text:
    TOLEDO, SAGINAW & MUSKEGON RAILWAY CO. v. PETERS.
    1. Bills and Notes — Bonds—Good Faith of Holder — Evidence —Injunction—Burden of Proof.
    In a suit to enjoin the enforcement of a railroad bond that defendant claimed to hold in due course, the burden rested on complainant to show that defendant was not a good faith purchaser: evidence that the entire issue of bonds, of which the one held by defendant was a portion, had been recalled, canceled, and destroyed by fire, was insufficient to impair defendant’s title.
    2. Same — Presumptions.
    It is presumed that the person presenting a negotiable bond is a bona fide holder, and until evidence is introduced tending to show that it was lost or stolen before Re acquired it, or that the consideration for the instrument was illegal, or that the issuance or transfer was induced by fraud, no obligation rests upon him to prove that he is a holder in due course.
    Appeal from Wayne; Mandell, J.
    Submitted April 22, 1913.
    (Docket No. 107.)
    Decided September 30, 1913.
    Bill by the Toledo, Saginaw & Muskegon Railway Company against Charles Peters for an injunction to restrain an action at law on a negotiable instrument. From a decree for complainant, defendant appeals.
    Reversed.

      L. C. Stanley, for complainant.

      George W. Bates, for defendant.
   Moore, J.

This bill was filed to enjoin the prosecution of a suit brought to recover upon seven interest coupons amounting to $225, which coupons were attached to a railroad bond for $1,000. Said suit was commenced in April, 1908. From a decree in favor of the complainant, the case is brought here by appeal.

Stated in the narrative form, the averments of the bill are, in substance, that in November, 1886, the complainant issued 1,600 bonds of $1,000 each, secured by mortgage, said bonds bearing 6 per cent, interest, payable semi-annually, the interest payments being evidenced by coupons, said bonds being due November 1, 1926; that in 1888 they were delivered to W. V. McCracken & Co., who had the contract to build complainants’ road for the purpose of paying them for the labor and material in building the road.

“Your orator is informed and believes that said McCracken & Co. did not sell or dispose of any of said bonds and did not sell or dispose of bond No. 1401, hereinafter mentioned, or any of its coupons, with the possible exception that said McCracken & Co. did pledge some of said bonds, what bonds your orator is not now informed; but your orator is informed and believes that if any were so pledged, they were redeemed, together with all coupons, and that shortly , before the 9th of August, 1888, said W. V. McCracken & Co. were in possession of said entire issue of 1,600 bonds, including bond No. 1401, hereinafter mentioned, and all coupons pertaining thereto.”

It is averred: That an arrangement was made by which these bonds were all to be canceled and an issue of 5 per cent, bonds made to take the place of them. That they were all taken to New York and burned, as complainant believed, and, after that fact was established to the satisfaction of complainant and the Grand Trunk Railway Company of Canada, 1,734 new bonds of $1,000 each, bearing 5 per cent, interest, were issued, and 1,560 of them were delivered to W. V. Mc-Cracken & Co. in lieu of the 1,600 bonds before mentioned and the remainder delivered to the Grand Trunk Railway Company of Canada. That complainant rested in the belief that all of said first issue of bonds had been destroyed, until April, 1906, when a firm of brokers in New York demanded payment of the interest coupons on bond 1401, which bond was later sued as before stated; that other coupons will be sued and perhaps the bond itself.

An averment is made that complainant has a defense in equity for several reasons, the last of which is stated as follows:

“Because under all the circumstances the said bond 1401 could not now be in existence except for some fraud, on the part of some of the clerks of said trust company in handling them at the last when they were being counted or being taken to the said furnace for destruction by burning, or else could not now be in existence except for an accidental loss of the same, or purloining of the same, or other fraudulent means, of which your orator has no knowledge.”

Then followed a prayer for an injunction and for general relief. Accompanying this bill of complaint was an affidavit of the taking of the first issue of bonds to New York, and their delivery to a trust company for cancellation.

“That deponent delivered into the hands of the aforesaid the bonds so carried by him, and they were counted from deponent’s hands and found to be the complete .lot of 1,600 bonds as aforesaid, with all coupons. That after being so as aforesaid counted and checked by the said officers of said company or by clerks of said company, and in the presence of deponent, they were carried down to the furnace in the basement of the building wherein were the offices of said trust company (that is to say, from the ground floor to the basement one story below), being carried downstairs by one or more clerks of said trust company, and were there in the presence of deponent and said clerks burned in said furnace; that to the best of deponent’s knowledge and belief the bond 1401 mentioned in said bill was then and there burned with the rest. And deponent believed it to have been so burned under his eyes and in his presence until the year 1906, when he learned of the claim being presented against said railway company by one claiming to hold said bond 1401.
“Deponent further states that the only explanation he can give for the said bond 1401 not having been destroyed, if it was not destroyed with all its coupons, is either that it escaped from the fire and went out at the chimney in the draft and was picked up by some one whq had no right to it and thus got to the hands of the present holder, or else that it was purloined by one or more of the clerks taking it to the furnace to be burned.”

The defendant answered the bill of complaint and among other things averred:

“But the defendant alleges and so states the fact to be that the said bond No. 1401 was not so destroyed, and that the same had been negotiated and subsequently came into the hands of defendant who is now the bona fide holder and owner of the same for value. * * * That the defendant admits that the said complainant will not be able to show that either said bonds, including bond No. 1401, or any of said coupons were not signed by or on behalf of the said complainant; that the defendant submits that the reasons contained in the eleventh paragraph of said bill as a defense in equity to the rights of this defendant to recover in the said action at law now pending are wholly ineffective and insufficient, and that as a bona fide holder of said bond No. 1401 and the coupons thereto attached for a good and valuable consideration paid therefor he has a legal and valid right to maintain such action and recover therein the amount due on said coupons, and that by reason of the same the said complainant cannot successfully defend the said suit at law now pending against it.
“And the defendant also submits that the facts set up by the complainant in its said bill so disclosed and that all and every matter mentioned and complained of are matters in respect to which said complainant is not entitled to any relief from a court of equity, and this defendant hopes that he will have the same benefit as if he had demurred to the said bill of complaint.”

A hearing was had in open court, and the first witness produced the discharged first mortgage and a letter from the trustee, reading as follows:

“Detroit, Aug. 1, 1888.
“The American Loan & Trust Company, of the City of New York.
“Gentlemen:
“The undersigned are trustees in a mortgage executed by the Toledo, Saginaw & Muskegon Railway Company, bearing date the 2d day of July, 1888, and in the bonds secured by the mortgage in the amount of $1,734,000. It appears that a prior mortgage to this was executed by the railway company to you as trustees, to secure an issue of bonds, dated November 1, 1886, in the amount of $1,600,000. The bonds under this last-named mortgage, it is said, have not been sold, but have been pledged as collateral security for money loaned. It has been arranged between the railway company and W. V. McCracken & Co., who own the bonds issued and outstanding under your mortgage, that these bonds shall be retired by the substitution of bonds issued under the mortgage in which the undersigned are trustees. This has been duly authorized by resolutions of the board of directors of the company, and will be sanctioned by the written authority of McCracken & Co., which will be given to you. To effect such retirement, $1,560,000 of the bonds of our mortgage are available, and are to be placed in your possession concurrently with this letter, but on the following conditions and understanding, to wit: That you are to use the bonds ($1,560,000) to retire and secure possession of all the bonds of your mortgage issued and outstanding. Having thus retired and secured possession of the bonds last named, you are to cancel them in the presence of at least one of the undersigned and at once destroy them. You are thereupon to execute a discharge of said mortgage of November 1, 1886, and have the discharge duly recorded in the several counties into or through which said Toledo, Saginaw & Muskegon Railway runs. The remainder of the $1,-560,000, if any shall be left in your possession, are to be delivered to W. V. McCracken & Co.
“Concurrently with the receipt by you for cancellation of the bonds secured by the mortgage of November 1, 1886, you will receive from W. V. McCracken & Co., certificates of the capital stock of said railway company in the amount of $1,600,000, and the understanding is that you will deliver this stock to said James H. Muir, treasurer, duly transferred as he shall direct.”

A, certificate from the American Loan & Trust Company was introduced, stating that the 1,600 bonds had been destroyed by fire. Two affidavits of date August 9, 1888, to the same effect were introduced in evidence. The deposition of Mr. Berry was offered. In it appeared the following:

“Q. What did you do, if anything, about these bonds about the 9th of August, 1888?
“A. They were cremated.
“Q. When, where, and how and by whom were they cremated?
“A. They were put in a furnace by Mr. McCracken, the president of the railway company, and myself; that is, we were present when they were put in and saw them burn. * * *
“Q. Mr. Berry, what was the issue of these bonds?
“A. One to 1,600, inclusive.
“Q. What did you do yourself, Mr. Berry, with reference to ascertaining the numbers?
“A. Well, the custom always has been to count the bonds one by one, and also count the coupons then belonging to that particular bond. (Mr. Brinckerhoff asked to have answer stricken out as irresponsive.)
“Q. Was the process ever done by one person?
“A. No, sir; two persons have always done this.
“Q. In response to the question, Mr. Berry, what was done on that occasion with reference to the corporation or any other individual.
“A. Mr. McCracken, president of the railway company, represented the railway company and was one of the parties who counted the bonds.
“Q. In your presence?
“A. In my presence, and I call to mind that there was another, a workman, also present.
“Q. Of the railway company?
“A. I think he was of the railway company.
“Q. Was his name Muir?
“A. I think it was Muir.
“Q. Mr. Berry, do you recall whether I was present?
“A. Yes, sir; you were.
“Q. Was I the one who brought the issue to the trust building?
“A. I do not remember.
“Q. Did you say you burnt the bonds yourself?
“A. No, sir.
“Q. You stood by?
“A. Yes, sir.”

