Picetti v. Orcio

58 P.2d 1046, 57 Nev. 52, 1936 Nev. LEXIS 29

• Court: Nevada Supreme Court
• Decided: June 30, 1936
• Docket: 3096
• Status: Published

Opinions

An analysis of the testimony will bear out the conclusion that the entire premises was used by one of the partners for the purpose of raising money to carry on and conduct the business for all of them, and that the partnership as a whole, including all of the assets, becomes liable for the payment of the debt. Minter v. Minter, 157 P. 157; Arnold v. Wainwright, 80 Am. Dec. 448.

Real estate acquired and used in the manner in which this property was, will be deemed in equity as the property of the partnership. Whitney v. Dewey, 158 Fed. 385, 86 C.C.A. 21; Adams v. Blumenshine, 204 P. 66; Sumner v. Hampson, 32 Am. Dec. 722.

The record here shows that the improvements which are a part of the realty were acquired with partnership funds and funds acquired on the security of the property as a whole. Hogle v. Lowe, 12 Nev. 286.

Without any question of doubt Joe M. Orcio and his wife had the power to manage the business and subject the partnership assets to a mortgage lien as they did. Hogle v. Lowe, supra; Gold Fork Lumber Co. v. Sweeney Smith Co., 205 P. 554.

The presumption of law is in favor of the execution of the mortgage by Mrs. Orcio, when acknowledged before a notary public, and this, coupled with the testimony of the notary public himself to the effect that Mrs. Orcio said she signed the document, has not been overcome by the mere denial of Mrs. Orcio. Under the conveyance by which the lands involved were deeded to defendants, they took and held as tenants in common. Section 1513 N.C.L.; section 3362 N.C.L.

"An undivided interest in realty may be made the subject of a mortgage, but a mortgage by one tenant in common conveys only his rights to the property." 41 C.J. 481, 62 C.J. 542.

In view of the foregoing, it is clear that the execution of the purported mortgage by Joe M. Orcio did not affect the interests of the other three defendants, or create any lien on their interests in the lands as tenants in common.

Although ordinarily where one tenant in common executes a mortgage it holds as to his interest, in the case at bar the testimony established, and the court found, that the property involved had been used and occupied as the home of the defendants since its purchase, and that its value did not exceed $4,000. It was, therefore, the homestead of the defendants within the terms of section 3315 N.C.L. Moreover, inasmuch as Joe M. and Marie Orcio were husband and wife, he alone was unable to give any mortgage of their homestead, good even as to his own interest in the property. Section 3360, N.C.L.; art. IV, sec. 30, Constitution of Nevada; Clark v. Shannon, 1 Nev. 568; Ely First National Bank v. Meyers, 39 Nev. 235, 150 P. 308, 40 Nev. 284,161 P. 929.

The cases cited by appellant on the proposition as to whether or not real estate can be owned by a partnership are not in point. The land here involved was deeded to all four defendants as of record, and under section 1513 N.C.L., they took and held as tenants in common, and not as a partnership.

OPINION This is a suit to recover judgment upon a promissory note purporting to have been executed by defendants Joe M. Orcio and his wife, and to foreclose a mortgage alleged to have been executed by them to secure the payment of said note. The court entered a personal judgment only against Joe M. Orcio, and a judgment in favor of the other defendants.

Plaintiff has appealed from so much of the judgment as was adverse to her, and from the order denying a motion for a new trial.

In July 1919, the defendant Joe M. Orcio, Marie Orcio, his wife, Angelo Orcio, and Pedulla Giorgio purchased the ranch in question. The Doe family do not appear to have any interest in the ranch. It appears from the undisputed testimony of the defendants that each of them paid one-fourth of the purchase price of the ranch and they were named as grantees in the deed of conveyance.

It is the theory of the plaintiff that the defendants Joe Orcio and Marie Orcio, his wife, executed the note and mortgage in question, and that though the other two owners in the ranch did not sign the note and mortgage, the four constituted a partnership in the ownership and operation of the ranch, and that Joe Orcio had the authority to bind the four by the execution of the note and mortgage. It is the contention of each of the defendants that they are tenants in common and own an undivided one-quarter share in the ranch, and that the ranch constitutes a homestead in fact.

It appears that Joe Orcio and his wife borrowed $500 from the Washoe County Bank, in December 1919, and later (in 1920), a thousand dollars, both of which loans were secured by their joint mortgage upon the ranch; that thereafter (in 1921) Joe Orcio borrowed $2,500 from Philip Curti, and that a note therefor, and a mortgage securing the same, purporting to be executed by Joe M. Orcio and Marie Orcio, his wife, were delivered to him; that in 1928, Curti desiring to obtain the money on said last-mentioned note and mortgage, and Orcio being unable to pay it, negotiated a sale of the same to this plaintiff, who being desirous of a new note and mortgage, the one in question here was drawn, and admittedly executed by Joe Orcio, but denied by Marie Orcio. It is conceded that the other two defendants did not sign either the note or mortgage.

