text:
      In re REID’S ESTATE. STOCKWELL v. SEDINA.
    1. Appeal and Error — Directing Verdict — Trial.
    In reviewing, on error, a verdict directed against claimant, who presented a claim against the estate of his deceased and divorced wife, his evidence is entitled to its greatest probative force.
    3. Estates op Decedents — Revival op Commission on Claims— Executors and Administrators.
    Revival of the commission on claims of a decedent’s estate is a matter of right before the estate is closed; the petition need only show that fact and that petitioner is a creditor whose claim has not been passed on by the commission. On the trial, claimant’s right to revive such commission was not a proper issue, although defendant charged that the order was fraudulently obtained.
    3. Same — Evidence.
    The court erroneously directed a verdict for defendant estate on testimony tending to show an agreement of decedent with claimant to repay him what he might expend in keeping up a life insurance policy upon her father’s life, on evidence showing by her admissions a oontract to settle the matter by paying him $1,200 after he had kept up the premiums for a number of years.
    4. Same — Insurance—Husband and Wipe.
    Where claimant agreed with the member of a mutual benefit society to keep up his insurance, paying all premiums thereon, in consideration of insured making claimant’s wife the beneficiary under the policy, and where the wife also promised to repay her husband from the proceeds of the policy, on which he paid about $1,200, the wife acquired a vested interest in the policy which the law will protect, and the insured could not change beneficiary so as to deprive her of rights under the policy, although it provided for change of beneficiary at the option of insured.
    5. Same — Separate Estate op Wipe — Contracts.
    Such interest or equity related to the wife’s separate estate, and a contract to reimburse her husband for sums paid on the premiums was valid.
    6. Same.
    The husband, who was prevented by divorce from the wife and by imprisonment for crime from completing his agreement, could recover as on a quantum meruit tor the sums he paid in part performance of the contraot, after the policy had been paid to his wife.
    7. Same — Evidence.
    Averments contained in a bill for divorce filed by decedent against claimant were not competent evidence of the relations existing between claimant and his wife, and such relations were immaterial to the issue.
    Error to Ingham; Collingwood, J.
    Submitted April 5, 1912.
    (Docket No. 56.)
    Decided May 31, 1912.
    Claim by Joseph W. Stockwell against the estate of Mary E. Reid, deceased, for money paid to the use of decedent. The claim was allowed by the commissioners on claims. Thomas H. Sedina, executor of said estate, appealed to the circuit court. Judgment for defendant on a directed verdict. Claimant brings error.
    Reversed.

      Black & Roe, for appellant.

      Gardner & Hood, for appellee.
   Stone, J.

This case involves a claim presented by Joseph W. Stockwell against the estate of Mary E. Reid, deceased. The claimant and deceased were formerly husband and wife, having been married on the 5th day of May, 1879. They lived together until some time in the year 1900. They were subsequently divorced on a bill of complaint filed by the wife on January 7, 1901, in the circuit court for Benzie county, in chancery. At the time the decree of divorce was granted, claimant had been arrested and was thereafter tried in the circuit court for the county of Genesee for the crime of conspiracy and sentenced to the State prison at Jackson on or about the 22d day of January, 1903. In the month of May, 1905, Mary E. Stockwell was remarried to a man by the name of Reid with whom she lived but a short time; she having been killed in the month of August of the same year, leaving a last will and testament which was admitted to probate by the probate court of Ingham county on September 8,1905. Following the probate of the will of Mrs. Reid, and while the claimant was still in prison, commissioners were appointed by the probate court to receive and allow claims against her «state. The commissioners made their report to the probate court showing the various claims allowed on the 17th day of February, 1906 j the claimant still being in prison.

The claimant, after being confined for about 34-years, was paroled, and on being released from prison, and on September 27, 1907, petitioned the probate court for a revival of the commission on claims in order that he might have an opportunity to present a claim against said estate, which petition was granted by the court. No claim was proved before the commission thus revived, and the claimant again petitioned the probate court for a revival of the commission, which was granted. Owing to the failure of the commissioners to act within the time provided in the order, the claimant was unable to present the proofs of his claim, and he again presented his petition for a third revival of the commission. This last petition was granted December 29, 1908, by the probate court. The claimant then presented his claim before the commissioners who allowed it at the sum of $3,4=93.30, and made their return to the probate court on January 30, 1909. From this allowance the administrator appealed to the circuit court.

On the trial of the case, the claimant by his attorneys waived all claims against said estate except one of $1,200, which amount he claimed he had paid as assessments upon a life policy held by the father of the deceased in the Royal Arcanum Insurance Association; she claiming to be a beneficiary under the policy, and claimant claiming that such money had been paid by virtue of an agreement between the insured, the deceased, and the claimant to the effect that what the claimant paid should be paid hack to him on the maturity of the insurance.

Owing to the course which the trial took in the circuit court, the testimony offered on behalf of the claimant is entitled to its greatest probative effect.

To support his claim, on the trial the claimant offered testimony showing that Thomas Shivley, the father of deceased, was insured in the association above stated. The date of the policy was September 2, 1881, and the amount was $3,000. The original beneficiary was Catharine Shivley, the wife of the insured. The beneficiary was changed November 28, 1886, to Andrew J. Shivley, son; and again in August, 189Í, to Catharine Shivley two-thirds, and Andrew Thomas Shivley, grandson, one-third. It was changed again November 7, 1894=, to Andrew T. Shivley, grandson, $1,000; Mary E. Stockwell, daughter, $2,000. It was changed again on March 27, 1895, to Mary E. Stockwell, daughter, $3,000. That was the last change, and Mary E. Stockwell was the beneficiary at the time of the death of Thomas Shivley, which occurred March 4, 1904, and she drew the amount of $3,000 upon said policy or certificate.

The claimant’s evidence tended to show that soon after May 24, 1891, there was a meeting of the relatives of Thomas Shivley at the old homestead in Lansing, which meeting included Thomas Shivley, Mrs. Stockwell, the deceased, Mr. Stockwell, the claimant, Mr. Sedina, a brother-in-law, and one Levi W. Shivley.

Levi W. Shivley testified that a conversation was had in relation to the insurance policy in which all present took part. At that time Andrew Shivley, a brother of the deceased, had recently died, and the father, Thomas Shivley, requested a conversation and interview over the matter of the insurance, as there was an assessment due or about to become due; that Mrs. Stockwell said to the witness:

“ Now what can be done about it ? We must have an understanding what should be done about it. I have a proposition to make to you. If it will be changed suitable to us, Stockwell and I will go on and keep the insurance up.”

When witness asked her on what conditions they proposed to put in that, she replied, “Thomas Andrew (son and only heir of Andrew Shivley, who is dead ) shall have a share of it, like one-third,” and two-thirds was to go to Mrs. Stockwell. And Mrs. Stockwell suggested that:

“ Whoever keeps this up should receive back what they paid in.”

Mr. Stockwell proposed like this:

“ That if they would fix this beneficiary so that little Andrew would have one-third and Mary (Mrs. Stockwell) two-thirds, he would keep it up himself.”

The following question and answer appear:

“Claimant’s counsel: As I recall it now, Mr. Shivley, you stated that Stockwell made a proposition that he would keep up the premiums on the policy provided that the policy was changed so that Stockwell’s wife would have a two-thirds interest and little Andrew a one-third interest ?
“A. Yes, sir; Mr. Sedina said it was all right; Mrs. Stockwell said all right; all of them there said all right. * * * They acquiesced with the thing and matters as it was put before them.”

Levi W. Shivley further testified:

“I had a talk with my sister, Mary Stockwell, with regard to the insurance and what was to be done with Stockwell, and she said to me, c Whoever keeps this up shall be paid for all he puts into it,’ and she says, * Mr. Stockwell stands ready and willing to keep these payments up. * * * After Thomas Shivley’s death a short time, I had a conversation with Mrs. Stockwell with regard to the property and this insurance. When she was waiting for the insurance we had a conversation about it, and I said I hoped when she got it she would carry out the agreement as it was made by Mr. Sedina, my father, and Mr. Stockwell and herself. She said there had been some misunderstanding about the insurance between little Thomas Andrew’s mother and herself some way. She said she was perfectly willing Stockwell should have back what he had paid in.”

