text:
    HILBERG v. GREER.
    1. Frauds, Statute of — Contracts—Option.
    An option in writing, properly signed, describing the property by street number, including building and lot, consideration one dollar, purchase price to be §5,500, “interest five per cent., easy terms,” although sufficient as to whether it was a lease or a sale and as to description of the premises, insufficiently stated the terms and is unenforceable under the statute of frauds, since no inference could be drawn that the purchase price was to be paid in cash, and the length of credit and amount of payments were left undetermined.
    2. Same — Memorandum.
    A memorandum to be sufficient under the statute must be complete in itself and leave nothing to rest in parol. 3 Comp. Laws, § 9511.
    Appeal from Oakland; Smith, J.
    Submitted June 4, 1912.
    (Docket No. 1.)
    Decided November 8, 1912.
    Bill by George J. Hilberg and Emory J. Doerr against Charles H. Greer and Elizabeth Greer for specific performance of an option for the sale of land. From an order sustaining a demurrer to complainants’ bill, complainants appeal.
    Affirmed.

      A. L. Moore and Patterson & Patterson, for complainants.

      James H. Lynch and Peter B. Bromley, for defendants.
   McAlvay, J.

Complainants filed their bill of complaint to enforce the specific performance of the following written option:

“Pontiac, Mich., Apr. 21, 1910.
“For and in consideration of the sum of one dollar, I hereby give to Hilberg & Doerr an option on building and lot known as No. 20 South Saginaw St., Pontiac, Mich., for a period of sixty days. Purchase price to be five thousand five hundred dollars. Int. 5% easy terms.
“Charles H. Greer.”

The bill avers that, after this option was signed and delivered to complainants, the parties met by agreement at the office of A. L. Moore, in Pontiac, for the purpose of preparing proper instruments to transfer the title of the premises to complainants in accordance with the option. Complainants aver that they had given defendant Charles H. Greer notice of their election to accept and carry out the terms thereof, that the terms of the transfer were all agreed to between the parties, and, while the said papers were being prepared, the fact was stated that defendant Greer had married since giving said Option, and that it would be necessary for his wife to join in the execution of a deed. For this reason the matter was postponed until the following day. On the next day defendant Greer came to complainants’ place of business, and stated to one of them that he did not wish to make the sale, and that he would not unless complainants could compel him to do so. They went together to the office of Mr., Moore, where he repeated said statement; that he was shown the deed, mortgage, and note, which had been drawn, and again repeated that he would not transfer the property. Later complainants changed the date in said mortgage to J une 8, 1910, and on that date signed and executed the same with the note, and caused them, together with the deed and $500 legal tender, to be tendered to said defendant Greer, and requested him with his wife to execute the deed. This he refused to do, and later a tender of the full sum of $5,500 was made to said defendant with the request to make transfer, which he also refused to do. The tender is also made into court. Defendant Greer never signed any instrument except the option above set forth. Defendants demurred to this bill of complaint upon the ground that the writing sought to be specifically enforced is not sufficient to bind the defendants to make such sale, because it fails to express the time or terms of payment of the price for said premises. The demurrer was sustained, and complainants have appealed.

The only question in the case to be determined is whether this option given by defendant Greer is sufficient to satisfy the requirements of the statute of frauds. We do not agree with the defendant that the option is indefinite as to whether it is for the purchase or leasing of the property. We think it clear that the option was given to complainants for the purchase of the property as the purchase price is definitely stated. The description of the premises is also sufficient.

The infirmity of the writing, if any, depends upon its construction as to the time and terms of payment of the purchase price of the premises. The statute provides:

“Every contract * * * for the sale of any lands, or any interest in lands, shall be void, unless the contract, or some note or memorandum thereof, be in writing, and signed by the party by whom the lease or sale is to be made, or by some person thereunto by him lawfully authorized by writing.” 3 Comp. Laws, § 9511.

The question of the sufficiency of such, writings has been frequently before this court. In an early case in an opinion of this court written by Mr. Justice Cooley, where the question involved was almost identical with that in the instant case, the court said:

“ There was no written evidence of the sale of the lots except the receipt which was given for the $75, and that was insufficient to answer the requirements of the statute of frauds, for, though it specified the purchase price, it failed to express the time or times of payment and there is no known and recognized custom to fix what is thus left undetermined. A memorandum, to be sufficient under the statute, must be complete in itself, and leave nothing to rest in parol.” Gault v. Stormont, 51 Mich. 636 (17 N. W. 314).

The writing in question in this case reads, “ Int. 5% easy terms.” No inference can be drawn from this writing that the purchase price was to be paid in cash. Interest is fixed at a certain rate per cent., and “ easy terms ” are given. As to the length of time and the amounts of the payments — whether in one sum or in different amounts —the writing is absolutely silent. The words “easy terms ” have no well-defined and accepted meaning, but are absolutely indefinite. In our opinion the court was correct in sustaining the demurrer upon the authority of the decisions of this court. The case of Gault v. Stormont, supra, has been cited and affirmed repeatedly by this court, the last instance being Ebert v. Cullen, 165 Mich. 75 (130 N. W. 185, 33 L. R. A. [N. S.] 84), where most of the cases relied upon by complainants in the instant case were considered. Of these cases the court said:

“ They do not, in our opinion, modify or cast any doubt upon the correctness of the rule laid down in Gault v. Stormont.

The decree of the circuit court is affirmed, with costs.

Moore, »C. J., and Steere, Brooke, Stone, Ostrander, and Bird, JJ., concurred.


source: Caselaw Access Project

author: McAlvay, J.

license: Public Domain

text:
    HILL v. TOWN.
    Corporations — Stockholders’ Meetings — Election op Directors — Statutes.
    In quo warranto proceedings to determine the right of directors of a corporation to their respective offices, the statutory requirement that a majority of the shares of stock constitutes a quorum of stockholders for the transaction of business is mandatory (Act No. 232, Pub. Acts 1903, 4 How. Stat. [2d Ed.] § 9541), and directors elected at a meeting at which 1,100 out of 10,000 shares were represented, were not entitled to hold office.

      Case-made from Eaton; Smith, J.
    Submitted June 5, 1912.
    (Docket No. 18.)
    Decided November 8, 1912.
    Information in the nature of quo warranto by Calvin H. Hill and others against Frank P. Town and others to determine the right of respondents to the office of directors of a corporation. A judgment confirming respondents’ title to the office is reviewed by relators on case-made.
    Reversed.

      Garry O. Fox (Butterfield & Keeney, of counsel), for appellants.

      Elmer JV. Peters, L. H. McCall, and James M. Powers, for respondents.

      As to what constitutes a quorum for meeting of stockholders, see note in 21 L. R. A. 174.
      For effect of withdrawal of stockholders from meeting to break quorum, see note in 36 L. R. A. (N. S.) 45.

   McAlvay, J.

In the circuit court for the county of Eaton, relators, on October 5, 1911, asked and were given leave to file an information in the nature of a quo warranto against respondents to determine by what right they assumed to act as directors of the Duplex-Power Car Company, a Michigan corporation, relators claiming that they were the lawful directors of such corporation, and that respondents unlawfully assumed such rights and authority as directors, and unlawfully used, held, and retained the factory, offices, and all the personal property of said corporation. A demurrer to this information was interposed by defendants, but, before a hearing was had thereon, relators discontinued as to one of the respondents, and .filed an amended information. To this information, as amended, respondents entered a plea, in substance averring that they were the duly and lawfully elected directors of said corporation, admitting that relators were duly elected directors of said corporation at the annual stockholders’ meeting held on August 6, 1910; that their said election was for the term of one year and until their successors should be elected; that the annual meeting for the following year, of which due notice was given to the stockholders of the corporation, was called to be held on August 5, 19.11, and an adjournment was had to September 19, 1911; that at such adjourned meeting the respondents were regularly elected directors by a majority vote of the stockholders, and stock present at such adjourned meeting, and that therefore relators ceased to be such directors, and respondents, by virtue of the said election, became and still continue to be the lawfully elected and qualified directors of said corporation, and that by reason thereof they are rightfully and lawfully acting as such directors.

To this plea the relators filed a replication November 22, 1911, the material parts of which are as follows: That Act No. 232 of the Public Acts of 1903, and amendments thereof, require stockholders holding a majority of the stock in corporations incorporated thereunder to be present, either in person or by proxy, in order to lawfully do business at any meeting of said stockholders; that at the annual meeting of this corporation, which is incorporated under this act, held on August 5, 1911, there were not present stockholders, either in person or by proxy, holding a majority of such stock, and not a sufficient representation of stock to constitute a lawful quorum for the transaction of business, except that of adjournment to a future day, as provided by said act; that the adjourned meeting held September 19, 1911, was not a lawful meeting of the stockholders, for the reason that a lawful quorum was not present as provided by said act, to transact any business other than to adjourn said meeting; that said act requires that all voting at such meetings of stockholders shall be by shares of stock, one vote for each share; that the total shares of stock of the said corporation was at that time and still is 10,000 shares, and that at such adjourned meeting there were less than 1,100 shares represented by said stockholders present, either in person or by proxy; that the election of respondents at said meeting was therefore unlawful, and they were without right to exercise and enjoy the offices of directors in the corporation, or to use, hold, and retain its property. Respondents filed a rejoinder to this replication* denying the construction given to this act by relators. To this rejoinder relators filed a surrejoinder. Said cause was tried before a jury, demanded by respondents, to determine the disputed facts raised by the pleadings.

