Adams v. Church

• Decision Date: 22 December 1902
• Parties: ADAMS v. CHURCH et al.
• Court: Oregon Supreme Court

70 P. 1037

42 Or. 270

ADAMS v. CHURCH et al.

Supreme Court of Oregon

December 22, 1902

Appeal from circuit court, Malheur county; M.D. Clifford, Judge.

Action by Isaac H. Adams against J.M. Church and others. From a judgment for defendants, plaintiff appeals. Reversed.

L.R. Webster and Will R. King, for appellant.

John L Rand and T.H. Crawford, for respondents.

BEAN J.

This is a suit to enjoin the sale of an undivided one-half of 160 acres of land in Malheur county to satisfy the debts of a partnership composed of the plaintiff and one R.M. Steel. Prior to November, 1885, the plaintiff made application to purchase the land in controversy under an act of congress "to encourage the growth of timber on the western prairies," and amendments thereto. 20 Stat. 113. Shortly afterward he entered into partnership with Steel for the purpose of carrying on the business of farming and stock raising, under the firm name and style of Steel & Adams. By the terms of the partnership agreement, plaintiff's timber culture was to be considered as partnership assets and was to be conveyed by him to the firm as soon as he obtained title from the United States. Thereafter Steel died and, the plaintiff refusing to comply with his agreement, it was decreed, in a suit prosecuted by Steel's representatives for the purpose of determining the assets of the firm and for its dissolution, that the land in controversy was partnership property, and belonged to the firm. Church v. Adams, 37 Or. 355, 61 P. 639. The proof of compliance with the provisions of the act of congress under which the land was taken was made by plaintiff and the final certificate issued to him in 1896. The partnership debts which it is now sought to enforce against the land were contracted prior to that time, so that the sole question for decision is whether the plaintiff's interest in the land can be seized and sold under execution for debts contracted by the firm of which he was a member prior to the issuing of the certificate. The case would be clear if Adams still owned the land in his individual right. The act of congress under which it was acquired provides as follows "Sec. 4. That no land acquired under the provisions of this act shall, in any event, become liable to the satisfaction of any debt or debts contracted prior to the issuing of the final certificate therefor." 20 Stat. 114. This is a valid provision, and a condition annexed to the grant which congress was authorized to make, and absolutely prohibits the seizure and sale of the land, against the will of the owner, for the satisfaction of a debt contracted by the donee prior to the issuing of the final certificate. Nash v. Bank, 3 Kan.App. 694, 44 P. 907; Clark v. Bayley, 5 Or. 343; State v. O'Neil, 7 Or. 141; Faull v. Cooke, 19 Or. 455, 26 P. 662, 20 Am.St.Rep. 836; k v. Riley, 29 Or. 289, 45 P. 766, 54 Am.St.Rep. 794; Miller v. Little, 47 Cal. 348; Russell v. Lowth, 21 Minn. 167, 18 Am.Rep. 389; Baldwin v. Boyd, 18 Neb. 444, 25 N.W. 580; Brandhoefer v. Bain, 45 Neb. 781, 64 N.W. 213; Van Doren v. Miller, 14 S.D. 264, 85 N.W. 187; Gile v. Hallock, 33 Wis. 523.

But it is argued that, when the land became the property of the firm of Steel & Adams by virtue of the decree referred to, the interest of Adams therein was no longer within the provisions of the act of congress, and thereafter became liable for the debts of the firm, whether contracted before or after the issuing of the final certificate, the same as it would for similar debts of a private individual to whom Adams had conveyed the title. The vice of this position, however becomes manifest when it is remembered that the decree does not affect Adams' title to an undivided one-half of the land in any way, except that thereafter he held it in trust for partnership purposes, and subject to the payment of such partnership debts as it might be legally liable for, in preference to his individual liabilities. The title did not pass to the partnership, because a partnership, as such, cannot take or hold the legal title to real estate. It is not a person, either natural or artificial, and when a deed is made to a partnership it passes the title to the individual members thereof as tenants in common. Kelley v. Bourne, 15 Or. 476, 16 P. 40; 1 Bates, Partn. § 296; Shumaker, Partn. 202. In England partnership realty is in equity deemed personalty for all purposes; but under the American doctrine it is, even in that forum, regarded as personal property only so far as may be necessary for the payment of the debts and the adjustment of the partnership assets. For such purposes, it is considered as personal property, and governed by the rules and general doctrine applicable to that species of property. But this is not an arbitrary rule, by which real estate, when it is once owned and possessed by a partnership, is transmuted by a court of equity into personal property for all purposes. It still retains all its characteristics as real estate, and must be owned and conveyed as such. The ground of the doctrine is the special interference of equity in favor of commerce, whereby the trust in favor of the partnership is separated from the legal estate, and made subject to the rules applicable to the personal property of a partnership, so far as it concerns the partners in relation to each other, or those in privity with them. It is only when necessary to protect the equitable rights of creditors and the respective partners, or when otherwise required by the exigencies of the partnership, that it is so considered by a court of equity. The legal title is at all times held by the copartners as tenants in common, and, when no longer needed for partnership purposes, it is released from all trusts growing out of the partnership relation; and, if each partner's legal title corresponds to his interest or share in the partnership, equity will not interfere to convert it into personalty, but it will descend to the heirs of the respective partners, as in the case of any other tenancy in common. "The clear current of the American decisions supports the rule," says Mr. Chief Justice Andrews in Darrow v. Calkins, 154...