On certification to the Superior Court, Appellate Division, granted to both parties.
For affirmance -- Justices Case, Oliphant, Wachenfeld, Burling and Ackerson. For reversal -- Chief Justice Vanderbilt, and Justice Heher. The opinion of the court was delivered by Case, J.
The litigation is between wife and husband. It concerns a paper and twine business conducted under the name of Bacon & Graham, and, on the counterclaim, title to real estate.
The wife, Mary G. Bacon, filed a complaint in the former Court of Chancery alleging that she was the owner of the business and that her husband, Jacob D. Bacon, the defendant, was employed by her as a salesman and was seeking to seize the business as his own. The complaint prayed for restraint. The husband answered denying the wife's allegations. By way of counterclaim he asserted that he was an equal partner in the business and asked a dissolution of the partnership and an accounting; and as a further cause of action he alleged that a house, title to which was taken in the name of the wife, had been purchased with funds supplied by him under an agreement that he was to receive a one-half interest as tenant by the entirety, and he sought a judgment decreeing that the wife held title to one-half of the entire premises in trust for him and that she be directed to convey the same to the two of them as tenants by the entirety.
The case was referred to then Vice-Chancellor Lewis who had taken several days' testimony on final hearing when the change in the court system was effected and he was retired. Thereafter, at the request of the parties, the matter was referred to him as special master so that he might conclude the hearings. In due course he filed a report, which concluded that Bacon & Graham was a partnership business owned equally by Jacob D. Bacon and Mary G. Bacon, his wife,
that the plaintiff should account for the defendant's interest in the partnership and for the profits and losses up to and including the date of the report, and that the real estate standing in the name of Mary G. Bacon should be transferred to Mary G. Bacon and Jacob D. Bacon as tenants by the entirety. Objections were filed and were argued before Judge Grimshaw whose findings, reported in 8 N.J. Super. 418, agreed with the conclusion of the master that there was a partnership and that there should be an accounting but decided that the partnership terminated on March 5, 1946, and that the accounting should be as of that time, and, further, that the money with which the real estate was purchased came from the account of Bacon & Graham and that as the account was the joint property of the parties the husband had contributed one-half of the purchase price, but because the title was taken in the name of the wife there was a presumption of gift without convincing proof of a contrary intent and that transfer of title should not be ordered.
On appeal from the judgment entered thereon the Appellate Division, by an opinion of Judge Colie, reported in 7 N.J. Super. 182, affirmed the finding that a partnership had existed and was dissolved on March 5, 1946, and that plaintiff should account to defendant for half of the net worth of the partnership and make the monetary adjustments enumerated in the judgment below. It also determined that the real estate was purchased with money from the account of the partnership, that the wife as a partner held title in trust for the co-partners, and, there being no evidence of a contrary intent, that the property was, consequently, an asset of the partnership and not the sole property of Mary G. Bacon.
Both parties petitioned this court for certification and each petition was granted. The matter is, therefore, now before us on appeal from the judgment of the Appellate Division.
The finding of facts in the Chancery Division was as follows:
"Jacob D. Bacon and the plaintiff were married in 1929. They have one child, a son. Bacon has had a varied business career. Mary
Bacon, prior to her marriage had served in various clerical capacities. At the time of the marriage Bacon was operating a large storage garage in the City of Paterson. He continued in this business until 1938, when the depression proved too much for the garage business and it was lost by foreclosure. Mrs. Bacon, who had ceased work upon her marriage, went to live with her parents, Bacon to live with his sister. In 1939 Bacon started the paper and twine business in a small way. Progress was slow. Husband and wife conferred on ways to increase their income so that they might again have a home of their own. Mary Bacon suggested that she should borrow money on a diamond ring which defendant had given her. Together they determined to borrow money from relatives and place the combined sum in the business, as capital. Accordingly, Mrs. Bacon borrowed $220 on the security of the ring. An additional $200 they obtained in the form of a loan from Mrs. Bacon's brother, a lawyer. Bacon, at the time, had two judgments against him and the brother, as a condition to the making of the loan, insisted that it should be made to appear that the business belonged to Mrs. Bacon until the loan was repaid. Bacon demurred. He was not being pressed. He intended to pay the claims against him at the earliest possible moment and he saw no need for the subterfuge. He was overruled and a certificate of trade name was filed setting forth that Mary G. Bacon was trading as Bacon & Graham. An account in that name was opened. Mary Bacon executed a power of attorney to her husband. It was not used, however. A signature card requiring the signatures of Mary G. Bacon and Jacob D. Bacon was filed at practically the same time. The $220 received on the ring and the $200 loan obtained from Mrs. Bacon's brother, as well as a small additional sum from Bacon were deposited in the account. On paper the enterprise appeared to be the sole venture of Mrs. Bacon. Actually, however, it was a partnership. Checks were signed by both partners. Loans required for the business were obtained upon the joint credit of both Bacon and his wife. Business premises were ...