## Facts

- Albert J. Kay and Benjamin F. Eckles, brothers-in-law, operated an informal contracting partnership without a written partnership agreement.
- In 1959, they acquired several lots in Silver Spring, Maryland, including Lot 5 (unimproved except for a small structure); record title to Lot 5 was taken in Kay’s and Eckles’s names as tenants in common.
- A purchase-money deed of trust (joined by their wives) secured a loan on the rear 50 feet of adjacent lots (Lots 1–4), not on Lot 5.
- The partnership operated from a bungalow on Lots 1–4; Lot 5 was later rented as a parking lot.
- Rental income from Lot 5 was treated as partnership income, the lot was listed as a partnership asset, and taxes on the lot were paid from partnership funds.
- After business losses, the partners engaged a broker and indicated willingness to sell Lot 5 for $45,000 with 29% cash at settlement.
- Norman M. Gitomer offered to purchase on those terms; while Eckles was out of town, evidence showed he had participated in earlier negotiations and authorized Kay to act for the partnership regarding the sale.
- Kay accepted the offer and signed the sales contract, signing both his name and Eckles’s name.
- The transaction did not close after the wives refused to sign a deed unless Gitomer paid the full price in cash, contrary to the contract terms.
- Gitomer sued in equity for specific performance.

## Issues

1. Whether Lot 5, though titled in the partners’ individual names as tenants in common, was partnership property based on the parties’ intent and treatment of the property.
2. Whether Kay had authority as a partner to bind the partnership to a contract for sale of Lot 5 by signing the contract without Eckles’s signature.

## Decision

- The Court of Appeals of Maryland affirmed the decree of specific performance.
- The court upheld the finding that Lot 5 was owned by Kay and Eckles as partnership property (“tenants in partnership”) under the Uniform Partnership Act.
- The court held that Kay, acting within partner authority, could bind the partnership to the sale contract despite record title being in the partners’ individual names.
- The court declined to disturb the trial court’s factual findings because they were not clearly erroneous.

## Legal Principles

- Property titled in partners’ individual names may still be partnership property if the parties intended to devote it to partnership purposes, as shown by surrounding circumstances and subsequent conduct.
- Under the Uniform Partnership Act, property acquired “on account of the partnership” is partnership property; acquisition need not be funded from a separate partnership account if the funds function as capital contributions.
- When title to partnership real property is in one or more partners, a conveyance executed by a partner (in the partnership name or the partner’s own name) passes the partnership’s equitable interest if the act is within the partner’s authority.
- Appellate review of equity fact-finding defers to the trial court unless findings are clearly erroneous.

## Conclusion

The court enforced the real estate sales contract by specific performance, concluding that Lot 5 was partnership property based on intent and treatment and that Kay had sufficient authority to bind the partnership to the sale.


Kay v. Gitomer, 253 Md. 32, 251 A.2d 853 (Md. 1969)