Gardner Hotel Co. v. Hagaman
| Decision Date | 04 April 1921 |
| Docket Number | 358 |
| Citation | 182 N.W. 685,47 N.D. 434 |
| Court | North Dakota Supreme Court |
Questions of law certified in an action to determine adverse claims in District Court, Cass County, Cole, J.
Determination of trial court modified and affirmed.
Spalding & Shure, for appellant.
Without the furnishing of the inventory of the partnership property and the giving of the bond required by § 8711, the surviving partner is disqualified to sell and convey the partnership realty. McFadden Case, 40 N.D. 415; Tillinghast v. Champlin, 4 R. I. 173, 67 Am. Dec 510 and other authorities.
Partnership realty is converted into personalty only for the purpose and to the extent necessary to liquidate partnership affairs that the ultimate right to the surplus of the proceeds is in the heirs, and that this leaves the legal title to real property in the heirs. Tillinghast v. Champlin, supra, is a leading authority on the subject and treats it exhaustively. Woodword-Holmes Co. v. Rudd (Minn.) 27 L.R.A. 340 and notes 348; Barton v. Lovejoy, 56 Minn. 360, 45 Am. St. Rep. 482; Hanson v. Metcalf, 46 Minn. 25, 40 N.W 441.
Fowler & Green, for respondents.
The provisions of § 8711, Comp. Laws, are for the protection of beneficiaries, and are intended to see that the surviving partner performs his trust, but are not limitations upon his power to sell or convey. Havens & Co. v. Harris (Ind.) 39 N.E. 49; Courtland v. Bank (Ind.) 40 N.E. 1070; Bank v. Peru (Ind.) 27 N.E. 486.
The entire fee-simple title vested in the surviving partner. Comp. Laws 1913, §§ 5261, 6389, 6394, 6425; Woodward v. Nudd, 27 L.R.A. 340, and editorial notes to that case, 59 N.W. 1010.
OPINION
This is a suit to quiet title to certain property adjacent to the Gardner Hotel in Fargo, North Dakota. It was the partnership property of C. A. Bowers and J. H. Bowers. In 1917 the latter died leaving a widow, Catherine, and daughter, Helen, ten years old. The surviving partner contracted to sell the property to the Gardner Hotel Company, and on receipt of $ 40,000 made to the hotel company a conveyance whereby for himself, individually and as surviving partner, he conveyed the property to the Gardner Hotel Company. Catherine Bowers joined in the deed. The surviving partner did not make to the administrator of the deceased an inventory of the partnership property, with a bond, as provided by statute. Comp. Laws, § 8771. The court gave judgment sustaining the deed as a valid conveyance and quieting title under the deed. And to remove all doubts on the matter the case has been duly certified to this court pursuant to the statute.
The question is on the power of the surviving partner to sell and convey the partnership property regardless of any inventory or bond, and on the jurisdiction of the court to quiet title. Doubtless the heirs of the deceased might have obtained an order from the probate court requiring the filing of an inventory and bond, but the surviving partner is so amply responsible and so far above suspicion that the filing of a bond and inventory would be an idle act. It would have made expense for no purpose. And such filing is not made a condition precedent to the power to sell and convey the partnership property of the vesting of title in the surviving partner.
By statute, "on the death of a partner the surviving partners succeed to all the partnership property, whether real or personal, in trust for the purpose of liquidation, even though the deceased was appointed by agreement sole liquidator; and the interest of the deceased in the ultimate distribution of the partnership assets passes to those who succeed to his other personal property." Comp. Laws, § 6425. The term "other personal property" indicates that the partnership assets are classed as personal property. The statute contemplates no procedure in probate. It vests in the surviving partner the title to all partnership property in trust for the purpose of liquidation,--for the purpose of selling the property, paying the debts, winding up and closing the affairs of the partnership. When that is done the interest of the deceased in the distribution of the partnership assets passes to the heirs the same as "other personal property." On the plain words of the statute it is entirely clear that the surviving partner had full power to sell and convey the property in question. His deed gives a good title to his own and to the partnership estate. There is no good reason for reviewing the numerous authorities cited by counsel.
