author: Steere, J.

text:
    STROH v. O'HEARN.
    1. Wills — Legacies—Estates oe Decedents.
    Under provisions of a will, bequeathing to two of decedent’s daughters $500 each, “to be paid from the proceeds of testator’s farm as soon as it will admit, or at the pleasure” of testator’s widow, but within five years at farthest, the bequests were a charge upon the real estate and proceeds realized therefrom by sale, although the will devised the real property to other beneficiaries.
    2. Subrogation — Mistake—Equity Jurisdiction — Mortgages.
    Where complainant and one of the defendants asking affirmative relief, respectively advanced funds as a loan upon real property and to purchase land belonging to the estate of a decedent, mistakenly supposing that certain children of deceased had a complete title in fee to the realty sold and mortgaged, by conveyance of such children, and where the money realized was employed in paying off incumbrances against the estate property, and in paying certain legacies that the will provided for, com- . plainant and such purchasing defendant were entitled in equity to be subrogated to the rights of the mortgagee who received payment out of the funds advanced by them.
    3. Same.
    The granting of subrogation is an equitable remedy, applicable when persons other than mere volunteers pay a debt or demand that in equity and good conscience should have been satisfied by another, and it is proper in all cases where injustice would follow its denial.
    4. Waste — Life Estate — Logs and Logging.
    Life tenants may not convey the timber on real estate, as against the rights of remaindermen, granting, at the same time, permission to remove the timber within five years: the transaction amounts to waste, and. is invalid.
    5. Life Estates — Incumbrances—Mortgages—Interest.
    It is the duty of the life tenant, whose estate is subject to a mortgage upon the fee, to discharge the interest; and the remaindermen are charged with the duty of paying the principal. If the life tenants pay the incumbrance or mortgage, they may call on those having title to the remainder for contribution; if the reversioner satisfies the incumbrance when it becomes due, the life tenants may be required .to contribute as their share the interest on the amount paid, based on the term of the life estate.

    6. Same — Improvements.
    Improvements made by a life tenant, being presumed to be made for his own benefit, are not chargeable to the remaindermen.
    7. Subrogation — Equity.
    In granting subrogation to complainants, they should be placed, as nearly as possible, in the condition existing at the time they acquired their interests, and should have a lien only to the amounts paid in satisfaction of the preceding incumbrances.
    8. Receivers — Estates op Decedents — Life Estates.
    Upon a showing that an estate in process of probate has been mismanaged, incumbrances executed upon the interests of life tenants who mistakenly assumed to have a fee, that default has been made in the satisfaction of debts and legacies due from the estate, and in interest upon mortgages outstanding against the same, equity may enter a decree appointing a receiver.
    9. Subrogation — Foreclosure of Mortgages.
    Proceedings taken by one of the complainants to foreclose his mortgage by advertisement, instituted subsequently to filing his bill for subrogation, which submitted to the court of chancery the entire matter of mortgage foreclosure and his right to a lien, were insufficient to affect the rights of the parties, and could not dispose of any matters in issue in the equity suit.
    10. Equity — Jurisdiction—Estates of Decedents.
    Decedent devised a life estate in his property and estate to his wife, and, after her death, a life interest in specified parcels to his two sons, charging the entire estate with the payment of certain legacies. The sons attempted to convey the fee of separate pracels to one another, and to execute a mortgage upon one of the farms belonging to the estate, following the decease of the widow and termination of her life interest. Out of the proceeds thus obtained, the legacies were paid and an existing incumbrance on the farm satisfied, and one of the life tenants executed to a purchaser, who innocently and mistakenly supposed that he was obtaining a clear title, a deed of a sixty-acre parcel belonging to the estate. Other conveyances were made, and default occurred under the mortgage. Discovering the error and the actual state of the title, the mortgagee filed a bill as complainant to obtain subrogation to the rights of the previously existing and discharged mortgage, making the grantee above-named and another purchaser from one of the life tenants a party. Held, that the remedy of subrogation was a proper method of relief in favor of complainant and the purchaser of the sixty acres, that the defendant purchaser last named must be relegated to his action at law for breach of warranty, on the ground that the proceeds went to the grantors personally, and a decree Is entered disposing of the entire controversy and remanding the estate to the lower court to be wound up and distributed.
    Appeal from Ottawa; Padgham, J.
    Submitted January 16, 1913.
    (Docket No. 28.)
    Decided July 9, 1913.
    Bill by Conrad Stroh against John O’Hearn, Joseph Bauman, and other defendants for subrogation. Said Joseph Bauman filed a cross-bill praying for affirmative relief. From a decree for complainant and said Bauman, defendants appeal.
    Modified.

      Farr & Kolyn, for complainant.

      Hatch, McAllister & Raymond, for defendants O’Hearn, et al.

      Charles E. Soule and C. Edward Soule, for defendant Bauman.

       As to the duty of a life tenant to keep property in repair, see note in 33 L. R. A. (N. S.) 669. And upon the right of a life tenant, or person claiming under him, to recover for improvements, see note in 13 L. R. A. (N. S.) 514. And as to the duty of a life tenant to pay taxes, see note in 32 L. R. A. 744.

   Steere, J.

This suit involves a tangled tale of misunderstanding, bad management, and bad advice in the administration of the estate of Dominick O’Hearn, formerly a farmer residing in the township of Tallmadge, Ottawa county, where he owned a farm of 180 acres, which is now the subject of this litigation. The accompanying plat of said farm may serve to more readily understand its shape and the relative location, of the different parts now in controversy.

On January 15,1892, said Dominick O’Hearn, being the owner of this farm free and ‘unincumbered, together with personal property of considerable value, executed his last will and testament in which he gave all his property, real and personal, except a span of horses to be set off to his son Frank, to his wife, Margaret O’Hearn, for life, and after her death the 120 acres south and west of the State road to his son John O’Hearn for life, and the 60 acres north and east of said road to his son Martin O’Hearn for life, and after their death to their heirs; also legacies of $500 each to his daughters Mary and Agnes, and $1 each to his daughters Lizzie and Mariah, “to be paid from the proceeds of the farm as soon as it will admit, or at the pleasure of my wife, Margaret O’Hearn, should she survive that long, but in no case shall a payment be put off to exceed the term of five yearsalso providing that after the death of Margaret all personal property that she possessed at that time should be divided equally between the two sons John and Martin. Said Margaret O’Hearn was appointed executrix of the will. Before his death, and after making this will, -he and his wife, on April 9, 1894, gave a mortgage for $1,500 on that portion of the farm lying north and east of the State road. This mortgage, with accompanying notes, was proved before the commissioners on claims against his estate, and allowed.

Said Dominick O’Hearn died on September 7, 1898, his wife and said seven children surviving him, and his will was admitted to probate by the probate court of Ottawa county, on October 24, 1898. His widow, Margaret O’Hearn, was appointed administratrix, but did not qualify, and on May 2, 1900, Thomas Malloy was appointed administrator de bonis non with the will annexed. On June 5th Malloy, having duly qualified, filed an appraisal of decedent’s estate, showing realty valued at $7,900, and personal property valued at $1,335. Commissioners on claims were appointed Who, on December 7, 1900, made a report, which was confirmed, showing claims filed against the estate amounting to $3,148.99, in which was included said mortgage amounting, with interest, to $1,739. On March 4, 1901, the administrator, having obtained a license for that purpose from the probate court, sold a strip of land 3 rods wide from the 60 acres north and east of the State road, and adjacent to it, to an interurban railway for $150, and to Frank O’Hearn the northwest quarter of the southwest quarter of section 1, which had been appraised at $1,500 in the probate court, for $1,000, and also contracted to sell to Charles E. Chappell the remainder of the 60 acres north and east of the State road for $1,900. That latter sale was not consummated, a payment of $50 being forfeited, but the other sales were duly confirmed by the probate court, and the purchase prices paid to the administrator. The administrator also sold a team of horses for $125, and other personal property. The proceeds of these sales were used in payment of the debts of the estate and expenses of administration.

Following this, on May 27, 1901, the administrator, having applied to the probate court and obtained per-' mission to mortgage, for the purpose of paying debts, the northwest quarter of section 1 lying south and west of the State road for $1,050 (which had been willed to John for life and after his death to his heirs), and the 60 acres lying north and east of the State road (willed to Martin for life and after his death to his heirs) for $1,000, borrowed from Charles E. Chappell the sum of $2,050 at 6 per cent, interest, payable annually, $600 to be paid on the principal June 1, 1904, $600 June 1, 1905, and the balance of $850 June 1, 1906, securing the same by two mortgages on said property. To these mortgages the widow and all children of deceased consented in writing. The mortgages were made subject to the life interest of Margaret O’Hearn, the widow of deceased. At this time the legatees and devisees named in testator’s will were all living, and their names were as follows: Margaret O’Hearn, widow; John, Frank, and Martin O’Hearn; Mariah (O’Hearn) Hall, Elizabeth (O’Hearn) Butcher, Agnes (O’Hearn) Loftus, Minnie (Mary O’Hearn) Stroh; the then living prospective heirs of John O’Hearn, who was unmarried, were his six brothers and sisters; the prospective heirs of Martin O’Hearn were three children, Harold, Mabel, and Richard; since then another child has been born to him. The contingencies as to remaindermen, from births, marriages, and deaths, are practically unlimited.

On June 11, 1901, the administrator rendered his final account, which was allowed by the probate court on July 8th following. This showed that the administrator had paid total debts of $8,219.92, had expended incurred expenses and administration amounting to $204.08, had lost on sale of real estate, from the appraisal, $500, and had personal property on hand valued at $1,281, with real estate unsold valued at $6,150. The order of the probate court required him to turn the estate over to Margaret O’Hearn, the widow, to be enjoyed and used by her as provided in the will, after which he should be finally discharged.

