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two sisters held the Htock jiur-
chasod in their joint names, and



LAKE V. CRADDOCK.



207



the balance to their joint account
at their bankers, as tenants in
common. " I am not," said his
Honor, "aware of any decision
as to the effect of a payment of
moneys in which two or more per-
sons are interested as tenants in
common to their joint account at
a banker's, whether such a pay-
ment would fall within the doc-
trine as to mortgages, or within
that as to purchases ; and j^er-
haps I might be allowed to en-
tertain some degree of doubt if
the case rested simply there ; but
the bankers, from time to time,
invested portions of these moneys,
and I must assume that they did
so by the direction of both ladies
in the purchase of stock in theii"
joint names ; which, no doubt, as
it was argued, they might have
invested in equal moieties, one in
the name of each lady." And
after referring to Edivards v.
Fashion, Prec. Ch. 332 (post, p.
208), where mortgagees purchas-
ing the mortgaged estate were
held to be tenants in common, his
Honor, quoting Sir Wjh. Grant,
proceeds to observ^e : " That case
proceeds on the ground that the
purchase was founded on the mort-
gage ; and the mortgagees being
tenants in common of the mort-
gage were held to be tenants in
common of the equity of redemp-
tion likewise. That is a case that
has some bearing upon the pre-
sent, when one looks to what was
the root of the property now in
question, viz., rents of land held



by the two ladies as tenants in
common.

" But besides the first point, as
to the root of the property, there
is a second, viz., that where it was
necessary for a deed to be exe-
cuted, as in the case of the mort-
gage, there was actually a decla-
ration that they would hold the
mone}' so invested as tenants in
coinmon. With regard to the in-
vestments in the purchase of stock,
in those transactions there was,
of course, no necessity for a deed
to be executed, or any memoran-
dmn signed.

" Then I find the thiixl point, —
perhaps the strongest of all — viz.,
that the sister who joroved to be
the survivor, and against whom,
of course, her own declaration
may be read, by her will, executed
in the lifetime of her sister, not
only speaks of * her share ' of the
pi'operty in question, but affects
to dispose of it in favour of her
sister ; and further, on the as-
sumption that her sister will sur-
vive her, she directs that, aftar her
sister's decease, a legacy of 350L
stock should be paid out of a part
of the stock in question, that part
standing exactly in the same po-
sition as the rest.

** These three circumstances
concurring, and the whole being
a question of intention, to be as-
certained from the circumstances
of the case, it is not illogical to
say, that the three combined have
a force and carry a conviction,
which perhaps any one of them



208



LAKE r. CRADDOCK.



taken alone would not produce."
But see and consider Bone v. Pol-
lard, 24 Beay. 283.

And it seems that j)arol evi-
dence of subsequent dealings, as
well as of sun'ounding circum-
stances, is admissible on a j)ur-
chase by two persons contributing
equally to the cost of it, te prove
an intention to hold in severalty
{Harrison v. Barton, 1 J. & H.
287) ; but it seems that parol evi-
dence of statements of intention
is not admissible. — Ih. But see
Devoy v. Devoy, 3 Sm. & G.
403.

Again, where money is advanced
by persons, either in equal or un-
equal shares, who take a mortgage
to themselves jointly, although the
debt and security will at law be-
long to the survivor, in equity
there will be a tenancy in com-
mon, the sui'vivor being a trustee
for the personal representatives of
the deceased mortgagees : {Petty
V. Styward, 1 Ch. Rep. 31 Eq. Ca.
Ab. 290 ; Rlgden v. Vallier, 2 Yes.
258). For " equity says it could
not be the intention that the inte-
rest should survive. Thoiigh-they
take a jomt security, each means
to lend his own and to take back
his own : " Per Lord Alvanley,
M. E., in Morley v. Bird, 3 Yes.
631 ; and see Robinson v. Preston,
4 K. & J. 505, 511.

The personal representatives
of the deceased mortgagees were
therefore necessary parties to a
bill of foreclosure or redemjitiou
(Vickers v. Coicell, 1 Beav. 529) ;



and although the entire legal estate
is in the survivor, they are neces-
sary parties to a reconveyance, in
order that they may give a valid dis-
charge for their share of the mort-
gage-money : Garth. 16. Hence
it is usual, where trustees advance
money on mortgage, to insert a
declaration, that, if one of the
mortgagees die before the money
is jDaid off, the receipt of the sur-
vivor shall be a sufficient dis-
charge ; and that the concui'rence
of the personal representative of
the deceased mortgagee shall not
be requisite. See Matson v. Denis,
12 W. R. (Y.-C. S.) 596.