The deposition of Neil MacDonald was taken. In it appeared the following:

“Q. Mr. MacDonald, what was your line of business in August, 1888?
“A. I was a member of the firm of W. V. Mc-Cracken & Co. Our business was railroad contractors and builders. W. V. McCracken, George A. Evans, and Neil MacDonald. .
“Q. Where was their office?
“A. Nos. 40 and 42 Wall street.
“Q. What is Mr. Evans’ address now?
“A. Mr. Evans is dead.
“Q. Mr. W. V. McCracken?
“A. He is dead.
“Q. What was the relation of that contracting firm to the securities of the Toledo, Saginaw & Muskegon Railway?
“A. W. V. McCracken & Co. agreed to build the road and took the securities of the Toledo, Saginaw & Muskegon Railway Company.
“Q. That was under -general contract? Did they perform the contract and build the road?
A. They built the road to Ashley, Mich., about 100 miles from Muskegon.
“Q. Was that done under a contract to build that much?
“A. As I recall it, the road was to be a little longer, but we took the contract to build the road as far as Ashley.
“Q. Where did you get the securities for the work?
“A. We got bonds and stock of the Toledo, Saginaw & Muskegon Railway Company.
“Q. What bonds did you get?
- “A. As I recall it, there was an original lot of 1,600,000 bonds (6 per cent, bonds) that we got.
“Q. You mean by that $1,600,000 of bonds?
“A. Yes.
“Q. Do you remember the date of these bonds?
“A. No, I cannot tell the date, but I think (I feel certain) it was in 1886.
“Q. If it will refresh your memory, was it one of the last months of the year?
“A. I have been looking into the matter and think it was November, but I am not prepared to say, but I can easily find out.
“Q. Mr. MacDonald, what did the firm do with these bonds; I mean to say, as to selling them on the market or otherwise?
“A. These bonds were made away with, or destroyed, to make way for another issue of 5 per cent, bonds.
“Q. The question is whether all of these were made away with?
“A. As I recall it, I am certain that I was not present at the time they were made away with to make way for the new 5 per cent, bonds. As I recall the matter, the whole original issue of $1,600,000 6 per cent, bonds was offered to our company for the purpose of building the road above referred to.
“Q. Before, after, or concurrent with the building?
“A. Before the building. As I was the financial member of the firm, I decided that an issue of 5 per cent, bonds could be as easily handled by me, making, of course, the saving in interest. The original bonds (the 6 per cents.) were then destroyed, as I supposed.
“Q. Do you know what the intention of the firm was with reference to their destruction?
“A. To make way for the new 5 per cent, mortgage, which would, of course, not be a good mortgage with the original bonds out.
“Q. At the time of what you call their destruction, who owned and possessed the $1,600,000 bonds?
“A. McCracken & Co., subject to our performing the contract.
“Q. On the day when you supposed they were destroyed, to wit, on August 9, 1888, will you state who handled and destroyed these bonds ?
“A. Up to the time they were destroyed, Mr. Mc-Cracken.
“Q. Up to that time and from and after getting possession of them, what, if any, sales had McCracken & Co. made of any of these bonds?
“A. No part of this issue was ever sold, given away, or loaned.
“Q. What would have been the market value or the success in marketing the bonds of that road?
“A. As the road was not built, it would be impossible to say. At the time they would not have had any market value.
“Q. When were these bonds offered to McCracken & Co. in 1886?
“A. As I recall it, the latter part; I think November.
“Q. As I understand it, you were directed to surrender the entire loan of bonds in 1888, Mr. MacDonald?
“A. Yes. * * * They were kept in our safe
“Q. How were they kept in your safe? _
_ “A. Perhaps I had better say for the period of time they were kept in the American Loan & Trust Company, in the safe deposit box-of the American Loan & Trust Company.
“Q. Were these bonds. accessible to any one while in your safe?
“A. As I recall it, they were, Mr. Brinckerhoff.
“Q. You received these $1,600,000 bonds and the stock which you spoke of as compensation for the work to be done under your contract with the railway company?
“A. I would say as consideration; perhaps compensation might do; but as compensation that was all we received for the building of the road. The bonds were ours absolutely.
“Q. Where did you get the funds to build the road under the contract?
“A. Only of these 6 per cent, bonds which were destroyed.
“Q. Did you not do the work under your contract between November, 1886, and August, 1888?
“A. Yes.
“Q. How much work, more or less, did you do during the 18 months?
“A. I think the road was practically completed in that time.
“Q. Where did you get the' funds to carry on the construction work?
“A. McCracken & Co. had plenty of money and could get millions on demand.
“Q. You built this road, then, out of your own resources and money which you borrowed?
“A. Yes.
“Q. What was your procedure when you borrowed money to carry on the construction work on this road? How did you go about borrowing such funds?
“A. I suppose you refer to this road when you ask that. They would take the liquid assets, of which we had abundance in the safe at all times, and go out and borrow the money.
“Q. With these securities as collaterals you would borrow money?
“A. Yes.
“Q. What do you mean, Mr. MacDonald, by liquid assets ?
“A. Readily salable securities.
“Q. Did you use these bonds as collateral securities?
“A. According to my remembrance we never used one of these bonds as collateral security.
“Q. Would you consider these railway securities as liquid assets ?
“A. No.
“Q. Who had access to these bonds while they were in your safe?
“A. Anybody in our firm could have had access to them, but they were in charge of Mr. Pennington, private secretary of Mr. McCracken & Co.
“Q. The other members of the firm of McCracken & Co. had access to the safe?
“A. There were only two members besides myself, W. Y. McCracken and George A. Evans; but, as a matter of fact, the McCracken safe was generally managed by the private secretary and bookkeeper, Mr. Pennington, and if we had occasion to use anything in the safe we would send for Mr. Pennington.
“Q. Did any member of the firm have the exclusive duty of raising the money upon your assets to carry on the construction work?
“A. I had that exclusive function.
“Q. During the summer of 1888, what became of these bonds?
“A. The bonds were destroyed in the summer of 1888.
“Q. Prior to their destruction what did you do with them?
“A. Nothing was ever done with these bonds, as we intended to have them destroyed; they were as so much waste paper. (Mr. Brinckerhoff objected. Asked to have that answer stricken as .not responsive, Mr. Stanley objected to its being stricken out as irresponsive.)
“Q. What did you do with the bonds when you you removed them from your safe in the summer of 1888 ?
“A. Personally I did not do anything with them.
“Q. Then you have no personal knowledge of anything concerning these bonds subsequent to the time they were removed from your safe ?
“A. No.
“By Mr. Stanley:
“Q. You say that these bonds were never lent by your firm? I will ask if they were ever pledged for loans?
“A. Never, according to my remembrance. They were never used in any financial transaction.
“Q. When was the plan formed of having them replaced by 5 per cents.? -
“A. Shortly after our original contract, whatever date that was. * * *
“Q. You say that your firm got, of the new 5 per cent, bonds, practically 1,560. Can you not say what the exact amount was?
“A. I think it was exactly 1,560. I had 1,560 bonds to deal with.
“Q. That you remember?
“A.- Distinctly.
“By Mr. Brinckerhoff:
“Q. Why did you receive 40 bonds less of the new issue than of the old issue which you surrendered?
“A. I don’t know that I can tell you the exact reason, but, as we were the sole owners of the road, we had it all anyway whether it was 1,560 or 1,600; it was all ours. There was some reason, but I don’t seem able to recall it.
“Q. Do you mean by that that you owned all the securities — all the bonds and all the stock?
“A. We were practically owners of the road and of practically all the stock.
“By Mr. Stanley:
“Q. Mr. MacDonald, was this evidence, then, that you took the 1,560 bonds before you had any arrangement for either .a deal with the Grand Trunk Railway or any connection with the Grand Trunk, and you took the 1,560 of the new issue under a direct arrangement of some kind with the Grand Trunk?
“A. I cannot say as to that; I was what you might call the financial end of affairs, but it was 20 years ago, and I cannot quite testify as to that.
“Q. You would not say that it was not the case?
“A. No.”

The witness who took the bonds to New York testified as follows:

“Mr. Muir, who has been mentioned, met me at the trust company’s office and there was present Mr. - and Mr. Berry, whose deposition has been read, and Mr. O. D. Baldwin, whose signature is on Exhibit C. Some one brought in a lot of these bonds that have been referred to as 6 per cent, bonds of the same road, and I remember distinctly going down to the furnace below the office with two or three of the clerks who had counted them, and the janitor had been called up and had been asked to build a fire there, and when we went down there was a fire burning and these piles of pamphlets or bonds were put into that furnace, and then we came upstairs then and I made out for Mr. Muir in my handwriting this Exhibit G, and he signed it, and at the same time Mr. Baldwin delivered to us his signature to Exhibit 6.”

