Kyle v. Carpenter, 130 Wis. 310.

giving him such credit there was still due to him from such firm $322.59, which amount these plaintiffs paid to said Curtiss and he received the same in full payment and satisfaction of his interest in said firm and its property of every kind; that ever since such time, May 25, 1897, these plaintiffs have carried on such business under the firm name of Kyle Bros., and have been in the actual and open possession and occupancy of said real estate, and the said Curtiss has never made any claim thereto, except by the making of the deed of said premises to one Carpenter as hereinafter alleged; that October 9, 1905, the said Curtiss wilfully and wrongfully, and in violation of the trust in which he held such real estate, did execute and deliver to the defendant Carpenter a deed to an undivided one-third of such real estate; that said Carpenter wilfully and wrongfully, and for the purpose of defrauding these plaintiffs, accepted such deed and caused the same to be recorded in the office of the register of deeds October 12, 1905, and has since such time claimed to be the owner of such undivided one-third of said real estate by virtue of such deed; that at the time of accepting such deed said Carpenter well knew that these plaintiffs were the real owners of such real estate and that said Curtiss held the legal title thereof in trust for them.

C. M. Hilliard, for the appellants.

For the respondents there was a brief by Bundy & Varnum and J. W. McCauley, and oral argument by R. E. Bundy.

CASSODAY, C. J. The facts alleged in the complaint are of course admitted by the demurrer. From such facts it appears that after the defendant Curtiss had been in partnership with the plaintiffs about three and one-half years under the firm name of Kyle Bros. & Co., conducting the business mentioned upon the premises described, the firm was dissolved by mutual consent, Curtiss retiring from the firm and selling to the plaintiffs all his right, title, and interest in and

Kyle v. Carpenter, 130 Wis. 310.

to the assets and property of the firm, including said real estate, and in consideration therefor the plaintiffs, in and by the agreement of dissolution, assumed all obligations against the firm and released the said Curtiss from any and all obligations to the firm, including his indebtedness mentioned, which was thereupon credited to him on the books of the firm, and the plaintiffs also paid to said Curtiss the balance due him. on such dissolution; and said Curtiss received such release, agreements, and payment in full satisfaction for his undivided one-third interest in and to the assets and property of said firm of every kind, including said real estate, but said Curtiss failed to make any conveyance of said real estate to plaintiffs. It further appears that ever since May 25, 1897, the plaintiffs have carried on such business under the firm. name of Kyle Bros., upon and in the actual and open possession and occupancy of said real estate, without any objection or question from said Curtiss, and that for the purpose of defrauding the plaintiffs the said Curtiss on October 9, 1905, wilfully and wrongfully and in violation of the trust reposed in him conveyed the legal title to the undivided one-third interest in said real estate to the defendant Carpenter, who wilfully and wrongfully, and with full knowledge of the facts stated, accepted such conveyance for the purpose of defrauding the plaintiffs.

Upon the facts stated it s difficult to perceive upon what theory the defendants can withhold from the plaintiffs the legal title to the lands in question. They were property which belonged to the partnership up to the time of its dissolution. The terms of dissolution were mutually agreed upon. In such mutual agreement the plaintiffs assumed all obligations against the firm and released Curtiss from any and all his indebtedness to the firm. By such agreement the plaintiffs were to have all the right, title, and interest of Curtiss in the partnership property, including the real estate, for which the plaintiffs paid him the agreed price, which Curtiss received in full

Kyle v. Carpenter, 130 Wis. 310.

payment and satisfaction for such right, title, and interest. True, the complaint does not in express terms allege that Curtiss agreed to convey to the plaintiffs such legal title, but it does allege that the plaintiffs purchased the real estate from Curtiss and paid him in full the agreed purchase price, and this necessarily implied an agreement to so convey. The agreement thus made between the parties was fully executed, except that Curtiss failed to convey such legal title to the plaintiffs. The prayer of the complaint is that the judgment shall declare and establish that the respective defendants held and hold the legal title to the undivided one-third of said real estate in trust for the firm of which Curtiss was a member and for these plaintiffs. It is true, as argued by counsel for the defendants, the transaction did not create an express trust within the meaning of the statutes. Sec. 2081, Stats. 1898. The chapter in which that section is found abolishes "uses and trusts, except as authorized and modified" therein, but declares that the sections of that chapter shall "not extend to trusts arising or resulting by implication of law." Sec. 2076, Stats. 1898. Such resulting trusts have frequently been reeognized and enforced by this court. Whiting v. Gould, 2 Wis. 552; Orton v. Knab, 3 Wis. 576; Martin v. Morris, 62 Wis. 418, 22 N. W. 525; Davenport v. Stephens, 95 Wis. 456, 458, 70 N. W. 661.