The findings of the jury are included in the opinion of the court. Of these findings it is only necessary to say, it appears that the jury upon the first issue found that only 3,968 shares of stock of the corporation were represented by stockholders present and by proxies at the annual stockholders’ meeting held August 5, 1911; and upon the second issue that no by-law providing as to what should constitute a quorum at any meeting of the stockholders was ever enacted.

It is admitted in the case that at the adjourned stockholders’ meeting, at which respondents claim to have been elected directors, held September 19, 1911, not more than 1,100 shares of stock were represented by stockholders present and by proxies. In the opinion of the court in this case, which has been stipulated to be considered as the findings of the court herein, it was held that the respondents were legally chosen as directors of this corporation, and were not usurping such offices and should not be ousted; that the information in the case was not supported by the proofs and that the relief asked by relators should be denied, and a judgment of non-ouster in the usual form, with costs to be taxed, was entered in said cause. From this judgment the case is before this court for review upon a case-made.

For the purpose of a better understanding of the errors assigned, it will be necessary to quote the following material portions of the findings of the court:

“This is a proceeding to test the right of respondents to hold and exercise the offices of directors of the Duplex-Power Car Company, a corporation doing business in the city of Charlotte, Mich. The capital stock of said company is $100,000, divided into 10,000 shares of $10 each. The company was organized under Act No. 232 of the Public Acts of 1903. The vital question at issue is whether a minority of the stockholders in interest can elect a board of directors. The relators contend that the respondents, having been elected at a meeting of the stockholders having a minority of the stock of the company, were not legally elected, and are not the lawful directors, and that the relators, having been elected prior thereto, are the lawful directors of said corporation. It is not disputed that the relators were duly and regularly chosen as the directors of said company on August 6, 1910, and it is conceded that if the respondents were not legally elected on September 19, 1911, the relators would hold over, and would now be the legal officers of said corporation and should have a judgment of ouster against respondents. The respondents, if elected, were elected at an adjourned meeting on September 19, 1911. It is admitted in the case that the annual stockholders’ meeting was legally called and held on the 5th day of August, 1911, and legally continued by adjournment to September 19, 1911. It is admitted that at the adjourned meeting of September 19, 1911, about 1,100 shares of stock were represented by stockholders present and by proxy, and that at that meeting each of the respondents received nearly, if not, the unanimous vote of all the shares present. The issues are practically framed by the pleadings. A jury was asked for, and called to determine certain issues of fact. These issues of fact were prepared and submitted, to the jury by the court.”

Then follow the issues submitted to the jury, including the questions and answers thereto, the substance of which has already been given. The court proceeds:

I do not regard the first issue as important in the determination of this case. The determination of the second issue is important. It is conceded that there were present at the adjourned meeting at which respondents were elected only about 1,100 shares of stock. The answer of the jury to the question constituting the second issue being in the negative, the rights of relators and respondents are dependent upon the construction given section 10 of Act No. 232 of the Public Acts of 1903, the act under which the Duplex-Power Car Company was brought into existence.- Section 10 reads as follows:
*' ‘A majority of the directors of every manufacturing or mercantile corporation convened according to the by-laws, shall constitute a quorum for the transaction of business; and the stockholders holding a majority of the stock at any meeting of the stockholders, shall be capable of transacting the business of that meeting, except as herein otherwise provided; and at all meetings of such stockholders each share shall be entitled to one vote. Stockholders may appear and vote in person or by proxy duly filed.’
“ I am not in doubt as to wbat,should be the interpretation of this statute. It is a self-evident proposition that the owners of a majority of the stock of any corporation have the power to control its affairs by electing a greater number of the board of directors. To do this, however, they must attend the meeting of the stockholders and care for their rights, and, if they neglect to do this, they are bound by the action of those who do attend. That is conceded to be the common-law rule, and it is a rule well founded in right and common sense. In this case there is no claim that there was any fraud or any action on the part of the minority stockholders in interest or on the part of respondents by which the relators, or the majority stockholders in-interest, were in any way deceived or misled as to the time to which the annual meeting was adjourned. ‘ The stockholders holding a majority of the stock, at any (this) meeting of the stockholders,’ can transact the business of the meeting. That was what was done at the meeting of this corporation September 19, 1911, and I think it should be held as a matter of justice, and must be held as a matter of law, that the stockholders present at that meeting cannot be restricted in or denied their right to attend to the business for which the meeting was called, because of the absence of other stockholders. It is the judgment of the court that the respondents are not usurping the offices of directors of said corporation, but that they were legally chosen as directors and should not be ousted, and that the information in the nature of a quo warranto filed in this case is not supported by the proof and that the relief asked for by relators should be denied. Such an order will be entered with costs to the respondents.
“ Dated February 28, 1912.”

The question involved in the case is a single one. It arises on the construction of section 10 of Act No. 232 of the Public Acts of 1908 (4 How. Stat. [2d Ed. ] § 9541), quoted above in the findings of the court. A reading of the findings of the court shows that the construction given to this section was that it in no way changed the common-law rule, and that it authorized the transaction of business at any stockholders’ meeting by those stockholders present without reference to the amount of stock of the corporation they represented in person or by proxy, and that the only requirement to make any action valid was that it received the votes of a majority of the stock present. Relators contend that in so holding the court was in error; that a fair construction of this section requires this court to hold that to authorize the stockholders at any meeting of the stockholders of such a corporation to transact business, there must be represented in person or by proxy a majority of all the stock of such corporation.

This provision has existed as a part of the law of this State for more than 50 years, and appears in all of the compilations of our statutes since 1853. The exact question is one of first impression in this court. In the case of Star Line v. Van Vliet, 43 Mich. 364 (5 N. W. 418), it is indicated that the court accepted the construction claimed by relators in the instant case. The dispute in that case arose over the claimed want of authority of a committee appointed by the stockholders of the corporation (the affairs of which the stockholders were investigating) to bind the corporation by the employment of expert accountants. The court said:

Generally, no doubt, a stockholders’ meeting would not be authorized to contract on such subjects, the ordinary management being with the directors; but, as the purpose here was in part at'least to investigate what had been done under the superintendence of the directors, it was competent for the holders of a majority of the stock to do what was done. Comp. Laws 1871, § 2682. There is no ground on which the'corporation can urge an intendment against the validity of the resolution, and arbitrarily deny its regularity and force. In view of the facts presented, every presumption is the other way. There was no offer of proof that the stockholders present at the meeting did not hold a majority of the stock.”

Section 2682 of the Compiled Laws of 1871, referred to by the court, contained in an act to authorize the for-' mation of corporations for the purpose of engaging in commerce or navigation, is identical in all respects with the section now under consideration. This is the only case where any reference has been made to the question by this court.

In the State of New York the question here involved was passed upon by the supreme court, at special term, as follows:

“ By general law, the stockholders present in person or by proxy at a meeting of stockholders constitute a quorum. The general corporation law (Laws 1892, c. 687), however, allows the directors to change this by by-law, and fix the amount of stock which must be represented in order to make a quorum. Section 11. In this company the following hy-law was passed, viz:
“ ‘A majority of the stock present in person or by proxy at any meeting of the stockholders shall constitute a quorum.’
“It is without any punctuation marks. Unless to establish a quorum different to that which the general law makes, this by-law could have had no object. It cannot be construed as meaning that a ‘ majority ’ of the stock actually represented at a meeting should be a quorum, for that would be unlawful. A majority cannot separate itself from the minority, and be a quorum. All present are the quorum. It must therefore mean that it is necessary that a majority of the stock of the company shall be present in person or by proxy to make a quorum. * * * ” In re Rapid Transit Ferry Co., 19 Misc. Rep. (N. Y.) 409, 43 N. Y. Supp. 538.

Upon a hearing before the appellate division of the supreme court of that State, it approved of the construction given to this by-law by the lower court, but held that, by reason of the statute making provision for the election of directors of corporations, the by-law did not apply. Matter of Rapid Transit Ferry Co., 15 App. Div. (N. Y.) 530, 532 (44 N. Y. Supp. 539). The construction of the following by-law of a corporation was before the supreme court of Maine:

“ No business shall be transacted at any meeting of the stockholders unless a majority of the stock is represented, except to organize the meeting and adjourn to some future time.”

The court said:

“ What should constitute a quorum for the transaction of business at their meetings, was a question which the stockholders had a right to determine (R. S., c. 46, § 6), and this they did by the adoption of the foregoing bylaw providing that, unless a majority of the stock was represented, no business should be transacted at any meeting, except to organize and adjourn to some future time.
“At the annual meeting of June 8, 1885, at which it is claimed the new board was elected, 138 shares of the capital stock were represented, and no more. Was there a majority of the stock represented at that meeting ? If not, there could be no legal election of officers at that meeting.
“We think a fair and reasonable as well as proper construction of the by-laws leaves no room for doubt as to what was intended by a ‘ majority ’ of the stock. It was divided into 400 shares, and it would take 201 shares to constitute a majority of that stock. The language of the by-law is plain and susceptible of no ambiguity. * * *
“ But inasmuch as there was not, in fact, a majority of stock represented at that meeting, there could be no legal business transacted, except to organize and adjourn to some future time. Such was the language as well as the evident intent and meaning of the by-law, duly adopted for the government of the corporation. Consequently it was not in the power of a minority to do that which only a majority could legally accomplish. Hence, it cannot be held that the board which now represents this plaintiff corporation, and which claims the right to commence and prosecute this suit, was legally elected.
“The consequence is that the old board of directors, about whose election no question is raised, continued in office by virtue of the by-laws of the company, and were the only legal board of directors at the time this suit was commenced.” Ellsworth Woolen Manfg. Co. v. Faunce, 79 Me. 440, 443 (10 Atl. 250, 251).