The deposition of the defendant was taken. He produced bond 1401. He testified that he was the sole survivor of a firm of New York brokers known as Peters, Schenck & Co.; that the firm went out of existence in 1891, and that he was the owner of the bond; that he received it upon the division of the assets of the firm in 1893 or 1894; that he put it in a box with mining shares that since became worthless; that its existence was overlooked until about two years before the suit was brought. On the cross-examination he testified in part as follows:

“Q. Have you any bill of sale of this bond or paper to show sale of this bond?
“A. None that I know of. There was an agreement signed by the partners, dividing the assets of the firm equitably. This was in full satisfaction between the partners.
“Q. Do you know how your firm became possessed of this bond?
“A. I have not the faintest idea.
“Q. You don’t know who put this bond up?
“A. I was not in the bookkeeping department. I was a member of the board of exchange and my work was on the exchange.
“Q. Did you ever collect coupons on that bond?
“A. Not that I am aware of.
“Q. Do you know whether the firm did?
“A. Not the slightest idea.
“Q. Is there any one in the city of New York who would know better than you say you know as to who used that bond as margin?
“A. All my partners are dead; my .bookkeeper, who had the power of attorney, died five years ago, and my cashier died six or seven years ago, and I am the only surviving one.
“Q. Do you know whether other bonds of this road were put up as margin at the same time?
“A. No.
“Q. Was there any memorandum made between you as partners which recited the assets which wele to go to you and the assets that were to go to your partners ?
“A. Yes, also a release that was given of the whole matter regarding Peters, Schenck & Co.
“Q. Who divided these assets?
“A. Mr. Schenck and myself, I think.
“Q. At the time of the division of the assets, you took note of the value of each item that went to you and which went to your partner, Mr. Schenck?
“A. Everything had been charged on the books to profit and loss, and when we come to close up, Mr. Schenck said to me, or Mr. Benedict, my bookkeeper (he took principal charge of those matters), and either Mr. Schenck or Mr. Benedict said to me that these things were equally divided.
“Q. Do I understand that you, then, personally did not note the division of these assets, but you left it to your clerk and assistant to do it?
“A. My impression was that Mr. Benedict and Mr. Schenck rendered the account to me.
“Q. Have you that account or release?
“A. I cannot find it anywhere. I think all the partnership papers were destroyed in 1901 when the books were destroyed.
“Q. You refer to this bond as among a lot of assets that were turned over to you and which were regarded as worthless?
“A. The mining stocks which were in the box I regarded as worthless three years ago.
“Q. This bond was included in the assets which were turned over to you as worthless?
“A. You misunderstand me. I say that the mining stocks I took out and examined three years ago I then regarded as worthless. When the firm expired they were not worthless.
“Q. You discovered this bond two or three years ago in a box of assets of your old firm, which assets ■you had regarded as worthless?
“A. They were no longer assets of the firm. They were my personal property. The assets of the firm had been divided, and they were my personal property.
“Q. The assets of the firm were divided in 1893 or 1894 and you had not examined this box of assets of the old firm, now your property, between 1893 or 1894 and 1905, had you?
“A. I have been to the box several times during that time.
“Q. Did you never notice this bond?
“A. Not to my recollection.
“Q. How has it happened that you produce this bond so long after the time of this dissolution?
“A. It was the first time that I had taken particular notice of it.
“Q. Had you handled the bonds of this road other than this bond at any time?
“A. Not that I know of.
“Q. At the time of the division of the assets, I understand you to state that a statement distinct from the release was given, showing what was given to you in the division and what was given to your partners?
“A. To the best of my recollection.
“Q. I understand that the statement has been destroyed?
“A. That is my impression, as I would have found it.
“Q. When did you look for it?
“A. At the time I first saw those securities there, and I have looked for it since.
“Q. Your knowledge of this method by which this bond came into your firm’s possession, and the way in which this bond came into your firm’s possession, is only a surmise that it was probably put up as margin by one of your customers, but which one of your customers you have no means of knowing?
“A. No, none at all.
“Q. And from the time of the dissolution of the firm when such assets in the division as came to you from the firm were put into this box in 1893 or 1894, until within a couple of years, although you had examined the box and its contents, your attention had never been called to this bond until about two years ago?
“A. No.
“Q. When were your books, destroyed?
“A. 1901. Ten years after the dissolution.
“Q. Where were they destroyed?
“A. Destroyed by Mr. Schenck, down at his house at Lawrence, Long Island. We had a pile of books larger than this desk. They were all destroyed. He asked my consent, and I said, ‘Certainly.’
“Q. Your recollection of the destruction was that he burned them?
“A. Yes.
“Q. When was the record of this account between you, as partners, or the memorandum as to the division of assets, when was that destroyed?
“A. I can’t tell you whether it was lost or destroyed. If it existed, and I am not sure that it did, it must have been in the box. It was not in the box.
“Q. When did you last see it?
“A. I cannot fix any date of it. It must have been prior to 1900.
“Q. Have you any list of your customers?
“A. I cannot tell you any, except some of the most prominent ones. We had 600 or 700 names on the books and I cannot tell you the names of the smaller ones.
“Q. And you cannot relate this bon'd and its possession to any one of these customers?
“A. I cannot place it at all in any way.”

In the brief of counsel for the complainant we find the following:

“It is said that the burden never shifts. In this case the burden of proof is on-the complainant to satisfy the court by a preponderance of the evidence that it would be inequitable to allow the defendant to recover the amount of the bond and coupons. But when we have shown, as above, that there was no way for this bond to have escaped the fire except by loss or theft or a fraudulent act amounting to theft, we have shown we should have a decree. * * * The holder of a negotiable instrument is not bound to introduce any evidence to show that he gave value for the instrument until the other party has clearly proved that the consideration of the instrument was illegal or that it was fraudulent in its inception or that it had been lost or stolen before it came to the possession of the holder, citing Story on Bills (4th Ed.) § 416; Byles (10th Ed.) 119; 1 M. & W. 425; [Sistermans v. Field] 9 Gray [Mass.] 336. Judge Story said that nothing short of fraud, not even gross negligence, is sufficient to overcome the presumption furnished by possession that the holder is the proper owner and lawful possessor, citing cases. Lord Denman said (1 A. & E. N. S. 498) that it requires fraud, felony, or some such matter to be proved in order to overcome the presumption. The burden of proof against the holder of coupons payable to bearer is on the party who assails his possession [Ranger v. Cary] 1 Metc. [Mass.] 369; Smith v. Sac County, 11 Wall. [U. S.] 139, 154. But in this case not only is there no proof of bona fides but bona fides is inconsistent with (that is, is contradicted by) all the other proofs in the case. Defendant attaches too much weight to the fact that his bond is not destroyed as foundation of the presumption of good faith and a right to sue. That fact is entirely consistent with our theory of a loss or theft, and it helps to make out loss or theft.”

We agree with the statement of counsel as to the law of the case.

In Jones on Corporate Bonds and Mortgages (3d Ed.), §190, the following language appears:

“Although they contain an agreement for their conversion into stock, the coupon bonds of a railroad company, payable to a person named or bearer, are negotiable instruments, with the privileges of such paper; and so, although the bonds contain an agreement on the part of the company to make what is termed ‘scrip preferred stock’ in exchange therefor at any time within ten days after any dividend should become payable on such stock. Such an agreement is independent of the pecuniary obligation contained in the instrument, and does not change the duty of the company with respect either to the principal or interest stipulated. Whether the agreement to convert into preferred stock is of any value or not, it can in no way affect the negotiable character of the instrument; and therefore the title of a bona fide holder is good, although the bonds may have been stolen from the former owner.
“Where it further appeared that to such bonds there was attached by a pin the certificate of such preferred stock, which stated that the bondholder was entitled to a certain number of shares of such stock, and that upon the surrender of the bonds he should be entitled to receive the stock, the bonds having been stolen and negotiated to one who took them without actual notice of any defect in the title to them, the fact that the certificate originally attached to the bonds had previously been detached was held not to be a circumstance sufficient to put the person who took the bonds upon inquiry as to the title of the previous holder. The title of a person who takes negotiable paper before due for a valuable consideration can only be defeated by bad faith on his part, which implies guilty knowledge or wilful ignorance of facts impairing his title; and the burden of proof lies on the assailant of the title.”

Section 200 of the same authority reads:

“A purchaser of negotiable bonds before due, for a valuable consideration, in good faith and without actual knowledge or notice of any defect of title, holds them by a title valid as against every other person. Even gross negligence at the time of purchase does not alone defeat the purchaser’s title. A purchaser may have had suspicion of a defect of title, or knowledge of circumstances which would excite such suspicion in the mind of a prudent man; or he may have disregarded notices of stolen bonds; and yet, if he has purchased for value in good faith, his title cannot be impeached. Such suspicion, or ground of suspicion, or of knowledge on his part, may be evidence of bad faith; but before his title can be impeached his bad faith must be established. It must be shown that he did not purchase honestly. The protection-accorded to a purchaser of such bonds extends to the mortgage given to secure them.
“It is a presumption of law that the person presenting a negotiable bond is a bona fide holder, and until evidence is introduced tending to negative that presumption, he is under no obligation of proving himself a bona fide holder.”

See Walnut v. Wade, 103 U. S. 683; Ottawa v. National Bank, 105 U. S. 342; Hovey v. Sebring, 24 Mich. 232 (9 Am. Rep. 122); Hogan v. Dreifus, 121 Mich. 453 (80 N. W. 254); Massachusetts Nat. Bank v. Snow, 187 Mass. 159 (72 N. E. 959).

Has the complainant so met the rule of law that it should escape liability? The bond was produced before us upon the hearing. It and each of the coupons is payable to bearer. It is conceded it is the original bond. It does not bear the slightest evidence of fire or any trace of any effort to cancel it. The whole of the testimony introduced on the part of the complainant was to show that all of the first issue of bonds were destroyed' by fire. The bond itself is a complete refutation of that theory so far as relates to it. The defendant testifies that he is the owner of the bond and gives his explanation of how it came to him. It is unfortunate that so many of the people who knew about the transaction are dead. The statement of the trustees in the letter of August 1, 1888, as follows:

“It appears that a prior mortgage to this was executed by the railway company to you as trustees to secure an issue of bonds, dated November 1, 1886, in the amount of $1,600,000. The bonds under this last-named mortgage, it is said, have not been sold but have been pledged as collateral security for money loaned. It has been arranged between the railway company and W. V. McCracken & Co., who own the bonds issued and outstanding under your mortgage, that these bonds shall be retired by the substitution of bonds issued under the mortgage in which the undersigned are trustees” — and the testimony of Mr. MacDonald: “Q. You say that your firm got, of the new 5 per cent, bonds, practically 1,560. Can you not say what the exact amount was? A. I think it was exactly 1,560. I had 1,560 bonds to deal with. Q. That you remember? A. Distinctly. By Mr. Brinckerhoff: Q. Why did you receive 40 bonds less of the new issue than of the old issue which you surrendered? A. I don’t know that I can tell you the exact reason, but, as we were the sole owners of the road, we had it all anyway whether it was 1,560 or 1,600; it was all ours. There was some reason, but I don’t seem able to recall it” — may have some significance.