It is elementary that "real estate purchased for partnership purposes and appropriated to those purposes, paid for by partnership funds and necessary for partnership purposes, always becomes partnership property. Nor does it seem to be material in what manner, or by what agency, the land is bought, or in what name it stands." Parsons, Partn. (4th ed.) § 265. In the same section it is said:

"We consider it an established rule in equity that any party holding the legal title to land, however it may have come to him, will be held as trustee for the partnership, if it be certain that the land was in fact a part of their joint property as partners."

Kyle v. Carpenter, 130 Wis. 310.

Another text-writer says:

"Where à partnership holds land not as the chief purpose of its existence, but as an incident to its business, the statute of frauds does not apply, and the land may be shown to be part of the partnership stock and affected with partnership equities by oral evidence." 1 Bates, Partn. § 301.

Such statements are amply supported by adjudged cases. Among others, see Fairchild v. Fairchild, 64 N. Y. 471; Greenwood v. Marvin, 111 N. Y. 423, 19 N. E. 228; Sherwood v. St. P. & C. R. Co. 21 Minn. 127; Marsh v. Davis, 33 Kan. 326, 6 Pac. 612. Such real estate, so purchased and held, is in equity not only considered as the property of the firm for the payment of its debts, but also "for the purpose of adjusting the equitable claims of the copartners as between themselves." Smith v. Tarlton, 2 Barb. Ch. 336. Here, upon the dissolution of the firm and in the adjustment of such equitable claims between the partners, Curtiss was to convey his legal title to the lands to plaintiffs; and his refusal to do so and his conveyance to Carpenter was a breach of trust and fraud on the plaintiffs. In the opinion of the trial court the facts alleged entitled the plaintiffs to a specific performance of the contract to convey to them the legal title to the real estate. Of course the power of courts to compel specific performanceis not abridged by the statute of frauds. Sec. 2305, Stats. 1898. The complaint does not in terms pray for such specific performance, and so we refrain from further considering the question here. We perceive no ground for claiming that the cause of action alleged is barred by the statutes of limitation. By the Court.-Both orders of the circuit court appealed from are affirmed.

Twentieth Century Co. v. Quilling, 130 Wis. 318.

TWENTIETH CENTURY COMPANY, Respondent, vs. QUILLING,

Appellant.

December 5, 1906—January 8, 1907.

Patents and patent rights: Notes given for territory: Validity: Consideration: Compensation for effecting sales: Public policy: Pleadings: Amendment: Parol evidence.

1. It is competent for the owner of a patent to sell an exclusive right to vend the device in a given county and take a note therefor.

2. Such note is valid and enforceable in full (in the absence of fraud) notwithstanding the fact that the value of the right sold is greatly overestimated.

3. A valid patent on a useful article is a sufficient consideration for a note, though the patent may never be profitable.

4. Where the owner of a patent sells an exclusive right to vend the device in a given county it is competent to agree that, in case the vendee induces others to purchase county rights of sale, the vendee shall receive as his compensation a specified part of the purchase price of such rights so purchased.

5. Plaintiff, a patentee, and defendant entered into a written contract giving defendant a county right to sell the patented article, which also contained an agreement that, if defendant should induce others to purchase county rights, he should receive a specified proportion of the sums realized from such sales. In an action on defendant's note given in part payment on such contract, defendant sought by amendment to set up a defense, substantially, that the written contract, while containing some of the conditions of the real agreements made, was largely a mere cover executed to give appearance of fairness and legality to the arrangement; that neither party contemplated that the right to sell the device in defendant's county was of any real commercial value, or that defendant would make any effort to make such sales; that the real arrangement was a joint scheme to make money by selling similar nominal territorial rights to others who should also become parties to the scheme and sell similar territorial rights to still others, and so on, the process to go on in constantly broadening circles as long as purchasers could be found, and thus necessarily leave the ultimate purchasers with nothing to show for their investment save the practically worthless right to sell the patented device in some remaining county. The trial court re