Schaefer's Estate, In re

• Decision Date: 12 July 1976
• Docket Number: Nos. 101,167,s. 101
• Parties: In re ESTATE of Ben G. SCHAEFER, Deceased. Marilynn H. SCHAEFER, Appellant, v. Arthur E. SCHAEFER et al., Respondents. (1974).
• Court: Wisconsin Supreme Court

Page 607

241 N.W.2d 607

72 Wis.2d 600

In re ESTATE of Ben G. SCHAEFER, Deceased.

Marilynn H. SCHAEFER, Appellant, v. Arthur E. SCHAEFER et al., Respondents.

Nos. 101, 167 (1974).

Supreme Court of Wisconsin.

Submitted on Briefs Jan. 7, 1976.

Decided May 14, 1976.

Rehearing Denied July 12, 1976.

Marilynn H. Schaefer, in pro. per.

Brown, Black, Riegelman & Kreul, Racine, for respondents.

DAY, Justice.

The orders appealed from arise out of a single petition filed in probate court by Marilynn H. Schaefer, widow of the decedent, Ben G. Schaefer, concerning a large number of matters in the administration of the estate. ¹ As the result of a pretrial conference the issues raised by the petition were bifurcated for hearing. The principal issue concerns real estate inventoried as property of a business partnership between Ben Schaefer and his brother, Arthur Schaefer, and claimed by Marilynn Schaefer to have belonged to the brothers as tenants in common. Appeal No. 101 is taken from an order denying her petition in this respect. Various other parts of the petition were treated by the trial court in a separate order, from which Appeal No. 167 has been taken.

Appeal No. 101

Ben G. and Arthur E. Schaefer went into business together in 1933, each providing an equal capital share to start an automobile dealership in Racine, which came to be known as Schaefer Pontiac Sales. No written partnership agreement was ever executed. The brothers began acquiring real estate in 1944, making purchases through 1967 which included items 26 through 38 of the inventory, which are at issue here. The deeds to all 13 parcels are included in the record; nine of the deeds name the grantees simply as 'Ben G. Schaefer and Arthur E. Schaefer;' three of the deeds name the grantees as 'Ben G. Schaefer and Arthur E. Schaefer, as tenants in common,' and one deed refers to 'Ben G. Schaefer and Arthur E. Schaefer, a real estate partnership.'

In 1947, the automobile sales activity was incorporated, and separated from the real estate business which became known as 'Ben G. Schaefer and Arthur E. Schaefer, Real Estate Department.' A separate checking account was maintained for the real estate business, titled 'Ben G. Schaefer and Arthur E. Schaefer, Real Estate Trust Account, Partnership.' The respondents introduced testimony by an accountant, retained to examine the business records, to the effect that all payments for real estate purchased, and all proceeds from real estate sold, and income from leases, came from or went into this checking account. When mortgage loans were obtained, the proceeds went into the 'partnership' bank account, and the amortization payments came from that account. When improvements were made to property held by the business, they were paid for out of the 'partnership' account. This testimony was uncontradicted, and was accepted as true by the trial court.

Various documents in the record provide additional evidence concerning the understanding of the Schaefer brothers as to ownership of the real estate. A mortgage on one of the parcels in question was given by 'Ben G. Schaefer and Arthur E. Schaefer, as co-partners.' Leases were introduced by the respondents as follows:

(1) Lease from 'Ben G. Schaefer and Arthur E. Schaefer, d/b/a Schaefer Realty Company,' signed by Arthur E. Schaefer alone;

(2) Lease from 'Ben G. Schaefer and Arthur E. Schaefer,' signed by Arthur E. Schaefer as 'Partner,' alone;

(3) Lease from 'Arthur E. Schaefer and Ben G. Schaefer, co-partners,' signed by Arthur E. Schaefer alone; and

(4) Lease from 'Ben G. Schaefer and Arthur E. Schaefer, a partnership' signed by Arthur E. Schaefer as 'partner,' alone.

In an attempt to show that the real estate was not regarded as partnership property, Marilynn Schaefer introduced additional leases as follows:

(1) Lease with option to buy from 'Arthur E. Schaefer and Colette Schaefer, his wife, and Ben G. Schaefer and Marilynn Schaefer, his wife,' signed by all four lessors;

(2) Lease from 'Ben G. Schaefer and Arthur E. Schaefer,' signed by both of them;

(3) Lease from 'Ben G. Schaefer and Arthur E. Schaefer,' signed by Arthur E. Schaefer, alone.

