author: Grant, C. J.

text:
    PITTSBURGH & LAKE ANGELINE IRON CO. v. LAKE SUPERIOR IRON CO.
    1. Inland Lakes — Riparian Rights.
    No fixed rule ever has been or ever can be laid down for the division of the territory covered by inland lakes. Each case must depend upon its own peculiar circumstances and facts, and as reasonable a division arrived at as possible.
    2. Contracts — Mistake op Law — Overruled Decisions.
    Contracts made on the faith of the law as enunciated in a decision of a court of last resort, in the absence of fraud, misrepresentation, or want of knowledge of all the facts, will not be set aside because of a subsequent decision by the same court overruling the former one, since a mistake of law is no ground for relief.
    8. Boundaries — Adjustment—Adverse Possession.
    Where disputed boundary lines have been established by express agreement, or under such circumstances that an agreement will be implied, and the parties have for any considerable time recognized them, they will be upheld, though title by adverse possession could not be maintained.
    4. Same — Dispute—Evidence.
    Evidence that one of two companies owning land bordering upon a lake requested the other to deed to it such of the land under the waters of the lake as would be included within its subdivision of the section if its lines were projected through the lake, and that the request was refused bn the ground that the boundary between the properties should be determined with reference to the rules of riparian ownership, shows that the boundary was in dispute.
    5. Same — Estoppel—Statute op Frauds.
    The statute of frauds, which operates to forbid the acquiring of title to land by estoppel, has no application to voluntary adjustments of disputed boundaries, to -which, therefore, the doctrine of estoppel may be applied.
    6¡. Same — Mining Corporations — Alienation op Property — Authorization by Stockholders.
    A voluntary adjustment of boundary lines between mining corporations owning property bordering upon a lake, whereby they surrender, respectively, all claim to land on the north and on the south side of a section line projected through the lake, each thereby acquiring territory claimed by the other, the actual ownership of which could be determined only in equity, is not an alienation, division, or sale of the corporate real estate, such as will enable one of the companies to avoid the adjustment under 1 How. Stat. § 4052, on the ground that it was not authorized by three-fifths of the stock.
    7. Equity — Annulment op Contract — Substitution op Different Agreement.
    While a court of equity may annul a contract for fraud or mistake, it cannot substitute therefor a different agreement, fixing the liability of the parties upon a basis not contemplated nor assented to by them.
    8. Same — Laches.
    A delay by a party to seek relief from a contract, of two and a half years after the overruling of a decision in reliance on which it was made, and of nine months after being informed of such overruling by its attorney, during which time the conditions have so changed that it is impossible to restore the status quo, is such laches as will defeat its right to relief.
    Appeal from Marquette; Stone, J.
    Submitted April 23, 1898.
    Decided September 20, 1898.
    Bill by tbe Pittsburgh & Lake Angeline Iron Company against the Lake Superior Iron Company and the Cleveland Iron-Mining Company for an equitable division of the territory formerly covered by the waters of Lake Angeline, and for other relief. From a decree dismissing the bill, complainant appeals.
    Affirmed.

      Lake Angeline was situated on sections 10, 11, and 15,-township 47 N., range 27 W., and was within the corporate limits of the city of Ishpeming, in Marquette county. It contained 148.61 acres within the government meander lines. It was a mile in length east and west, and 1,690 feet in width on the center line of section 10, which was its widest point. The lake was meandered, and the courses and distances of the meander lines of the original survey are shown by the field notes of the United States government surveyors. The official plat was introduced in evidence. A copy of a part of said plat, sufficient to show the location of this lake upon the sections mentioned, is herewith given. The figures on the map show the number of acres in each parcel according to the government survey.

    The three parties to this litigation own all the lands surrounding this lake, — the complainant owning that part of section 15 bordering upon the lake; the defendant Cleveland Iron-Mining Company owning that part of sections 10 and 11 bordering on the lake east of the centerline of section 10; and the defendant Lake Superior Iron Company owning that part west of said center line. These three mining corporations have owned this land about 30 years, and have been engaged in mining upon their respective properties for more than 20 years. For the sake of brevity, these companies will be designated by their initial letters.
    The patent under which the C. I. M. Co. holds its title contains the following description: “The east half of section ten (10) and the west half of section eleven (11), in township forty-seven (47) N., of range twenty-seven (27) W., containing 555 acres and 15-100 of an acre, according to the official plat.” The patents under which complainant holds title describe the land as lots 2, 3, 4, and 5 of section 15. The patents under which the L. S. I. Co. derive title described the lands as lots 4, 5, and 6 of section 10.
    No ore was known to exist in the bed of the lake until the winter of 1886 and 1887, when the agent of the C. I. M. Co. caused three diamond drill borings to be made through the ice into the rock upon the north side of the lake, resulting in the discovery of iron ore. These horings were not upon territory now claimed by the complainant. Knowledge of this was conveyed to the complainant’s agent, but doubts were expressed whether the ore extended into complainant’s property. In 1890 complainant sunk a shaft a short distance south of the south line of section 10, adjacent to the southeast arm of the lake, and in 1891 discovered good ore. Drifts were run in various directions, including one to the northwest, in order to ascertain the extent of the ore. These explorations resulted in the probability that the ore would continue northwest, into section 10. This discovery was communicated to the C. I. M. Co. In the latter part of 1892, complainant permitted the C. I. M. Co. to enter its shaft, and drill holes from the south side into the territory north of the section line, and ore of good quality was found. Five holes were thus drilled. In order to keep out the water from its mine at the southeast arm of the lake, complainant contemplated building a cofferdam across this arm, and would probably have done this but for the agreement hereinafter referred to. Negotiations were soon thereafter entered into between the parties for pumping the water out of the lake. Mr. B. C. Howell had made a proposition to drain the lake by pumping for $33,000. These negotiations were evidently conducted for some time. The first writing that appears upon the subject was a letter from complainant io the C. I. M. Co., dated at Ishpeming, March 2d, and is as follows:

      “Gentlemen: Providing you close by March 15, 1892, a contract with B. C. Howell to drain Lake Angeline for $33,000, in full, and only on completion of the work, we will pay you one-fifth (1-5) of such cost, less one-fifth (1-5) the then estimated value of such plant as becomes yours at that time. We also, by reason of not entering into a joint contract to keep the lake bed empty, agree that we will construct a flume to take away all drainage from our side of the section line, and maintain it until the ore on such land, situated under the lake bed, is exhausted. After that you may take the' flume without charge, and care for it as you see proper.
    “Yours truly,
    “Pittsburgh & Lake Angeline Iron Co.,
    “By Thos. Walters, Sup’t.”
    This proposition was indorsed as follows:
    “Conditions accepted.
    “Cleveland Iron-Mining Company,
    “By F. P. Mills, Agt.”
    Upon a petition, signed by all the parties, to the common council of the city of Ishpeming, the following ordinance was adopted on March 16, 1892:
    “An ordinance granting permission to the Cleveland Iron-Mining Company, the Lake Superior Iron Company, and the Pittsburgh & Lake Angeline Iron Company to pump out and permanently drain Lake Angeline.
    c‘ Whereas, the Cleveland Iron-Mining Company, the Lake Superior Iron Company, and the Pittsburgh & Lake Angeline Iron Company, by mesne conveyances from the original patentees of the United States, severally own all the land surrounding Lake Angeline, which said lake is situated within the corporate limits of the city of Ishpeming, and therefore, exclusively, severally own the bed of said lake, as follows, to wit: The said the Cleveland Iron-Mining Company, all that portion of the bed of said lake lying east of the center line of section ten (10) as projected through said lake, and north of the south line of section ten (10) and section eleven (11), township forty-seven (47) north, of range twenty-seven (27) west, as so projected; the Lake Superior Iron Company, all that portion of the bed of said lake lying west of the center line of said section ten (10) and north of the south line of said section ten (10) as projected through said lake; the Pittsburgh & Lake Angeline Iron Company, all that portion of the bed of said lake lying south of the south line of said section ten (10) as projected through said lake, and the surface right of lot six (6) of said section ten (10), as acquired by them from the Lake Superior Iron Company.

      “And whereas, the said three companies desire to pump the water out of said lake, and to permanently drain the same, in order to severally conduct mining operations on the respective portions of said lake bed belonging to each, and desire the formal permission and authority of the common council of the city of Ishpeming so to do, said lake lying and being within the corporate limits of said city:
    “Therefore, be it ordained, by the common council of the city of Ishpeming:
    “Section 1. That consent, permission, and authority are hereby given and granted and duly vested in the said the Cleveland Iron-Mining Company, the said the Lake Superior Iron Company, the said the Pittsburgh & Lake Angeline Iron Company, and their respective successors and assigns, to pump out and drain away the water of the said Lake Angeline, and, thereafter, to permanently drain the samé, and to maintain and operate the necessary machinery and pumping apparatus and appliances so to do: Provided, that the water pumped out of said lake and permanently drained therefrom shall be carried away through the present outlet of said lake into Carp river.
    “Sec. 2. This ordinance shall take effect from and after the passage thereof. ”
    The petition set forth the ordinance in full.

      On the following day the parties executed an agreement, the material parts of which are as follows:
    “This agreement, made this 17th day of March, A. D. 1892, by and between the Cleveland Iron-Mining Company, first party, the Lake Superior Iron Company, second party, and the Pittsburgh & Lake Angeline Iron Company, third party, all corporations organized under the laws of the State of Michigan, Witnesseth:

      “First. That tvhereas, the three parties to this agreement severally own all the' land surrounding Lake Angeline, in the county of Marquette, State of Michigan, and, iron ore having been discovered under the bed of said lake, it has become necessary to pump out the water of said lake, and permanently thereafter drain the bed thereof, in order that each of the parties hereto may economically mine such ore as lies under such portions of said bed as each of said parties is respectively entitled to.

