
    Kate Rosenbaum, Plaintiff, v. The City of New York et al., Defendants.
    (Supreme Court, New York Special Term,
    April, 1908.)
    Partnership — Firm capital and property — What constitutes partnership property — Real property: Dissolution, settlement and accounting— Effect "of dissolution — As to retiring partner — Estoppel to question effect of transfer of interest in partnership property.
    Estoppel — Equitable estoppel and estoppel in pais — Facts creating estoppel — Contracts — Assignments.
    Eminent domain — Who entitled to award — Award for partnership property — Effect of dissolution of copartnership.
    Lands owned by a copartnership carrying on the business of purchasing real estate, building houses thereon and selling them are part of the firm assets; and, upon the dissolution of the firm and the transfer of the partnership property to one of the partners who assumes the liabilities of the firm, the equitable title passes without the execution of any deed and the retiring partner is estopped from asserting the invalidity, if any, of the transfer of her interest therein.
    Where, under section 990 of the Greater New York charter, the title to a part of such lands which was taken for a street vested in the eity before the dissolution of the partnership, the damages awarded took the place of the real estate and passed by virtue of the transfer of the partnership property to the partner who assumed the liabilities of the firm.
    D-emurrbr to a separate defense contained in the answer of the defendant Bleeher, on the ground that the same is insufficient in law upon the face thereof.
    John H. Regan, for plaintiff and demurrant.
    Augustine & Hopping, for defendant Blecher, opposed.
   Giegerich, J.

The action is brought to determine who is entitled to an award made in proceedings had to acquire for street purposes the title to certain lands situate on the westerly side of St. Ann’s avenue, distant 455 feet northerly from the northwesterly corner of St. Ann’s avenue and One Hundred and Fifty-sixth street, in the borough of the Bronx. The complaint alleges that the premises were conveyed by one Adolph M. Bendheim and Henrietta, his wife, to the plaintiff and one Abram or Abraham Abelman, who thereby became tenants in common, each entitled to an undivided one-' half share; that condemnation proceedings were instituted by the city of Hew York to acquire the title thereto for street purposes; that title was vested in the city of Hew York, and that an award of $3,600 was erroneously made to the defendant Bleeher; that the city is ready to pay said award and would pay the same but for the claim made by the defendants Bleeher and Kobre to some interest therein or lien thereon, by reason of which claim it will not pay said award or any part thereof to the plaintiff, although she has duly demanded payment of the same; that on or about the 4th day of January, 1900, the said Abelman and his wife conveyed to the defendant Bleeher all their right, title and interest in the premises, it being alleged that by reason of the facts set forth the plaintiff and said defendant Bleeher became seized of and the owners of and tenants in common of the said strip of land and of the award thereafter made for same, as aforesaid, and so continued, an undivided one-half (%) thereof still belonging to the plaintiff and the other half to the defendant Bleeher; that the said defendant Bleeher wrongfully claimed and still claims to be entitled to the whole of said award, notwithstanding that his interest therein is only to the extent of one-half thereof as aforesaid.” The answer is practically a denial of the allegations of the complaint, except those relating to the conveyance of the property to the plaintiff and Abelman, the making of the award and the conveyance by Abelman and his wife to the defendant Bleeher. For a further and separate defense the defendant alleges that the said Abelman and the plaintiff were at the time of the conveyance to them “ co-partners in the building business, and said premises and real estate were purchased by them as such copartners and were copartnership property up to the time of the dissolution of the said copartnership; that said copartnership was dissolved by mutual consent on or about the 30th day of December, 1899, and said Abram Abelman purchased from said plaintiff, Kate ¡Rosenbaum, all her right, title and interest in and to all copartnership property, and paid her therefor the sum of $1,500;” that as a further consideration therefor the said Abelman assumed all the partnership liabilities of every kind and nature whatsoever, and released the plaintiff of and from all claims, the plaintiff on her part agreeing that all moneys due to the firm from any person or persons whomsoever should be the sole property of Abel-man, and releasing him generally of all claims and demands whatsoever; and it is further alleged that no claim whatsoever was thereafter made by the plaintiff against Abelman on account of said real property or her alleged share therein.” The plaintiff has demurred to this said further and separate defense on the ground that it is insufficient in law upon the face thereof. By demurring to such separate defense the plaintiff admits the truth of the allegations therein set forth as well as the matters alleged in the complaint to which it refers. Douglas v- Coonley, 156 N. Y. 521; Schlesinger v. Burland, 42 Misc. Rep. 208. Dor the purposes of the demurrer the allegations of the complaint referred to in such separate defense are to be treated as incorporated in it. Cragin v. Lovell, 88 N. Y. 258; Douglas v. Goonley, supra. As I construe the defense under consideration it alleges that the real estate for which the award was made was the property of a copartnership consisting of the