author: Moore, J.

text:
    FIFTH NATIONAL BANK v. PIERCE.
    1. National Banks — Unauthorized Security — Validity.
    While the taking of unauthorized security by a national bank might afford a reason for the forfeiting of its charter by the government, security so taken is not necessarily invalid.
    2. Mortgages — Failure to Record.
    A woman intrusted to her brother-in-law, for more than 20 years, the management and use of her property, relying wholly upon him to take care of her interests. The brother-in-law, becoming insolvent, conveyed to her certain property, subject to a mortgage which had been left unrecorded for one year after its execution. Thereafter she resisted foreclosure, claiming that, during the time the mortgage was not of record, she was ignorant of its existence, and was thereby led to trust her brother-in-law more implicitly than she would have done had she known that his property was incumbered. Held, that her long acquiescence in his management negatived the contention that she was misled by the omission in question.
    3. Same — Foreclosure—Defenses—Cross-Bill.
    Where a defendant in foreclosure proceedings files a cross-bill asking that the mortgage be postponed to his levy of execution as a judgment creditor of the mortgagor, for the reason that the mortgagee had misled him into extending credit by false statements as to the mortgagor’s responsibility, he cannot urge upon the hearing a further reason, not stated in the cross-bill, that the mortgage was for some time left unrecorded, to his damage.
    4. Same — Priorities—Estoppel.'
    That a bank, in reply to a letter asking for information as to the capital, character, iiromptness, and responsibility of a specified person, answers in good faith that he is in good standing and credit, and claims to be worth a specified amount, without referring to a mortgage which such person has given to the bank, does not thereby entitle the one making the inquiry to priority over such mortgage for a credit given to the mortgagor, especially where reliance is not placed solely on such communication, but similar communications are sent to other banks, and the reports of commercial agencies aro consulted.

      5. Same — Delivery—Dower.
    A mortgage executed by husband and wife under an agreement that it is to be delivered and put upon record when the husband consents thereto will pass the wife’s inchoate dower right upon its delivery and recording by the husband’s consent.
    6. Same — Interest—Usurious Rate — Mistake of Scrivener— Correction on Foreclosure.
    Where a mortgage is drawn upon a printed blank which fixes a rate of interest above the legal rate, and, through an error of the scrivener, in a single instance the printed form is not changed to accord with the lawful rate agreed upon, the instrument is not thereby rendered usurious, but the mistake may be corrected on foreclosure.
    7. Same — Redemption Period — Sufficiency.
    A decree foreclosing a mortgage, which authorizes a sale of the premises at any time after 32 days after such decree, unless the amount found due thereon should be paid, is not invalid as not allowing a reasonable time in which to redeem, where the mortgage was entirely due nearly two years before the decree was rendered, and the foreclosure suit was commenced 21 months before the decree.
    8. Same — Rents and Profits — Receiver Pending Foreclosure.
    A mortgagee is not entitled to have a receiver of the property appointed pending foreclosure, even though it appears that the mortgagor’s grantee does not intend to apply the rents and profits to the payment of the incumbrance.
    Cross-appeals from Kent; Adsit, J.
    Submitted February 5, 1898.
    Decided June 28, 1898.
    Bill by tbe Fifth National Bank of Grand Rapids against Edwin S. Pierce' and wife, Emma L. Chamberlain, the Charles P. Kellogg Company, and others, to foreclose a mortgage. From a decree of foreclosure, defendants Chamberlain and the Charles P. Kellogg Company appeal, and complainant appeals from an order refusing to appoint a receiver.
    Affirmed.

      Uhl, Hyde & Earle and Carroll, Turner & Kirwin, for complainant.

      Butterfield & Keeney, for defendant Chamberlain.

      G. A. Wolf (W. D. Fuller, of counsel), for defendant Charles P. Kellogg Company.
   Moore, J.

Complainant filed a bill to foreclose a mortgage made by Mr. and Mrs. Pierce February 24, 1894, which mortgage was recorded March 14, 1895. A decree of foreclosure was rendered, in which there was found to be due $11,423.38. After the decree, complainant asked to have a receiver appointed. The application was denied.

The defendant the Charles P. Kellogg Company is a judgment creditor of Mr. Pierce, having an execution levy upon the property covered by the mortgage. It- defends against the mortgage upon the ground that, previous to extending credit to Mr. Pierce, it inquired of the complainant bank about his standing, and was wrongfully advised by it that Mr. Pierce was of good standing and credit, and claimed to be worth $35,000 or $40,000, and, relying upon such representation, it extended credit to Mr. Pierce. It is also the claim of this company that it was the duty of complainant to advise it of the mortgage it held, but, instead of doing so, it concealed the fact that it had such a mortgage, and the mortgage was in fact, and in legal effect, put to a fraudulent use, and should, in equity, be postponed to the execution levy of the defendant company. The defendant Chamberlain is- the sister of Mrs. Pierce. She was the possessor, by inheritance, of some property, which was managed many years by Mr. Pierce. He was indebted to her for nearly $9,000 at the time the mortgage was made. At about the time of his failure, Mr. and Mrs. Pierce deeded the property covered by the mortgage to Miss Chamberlain, who defends against the mortgage, diaiming that, during the time the mortgage was not of record, she was ignorant of its existence, and that, if she had known of it, she would not have intrusted Mr. Pierce so implicitly as she did, but would have secured her indebtedness before the failure of Mr. Pierce made it too late to do sq. She also claims that the inchoate dower interest of Mrs. Pierce is not conveyed by the mortgage, and that, by virtue of the deed to her, she succeeds to it, and it should not have been covered by the decree. The decree was dated July 27, 1897, and authorized a sale of the premises any time after August 28, 1897, if the amount due was not paid. It is the claim of Miss Chamberlain that the time in which to redeem was too short. It is also claimed by her that, because of the interest clause in the mortgage, it was usurious. The complainant and Miss Chamberlain and the Charles P. Kellogg Company have all appealed, — the complainant, from the order of.the court refusing to appoint a receiver; and the others, from the decree.

It is urged that the bank was not authorized, under the national bank act, to extend credit based upon security upon real estate, and that the credit to Mr. Pierce was based upon the mortgage sought tp be foreclosed, and for that reason the mortgage is void. The testimony in relation to the circumstances under which the mortgage was given, and the time when it was to take effect, is conflicting; but, conceding that the credit was extended because of the security offered by the mortgage, it does not follow that the mortgage is void. If the bank, in taking this security, has violated any of the provisions of the banking act, — a question about which we do not express any opinion, — it may be a reason why the governmental authorities should interfere and forfeit the charter of the bank, but it does not invalidate the mortgage. The authorities are very clear upon this proposition. National Bank v. Matthews, 98 U. S. 621; Butterworth & Lowe v. Kritzer Milling Co., 115 Mich. 1.

In our view of the case, it does not become necessary to decide whether the mortgage became a present mortgage at the time of its execution, or whether it did not become a completed mortgage, by delivery, until the day when it was put upon record. It is very evident from the testimony that Miss Chamberlain was not influenced either one way or the other, in her dealings with her brother-in-law, by the withholding from the record of the mortgage. She had confidence in Mr. Pierce, and for more than 20 years she allowed him to manage and use her money, without questioning his ability and willingness to take care of her interests. The deed which she accepted, and through which she holds title, is a warranty deed, except as to two mortgages, one of which is the one involved in this litigation. We do not mean to intimate that this mention of the mortgages in the deed estops Miss Chamberlain from contesting their validity, but, taken in connection with the entire proceedings between her and Mr. Pierce, it shows that she relied wholly upon him to take care of her interests.

As to the effect of the withholding of this mortgage from the record upon the claim of the Charles P. Kellogg Company, they do not base their claim to relief, in their cross-bill, upon the fact that the mortgage was void against them as subsequent creditors. The ground for relief stated by them is that Mr. Pierce desired credit; that, before extending it to him, they inquired of the complainant about his financial condition, and-

“ Asked it to state fully all his circumstances; and complainant, about March 2, 1894, wrongfully advised this defendant that said E. S. Pierce was of good standing and credit, and claimed to be worth $35,000 to $40,000; that defendant believed and relied upon said representation, as complainant intended it should, and sold and delivered said Pierce, on credit, goods to the amount and value of $799.50; that it was the duty of complainant to disclose said mortgage, but it concealed the same from the defendant, and defendant did not know of the same until after said credit was extended.”

It is important to ascertain from the record whether the allegation of the cross-bill is sustained by the proof. The inquiry made of the bank was as follows:

“Charles P. Kellogg Company.
“Chicago, March 1, 1894.
“Dear Sir: E. S. Pierce, Grand Éapids, Michigan:' We would thank you for any information that will enable us to form a correct opinion of capital, character, promptness, responsibility, etc.
“Your reply herein will be considered strictly confidential.
“Yours truly,
“Charles P. Kellogg Company.”