In any event, bond 1401, which had been issued to ' W. V. McCracken & Co., was not destroyed. It passed into the possession of a firm of brokers. Upon the dissolution of that firm it came to one of the members as a part of his share of the assets of the firm. We do not think complainant has established a case entitling him to the relief prayed.

The decree is reversed, and one may be entered here, dismissing the bill of complaint, with costs.

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


source: Caselaw Access Project

author: Moore, J.

license: Public Domain

text:
    RAHALEY v. DETROIT UNITED RAILWAY.
    1. Street Railways — Contributory Negligence — Use of Streets.
    In an action for injuries sustained in a collision between a street car and plaintiff’s conveyance, his testimony that he looked both ways and could- see no car, that his vision was obstructed at a distance of about 240 feet by vehicles and similar objects, that he believed he could safely cross, but was struck by a car as his rear wheels were clearing the track, that the car ran 650 feet after it struck him and its speed was 40 to 50 miles per hour, presented an issue for the jury as to his contributory negligence.

    2. Same — Trial—Charge—Due Care.
    In charging the jury the trial court erred in omitting to state the duty resting on plaintiff to act as a reasonably prudent man would and to state the degree of care also required of defendant’s motorman; the language of the court’s instructions being ambiguous.
    3. Same — Streets—Negligence.
    The jury should also have been instructed that additional care was required of both plaintiff and defendant’s servant because of the fact that the street was badly torn up and the crossing difficult to make, as shown by the testimony.
    Error to Wayne; Donovan, J.
    Submitted April 22, 1913.
    (Docket No. 136.)
    Decided September 30, 1913.
    Case by Michael Rahaley against the Detroit United Railway for personal injuries. Judgment for plaintiff. Defendant brings error.
    Reversed.

      Corliss, Leete & Joslyn and A. B. Hall, for appellant.

      Washington I. Robinson, for appellee.

       On the question of injuries by street car collisions with vehicles or horses, see note in 25 L. R. A. 508.

   Moore, J.

The plaintiff recovered a judgment against the defendant for injuries received by him in a collision when he attempted' to cross defendant’s street railway track. The case is brought here by writ of error. We quote from the brief of appellant:

“In discussing the assignments of error, we propose to classify the assignments under four heads: (1) The refusal of the court to direct a verdict at the conclusion of the plaintiff’s case; (2) the error claimed in the argument of counsel; (3) error in the charge of the court; (4) refusal of the court to grant a new trial.”

1. Did the court err in refusing to direct a verdict in favor of defendant? Counsel base this claim upon the theory that plaintiff was, according to his own testimony, guilty of contributory negligence. The accident occurred on Woodward avenue in Highland Park, in a thickly settled and busy neighborhood. The paving was torn up on alternate sides of the street every other block, and the street intersections were filled in with loose planks and dirt, making the crossings very rough. The plaintiff was driving a one-horse rig loaded with crockery and glassware. He testified that before attempting to cross the tracks he looked and listened and could see up the street to the next street intersection, about 240 feet, where his further view was cut off by vehicles, including a moving van, which were crossing the tracks at that intersection, and that he saw no car. He claimed he thought he had ample opportunity to get across and that he was nearly over when the rear wheels of his rig were struck.

There is testimony that the car was running 40 or 50 miles an-hour and that it ran 650 feet after colliding with plaintiff before it was stopped. The witnesses for defendant told a different story. We think the testimony offered on the part of the plaintiff made a question for the jury. See Ryan v. Railway Co., 123 Mich. 597 (82 N. W. 278); Chauvin v. Railway, 135 Mich. 85 (97 N. W. 160); Deitsch v. Traction Co., 155 Mich. 15 (118 N. W. 489), and the cases cited therein; Hibbler v. Railway, 172 Mich. 368 (137 N. W. 719).

3. Was there error in the charge of the court? Complaint is made to the following portions of the charge:

“I charge you it was the duty of the motorman to be watchful to see he did not collide in going along the track when others were going over the track.
“I charge you again that the street car tracks form a part of the public highway, and the public have a right even to drive upon the tracks, and they drive upon the tracks repeatedly; and if you believe from the testimony in the case that the driver in this case was exercising reasonable care and caution before he went upon the track, if he looked back to see if the car was approaching before he went across, the track as he claims, and, seeing none, he started on the tracks, that he had a right so to do. And then it was the duty of any one who attempted to go on to take notice all the way in that way.”
Again:
“I charge you again that, if the highway at the point or location where the collision occurred was obstructed by conditions for any length of time, the defendant would be presumed to have notice of the condition of the highway. That is the torn-up condition, not that the tracks were torn up, but that they required a crossing to be built over to cross the grass plat between the T rails at each of the street crossings; that fact also appears from the testimony.”
Again:
“I charge you again, if you believe from the testimony that the motorman had ample time to have discovered the plaintiff’s position and then made no attempt to hold his car until it was too late, and the collision occurred for that reason, then the company would be held to be negligent. That he could in the exercise of common prudence — the plaintiff might have always reasonable time to make a crossing, and make it so without negligence.”
Again:
•' “And then again that the defendant company, by reason of its tracks being laid in the center of Woodward avenue, had no exclusive right to that portion of the highway, and that the use by the cars of the. highways does not deprive the persons of their right; to drive thereon. They are constructed and operated upon the assumption that they will be driven upon, and over, and mutual care should be used in both cases by both parties.”
Again:
“I charge you, then, that under the testimony in this case that the motorman in charge of the car, if you believe his testimony, said that he saw the plaintiff when he was first attempting to cross the tracks, and he immediately realized and appreciated the plaintiff’s danger, it then became his duty to have his car under control, in the way that any prudent person would do, where a danger was nearby.”

It will be noticed that much of this charge is ambiguous, and it fails to state the duty on the part of the plaintiff to act as a reasonably prudent man should. It also fails to state that, if the motorman acted as a reasonably prudent man should, he would then have performed his duty. The law applicable to cases like this has been so recently stated in the cases cited that we deem it unnecessary to repeat what is said therein.

It may be well to add, however, that when a street is torn up so badly as this one was, with crossings so difficult to make, this situation makes added care necessary on the part of both the driver of the vehicle and the motorman. It is not necessary to discuss the other assignments of error.

The judgment is reversed, and a new trial ordered.

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


text:
    KETCHUM v. KETCHUM.
    1. Executors and Administrators — Estates of Decedents— Sale by Administrator to Himself — Fraud—Presumption.
    While it is presumed that a sale of real estate by an administrator to a third person who thereafter conveys to the administrator, is void, the presumption is not conclusive; evidence showing good faith or sufficient consideration may be enough to rebut the presumption. 3 Comp. Laws, § 9095 (4 How. Stat. [2d Ed.] §11248).
    2. Same — Evidence—Value.
    Where the administratrix of an estate sold real property of the estate to pay debts, for a consideration of $900, taking a deed from the purchaser to herself on the same day, for the same consideration, and it appeared that the value of the property was $900, that it had been appraised at $950 and before it was sold a second appraisal was made at $900, the sale was voidable only, and the evidence tending to show good faith and sufficient consideration, uncontroverted, sustained the validity of the transfer.
    3. Same — Fraud.

      Held, also, that the evidence was insufficient to establish either actual fraud or the claim that the administratrix was interested in the sale to such an extent as to invalidate it. t

      Appeal from Shiawassee; Miner, J.
    Submitted June 3, 1913.
    (Docket No. 26.)
    Decided September 30, 1913.
    Bill by Ada Ketchum and another against James Ketchum and another to correct a mistake in the description of certain deeds. Defendant filed a cross-bill setting up the invalidity of the conveyances in question. From-a decree for complainant, defendant Ketchum appeals.
    Affirmed.

      Walter M. Bush, for appellant.

      Pulver & Pond, for appellees.
   Moore, J.

The bill of complaint in this case is filed for the purpose of correcting a description in two real estate deeds. From a decree in favor oí the complainant, the defendant James Ketchum has brought the case here by appeal.

On August 14, 1908, Daniel Ketchum died, leaving as his widow the complainant Ada Ketchum. She is the daughter of defendant Griselda Russell. The defendant James Ketchum, who resides in Virginia, is the brother of Daniel Ketchum, the deceased. Daniel Ketchum left no children and no brothers or sisters except James Ketchum. After due notice on September 14, 1908, Ada Ketchum was appointed administratrix of the estate of her deceased husband. She gave a bond and entered upon the duties of her office. Appraisers of the estate were appointed and a warrant and inventory issued. These appraisers took the oath of office and returned under oath as follows:

“In the Matter of the Estate of Daniel Ketchum, Deceased.
“A true and perfect inventory of all the real estate, goods, chattels, rights and credits of said estate, to wit:
East half of lots 2 and 3, block 14, of the city
of Owosso, Michigan ....................... $950 00
Household furniture .......................... 75 00”

The administratrix filed an affidavit that the above was all the property belonging to the estate. Commissioners on claims were appointed who entered upon their duties and after due notice allowed claims: Owosso Grocery Company, $6.80; Griselda Russell, $597.85. They made due report of their findings and of their fees as $4 each. On February 3, 1909, the administratrix filed a petition for leave to sell the real estate. In that petition it was stated:

“Your petitioner further represents that as far as can be ascertained, and as she is informed and verily believes, the just debts and valid claims outstanding against said estate amount to $604.65, exclusive of interest, and also about $160 funeral charges and taxes, and that the charges and expenses of managing and administering said estate, including future probable charges and expenses, will amount to about $100. Your petitioner further represents that it is necessary, for the purpose of paying said debts, valid claims, charges, and expenses, to raise the sum of about $900 or thereabout by the sale of the following described real estate, or some part thereof, of which the said deceased died seised and possessed. The description, condition, and value of each parcel and of the whole of said real estate of which said deceased died seised and possessed, according to the information and belief of your petitioner, are as follows, viz.: The E. y% of lots 2 and 3, block 14, of the city of Owosso. Your petitioner further represents that the value of said real estate described above, according to her best judgment and belief, does not exceed the sum of $1,000. And your petitioner further represents that the names and residence of the next of kin and heirs at law of said deceased and other persons interested in said estate, as your petitioner is informed and believes, are as follows: Your petitioner, the widow of said deceased, Owosso; James Ketchum, brother of said deceased, Burkley, Va.”

