 233; Abernathy v. Latimore, 19 Ohio, 286; Gunn Hardware Co. v. Denison, 83 Mich. 40; Austin v. Burroughs, 62 Mich. 181. It is also well settled that, when an attorney appears in the case, the presumption is that he has proper authority to appear. Corbitt v. Timmerman, 95 Mich. 581 (35 Am. St. Rep. 586). The court, therefore, had jurisdiction of the person of William J. Byers in the proceeding for the dissolution of the partnership, and the appointment of a receiver, and the sale of the lands.

The court being one of general jurisdiction, and having acquired jurisdiction over the parties, the-only remaining question upon this branch of the case is whether it had jurisdiction of the subject-matter of the suit. While the distinction between law and equity is, to a great extent, abolished by the Ohio Code, the action brought in that court was, in effect, a bill for an accounting and dissolution of the partnership, including a prayer for a general settlement of the affairs of the firm, and the appointment of a receiver to take charge of the property for that purpose ; and by the statute of that State the court is given jurisdiction to try and determine such causes of action, and, in effect, is regarded as having such jurisdiction as an ordinary chancery court of general jurisdiction would have. The jurisdiction of courts of equity extends to all matters necessary to wind up the affairs of a partnership, including the sale of real estate; and the jurisdiction is not local, even though a part of the assets consists of real property, and although that property may be situate in another county or State. Godfrey v. White, 43 Mich. 171; Graydon v. Church, 7 Mich. 36; Lindsay v. Race, 103 Mich. 28; Lyman v. Lyman, 2 Paine, 11; Griggs v. Clark, 23 Cal. 427; Jones v. Fletcher, 42 Ark. 422; Wright v. Ward, 65 Cal. 525; 2 Story, Eq. Jur. §§ 743, 744, 1295-1297; 2 Bates, Partn. § 907.

In Godfrey v. White, supra, the bill was filed for a partnership accounting. The partnership owned plaster lands in Kent county, and the suit was brought'in the superior court of Grand Rapids, which had no territorial jurisdiction over the plaster lands. This court held that the lands were to be treated as assets of the firm, and that, for the proper settlement of the affairs of the partnership, the lands should be sold, and the proceeds divided. It was said by the court in that case:

“Proceedings between partners for an accounting are always for the principal purpose of reaching a statement "' '"oney balances, and a division of assets as personalty. It may, no doubt, in some cases, turn out that there is enough pure personalty to settle all balances, without reference to such lands as are owned by the firm, so that, if parties choose, they may keep the lands separate; but this cannot usually be known until the accounts are taken, and unless the lands are kept out of the accounting altogether, originally, by general consent, there must be some difficulty in treating them as distinct at any time. It would be contrary to all principle to hold a court capable of maintaining jurisdiction up to the last stage of a cause, and then incapable of completing its work over any part of the property in controversy. Partnership settlements cannot very well be made piecemeal. The courts that deals with them must determine all of the equities. The proceeding is, in its essence, a personal, and not a real, controversy. * * * The decree, when it reaches lands, does it incidentally, and its chief purpose is different.”

In effect, the rule is that, for the nurnoses of settlement. partnership-lands cannot be distinguished from other" assets. It therefore seems to us to appear concluSÍvé]y"""that the superior court of Cincinnati acquired jurisdiction, not only over the parties, but over the subject-matter, and had the power to adjudicate the rights of the parties in all the property belonging to the partnership, although a portion of the same was real estate in the Sthte of Michigan. This appears to be the general rule, and is supported by a large number of authorities cited in the brief of counsel for the complainants. Burnley v. Stevenson, 24 Ohio. St. 474 (15 Am. Rep. 621), is the leading Ohio case on thesubject; and the court there held that, although the deed made by the commissioner under the decree of the Kentucky court did not have tlie effect to transfer the legal title to the lands, nevertheless, the decree bound the consciences of those against whom it was rendered, and that such decree was record evidence of the fact that it became the defendants’ duty to convey the legal title to the plaintiffs. A similar rule was laid down in Wood v. Warner, 15 N. J. Eq. 81, and the court said:

“The strict primary decree of a court of equity is in personam, and not m rem, and the authority of this court to deal with contracts in relation to land not within the jurisdiction of the court is fully established.”