The above was all printed. It was addressed to the complainant bank. On the same piece of paper the cashier of the bank wrote as follows: “He is of good standing and credit, and claims to be worth $35,000 to $40,000.” The credit man of the Charles P. Kellogg Company did not content himself with this reply, but consulted Bradstreet’s report, which gave the business history of Mr. Pierce; and, among other things, it stated, “We are informed that he claims to be worth $35,000, net, at the present time.” Then followed a statement of his property, and the report continued, “He is not supposed to have much ready means, and we are informed that at least part of the capital which he will use in this business will be borrowed.” And the report spoke well of him personally, and of his reputation. R. G. Dun & Co.’s report was also consulted. This report was a detailed one, and, among other things, said, “It is not believed that he requires any further introduction to the trade, and is held safe for his business engagements, upon an estimated worth of from $30,000 to $35,000 clear.” A printed inquiry like the one sent to complainant was addressed to four other banks at Grand Rapids. One of them replied: “We cannot speak too highly of Col. Pierce’s character and promptness. We cannot give you reliable information as to capital, but consider you may rely on the representations he makes.” The National City Bank replied, among other things: “On inquiry, I learn that Mr. E. S. Pierce is regarded worth about $30,000. He stands well as to character.” Inquiries were also addressed to the lawyers of the defendant, one of whom replied, under date of March 3d, saying, among other things: “He is probably worth $25,000. He has a good reputation, has always paid his debts, has a good credit, and we think he is a good business risk at present. * * * However, we’ think he will be able to meet his obligations for a time.” The other one, under date of March 10th, wrote defendant, among other things: “I should advise, in giving credit, to ask for a personal statement from Mr. Pierce.” Inquiry was also made of the Michigan Trust Company. The inquiry sent to the complainant was the same as the one sent to the others. After receiving these answers, in the spring of 1894, goods were shipped to Mr., Pierce, all of which were subsequently paid for. With the exception of a bill of goods valued at $42, shipped August 1, 1894, upon a credit of four months from December 1, 1894, all of the goods embraced in the judgment were sold after October 20, 1894. A large proportion of them were sold as late as March, 1895. There was nothing in the inquiry addressed to the complainant which made it incumbent upon it to send a reply; but, as a matter of courtesy, it did the same as the other banks, — it sent a reply. There is nothing in the record to show that its reply was not according to the fact, or that it was intended to deceive. To hold a bank liable for replying to an inquiry under the circumstances shown by this record would make it exceedingly hazardous for it to reply to any such inquiries, and would not be in accordance with any principle of law to which our attention has been called. See First Nat. Bank v. Marshall & I. Bank, 108 Mich. 114, and the many cases there cited; Potts v. Chapin, 133 Mass. 276.

It is the claim of defendant Chamberlain that there was no such delivery of the mortgage as- to make it a valid mortgage as to Mrs. Pierce, and that her dower interest was not conveyed. The record discloses that the mortgage was executed by both Mr. and Mrs. Pierce. According to one theory of the case, it was then delivered, so as to become a present mortgage. According to the other theory, it was to be delivered and put upon record when Mr. Pierce consented that it should be done. Mr. Pierce gave his consent to its delivery and recording. Which-, ever theory is adopted, we think it clear that Mrs.' Pierce consented to the delivery of the mortgage, and that by her joining in the execution of it, and its subsequent authorized delivery, her inchoate dower right was alienated.

The mortgage contained a provision that deferred installments of interest should become principal, and draw interest at 10 per cent. It is claimed that this provision made it a usurious contract, and that payment of interest upon such a contract cannot be enforced; counsel citing Act No. 156, Pub. Acts 1891. An inspection of the original mortgage shows it to have been drawn upon a printed blank, in which, wherever the rate of interest is mentioned, it is described as being at the rate of 10 per cent. In all other portions of the mortgage, except the clause referred to, the printed word “ten” was stricken out, and the figure “7” was written in. The scrivener swears that the failure to make the change in the interest clause was a clerical error; that the agreement was for interest at 7 per cent.; and that, to carry out the intention of the parties, the word “ten” should have been, and was intended to be, stricken out, and the figure “ 7 ” written in the place of it. We think this was such a mistake as could be corrected in this proceeding. The court below figured interest at the rate of 7 per cent., and in doing so, we think, carried into effect the intention of the parties to the mortgage.

It is said that the court did not allow a reasonable time in which to redeem, and counsel cite Detroit Savings Bank v. Truesdail, 38 Mich. 430. In that case the decree provided that the amount due, $110,000, should be payable forthwith. In this case the amount secured by the mortgage was all due im September, 1895. This case was commenced in October, 1895. The decree was not taken until July, 1897. Under these circumstances, we cannot say that the time given in the decree in which to redeem was unreasonable.

On the part of the complainant, it is urged that the court erred in refusing to appoint a receiver. It is said that Miss Chamberlain does not intend to pay the incumbrances upon the property, and that she should not be entitled to the rents and profits. Counsel cite Belding v. Meloche, 113 Mich. 223. This case was a foreclosure of a land contract, wherein it was agreed that, in case of a default, the. grantor should be entitled to possession. It is shown by the opinion that a different conclusion would have been reached had it been a proceeding to foreclose a mortgage. See 2 How. Stat. § 7847; Wagar v. Stone, 36 Mich. 364.

We think the decree of the court below should be affirmed. As all the parties in this court are appellants, no costs will be allowed.

The other Justices concurred.


source: Caselaw Access Project

author: Montgomery, J.

license: Public Domain

text:
    WESSON v. TOLSMA.
    1. Easements — Alleys—Prescriptive Right.
    The use of an. alley in the rear of certain lots by the owner of one of them, under a claim of right recognized by the owner of the other, will ripen into a right by prescription.
    2. Same — Evidence—Terms of Grant.
    A deed to a lot originally 100 feet deep, describing it as being 80 feet deep and bounded in the rear by an alley, is persuasive evidence that such grantee and his subsequent grantees held in recognition of the rights of the adjoining owners in such alley.
    8. Same — Character of User.
    The fact that sheds for the shelter of teams were built in a space claimed to be an alley is not conclusive evidence that the space was not used for all the purposes of an alley.

      Appeal from Wayne; Frazer, J.
    Submitted April 19, 1898.
    Decided June 28, 1898.
    Bill by Lacyra E. Wesson against Alexander S. Tolsma to enjoin the obstruction of an alley. From a decree dismissing the bill, complainant appeals.
    Reversed.

      Julian G. Dickinson, for complainant.

      Brennan, Donnelly & Van De Mark and Selling & Hatch, for defendant.
   Montgomery, J.

The bill in this case was filed to compel the removal of a building erected upon land claimed by complainant to be an alley abutting complainant’s property, and to restrain defendant from obstructing such alley, or interfering with complainant’s rights therein. The locus in quo is a strip of land 40 by 20 feet in the rear of lot 60 of section 3, Governor and Judges’ plan of Detroit. It appears that on the 27th of April, 1807, a plan of this section was made, showing an alley or cul de sac of the dimensions stated, in the rear of lot 60, and terminating at the side of lot 59, now owned by complainant. This plat did not show the names of the streets, but was apparently accurate in other respects. It was not, however, recorded until the 23d of December, 1848, when it was placed of record, pursuant to a resolution of the common council of the city, sitting as a land board, adopted December 12, 1848. A map of Detroit was made by John Farmer in 1831, which shows this alley. In 1835 another map was made by Mr. Farmer, which shows lot 60 with the rear 20 feet separated from the front portion by a dotted line. Numerous other maps were introduced, — one made by Eugene Robinson in 1879, one by the same publisher in 1885, and still another in 1889; also a map approved by the board of public works in 1886, — none of which show the alley in question. Some testimony was also introduced to show that the dotted lines in the maps of 1831 and 1835 indicated only a proposed alley. As to the map of 1831, this testimony is not persuasive, in view of the fact that in the marginal annotation on that map appears the following: “The dotted lines exhibit the boundaries of certain lots and alleys according to the recorded plan.”

One A. E. Hathon made a map of the city of Detroit, the date of which does not appear. The copy which is recorded bears date of 1856. After the Governor and Judges’ plan was made, a conveyance was made of both lots 59 and 60 to "William Brown, describing the lots as 100 feet in depth, which description included the land appearing as an alley on the map. Similar descriptions were contained in the chain of title until 1848, when the title was vested in Albert Crane. March 30, 1848, Albert Crane deeded an undivided one-half to Daniel C. Waterman, describing the property as the undivided one-half of lots 59 and 60 in section 3, corner of Woodbridge and Griswold streets. On May 29, 1849, Waterman conveyed to Crane lot 59 in section 3, Governor and Judges’ plan of Detroit. Complainant derives title through mesne conveyances from Crane. On the 8th of August, 1848, Crane and Waterman conveyed to Charles J. Trombley “lot 60 in section 3, Governor and Judges’ plan, according to A. E. Hathon’s map of Detroit, being 80 feet deep and 40 feet wide, more or less, and bounded in front by Griswold street, on one side by lot 59, and on the other side by an alley, and in the rear by an alley.” One Robert Dermont apparently held title to lot 59 at one time, and complainant’s grantor, by mortgage foreclosure, acquired title. On the 1st of November, 1856, Dermont, as owner of lot 59, and Trombley, as owner of lot 60, entered into a pa^-wall agreement, which recited that “said Dermont is desirous * * * to extend the present wall from its present terminus to the alley in the rear, ” and contains a grant to Dermont of the right to construct a party wall along the line “to the alley in the rear of said lot.” Trombley conveyed to Rahaley, and Rahaley to Seberon E. Tolsma. In each conveyance lot 60 is described as bounded in the rear by an alley. On the 11th of October, 1894, Seberon F. Tolsma procured a quitclaim deed from Trombley, purporting to convey the locus in quo. The title of defendant was derived through this latter conveyance. Defendant thereupon erected the structure complained of. A large mass of oral testimony was taken bearing upon the question of the existence of an alley by prescription. The circuit judge dismissed the bill, and complainant appeals.

Defendant contends that, under the authority given to the governor and judges to make a plan, they could not divest title, and that the plan proposed by them was a tentative plan, as evidenced by their subsequent conveyance of the locus in quo as a part of lots 59 and 60, and that, in the absence of any express acceptance of the dedication by the public, the complainant has no standing. There would be force in this contention if there were no evidence of prescriptive right. It is also urged that an estoppel does not arise in favor of the complainant by a conveyance to defendant’s grantors, describing the locus in quo as an alley. This is by no means so clear, as the conveyance to Trombley was made by Crane, he (Crane) reserving title in lot 59; but we do not care to rest our conclusion on the effect of this conveyance. We are all well satisfied that complainant has shown herself entitled, as against defendant and his grantors, to claim an easement in the locus in quo, acquired by user, under a claim of right, not only acquiesced in, but affirmatively recognized, by the grantors of defendant, for much more than the statutory period. The terms of the conveyance under which defendant’s grantors held may not estop defendant, but they are most persuasive evidence that the tenants of lot No. 60 held in recognition of the right of complainant and her grantors. The fact that sheds were built in this alley to shelter teams is by no means conclusive evidence that the space was not used for all the purposes of an alley. The chief use of an alley, and particularly of a cul de sac, is that made by the abutting owners. Paul v. City of Detroit, 32 Mich. 108; Bagley v. People, 43 Mich. 355 (38 Am. Rep. 192); Horton v. Williams, 99 Mich. 423.

