Hosmer, Ch. J.
1. Whether as between Sigourney and Munn the land mentioned in the plaintiff’s bill is a portion of the partnership fund, is the first question which the case presents.
For the more clear understanding of the questions of law in the case, I will consider the rights of the parties in relation to real estate, by a division of them into three classes.
The first of them exists when partners invest part of their capital in land, without any reference to the accommodation of the partnership business, and without any special agreement concerning the use of the property.
This class of rights is so distinct from the case before us, that to discuss it would be useless; and my only purpose in noticing it, is to dispose of some of the determinations that have been cited.
The case of Coles v. Coles, 15 Johns. Rep. 159. hardly falls within it, and certainly does not extend beyond it. The partners, Stephen and Willet Coles, sold and conveyed two lots of land for 9000 dollars, which sum was paid by the purchaser to the defendant. To recover this sum, the administrators of [18]*18Stephen brought an action against Willet for money had and rece¡ve(j partnership had existed between the intestate and the defendant, in relation to the business of a still-house situate on the above lots of land ; but it does not appear, that the land or house was bought with partnership property, or that they were any part of the company’s fund. A verdict was rendered in favour of the plaintiff, under the judge’s direction, for a moiety of the sum received by the defendant, on the ground that the intestate was entitled only to the half of the land, the partners being joint owners or tenants in common of it. Now, on these facts, that they were tenants in common, and not partners, in the land, is too clear to be questioned. The court, it is true, expressed an opinion, that the principles and rules of law, which govern and regulate the disposition of the partnership property, do not apply to real estate, even when held for the purposes of the partnership. This opinion, however, was obiter; and the question could not be thoroughly discussed, in a case where it was unimportant and inapplicable ; and that this was the fact every one would be convinced, by reading the report of the case. Were it entitled to higher consideration, I would array against it the determination in Edgar v. Donnally & al. 2 Munf. 387. in which it was decided, that where a right of land had been acquired with partnership stock, and a title was taken in the name of one of the partners, a claimant under the other partner in equity was entitled to a moiety of the land, against a purchaser with notice of the partnership right.
The case of Goodwin v. Richardson, 11 Mass. Rep. 469. falls within the class I am considering. Land was mortgaged to two partners, to secure a partnership debt ; and an absolute title was afterwards obtained by foreclosure. This was considered by the court as the acquisition of a new title, by purchase, out of the partnership fund ; and that the partners, in this transaction only, were tenants in common of the estate. The case involves this proposition merely, that where two partners buy land with partnership stock, and there is nothing more in the case, the land is not partnership property.
The cases of McDermot v. Lawrence, 7 Serg. & Rawle, 442. and Forde v. Heron, 4 Munf. 316. go beyond the principle of the former case, and decide, that real estate, acquired by'partnership funds, and held by partners in common, may be charged by one partner, on his private agreement, to the ex[19]*19tent of his legal title, provided the purchaser or mortgagee dealt with him bona fide, and without notice of the partnership rights.
I now come to the consideration of a second class of rights, —that is, where partners invest part of their capital in real property for the purpose of accommodating the partnership business.
Courts of law, who look at the legal title only, will consider persons in the above predicament merely as tenants in common. But courts of equity, unfettered by technical rules, and regarding the justice of each particular case, will break through the exterior form of a transaction, and if real estate is acquired by partnership funds, for partnership purposes, will consider it as the stock of the company, and the legal owners as trustees for those beneficially interested. It is an obvious truth, that partners are sometimes obliged to vest part of the company’s fund in real estate, the better to carry on their trade ; and when this is done, common sense and natural justice demand, that houses and land thus acquired, with joint capital for joint purposes, should be considered as partnership property, and be liable to all the incidents attending the company’s stock. Nor am I able to imagine a reasonable objection to the principle. If there is any, it must arise from its producing general inconvenie ce ; but for this supposition there is no foundation. It is entirely obviated, by the refusal of a court of equity to interfere, where a conveyance is bona fide and for valuable consideration.
To enter on an examination of all the cases decided in Westminster-Hall, in which the subject in question has been extensively discussed, would be both tedious and unnecessary. That partnership capital invested in real estate, for the purpose of accommodating the partnership business, is, in chancery, deemed personal estate and part of the company’s fund, has been decidedly established. Thornton v. Dixon, 3 Bro. Ch. Ca. 199. Smith v. Smith, 5 Fes. 189. Ripley v. Waterworth, 7 Ves. 424 Featherstonhaugh v. Fenwick, 17 Ves. 298. Townsend v. Devaynes, Gow on Part. 52. Crawshay v. Maule, 1 Swans. 521. Selkrig v. Davies, 2 Dow's Parl. Ca. 242. Decisions to the contrary have heen made, it is admitted. Bell v. Phyn, 7 Ves. 453. Balmain v. Shore, 9 Ves. 500. Gow on Part. 51, 2, But the number and weight of determinations are altogether in favour of the preceding principle. Lord Eldon, in the case of Selkrig v. Davies, 2 [20]*20Dow’s Parl. Ca. 242. has gone the length of expressing the Opin¡on¡ that all property involved in a partnership concern ought to be considered as personal. See also Crawshay v. Maule, 1 Swans. 508. 521.
