Houston v. Stanton

11 Ala. 412

• Court: Supreme Court of Alabama
• Decided: January 15, 1847
• Status: Published

Opinion

COLLIER, C. J.

The agreement between the plaintiff and Rufus W. J. Stanton, contains a recital and stipulation as follows, viz: “ having mutually agreed heretofore to labor in concert, and be equal sharers and partners in law and equity in the product of our labor, and those under our care; and having agreed to bear, each and severally an equal part in the expense and debts incurred by carrying on a farm, raising stock, purchasing land, negroes and other property, sometimes jointly, sometimes individually — Now know ye, and all to whom these presents shall come, that we, the said Rufus W. J. Stanton, Hubbard D. Stanton, and Warren G. Stanton, do hereby agree to still continue and carry on our farm, purchase of property, and other branch of business in which we, or either of us may engage, in joint stock, and be equally liable, and equal sharers in all profit and loss, attending or accruing from our joint or individual operations ; and should either of the brothers of the parties aforesaid, die before a final adjustment and division of the property now owned by us jointly or individually, the survivor or survivors, if two should die before said adjustment and division, shall heir or inherit all the property after a liquidation and final settlement of all the debts, or lawful claims against us, or either of us,” &c.

The questions which arise upon this agreement are these, is it sufficiently comprehensive to embrace the notes which the complainants are' seeking to collect and make them part of the partnership property, and are the complainants entitled to the relief they ask ? The recital in the agreement is, that the parties had heretofore agreed to labor in concert, and participate equally in the product of their labor, and jointly bear the expense incurred by carrying on a farm, raising stock, purchasing land, &c. “ sometimes jointly and sometimes individually;” It is then agreed, as we have seen, to continue the partnership. The testimony establishes the existence of a partnership for farming and other purposes commencing in 1833. One witness testifies that the half quarter section of land which Moffitt purchased of R. W. J. Stanton, was the property of the latter jointly, though the ^egal title was in the vendor, and that their partnership contract made them alike interested in it. Independently of the written agreement, it may be, that the statute ot frauds would have pre-. vented the successful assertion of the complainants’ claim ; but the agreement recognizes the existence of a partnership, by which lands purchased on joint account, or in the name of the partners individually, inured to the benefit of all of them. The parol evidence is admissible for the purpose of showing when the.joint operations of the complainants and their deceased partner commenced, which we have seen was six years previous to the sale by Moffitt. We therefore incline to think, that the lands in question, whether the legal title was in one or all the partners, vested beneficially in the firm. This being the case, the notes received for the payment of the purchase money; though payable to one eo nomi-ne., vested in the partnership, at least in equity.

On the death of one partner, the survivors are entitled to all the choses in action, and other evidences of debt belonging to the firm. They must be collected in their name; and they are entitled to the exclusive custody and control of them: the books of accounts are incidents to the debts or choses in action; and whoever is entitled to the one, is of course entitled to the other. The right of action in relation to all partnership demands, is transferred to the surviving partners; but they are liable to account to the representatives of the deceased partner for his share of the partnership property. [6 Cow. Rep. 441; 1 Paige’s Rep. 398; 3 Id. 526; 6 Conn. Rep. 180; 7 Mass. Rep. 257; 1 Dall. R. 65, note; 3 Rawle’s Rep. 355; 4 Dev. R. 367 ; 1 Dev. & Bat. Eq. Rep. 524; 4 Ala. Rep. 588; 5 Id. 446; 2 Mass. Rep. 401; 6 Pick. R. 330.]

Mr. Justice Story, in his work on Partnership, (§ 346,) says, choses in action, debts and other rights of action of the partnership, belong to the surviving partners; and they possess the sole and exclusive right and remedy to reduce them into possession, although when so recovered, the survivors are regarded as trustees thereof for the benefit of the partnership; and the representatives of the deceased possess in equity the same right of sharing and participating in them, ‘ which the deceased partner would have possessed if he had been living. If then the complainants have made such a case as entitles the holders of the notes to enfore an equitable lien upon the land, which was the consideration of them, the suit is well brought in their names. To the consideration of this question we will now address ourselves.

The lien of the vendor of land for the unpaid purchase money, where it has not been waived, either expressly or by implication, is aright well established in equity; but, that it may be defeated'by an alienation to a bona fide purchaser without notice is equally clear. [Coote on Mort. 248; 3 Ala. Rep. 302; 7 Id. 318.] In Dufphey v. Frenaye, 5 Stew. & P. Rep. 215, it was held, where a sale of land has been made by a purchaser to a second vendee, for a valuable consideration, without notice of an incumbrance, if none of the purchase money has been paid, chancery will arrest the entire subsequent sale, and sustain the lien of the first vendor, for the purchase money. But the second purchaser will be protected to the extent of all payments made by him previous to notice of the lien or incumbrance; and if the lien is enforced against the land to any extent, it may be that he will be allowed for improvements made on it previous to the notice. To the same effect is 6 Monr. R. 198, 221.