We are satisfied that the occupants of complainant’s premises have had the uninterrupted use of these premises ever since their building was constructed, and that this occupancy has been with the recognition and consent of the owners of lot 60. This case is quite unlike Dexter v. Tree, 117 Ill. 532, cited by defendant’s counsel. In that case the question was whether a prescriptive right had been acquired in an alley when the instrument creating it described it as a private alley for the sole and exclusive use of the named parties. It was held that the mere permissive use of the alley by a third person, under no claim of right, could not ripen into a right by prescription. In this case the complainant’s and defendant’s grantors all understood that the use of this alley by complainant’s grantors was not merely permissive, but under a claim of right; not only this, but a claim of right recognized by defendant’s grantors.

The decree below will be reversed, and a decree entered granting the relief prayed, with costs of both courts to complainant.

The other Justices concurred.


text:
    MYERS v. ALPENA LOAN & BUILDING ASSOCIATION.
    1. Building and Loan Associations — Fraudulent RepresentaTIONS.
    Statements by officers of a building and loan association as to how soon the shares of stock would attain their full value, and how low the rate of interest to the borrower would be, are but matters of opinion, and cannot be treated as fraudulent representations.
    2. Same — Premiums—Fixed Minimum — Validity.
    Under 3 How. Stat. § 39817t, providing that the money of building and loan associations shall be loaned to the stockholder who bids “the highest premium” for the preference, the establishing of a minimum premium by such an association is unlawful.

    3. Same — Return of Premiums.
    A building and loan association which has loaned money to the persons offering the highest premiums, in accordance with 3 How. Stat. § 39817i, has no right, after the lapse of several years, to return to the borrowing stockholders the premiums bid by them, thereby depriving those who bid a premium below the average amount of their right to share in the próñts derived from the premiums.
    Appeal from Alpena; Kelley, J.
    Submitted April 20, 1898.
    Decided June 28, 1898.
    Bill by Julius Myers and wife and Moses C. Myers against the Alpena Loan & Building Association to en-" join a foreclosure sale. Defendant appeals from a decree fixing the amount due.
    Affirmed.

      Joseph H. Gobb, for complainants.

      J. D. Turnbull, for defendant.

       The validity of fixed premiums or fixed minimum of premiums is the subject of a note to McCauley v. Workingman’s Building & Saving Ass’n, (Tenn.) 35 L. R. A. 244

   Moore, J.

In 1890 Julius Myers was the owner of real estate upon which there were mortgages for $6,000, on which he was paying interest at the rate of 7 and 8 per cent. He claims he was told by the officers of the defendant association that he could obtain money from them so it would not cost him more than 5 or 6 per cent., and that the loan would have to be made through his son, Moses C. Myers, who was then a member of the association. He then conveyed the property to his son, and a loan was procured, secured by 77 shares of stock and a mortgage upon the real estate. The property was after-wards so conveyed that Julius Myers and his wife are now the owners of it. August 10, 1897, defendant commenced foreclosure proceedings by advertisement, claiming there was due $3,968.35. November 5, 1897, complainants filed a bill and obtained an injunction restraining said sale. After a hearing in open court, a decree was rendered by the circuit judge finding there was due upon the mortgage $3,307.37. From that decree the defendant appeals.

The defendant association was organized under Act No. 50, Pub. Acts 1887 (3 How. Stat. § 3981a et seq.). From the facts disclosed by the record, the transaction should be treated as though Julius Myers became a member of the association, and the loan was made to him. It was for the purpose of accomplishing this result that the various transactions occurred. The record shows that it was represented to Mr. Myers that he would get his money for a less rate of interest than he was then paying, and that the shares of stock would attain the full value of $100 each in five or six years. He was also told that the defendant sold its money at auction at its stated meetings, and would not accept a bid for less than 20 per cent, premium, and that it frequently obtained a much higher premium. June 10, 1890, 77 shares of stock were obtained by Moses C. Myers, acting for his father, at a premium of 20 per cent., which was figured upon the face value of the stock; and the mortgage in question was given for $7,700, though there was paid to the complainant but $6,160. The principal of the mortgage was to be paid at the rate of $38.50 each month, and the interest on the principal sum at 8 per cent., amounting to $51.33 each month, until the shares of stock attained the value of $100 each. Complainants made these payments promptly until October, 1896, when they amounted to $5,081.69. Up to March, 1897, the shares of stock in the company had been issued in series, — 13 series in all. The association had collected from its members, and loaned on real estate and on its stock, nearly $150,000, at an average premium of upwards of 30 per cent. It had sustained some losses, through the defalcation of one of its officers, and through the depreciation of real estate, but, according to the record, it had made large profits. In the spring of 1897, without the consent of complainants, the association voted to return to all the borrowing members the premiums they had bid for their respective loans, and this was done. At the same time the keeping of the stock in series was abolished. The accounts of all the members were readjusted, and interest was figured on the amount of the mortgages at 8 per cent., and credited upon the dues paid at 6 per cent. At the same time the practice of loaning money in open competition to the highest bidder was abolished, and the subsequent loans have been made either at a nominal premium or without any premium.

It is the claim of the complainants that the representations made to them were fraudulent, and for that reason the contract is void. It is also claimed that the subsequent acts of the association were unlawful, and deprived them of vested rights, and made it impossible for the original contract between the parties to be carried out. They filed their bill to have the original contract set aside, so far as the amount of. the mortgage, the time of payment, and rate of interest are concerned, and to be allowed to treat the transaction as a direct loan, and pay the defendant the amount of money they received, with 6 per cent, interest. The circuit judge granted complainants this relief, except that he computed the interest at 8 per cent.

It is claimed on the part of the association that the statements of its officers as to how soon the shares of stock would attain their full value, and how low the rate of interest to the borrower would be, are but matters of opinion, and cannot be treated as fraudulent representations. We think this contention is sustained by the following authorities: Lake v. Security Loan Ass’n, 72 Ala. 207; Hammerslough v. Loan & Savings Ass’n, 79 Mo. 80; American Building & Loan Ass’n v. Bear, 48 Neb. 455.

Section 11 of the act (3 How. Stat. § 3981/c) provides that no premiums, fines, nor interest on such premiums shall be deemed usurious. It has already appeared that the mortgage was for $7,700, upon which interest was to be computed monthly at 8 per cent., though the complainants received in money but $6,160. Under the general laws of the State, a like transaction would be usurious, and is saved from being so only by the provisions of this statute. To entitle these associations to the privilege of charging more than the rate of interest fixed by the general law of the State, they must comply with the provisions of the law under which they are organized. Section 8 of the act (3 How. Stat. § 3981 A) provides that the money to be loaned shall be offered for loan in open meeting, and that the stockholder who shall bid the highest premium for the preference or priority of loan shall be entitled to receive a loan for the amount stated in the by-laws. It has been repeatedly said that the primary purpose of these organizations was to encourage people of limited means to procure homes, and to make it possible for them to do so by advancing money to them to build their homes, secured by their stock and real estate. There are two classes of shareholders, — those who borrow, and those who do not. The shareholder whose necessities require him to borrow is entitled to have the money loaned to him, if the security offered by him is good, if he is the highest bidder. The rule to require a bid of 20 per cent, minimum premium was in contravention of this right. It is in the interest of the nonhorrowers, at the expense of the borrowers, and is contrary to the provisions of the act under which this organization exists. Stiles’ Appeal, 95 Pa. St. 122.

It is evident that the right to charge a borrower fines, premiums, and interest on money he has never received gives him the reciprocal right, as a member of the association, to share in the profits growing out of these fines, premiums, and interest on premiums. The complainant had been a member of this company and made his payments for nearly six years, when it was decided to return to the borrowing stockholders the premiums bid by them. The complainant had a right to share in the profits derived from these premiums. It is evident that to return to one stockholder a premium of 60 per cent., and to all the stockholders their premiums, which would average upwards of 30 per cent., while there was returned to the complainant but 20 per cent., is to deprive him of a portion of the profits to which he is entitled. The practical effect of the act of the association is to compel the complainant to pay 8 per cent, interest, computed monthly, on $7,700, when he has had but $6,160, and at the same time to deprive him of any portion of the profits of the business.

The circuit judge, in computing the amount found due by the decree, figured the interest each month at 8 per cent, on the amount of money received by the complainant, added it to the principal, and deducted each monthly payment. From this decree the complainant has not appealed. The appeal of the defendant is not well taken. The decree is affirmed, with costs.

The other Justices concurred.


text:
    BLAKLEY v. COCHRAN.
    1. Principal and Agent — Ratification—Knowledge of Facts— Inference from Situation of Parties.
    Where decedent, for three years prior to her death, lived at the home of her business manager, who previously, in her absence, had borrowed money to pay for repairs upon her house, and had given her note therefor without authority, the jury, in determining the validity of a claim upon the note, were justified in drawing the inference that decedent, before making statements to the manager’s wife relied upon to show a ratification, informed herself fully as to the transaction.

      2. Same — Evidence—Sufficiency.
    A statement made by decedent to the manager’s wife, with full knowledge of the facts, to the effect thqt, but for her owing the note in question, she might carry out a certain benevolence, taken in connection with a letter previously written to the manager, expressing satisfaction that he had been able to raise the money for the repairs, was sufficient to support a finding that she had ratified the execution of the note.
    3. Same — Agent’s Claim against Principal’s Estate — Accounting — Defenses.
    A claimant against an estate upon a note need not show affirmatively, where he was agent for the decedent for several years before her death, that he had properly accounted to her as to all matters between them, as the failure so to account is matter of defense.
    Error to Alpena; Kelley, J.
    Submitted April 20, 1898.
    Decided June 28, 1898.
    Abraham R. Blakley presented a claim against the estate of Julia F. Farwell, deceased, upon a. promissory note.' The claim was allowed in the probate court, and George G. Cochran, a legatee, appealed to the circuit. From a judgment for claimant, .contestant brings error.
    Affirmed.

      Joseph H. Cobb (J. D. Turnbull, of counsel), for appellant.