      “Second. And whereas, one B. C. Howell, prior to the date of this contract, had a large pump suitable for such work, and proposed to said first party to contract to pump out said lake, and to sell said pump and necessary appliances, all for the sum of thirty-three thousand dollars ( $33,000), provided he could begin operations immediately, while firm ice remained in said lake, so as to furnish the necessary support for placing the proper timber work in position; and whereas, said first party, after communicating with said second and third parties and getting their approval, has entered into a contract with the said Howell to pump out the water of said lake, and to purchase said pumping apparatus and appliances, for said sum, thus making a large saving in the cost thereof; and whereas, the cost of the continuous drainage of the bed of said lake, after the water thereof is pumped out, is now impossible of ascertainment, and the parties hereto are desirous of fixing the proper proportion of expense, both of the purchase of*said pumping apparatus and of the pumping out of said lake, and of the cost of the continuous or permanent drainage of the bed thereafter, to be borne by each, the same being for the mutual benefit of all:
    “Now, therefore, the parties hereto, in consideration of the premises, and of mutual considerations received by each from each, the receipt of which is hereby respectively acknowledged, hereby agree as follows:

      “Said first party agrees: First. To bear and pay eight-fifteenths (8-15) of the entire cost of the purchase, of said pump and apparatus, and of the pumping out of said lake, under the arrangement with the said Howell, to wit, the sum of seventeen thousand six hundred dollars ($17,600), and eight-fifteenths (8-15) of any additional cost which may be necessarily incurred in the premises, and will also bear and pay one-fifth (1-5) of the value of said pump and appliances after the lake is pumped out, .which one-fifth (1-5) thereof is to be deducted, as hereinafter provided, from the amount to be paid by said third party. Second. After said lake is once pumped out by said Howell, to maintain and operate the said pumping apparatus and plant for the continuous and permanent drainage of the bed of said lake, advancing all necessary expenses for such maintenance, operation, and repairs, and, at the end of each calendar year, to pay and bear such a proportion of the cost thereof during the year preceding as the total number of tons of ore mined and produced by said first party from that portion of the said lake bed belonging to it during said year bears to the total number of tons of iron produced, and mined during such year by said first and second parties jointly from the bed of said lake, and, further, to bear and pay two-thirds (f) of the cost of any additional or other apparatus which may be needed for the permanent drainage of said lake.
    ‘ ‘Said second party agrees:\ First. To bear and pay four-fifteenths (4-15) of the entire cost of the purchase of said pump and apparatus, and of the pumping out of said lake, under the arrangement with the said Howell, to wit, the sum of eight thousand eight hundred dollars ($8,800), and four-fifteenths (4-15) of any additional cost which may be necessarily incurred in the premises. Second. To bear and pay to said first party, on settlements to be made at the end of each calendar year, such a proportion of the entire cost of maintaining, operating, and repairing the plant for the permanent drainage of said lake bed as the total number of tons of iron ore produced and mined by said second party from that portion of the lake bed owned by it during such year bears to the total number of tons of iron ore produced and mined by said first party and said second party from the entire lake bed during such year, and also to bear and pay one-third (£) of the cost of any additional or other apparatus which may be needed for the permanent drainage of said lake.

      “Said third party agrees: First. To bear and pay three-fifteenths (3-15) of the’ entire cost of the account to be paid to the said Howell under the arrangement of said first party with him, to wit, three-fifteenths (3-15) of the said thirty-three thousand dollars ($33,000), namely, the sum of six thousand six hundred dollars ($6,600), and three-fifteenths (3-15) of any additional cost which may ' be necessarily incurred in the premises, less one-fifth (1-5) of the value of said pump and appliances purchased from the said Howell under the arrangement with him, the value of which is to be estimated as soon as the first drainage of said lake is completed. Second. To erect and maintain a proper and sufficient flume, so constructed above the present water level of Lake Angeline as to divert and carry away all the surface water or other surface drainage which would otherwise come into the present bed of said lake from all the land lying above the ' present water level of said lake, and south of the south line of section ten (10) as projected through said lake, and also to run into said flume any and all water which the said third party may pump from its mine or mines; which said flume said third party agrees to maintain and keep in repair and in successful operation, diverting such drainage from the bed of said lake, until the iron ore to which said third party is entitled, lying on, in, or under the portion of the bed of said lake lying south of the said south line of said section, is mined and exhausted, and then to turn over said flume in good repair to the said first and second parties hereto, without charge, and to allow them thereafter to operate and maintain the same for the purpose of continuing said drainage, giving the employés of said first and second parties free access in and to said flume for the purpose of maintaining, repairing, and operating the same, allowing them to make such alterations in said flume, and in the direction of the same, as may be necessary to successfully accomplish such drainage.”
    This agreement was signed, sealed with the corporate seal, and acknowledged with all the formalities of a deed. The certificates of acknowledgment stated that the president and secretary of each company acknowledged — ■
    “That they duly executed the foregoing instrument for and on behalf of said corporation, duly authorized thereto, and that the same is the free act and deed of said corporation, and the free act and deed of themselves as such officers.”

      The contract was carried out, and the drainage completed December 24, 1892. The total cost of draining and of keeping the water pumped out until January 1, 1897, was $76,488.38. Of this, the C. I. M. Co. paid $44,149.68; the L. S. I. Co., $17,147.18; and the complainant, $7,-601.38; the balance of $7,590.14 being left for adjustment between the defendants. The water under the southeast arm of the lake was comparatively shallow. A vast body of mud was found in the bottom of the lake, and the two defendants incurred an expense, in attempting to remove it, of $20,227.53. After the execution of this contract, each party worked upon its own property as defined thereby. The complainant mined out all the valuable ore under the southeast arm, and afterwards filled its opening with the waste rock. The L. S. I. Co. made explorations at considerable expense, and the C. I. M. Co. made the five drill holes above referred to from the complainant’s mine, and ran a drift through the rock underneath the lake nearly to the south line of section 10, and, after reaching ore, ran drifts and cross-cuts, with a view to determining the value of the ore, and ascertaining if there was sufficient to open and equip a mine. All this involved large expense.
    The section line was regarded as the line dividing these properties. Nails were driven in the timbers underground to indicate the line. In 1894 complainant made an innocent trespass north of the line, for which an amicable settlement was made. In 1896 the C. I. M. Co. trespassed upon complainant’s property south of the line, and amicably settled for it. Maps were frequently exchanged with each other. Complainant asked and obtained' permission from the C. I. M. Co. for the construction of a railroad track north of the section line, which was constructed and has ever since been in operation by complainant. On March 21, 1894, the C. I. M. Co. executed a lease to complainant, granting it the right to use land north of the section line for stock-pit grounds, and the erection of temporary structures for mining purposes. Other acts also were done by the respective parties in recognition of the fact that the south line of section 10 was the boundary line, as stated in the above agreement. This state of affairs continued until in November, 1896, when complainant served a notice upon the defendants that it claimed title to certain lands north of the section line.
    One other fact should here be noticed. Complainant commenced mining on lots 4 and 5 in 1863. The hill was very near the shore of the lake, and complainant dumped its waste rock into the lake, and filled in several acres north of the section line. Upon this made land north of the line it erected some buildings, the most of which it removed to the south of the line in 1887.
    Complainant filed its bill of complaint November 23, 1896. Issue was duly joined, proofs taken, and decree entered dismissing the bill.

      Clark & Pearl {Alfred Bussell, of counsel), for complainant.

      Ball & Ball {Benton Hanchett, of counsel), for defendant Lake Superior Iron Company.

      George Hayden {Hoyt, Dustin & Kelley, of counsel), for defendant Cleveland Iron-Mining Company.
   Grant, C. J.

{after stating the facts). The theory of the complainant’s bill is that the territory formerly covered by the. waters of this lake should be divided among .the shore owners in proportion to the amount of shore frontage owned by each; that such ownership extends to the center of the lake, to be equitably established by the court; and that such territory should be partitioned by convergent lines drawn from the outside limits of each frontage to a convergent point called the ‘ ‘ equitable center.” To the bill is attached a map purporting to contain such equitable division.

The equitable center is placed a short distance east of the center line of the section, and about 12.84 chains north of the south line. To this center lines are run from the several points where the meander line crossed the south line of the section. A piece of land in the shape of an obtuse-angled triangle is thus carved out of the bed of the lake upon the southwest quarter of section 10, and contains 14.92 acres. A similar piece is carved out of the southeast quarter, of section 10, and contains 10Í84 acres. These pieces are claimed by the complainant, while the triangular piece between them, containing 4.05 acres, is apportioned to the L. S. I. Co. by virtue of its ownership of lot 6. . The southeast arm of the lake, south of the section line, contained 12.50 acres. The part between lots 4 and 5 and the south line of the section contained 5.57 acres. This apportionment, if adopted, would give the complainant the entire southeast arm of the lake, and from two-thirds to three-quarters of the west arm.

