text:
    BACON v. WALDEN.
    1. Res Judicata — Conolusiveness — Judgments — Injunction— Waters and Watercourses.
    Where an injunction was granted in a suit to determine the right to maintain a dam at the outlet of Walloon Lake, to which cause defendant was not a party, although he owned property which was affected by the decree, he was not concluded by the decree of the court.
    2. Waters and Watercourses — Lakes—Dams—Riparian Rights —Injunction.

      Held, that conflicting evidence relative to the height of a dam sustained a decree determining that the dam of defendant caused the lake to rise above the point at which he was entitled to maintain it.
    Appeal from Charlevoix; Lamb, J., presiding.
    Submitted January 27, 1915.
    (Docket No. 60.)
    Decided June 7, 1915.
    Bill by Henry Bacon and others against Samuel D. Walden for an injunction. From a decree for defendant, both parties appeal.
    Affirmed.

      Harris & Ruegsegger, for complainants.

      Halstead & Halstead, for defendant.
   Steere, J.

Complainants, riparian owners of certain particularly described lands in the counties of Emmet and Charlevoix bordering upon Walloon lake, filed this bill in the circuit court for the county of Charlevoix, in chancery, to secure a judicial determination that the natural level of said Walloon lake at its outlet is the original floor of the so-called Mc-Manus dam, and to obtain a perpetual injunction restraining defendant from impounding the waters of said lake to a higher level, which was causing more or less damage to the lands of complainants by flooding.

The suit was heard upon pleadings, and proofs taken in open court, in July, 1913, and resulted in the entry in that court of a decree establishing the water level at a point ten inches below the level of the dam as maintained by defendant at the commencement of the suit. About two months subsequent to the hearing, defendant Walden departed this life. The suit was duly revived and an appeal taken to this court in the name of his administrator. Complainants thereafter took a cross-appeal.

Walloon (formerly Bear) lake is an attractive body of water situated in both Charlevoix and Emmet counties, and is irregular in outline, consisting of two connected parts or arms. It lies in an elevated basin about 80 feet above the level of Lake Michigan, near and to the south of Little Traverse Bay, surrounded by rugged hills, has a comparatively limited tributary watershed, the extent of its drainage area being about 42 square miles. It is fed principally by springs and rainfall, a number of small streams also emptying into it. The larger arm is about 12 miles long with an average width of 1% miles, while the northerly and smaller arm is about 3 %x% miles in extent. The outlet is at its southeastern extremity, where it empties into Bear creek (or river), through which, curving to the north, its waters meander into Little Traverse bay at Petoskey, some 8 miles distant. The location, beauty, and attractive environments of this lake are such that since about the year 1875 it has been recognized and. more or less frequented as a summer resort for health and pleasure, assuming increasing importance in that respect. To that end private cottages, boathouses, and docks have been built at places along its shores, while craft to navigate its waters and places for public accommodation and entertainment have been provided. So far as indicated the great, if not the only, disturbing element to the peace and pleasure of those who dwelt or resorted there was the level of this lake which, either through natural causes or by the indústry of man, has at times risen and fallen, thereby contracting and expanding its littoral outlines to the serious confusion and inconvenience of those who sought to dwell upon its shores. This has been ascribed by parties affected to the erection and manipulation of a dam, or dams, at the outlet of the lake at the head of Bear creek, by those owning or controlling the shore at that point, from which has resulted contention and litigation since 1902. The suit of Hass and 17 other shore owners, with summer homes upon the lake, against McManus and associates, owning and controlling the so-called McManus dam, extended over a period of about 7 years and was finally decided by this court in May, 1910. Hass v. McManus, 161 Mich. 372 (126 N. W. 462). A comparison of the ample records in that case and this discloses that descriptively and historically they cover the same ground up to the time of trial of the former suit, and reference may be made to that opinion for a general outline of the situation up to that date. There as here the issues involved were changes in the level of the lake, and their causes. In that litigation was involved also the question of manipulation of the level by defendants in the use of flashboards to regulate the overflow of their dam.