      I. S. Canfield and Frank Emerick, for appellee.
   Montgomery, J.

This is an appeal from the Alpena circuit allowing a claim in favor of Abraham R. Blakley against the estate of Julia Farwell, deceased. Mr. Blakley was the business manager of the estate of Julia Far-well from the time she came into possession of her estate by inheritance from her mother until her death, which occurred February 29, 1896. This estate consisted of dwelling houses, a brick block, and unimproved property, or city lots, situated in Alpena, a portion of which had been sold on land contracts. Miss Farwell disposed of her property by will, dividing it into three equal parts. One-third she willed to George Grove Cochran, the contestant in this case; one-third to her sister, Mrs. Osborn; and one-third principally to charitable institutions. Mr. Blakley filed two claims in the probate court against the estate of Miss Farwell, — one for his personal services in managing the estate for the last few years, the other on a promissory note, which reads as follows:

“$1,200. Alpena, August 14,1888.
“One year after date I promise to pay to the order of Mrs. A. E. Montague twelve hundred dollars, at Alpena (value received), with interest at 8 per cent, per annum until paid.
[Signed] “Julia Farwell,
“By Abraham R. Blakley, Agent.”

The note is indorsed: “A. R. Blakley. A. E. Montague.”

Both of these claims were allowed in the probate court, and from that order Mr. Cochran appealed to the circuit court. Mr. Blakley presented no evidence on the trial in the circuit court in support of his claim for services, but his claim upon the note was allowed by the jury at $1,966, and the case is brought to this court for review.

In 1887 the house occupied by Mr. Blakley, and the one adjoining it, were partially destroyed by fire. Mr. Blakley collected the insurance, and commenced to repair the one he lived in. He also repaired the corner house, and on June 1, 1888, the comer house was completed and rented to Mr. Gilchrist. August 14, 1888, Mr. Blakley gave Mrs. Montague the note presented against Miss Far-well’s estate. In the spring of 1889 he sold Mrs. Montague a farm, and took this note in payment. Miss Far-well resided in St. Paul, Minn., from October, 1885, until April 5, 1889, when she visited Alpena. She returned to St. Paul, May 16, 1889, and remained until September, 1892, from which time she made Alpena her home. She was absent from Alpena when the fire occurred and when the houses were repaired.

No claim is made that Mr. Blakley had any authority whatever, under his power of attorney or otherwise, to make this note. It is contended that Miss Farwell recognized her liability on the note, and ratified the transaction. Defendant contends that there was no evidence of ratification; and, further, that no recovery should have been permitted until the claimant accounted with the estate as to all his transactions, and showed affirmatively that he did not owe deceased on account of such dealings. Claimant could not himself give testimony as to facts equally within the knowledge of deceased. He, however, called his wife as a witness. She testified that she saw and read a letter to claimant written by deceased while she -was in St. Paul, in answer to a letter written by Mr. Blakley, in which deceased wrote that she was glad he (Mr. Blakley) was able to raise the means to fix over the house and to pay for the repairs, and that it was all satisfactory to her; that she was glad it was done. Mrs. Blakley further testified that at a later date, in a conversation between deceased and herself, relating to the note in suit, deceased said there were some missionary causes she wanted to give more money to.

“Said she would like to give more money to those missionaries, or some cause they had, but said that she didn’t think she could on account of this note of Abraham that she owed; she must pay that first.”

It is contended that, before a ratification can be shown, it must appear that the principal has full knowledge of the transaction. This knowledge may be inferred from the circumstances proven. At the time of this last conversation, deceased was a resident of Alpena, living in the family of claimant, and the jury might well have drawn the inference that she had informed herself of the situation before making the statements shown.

No claim of set-off was filed, nor was there any definite showing as to the amount of money that came to the hands of claimant as agent of deceased. The note in question, if a valid obligation, came to claimant by transfer from the payee, and was a distinct item by itself. It was not incumbent in a suit on this note to show affirmatively that in all the dealings between the parties, for all the years in which he acted as her agent, he had properly accounted to her. This was matter of defense.

The charge of the circuit judge was sufficiently favorable to the estate.

Judgment affirmed.

The other Justices concurred.


text:
    McMORRAN v. GREAT HIVE OF THE LADIES OF THE MACCABEES.
    1. Statutes — Title—Duality—Benefit Societies.
    The title to Act No. 119, Pub. Acts 1893, “An act to define what shall constitute fraternal beneficiary societies, orders, or associations; to provide for their incorporation, and the regulation of their business, and for the punishment for violation of the provisions of the act of their incorporation; and to repeal all existing acts inconsistent therewith,” — is not objectionable for duality.
    2. Same — Germane Provisions — Exemptions.
    The provision of section 15, exempting from garnishee process the benefits to be paid, provided, or rendered by associations authorized to do business under the act, is germane to the title.
    Error to St. Clair; Vance, J.
    Submitted April 22, 1898.
    Decided June 28, 1898.
    • Garnishment proceedings by David McMorran and another, copartners as D. McMorran & Company, against the Great Hive of the Ladies of the Maccabees, as garnishee of John Buzzard. From a judgment for the garnishee defendant, plaintiffs bring error.
    Affirmed.

      Atkinson & Wolcott, for appellants.

      De Vere Hall, for garnishee defendant.

      W. E. Leonard, for principal defendant.
   Montgomery, J.

Plaintiffs sought to reach by garnishee process a sum due the principal defendant as beneficiary named in a benefit certificate issued to Electa Buzzard. The garnishee defendant disclosed that, “at the time of the issue and service of the writ of garnishment, it was contingently, liable to the said defendant John Buzzard or his assignee for the sum of $950, notice having been served on the said garnishee defendant of the assignment of said claim to W. E. Leonard, of Port Huron, Michigan.” The proceeding originated in justice’s court, where judgment passed for the garnishee defendant. Plaintiffs appealed to the circuit court, where judgment also passed for the defendant. The case is brought to this court by writ of error.

The record contains no findings of fact or law except as embodied in the judgment, and the'finding there is that the defendant “had no property, money, goods, chattels, credits, or effects in its possession, not exempt from execution under the laws of this State, belonging to the said principal defendant, at the time of the service on it of the writ of garnishment in this case.” It is obvious that the record does not affirmatively show that the plaintiffs were entitled to judgment. Indeed, it does not appear what the evidence adduced at the trial at the circuit was.

As this court cannot assume error, we might well affirm the judgment without further comment;- but, as both counsel have treated the case as involving the constitutionality of Act No. 119, Pub. Acts 1893, we will consider the question raised. Section 15 of the act in question provides that—

“ The money or other benefit * * * to be paid, provided, or rendered by any association authorized to do business under this act shall not be liable to attachment by trustee, garnishee, or other process, and shall not be seized, taken, appropriated, or applied by any legal or equitable process, or by operation of law, to pay any debt or liability of a certificate holder, or of any beneficiary named in a certificate, or of any person who may have any right thereunder.”

It is claimed that the title of the act does not cover this provision, or, if it does, that the title should be held double, and that, in either view, this provision of the act is inimical to the provision of article 4, § 20, of the Constitution, which provides that no law shall embrace more than one object, which shall be expressed in its title. The title to the act in question is:

“An act to define what shall constitute fraternal beneficiary societies, orders, or associations; to provide for their incorporation, and the regulation of their business, and for the punishment for violation of the provisions of the act of their incorporation; and to repeal all existing acts inconsistent therewith.”

The question of duality of the title is to be determined by reference to the title itself. This title all relates to one general subject, — the incorporation and conduct of the business of fraternal benefit societies. This general subject necessarily, or at least very properly, includes a definition of what constitutes benefit societies, within the meaning of the act, and penalties for the violation of its provisions. An act is not unconstitutional whose title expresses,, and whose provisions are limited to, one general subject. Bissell v. Heath, 98 Mich. 472; People v. Hurlbut, 24 Mich. 57 (9 Am. Rep. 103).

Is the provision as to the exemption so far germane to the subject as to bring it within the title to this act ? The provision relates to what shall be furnished by way of benefit. It is akin to other provisions of the act, which prescribe who may be named as beneficiaries, and is in keeping with the general purpose of the act, and accords with the general policy of such associations. We think the title sufficient to challenge the attention of the legislators to this provision. See Connecticut Mutual Life Ins. Co. v. State Treasurer, 31 Mich. 17; Hall v. Slaybaugh, 69 Mich. 485; People v. State Ins. Co., 19 Mich. 398; Hall v. Judge of Superior Court of Grand Rapids, 88 Mich. 438; Van Husan v. Heames, 96 Mich. 506; Tillotson v. Saginaw Circuit Judge, 97 Mich. 585.

The judgment of the court below will be affirmed, with costs.

The other Justices concurred.


author: Hooker, J.

text:
    FONTAINE CROSSING & ELECTRICAL CO. v. RAUCH.
    1. Agency — How Proved — Declarations.
    A person’s authority to act as another’s agent cannot be shown by his own declarations.

      %. Same — Question eor Jury.
    The question whether certain correspondence and subsequent dealings show agency is for the jury, where reasonable minds . might differ in regard thereto.
    Error to Newaygo; Palmer, J.
    Submitted April 26, 1898.
    Decided June 28, 1898.

      Assumpsit by the Fontaine Crossing & Electrical Company against Henry S. Baucb and another, copartners as H. S. Bauch & Bro., on promissory notes. From a judgment for plaintiff on verdict directed by the court, defendants bring error.
    Beversed.

      A. F. Tibbitts (Martin Rozema, of counsel), for appellants.

      W. D. Fuller (L. C. Stanley, of counsel), for appellee.
   Hooker, J.

Upon the conclusion of the testimony offered upon behalf of the defendants, the court directed a verdict for the plaintiff, upon the ground that the evidence was insufficient to justify a finding by the jury that Benjamin was the plaintiff’s agent, which was necessary to the defense sought to be made. Error is assigned upon the charge.

