text:
    FAUROT v. SWAN.
    1. Life Insurance — Beneficial Associations — Assessments—Liability of Members.
    The obligation of members of a beneficial association to pay assessments rests in contract relations, express or implied, or is imposed by the statute under which the association is organized ; and where one joining such association promises to pay assessments, but for default in the payment thereof his rights are forfeited, he is liable for said assessment, but for none made thereafter.
    3. Same.
    Where the law under which a beneficial association is incorporated (Act No. 83, Pub. Acts 1887) does not impose an obligation on its members to pay assessments, and one joining it does not expressly promise to pay them, and the contract provides that the rights of a beneficiary will be forfeited, without action, if the assessments are not paid within a month, a promise of the member to pay, making him personally liable, will not be implied.
    Appeal from Wayne; Mandell, J.
    Submitted November 18, 1908.
    (Docket No. 131.)
    Decided December 31, 1908.
    Petition by Fred C. Wetmore and others for the dissolution of the Grand Lodge of the Ancient Order of United Workmen of the State of Michigan, and the appointment of receivers. James Swan and George Latcham were appointed receivers. Jessie M. Faurot and another and Mary Cash and another intervened praying for an order requiring the receivers to collect certain assessments for the payment of death claims. From an order dismissing the intervening petitions, they appeal.
    Reversed and remanded.

      L. F. Humphrey and H. H. & B. E. Barlow, for interveners Faurot.

      William J. Griffin (John H. O’Leary, of counsel), for interveners Cash and Bell.

      Fred G. Wetmore (James Swan, of counsel), for defendant receivers.
    The Grand Lodge of the Ancient Order of United Workmen for the State of Michigan was organized (reincorporated) under the provisions of Act No. 88, Pub. Acts 1887, filing its articles of association in the office of the secretary of State February 8, 1888. The act referred to is entitled, “An act to provide for the incorporation of lodges of the Ancient Order of United Workmen,” and it provides (section 2) that any 10 or more persons residents of this State and members of a grand lodge of the Ancient Order of United Workmen of the State of Michigan that has been duly chartered by the supreme lodge of the said order, etc., may make and sign articles of association setting forth their names, titles, and places of residence, the corporate name by which the association shall be known in the law, the place of its business office, “and the purposes of the association, which shall be to promote the general welfare of the fraternity known as the Ancient Order of United Workmen, to improve the mental, moral, and social condition of the members of said fraternity, and to provide for the relief of the families and heirs of deceased members of the said fraternity. ” Among the powers conferred by the act is the power to create, hold, and disburse beneficiary, relief, general, or other funds for the benefit of sick or disabled members or for the families and heirs of deceased members of subordinate lodges, and the power to levy assessments upon the members of subordinate lodges for the purpose of raising beneficiary, relief, general, or other funds. The said grand lodge adopted a constitution, laws, rules, and regulations which have been from time to time somewhat changed and modified. Not all members of the order are beneficiary members. In a book referred to in the record, containing a printed copy of the constitution, general laws, and rules of the order which were in force at the time of the filing of the original petition in this cause, under the head, “ Objects of the Order,” is the following:
    ‘ ‘ To pledge its membership to the payment of a stipulated sum of money to such beneficiaries under its laws, rules and regulations, as each member while living may designate to receive it.”
    Said grand lodge created a beneficiary fund, and the sections referring to said fund and of interest here are the following:
    “ Sec. 38. In order to provide for the payment of a sum not to exceed $2,000 to the beneficiaries of all Workmen degree members of the order in good standing upon the death of such members, a beneficiary fund is hereby established by the Grand Lodge of the Ancient Order of United Workmen of the State of Michigan, in accordance with the laws, rules and regulations of the Supreme Lodge of the Ancient Order of United Workmen.
    “Sec. 39. The beneficiary fund shall be composed in the first instance of a sum equal to one assessment, to be paid by each and every member as a part of the admission fee before the Workman degree is conferred, and in the second place, from the proceeds of assessments collected from time to time from the members. * * *
    “Sec. 46. The beneficiary fund shall be composed of an amount equal to one assessment collected for that fund from each member when initiated, and all moneys collected from the members from time to time on account of current or back assessments. ”
    Under another section, which also contained the schedule of rates to be paid by members, it is provided that each beneficiary member shall, unless notified to the contrary, pay each month into the beneficiary fund an assessment in accordance with the foregoing schedule of rates in proportion to the amount of his certificate, and it is provided in another section that, when certain officers shall decide that it is not necessary to pay any assessment for any month, the member shall.be notified of the fact. Beneficiary certificates were issued for $500, $1,000, and $2,000; each certificate after the year 1888 containing the following:
    “ That Bro. -, a workman degree member of ---Lodge No.--of said order, located at-, in the State of Michigan, is entitled to all the rights and privileges of membership in the Ancient Order of United Workmen of the State of Michigan, and to designate the beneficiary to whom the sum of -thousand dollars of the beneficiary fund of the Order shall, at his death, be paid. This certificate is issued upon the express condition that said -shall, in every particular, comply with all the laws, rules, and requirements of said order. He designates as beneficiary under the terms hereof --, bearing to him the relation of- — .”
    Certificates were issued upon written applications. The form used prior to the year 1897, besides containing a direction that the amount be„paid to a person named, contained a provision that the applicant agreed that compliance on his part with all the laws, regulations, and requirements existing or thereafter enacted by the order was an express condition upon which the applicant was entitled to participate in the beneficiary fund, and to have and enjoy the other benefits of the order. The form of application used after the year 1897 contained the following:
    “ I do also agree that this application shall be, become, and form part of my contract with said grand lodge, and that I will, within the time provided in said laws, rules, and usages, pay all assessments, calls, and other demands made upon me, and that should I fail or neglect to so pay or to conform to, abide by or observe any rule, law or usage of said grand lodge and of the Order, my membership therein, and my medical examination and the agreements and warranties therein contained, and also all rights, benefits and privileges of my beneficiaries, heirs and such other persons, shall cease and terminate.”
    Referring again to the laws of the said grand lodge, it appears that each member initiated and each member reinstated or admitted by card from another jurisdiction is not liable for any assessments for the beneficiary and guaranty funds other than the initiation assessments for the month in which he was initiated, reinstated, or admitted by card, ‘ ‘ but he shall be liable for and shall pay the assessments of the month following the month of his initiation, reinstatement or admission.”
    Sections 28, 29, 77, and 78 of article 5 of the general laws are as follows:
    “ Sec. 28. Any member failing or neglecting to pay all assessments for the beneficiary or guaranty funds to the financier of the lodge of which he is a member, or before the 28th day of the month in which said assessments are payable, shall forfeit all his rights as such member, shall stand suspended from all the rights, benefits and privileges of the order from and after that date, and shall not be reinstated except as hereinafter provided.
    “ Sec. 29. Any suspended member who has forfeited all his rights by reason of nonpayment of assessments for the beneficiary or guaranty funds, may be reinstated at any time within three months from the date of forfeiture thereof, provided he shall pay all assessments that have been made during that time, including the assessment for the nonpayment of which he was suspended, and the pending assessments, and further provided that such suspended member shall, at the time of such payment, certify that he is at that time in sound bodily health, in the manner and form and upon the blank provided for that purpose by the grand lodge. * * *
    “Sec. 77. Any member of the order in good standing may sever his connection with the order at any time by paying all assessments, dues and fines charged against him, or for which he is liable, and surrendering his beneficiary certificate, when a final card shall be issued to him by the grand lodge, free of cost.
    “Sec. 78. Any member who makes application for a final card for the purpose of severing his connection with the order, or any member who without making formal application accepts a final card, does upon such application or acceptance surrender all rights, benefits and privileges that he may have acquired by virtue of his membership in the order.”
    On August 12, 1907, the trustees of the said grand lodge filed a petition in the circuit court for the county of Wayne, in chancery, setting out that the said corporation had in its beneficiary fund $8,643.59 and in the general fund $4,855.63; that the proceeds of the assessment levied upon the members in the month of June, 1907, had not all been received, the amount yet to be received being about $2,500; that an assessment had been levied upon the members on the 1st day of July, 1907, from which it was estimated there would be received about $6,000; that it had a demand for about $80,000 against the supreme lodge of the same order which if paid would be placed to the credit of the beneficiary fund; that it owned office furniture and fixtures of the value of about $500; that the corporation was not owner of any property, real or personal, other than stated; that the corporation was indebted to various persons, beneficiaries of deceased members, to the amount of about $162,983.40. An inventory of the assets and an itemized statement of liabilities were annexed to the petition. It was further represented that because of the decrease in membership of said corporation, and because of the large indebtedness aforesaid, it could not pay just demands, and it was prayed that an order might be entered dissolving the corporation and appointing one or more receivers of its property and effects. Such proceedings were had that two receivers were appointed who entered upon the discharge of their duties as such receivers.
    Appellants are intervening petitioners, and are beneficiaries in a certain certificate issued by said grand lodge to John M. Faurot, who died June 16, 1907. They represented to the court by their said petition that each of the members of the organization undertook and promised, when they became members, that as long as they remained members they would be liable to and would pay all assessments made against them on account of such beneficiary fund accruing by reason of the death of any member of such order during the time they were members thereof, and that they further undertook and agreed to pay all assessments which might be lawfully made against them for the benefit of such beneficiary fund; that such agreement and promise is contained in the application, certificate, ritual, constitution, and by-laws and rules and regulations of said grand lodge. The prayer of the petition is—
    “ That this court may ascertain and determine the assessments made against the several classes of members of said order for the payment of such unpaid death claims, and may ascertain and determine the liability of the several members of said corporation for assessment of such death claims, and may ascertain and determine the members of such order liable for such claims, and may direct the receivers of said corporation to take all necessary steps for the collection of such assessments, and further direct such receivers to assess against said members, according to their several liabilities, a sufficient sum for the payment of such unpaid death claims, and to proceed with the collection thereof and for such other and further relief as your petitioners may be entitled to.”
    This petition was answered by the receivers, and in their answer they deny that each of the members of said organization undertook and promised, when they became members, that so long as they remained members they would be liable to and would pay all assessments made against them on account of such beneficiary funds accruing by reason of the death of any member of such /Order during the time they were members thereof, and deny that members of said order were indebted individually to the beneficiaries of deceased members, or that said members are liable personally for any assessments levied, or that defendants as receivers have any power or authority to collect any assessments already levied or to levy any further assessments. It is stated in said answer that for several years prior to July 1, 1907, members of said order had paid assessments each month; that in the month of July, 1907, assessments were paid by 1,023 members; and that 1,045 members failed to pay the July assessment, and were, by reason of such nonpayment, suspended from membership; that in August, 1907, none of the members paid the assessment, and that all of the members were thereby suspended from membership, so that on August 31, 1907, there were no members remaining in said order upon whom any assessments may be levied or from whom any assessments may be collected to pay the unpaid death claims. The petitions of interveners were dismissed, and, from the order entered, said petitioners have appealed.
   Ostrander, J.