On May 30, 1903, Margaret O’Hearn, widow of Dominick, died. On July 3,1903, said mortgages were foreclosed in chancery by said Chappell for default in payment of interest, the administrator and several legatees in the will being made defendants, and a decree by default was taken, not for the principal, but for interest only, amounting to $133.15 on one mortgage and $126.84 upon the other, there being no provision in the mortgages for declaring the principal due on default in interest. No sale was had on these foreclosures. The matter was allowed to rest in that shape until March 19, 1904, when the condition of the estate had become such that it seemed imperative something should be done, and upon the advice of certain parties the complainant, Conrad Stroh, together with his wife, who was the Mary O’Hearn named as one of the legatees in the will, and Martin O’Hearn, John O’Hearn, the daughter Lizzie O’Hearn, and Joseph Bauman, a defendant herein and complainant by cross-bill, together with Charles E. Chappell, the mortgagee, met at the office of an attorney, who was Mr. Chappell’s solicitor in the mortgage foreclosures, and had a conference resulting in an apparently unintentional juggling of titles in which Martin O’Hearn and his wife conveyed by warranty deed the 60 acres north and east of the State road to Joseph Bauman, excepting therefrom the strip sold to the railroad, for $2,200; John O’Hearn conveyed by warranty deed to Martin O’Hearn an undivided one-half interest in that part of the northwest quarter of section 1 lying southwest of the State road, which contained the buildings of the O’Hearn farm, and said John and Martin O’Hearn, and wife, gave to complainant, Conrad Stroh, a mortgage on said last description, for $1,300. In connection with this transaction Martin O’Hearn and John O’Hearn together sold and'deeded to said Stroh the timber on a portion of the land, on which they held a life estate, for $350, with five years’ time in which to remove the same. The result of the transaction was that Stroh and Bauman together contributed $3,825, out of which was paid $2,309.99 in liquidation of the Chappell mortgages, and $1,000 in payment of the legacies to the two daughters Mary and Agnes, making a total of $3,309.99 applied in paying debts of the estate. At this meeting neither Frank, Mariah, Agnes, nor the children of Martin O’Hearn were present or consented to what was there done. No order was made by the probate court directing the payment of said legacies, but receipts for the same were duly filed in said court. All parties to this transaction manifestly acted upon the assumption that John and Martin O’Hearn had complete titles to the portions of the real estate which they conveyed, instead of life leases. It is conceded that Bauman believed he had purchased a complete title, and that John O’Hearn and Martin O’Hearn understood that Martin had acquired complete title to an undivided half of the 80 acres southwest of the State road, and complainant, Stroh, believed that the mortgage and the deed of the timber given to him were based upon a title in fee simple.

The titles to this property were further confused by the following conveyances: On January 25, 1906, complainant Stroh reconveyed to John and Martin O’Hearn the timber he had purchased from them, and received from Martin O’Hearn and wife and John O’Hearn a mortgage for $600 “on that part of the northwest quarter of said section one of said Tallmadge township.” This mortgage was not recorded but on October 8, 1906, Stroh surrendered the same to John and Martin, receiving from them a mortgage on the same premises for the sum of $730, the consideration being a surrender of the first mortgage, with accumulated interest, and an additional loan of $100 in cash. On November 27, 1906, Bauman gave a warranty deed, for a consideration of $950, to William W. Nash and wife, defendants herein, of a portion of said section 1, described as beginning 100 feet east of the northwest corner of said section, thence east 961 feet, thence south 906 feet, thence west along the right of way of the interurban railway 1,312 feet to the place of beginning, and on the same date said grantees mortgaged the same to an outside party for the sum of $600; said mortgage being yet unpaid. On October 27, 1907, a house located on the property purchased by Nash and wife from Bauman burned, without insurance.

It is undisputed that at the death of Dominick O’Hearn all of his children were over 21 years of age; that neither Martin O’Hearn nor John O’Hearn are financially responsible, nor have property of substantial value other than their interests in this estate; that Frank O’Hearn and Mariah, the sister, are financially responsible aside from their interests in the estate. John O’Hearn was born in 1848, and is unmarried; Martin O’Hearn was born in 1865, is married, and has four children, the eldest having been born in 1894 and the youngest in 1906.

Defendant Bauman, after receiving his conveyance and making payment, as already stated, immediately took possession, of the land described in his conveyance, and made improvements thereon of some value and of permanent character, in the way of fencing, ditching, fertilizing, etc., and remained in possession of the same up to the time of the hearing in this case, except the tract, of about 10 acres, which he sold to defendants Nash. It is his claim and testimony that he made betterments to the extent of $961, which is disputed, the value of the same, as shown by the testimony of Frank O’Hearn, being about $361. It is, however, undisputed that he bought the land in good faith for full value, paid for the same, took possession, improved and worked it as his own, believing that he held title thereto in fee simple.

It is manifest from this record that not only did the adult beneficiaries of Dominick O’Hearn’s estate, who had control and possession of the property, lack thrift and business ability to properly conserve the assets and protect their own interests and those of their kin who were to follow them, but many errors and irregularities crept into its management while in the hands of the administrator, going through probate. Real estate was sold and mortgaged by authority of the court to pay indebtedness while there was yet personal property undisposed of, mortgages of different amounts were given on different parcels of the estate, with no attempt to adjust the rights of the respective devisees by contribution, or to apportion the burden of the indebtedness on the respective interests.

At the time Stroh and Bauman became interested in this property, on the 19th of May, 1904, the situation was substantially as follows: A legacy of $500 to each of decedent’s two daughters, which was a lien upon the estate, was yet unpaid, and the five-year period in which the will provided that it should be paid had already elapsed. Eighty acres of the realty was under a mortgage of $1,050, given by the administrator under authority of the probate court to one Chappell, to raise money to pay debts of the estate, and another tract of 60 acres was under a mortgage of $1,000, given in like manner. Both these mortgages had been foreclosed, decrees of foreclosure had been rendered in a chancery court, and the time for sale had arrived, and a 40 acres had been sold for like purpose. The 80 acres in question had been devised to John O’Hearn for life, and after his death to his heirs; and the 60 acres likewise to Martin O’Hearn for life, and after his death to his heirs. Under these conditions Stroh and Bauman, previously disinterested parties, except as Stroh was indirectly interested through his wife, were somehow led to participate in a meeting, held by certain beneficiaries and a creditor, to devise means for relieving the situation, at which meeting legal counsel was present, and to invest their money as heretofore stated. It cannot be said from this record that they were meddlers and interlopers. The testimony shows that Stroh, by reason of his family relations, was induced to participate in an attempt to save the estate, and Bauman, a thrifty neighbor, who had more than once previously been solicited by a member of the family to purchase part of this estate, was induced to enter into the deal, and did so as a legitimate business transaction, buying what he supposed was a good title to a piece of land, as an investment, paying full price therefor, as already shown.

The parties to this suit have filed elaborate pleadings, bill of complaint, amended bills, answers, cross-bills, answers to cross-bills, etc.; by stipulation and otherwise all parties are before the court and all questions raised are in issue by appropriate pleadings.

The legal rights of, and relief sought by Stroh and Bauman are similar, and they are working in harmony for practically the same end. It is alleged and argued in their behalf that they are entitled, by reason of an honest mistake, not only on their part but of all parties participating, to be subrogated to the liens of the Chappell mortgages and the legacies to the daughters, to the amount which they have paid to relieve the estate of those burdens, in proportion to the money advanced by each, and that they should be granted foreclosure therefor, otherwise leaving existing conditions undisturbed.

On behalf of the heirs and beneficiaries under the will it is argued that the legacies to the daughters create no lien against the estate, that no subrogation can arise, because Stroh and Bauman were mere volunteers gratuitously paying the debt of another; and it is most seriously contended that, under the peculiar complications and conditions which have arisen, there being contingent remaindermen now undetermined, even to the possibility of some yet unborn, the only way in which this snarl can be equitably untangled and the rights of all parties protected is by granting the special relief prayed for in the answers and cross-bills, to the full extent of decreeing that all deeds, mortgages, and mortgage sales affecting title to the lands of the estate of decedent as it stood prior to March 19,1904, be set aside, and this court direct that the assets of said estate be marshaled and contribution imposed, under the direction of the circuit court of Ottawa county, for the purpose of conserving the assets of the estate and paying such debts and legacies as may be found a proper charge against it.

We are well satisfied that the legacies to decedent’s daughters are a burden on the estate. They were to be paid from the proceeds of the farm, and it is suggested that this means income, or usufruct, only. If there was nothing contained in the will beyond this, that view might be possible. Although the will authorized a postponement of their payment as a convenience to the estate, it was “in no case to exceed the term of five years.” “Proceeds,” as an ultimate contingency under such a provision, means “money obtained by the sale of property.” Birmingham v. Lesan, 77 Me. 494 (1 Atl. 151). These were demonstrative legacies, and a charge against the land from which proceeds to pay them must be realized, either by income or sale, within five years. The gifts were so made as to clearly show testator’s intention that the donees should, within a specified time, certainly receive the amounts bequeathed.

“If the language of the will indicates that the testator intended legacies to be paid, knowing that his personal estate would be insufficient for the purpose, or if it appear that in giving the legacies he had the real estate in mind, they will constitute a charge thereon although it be devised.” Woerner’s American Law of Administration (2d Ed.), *p. 1097, and cases cited.

The Chappell mortgages were given, to meet the needs of the estate, by the administrator under authority of the probate court, with consent in writing of the widow and children of decedent, for the express purpose of borrowing money to pay debts and expenses, which, when received, were so applied. So far as the lender was concerned, they were a valid, subsisting lien on all the realty which they covered. The matter of contribution was between the beneficiaries under the will, and no concern of his.