The action was brought upon some promissory notes made by the defendants, payable to the order of the Electrical Outfitting Company, and indorsed in the name of said company by E. O. Benjamin, treasurer. By way of defense, the defendant Henry S. Bauch testified that the defendants were engaged in furnishing electric light in White Cloud, and that Benjamin was at his place in August, 1895, to sell him a dynamo, and that “he claimed to be representing the plaintiff in this case, as its agent.” The witness stated further that an oral agreement was then and there made for a new dynamo, for which the defendants were to pay $680, of which $300 was to be cash, to be paid after 30 days’ trial. He stated further that Benjamin said that he would put part of the bargain in writing, so that the factory could go to work on the machine at once, when he got home, and that he would make two contracts, typewritten, and send them to defendants to sign. This memorandum was signed by the defendants, but not by Benjamin, and was not produced. Soon after, the defendants received a writing from Benjamin, as follows:

“Electrical Outfitting Co.,
“Manufacturers’ Agents.
“Dealers in
“Dynamos, Motors, Combination Ventilating Fans, etc.
“Estimates for Complete Lighting Plants.
“Office, 194 Griswold street.
“Detroit, Mich., August 15, 1895.
“Messrs. H. S. Rauch & Bro.,
“White Cloud, Mich.
Gentlemen: We propose to furnish you one 500-light dynamo, etc., manufactured by the Fontaine Crossing & Electrical Co. [ Here follow specifications of machine, guaranty, and amount of price and manner of payment.]
“Respectfully submitted.
“Electrical Outfitting Co.,
“E. O. Benjamin, Treas. & Manager.”

No response appears to have been made to this, and after a time the machine was delivered.

Considerable correspondence passed between the defendants and the Electrical Outfitting Company. On September 10th, the Outfitting Company wrote to the defendants, explaining a delay, and saying, “If you intend sending your old machines to us for sale, do so as soon as you can, as we have places in view where we think we can sell them;” and it is apparent from the correspondence that they were sent to the Outfitting Company. On October 3, 1895, the Electrical Outfitting Company wrote that, “We inclose you bill for dynamo, along with the three notes;” asking signature, and a remittance of check for $300, with the notes. On October 5th defendants reply, in a long letter, complaining of a failure of the machine to work, and expressing a willingness to settle as soon as the machine should work according to contract. Thereupon Benjamin wrote that he would go to White Cloud and see about it, and he did so; and upon his representation that the manufacturer was responsible, and would certainly make the machine all right, a check for $300 was given, and the notes were signed and delivered to Benjamin. Other correspondence was had about the old machines as late as October 28th. On November 8th the defendants began a correspondence with the plaintiff. Their first letter says: “We are sorry to say that the machine bought through your agent, Benjamin, does not give satisfaction.” After a description of the working of the- machine, the letter concludes: “Please advise us what course you will pursue, at once.” Plaintiff, by Mr. Fuller, answered, saying: “I have just been talking with Mr. Benjamin,” etc. “I would say that I, always endeavor to please purchasers of our machinery, and would like to do so in this case, and have, at our expense, sent Mr. Benjamin to your mill on two different times.” The letter also contained a proposition to send a man to instruct defendants, at their expense if the machine should work well, and, if not, at the plaintiff’s expense. A man was sent on one or two occasions, and finally another and larger machine was sent, as the result of a long correspondence, of which the following letters were part:

“January 13, 1896.
“H. S. Rauch & Bro.,
“White Cloud, Mich.
“Gentlemen: On the return of our Mr. Rumsey, we are informed yon desire us to make a price on a 25 K. W. 250-volt dynamo; also, on a 25 K. W. 125-250 volts or double machine. We will exchange you a 250-volt machine for the one you now have at 116 volts; you paying freight on machines. That is, we deliver 250-volt machine f. o. b. cars Detroit; you deliver 116-volt machine to us f. o. b. cars Detroit. If you desire a double-voltage machine, we will exchange for the one you now have on ■the same conditions as above; you paying us $50 extra on this type of machine.
“In this matter, you understand, we supplied you with just what we were ordered to build; that is, an ordinary lighting machine. Our knowledge of what sort of wiring you had in service was not in question with us, as we simply built to order, on contract. Whatever verbal conversation you had with Mr. Benjamin relating to your distribution of current was entirely unknown to this company. You, of course, understand that, if a boiler-maker got an order for a boiler to sustain 125 pounds of steam, it would not be the correct thing to attempt to carry 25 6 pounds of steam on such a boiler. In other words, you must know that — When you contracted for a dynamo, you certainly, with your knowledge of electricity, must have known what voltage you ordered on contract. Please let me hear from you in regard to which machine you require.
“Yours truly,
“R. Fuller.”
“White Cloud, Jan. 15, 1896.
“Fontaine Crossing & Electrical Co.,
“Detroit.
Gentlemen: Yours of 13th at hand. In answer to same, you make us propositions on 2 machines. We wish to know if the 25 K. W. 250-volt machine is made of steel, or cast iron. Also, what heft the machine is, and what speed it must run at full load. Also, can you guarantee the proposed machine to not heat or spark, to do damage to commutator, or cause melting out of any parts of same ? Also, is the proposed machine double compound wound, automatic in its adjustments from one light to full load if speed of dynamo is regular ? Please advise at once. Yours respectfully,
“H. S. Rauch & Bro.”
“ January 16, 1896.
“H. S. Rauch & Bro.,
“White Cloud, Mich.
Gentlemen: In reply to yours of the 15th inst.: We will supply the 250-volt 25 K. W. machine as stated in my letter of the 13th inst. This machine is cast iron, and its weight is from 3,500 to 3,900 lbs. The machine will be compound wound, and automatic in its action under any load, providing the revolutions of its armature are kept constant. The machine we guarantee to operate without undue heating or sparking, when operator properly adjusts its brushes, and keeps the same clean. The speed of this machine is from 1,200 to 1,400 revolutions per minute, as it is impossible to state the exact speed of machinery that is automatic until such machine is built and tested.
‘ ‘ In relation to a machine being double compound 'wound: This is only done in case of a double-voltage machine. If you require a double-voltage machine, our price, as before stated, will be $50 extra. Of course, you understand, if you use a double-voltage with your present wiring, the service would be 250 volts; but at any future time you can put in a neutral wire, and distribute current on three wires. Yours truly,
“ R. Fuller.”
“White Cloud, Mich., Jan. 20, 1896.
“Fontaine Crossing & Electrical Co.,
“Detroit, Mich.
“Yours of Jan. 16th at hand. In answer to same, we wanted one of your steel frames; but as we have been to a great loss and expense, as well as yourself, we will do this: You deliver f. o. b. cars Detroit the proposed dynamo as stated in your letters Jan. 13, 16, to take the place of the one we now have. We will, on installing the one you ship us, deliver f. o. b. cars White Cloud the one we now have. We pay freight on the'one we receive; you pay freight on the one you receive. * * *
“Yours respectfully,
“H. S. Rauch & Bro.”
“Detroit, Mich., January 28, 1896.
“H. S. Rauch & Bro.,
“White Cloud, Mich.
“Gentlemen: I was very much surprised to receive your letter of the 26th, and in reply would say I am inclined to think you misunderstood your informant, in regard to my stating your letters to me were ‘ bluffs,’ as you call it; nor do I for a moment question your credit, as I made myself acquainted with your standing before any machine was ever sold to your firm. I do not blame you for not being satisfied with the manner your machine is working on the distributing wires from it, as I understand you purchased one machine, and wanted altogether another kind of current from the one you are now supplying, although you thought you were purchasing right, and we thought we were building right, which we did do according to contract received from Mr. .Benjamin. We now have found we were misled, and I, for one, have been trying to straighten the matter out, and have .under way. a 25 K. W. 250-volt machine for you, and hope to ship the same next week. . I am inclined to think the trouble is caused by your listening to too many people that can always be found ready to give unsolicited advice, and those inclined to attend to other people’s business rather than their own. Would it not be better to have more confidence in our personal transactions ? I propose to satisfy jtou, and not all of Northern Michigan, as I do not like to have any of my machinery misrepresented; and, if a mistake has been made, I want to make it right, and will do so. In regard to the machine you are now running, I would say, if your distributing current was of low resistance for 125-volt service, the machine is all right, and will do the work it was sold for by us; but it will not do on 250-volt service.
“In regard to other people requiting machines of larger units up north, I would be very glad to sell machinery to them, but not until after you are satisfied; nor would I care to send an agent to sell such machinery, after my experience at White Cloud, as it is not my custom to deceive purchasers, and I propose to give a man the best kind of machine for the particular service required by him, when I make a personal sale, and I have always instructed agents to be very particular in regard to such matters, and find it hard work to hold them down where they belong in some cases. I suppose you find the same trouble in having your agents sell flour, as I understand that a flour that makes good bread does not always make good pastry, and it would be poor policy for a salesman to claim too much in one barrel. For my part, I want you satisfied, and understand I was to send you a 25 K. W. 250 machine. Am I right? Yours truly,
“R. Fuller.”
“Detroit, Mich., March 2, 1896.
“Messrs. Rauch Bros.,
“White Cloud, Mich.
“Gentlemen: Inclosed bill of lading for 25 K. W. 250-volt machine. If you will let me know when you are ready to put this machine in service, I will send our man, Mr. Rumsey, to White Cloud, to start the machine and see it is in proper running order, which course will, I think, be more satisfactory all around, as there may be some information you may require; and we are anxious to have everything go off all right, that all may be pleased. Yours truly,
“R. Fuller.”
“White Cloud, March 7, 1896.
“Fontaine Crossing & Electrical Co.,
“Detroit, Mich.
“Gentlemen: Inclosed find shipping receipt for the dynamo shipped you in place of one received. We have been running it two nights, and are very much pleased with its workings. You may at any time refer to us any one in doubt as to your machines; also, send any one you wish to us, and we will do all in our power to show up the good qualities your machine has over others. If at any time we can do you a friendly act in any way, you may rest assured we will. We thought there was no use of having your firm go to the expense of sending your Mr. Rumsey to install the dynamo, as the writer has some little knowledge of electrical machinery, and has the machine installed and working satisfactory so far. We find this machine on our line takes care of the drop in line as lamps are cut on. If we do not allow the speed to vary, it gives a bright and white light at same voltage as on other machine. We cannot praise it too highly. Wishing you all the success the world can afford you, you may depend on us being with you.
“Yours respectfully,
“H. S. Rauch & Bro.”
“March 10, 1896.
“H. S. Rauch & Bro.,
“White Cloud, Mich. _
_ “ Gentlemen: I received your kind lettér of March 7th, and am pleased to learn you have the new machine in operation, and it is doing its work in accordance with what you ought to have had done in the first place. * * *
“Yours truly,
“R. Fuller.”
“March 10, 1896.
“H. S. Rauch & Bro.,
“White Cloud, Mich.
Gentlemen: Our Mr. Fuller has informed me that the 250-volt 25 K. W. machine is now in service, and running to your satisfaction. Will you be kind enough to send us your check covering your first note, with interest, amounting to $129.33 ? We might add that we paid $1.29 protest fees on this note; but, of course, owing to the unsettled condition of your apparatus, and as Mr. Benjamin was to a very great extent, if not wholly, to blame for this, we will charge the protest fees to his account, and not yours.
“Yours very truly,
“John Thompson, Sec’y & Treas.”
“Detroit, Mich., March 18, 1896.
“H. S. Rauch & Bro.,
“White Cloud, Mich.
Gentlemen: Our treasurer, Mr. Thompson, wrote you, March 10th, asking you if you would be kind enough to send us check for $129.33. As we have heard nothing from you in reply to our request, I take the liberty of again asking if you will remit this amount, as we are finding collections very hard, and have large pay-rolls; consequently, must have remittances. If you can send us check by return mail, it will be considered a great favor.
“Yours very truly,
“R. Fuller.”
“White Cloud, Mich., March 20, 1896.
“Fontaine Crossing & Electrical Co.,
“Detroit, Mich.
G-entlemen: Inclosed find statement of expense and delay of first dynamo; also, the price of Simpson'machine, which was to apply on our account. We supposed the Electrical Outfitting Co. had turned this over to you before now. If statement is allowed, we will waive further damages against your firm, and look to the Electrical Outfitting Co. for other damages.
“Yours respectfully,
“H. S. Rauch & Bro.
“H. S. R.
“ Statement.
■“Fontaine Crossing & Electrical Co., Detroit, in Account with H. S. Rauch & Bro.
1 Simpson dynamo----------------------------------- $87 00
Freight on first_______________________________________ 23 56
Expense unloading and installing first dynamo-------- 25 00
Loading same________________________________________ 20 00
15 days’ loss on track--------------------------------- 45 00
Loss on C. H. Mehrtens’ contract--------------------- 75 00
Expense of an attorney, Detroit_______________________ 40 00
§315 56”
“Detroit, March 23, 1896.
“H. S. Rauch & Bro.,
“White Cloud, Mich.
Gentlemen: Your favor of the 20th, with statement, received. All the items in the statement are matters between you and the Electrical Outfitting Co. If they are a claim at all, they are against that company. We have nothing to do with any of these matters. In the course of business, we bought your notes of $380, bearing interest, and we hold them against you. We shall expect payment, and, unless the first one is paid by April 1st, we will begin suit on it. Yours truly,
“R. Fuller.”