. Mr. Justice Story considers the doctrine, that a lien exists on the land for the purchase money, though well settled in equity jurisprudence, is borrowed from the text of the civil law; and is manifestly founded on a supposed conformity with the intentions of the parties, upon which the law raises an implied contract. He therefore concludes that it is not inflexible, but ceases to act, where the circumstances of the case do not justify such an adherence to it. Such alien “ is not of so high and stringent a nature as that of a judgment creditor, for the latter binds the land according to the course of the common law; whereas the former is the mere creature of a court of equity, which it moulds and fashions according to its own purposes. It is in short, a right which has no existence until it is established by the decree of the court in the particular case, and is then made subservient to all other equities between the parties, and is enforced in its own peculiar manner, and upon its own peculiar principles. It is not therefore an equitable estate in the land itself, although sometimes that appellation is loosely applied to it.” [1 Mason’s Rep. 191, 212-13-14, 221-2.]

In Bailey v. Greenleaf, 7 Wheat. Rep. 46, it was decided that the vendor of real estate who has not taken a separate security for the purchase money, has a lien for it on the land, as against the vendee and his heirs; but this lien is defeated by an alienation to a bona fide purchaser without notice; and it cannot be asserted against creditors holding under a bona fide conveyance from the vendee. Whether it could be asserted against the assignees of a bankrupt, or other creditors coming in under the purchaser by act of law, was not determined. It was said, whether the lien of the vendor be established as “ a natural equity,” or from analogy to the principle, that in a bargain and sale the bargainor stands seized in trust for the bargainee, unless the money be paid; still it is a secret invisible trust, known to the vendor and vendee, and to those to whom it may be communicated. If a vendor relies upon this lien, he ought to reduce it to a mortgage, so as to give notice of it to the world, if he does not, he is in some degree accessory to the fraud committed on the public by an act which exhibits the vendee as the complete owner of an estate on which he claims a secret lien. Again: “ The lien of the vendor, if in the nature of a trust, is a secret trust; and although to be preferred to any other subsequent equal equity, unconnected with a legal advantage, or equitable advantage which gives a superior claim to the legal estate, will be postponed to a subsequent equal equity connected with each advantage.”

'It has been holden that a bona fide mortgagee of land, without notice of any equitable lien in the original vendor, of whom the mortgagor purchased,) is authorized to purchase of the mortgagor a release of the equity of redemption, (even after notice from the vendor,) in consideration of any just claim he may have upon the mortgagor, originating before such notice; but after notice, the lien attaches for so much as he may have actually paid or agreed to pay for such release, over and above the claims for which the mortgage was taken, and which originated before the notice. [4 Hen. & M. Rep. 113.]

In Moore, et al. v. Holcombe, et al. 3 Leigh’s Rep. 597, Moore purchased the land from Hancock, sold it to Franklin, executed a deed to him, received his bonds for the purchase money and assigned them to Murrell and Meem — all which occurred before Franklin had any intimation of the claim of Hancock. The assignees did not take the bonds 'upon any assurance of payment by Franklin; but the latter, on hearing of the claim of Hancock, determined to retain the purchase money until it should be decided whether the original vendor or the assignees had the best right to it. In this predicament of the case, the court said the question really is, between Hancock and the assignees, which shall have this portion of the purchase money, yet in the hands of Franklin. Does it belong to Hancock by virtue of his implied lien, or to the assignees, who have purchased the lands without notice of the arrears due to Hancock. The judges were all of opinion, that the assignees had the superior right to the money due on the bonds. It was said the equity as against the sub-ven-dee “ is, that he shall pay to the original vendor whatever he himself yet owes to his own vendor. If he owes anything, he and his land are discharged, upon his paying up the original vendor’s demand; and if he owes nothing, neither himself nor his land is in any way responsible.” It is then concluded that nothing was due from Franklin to Moore when he received notice of Hancock’s claim. Moore had previously sold his bonds “for value to persons who knew nothing of the vendor’s pretensions. From the moment of that sale, Franklin ceased to owe Moore any thing. He became the debtor of the assignees; and as he owed Moore nothing, he could be liable to Hancock for nothing.” It was admittéd that assignees take every bond subject to the obligor’s equity against the obligee. Such an equity is against the bond, and intended to avoid it; the equity of the original vendor is not to discharge or vacate, but to enforce the bond for his benefit. The assignees purchased the bond subject to any equity of the obligor against the obligee, but not subject to any supposed equity of the obligee’s vendor, of which they had no notice. It was asked, why should not the lien upon the bonds given by the sub-vendee, be lost by a sale of them, without notice, in the same manner that the vendor’s lien is lost as to the land, by a sale to a subsequent vendee without notice, and supposed that there was no distinction in the cases. The assignee of the bond it was said had possession of them, and a legal right to sue on them in his own name, and enforce payment; and that this was a legal advantage which equity would not take from a fair purchaser without notice. [2 Johns. Ch. Rep. 441, 479.] It was also said the assignment of the bonds transferred to Murrell &. Meem the lien on the lands, which the obligee had before the assignment, and that this lien, thus acquired, was not subordinate in the hands of the assignees to that of the original vendor; and as the assignees were the parties really interested, they should be made defendants to the bill. See 4 Hen. & M. Rep. 113, upon the last point; and upon the general doctrine of equitable lien, 2 Humph. Rep. 248; 4 Wheat. Rep. 256; 2 Wash. Rep. 141; 3 Litt. Rep. 217; 4 Id. 290, 318; 5 Monr. Rep. 287, 312; 3 J. J. Marsh. Rep. 178.]

