Case Name: MICHIGAN TRUST CO. v. BENNETT
Court: Michigan Supreme Court
Jurisdiction: Michigan
Decision Date: 1895-09-26
Citations: 106 Mich. 381
Docket Number: 
Parties: MICHIGAN TRUST CO. v. BENNETT.
Judges: McGrath, C. J., Long and Montgomery, JJ., concurred. Hooker, J., did not sit.
Reporter: Michigan Reports
Volume: 106
Pages: 381–384

Head Matter:
MICHIGAN TRUST CO. v. BENNETT.
1. Partnership — Conveyance by One Partner to Secure Firm Creditor.
A conveyance by a partner of lands to which he holds the legal title, given as security for a bona fide indebtedness of the partnership, is valid as against the other creditors of the firm, whether the land be individual or partnership property
2. Partnership — Tenancy in Common — Bona Fide Purchaser
Where the legal title to partnership realty is vested in the-individual members of the firm as tenants in common, a conveyance by one partner of his undivided interest to a bona fidepurchaser is valid as against the firm creditors.
Appeal from Montcalm; Dodds, J., presiding.
Submitted June 12, 1895.
Decided September 26, 1895.
Bill by Seymour B. Gorham, assignee of Clarence W. and Merrick W. Chapin, against Frederick EL Bennett and others, to set aside certain conveyances on the ground that they were fraudulent as against the creditors of the assignors. The assignee having resigned, the Michigan Trust Company, as receiver, was substituted as complainant, and the cause proceeded From a decree for defendants, complainant appeals.
Affirmed.
Oscar Webber and Clarence W. Chapin, composing the firm of Webber & Chapin, bankers, became the owners of the land in dispute, having obtained the same in payment of a debt. June 26, 1883, Oscar Webber and wife conveyed an undivided half of said land to defendant Frederick EL Bennett for the expressed consideration of $1,400. The deed was not recorded until July 10, 1893. December 28, 1892, Webber & Chapin dissolved partnership; Webber selling out to Chapin, Merrick W. Chapin taking his place in the firm. The bank was indebted to defendant Spanogle in the sum of $1,800 for money deposited. Spanogle, hearing that the firm was in financial embarrassment, demanded the payment of his money. The firm was unable to pay, and thereupon Clarence W. Chapin and wife conveyed by deed to him •an undivided half interest in said land, and his interest in the personal property upon the farm, in payment of the claim. Afterwards, Chapin & Co made a general assignment for the- benefit of their creditors. This bill was filed by the assignee to set aside the two deeds,--one to Spanogle, and the other to Bennett, — and to recover the land for the benefit of the creditors. The testimony was taken in open court, and decree entered dismissing the bill as to Bennett, and holding that the conveyance to Spanogle was taken bona fide as a security for his debt, and that he should convey to the complainant upon the payment of his debt, with, interest and costs.
Thomas F. McGarry, for complainant.
F. A. Miller and William O. Webster, for defendants.

Opinion:
Grant, J.
(aft&r stating the facts). It is conceded that Chapin & Co. were indebted to Spanogle in the sum of $1,800. The title to the undivided one-half interest in the land stood in Clarence W. Chapin. It is immaterial whether the land was the property of the bank or of Mr. Chapin. Mr. Spanogle had the undoubted right to secure his claim, either out of the firm property or out of the individual property of one of the'members. There is no evidence that Spanogle acted in bad faith, or with any intent to assist Bennett and Chapin in defrauding the other creditors. There is good evidence to show that there was no considerable difference between the value of the property conveyed and the debt due. It is, however, of no consequence, because the assignee, by the decree of the court below, can obtain the entire value of the excess, if any, by paying the amount of the indebtedness, and from this decree Spanogle has not appealed.
Defendant Bennett testified that when he purchased the land from Webber he paid $1,400 in cash. Webber also testified to the same thing. Bennett went into possession immediately, and continued in possession thereafter, clearing up the land and erecting buildings. He used the proceeds of the land in supporting himself and family, and in these improvements. While there are some suspicious circumstances, such .as the failure to record the deed and the relationship of the parties, we do not think there is sufficient to justify the conclusion that Bennett did not pay the $1,400, or that the transaction is vitiated by fraud, which must be proven, and not based upon surmise. If Bennett actually paid the $1,400 to Webber, there is no reason why he should not be protected, although the purchase by Webber & Chapin was made with bank funds. Upon this record they were tenants in common, and each had the right to convey an undivided half interest to one who took without knowledge that the land was partnership property.
We see no reason to disturb the decree below, and it is affirmed, with costs.
McGrath, C. J., Long and Montgomery, JJ., concurred. Hooker, J., did not sit.