The mortgages had been foreclosed and sale decreed, and the legacies were past due and payable when Stroh and Bauman first became connected with the estate. They were in no way responsible for the conditions which had arisen. Under the apparent necessity of raising money to avoid a sacrifice of the entire estate and meet these pressing obligations, through innocent misrepresentation, and a misunderstanding all around as to the condition of titles, they advanced the money to pay off those liens, under the honest belief that they were paying incumbrances on property bought or security taken, based on perfect titles. We think it is within the power of a court of equity to grant them subrogation, subject to such conditions as are just and equitable. They are not arbitrarily entitled to it as a matter of right, irrespective of equitable considerations arising in favor of other interests which may be affected thereby. Subrogation is an equitable doctrine depending upon no contract or privity, and proper to apply whenever persons other than mere volunteers pay a debt or demand which in equity and good conscience should have been satisfied by another. It is proper in all cases to allow it where injustice would follow its denial, and in allowing it all injustice should be guarded against so far as possible. We need not go afield in other jurisdictions for authority upon this subject; the law is well settled in this State. Detroit Fire & Marine Ins. Co. v. Aspinall, 48 Mich. 238 (12 N. W. 214); Lockwood v. Bassett, 49 Mich. 546 (14 N. W. 492); Warner v. Hall, 53 Mich. 371 (19 N. W. 40); Kelly v. Kelly, 54 Mich. 30 (19 N. W. 580); White v. Newhall, 68 Mich. 641 (36 N. W. 699); Palmer v. Sharp, 112 Mich. 420 (10 N. W. 903); Dayton v. Stahl, 132 Mich. 360 (93 N. W. 878); Sproal v. Larsen, 138 Mich. 142 (101 N. W. 213); Taylor v. Roniger, 147 Mich. 99 (110 N. W. 593).

In the last-mentioned case Taylor purchased land in good faith believing that he was acquiring a perfect title thereto, and paid a valid mortgage thereon, subsequently losing the land by reason of the title not being in his grantors; the court, in disposing of this question, said:

“Complainant purchased the land for $300 cash, understanding that he was obtaining the title in fee subject to the incumbrance. He paid the mortgage thinking he was relieving his own land from the incumbrance, and having paid the mortgage upon the land which in fact he did not own became its equitable owner, and entitled to be so considered and to have the same declared to be a subsisting lien upon the land. A court in equity was the only forum having jurisdiction to determine these questions. * * * The court had jurisdiction of the parties and of the subject-matter of the suit, and under the general prayer for relief could make such decree as equity demanded.”

In Detroit Fire & Marine Ins. Co. v. Aspinall, supra, money borrowed by an administratrix, under authority from the probate court, though the court exceeded its powers in granting such authority, was applied to the payment of a debt secured by mortgage upon real estate, and the mortgage was discharged. It appeared that all proceedings relating to the loan, being under color of authority from the probate court, were in good faith, and the estate had the benefit of the money. The complainant asked to be subrogated to the rights which the holders of the mortgage would have had if it had not been paid and discharged. This court there said:

“The complainant does not stand in the light of a stranger or volunteer paying the debt of another without authority, nor as one merely loaning money to pay off a debt. The complainant’s equities do not stand upon any such ground; but because of the mistake of all parties, who, acting in good faith and under color of authority, paid an existing obligation against the estate under an agreement that they should have security upon the estate, it is therefore equitable that the property thus saved to the estate should now, in part at least, respond to the claim of the complainant.”

Is it possible, or just and equitable, to grant subrogation and order foreclosure, leaving other complications resulting from the mistake undisturbed?

After Stroh and Bauman became connected with this estate, and the various conveyances mentioned had been made, Bauman, by the records, was the owner of a life estate only, in the land north and east of the State road, except that portion previously sold to the interurban railway and the 10 acres sold by him to Nash and wife, to whom he conveyed but a life estate. This life estate was not for their own lives, but that of Martin O’Hearn. Martin and .John O’Hearn together owned an estate for the life of John in the 80 acres south and west of the State road. Their timber deed to Stroh authorized waste of the fee, and was invalid. The $1,800 mortgage on the 80 acres, given by John and Martin to Stroh, was not an incumbrance on the fee, but only on the life estate they held, which would terminate at the death of John.

The legacies to the two daughters and the mortgages held by Chappell were paid and discharged. These two mortgages had been foreclosed and sale decreed because of default in payment of interest. This was a default of the life tenants. Life tenants, while entitled to the possession and income of the realty, are obligated to pay taxes and the interest on mortgages and debts which are a lien upon the fee of the property. During the widow’s life it was her duty to do this. After her death it devolved upon John and Martin. Had they paid this interest, the mortgages could not then have been foreclosed, for they were not yet due. It was the duty of the remaindermen, or owners of the fee, ta care for the principal of any incumbrances upon the property; in case they did not do so, and the life tenants paid the same, or purchased the property at foreclosure sale, they could not acquire an adverse title against the remaindermen. While it was the duty of the remaindermen to prevent foreclosure and save the property, if the life tenants, being under no obligation to do so beyond paying interest, did pay the incumbrances, they would be entitled to call upon the remaindermen for contribution, and would have a lien upon the property for the amount so paid, less interest on the principal of the indebtedness, to be computed against them during the continuance of their life estate; if, on the othe.r hand, the reversioners paid the indebtedness when due, the life tenants would be required to contribute as their share the interest on the amount paid, on the basis of its continuance during the life estate. Whitney v. Salter, 36 Minn. 103 (30 N. W. 755, 1 Am. St. Rep. 656); Defreese v. Lake, 109 Mich. 415 (67 N. W. 505, 32 L. R. A. 744, 63 Am. St. Rep. 584); Damm v. Damm, 109 Mich. 619 (67 N. W. 984, 63 Am. St. Rep. 601); Plympton v. Boston Dispensary, 106 Mass. 544; Jones v. Gilbert, 135 Ill. 27 (25 N. E. 566). Bauman took upon himself, when receiving his deed of a life estate, the burden of paying his proportionate share of interest on the indebtedness against the estate on the basis of the life of Martin.

“If the property is sold under foreclosure to satisfy an incumbrance, the life tenant may be a purchaser at the sale. He cannot, however, hold the title adversely, but will be deemed to have made the purchase for the benefit of himself and the remainderman or reversioner, in case the latter will contribute his share of the purchase price, and does so within a reasonable time.” 16 Cyc. p. 618.

Bauman, having paid the mortgage, or any other lien, on the 60 acres he held as a life tenant, would himself have a lien thereon for the amount paid, deducting interest computed for the estimated duration of his life tenancy. As life tenant he was also required to pay the actual expenses of care and maintenance of the estate. Improvements made by him during his tenancy are presumed to be for his own benefit and, as a rule, not a charge against the estate or the remaindermen.

This is but a beginning of the complications which the manner of handling this estate and resulting condition of the titles develop for consideration if the interests and rights of the parties are to be adjudicated on the basis of the conveyances as they now appear.

It is the claim of all parties to this litigation that the transactions of March 19,1904, arose from a general misunderstanding, and were honest but unfortunate mistakes. The participants on both sides claim that had the true situation and condition of titles been then known and understood, that which was done would not have been done. They all ask in this suit, by bill and cross-bill, to be relieved from the consequences of the mistakes then made.- The contention is over the extent and nature of the relief which should be granted. The inequity of the relief asked by Bauman and Stroh is that they desire to retain the benefits .accruing to them from the mistakes made, and to be relieved of the harm. It is manifest that their interests and purposes are adverse to those of the remaindermen. It can fairly be inferred from the record that they are seeking to acquire title to this land and wipe out the reversionary interests. The hold which they have on the property through life ■estates acquired by the conveyances inadvertently given puts them in an advantageous position to that end, by making it more difficult for the remaindermen to harmonize interests and so adjust matters as to provide the necessary means to protect the estate, or, in case of sale, to realize an adequate price; and uncertainties of the contingent interests further add to that difficulty. In granting relief from the consequences of these mistakes, the rights and interests of all parties must be considered. We think it proper, and within the power of a court of chancery, to grant subrogation to Bauman and Stroh to the amount of the liens against the estate which they have paid, less the value of any benefits they may have received from the estate; but the subrogation must be in lieu of that out of which the mistakes, which justify the court in .granting subrogation asked, arose. The mistakes ran through the negotiations, agreements, conveyances, and payments of March 19,1904, resulting in relieving the estate of the burden of the mortgages and legacies then paid. The reimposition of that burden must be accompanied by a restoration of then existing conditions as near as possible. With these conveyances canceled and subrogation granted, Stroh and Bauman stand in their relation to the estate as secured creditors only to the amount of the money they advanced in payment of liens against it. Their only right is to have their liens enforced with reasonable diligence. On this record under the relief granted they are not entitled to possession of the property.

The owners of the property, life tenants and remaindermen, all ask that it be taken in charge by the court, through a receiver, and sold, the debts paid, the assets marshaled, and contribution apportioned. Under the undisputed facts in this case, we think this request should be granted.

There are minor beneficiaries who appear by guardian. The protection of the rights of infants is always a matter of special concern in a court of chancery. The life tenants and remaindermen are in default in paying debts which are a lien on the land. They are manifestly incompetent or unwilling to care for the estate and conserve its interests. The history of its mismanagement so indicates, and they, in effect, admit it in their pleadings. The court of chancery has power to order such auxiliary proceedings to conserve the property in litigation from being dissipated and lost. The only objection to this course is from Stroh and Bauman. If their claims as creditors are satisfied within a reasonable time, their rights and legal interest in the estate end. It is shown that they contributed a fund of $3,825 — Stroh $1,625 and Bauman $2,200 — out of which $3,309.99 was applied in liquidation of liens on the estate, and they should stand subrogated proportionately. Interest should be computed in their favor, together with any increase of value shown to have been added by them to the realty by reason of permanent improvements, and they should be charged with the rental value of any portion they have had in possession, which ultimately, in adjusting contribution between the beneficiaries, should be credited to the life tenants.