This action was then brought on the notes. Upon the trial the defendants sought to recoup damages as per the bill rendered.

The evidence alleged to show an agency is the following:

1. The representation of Mr. Benjamin.

2. The failure to deny that the defendants had bought a dynamo through the plaintiff’s agent, Benjamin, in the answer to defendants’ first letter.

3. The statement of plaintiff that it had twice sent Benjamin to White Cloud, at its expense, to adjust that machine.

4. The defendants’ statement in letter of November 27th “that the machine must work different from what it does, if we keep it;” and the following, contained in the same letter: “We would further say: You send a good man up, and if he can run the dynamo all right, without armature and commutator overheating more than the fields, — also, keep brushes from sparking, — we will stand the expenses, as stated in your letter of November 11th; and, should he fail to do so, you must stand the expenses, fix the machine, or refund our money, and expense of putting same in, at once. All we ask is to have value received for what we paid our money for. ”

5. The following statements found in letter of December 9th written by plaintiff: “lam sorry Mr. Benjamin ever went to White Cloud to start your machinery; but as this man has been in the electrical trade several years, and has done well on plants heretofore, I quite naturally supposed he would make no statements but those that were perfectly correct, as I am very particular in regard to such matters, and endeavor in every way to fully satisfy my customers, and have never before had any differences with any customer that we have sold machinery to. * * * In relation to our machine, again, we realize our future business, to a great extent, depends entirely on building first-class construction of machinery. We have never had a machine thrown out of service, and do not want a machine running that does not fully satisfy its owner, and will stand by our machine, even if it costs us more than the price of the machine. * * * We want to please you, and will use every endeavor to do so. I am sorry Mr. Benjamin was antagonistic to supplying you information. At any time you wish, write us, and we will be only too glad to answer questions.”

6. Letter of December 10th, as follows: “As I wrote you yesterday, if you will be kind enough to have a little patience, now that we have had a practical man examine into the cause of your trouble, we will make the machine right, and only ask you to give us a chance outside of your experience with Mr. Benjamin. We want to do what is right, and will do so, if you will only have a little patience, and give us a chance.”

7. The statement that plaintiff did not question defendants’ credit, as “ I made myself acquainted with your standing before any machine was ever sold to your firm. * * * You thought you were purchasing right, and we thought we were building right, which we did do, according to contract received from Mr. Benjamin. * * * If a mistake has been made, I want to make it right, and will do so. ”

8. The following: “In regard to other people requiring machines of larger units up north, I would be very glad to sell machinery to them, but not until after you are satisfied ; nor would I care to send an agent to sell such machínery, after my experience at White Cloud, as it is not my custom to deceive purchasers, and I propose to give a man the best kind of machine for the particular service required by him, when I make a personal sale, and I have always instructed agents to be very particular in regard to such matters, and find it hard work to hold them down where they belong in some cases. I suppose you find the same trouble in having your agents sell flour, as I understand that a flour that makes good bread does not always make good pastry, and it would be poor policy for a salesman to claim too much in one barrel. For my part, I want you satisfied, and understand I was to send you a 25 K. W. 250 machine. Am I right ?”

From this the defendants contend that the jury might find that the contract was made by the plaintiff through its agent, Benjamin, while the plaintiff maintains that all that was written or done by the plaintiff was consistent with the theory that the Electrical Outfitting Company was the contracting party, and that the plaintiff was not, and that plaintiff’s efforts to satisfy the defendants do not necessarily recognize any contract obligation to do so, but merely a desire to protect its own business interests by satisfying purchasers of its machines.

It is obvious that the statements of Benjamin do not prove his agency; but we think that the correspondence and subsequent dealings raise a question about which minds might differ, and therefore it was for the jury. We do not'wish to be understood as expressing an opinion upon the merits of this question, but only that it is a question of fact.

It follows that the judgment must be reversed, and a new trial ordered.

The other Justices concurred.


author: Long, J.

text:
    RODDA v. CITY OF DETROIT.
    1. Municipal Corporations — Defective Sidewalk — Construo-. tive Notice.
    A city lias constructive notice of a defect in a sidewalk where the same has existed for upwards of two months.
    3. Same — General Condition — Evidence.
    A declaration described a sidewalk as being defective at a point opposite and a little west of certain premises. Held, that plaintiff had a right, upon the question of notice, to show the general bad condition of the walk in front of the premises described.
    Error to Wayne; Frazer, J.
    Submitted April 36, 1898.
    Decided June 28, 1898.
    Case by Simon J. Rodda against the city of Detroit for personal injuries. From a judgment for plaintiff, defendant brings error.
    Affirmed.

      C. D. Joslyn, for appellant.

      George H. Carlisle (Alfred Lucking, of counsel), for appellee.
   Long, J.

This action is brought to recover damages for an injury received on a defective sidewalk. It appears, without contradiction, that the plaintiff, who resides in the city of Detroit, on the evening of May 35, 1895, between dusk and darkness, was passing eastward over the sidewalk on the south side of Hancock avenue, in company with a boy named Eipper. When they reached a point between Fourth and Crawford avenues, opposite and a little to the west of the house of Mr. Duncan, which is on the north side of the street, plaintiff’s feet became entangled under ¿loose plank in the walk, and he was thrown to the ground, sustaining severe injuries. When assisted by another person to rise, they found the plank over which he had fallen out of place, and lying diagonally across the walk. On a trial the plaintiff had verdict and judgment.

The only question raised by this record is whether there was any evidence that the walk at this particular place .had been out of repair for such a length of time that it was the duty of the city to have known it. There was no claim that the city had actual notice of its defective condition.

The court charged the jury as follows:

“I am requested by defendant to charge you that 48 hours would not be sufficient, and I say to you that it would not be sufficient. I am requested by plaintiff’s counsel to charge you that two months would be sufficient, and I charge you that it would be sufficient.”

The court thereupon further instructed the jury that, if they found that the walk had been out of repair for a sufficient time to amount to constructive notice of its condition, the verdict should be for plaintiff.

Inasmuch as the contention is that there was no evidence to warrant this charge, we shall cite some of the testimony given. Mrs. Josephine B. Cole testified, in be half of plaintiff, that she—

“ Used to pass over the walk three or four times a week before the injury to Mr. Rodda, and knew the condition of the sidewalk on the south side of Hancock avenue, at the point in question.
“Q. Why were they unsafe ?
“A. Because they were loose.
UQ. How do you know they were loose ?
“A. Because, in walking over them when a person was walking with you, you had to be careful that you didn’t step on the other end of the board and throw you down. If they stepped on the board as you went to, the board would rise up and throw you over. * * *
“Q. How long a time before you heard of Mr. Rodda’s accident had that walk been in that condition, to. your knowledge ?
“A. I had been going over it more or less all the spring. I should judge it might have been loose in April. I could not remember, indeed. * * * It had all the spring, as far as I can remember in my walking back and forth there; I think it was loose. * * *
“Q. Where was this walk with reference to Mr. Duncan’s house ?
. “A. Across the road from it.
Q. I mean this bad place in the walk ?
“A. I think, if I remember rightly, Mr. Duncan’s house is on the alley, and on the north side of the street, and this walk starts from the alley up on the south side.”

