First National Bank v. State Savings Bank

Grant, J. (after stating the facts). 1. The defendant, by its demurrer, admits all the averments of the bill. Technical rules of pleading cannot be invoked to aid defendant on demurrer. Averments, though informal and defective, will be held sufficient upon general demurrer if the facts are therein stated with reasonable certainty. Evans v. Railroad Co., 68 Mich. 608 (36 N. W. 687); Story, Eq. PI. (10th Ed.) 404, note 3. It is reasonably certain that the bill of complaint intends to allege, and does allege, that the defendant bank had notice, both at the time of the levy and at the execution sale, of the fact that this land was partnership property, and that the complainant obtained title to it in payment of its partnership debt. We think it sufficiently alleged that the defendant bank levied upon and purchased this property [325] burdened with notice and knowledge of complainant’s rights. 2. Did such notice and knowledge operate to defeat defendant’s title? Counsel insist that the rights and equities of the creditors of Amos Bissell & Son have been destroyed, for the following reasons: (1) Because the entire firm assets became vested in George N. Bissell as sole heir at law of Amos, by operation of law, just as much as though Amos had transferred the same to George by deed of conveyance. (2) By the sale of the property in question by George N. Bissell to John Peter Johnson on the land contract. (3) By the assignment of the land contract as security from George to Hannah and from Hannah to complainant. (4) By deed from George N. Bissell and Brooks to Potter and from Potter’s heirs to complainant. (5) By sale on execution of the joint interest of George and Amos under the execution of the defendant bank. Counsel, in their argument, overlook the material averment in the bill that the contract, the assignments thereof, and the deeds were all executed for the purpose of effecting that to which creditors of a partnership are legally and equitably entitled, viz., the appropriation of partnership property to pay partnership debts. George Bissell treated the land and made the contract as the surviving partner. It was assigned to secure partnership debts. It has long been the settled law of the State that partnership property must be first applied to the payment of partnership debts, and that real estate owned by a partnership is regarded as personal property for the purpose of paying debts and closing the partnership business. Moran v. Palmer, 13 Mich. 367; Godfrey v. White, 43 Mich. 171 (5 N. W. 243); Merritt v. Dickey, 38 Mich. 41; Way v. Stebbins, 47 Mich. 296 (11 N. W. 166); Hutchinson v. Dubois, 45 Mich. 143 (7 N. W. 714). It is also the universal rule that a surviving partner has the right to apply partnership funds in payment of partnership debts. Story, Partn. § 326. The right and duty of George Bissell, as surviving [326] partner, and the rights of firm creditors, are unaffected by the fact that George was the sole heir of his father, his former copartner. No creditor of George could levy upon and sell the firm assets for his individual debt, unless both he and the firm creditors have in some manner been es-topped to assert, or have waived, their rights. Under the allegations of the bill, they have not done so. We are not called upon to anticipate what the evidence upon the hearing may show. Neither need we now discuss the effect of the failure to record some of the deeds by which complainant claims title until after the levy made by the Ionia National Bank. The bill sufficiently alleges (1) that the land was partnership property; (2) that the partnership was heavily in debt when Amos died; (3) that the land was conveyed to complainant to apply on its partnership debt; and (I) that defendant had notice of the above facts. These allegations make a case sufficient to require an answer and the taking of proofs. The decree is affirmed, with costs, and the case remanded to the court below, where the defendant will be given time to answer in accordance with the rules and practice of the court. The other Justices concurred.