If joint mortgagees purchase or
foreclose the equity of redemp-
tion, they will be held, in equit}",
tenants in common, " because
their intent is prersumed to be
so : " Bigden v. Vallier, ^\e^. 258.
Thus in Edwards v. Fashion, Prec.
Ch. 332, where the two daughters
of a mortgagee for a term of years,
taking under his will the residue
of his personal estate, including
the mortgage, equally to be (U-
vided between them, afterwards
l^urchased the equity of redemp-
tion to them and theii' heirs, it
was held, that there was no sur-
vivorship, upon the gi'ound that
the purchase was founded on the
mortgage, and the daughters being
tenants in common of the mort-
gage, they were held to be tenants
in common of the equity" of re-
demption likewise. See Aveling
V. Knipe, 19 Yes. 444; and the
comments therein of Sir Wm.



LAKE V. CEAPDOCK.



209



Grant, M. R., on Edwards v.
Fashion.

Another rule laid down by the
Master of the Rolls in Lake v.
Gibson is, that, in all cases of a
joint undertaking or partnership,
either in trade or in any other
dealing, two or more persons who
make a joint purchase will be con-
sidered in equity as tenants in
common, or the siu'vivors as trus-
tees for the representatives of
those who are dead. This was
the gi'ound of the decision in
Lake v. Gibson, or Lake v. Crad-
dock, which shows that a joint
speculation in improving land, on
a hazard of profit and loss, is
treated in a court of equity, as
in the nature of merchandise, and
the jus accrescendi is not allowed.
See In re Thomas Ryan, 3 I. R.
Eq. 222, 282.

In favour of merchandise it is
well known that an exception to
the rule of survivorship has been
long established. It is thus
stated in Co. Litt. 182, a :— " An
exception is to be made of two
joint merchants : for the wares,
merchandises, debts, or duties that
they have as joint merchants or
partners shall not smwive, but
shall go to the executors of him
that deceaseth ; and this is per
legem mercatoriam, wliich (as
hath been said) is part of the
laws of tliis realm, for the ad-
vancement and continuance of
commerce and trade, which is
pro bono publico ; for the rule is,
that jus accrescendo inter merca-



tores pro heneficio commercii locum
non hahet." And see Nelson v.
Bealhy, BO Beav. 472 ; Ambler v.
Bolton, 14 L. R. Eq. 427 ;
M' Clean v. Kennard, 9 L. R. Ch.
App. 336.

The exception in favour of
merchants was afterwards ex-
tended to all traders ; and courts
of equity have extended it to the
analogous cases of real property
purchased for a joint undertaking
or partnership in trade, or in any
other dealing. It has been re-
marked by Sir James Wigrani,
V.-C, that the consequences of
the admission of the partnership
contract were carried to a great
length in Lake v. Craddock ; "for
one of the five original con-
tractors," observed his Honor,
" who had retired for nearly thirty
years, was held bound by a sub-
sequent contract, made b}' the
other four, for the purchase of
other lands in aid of the orioinal
design ; " 5 Hare, 384. In Jejfe-
reys v. Small, 1 Vern. 217, where
two persons having jointly stocked
a farm, and occupied it as joint
tenants, the bill was to be re-
lieved against survivorship, one
of them being dead. Lord Keeper
North was clearly of opinion that
the plaintiff" ought to be relieved,
and said that, if the farm had
been taken jointly by them, and
proved a good biirgain, tlien the
survivor shcnild have the benefit
of it ; but as to a stock employed
in the way of trade, that should
in no case survive. That the cus-



210



LAKE V. CRADDOCK.



torn of merchants was extended
to all traders, to exclude sur-
vivorship : and though it was
common for traders in articles of
co-partnership to provide against
survivorship, yet that was more
than was necessary ; and he said,
he took the distinction to he,
where two became joint tenants,
or jointly interested in a thing by
way of gift or the like, there the
same shall be subject to all the
consequences of law ; but as to a
joint undertaking in the way of
trade or the like, it is otherwise ;
and decreed for the plaintiff ac-
cordingly. Lord Eldon, in com-
menting upon this case, observed :
— " Jefereys v. Small has been
approved, with some distinctions,
in subsequent cases. It was held,
in that case, that, if two take a
lease of a farm jointly, the lease
shall survive, but the stock on the
farm, though occupied jointly,
shall not survive. I have a note
of my own of a case of Elliot v.
Brown, upon the 25tli of July,
1791, in which another distinc-
tion was made by Lord Thuiiow,
that the law, with reference to the
stock, would be the same as to
lease, provided the lease was taken
only upon the same pnirpose as the
stock, and the lease was only the
substratum; and Lake v. Gibson
was referred to. The observation
upon that was, that the purchase
of the land was made to the
intent that they might become
partners in the improvement ;
that it was only the substratiun



