Vlamis v. De Weese

Hammond, J., delivered the opinion of the Court. In 1921 Warren E. Malin bought a lot in Elkton, erected a building thereon and began to operate a garage and automobile sales agency. In 1922 Malin, for a cash consideration, conveyed to Reuben A. Deibert a one-half interest as a tenant in common in the real estate and personal property used in the business. Deibert died nine months later, leaving a will which gave his widow a life interest and his daughter the re ³⁸⁷ tnainder interest in all of his estate, real and personal.

Malin continued to operate the business and treated the real estate as his own. In 1931 he took a bill of sale or release from Deibert’s executrices, his widow and sister, and from Mrs. Deibert individually, of all his deceased partner’s interest in the partnership, including the real estate, and soon thereafter mortgaged the property to an Elkton bank. At Malin’s death in 1946 the entire fee simple ownership of the real estate was inventoried in his estate. In 1953 his son, as residuary devisee, sold the property to the appellants Vlamis; they in turn sold most of it three years later to appellants Freng, who executed a purchase money mortgage to the appellant, The Elk-ton Banking and Trust Company.

In 1957, soon after she had heard for the first time that she might have an interest, Deibert’s daughter, Chlotilda Deibert De Weese, “individually and as Vested Remainder-man. under the Will of Reuben A. Deibert, deceased,” and her husband, sued the Vlamises, the .Frengs and the Bank in ejectment and for money damages, claiming that her father had died seized and possessed of a half interest in the lot in question and that she had inherited that interest under his will at the death of her mother in 1955. The trial court, sitting without a jury, gave judgment against all defendants for the interest in the land and for damages against the Vlamises in the amount of $3,082.50 and against the Frengs in the amount of $2,403.50. The primary appeal is from this judgment and there is a second appeal from the failure of the court, on application of the appellants, to reduce the amount of the money damages. The court declined to act, on the ground that after the entry of the first appeal he was without, jurisdiction.

The defense to the ejectment was that Malin and Deibert were partners and, despite the record title, held the real estate as tenants in partnership so that the interest of Deibert, at his death, was personal property that passed to his executrices. The trial court, after observing during the course of the (rial that there would seem to be no doubt that there was a partnership, finally held that there was not, that the real es ³⁸⁸ tate had not been shown to be partnership property, and that if it be assumed that a partnership did exist and that the real estate was partnership property, a .half interest in the real estate descended to the heirs at law of the deceased partner. The appellants urge that the trial court was in error in all three holdings and that their contentions that Deibert had no individual title to the real estate, and, so, his daughter therefore took no title to it under his will, are sound. We agree.

Appellants produced evidence that for the sum of $8,000 Deibert received from Malin a deed dated July 1, 1922, conveying a one-half interest in the real estate in which Malin was conducting the garage and automobile sales business; that the deed was recorded some three weeks later; that four days after the date of the deed an account was opened in the Elkton Banking and Trust Company under the name of “Malin & Deibert”; that the account was very active from its opening until the death of Deibert; that the minute book ■of the executive committee of the Elkton Banking and Trust Company showed that on October 3, 1922, a note of Malin & Deibert in the amount of $1,900 was approved and accepted for discount (The trial court sustained an objection to the admission of the minute book but we think it was admissible .as a record made in the ordinary course of business. Code, 1957, Art. 35, Sec. 59) ; that seven weeks after the recordation of the deed a traders’ license was issued to Warren E. Malin and Reuben Deibert, partners, trading as Malin & Deibert; that the builder of the garage and showroom saw Deibert at the garage almost every evening from July, 1922, until his death; and that Deibert had instructed him how to fix up a stockroom. It was also shown that the business had .a Buick tow truck that ran around Elkton on which was painted “Malin & Deibert”. Introduced into evidence were • conditional contracts of sale given by purchasers of automobiles to Malin & Deibert.