To further support his claim, claimant offered the testimony of one Fred C. Reichert tending to show that during the years 1891 to 1900 the claimant paid the assessments on this insurance as they fell due; that in 1900 or 1901, while claimant and deceased were talking over some other matters in relation to some land that he wanted her to deed back to him, the insurance matter came up, and the claimant told her that he did not feel like going on and paying this insurance any longer; that he did not know that he was ever going to get anything out of -it, and she asked him how much money he had paid into it, and he said somewhere in the neighborhood of $1,200, and she said he would get every penny of it back for what he had paid up to that date; that he would get back what he had paid into it just as soon as she received it; that she there agreed to pay him $1,200 when she got it; that this was a short time before the final separation of the claimant and deceased; that afterwards in 1904, after her father died, said Mary E. Stockwell told the witness that she was going to pay the claimant $1,200 when she got her money.

In further support of his case, claimant offered the deposition of one William A. Miller to the effect that at one time the deceased told him she had an insurance on her father’s life, and when claimant was away she borrowed money from the deponent to pay the premiums, and the claimant repaid the money. There was evidence showing the amount of monthly payments made upon this policy from May, 1891, down to and including March, 1904.

At the close of the testimony, defendant’s counsel moved the court to direct a verdict for the defendant for the following reasons:

“ (1) The court has no jurisdiction to litigate the question or questions involved because the probate court had no legal right to revive the commission, and because Mr. Stockwell procured the revival by deception and fraud which is disclosed by the evidence.
“(2) There is no evidence to establish an agreement on the part of Mrs. Stockwell to reimburse the party, Stock-well, for the moneys which he promised to pay, the assessments on the life of Thomas Shivley.
“(3) There is no evidence from which the jury can determine what, if any, sums Stockwell advanced or paid to keep up the assessments on the certificate issued on the life of Thomas Shivley. ■
“(4) Even though there is some evidence tending to show that Mrs. Stockwell agreed with Stockwell that, if he should pay the assessments on the certificate issued by the Royal Arcanum on the life of Thomas Shivley, she would pay him back whatever sum he should so advance or pay, such promise and agreement, on her part was not binding upon her because she was at the time of such promise a married woman and was under no legal obligations to pay the assessments, and such payments do not affect her separate property.
“ (5) Because it appears from the undisputed testimony in the case that if an agreement was made by which Mrs. Stockwell became obligated to pay Mr. Stockwell all moneys necessary to keep up the payments, Stockwell did not perform his part of the agreement, and by his own misconduct made it impossible to keep good his contract and agreement.”

This motion was granted by the court, and the learned circuit judge directed a verdict for the defendant in the case for the announced reason that it appeared that there was no evidence to go to the jury, that no facts had been shown which, in the opinion of the court, should take the case to the jury, and that the plaintiff had not made a case; and a judgment for the defendant was thereupon entered.

The claimant has brought the case to this court by writ of error, assigning a large number of errors in the statements of defendant’s counsel in his opening to the jury, in the rulings relating to the admission of evidence, and in directing a verdict for the defendant. Counsel upon both sides have discussed the questions raised by the assignments of error and involved in the points urged by defendant’s counsel in his motion to direct a verdict, and we shall follow the same course.

Was the question whether the probate court had the legal right to revive the commission because said revival was procured by-fraud and deception one that was involved in the trial of this case ? Section 9373, 3 Comp. Laws, as amended in 1901 (Act No. 70, Pub. Acts 1901), clearly authorizes and requires the probate court to revive a commission on the application of a creditor who has failed to present his claim. As this court held in Bresler v. Wayne Probate Judge, 152 Mich. 167 (115 N. W. 960), the policy of this statute, as indicated by the decisions of this court, is to permit a creditor to present to a revived commission any claim not theretofore presented so long as the estate remains open. The order reviving the commission is a matter of right which may be made ex parte and without notice. There is no distinction in principle between an application to revive a commission to hear a part of a claim which might, if known, have been presented to the original commissioners, and an application for a second revival to hear a part of a claim, or a distinct claim, which might, if known, have been presented to the commissioners upon the first revival of the commission. We think that it is well set-tied in this State that a revival of a commission under the statute at any time before the estate is closed is not a matter of discretion, but of right. All that was necessary to be shown in the petition was that the petitioner was a creditor whose claim had not been presented and passed upon by the commission, and that the estate was not yet closed. Hart v. Shiawassee Circuit Judge, 56 Mich. 592 (23 N. W. 326); Quinn v. McGovern, 97 Mich. 114 (56 N. W. 226); Heavenrich v. Nichols’ Estate, 113 Mich. 508 (71 N. W. 852); Draper v. Brown, 153 Mich. 120-138 (117 N. W. 213). We do not think there is any merit in the first reason urged for a directed verdict.

The second and third reasons for defendant’s motion are directed at the sufficiency of the claimant’s evidence showing an agreement on the part of the deceased to pay the claimant the money he had advanced upon her father’s insurance. We shall not review the evidence which we have only in part called attention to. It should be borne in mind that the question here to be determined is whether there was any evidence to go to the jury upon this branch of the case, taking the most favorable view of claimant’s evidence, and bearing in mind that the weight of this evidence was for the jury. A careful reading of the record leads us to the conclusion that it cannot be said there was no evidence to submit to the jury upon this branch of the case, and we therefore think that there was no merit in the second and third reasons urged for a direction of verdict.

The defendant’s fourth reason for the motion to direct a verdict was predicated upon the claim that the contract, if made, was not one in relation to her separate property; the deceased being at the time a married woman. This is in our opinion the most meritorious question in the case. It must be conceded as a general proposition that, under this certificate of insurance, Thomas Shivley in 1891 had the right to change the beneficiary, and therefore, under the constitution and laws of the society, he could name a new beneficiary. But this statement requires some qualification. After the deceased, by her husband, had made payments on the assessment in pursuance of the claimed agreement with her father, such change of beneficiary could not deprive Mrs. Stockwell of her equity in such insurance. That from and after the making of such agreement, and the payments of assessments in pursuance thereof, she had an equitable interest in such insurance which she could enforce against the insured.

The rule is well stated in Niblack on Accident Insurance and Benefit Societies (2d Ed.) in the latter part of section 227, as follows:

“ A beneficiary who pays the assessment on a certificate voluntarily and gratuitously, and not under a contract with the assured, acquires no vested interest therein as against a person afterward named as beneficiary by the member. A member may change this beneficiary, though the latter has paid the assessments and has possession of the certificate. But it has been held that where a person became a member of a society under an agreement with the beneficiary designated in his certificate that the beneficiary should pay all assessments, and he paid them under the agreement, the beneficiary acquired a vested interest in the certificate, and the member could not afterward make another designation. A provision of the charter or of a contract of the society, declaring that a member shall have a right to make a change of his beneficiary without the consent of the latter, applies when the original designation is in the nature of an inchoate or an unexecuted gift, and where there is no agreement on the part of the member, the society, and the beneficiary that no change shall be made. It does not prevent an express contract between the member, the beneficiary, and the society that a vested right shall pass to the beneficiary ” — citing Maynard v. Vanderwerker (Sup.), 24 N. Y. Supp. 932; Smith v. Benefit Society, 123 N. Y. 85 (25 N. E. 197, 9 L. R. A. 616).

To the same effect, see 2 Bacon on Benefit Societies and Life Insurance (3d Ed.), latter part of section 295.