(after stating the facts). Whether the members of the lodge are personally liable to pay assessments, or whether the contract between the members and the organization is unilateral, is the broad question presented. That the obligation to pay assessments, if it exists, rests in contract relations, express or implied, or is imposed by the statute, is not disputed, and is indeed well settled. See Calkins v. Angell, 123 Mich. 77; Ellerbe v. Barney, 119 Mo. 632 (23 L. R. A. 435); Provident Mutual Relief Ass’n v. Pelissier, 69 N. H. 606; Fulton v. Stevens, 99 Wis. 307; New Era Life Ass’n v. Rossiter, 132 Pa. 314; Gibson v. Megrew, 154 Ind. 273 (48 L. R. A. 362); Lehman v. Clark, 174 Ill. 279 (43 L. R. A. 648); L’Union St. Jean Baptiste de Pawtucket v. Ostiguy, 25 R. I. 478 (64 L. R. A. 158).

The generally accepted rule with respect to ordinary life-insurance contracts is that the payment of the premium or assessment is only a condition precedent of the liability of the company, and that the insured may pay or not as he pleases. The assessment or premium is a debt only when there is an absolute promise to pay. 2 Bacon on Benefit Societies and Life Insurance (3d Ed.), § 357. The statute does not in terms impose an obligation to pay assessments. Prior to the year 1897 no one joining the order as a beneficiary member did expressly promise to pay them. Whether they made use of one or the other form of application, the rights of all beneficiary members were alike forfeited from and after the 28th day of the month in which an assessment was payable without any action upon the part of the lodge or of any officer thereof, if such assessment remained unpaid. Undoubtedly the founders of the order were of opinion that a monthly assessment upon members at the rates fixed in the laws of the order would produce a fund sufficient to pay losses accruing with the death of members. However this may be, the plan adopted does not make the organization the mere collector and distributer of an assessment to be made after, and because of, the death of a member. Each certificate contains a promise to pay a stipulated sum. A fund is created out of which such sums are to be paid. This fund is replenished by regular, perhaps upon occasion by special or extra, assessments. There is apparent in this plan no notion of an obligation, express or implied, to pay an assessment on, and because of the death of, each member occurring during the membership of the assured. There is apparent the idea that they are payments made in advance, in consideration of a risk assumed or continued by the organization, each payment operating to keep the certificate of a member in force until the next assessment is due and payable. This consideration is not controlling in a case where the promise of the member to pay assessments is made out. But in a case where the promise of the member to pay assessments, if it exists at all, must be made out by fair interpretation of the statute, the constitution and laws of the organization, it supports an argument opposed to the idea that such a promise ought to be found to exist. It is consistent with the idea that, having paid for all benefits received, it is optional with the member to relinquish the right to further benefits by declining to pay the assessment immediately levied, consistent with the idea that payment of an assessment was a condition merely to any liability of the organization.

It will be assumed that each member of this order understood that one of its objects was to pledge its membership to the payment of a stipulated sum to beneficiaries of other members under conditions set out, and that each understood that the money necessary for the purpose must be contributed by the members. Each knew that a member might at any time sever his connection with the order by paying all assessments, dues, and fines charged against him. These and other considerations, it is said, warrant, •and, indeed, require, the conclusion that the relations of each member to the organization and to other members were those of an insurer as well as those of one insured. This might be admitted if an agreement could be reached concerning the nature and extent of the relation which each member, viewed as an insurer, bore to the organization and to other members. But it is evident that, when we have determined what this relation is, we have also determined the point in issue. The business carried on by the lodge, so far as we are concerned with it, was the business of life insurance. In the exercise of the general statute power to provide for the relief of families and heirs of deceased members, it had a wide choice of methods to b,e employed. An essential element in any plan which it could adopt is the one of mutual interest and mutual responsibility of members. But the conditions under which this mutual interest and responsibility should begin and cease were also necessarily determinable by the organization, and, when made, such determination was evidenced by the terms of the contract employed. There is nothing in the general nature of the object to be accomplished which requires courts to read into the contracts actually made a promise of the member to pay an assessment made upon him when the Contract expressly provides a penalty, enforced without action of the organization, for a default in the payment. When the penalty was incurred, all relations between the member and the organization, whether those of insurer or insured, were ended. The right of the organization to so terminate them is not disputed. We are not able, by fair construction of the statute, constitution, and laws of the order, the application and the certificate, as they existed previous to 1897, to find an undertaking on the part of a member to pay assessments made upon him. In this we are not in agreement with, the conclusion reached by a majority of the judges in Ellerbe v. Barney, 119 Mo. 632 (23 L. R. A. 435), and by the court in Provident Mutual Relief Ass’n v. Pelissier, 69 N. H. 606. We are not satisfied with the reasoning employed in either case in support of the prop-, osition that an agreement to pay assessments existed. We are in accord with the decisions in Lehman v. Clark, 174 Ill. 279 (43 L. R. A. 648), and Gibson v. Megrew, 154 Ind. 273 (48 L. R. A. 362).

Much has been said herein which need not have been said if we admitted the contention that, whether there was or was not an express agreement to pay assessments, the only means for enforcing payment is forfeiture of rights. The agreement of those members who entered the order after, the form of application employed in 1897 and thereafter was adopted and who used the form is to pay all assessments made. An assessment was made by the laws of the order, due and payable each month before the 28th day thereof. The form of notice used in connection with the levy of a special assessment, if any such was made, does not appear. But an assessment being called, regularly by the law or specially by notice, was an assessment made on the member, and his liability to pay it became fixed. The fact that they were not paid, and that forfeiture of rights resulted, does not affect the contract obligation to pay assessments made before forfeiture of the member’s rights. Fulton v. Stevens, 99 Wis. 307. It follows that the association, and therefore its receivers, had the right to collect such assessments by suit, and had not the right to collect assessments made after membership had expired. It does not follow, however, that the prayer of intervening petitioners should be granted. The amount of a single assessment from each member who is liable under the rule announced is the limit of recovery in an action at law. According to the record, assessment rates run all the way from 62 cents to $19.30, depending upon the amount of the certificate and the attained age of the member. Whether funds on hand and the services of the receivers and of counsel can be profitably employed in attempts to collect these assessments is a question which upon this record cannot be answered.

A decree will be entered in this court reversing the decree below, and in accordance with this opinion, but reserving for the determination of the court below the question whether the prayer of interveners should be granted. Neither party will recover costs,'of this appeal.