The singular record of this suit discloses that it was begun by Stroh in April, 1907, was heard and submitted in the trial court March, 1909, and finally decided in that court in December, 1911, after which an appeal was taken to this court. It is stated in the briefs of counsel that, after filing his bill of complaint, Stroh proceeded independently to foreclose by advertisement the $750 mortgage given him by John and Martin O’Hearn on the life estate of John in the 80 acres southwest of the State road, and has been in possession of said property for some time. This mortgage is set out in his bill of complaint, and the court asked to adjudicate his.rights in that connection. The matter of subsequent statutory foreclosure is not properly presented here, by pleading or proof, but if it be shown in a supplemental proceeding that, after tying up this estate in the chancery court, he sought to forestall results and secure possession and enjoyment of a portion of the estate by thus assuming to dispose of a matter previously submitted by him to the chancery court, the foreclosure may be held for naught. The mortgage was proved at the hearing. While some remarks of complainant’s counsel then made indicated a waiver of this claim, a fair inference is that no claim was made of right to assert it against the estate as an entirety. The same misunderstanding as to titles existed when it was given, though it was at a time subsequent to the payment of the mortgages and legacies. So far as shown, Martin and John received the proceeds of it. It is a personal liability of theirs, and a lien on John’s life estate in the 80 acres subject to the prior liens of the legacies and mortgages.

Defendants Nash dealt with Bauman, and paid him for the title which failed. He gave them a warranty deed, and their recourse is against him upon his warranty.

Having obtained jurisdiction over this estate on well-recognized equitable grounds, it is within the power of the chancery court to retain jurisdiction, fully administer and wind up the same. We think this should be done with all convenient speed.

The decree of the lower court must be reversed and a decree may be entered herein in accordance with the foregoing conclusions, remanding the case to the circuit court of Ottawa county in chancery, with authority to appoint a receiver, take possession of the property of said estate, and sell the same, pay the debts of said estate (in determining the exact amount of which under the rules above intimated further testimony may be heard), award contribution and distribution between beneficiaries, and take such other and further proceedings as may be found necessary in order to fully administer and close said estate. Costs of this appeal are awarded in favor of appellants against Stroh and Bauman.

Moore, McAlvay, Brooke, Kuhn, Stone, Ostrander, and Bird, JJ., concurred.


source: Caselaw Access Project

author: Kuhn, J.

license: Public Domain

text:
    VANDERVELDE v. WILSON.
    1. Usury — Intent—Written Contract — Mortgages—Taxation.
    In addition to 7 per cent, interest provided for in a mortgage, it was usury to stipulate that the mortgagor should pay the mortgage tax, whether or not the parties actually intended to carry out the arrangement.
    2. Same — Equity.
    Under the statutes of this State, no remedy in equity is provided for the mortgagor to restrain the foreclosure of the security on the ground of usury, or to obtain relief for usurious provisions in the instrument.- 1 Comp. Laws, §§ 4857, 4858 (2 How. Stat. [2d Ed.] §§2870, 2871).
    3. Same — Equitable Remedies — Pleading.
    Since statutes forbidding usury are penal in character, they must be strictly construed, and if a complainant is not strictly within the terms of the statute relieving the borrower of interest, he must offer or tender in his pleading in chancery to pay the principal and five per cent, interest thereon.
    4. Same.
    Unless some attempt has been made by the mortgagee to enforce payment of the mortgage tax as provided for in the contract, no equitable relief can be awarded in a suit to enjoin foreclosure by advertisement.
    Appeal from superior court of Grand Rapids; Stuart, J.
    Submitted January 23, 1913.
    (Docket No. 10.)
    Decided July 9, 1913.
    Rehearing denied November 3, 1913.
    Bill by Maggie Vandervelde against Charles M. Wilson for an injunction. From a decree for defendant, complainant appeals.
    Affirmed.

      Myron H. Walker, for appellant.

      Hugh E. Wilson, for appellee.
   Kuhn, J.

The bill of complaint in this cause is filed to restrain the foreclosure of a mortgage by advertisement. The rate of interest specified in the mortgage is 7 per cent, and, in addition, the mortgage provides:

“It is expressly agreed, that the said party of the first part, within thirty days after the same become due and payable, will pay all taxes and assessments which shall be levied upon the said lands, or upon or on account of this mortgage, or the indebtedness secured hereby, or upon the interest or estate in said lands created, conveyed or represented by this mortgage, or by said indebtedness, whether levied against said party of the first part, his legal representatives or assigns, or otherwise; and the said party of the first part hereby waives any and all claim or rights against said party of the second part, his legal representatives or assigns, to any payment or rebate on, or offset against, the interest or principal of said mortgage debt by reason of the payment of any of the aforesaid taxes or assessments. And that in default of the payment of any or all of said above-mentioned duties, assessments and taxes, by said party of the first part, within the time prescribed by law, it shall be lawful for said party of the second part, his executors, administrators or assigns, to pay and discharge any or all of said' above-mentioned duties, assessments and taxes, and the moneys thus paid by said party of the second part, shall be a lien on said premises, added to the amount secured by this mortgage, and payable forthwith with interest at the rate of seven per cent, per annum.”

It is claimed by complainant that the mortgage is usurious, because it provides for the payment of 7 per cent, interest and, in addition, the taxes upon the mortgage, and that in default of such payment such amount shall be a lien on the premises added to the amount secured by the mortgage; also, that because the contract is usurious all payments made should be applied on the principal in reduction of the same. It is contended by the defendant that the trial judge who dismissed the bill came to a correct conclusion, for these reasons, as stated in the brief:

(1) The mortgage is not usurious, because there was no intent to compel the complainant to pay more than 7 per cent., the legal rate.

(2) This suit cannot be maintained under the statute upon which the complainant relies.

(3) Complainant cannot maintain this suit because she has not offered to do equity.

In support of the proposition that there was no intent, testimony of the defendant was taken to show that he had no intention at the time of the making of the mortgage of asking the complainant to pay any tax on it; that he “never asked her to pay it or never considered the subject of asking her to pay it.” It is contended that the intent must be proven, and that in view of this testimony it will not be presumed. The contract here made is unambiguous, and its legal meaning clear. It follows that the parties to the contract must be held to have intended the result expressed by the contract. It speaks for itself. Mr. Page, in his work on Contracts (page 730), says:

“The view taken by other courts makes the contract for unlawful interest usury without reference to the intention of the parties. Apart from mistakes in expression and in computation, this is undoubtedly the correct view. Hence a bona fide mistake of law does not prevent the contract from being usurious.”

The insertion of the mortgage tax clause cannot be said to be a mistake in expression or computation, and no such claim is made in the answer of defendant. Our attention is challenged to the case of Fifth Nat. Bank v. Pierce, 117 Mich. 376 (75 N. W. 1058). In that case it clearly appeared that it was a clerical error, and such a mistake as should be corrected. In Becker v. Headsten, 137 Mich. 478 (100 N. W. 752), cited to be directly in point by defendant, it appears that the mistake was one in computation. In the case of Green v. Grant, 134 Mich. 462, 467 (96 N. W. 583, 585), this court said:

“Nor can we assent to the contention of defendant that a contract is usurious because the aggregate of interest reserved and taxes paid exceeds the maximum allowed by the statute. In our judgment, such a contract is not usurious per se. Whether or not it is usurious depends upon the intention of the lender. If, at the time the contract was made, he knew that the aggregate of interest reserved and taxes to be paid would exceed the statutory rate, as he would if the interest reserved was the maximum interest, the contract is usurious. If, on the other hand, at that time he believed that the aggregate of interest and taxes would not exceed the maximum rate allowed by statute, it would be as contrary to law as to good morals to declare it usurious.”

Counsel says that the statement in the opinion, “as he would if the interest reserved was the maximum interest,” is obiter dictum. This is, however, a correct statement of the law, and when the contract in terms reserves usury the intent is necessarily implied. Fretz v. Murray, 118 Mich. 302 (76 N. W. 495); Estey v. Loan Ass’n, 131 Mich. 502 (91 N. W. 753); Stack v. Cedar Co., 151 Mich. 21 (114 N. W. 876, 16 L. R. A. [N. S.] 616, 14 Am. & Eng. Ann. Cas. 112); Rosen v. Rosen, 159 Mich. 72 (123 N. W. 559, 134 Am. St. Rep. 712); Continental Nat. Bank v. Fleming, 170 Mich. 624 (134 N. W. 656); 39 Cyc. p. 920.

Complainant relies upon sections 4857 and 4858, 2 Comp. Laws (2 How. Stat. [2d Ed.] §§2870, 2871), which provide:

“ (4857) Sec. 2. No bond, bill, note, contract or assurance, made or given for or upon a consideration or contract, whereby or whereon a greater rate of interest has been, directly or indirectly, reserved, taken or received, than is allowed by law, shall be thereby rendered void; but in any action brought by any person on such usurious contract or assurance, except as is provided in the following section, if it shall appear that a greater rate of interest has been, directly or in- ■ directly, reserved, taken or received, than is allowed by law, the defendant shall not be compelled to pay any interest thereon.
“(4858) Sec. 3. Whenever it shall satisfactorily appear by the admission of the defendant, or by proof that any bond, bill, note, assurance, pledge, conveyance, contract, security, or any evidence of debt has been taken or received in violation of this act, the court shall declare the interest thereon to be void.”