After the Hass Case was finally decided in this eourt, the use of all flashboards was abandoned, and in the summer of 1910, McManus proceeded to repair and reconstruct the dam, changing it to a flume giving steady outflow, and used the sill of the old dam for the sill of the flume in compliance with the decision as claimed by complainants, although defendant denies that the level of the old sill as then found was retained. Following this, whatever the cause may have been, the level of Walloon lake fell materially and increasing complaints of low water were made. The evidence produced by defendant disclosed that the water lowered about 19 inches that season, leaving a margin around the lake, which-had before been always covered by water, bare to a width varying from 30 to 100 feet, and the last' condition of those who dwelt upon its shores was worse than the first. This resulted in a suit, begun in Charlevoix circuit court in chancery early in the summer of 1911, by Henry S. Jordan and 42 other complainants against McManus and others to compel a reconstruction of the dam which would raise the level of the lake 18 inches above the then level of the dam or flume. This- suit progressed to a hearing, but was settled before the hearing was concluded, and dismissed by stipulation; Walden, defendant in the present case, at that time purchasing from McManus and associates the land upon which the dam was located at the outlet of the lake for $5,000. Shortly thereafter, having first obtained written consent from all complainants in the Hass Case, defendant, aided by his associates, constructed, with concrete, part of the present flume, raising its level 26 inches above the sill of the McManus dam, retaining at that time the original width of 14 feet, and completed it the following spring by extending the sill 21 feet, making a flume 35 feet wide.

Claiming that defendant by this change had raised the'waters of the lake from 26 to 30 inches above' the natural level and flooded their lands, complainants filed this bill in July, 1912. In connection with the hearing an inspection of conditions at and around the lake was made by the court for a better understanding of the testimony. Thereafter a decision was filed and decree rendered requiring the sill of the dam or flume as then constructed to be lowered 10 inches within the original 14 feet width, but determining that the 21 feet extension with all other parts and conditions of the dam, both in front and below, should be maintained and remain the same as they existed at the time of taking evidence in the case.

It is urged by complainants that the Hass-Mc-Manus Case is a conclusive adjudication of the natural level of the lake at its outlet and directly binding upon defendant Walden, he being in privity with parties to the action in respect to the subject-matter of the litigation, as purchaser of the outlet of the lake from the defendants in that case.

Had the injunction decreed in the Hass Case been made unequivocally and irrevocably perpetual, that decision might have foreclosed defendant in this case, but it was not. Although the decree which followed that opinion enjoined defendants from again raising the dam by flashboards or otherwise above the level to which it was directed to be abated, and from allowing the same to get out of repair so as to permit water to escape from Walloon lake at a lower level than the plank flooring of the dam so as to affect the level of the lake, yet, in harmony with suggestions in the concluding paragraph of the opinion, the injunction was not made absolute beyond the possibility of subsequent amicable arrangement between the parties litigant, as appears by the following provision in the decree:

“Their heirs or assigns, unless and except the same .be done by and with the express consent, in writing, of the said complainants, or their respective heirs, legal representatives, or assigns, and in such manner as may serve best to maintain a level of the water in said lake during the summer months without interfering with the rights of defendants and others entitled to the overflow of said lake.”

For a better understanding of the situation it may be stated that, while properly the sole defendant in this suit as owner of the land at the outlet and legally responsible for the change, Walden’s interest and activities were in co-operation with and supported by others, in what was claimed to.be an effort,to ascertain and restore the natural level of the lake. He had a summer home there and held land as trustee for others. After settlement of the Jordan-McManus Case and purchase of the outlet by him, he and his associates, before taking any steps to change the outlet, secured the services of a surveyor and two experts, Professor Hobbs of the Michigan University and State Geologist Allen, to investigate and advise them as to the natural level. Being advised by them that the dam should be raised, and to what extent, Walden then obtained consent in writing signed by the 18 complainants in the Hass-McManus Case, dated September 1, 1911, expressly waiving and annulling to the full extent authorized by said decree its provisions restraining elevation of the outlet, distinctly stating their consent as follows:

“We, the undersigned, do hereby consent that the dam or flume at the outlet of Walloon Lake be so far altered as to allow the waters of said lake to be raised to a level of 18 inches above the level to which they are raised or maintained by the dam or flume now in place, or be raised to such other height or level as may, by any competent authority, judicial or otherwise, be determined to be the natural level of the waters of said lake.”