Grant, C. J., and Blair, Montgomery, and Brooke, JJ., concurred.


source: Caselaw Access Project

author: Ostrander, J.

license: Public Domain

text:
    STRINGER v. GAMBLE.
    1. Wills — Conditions Imposed — Liability oe Devisee — Annuities — Lien upon Land.
    Where a father devised a farm and personal property thereon to his son, on condition that he pay to the mother a certain sum annually during her life and furnish certain products of the farm, and made the charges a lien upon the property devised, and the devisee took the property charged with the conditions imposed, he was personally liable as upon a contract, express or implied, to perform the conditions thereof as long as the mother lived, and, at the death of the mother, any installments due and unpaid were valid claims against the estate of the son unless barred 'by the statute, or other defense.
    2. Same — Construction—Annuities—Lifer upon Land.
    Under said will, the conditions imposed were in essence an annuity expressly charged upon the corpus of the land devised, and measured by the duration of the life of the mother. And such lien, given to secure the payment of such sums accruing during her life, may be enforced after her death by the representatives of her estate.
    3. Judgments — Conolusiveness — Remedies — Res Judicata — Wills — Contracts—Liens—Enforcement.
    Under a provision of a will devising certain land, a condition of the bequest being the payment of an annuity, and making the charge a lien upon the property devised, there were two forms of action for collecting unpaid installments; one, a claim against the estate of the devisee upon the contract implied by the acceptance of the bequest, and another in equity to enforce the lien upon the property. A claim was first presented against the estate of the devisee, and, because of the statute of limitations applicable to that form of action, judgment was recovered for only a part of the amount due. Held, that the judgment was not res judicata of the extent of the condition unperformed, nor of the sum actually secured by the lien.
    4. Election of Remedies — Inconsistency of Remedies — Necessity for Election.
    Where the payment of an annuity was made a condition of a bequest of certain land, and a lien imposed upon the land for its payment, though there was no undertaking on the part of the devisee to pay the annuity, he became liable to do so by the acceptance of the bequest; and the lien not existing to secure the liability thus arising, but to secure, out of the land itself, the payment of the annuity, a condition analogous to that of a note secured by a mortgage existed, and there were two remedies not inconsistent with each other, one on the devisee’s liability imposed by law, and the other in equity to enforce the lien. And an action at law did not preclude a proceeding to enforce the lien.
    5. Statute of Limitations — Annuities Secured by Lien — Rule.
    On a bill to enforce a lien on land for the payment of an annuity, the rule as to limitations applicable to the foreclosure of a mortgage should be applied and recovery allowed for payments not 15 years past due at the time the bill was filed.
    Appeal from Oakland; Lockwood, J., presiding.
    Submitted June 17, 1908.
    (Docket No. 76.)
    Decided January 4, 1909.
    Bill by Marshall L. Stringer, administrator de bonis non of the estate of Fannie Stephens, deceased, against John Gamble, administrator of the estate of Thomas Stephens, deceased, and others, to enforce a lien for the payment of certain annuities. From a decree dismissing the bill, complainant appeals.
    Reversed, and decree entered for complainant.

      Thomas A. Oonlon, for complainant.

      James H. Lynch, for defendants.
   Ostrander, J.

The position of appellees is stated in the following language taken from the brief:

“ In the former trial I claimed, and I again claim, that, when Thomas Stephens accepted the property under the will, he took it charged with the conditions imposed by the will, but his position was not the same as if he had entered into a written agreement with his father or his mother by which he agreed to pay a certain sum of money and furnish certain products of the farm, but, so far as the performance of the conditions is concerned, he was personally liable upon a contract, either express or implied, and the land was charged with the performance thereof so long as Fannie Stephens lived. At the death of Fannie Stephens, if there were any portions of the annual payments unpaid, the estate of Thomas Stephens would be liable for the same unless barred by limitation or other defense. If the lien continued beyond the life of Fannie Stephens, in case of unpaid installments, her representative might proceed in equity to enforce the lien.”

This statement is in accord with the rules of law, gen-, erally adopted, in cases involving facts like those presented in the case at bar and with the opinion of this court in Stringer v. Stevens’ Estate, 146 Mich. 181 (8 L. R. A. [N. S.] 393). The brief proceeds:

‘' So far it would be analogous to the case of a promissory note secured by real estate mortgage. But, when suit is brought upon a promissory note, secured by mortgage, and judgment is taken in such suit, and the same paid and satisfied, then the mortgage lien in any event is thereby terminated.”

The legal representative of Fannie Stephens is seeking in this suit to enforce the lien. It would appear that the questions presented for our determination are, first, whether the lien was discharged by the death of the person in whose interest it was created; if it was not, then, second, whether the fact that the claim for unpaid portions of the charge was presented as a demand against the estate of Thomas Stephens and a portion of it allowed and paid operated to discharge the lien.

First. The words employed by the testator, after reciting the charge in favor of his wife imposed upon his devisee, are: “All the above to be and remain a lien upon said above-described farm as long as my said wife shall live;” and the devise is made “upon this express condition that he furnish to my beloved wife,” etc. No other provision fpr the wife is made in the will. It is clear from the nature of the charge imposed that it was intended by the testator to secure to the wife subsistence during her life. There may be doubt whether, strictly speaking, the provision made for the wife should be called an annuity, a question which is sometimes of considerable importance; but it is in essence an annuity, expressly charged upon the corpus of the particular land devised to the son, payable annually, and measured by the duration of her life. See 2 Am. & Eng. Enc. Law (2d Ed.), p. 390. I think the express provision for a lien should be held not either to limit the duration of a lien which in the absence of the express provision would be raised by law or to expire at the death of the annuitant. It is more reasonable to say that it was given to secure payment of the sums accruing during her life and for that purpose may be enforced after her death.

Second. The whole demand for unpaid money (for nine years) was presented as a claim against the estate of the devisee. A judgment for the entire amount, with interest, was rendered. The case coming to this court on error, it was held, first, that although the demand grew out of a specialty, — a will — it was nevertheless one properly recoverable in that action as upon an implied promise of the devisee to pay the annuity. It was held, second, that the statute of limitations had application as in the case of an ordinary action upon an implied contract. It was found that the statute barred recovery for the most of the demand, and the claimant was given an option to permit judgment to stand for the sum not barred or to take a judgment of reversal and a new trial. He exercised the option by permitting the judgment for the smaller sum to stand and by accepting the amount of that judgment. In the entire proceeding the demand was for the several annual money charges and interest was allowed as upon sums falling due annually. I am not prepared to hold that this operated as a performance of the condition. I think the decision was not res judicata the extent of the condition unperformed and of the sum actually secured by the lien, and, if the lien survived this action, it might be enforced notwithstanding the judgment and its payment. The question is, it seems to me, whether, by adopting the remedy, the lien was waived. Neither the charge upon the land nor the lien was created by the devisee. There is no undertaking of the devisee to pay the annuity although he became liable to do so by accepting the devise. The lien did not exist to secure the liability thus arising, but it did exist to secure, out of the land itself, the benefit intended for the wife. In this State a mortgage is a security merely, transferring no interest in the property mortgaged, and is not released because an action at law is brought to recover the sum secured. Ordinarily the rule is no different where the note is given by one person and the mortgage by another. I think there is no ground for a distinction in the fact that the liability of the devisee to pay the secured charge rested upon legal implication, instead of express stipulation. The annuitant had two remedies, not inconsistent with each other,' for obtaining the benefit secured to her in the will of her husband. It was established in the probate proceedings, the remedy first adopted, that because of the operation of the statute of limitations applicable to the form of action no recovery could be had for sums falling due in certain years. For these years she has not received the benefit. She has not waived or forgiven it. The land is not relieved of this charge unless by operation of the statute of limitations. I know of no rule which denies her the right to pursue the remedy afforded by the terms of the will. I am of opinion that in .this case the court should adopt the rule of the statute affecting the foreclosure of mortgage liens, and that a decree should pass for such sums only as were not 15 years past due at the time of filing the bill. No trust relation existed between the wife and the devisee of the land. The wife died February 28, 1897. As to each annual installment unpaid, the statute began to run during her life. Thomas Stephens died April 9, 1903. The bill was filed on or about February 26, 1907. All payments falling due prior to February 26, 1892, are barred.

The decree of the court below should be reversed, with costs of both courts, and a decree entered in this court requiring payment within four months from the date of the decree of the installments which came due June 7, 1892, June 7, 1893, and June 7, 1894, each installment being $100, with interest at the rate of 6 per cent, per annum from the dates when they respectively became due. In default of payment, the decree should provide for a sale of the premises after the manner of foreclosure sales under decrees of a court of chancery.

Blair, C. J., and Montgomery, Hooker, and Moore, JJ., concurred.


author: Hooker, J.

text:
    JEWELL v. KELLEY.
    1. Fraudulent Conveyances — Deeds —Mortgages—Evidence.
    On a bill attacking the transfer of certain parcels of land from a husband to his wife in fraud of creditors, evidence examined, and held, that her title, to two paroels was not fraudulently acquired, and that her title to a third parcel obtained by a mortgage upon the three parcels could not be disputed.
    2. Same — Bill op Sale — Evidence.
    On said bill attacking a bill of sale from a husband to his wife, evidence examined, and held, to sustain the allegations of the complaint.
    3. Witnesses — Falsus in Uno, Falsus in Omnibus — Rule Limited.
    The rule of “falsus in uno, falsus in omnibus” is limited in its application, since a falsifier usually tells many truths, and it is the province of courts and juries to sift the true from the false; corroboration being a potent factor.
    Appeal from Allegan; Padgham, J.
    Submitted October 13, 1908.
    (Docket No. 46.)
    Decided January 4, 1909.
    Judgment creditor’s bill, and also in aid of execution, by Fred Jewell against Josie Kelley and Michael Kelley. From a decree for complainant, defendants appeal.
    Modified.

      Wilkes & Stone, for complainant.

      Charles N. Thew (Frank E. Knappen, of counsel), for defendants.
   Hooker, J.