Due notice of this application was published and, affidavits of two freeholders were filed that a fair valuation of - the property was $900. On March 8, 1909, the administratrix was authorized to sell at private sale the real estate for $900. She gave a bond and reported that she had made the sale to Mrs. Russell for $900 and asked that it be confirmed. It was confirmed by an order duly entered by the judge of probate March 17, 1909. After due notice of hearing Mrs. Ketchum filed a detailed final account as administratrix, showing that there had come into her hands as administratrix $975, $900 of which was from the sale of the real estate, and that she had disbursed $987.19. The only items in this account in favor of herself were household furniture $75, commission as administratrix, $45. This final account was duly allowed and the administratrix was discharged.

The deed from the administratrix to Mrs. Russell was made and placed on record March 18, 1909.' Later, and upon the same day, Mrs. Russell made a quitclaim deed of the premises to Ada Ketchum, the consideration of which was stated to be $1 and love and affection, which deed was recorded in May, 1909. In January, 1911, Mrs. Ketchum made a land contract for the sale of this land to Christ Episcopal Church for $2,000. Later it was discovered that a mistake was made in the description in the two deeds, and this bill was filed June 14, 1912, to have them corrected. The defendant James Ketchum filed an answer in the nature of a cross-bill claiming the deeds were fraudulent and void, asking that they might be canceled and that he might be decreed to be the owner of a one-half interest in the premises.

The hearing was in open court. No witnesses were sworn on the part of defendant, and but one exhibit was introduced by him, and that was the claim presented on the part of Mrs. Russell to the commissioners. The trial judge made a decree as prayed by the complainants. The case is brought here by appeal.

Counsel argue appellants claim under the following heads:

(1) The presumption of fraud is conclusive as a substantive rule of law.

(2) Christ Episcopal Church is not a bona fide purchaser.

(3) The evidence shows actual fraud.

(4) Complainant Ada Ketchum was interested in the sale.

(5) Accounting. Counsel for appellee concede that if either 1, 3, or 4 is established the decree of the court below is wrong.

1. Is the presumption of fraud conclusive as applied to this case? We quote from the brief:

“The presumption of fraud is conclusive as a substantive rule of law. 3 Comp. Laws, § 9095 (4 How. Stat. [2d Ed.] § 10248) :
“ ‘The executor or administrator making the sale, and the guardian of any minor heir of the deceased, shall not directly or indirectly purchase, or be interested in the purchase of any part of the real estate so sold, and all sales made contrary to the provisions of this section shall be void,’ etc.
“Both deeds being executed on the same day, between the same parties, and covering the same land, the presumption of collusion is conclusive, the same as is the presumption that a child under the age of seven years is incapable of committing a crime, regardless of what the evidence might show” — citing Clute v. Barron, 2 Mich. 192; McKay v. Williams, 67 Mich. 547 (35 N. W. 159, 11 Am. St. Rep. 597); Winter v. Truax, 87 Mich. 324 (49 N. W. 604, 24 Am. St. Rep. 160); and other authorities.

Are these cases controlling in favor of the defendant? In the first of these cases the sale was made by a public officer directly to himself. Clearly not the case before us.

In the case of McKay v. Williams, supra, it appears that Mrs. Shults gave to her husband a power of attorney to sell and deed lands. On the same day he deeded the land to one Knight, who on the same day executed a deed back to the husband. We quote from the opinion:

“Both these deeds purported to be for the consideration of $600. The notary who drew the deeds and took the acknowledgments saw no money consideration pass between the parties. Both deeds were recorded the same day and at the same time. * * *
“In holding that the deeds introduced by the defendants are prima facie void upon their face, we do not militate against the rule declared by this court in several cases, that in. ejectment all defenses are excluded that are not legal,” etc.

Suppose in that case it had appeared that the full value of the property had been paid when the power of attorney was executed, or when the deed from Mr. Shults to Mr. Knight was'made, would it not have overcome the prima facie case spoken of by Champ-LIN, J.? .

In Winter v. Truax, supra, the following language is used in the opinion:

“Cyrus A. Kellogg may possibly have acted throughout without fraud, and for the benefit of his ward, but this record does not show it. So far as he, as guardian, conveyed to Wright, and Wright immediately reconveyed to him, individually, for the same consideration, no title passed by the transaction. This case must be ruled by the case of McKay v. Williams, 67 Mich. 547 [35 N. W. 159, 11 Am. St. Rep. 597]. The whole record abounds with evidence of the efforts of Kellogg to get the legal title to this land in his individual name; and aside from the deed from Wright to him, which is void, his transactions would require very satisfactory evidence to explain why he assumed fiduciary relations with the estate of Helen E. Tucker, if he already had a valid title through Cole and Lewis.”

In Taylor v. Brown, 55 Mich. 482 (21 N. W. 901), the following appears in the opinion:

“The premises in question were regularly sold and conveyed under proper license for that purpose, by the executors of Jonathan B. Taylor, to pay debts of his estate to Caroline Taylor, who was, at the time she bid off the same at such sale, guardian for said minors. The facts in the case are all stipulated by the parties, from which it appears that, upon the sale of the property to Caroline, she paid the full cash value therefor, and that the sale was fairly and in good faith made by the executors, as was the purchase by Caroline, and that her guardianship was known to the executors at the time the sale was thus made. With a full knowledge of all the facts, the sale to said Caroline was regularly confirmed by the judge of probate, and in her capacity as guardian she accounted to the said executors for the purchase money of said property; they receipting the same to her accordingly.”

The land was later sold to the defendants. Later one of the minors, after he became of age, brought ejectment for an undivided one-third interest. The court declined to hold that the executors’ sale was void.

In Otis v. Kennedy, 107 Mich. 320 (65 N. W. 221), it is said in part:

“In McKay v. Williams, 67 Mich. 547 [35 N. W. 159, 11 Am. St. Rep. 597], Mr. Justice Champlin, referring to section 6042, 2 How. Stat. [1st Ed.], said:
“ ‘This statute was merely an affirmance of the common law.’
“We are therefore compelled to hold, both upon reason and authority, that sales of the kind in question are voidable only. The statute must be read in connection with the registry laws. 2 How. Stat. [1st Ed.] § 5683.
“Upon the question of whether there was evidence upon the face of the record to create in the minds of the defendants such a suspicion of bad faith in the executor as to put them upon inquiry, it appears that Pillard did not purchase until one month after the sale to Leonard. It is true that the deed to Leonard was not recorded until the date of the execution of the deed back to Pillard; but it frequently occurs that deeds are not put upon record on the date of their execution. We think this fact could not be construed as notice to a subsequent purchaser that anything was wrong about the purchase by Pillard, especially in view of the fact that the consideration in the deed to Pillard was greater than the purchase price recited in the Leonard deed, and also in view of the settled rule that the subsequent purchase by an executor of - land which he has previously and in good faith sold under license of the probate court is legal. That such purchases are legal is held by Woerner in his work on the American Law df Administration (section 334, p. 702), in which the author says:
“ ‘But the rule that an administrator cannot buy indirectly ■or acquire the property sold by him as administrator by the interposition of a third party does not extend to a subsequent bona fide purchase by him from one who himself purchased in good faith at the administrator’s sale.’
“This doctrine is supported by Wayland v. Crank, 79 Va. 602; Welch v. McGrath, 59 Iowa, 519 [10 N. W. 810, 13 N. W. 638]; Staples v. Staples, 24 Grat. [Va.] 225; Silverthorn v. McKinster, 12 Pa. 67; Creveling v. Fritts, 34 N. J. Eq. 134.”

As has already appeared, when the property was inventoried it was appraised at $950. Before it was sold it was also appraised at $900. Upon the trial of the case now before us it was shown that $900 was a fair price for the land when it was sold. This was shown by witnesses who lived adjacent to it, and there is no evidence to the contrary unless it may be inferred from the fact that two years later it was sold on land contract to Christ’s Episcopal Church for $2,000. This inference is met by the undisputed testimony of witnesses that during that two years there had been a marked increasé in real estate values in that vicinity.

The church warden and chairman of the building committee testified as to values:

“Q. What would you regard as a fair cash value of the property in controversy in March. 1909?
“A. Well, there was quite a change along there just before that and just along about that time in values, before and after, but just at that time there was quite a depression in the city. I bought good houses and lots in Owosso for $400 that I afterwards sold for $800 or $900 within a year. I was familiar with it at the time the price was made, and I considered very seriously of buying it for the church at that time, and we thought at that time it was worth somewhere around $900 or $1,000.
“Q. What would you say as to the sum of $900 being a fair cash value for it at that time?
“A. At that time I think it was.”

Mrs. Ketchum testified that when her mother bought the property she intended to live there so as to be near the church, and that it was not until she (Mrs. Ketchum) declined to move there with her mother, on account of the property being associated with the death of her husband, that her mother gave up the idea of living there and decided instead to deed the property to her only daughter Mrs. Ketchum. If these were the facts, the prima facie case made by the deeds was fully met.

3. Does the evidence show actual fraud? In support of this claim it is said Mrs. Ketchum is guilty of fraud because she made out the claim of her mother and swore to it before the commissioners. This claim which was presented shows that Mrs. Russell paid to the Ketchums January 15, 1902, $30, and from that time until the death of Mr. Ketchum, upon 17 different occasions, sums of money ranging from $4 to $79. It is unfortunate that after this suit was begun, and before the trial, Mrs. Russell died. The attorney who looked after the business, it is conceded at the time of the trial, was incompetent both physically and mentally to testify. Mrs. Ketchum swore that she kept this account for her mother, who was an old lady, and that she knew the sums of money were loaned as stated, and for that reason she swore to the account before the commissioners. If this is true, what she did does not convict her of fraud nor of any improper conduct.