In Stronge v. Supreme Lodge K. of P., 189 N. Y. 346 (82 N. E. 433), many authorities are reviewed, and the Court of Appeals there held that the designation of the beneficiary of a mutual benefit certificate of insurance, in pursuance of a contract fully performed by the beneficiary, cannot be revoked and a new beneficiary named at the pleasure of the insured, even though the by-laws of the association provide that a change of beneficiary may be made at any time without the consent of the existing beneficiary. In that case the court cites with approval the case of Webster v. Welch, 57 App. Div. (N. Y.) 558 (68 N. Y. Supp. 55), in which case a mutual benefit insurance company had issued a certificate upon the life of the deceased in favor of one of his daughters, naming her as the sole beneficiary under an agreement that she should care for her father during life, which agreement was carried out. Subsequently the deceased procured the issue of new certificates which changed the designation of the beneficiary. It was held that the daughter acquired a vested interest in the certificate and that she could not be deprived of that interest by subsequent changes procured by the member in derogation of her rights. Many authorities might be cited in support of this position. We will content ourselves by citing the following: Supreme Council Royal Arcanum v. Tracy, 169 Ill. 123 (48 N. E. 401); McGrew v. McGrew, 190 Ill. 604 (66 N. E. 861); Leaf v. Leaf, 92 Ky. 166 (17 S. W. 354, 854); Carter v. Carter, 35 Ind. App. 73 (72 N. E. 187); Supreme Council Catholic Benevolent Legion v. Murphy, 65 N. J. Eq. 60 (55 Atl. 497); Benard v. Grand Lodge A. O. U. W., 13 S. D. 132 (82 N. W. 404).

The rule is stated in 3 Am. & Eng. Enc. Law (2d Ed.), at page 993, as follows:

“ While the established rule is that the beneficiary’s interest in a mutual benefit certificate is a mere expectancy, there are some circumstances which modify his operation. Where the member, upon taking out the certificate, makes an agreement with the beneficiary that the latter should pay the assessments, and that no substitution should be made, the beneficiary, upon performing this agreement, acquires a vested right” — citing many cases, including some of those above cited.

See, also, 29 Cyc. p. 128, and cases cited.

It appears and is undisputed that at the meeting in May, 1891, between the father, Thomas Shivley, the deceased, the claimant, and others, that the father was desirous of having some provision made for the payment of the assessments upon his certificate which he was unable to pay. It was perfectly competent for him to make an arrangement with the deceased in and by which if she would make the payments in the future she should become the beneficiary in the certificate. It is claimed that such an arrangement was made and carried out. The change in beneficiaries was subsequently made giving her an interest first, and finally the whole of the benefits under the certificate, and she drew the whole amount thereof. This arrangement gave her a trust interest in this certificate. It may have been an equitable interest only, but it was such an interest as the law will recognize. It was a vested interest; it was to her solely; it related to her sole property in the certificate; it was more than an expectancy; and we think the authorities cited by defendant are readily distinguishable from those which we have above cited. The case falls in principle within that of Grand Lodge A. O. U. W. v. Beath, 150 Mich. 657 (114 N. W. 662). The majority opinion in that case, recognizing the trust relation and trust fund, holds that under circumstances somewhat similar to those in this case, where the member had no property or means of support and could not even pay his premiums and keep his policy alive unless he could borrow money upon it, an arrangement by which he did obtain such relief was properly sustained. See, also, Woodruff v. Tilman, 112 Mich. 188 (70 N. W. 420); Cowin v. Hurst, 124 Mich. 545 (83 N. W. 274, 83 Am. St. Rep. 344). In this last-cited case an equitable rule is invoked that a trustee cannot be heard to say:

“ I will not carry out the trust, because the parties had no legal right to repose the trust in me.”

It is only necessary to go a step further to hold that there is a claim here that should have been presented to the jury: Mrs. Stockwell, having an equitable interest in this policy or certificate, had the legal right to pay the assessments and claim her interest; she had also the right and power to agree with the claimant that he should make the payment and that she would reimburse him. It related to her separate property. That is the claim here. In our opinion it should have been presented to the jury under proper instructions; and we do not think that the claim of the defendant in the fourth reason stated can be sustained. The claimed contract in this case had a direct reference to the avails of the insurance which was to be thereafter received by the decedent.

It should be borne in mind that this is not a case where the insurance company or society is resisting the claim of the decedent. The money was paid to her, and we think that the alleged agreement with her husband was with reference to a vested interest in her separate estate.

We shall not discuss at length the fifth point urged by defendant’s counsel. It is only necessary to say that the claimant seeks to recover for moneys which he actuually paid out and expended under the claimed agreement with his wife with reference to her separate estate. In any view of the case, he would have a right to recover under a claim in the nature of a quantum meruit what he paid, and that is really the substance of his claim as here presented.

We shall not review seriatim all of the alleged errors relating to the statements of defendant’s counsel to the jury or in the reception of the evidence. We do not think that the relations between the claimant and his deceased wife, whether pleasant or unpleasant, harmonious or otherwise, are involved in the case. We see no materiality as evidence of the bill of complaint for divorce unless it might be to fix certain dates. We think the numerous questions raised by appellant upon this branch are not liable to occur upon a new trial, in view of what we have already said.

The judgment of the circuit court is reversed, and a new trial granted.

Moobe, C. J., and Steere, Me Alva y, Brooke, Blair, and Ostrander, JJ., concurred. Bird, J., did not sit.


source: Caselaw Access Project

author: Brooke, J.

license: Public Domain

text:
    HALLIDAY v. BASEL.
    1. Trusts — Gifts — Delivery — Evidence of Transfer — Constructive Delivery of Money.
    Payments by father of complainants as a part of the purchase price of property to be conveyed in trust to him for the benefit of his children, amounting to the sum of $250, was a gift inter vivos, after the creation of the trust, and it was improper to allow him a oredit therefor out of the estate on an accounting.
    2. Same — Resulting Trusts — Consideration.
    His right to recover as for a resulting trust was barred by 3 Comp. Laws, § 8835, in accordance with which, title vested in the beneficiaries.
    3. Same — Accounting.
    The payment being made four years before the trust estate came into his hands to administer, it was disconnected from the administration thereof, and was not a proper item of credit.
    Appeal from St. Clair; Law, J.
    Submitted April 10, 1912.
    (Docket No. 96.)
    Decided May 31, 1912.

      Bill by Florence Halliday and others against George Basel for an accounting. From a decree allowing defendant’s account as filed, complainants appeal.
    Reversed.

      Bert D. Cady, for complainants.

      Carl A. Wagner, for defendant.
    Defendant George Basel is the father of the complainants, seven in number. On July 25, 1899, one Theresa Speigle, who was the mother of Anna Basel, the deceased wife of George Basel, executed a deed of a certain house and lot in the city of Port Huron to George Basel as trustee for the seven. children (complainants herein) of himself and his wife Anna. The expressed consideration in the deed is “ the sum of $250 and other valuable consideration.” Theresa Speigle reserved to herself a life estate in said property. She died March 14,1903, since which time defendant has been in possession of and has managed the trust estate.
    Complainants ask for an accounting from their father, for a conveyance to such of them as are entitled to receive deeds, and for the appointment of a new trustee for the minor complainants. Defendant filed his answer to the bill of complaint and included therein his account as trustee. As a disbursement under the trust he claimed credit for the sum of $250 paid by him to Theresa Speigle to obtain the deed for the benefit of the heirs of Anna Basel. The further item of $150, being 12 years’ interest upon said sum at 5 per cent., was included. The balance of defendant’s account was conceded by complainants to be correct.
    A decree was entered in the court below allowing defendant’s account as filed by him, including the two items above mentioned amounting to $400, and directing him to convey the property to complainants only when they shall pay to him the sum of $317.76, the balance found by the circuit judge in his favor. From this decree complainants appeal.
   Brooke, J.

(after stating the facts). The only question involved in the appeal is whether the defendant should have been allowed the credit of $400 which arose from the fact that he had contributed the sum of $250 to Theresa Speigle to assist her in the purchase and creation of the trust estate. Defendant states the situation at the time of payment as follows:

“ The way it came about, she (Mrs. Speigle) wanted to buy the place, and it amounted to more than the other daughter was to get, and I said, ‘ Seeing the place is next door, I will pay $150 or $250 in order to get it. I will pay that out for the benefit of the children.’”

Defendant paid this sum in small amounts from time to time to Theresa Speigle, who in turn paid them upon the property which she had purchased upon land contract. As soon as the contract was paid up, she took a deed from her grantor and immediately conveyed the land to the defendant in trust for his children.

It is contended by complainants that defendant should be held to be estopped from setting up this claim because its effect would be to permit a fraud against the estate of Theresa Speigle. It is true, as urged, that part of the consideration which moved Mrs. Speigle to create the trust estate was the contribution by the defendant of the sum of $250 towards the project, and it may be true that, without this contribution, Mrs. Speigle would not have created the estate at all. Her estate, however, is not a party to this cause, and is not now interested in the result.