for an adventm'e, in the profits of
which it was previously intended
they should be concerned : Jack-
son V. Jackson, 9 Ves. 596. In
Elliot V. Brotvn (since reported,
3 Swanst. 489), there was a lease
of a farm to two partners ; one
partner dying, the other agreed
to a di\'ision of stock with the
representatives of the deceased
partner, but insisted on holding
the lease b}^ survivorship; Lord
Thurlow, however, thought the
lease was accessory to the trade
in which the parties were em-
barked, and granted an injunction
to restrain the surviving partner
from proceeding by ejectment to
obtain possession of the farm."
From Lord Colchester's MSS.
See also 1 Vern. 217, n. (3).

So, likewise, in Lyster v. Dol-
land, 1 Ves. jun. 421, where two
persons took a building lease, and
laid out money in erecting houses,
Lord Thurloiv held them to be
partners in respect of this pro-
perty ; and the sm'vivor was de-
creed to be a trustee of a moiety
for the representatives of the de-
ceased partner. " Though," ob-
served his Lordship, " if two
persons take a farm, the lease
will survive, yet has it not been
determined that, if thej^ lay out
money jointly upon it, that turns
round the estate at law, and makes
it equitable '? I all :' ■> to the case
of a joint lease l Len or a fee
purchased to carry on a joint
trade ; the object being to carry
on the trade, the Court thought



LAKE V. CRADDOCK.



211



it would convert the joint property
for the purposes of trade, and
making a common advantage. I
am now clearl}'^ of opinion, that,
if partners purchase leasehokl or
freehold to carry on trade, that
will carrj' with it all those circum-
stances." See also Craicshay v.
Maide, 1 Swanst. 508.

A deceased partner may, how-
ever, have so conducted himself
hy repudiating a contract, as for
instance a lease of ground for a
building speculation, as to pre-
clude his executors from claiming
a share in the lease : Reilly v.
Walsh, 11 Ir. Eq. Eep. 22.
And see Nonvay v. Rowe, 19 Ves.
143 ; Clements v. Hall, 24 Beav.
333.

And though the conveyance of
realestate be taken in the name of
one of the partners, having been
purchased with partnership funds,
it will be part of the partnership
property; Smith v. Smith, 5 Ves.

1 193 ; Clerjf) v. Fishwick, 1 Mac.

I & G. 294. And see Tibbits v.
PhilUps, 10 Hare, 355.

The question whether property
purchased with partnership assets
is joint or separate property of
the partners depends upon the

, circumstances under which and

ithe purposes for which it was
bought. Thus, in the Bank of
j:»riland Case, 3 I)e G. F. & Jo.
;645, one of t '-'partners caiTying
jon the businc-Srt of leatlier factor

I 'bought lands for the puiT^ose of
reeling a residence on part of it,
aid selhng the remainder to a



railway company. He offered a
share to his partner, who was also
desirous of building a house out
of town for his residence. The
offer was accepted, and the pur-
chase money paid out of the part-
nership assets ; but the conveyance
was to the partners in separate
moieties, each of which was con-
veyed to the usual uses to bar
dower. The partners at their
individual expense built houses
upon portions of the land set
apart for the purpose, but the
other expenses relating to the
land were paid out of the part-
nership assets. It was held by
the Lords Justices that the whole
of the land constituted joint es-
tate. " Questions of this nature,"
said Lord Justice Turner, " de-
pend, as I apprehend, generally,
if not universall}^ upon the cir-
cumstances. It cannot, I think,
be laid down as an universal rule,
that when lands are bought by
partners in trade, and are paid for
out of the partnership assets, they
of necessity become part of the
joint estate of the partners. There
are different purposes for which
the lands may have been bought.
They may have been bought for
the purpose of being used and
employed in the trade, but for
the purjiose of a mere specu-
lation on account of the part-
nership, for I know nothing
which can prevent partners from
speculating in land, if they think
proper to do so, as freely as they
may speculate in mere articles of



212



LAKE V. CRADDOCK.



