Cunningham v. Ward
| Decision Date | 28 January 1888 |
| Citation | 5 S.E. 646,30 W.Va. 572 |
| Parties | CUNNINGHAM v. WARD et al. |
| Court | West Virginia Supreme Court |
Submitted January 12, 1888.
Syllabus by the court.
When real estate is purchased with partnership funds for partnership purposes, and so used, and the conveyance is made to the partners individually as tenants in common, or joint tenants, but it appears on the face of the deed that they are partners, and as such have bought the property, the individual partners hold the legal estate subject to the debts and equities of the partnership. [1]
A conveyance subsequently by one partner of an undivided moiety of such real estate to a trustee, to secure his individual creditors, passes the legal title to one undivided moiety of such real estate, but subject to the prior implied trust in favor of partnership creditors, or the balance due another partner upon a settlement of the partnership accounts; and after their payment the interest of the partner making such deed of trust in said real estate is bound by the express trust to pay his individual debts secured in such deed of trust.
In such case neither the other partner nor partnership creditors can enjoin the sale by the trustee under such deed of trust, as the purchaser at such a sale would hold the land subject to their prior equities, appearing on the face of the deeds under which such purchaser would claim the land bought at such a sale.
Appeal from circuit court, Roane county.
This was a suit in chancery, instituted in the circuit court of Roane county by the filing of a bill praying, among other things, the awarding of an injunction against the defendant A. B. Wells, trustee, from proceeding to make sale of the land in the bill mentioned. The bill was filed in open court on March 25, 1885, and the injunction asked to be awarded as prayed for in the bill, which was sworn to by the plaintiff P. G. Cunningham. And the bond, with approved security in the penalty of $200, the amount fixed by the court, was at once given, and the injunction took effect. The bill states that the plaintiff, P. G. Cunningham, and the defendant James T Ward, were for about 15 years partners, doing business in said county of Roane under the name of Ward & Cunningham that And the bill says that copies of them will be furnished if required; but no copies of any of these deeds were ever filed. And there is nothing in the record to indicate what was the character of any of these deeds, other than the above statement, except, perhaps, the deed of trust given by James T. Ward and wife on the 11th day of April, 1883, on his interest in those lands, to secure certain individual creditors of said Ward. The bill states that "this real estate was owned and held and used as partnership property of said firm of Ward & Cunningham; that said firm was dissolved in 1880, and said real estate is assets of the said late firm, and first liable to pay the debts thereof; that its business has not been entirely settled; that there are several suits now pending against this firm, [naming the suits,] which suits are undecided; that this real estate is all the partnership property, and is subject to the payment of these or any other partnership debts, though said Ward had made, on April 11, 1883, a deed conveying the undivided half of these several tracts of land to A. B. Wells, trustee, to secure the payment of a number of individual creditors of said Ward, named in the bill." A copy of this deed of trust is filed with the bill. It conveys his "undivided one-half interest in each of these tracts," naming them and stating that they severally are "now of record in the name of P. G. Cunningham and James T. Ward, purchased of certain persons severally, [giving their names, and the situation severally of each tract, and for a more particular and accurate description referring severally to the deeds from the several grantors to 'Ward & Cunningham, on record in the county clerk's office of said county.']" And this deed concludes this description of the lands conveyed thus: "This deed is intended to convey, and the above land described is all the land situated in said county owned in common by said P. G. Cunningham and said James T. Ward, containing in all 770 1/4 acres." This conveyance was in trust, to secure a number of individual debts of James T. Ward,--naming them severally. They amounted to more than $3,000; but the bill states that payment had been made on those debts which reduced them to some $1,800. It states, also, that a part of the original purchase money on one of the tracts of land, bought of one Edwards, was still unpaid, and that the trustee in this deed of trust, A. B. Wells, has advertised this real estate to be sold under this deed of trust, on March 25, 1885, for cash, as authorized by the deed of trust; that said Ward is insolvent; that there is a suit pending,--naming it,--to ascertain his indebtedness; and the bill then concludes "that said sale by the trustee, on March 25, 1885, before the amount and priority of said Ward's indebtedness in this suit is ascertained, and the amount of the liability of the said firm of Ward & Cunningham is ascertained and fixed, would result in a mere sacrifice of these lands, and the plaintiff would be irreparably injured by such sale." This bill then concludes thus: The parties defendant to the suit were James T. Ward, the trustee A. B. Wells, and the several creditors of Ward secured by this deed of trust.
The cause having been returned for hearing on the 1st day of September, 1885, the court by its decree referred the cause to a commissioner "to take and state the account of the late firm of Ward & Cunningham, showing (1) for what indebtedness said firm owes or is liable for, and to whom owing; (2) state the account between said Jas. T. Ward and P G. Cunningham growing out of said firm business; (3) any other pertinent matter." The defendants other than James T. Ward demurred to this bill, and the plaintiff joined in the demurrer, on March 31, 1886. The court by a decree overruled the demurrer, and these defendants filed a joint answer. I deem it unnecessary to state the contents of this answer except to say that they denied that there were any outstanding debts of the late firm of Ward & Cunningham; and, if there were, they alleged that abundant assets of this firm had been left in the hands of the plaintiff, P. G. Cunningham, to pay all these partnership debts, and that he had assumed to pay off all the debts of the late firm of Ward & Cunningham in consideration of these assets of the firm having been left with him, and that he had never accounted for these assets so left with him. The commissioner reported, on July 29, 1886, that the amount of the indebtedness of the late firm of Ward & Cunningham unpaid was $204.31, and that, in addition, the plaintiff, P. G. Cunningham, had, out of his own fund, paid debts of Ward & Cunningham to the amount of $2,280.05; and that Ward had collected $1,214.14, which he had not accounted for; and that therefore J. T. Ward was indebted to P. G. Cunningham the one-half of these two sums, or $1,747.09 1/2, with interest from March 25, 1886. There was returned with this report all the evidence taken by the commissioner,--four depositions and a number of exhibits. The evidence was in reference to the settlement between the partners of the business of the late firm of Ward & Cunningham, and was very unsatisfactory in its character; but I deem it unnecessary to state what it proved. There were five exceptions field to this report by the defendants, who were trustees in this deed of trust. On December 1, 1886, the court rendered this decree: ...
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