It is next urged by complainants that the payment of the $250 by defendant should be held to be a gift inter vivos. An examination of the record convinces us that, at the time the defendant paid this money, he intended it as a contribution to the estate which their grandmother • was about to create for the benefit of his children. His subsequent remarriage and obvious estrangement from his children by his first wife has apparently changed that intention. Is he now in a position to insist upon its return to him ? We are of opinion that he is not.

In Holmes v. McDonald, 119 Mich. 563 (78 N. W. 647, 75 Am. St. Rep. 430), this court said:

“To constitute a gift inter vivos there must be adelivery of the thing given, either actual or constructive.' It is not necessary that it be delivered to the person intended directly; it may be delivered to some person for him, or to a trustee for that purpose; but in all cases such a disposition of it must be made in favor of the donee as effectuates the object and places thejws disponendi beyond the power of the donor to recall” — citing Love v. Francis, 63 Mich. 181 (29 N. W. 843, 6 Am. St. Rep. 290).

It is, we think, clear that, in making the payments in question to Theresa Speigle, defendant did so with the knowledge and intention that they should be used together with her own money in the creation of the trust estate.

After their payment by him to her and her application of them to the agreed purpose, it seems plain that defendant could not have recovered them from her. He had lost all power of disposition over them. So far as is disclosed by this record, Theresa Speigle was under no obligation to make defendant trustee for his children. Had she chosen to name a stranger as such trustee, we think it would hardly be contended that defendant could recover from the trust estate the amount he had voluntarily contributed thereto. The fact that defendant rather than a stranger was made trustee in no wise changes the legal situation.

The statute (3 Comp. Laws, § 8835) is a complete bar to defendant’s right to recover the money paid out of the estate. It provides:

“When a grant for a valuable consideration shall be made to one person, and the consideration therefor shall be paid by another, no use or trust shall result in favor of the person by whom such payment shall be made; but the title shall vest in the person named as the alienee in such conveyance,” etc.

This is precisely what was done in this case. Defendant paid (in part) the consideration for the grant to his children. By reason of such payment no use or trust arose in his favor, but the title vested absolutely in his children.

It is said by defendant that:

“ Where the trustee advances money toward securing the property which is to constitute the trust estate, he may credit himself with the amount so advanced.” 28 Am. &. Eng. Enc. Law (2d Ed.), p. 1092, and cases cited.

An examination of the cases cited in support of this excerpt from the text will at once demonstrate that they have no bearing upon the case at bar. Here the money was advanced, not by a trustee, but by a father “for the benefit of his children ” long before the trust was created, and at least four years before he entered upon its administration. Its payment by him was wholly unrelated to the administration of the trust, and the item had no proper place in his account as trustee.

The decree of the circuit court will be modified by deducting from defendant’s account the two items aggregating |400. Complainants will recover costs of both courts.

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


author: Stone, J.

text:
    SHURLOW v. LEWIS.
    Corporations — Actions—Stock and Stockholders — Statutes.
    The individual liability of stockholders for labor claims is not enforceable in an action at law by another stockholder as creditor and plaintiff, the remedy is in equity, where the rights of contribution may be considered and enforced: such creditor under the statute stands in relation to the other stockholders as a partner to other members of a firm, and cannot sue on the law side under 3 Comp. Laws, § 7065.

      Error to Lenawee; O’Mealey, J.
    Submitted April 8, 1912.
    (Docket No. 70.)
    Decided May 31, 1912.
    Assumpsit by Edwin T. Shurlow against John E. Lewis and other stockholders of the Michigan Southern Brick & Tile Company for work, labor and services performed for said corporation. Judgment for plaintiff. Defendants bring error.
    Reversed and no new trial granted.

      Frankhauser & Cornell and Lyman B, Trumbull, for appellants.

      Fellows & Chandler, for appellee.
   Stone, J.

In the absence of such a statement of facts by appellants as the rule requires, it is perhaps sufficient to state that plaintiff recovered a judgment against the Michigan Southern Brick & Tile Company, a corporation organized and doing business under the statute of this State relating to manufacturing companies, alleged to be for personal work and labor of the plaintiff for said corporation. Said judgment was rendered on November 1, 1909, for $643.43 damages and costs of suit. An execution was duly issued and returned unsatisfied in part, and, for the purpose of collecting the amount remaining due upon said judgment, this suit was brought against the defendants as stockholders of said corporation under the provisions of section 7065, 2 Comp. Laws, which statute reads as follows:

“ The stockholders of all corporations organized or existing under this act shall be individually liable for all labor performed for such corporations, which said liability may be enforced against any stockholder by action founded on this statute, at any time after an execution shall be returned unsatisfied, in whole or in part, against the corporation, or at any time after an adjudication in bankruptcy against said corporation, and the amount due on such execution shall be prima facie evidence of the amount recoverable, with costs against any such stockholder ; and if any stockholder shall be compelled by any such action to pay the debts of any creditor, or any part thereof, he shall have the right to call upon all the responsible stockholders to contribute their equal part of the sum so paid by him as aforesaid, and may sue them, jointly or severally, or any number of them, and recover in such action the amount due from the stockholder or stockholders so sued.”

It appeared upon the trial of the case that the plaintiff was a stockholder of said corporation, he being the owner of 800 shares of the capital stock thereof during all of the time of the performing of the labor sued for in said suit against said corporation, and that the plaintiff and the defendants were stockholders of said corporation when this suit was begun. Other questions were in dispute upon said trial which, in the view we take of the case, it will not be necessary to dwell upon.

At the close of the plaintiff’s evidence, the defendants moved for a directed verdict in their favor, upon the ground, among others, that it appeared and was undisputed that the plaintiff was a stockholder of said corporation, and that under the statute in question one stockholder cannot sue other stockholders in an action at law. The motion was denied by the trial court, and the case was submitted to the jury, they returning a verdict for the plaintiff for the full amount of his claim, and a judgment for plaintiff was rendered.

The defendants have brought the case here upon writ of error. The question whether the plaintiff being a stockholder can maintain this action in a court of law is properly raised by an assignment of error and has been thoroughly discussed by counsel for the respective parties, and we shall proceed to examine it.

Does this statute contemplate the right of a stockholder to sue his fellow stockholders in an action at law ? Is he of a class entitled to sue upon the law side of the court ? These questions have not received uniform rulings in the different States and we are at liberty to adopt the more reasonable rule. It is the claim of the defendants that the plaintiff should have brought a suit for contribution on the equity side of the court, where the rights of all the parties interested could be ascertained, justly admeasured, and severally fixed. It is very clear that the plaintiff and defendants stand in the same relation to the corporation. If the defendants are personally liable on this labor debt, so is the plaintiff, because the statute provides that “ the stockholders * * * shall be individually liable for all labor performed for such corporations.” A bill in equity is the appropriate remedy for contribution. McGunn v. Hanlin, 29 Mich. 476; 10 Cyc. p. 801.

“The stockholders of a corporation are pre-eminently persons having a common interest and charged with a common burden, and if one, without his own fault, is compelled to pay a debt of the corporation, he can recover contribution from the others. Where the statute casts a personal liability for the debts of the corporation upon its stockholders, and one has been compelled to pay such a debt, he can sue the other stockholders for contribution; and equity is the proper forum, so that the liability of all may be determined.” 7 Am. & Eng. Enc. Law (2d Ed.), p. 368, and cases cited.

The liability of stockholders under this statute for labor claims is substantially the same liability as that of partners. As we have already said, the rulings of the courts in the different States have not been uniform upon the question of the right of one stockholder, being a creditor, to sue other stockholders in an action at law.

