Jones v. Dugan
| Decision Date | 04 December 1914 |
| Docket Number | 5. |
| Citation | 92 A. 775,124 Md. 346 |
| Parties | JONES v. DUGAN et al. |
| Court | Maryland Court of Appeals |
Appeal from Circuit Court, Baltimore County; Wm. H. HarLan, Judge.
Exceptions by Harry C. Jones, trustee in bankruptcy, to the sale of property of a partnership by Ferdinand C. Dugan and Joseph N Ulman, receivers. From a ruling on the exception, the trustee appeals. Order reversed, and case remanded for further proceedings.
Argued before BOYD, C.J., and THOMAS, URNER, STOCKBRIDGE, and CONSTABLE, JJ.
Henry Zoller, Jr., and Edward M. Hammond, both of Baltimore (N Rufus Gill & Sons, of Baltimore, on the brief), for appellant.
Louis A. Tuvin and Clarence A. Tucker, both of Baltimore, for appellees.
On the 11th of April, 1907, John Singleton and John Real entered into a written agreement, in which it was recited that Singleton had purchased from Mrs. Mary Meeter for a consideration of $7,000 a piece of real property, in Westport, Baltimore county; and that the parties had agreed that Real should have a half interest in it, but that Singleton was then able to contribute but $2,000 towards the purchase money. The agreement then makes the following provisions: That the title to the lot should be taken in the name of John Singleton alone; that Singleton should contribute towards the purchase money $2,000 and Real $5,000 of which $3,500 was to be for his share of the purchase money, and $1,500 as a loan to Singleton; and that the property was to be held for "the joint and equal benefit of the parties." Five days later, on April 16th, the purchase was consummated by the execution of the deed. In legal effect the situation was then this: Singleton was the holder of the legal title, the beneficial interest being in himself and Real in accordance with their agreement, the law raising a constructive trust in favor of Real to the extent of his contribution to the purchase money of the land. They were thus practically in the relation of tenants in common of the property in proportion to their contributions and in accordance with the agreement entered into. About two years after this purchase had been made, Singleton and Real became partners in the manufacture of barrels and baskets, carrying on this business under the name of the Westport Veneer Barrel & Basket Company. The manufacturing was done on the property bought in 1907, and continued so to be till October, 1913. There were no written articles of partnership, and the verbal arrangement was apparently very indefinite; the record not containing any statement as to the terms and provisions of the partnership agreement. On October 15, 1913, a bill was filed by Real for a dissolution of the partnership, the appointment of receivers, and the winding up of the partnership business. Insolvency was not alleged, but the relief was asked because of irreconcilable differences. There was a consent answer filed at the same time, and upon these a decree was passed appointing receivers. This was followed on the 17th of October by an application in the United States District Court to have Singleton declared a bankrupt, and on the 20th an adjudication of bankruptcy was entered. The receivers appointed by the circuit court for Baltimore county proceeded promptly to make sale of the effects of the partnership including the land acquired from Mrs. Meeter and standing in the name of John Singleton. A sale having been reported, the trustee in bankruptcy intervened and excepted to the sale, and it is from the ruling of the court upon such exceptions, and the rulings of the court upon certain questions of evidence, reserved during the hearing, that the case comes before this court.
The important question in the case is whether the land involved was the property of John Singleton, individually, in which case it would of course, pass to his trustee in bankruptcy; or whether it was the property of the partnership, in which case it would pass to the receivers; or whether at the time that John Singleton was adjudicated a bankrupt it was the property of John Singleton and John Real as tenants in common, in which case only the individual interest of Singleton would pass to his trustee in bankruptcy and the remaining undivided interest would remain in John Real.
There is great conflict among the decisions upon questions of this character, and an excellent collection of them will be found in two elaborate notes, one to be found in 27 L. R. A. beginning on page 449 and the other in 37 L. R. A. (N. S.) p. 889.
In Pennsylvania the doctrine of the common law is more rigidly adhered to than in any other state, and is to the effect that under all circumstances the record title conclusively controls. See Gwinner v. Union Trust Co., 226 Pa. 614, 75 A. 856. In no other state is the right of a party who has contributed the funds, or the greater part of them, with which the property has been purchased, so circumscribed. The weight of authority is that as between the parties it is always competent to show, in equity, what the actual interests were. In a case of bankruptcy, the trustee for some purposes stands in the position of the creditors of the bankrupt and for others in that of the bankrupt himself, and this is in no wise affected by the amendment of 1910 to the bankrupt act. Given its fullest effect, that amendment only vests in the trustee in bankruptcy the right of lien which a judgment creditor would have against the property of the bankrupt. In re Superior Drop Forge & Manufacturing Co. (D. C.) 31 Am. Bankr. Rep. 455, 208 F. 813. It does not vest in him any right in property which the bankrupt himself could not have claimed.
The first, second, third, fourth, fifth and eighth exceptions all arose from rulings of the court on tenders of evidence to show statements made by Singleton to different parties that he was the owner of the real estate in question. The agreement of the parties of the 11th of April had already been offered in evidence, and the sole purpose of these offers must have been to contradict the agreement of the parties as set out in that paper; moreover, none of these offers were pretended to have been made in the presence of Real, and it is a well-established rule of...
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