The only reference made in the bill to the agreement above given, or to the action of the parties thereunder, is as follows:

“And your orator further alleges that within the last four or five years, by mutual consent, your orator and the said defendants shared in the expense of pumping out and draining the said inland lake, your orator paying three-fifteenths of said expense, the defendant the Lake Superior Iron Company four-fifteenths, and the defendant the Cleveland Iron-Mining Company the balance, so that now said lake has been drained of water, except what is easily disposed of by moderate pumping.”

The claim of the C. I. M. Co. is thus stated:

“1. The patent under which the defendant the Cleveland Iron-Mining Company claims title gave it title to the whole east half of section 40 to the south line thereof, and complainant is barred from objecting to this claim, because it has treated a body of water covering a portion of that territory as of no value, and joined in the draining of the water, as if the land was merely swampy ground, value-able only when reclaimed and made dry land.
“2. Because it has title by adverse possession for more than 15 years.
“3. Because the south se'ction line of section 10 was fixed as a boundary by agreement between the parties; that agreement being recognized and evidenced by tbe pumping contract and its written adjuncts, and was followed by continuous acts of recognition thereof, and expenditures based thereon, by both parties.
“4. Because the pumping contract is an estoppel by deed against the complainant from now asserting title.
“5. Because the complainant is estopped by matter in pais from asserting title to the land.
“6. Because the complainant is estopped by its laches.
”7. Because, as a tenant of a portion of the premises in dispute, complainant is estopped to deny defendant’s title.”

The claim of the L. S. I. Co. is thus stated:

“1. That there has been a practical division of the lake bed between the parties; that contracts, explorations, and mining operations have been carried on on the strength of such division for many 'years, in which large sums of money have been expended, without any certainty at the time of such expenditures that returns would be realized by the defendants therefrom; and that, by such division and long course of construction between the parties, the complainant is estopped to claim any portion of the lake bed lying north of the section line.
“2. That the pumping contract, executed by the several parties under their corporate seals, and expressly providing that it shall be binding upon the successors and assigns of the several parties, making it a contract running with the land, amounts to a division of the -lake bed by deed duly executed by the several parties.
“3. That the pumping contract is so entirely based upon the division of the lake bed above mentioned, and said division forms so essential a part of the contract, that, if such division be set aside or disregarded, the contract itself must fall; that in such case not only is the agreement to continue the drainage of the lake at an end, but either party has a right to demand that the drainage of the lake must stop, and the water allowed to rise to its original level, — a result which, after all that has been done under the pumping contract, and in reliance upon it, would work great injustice to the defendants.
“4. That if the original division of the lake be disregarded, and a new division must be made, such division must be made by the middle line or thread of the lake, in accordance with the common-law rule for division of the bed of fresh-water streams.”

The situation is anomalous, and the books present no similar case. In March, 1892, the parties entered into an agreement to extinguish the lake by pumping out the water, leaving the territory dry ground. They agreed upon an apportionment of expense substantially according to the territory within the lines of the government survey. The lake no longer exists. Nearly five years after, this suit is planted upon the theory that the lake exists, and that the court must make an equitable division from a common equitable center. All the parties, however, seem to have discussed the question as of a lake actually in existence.

The difficulty in apportioning the territory according to the theory of complainant is apparent from its irregular form. It seems conceded by the learned counsel for the complainant that the division according to the diagram made a part of its bill cannot be sustained, because they concede that it may be more equitable to divide the two arms of the lake according to the river rule, viz., the medium filum aguce. It must also be conceded that the C. I. M. Co., under this rule, would be entitled to some of the territory lying under the southeast arm of the lake south of the section line. In this territory the complainant, in 1891, discovered valuable ore, which it has mined through its shafts, levels, and drifts. Complainant has no means of ascertaining how much ore was taken from this territory, part of which, under its theory, belongs to the C. I. M. Co. Part of the territory has caved in, and the rest is filled with waste rock.

The distance from the south section corner, between sections 10 and 11, to the meander line, is 125 feet. The meander line then runs from the south section line, in a northwesterly direction, 225 feet, and thence to the northeast. Complainant’s proposed line of division upon the northeast almost entirely cuts off this frontage of the C. I. M. Co. Another complication results from the fact that the C. I. M. Co. is the owner of a small piece of land in the southwest corner of the southeast quarter of section 10, which is 100 feet in length on the section line.

No fixed rule ever has been or ever can be laid down for the division of the territory covered by these inland lakes, with their irregular shores. Each case must depend upon its own peculiar circumstances and facts, and as reasonable a division arrived at as possible.

The manner in which the equitable center was established in this case appears from the testimony of one of complainant’s own witnesses, Mr. Bradt, an engineer:

Q. How did you locate your center point in the lake ? What guided you ?
" A. I refer you to Mr. Clark, our attorney.
Q. What did he tell you to do to find that center point ?
“A. He didn’t tell me to find it; he found it himself.
Q. How did he find it ?
“A. You will have to ask him.
Q. What did he tell you about that point? What information did he give you ?
“A. He simply asked me to compute courses and distances that would converge at a point that he selected and designated.
“ Q. Did he tell you the angle to make?
“A. No, sir.
Q. Now, I wish you would give us just what Mr. Clark gave to you as a basis from which you did that work.
“A. Mr. Clark located upon the map a point that might be considered the equitable center, and I was, from that point, to compute courses and distances from the section line which would converge or meet at that point.”

This same witness also admits that the apportionment on his diagram deprives the C. I. M. Co. of any frontage on the southwest shore of lot 7.

The above statement is sufficient to show the difficulty in making an equitable apportionment, and while nothing was said during the negotiations leading up to the agreement, or in the agreement itself, in regard to the difficulty, it may have had much to do in the minds of the officers and agents of the respective parties in fixing the terms of that agreement. That contract was a deliberate settlement of the boundary line between the lands of the three companies, and was so understood. It was of the utmost importance to these parties that the boundary line be settled beyond any possible doubt. Complainant had discovered a mine on its territory south of the line, and extending under an arm of the lake. At that time it was the only one which it was known would be benefited by the removal of the water. No ore of sufficient value to mine had been found under the lake north of the line. After the removal of the water would come extensive and very expensive explorations, to determine whether there existed under the bed of the lake ore worth mining. The contract, if valid, established the line beyond dispute.

The first obstacle for the complainant to remove, before resorting to an equitable apportionment, is this contract, recognized as valid and acted upon for nearly five years by all the parties. It attempts to do this by asserting that in making that contract it relied upon the case of Clute v. Fisher, 65 Mich. 48, as establishing the rule that the territory should be divided by the government lines, and that it rested upon that case as the established law until the decision of Grand Rapids Ice & Coal Co. v. South Grand Rapids Ice & Coal Co., 102 Mich. 227 (25 L. R. A. 815, 47 Am. St. Rep. 516), claiming that the latter overruled the former, and that in making that contract there was a mutual mistake which entitles it to the relief prayed. The former case was decided in February, 1887, and the latter in September, 1894. This claim depends upon the testimony of Mr. Kidder, the superintendent of complainant. He testified that, upon learning of the decision in Clute v. Fisher, he obtained the opinion of Mr. Clark, its attorney, to the effect that the decision established the rule that the government lines controlled; that he thereupon removed some of the buildings which complainant had erected on land made by it north of the’ section line on the southwest quarter; that he learned of the decision in Grand Rapids Ice & Coal Co. v. South Grand Rapids Ice & Coal Co. in the last of December, 1895; that he then applied to Mr. Clark for his opinion, which he received February 8, 1896. Still complainant waited nearly nine months before asserting title contrary to that defined by the contract. Upon this subject Mr. Kidder further testified:

“I accepted Mr. Clark’s opinion as final on the subject, so far as to govern my actions. I understood it to be only a matter of opinion. I understood it to be his opinion, but that the decision was definite by the Supreme Court.
“Q. So long as the matter remained in an opinion, it was a matter of doubt, wasn’t it ?
“A. .Yes.
“Q. You were also aware of the fact that the courts sometimes change their opinions, were you not ?
“A. I have very frequently thought that, with reference to this very thing, the Supreme Court might change sometime.
“Q. And rather than investigate any further, or raise any question about it, you concluded to accept the opinion as rendered by Mr. Clark. Is that it?
“A. Yes; that is so.”

In Clute v. Fisher the lake contained 32.68 acres. Plaintiff owned about three-fourths of the frontage. Defendant owned no land fronting upon it, but claimed that the title was in the State. The question of the division of the lake was not involved. The place where the ice was cut was conceded to be in territory owned by the plaintiff, unless his title was limited tó the meander line. A diagram of that lake is found in 102 Mich. 231, and the issue clearly stated in the opinion of Chief Justice McGrath. Ah examination of the briefs shows that the question of a division among the riparian owners was not mentioned. That part of the opinion was therefore mere dicta, and was an erroneous statement of the law, as was subsequently held in the case between the ice companies. The mere dicta in the opinions of courts are not controlling. It may, however, be conceded that the statement of the learned justice who wrote the opinion, which was concurred in by the entire court, might fairly be considered as enunciating the law in this State applicable to inland lakes of such size, while it also recognized the correct rule in larger lakes. The Supreme Court of the United States so accepted it, as is evident by their reference to it in Hardin v. Jordan, 140 U. S. 398.