Michael and Josie Kelley, husband and wife, are made codefendants in a creditors’ bill, also filed in aid of execution issued against the husband, to reach, first, an 80-acre parcel of land including their homestead; second, a 55-acre parcel; third, a 40-acre parcel called the “Sinkler farm;” fourth, certain personal property. To prove his case, the complainant, in addition to the judgment and execution returned unsatisfied, showed a deed from Michael Kelley, Sr., and wife, to defendant Michael Kelley, his son, of parcel No. 1 and the undivided one-half of parcel No. 2. This deed was dated December '8, 1891. Also a deed dated March 2, 1902, from John Kelley to Michael Kelley of the undivided one-half of parcel 2. Also a deed of both parcels (1 and 2) from Michael Kelley to Josie Kelley, dated January 30, 1904. Also a bill of sale from Michael to Josie Kelley, dated January 30, 1904, conveying 5 horses, 16 head of cattle, 25 swine, 2 wagons, 2 buggies, 3 sets harness, 1 pair bob sleighs, being the whole or greater part of his personal property, and constituting the fourth item referred to. Also a deed from one Sinkler to Josie Kelley of parcel 3, being 40 acres which the proof shows to have been purchased by giving a mortgage upon that and the other parcels in payment. This deed was dated August 27, 1904.

The defendants claimed, and undertook to show, that Josie participated in no attempt to defraud creditors, and that she knew of no such design on the part of her husband, and her counsel say that the case “narrows down ” to the question whether she paid an adequate or reasonable compensation for the property. It is her claim that the deed from her husband to her was made in compliance with a written contract, made soon after her marriage to Michael, to which Michael, herself, and Michael’s parents were parties, and that it covered parcels 1 and 2; that this contract was burned in their house. This contract is said to have grown out of relations then existing between Michael and his brother John, and their parents. It seems to be conceded that Michael was in possession of parcel 1, but under an obligation to support his parents ■ for life, while both John and Michael were each bound to pay to their parents $100 per year for their lives. The parents had a life estate in parcel 1. John owned an undivided half interest in parcel 2. Josie testified that previous to their marriage Michael gave her to understand that he owned parcel 1, but after marriage she found that it was subject to mortgages and to the life estate of Michael, Sr. She objected to living upon the place, and the result was a contract, by the terms of which she agreed to remain and care for the old people during their lives. They were to surrender to her the amount due, and to become due, upon the annuity from Michael. Michael, her husband, was to receive from her a sum of money, which she had received from various sources at the time of and soon after her marriage, and -to be released from his annuity obligations, and was to deed to her parcels 1 and 2 on her performance of the contract. Subsequently on her agreeing to release John from his liability to the old people, John agreed to deed his half of parcel 2 to her. She intrusted this business to Michael, who took the deed to himself, and before she could induce him to deed the parcels to her she was compelled to pay him further sums — $800, we believe, in all— when he deeded to her, as stated. About the same time, and as a part of the last transaction, the bill of sale was made, while the purchase of the Sinkler place occurred later. It is apparent that, if she was the owner by an untainted title of parcels 1 and 2, her title to the Sinkler lot cannot be disputed, while if her title to those parcels was obtained under circumstances that made it a fraud on Michael’s creditors, the fund raised by mortgage upon parcels 1 and 2 might be followed by creditors to the Sinkler land, if any went into that parcel. Upon a hearing upon proofs taken in open court, the learned circuit judge who saw the witnesses was^of the opinion that the transaction was fraudulent, and therefore granted the relief prayed. We have examined the testimony with a full sense of the responsibility resting upon us, and of the advantage which the triál judge has over an appellate court, where the latter has only a printed copy of the testimony.

It is a significant fact that the deed from Michael to his wife and the bill of sale occurred simultaneously, and at a time when the danger from creditors became acute, but it does not necessarily follow that Josie’s- conduct was fraudulent. However much suspicion we may have of the entire transaction, there is evidence in support of Josie’s claim. Several witnesses testify to her receiving sums of money from her father and mother, and manifestly this could not be easily contradicted except by circumstances. Complainant sought to do this by showing such poverty upon the part of her, parents as to render the falsity of the statements probable; but we consider it well proven that both had property, or the means of getting it, while she and her husband, her mother, and her sister testify that she received the money from them, and she and her husband say that she paid it to him, and there is a little corroborating testimony from another witness. Again, she did care for her husband’s parents during life, and neither John nor Michael ever paid his share of the amount. In John’s case there was a balance unpaid. John testified that his father deeded to each of the two boys an 80-acre lot and an undivided part of parcel 2. John gave a mortgage back to secure the annuity of $100; Mike took his under similar, though additional, conditions, one of which was his obligation to support his parents. When this occurred is not shown. The witness stated further that when Josie came there, a sister of the boys made trouble. He did not explain it, but Josie and Michael did, and gave it as the first cause of the refusal of Josie to remain. John added that soon after, or about that time, his father and mother said a new arrangement had been made, whereby Josie was to have the farm after their death. The arrangement whereby he deeded his half of parcel 2 was at his father’s request. If this testimony is true, it tends to corroborate Josie. While it is plausibly argued that this story of the written contract is improbable, the circumstances show it not to be so improbable as alone to justify disbelief of sworn testimony. If the testimony of Michael, Josie, and John is true about the agreement, a written contract was the natural and proper method of evidencing it, though part performance may have made it enforceable specifically, if not in writing. Upon either theory, Josie became entitled to the land, and Michael perpetrated no fraud upon creditors in carrying it out, for the law would have compelled it, creditors to the contrary notwithstanding. And as already stated, this view renders á further discussion of parcel 3 unnecessary. It is with misgiving that we venture to differ from the learned circuit judge upon a question of fact, where he has, and we have not, seen the witnesses, but when the record induces a conviction somewhat positive, we have no alternative.

As to the bill of sale as much cannot be said. We are far from being convinced that it was not given and received with an intent to hinder, delay, and defraud creditors. It was not required by a contract of long standing, if it was not a voluntary transfer. The consideration is less clearly proved, while its adequacy is subject to some doubt. We are of the opinion that the trial judge was right in not sustaining it. Josie denies knowledge of her husband’s fraudulent intention. She denies a fraudulent knowledge. We doubt these. Counsel for complainant may invoke the rule “falsus in uno, falsus in omnibus,” and urge its application to the other branch of the case, but there are limitations on the application of the rule, for a falsifier usually tells many truths, and it is the province of courts and juries to sift the true from the false; corroboration being a potent factor. Michael Kelley impresses us as being a wilful, selfish, and, perhaps, unscrupulous man. He did not hesitate to deceive his betrothed, and he does not attempt to deny an inclination and willingness to absorb all cash that came to the possession of his wife, which he apparently succeeded in doing. His property was heavily mortgaged and otherwise incumbered, and he was deeply in debt. Aside from the filial duty owed his parents, which apparently did not rest very heavily upon him, he had little inducement to oppose his parents’ wishes to make a new contract with Josie. The preponderance of evidence appears to us to sustain defendants’ claim as to the land.

The decree of the circuit court will be modified, and a decree entered here in accordance with this opinion, declaring the bill of sale fraudulent and void as to complainant, and subjecting the property described therein to complainant’s claim. As to the several parcels of land, relief will be denied. Complainant will take costs of the circuit court, defendant Josie Kelley of this court.

Blair, C. J., and Grant, Moore, and Me Alva y, JJ., concurred.


author: Grant, J.

text:
    RATHBONE v. MALTZ.
    1. Witnesses — Husband and Wife —Competency —Evidence— Depositions.
    Neither a husband nor a wife can be a witness against the other without the other’s consent; and where, on a judgment creditor’s bill against the judgment debtor and his wife to reach the proceeds of real estate conveyed by the debtor to a third person, and by the latter’s executors to the wife and since sold by her, a deposition of the debtor taken under chapter 299, 3 Comp. Laws, before the filing of the bill and after the return of execution unsatisfied, is inadmissible as against the wife without her consent.
    2. Evidence — Books of Account — Admissibility.
    Books of account kept by the executors and trustees of a third person, to whom a judgment debtor had deeded certain property, and by the executors deeded to the debtor’s wife, who later sold it, are not competent evidence against the wife on a judgment creditor’s bill to reach the proceeds of said property, where she had nothing to do with the making of the account and no knowledge that it was made.
    3. Mortgages — Deed as Mortgage — Evidence — Fraudulent Conveyances.
    Where the amount of the debts exceed the value of the land conveyed by a debtor to a creditor, the proofs must be clear and convincing that will change a deed into a mortgage. The proofs in this case held insufficient for that purpose; also insufficient to sustain a charge of fraud.
    4. Same — Judgment Creditor’s Bill — Receivers — Condition Precedent.
    Where it appears that, prior to the conveyance complained of, the judgment debtor had given a note on which the grantee in the deed was liable as indorser, and his executors had been subsequently obliged to pay it, complainant must, as a condition precedent to the relief asked for, tender or offer to pay the amount of said note.
    Appeal from Wayne; Donovan, J.
    Submitted October 14, 1908.
    (Docket No. 55.)
    Decided January 4, 1909.
    Judgment creditor’s bill by Charles A. Rathbone against Elvira E. Maltz, impleaded with George L. Maltz. From a decree dismissing the bill, complainant appeals.
    Affirmed.

      Bernard B. Selling, for complainant.