The authorities above cited favor the construction contended for by relators, and are all the authorities we have been able to find after a somewhat extended search. It is clear that the legislature by this section under consideration intended to establish a quorum for all stockholders’ meetings of corporations organized under this act, and the fact that the construction of an exactly similar statutory provision indicated by this court in Star Line v. Van Vliet, supra, has never been questioned, shows that such construction has been accepted. The construction which the respondents insist upon, as appears from the decision of the trial court and their brief in this court, is, as already stated, that the only requisite to the validity of business transacted at a stockholders’ meeting is that a majority of the stock present voted in its favor, without reference to the number of shares of stock represented at such meeting. Such a contention, reduced to its lowest terms, would authorize a meeting held by two stockholders, one representing one share of stock and the other representing two shares of stock, to lawfully transact business and elect a board of directors by two votes. We scarcely think that such can seriously be contended to have been the intention of the legislature in enacting this law. The reasonable construction of this section is, as contended by relators, that, in order to hold a lawful meeting of stockholders for the transaction of business, a majority of all the stock of the corporation must be represented in person or by proxy to constitute a statutory quorum, and that, the majority of the stock being so represented, the meeting could then lawfully proceed, and business could be transacted lawfully by a vote of the majority of such quorum. Such construction does not require that a majority of all the stock of a corporation must vote in favor of every proposition before such meeting, but only a majority of the quorum. In the findings of the court it is said:

“ The vital question at issue is whether a minority of the stockholders in interest can elect a board of directors.”

This statement does not state the issue. The vital question at issue is whether this section fixes the quorum required to authorize the transaction of business at a meeting of stockholders, and what constitutes such quorum. As was said in Re Rapid Transit Ferry Co., supra:

“A majority cannot separate itself from the minority, and be a quorum. All present are the quorum.”

And a majority of the statutory quorum controls in such meeting.

All of the authorities agree that the requirements of a statutory quorum are mandatory. It is urged that, under such a construction, a majority of the stockholders may absent themselves from meetings and prevent the transaction of any business by the stockholders, and continue indefinitely their control of corporate affairs. This is met by the reply that there could be no reason or inducement why a majority in interest of the stockholders should absent themselves from such meetings when by their presence and voting their stock they could control the affairs. And a conclusive answer is that a minority of the stockholders would have the right to enforce the attendance of stockholders sufficient to make the required quorum necessary to transact business and to permit a minority to exercise the right of cumulative voting by proper proceedings upon a sufficient showing in a court of competent jurisdiction. The court below was in error, and should have granted relators the relief prayed for. Under the undisputed facts in this case, it appears that the respondents were unlawfully usurping the offices of directors in this corporation, and that relators, having been duly and regularly elected as such directors, and no successors having been legally elected, continued to hold such offices, and are now the lawful directors of such corporation.

Therefore the judgment of the circuit court is reversed, and no new trial will be granted. A judgment of ouster against said respondents and in favor of the relators will be entered in this court, with costs of both courts to be taxed.

Moore, C. J., and Steere, Brooke, Stone, Ostrander, and Bird, JJ., concurred.


author: Ostrander, J.

text:
    TOWN v. DUPLEX-POWER CAR CO.
    1. Sequestration — Equity—Corporations—Receivers.
    Courts of equity will not ordinarily, by virtue of their general equitable jurisdiction, or by virtue of their visitatorial powers over corporate bodies, sequestrate the effects of the corporation or take the management of its affairs from its officers and commit it to a receiver, whether upon the application of creditors or of shareholders; nor have they general jurisdiction to dissolve and wind up corporations.

    2. Corporations — Stock and Stockholders — Statutes.
    Section 9757, 8 Comp. Laws, 5 How. Stat. (2d Ed.) § 13530, gives the courts authority to entertain bills and petitions of shareholders of a corporation, to compel its officers to account for official conduct in the management and disposition of corporate funds, to remove or suspend them, order new elections, to restrain the alienation of its property or sequestrate it, and appoint a receiver at the suit of a judgment creditor, in certain cases, or to dissolve the corporation.
    3. Same — Injunction—Receiver.
    Complainants averred that they and certain defendants were stockholders of defendant corporation which was organized for the purpose of manufacturing motor cars, trucks, etc.; that defendants, who constituted a majority of the stockholders, conspired together to acquire the property and business of the company to themselves, and with that intent bought sufficient stock to obtain control of the corporation, electing themselves and others to the office of directors; that although money in addition to that obtained from the issue of stock was not needed, defendants- borrowed funds, executing a chattel mortgage on all its assets to one of the defendants; that the mortgage was payable 30 days after its execution, in Chicago, and conferred the right of taking possession and selling without notice at private sale; that the books had not been kept so as to show the actual status of the corporation or its financial condition; that defendants, in pursuance of their fraudulent scheme, refrained from finishing up or marketing cars in its shop that were practically complete, and that unless the court should restrain defendants they purposed to dispose of all the assets of the corporation under the mortgage. Held, that an injunction restraining the defendants from disposing of any of the corporate property was too broad, that'while the showing made by the bill and accompanying evidence and affidavits justified the appointment of a receiver, defendants should only have been restrained from foreclosing the mortgage, upon condition that they indemnify the creditors by securing the payment of the indebtedness.
    Appeal from. Eaton; Smith, J..
    Submitted June 10, 1912.
    (Docket No. 63.)
    Decided November 8, 1912.
    Bill by Frank P. Town and others against the Duplex-Power Car Company, for injunctive and other relief. From orders appointing a receiver and enjoining the sale of assets, defendants appeal.
    Modified and affirmed.

      Elmer N. Peters, Lyman H. McCall, and James M. Powers, for complainants.

      Garry C. Fox {Butterfield & Keeney, of counsel), for defendants.

       As to inherent jurisdiction of equity, independently of statute, at the instance of stockholder, to appoint a receiver or wind up a corporation because of mismanagement or fraud of its officers, see note in 39 L. R. A. (N. S.) 1032.

   Ostrander, J.

The bill is filed by a minority of the stockholders of the Duplex-Power Car Company, and it prays for the discovery and collection of the assets of the company, through a receiver, for a dissolution of the corporation and the distribution of its assets. There is also the prayer that the receiver carry on the business if the court deems it necessary to do so to protect stockholders and save assets. The defendant corporation and its directors and others of the defendants, including the trustee named in a mortgage of corporate property, are restrained by an order of the court, made upon the filing of the bill, from selling, mortgaging, or otherwise incumbering any property of the corporation, and the said trustee is restráined from foreclosing the said mortgage. The bill was answered on oath; the material allegations thereof being denied. Later, before a hearing upon the merits, a modification of the injunction was refused, a receiver of the assets of the corporation was appointed, and, in addition to the usual powers of a receiver, he was authorized to—

“Complete the cars now in course of construction, and to employ such help as may be necessary therefor to sell not to exceed five of said cars, until the further order of the court, and at the best price that can be obtained. The cost of such completion to be a charge against the assets coming into his hands, and the receipt therefrom to be an asset belonging to said company. It is further ordered that said receiver may borrow money to an amount not to exceed one thousand dollars for the purpose of completing said cars and to pledge the assets of said company to pay the same, until the further order of the court.”

Defendants claim the benefit of an appeal “ from the final order and decree, and other orders and decrees rendered in said cause on, to wit, April- 23d, A. D. 1912, and on other prior dates, and filed and entered in said court and cause by the register thereof.” It is the contention of appellants that the court exceeded its powers both in granting and keeping in force the injunction and in appointing a receiver.

The Duplex-Power Car Company was organized September 22, 1909, under Michigan laws by three of the defendants. In the articles of association its business is stated to be the manufacture and sale of commercial and pleasure motor cars, motor trucks, motor wagons, motor vehicles, and parts entering into the manufacture of the same. Its designated principal place of business is Charlotte, Mich., its capital $100,000, and it is recited that $64,-000 of this was subscribed and $55,700 paid in — $28,000 in real estate in Charlotte and $22,000 in machinery, tools, patterns, etc. It is charged in the bill that, when the articles were executed, the corporation did not own the said mentioned property, and has not since acquired it; that the property was not worth $50,000, nor more than $15,000, that none of the persons executing the said articles owned said property or have since acquired it; and that the corporation has never had any interest therein, except to occupy and use it. It is charged, upon information and belief, that the said incorporators fraudulently represented that the corporation owned the said property to induoe complainants and others to purchase the stock of said company. It is further charged that the cars and trucks which it was proposed the said company manufacture were to be what is known as a “four-wheel drive,” according to which the power is applied to each of the four wheels of the car, and that in the organization of the corporation, one-half, or 5,000 shares, of the capital stock, was to be paid to the owners of the patent covering such four-wheel drive, in consideration of the transfer of the patent right to the corporation, and the remaining 5,000 shares was to be known as treasury stock and sold at par for the purpose of creating a working capital ; that between the organization of the company and the 1st day of June, 1910, complainants and others had subscribed and paid for $15,000 of the treasury stock, which sum of money had been used to develop and perfect cars and purchase material for their manufacture, so that on June 1, 1910, the corporation was ready to manufacture and sell its cars, and had sufficient material on hand to manufacture 17 or 18 cars.