These two sections were enacted at the same time by the legislature in 1891 and must be construed together. Section 2 is a copy of section 4 of the previous usury statute — 1 How. Stat. (1st Ed.) § 1595 —with the exception that section 4 merely forfeited the interest in excess of the legal rate, while the act of 1891 forfeits all interest.' In the previous act, “the following section” — 1 How. Stat. (1st Ed.) § 1596 (Sec. 5) — exempted bona fide holders of negotiable paper from the provisions of section 4 of that act. The words in section 2 of the act of 1891, “except as is provided in the following section,” were undoubtedly inadvertently left in the section, as section 3 of the present act contains no exceptions whatever from the provisions of the previous section. The section with reference to the bona fide holders of negotiable paper was omitted from the act of 1891 and section 3 was added. When this section was added the following statutes appeared in the statutes of the State of New York (Banks & Bros. Rev. Stat. of 1889, pt. 2, chap. 4, tit. 3 [8th Ed.], vol. 4, p. 2514):

“Sec. 4. Whenever any borrower of money, goods or things in action, shall file a bill in chancery for relief or discovery, or both, against any violation of the provisions of the said title or of this act, it shall not be necessary for him to pay or offer to pay any interest or principal on the sum or thing loaned; nor shall any court of chancery require or compel the payment or deposit of the principal sum or interest, or any portion thereof, as a condition of granting relief or compelling or discovering to the borrower in any case, usurious loans forbidden by said title or by this act.
“SEC. 5. Whenever it shall satisfactorily appear by the admissions of the defendant, or by proof, that any bond, bill, note, assurance, pledge, conveyance, contract, security, or any evidence of debt, has been taken or received in violation of the provisions of said title or of this act, the court of chancery shall declare the same to be void, and enjoin any prosecution thereon, and order the same to be surrendered and canceled.”

Section 3 of our act is practically a copy of section 5 of the New York statute, excepting that the latter part of the New York section is omitted from ours. The New York statute expressly provides for the filing of a bill in chancery by the borrower to obtain relief from a usurious contract, but our legislature in adopting section 3 omitted all reference to such relief in a court of equity, unless it can be said that the words “admission of’the defendant” left in the section are sufficient to warrant the conclusion that it was the intention to give the right to proceed in that way. It seems clear, however, that if such had been the intention of the legislature a provision similar to the latter part of section 5 of the New York statute would have been enacted into our statute, and the chancery court given explicit power. The failure to do this is to our minds very significant, and it seems that all the legislature desired to do, and did do, was to strengthen the provisions of section 2 and give the court the power, if an effort is made to collect usurious interest, to declare it void. We are forced to the conclusion that the words, “by the admission of the defendant,” were also inadvertently left in the section and have no meaning in the section, as they are entirely inconsistent with the remainder of the act, which refers only to actions brought by the lender to enforce a usurious contract.

Usury statutes, being penal in character, must be strictly construed, and unless the statute takes away equitable rights it follows that they remain. He who asks equity must do equity. Webb, in his work on Usury (page 398), says:

“But where the bill for relief against an usurious contract does not come strictly within the terms of the statute relieving the borrower of either paying or tendering interest in addition to the principal he will be governed by the general rule of law and compelled to pay or tender both principal and legal interest, for such statutes are construed strictly.’

Complainant, in order to obtain relief in a court of equity against an attempt to collect usurious interest, must offer to pay the principal and legal interest, it being understood that this means the legal rate of interest fixed by the statute and not the rate provided for in the mortgage. Complainant relies upon the case of Estey v. Loan Ass’n, 131 Mich. 502, at page 505 (91 N. W. 753). While the opinion does not expressly show it, the record of the case, which we have examined, discloses that the defendant filed a cross-bill and sought to enforce its mortgage. Mr. Justice Montgomery, who wrote the opinion, must have had this in mind, for he says:

“We * * * hold that, where it is sought to enforce a contract which was usurious at its inception, in so much as our statute provides that the court shall declare the interest void (section 4858), and that the debtor shall not be compelled to pay interest (section 4857), the recovery should be limited to the principal sum, less payments actually made, however designated at the time of payment.”

This court, in the case of Malone v. Danforth, 137 Mich. 227, at page 231 (100 N. W. 445), in which it was sought to have a deed and contract declared to be a mortgage and the contract rate of interest was usurious, said:

“The complainant, having appealed, protests against the allowance of interest on the moneys advanced, on the ground that the contract was usurious. This contention cannot prevail. The contract is not in its terms a mortgage. The complainant seeks to have a' court of equity declare it such, and, in asking aid, he should be prepared to do equity. The court below decreed simple interest, and this order is affirmed.”

This is controlling of the instant case. No attempt having been made to. collect illegal interest, complainant in a court of equity had no reason to complain.

The decree dismissing the bill is affirmed, without costs to either party in this court and with costs to the prevailing party in the court below.

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


text:
    HARGER v. WATSON.
    1. Brokers — Commissions—Contracts—Options.
    Where a broker advised the owner of hotel property that he had a prospective buyer, asking about price and terms, and naming the party, and the owner telegraphed giving the price and stating that he had six buyers, later stating by letter his terms and closing with the broker’s offer of $38,000 for the property, upon commission of $1,000, and where the broker arranged with other purchasers to take the hotel property through a deed to and in the name of the one purchaser mentioned, who was to execute a quit' claim deed to the parties in interest, the broker was entitled to recover his commission, although the sale could not be completed because tbe property became involved in litigation so that the owner could not convey a clear title.

    2. Same.
    The broker’s duty is performed when he. has found a purchaser that is ready, willing, and able to purchase upon the terms specified, and his right to commissions is not defeated if the title proves to be defective or unmerchantable.

    Error to Oakland; Smith, J.
    Submitted April 23, 1913.
    (Docket No. 16.)
    Decided July 9, 1913.
    Assumpsit by Edwin S. Harger against William C. Watson for broker’s commissions. Judgment for plaintiff on a directed verdict. Defendant brings error.
    Affirmed.

      Perry & Lynch, for appellant.

      Peter B. Bromley, for appellee.

       On the question of the broker’s right to commissions where sale fails because of defects in employer’s title, see notes in 3 L. R. A. (N. S.) 576 and 24 L. R. A. (N. S.) 1182. And as to the right to compensation upon procuring customer to take an option, see note in 43 L. R. A. (N. S.) 91.

       As to when real estate broker is considered as procuring cause of sale or exchange, generally, see note in 44 L. R. A. 321.

   Kuhn, J.

The plaintiff sues to recover a commission claimed by him to have been earned in obtaining a purchaser for defendant’s hotel property in the city of Pontiac, known as the Hodges Hotel property, and also to recover $29 paid for an abstract of title to such property. The defendant resides in Pasadena, Cal., and all communications between the plaintiff and the defendant with reference to the property were in writing in the form of letters and telegrams. At the close of the evidence, the defendant’s counsel requested the court to instruct the jury to render a verdict in favor of the plaintiff for $29 and interest, amounting to $29.65, as this item was not contested. The court denied this motion, but instructed the jury to find a verdict for the plaintiff for $1,029.65, being the amount of commission claimed and the item of the abstract, and such a verdict was accordingly rendered by the jury, and judgment had thereon.

The only errors relied upon and discussed by counsel for defendant are the refusal of the court to instruct as requested, and in instructing the jury to render a verdict for the amount they did.

The first communication between the parties was a letter dated April 10, 1912, from the plaintiff to defendant :

“Real Estate Office of Edwin S. Harger.
“No. 7 North Saginaw Street.
“Pontiac, Mich., April 10th, 1912.
“W. C. Watson,
“Pasadena, California.
“Dear Sir — Mr. E. Howland requested me to write you concerning your hotel here. He wished to know if it were for sale, and if you did want to sell what you would ask for it. If you were about to do anything would like to hear from you.
“Yours respectfully,
“Edwin S. Harger.”

In reply the following telegram was received:

“Pasadena, California, April 17th.
“Edwin S. Harger,
“No. 7 North Saginaw Street,
“Pontiac, Michigan.
“Hotel price $38,000. Wire immediately, have six purchasers. “W. C. Watson.”
Harger sent the following telegram in reply:
“April 18th, 1912.
“W. C. Watson,
“936 Magnolia Ave.,
“Pasadena, California.
“Think man will take property. Wants thirty-six hour option. Will you give it? Answer.
“Edwin S. Harger.”

In reply he received the following:

“Pasadena, California, April 18th.
“Edwin S. Harger,
“Pontiac, Mich. .
“Make sale. One thousand for you. Send draft for balance Crown City National Bank, Pontiac. On receipt will send deed. Answer immediately.
“W. C. Watson.”

In the above telegram it is undisputed that by “Pontiac” was intended “Pasadena,” the Crown City National Bank being in Pasadena. To this Harger replied that the property was sold, and that $37,000 would be paid to Watson and $1,000 retained by him upon receipt of an abstract of title showing property free and clear of leases and incumbrances. In reply the following communication was received from Watson:

“Pasadena, California, April 22d.
“Edwin S. Harger,
“Pontiac, Michigan.
“Will accept $37,000 net to me for Hodges property and give warranty deed subject to lease to Henry A. Thomas, and subject to all taxes and assessments since January first, 1912. Have receipt for taxes paid January 8th, 1912, and also paid, November 30th, last paving tax in full. Will furnish abstract, which you may order at my expense. My offer must be accepted at once and money deposited in First Commercial Bank at Pontiac, to my credit, within fifteen days.
“W. C. Watson.”

It is the claim of the plaintiff that when Mr. How-land learned of the Thomas lease he refused to take the property, and the plaintiff then immediately procured other purchasers who were willing to buy the property subject to this lease. To these purchasers Harger gave the following writing:

'Tontiac, Mich., April 26, 1912.
“Received of John B. Brown, Jay S. Stockwell, Jr., Arthur E. McLintock and Frances R. Harger, the sum of $1,000, to apply upon the Hodges House property, located at the corner of Saginaw and Pike streets, in the city of Pontiac, Michigan; the balance of said $37,000 to be paid to me on or before the 7th day of May, 1912. Abstract to be furnished by me on or before said date, showing good and merchantable title.
“William C. Watson,
“By Edwin S. Harger, Agent.”