Objection is made to the jurisdiction of the court on the ground that this is a probate matter, in which the Constitution gives to the county court exclusive original jurisdiction. Constitution, § 111. The answer is that the liquidation of a partnership estate is not a probate matter. County courts have no jurisdiction of actions to quiet title, and in such actions the district courts have original jurisdiction. The district court, with few exceptions, has original jurisdiction of all cases, both at law and in equity. Const. § 103. In the district court actions to quiet title and determine adverse claims to real estate are a common and every-day occurrence. By statute any person having an estate or interest in land may maintain an action to quiet his title against any person claiming an adverse estate or interest. Comp. Laws, § 8441.
"To quiet title to real property or to remove an existing cloud and to prevent a threatened cloud is an ancient and well-established head of equity cognizance."
"The broad grounds on which equity intervenes to remove a cloud on title are the prevention of litigation, the protection of the true title and possession, and because it is the real interest of both parties and promotive of right and justice that the precise state of the title should be known if all are acting bona fide." 32 Cyc. 1305, 1306.
Accordingly this court does hold and determine:
(1) That the district court has power to quiet title in the plaintiff as to any possible estate Helen Bowers may have in such real estate.
(2) That the deed made by the surviving partner of Bowers Brothers and the widow of J. H. Bowers conveyed the entire legal and equitable title to the property.
The certification in this case is, in effect, a certification of the entire record for purposes of reviewing the two determinative legal questions involved. The facts are not disputed. The trial court has made its findings and order for judgment quieting title in the plaintiff. The two ultimate legal questions involved are:
First: Did the deed of the surviving partner convey upon this record a good title to the plaintiff?
Second: Did the court have jurisdiction in an action to determine adverse claims over the title of the minor heir of the deceased partner?
I am of the opinion that these questions are to be answered in the affirmative, and that the order of the trial court directing title to be quieted in the plaintiff is correct. It is fundamental that, upon the conveyance of real estate purchased with partnership funds and for partnership purposes, such real estate, in equity, is treated as personalty, and is subject, so treated, to disposition for partnership purposes. Betts v. Letcher, 1 S.D. 182 46 N.W. 193; Brady v. Kreuger, 8 S.D. 464, 59 Am. St. Rep. 771, 66 N.W. 1083; 30 Cyc. 430. In such case it is immaterial whether the title be taken in the name of all of the partners, one of the partners, or even in the name of a person who is not a partner. Notes in 37 L.R.A. (N.S.) 892, and 27 L.R.A. 463; Johnson v. Hogan, 158 Mich. 635, 37 L.R.A. (N.S.) 889, 123 N.W. 891; Hardin v. Hardin, 26 S.D. 601, 129 N.W. 108; Devlin, Deeds, 3d ed. §§ 208, 209. The status of the realty in any event remains the same for partnership purposes. Owing to the distinction, however, that exists concerning the application of principles of law to realty and personalty, the legal title in such partnership real estate resides and remains in the grantee or grantees named in the deed. Note in 27 L.R.A. 462; Spaulding Mfg. Co. v. Godbold, 92 Ark. 63, 29 L.R.A. (N. S.) 282, 135 Am. St. Rep. 168, 121 S.W. 1063, 19 Ann. Cas. 947; Tidd v. Rines, 26 Minn. 201, 2 N.W. 497; Gille v. Hunt, 35 Minn. 357, 29 N.W. 2; note in 48 Am. St. Rep. 65; Riffel v. Ozark Land & Lumber Co. 81 Mo.App. 177. In such case the grantee in such deed holds such legal title as a trustee for partnership purposes. In law a partnership has no status as a person, the title to real estate therefore must rest in some person who holds the same as trustee for the partnership purposes. 30 Cyc. 430. In the instant case the legal title to the realty involved was in C. A. Bowers and J. H. Bowers. Upon the decease of the latter, his legal title devolved upon his widow, Catherine, and his minor child, Helen. This real estate was bought with partnership funds and for partnership purposes. In equity, it was partnership real estate; it was personalty for purposes of the partnership. Upon the decease of one of the partners, the surviving partner succeeded to the partnership property, including this real estate, in trust for purposes of liquidation. Comp. Laws 1913, § 6425. As such trustee, the surviving partner had the same power for purposes of liquidation as the partners would have had as a partnership. The surviving partner accordingly was authorized as such trustee to make a contract for the sale of the real estate, and to sell it for purposes of liquidation. Comp. Laws 1913, § 6423, note in Ann....
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