The first contention we will dispose of is whether the defendants were partners in the purchase and operation of the ranch, and whether Joe Orcio was the managing partner and had full power to bind the other defendants in the execution of the note and mortgage.

In support of the rule of law relied upon, counsel cite Adams v. Blumenshine, 27 N.M. 643, 204 P. 66, 67, 20 A.L.R. 369; Whitney v. Dewey, 158 F. 385, 86 C.C.A. 21; Sumner v. Hampson,8 Ohio 328, 32 Am. Dec. 722.

In the first-named case the court says: "The presumption is always against the inclusion in the firm assets of real estate held by the partners as tenants in common. * * * The mere use of the property for firm business is only a slight circumstance tending to show that the premises were intended to be partnership property."

The other two cases just mentioned are of no aid to us in deciding the question involved.

1. We think that the correct rule to be applied in a situation such as confronts us is stated in 20 R.C.L. p. 854, sec. 61, as follows: "There is some uncertainty as to what must be shown in order that real property may be considered a portion of the firm assets. The rule which has the support of the best authority, and which rests on sound principle, is the one which makes the intention of the parties at the time of taking the conveyance the proper test. In other words, the question is one to be determined from the intention of the parties, or as it is sometimes said, from the agreement of the parties. In all cases the presumption is against the inclusion of the real estate, and in order that it may be treated as belonging to the partnership the intention must be clearly manifested. There is also a presumption that the ownership of real estate is where the muniment of title places it. If by all the circumstances attending the transaction, it is made to appear that, in the intention of the parties, it was purchased for and was treated as partnership property, the presumption of ownership arising from the face of the deed will be overcome, and the property will be treated as belonging to the partnership."

In an early case arising in Virginia, where two men bought a tract of land with a mill situated upon it, which (mill) was operated as a partnership, the court said: "I consider Wheatley and Calhoun as joint owners of the realty, and partners only in the milling business carried on upon the property. There may, indeed, be partnerships in the business of milling, or mining, or farming; but unless the intent of the joint owners to throw their real estate into the fund as partnership stock is distinctly manifested, or unless the real property is bought out of the social funds, for partnership purposes, it must still retain its character of realty. Considering the partnership as a third person, the titles of the individual partners cannot be passed to it, perhaps, without violating the statute of frauds, unless it be by express agreement in writing, or unless, by purchasing with partnership funds, an implied trust is raised in its favor. In this case, I see nothing from whence to infer that there was any design on the part of these joint purchasers to convert their real estate into partnership stock; nor am I better satisfied, that the property was purchased with, or paid for out of, partnership funds. To raise a trust by such purchase it must have been made at the time with partnership funds or on partnership responsibility. The payment, incidentally, out of those funds of an installment due upon an antecedent contract on individual responsibility cannot raise such a trust, or give title to anything but reimbursement." Wheatley's Heirs v. Calhoun, 12 Leigh, 264, 273, 37 Am. Dec. 654.

In Parsons on Partnership (4th ed.), at section 265, it is said: "Real estate purchased for partnership purposes, and appropriated to those purposes, paid for by partnership funds, and necessary to partnership purposes, always becomes partnership property."

The same author, at section 266, says: "We consider that the three elements we have above stated must unite in order to make the real estate necessarily partnership property."

Counsel quotes from the case of Hogle v. Lowe, 12 Nev. 286, as follows: "When property is purchased with partnership funds for partnership purposes, and appropriated to partnership uses, no further proofs should be, and certainly none are, required in order to establish the evident intention and agreement of the partners. In such case, every act impresses upon the property the character of personalty."

Even this quotation contemplates a purchase with partnership funds, which was not the fact in the instant case. And counsel failed to quote the following language in the same paragraph: "But the mere fact that real property held by members of the firm as tenants in common is used by the partners in the partnership business for partnership purposes, or an agreement to so use it, is not of itself sufficient to convert it into partnership stock; there must be some evidence of further agreement to make it partnership property. (Vol. 1, Am. Lead Cas. 496). At law, real property used by a partnership is deemed to belong to the person in whose name the title by conveyance stands; and it is so considered in equity, until it is shown to be partnership property, either by evidence establishing a proper agreement, or by proof of purchase with partnership funds for partnership purposes."