In 3 Am. St. Rep. 870, in a lengthy note to the case of Thompson v. Savings Bank, appears the following language:

“It. has already been observed that stockholders made individually liable for corporate debts are considered partners to such an extent that one stockholder, who is also a creditor of the corporation, cannot maintain an action at law against other stockholders” — citing Bailey v. Bancker, 3 Hill (N. Y.), 188 (38 Am. Dec. 625); Wait v. Ferguson, 14 Abb. Prac. (N. Y.) 379; Beers v. Waterbury, 8 Bosw. (N. Y.) 396; Richardson v. Abendroth, 43 Barb. (N. Y.) 162; Clark v. Myers, 11 Hun (N. Y.), 608; Thompson v. Meisser, 108 Ill. 359; Perkins v. Sanders, 56 Miss. 733. “Compare Woodruff, etc., Iron Works v. Chittenden, 4 Bosw. (N. Y.) 406; and, at all events, if the rule be not placed on this ground there are inherent difficulties in the suit at law. See Mathez v. Neidig, 72 N. Y. 100; Garrison v. Howe, 17 N. Y. 459. But where a stockholder is thus a creditor, or where he has been compelled to pay more than his share of a debt of the corporation to a creditor, he has a claim for contribution in equity against the other stockholders who are liable for the debt” — citing above cases, also Judson v. Bossie Galena Co., 9 Paige (N. Y.), 598 (38 Am. Dec. 569); Aspinwall v. Torrance, 1 Lans. (N. Y.) 381.

In Cocking v. Ward (Tenn. Ch.), 48 S. W. 287, it is held that where a creditor who is also a stockholder seeks to enforce a statutory liability, he is entitled, not to the entire amount claimed by him as a creditor, but only to contribution, and his bill in equity must be based on that theory.

In 1 Cook on Corporations (6th Ed.), § 220, that author says:

“Perhaps the most difficult, unsettled, and unsatisfactory question concerning the statutory liability of stockholders is the question whether that liability must be enforced at law or must be in equity, or may be in either a court of law or of equity. After determining this point there arises the further difficulty of ascertaining who shall be parties plaintiff and parties defendant — whether one corporate creditor may sue, or all must join; whether one stockholder may be pursued as a single defendant, or all of the stockholders must be brought in. Not only must the decisions of the State in which the action is brought be examined, but it is necessary also to note carefully the wording of the statute creating the liability. Where the statute prescribes expressly the form of the remedy, it is the well-established rule that the remedy was intended by the legislature to exclude every other, and it must be strictly pursued.”

In 4 Thompson on Corporations (2d Ed.), § 4851, that . author says:

“There seems to be no good reason why the statutory liability imposed upon stockholders is not intended for the benefit of stockholders who become good-faith creditors of the corporation. This is certainly the rule, unless the statute expressly or very clearly shows that its provisions were not intended for other stockholders. While the equities of a stockholder who is a corporate creditor might be worked out in the contract doctrine of contribution, yet it is very clear from many holdings that a stockholder creditor may proceed directly against other stockholders to enforce his statutory liability; but in such a case his own proportionate liability must be taken into account. Thus it has been said that a creditor who was a stockholder was not precluded from enforcing against other stockholders the balance remaining due after deducting the amount of his own liability ” — citing Bissit v. Navigation Co. (C. C.), 15 Fed. 353, and other cases.

In Perkins v. Sanders, 56 Miss. 733, at page 742, the court says:

“When the creditor is a partner, as in this case, he» cannot sue at law, for he is himself liable to pay the debts of the company; and if he were to sue, and recover satisfaction from one of the stockholders, this payment would make the paying stockholder a creditor of the company, and he might in turn sue the complainant and recover back the debt created by such payment. To obviate this, the complainant must come into equity, where there can be a full adjustment and settlement of all the rights of the parties.
“ It is objected that the obligation of the stockholders is several and limited, and not joint. Our view is that each stockholder, just as a partner in an unincorporated association, is liable for all the debts of the company.”

In Thayer v. Tool Co., 4 Gray (Mass.), 75, the court, on page 80, said:

“ To the creditor who is not a stockholder, each of the stockholders is not only jointly with the others, but severally, liable for the debt, and for the entire debt. To a creditor who is also a stockholder, each of the other stockholders is not severally liable, and for the entire debt, but only for his proportionate part thereof. The creditor therefore who is not a stockholder may, from any stockholder liable, get his whole debt. If he is a creditor and also a stockholder, he may have contribution; he may have all the stockholder is bound to pay him and no more.
“But, upon the construction of the statute claimed by the plaintiff, he may collect from one stockholder, not only all that such stockholder is bound ultimately to pay, but all that the entire body of stockholders, including the plaintiff, is bound to pay. He may collect with his right hand what he must restore with his left. Take a plain case: The corporation owes to A. a debt of $1,000. A. and B. are the only stockholders liable for the payment of the debt. A. sues the corporation and levies his execution upon the property of B. B. brings his bill in equity against A. and compels him to pay back, by way of contribution, $500. It is but the momentary shifting of the burden which both must bear.
“We think the fair construction of the statutes leads to no such result. But while the plaintiff has, against the corporation, the power to sue at law and enforce his claim against the property of the company, his remedy, as against the other stockholders, is for contribution. And if his case is not within the Bevised Statutes, chap. 88, § 32, it is within the provision of chapter 81, § 8, giving this court jurisdiction in equity on all suits for contributions by or between any persons who are respectively liable for the same debt or demand, where there is more than one person liable at the same time for contribution.”

See Potter v. Machine Co., 127 Mass. 592 (34 Am. Rep. 428), in which the court says in a case somewhat similar to this:

“In the opinion of the court, the remedy provided by the statute in question is intended only for creditors who are not members of the corporation, and cannot be availed of by creditors who are also stockholders.”

See, also, Thompson v. Paper Co., 127 Mass. 595. On page 598, Chief Justice Gray said:

“A creditor who is also a stockholder of a corporation, and as such liable for its debts, is not entitled to the remedies afforded by statute to creditors against stockholders for the debts of the corporation ” — citing Thayer v. Tool Co., supra, and the last above cited case.

In Bailey v. Bancker, 3 Hill (N. Y.), 188, Bronson, J., said:

“ Can a creditor who is a stockholder recover his debt against the company from another stockholder? We are referred to the case of Simonson v. Spencer, 15 Wend. (N. Y.) 548, to prove that the action .may be maintained. The late chief justice seems to have been of that opinion, but I* do not find from the statement of the case that the plaintiff in that action was a stockholder in the company, nor did the reporter understand that any such point was decided. It must, I think, be regarded as an open question. We have considered this and other charters of a similar character as placing the stockholders on the same footing as though they had not been incorporated, and making them answerable as partners for the debts of the company. Allen v. Sewall, 2 Wend. [N. Y.] 327; Moss v. Oakley, 2 Hill [N. Y.], 265. If the stockholders are to be regarded as partners, or, what is the same thing, as an unincorporated association, it is then quite clear that one member cannot maintain an action against the others for a debt due from the whole (citing many authorities). In one respect the statute departs from the common-law rule in relation to partners, and gives an action against the stockholders severally as well as jointly; but I do not see that this alters the principle. It is still the case of one partner suing another for a debt due from the whole firm. And, although it is declared that any person ’ having a demand against the company may sue, still I think the legislature did not intend to provide for creditors who were members of the corporation. They do not come within the reason and policy of the law which was made for the protection of third persons dealing with the company, and not for the benefit of the stockholders or copartners. They are left, and should in justice be left, to such remedies as had already been provided by law for the adjustment of partnership transactions. They may go into chancery for an account, and have the claims of all parties settled upon equitable principles.
“ The statute gives the creditor an action against the stockholders jointly as well as severally, and the same construction which would give an action to a stockholder would authorize him to sue himself, which is absurd. But let us look a little further into the consequences of allowing one stockholder to sue another at law. When the defendant has paid the debt, he will then stand as the creditor of the company, and what is to hinder him from turning round and recovering the same money from the plaintiffs as stockholders ? The language of the statute is broad enough to include the one case as well as the other, and the equity would be just as strong in favor of allowing the defendant to recall the money after he has paid it as it is in allowing the plaintiffs to recover against him in the first instance. And thus the parties might alternately sue each other to the end of the chapter. The thing is preposterous.”

This decision was rendered in 1842, while the case of Simonson v. Spencer (15 Wend. [N. Y.], 548), supra, cited by plaintiff’s counsel, was decided in 1836.