Mrs. Florence Robinson testified in behalf of plaintiff that she knew about the walk at the point where plaintiff was injured.

Q. What was the condition of the walk at the place about 50 or 60 feet west of the alley between Fourth and Crawford, on Hancock avenue, on the southerly side?
“A. In very bad condition.
Q. How do you know ? •
“A. Because I walked over that walk very frequently, going through to Woodward-avenue cars, and going through evenings to a class that I had on Second avenue in the winter. * * *
Q. How far from the alley were the boards loose?
“A. I should judge from 50 to 60 feet.
“ Q. In the place that has been described here in the evidence ?
“A. Yes, sir.
Q. How do you know the boards were loose ?
“A. I walked over them so many times that I know. I stubbed my toe frequently. I had my class right there in February and March down on Second avenue, and I walked over that way, and it was in bad condition then, and also all along in the spring.
Q. Right up to the time he was hurt ?
“A. Yes, sir. * * *
Q. Do you know where Mr. Duncan lived?
“A. Yes, sir.
Q. Where were the loose planks in this walk with reference to his house ?
“A. Across the street, a little to the west.”

Mrs. Laura Deacon, called by plaintiff, testified:

“ Q. Did you know in May, 1895, about the walk opposite Mr. Duncan’s house ?
“A. I don’t know that I knew of it at that particular time, but I had known it before.
Q. You know the walk?
“A. Yes, sir; perfectly. * * *
Q. You say you knew the walk before he was hurt ?
“A. Yes, sir.
Q. During what period, particularly?
“A. The spring before that.
“ Q. Was there anything special?
líA. I used to go through that block to church every Sunday and frequently. I would pass over the walk when it would teeter, and the boards would be loose, and I would step in and out to avoid being tripped on them, and the water would flush between the boards many times in the spring when it was breaking up; and I remember one time * * * I was with a lady, and we noticed the whole of one section of the sleepers was decayed so that the nails would not adhere to them. * '* * The boards were loose because the stringers were decayed.
Q. How do you know that?
“A. Because I examined them in one section.
Q. How did you come to do that?
“A. Because they were loose, and I had had notice to mend my own walk.”

The testimony of these witnesses had reference to the walk at the exact locality where the plaintiff was injured, and its defective condition covers a period of time sufficient that the city must be presumed to have had notice of the fact and have had time to repair. The question was properly submitted to the jury.

Counsel for defendant, however, contends that this testimony had reference only to the general bad condition of the walk, and was not confined to the existence of the defect complained of. This contention, we think, is not borne out by the evidence. The particular place described in the declaration was at a point in the south sidewalk opposite and a little west of Mr. Duncan’s house, and it is also described as being about 50 or 60 feet west of the alley. The witnesses refer to this particular place as the place where the walk was in bad condition. Under the declaration, however, the plaintiff had a. right, as bearing upon the question of notice, to show the general bad- condition of the walk in front of the premises described. Campbell v. City of Kalamazoo, 80 Mich. 660.

We find no error in the record. The judgment must be affirmed.

The other Justices concurred.


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    COLDWATER NATIONAL BANK v. BUGGIE.

    1. Power oe Attorney — Parol Evidence.
    In an action on a note against a married woman, the pivotal question was whether defendant was the owner of a mercantile business managed by her husband under a firm name, in which name the note in suit was executed. It appeared that defendant had given her husband a power of attorney “to transact all my business of every name and nature; * * * to borrow money in my name, and to make all notes and other instruments necessary to carry into effect the powers hereby granted.” There was evidence tending to show that the power of attorney was given by defendant at plaintiff’s suggestion, communicated to her by plaintiff’s attorney. The attorney testified, under the objection that his testimony tended to vary the terms of the instrument, that, when the power of attorney was granted, he told defendant that plaintiff wanted to know from her that her husband was managing the mercantile business for her, and wanted a power of attorney from her to him to sign all notes at plaintiff’s bank; that the instrument was a general power, and gave him authority to mortgage and sell her real estate; and that she said it was all right, — that whatever her husband said about it was all right. Held, that the testimony was properly received; the power being broad enough to authorize her ■ husband to act for her in any name in which she was carrying on business, and the testimony having some tendency to show that the mercantile business was hers.
    2. Personal Property — Title—Declarations of Possessor.
    In an action against the wife of B. on a note executed by B. & Co., the statements of B., who managed the business of B. & Co., to the effect that his wife was sole owner, are not admissible to characterize his possession as other than that of owner.

    3. Principal and Agent — Evidence oe Authority.
    The declarations of an agent are not admissible to show his authority.
    Error to Branch; Yaple, J.
    Submitted April 26, 1898.
    Decided June 28, 1898.

      Assumpsit by the Coldwater National Bank against Mary E. Buggie on a promissory note. From a judgment for plaintiff, defendant brings error.
    Reversed.

      Palmer & Palmer (John B. Shipman, of counsel), for appellant.

      Campbell & Johnson and Champion & Champion, for appellee.

       Rehearing denied September 27,1898.

      A similar question was considered in Krementz v. Howard, 109 Mich. 466.

   Montgomery, J.

When quite young, defendant went to live with her uncle and aunt in Coldwater, Mr. and Mrs. Frederick Y. Smith, who were childless. Her uncle was a man of considerable property, consisting of residences, a farm, and a store in which for many years he carried on a clothing business. October 28, 1880, the defendant married John H. Buggie, who had no property. They went to live at Laporte, and after that to Hillsdale, but in the summer of 1885, at Mr. Smith’s solicitation, they came back to live with him, and, to induce them to do so, he transferred to John H. Buggie his entire stock of clothing, receiving therefor his note for $7,000, and made him a seven-years lease of the store, at a rental of $1,000 per year, the bill of sale and lease being both dated August 24, 1885. From that date the clothing or store business was carried on in the name of J. H. Buggie & Co., that being the name on the sign at the store front, as well as the one used in all departments of the business; Mr. Smith being the. “ Co.,” but having no interest in the firm, his name being used merely to help the credit of the concern. October 27, 1886, Mr. Smith died, leaving a will by which all of his property was bequeathed to his widow, the defendant’s aunt, but the goods in the store were not included as a part of his estate, and did not pass to her. Mr. Buggie continued the business under the same name as before, Mrs. Smith tacitly taking the place of her husband in the firm. September 9, 1888, Mrs. Smith died, also leaving a will giving all of her property to the defendant, but neither the store business nor goods in it passed to her by it. After her death, Mr. Buggie carried on the business under the same name as before, and has so continued ever since. Whether Mrs. Buggie- became owner of the business, and responsible for its debts, was the pivotal question on the trial of this case below, as it appears to be a conceded fact that the credit extended by the plaintiff was extended to that firm or concern, however composed.

The defendant’s claim at the trial was that, at her aunt’s decease, she took the place in the firm which her aunt had tacitly assumed, and supposed herself a partner, and liable as such, and that she acted in this belief until shortly before the suit was instituted, when she was advised that she could not be treated' as a partner of her husband. The plaintiff, on the other hand, claimed (and the jury found in accordance with this contention) that the defendant became, at some time after her aunt’s decease, the sole owner of the business, and that it was conducted by John H. Buggie as her agent. The defendant’s counsel contend that there was no evidence supporting this claim. We think there was testimony of admissions made by defendant which tended to support plaintiff’s theory. The weight of this testimony was properly left to the determination of the jury.

The other questions arising relate to rulings admitting certain testimony which was objected to. On the 26th of Api’il, 1889, defendant gave to John H. Buggie a general power of attorney. Among the powers granted, as expressed in the language employed, were:

“For me, in my place and stead, to do and transact all my business of every name and nature; * * * to borrow money in my name, and to make and execute all papers, notes, conveyances, and other instruments necessary to carry into effect the powers hereby granted.”

The plaintiff gave evidence tending to show that this power of attorney was given at the suggestion of the officers of the bank, and that this suggestion was communicated to Mrs. Buggie by Mr. Barlow, the attorney for the bank. He testified that, when the power of attorney was executed, he told the defendant that the bank wanted to know from her that John was managing the business at the store for her, and they wanted a power of attorney from her to him to sign all notes at the bank; that the instrument was a general power, and gave John authority to mortgage and sell her real estate; that she said it was all right; that whatever John said about it was all right. It is contended that this testimony was incompetent, as tending to vary the terms of the power of attorney. We think it not open to this objection. The power was broad enough to authorize Mr. Buggie to act for her in any name in which she was carrying on business, and the testimony had some tendency to show that the business at the store was her business.

Plaintiff was permitted to introduce evidence of statements made by John H. Buggie to the effect that the defendant was the sole owner of the business carried on in the name of J. H. Buggie & Co. These statements were not received as impeaching testimony, but were distinctly received as characterizing the possession which John H. Buggie had; so that the question is whether, in a case to which the declarant is not a party, and not directly involving the goods, the declaration against interest of one in possession of goods may be received to show that he is in possession as agent of another. It is plain that the effect of such declaration might be far-reaching, and involve a stranger in utter ruin. Whether, at the time these declarations were made, the business was prosperous, or whether, on the other hand, the firm was insolvent, does not appear, nor could the admissibility of such testimony well be made to depend upon such circumstances. If the business was insolvent, it is very plain to see that the insolvent merchant could, by his own declarations, nominally against interest, fix upon his more prosperous neighbor the liability of a failing concern by his unsworn declarations. We-do not understand that the rule permitting declarations by one in possession as part of the res gestee goes so far. The cases cited by counsel for plaintiff are, with possibly one exception, cases in which the property with reference to which the declarations were made was directly involved in the action, or the right of possession was involved. Jacobs v. Callaghan, 57 Mich. 11; Avery v. Clemons, 18 Conn. 306 (46 Am. Dec. 323). But in this case the title to specific goods was not in controversy. The question was in whose behalf a contract of borrowing was made. If the testimony characterizing possession was useful for any purpose, it was useful as a declaration by John H. Buggie that he so contracted on behalf of defendant. See Carroll v. Frank, 28 Mo. App. 69; Darrett v. Donnelly, 38 Mo. 492; 1 Rice, Ev. 424; Burns v. Fredericks, 37 Conn. 86; Fellows v. Fellows, 37 N. H. 75. That declarations of an agent are not admissible to show his authority is, of course, well settled. Mechem, Ag. § 100.