We will first discuss and dispose of the question raised upon the theory that complainant relied upon the decision of Clute v. Fisher as an authoritative enunciation of the law in its negotiations and contract with the defendants, and that all the parties so understood it. The following, then, is the situation: We find that the parties, in reliance upon that case, entered into a deliberate contract establishing their boundary lines and determining the amount of territory belonging to each. Complainant made the contract with knowledge that it gained territory south of the line, known to be valuable, while it surrendered territory north of the line, not then known to possess any value. All parties are chargeable with knowledge that each was to incur risks of its own, make its own expenditures upon its own land according to the agreement, and, by reason of its expenditures and improvements, would be placed in such a position that it could not be restored to its former status quo. The anticipated result came. The explorations, expenditures, and improvements were made, each company making them at its own risk. It is impossible to restore the status quo or to render exact justice between the parties, because the data are not in existence. It is doubtful if a result approximately correct could be reached upon an accounting. It would be impossible to determine its correctness, within many thousands of dollars. The result of complainant’s contention would be that, whenever any case had been overruled, every transaction or agreement based upon that decision may be set aside by the courts, if not barred by the statute of limitations. The agreements and settlements of parties, made with full knowledge of the facts and in reliance upon the law, ought to be as binding as the judgment of the court in a particular case. If ten other similar suits had been pending when Clute v. Fisher was decided, and judgments had been rendered in reliance upon that decision, the courts could not now set them aside. The law is not so unstable as to permit such results. Judgments rendered and contracts made upon the faith of the law as enunciated in the decision of a court, in the absence of fraud or misrepresentation, * must stand. When that decision is overruled, the overruling decision controls only-subsequent transactions. Such is the rule recognized by the decisions and text-writers.

“The general rule certainly is (as has been very clearly stated by the Supreme Court of the United States) that a mistake of the law is not a ground for reforming a deed founded on such a‘ mistake; and, whatever exceptions there may be to this rule, they are not only few in number, hut they will be found to have something peculiar in their character, and to involve other elements of decision.” 1 Story, Eq. Jur. § 116.
“Upon a close survey, rhany, although not all, of the cases in the latter predicament will be found to have turned, not upon the consideration of a mere mistake of law, stripped of all other circumstances, but upon an admixture of other ingredients, going to establish misrepresentation, imposition, undue confidence, undue influence, mental imbecility, or that sort of surprise which equity uniformly regards as a just foundation for relief.” Id. § 120. See, also, Id. § 128.

Kent, the learned chancellor, said:

“A subsequent decision of a higher court, in a different case, giving a different exposition of a point of law from the one declared and known when a settlement between parties takes place, cannot have a retrospective effect and overturn such settlement. The courts do not undertake to relieve parties from their acts and deeds fairly done on a full knowledge of facts, though under a mistake of the law. Every man is to be charged, at his peril, with a knowledge of the law.. There is no other principle which is safe and practicable in the common intercourse of mankind. And-to permit a subsequent judicial decision in any one given case, on a point of law, to open or' annul everything that has been done in other cases of the like kind, for years before, under a different understanding of the law, would lead to the most mischievous consequences. Fortunately for the peace - and happiness of society, there is no such pernicious precedent to be found. This case, therefore, is to be decided according to the existing state of things when the settlement in question took place.’’ Lyon v. Richmond, 2 Johns. Ch. 51.

An examination of the cases cited by complainant’s counsel will show that there were other considerations in them besides a naked mistake of law. To analyze them would make this opinion unnecessarily long. A brief reference to two will suffice. In Whelen’s Appeal, 70 Pa. St. 410, there existed a failure to furnish evidence for which the applicant called and to which she was entitled. The court refers to the well-settled principle, and says:

“This doctrine, though founded on principle and supported by authority, will not be allowed to bar the way to relief, where the party seeking to avoid the consequences of his own deed shows that he has acted upon a want of proper knowledge, which he was not able to obtain, though vigilant and diligent in his search for it, or where information to which he was entitled, and which was necessary to the formation of a correct judgment as to the performance of a proposed act by which, his rights are to be affected, has been withheld from or refused to him. * * * It is clearly settled that where, with a mistake in law, there is found mixed up other ingredients, showing misrepresentations, stating that which is not true, or concealing that which ought to have been made known; where imposition, undue influence, mental incapacity, or surprise are established,- — -relief will be afforded to one who has thus been imposed upon and induced to do that which it is contrary to equity to maintain.”

In Blakeman v. Blakeman, 39 Conn. 320, petitioner purchased of defendant land, including a right of way through a lane, and paid a greater price than would have been paid for the land alone. There had been an appurtenant right of way, which had ceased by operation of law. The d efendant represented that the way still existed, and would pass by the deed. The court says: “Both parties were mistaken in relation to the fact of the existence of the way, — a mutual mistake.”

This case is stripped of all other circumstances. It contains no element of misrepresentation, imposition, suppression, undue influence, undue confidence, imbecility, or surprise. Neither -said or did anything to mislead the others. Each acted with deliberation and with complete knowledge of all the facts. The sole basis of complainant’s claim is that the decision of this court, upon the faith of which the contract was made, was subsequently overruled. We recognized the rule in Ingles v. Bryant, 117 Mich. 113. We declined to reopen a chancery case, where a decree had been entered in this State by mutual consent, upon the faith of a decision of the supreme court of Ohio. Subsequently this court held directly to the contrary. It was decided that the consent decree, acquiesced in for three years, was conclusive upon the parties. Why should not a voluntary settlement out of court be as conclusive as the like settlement made in court? We are therefore of the opinion that this case does not come within any exception to the rule that a mistake of law does not furnish any ground for relief.

Do the contract settling the boundary line, and acquiescence therein, and the acts done thereunder, estop complainant to now assert a different line ? The rule is settled by the decisions of this court that, where disputed boundary lines have been established by express agreement, or under such circumstances that an agreement will be implied, and parties have for any considerable time recognized them, they will be upheld, though title by adverse possession could not be maintained. Joyce v. Williams, 26 Mich. 332; Smith v. Hamilton, 20 Mich. 433 (4 Am. Rep. 398); Jones v. Pashby, 67 Mich. 459 (11 Am. St. Rep. 589).

According to the testimony on the part of the complainant, there was a dispute as to the boundary line. Mr. Kidder testified that the superintendent of the C. I. M. Co. asked him for a deed of the land lying north of the section line, and that he for his company declined to give it, making the same claim that he now asserts. If his testimony be true, and for this purpose the company must ’Stand by its own testimony, there was a dispute, and it was settled by the agreement. Complainant recognized it for nearly five years, and saw all these expenditures made by the defendants without protest.

Complainant, however, invokes the doctrine that title to land cannot rest on estoppel on account of the statute of frauds, and that a vote of three-fifths of the entire stock of the company is essential, under the statute, to convey title. The obvious reply to the first proposition is that it is also established that the statute of frauds does not apply to boundary lines, and that the doctrine of estoppel will be applied to the voluntary adjustment of disputed boundaries. Hayes v. Livingston, 34 Mich. 384. Under the theory of complainant, corporations could not settle boundary lines without a meeting of the stockholders called to pass upon the alienation of its lands, and the doctrine of estoppel could never be applied to a boundary line between corporations or between a corporation and an individual.

So, too, in reply to the second proposition, it may be said that the statute does not apply to the voluntary adjustment of these lines, but to alienation by deed of conveyance. Complainant was not alienating, dividing, or selling any of its real estate, within the language of the statute. 1 How. Stat. § 4052. “Alienation” means, in law, a transfer of title by conveyance. Webst. Diet.; Cent. Diet. The C. I. M. Co. claimed title by virtue of the original patent. Complainant owned no specific piece of land north of the section line, even under its own theory, which could be measured by metes and bounds. How much, if any, it owned could only be determined by agreement or the decree of a court of equity. If it surrendered land north of the line, it gained other on the south. There was no such alienation of lands as required the vote of the stockholders.

The contract was the act of the three parties to it. It was introduced by the complainant as a valid contract. It was executed with all the formalities of a deed. It had the seal of the corporation. Complainant, as well as the defendants, paid out large sums of money under it. All are now estopped to deny its due execution and validity.

Another singular result of complainant’s contention is this: The annulment of the pumping contract, and the substitution by the court of another in its stead. Courts may annul contracts for fraud or mistake, but they cannot make and substitute others. Complainant did not offer by its bill to have the court fix its proportion of the cost of pumping out the water and mud from the lake, nor define its position upon the contract. Upon the hearing, and after proofs were in, it asked to have the court virtually set the contract aside, and make another one for the parties. The contract was a continuing one, and provided for the continuance of the drainage. Can a court of equity make an agreement for the parties requiring them to keep the water of this lake pumped out, and fix the amount each shall pay, upon a basis which neither contemplated or assented to? Would the parties originally have entered into a contract such as the complainant now asks to be made? In the summer of 1893 the parties disagreed as to the continued liability under that clause of the contract relating to the drainage, and a claim was made against the complainant. Its superintendent replied to this claim by stating that it was under no circumstances interested in pumping out the mud, and that, had such a contingency been stated in the contract, it would not have become a party to it. If complainant would not then tolerate a change in the contract contrary to its understanding, upon what reason can it now ask the court to make one for its benefit, contrary to the express terms of the one the parties made? The court must either affirm the contract in toto or wholly set it aside. The foundation of the contract was the settlement of the boundary lines, and the division of the territory and apportionment of expense in accordance therewith. The court cannot set it aside as to the boundary lines, and reform or remake it upon an equitable division of the territory. ' If set aside, the contract is at an end, and the lake must be left to fill up, if either refuses to enter into a new contract. The L. S. I. Co. has discovered no valuable ore. It was willing to assume risks in the hope of finding ore. Though it has found none, it does not seek to avoid its agreement. To that agreement alone it can be held.

