Story Case

Stephen Wing and Andrew Parker were doing a retail grocer business as Parker and Wing, a partnership at Benton, Michigan. Parker lived in Detroit, Michigan, and Wing lived at Benton, where he was manager of the store. In accordance with an understanding between Parker and Wing, the latter gave a mortgage on the store fixtures to Joseph Hulbert. A statute in Michigan made it desirable for Hulbert to record the mortgage at the place where the owner of the property resided. Should Hulbert record the mortgage at Benton only, or at both Benton and Detroit?

Ruling Court Case. Hubbardston Lumber Company Vs. Covert, Volume 35 Michigan Reports, Page 255

Homer, of North Plains, Michigan, and Marcy, of Massachusetts, were engaged as partners in the lumber business under the firm name of Homer and Marcy. The partnership gave a mortgage to Mrs. Homer on certain logs, a portion of which was located at North Plains where the partner, Homer, resided, and the remainder of them was at Crystal, Michigan. There was a statute in Michigan which required that all mortgages on chattels should be recorded either at the place where the owner resided, or if the owner was a non-resident, at the place where the property was located. The mortgagee, Mrs. Homer, recorded this mortgage at North Plains, where she resided.

Mrs. Homer, thereafter, sold the logs in question to the Hubbardston Lumber Company, with the consent and approval of the resident partner, Homer; this company took the logs and manufactured them into lumber. A certain creditor of the partnership had recovered a judgment on his claim; and execution was issued and the defendant, as deputy sheriff, had levied upon this lumber as property of the partnership; they claimed that the mortgage should have been recorded at Crystal as well as at North Plains, to comply with the statute, because one of the partners was a non-resident. This was an action brought by the lumber company against the deputy sheriff to recover possession of the lumber.

Decision

"In this case, the mortgage purported to be the contract or mortgage of the firm, and not of the individuals composing it, as individuals, and the evidence tended to show that the firm resided or had its seat in North Plains. The only member residing in the state, the only party representing or authorized to represent the firm, lived there, and in the state of things which appeared, and in the absence of countervailing proof, this was strong evidence of the residence of the firm there. This mortgage on firm property, made in the firm name by this very party, was there filed, and it seems to me this should be considered a sufficient filing within the spirit of the statute." Accordingly, it was held that the lumber company was entitled to possession of the lumber from the deputy sheriff.

Ruling Law. Story Case Answer

Although a partnership is unlike a corporation, in the fact that it is not considered a legal person, and cannot sue or be sued as an entity, yet the courts will recognize a partnership as an entity or firm to the extent of stating that it establishes a contractual relation between the members. As the case of Hubbard-ston Lumber Company vs. Covert illustrates, the Courts may even invest this firm with a residence. The place where the business is transacted is the situs of the firm, although one of its members lives in another state. In accordance with this principle, it is sufficient for Hulbert, in the Story Case, to record his mortgage in the county in which Benton is located.