Needing more capital, the remaining treasury stock was offered for sale and certain of the defendants agreed to purchase the balance of $32,000 at par. The arrangements for this sale of capital stock were made by one Todd Lunsford, who caused an investigation to be made of the practicability of the four-wheel drive, covered by the patent owned by the company. But it is said that this purchase of stock by defendants was not with an honest intent and purpose, but for the purpose of acquiring eventually the property and the said patent to themselves to the exclusion of complainants and' other stockholders; that said Todd Lunsford, on behalf of himself and his associates, refused to carry out the arrangement and to purchase the said capital stock unless complete control and management of the business was turned over to them; and that in consequence $10,000 of the patent stock was transferred to him, and the remaining $40,000 or thereabouts of the patent stock was transferred to a trustee or trustees with power to vote the same, after which Lunsford and his associates did pay $32,000 in cash, and received certificates of stock therefor. This arrangement was completed on or about June 9, 1910, Lunsford was placed in management and control of the affairs of the corporation, elected treasurer, and made manager, and has since had the control and management of the corporation affairs. It is charged that he and his associates entered into a.conspiracy to secure the property, including the letters patent, to deprive the remaining stockholders of their interest in the property, and to “ freeze out ” other stockholders; that he and his associates purposely dissipated and wasted the assets, and did not complete and place upon the market cars for which material had been purchased, leaving cars unfinished, so that they could not be sold, which cars, if finished, could have been sold for approximately $70,000. Various other acts of omission and commission are charged to have been done in furtherance of the alleged conspiracy, including the borrowing of $9,700 from two of the defendants, some of one and some of the other, and giving notes therefor, when the money borrowed was not needed to pay running expenses; that on the 6th day of July, 1911, the company executed a chattel mortgage on all of its property to defendant Farlin H. Ball, of Oak Park, Cook county, 111., as trustee, to secure payment of the money evidenced by said notes, the mortgage being made due and payable BO days from date, in Chicago, with the right to take possession of the mortgaged property and to sell the same at private sale, without notice. It is charged that the money was not lent to the corporation nor was the mortgage given in good faith, but for the express purpose of embarrassing the corporation and acquiring its assets. It is charged that the books of account of the corporation have been inaccurately and imperfectly kept, so that an examination of them will not disclose what the actual expenses have been nor the true situation of its financial condition, and that this method of keeping the books was in accordance with the purpose of said conspirators. It is charged that the company, at the time of filing the bill, had cars manufactured and in process of manufacture of the value at the regular retail price of $60,000 and upwards, and practically complete and ready for market.

Complainants offer to indemnify the noteholders and the trustee in the mortgage against damage or,loss on account of the nonpayment of the said notes if the court shall determine that the money represented thereby is actually due and owing. It is further charged that the complainants have good reason to believe, and do believe, that the trustee is about to dispose of all the assets of the corporation under the power of sale contained in the mortgage, and are justly apprehensive that he will do this unless restrained by injunction; that they have good reason to believe, and do believe, that the board of directors will sell and dispose of the personal property of the corporation, unless restrained by injunction, to the irreparable injury of complainants. Amendments later made to the bill, pursuant to an order of March 18, 1912, charge that Todd Lunsford, before he and his associates acquired stock in the corporation, obtained a written agreement securing the right to name four out of the seven directors of the corporation; that at the annual meeting of the stockholders held August 6, 1910, he did, in fact, name all the directors, who were Calvin H. Hill, Charles B. Lamb, Fitch Beach, Todd Lunsford, William L. Cummings, Walter C. Powell, and Francis A. Messier; that for the purpose of making William L. Cummings a director Messier assigned to him 200 shares of the capital stock, and Cummings accepted the same, and became a member of the board of directors for the express purpose of enabling Todd Lunsford and his associates to carry out their fraudulent scheme and wreck the company; that Fitch Beach and Charles B. Lamb, if they were not parties to the scheme and plan to wreck the company, were deceived and misled by Todd Lunsford and induced to act in harmony with him and his associates in carrying out such scheme; that because of the connivance and active assistance of the board of directors, and the fact that five of the seven directors are parties to said scheme, it is impossible for complainants to protect their rights by appealing to the board of directors, and because the mortgage held by Farlin H. Ball was due on the 6th of August, 1911, it is impossible to bring the grievances of which they complain before a meeting of the stockholders, and because Todd Lunsford and his associates control a majority of the stock it is futile to expect them to correct the grievances of which complainants complain at a meeting of stockholders.

It has been stated that the material allegations of the bill, and it should be added of the amended bill, are denied by defendants under oath. It should be noted, also, that nineteen or more persons made defendants answer, admitting each and every allegation of the bill to be true according to their information and belief. In the answers of other defendants to the amended bill, it is set up that at the meeting at which the directors who have been named were elected the complainants were present, or were represented, voted for them for directors of the company, and that every vote cast at the meeting was cast for them, and in the answer to the original bill it is alleged that at the annual meeting of the company held at its office in Charlotte on August 5, 1911, there were present a considerable number of stockholders; that a financial statement of the affairs of the corporation was made by the treasurer, and, in view of the fact that the bill of complaint in this cause had then been lately filed and an injunction issued restraining the officers and directors from selling any of the property of the company, it was not thought best by the majority of the stockholders present to elect a new directorate, but to allow the old directors and officers to hold over, and the meeting was adjourned to September 19th at 2 o’clock in the afternoon. On said last-mentioned date and hour there were present certain of the complainants constituting a minority of the stockholders, and holding not more than $10,000 par value of the capital stock; that, because of a misunderstanding respecting the date to which the meeting had been adjourned, the majority of the stockholders did not attend; that the minority attending, finding that the majority had failed to attend, proceeded to elect as directors certain of the complainants, who organized as a board of directors and elected officers; that on the morning of September 20, 1911, these directors and officers so elected took possession of the office and plant of the defendant company, assumed to discharge the superintendent and custodian of the building, and to put a new custodian of their own selection in possession of the plant, took locks off the doors, and put on new locks, and have forcibly excluded the old and alleged rightful officers of the corporation, carried away and suppressed the corporate records and books of account and papers.

To complete the pertinent history of the proceedings, it should be stated that the injunction was issued August 4, 1911, when an order was made to show cause on September 5, 1911, why a receiver should not be appointed, defendant Farlin H. Ball, the trustee named in the mortgage, and a nonresident of the State, conceiving that as to him* self a separable controversy existed, removed the cause to the Federal court for the western district of Michigan, and by order of that court, made January 18, 1912, the cause was remanded to the State court. At this time other nonresident and principal defendants had not been brought before the court, and they answered the bill in February, 1912. Later two motions were brought on for hearing. One of them was the motion of defendants for such a modification of the preliminary injunction as would permit the trustee to foreclose the mortgage; the other the motion of complainants for leave to amend the bill and for the appointment of a receiver. The court on March 14, 1912, announced that the motion to amend the bill was granted, to modify the injunction and to appoint a receiver refused, and concluded:

“ I can see no good reason why this case should not be heard at the coming April term, and the interests of the parties to the cause will be best subserved if a speedy hearing is had.”

Accordingly, an order was entered March 18,1912, pursuant to the said announcement, except that no reference is made therein to the motion for a receiver and the motion for a receiver is not therein denied. It was not until after April 8, 1912, that all answers to the amended bill of complaint were filed, or were required to be filed by the order of the court. The April, 1912, term of court began April 8th. A motion was made by defendants to strike the cause from the calendar. On April 16, 1912, the court made and filed the following opinion and decision:

“ I am of the opinion that this motion must be granted. In the memo opinion filed March 16, 1912, in this cause, denying a motion for the appointment of a receiver, the court said that there seemed to be no good reason why this case should not be heard at the April term, and that the interest of the parties would be best subserved by a speedy trial. I think that the case should be heard speedily, and I can see no good reason why it may not be. I do not think, however, that the defendants can be compelled to go to a hearing, and, having moved that the cause be stricken, the motion is granted. The motion of the complainants filed March 1st last for the appointment of a receiver was denied, believing that the case would surely be heard this term. No order has as yet been signed denying the motion. The situation is such that the court feels it a duty to appoint a receiver if the case is to be continued. The complainants may have an order for the appointment of Frank P. Town as receiver of the Duplex-Power Car Company, with such restrictions as will conserve the property and such bond as may hereafter be fixed by the court on application for the same.”

The order appointing the receiver followed.

The sufficiency of the bill is challenged by appellants; but not by demurrer and not with respect to the power'of the court upon final hearing to wind up the affairs of the company, and for that purpose to appoint a receiver. Therefore we may say, as we did in Woodmansee v. Brick Co., 164 Mich. 688, 691 (130 N. W. 311):

Whether the bill states a case for equitable cognizance is a question not presented on this appeal.”

It is proper, however, to give some attention to the scope and purpose of the bill and to some general rules governing the jurisdiction exercised in such cases.

The general jurisdiction of equity over corporate bodies does not extend to the dissolving of the corporation, winding up its affairs and sequestrating corporate property. Courts of equity will not ordinarily, by virtue of their general equitable jurisdiction, or by virtue of their visitatorial powers over corporate bodies, sequestrate the effects of the corporation, or take the management of its affairs from its officers and commit it to a receiver, whether upon the application of creditors or of shareholders. High on Receivers, § 288 et seq.; Fuller v. McCormick, 156 Mich. 518 (121 N. W. 280). It was said in Miner v. Ice Co., 93 Mich. 97, 112 (53 N. W. 218, 223 [17 L. R. A. 412]):

“ The general rule undoubtedly is that courts of equity have no power to wind up a corporation, in the absence of statutory authority. This rule is, however, subject to qualifications.”

Following a statement of the facts of the particular case and references to authorities, the opinion (93 Mich. 117, 53 N. W. 224, 17 L. R. A. 412) continues as follows:

“ I think a court of equity, under the circumstances of this case, in the exercise of its general equity jurisdiction, has the power to grant to this complainant ample relief, even to the dissolution of the trust relations.”