In Richardson v. Abendroth, 43 Barb. (N. Y.) 162, the action was brought against the defendants as stockholders of the Warner Foundry & Machine Company, a manufacturing corporation, upon a judgment recovered by the plaintiff against the company for his services as secretary, his claim against the defendants being founded upon the eighteenth section of the act of 1848, by which stockholders of such corporations are made individually liable for debts due to their “laborers, servants, and apprentices for services performed for such corporation.” Two defenses were set up by the answer: (1) That the plaintiff was an officer, not a servant, of the company. (2) That the plaintiff was a stockholder of the company during the time that his alleged services were rendered, and therefore was equally liable to the defendants for the payment of all debts for which stockholders are rendered liable by the act. The case was tried without a jury. The court, after speaking of the character of the services, used the following language:

“But upon another ground, I think judgment should be given for the defendants. An action will not lie by one stockholder against a fellow stockholder of a corporation, to enforce a personal liability for a debt of the company. To the extent of the personal liability created by the statute the corporators are partners, and one partner cannot sue a copartner for a debt due from all ” — citing Bailey v. Bancker, supra; Andrews v. Murray, 33 Barb. (N. Y.) 354. “The plaintiff was, at the time of the contracting of the debt, a stockholder of the company, liable for this class of its debts; liable to the creditors of the corporation, and liable to contribute to the other stockholders. His liability was absolute, and whether called upon by a stranger, a creditor, upon the original liability, or by his fellow stockholders, to contribute, can make no defense.”

Upon appeal to the general term, the judgment was affirmed on the authorities cited. It is well to here note the fact that the New York statute is in all essentials like our own.

Clark v. Myers, 11 Hun (N. Y.), 608, was an action brought by the plaintiff, a stockholder of a manufacturing corporation, against the defendant, who was also a stockholder thereof, to recover a portion of certain judgments recovered against the plaintiff by laborers employed by the company, which judgments he had subsequently paid. Held that he could not maintain an action at law against a single stockholder, but must bring his suit in equity against them all.

Plaintiff’s counsel have called our .attention to Norris V. Johnson, 34 Md. 485; Simonson v. Spencer, supra; Woodruff, etc., Iron Works v. Chittenden, 4 Bosw. (N. Y.) 406; Fowler v. Lamson, 146 Ill. 472 (34 N. E. 932, 37 Am. St. Rep. 163); 4 Thompson on Corporations, §4851; Brinham v. Coal Co., 47 Pa. 43; Dauchy v. Brown, 24 Vt. 197; Guerney v. Moore, 131 Mo. 650 (32 S. W. 1132); Russell v. Railway Co., 113 Cal. 258 (45 Pac. 323, 34 L. R. A 747); Pollard v. Bailey, 20 Wall. (U. S.) 520; Oswald v. Minneapolis Times Co., 65 Minn. 249 (68 N. W. 15).

An examination of Norris v. Johnson, supra, shows that it had no reference to a case where the creditor was also a stockholder, and we are unable to see how the reasoning used there has application here. Neither are we able to agree with counsel in the claim that in Massachusetts all creditors must pursue their remedy in a court of equity. An examination of the cases we have cited will show that this is not the case.

We have already called attention to the fact that Simonson v. Spencer, supra, was decided six years before Bailey v. Bancker, supra. It is also worthy of notice that Simonson v. Spencer, supra, involved the construction of a provision subjecting the stockholders jointly and severally to the payment of the debts of the company to the nominal amount of the stock held by them. This language would seem to do away with the idea of contribution.

We are dealing with a case where each stockholder is individually liable for all the labor debts of the corporation. He can be sued again and again until all the debts are satisfied, and his liability is not limited to the amount of stock he holds, and he may call upon other responsible stockholders to contribute. We think there is a plain distinction between the instant case and that of Simonson v. Spencer, supra.

A reference to the case of Woodruff, etc., Iron Works v. Chittenden, supra, will readily distinguish it from the line of cases which we have examined. There again the stockholders were liable only to the amount of stock each owned. If a stockholder paid this amount it would be a bar to any further action against him, no matter how many debts were unpaid. It is worthy of note, also, that in that case the court called attention to the fact that that action was not brought by a stockholder, but by the assignee of men who were formerly stockholders.

In this connection we call attention to Beers v. Waterbur v. 8 Bosw. (N. Y.) 396. At page 413, the court said:

“As to the appellants’ claim to an allowance, by way of counter-claim, founded on the fact that the plaintiff was a stockholder; we think that the question involved therein is not open to discussion. The case of Bailey v. Bancker, 3 Hill [N. Y.], 190 [38 Am. Dec. 625], must be deemed to dispose of this question. The appellant Waterbury, being himself a stockholder, can only set up the claim in a proper action against the stockholders generally for a contribution.”

This case was decided in 1861, a number of years after Woodruff, etc., Iron Works v. Chittenden, supra.

In Clark v. Myers, supra, the court used the language that stockholders were partners, at least to the extent of those debts owing to laborers. This case puts in apt language precisely what we have tried to state, that the relation of stockholders under our statute, as between themselves, is that of partners as to their liability for labor debts.

In Fowler v. Lamson, supra, the Illinois court simply holds that the remedy contained in the Kansas statute must govern in that case; the action being founded upon the statute of that State.

In Brinham v. Coal Co., supra, the decision seems to turn strictly upon the proposition that the statute itself is so worded as to exclude a resort to equity. Speaking of the principle involved, Thompson, in his work on the Liability of Stockholders, at section 271, where the author is dealing with the subject of the forum, says:

“ In Pennsylvania, under the statute relating to manufacturing companies, the creditor proceeds by an action at law upon the original contract, joining the corporation and the stockholders; and he may do this even though he is himself a creditor. Nay, if he has been compelled to pay a debt of the corporation and is suing for contribution, he proceeds at law against the company and his co-stockholders; the statute is held to exclude a resort to equity.”

And the author then cites the above case. There the statute points out the remedy to be pursued as one expressly on the law side of the court.

Dauchy v. Brown, supra, deals with the proposition as to whether the liability of the stockholder was primary or secondary, and states that the statutory remedy must be pursued and was exclusive.

In Guerney v. Moore, supra, the court uses the following language:

“The cases which hold that the only remedy of a stockholder is for contribution are based on statutes making them absolutely liable for all debts of the corporation, but under the Kansas statute and our own, the stockholders are not sureties for each other. There is no joint and several liability, nor does the statute make them copartners. Each stockholder simply becomes liable to the creditors of the company for an amount equal to the amount of his stock, or double the amount, as the statute prescribes; but there is nothing which forbids a stockholder becoming a creditor of the corporation or invoking the remedies open to other creditors.”

We think this case is readily distinguished from the line of cases first cited by us.

While the authorities cannot be reconciled, we are of opinion that the great weight of authority is to the effect that under a statute like ours, where the relation of stockholders is like that of partners, making the stockholders jointly and severally liable for the payment of all labor debts, one stockholder cannot sue other stockholders in an action at law to enforce a debt to the former by the corporation, but his remedy is in a court of equity for contribution. This view of the case renders it unnecessary to consider the other questions raised and discussed.

In our opinion, plaintiff has no standing in this suit, and the judgment of the circuit court is reversed, and no new trial granted.

Moore, C. J., and Steers, McAlvay, Brooke, Blair, and Ostrander, JJ., concurred. Bird, J., did not sit.


text:
    REIS v. APPLEBAUM.
    1. Abatement and Revival — Plea of Suit Pending — Identity oe Issues — Fraud.
    A suit for the foreclosure of bonds of a corporation, in which certain bondholders intervened for the purpose of enforcing any existing liability of stockholders upon subscriptions to stock, was not identical, as to the issues, with a subsequent suit by the same and other bondholders, charging fraudulent conduct on the part of certain stockholders and directors who falsely stated in the articles of association that $100,000 was paid in, which induced complainants to purchase the bonds held by them, and praying for relief on the basis of fraud; the substantial character of the relief being different in the two suits, and other parties being joined.
    2. Same — Action Pending — Equity.
    In order that a suit may abate upon defendants’ plea of another suit pending, it must be made to appear that the relations of the parties and the relief sought are practically identical in both proceedings.
    3. Same.
    If the second cause of action would decide much more than the first, it should not abate.
    Appeal from Saginaw; Gage, J.
    Submitted April 11, 1912.
    (Docket No. 147.)
    Decided May 31, 1912.
    Rill by Joseph Reis and others against Isaac Applebaum and others for fraud and other wrongful conduct in the incorporation of the Detroit, Flint & Saginaw Railway Company. From an order sustaining a plea to complainants’ bill, defendants appeal.
    Reversed.