      Graves, Hatch & Wasey, for defendants.
    The bill in this case was filed as a judgment creditor’s bill to reach proceeds of real estate, claimed to have formerly belonged to George L. Maltz; to have been deeded by him to his son-in-law, Albert Pack, and by Mr. Pack’s executors after his death to Mrs. Maltz, and by her sold and the proceeds invested in certain industrial stocks and bonds. The pleadings are very voluminous, covering 34 pages of the record. Summed up as briefly as possible, and stating all that is perhaps essential, the bill alleges a judgment for $1,154.21, rendered against defendant George L. Maltz; the issuance of an execution thereon; its return unsatisfied; the insolvency of Mr. Maltz; his ownership of the land situated in the village of Quincy; a deed of the same by Mr. Maltz and his wife on July 20, 1897, to Mr. Pack to secure a loan made by Pack to Maltz of $6,000; upon information and belief its payment by Maltz to Pack; that said deed was security merely; that the deed from Pack’s executors to Mrs. Maltz was without consideration and void as to creditors; that the amounts received by Mrs. Maltz upon the sale of said land were invested by her in the'stock and bonds of the National Bolt & Nut Company and the International Clark Wireless Telegraph Company, and prayed that a decree be entered to subject said stock and bonds to the payment of the complainant’s judgment. The bill also prays for a discovery and other relief unnecessary to mention. The answer denies all the material allegations of the bill, but admits the deed of real estate to her, the sale thereof by her, and the investment of the proceeds of the sale in the stocks and bonds in the above-named companies. The case was heard upon pleadings and proofs taken in open court, and the bill dismissed.
   Grant, J.

(after stating the facts). 1. The judgment, the basis of this suit, was rendered March 27, 1905. On August 8, 1907, after execution returned unsatisfied, Mr. Maltz was examined before a circuit court commissioner under the statute (sections 10837-10851, chap. 299, 3 Comp. Laws) in regard to his financial dealings with Mr. Pack, and the deed of this land by himself and his wife to Mr. Pack, and the other transactions growing out of it, and referred to in the above statement of facts. It was after that deposition was taken that this suit in equity was commenced. That deposition was introduced in evidence upon the hearing, under objection and exception. The testimony was so clearly incompetent that it should not have been offered or received in evidence, even in a chancery case. Neither a husband nor wife can be a witness against the other without the other’s consent. Riggs v. Whitaker, 130 Mich. 327. Mr. Maltz’s testimony cannot therefore be considered.

2. The books of account kept by the executors and trustees after Mr. Pack’s death were not competent evidence against the defendant Mrs. Maltz. She had nothing to do with making them, and did not know that they were made. Whatever reason there was for entering upon their books any of the receipts from the Quincy store prior to the deed by the executors and trustees to Mrs. Maltz, or what purpose they had in so entering them, whether for convenience or otherwise, were not binding upon her, and can have no influence in determining whether the transfer of the land by her and her husband to Mr. Pack, and by Mr. Pack to her, were in fraud of creditors. This evidence must therefore be excluded. We may say here that we find no evidence upon this record Of conspiracy on the part of Mr. Pack, Mr. Maltz and his wife, or the executors to defraud Mr. Maltz’s creditors. Whether the books kept by Mr. Pack in his lifetime, showing, in the account with Mr. Maltz, credits from the rent of the Quincy property, were competent, we find it unnecessary to determine. Counsel for complainant seek to defend their competency upon the ground that they are admissions made by a holder of the legal title to land in disparagement of his title.

3. Complainant’s bill and his right of recovery are based upon the allegation that Mr. Pack had loaned Mr. Maltz the specific sum of $6,000, for which Maltz and his wife deeded to him the land now in controversy as security for that specific debt. The evidence fails utterly to sustain any such claim. If this deed was made as security for any, it was as security for all debts which Maltz might have owed Mr. Pack. It is established that Mr. Pack loaned Mr. Maltz various sums of money, and indorsed various notes for him. It is shown by the evidence that on May 11, 1899, Maltz owed Mr. Pack $16,092.40; that this was charged off upon the books to Mr. Pack’s personal account, which the bookkeeper, a witness for the complainant, testified was equivalent to charging it to profit and loss. At that time Mr. Maltz was hopelessly bankrupt. After Mr. Pack’s death the estate was compelled to pay a note of $3,000 and interest for Mr. Maltz, on which Mr. Pack was indorser. If, therefore, the allegations of the bill should be held sufficient to justify a decree that this deed was a mortgage for whatever debts Mr. Maltz owed Mr. Pack, or for indorsements for Mr. Pack, it is evident from this record that such amounts are far in excess of the value of the property conveyed.

4. The question of fraud must be determined by the status of affairs at the time of the conveyance by the defendants, Maltz, to Mr. Pack. The value of the property deeded was not equal to the amount of the debts and obligations of Maltz to Pack. Under such circumstances, the proof must be clear that will change a deed into a mortgage. There is little, if anything, tending to establish this as a mortgage other than a few subsequent entries upon the books of Mr. Pack, in which he includes the rents of this property in the account with Mr. Maltz. This alone is not sufficient to change the character of the deed. Such entries, under the facts of this case, are entirely consistent with the idea that Mr. Pack desired to keep his dealings with this property entirely distinct, and whether he intended at some future time to reconvey this land to Mr. Maltz or to his wife is wholly immaterial. There is nothing in the record to show that he intended to do so. We are not unmindful of the fact that Mrs. Maltz and her daughter Mrs. Hubbard, formerly Mrs. Pack, in their testimony, and under leading questions, spoke of certain deeds made by Mr. Maltz for the benefit of creditors as securities. It is not unnatural that these women, unused to legal terms and the legal significance of words, should, under such circumstances, speak of these transactions as intended for the security of creditors. They are not, however, sufficient of themselves to change the language of written instruments. The record as a whole rebuts the idea that they were intended as mortgages. We are therefore constrained to hold that the complainant has upon the facts failed to make out a case of fraud.

5. The note which the executors of Mr. Pack were compelled to pay after his death for Mr. Maltz antedated the deed of the Quincy land. Even should it be held that prior transactions between Mr. Maltz and Mr. Pack were settled and paid, it is undeniable that this note was not included therein, and that there is now due upon it about $4,000. Complainant prays that these bonds and stock, the result of this alleged fraudulent transaction, be transferred to the receiver, prayed for, and to be appointed by the court, for the purpose of satisfying complainant’s debt. He does not tender or offer to pay the amount of this note, and until he has done so, he is not entitled to the relief asked.

The decree is affirmed, with costs.

Blair, C. J., and Hooker, Moore, and McAlvay, JJ., concurred.


author: McAlvay, J.

text:
    ST. LOUIS HOOP & STAVE CO. v. WAYNE CIRCUIT JUDGE.
    Defaults — Vacation of — Rules.
    Under Chancery Rule 7, subd. d, an order vacating a decree and setting aside a default regularly entered, is unauthorized, where the application was not made within six months after such entry.
    Mandamus by the St. Louis Hoop & Stave Company to compel Joseph W. Donovan, circuit judge of Wayne county, to vacate an order setting aside a default.
    Submitted November 10, 1908.
    (Calendar No. 23,092.)
    Writ granted January 4, 1909.

      Harry M. Lau, for relator.

      Jonas B. Houck, for respondent.
   McAlvay, J.

Relator filed a bill of complaint in the circuit court for Wayne county, in chancery, in the nature of a judgment creditor’s bill and in aid of execution, against Elmer M. Danforth and his wife as defendants. Personal service of subpoena was had upon both defendants, who appeared by their solicitors and demanded a copy of the bill of complaint, which was duly furnished. The default of defendants was afterwards regularly entered. This default was opened by stipulation, and defendants given further time to plead, answer, or demur. Not having taken any steps in the case, defendants were again defaulted, January 10, 1908, and later a decree was granted complainant according to the prayer of the bill. All of the proceedings were regular, and solicitors for defendants were notified of every step taken. On September 16, 1908, more than six months after default was entered, an application was made to respondent, who-heard.said cause and granted the decree therein, to vacate said decree and set aside said default. This application was resisted on the ground that it could not be granted under Chancery Rule 7, subd. d. The application was granted and an order entered vacating the decree and setting aside the default of defendants. Relator moved respondent to set aside such order, and the motion was denied. The material provision of Chancery Rule 7, subd. d, is as follows:

“ And in cases where personal service shall have been made upon a defendant, and proceedings taken after default on the strength thereof, his default shall not be set aside unless the application shall be made within six months after such default is regularly entered.”

This provision is identical with the provision in regard to defaults in law cases contained in Circuit Court Rule 12, subd. b (131 Mich. xxxv), which has been considered by this court several times, and it has been held that in such cases an application to set aside a default must be made within six months after it is regularly entered. Petley v. Wayne Circuit Judge, 124 Mich. 14; Carpenter v. Judge of the Superior Court of Grand Rapids, 126 Mich. 8; Bienstadt v. Clinton Circuit Judge, 142 Mich. 633. There is no reason for á different construction of the chancery rule. The writ of mandamus will issue as prayed because the application was not made within six months after the default was entered; the record showing that personal service was had, and proceedings were taken upon the strength of such default.

Another question presented need not be considered.