commerce, though foreign to their
trade. Again, they may have been
bought without reference to the
purposes of the trade or the bene-
fit of the partnership, with the
intention of withdrawing from the
trade the amount employed in the
purchase, and converting that
amount into separate property of
the partners, or they may have
been bought on account of one or
more of the partners, he or they
becoming debtors to the partner-
ship for the amount laid out in
the purchase. The form of the
conveyance in these cases does
not settle the question, for in
whatever form the conversance
may be, there may be a trust of
the land which may follow the
money, liable, however, as other
trusts are, to be rebutted by evi-
dence. Where land purchased is
not merely paid for out of the
partnership assets, but is bought
for the purpose of being used and
employed in the partnership trade,
it is scarcely possible to conceive
a case in which there could be
sufficient evidence to rebut the
trust, and accordingly in these
cases we find the decisions almost
if not entirely uniform — that the
purchased land forms part of the
joint estate of the partnership ;
but where the land is not pur-
chased for those purposes, the
question becomes more open, and
we have to consider whether the
circumstances attending the pur-
chase show that it was made on
account of the partnership, or of



any one or more of them indi-
vidually, in whose name the land
may have been bought. . . .
I am of opinion that, looking at
the case with reference to the
whole of the estate, this purchase
must be taken to have been made
by way of speculation on account
of the partnership, and that the
petition of the Bank of England
accordingly fails and must be dis-
missed."

Where property is not purchased
by j)ersons for partnership pur-
poses, but is devised to them as
joint tenants, although they make
use of it for partnership purposes,
they will not be held tenants in
common in equity, unless by ex-
press agreement, or by their course
of deahng with it for a long period,
it ma}^ be inferred that they meant
to sever the joint tenancy. In
Jackson v. Jackson, 9 Ves. 591, a
testator left leasehold and other
personal estate embarked in trade
to his two sons, as joint tenants,
who continued to carry on the
trade for twelve years, when one
of them died. Lord Eldon, over-
ruling the decision of Sir TF.
Grant, M. R. (reported 7 Ves.
535), held, that, under all the
circumstances of the case, tlie
two sons of the testator were to
be considered as tenants in com-
mon of his property embarked in
trade, from the time they were let
into possession, includmg as well
the capital as the profits; for,
though there might be cases of
distinction between them, the



LAKE r. CRADDOCK.



213



course of dealing for so many
years oui^ht to be taken as evi-
dence that they meant to sever
the joint tenancy. See also Brown
X. Oakshot, 24 Beav. 254 ; Ward
V. Ward, 6 L. K. Ch. App. 789. In
the case, however, of Morris
V. Barrett, 3 Y. & J. 384, in the
Exchequer, a testator devised and
bequeathed the residue of his real
and personal estate to his two
sons, their heirs, executors, and
administrators. The two sons,
after their father's death, during
the period of twent}^ )'ears, carried
on the business of farmers with
such estate, and kept the monies
arismg therefrom in one common
stock, and, with part of such
moneys, purchased other estates in
the name of one of them, but
never in any manner entered into
any agreement respectnig such
farming business, or ever ac-
counted with each other. One of
the brothers died ; and upon a
bill being filed by the legatees
and persons beneficially entitled
under his will, it was admitted,
liy the counsel of the surviving
lirother, that the estates pur-
I chased with the profits of the
i business and the partnership
I stock were held by the brothers
;i^ tenants in common, but they
'ontended tliat the leasehold es-
tates and the personal estate
hich the fatlier bequeathed to
liem were held by them as joint
nants ; that where real estates,
conveyed to persons as joint te-
nants, had been adjudged to have



been held by them as tenants in
common, the estates had been
purchased expressly for the pur-
pose of a partnership, or for a
joint speculation, as in Lake v.
Craddock, and that no case could
be cited in which real estate de-
vised had been converted from an
estate in joint tenancy to a te-
nancy in common : Alexander,
C. B., held that the brothers re-
mained joint tenants of all the
property that passed by the will
of their father, but were tenants
in common of the after-purchased
lands.

In Dale v. Hamilton, 5 Hare,
369, it was held by Sir J. Wigram,
Y.-C, that a partnership agree-
ment between A. & B. that they
should be jointly interested in a
speculation for buying, improving
for sale, and selling lands, might
be proved without being evidenced'
by any writing signed by, or by
the authority of, the party to be
charged therewith, within the
Statute of Frauds ; and that such
an agreement being proved, A. or
B. might establish his interest in
the land, the subject of the part-
nership, without such interest
being evidenced by any such
writing. See >S'. C, 2 Ph. 266 ;
and Darby v. Darby, 3 Drew. 495 ;
but see and consider Caddick v.
Skidmore, 2 De G. & Jo. 52;
Smith V. Matthews, 3 De G. F. &
Jo. 139, 151.

Conversion of real estate held by
partners for partnership purposes,]



214



LAKE V. CRADDOCK.