There remains a third class of cases, which I will now consider ; and that is, when partners, in their copartnership articles, or at the time of a purchase, agree, that real estate, advanced as stock, or acquired with partnership funds, shall form a part of the company’s property.
It was decided by Lord Thurlow, in Thornton v. Dixon, (supra) that a copartnership agreement might alter the nature of real property, if it were express, and thereby make it partnership fund ; (11 Ves. 665, 6, 7. 7 Ves 425.) and in two cases, which came before the late learned master of the rolls, Sir William, Grant, he acted upon the above decision, and considered it to conclude the question. Bell v. Phyn, 7 Ves. 453. Balmain v. Shore, 9 Ves. 500.
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Hosmer, Ch. J.
1. Whether as between Sigourney and Munn the land mentioned in the plaintiff’s bill is a portion of the partnership fund, is the first question which the case presents.
For the more clear understanding of the questions of law in the case, I will consider the rights of the parties in relation to real estate, by a division of them into three classes.
The first of them exists when partners invest part of their capital in land, without any reference to the accommodation of the partnership business, and without any special agreement concerning the use of the property.
This class of rights is so distinct from the case before us, that to discuss it would be useless; and my only purpose in noticing it, is to dispose of some of the determinations that have been cited.
The case of Coles v. Coles, 15 Johns. Rep. 159. hardly falls within it, and certainly does not extend beyond it. The partners, Stephen and Willet Coles, sold and conveyed two lots of land for 9000 dollars, which sum was paid by the purchaser to the defendant. To recover this sum, the administrators of [18]*18Stephen brought an action against Willet for money had and rece¡ve(j partnership had existed between the intestate and the defendant, in relation to the business of a still-house situate on the above lots of land ; but it does not appear, that the land or house was bought with partnership property, or that they were any part of the company’s fund. A verdict was rendered in favour of the plaintiff, under the judge’s direction, for a moiety of the sum received by the defendant, on the ground that the intestate was entitled only to the half of the land, the partners being joint owners or tenants in common of it. Now, on these facts, that they were tenants in common, and not partners, in the land, is too clear to be questioned. The court, it is true, expressed an opinion, that the principles and rules of law, which govern and regulate the disposition of the partnership property, do not apply to real estate, even when held for the purposes of the partnership. This opinion, however, was obiter; and the question could not be thoroughly discussed, in a case where it was unimportant and inapplicable ; and that this was the fact every one would be convinced, by reading the report of the case. Were it entitled to higher consideration, I would array against it the determination in Edgar v. Donnally & al. 2 Munf. 387. in which it was decided, that where a right of land had been acquired with partnership stock, and a title was taken in the name of one of the partners, a claimant under the other partner in equity was entitled to a moiety of the land, against a purchaser with notice of the partnership right.
The case of Goodwin v. Richardson, 11 Mass. Rep. 469. falls within the class I am considering. Land was mortgaged to two partners, to secure a partnership debt ; and an absolute title was afterwards obtained by foreclosure. This was considered by the court as the acquisition of a new title, by purchase, out of the partnership fund ; and that the partners, in this transaction only, were tenants in common of the estate. The case involves this proposition merely, that where two partners buy land with partnership stock, and there is nothing more in the case, the land is not partnership property.
The cases of McDermot v. Lawrence, 7 Serg. & Rawle, 442. and Forde v. Heron, 4 Munf. 316. go beyond the principle of the former case, and decide, that real estate, acquired by'partnership funds, and held by partners in common, may be charged by one partner, on his private agreement, to the ex[19]*19tent of his legal title, provided the purchaser or mortgagee dealt with him bona fide, and without notice of the partnership rights.
I now come to the consideration of a second class of rights, —that is, where partners invest part of their capital in real property for the purpose of accommodating the partnership business.
Courts of law, who look at the legal title only, will consider persons in the above predicament merely as tenants in common. But courts of equity, unfettered by technical rules, and regarding the justice of each particular case, will break through the exterior form of a transaction, and if real estate is acquired by partnership funds, for partnership purposes, will consider it as the stock of the company, and the legal owners as trustees for those beneficially interested. It is an obvious truth, that partners are sometimes obliged to vest part of the company’s fund in real estate, the better to carry on their trade ; and when this is done, common sense and natural justice demand, that houses and land thus acquired, with joint capital for joint purposes, should be considered as partnership property, and be liable to all the incidents attending the company’s stock. Nor am I able to imagine a reasonable objection to the principle. If there is any, it must arise from its producing general inconvenie ce ; but for this supposition there is no foundation. It is entirely obviated, by the refusal of a court of equity to interfere, where a conveyance is bona fide and for valuable consideration.