Blair, C. J., and Grant, Montgomery, and Ostrander, JJ., concurred.


text:
    VILLAGE OF FRANKFORT v. SCHMID.
    Municipal Corporations — Bonds—Bona Fide Purchaser — Evi- . denoe. _ '
    Where, on a bill by a municipal corporation to enjoin the negotiation of certain bonds and for their surrender and cancellation, defendant filed an answer in the nature of a cross-bill to determine their validity and a decree for their payment, held, that, under the evidence, the allegations of defendant’s cross-bill were established, and a decree should be entered accordingly.
    Appeal from Benzie; Chittenden, J.
    Submitted October 16, 1908.
    (Docket No. 101.)
    Decided January 4, 1909.
    Bill by the village of Frankfort against Frederick Schmid, surviving partner of Mack & Schmid, to enjoin the negotiation of certain bonds, and for the surrender and cancellation of the same. Defendant filed an answer in the nature of a cross-bill to determine the legality of said bonds, and a decree for their payment. From a decree for complainant, and dismissing defendant’s cross-bill, defendant appeals.
    Reversed, and decree entered for defendant.

      D. G. F. Warner and Thomas Smurthwaite, for complainant.

      B. M. Thompson, for defendant.
   McAlvay, J.

“Defendant is survivor of himself and Christian Mack, copartners, who resided and carried on their business at Ann Arbor. On June 5, 1895, defendant’s firm purchased three certain bonds, issued by complainant village, of $1,000 each, dated February 27, 1895, payable in 10 years, with interest at 6 per cent, payable annually. Ten interest coupons of $60 each were attached to each bond. These bonds were apparently valid, and purported to be issued for park purposes. They were sold and delivered to defendant’s firm by E. R. Chandler, a banker of the village of Frankfort, who acted as agent for Howard Seeley (whose relation to this transaction will appear later), for the sum of $2,700. Defendant claims the purchase of these bonds was made June 5, 1895; that his firm was a bona fide purchaser for value without notice ; that the first knowledge Mack & Schmid had that the validity of the bonds was disputed was eight months later, when interest fell due, and coupons were forwarded for collection. It is now admitted that these were bonus bonds and were invalid; that issuing them as park bonds was a subterfuge; that the bonds were to go to Howard Seeley in consideration of the establishment of a manufactory by him at Frankfort. Out of this transaction litigation arose, which in various forms has frequently been before this court. The present suit in chancery is the latest phase of this extended controversy. This case in which complainant, the village of Frankfort, filed its bill of complaint against defendant for purposes which will appear later, was before the court on demurrer by complainant to defendant’s cross-bill, which was overruled by the circuit court, and affirmed by this court. Village of Frankfort v. Schmid, 151 Mich. 85.

An excerpt from the opinion in that case, and a reading of the cases cited wherein this controversy has previously been before this court, will give a perfect understanding of the question now before this court, and the questions heretofore settled in this litigation. The court said :

“ This controversy in various forms has been frequently before us, and its history can be learned by consulting the following citations: Mack v. Village of Frankfort, 123 Mich. 421; Schmid v. Village of Frankfort, 131 Mich. 197, 134 Mich. 619; Schmid v. Benzie Circuit Judge, 138 Mich. 452; Schmid v. Village of Frankfort, 141 Mich. 291; Schmid v. Benzie Circuit Judge, 144 Mich. 680. The crucial question in the controversy is whether Mack and Schmid were bona fide purchasers of certain village bonds without notice. At one stage of this litigation, after one or more trials of the action now pending upon the coupons, the defendant in that action filed the original bill in this cause. It alleged the issue and invalidity of the bonds and coupons, the pendency of a suit upon them, plaintiff’s claim that Mack and Schmid were bona fide purchasers and complainant’s denial of the same, its fears that the bonds might be negotiated in a way to create a liability upon complainant, and prayed an injunction restraining such transfer, and that the bonds should be delivered up and canceled. A temporary injunction issued and is now in force. The defendant Schmid answered, claiming affirmative relief under the statute, to the end that the bonds and coupons be decreed to be legal and valid in defendant’s hands and complainant decreed to pay the same.”

In that opinion the court further stated the exact issue in this suit, as follows:

“As we have said, the original bill in this case was filed for the cancellation of these bonds and coupons which it alleged to be fraudulent and void, asking an injunction to restrain sale pendente lite. The relief asked necessarily required an adjudication of the question of validity of the bonds in the hands of the defendant. It went so far as to allege plaintiff’s want of bona fides, which was denied in the answer.
“There was an issue which would justify a dismissal of the bill, but, as that would leave the controversy without a complete adjudication, defendant filed a cross-bill for the purpose of obtaining-a complete adjudication. It raised no new issue. It introduced no new facts. An adjudication that defendant was a bona fide holder would determine the validity of the bonds between the parties. This determination of the question would make it res adjudicata, and would conclude the complainant in any new action at law involving it, or for that matter in the action already pending if properly pleaded.”

Since that decision in this .case, and before the case was brought to a hearing upon the merits in the court below, all of the disputed bonds became due. A decision at this time then finally disposes of the entire controversy between the parties.

There is but a single' issue in the case. It is an issue of fact, and it has during the years of this litigation been the principal issue involved. It is agreed that these bonds are valid in the hands of an innocent purchaser for value. The question is: Were Mack and Schmid innocent purchasers of these bonds for value without notice of their invalidity ? When the suit at law to recover interest due upon these bonds was before this court the second time (reported in 134 Mich. 619), the court, in referring to the evidence in the case upon the question of the bona fides of the plaintiff in that suit in the .purchase of the bonds, said:

“ There is no evidence in the case which justifies the conclusion that the plaintiffs did not act upon the honest belief that the bonds were what they appeared to be, viz., park bonds.”

Plaintiff insisted that under the evidence in the case the court should have directed a verdict for him, and asked this court to enter such judgment. The court refused to do this on the ground that there was no special verdict upon which to base such judgment. The case was reversed and a new trial ordered. The third trial was had after the bill of complaint in the suit at bar was filed. From a judgment for defendant plaintiff appealed, and again the judgment was reversed and a new trial ordered. 141 Mich. 291.

When the case at bar came on to be heard, it was stipulated in open court:

“ That the testimony heretofore taken in this court in the cases at law wherein Mack & Schmid or Frederick Schmid, survivor, is plaintiff and the village of Frankfort is defendant, be" and the same is hereby stipulated to be submitted to this court as the evidence in the case now under consideration.”

This court, upon the occasions when the law case was before it for consideration, has very properly declined to pass upon the facts in the case. The quotation from the opinion of the court (134 Mich. 619), in passing upon the request to enter a judgment in favor of plaintiff in this court, gives a very strong intimation of the weight which the court at that time would have given to the evidence in the case, if properly before it.

Upon the third trial some new evidence was introduced by both sides. On the part of the village, to show lack of bona fides in Mack and Schmid in their purchase, Howard Seeley was produced as a witness. In 141 Mich. 293 this court states the substance of his testimony as follows:

“ Seeley testified that about the middle or latter part of June, probábly from the 12th to the 20th, he received a letter from Mack and Schmid, asking if he had or expected to have any Frankfort bonds to sell; that he at once answered that he would have some; that they were bonus bonds for building a factory; and that he properly addressed and mailed the same. Upon his statement that the former letter was lost, and the plaintiff’s denial that they ever had such correspondence, he was permitted to give oral testimony of the substance of such letters.”

Mr. Seeley is the party who was to receive these bonus bonds from the village. On a former occasion the court held that the delivery of the bonds to Chandler was a delivery to Seeley. In 141 Mich. 291, the court held that Seeley, having received $2,400 of the proceeds of the sale to Mack and Schmid, was estopped from denying their title, and that the village could not question the validity of this purchase unless Seeley could. This has reduced the proposition to its lowest terms, viz., the question of the bona fides of Mack and Schmid.

As against the witness Seeley stands the testimony of Messrs. Mack and Schmid and their bookkeeper, Henry Mann, two of them denying that any such letter was written or received to their knowledge, showing thát files were kept and copies made of all letters sent and received by them in all their business transactions and no such letters can be found, and the testimony of Mr. Mack, now deceased, that he first heard the validity of these bonds questioned when the coupons were forwarded to collect interest. It is remarkable that Seeley who was the one person most interested in these bonds, and who had accepted the $2,400 of the proceeds of the sale to plaintiff’s firm, should have withheld for five years the fact that he had this correspondence with Mack and Schmid at the time they purchased. These letters are not produced. He claims he lost one, and made no copy of the other. Four hundred dollars was paid June 5th when plaintiff claims the purchase was made. Other payments were made on the 6th of June, and the balance of $500 on June 22d. That this correspondence occurred shortly before these last payments and caused no hesitancy on the part of the purchasers is remarkable; that at this time business men of large banking and mercantile interests should write the letter and receive the answer as detailed by Seeley is highly improbable; and that Seeley should never mention the fact until five years had elapsed, although he had knowledge of this litigation, and was in Frankfort each year, is incredible.

The fair preponderance of the proof introduced upon the third trial is in favor of the defendants in the case at bar. In fact, we are satisfied that it adds in their favor to the weight of evidence theretofore in the case.

To discuss further the evidence in the case would be of no benefit. The substance of much of it appears in the cases cited. Reviewing and considering with care all of the evidence before us, we are clearly satisfied that Mack and Schmid were bona fide purchasers without notice of the invalidity of said bonds, and that there is no evidence which would justify a conclusion to the contrary.

Therefore the decree of the circuit court is reversea, and a decree will be entered in this court so declaring, and giving and granting defendant the relief prayed by his cross-bill, determining the amount of principal and interest due him on said bonds and coupons from complainant, and that he do recover the same in manner provided by law against said village of Frankfort, complainant, together with his costs of both courts.