It is said in 47 C.J. 677: "While, in accordance with general rules, an agreement beween joint owners of property to carry on a common trade or business and to share the profits and losses thereof will constitute a partnership, a mere community of interest, such as exists between tenants in common or joint tenants of real or personal property, does not make such owners partners or raise a presumption that a partnership exists, and this is so, even though they cooperate in making improvements in their property and in realizing and sharing the profits or the losses and expenses arising therefrom."

2. Without reviewing the evidence at length, we may say that all four of the defendants testified that each paid out of his own private funds one-fourth of the purchase price of the ranch. The wife testified that she earned the money she paid, partly before her marriage, as a trained nurse. Each of the witnesses testified that the individual purchasers acquired an undivided one-fourth interest in the property, and that they purchased the ranch for ranching purposes, each to receive one-fourth of the profits and to share equally the losses, if any. While the testimony of the defendant Joe Orcio, as to certain funds which went into improvements, and as to other phases of the case, is very unsatisfactory, we cannot say that it clearly appears that the finding of the trial court on this phase of the case was erroneous, and such finding must stand.

Counsel for appellant call to our attention several authorities which expressly recite the fact of an express agreement between the partners, at the time the real estate is appropriated to the use of the firm, to the effect that it shall become a partnership asset. They are not in point, since there was no such agreement in this case.

Counsel do not refer to the case of Arnold v. Stevenson,2 Nev. 234, where it was held that one partner has no authority to mortgage the real estate of the firm, and we do not find it necessary to determine the correctness of that holding.

3. The next question is whether or not Mrs. Orcio signed and acknowledged the mortgage in question, so as to charge the homestead interest of herself and husband with the debt. She testified that she did not sign it, and her husband testified that he signed her name to the deed, at the time he signed his name to it. To justify this court in reversing a judgment of the trial court on a question of fact, it must clearly appear that the trial court reached the wrong conclusion. Can we say in this case that the trial court did reach a wrong conclusion on the point in question?

We are satisfied that the trial court did not give due consideration to the weight which should be given to the certificate of the notary public, who certified to Mrs. Orcio's signature. We say this for the reason that the law on the point was not called to our attention, either in the briefs or the oral argument, which is very strong reason to believe that it was not suggested to the lower court.

Mrs. Orcio admitted signing two previous mortgages given on the ranch, one executed in 1919 and the other in 1920, the latter just a year before the mortgage to Curti was given, of which the one in question is in reality a renewal. She testified that the notary who certified to her signature to the Curti mortgage and to the one in question at no time sought to take her acknowledgment. The notary, who is an attorney and who prepared the two mortgages, pursuant to instructions, and who was in no way blamable for failure to include the other two owners as mortgagors, testified that at the time the husband signed the mortgage he told him that it would be necessary that his wife sign it also. He testified that the husband said it was impossible for her to come in at the time, to sign; and that, after waiting a few days, he drove out to the ranch, exhibited the note and mortgage to the wife, told her what they were, and that she must sign them; that she took them in the house and brought them back with her signature attached, handed them to him, saying she knew all about them, whereupon he certified to her signature in due form. Mr. Curti testified that he was in the attorney's office at the time that the husband signed the mortgage, and that he did not sign his wife's name thereto, as he testified.

4. What is the law pertaining to the impeachment of a certificate of acknowledgment of a notary public? The rule stated at section 267 of John's American Notaries (4th ed.) is as follows: "Certificates of acknowledgment may usually be impeached only for fraud, conspiracy, collusion or imposition, and clear, convincing and satisfactory proof is required."

In 46 C.J. at page 519, it is said, relative to impeaching a notary's certificate: "It may be contradicted or impeached by other competent evidence, but clear and convincing proof by disinterested witnesses is required."

1 R.C.L. p. 297, sec. 88, states the rule as follows: "The decisions disclose a very decided tendency on the part of the courts to attach weight to certificates of acknowledgment and to view attempts to discredit them with suspicion and distrust. It frequently has been stated as a rule that in order to impeach a certificate the evidence must be clear, cogent and convincing beyond reasonable controversy."

The supreme court of the United States, in Young v. Duvall109 U.S. 573, 576, 3 S.Ct. 414, 416, 27 L.Ed. 1036, in considering the weight to be attached to the certificate of a notary public, said: "Of necessity, arising out of considerations of public policy, his certificate must, under circumstances disclosed in this case, be regarded as an ascertainment, in the mode prescribed by law, of the facts essential to his authority to make it; and if, under such circumstances, it can be contradicted, to the injury of those who in good faith have acted upon it, — upon which question we express no opinion, — the proof to that end must be of such a character as will clearly and fully show the certificate to be false or fraudulent. Northwestern Mut. L. Ins. Co. v. Nelson,103 U.S. 544, 547 [26 L.Ed. 436]. The mischiefs that would ensue from a different rule could not well be overstated. The cases of hardship upon married women that might occur under the operation of such a rule are of less consequence than the general insecurity in the titles to real estate which would inevitably follow from one less rigorous."