plaintiff and said Abelman, and that such firm carried on the building business, meaning thereby that the firm purchased real estate and built houses thereon with a view of selling the same. If these views are correct, then there can fairly be implied an intention upon the part of the copartners that there shall be a conversion of the real estate of the firm into personal property for all purposes, although such real estate was conveyed to them in individual interests. Buckley v. Doig, 188 N. Y. 238. Even if the real estate was not purchased for the purpose before mentioned, nevertheless, the dissolution agreement provided for the payment of partnership debts and for the adjustment of the rights of the partners in the copartnership assets, and a conversion of the real estate so held in individual interests may, under such circumstances, be regarded as having been effected, at least for such purposes. Darrow v. Calkins, 154 N. Y. 503; 22 Am. & Eng. Ency. of Law (2d ed.), 106-108. In either aspect the character of the real property of the partnership may fairly be deemed to have been changed into personalty when Abelman purchased from his copartner, the plaintiff, all her right, title and interest in the copartnership property, as above mentioned. Such interest, as heretofore shown, consisted of an undivided half of the firm’s assets, but it is claimed on behalf of the plaintiff that the separate defense fails to show that such right was transferred by a deed or conveyance pursuant to the provisions of the Real Property Law (§ 207), and hence that such defense is insufficient. While there might ordinarily be some force in such contention if the legal title of the plaintiff as distinguished from the equitable one were sought to be passed (Matter of Godding, 9 Fed. Rep. 849, and citations), the plaintiff is estopped from asserting the invalidity, if any, of the transfer of her interest to Abelman, because if permitted to do so it would, under the circumstances alleged in the separate defense and above set forth, aid her to perpetrate a fraud. Geneva Mineral Spring Co. v. Coursey, 45 App. Div. 268; Browne Stat. of Frauds, § 457a. The plaintiff contends, furthermore, that since it appears from the brief of the defendant Blecher that title to the premises for which the award was made did not vest in the city until July 23, 1900, six months after the dissolution and after his alleged purchase, the property was certainly real estate and not personalty. The right to an award in proceedings taken by the city of New York to condemn land for a street is given to the owner at the time when title vested in the city. Matter of East 135th St., 36 Misc. Rep. 427. Section 990 of the Greater New York charter, as it was in force when the condemnation proceedings were conducted, provided that the title to lands taken for a street shall be vested in the city if vacant upon the date of the filing of the oath of the commissioners of estimate and assessment* or upon a specified date thereafter, and if there are buildings upon such lands, then upon a date not less than six months from the date of the filing of the oath. "While facts not alleged in the pleadings will not be considered upon a demurrer (Ayres v. Covill, 18 Barb. 260; Cochran v. Am. Opera Co., 20 Abb. N. C. 114; Hardon v. Ongley Elec. Co., 89 Hun, 487), it sufficiently appears from the allegations respecting the condemnation proceedings that "title was not vested in the city until after Abelman and his wife had conveyed to the defendant Blecher their right, title and interest in the lands in question. Consequently, the defendant Blecher, by such conveyance, succeeded to his grantor’s rights in the award. "Such rights consisted not only of Abelman’s original share in the partnership property, but of his additional share acquired by purchase from the plaintiff. The damages awarded took the place of the partnership real estate in suit in respect to all the rights and interests which were dependent upon and incident to it (Matter of Grade Crossing Commission, 64 App. Div. 70), and since the defendant Blecher acquired the entire interest of the firm by such conveyance and purchase he is entitled to the entire award. The plaintiff makes the further contention that the allegations of the separate defenses are defective because the averment that Abelman “purchased” the right, title and interest of the plaintiff is a legal conclusion and not an allegation of fact. As facts may be pleaded according to their legal effect at the option of the pleader, instead of averring the facts as they actually exist (McKee v. Jessup, 62 App. Div. 143), such allegation is sufficient. Prindle v. Caruthers, 15 N. Y. 425, 431. In the case last cited the complaint alleged that the contract in .controversy became the property of the plaintiff by purchase, without stating when, from whom or upon what" consideration, and it was held that such defect was not of such a substantial nature as to be available upon a demurrer; that such allegation tendered the issues as to the matter, and that the remedy was by motion to make the complaint more definite and certain. The plaintiff further argues that the separate defense is also defective because it fails to state when the purchase of the plaintiff’s interest was made by Abelman. As I construe the language of such separate defense, not only did the dissolution of the copartnership take place on or about the 30th day of December, 1899, but that as a part of the transaction had on that day the plaintiff’s interest in the copartnership assets was purchased by Abelman. My conclusion, therefore, is that the demurrer should be overruled, with costs, with leave to the plaintiff to withdraw the demurrer.

Demurrer overruled, with costs, with leave to plaintiff to withdraw demurrer.  