In Mitchell v. Bunch, 2 Paige, 606 (22 Am. Dec. 669), the court said:

“Although the property of a defendant is beyond the reach of the court, so that it can neither be sequestered nor taken in execution, the court does not lose) its jurisdiction in relation to that property, provided/ the person of the defendant is within the jurisdiction. * * * It is well settled both in England and in America that courts of equity have jurisdiction to enforce the performance of contracts, where the party proceeded against is within the jurisdiction of the court, regardless of the location of the property.”

y^So the rule seems to be well settled that while the« decree itself, in such cases, would not directly effect the transfer of title, the decree of the court would bind the consciences of the parties, and could be enforced by a court within the territory where the property was located^ In all jurisdictions it is settled that, nartnership lands must be regarded by a court of equity as personal property for the purpose of settling the affairs of the partnership affairs such court is given jurisdiction over real estate that is outside of the jurisdiction of the court. Thayer v. Lane, Walk. Ch. 200; Moran v. Palmer, 13 Mich. 367; Way v. Stebbins, 47 Mich. 296; Merritt v. Dickey, 38 Mich. 41; Godfrey v. White, 43 Mich. 171; Rammelsberg v. Mitchell, 29 Ohio St. 22; Page v. Thomas, 43 Ohio St. 38 (54 Am. Rep. 788); Greene v. Greene, 1 Ohio, 535 (13 Am. Dec. 642); Shanks v. Klein, 104 U. S. 18.

2. It is contended, however, by the defendants, that the complaint and answer were not broad enough, or specific enough, to furnish a foundation for the finding the court made in the case, in that there was no description of any of the lands claimed to belong to the partnership, and that the general allegation in the complaint that the lands in Michigan were partnership lands, and the denial of that allegation by the defendant, were not sufficient to create an issue as to any particular description of land, and did not authorize the decree that the land in question, or any part of it, was partnership property; and, further, that the court wotild not have jurisdiction to make a decree as to lands not so described. The petition for dissolution was specific in the: statement that a partnership existed. It also set out facts entitling petitioner to a dissolution, and that the lands in Michigan were purchased with partnership funds and for partnership purposes. The answer denied that these lands were assets of the partnership of James Dunlap & Co. The true purpose of the bill was for dissolution of the partnership, and an accounting between the partners. The Cincinnati court found that these lands were partnership assets. In a bill filed for such purpose, it is not necessary to describe the property specifically in the bill or petition. 2 Bates, Partn. § 936; Little v. Snedecor, 52 Ala. 167; Groves v. Tallman, 8 Nev. 178; Copeland v. Crane, 9 Pick. 73.

No proceedings were taken, so far as shown by this record, to set aside the judgment of the Ohio court. The questions which were there adjudicated cannot be reopened here, and the findings of that court are res adjudícala. Wilcox v. Kassick, 2 Mich. 165; Burnley v. Stevenson, 24 Ohio St. 474 (15 Am. Rep. 621).

3. Defendants further contend that the decree of the Ohio court was obtained by fraud, and that the sale under it was fraudulently conducted. There is no allegation in defendants’ answer that points out what acts of fraud are complained of. Wilson v. Eggleston, 27 Mich. 257; Reed v. Jourdan, 109 Mich. 128. But, even if the answer were sufficient to admit such proof, the defendants \pre not in position, in this collateral proceeding, to attack the judgment of the Ohio court on that ground. While a third person, without notice (at the time he acquired interests in the property) of the fraudulent character of the judgment, maj" attack the judgment for fraud in a collateral proceeding, it is held that parties and their privies can obtain relief from a fraudulent decree only in a direct proceeding for that purpose, and in the courtf where the original proceeding was had, either by writ of error, or by some other means to set the judgment aside. Eureka Iron & Steel Works v. Bresnahan, 66 Mich. 495; 2 Freem. Judgm. § 331.

1. It is also contended that the lands are insufficiently described in the decree, for the reason that no State or county, town or range, is designated. We think the descriptions definite enough to enable the lands to be located. The numbers of the section, town, and range are given. See Mee v. Benedict, 98 Mich. 260 (39 Am. St. Rep. 513).

5. It is also claimed that no decree was made by the Ohio court as to certain descriptions of the lands in controversy here. According to the finding of the Ohio court, these lands were partnership lands, but the title stood in James Dunlap; that he sold them, giving deeds of warranty, to the. knowledge of Mr. Byers, and the proceeds were credited to the partnership. The parties purchasing under suplí circumstances could maintain a bill in chancery to perfect their title. The court was not in error in including these lands in the decree, as well as the other lands referred to where contracts had been made and not completed.

The other points raised by the brief of defendants’ counsel must be overruled, as we think, upon this record, it would be inequitable and unjust to permit the heirs of William J. Byers to claim any interest in these lands, especially in view of the fact that William J. Byers, as well as the company itself, was indebted to James Dunlap, as found by the Cincinnati court, and which sum has not been canceled even by the. sale of the lands in controversy.

The decree of the court below must be affirmed.

The other Justices concurred.