It is further claimed that an agreement was had between the prospective purchasers and Howland and Harger that the previous arrangement should stand, and that the deed was to come on in Howland’s name, and that he was to then make a quitclaim to the new purchasers. The money, $37,000, was paid to the First Commercial Bank within the time specified in letter, Watson was so notified, and he forwarded the deed. Before the deed was actually delivered, however, to the purchasers it was discovered .that a suit by attachment levy on this property had been started, and also a Us pendens filed in a suit for specific performance of an alleged contract made by Watson with another purchaser to convey the property to him. Because of these suits involving the title to the property the purchasers refused to carry out the agreement, the bank at Pontiac so notified the defendant, and returned the deed to the bank at Pasadena.

It is the contention of the appellant that the authority of Harger to sell the property was limited to a sale to Howland, and no one else was thought of by Watson as a purchaser. It would seem that this question should be determined from the correspondence between the parties, and in the very first .telegram sent by Watson to Harger he speaks of having six purchasers. There is no doubt in our minds that if these suits had not been started no question would have been raised about the title going to the new purchasers through Howland. This position of appellant has all the earmarks of an afterthought.

Harger was not to blame for the failure to make the sale. He did everything necessary on his part to complete it within the terms agreed upon. He had the parties ready to accept the title, and the money was in the bank. They were entitled to a merchantable title, and clearly Harger should not be deprived of the result of his efforts because of the inability of Watson to give such a title, without any fault on Harger’s part. The rule of law applicable is well stated by Mr. Mechem in his work on Agency in speaking of the duty of the real estate broker, par. 966:

“His duty is performed when he has found a purchaser who is ready, willing, and able to purchase upon the terms specified.”

In this case there can be no question that the terms of Watson were complied with, and the purchasers procured by Harger were ready, willing, and able to purchase upon the terms specified. Hannan v. Moran, 71 Mich. 261 (39 N. W. 909); Wood v. Wells, 103 Mich. 320 (61 N. W. 503).

The charge of the trial court was a proper one, and sthe judgment is affirmed.

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


author: Stone, J.

text:
    McKENZIE v. CALL.
    1. Fraud — Evidence—Equity.
    Upon a review of conflicting testimony, it is held, that complainants’ hill to cancel an exchange of real and personal property should he dismissed ■ for failure of complainants to establish that they relied on the alleged false representations as to value; held, also, that defendants did not falsely represent that certain pianos were free from incumbrances or conceal the amount due thereon.
    2. Same — Cross-Bill—Warranty.
    No relief can he awarded to defendants, as prayed in their cross-hill, filed in a suit to cancel or annul an exchange of property, where complainants charged fraud and defendants claimed damages for breach of warranty.
    Appeal from Shiawassee; Miner, J.
    Submitted April 17, 1913.
    (Docket No. 80.)
    Decided July 9, 1913.
    Bill by William E. McKenzie and Tod Kincaid against Rose Call and Emma Connelly for cancellation of certain deeds and contracts and for an injunction. Bill dismissed as to defendant Connelly. Defendant claimed affirmative relief. From a decree for complainants, defendant appeals.
    Reversed; bill and cross-bill dismissed.

      A. L. Chandler, for complainants.

      Brennan, Donnelly & Van De Mark (S. O. Van De Mark, of counsel), for defendant.
   Stone, J.

The bill of complaint in this cause stated: That complainants on September 20, 1909, were the owners of certain lots in the city of Corunna upon which there was a valuable dwelling house and outbuildings of the value of $6,000; that they sold said property to defendant Emma Connelly of Detroit, and took back a purchase-money mortgage of $2,500; that said purchaser never made any payments upon said mortgage, and that under the power of sale therein said mortgage was foreclosed on April 11, 1911, by a public sale to complainants for $2,669, not including costs, and that complainants held a sheriff’s deed of said premises, subject to redemption; that, desiring to convert their interest into “more liquid” assets, they on August 9, 1911, sold and transferred their equity in said property to defendant Rose Call of Detroit; that they executed and delivered to said last-named defendant a warranty deed, subject to redemption from said foreclosure for an expressed consideration of $1 and other considerations to them paid; that said defendant Call in consideration of said conveyance agreed to sell and deliver to complainants a certain amount of personal property consisting of furniture located in a rooming house in Detroit, known as 153 Congress street east; that, in order to induce complainants to make the exchange, said defendant represented that said furniture was of the value of $6,000, and was insured for $10,000; that she desired to dispose of the same, and rent the house to complainants, as she was to be married in a day or two, and was going to leave for California, and was anxious to close the deal immediately; that if complainants would rent the house for one year, to be occupied for rooming purposes, for a rental of $175 per month, she would immediately deliver all of said property, and that complainants could rent said house and furniture to her sister, called Beatrice Bell, that she, said defendant, would not lease to her sister directly, but that, if complainants would lease the house and sublease to said sister, the latter would take said house and furniture at a rental of $575 per month in advance, and complainants would thus have immediate use for the furniture which they were purchasing from said defendant; that complainants believed the statements of said defendant with reference to the value of said furniture, and defendant’s purpose in selling, and the rental of said property, and accepted said furniture, and the lease of said house, and rerented the same to said Beatrice Bell for one year, with the privilege of five years, after August 9, 1911, for the rental of $6,900 per annum in payments of $575 per month, payable monthly in advance. That the defendant represented to complainants that said furniture was free and clear from all liens and incumbrances, except a debt of $930 to Crowley, Milner & Co., and $1,780 to Weil & Co., which representations were untrue, and known to be untrue, as the pianos mentioned in the bill of sale of said furniture had not been paid for, and that there were over $700 due on said pianos alone, and that there were other incumbrances on said property, which made the same of little or no value whatever to complainants, and that they never had received possession of the same. That said furniture was of no value over and above the incumbrance thereon: that defendant had no intention of getting married or leaving the city, and her sister, Beatrice Bell, did not intend in good faith to lease said building and furniture of complainants, and said statement and-leasing amounted to a conspiracy between said persons to cheat and defraud complainants, and get them to take said lot of secondhand furniture subject to said indebtedness, and to cheat and defraud complainants of the mortgage interest in said Corunna property, which scheme, as far as possible, said defendant had carried out; that after the sale of said furniture, which included all the furniture in the house, and in her possession at 153 Congress street east, the defendant entered said building and carried away a large amount of said furniture, the exact value of which complainants were not able to accurately estimate, but worth several hundred dollars; that the property which defendant had turned over to complainants under said bill of sale was incumbered for over $3,000, which was more than it was worth, and that she insists on keeping said Corunna property, of the value of $3,000, without paying anything therefor; that upon complainants discovering the fraud and conspiracy to cheat and defraud them out of their said property they called upon defendant to redeliver said deed and lease, the consideration of which she had taken away, or to perform her agreement, which she had refused to do, but insisted on holding the deed of said Corunna real estate.

Complainants in their bill prayed for an injunction restraining defendant from recording the deed given by complainants; that their damages be ascertained, and the same satisfied out of any interest which defendant may have in such furniture; and that defendant be restrained from taking possession of the Corunna real estate, and that said deed and lease be canceled and delivered up to complainants. The bill of complaint was dismissed as to defendant Emma Connelly.

The answer of defendant Rose Call denied the fraud, misrepresentation, and conspiracy charged in the bill of complaint. It denied that she ever represented to complainants, or either of them, that the said furniture was worth the sum of $6,000 or any other sum. Defendant admitted that the furniture and household goods on the premises where said furniture purchased by complainants was situated were insured in the sum of $10,000, but averred that the policies covering the same included much other personal property not sold to complainants. The answer averred that long prior to the 9th day of August, 1911, and persistently up to that date, one of the complainants had solicited defendant to sell said personal property and rooming ( house business; that any negotiations or agreements made with the sister of defendant relating to the leasing of said premises and the furniture and household goods therein contained, or any negotiations had with said sister relative to running said rooming house for complainants, were had directly with said sister, and not with the defendant. The answer further denied that part of the bill of complaint charging that defendant represented that the furniture was free and clear from all liens and incumbrances, except as to the amounts due Crowley, Milner & Co. and Weil & Co. The defendant averred that she had in all things carried out the contract and agreement made with said complainants; and by way of cross-bill she averred that the premises conveyed to her by complainants were not free and clear from incumbrances thereon, but certain taxes, which formed a lien thereon, due and payable prior to the year 1911, were unpaid on said premises, and that she had been obliged to pay the same, amounting to the sum of $120, in order to obtain record of said deed, and she prayed that complainants be decreed to reimburse her in this amount, with interest thereon. The complainants answered the cross-bill, and issue was joined.

The testimony taken in this case is quite voluminous, and there is an unreconcilable conflict between the testimony produced on behalf of complainants and that on the part of defendant.upon nearly every material matter involved; A decree was entered for complainants in so far as relief was prayed for, relating to the conveyance of the Corunna property.

There are really three points raised by the pleadings and testimony and discussed by counsel in the case:

(1) Did defendant fraudulently deceive the complainants as to the value of the furniture, and did they rely upon such misrepresentations?

(2) Did the defendant conceal from the complainants the amount due on the piano contracts, and warrant them free and clear?

(3) Were the complainants aware of the business they were buying, and does the doctrine “in pari delicto” obtain?

