Opinion
July, 1893.
P.H. McEvoy, for the administrators.
R.H. Smith, for Nathan B. Arnold.
A.M. Mills, for administrator of Ambrose Arnold.
It is well settled that a tenant in common of either personal or real property, may have an action against his cotenants in a court of equity for a partition of the common property, and if the interests of the parties require it, such partition will be made by a sale of the property and a division of the proceeds. Tinney v. Stebbins, 28 Barb. 290; Tripp v. Riley, 15 id. 334; Andrews v. Betts, 8 Hun, 325; Shehan v. Mahar, 17 id. 130; Prentice v. Janssen, 7 id. 86; Smith v. Smith, 10 Paige, 470.
Where one tenant in common has the occupation and enjoyment merely of the whole of the common property without any agreement with his cotenants, express or implied, to render anything for the use, and receives nothing in the nature of rents and profits from the use of the property, he cannot be called upon by his cotenant to account or pay for the use and occupation, but if he receives rents and profits he may be called to account for them in an action for partition. McCabe v. McCabe, 18 Hun, 154; Scott v. Guernsey, 48 N.Y. 124.
And such rents and profits are upon partition a lien upon the share of him from whom they may be due. Scott v. Guernsey, 48 N.Y. 124.
If one tenant in common, with the assent of the other, lays out his money in repairs or improvements upon the common property, or if by agreement the common property is used for the purpose of making a profit, either tenant in common may have an accounting in equity of the rents and profits and disbursements, and the tenant in common to whom there is found a balance due, will have an equitable lien upon and right to reimbursement out of the share of the common property from whom such balance is found due. Green v. Putnam, 1 Barb. 500; Prentice v. Janssen, 7 Hun, 86; Dyckman v. Valiente, 42 N.Y. 564; Mumford v. Nicoll, 20 Johns. 611, 634; Willard's Eq. Juris. 106; Wright v. Wright, 59 How. 176, 186.
The reason of the rule is well stated by MERWIN, J., in the case last cited, as follows: "The increase or rents are common property as much as the principal, or the original estate. When one, therefore, takes of the increase or rents he takes a part of the common fund or property, and it may well be said that there is on his part an implied agreement to have what he has received applied on his share, or that on division he will bring it in to the end that it may be charged to him on division, and that a court of equity works out this result through the operation of an equitable lien."
When an agreement is made between tenants in common for the use of the common property, and sharing the profits obtained from such use, the tenants in common do not become partners generally, although such relation is sometimes called a special partnership for the particular adventure. Thus, in Mumford v. Nicoll, 20 Johns. 611, 635, Chief Judge SPENCER, who wrote the prevailing opinion, says: "I must not be supposed to overrule the distinction between partners in goods and merchandise and part owners of a ship. The former are joint tenants, and the latter are, generally speaking, tenants in common, and one cannot sell the share of the other. But I mean to say that part owners of a ship may, under the facts and circumstances of this case, become partners as regards the proceeds of the ship, and if they are to be so regarded the right of one to retain the proceeds until he is paid what he has advanced beyond his proportion is unquestionable."
The gist of the decision in Mumford v. Nicoll, 20 Johns. 634, is stated as approved by FOSTER, J., in Dyckman v. Valiente, 42 N.Y. 549, 564, as follows: "And in Mumford v. Nicoll, 20 Johns. 611, it was held that where one of two part owners of a ship receives or gets possession of the whole funds of a vessel and of the voyage, he has a right to retain them until he is paid or indemnified for what he has advanced or paid more than his share for outfits, repairs or expenses of the vessel for the particular voyage or adventure."
Although an agreement between tenants in common for the use of the common property for the purpose of making a profit or income to be divided may not constitute a partnership, yet after the undertaking has been commenced the rights and liabilities of the parties are to be determined upon the same principles as are applied by courts of equity to partnership transactions. King v. Barnes, 109 N.Y. 267; Dyckman v. Valiente, 42 id. 551; Wilcox v. Pratt, 34 N.Y. St. Repr. 477.
Ambrose Arnold and Cornelius D. Lucy entered into an agreement for the use of their common property for the purpose of making a common profit. The contracting parties carried on the business provided for until the death of Lucy, and his administrators taking his place, the business was carried on by them, with the assent of the other party to the adventure, until the completion of the enterprise. The proceeds of the business came to the hands of Lucy in his lifetime and to the hands of his administrators after his death. The administrator of the estate of Ambrose Arnold was entitled to go into a court of equity and have an accounting with Lucy's administrators of the year's business and the proceeds of it. Such an accounting has in effect been had, and from it there appears to have been received by Lucy and his administrators as the proceeds of the year subject to a division, the sum of $1,168.80, of which Arnold's share was $350.64, and it also appears that Lucy sold a bull which was owned in equal shares by Ambrose Arnold and himself as a part of the dairy and received $25 for it, of which $12.50 would be properly added to the $350.64, making $363.14 as the amount found due the administrators of Ambrose Arnold upon the accounting. The estate of Lucy is insolvent, the amount of assets to be used in the payment of debts being less than $1,000, and the indebtedness amounting to over $5,000. As a part of the assets there appears to have been received by the administrators over $400 as proceeds of the farm arising from the sale of cheese; also over $400 from the sale of Lucy's interest in the dairy owned in common with Ambrose Arnold. Such being the facts the administrator of Ambrose Arnold claims that only such part of the proceeds of the farm and of the common property as remains after the payment of his share, viz., $363.14, should be considered as assets applicable to the payment of general creditors. The principal creditor, Nathan B. Arnold, resists this claim and insists that the proceeds of the farm products and other common property sold by Lucy and his administrators, must be treated as though it were Lucy's individual property and as being general assets, and the amount shown to be due upon the accounting to the administrator of the estate of Ambrose Arnold as his share of the proceeds of the year's business must be treated as an ordinary debt and only entitled to the same percentage of the assets as the other debts. I am of the opinion that there are equities founded upon the relations of the parties growing out of their undertaking for the use of the common property for the purpose of getting common profit, that authorizes and requires that Ambrose Arnold's share of the profits be paid to him out of the money received from sale of the products of the farm, and if necessary out of the proceeds of any property owned by the parties in common and employed in the business. The learned counsel for Nathan B. Arnold asserts in his brief, upon the authority of Taylor v. Bradley, 39 N.Y. 129, that the contract between Ambrose Arnold and Lucy was in the nature of a partnership.
In this position I think the learned counsel is correct and that the rights of Lucy's administrator in the common property must be determined by the rule that applies to the administrator of a deceased partner. In such a case the administrator takes or retains as assets only such a part of the common property as may be found due after an adjustment of the partnership accounts upon equitable principles. Thomson v. Thomson, 1 Bradf. 24; Hooley v. Gieve, 9 Abb. N.C. 11; Leserman v. Bernheimer, 113 N.Y. 45.
The conclusion, therefore, is reached that the administrator of the estate of Ambrose Arnold must be paid in full out of the money received for the common property and the remainder of the property in the hands of Lucy's administrators be distributed among his creditors ratably.