The allegation of the bill, which denies the delivery of the deed by R. W. J. Stanton to Moffitt, is not supported by the proof. B. D. Turner, a witness examined at the instance of the complainants, testifies that he was a justice of the peace, and that Moffitt delivered to him that deed for the purpose of taking the acknowledgement of its execution, that after it remained in his possession about two months, Moffitt called to inquire whether the acknowledgement had been obtained. Witness then informed Moffitt that he knew the land was not paid for, and being involved in his affairs, he felt a delicacy in calling upon the grantor to acknowledge the deed. Moffitt then instructed witness to hold the deed, until he secured the parties or settled with them. Some short time after the interview narrated, D, M. Russell called on witness for the deed — claiming it as his own, and witness delivered to him.

Witness further testified, that R. W. J. Stanton called on him to know if he could get any pay from Moffitt, and requested him to sign the notes, as Moffitt promised to give H. G. Turner and witness as sureties. Giving to this testimony all the effect that can be claimed for it, and we think it falls short of establishing that there was not an absolute delivery of the deed, or that surety for the purchase money was a condition upon which the delivery became operative. The-possession of the deed by Moffitt is prima facie evidence that it was delivered to him by the grantor, and the onus lies upon the complainants of repelling this presumption by proof — and this they have failed to do.

The defendant positively denies that he was informed of the non-payment of the purchase money by Moffitt to R. W. J. S. until some time after he had consummated his purchase from Moffifitt — in fact, not until he had paid all but the two last in-stalments. It is proved by the testimony of D. M. Russell and J. Bliss, that at or about the date of defendant’s notes, they were assigned to Russell as agent of the trustees of the Massachusetts and Alabama Land Company — that the defendant was present when the assignment was made. Russell further testifies that he never heard of the non-payment of the purchase money due upon the sale to Moffitt, until, (according to his recollection,) this suit was instituted.

Here then, simultaneously with the making of the notes of the defendant, they were assigned by the payee — neither the maker nor assignee being informed that there was an equitable lien on a part of the lands, or any thing of which it could be predicated, at the instance of the person from whom Moffitt purchased. This state of facts brings the case directly within the influence of the decision cited from 3d Leigh, which is not only well supported by the reasoning there employed, but is fortified by the principles and illustrations furnished in the citations from 1st Mason and 7th Wheaton. It is unnecessary to re-state the argument here —it has been sufficiently expanded, and satisfactorily shows, that the equity of the complainants, as it existed against Mof-fitt, cannot be enforced against the land, nor can the defendant be chargeable upon the ground that he was informed of the claim of the complainants before he had completed the payment of the purchase money. Before he received such information, the notes were assigned to a third person who it appears from the evidence had no notice of any equity that could affect his right to receive the money on them. This we have seen gave to the assignee the paramount title, both at law and in equity, to the notes and their proceeds; consequently left nothing due by the defendant to Moffitt to subject to the complainant’s demand.

The declarations of the defendant, after he was informed of the claim set up by the complainants, that he did not intend to pay for the land, until he was made safe, cannot impair the rights of the assignee, or assist the equity of the complainants. Nor can the indemnity which the defendant received from the assignee as an inducement to complete the purchase money, have any effect upon the right of the latter to retain the money. The giving or receiving such an indemnity, neither impliedly nor expressly admitted any thing favorable to the complainants, or prejudicial to the defendant, or the assignee in a controversy with them.

Other questions have been discussed at the bar, but what we have said is decisive against the complainant’s right to recover, we have therefore but to add, that the decree of the court of chancery is reversed, and the bill dismissed.