1. Some important, and we think controlling, facts appear by the documents which were introduced in evidence in the case. In the bill of sale given by the defendant to the complainants of the furniture and household goods, after enumerating the list of articles sold, appears the following:

“It is the intention of this statement to include all the furniture now in the above said place, except the pieces reserved, namely, the davenport in red room, couch in front room, all the furniture in Miss Bell’s room upstairs except carpet, one dresser in east room upstairs and all furniture in Miss B. Bell’s room, subject to $930 to Crowley, Milner & Co. and $1,788 to Weil & Co.”

The evidence shows that the complainants were experienced business men. Complainant McKenzie was 54 yeárs old, and had been a school teacher for many years; he had been engaged in the real estate and insurance business in the city of Detroit for some time before the transactions appearing in this case; he was well acquainted with the defendant and her sister, and the business in which they were engaged. He and a man by the name of Robinson had formerly owned the premises known as 153 Congress street east, and had sold the same to defendant upon a land contract, and he had had frequent business dealings with her prior to August 9, 1911. Complainant Kincaid was a man 61 years of age, and had. been engaged, among other things, in real estate in Detroit and elsewhere. Their principal witness, Fred Rollison, was associated in the insurance business with complainant McKenzie; they occupied offices together, and he was interested also in the sale of the Corunna property. We are satisfied from the evidence that complainants went into this deal to obtain possession of these premises in the city of Detroit with their eyes open, and of their own volition, and were not inveigled into it by defendant as claimed.

A careful examination of the testimony in the record satisfies us that they did not rely upon any representations which may have been made by the defendant as to the value of this furniture, and we think they exercised their own judgment in the purchase of the same. They carefully went through the house with the defendant and with the witness Rollison, and an inventory made by Rollison appears in the record, and the values of the articles are therein stated. The pianos appear in that inventory as valued at $400 each. The total valuation stated in that inventory, so made by Rollison, was $1,869. They concede that they took this property subject to the amounts due Crowley, Milner & Co. and Weil & Co. of $2,718. It is very evident that the value of this furniture was not the inducement or moving cause of their making this purchase of furniture and taking this lease from the defendant of the premises. The real object or purpose which they had in view was the lease made with the sister of the defendant, by the terms of which they were to receive from her a rental of $575 a month. It appears that they were to pay a rental to the defendant of $175 per month for the house, and that they turned around and rented to her sister the premises and furniture for this large amount, thus securing, by the terms of the lease, from her for the use of the furniture alone the sum of $400 monthly, or $4,800 yearly rental. This was the real purpose and object of this deal on the part of the complainants. We are satisfied, therefore, that they did not rely upon any representation as to the value of the furniture made to them by the defendant.

2. Did defendant conceal from the complainants the amount due on the piano contracts, and warrant them free and clear? There is a square conflict in the testimony upon this subject. There are, however, certain earmarks attending the transaction which are not denied by complainants, which are very pertinent upon this branch of the case. It appears that on the day of the transfer to them of this property certain insurance policies were turned over to the complainants by the defendant. These covered the furniture, pianos, musical instruments, etc. These pianos were player pianos of the nickel-in-the-slot machine variety, and had been purchased by defendant (one of them in the name of her sister, who had been her manager) of Grinnell Bros.; and one of the insurance policies expressly provided that the loss, if any, was payable to Weil & Co. and Grinnell Bros, as their respective interests might appear. These policies were turned over to the complainant McKenzie, an experienced insurance man, and he testifies that he did not observe that the policy contained the clause referred to. He claims and testifies that he did not discover that these pianos had not been paid for until on the 19th of August, 1911, when he called at the house. And, while he claims that he made some objection when he learned that the pianos had not been paid for, yet he concedes that he received the contracts from the defendant, and gave her a receipt therefor in the following language:

“August 19, 1911. Received of L. Bell two piano contracts from Grinnell Bros. W. McKenzie & Kincaid.”

It appears that these contracts were, by complainant McKenzie, turned over to Beatrice Bell, who was then in charge of the premises under the lease from complainants, and that she made a payment that month on the pianos, as defendant claims, in pursuance of the understanding that Beatrice was to take charge of these pianos and make the payments thereon. It is undisputed that complainant McKenzie had helped take the nickels, amounting to $10 in one instance, out of these pianos, and there was testimony that he then understood that these instruments were paying for themselves, and would continue to do so. Matters ran along with Beatrice in possession, running and managing this rooming house under her lease from the complainants, until the police of the city interfered, and closed the house on September 11, 1911. We are of opinion that had there not been police interference this bill of complaint would never have been filed. As we have said, there is a conflict that cannot be reconciled between the testimony on the part of the complainants and on the part of the defendant on nearly every material question involved. On the part of the defendant it is testified to that upon the house being closed the keys of the premises and these identical piano contracts were turned over to complainant McKenzie — left in his office in his presence by Beatrice. This is denied by complainant McKenzie, who seeks to show that the keys and papers were left upon the desk of the witness Rollison in an adjoining room. We do not think the difference here is important. They occupied adjoining rooms, were in the insurance business together, and both had interested themselves in this matter. Whether any of the furniture not belonging to and reserved by defendant was ever taken by her from the rooming house is also a disputed question. Defendant testified that no articles were taken. Complainant McKenzie, when examined upon cross-examination, is not very clear whether any of the articles sold to complainants had been removed or not. He was asked on cross-examination the following question, and made the following answer:

“Q. Do you claim there were any of the articles that are stated in there (bill of sale) that were gone, that weren’t there?
“A. Well, all the articles put down I suppose are there yet for all I know. I never have seen them since.”

Taking the entire case together, we are of opinion that the complainants have failed to show by any preponderance of evidence that the defendant fraudulently deceived complainants as to the value of the furniture, or that they in any manner relied upon any representations that she may have made with reference to the value thereof. They went into and through the house with their eyes open, and saw what they were purchasing. They were dealing with this defendant at “arm’s length,” and are in no position to claim, in view of the evidence in the case, that they ever relied upon anything but their own judgment in the purchase of this furniture. Neither can we say from the evidence in the case that the defendant concealed from the complainants the amount due on the piano-contracts, or that she-ever warranted them free and clear of liens and incumbrances. Upon these two material and controlling points we are of opinion that the complainants have failed to make a case which entitles them to any equitable relief. This renders it unnecessary for us to consider the third point urged by defendant’s counsel.

So far as the claim under the cross-bill is concerned, we do not think that any breach of the covenant of warranty and against incumbrances contained in the deed from complainants to defendant is the subject of relief upon a cross-bill.

In our opinion the bill of complaint and the cross-bill should both be dismissed, and the case reversed, with costs to the defendant. It is so ordered.

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


author: Ostrander, J.

text:
    CAMPBELL v. RAVEN.
    Corporations — Stock and Stockholders — Nominal Shareholder’s Liability — Estoppel.
    While a subscriber to the capital stock of a corporation is generally bound by his subscription and may not escape liability by transferring his interest to a third' party, no liability was established by evidence that defendant, in an action commenced by the trustee in bankruptcy of a corporation, became a subscriber to the stock before the completion of corporate organization for the purpose of accommodating the promoters, and with the understanding on the part of the other stockholders as well as of defendant that his subscriptions should create no liability, and, merely to provide the three required incorporators, signed the articles of association, resigning immediately thereafter as a director and disposing of his stock to a stockholder, who had not been able to be present at the time of organization, that defendant supposed he had assigned all his stock, but by mistake retained one share, that defendant took no part in any proceedings after the articles were duly filed and no person dealt with the corporation in reliance on his ownership of stock.
    Error to Ottawa; Cross, J.
    Submitted April 25, 1913.
    (Docket No. 86.)
    Decided July 9, 1913.
    Assumpsit by Robert L. Campbell, trustee in bankruptcy of the estate of the Kalamazoo Sample Furniture Company, against John H. Raven to enforce payment of a subscription to stock of the bankrupt. Judgment for defendant. Plaintiff brings error.
    Affirmed.

      Cleland & Heald, for appellant.

      Diekema, Rollen & Ten Cate, for appellee.
   Ostrander, J.

The cause was tried by the court without a jury, and a judgment of no cause of action was entered November 27, 1912, pursuant to certain findings of fact and of law made by the court. Various amendments to these findings were proposed by plaintiff, and later amended findings were made and filed' as follows:

