Wilson's Estate, In re, 33927
| Decision Date | 05 September 1957 |
| Docket Number | No. 33927,33927 |
| Citation | 315 P.2d 287,50 Wn.2d 840 |
| Parties | Matter of the ESTATE of Claude C. WILSON, Deceased. |
| Court | Washington Supreme Court |
Neal, Bonneville and Hughes, Tacoma, for appellant.
Teats and Teats, Lee D. Rickabaugh, Tacoma, for respondent.
This is an appeal by the surviving partners of the Wilson Brothers Logging Company from a decree in probate fixing the decedent's interest in the partnership under RCW 11.64.030.
In 1933 Claude C. Wilson, Delbert Wilson, A. E. Currie and G. E. Poston, formed, as equal partners, the above named company. The partnership, organized to engage in the logging business, was in essence a family undertaking. Claude and Delbert were brothers; Currie, a cousin; and Poston, a brother-in-law. The partnership agreement was not reduced to writing and for the most part the business was run in a rather loose manner. Claude assumed charge of the business end, while the other partners worked in the woods.
Delbert died in 1947 and thereafter the partnership was carried on by Claude, Currie and Poston.
January 12, 1953, Claude died testate, and his surviving spouse, Grace G. Wilson, was appointed executrix of his estate. Thereafter, the National Bank of Washington was appointed administrator de bonis non.
Included among the assets of the estate was decedent's interest in the logging partnership. The surviving partners, Currie and Poston, filed a revised inventory and appraisement of the assets of the partnership estate. They also filed a petition which prayed that decedent's interest in the partnership be determined and that they be permitted to purchase such interest under the provisions of RCW 11.64.030.
The findings of the trial court which are not disputed, are substantially as follows: During the year 1946, and both prior and subsequent thereto, the logging partnership had sold a large portion of its logs to the Seaboard Lumber Company of Seattle. In the spring of 1946, Claude and Delbert, without the knowledge of Currie or Poston, obtained a loan from Seaboard in the amount of $15,000 for the purpose of purchasing a caterpillar tractor. The loan was made to the logging partnership and was advanced on the strength of the partnership credit. The entire loan was repaid by the logging partnership. Without the knowledge or consent of Currie or Poston, title to the caterpillar was taken in the names of Bob Wallin and Gordon Wilson (a brother, but not a member of the partnership). By this transaction Claude, Delbert, Wallin and Gordon Wilson formed what they considered to be a separate partnership for the operation of the caterpillar. Immediately after the caterpillar was purchased it was rented to the logging partnership for $8 an hour. The account was carried on the books of the partnership in the names of Bob Wallin and Gordon Wilson. The names of Claude and Delbert did not appear on the books in connection with the caterpillar account, nor did the records indicate that they had any interest whatsoever. In setting up the books of the logging partnership Bob Wallin and Gordon Wilson were debited with the cost of the caterpillar and certain accessories, in an amount in excess of $15,000. The partnership retained all of the rental income and applied it in liquidation of the amount borrowed to purchase the caterpillar. Bob Wallin and Gordon Wilson did not advance any capital at the time of the purchase.
During the time the caterpillar was rented to the partnership it was operated by Bob Wallin and Gordon Wilson. The partnership paid them daily wages of $16 a day and, in addition, paid for all gas and oil used by it. At that time the logging partnership owned like equipment which could perform the same services as the caterpillar.
Upon Delbert's death in 1947, his interest in the 'caterpillar partnership' was purchased by Claude individually for the sum of $893.68. Thereafter the fiduciary income tax returns of the 'caterpillar partnership' were made out in the names of Claude, Bob Wallin and Gordon Wilson, each reporting as having received an equal share of the income.
From time to time, after the caterpillar had been acquired, the logging partnership made loans or advances to Bob Wallin and Gordon Wilson in the amount of $12,425.80. After the loan used to purchase the caterpillar had been paid from the rental income, the partnership continued to retain the rental income and applied it on the loans or advances. At the date of Claude's death the amount owing had been reduced to $585.80.
The caterpillar was sold in 1953 for $12,750. The court found that Bob Wallin and Gordon Wilson each retained one-fourth of this amount and paid one-half to Mrs. Claude Wilson as executrix of her husband's estate.