It is nowhere claimed in the cross-bill that there were no debts against the estate of Mr. Ketchum. It is claimed therein that there was collusion between Mrs. Russell and Mrs. Ketchum. The following appears in the cross-bill:

“This defendant further avers that said complainant Ada Ketchum, with the intention of defrauding this defendant out of his interest in said estate and said property, in and by said scheme and as is set forth and described in said bill of complaint, obtained possession and control of the property involved in this suit at an expense or cost to her, as this defendant is informed and verily believes and charges the truth to be, of not to exceed the sum of $900, and that thereafter said complainant Ada Ketchum sold the said property to the said Christ Episcopal Church, upon a contract, for the sum of, to wit, $2,500, thereby defrauding said estate and this deponent out of the sum of, to wit, $1,600.”

The land contract shows a consideration of $2,000 and not $2,500, and this contract was made nearly two years after the sale.

No proceedings have ever been taken to set aside the allowance of claims or the allowance of the final account, which included funeral expenses, doctor’s bill, and expenses of administration.

4. Was complainant interested in the sale? The claim that she was is based upon the fact that her mother had, prior to the sale, for the purpose of making a testamentary disposition of her property, made conditional deeds to real estate to her daughter, and that to enable her mother to borrow money to pay the funeral and other expenses the daughter joined with her in making a note and mortgage to the bank, where the money was borrowed. It is the testimony that at this time Mrs. Ketchum had no property of her own except her interest in her husband’s estate and her interest in the real estate so deeded by her mother, and that the loan from the bank was made to Mrs. Russell.

This is a chancery case where the defendant James Ketchum is asking affirmative relief upon his cross-bill. The record shows that when Daniel Ketchum died he left nothing except this house and lot worth $900 and household goods worth $75. It also shows that, when his debts were paid and the last illness, funeral, and administration expenses were met, the «state was exhausted, and there was nothing left, either for the widow or the brother. Had not real estate suddenly acquired additional value, it is not likely this litigation would have occurred.

The decree is affirmed, with costs.

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


text:
    ANDRIES v. EVERITT-METZGER-FLANDERS CO.
    1. Damages — Automobiles — Injury — Motor Vehicles — Evidence — Value of Use.
    Plaintiff, who claimed that defendant damaged his car by-running into it, was correctly allowed to testify what .the value of the use of the car amounted to during the time that he was deprived of it.
    2. Admissions — Appeal and Error — Curing Error.
    There was no reversible error for admitting evidence of admissions made by the officer of a corporation when he testified, as a witness, to the facts claimed to have been admitted on the trial of an action for damages to plaintiff’s automobile.
    3. Automobiles — Negligence.
    Evidence considered, and held, to present a question of fact relative to defendant’s negligence in colliding with plaintiff’s motor car.
    4. Same — Care Required — Trial—Requests to Charge.
    Defendant’s requests to' charge the jury were not improperly denied when the court fully covered the same subjects in different language.
    Error to Wayne; Murphy, J.
    Submitted June 9, 1913.
    (Docket No. 47.)
    Decided September 30, 1913.
    Rehearing denied January 5, 1914.
    Case by Joseph H. Andries against the Everitt-Metzger-Flanders Company for damages to plaintiff’s automobile. Judgment for plaintiff. Defendant brings error.
    Affirmed.

      Denton Guinness, for appellant.

      George B. Greening, for appellee.
   Moore, J.

This suit grew out of, an automobile accident. It was started in justice’s court, and appealed to the circuit court. From a judgment in favor of the plaintiff for $450, the case is brought here by writ of error. ,

The plaintiff is a doctor. It is his claim that while he was driving his runabout north on Brush street, across Medbury avenue, at the rate of eight or ten miles an hour, the driver of one of defendant’s automobiles came out of Medbury avenue at a rate of speed not less than 30 or 35 miles an hour, and came into collision with his car.

“I drove along until I got near to the little court shrubbery on Medbury avenue, and just passing that I saw this car about 15 or 20 feet from me. I was helpless, and this man bore down on me and struck my car almost at the center. His car picked mine right off the ground, and carried it from where I was, on the right-hand side of Brush, to the left side of Brush, on the corner, and threw the car around on the curbstone sidewalk. His car, after hitting mine, swung around completely, and also ran to the corner of Brush and Medbury, that is, on the northwest corner, and then, after he struck my car, you could see that about 15 feet before he hit me he put on his emergency brake, or rather a brake, and his car skidded for about 15 or 20 feet, and after skidding, and his car hitting my car, it carried it about 30 feet across the street with such violence that you could not see where my tires or wheels had skidded on the street; it picked it up in the air without skidding at all. * * * I say he picked my car up and carried it from the right-hand side of Brush street clear across and threw it on the curb on the left-hand corner, and I was in the car all this time. I was stunned.”

He testified that he sustained a nervous shock; that it cost him $249.59 for repairs to his automobile ; that during the time his machine was being repaired he was compelled to hire other vehicles and transportation to go about.

“Q. What would be your reasonable charge for the loss of the use of that car during that time and the expense you were put to?
“A. I would value the use of the car at about $5 a day.
“Mr. Guinness: I object to it, and move to strike it out.
“The Court: It may stand. Exception for defendant.
“I suffered a nervous shock for quite a while after-wards. For a few days, probably a week, I was not able to attend to my regular business, and was compelled to have somebody at my business.
“Q. How much did you actually lose in dollars and cents for loss of business while you were laid up, loss of time and services?
“Mr. Guinness: I object to that as not specified in the declaration.
“Q. Did you suffer any pain or annoyance yourself?
“A. I had a headache for a few days from the blow I received.
“Mr. Greening: I call your honor’s attention to the bottom of the third page, that he has been deprived of his earnings as a physician during the time he was so injured, etc. I figured the actual loss would be about $250. That would be far in excess of what I claim in this case. I am willing to waive the excess of the damage I claim in this case. The total, $249.59, and $175 for the use of the car, and $250 for the personal injuries, would bring it up over $500, and I waive all the excess above the $500.”

The driver of the car told a different story, though he admitted his car was going 15 or 20 miles an hour.

Counsel argue their case under the following heads:

(1) Errors in testimony during trial..

(2) The court should have directed a verdict for defendant, either when plaintiff rested, or when both sides rested.

(3) Errors in court’s charge, refusal to give requests to charge, and argument of counsel.

(4) Motion for new trial.

We take up the case in the order pursued by counsel.

1. It is said the court erred in allowing the value of the use of the car. It will be noticed no reason was given for the objection to this testimony; but even if one had been given the testimony was competent.

The following is said to be reversible error:

“Q. Did Mr. Spencer, in the presence of the driver, tell you he was going about 25 or 30 miles an hour?
“A. They took Mr. Funke aside, and I heard them say, ‘You certainly must have hit him an awful smash.’ ”

The record shows Mr. Spencer was assistant secretary of the defendant, and arrived on the scene while the parties were all there, and while the automobiles were in the positions left by the collision. Mr. Spencer was called as a witness by the defendant. On cross-examination he testified in part as follows:

“Q. Didn’t you state in the presence of the doctor and his brother that he must have got an awful bump, that your driver must have hit him an awful bump?
“A. I told you I stated that the day the accident occurred; I don’t remember the other man being there.
“Q. You stated to him your driver must have given him an awful bump?
“A. Yes, it must have been an awful' bump.”

If there was any error in the first instance, it was harmless error, in view of the fact that Mr. Spencer testified to the same thing.

2. Did the court err in declining to direct a verdict for defendant? In view of the doctor’s testimony, which we have quoted, it would have been error to direct a verdict for defendant, as the plaintiff’s testimony made a question for the jury.

3. Did the court err in his charge and in his failure to give defendant’s requests? We quote one of these requests:

“If you find that plaintiff could have seen defendant’s machine coming in time to have avoided a collision, either by turning to the left or stopping or in any other way, your verdict should be for the defendant.”

The court gave a long general charge, and told the jury repeatedly what was the duty of the respective drivers. We quote:

“Examining a little more specifically the duty resting upon the plaintiff, it was his duty, in driving his automobile, to have regard for the fact that Med-bury avenue was open for traffic, and it was his duty to do what a reasonably cautious man, a man of average prudence, would do under like circumstances. Indeed, gentlemen of the jury, in testing the conduct both of the plaintiff and of the defendant’s driver, Funke, to determine whether either of them was guilty of any negligence, this is the test furnished you by the law for determining that fact: Each of them, both the plaintiff and Funke, was expected to do, as he drove his automobile, what a man of average prudence, what a man of ordinary caution, would do under like circumstances. Thus, gentlemen of the jury, not the highest degree of care and caution was exacted of them; but as the doctor, the plaintiff, drove his automobile north on Brush street, and as' Funke drove his car west on Medbury, each of them was expected, under the law, to do what, under the then existing conditions, a man of average ordinary caution and prudence would do. Now, if either of them failed in that respect, such failure would be negligence. It is for you to say, then, gentlemen of the jury, keeping in mind the conditions as they existed that day, with reference to the light, with reference to the opportunity for seeing or not seeing the approach of a car, keeping in mind all the circumstances as they are established by this evidence here —it is for you to say whether the doctor, whether Funke, each operated his car as a man of average, ordinary prudence would do under like conditions. If you find that the doctor did, and that Funke did not, and that Funke’s failure resulted in injuries to the plaintiff, that would entitle the plaintiff to recover. If you find that the doctor did not operate his car under the then conditions as a reasonable man of ordinary prudence would have done, then the doctor could not recover. Likewise, if the driver, Funke, operated his car as a man of ordinary caution would do, under the conditions, then existing, then the defendant would not be liable.
“To make out the plaintiff’s right to recover then, gentlemen, upon this phase of the case, it must be shown by the evidence that the plaintiff operated his car with that degree of caution which an ordinary man would exercise under like conditions, and that Funke did not do so, resulting in the plaintiff’s injuries, and if that is your finding, the plaintiff is entitled to recover.”