To enter on an examination of all the cases decided in Westminster-Hall, in which the subject in question has been extensively discussed, would be both tedious and unnecessary. That partnership capital invested in real estate, for the purpose of accommodating the partnership business, is, in chancery, deemed personal estate and part of the company’s fund, has been decidedly established. Thornton v. Dixon, 3 Bro. Ch. Ca. 199. Smith v. Smith, 5 Fes. 189. Ripley v. Waterworth, 7 Ves. 424 Featherstonhaugh v. Fenwick, 17 Ves. 298. Townsend v. Devaynes, Gow on Part. 52. Crawshay v. Maule, 1 Swans. 521. Selkrig v. Davies, 2 Dow's Parl. Ca. 242. Decisions to the contrary have heen made, it is admitted. Bell v. Phyn, 7 Ves. 453. Balmain v. Shore, 9 Ves. 500. Gow on Part. 51, 2, But the number and weight of determinations are altogether in favour of the preceding principle. Lord Eldon, in the case of Selkrig v. Davies, 2 [20]*20Dow’s Parl. Ca. 242. has gone the length of expressing the Opin¡on¡ that all property involved in a partnership concern ought to be considered as personal. See also Crawshay v. Maule, 1 Swans. 508. 521.
There remains a third class of cases, which I will now consider ; and that is, when partners, in their copartnership articles, or at the time of a purchase, agree, that real estate, advanced as stock, or acquired with partnership funds, shall form a part of the company’s property.
It was decided by Lord Thurlow, in Thornton v. Dixon, (supra) that a copartnership agreement might alter the nature of real property, if it were express, and thereby make it partnership fund ; (11 Ves. 665, 6, 7. 7 Ves 425.) and in two cases, which came before the late learned master of the rolls, Sir William, Grant, he acted upon the above decision, and considered it to conclude the question. Bell v. Phyn, 7 Ves. 453. Balmain v. Shore, 9 Ves. 500. In the case cited from the 7th vol. of Serg. & Rawle, (p. 438.) Ch. J. Tilghman observed, that by positive agreement, as between the partners and their heirs and personal representatives, the character of real estate may be changed ; — that it may be brought into stock, and considered as personal property.
I think there exists no reasonable doubt, that the land in question, put into the compai y stock in part, and partly bought for partnership purposes with partnership funds, and the whole being under an express agreement that it should be partnership property, must in equity be considered and treated in this light.
2. The next question occurring in the case, is, whether there is a balance due to the plaintiff, after the application of all the company funds towards his demand. This he has averred ; and to establish his allegation, he has adduced the report of the committee appointed to enquire into the truth of the facts set forth in his bill. That the fact alleged is supported, admits of no doubt, if the committee have duly ascertained the value of the partnership property. A large amount of personal estate was on hand, at the dissolution of the partnership ; and in arriving at their result, the committee have taken a valuation by estimate, both of the real and personal estate. This proceeding is inadmissible. At present, I shall say nothing concerning the real estate ; but as to the personal property, it may not in this manner be estimated. A partner cannot compel his [21]*21copartner to accept what, according to valuation, his interest may be worth Featherstonhaugh v. Fenwick, 17 Ves. 309. In every case in which a c- art of equity interferes, to wind up the concerns of a partnership, it directs the value of the stock to be ascertained in the way in which it best can be done, i. e. by a conversion of it into money. Crawshay v. Maule, 1 Swans. 506. 523. Gow on Part. 291, 2. 3 Kent's Comm. 37. Each party may insist, that the joint stock shall be sold, and if before a sale, the partner in possession of the capital continues to trade, with the joint property, he will be obliged to account with the other partner for the profits of the trade, subject to just allowances. Crawshay v Collins, 15 Fes. 218. and Featherstonhaugh v. Fenwick, 17 Ves 298.
For the before-mentioned reasons, the report of the committee cannot be accepted.
It is unnecessary, and would be premature, to express an opinion on the validity of the mortgage to Holbrook. As the facts in the case must undergo a re-examination, they may, on new lights obtained, receive such a variation from what they now appear to be, as to render any present opinion wholly unimportant. It will be sufficiently early to consider their effect when they are ultimately found.
Lanman, J. was of the same opinion.
PeteRS, J. dissented, on the ground that a sale of the partnership effects was not indispensable, in order to ascertain their value.
Brainard, J. was absent; and Daggett, J. having been of counsel in the cause, gave no opinion.
Cause remanded for a rehearing.