Godfrey v. White

Sherwood, J.

On the twenty-third day of April, 1877, the defendant and Amos Rathbone were the joint owners of thirty shares of the capital stock of the Continental Improvement Company, a corporation organized under the laws of the state of Pennsylvania.

The said Rathbone and the defendant owned equal interest in the stock, but it was all issued to defendant, and is still held by him, and stands in his name upon the books of the company.

Amos Rathbone died in 1882, leaving a will, which .was probated in Kent county in December, 1882, and executors named in the will were duly appointed and qualified, and as ■such sold and duly transferred, for the consideration of $775, the interest of said Rathbone’s estate to the complainant, on the ninth day of July, 1883.

After this purchase the complainant applied to the defendant for a division 'of the stock, which was refused, and thereupon the complainant filed the bill in this case for the pur *447 pose of obtaining the division asked for, setting forth, among ■others, the foregoing facts.

The defendant appeared and answered, contenting himself ■with a -simple denial of the facts set forth in the bill which would show him guilty of the injustice charged, and adding ¡thereto the following averment, viz.:

“ And this defendant, further answering, says that, in regard to his dealings with the complainant in the stock of said corporation, he caused to be transferred, many years ago, all the stock he paid for either to this defendant or said corporation ; that the certificate standing in his name was the individual property of this defendant; that the complainant never bargained for or paid any consideration for the same, or any part thereof, either to this defendant or to said corporation ; and the defendant further avers whatever complainant’s rights are they are subject to the equities existing between the defendant and the said Amos Rathbone’s estate.”

The cause was heard in the Kent circuit, before Judge Montgomery, upon pleadings and proofs, who rendered a ■decree granting the relief prayed.

We think the decree made was entirely proper in the case.

The testimony tends to show that for a series of years previous to April, 1877, the said Amos Rathbone and defendant did business together of all kinds, nearly; perhaps not as partners, but made joint, purchases of land and other property, holding the same either as joint tenants or tenants in common, taking the title to such property at the time of purchase, sometimes in the name of one and sometimes in the name of the other, and often in the name of both, but in all of which the interest of the parties was equal. In this manner it seems the property sought to be partitioned was purchased.

On the said twenty-third of April, 1877, a settlement was made between the parties, and all the property divided except the above-mentioned thirty shares of Continental Improvement stock, fifty-eight shares of the Grand Rapids & Indiana Railroad stock, and twenty shares of Chicago & Michigan Lake Shore Railroad stock.

These three items of property were not divided at the *448 time of the settlement, and this statement appears in tlieagreement made between the parties at the time of the settlement in relation thereto:

“ There is certain property [meaning these three items of stock] which it is inconvenient at this time to divide; but it. is hereby agreed between the parties hereto that said Rathbone and said White are the joint and equal owners thereof,, and that the same shall be divided equally between them as soon as practicable.”

In the division made each party took a portion of the assets as his share, and each assumed a portion of the liabilities of the parties, each guarantying the other against the payment of the portion he assumed. At the same time the following-agreement was made:

“ Whereas, Amos Rathbone and George H. White have-this day settled up their matters and divided their property, which they have held and owned together; and whereas, they have operated together for a number of years, and taken conveyances of land, sometimes in the name of said Rathbone and sometimes in the name of said White, and the same has been from time to time conveyed, sometimes with warranty,, and the said Amos Rathbone and George H. White have been and are also executors of the estate of A. D. Rathbone, deceased:

“Now, therefore, the said Amos Rathbone and the said George II. White, in consideration of the premises, each with the other agree that they shall mutually and equally pay and discharge all obligations and liabilities which may have or will hereafter grow or arise out of the aforesaid business- and trust, other than those respectively aforesaid assumed by them in a certain contract of even date herewith, executed by the parties hereto.”

The particular reasons why it was not convenient to make-division of the three items of stock at the time of the settlement does not appear in the record. It is therefore quite probable that it was immaterial to this issue. Neither does it appear that the defendant ever had any lien or claim to the estate’s undivided half, nor that the stock was liable in any way to any claim made by the defendant.