Blair, C. J., and Grant, Hooker, and Moore, JJ., concurred.


author: Moore, J.

text:
    FITSCHEN v. OLSON.
    1. Evidence — Pleading—Judicial Notice — Tax Deeds —Recitals.
    In passing on a demurrer to a bill to set aside certain notices of tax sales, judicial notice cannot be taken of the form or recitals of deeds, nor whether they are void upon their face, where the deeds are not made to appear as a part of the pleadings.
    2. Pleading — Amendments—New Facts.
    Where an amended bill of complaint to set aside certain notices of tax sales for the first time makes certain tax deeds a part of the pleadings, new facts are presented from which the court can determine their validity.
    3. Taxation — Tax Deeds — Void on Face — Effect—Notices of Sale.
    A tax deed void on its face is a nullity; and a notice of sale based thereon must fail.
    4. Same — Tax Deeds — Statute of Limitations — Adverse Possession-Color of Title.
    A tax deed, to be sufficient to set the statute of limitations in operation, must of itself be prima facie evidence of title. It is not necessary that it be sufficient to withstand all evidence brought against it to show that it is bad, but it must appear to be good on its face; and when the deed discloses upon its face that it was issued in violation of law, the law will not assist it.
    5. Same — Tax Sales — Validity—Owner’s Rights.
    A notice of sale, under section 140 of the tax law, to be effective, must be based on a valid deed; and, under section 143, owners are not barred by neglecting to redeem after the service of a notice based on a deed void on its face.
    fi. Equity — Injunction—Jurisdiction—Restraining Trespasses.
    Where defendants Have placed upon record tax deeds void upon their face, have served notices of sale based thereon, and have attempted to convey the timber growing on the land, a court of equity has power to restrain a continued trespass, and, having obtained jurisdiction for such purpose, will retain it to give such full relief as will finally dispose of the controversy.

      Appeal from Iron; Stone, J.
    Submitted November 9, 1908.
    (Docket No. 105.)
    Decided January 4, 1909.
    Bill by J. Frederick Fitschen and Ellen D. B. Williams, executors of the last will and testament of George R. Williams, deceased, against Mary E. Olson and others to set aside certain notices of tax sales, and to restrain trespasses upon land. From an order overruling a demurrer to the bill, defendants appeal.
    Affirmed.

      J. F. Oarey, for complainants.

      Isaac W. Byers, for defendants Olson.
   Moore, J.

This case has been before this court before. It is reported as Williams v. Olson, 141 Mich. 580. A reference thereto will make it unnecessary to make so long a statement of facts as would otherwise be necessary. After the opinion was handed down an amended bill of complaint was filed. A demurrer was interposed to the amended bill and was sustained. The complainant then filed a second amended bill of complaint. A demurrer was then interposed and overruled, and defendants were given 30 days in which to answer. Instead of answering, the defendants have appealed. -

It is insisted the case was heard upon its merits when here. It is also insisted that, as the complainants did not appeal from the order sustaining the demurrer to the amended bill of complaint, the issues involved in the case have become res ad judicata. In disposing of the last demurrer, the learned circuit judge filed a written opinion, which is so able that we quote it:

“The cause is now before the court upon the demurrer of the defendants to the second amended bill of complaint. An inspection of this demurrer will show that it is identical with the demurrer to the first amended bill of complaint, save that it adds an eighth ground of demurrer as follows:
“ ‘ For that all matters and facts set forth and alleged in said bill of complaint have been fully passed on and adjudicated by this court, and the Supreme Court of this State in this cause.’
“ Let us first inquire whether this statement is true as matter of fact and in law. This involves the question whether the first and second amended bills of complaint are identical in their allegations. In deciding the questions raised upon the demurrer to the first amended bill of complaint we said:
‘ ‘ ‘ The main question presented by these amendments arises under the decision in Monaghan v. Auditor General, 136 Mich. 247. As in that case so in this the land in controversy was sold as State tax lands, and as delinquent lands at the county treasurer’s sale in May, 1901. While the dates of the deeds do not appear, yet it does appear that the notices were served in the months of September and October, 1901. So it appears that the deeds were issued and the notices were served before the expiration of the period of redemption. While the deeds are not set forth in the bill, and we cannot take notice of their recitals, it does"appear that the deeds on their face purport to convey absolute title as is provided by section 72 of the tax law (1 Comp. Laws, § 3895), for other deeds issued by the auditor general. * * * As I have already said, the bill of complaint in this case does not set forth the deeds, and I cannot say whether they were void on their face or not. From all that appears by the bill of complaint the tax deeds in question were color of title. Though void, they would be clouds upon complainant’s title, and he would, if not cut off, have the right to take steps to get rid of them.’
“ In giving my reasons for denying the motion of defendants to strike from the files the second amended bill of complaint, I said:
“ ‘ It is true that the first amended bill sought to raise the question that the deeds of the defendant Mary E. Olson were prematurely issued by the auditor general, but the dates of the deeds were not alleged, nor were they set forth either in substance or form, and the pleading was therein defective. The court was unable to determine whether or not they were void upon their face. It could not take judicial notice of their form, for it is notorious that their forms vary from time to tjme. In the case of Detroit, etc., R. Co. v. McCammon, 108 Mich. 368, cited by defendant’s counsel, it was said that the additional facts set up are amplifications of the facts set up in the former bill. Is that so here ? I think that by setting forth the deeds in full new facts are stated, and the court for the first time is enabled to know the forms and dates of these deeds. As already said, it could not take judicial notice of their forms nor their dates, nor whether they were void upon their face or not. It could only be inferred that their dates were prior to the dates of the notices served. The date of the purchases only was given in the first amended bill. These deeds are now by reference made a part of the bill of complaint, and, in my judgment, now that they are for the first time before the court, and their infirmity appears upon inspection, important questions are raised, which I do not think it proper,to decide until an issue is raised upon their force or validity. I was purposely guarded upon this point in my reasons for sustaining the demurrer to the amended bill. That matter is now made clear by the pleading. If void upon their face, what effect is to be given to them in a chancery case ? These are matters to be disposed of at the proper time.’
“After a careful consideration of the arguments of counsel and the authorities cited, I must adhere to my views above expressed. I must hold that by the allegations of the second amended bill of complaint, and the demurrer thereto (which admits the facts pleaded), does it appear for the first time in the cause that the said deeds so issued to Mary E. Olson were void upon their face. Being void upon their face, they were a nullity; and it is as though no deeds had been issued by the auditor general. If this is true, then the notices given must fall. Surely this question has not before been adjudicated by this court in this cause. So it must be held that the eighth ground of demurrer is not well taken.
“Referring to the authorities cited by me in disposing of the demurrer to the first amended bill of complaint upon the question of color of title, and after ah examination of the authorities cited by counsel, I must hold that the auditor general had no lawful power to issue these deeds when they were issued, that their infirmity appeared upon their face, and that, they being void upon their face, the notices were of no avail, and that it is as though no notices had ever been given. I am aware that authority can be found in other- States holding that a tax deed void on its face is color of title, but I do not believe that to be the law of this State. I believe that a tax deed to be sufficient to set the statute of limitations in operation must of itself be prima facie evidence of title. It is not necessary that it be sufficient to withstand all evidence brought against it to show that it is bad; but it must appear to be good on its face. When the deeds, as in this case, disclose upon their face that they were issued in violation of law, the law will not assist them. In Redfield v. Parks, 132 U. S. 239, the Supreme Court of the United States said:
“ ‘We think that both the weight of authority and sound principle are in favor of the proposition that, when a deed founded on a sale for taxes is introduced in support of the bar of a possession under these statutes of limitations, it is of no avail if it can be seen upon its face, and by its own terms, that it is absolutely void.’
“ Limitations do not run in favor of a tax deed void on its face. King v. Lane (S. Dak.), 110 N. W. 37; Black on Tax Titles (2d Ed.) § 497; Cooley on Taxation (1st Ed.), p. 379. The case of Moore v. Brown, 11 How. (U. S.) 414, seems to be in point. The defendant in that case claimed under a tax deed void upon its face, because issued ‘short of the time prescribed fey the act.’ It was held that a statute of limitations would hot aid such a deed. This case is discussed, quoted from, and approved by Chief Justice Cooley in the case of Toll v. Wright, 37 Mich. 93-99. The mode of determining whether a deed is void upon its face, it is said:
“ ‘Is to test the deed by making a reference to the authority recited in it for making the sale, in connection with the act giving the auditor power to sell. When the sale is found not to be in accordance with that power, the deed is void upon its face, because the action of the auditor is illegal, and the law presumes it to be known to a purchaser.’
“Applying that reasoning to this case, it must appear that the sale, as evidenced by the deeds, was not a sale according to law. See, also, Millar v. Babcock, 29 Mich. 526. In the case of Griffin v. Jackson, 145 Mich. 23, the court said, speaking of a tax deed similar to those involved in this case:
“ ‘ The auditor acted under a statute without any discretion. His act, a ministerial one, was unauthorized because premature. To say that the deed would become valid by lapse of time, would be to open the door to parol proof on the question of attempts to redeem, when, a deed having issued, the auditor would not be likely to permit redemption. The courts are not hasty in cutting off the rights of landowners whose lands have been sold for taxes, and we are of the opinion that this question should be governed by the usual policy.’
“ It will be noted that Judges Ostrander, McAlvay, and Blair concurred in affirming the judgment in Griffin v. Jackson on the ground that Allen’s tax deed was, upon the authority of Monaghan v. Auditor General, void on its face, and that upon the authority of Morse v. Auditor General, 143 Mich. 610, mere lapse of time — that is to say, the passing of the redemption period — would not make it a good deed, and that Allen was, therefore, entitled to no notice from plaintiff, and want of such notice could not aid the appellant. To hold that the six months’ notice given under a tax deed void on its face is valid, would be to do away with all distinction between a deed void on its face, and one prima facie valid. A tax deed void on its face is as invalid as no deed, and we might as well hold that the service of the notice dispenses with the deed altogether. This court has already held that a tax notice served under a premature deed, like those involved in this case, was unavailing, and would not set the statute running, and we must adhere to that holding. There is nothing sacred in the service of a notice. To be of any avail, there must be back of it a deed fair upon its face. The notice provided for in section 140 of the tax law asserts that sale has been lawfully made, and that the signer thereof has title to the land under tax deed issued for unpaid taxes thereon. The Supreme Court has held that the auditor general might cancel a tax deed after a notice, and the expiration of the six months. Hayward v. Auditor General, 147 Mich. 591; Jakobowski v. Auditor General, 144 Mich. 46; O’Connor v. Carpenter, 144 Mich. 240. It must therefore be held that complainants are not barred by section 143 of the tax law, and that no valid tax notice has been served, as is required by the statute.
“It may be claimed that the complainants have no standing in a court of equity, and that they have an adequate remedy at law. It seems to me, however, that, where defendants have placed upon record deeds like these, have claimed to serve the notices, have attempted to convey away a part of the timber, and have commenced to denude the land of valuable timber as here alleged, a court of equity has power to restrain the continued trespass, and, having obtained jurisdiction for such purpose, will retain it, to give such full relief as will finally dispose of the controversy. Hall v. Nester, 122 Mich. 141.
“For the reasons stated, the demurrer of the defendants must be overruled, and, under the provisions of subdivision e of Chancery Rule 9, the defendants should be permitted to answer the second amended bill of complaint within 30 days from the entry of the order overruling said demurrer.”