We think this fully covered the law of the case. The other assignments of error have been examined; but we deem it unnecessary to discuss them.

The judgment is affirmed.

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


text:
    GORREY v. W. F. HURD CO.
    1. Master and Servant — Evidence oe Custom — Guards—Personal Injuries — Negligence.
    Where plaintiff claimed that the superintendent of defendant had promised him to repair a defective sticker machine near his place of work, and that the defendant failed to make the promised repairs to the machine, which threw a splinter into plaintiff’s eye, and it was apparent that plaintiff knew of the dangerous condition, evidence that other manufacturers provide hoods for sticking machines of that kind to protect the side heads, was not material, plaintiff failing for other reasons to establish liability.

    2. Same.

      Held, that the testimony showed plaintiff knew the exact situation and might have protected himself from injury, but that he did not regard the alleged defect as dangerous to him.
    Error to Wayne; Van Zile, J.
    Submitted June 10, 1913.
    (Docket No. 65.)
    Decided September 30, 1913.

      Case by Michael Gorrey against the W. F. Hurd Company for personal injuries. Judgment for defendant upon a directed verdict, plaintiff brings error.
    Affirmed.

      Samuel E. Jones, for appellant.

      Sherman D. Callender, for appellee.

       The question of the liability of a master for injuries caused by splinters flying from hammers or chisels, punches, and other similar tools is treated in notes in 13 L. R. A. (N. S.) 670; 30 L. R. A. (N. S.) 800; and 40 L. R. A. (N. S.) 832.

   Moore, J.

The plaintiff was a woodworker employed for four or five years by defendant on a sticker machine. He claims to have received an injury to the eye, not from his machine, but one adjoining it and about four feet away. This suit was commenced by declaration. Omitting its formal parts, the material averments are:

“Whereupon it became and was the duty of said defendant corporation to furnish the said plaintiff with reasonably sound, safe, and suitable machinery, appliances, fixtures, and place for the making and manufacture by said plaintiff of said woodenware as aforesaid, while so employed by said defendant as aforesaid. Yet the said defendant, not regarding its duty in that behalf, without the consent of the plaintiff, furnished and operated a certain machine in its factory, to wit, a sticker machine, for use by its employees in the aforesaid factory, which sticker machine was not reasonably sound, safe, and suitable for the purpose aforesaid, but on the contrary thereof was defective and wholly unsound and unsafe in this, to wit: That the aforesaid sticker machine was not provided with a sheet iron hood over the knives attached to the heads of the sticker machine to protect employees from slivers and other material thrown out, whereby and by means of the premises, and while the said plaintiff, with due care and caution upon his part, was operating an adjoining machine, there being a space of about four feet between the machine plaintiff was operating and the aforesaid sticker machine, and in the employ of said defendant, as aforesaid, without any fault or negligence upon the part of plaintiff, he was injured by having his left eye injured and destroyed by being struck in the left eye by a flying sliver thrown out from the aforesaid sticker machine, which injury to the left eye affected and impaired the vision of the right eye.
“And plaintiff avers that the place or shop where plaintiff was required and commanded to work in by the superintendent of the defendant corporation, on or about the 4th day of April, 1911, was not a sáfe place to work; that the aforesaid sticker machine which injured him was an old and obsolete make and a dangerous machine and was not provided with a sheet iron hood over the knives attached to the heads of the sticker machine, as is the custom so to do on similar machines.
“And plaintiff avers that the sticker machine which injured him on the 4th day of April, 1911, was not protected or guarded as ordered by the State factory inspector and as required by the statutes of the State of Michigan, to wit, section 15, Act 285, of the Public Acts of 1909.
“And plaintiff avers that the sticker machine which injured him on April 4, 1911, was defective as aforesaid, and that the defect was known to the defendant corporation, and plaintiff avers that on March 31, 1911, he called the attention of the superintendent of the defendant corporation to the defective condition of the aforesaid sticker machine which injured him, and the superintendent of the defendant corporation promised to repair and make safe the aforesaid sticker machine and ordered plaintiff to continue work, and plaintiff, relying upon the promise to repair the defects on the aforesaid sticker machine, continued to work for a period of three days, when plaintiff was injured as aforesaid through the neglect of defendant corporation to repair and make safe the sticker machine as aforesaid, whereby the plaintiff became and was sick, sore, lame, and disordered and so remained and continued for a long space of time, to wit:”

The trial disclosed that hoods had been put over the upper and lower knives of the machines, but that none were over the small sideheads that shaped the edges of the article planed, and no factory inspector had ever directed that hoods should be over them. The trial judge was of the opinion that plaintiff had failed to make a case and directed a verdict in favor of defendant. The case is brought here by writ of error.

We quote from the brief of counsel:

“Assignments of error 1, 2, 3, 4, and 5, all relating to the same matter, will be discussed together. Witness Eikoff was’ asked some questions, in relation to the custom of other factories using the same'kind of machine, as to placing hoods over the side heads over said machines. The court sustained an objection thereto, because the court maintained that immaterial testimony given by a witness in behalf of the defense could not be impeached by plaintiff. If the testimony were immaterial, there is no doubt but what that is the rule; but the question here before this court is: Can custom be shown? Or, in other words, is it competent to show that similar machines used by other manufacturers, that it is the custom by them to protect such machines so that workmen are safe from injury by reason thereof? .1 contend that the testimony is material. And in support of that contention I desire to cite the following cases:”

The averments of the declaration and the proofs offered on the part of the plaintiff are an answer to this contention. The plaintiff knew and had known just the condition of the machine, and his claim is that he continued to work, relying upon a promise to place a hood over the side knives. He gave proofs tending to support that claim. The foreman of the defendant swears the subject was never mentioned to him.

Under the issue as framed, the question of custom was immaterial. We again quote from the brief of counsel:

“As to the last assignment of error in this case; that is, in the granting of motion of defendant’s counsel in directing a verdict for defendant. It is a well-settled principle of law in this State that an employee being injured in the course of his employment by machinery which has become dangerous for want of repair and which the principal promises to repair on being notified of its condition, and the employee relying upon the promise to repair continues his work and is injured by reason of the defect while so continuing at work, it becomes a question for the jury as to whether or not the employee had a right to rely upon the master’s promise to repair and whether as an ordinary prudent man he was justified in continuing to perform the service in the manner in which it was performed. In support of this proposition the court is cited to the following authorities: Mann v. Railway, 124 Mich. 641 [83 N. W. 596]; Schlacker v. Mining Co., 89 Mich. 253 [50 N. W. 839],” and other cases.

There might be much force in this contention if the record was different. Plaintiff preferred no requests to charge. The trial judge was not told plaintiff desired this phase of the case submitted. The only assignment of error that can be said to relate to it reads as follows:

“That the court erred in charging the jury to render a verdict against the plaintiff and in favor of the defendant as requested by motion of defendant’s attorney.”

The case was very carelessly tried. However, the testimony of the plaintiff does disclose that he had a pair of large eyeglasses which he used to protect his eyes when grinding his tools at the emery wheel. His testimony in part is:

“Q. Did you wear them?
“A. If there was very much dust I would put them on.
“Q. Did you have them on on the 4th of April, 1911?
“A. No, sir.
“Q. Why not?
“A. Because there was no dust; I had no occasion to.
“Q. No dust that morning?
“A. No, sir. * * *
“Q. You had them with you in your pocket on the 4th of April, when you were running this machine; that you did not put them on because you did not think you needed to put them on?
“A. No, sir.”

The record also shows that a board had been prepared which, if put in place between the machines, would have intercepted the shavings and dust and had been used by the operator of the other sticker machine, and that plaintiff knew of this board and its use but did not use it.

The claim now made by the plaintiff is, to say the least, a strange one. He says a sliver struck him in the eye, and that one of his fellow employees pulled it out. The fellow employee testified that he never heard of a sliver but at times had been requested to remove dust, which he had done by rolling the lid of the eye over a lead pencil. The plaintiff never made complaint to the defendant, or any of its officers, that he had a claim against it. He testified in part as follows:

“Q. And then from the time that you got hurt until about ten weeks you were not at the factory?
“A. I had a small pay coming to me and about two or three weeks after I was hurt I went down and got • paid, I had a few days’ pay coming and I went down and got it.
“Q. That would be about three weeks after April 6th?
“A. Well, it may be; yes, sir; it was because I did not leave the house. I was from the doctor’s to the house all the time.
“Q. And the day when you say you got this sliver you were at the factory only once and that is when you went down to get your pay?
“A. I was at the factory to get my pay and then when I got kind of well I went back to the factory to go to work and that was Tuesday.
“Q. How long after you got the sliver did you go down there?
“A. It must have been about 10 or 12 weeks after I went down there, I know this day.
“Q. After you got the sliver?
“A. Yes, sir.
“Q. That was about 10 or 12 weeks?
“A. To my best estimation, I was not fit to work, but I was going to try it.
“Q. And who did you see when you were discharged?
“A. William F. Hurd.
“,Q. William F. Hurd, president of the company?
“A. Yes, sir.
“Q. And he told you he did not need your services any more?
“A. I started to work on the machine.
“Q. Did he dismiss you?
“A. Yes, sir; he said, ‘You are not wanted.’
“Q. Up to that time had you consulted an attorney about your claim?
“A. No, sir; not up to that time.
“Q. Never had consulted any one about your claim previous to that time that you were discharged?
“A. Until after I was discharged.
“Q. And about when was it, as you remember it, that you first made up your mind you wanted to make a claim against this company?
“A. After I was discharged and I saw the situation I was in.
“Q. After you were discharged?
“A. Yes, sir.
“Q. After you were discharged did you make up your mind you wanted to sue this company?
“A. About a month or two after.
“Q. And then that would be along in October?
“A. I could not say for sure, I know I was discharged and I thought I suffered 20 weeks at home idle and a doctor bill and I thought I could not stand for all that.
“Q. If you had not been discharged you would not have done anything about it?
“A. No, sir.”