In 1921, soon after Malin bought the property, Albert D. Mackey, a lawyer of Elkton, as trustee, obtained the approval ■ of the equity court to lend Malin $6,000 on a first mortgage . on the property. In 1931, eight years after Deibert’s death, ³⁸⁹ an agreement, apparently drawn by Mackey, was entered into with the approval of the Orphans’ Court between Malin, of the first part, Mrs. Deibert and Deibert’s sister, executrices of the estate of Reuben Deibert, of the second part, Mrs. Deibert, individually, of the third part, and The Elkton Banking and Trust Company, of the fourth part, which recited that “* * * the said Warren E. Malin and Reuben A. Deibert were co-partners trading as Malin and Deibert, and as such owned and operated a garage in the Town of Elkton * * that Deibert was a member of the partnership at the time of his death, and that Malin, the surviving partner, had offered to purchase Deibert’s interest “* * * in said business and the assets thereof” and to assume liabilities, for the sum of $5,000, and that therefore the parties of the second part “* * * agree to bargain, sell and convey unto the said Warren E. Malin all the undivided one-half interest in and to all the real estate, personal property and business known as Malin and Deibert’s Garage * * * together with all the fixtures, tools, appliances, stock, accounts receivable and other assets of said business” for the sum of $5,000, $500 of which was paid in cash with the balance to be paid in monthly instalments of $200. A further provision of the agreement was that the payments were to be made by Malin to “Albert D. Mackey, as Attorney for the said parties of the second, third and fourth parts,” and that Mackey was to pay $3,600 to the bank, being the amount due it by the estate, and the balance to the parties of the second part. It was stipulated that from the time of the agreement Malin was to conduct the business, and the profits and losses were to belong to or be borne by him; that all outstanding debts due the firm were to become his property and that he was to pay all debts of the firm.

Whether or not a partnership exists, where there is no express agreement, is to be gathered from the intention of the parties revealed by their conduct and the circumstances surrounding their relationship and the transactions between them. McBriety v. Phillips, 180 Md. 569 ; Fowler v. Loughlin, 183 Md. 48, 53 . Malin and Deibert exhibited to the public at large many evidences that they were partners. ³⁹⁰ Deibert was a man of substance and standing in the community. By holding himself out to the bank, to the tax authorities, and to the community at large, as associated in business with Malin, he created a potential personal liability for firm obligations.

Rowland v. Long, 45 Md. 439 ; Blaustein v. Oldfield, 135 Md. 162 . “Any conduct on the part of a person reasonably calculated to lead others to suppose that he is a partner in a particular business amounts to a holding out on his part.” McBriety v. Phillips, 180 Md. 569, 578 , supra. It is scarcely to be thought that Deibert would have permitted this unless the partnership in fact existed. The issuance of a traders’ license to the partners has significance. Such licenses usually are displayed publicly at the place of business, and Code, 1957, Art. 56, Sec. 5, now requires (as did Code 1912, Art. 56, Sec. 2 in 19Z2) that the names of all partners of the firm be set out in the licenses and makes it the duty of the Clerk issuing the license to enter the full names of all the members of the co-partnership when such licenses are issued.

Deibert obviously was not making a loan. He was investing equity capital, subordinate to two mortgage loans, in a business for financial reward. It must be inferred that such reward was to come in the forni of profits from the business, no other fount being indicated or available. Highly pertinent are the recitals in the 1931 agreement by Malin and the executrices of Deibert that the two were partners in the garage and automobile sales business, particularly since Mackey, the lawyer, had been familiar with the ownership of the land from the time it was bought by Malin and was counsel for the estate and for Mrs. Deibert.

The record shows that Mackey also was counsel for The Elkton Bank, which under the 1931 agreement was to receive about three-fourths of the value of Deibert’s partnership interest, and was the attorney named in the $10,000 mortgage from Malin and his wife to the bank, executed soon after the 1931 agreement. We think it was shown that Malin and Deibert were partners. We turn, then, to the question of whether the real estate was a partnership asset. The criterion of, whether property qot held in the partnership name is partnership property is ³⁹¹ the intention of the parties to devote it to partnership purposes, to be found from the facts and circumstances surrounding the transaction considered in connection with the conduct of the parties in relation to the property.

Price v. McFee, 196 Md. 443, 448 . In support of this statement of the law, the Court relied on Johnson v. Hogan (Mich.), 123 N. W. 891, 897, 898 . There it was held that land standing in the name of one partner was a firm asset since it was contributed by him as his portion of the firm assets. The Court went on to say: “The true method of determining, as between the partners themselves, whether land standing in the name of the individuals is or is not to be treated as partnership property, is to ascertain from their conduct and course of dealing the understanding and intention of the partners themselves, which, when ascertained, should unquestionably control. * * * They needed land with timber upon it for the success of their enterprise. * * * The lands selected had at the time no known value except for the timber standing thereon.” See also McCormick v. McCormick (Mich.), 70 N. W. 2d 706, 708 , where the Court held that property in the name of one partner was partnership property and said: “It was not essential that the record title should stand in the names of all partners” and “ ‘No express agreement is necessary to establish the equitable interest of a copartnership in property held for the benefit of the firm in the name of one of the partners, nor need the circumstances surrounding the transaction or the dealings of the partners with the