The trial court's Finding of Fact No. VII provides:
'VII. That the Court finds that the following is a statement of the interest of Claude C. Wilson in the Wilson Brothers Logging Co., which includes the adjustment in the caterpillar transaction:
"One-third interest of Claude C
Wilson in Wilson Brothers
Loggong Co. as of the date of
his death ........................... $15,498.10
"Reimbursement to Claude C
Wilson's estate for funds advanced
for the purchase of the
interest of Delbert Wilson in
the caterpillar ......................... 893.68
"Reimbursement to Grace B
Wilson for partnership taxes
paid by her on partnership
property ................................ 119.96
Total $16,511.74
"Credit to A. E. Currie and G.
E. Poston for their two-thirds
interest in the one-half interest
of Wilson Brothers Logging
Co. in and to the said
caterpillar ....................................... 4,250.00
----------
"Net value of the interest of the
estate of Claude C. Wilson in
Wilson Brothers Logging Co ...................... $12,261.74 "
The trial court entered its decree accordingly, fixing the decedent's interest in the partnership at $12,261.74. Under RCW 11.64.030 the court prescribed the conditions for the purchase of this interest by the surviving partners. This appeal follows.
Appellants have made seven assignments of error which we will summarize. The trial court erred: (1) in finding that decedent did not at any time receive individually for his own benefit any part of the income from the earnings of the caterpillar; (2) in finding that Bob Wallin and Gordon Wilson became owners of one-half interest in the caterpillar; (3) in finding that the estate of Claude should be reimbursed in the amount of $893.68, the entire sum paid by decedent for the purchase of Delbert's interest in the caterpillar partnership; and (4) in not allowing them, as surviving partners of the logging partnership, a two-thirds interest in the sales price and earnings of the caterpillar as a credit against the decedent's interest in the partnership.
Appellants' first assignment of error is directed to that portion of Finding No. IV: '* * * that Claude C. Wilson never at any time received individually for his own benefit any part of the income from the earnings of said caterpillar; * * *.'
The earnings from the operation of the caterpillar after the initial loan had been repaid, were retained by the logging partnership to repay advancements or loans made to Bob Wallin and Gordon Wilson. There was no showing that decedent shared in these advances. At the time of his death there was still owing $585.80 on this account. The testimony concerning the income tax returns of the 'caterpillar partnership' was very uncertain. Apparently Wallin and Gordon felt that the 'share of the income' merely meant the reduction of the loan to them. Be that as it may, from an examination of the record, the evidence does not clearly preponderate against the above finding.
The principal issue in this case is: which firm, the logging partnership or the caterpillar partnership, became the owner of the caterpillar tractor? Under the uniform partnership act, RCW 25.04.080 defines partnership property as follows:
'(1) All property originally brought into the partnership stock or subsequently acquired by purchase or otherwise, on account of the partnership, is partnership property.
'(2) Unless the contrary intention appears, property acquired with partnership funds is partnership property. * * *'
The caterpillar was purchased with the proceeds from a loan obtained on the logging partnership credit. The loan was repaid by the partnership.
The caterpillar became partnership property unless a contrary intention appears from the transaction. Was there such a contrary intention, or, to state it another way, was there a meeting of the minds of the partners that it was not to become partnership property? When we consider a 'contrary intention' it must not be the contrary intention of one partner--it must be the contrary intention of the members of the partnership. In discussing 'intention' as to firm ownership of real property, it is stated in 40 Am.Jur. 197, Partnership, § 97: 'While the intent of the partners is nearly always controlling in determining whether real property is to be treated as partnership assets, this circumstance is not conclusive, and where a partner without the knowledge of his copartners diverts firm moneys and invests them in real property, taking the title either in his own name or in the name of a third person, acting with the intent that the property should not be treated as firm assets, the realty, because the circumstances are such that his intent should be disregarded, may be held to be that of the partnership.'
The caterpillar was acquired with partnership funds. No contrary intention by the members of the partnership appears as to its ownership. The fact that the title was taken in the names of strangers did not change the nature or ownership of the asset. It was partnership property of the logging partnership.
The relation of partners is...
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