No one understood the situation better than the plaintiff. He had worked for several years where he was when hurt. He did not regard the situation as dangerous. If he had, the use of his glasses would have removed the danger, or the use of the thin board between the machines would have prevented any injury. We cannot say an improper result was reached in this case.

Judgment is affirmed.

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


author: MOORE, J.

text:
    SMITH v. AMERICAN INSURANCE CO.
    Insurance — Concurrent Insurance — Vendor and Purchaser.
    Where the plaintiff, with the consent of defendant insurance company, sold the property insured under a land contract which provided that the purchaser should keep the premises insured for the benefit of the seller, and in case of loss the insurance should apply on the unpaid balance due, and where the vendee obtained further insurance of another corporation on the equity in- the property, an action lay in favor of the vendor against the first insurer for the full amount of the policy which was less than the balance due under the land contract. Since the vendee obtained the second policy without the vendor’s consent, the rights of the latter were not affected, and he was not entitled to any benefit under that policy of insurance.
    Error to Ingham; Collingwood, J.
    Submitted June 16, 1913.
    (Docket No. 130.)
    Decided September 30, 1913.
    Assumpsit by Edward P. Smith and Carrie Smith against the American Insurance Company on a policy of fire insurance. Judgment for plaintiffs, and defendant brings error.
    Affirmed.

      Cummins & Nichols, for appellant.

      Harry E. Hooker, for appellees.
   MOORE, J.

This is an action on a policy of fire insurance issued by the defendant covering a dwelling house, then owned by plaintiffs, and situate in the city of Lansing. At the close of the proofs defendant moved the court to direct a verdict, which motion was overruled. Defendant thereupon submitted certain requests to charge, which were refused by the court. Verdict and judgment were in favor of plaintiffs for $717.50, which was the full amount of the policy and interest. The case is here by writ of error.

The facts are as follows: At the time of the issuance of the policy plaintiffs were the owners in fee of the property. Later they sold the property on land contract to one Amelia Ossanetzki, who agreed to keep the property insured for the benefit of the plaintiffs. To accomplish that result, she paid them the premium for the unexpired portion of the insurance, and the parties went to the agent of defendant and stated to him the situation, when the following indorsement was made on the policy:

“Permission is hereby granted to sell the property covered by this policy, on contract to Amelia Ossanetzki attached to, and forming a part of policy of No. 9099 of the American Insurance. Company of New Jersey.
“Dated at Lansing, Mich., December 20, 1910.
“Lansing Insurance Agency, Agent.
“Per Chas. S. Emery, Secy.”

The policy so indorsed was left with the plaintiffs.

On the execution of the contract, Mrs. Ossanetzki went into possession, and continued in possession until the property was destroyed by fire, and at the time of the trial the land contract was still in force. At the time of the fire there was due on the contract $700 and interest. About six months after the land contract was made, Mrs. Ossanetzki procured insurance in her own name on her interest in the house and on her household goods. The plaintiffs had no knowledge of this insurance until after the fire, and their names are not mentioned in the second policy. On December 17, 1911, the dwelling house was completely destroyed by fire. • There was no claim the building did not exceed $700 in value, nor was there any dispute but that the value of the lot, without the dwelling, was about $400.

The policy issued by the defendant company was the-usual form of Michigan standard policy, and contained this clause:

“This company shall not be liable under this policy for a greater proportion of any loss on the described property, or for loss by and expense of removal from premises endangered by fire than the amount hereby insured shall bear to the whole insurance, whether valid or not, or by solvent or insolvent insurers, covering such property, and the extent of the application of the insurance under this policy or the contribution to be made by this company in case of loss, may be provided for by agreement or, condition written hereon or attached or appended hereto. Liability for re-insurance shall be as specifically agreed hereon.”

There was attached to and made a part of the policy this clause:

“Other concurrent insurance permitted; but it is especially agreed that if there shall be other insurance on said property, this company shall be liable only pro rata, with such other insurance, whether same covers concurrent with this policy or not.”

In the land contract between the plaintiffs and Mrs. Ossanetzki there appeared this clause:

“(3) Said second party shall keep the buildings now on, or that may hereafter be placed on, said premises insured in the name and in manner and amount and by insurers approved by said first party and leave the policy with first party, and in case of loss the insurance, unless by mutual agreement used to repair or rebuild, shall be paid to first party and be indorsed on' this contract to the extent of the amount unpaid thereon, and the balance if any shall belong and be paid to second party.”

The second insurance company claimed to Mrs. Ossanetzki that their policy on the house was void because of the previous policy, and returned that part of the premium applying to the insurance on the house, and paid her her loss on the household goods, and canceled the policy.

We cannot state the claim of defendant better than to quote from the brief:

“At the time of the issuance of the policy, plaintiffs were owners in fee of the property insured. And had the loss occurred while they remained the sole and unconditional owners of the property, no question would have arisen as to the liability of defendant for the full amount of the policy sued on in this case. But at the time of the fire, plaintiffs’ interests had changed (with consent of defendant) to that of vendors. They were not at the time of the loss the sole and unconditional owners of the property. On the contrary, their vendee, Mrs. Ossanetzki, was the sole and unconditional owner of the property.”
“ ‘The proposition that the vendee under a contract for the purchase of land, or under a bond for conveyance of title, is a sole and unconditional owner, within the meaning of a policy of insurance, is supported by well-nigh all the authorities; only a few cases being found to dispute it,’ citing cases. [20 L. R. A. (N. S.) 775, case note.]
“Undoubtedly the vendee, Mrs. Ossanetzki, had an insurable interest to the full value of the property. * * * But in the case of a vendor, the rule is different. The only loss or damage which the plaintiffs could by any possibility, suffer was the loss or damage to their interest in the property insured. * * * We submit, therefore, that plaintiffs were not entitled to recover, in any event, more than the ‘loss or damage’ to their interest in the property insured.”
“Now, what was the ‘loss or damage’ to plaintiffs’ interest? It is undisputed that at the time of the loss there. was $700 balance due on plaintiffs’ contract with their vendee. It is also undisputed that at the time of the loss a policy of insurance on this same property had been taken out by plaintiffs’ vendee in her own name in the Commonwealth Insurance Company for $700. By the terms of the land contract between plaintiffs and their vendee, it was made the duty of the vendee to keep the premises insured in the name of the vendors, ‘and in case of loss the insurance, unless by mutual agreement used to repair or rebuild, shall be paid to first party and be indorsed on this contract to the extent of the amount unpaid thereon.’ While it is true that the policy in the Commonwealth Company was surrendered by the vendee and not recovered on by either the vendee or the plaintiffs, it is likewise true that the policy in that company was valid and enforceable, and the proceeds in equity belonged to the plaintiffs. * * *
“But the result of such a doctrine leads to the absurdity and injustice of permitting the plaintiffs to recover the amount of the balance due on their contract from the defendant, and at the same time collect the same amount from the Commonwealth Company under their contract with their vendee, (unless it should be held that the policies in these two companies must prorate the loss, a proposition we will take up later). * * *
“If the court should not accede to these views, then we contend that defendant company under its contract with plaintiffs was entitled to prorate the loss with the Commonwealth Insurance Company, and was only liable for one-half of the loss, or $350.”

This proposition is argued at length. Finally counsel say:

“If it be held that the policy in the Commonwealth Company is not other insurance within the meaning of the defendant’s policy, and that defendant is not entitled under its contract with plaintiffs to prorate this loss with the Commonwealth Company, the result will be to establish a rule of law in this State ,that will permit a vendor to recover from two or more companies the full amount of -any and all policies that may exist on the same property in his own name or for his benefit, thereby recovering, as in this case might have and still may bé done, twice the amount of the loss or damage to his interests, and several hundred dollars more than the admitted value of the specific property destroyed. No such construction, in the interests of honesty and fair dealing, is called for. And the plain language of the contract does not permit of it.”

We do not agree with the views expressed by counsel which we have quoted. When the policy was obtained from defendant by plaintiffs, they were the owners in fee of the property. Later they made a sale of the property upon land contract, with the consent of defendant, and, everybody who was interested recognizing that they retained an insurable interest in the property, the permit to sell was granted, and they retained the policy; the agreement being between the vendor and the vendee that, if loss occurred, the plaintiffs might receive as their portion of the loss the amount unpaid on the contract, and the balance be paid to the vendee. Neither the plaintiffs nor the defendant were ever parties to any other or different contract. The vendee, without consulting either the plaintiffs or defendant, insured her interest in the property in another company. Whether the second policy was good or bad as to the vendee of the plaintiffs is not a question necessary to decide. Plaintiffs had no interest in the second policy because their vendee had already carried out her agreement to keep the property insured for their benefit.

We think it equally clear that the policy which had been retained by the plaintiffs, under the agreement between the plaintiffs and their vendee, could not be changed to the harm of the plaintiffs without consulting them, by their vendee attempting to get insurance upon her interest in the property. See Miller v. Aldrich, 31 Mich. 408; Hall v. Insurance Co., 90 Mich. 403 (51 N. W. 524); Hogadone v. Insurance Co., 133 Mich. 339 (94 N. W. 1045); Brunswick-Balke-Collender Co. v. Assurance Co., 142 Mich. 29 (105 N. W. 76); Id., 150 Mich. 311 (113 N. W. 1113); Craig v. Insurance Co., 162 Mich. 657 (127 N. W. 757); Goodwin v. Insurance Co., 163 Mich. 41 (127 N. W. 790).

Judgment is affirmed.

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