Complainant is entirely without equity. It doubted the correctness of the rule of Clute v. Fisher, and thought that a different rule might some time prevail. It was then its duty to take steps to test the question, before permitting defendants to enter into a contract and explorations involving over $100,000. It should, at least, have informed the defendants of its claim, and given them the opportunity to make a contract with that in view. This claim would not have been heard of unless the C. I. M. Co. had developed a valuable mine. The fact that the venture proved successful after large expenditure creates no equity for this complainant. The skill, energy, and money of that company developed a valuable property. It ought, in justice, to reap the benefit, and the complainant ought to be estopped to participate in the benefit, unless an unbending rule of law prevents. Twin-Lick Oil Co. v. Marbury, 91 U. S. 592; Clegg v. Edmondson, 8 De Gex, M. & G. 787. It would not have offered to bear its share of the loss if unsuccessful, nor could it have been compelled to.

Furthermore, it was guilty of laches in keeping silence when it ought to have spoken. Every one is presumed to know the law. Therefore it must be presumed to have known of the law enunciated in Grand Rapids Ice & Coal Co. v. South Grand Rapids Ice & Coal Co., supra. It had an able attorney, who keeps well versed in the decisions of the courts of this State. Yet it waited 2£ years before asserting its claim, and still 9 months after obtaining the opinion of its attorney that Clute v. Fisher was no longer the law. It waited until circumstances and conditions have so changed that it is impossible to restore the status quo.

Decree affirmed, with costs.

The other Justices concurred.


source: Caselaw Access Project

author: Moore, J.

license: Public Domain

text:
    RAPID RAILWAY CO. v. CITY OF MT. CLEMENS.
    1. Street Railways — Switches—Removal.
    A street-railway company which, is authorized to put in a “ Y” at a given street, with the proviso that the company shall, if so ordered by the common council, remove the “ Y” within 60 days after service upon it of a copy of an order of the common council directing it to do so, is bound by such agreement, and must remove the “Y” when ordered.
    .2. Same — Construction of Ordinance.
    An ordinance authorizing a street-railway company to put in “such turnouts, switches, and side tracks as maybe deemed necessary,” and providing that the whole length of road shall be deemed one route, with a fare not exceeding five cents, does not authorize the construction by such company of a “Y” switch to make a turning point for another street-railway company.

      3. Same — Municipal Officers — Common Council.
    The common council of a city is not bound to assent to the use by a ’street-railway company of a “Y” switch, which the company constructed between midnight Saturday and midnight Sunday, at the intersection of two of the principal business streets, for the purpose of turning its cars there on; because the mayor and a member of the street committee had prior knowledge that such a switch was proposed.
    Appeal from Macomb; Eldredge, J.
    Submitted April 26, 1898.
    Decided September 20, 1898.
    Bill by tbe Rapid Railway Company to enjoin the city of Mt. Clemens and others from interfering with complainant in its operation of certain switches. From a decree dismissing the bill, complainant appeals.
    Affirmed.

      Byron R. Erskine (Charles M. Swift, of counsel), for complainant.

      Seth W. Knight (.Elliott &. Stevenson and Robert F. Eldredge, of counsel), for defendants.
   Moore, J.

This is a proceeding in chancery, where complainant-seeks to have defendants enjoined from hindering or interfering with the operation of complainant’s cars over the ‘ ‘ Y ” switch at the intersection of Cass avenue and South Gratiot streets, and the “ Y ” on Butler street, in the city of Mt. Clemens. The case was heard in open court. Complainant’s bill was dismissed by the circuit judge. From his decision, complainant has appealed.

The complainant for some time has been operating an electric line of street railway from the City of Detroit to Mt. Clemens. It obtained a right of way over the highway occupied by the Detroit & Erin Plank-Road Company from that company. In 1894 an ordinance was granted authorizing complainant to construct a railway track—

“On, along, and through Gratiot street, in this city, from its intersection with the southerly city limits to the southerly line of Cass avenue, and upon such other streets and highways as may be hereafter agreed upon, * * * with all necessary and convenient * * * tracks, turnouts, side tracks, switches, bridges, and culverts.”

Section 4 of said ordinance is as follows, viz.:

“ That the authority granted by section 1 hereof shall be construed to be authority only to lay a single track on said street, together with such turnouts, side tracks, and switches as may be necessary for the successful operation of said road: Provided, however, that the location of said turnouts, switches, and side tracks shall be first approved by the street committee.”

It will be noticed this franchise gave to the company no rights north of the southerly line of Cass avenue. ,

After the franchise was obtained, the company constructed its road. For a time its cars were operated from both ends. While this was done, the company did not have at Mt. Clemens a “Y” or turntable upon which it could turn its cars. Later its cars were equipped to run but one way, and it became desirable to have a “ Y” upon which its cars could be turned. Application was made to the common council for leave to put in a “Y” at Butler street, which application was granted subject to conditions which will hereafter be stated. The “ Y ” was put in, and it was the practice of the company to turn its cars at this place, and back them from there to near the south line of Cass avenue, a distance of about 4,000 feet.

At this time the Mt. Clemens & Lake Side Traction Company was operating an electric line of railway on Cass avenue, which passed near the terminal of the complainant. At the intersection of South Gratiot street and Cass avenue is one of the most important business centers of the city. Without consulting the common council, the complainant made an agreement with the president and manager of the Traction Company authorizing it to put in a “ Y ” at the intersection of South Gratiot street and Cass avenue, which would allow it to turn all its cars. The president and manager were not authorized by any vote of the directors or stockholders to make this contract, and, before the “ Y” was put in, they were instructed by the directors not to allow it to be done. The testimony shows this instruction was not communicated to the complainant. It is claimed the mayor and one of the aldermen who was on the street committee had knowledge of the making of this contract. They both testified that, while they knew a connection was to be made between the tracks of the two companies, they did not know it was proposed to put in a “ Y ” for the purpose of using it as a turning place for the cars. The “Y” was put in between midnight Saturday night and midnight Sunday night. On the following Monday night, the common council forbade the use of this “ Y,” and it was not used except to a very limited degree. Later the Traction Company refused to allow it to be used at all. Negotiations were had between the two companies and the city looking to the settlement of the differences between them. These negotiations failed. The common council ordered the “ Y ” on Butler street taken up, as well as the one at the intersection of South Gratiot street and Cass avenue.

It is the claim of complainant that the “ Y” at Butler street is necessary to the management of its road, and that it got some right to put it in by reason of its arrangement with the Detroit & Erin Plank-Road Company. Its application to the common council for leave to put this “ Y” in is hardly consistent with this claim. As the Detroit & Erin Plank-Road Company had no rights whatever in Butler street, it is difficult to see how it could confer any rights upon the complainant. The authority to put in the “Y” at Butler street was granted with this proviso: “That said grantee, its successors or assigns, shall, if ordered to do so by the common council of the said city, remove said ‘Y’ switch within 60 days after service upon it of a copy of the order of the common council directing it to do so.” The council ordered this “Y” taken up. The company refused to do what it had agreed to do as one of the conditions of obtaining the right to put in the “Y.” It now seeks the aid of equity to prevent having done what it agreed to do. If the writ can be used for such a purpose, why may it not be used after the 30-years franchise granted to the company has expired? The “Y” was accepted with the condition imposed, just as the franchise was accepted with the limitation as to the length of time which it should exist. The railway company is bound by these conditions.

It is claimed, the city having conferred the right to construct the “Y” on Butler street, it cannot now deprive the company of the use of it; citing Electric Ry. Co. of Grand Rapids v. Common Council of Grand Rapids, 84 Mich. 257. We do not think that case applicable to this one. The city was under no obligation to confer the right to construct a “Y” on Butler street, and, when it conferred that right, it was competent for it to attach conditions which must be observed. Suppose the franchise to construct and operate the road had been limited to 20 years; could it be claimed the company could operate the road after the 20 years had expired, even though the city refused to grant them a franchise to do so ? If not, how can it be claimed it can operate this “ Y” when the condition has arisen when the company agreed it should not be operated? The writ of injunction should not be used to aid the complainant in refusing to carry out its agreement. Union Street R. Co. v. Saginaw Circuit Judge, 113 Mich. 694.

It is claimed the “ Y” at Cass avenue was convenient and necessary to the operation of the road of the Traction Company; that it was competent for that company to make the contract it did with the complainant, and therefore the “ Y ” should be allowed to remain. In our view of the case, it will not be necessary to express any opinion upon the question of whether the president and manager of the company were authorized by the directors and stockholders to make the contract which they made. Whatever rights the Traction Company had to the use of Cass avenue it obtained by mesne conveyances of the rights given by an ordinance to Le Duke and Bishop, and its amendments. The ordinance which conferred the right to Le Duke and Bishop to put in “ such turnouts, switches, and side tracks as may be deemed necessary,” etc., also provided, in section 7: “The whole length of the road authorized by this ordinance shall be deemed one route, and the rate of fare over said route shall not exceed five cents for each person over five years of age.” This indicated very clearly that a connection with some other railway was not contemplated when turnouts and switches were referred to, but that the turnouts and switches needed by the railway to which the franchise was given were intended. This ordinance was amended so as to allow the use of a different kind of rails from those allowed to be used by the original ordinance, and had this proviso: “ The, manner of laying said tracks and rails and the alignment of same on the street to be subject to the inspection and approval of the common council and the city engineer.” The common council and city engineer had no knowledge of the putting in of this work until after it was done, and never approved of it. Whatever may be the effect of the contract so far as the two railway companies are concerned,' — -and upon that question we express no opinion, — the putting in of this “ Y ” was unauthorized by the city.