— Where partners hold real estate
for partnership purposes, a ques-
tion arises, which was not decided
in Lake v. Gibson, and Lake v.
Craddock (in which case the de-
fendant Craddock, it will be ob-
served, was both heir-at-law and
executor of his father), whether
the real estate is not, even in the
absence of any expressed inten-
tion of the partners, so absolutely
converted into personalty as to be
held by the surviving partners,
not in trust for the heir-at-law,
but for the personal representa-
tives, of the deceased partner.

It is clearly settled, that where
real estate is j^urchased with part-
nership capital, for the purposes of
partnership trade, it will, in the
absence of an}^ express agreement,
be considered as absolutel}- con-
verted into personalty ; and, upon
-the death of one of the partners,
his share will not go to his heir-
at-law, nor be liable to dower, but
will belong to his personal repre-
sentatives. See Townsend v. De-
vaynes, 1 Mont, on Partnership,
Append. 97; 1 Rop. H. &^W.,
Jac. ed. p. 346 ; Selkrig v. Davies,
2 Dow. 231. So, in Phillips v.
Phillips, 1 My. & K. 649, Sir J.
Leach, M. R., held, that freehold
and copyhold public-houses, pur-
chased with partnership capital,
and conveyed to the two partners
and then- heirs, for the purposes
of the partnership trade, were to
be considered as personal estate
generally, and not only for the
payment of the partnership debts.



" I confess," observed his Honor,
" I have for some years, notwith-
standing older authorities, con-
sidered it to be settled that all
property, whatever might be its
nature, purchased with partnership
capital for the purposes of the
partnership trade, continued to be
partnership capital, and to have,
to every intent, the quality of per-
sonal estate ; and in the case of
Fereday v. Wightwick, 1 Russ. &
My. 45, I had no intention to
confuie the principle to the pay-
ment of the partnership demands.
Lord Eldon has certainly, upon
several occasions, expressed such
an opinion. The case of Towns-
end V. Devaynes is a clear deci-
sion to that effect, and general
convenience requires that this
principle should be adhered to."
This decision has been followed
in Broom v. Broom, 3 My. & K.
443 ; Morris v. Kearsley, 2 Y. &
C. Excheq. Ca. 140; Bligh v.
Brent, 2 Y. & C. Excheq. Ca.
268 ; Houghton v. Houghton, 11
Sim. 491. In re Thomas Ryan, Z
I. R. Eq. 232.

It has, however, been held in
some cases that where real estate
belonged to the partners at the
time of their entering into part-
nership, or has been subsequently
acquired by them out of then- own
private moneys, or by gift, con-
version will not, unless by express
agreement, take place, although
the real estate has been used for^
the partnership purposes in trade.
See Thornton v. Dixon, 3 Bro.



LAKE V. CRADDOCK.



215



C. C. 199 ; Balmain v. Shore, 9
Ves. 500 ; Cookson v. Cookson,
8 Sim. 529 ; Bisset on Partner-
ship, 50.

In more recent cases, proceed-
ing upon a broader principle, it has
been laid down that where real
property has been substantially
involved in a business in trade,
it is part of the partnership pro-
perty, and therefore personal es-
tate, and that it is immaterial
how it may have been acquired
by the partners, whether by de-
scent or devise. See Waterer v.
Waterer, 15 L. R. Eq. 402. There
J. Waterer was seised of real
estate, upon part of which he
carried on the business of a
nurseryman, under the name of
J. Waterer & Sons. He was
assisted by his three sons in his
business, but they Avere not in
reality partners. J. Waterer hav-
ing contracted for the j)urchase of
a house and farm for the purj)ose
of his business, died on the 2nd
of November, 1868, having by
his will devised his real estate,
and his residuary personal estate
to his three sons as tenants in
tommon. After his death, the
I ontract for the purchase of the
farm was carried into effect by
Ids tliree sons, to whom the land
was conveyed as tenants in com-
mon. For a sliort time the busi-
ness was earned on by the three
s(jns under tlie same style as be-
fore. It appears that the resi-
duary real and personal estate of
ihe testator (except invested pro-



perty) was employed in the busi-
ness. In April, 1869, Michael,
one of the sons, retired from the
partnership, and the two others
purchased his one-third share in
the residuary and real estate, and
of the good will in the business,
for a sum which was paid for partly
out of the estate, and partly out
of moneys borrowed on the land.
The two continuing partners
carried on the business of nur-
serymen under the old style,
ujion the same land as their
father, and also on the purchased
land. The share of Michael was
purchased only in order to enable
the other two brothers to carry
on the business. On the 4th of
October, 1871, one of the part-
ners died intestate, leaving a
widow and childi-en. It was held



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