None of the other questions raised call for discussion.

The judgment is reversed, and a new trial ordered.

Grant, C. J., Moore and Long, JJ., concurred. Hooker, J., did not sit.


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    VAN AKIN v. DUNN.
    1. Drain Order — Revocation.
    The acceptance by a drain, commissioner of work under a drain contract, and the issuance of an order in payment therefor, is not such a judicial determination of the validity of the claim as will preclude the commissioner from revoking his action, and stopping payment of the order, upon the discovery of defects in construction not apparent when the order was issued.
    2. Same — Assignment—Equities.
    Where the payee of a drain order is not entitled to payment because he had not completed work for which it was given, his assignee is in no better position.
    3. Mandamus — Claim against County.

      Mandamus to compel payment of a claim against a county should be refused where the record shows its injustice.

      Certiorari to Monroe; Kinne, J.
    Submitted May 17, 1898.
    Decided June 28, 1898.

      Mandamus by Simeon Van Akin to compel Luke Dunn, treasurer of Monroe county, to pay a certain drain order. From an order granting the writ, respondent brings certiorari.

    Reversed.

      John O. Zabel, for relator.

      Willis Baldwin, for respondent.
   Hooker, J.

The relator obtained from the circuit court a peremptory writ of mandamus requiring the respondent to pay a certain drain order alleged to have been purchased from the payee named therein after presentation and demand of payment by the holder and refusal by the respondent. The respondent has brought the case to this court by certiorari.

The return of the treasurer to the order to show cause, issued by the circuit court, shows that the drain in question was laid out by a township drain commissioner, but that his office was abolished by law before payment was made, and the matter passed under the control of the county drain commissioner. The township commissioner let a contract to Daniel Bolton to make the required excavation, and lay 13-inch tile in a section of said drain. On March 16, 1898, the relator presented the order in dispute for payment, which was refused, although there was then, and is now, sufficient money in said drain fund, of said drain, to pay the same. Respondent’s reason for not paying it was that he had been previously notified by the county drain commissioner to refuse payment until further notice, because the work for which the order was given had not been completed. Respondent shows, further, on information and belief, that Bolton did some work upon such contract, under the township commissioner, who verbally reported it to the county drain commissioner as accepted; that the township commissioner’s office was abolished by Act No. 254, Pub. Acts 1897, taking effect June 2, 1897; that the moneys assessed to pay for the drain were paid to the respondent; that the order was of necessity, and in accord with the act, issued by the county drain commissioner, who had no personal knowledge of the work, and that, after issuing the order, he learned that the contract was not completed, whereupon he notified the township treasurer not to accept the order in payment of the drain tax, but to treat it as wholly void, which he accordingly did. Respondent also refused payment of said order to Bolton some time in January or February. The return states, further, that, by reason of the covering of the tile, it was impossible to ascertain, from an inspection, whether or not the work had been properly done, but that in the fall of 1897 the water did not run through said drain, and, upon excavating, it was found that the tile had been laid 13 inches above the prescribed grade, which practically destroyed its efficacy, and made it necessary to reconstruct that section of the drain; that Bolton has been repeatedly notified to place said tile upon the grade, and informed that, upon his doing so, no objection would be made to payment, but Bolton has refused to do so.

Upon the part of the relator it is contended that the acceptance of the construction of a drain contract is a judicial determination, and, having exercised the power, the commissioner cannot revoke or repudiate his action. It is contended, further, that the treasurer had no discretion, but was legally bound to pay the order upon presentation, and that, if the contract was not performed, the remedy is on the bond given by the contractor.

Settlements of contract rights by public authorities and officers have not usually the force of judicial determinations. They are more in the nature of adjustments between parties, and are subject to defense, when fraud or mistake can be shown, as in cases between private parties. See 15 Am. & Eng. Enc. Law, 1220, and cases cited. In the case of People v. Supervisors of Manistee County, 33 Mich. 497, this court held that a board of supervisors might reconsider a claim after allowance, and that it would not issue a mandamus to compel the clerk of the board to issue his warrant upon the claim as first allowed.

Again, the record clearly shows that Bolton did not perform his contract, and that he is not entitled to payment, and in this respect his assignee is in no better position. The writ of mandamus is a discretionary writ, and, while it may issue where there is a clear legal right, a court should always refuse it where the record shows the injustice of the relator’s claim. This it may do, and should do, in the interest of fair dealing and good morals, whenever the claim is tainted with fraud. Merrill, Mand. § 68.

The order of the circuit court is reversed, and the writ is denied, with costs.

The other Justices concurred.


author: Grant, C. J.

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    GRAVES v. BROOKS.
    Corporations — Stock—Payment in Property — Overvaluation.
    Corporate stock issued as fully paid aud nonassessable, in consideration of property transferred to the corporation, cannot be rendered assessable in payment of corporate debts, at the instance of the creditors and the holders of part-paid stock, for the difference between the value of such property and the par value of the shares, unless an intentional overvaluation of the property is actually shown, or such recklessness in fixing its value as to raise an inference of an intent to defraud.
    Appeal from Wayne; Adams, J., presiding.
    Submitted June 7, 1898.
    Decided June 28, 1898.
    Bill by Henry B. Graves, receiver of tbe Latimer Gash-Register Company, against Alanson S. Brooks, William G. Latimer, and Frederick W. Towle, impleaded with the corporation and other stockholders therein, to compel an assessment for the payment of debts. From a decree for complainant, defendants appeal.
    Reversed.
    The bill of complaint was filed by the receiver of the Latimer Cash-Register Company, a corporation, to compel an assessment upon its stockholders to pay its debts. The capital stock of the corporation was $200,000. $100,-000 was issued to the defendants Latimer, Brooks, and Towle, who were the owners of the patents conveyed to the corporation, as fully paid, in consideration for the transfer of such patents to it. The other $100,000 of the stock was assessable. The corporation became insolvent, and after the sale of all its tangible assets, and the application thereof to the payment of its debts, a considerable amount remained unpaid. The case was heard upon pleadings and proofs, and the court below found that the property conveyed by the patentee stockholders was worth $20,000, and that the cash-paying stockholders had paid in $20,000, and directed an assessment upon all the capital stock, except certain shares of the nonassessable stock which had been sold and transferred by the patentee stockholders to other parties, who were held to be innocent, good-faith purchasers. From this decree defendants Latimer, Brooks, and Towle alone appealed.

      Bowen, Douglas & Whiting, for complainant.

      Moore & Moore, for defendants.
   Grant, C. J.

(after stating the facts). The stockholders of the defendant corporation were lawyers and business men. Before organizing the corporation and making the agreement with the patentee stockholders,.a careful investigation was made by them into the merits and value of the patents. A model of the register was submitted. Two firms of attorneys specially skilled in patent law, and acting independently of each other, had given opinions sustaining the validity of the patents. These opinions were submitted to the stockholders. Careful estimates were made of the cost of constructing the machines. The conclusion was reached that $20,000 would suffice to construct the necessary machinery and place the registers upon the market. The appellant defendants sold some of their nonassessable stock, and purchased some that was assessable. There is no claim of fraud, had faith, misrepresentation, or recklessness on the part of the owners of the patents. They submitted to these capitalists all the knowledge they possessed. For aught that appears upon this record, the cash stockholders were as competent to judge of the probable success of the enterprise and the value of the patents as were the others. For reasons unnecessary to state, the stockholders, after an expenditure of about $20,000, decided to abandon the enterprise and wind up the affairs of the corporation.

The learned circuit judge evidently based his conclusion, not upon any fraud, but upon the finding that the patents conveyed were in fact worth only $20,000, instead of $100,000, the agreed purchase price. It is unnecessary to enter into a discussion of the question. The case, in all its essential features, is similar to Young v. Erie Iron Co., 65 Mich. 111, where the subject is fully discussed in an opinion by Mr. Justice Morse, concurred in by the entire court. It was there held that, in order to render stock, issued as fully paid and nonassessable, assessable, it is necessary to establish either an intentional fraud in fact, or such reckless conduct in fixing the value of the property conveyed, without regard to its actual value, that an intent to defraud may be inferred. The creditors in that case were remediless. No case of fraud or recklessness having been established, it follows that the contract of the parties must control.

The decree must be reversed, with the costs of both courts, and the case remanded to the court below, with directions to enter a decree against the assessable stock sufficient to pay the debts of the corporation.

The other Justices concurred.


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    PHILLIPS v. LINN.
    Chancery Appeals — Questions oe Pact.
    The case depending on questions of fact which were rightly determined by the circuit judge, the decree below was affirmed.
    Appeal from Wayne; Hosmer, J.
    Submitted June 7, 1898.
    Decided June 28, 1898.
    Bill by David S. Phillips and wife against Robert W. Linn and Margaret B. Kirk to set aside a lease and to restore a canceled land contract. From a decree dismissing the bill, complainants appeal.
    Affirmed.

      H. M. Du Bois (Galloway & Graham, of counsel), for complainants.

      Wells, Angell, Boynton & McMillan (A. G. Angell, of counsel), for defendants.
   Grant, C. J.

The object of this bill is to set aside a lease made by the defendant Kirk to complainant David S. Phillips, and to restore a contract for the sale of the land covered by the lease, made by defendant Linn to the same complainant, and to obtain an accounting to ascertain the amount due on said contract. This contract was destroyed by the mutual consent of the parties at the time the lease was executed. Complainants assert that the contract was destroyed, and the lease executed, under a mistake as to their legal rights, which mistake arose from the erroneous advice of their attorney. Complainants’ counsel say in their brief: “This case is one that stands for the consideration of this court exclusively upon the facts.” Proofs were taken in open court, and the facts determined by the learned circuit judge against the complainants.

There is no principle involved which justifies a recital of the evidence. We have carefully examined the testimony, and are of the opinion that the circuit judge reached the correct conclusion.

Decree affirmed, with costs.

The other Justices concurred.