The contract made between the Rapid Railway Company and the Traction Company indicated very clearly the purpose of the Rapid Railway Company in making it. It reads:

“ Whereas, the said Rapid Railway Company desires to put in a ‘ Y ’ at the intersection of Cass avenue and South Gratiot avenue, in the city of Mt. Clemens, for the purpose of connecting its line with the line of the Traction Company at this point, so that said Rapid Railway Company may turn its cars: Now, therefore,” etc.

The contract also provided:

“The said Rapid Railway Company is to have the privilege of using so much of the track of the said Traction Company as may be necessary to ‘ Y ’ its cars at this point, not to exceed a distance of 150 feet east and west from the line of' said Rapid Railway Company, and to maintain and renew so much of said track as it may use, if it becomes necessary during the life of this agreement, including paving and repaving.”

One cannot read this agreement without coming to the conclusion that the purpose of the Rapid Railway Company in making it was to allow it to turn its cars at this place. The Rapid Railway Company was not authorized by its charter to go north of the southerly line of Cass avenue. This “ Y” was put in to make a turning point for the Rapid Railway Company. It was not authorized by the franchise of the Traction Company. Booth, St. Ry. Law, § 56.

Is it possible that the right to turn cars 47 feet long, and weighing 22 tons, at the intersection of the two principal business streets of a city like Mt. Clemens, can be acquired without obtaining the right to do so from the common council ? To state the proposition is to suggest the answer. The common council was not consulted. While the mayor and a member of the street committee had knowledge that it was proposed to connect the two tracks, they both swear they had no knowledge that it was proposed to put in a “ Y” at this point, upon which the cars of the railway companies could be turned. And, even if they had knowledge of its purpose, they were not authorized to confer any authority to put it in. This “Y” was put in between midnight Saturday night and midnight Sunday night. The council at once forbade the use of the “Y,” and it never has been used except surreptitiously, or by force, or upon one or two occasions by the permission of the council, it being expressly stated that its use did not give the company any permanent rights.

It is claimed some rights were obtained by virtue of some action of the common council taken in September, 1896. At this time a contract was entered into between the two companies, giving the Rapid Railway the right to run over the tracks of the Traction Company to the lower part of the city. The contract was not to be binding unless the city granted to the Traction Company an ordinance satisfactory to it, nor unless the franchise rights of the Rapid Railway Company were extended so as to permit it to make a loop around the Avery House Square, and other concessions acceptable to the city and the Rapid Railway Company. Afterwards an ordinance was adopted which conferred certain rights upon the Traction Company. It provided the ordinance should be of no effect unless accepted in writing by the Traction Company within 30 days from the passage of the ordinance. The time for its acceptance was afterwards extended, but the company declined to accept the ordinance, and “never has accepted it. At the same time this ordinance was adopted, one was passed giving certain rights to the Rapid Railway Company. Among other rights conferred was the right to construct the loop around the Avery House Square, conditioned upon its being done within 90 days; the ordinance not to be binding unless accepted in writing within a stated number of days thereafter. The time for the acceptance of this ordinance was extended at the same time the extension was given to the Traction Company, and for the same period. Upon the last day the Rapid Railway Company accepted the ordinance, but it did not build the loop around the Avery House Square within the 90 days, and it is not yet built. It is evident from the record that, when this contract was made and the two ordinances were passed, they were all part of one transaction, and were intended to settle the differences between the two railway companies, and to give the public service to the lower part of the city, and to secure the turning of the cars at the loop provided for in the ordinance. Unfortunately for all the parties, this object was not attained. The contention of the complainant that it is to receive the benefit of this proceeding as though the object of the city in making it had been attained, when it in fact accomplished nothing, is not tenable. The Traction Company did not accept the ordinance. The condition upon which the contract and the ordinance were to be operative failed, and no rights were acquired by reason of what was done.

The decree is affirmed, with costs.

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


author: Montgomery, J.

text:
    MURPHY v. CHARLTON.
    1. Mortgages — Evidence.
    Complainant and his brothers comprised a corporation which owned certain boats, worth approximately §30,000, that had been libeled and were about to be sold. One of the brothers arranged with K. to advance §10,000 to bid in the boats, under an agreement that he should hold the title to the boats as security for a time, during which such brother was to retain possession; in consideration of which service K. was to receive, upon redemption of the boats, §11,000. K. bid in one of the boats for §13,050, and received a bill of sale of the other from the corporation. It was known to K. that the money to redeem the boats, over and above the §10,000 paid by him, was furnished by complainant. Held, that the transaction amounted to a conveyance to K. in trust for complainant, with an interest in K. in the nature of a mortgage interest.
    2. Same — Purchaser with Notice.
    A sale by K. to defendant, negotiated by the brother in possession, who received nothing therefor, entitled defendant merely to hold in the right of K., subject to complainant’s equities; at least if, in subsequent negotiations, the fact that complainant had equities in the boats was recognized by defendant.
    Appeal from Wayne; Lillibridge, J.
    Submitted June 7, 1898.
    Decided September 20, 1898.
    Bill to redeem by William J. Murphy against John Charlton and others. From a decree dismissing the bill, complainant appeals.
    Reversed.

      Moore & Moore, for complainant.

      John G. Shaiv and William B. Gady, for defendants.
   Montgomery, J.

In February, 1886, the Detroit Tug & Transit Company was the owner of the tug Balize and the schooner Harvey Bissell. Both of these boats had been libeled in the United States district court at Detroit. The claims against the Balize aggregated $13,-050. The specific amount of the claims against the Bissell does not appear. At this time, Samuel A. Murphy and William J. Murphy and Thomas Murphy owned nearly all the stock of the Detroit Tug & Transit Company, and were the ones chiefly, if not solely, interested in preventing a sale of the boats. At this time they sought one John Kelderhouse, of Buffalo, N. Y., to aid • them in securing to themselves the two boats in question. An arrangement was then made by which Kelderhouse, through an agent, bid in the Balize at a marshal’s sale, and thereupon the Tug & Transit Company made a bill of sale to Kelderhouse of the Bissell; so that he became at least nominal owner of both boats. At the sale of the Balize, complainant furnished $3,050 of the purchase money, and Kelderhouse $10,000. Complainant also furnished the money to pay off the claims against the Bissell. The boats went into the possession of Samuel A. Murphy, and continued in his possession until September following, when they were conveyed by a bill of sale to William T. M. Charlton, in trust for the other defendants. The Charltons took possession of the boats, and have since controlled the same.

The bill in this case is filed, alleging, in substance, that complainant, intending to become the purchaser of the two boats in question, applied to Kelderhouse for a loan, and that he effected the loan, and that the transfer to Kelderhouse was in trust for the complainant, and as security for the advance of $10,000, and by way of mortgage; that the Charltons took simply the interest that Kelderhouse had; and that the right to redeem from the mortgage continues. The bill also prays for an accounting. The answer denies that the transaction with Kelderhouse amounted to a mortgage, but avers that the agreement was between Samuel A. Murphy and Kelderhouse, and that the advance of $10,000 was not made as a loan, but as the purchase price of the property, and that the agree'ment with Murphy was a conditional agreement to sell, and that by this agreement Murphy was not bound to buy, or to repay the $10,000. The answer also alleges that the purchase of the boats from Kelderhouse was absolute and unconditional, and with the consent of Samuel A. Murphy. There seems to be no controversy between the shareholders of the Detroit Tug & Transit Company • and the complainant. The circuit judge dismissed the bill, and complainant ^appeals.

The two questions arising are:

(1) Whether the transaction between Murphy and Kelderhouse amounted to a mortgage, giving to Murphy a right to redeem.
(2) Whether, if the transaction gave to Murphy the rights of a mortgagor, this right has been cut off by the sale to the Charltons.

1. Some stress is laid by defendants’ counsel upon the fact that it does not appear clearly that, in the negotiations with Kelderhouse, complainant was named as principal. This circumstance is entitled to this much weight, viz.: ’The acts of Samuel A. Murphy on behalf of his undisclosed principal, in his (Samuel A.’s) own name, would bind the principal; but, as bearing upon the question of the nature of the contract, it is not of great importance, as we view it. It was known to Kelderhouse that the money to release "the boats, over and above the $10,000 paid by him, was furnished by complainant. What was the nature of the transaction? The complainant labors under a difficulty in proving his case, arising from the fact that Samuel A. Murphy, who conducted the negotiations, has since become insane. Mr. Kelderhouse is, however, apparently a candid witness, and a solution of the question depends very much upon an analysis of his testimony. A careful review of his testimony convinces us that the complainant’s contention is fully sustained thereby. He testified:

“I was to hold the boats, take a bill of sale of them .and hold them as security, for, my impression is, four months; it might have been six months, but not to exceed that; and he was to give me for the trouble $1,000, and I was to have, when they were redeemed, when I got my pay, I was to have $11,000, and I was to let him run the boats up to that time, providing he kept them out of ' debt.”

He also testified that Murphy applied to him for a loan, and on cross-examination, in answer to the question, “He was to pay you $11,000 when the loan matured?” he answered, “Yes.”