Miner v. Ice Co. came into the court after a hearing on the merits in the court below. In Torrey v. Cement Co., 150 Mich. 86 (113 N. W. 580), heard on demurrer to the bill, the court followed, upon the question of jurisdiction, Miner v. Ice Co. See, also, Avery v. Manufacturing Co., 27 N. J. Eq. 412. These cases are exceptional and decision seems to proceed upon the .theory that, in the exercise of jurisdiction to relieve from fraud and the effects of breaches of trust, relief may be granted to a suitor, although it involves sequestrating the property and winding up the affairs of a corporation; the result to the corporation being an incident merely of adequate and complete relief. In the New Jersey case referred to, á receiver was appointed merely to hold and preserve assets of a corporation, admittedly insolvent, with no available assets, against which numerous suits were pending.

The courts have power, derived from the statute, to entertain the bills and petitions of shareholders of a corporation, to compel officers of the corporation to account for official conduct in the management and disposition of corporate funds, to suspend and to remove them, to order new elections of directors, to set aside, and to restrain alienations of corporate assets. The courts have power, also derived from the statute, to sequestrate the property of a corporation and appoint a receiver thereof at the suit of a judgment creditor in certain cases, and in certain other cases to adjudge dissolution of the corporation. See 3 Comp. Laws, § 9757 et seq. (5 How. Stat. [2d Ed.] § 13530). It is plain that no statutory authority of the court is invoked by the bill of complaint, and that complainants seek the exercise of powers belonging to the general equity jurisdiction of the court.

It is equally plain that the case made by the original bill did not warrant the injunction which was granted. The stockholder of the Duplex-Power Car Company had joined in an adventure the success of which depended upon the application of certain alleged novel and patented ideas to motor cars, upon the demonstration of the practicability and popularity of the vehicle which it was proposed to manufacture. It was a going concern at that time, in the hands of duly elected officers. No device better calculated to destroy the corporation and all of its assets can be conceived than one which would interrupt its business, prevent the necessary demonstration of its vehicle, and wholly prevent the carrying on of the corporate business. This was the necessary effect of the injunction. It would have been proper enough to restrain a threatened foreclosure of the mortgage temporarily upon condition that the complainants furnished indemnity to those creditors of the company who were secured thereby. The injunction which was granted forbade the sale of vehicles and their removal from the company’s place of business.

Nothing is claimed for those charges in the bill which relate to the original organization of the company and the alleged false representations contained in the articles of association. The bill proceeds upon the theory that the patent was acquired, is the property of the company, and that cars were being manufactured for sale. The insolvency of the company is not made to appear. On the contrary, the facts stated indicated solvency if the patent had any real value. The charges concerning mismanagement, lack of necessity for borrowing such money as was borrowed, and failure to realize money from the sale of cars are most general, lacking entirely in detail and in certainty. No specifications were furnished by way of affidavits filed with the bill. It must be inferred that be-pause complainants charged upon information and belief a threatened sale of the assets to satisfy a mortgage given for the purpose of permitting such a sale to be made, the court below granted the injunction preventing not alone such a sale, but also practically closing the doors of the institution; this upon an ex parte showing. The showing for a receiver was more complete. In addition to the allegations of the bill, the court had before it, as affecting its judgment, the fact that the‘cause had been removed to the Federal court, which fact supported the inference that an apparently indifferent trustee in a mortgage was seeking in this way to escape the injunction of the State court, or that the creditors named in the mortgage, who were also charged with conspiracy to wreck the company, were using the trustee for their own purposes. The court also knew, when the order for a receiver was made, that two boards of directors were each claiming to be lawful officers of defendant company. There was produced at the hearing certain correspondence which had fallen into the hands of complainants after the filing of the bill, which tended rather strongly to prove that the appealing defendants were conspiring together either to force the complainants to sell their stock in the concern at a price favorable to the purchasers or to effectually exclude them from beneficial interest in the company. No one can read the correspondence which was produced without being impressed with the idea that Todd Lunsford and certain other of the defendants were privately considering, and were affected by, the purpose to prefer themselves at the expense of complainants, and were not seeking the common good of the company and of all of its shareholders. Counsel for both parties recognize the general rule stated and applied in Woodmansee v. Brick Co., 164 Mich. 688 (130 N. W. 311), and in numerous cases which are cited in the opinion. Upon the authority of those and of other decisions, it is contended that the power to appoint a receiver for a corporation pendente lite is never exercised upon preliminary inquiry and upon a bill the essential facts of which are denied by sworn answers.

Attention has been directed to the fact that the court below had before it more than a sworn bill and sworn answers. Upon the application for a receiver, the court was bound to consider whether, in view of all facts presented, there was reasonable prospect that the defendant company would be able to carry on its business and save its property; whether, however lawful the debt secured by mortgage of its assets may be, the security was given and its foreclosure was contemplated with the purpose on the part of defendants to secure the property of the company for themselves; whether it was likely that with rival boards of directors contending for control of the company either could command business success; and, finally, whether the charges that defendants were conspiring to exclude and injure the complainants were not so well established by the correspondence produced and by other circumstances, that a receiver with the duty of preserving the property of the corporation ought to be appointed.

We express no opinion upon the merits, or apparent merits, of the controversy. We are of opinion that the injunction granted was too broad, and should have been limited to restraining the trustees and all others interested from a foreclosure of the mortgage, upon condition, however, that complainants secure eventual payment of the debts secured by the mortgage, if found to be valid debts of the corporation. Likewise the order appointing the receiver should have confined him to preservation merely of the assets of the corporation. Whether a case can be made which will warrant the court in winding up the affairs of the company in order to grant complainants proper relief must be determined at the hearing.

Appellants may have the order indicated herein, and will recover one-half the taxable costs of this appeal.

Moore, C. J., and Steere, McAlvay, Brooke, Stone, and Bird, JJ., concurred.


author: Brooke, J.

text:
    CARPENTER v. HOOD.
    1. Executions — Equity — Adequate Remedy at Law — Injunction Against Levy — Setting Ore Judgment — Costs—Parties —Assignment—Attorneys. ' .
    Assuming (but not deciding), for purposes of this case, that defendant’s attorneys in certain litigation theretofore pending between complainant and defendant, were liable as assignees of 35 per cent, of defendant’s interest in the real property in dispute for the taxed costs of the actions wherein judgments adverse to defendants were rendered, complainant’s remedy at law was adequate - to have the costs taxed against them as assignees under the provisions of 8 Comp. Laws, § 11281, 5 How. Stat. (2d Ed.) § 14416, and a bill in equity could not be maintained.
    2. Same — Statutes.
    Where the parties were different in several actions at law, one of the joint plaintiffs, to whom costs were awarded in the first cause, could not offset against the same his liability as defendant in an action brought thereafter by the wife of one of the defendants so liable to him: by reason of the diversity of parties equitable relief was unauthorized. 3 Comp. Laws, § 10348,.5 How. Stat. (2d Ed.) § 13049.
    3. Same — Equity.
    Nor should the court have taxed costs against defendant’s attorneys for the alleged reason that there was no foundation for the litigation brought against complainant by them, it appearing that first one party then the other prevailed in the several causes in which complainant finally was awarded title to the property.
    Appeal from Kent; Withey, J., presiding.
    Submitted June 4, 1912.
    (Docket No. 4.)
    Decided November 8, 1912.
    Bill by Frank L. Carpenter against Oscar J; Hood, Shubael Hammond, Cora M. Carpenter, John I. Carpenter, and Herbert M. Rogers, executor of the estate of Q. A* Smith, deceased, to restrain an execution levy and offset certain judgments. From a decree dismissing the bill, complainant appeals.
    Affirmed.

      Frank L. Carpenter, in pro. per.

      Gardner & Hood, for appellees.

      John I. Carpenter, in pro. per.

   Brooke, J.

The bill of complaint in this cause sets out an extremely complicated state of facts. The pleadings and proofs thereunder are so well digested and set forth in the opinion of the learned circuit judge who heard the case that we print it in full, together with his conclusions of law thereon:

“ This is a bill filed upon the part of the complainant for the purpose of restraining the sale on execution of certain premises situated in the city of Lansing, and for an accounting between the parties and for some other incidental relief. In 1887 the complainant, Frank L. Carpenter, with his sister, Lucy Jones, as plaintiffs, began a suit in ejectment against the complainant’s brother, John I. Carpenter, and his tenant in possession of the premises, for the purpose of recovering the possession of the premises and settling the title thereto. The case was tried in the Ingham circuit court before a jury, and judgment passed for the plaintiffs. The case was never appealed. At the trial, the wife of the defendant John I. Carpenter, Cora M. Carpenter, appeared as a witness and testified in the case that she, and not her husband, owned the premises in question, and that the tenant was her tenant, and not the tenant of John I. Carpenter. In fact, she took such a position and such a part in the trial of that case that the Supreme Court afterwards held that, though not a party of record, she was a party in interest, and was bound by the result of the trial. Later Cora M. Carpenter began a suit in the same court in ejectment against August D. Carpenter and Josephine Carpenter for the same premises, or a portion of them, and still later Cora M. Carpenter began another suit in ejectment in the same court against the complainant Frank L. Carpenter and his sister, Lucy J ones, for the same premises, or a portion of them. These cases are known in the bill in the case at bar, for convenience, as cases Nos. 1, 2, and 3.
“Cases Nos. 2 and 3 had a very tortuous history; there having been various trials in both cases in the circuit and Supreme Courts, and many interlocutory proceedings. The complainant, Frank L. Carpenter, during the course of the law proceedings referred to, became the owner of the interest of his sister, Lucy Jones, and he finally recovered in the law cases, and is now, and has been for a long time, in possession of lot 10. During this legal warfare and internecine strife, which seems to have extended over a period of nearly 30 years, judgment for costs sometimes went to one side, sometimes to the other. In case No. 1, decided 1888, costs were taxed in favor of the complainant, Frank L. Carpenter, and his sister, Lucy Jones, and the complainant now owns that judgment amounting to about $130. The defendant Cora M. Carpenter recovered costs somewhere along the history of case No. 3 amounting to about $116. She was represented during this long litigation in the law courts (at least as to cases Nos. 3 and 3) first by Smith, Lee & Day, later by Smith & Hood. The attorneys first named made a contract with her to the effect that they were to do the professional work in the cases in question and furnish the money necessary to maintain them, except the witness fees, and possibly clerk and stenographer’s fees, for which they were to have any costs recovered and 35 per cent, of any land recovered. That this contract was made and all the business in regard to the several law suits referred to done under it is undisputed in the case at bar. The complainant, although entitled to do so, has never taxed any costs in any of the law cases, except No. 1. Recently an execution was issued in case No. 3, and the premises in Lansing in question, or some portion of them, were levied upon and advertised for sale. Knowledge of that fact came to the complainant, Frank L. Carpenter, whereupon he filed the bill in this case to restrain the sale and to compel an offset and balancing of the costs pro and con between the parties to this suit, but in the aforesaid cases at law he secured a temporary restraining order issued by Judge McDonald of this court, and the question here is primarily whether that order should be made permanent and an offset and balancing of accounts as to costs in said suits at law compelled.
“The complainant claims, and the proofs tend strongly to show, that Cora M. Carpenter is not, and never has been during the litigation referred to, collectible, and he asks that the defendants Smith & Hood, or to speak correctly, the representative of the estate of Smith, who is now deceased, and the defendant Hood, may be required to respond to him and pay any costs found due in the premises. As I understand complainant’s bill, he bases his supposed rights against John I. Carpenter, Smith’s estate, and Hood upon the alleged collusion, fraud, and oppression claimed to have been practiced by Cora M. Carpenter and her attorneys in the several lawsuits referred to herein, and upon an alleged agreement with said Smith during his lifetime while case No, 3 was in course of litigation, that neither side should attempt further to collect their costs until the litigation was concluded, when they would offset the costs to one side against those going to the other and pay the balance which might appear either way. This agreement is claimed to have been verbal. Upon the hearing the complainant conceded that he was not competent to testify to that agreement, and no evidence was given concerning it, but he claims that the allegations of the bill wherein the conversation between him and Smith are set forth are not specifically denied, and that, therefore, the agreement should be found to exist as alleged.
“I understand complainant to claim, further, that the general aspects of the case as disclosed by the proofs raise sufficient equities in his behalf to support a decree in his favor; that the existence of cross-demands is sufficient in itself for this court to act upon and afford the relief asked for. On the other hand, the defendants claim that the' agreement between Oora M. Carpenter and her attorneys referred to above constituted an assignment to Smith & Hood or their representatives of any judgment for costs which accrued in her favor. They deny that there was any collusion, fraud, or oppression in any of the proceedings, and claim to have acted in the utmost good faith from first to last. John I. Carpenter and the other defendants as well contend that the costs taxed in complainant’s favor in case No. 1 are barred by the statute of limitations, and that nothing appears in the case to relieve from that bar. They further claim that this court has no power to compel an offset or balancing of costs in the various suits at law, because the parties are not the same in the various suits, that there were various parties plaintiff and defendant in the lawsuits who are not parties in this case at all, upon which point there is no dispute as to the facts.
“ There seems to me to be a great deal of irrelevant matter in the bill, and the court became somewhat restive and perhaps a little impatient because of the irrelevant testimony produced in the case, particularly upon the part of the complainant, but more or less on both sides. Notwithstanding this, the sympathy of the court, if I am permitted to indulge such a sentiment, is with the complainant. The costs are largely in his favor, and many of the proceedings in law cases Nos. 2 and 3 appear to have been inexplicably unjust to him, and, if I could see my way clear in the faithful administration of the law, I would grant complainant at least some of the relief prayed for; but I am constrained to hold:
“First. That the parties are not the same, and that I have no power to compel the off-set or balancing of the costs in the several suits at law. In addition to the main defendants, there were in some and perhaps all of the law cases various persons named as defendants who were in possession of the premises, and therefore necessary defendants. In each case the costs were taxed against them as well as the other defendants, and they could have been made to respond, if collectible. When the side of the case where they appeared was successful, costs were taxed in their favor, and they could have enforced collection and contribution. None of this class of numerous litigants are before this court, and I am satisfied that the situation is such that an off-set or balancing of costs and claims cannot be enforced:
“Second. I hold that the agreement between Cora M. Carpenter and her attorneys was legal and valid and constituted an equitable assignment of all costs awarded to her, to her attorneys, and that neither she nor they can be restrained from their collection.
Third. I find that the proofs do not show any fraud, collusion, or oppressive conduct upon the part of Cora M. Carpenter or her attorneys, although some of their actions might be subject to criticism from an ethical standpoint, and that the proofs do not show such equities in a general way as entitle the complainant to the relief prayed for.
“Fourth. That the allegations of the bill wherein it is claimed and the agreement is set up with the late Quincy A. Smith that costs should be offset or balanced, is sufficiently denied by the answer, and, there being no proof at all of such an agreement or conversation, complainant’s case fails on that point, especially as no compliance with court rule 39 is claimed to exist.
Fifth. The judgment for costs in case No. 1 is barred by the statute of limitations, and I think the bar is sufficiently pleaded. Whether so or not, the proofs show without dispute that the claim is stale and dead both at law and in equity.
Sixth. The complainant had and yet has his remedy at law by taxation of costs, executions therefor, and proceedings under the special statute securing to him the offset he here prays for. This adequate and unquestionable remedy he has neglected for years, and cannot now well ask the court to do what he should have done for himself.
“ This court has no power to review the proceedings of law courts had long years ago, nor the unprofessional conduct, if any, indulged in by counsel at that remote period. Here, too, the remedy was in the hands of the trial court and if complainant neglected to enforce his rights or thought success unlikely, this court cannot now assist him.
“ It follows that the bill should be and is hereby dismissed, but without costs to either side.”

We understand complainant’s contention to be that the six findings of mingled fact and law above set forth are erroneous, and, further, that under Chancery Rule 10 (d) ‘ it should be held that by the answer filed the defendants admitted facts sufficient to entitle complainant to the relief prayed. The pleadings alone occupy some 34 pages of the record. To set them out in full is obviously out of the question, and would serve no good purpose. It is sufficient to say that, after carefully examining the bill and answers we are of opinion that both answers fairly meet the requirements of the rule invoked.

It is next urged by complainant that the court should have decreed Smith & Hood to be liable for costs taxed against Cora M. Carpenter in cases Nos. 2 and 3 upon the theory that, though the cases were brought in the name of Cora M. Carpenter as plaintiff, Smith & Hood were interested in the result of the litigation by reason of the contract between Cora M. Carpenter and Smith.

Assuming that the contract relations between these two parties were such as to render Smith & Hood liable for costs upon an adverse determination' of the litigation (which it is not necessary to determine), complainant had a clear legal remedy under section 11281, 3 Comp. Laws (5 How. Stat. [2d Ed.] § 14416). His remedy at law being clear and adequate, equity should not interfere. Beecher v. Mead, 49 Mich. 162 (13 N. W. 498).

Complainant says as to the first conclusion of the court below that—

“ The court based his inability to compel a set-off upon a diversity of the parties to the judgments; and his language shows that he was mistaken as to the facts.”

An examination of the record shows that the parties to the three suits were as follows: In case 1 the parties were Frank L. Carpenter, Lucy Jones, Myra, Lucy, and L. Victoria Harris, Plaintiffs, v. John I. Carpenter and Luellyn Sawtelle, Defendants. In case 2 the parties were Cora M. Carpenter, Plaintiff, v. Augustus D. Carpenter and Josephine Carpenter, Defendants. In case 3 the parties were Cora M. Carpenter, Plaintiff, v. Frank L. Carpenter, Lucy Jones, John Blankenberg, Charles Seigler, Augustus Seigler, and Mary Blankenberg, Defendants. This, we think, shows that the learned circuit judge was not in error as to the facts upon this point. With such diversity of parties no set-off of costs in one suit could be made against costs in one or both of the others. 3 Comp. Laws, § 10348 (5 How. Stat. [2d Ed.] § 13049). In the case of Wells v. Elsam, 40 Mich. 218, a bill was filed to obtain an offset of judgments. The court denied the relief sought, and, in commenting upon the statute, of which this section is a part, said:

“It is difficult to see what occasion there is, with such a statute, to resort to any other remedy. Without deciding how far it has abrogated other remedies, we are clearly of opinion that no other remedy can place the moving party in any better position than where that law places him.”

The decision of the court below might well have rested upon his first conclusion.

Complainant discusses at great length the other findings of the circuit judge, but in our view of the case the arguments pro and con need not here be considered.

Complainant asked relief in three particulars:

(1) That defendants be enjoined from selling, under the execution for costs, his property.

(2) That his costs be taxed by this court and set off against the costs awarded to Cora M. Carpenter.

(3) That the balance of costs found in his favor be decreed to be personally paid to him by said defendants or some of them and that such balance be declared a lien upon lot 12, the same to be sold in satisfaction thereof, if not paid within a certain time.

A preliminary injunction issued at the time the bill was filed was dissolved by stipulation on December 11, 1909. This was two months after the case was heard, and a few days before it was decided on December 27, 1909. There remains now, therefore, no question relative to the injunctive relief sought.