The decree is affirmed, with costs.

Grant, Ostrander, Hooker, and McAlvay, JJ., concurred.


text:
    CAMPBELL v. JACKSON CIRCUIT JUDGE.
    1. Venue — Disqualification of Judge — Constitutional Law-Criminal Law.
    Under the Constitution (article 6, § 11) circuit judges may-hold court for each other, and shall do so when required by law; and a judge disqualified to hear and try a criminal proceeding, is warranted in calling the judge of another circuit to sit in such case.
    2. Same — Local Prejudice — Discretion of Trial Court.
    Where an examination of the record shows that the trial court did not abuse his discretion in denying a change of venue on the grounds of local prejudice, his ruling will not be changed.
    Mandamus by Robert Campbell to compel Howard Wiest, acting circuit judge of Jackson-county, to grant a change of venue.
    Submitted December 21, 1908.
    (Calendar Nos. 23,143, 23,144, 23,145.)
    Writs denied January 4, 1909.

      Thomas ]3. Barlcworth, for relator.
   Moore, J.

There are three motions heard as one in this proceeding. The relator is charged with three separate felonies in three criminal cases. In each of the cases he sought for a change of venue. His application was refused. This proceeding is brought to review that action. His motions were heard and decided by the judge of the Ingham county circuit court at the request of the judge of the Jackson county circuit court, where the cases against Mr. Campbell are pending. The questions presented by counsel for the relator in his brief are: Should the change of venue have been ordered, first, because the judge of the Jackson circuit court was disqualified from hearing these particular cases, and; second, because of the prejudice existing on the part of the people of Jackson county ?

Counsel state that the only statute governing the application is section 309, 1 Comp. Laws, which gives the power to change the venue upon, good cause shown. It is urged that, when it appears the judge of the circuit court where the cause is pending is disqualified from hearing the particular case, a change of venue will follow for that reason alone. Counsel say in relation to this contention:

I know of no decision in Michigan affecting the matter with respect to the points raised by this record.”

Article 6, § 11, of the Constitution, provides:

“ Judges of the circuit court may hold courts for each other, and shall do so when required by law.”

Counsel suggest that section 300,1 Comp. Laws, should apply; but a reference to the language of that section will show that the condition in the Jackson circuit court is not such as to require a notice from the clerk of Jackson county to the governor and the designation by him of a judge to preside in Jackson county. The constitutional provision quoted above is broad enough to warrant a judge of some other circuit to preside at the request of the judge of the circuit where the case is pending. See People v. Goodwin, 22 Mich. 500.

Second. Has the relator shown good cause for a change of venue ? A stipulation was filed as to certain publications appearing in newspapers in Jackson county. Affidavits were filed in favor of the relator, and also in favor of the people. Judge Wiest was of the opinion that it was not shown that a fair and impartial jury could not be obtained in the circuit court where the cases are pending. An examination of the record satisfies us that his conclusion is correct.

The order denying the application for a change of venue in each of the cases is affirmed.

Blair, C. J., and Grant, Montgomery, and McAlVAY, JJ., concurred.


author: Montgomery, J.

text:
    HOFFMAN v. HOFFMAN.
    1. Divorce — Jurisdiction—Residence of Parties — Loss—Statutes.
    Where, on a bill for a divorce, the complainant, after her marriage, removed from the State with her husband, and, upon leaving him, returned to the State, and within a month filed her bill, the court is without jurisdiction; the statute (section 8624, 3 Comp. Laws, as amended by Act No. 210, Pub. Acts 1899) requiring a residence in this State for one year immediately preceding the time of filing the hill.
    2. Costs — Appeal—Affirmance.
    On an appeal from a decree dismissing a bill, defendant not having filed a brief, an order of affirmance will be without costs.
    Appeal from Berrien; Coolidge, J.
    Submitted November 9, 1908.
    (Docket No. 120.)
    Decided January 4, 1909.

      Bill by Effie May Hoffman against David R. Hoffman for a divorce. From a decree dismissing the bill, complainant appeals.
    Affirmed.

      James O'Hara, for complainant.
   Montgomery, J.

This is a bill filed for divorce on the ground of extreme cruelty. After hearing the evidence on the part of the complainant, the circuit judge held that the bill could not be maintained, for the reason that the complainant had not been a resident of this State for one year immediately preceding the time of filing the bill for divorce.

There is no testimony offered on behalf of the defendant. That adduced by the complainant tended to show that the marriage was a most unfortunate one, and that the defendant had been guilty of the acts of cruelty which were charged in the bill. The evidence as to residence of the complainant was as follows: She had for many years been a resident of St. Joseph, Mich., and while on a visit to Chicago, on July 29, 1907, she was married to the defendant. The parties did not cohabit together as husband and wife until about the 10th of August. The marriage had been kept secret, the wife, after the ceremony, returning to Michigan and visiting an aunt at Holland. It became known, however, to some of their acquaintances that the marriage had taken place. The wife returned to St. Joseph, and telegraphed the defendant, who came.oh to St. Joseph on August 10th. They then occupied the same room for a few days, and on the 14th of August the complainant’s mother (by adoption) was made acquainted with the fact of this secret marriage. It would seem that the parties had expected that complainant should continue with her mother for a year or so, but when the mother was made acquainted with the fact of the secret marriage, she told complainant that she must go and live with her husband, and that she ought not to come to live with her. This conversation occurred on Thursday, and on the following Sunday, about the 17th of August, complainant went with her husband to .Chicago, and commenced living with him there. The defendant’s home was with his mother, a widow, and all three continued to occupy the same house until the 31st of October, 1907, the complainant in the meantime having sent over a considerable amount of household furniture from her home in St. Joseph to Chicago. She made various visits back and forth. On the 31st of October, 1907, complainant left the defendant, and returned to St. Joseph to make her home with Mrs. Parker. She left without defendant’s consent. Complainant may have had a hope that Mrs. Parker would relent and allow herself and defendant both to live with her. But there is nothing to indicate that, when she went to Chicago with the defendant, she had any other thought than to make her home with him, either at Chicago, where he then lived, or, if they should subsequently return to St. Joseph, at that place. She gáve up her residence for that of the husband, and there is no room for saying that she continued her residence during this time at St. Joseph. A distinction is sought to be drawn between residence and domicile, complainant’s counsel conceding that the rule is that the domicile of the husband is that of the wife, but contending that, under the facts in this case, her residence continued to be in St. Joseph. We cannot assent to this view. Not only was her domicile in Chicago, but she undoubtedly intended to reside there, unless a certain contingency should happen, which did not occur. The statute is very clear. Section 8634, 3 Comp. Laws, as amended by Act No. 310, Pub. Acts 1899, provides:

“No decree of divorce shall be granted by any court in this State in any case unless * * * the party applying therefor shall have resided in this State for one year immediately preceding the time of filing the bill or petition therefor.”

This bill was filed about one month after the return of the complainant to St. Joseph. She had not resided in St. Joseph for a year immediately preceding the filing of the bill. The decree is affirmed.

As no brief was filed in this court for defendant, the order of affirmance will be without costs.

Ostrander, Hooker, Moóre, and McAlvay, JJ., concurred.