We cannot escape the conclusion that both parties understood that this was a loan, and that Mr. Samuel A. Murphy understood that his principal was obligated to pay the amount, and that, if Mr. Kelderhouse did not know of the fact that Mr. Samuel A. was acting for the complainant, he might have had recourse against Samuel A. or the complainant whenever he discovered that he was the principal. We think this transaction amounted to a conveyance to Kelderhouse in trust in favor of complainant, with an interest in Kelderhouse in the nature of a mortgage interest. See Jarvis v. Woodruff, 22 Conn. 548; Horn v. Keteltas, 46 N. Y. 605; Reed v. Bond, 96 Mich. 134, and cases cited; Morgan’s Assignees v. Shinn, 15 Wall. 105.

2. The question whether the purchase by the Charltons was absolute or made subject to complainant’s equities . is more doubtful. The defendants claim that their purchase was absolute and final, and they so testify; but there are circumstances which, as the case presents itself, to us, cannot be reconciled with this claim. Mr. Kelderhouse testified that, when his claim fell due, he insisted on payment; that Samuel A. Murphy said he would look around, and see what he could do; and that later he returned, and said: “I want you to make the bill of sale out to Charlton Brothers on the boats, and they will pay you for them.” The question occurs at once, Why should Samuel A. exhibit the anxiety to place these vessels beyond redemption ? Admittedly, the Murphys were, paid nothing for any release, and yet, according to the claim of the Charltons, Samuel A. was looking for a customer for Kelderhouse to sell to, and to cut off their claim. This spirit would not have appeared so unaccountable if the indebtedness to Kelderhouse equaled the value of the ves- ■ seis, or nearly equaled it; but it did not. The two vessels were worth $25,000 to $30,000 at the least, and the total claim against them was less than $17,000. It further .appears that in. subsequent negotiations the Charltons recognized the fact that the complainant had equities in the boats. We cannot escape the conclusion that, whatever the form of the transaction or the language employed, the Charltons were induced by Samuel A. Murphy to invest, and they expected to take the place which Kelderhouse previously occupied, and succeed to his rights.

The complainant was entitled to relief. The decree will be reversed, and the case remanded for an accounting. Complainant will recover costs of this court. The costs of the court below will abide the result.

The other Justices concurred.


author:
Grant, C. J.
      Moore, J.

text:
    BACON v. POMEROY.
    Principal and Agent — Authority to Collect Mortgage.
    A negotiable note and mortgage were assigned to a nonresident, with tbe knowledge of the grantee of the mortgagor. The assignee usually sent to the mortgagee to collect interest as it fell due, and the proceeds of such collections were remitted. On one occasion the assignee authorized the mortgagee to receive and remit a payment upon the principal, which the debtor had expressed a desire to make. Thereafter the debtor, relying on the mortgagee’s representation that he was the agent of the assignee, made a further payment on the principal. The assignee retained possession of the mortgage and note, and the mortgagee gave receipts in his own name. The latter never accounted for the last payment on the principal. Held, that no general authority to collect appeared, and thht the payment was at the debtor’s risk. Moore, J., dissenting.
    Appeal from Van Burén; Buck, J.
    Submitted June 8, 1898.
    Decided September 20, 1898.
    Bill by Francis Bacon against Mary A. Pomeroy, William Klett, and others, to foreclose a mortgage. From a decree for defendants, complainant appeals.
    Reversed.
    Bill to foreclose a mortgage. Defense, payment. The note and mortgage were dated January 28, 1889, and executed by George H. Pomeroy to one George E. Breck, for $800. It was a negotiable promissory note, due in five years from date. Breck immediately assigned the mortgage to Francis Bacon, who resided in Waterloo, N. Y. The money loaned belonged to Mr. Bacon as trustee. He did not record his assignment until February, 1896. Defendant Klett purchased the land March 11, 1889, subject to this mortgage. The note and mortgage were sent to Bacon, and were in his possession until the hearing. On February 10, 1893, Klett paid to Breck $400 of the principal, which is the sole subject of dispute here. He made this payment in good faith, assuming Breck to be the agent of Bacon. Breck proved to be a scoundrel, and did not remit the money. The 'sole questions are: (1) Was Breck the agent of Bacon? (2) Was Bacon’s conduct such as to justify Klett in believing him to be such agent?

      Heckert & Chandler, for complainant.

      Charles E. Sweet, for defendants.
   Grant, C. J.

(after stating the facts). Breck was not Bacon’s agent. Bacon usually sent to Breck to collect the interest as it fell due, and it was paid and remitted. Klett lived near Paw Paw, and knew Breck, in whom he placed confidence. He testified that Breck told him he was Bacon’s agent. He had no other reason for so believing. He knew that Breck had assigned the note to an Eastern party. Bacon testified that he never authorized Mr. Breck to collect this amount, and had no knowledge of this payment until after Breck’s death. Breck gave receipts to Klett in his individual name. On one occasion Klett informed Breck that he desired to pay $100 of principal. Breck wrote to Bacon, and received a letter authorizing him to receive and remit it. Klett did not ask Breck to see the note and mortgage, or if he had them. He knew that the note was negotiable, and that it was transferred, and he had no right to assume that Breck was Bacon’s agent to collect the principal. The fact that Klett paid the interest to Breck, and that Breck remitted it to Bacon, is not sufficient to establish the authority to receive the principal, or any part of it, or to justify Klett in believing that Breck was Bacon’s agent. The employes in Breck’s office testified that they knew of no authority conferred by Bacon upon Breck. Breck’s authority was confined by Bacon to express instructions on every occasion. All the transactions between Breck and Bacon are consistent with specific authority and instructions for each case, and do not establish general authority. Aside from this there is nothing to show such general authority. Terry v. Durand Land Co., 112 Mich. 665; Trowbridge v. Ross, 105 Mich. 598; Bromley v. Lathrop, Id. 496; Joy v. Vance, 104 Mich. 99; Church Association of Michigan v. Walton, 114 Mich. 677. Klett could easily have ascertained whether Breck had authority. Instead, he chose to rely upon information given him by Breck. It is he, and not Bacon, who must suffer.

Decree reversed, with costs of both courts, and decree entered here for complainant.

Montgomery, Hooker, and Long, JJ., concurred with Grant, C. J."

Moore, J.

(dissenting). I think the record shows Mr.

Breck was authorized to receive the payments, and that the decree should be affirmed.


text:
    GRUNOW v. SALTER.
    1. Land Contracts — Surrender—Joint Vendors.
    An attempt to surrender a land contract by delivering it to one of the vendors upon his suggestion that he will be satisfied to accept the contract and “let the interest go,” but will have to consult the other vendor, is ineffectual without the other vendor’s consent.
    2. Same — Statute oe Frauds.
    The interest of contract purchasers in land cannot be surrendered by parol.
    Error’ to Wayne; Donovan, J.
    Submitted June 10, 1898.
    Decided September 20, 1898.

      Assumpsit by Oliver H. G-runow and Buchanan M. Patterson against Casper Salter and Joseph Salter to recover the accrued interest on a land contract. From a judgment for plaintiffs on verdict directed by the court, defendants bring error.
    Affirmed.

      Franklin L. Lord, for appellants.

      James Swan, for appellees.
   Montgomery, J.

The plaintiffs brought an action to recover the amount of an installment of interest due them by the terms of a written contract for the sale of lands. The defense interposed was a surrender of the contract. The circuit judge directed a verdict for the plaintiffs for the accrued interest, and defendants bring error.

One of the defendants testified to the surrender as follows:

“ That he saw Mr. Patterson prior to giving up the contract, and that Patterson said that he must have either the money or the contract; that upon this occasion Casper Salter was hot present; that, some days after, he took the contract to the plaintiffs’ store, where he found Mr. Patterson, and told him the contract was there, and, if he was satisfied to take it and let the interest go, he would be satisfied, and that Mr. Patterson said it would be all right, after which he gave Mr. Patterson the contract, and asked for a receipt; that Mr. Patterson did not say anything about consulting his partner; that, after getting the receipt, Mr. Patterson then said he would speak to his partner, and he thought it would be all right; and that, having parted with his contract, he did not know what to do; that, not long after, he received a letter from the plaintiffs asking for interest; that neither of the plaintiffs ever offered him back the contract, and that he did- not go back to get the contract.”

The testimony of the plaintiff Patterson differs from that of the defendant, in that he disputes any agreement to surrender, but he corroborates the statement that he (Patterson) said-he would have to refer the matter to the plaintiff Grunow. He also testifies that he did not in fact have authority to release defendants.

It is evident from defendant’s testimony that, before the parties separated, the defendant was informed that the assent of Mr. Grunow was essential to defendants’ release, and that he made no dissent from this statement, and left the contract with Patterson upon that understanding. The circuit judge was right in so holding.

The court was also correct in holding that the interest of the defendants as contract purchasers was such an interest in land as could not be surrendered by parol. 2 How. Stat. § 6179; McEwan v. Ortman, 34 Mich. 325; opinion of Campbell, J., in Whiting v. Butler, 29 Mich. 144.

The other questions presented relate to rulings in no way affecting the main issue.

The judgment will be affirmed.

The other Justices concurred.


text:
    BELDING SAVINGS BANK v. MOORE.
    1. Trusts and Trustees — Equity—Parties.
    A bill to declare a mortgage placed in escrow a prior lien over a deed to a trustee for the benefit of an insolvent bank will not be dismissed for failure to make the bank and its receiver
    parties, where the trustee is made a party, and enters fully upon the defense claimed by the cestui que trust.