Marilynn Schaefer also introduced documents relating to a condemnation proceeding which referred to 'lands of Ben G. Schaefer and Marilynn Schaefer, his wife; Arthur E. Schaefer and Colette Schaefer, his wife,' and a deed conveying some of the business property from the Schaefers and their wives, individually named. The proceeds of that condemnation, however (as well as prior rental income from that property), went into the 'partnership' books, and were distributed to Ben and Arthur accordingly. Arthur testified that the wives' names were included 'because the attorneys wanted them, not because they (the wives) had any interest,' although he was referring to a deed not admitted into evidence.

Respondents also introduced testimony based on tax returns filed between 1948 and 1969 by the business on tax forms designed for partnerships, and by Ben G. Schaefer individually, showing that the income of the real estate operation was divided equally between Ben and Arthur, and that Ben's reported income coincided with the amount distributed by the business. This testimony was undisputed, except insofar as Marilynn extracted the concession that the partnership tax return forms might be used for non-partnership business arrangements.

On this evidence, the trial court found that a partnership existed, and that the real estate was partnership property. Marilynn Schaefer challenges the sufficiency of the evidence to support that finding, and makes legal arguments based on the statute of frauds and the form of the deeds of conveyance.

The evidence overwhelmingly supports the trial court's finding that a partnership did exist. In Skaar v. Dept. of Revenue (1973), 61 Wis.2d 93, 98, 99, 211 N.W.2d 642, this court expressed the requirements for proof of a partnership:

'Since Wisconsin has adopted the Uniform Partnership Act, we must initially look there for guidance. Sec. 178.03(1), Stats. defines a partnership as an 'association of 2 or more persons to carry on as co-owners a business for profit.' More specifically, it is recognized that four elements need be met so as to qualify as a partnership. Initially, the contracting parties must intend to form a bona fide partnership and accept the legal requirements and duties emanating therefrom. Secondly, there must exist a community of interest in the capital employed. Thirdly, there must be an equal voice in the management of the partnership. Finally, there must be a sharing and distribution of profits and losses.'

The essentially uncontradicted evidence in this case establishes each of the four elements. Marilynn Schaefer's argument that a 'community of interest' was not shown, because of a lack of evidence that each partner could dispose of the property, overlooks the leases introduced in evidence which were signed by Arthur E. Schaefer alone.

Once the existence of a partnership is established, there is a statutory presumption that property purchased with partnership funds belongs to the partnership unless a 'contrary intent' is shown. Sec. 178.05(2), Wis.Stats. ² The evidence in this case is plainly insufficient to establish a 'contrary intent.' The only evidence of intent not to operate as a partnership are the references to 'tenants in common' on three of the thirteen deeds conveying the lands in question to Ben and Arthur, and the inclusion of the Schaefers' spouses as grantors on the two conveyances introduced. Even if this would be sufficient to overcome the statutory presumption, it must be weighed against the overwhelming mass of evidence showing that the lands were purchased with partnership funds, managed as a partnership activity, and sold for partnership benefits.

Marilynn Schaefer attacks the probative value of the respondents' evidence, in particular the testimony concerning the 'partnership' tax returns. Even assuming she is correct that 'partnership' tax returns may be, and are, used for non-partnership joint ventures of various sorts, the tax treatment of the income is not stripped of all probative value. This court has held that receipt of a share of business profits, as shown in tax returns, is prima face evidence of partnership, under 178.04(4), WIS. STATS. KARP V. COOLVIEW, INC. (1964), 25 WIS.2D 299, 305, 130 N.W.2D 790.³ In any case, there is ample evidence independent of the tax returns to support the trial court's finding that a partnership existed and owned the real estate in question. In order for this court to overturn the trial court's finding, that finding would have to be 'contrary to the great weight and clear preponderance of the evidence,' Milbauer v. Transport Emp. Mut. Ben. Soc. (1973), 56 Wis.2d 860, 862, 203 N.W.2d 135, 137; in the present case, the great weight of the evidence supports the trial court's decision.

Marilynn Schaefer also argues that a partnership dealing in real estate is subject to the statute of frauds, and must be evidenced by a writing. It is true that this court has adopted the minority view that a partnership created to deal in real estate is void unless conforming to the statute of frauds:

'In Wisconsin, contrary to the great weight of authority in this country, a joint adventure or a partnership to engage in the sale or purchase of real estate is held to be a contract respecting an interest in lands, and void under the statute of frauds, unless in writing, or unless sufficiently performed to take the same out of the statute.' Goodsitt v. Richter (1934), 216 Wis. 351, 257 N.W. 23.

There was admittedly no written partnership agreement in the present case.

However, an exception to the statute of frauds is made where all parties have performed the contract, indicating their acquiescence in its terms. In Smith v. Putnam (1900), 107 Wis. 155, 82 N.W. 1077, 83 N.W. 288, a claimed partnership had been formed to purchase...