As no offset can be had under the facts disclosed, for the reasons pointed out, a discussion of the other matters briefed would be without value. Complainant is still entitled to proceed at law for the collection of his costs against all those liable therefor, except so far as that right may have been lost by his failure to act seasonably. A judgment at law affords quite as adequate a remedy for the purposes of collection as a decree in chancery.

It is perhaps pertinent to add that the history of thi« litigation, disclosing as it does that first one party then the other was successful in the circuit or Supreme Court, negatives the conclusion of the complainant that the rights of Cora M. Carpenter were of such a doubtful character as to warrant the belief that she and her attorneys were engaged in a fraudulent and malicious attempt to oppress and harass complainant by bringing against him foundationless actions. The fact that complainant finally prevailed does not necessarily lead to that conclusion.

The decree is affirmed, with costs.

Moore, C. J., and Steere, McAlvay, Stone, and Bird, JJ., concurred. Ostrander, J., did not sit.


author: Moore, C. J.

text:
    JACKSON CITY BANK v. CAMPBELL.
    Mortgages — Registration—Priority.
    A mortgage, withheld from record until after the registration of a subsequently executed mortgage, becomes subject thereto, if the second mortgagee had no notice of the other incumbrance: the first recorded conveyance has priority under 3 Comp. Laws, § 8988, 4 How. Stat. (2d Ed.) § 10850.
    Appeal from Jackson; Smith (Clement), J., presiding.
    Submitted June 10, 1912.
    (Docket No. 50.)
    Decided November 8, 1912.
    Bill by the Jackson City Bank against Robert Campbell, Helen Turner, and others, for the foreclosure of a real estate mortgage. From a decree for complainant, defendant Turner appeals.
    Affirmed.

      Potter & De Land, for complainant."

      Lyman B, Trumbull, for defendant Helen Turner.
   Moore, C. J.

The following is taken from the brief of appellant:

“ This suit was brought by the Jackson City Bank to foreclose a mortgage given it by the defendant Robert Campbell upon two pieces of property situated in the city of Jackson. The defendant Helen Turner filed her cross-bill asking for foreclosure of a prior deed, in the nature of a mortgage, given her by Mr. Campbell on the same property, also asking that her lien be given priority over that of the Jackson City Bank. The circuit judge decreed a foreclosure of both mortgages, but gave priority to the bank. The appellant is seeking to have the decree modified so as to give priority to her lien. No other question is involved on this appeal. The claim of the bank amounts at this time to upwards of $3,600, and Mrs. Turner’s claim to upwards of $1,700. Unless Mrs. Turner be given priority, nothing will be realized upon her mortgage, because the value of these properties is not in excess of the bank’s lien.
“After this suit was commenced, by stipulation of all the interested parties, one of these pieces of property, known as the Wildwood avenue property, was sold for the sum of $3,000 and the money deposited with the register of the court, under agreement that the liens of the respective parties on that piece of property should be transferred to that fund and the decree run against the fund instead of the property. The other piece of property, known as the Webster street property, is worth about $600.”

April 25, 1891, complainant made a deed of the Wild-wood property to Marian Campbell. January 5, 1900, Marian Campbell deeded the same property to Robert Campbell. December 2, 1905, Mr. and Mrs. Campbell, for the purpose of securing an indebtedness of Mr. Campbell, deeded this property to Mrs. Turner. This deed had the following provision in it:

“This deed is given to secure the investment of $3,200, and if said moneys are not all paid back to Helen Turner to be in full force and effect. But, if said moneys are paid back, then this deed to be null and void.”

It is conceded that this deed in fact was a mortgage. The last three mentioned deeds were not placed on record, but were all left with Mrs. Turner. In June, 1906, Mr. Campbell was indebted to the complainant bank. He stated to its vice president and cashier that he was the owner of the Wildwood property. The bank, without causing an examination of the record, granted an extension of time to Mr. Campbell, and Mr. Campbell and his wife executed and delivered to the bank a mortgage, containing no covenants of title or warranty covering the property in question, purporting to secure said bank for indebtedness which Mr. Campbell might from time to time be owing it. Said mortgage was dated June 15, 1906, acknowledged June 27, 1906, and was recorded on the 12th day of January, 1907.

The above being the undisputed facts, the question is, Did the trial court err in its decree? The position of the appellant is stated by her counsel as follows (we quote from the brief):

“If the complainant had gone to the records, it would have found title in Waldron and nothing to indicate that Campbell ever had any claim upon the property. Would this not naturally have raised the inquiry as to where was Mr. Campbell’s deed ? For what purpose was his deed or deeds being withheld from record ? The registration books were open to Mr. Potter, and, if he did not actually make use of them, the bank cannot now compláin that it did not have the benefit of the inquiry which he would have made if the facts as they appeared in the books had been disclosed to him. A question or two put to Mr. Campbell would have disclosed the whereabouts of the deeds and the purpose for which they were left with Mrs. Turner, or, if Campbell had not disclosed these facts, his inability to produce or account for the deeds would have put Mr. Potter upon further inquiry, and, until they were located, no man acting in a reasonable way would have parted with a consideration for that kind of security. Was Mr. Potter not put upon inquiry by the absence of these deeds to determine what had been done with them, and can it be said that he acted in good faith within the meaning of the law ?
“ The argument under this head resolves itself into this: When a mortgagor deposits with the mortgagee his unrecorded title deeds, has the mortgagee not a right to presume that, as far as the mortgagor is concerned, no person acting in good faith and for valuable consideration will take another conveyance until these deeds are produced ? We regret that diligent research has not disclosed other cases where this exact point has been presented.”

The legislature has made an effort to guard the rights of parties who acquire titles to, or liens against, real estate. Section 8988, 3 Comp. Laws (4 How. Stat. [2d Ed.] § 10850), reads as follows:

“Every conveyance of real estate within this State hereafter made, which shall not be recorded as provided in this chapter, shall be void as against any subsequent purchaser in good faith, and for a valuable consideration of the same real estate or any portion thereof whose conveyance shall be first duly recorded.”

We have held that this section applies to mortgages as well as deeds. Burns v. Berry, 42 Mich. 176 (3 N. W. 924); Peninsular General Electric Co. v. Norris, 100 Mich. 505 (59 N. W. 151). The object of the registry laws is stated in the note to section 8978, 3 Comp. Laws (4 How. Stat. [2d Ed.] § 10840). The parties to this litigation had the misfortune to believe a man to be honest who was in fact dishonest. One of them withheld her evidence of a lien from record. The other one recorded its lien, and thereby became entitled to the benefit of the statute.

The decree is affirmed, with costs.

Steere, McAlvay, Brooke, Stone, Ostrander, and Bird, JJ., concurred.


author: Steere, J.

text:
    RODGERS v. BECKEL.
    1. Quieting Title — Demurrer—Equity.
    Complainant’s bill to quiet title to land held by his intestate under a land contract which he averred had been fully paid up, defendants claiming no interest therein, also charging that decedent had been in possession adversely for upwards of twenty-five years prior to the filing of the bill, could not be sustained on demurrer as a suit to quiet title; averments of some claim or hostile interest being essential.
    2. Same — Limitation op Actions.
    Defendants’ contention on demurrer that complainant’s claim was barred by the statute of limitations could not be sustained in the face of averments of possession and payment.
    3. Specific Pebpormanoe — Limitation op Actions — Laches — Equity.
    In suits for specific performance, while courts of equity have regard to statutes of limitation, and "by analogy are inclined, as a general rule, to conform therewith, when applying the rule of laches, they are not conclusive and are often disregarded.
    4. Vendor and Purchaser — Adverse Possession.
    The possession obtained under a land contract, being permissive, cannot ripen into an adverse holding.
    5. Same — Specific Performance — Laches.
    If the vendee of real property takes and retains possession of the premises with the vendor’s consent, and makes payment therefor, mere delay in bringing suit, however long continued, will not defeat his remedy by' specific performance, unless special conditions intervene or the execution of the agreement has become inequitable.
    6. Same.
    A demurrer should have been sustained where the bill of complaint was contradictory, was wanting in specific averments, failed to allege that defendants owned, claimed or ever had title to the land in question, and omitted to show the present condition of the title.
    Appeal from Kent; Brown, J.
    Submitted June 17, 1912.
    (Docket No. 106.)
    Decided November 8, 1912.
    Bill by Harry E. Rodgers as administrator of the estate of Flora A. Yates, deceased, against Susan H. Beckel and others for specific performance, accounting, and other relief. From an order overruling a demurrer to the bill of complaint, defendants appeal.
    Reversed.

      Rodgers & Rodgers, for complainant.

      ^Gleason & Lee and Gottschall & Turner, for defendants.
   Steere, J.

This is an appeal from an order of the circuit court of Kent county, in chancery, overruling defendants’ demurrer to complainant’s amended bill filed to perfect title to a certain tract of land in said county. The original bill of complaint was filed July 21, 1910. Defendants were either nonresidents or their residence unknown, and, on proper showing, by affidavit, an order of publication was made. Before the expiration of said order, defendants appeared and moved the court to set the same aside, which was done and a general appearance was entered by defendants. Thereafter, on March 28, 1911, complainant filed an amended bill, to which defendants demurred on various grounds, appealing from the decision of the court overruling the same as stated.