    2. Debtor and Creditor — Security—Preferences.
    A debtor may prefer one creditor to another, and may use any of his property for the purpose of paying or securing his debts, in such order as he may select; and nothing but a distinct lien upon property can prevail against such disposition.
    8. Same — Priority of Liens.
    The lien of a prior unrecorded mortgage given to secure a creditor, to be delivered upon a contingency which may never happen, is inferior to that óf a deed of trust given to secure another creditor, without notice of the existence of the prior mortgage.
    4. Mortgages — Escrow—Delivery.
    Where a mortgage is placed in escrow upon the mutual understanding of the parties that it shall be delivered upon the joint request of two persons, one of whom is the mortgagor, the instrument can only be rendered effective by the mortgagor’s assenting to its delivery.
    Appeal from Kent; Grove, J.
    Submitted June 10, 1898.
    Decided September 20, 1898.
    Bill by the Belding Savings Bank against Le Roy Moore, Charles F. Morgan, and Thomas J. Potter, to compel the delivery of a mortgage held in trust by defendant Morgan^ and to declare said mortgage a prior lien over a deed of the same premises to defendant Potter. From a decree, dismissing the bill, complainant appeals.
    Affirmed.

      McGarry & Nichols, for complainant.

      Francis A. Stace, for defendant Morgan.

      Fitz Gerald & Barry, for defendant Potter.
   Moore, J.

The following statement of facts, taken from the brief of counsel, is justified by the record:

“In June, 1893, the City National Bank of Greenville, of which Moore was president and actual manager, ceased to do business, and was put into the hands of a receiver (Robert T. Gibbons), Moore being then indebted thereto to the amount of $98,000 and upwards. Moore was also then indebted to the complainant bank in the sum of $4,500 on five several notes, none of which, however, were then due, the earliest one to fall due maturing July 16th, and the latest October 15th. Moore, at the request of the receiver, immediately after the bank failed, promised to turn all his property over for the benefit of the bank; and, relying on that promise, the receiver refrained from taking any steps by process of law to enforce the collection of this indebtedness. After all their notes against Moore had matured, and about October 21, 1893, complainant commenced a suit at law in the Montcalm circuit court against Moore, by declaration, to recover the amount due on the notes. To this declaration the general issue was pleaded. Two months afterwards, on January 2, 1894, the complainant procured an attachment to be issued in the same suit; and on the same day lands belonging to Moore in Montcalm county, valued at $15,000, were attached, and on the next following day the lands in question in this suit were also attached in Mecosta county.
“On January 20th, Moore made his application to the circuit judge of Montcalm county to dissolve the attachment ; and an order that complainant show cause why it should not be dissolved was made on that application, and Moore also threatened to prosecute the complainant for damages for groundlessly suing out the writ of attachment. The hearing of the application to dissolve the attachment was adjourned on motion of complainant; and pending the adjournment, and about February 5, 1894, an agreement was made between the complainant and Moore that the suit should be discontinued and the attachment released; that Moore should sign and acknowledge a mortgage on the Mecosta county lands in question, and should place the same in the hands of defendant Morgan, to be delivered to Leonard, the president of the complainant bank, when - Moore and J. Milton Earle, one of the directors of complainant, should jointly direct Morgan so to deliver it. J. Milton Earle, complainant’s witness, states the agreement as follows: ‘ Mr. Moore agreed with us that in case of his being obliged to give any security to any one, or in case of any financial difficulty whereby he would be obliged to secure any one, or in case of any attachment proceedings, or of any danger, as he expressed it, he would deliver the mortgage to Mr. Leonard, or cause Mr. Morgan to deliver it. The agreement was that the mortgage should be delivered to Mr. Leonard, the president of our bank, by the direction of Mr. Moore and myself jointly. That is what I meart when I say that Mr. Moore agreed to cause it to be delivered in that way.’ Earle, who represented the complainant at that time, was then advised by Mr. McGarry, the bank’s counsel, in whose office and in whose presence this agreement was made, that the complainant bank would have to trust Moore in the matter. Whereupon a mortgage of the lands in question was prepared, and signed and acknowledged by Moore, and was put in an envelope, sealed up, and on the envelope was written:
‘ ‘ * Doctor O. F. Morgan; to,be delivered to H. J. Leonard when so directed by Le Roy Moore and J. M. Earle.
[Signed] ‘“Lb Róy Mooee.
‘“J. M. Earle.’
“This envelope was then carried by Moore, accompanied by Earle, to defendant Morgan, to whom it was handed by Moore in Earle’s presence, with verbal instruction to hold it until he should be instructed by both Moore and Earle together to deliver it to Mr. Leonard, or give it up to them when they both came after it together, but not to deliver it upon request of either one individually; and Morgan was. not informed of the contents of the envelope. Moore retained the possession of the mortgage from the time it was signed and acknowledged until it was by himself placed in Morgan’s hands; and. it has never been in the hands or under the control of the complainant, nor of any of its officers. The suit at law then' pending in the Montcalm circuit court was also discontinued, and the attachment released.
“After this, and about March 29, 1894, Moore, with his wife, executed and delivered to the defendant Potter a deed of conveyance of his property, real and personal, in trust to convert the same into money, and, after pajcment of expenses, to pay the same to the receiver of the City National Bank of Greenville on the indebtedness and liability of Moore thereto; the balance, if any remained after paying such, liability, to be returned to Moore. This deed was duly recorded in the office of the register of deeds of Mecosta county on the 2d day of April, 1894, and defendant Potter immediately took possession of the lands, and continued to hold and manage the same. Neither Gibbons, the receiver of the bank, nor the defendant Potter, had any knowledge, information, or notice of the agreement between Moore and the complainant, or of the existence of the mortgage, or of its deposit with Morgan. They knew the attachment had been released. Moore refused to join with Earle in directing Morgan to deliver the mortgage to Leonard, and refused to direct such delivery in any manner. Both Leonard and Earle have demanded it of Morgan, who has declined to deliver it because Moore has not joined in directing him to do so; and Morgan retained the envelope containing the mortgage, with the seal unbroken, until directed to open it while giving his testimony in this case.”

It is claimed Mr. Moore, at the time the arrangement was made, represented he was solvent. The president and Mr. Earle, a director, say they believed the statement. The cashier says he doubted very much his statement that he was solvent. Subsequent events showed his liabilities were largely in excess of his assets. The only defendant in interest is the City National Bank of Green-ville, then in the hands of Mr. Gibbons, a receiver. The bank and its receiver are not made parties to the proceeding. TheLill is filed for the purpose (1) of compelling the defendant Morgan to deliver the mortgage to the complainant; (2) to declare such mortgage prior in point of right and time to the deed to the defendant Potter; (3) for general relief. The circuit judge dismissed the bill.

It is claimed the City National Bank and its receiver should have been made parties, and, as they were not, the bill should be dismissed. The deed to Mr. Potter was made for the benefit of the bank. He was made a party, and the defense claimed by the bank is entered upon fully by Mr. Potter. We think there is no difficulty in taking care in this proceeding of the rights of all the parties in interest, and the bill will not be dismissed for that reason.

The contest is one between two banks, both of whom are creditors of Mr. Moore, both of whom were promised security by him. One of these creditors has obtained, through the deed to Mr. Potter, some of the promised security. The other creditor claims the transaction between it and Mr. Moore, in relation to the mortgage, resulted in giving it security, which should be treated as prior in time and right to the deed. The law is well settled in this State that a debtor may prefer one creditor to another, and may use any of his property for the purpose of paying or securing his debts, in such order as he may select, and nothing but a distinct lien upon property can prevail against such disposition. People v. Bristol, 35 Mich. 28; Hill v. Bowman, Id. 191; Jordan v. White, 38 Mich. 253; Brigham v. Fawcett, 42 Mich. 542; State Bank of Fenton v. Whittle, 48 Mich. 1; Howard v. Rynearson, 50 Mich. 307; Sheldon v. Mann, 85 Mich. 265; Strauss v. Parshall, 91 Mich. 475; Ball v. Phenicie, 94 Mich. 355.

Even if the mortgage which was left with Mr. Morgan was a present security, as contended by complainant, it was not put upon record so that other creditors had constructive notice of it. All the witnesses sworn who had any knowledge upon the subject testify that Mr. Potter, the trustee, and Mr. Gibbons, the receiver, had no notice of the giving of the mortgage when the deed to Mr. Potter was made and he entered into possession of the property. The mortgage was never delivered to the Belding Savings Bank, or to any one for it. Giving the most favorable construction possible to the language used bj>- the parties, the mortgage was, to be delivered when a contingency, which might or might not occur, had occurred. Whether the event had happened or not was left for Mr. Earle and Mr. Moore jointly to decide. It was agreed by both parties that their joint assent was essential before the mortgage should be delivered to the bank, and a like assent was required before it could be returned to Mr. Moore. This joint action was never had. One of the necessary essentials to the validity of a deed so as to pass title is delivery; not necessarily to the grantee, but it must be surrendered to the grantee or to some third person for the grantee. If the delivery to the third person is unconditional, it would be a good delivery when accepted by the grantee. The grantor must intend there should be a delivery of the deed, to make it effective. Thatcher v. St. Andrew’s Church, 37 Mich. 264; Stevens v. Castel, 63 Mich. 111; Schuffert v. Grote, 88 Mich. 650 (26 Am. St. Rep. 316); Chick v. Sisson, 95 Mich. 112; Burk v. Sproat, 96 Mich. 104. The parties mutually agreed the assent of Mr. Moore should be obtained before the mortgage should be delivered.

The decree is affirmed, with costs.

The other Justices concurred.