      Henry M Naegely, for complainants.

      Bundell & Stockton, for defendant Russell.
   Stone, J.

After the filing of the bill of complaint in this cause, the defendant John A. Russell filed a plea to the said bill. The complainants noticed said plea for argument. Upon the conclusion of the argument the court entered an order allowing the plea. The complainants not having moved under the rule for leave to amend their bill, and not having elected to take issue upon the plea of said defendant, a decree was entered dismissing the bill of complaint, without prejudice as to said defendant Russell, with costs against complainants. The complainants have appealed.

It may be said that the sole question raised is whether or not the circuit court for the county of Saginaw, in chancery, has any jurisdiction to hear and determine the questions raised by the bill of complaint, in view of the question raised in the pleadings. The pleadings are substantially as follows: There are 23 complainants in this cause who state that they are severally owners of bonds issued by the Detroit, Flint & Saginaw Railway to the amount of $54,000, as specified in the schedule attached to the bill. The schedule states the amount of the ownership of said bonds in each party.

(1) The bill states that the Detroit, Flint & Saginaw Railway was duly organized as a corporation under the laws of the State of Michigan entitled, “An act to provide for the construction of train railways,” and that said company was organized for the purpose of building, owning, and operating a line of electrical railway from the city of Saginaw, in the county of Saginaw, to the city of Flint, in the county of Genesee, and elsewhere, and its articles of incorporation were filed on, to wit, November 27, 1903, according to law.

(2) Complainants state that said articles of association, among other things, stated the assets of the company paid in to be $100,000; that the incorporators of said company were, to wit, Timothy Nester, John A. Russell, Arthur S. Nester, Thomas G. Sullivan, Timothy E. Tarsney, and Henry P. Wickham, all of Detroit, Mich.

(3) Complainants show that said Detroit, Flint & Saginaw Railway, for the purpose of financing the project and proceeding with the construction and equipment of said electrical railway, on, to wit, the 30th day of January, 1904, at a meeting of its stockholders, authorized the issue of bonds to the amount of $1,000,000, and the giving of a trust mortgage to the Detroit Trust Company, as trustee, to secure the said bond issue, and the said bond issue as authorized was to be dated December 1, 1903, payable December 1, 1923, to bear interest at 5 per cent, per annum, payable semi-annually.

(4) Complainants show that they purchased for valuable consideration certain of the bonds so authorized to be-issued, of the value and in amount of $54,000, in the spring and summer of the year 1904. Complainants aver that at the time of the purchase they relied upon the statements of said company as true, and believed at that time that there was actually paid into the treasury of said company the sum of $100,000 in cash, being the amount specified in. said articles of incorporation as paid in.

(5) Complainants aver that, at the time of their purchase of the aforesaid bonds, the amount of money as specified in the articles of association was not paid in, and that the only money that came to the said company was the money realized from the sale of the bonds of said company which were authorized to be issued and sold as aforesaid, and that the statement contained in said articles of incorporation in that respect was false, untrue, and fraudulent, and á fraud on the rights of complainants; and that by reason of said misrepresentation said company became bankrupt, and the value of said bonds did not exceed six cents on the dollar, and any right of action against said company was without force to reimburse said complainants for their money so advanced.

(6) Complainants aver that one Isaac Applebaum, of Detroit, commenced loaning money to the said company as early as, to wit, the 10th day of October, 1904, and taking the promissory note of said company indorsed by Timothy E. Tarsney and Thomas Q. Sullivan, and also taking bonds of the said railway company as collateral security. And that Mark Mitshkun is the brother-in-law and agent in loaning money of said Isaac Applebaum; that said Isaac Applebaum is in the iron and steel machinery business and engaged in the loaning of money in the city of Detroit, and both said parties were entirely familiar with and well knew the financial situation and condition of said Tarsney and Sullivan and the said railway company prior to and at the time said Applebaum began the loaning of money to said railway company upon its promissory notes and indorsements aforesaid; and that said Applebaum held as collateral security in the sum of, to wit, twice the face value of said notes in the aforesaid bonds of said company, and that defendants Edwin Henderson and Alex. J. Groesbeck were the attorneys for said Applebaum and Mitshkun during all the time aforesaid.

(7) Complainants represent that, between the time of the organization of said company and October, 1906, a portion of said road was built, and that the road was completed and operated as an electric railway between the city of Saginaw and the township of Erankenmuth, in said county of Saginaw, a distance of 13 miles, and that bonds to the extent of, to wit, $410,500 were issued and disposed of by the company, including the $54,000 worth sold for a valuable consideration to the complainants, and that $69,000 thereof were turned over to a construction company as collateral for work, labor, and materials performed and furnished to said company, and that $274,000 thereof was retained by the officers of the company.

(8) Complainants represent that prior to October 11, 1906, said Applebaum, Mitshkun, Henderson, and Groesbeck were familiar in every way with the organization, construction, and operation of said railway, and well knew all the facts, and had complete knowledge regarding the financial condition and situation of said railway from its commencement, and that with full knowledge thereof, and well knowing that said company was fraudulently incorporated contrary to the laws of the State of Michigan, and that thereby the sum of $54,000 was obtained from complainants by such fraudulent misrepresentation and incorporation, and that complainants thereby bought the bonds of said company aforesaid, and that said company did not have the capital paid in as stated in its articles of incorporation; said Applebaum, Mitshkun, Henderson, and Groesbeck becoming directors of the said company and commencing to operate said railway, having theretofore acquired shares of stock of said company in a sufficient amount to elect themselves directors and take charge and control of said railway, said parties owning shares of stock as follows: Isaac Applebaum, 2,082 shares; Mark Mitshkun, 25 shares; Ales. J. Groesbeck, 25 shares; Edwin Henderson, 25 shares, and said Isaac Applebaum owning the further number of 5,060 shares.

(9) Complainants show that on the 20th of November, 1906, the Detroit Trust Company, as trustee, filed a bill in chancery to foreclose the mortgage given by said railway company, and that thereupon the circuit court for the county of Genesee, in chancery, where said bill of complaint was filed, duly appointed the said Detroit Trust Company receiver of said railway, and that said railway company and all of its rights, property, and assets of every name and kind were taken into possession of said receiver, and said railway property was duly operated by said trust company as receiver until its discharge, and that all the rights of complainants as bondholders of said company were cut off and foreclosed against said railway company by said receiver’s sale of the property of said company. '

(10) Complainants further represent that said Isaac Applebaum on, to wit, June 25, 1908, became the purchaser of all of the property of said company and took the same into his possession, and that said property so acquired was thereafter sold and turned over to a company incorporated under the laws of the State of Michigan, which said company was composed of said Mitshkun, Henderson, Groesbeck, and Nelson A. Tabor personally, and as trustee, which said sale was duly confirmed by the circuit court. for the county of Genesee; and said new company further extended the railway by additional construction from the county of Saginaw to the city of Flint, in Genesee county, and that said parties, through said corporation, are operating all of said property formerly owned by the Detroit, Flint & Saginaw Railway as a part of the Flint & Saginaw Railway, under which name their corporation is existing and doing business.

(11) Complainants further show that the officers and those in control of the Detroit, Flint & Saginaw Railway at the time it went into the hands of a receiver were the same persons and the same interests in every way as those which purchased from and through the receiver’s sale aforesaid, and which secured all of the property of the Detroit, Flint & Saginaw Railway at said receiver’s sale.

(12) Complainants show that said Applebaum, Mitshkun, Groesbeck, Henderson, and Tabor all had positive knowledge and well knew of the initial illegality and fraudulent incorporation of said Detroit, Flint & Saginaw Railway, and by taking over said property, well knowing that complainants and divers other persons had put money into said company by the purchase of bonds as aforesaid, and were innocent of any knowledge of the fraudulent incorporation, said parties placed themselves legally and equitably in the same position and situation as the original incorporators, and are now reaping, and have reaped, and will continue to reap, the profits of the money so advanced and paid in by complainants to said company for the bonds as aforesaid.