“This is an action of assumpsit by Robert L. Campbell, trustee in bankruptcy of the estate of the Kalamazoo Sample Furniture Company, bankrupt, against John H. Raven, on an alleged subscription for stock in a corporation.
“Henry Brusse, George Van Der Veen, and Percy Ray formed a copartnership under the firm name of the Kalamazoo Sample Furniture Company, the business of which consisted of the sale of furniture at retail at Kalamazoo, Mich. Mr. Brusse and Mr.' Van Der Veen contributed $2,500- each, and Mr. Ray, $1,000, to the capital stock of the partnership.
“In the fall of 1911 the copartners, Mr. Brusse, Mr. Van Der Veen, and Mr. Ray, decided that they needed more capital to conduct a successful business, and they decided to form a corporation and sell stock and thereby increase their capital.
“Mr. Arthur Van Duren, an attorney of Holland, was employed to prepare the articles of association to form the corporation. He went to Kalamazoo, prepared the articles of association, and proceeded to organize the corporation at the store of the Kalamazoo Sample Furniture Company. Henry Brusse and George Van Der Veen were at the store, but Percy Ray was in Detroit, and his presence at the time could not be obtained. Mr. Van Duren informed Mr. Brusse and Mr. Van Der Veen that it would .be necessary to have three persons to sign the articles of association in order to comply with the law.
“The defendant, John H. Raven, who by profession is an auctioneer and was at the time employed by the partnership to conduct auction sales, was in the store and was requested by Mr. Van Duren and Mr. Brusse to sign the articles of association in the place of the absent partner, Percy Ray. Mr. Raven inquired of Mr. Van Duren if by signing the articles of association he would in any manner assume any liability and was informed by Mr. Van Duren that his signing would create no liability against him; that it was a mere matter of form to comply with the law in having three persons sign the articles. Upon this assurance the defendant signed the articles of association. It was understood by all the parties that Mr. Raven was not expected to take any stock or to pay for any stock. It was understood that he was simply to act in the place of Mr. Ray for the sole purpose of having three persons execute the articles to form the corporation. He was not to assume any liability of any kind or nature by signing the articles. The method by which the corporation was formed was ratified by the corporation at the meeting of directors on October 26, 1911. The testimony shows that Arthur Van Duren presented to John H. Raven a waiver of notice of the first meeting of stockholders, which Mr. Raven signed without question.
“The following are the records of the first stockholders’ meeting:
“‘Kalamazoo, Mich., Oct. 26, 1911.
“ ‘Meeting of the stockholders of the Kalamazoo Sample Furniture Company, Incorporated, held this day at the office of the company, 317-319 South Burdick street, Kalamazoo, Michigan.
“ ‘Present, Henry Brusse, George Van Der Veen and John H. Raven. Waiver of notice was filed by all subscribers to stock, for the first meeting of stockholders, and thereupon proceeded to organization.
“ ‘Upon motion Henry Brusse, George Van Der Veen and John H. Raven were elected as directors.
“ ‘George Van Der Veen was chosen as temporary president, and Henry Brusse temporary secretary.
“ ‘Upon motion the board of directors were directed to fill the two vacancies on the board as soon as the additional stock was taken; said vacancies to be so filled until the next regular meeting. Carried.
“ ‘Upon motion the following by-laws were unanimously adopted: [By-laws attached.]
“ ‘Upon motion the secretary and president were directed to issue stock in accordance with the several subscriptions. Carried.
“ ‘Upon motion the board of directors were authorized to purchase the business, stock, etc., of the Kalamazoo Sample Furniture Company, a copartnership, for the sum of $25,000.00. Carried, all stockholders voting therefor.
“ ‘Upon motion the meeting of stockholders adjourned.’

“The records show that a meeting of the board of directors of the corporation was held on October 26, 1911, with Directors Brusse, Van Der Veen and Raven present. The testimony shows that neither Directors Raven nor Brusse were present at this meeting. The recards show the following proceedings at said meeting: •

“ ‘John H. Raven reported having sold a part of his stock to Percy Ray.
“ ‘Upon motion Percy Ray was elected to one of the vacancies on the board of directors. Carried.
“ ‘The following officers were then elected to serve until the next annual meeting: President, George Van Der Veen; vice president, Percy Ray; secretary and treasurer, Henry Brusse; manager, Henry Brusse.
“ ‘Upon motion the president and secretary were authorized and instructed to purchase the business, stock, leases, etc., of the Kalamazoo Sample Furniture Company, for the sum of $25,000.00 as voted by the stockholders. Carried.
“ ‘John H. Raven reported having sold the balance of his stock,' and presented his resignation, which was duly accepted.
“ ‘Upon motion the meeting of directors adjourned.’

“The following is the resignation of John H. Raven, presented to him by Mr. Van Duren, and by Mr. Raven signed without question and without reading:

“ ‘October 26, 1911.
“ ‘To The Board of Directors of the Kalamazoo Sample Furniture Company, Inc.
‘Gentlemen:
“ ‘Having disposed of all stock held by me in your company, I hereby present my resignation as a member of the board of directors, to take immediate effect.
“‘Very truly yours,
“ ‘John H. Raven.’

“The articles as signed specified that the defendant owned five hundred shares of the capital stock. A certificate of stock was prepared which recited that the defendant was the owner of five hundred shares, and he immediately assigned four hundred and ninety-nine shares of the same to Percy Ray, in pursuance of the understanding between those present. He intended to assign all of the shares of stock to Percy Ray and supposed he had done so until he was shown the assignment on the trial of the case. The defendant had no interest in the corporation of any kind and took' no part in the proceedings to organize the same, except to sign his name to such papers as Mr. Van Duren requested him to sign.

“The articles of association were signed on the 18th day of October, 1911, and filed with the secretary of State on the 23d day of October, 1911, and with the county clerk on the 18th day of November, 1911. The assignment of the stock from Mr. Raven to Mr. Ray was made on the 26th day of October, 1911.
“The articles of association recited that the name of the corporation should be the Kalamazoo Sample Furniture Company, and that Henry Brusse was the owner of 1,000 shares, George Van Der Veen the owner of 1,000 shares and John H. Raven the owner of 500 shares of the capital stock, and that the shares were paid for in cash. It was not the intention of any of the parties to pay for any of the stock in cash. The defendant, John H. Raven, has never paid anything in in cash or property to the corporation.
“On the 27th day of November, 1911, an amendment was made to-the articles of association, which amendment recited that the capital stock of the corporation consisted of $25,000, of which $6,000 was paid in in cash and $19,000 in merchandise and being the entire property and good will of the Kalamazoo Sample Furniture Company, a copartnership. To this amendment of the articles of association is an acknowledgment by Percy Ray, certifying that he is one of the organizers of the corporation. Percy Ray testified that he undoubtedly supposed when he signed said acknowledgment that it referred to the organization of the copartnership, because he considered it one and the same business.
“On the 27th day of November, 1911, an assignment was made for -the benefit of the creditors of the Kalamazoo Sample Furniture Company, and after-wards certain creditors filed a petition to have the corporation adjudged a bankrupt, and on the 29th day of December, 1911, the corporation was duly adjudged a bankrupt. Proceedings were also taken to have the copartnership adjudged a bankrupt. Schedules were filed in both cases,' and the schedules set forth the same creditors and also the same assets; that is, the creditors and assets set forth in the schedules in the bankruptcy proceedings against the corporation were identical with those set forth in the bankruptcy proceedings against the copartnership. Upon a petition filed by the creditors, an order was made by the referee in bankruptcy consolidating the two proceedings, and since the entry of said order the two cases have been conducted as one proceeding.
“The testimony fails to show that any credit was extended to the corporation because of the signing of the articles of association by the defendant, and the proof shows conclusively that the defendant never signed the articles of association with any intention of being bound thereby. The proofs also show that a large percentage of the indebtedness was incurred by the partnership and before the corporation was formed- The defendant has never held himself out as a stockholder in the corporation and he has not been guilty of any laches which would estop him from relying upon his defense in this action.
“It is therefore the opinion of the court that a judgment of no cause of action should be and the same hereby is entered against the plaintiff and in favor of the defendant, with costs to be taxed.”

Plaintiff excepted to certain of the findings of fact and to the final conclusion of law, but the grounds of these exceptions are not apparent. As to the findings of fact, it is not asserted that they are not supported hy testimony; and, as to the conclusion of law, it is not asserted that it and the judgment are not supported by the findings of fact. Errors are assigned upon exceptions to rulings admitting and rejecting testimony, upon the refusal to make certain amendments to the findings, and upon the conclusion that a judgment for defendant ought to be entered. One of the amendments to the findings proposed by plaintiff and refused was the following:

“The said defendant, John H. Raven, signed the articles of association of said corporation, agreeing to take 500 shares of the stock of said corporation Of the par value of $10 per share, amounting to $5,000. It is therefore the opinion of the court that a judgment of $5,000, with interest from the 26th.day of October, 1912, at the rate of 5 per cent, per annum, should be, and the same hereby is, entered against the defendant, John H. Raven, and in favor of the plaintiff, Robert^ L. Campbell, trustee in bankruptcy of the estate of the Kalamazoo Sample Furniture Company, bankrupt.”

The exception to this refusal and the assignment of error based thereon raise the principal and, if decided favorably to defendant, the only question to be considered.

That the judgment is right is a necessary conclusion, whether we'consider only the facts found by the court or the facts found and various proposed amendments thereto, which are supported by undisputed testimony. Plaintiff is contending that the controlling fact, from which the liability of defendant, Raven, to pay the par value of the shares is inevitable, is the fact that he deliberately, however mistaken as to the effect, signed the original articles of corporate association as a subscriber for shares.

We recognize the general rule that one who subscribes in the articles of association for shares of stock of a corporation is bound by his subscription. St. Johns Manfg. Co. v. Munger, 106 Mich. 90 (64 N. W. 3, 29 L. R. A. 63, 58 Am. St. Rep. 468); Peninsular Sav. Bank v. Stove Polish Co., 105 Mich. 535 (63 N. W. 514). See Foote v. Greilick, 166 Mich. 636 (132 N. W. 473); Union City Lumber Co. v. Railroad Co., 170 Mich. 205 (136 N. W. 463).

But in the instant case the undisputed facts are that defendant, Raven, while acting deliberately enough, acted with the purpose of accommodating the real parties in interest; himself supposing and they supposing that he had and would have no interest in the corporation. He assumed, for the convenience of the interested parties, to act in the place of Ray, but in his own name. No one considered that his formal subscription bound him and that in fact contract relations were established with him. Quite the contrary. Before the corporation was authorized to do business (2 Comp. Laws, §7045), Raven had, pursuant to the original understanding, assigned his stock, withdrawn from the board of directors, and, so far as was possible, eliminated himself from apparent interest in the concern. Nine days after the articles were filed with the county clerk, amended .articles, which • were in fact substituted articles of association, were prepared, in which not Raven, but Ray, the man for whom, in the original organization, Raven had been substituted, appeared by recital as one of the organizers, and in which, too, the real terms of the organization were set out. It is not made to appear that any one dealt with the corporation during the interim or that credit was ever extended to it while Raven was apparently a shareholder. In short, the risk which Raven undoubtedly ran of corporate liability incurred while he was apparently a shareholder was escaped without injury. The case is a peculiar one, standing upon its own particular facts.

The judgment is affirmed.

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