The supreme court of Alabama, in Miller v. Marx, 55 Ala. 322, in disposing of this question, referred to and quoted from one or two cases sustaining the rule above stated. In that case the court said: "The question we are discussing is not new in the courts of justice. When families are about to lose the protection of the roof-tree, and to be turned homeless upon the world, it is but human that they should resort to every means within their power to avert so dire a calamity. Interest is no longer a disqualification to testify, under the statutes of this state. Impelled by keen apprehension of want, it is not surprising that parties to the suit, when on the witness stand, should testify under undue bias, no matter how honest their intentions to tell only the truth may be. Wives rarely join in a conveyance or incumbrance of a homestead, without a suppressed misgiving or reluctance. When in after years — perhaps after the death of the husband — such conveyances are about to be enforced, and the family dispossessed, how easy to prove by the wife herself, and perhaps by the children who have all the while been around her, that her signature was not voluntary, and that she did not assent to the conveyance. If such testimony can prevail to set aside solemn conveyances, acknowledged or proved, and certified according to the forms of law, what confidence can the public repose in land titles? It is much less hurtful that cases of individual hardship should be endured, than that, on testimony always open to distrust, the repose of society should be disturbed by so fearful discredit cast on the titles to real estate."

The supreme court of Washington, in Western L. S. Co. v. Waisman, 32 Wn. 644, 73 P. 703, 704, in dealing with this question, said: "That the evidence required to overcome a certificate of acknowledgment must be clear and convincing is generally held, and it may well be said that where fraud or duress is not shown as a circumstance attending an acknowledgment, the unsupported testimony of parties directly interested in the impeachment is not of that clear and convincing character that is necessary to overcome a record and an official act."

In a note to Ford v. Ford, 7 Ann. Cas. 245, a long list of cases is cited in support of the rule that to impeach a certificate of a notary public to an acknowledgment the evidence must be clear, cogent, and convincing beyond reasonable controversy; and in the same note many cases are cited to sustain the proposition that the testimony of interested witnesses is insufficient to overcome the force of the certificate of acknowledgment. As to this latter proposition we do not find it necessary to express an opinion. See 1 Devlin on Deeds, sec. 529.

5. Let us determine if the evidence in behalf of defendants Joe Orcio and wife to the effect that she did not sign and acknowledge the mortgage is so clear, cogent, and convincing as to overcome the certificate of acknowledgment and adverse evidence. We do not think it is. The defendants were vitally interested in defeating the foreclosure on their homestead, whereas the notary had no real interest in the outcome. When the husband signed the mortgage, he was told by the notary that his wife had to sign it, which showed that he knew the necessity of her signature. He is an attorney who stands unimpeached. Is it likely that, knowing the necessity of the wife's signature, he would certify to her having signed if he had known that she had not? The testimony of her husband is contradicted by Philip Curti, who may be a biased witness, but is not shown to be interested in the result. Furthermore, the testimony of the husband as to use of the $2,500 obtained from Curti in 1921 seems incredible. A few months after the ranch was purchased he gave a mortgage to the bank for $500, which indicates that he had no available funds at that time; and some months later he borrowed $1,000 from the bank, both loans having been secured by a mortgage in which his wife joined; yet a year or two later he testified to spending several thousand dollars for chickens and chicken feed, and accounted for the acquiring of such funds through earnings of $150 per month. His whole testimony, when closely analyzed, would indicate that it is entitled to little or no credit.

6, 7. There is nothing in the wife's testimony which throws suspicion upon it, save her interest and the improbability that a notary, knowing the law and its consequences, would be likely to falsely certify to her acknowledgment. It is true that if we accept the notary's testimony we must say that she did not, strictly speaking, acknowledge that she signed the mortgage. But, from his testimony, she handed him the document with her signature thereto, and stated she knew all about it. This, we think, was enough to bind her. It is the well-recognized rule that where one adopts the signature and seal of another, purporting to be his, he is bound thereby. Chivington v. Colorado Springs Co., 9 Colo. 597, 14 P. 212; Clegg v. Eustace, 40 Idaho 651,237 P. 438; Jansen v. McCahill, 22 Cal. 563, 83 Am. Dec. 84.

It is ordered that the judgment and order in favor of Joe M. Orcio and Marie Orcio, his wife, be and is hereby reversed, and the trial court is directed to enter a judgment in plaintiff's favor against them, and to decree a foreclosure of the mortgage as to their interest in the ranch. Judgment and order affirmed as to other defendants. Plaintiff to recover costs against Joe Orcio and wife.