Campbell v. Bane

Grant, C. J. (after stating the facts). 1. The main contention is that, under the allegations of the bill, there has been no final adjustment of the partnership accounts between complainants and Keys, and therefore the suit will not lie, because it is against a member of the firm. In support of their position, counsel cite Gardiner v. Fargo, 58 Mich. 72. In that case, which was a suit at law, one partner, Gardiner, sold his interest in all the goods, personal property, fixtures, book accounts, of every kind and nature, of the firm of Gardiner & Fargo, to the firm of Fargo & Peck. It was held that the indebtedness of Gardiner to the firm was not included in the bill of [42] sale. The language in the present case is far more comprehensive. Keys had acknowledged himself indebted to the firm, and had given it a note and mortgage. This was one of the assets of the copartnership. By the arrangement set out in the bill, the partnership was dissolved. Keys ceased to be a member, and transferred to the remaining partners his right, title, and interest in all the assets, which included his own note and mortgage. Under the allegations, all title in him passed to complainants, and lodged in them the power to proceed to enforce the collection, as though the mortgage had been given by a stranger to the firm. Partners may deal with each other as individuals, and, when they have so done, a suit at law to enforce the contract is applicable. Carpenter v. Greenop, 74 Mich. 664 (4 L. R. A. 241, 16 Am. St. Rep. 662); Smith v. Kemp, 92 Mich. 357. This is a suit in equity, and if Keys claimed payment, or that under the arrangement it was necessary for a partnership accounting in order to determine the amount due upon his note and mortgage, he could file an answer in the nature of a cross-bill. Bane, as a subsequent purchaser or lienholder, has a right to redeem, and is also entitled to have the amount due upon the mortgage determined. The parties are not in a court of law, but in equity, where all their rights can be protected. 2. Under the allegations of the bill, Bane is a subsequent lienholder, and, under the statute, is a proper party defendant. The case of Dickerson v. Uhl, 71 Mich. 398, has no application, because there the claim of the defendants antedated the mortgage which was in process of foreclosure. In the present case Bane’s lien is subsequent in date, and his right of priority must be determined bjr the fact of actual notice of the existence of the mortgage. The statute providing for foreclosure suits contemplates the settlement of just such suits. The decree is affirmed, and the case remanded, with leave to the defendant to answer in accordance with the rules and practices of the court. The other Justices concurred.