The original bill alleges: That on June 12, 1888, Susan H. Beckel, of Dayton, Ohio, was the owner of a certain described 40 acres of land in Kent county, Mich., and on that day sold the same on contract, by her authorized agent, N. B. Hill, to Millard E. Yates for the sum of $600, receiving $100 down, the balance to be paid at the rate of $100 annually, with interest at 7 per cent.; that immediately on delivery of said contract, said Yates went into possession of said land; that he and his wife, Flora A. Yates, as his subsequent grantee, continued thereafter in open and peaceful possession of the same, claiming ownership, until the death of said Flora A. Yates, paying all taxes assessed against said land, and greatly increasing the value thereof by clearing and improving the same; that said Millard Yates deeded said property on October 5,1905, to his said wife, Flora, who died leaving an indebtedness, including funeral expenses, of over $200, and insufficient personal property to pay the same; that complainant, a creditor, was duly appointed administrator of her estate; that her debts cannot be paid except from said real estate; that said Susan H. Beckel died some number of years ago, leaving as heirs at law Charles B. Beckel, of Dayton, Ohio, and Susan H. Beckel, Mary Gf. Beckel, Fannie (Beckel) Conklin, and Anna (Beckel) Huffman, whose residences are unknown. It is also alleged on information and belief that Charles B. Beckel, of Dayton, O., has had charge and management of the said Susan H. Beckel estate, and that complainant caused a letter to be written to him oh June 23, 1910, asking if the heirs of said Susan H. Beckel made any claim to said real estate, and if they would quitclaim their interests in said property to complainant as administrator; that complainant is informed and believes payments were made upon said land from time to time, but whether in full or not he is unable to learn; that he is informed and believes nothing has been paid within the last 15 years, and that no claim has been made on the part of said Susan H. Beckel or any of her heirs in the last 15 years that any money was due on said contract. The bill prays for an answer, without oath, that defendants be decreed to convey said land to complainant as administrator, and if the court find that defendants have any interest in the same an accounting may be had, and if anything is found due, complainant be permitted to pay the same and a decree be entered for a deed from defendants upon such payment.

The amended bill is substantially the same as the original, except it alleges the possession under claim of ownership was adverse, that Susan H. Beckel died in Dayton, Ohio, March 9, 1890, fails to allege that she was ever owner of the land in question, alleges on information and belief that the purchase price was paid in full more than 20 years prior to the death of said Flora Yates; that Susan H. Beckel in her lifetime, and defendants since, have neglected and refused to convey said property according to the terms of the contract; that neither said Susan H. Beckel nor any of said defendants have, within the last 25 years, made any claim there was anything due on said contract, or brought action to recover possession, or attempted to make entry thereon. Answer under oath is demanded, no offer is made to pay any sum found due, and prayer for an accounting is omitted. Decree for conveyance is asked, in default of which it is prayed that the decree, when properly recorded, shall operate as a conveyance. The bill also contains a general prayer for relief.

Defendants set up 16 separate grounds of demurrer, some special and ultra technical; others, more general and comprehensive, directed against the merits and equities of the bill as a whole. Epitomized they are as follows: Unexcused laches for 25 years; statute of limitations; title to contract and right of action, if any, in Millard E. Yates and not in complainant; no allegation Mrs. Beckel or her heirs ever owned the land or made claim thereto; allegations of amended bill repugnant to substantive allegations of original bill; new controversy; adequate remedy at law; no offer to pay if anything found due; no allegation Mrs. Beckel died intestate, or that defendants have any title to or interest in the contract or the land, or have ever made any claim thereto; inconsistent claim of adverse possession for twenty-eight years.

Complainant’s bill presents a somewhat double aspect, inconsistently alleging possession taken and held under a land contract and full performance of that contract on his part, entitling him to specific performance by defendants, and also adverse possession ripening into a title under which it is claimed the bill should be maintained as one to quiet title. Counsel say:

“This bill could be maintained under section 448 of Miller’s Comp. Laws providing for quieting titles in courts of chancery. This court in passing upon this statute has held the object is to reach cases like the present.”

In this case there is no allegation that defendants make, or have set up, or are “setting up a claim thereto in opposition to the title claimed by complainant.” The contrary appears from the language of the bill. Counsel for complainant, in confirmation of this, state in their brief:

“ The complainant is not seeking to take anything from the defendants that they have in their possession, or have had in their possession, or that they, prior to the filing of the bill in this case, made any claim to.”

A bill to quiet title cannot be successfully launched against defendants not charged and shown to hold or claim any title or interest in the property involved. The only recognizable equitable allegations to be traced in complainant’s bill tend to mark it as a bill for specific performance of contract. The story told, much of it on information and belief, is that 28 years before the bill was filed a contract for the sale of this land was given Millard E. Yates by Mrs. Beckel, through her agent, $100 paid on the contract, and possession taken of the property, which has been maintained since, under claim of ownership by Yates and his successors, who made improvements on and greatly enhanced the value of the same; that Yates quitclaimed his interest to his wife; that his wife is dead and Mrs. Beckel is dead (we are not advised as to what became of Yates and Hall, the agent, between whom the contract was negotiated); that the contract price was fully paid; that no claim of any kind, either to the land or for payment, has been made by Mrs. Beckel or her representatives for more than 25 years; that she died in Dayton, Ohio, leaving certain heirs; that a letter was written to one of them on the subject. What answer, if any, was made to such letter, is not stated. By the terms of the contract it should have been fully paid and Yates entitled to a deed in 1888. The bill alleges full payment was made 20 years prior to its filing. Yates’ right of action to enforce specific performance would arise when full payment was made. Counsel on each side seek to máke against the other a somewhat strict and technical application of the statute of limitations. It is argued by complainant that it required 15 years after 1888 to bar defendants’ right of entry; that the statute of limitations would not run against Yates’ right of action until their right of entry was barred, and that this suit was begun only “seven years and one month after the statute had barred defendants from making entry or claiming any right under the land contract; ” that, defendants not having attempted to make entry or claimed any rights under the contract for more than 25 years, they are now barred by the statute from doing so.

It is argued by defendants that the allegations in complainant’s bill on their face raise the statute of limitations against him, and in this State a general demurrer will lie where such infirmity appears on the face of the pleading; ho explanation or excuse being stated is extenuation. In that connection it is not to be overlooked that payment and possession are alleged.

In suits for specific performance, while courts of equity have regard to statutes of limitation, and by analogy are inclined, as a general rule, to conform therewith when considering and applying the doctrine of laches, they are by no means absolutely conclusive and are often disregarded. Laches may be declared to be a bar long before the statute has run, or, where equitable reasons for delay have been shown, relief may be granted at a time beyond the statutory period.

Under complainant’s allegations of purchase, possession taken under such purchase, and continuously maintained since, and full payment of the purchase price, the statute ■of limitations becomes of minor significance either way, ;and his claim of adverse possession is wholly untenable.

“ Such holding and occupancy could not in a hundred years ripen into an adverse holding and the complainant would be equitably estopped from so claiming.” Township of Jasper v. Martin, 161 Mich. 336 (126 N. W. 437, 137 Am. St. Rep. 508).

On the other hand, it is well settled, as applied to the ■remedy ■ of specific performance, that, if the vendee of land takes and retains possession of premises with the vendor’s consent and makes payment therefor, mere delay in bringing suit, however long continued, will not defeat his remedy, unless special conditions have intervened and the relations of the vendor to the land have so altered that a specific execution of the agreement becomes impossible or inequitable. Pomeroy on Contracts, § 404; Waterman on Specific Performance of Contracts, § 468; 36 Cyc. p. 732. The principles applicable to such a case are very succinctly stated in an opinion written by Justice Tucker in the early case of Williams v. Lewis, 32 Va. 686. Williams filed a bill in 1822 for specific execution of a land contract made with Lewis’ father in 1774. Williams had been in possession of the premises since the latter date, and had paid for same by surrendering certain claims to other property. The court said:

“ Still less does it become him or them, to set up the defense of the length of time in bar of this equitable title. It is not admissible on the part of a vendor against his vendee. The relation in which they stand to each' other forbids it. The former is a trustee for the latter; and the trust can never be determined but by a conveyance of the title. The vendor can never be permitted to set up his own omission to make a deed, against the right of the vendee to demand one. Yet less can he invoke the aid of those cases, which discountenance -the assertion of a stale equity, by a party out of- possession, against an adversary claimant in possession.- For hqpe Williams has been in continued and uninterrupted possession from about the year 1774 to the present day; in the peaceful enjoyment of this equitable right, which has thus acquired strength by the lapse of time and acquiescence, instead of being weakened and impaired. If, indeed, we could look upon the parties in the light of adverse claimants, Williams’ possession alone would sustain him in a writ of right. But, as he is in fact a claimant under Lewis, he could not at law be permitted to defend himself, as an adverse claimant, by the statute of limitations. It is, then, but just that in this court the same relation should protect him from a similar defense on the part of Lewis.”

This bill of complaint is, however, in its present form contradictory, wanting in specific allegations and averments and clearly demurrable. It does not state a cause of action against these defendants in law or equity. It makes claims by contract rights and by adverse possession. It fails to allege that defendants ever owned, held title to, or claimed the land in question. It is silent as to the present condition of the record title, and does not Bhow that Susan H. Beckel ever owned or held any title to the property, except as the fact might be surmised from her having, through her agent, contracted to sell it. No liability or obligation under the contract could attach to defendants except as traced through title to, or interest in, the land as her heirs.

“The bill must show such a relation of defendants to the subject-matter as to charge them with liability, or some interest in the subject-matter which will be affected by the decree.” 16 Cyc. p. 235.

We are of opinion that the demurrer should be sustained. The order overruling the same is reversed, with costs, and the case remanded with leave to file an amended bill within 30 days.

Moore, C. J., and McAlvay, Brooke, Stone, Ostrander, and Bird, JJ., concurred.