The counsel for defendant depends in his brief upon four grounds:

*449 1. That complainant’s remedy is complete at law, and that equity has no jurisdiction.

2. That the contract under which complainant derives title, between Rathbone and White, is entire, and cannot be split up so as to allow the complainant, the assignee of Rathbone’s rights, to call for a division of the Continental Improvement stock without the rest of the undivided stock being embraced in the division called for.

3. That White has a right to an accounting between the Amos Rathbone estate and himself, claiming that Rathbone has not paid the liabilities assumed by him in the contract of settlement.

4. That the contract to divide the stock is entire, and that White is not bound to perform his part until Rathbone has or is ready and willing to perform his, and that the former is not bound to divide any part of the stock until Rathbone or his executors are willing to divide the remainder.

Courts of equity have exclusive jurisdiction of suits for the partition of personal property: Freem. Cotenancy, § 426; Smith v. Smith, 4 Rand. 102 ; Conover v. Earl, 26 Iowa, 167 ; Marshall v. Crow, 29 Ala. 278 ; Irwin v. King, 6 Ired. 219 ; Crapster v. Griffith, 2 Bland, 5 ; Tinney v. Stebbins, 28 Barb. 290 ; Low v. Holmes, 17 N. J. Eq. 148. This is true, even though the defendant denies the complainant’s title: Weeks v. Weeks, 5 Ired. Eq. 118 ; Smith v. Dunn, 27 Ala. 316 ; Edwards v. Bennett, 10 Ired. Law, 363 . We do not think the first point relied upon by defendant can be maintained. The demurrer claimed in the answer upon that ground does not appear to have been brought to a hearing at the circuit. This is not a, case to enforce a contract for the sale and transfer of stock, neither is it a case to compel a company to transfer stock on its books to the name of the assignee or purchaser, but a bill to compel the performance of an equitable duty springing up and having its origin in the equitable relation of the parties to the property in question, after the parties have acknowledged in writing the existence of such equitable relations.

It is only when the rights of parties spring from legal *450 duties and legal obligations that the law steps in and furnishes the remedy for their enforcement to the exclusion of proceedings in equity; and, even in those cases, where the legal remedy is inadequate to afford the proper relief, and property is wrongfully withheld to satisfy the just claims of parties, and beyond the reach of the law. equity may be successfully appealed to, and will furnish the necessary assistance, in most cases, to prevent a failure of justice: Low. Transf. Stocks, §§ 223, 225.

The second and fourth grounds, above stated, upon .which the defendant relies, furnish no defense in this case. They are not applicable to the facts stated, and so far as the interest of Nath bone and White in the three items of stock is concerned, it is substantially conceded ; but whether it is or ¡not, the record shows it was not a partnership one.

The thirty shares of Continental Improvement stock was ■an entire, distinct, and separate parcel of property, having no natural or necessary connection whatever with the stock in the other two railroad companies, and would, in any sale ■authorized in legal proceedings, ordinarily be required to be •sold separate from the other two items of undivided property, •and could 'as well be partitioned by itself as in connection with the other two parcels, and, in fact, there might be very satisfactory reasons why a separate partition should be made.

No lien was created in favor of either of the parties as against the other under the relation in which they held the property, and none was created under the contract of settlement; and had there been any from any other source, it could not have affected the right of complainant to the partition asked, but only the extent of his interest in the property : Low. Transf. Stocks, §§ 138-141; Butler v. Roys, 25 Mich. 53 ; Green v. Arnold, 11 R. I. 364 ; Hoyt v. Day, 32 Ohio St. 101 ; Earles v. Meaders, 1 Baxt. 248 .

The defendant’s third ground of defense cannot be maintained. It is only when the partnership relation exists between the parties as to the property sought to be partitioned, or there is some agreement, express or implied, between them that an accounting shall be had before a division *451 of the property can be made, that the rule contended for applies. The record fails to show the first, and the latter is not claimed. This necessarily disposes of the case,- and the •decree at the circuit must be affirmed, with costs.

Campbell, C. J. and Morse, J. concurred. Champlin, J. did not sit, having been of counsel.