The bill of complaint prays:

First. That the defendants Timothy Nester, John A. Russell, Arthur S. Nester, Thomas G. Sullivan, the administrator of the estate of Timothy E. Tarsney, deceased, Henry P. Wickham, Isaac Applebaum, Mark Mitshkun, Alex. J. Groesbeck, Edwin Henderson, Nelson A. Tabor, and Nelson A. Tabor, trustee, may be required to make full answer to the bill, their answer under oath being waived.

Second. That the legal liability and responsibility for the issuance and payment to the complainants of the several amounts of money represented by the bonds aforesaid of complainants may be aided, established, and decreed against said defendants and in favor of the said complainants, and that said defendants may be required by an order of the court to pay to the complainants the several said sums of money according to the tenor and effect as provided for in the bonds aforesaid of said complainants.

Third. That complainants may have such further relief in the premises as equity may require.

The plea of the defendant John A. Russell, filed and verified in accordance with the rule, sets forth:

(1) That before the time of filing the bill of complaint in this cause, on, to wit, November 20, 1906, a bill of complaint was filed by the Detroit Trust Company, as trustee of a certain mortgage.upon all the property of the Detroit, Flint & Saginaw Railway mentioned in complainants’ bill of complaint in the circuit court for the county of Genesee, in chancery, for the purpose of foreclosing the mortgage described in complainants’ bill, which said mortgage was given to secure, among others, the bonds now claimed to have been owned by the complainants, and is the same mortgage mentioned in the bill of complaint.

(2) That said Detroit, Flint & Saginaw Railway was made defendant in said cause, which will hereafter be called the “foreclosure suit,” and appeared by counsel and filed its answer, admitting practically all of the allegations of the bill of complaint in the foreclosure suit, among others, that said Detroit, Flint & Saginaw Railway was utterly insolvent.

(3) The court, on the application of the complainant in the foreclosure suit, appointed the Detroit Trust Company receiver of all the properties of the Detroit, Flint & Saginaw Railway by an order made on the day of filing said bill, and the receiver thereupon entered upon the discharge of its duties.

(4) The complainants in this cause, with the exception of Sarah Ingersoll who appears to have succeeded to the ownership of bond No. 81 of said company, together with James H. Davitt, by James H. Davitt, their solicitor, filed their petition in the foreclosure case on August 26, 1907, alleging the liability of the stockholders of the Detroit, Mint & Saginaw Railway to said complainants, including in their petition a list of stockholders of the Detroit, Flint & Saginaw Railway, among whom this defendant was one, and praying for leave to intervene and to take such steps as they found necessary to protect their rights, and for general relief. Sarah Ingersoll, who now appears to be the owner of bond No. 81, seems to have succeeded to Mary Garey at that time owning or claiming to own bond No. 81. That the bonds which complainants respectively now claim to own are the same bonds which the said complainants claimed to own at the time they filed'their petition in the foreclosure suit.

(5) The said Detroit Trust Company answered said petition and alleged that it was advised that it was not its duty as receiver to enforce any liability of the stockholders of the Detroit, Flint & Saginaw Railway to its creditors, but that it was ready and willing so to do when authorized by the court.

(6) That on March 28, 1908, James H. Davitt, as solicitor for the intervening bondholders, filed a protest against allowing certain bonds, and praying that these bonds be disallowed.

(7) That said James H. Davitt, as solicitor, then filed a replication to the answer of the Detroit Trust Company.

(8) That the said foreclosure case proceeded to trial, and on April 13, 1908, a decree was made in that case decreeing a sale of all of the property of the Detroit, Flint & Saginaw Railway covered by the mortgage for the satisfaction of the bondholders; and specially reserving for future consideration of the court the question of the liability of the stockholders of the Detroit, Flint & Saginaw Railway. And on the same day an order was made requiring all parties to the record as defendants or interveners, and all other persons who claimed to own bonds of the Detroit, Flint & Saginaw Railway, to appear and prove their title and ownership of said bonds.

(9) That pursuant to the decree of April 13, 1908, the property of the Detroit, Flint & Saginaw Railway was sold at public auction, and pending such sale, and on June 22, 1908, said James H. Davitt, as solicitor for the interveners, filed objections to the court’s reducing the price fixed by the court as a minimum price at which the property should be sold.

(10) That said interveners filed their objections to the confirmation of the sale of said property of the Detroit, Flint & Saginaw Railway on July 3, 1908, which objections were considered by the court and an order nisi made on motion of the interveners on the same day.

(11) That on April 10, 1908, the Detroit Trust Company filed its petition in the foreclosure suit praying that the claimants of bonds appear and prove their title and ownership of their claimed bonds, and praying also that all defendants and interveners who were holders of bonds appear and prove their interest. That on April 13, 1908, the court made an order in the nature of a citation requiring the bondholders, and including interveners, to appear and prove their interest, and providing for service of a certified copy of the order by mail, and proof of service was made by affidavit filed in the cause. That at the hearing of such matter the complainants in this cause were present by their solicitor James H. Davitt and took part in the proceeding.

(12) That on May 6, 1908, the court made an order in the foreclosure case determining the ownership and title of the bonds, and reserving control of the fund apportioned to any bonds owned by any of the original stockholders. That defendant Russell’s bonds were subjected to that order and his money is still held by the court.

(13) That the Security Trust Company of Detroit has filed a petition in-the foreclosure suit praying for distribution of a part of the fund of which defendant’s bonds also form a part, which petition is still pending.

(14) That on May 4, 1911, said James H. Davitt, in his own behalf and in that of all others similarly situated, filed in the foreclosure suit a petition for the revival of the receivership, and for other relief, which motion is still pending. Wherefore the said defendant prays the judgment of this court whether he ought to make answer to the said bill, and prays to be dismissed, with his costs to be taxed.

We are unable to agree with defendants’ contention that the subject-matter and the issues raised in the foreclosure proceeding were identical with the issues raised in this cause. It appears by the bill of complaint in the instant case that the complainants are here seeking to hold the defendants as tort-feasors for the fraud and misrepresentation which they claim was practiced upon them in inducing them to purchase the bonds in question. It is not a proceeding to enforce the statutory stockholder’s liability. Neither by the plea nor by an inspection of the interveners’ petition in the foreclosure suit does it appear that the issue there tendered was the same as that presented here.

We here express no opinion whether the bill of complaint in the instant case presents a case for equitable relief, nor whether by the case stated complainants may be entitled to a decree against any or all of the defendants. This question is not now before us.

In order for this plea to prevail, it should appear that the identity between the two suits as to the issue is complete. It is difficult to understand from the plea and from the petition in the foreclosure suit how any relief could have been obtained in that suit on account of the alleged fraudulent action of the incorporators or directors of the original railway company, or of the men who became the purchasers of the road at the receiver’s sale, as is sought here. The parties are not the same, defendant Tabor not being before the court in the foreclosure suit. The substantial character of the relief sought is so different that it must be said that the causes are not identical, or even similar.

It is well said that it is necessary for the party seeking the abatement of the present action, by reason of the pendency of that already commenced, to plead and prove the connection of the former action to the same subject-matter ; the relations of the parties to be the same as that in the case in which the plea is interposed, and that the relief sought is practically identical with that sought in the second action. Monroe v. Reid, Murdock & Co., 46 Neb. 316 (64 N. W. 983); LeRoy v. Collins, 165 Mich. 380 (130 N. W. 635). Another test sometimes applied is, Will the same evidence support both actions? Gates v. Goreham, 5 Vt. 317 (26 Am. Dec. 303).

We have held that, where the second cause of action would decide much more than could be decided by the first suit, the second cause of action should continue and not abate. Carr v. Lyle, 126 Mich. 655 (86 N. W. 145).

Applying the above tests to the case, we are of opinion that this cause of action is not the same as the one described in the petition in the foreclosure suit, and that the plea of the defendants should be overruled.

The decree of the circuit court is reversed, with costs, and the cause remanded- for further proceedings under the rule.

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