Defendant was not a party to that suit and was not as a matter of law affected or bound by the decree rendered in it, except as an adjudication upon some question raised in the case might in a similar suit to which he was a party prove a precedent. He had, however, a summer home upon its shore and owned lands bordering on the lake so that he was, in common with all shore owners, as a matter of fact, affected by compliance with the injunction on the part of those bound by it when it resulted in a material and permanent subsidence of the level of the lake, as we are convinced the trial court rightly found that it did. The Jordan-McManus suit brought by 42 of those affected, including defendant, was begun asking relief from that result and an elevation of the reconstructed dam to raise the water 18 inches. This was resisted. Meetings were held, in which leading citizens of Petoskey, including members of its common council, participated in an effort to adjust this water question and eliminate the friction which had arisen from it. What effect this had is a matter of inference, but the suit was finally settled and dismissed. The terms of the settlement were not in writing and are not in evidence, but it is shown that defendant here bought of defendants in that case the property impressed with the injunction and thereby, as to that property, became in privity with and subject to the restraint imposed on his grantors, at the same time acquiring the same right they had to obtain relief from the injunction and to thereafter alter his dam upon the property which he had pur? chased, by and with the express consent in writing of the complainants in that suit, “in such manner as may serve best to maintain a level of the water in said lake during the summer months without interfering with the rights of defendants and others entitled to the overflow of said lake.” This is what he claims to have done, after obtaining such consent in writing. Under such circumstances it cannot be said that in another suit by other parties with other testimony, though relating to the same subject-matter, defendant is bound, and precluded from his defense by the former decision, even though upon the trial similar facts raising similar questions of law might render the former decision more or less of a controlling precedent upon certain points involved. In the former case the court did not determine conclusively the natural average level of the waters of the lake, but from data furnished and testimony then given determined comparative levels of the Olds and McManus dams, affirming the decree of the lower court against artificially holding and raising and then lowering the water at pleasure with dashboards, and requiring repairs to be made upon the existing dam, but reversed the decree in so far as it required defendants to maintain any structure above -or higher than the plank flooring of the then present dam. The artificial work done at the outlet and use of flash-boards to increase the constancy of flow in the stream, at the same time disturbing the level of the •lake, had obscured the question of the natural level, and left an uncertainty as to the result of their discontinuance which led to a suggestion at the conclusion of the opinion and a provision in the decree relative to relief from the injunction by consent of complainants. As the matter is now presented, in view of former manipulation by flashboards, and subsequent developments, we do not think the door was closed by that decision to an investigation of the true and actual level of this lake to ascertain as near as possible where with reference to it the overflow of this dam or flume may be maintained as between ■these - litigants.

In this case as in the Hass Case counsel do not disagree as to applicable rules of law, and the controversy is upon questions of fact, although here no question of -the rights of a downstream proprietor to use and enjoyment of passing water is involved. While defendant owned the land upon which is located the outlet of the lake and head of the river, like complainants’, his interest in the matter was as a shore owner on the lake, and his work at the outlet was directed to maintaining what he claimed to be the- proper lake level.

The trial court recognized and rightly held that defendant was precluded by prescription from questioning any rights which complainants had obtained through long-continued open and notorious maintenance and user of the Olds dam, as constructed in 1889, without flashboards, and continued at .substantially the same level by its successor, in so far as the Olds dam, as constructed, had any effect upon the lake level, one season with another, saying in part:

“If the level of the water was affected at all by the 01ds_ dam, as constructed, and if the McManus dam continued that effect, in whole or in part, to that extent rights have become established and the parties hereto have a right to insist upon them and are bound by them, whether that is the natural level or otherwise.”

During the 11 years the Olds dam remained, whatever effect it may have had, there does not appear to have been abnormal conditions of the lake level to cause discontent, nor complaint of high or low water, unless affected by the use of flashboards. The Mc-Manus dam was built 16 feet nearer the lake, equipped with three flashboard openings, the evidence being, and the trial court finding, that its sill was placed on a level with the sill of the Olds dam; but from the testimony in the present case taken as a whole the court also found that the opportunity for water to pass and actual outlet of the lake was nevertheless materially increased and deepened, except as it was thereafter approximately held to the effect of the Olds dam by flashboards. From the evidence in this record it is difficult to reach any other conclusion.

While it was charged in the Hass Case that the lake was being lowered, the chief complaint was of the inconvenience and damage resulting from “irregularity in the level of the waters of said lake, caused by the adding and removal of barriers.” The testimony is conclusive that when, in 1910, McManus removed the dam, which was equipped to add and remove barriers, and reconstructed it as a constant concrete flume, on the level of the old sill, the lake fell to an unprecedented low level, resulting in a recession of the water from its old shore lines as it had never' done before. McManus himself testified that when he first built his dam he built a brakewater from the outlet along the lake shore for 500 feet, varying, according to the shore line, from 4 to 25 feet out in the lake from the shore water line, alongside of which it was shown that launches drawing 15 inches could usually tie up, but after he built the concrete flume the water line of the lake lacked 15 feet of reaching to the brakewater. This demonstration of lower level directly adjacent to the outlet was duplicated at many places around the lake where shoals appeared and boathouses, brakewaters, boat landings, etc., were left in shallow water or inland, while the larger boats engaged in transportation of passengers and freight were unable to make customary landings at certain wharves, encountered shoals and “dragged mud” in the narrows where they had freely navigated, with abundant water, for years previous. Numerous witnesses, familiar with the lake and its outlines for many years, as far back as 1876, testified positively and with convincing circumstances that the waters had never, since they knew the lake, been so low before. The long and detailed story of the cry of distress, which went up around those shores following the construction of the Mc-Manus concrete flume in 1910, settling down to the Jordan-McManus suit, in 1911, seems to fully justify the following conclusion of the trial court:

“I am satisfied, in view of the testimony, and after a physical examination of conditions at and around the lake and the conditions of the bottom of the lake near the shores, the low water in the years 1910 and 1911 was not a natural normal low water, nor was it such a condition of low water as would result from the use and operation of the ‘Olds dam’ as constructed and used from 1889 to 1900. This condition of low water, during those years, was the natural result of a physical fact or condition, viz., the stripping of the dam to the sill and the lowering of the outlet at the down river end and cleaning out in front of the flume causing a stronger current of water by a large increase of the draught.”

Whether that done to remedy this condition was overdone, and if so to what extent, are the important questions of fact most clearly debatable and difficult to determine. We think the learned chancellor, who heard the case, rightly adopted the Olds dam, as and when constructed, for the starting point and its effect, if any, on the level of the lake as the rule by which to seek the level to which these parties are bound and to which they are entitled. It is evident, as the court stated:

“With the radical change of conditions wrought by time and the elements, aided by man in careful pursuit of his own interest, to now determine with any degree of nicety the actual natural level of the lake is beyond the range of possibility.”

Neither would that if ascertained, though helpful in reaching conclusions, be the true test. Neither are the conclusions of the learned geologists, who figured down through the ages from the young world’s early dawn to the lake as they found it in 1911, and point out where its natural level should be, though interesting and helpful, conclusive as to where, by the test of the Olds dam and the facts shown in that connection, these parties are entitled to have it maintained, as near as may be. We are well satisfied the evidence preponderates in support of the conclusion reached by the trial court, that the effect of the Walden dam at the height constructed and as maintained impounds the waters of the lake for longer periods of time and to a greater extent from one season to another than would or did the Olds dam as constructed and maintained without manipulation, and that to produce as near as may be a like effect there should be a relative reduction.

To review the lengthy conflicting testimony with which the respective sides seek to sustain their contentions would be of no general interest or value. Giving due consideration to the instructive expert evidence, necessarily modified by the physical facts as actually shown, we find from this record no reason to disagree with or disturb the conclusions reached by the learned chancellor who, for a better understanding of the evidence and physical conditions as they actually existed and were testified to, inspected the subject-matter of this litigation and its environments. We think the evidence conclusive that the reconstructed McManus dam drew the level of the lake much below where it had ever previously been, within the knowledge of witnesses, under any condition of the outlet, and are well satisfied that the Walden dam exaggerated it in the opposite direction, and conclude that the extent to which it is directed to be modified is warranted by the evidence.

The decree is affirmed and, both parties having appealed, without costs to either party.

Brooke, C. J., and McAlvay, Kuhn, Stone, Bird, and Moore, JJ., concurred. Ostrander, J., did not sit.


source: Caselaw Access Project

author: Steere, J.

license: Public Domain

text:
    SMITH v. MAXEY.
    1. Trusts — Deeds—Purchaser ■ in Good Faith — Consideration—• Agency.
    One who in good faith and for a valuable consideration purchases lands from an agent or trustee, in whose name title vested, in ignorance of any trust or obligation resting upon the grantor, as for example not to make a conveyance until he paid the' principal in the transaction an agreed consideration, will be protected in his purchase. He is entitled to rely on the apparent authority with which the agent is vested.
    2. Principal and Agent — Authority—Trustee. ■
    Third parties are entitled to deal with an agent in pursuance of the apparent authority with which he is vested by his principal, irrespective of any secret limitations and restrictions of which they may be ignorant; the mutual rights and liabilities depend upon' the apparent scope of the agent’s authority. '
    3. Trusts — Constructive Trust — Agency.
    Upon testimony tending to show that defendant undertook to organize a ‘lumber corporation which would erect a mill and lumber plant on certain lands, which complainant had conveyed by absolute deed to his agent, a third party, though upon express restrictions as to payment of the price to the owner; that having found a buyer defendant secured a conveyance from the agent to buyer purporting to be a gift from complainant, who, in fact, had not so authorized; that defendant secured the payment of $9,000 from the last grantee to himself, held, in a suit to impress a trust upon the proceeds of the property, that complainant’s action in placing the title in his agent’s name, giving the latter apparent authority to convey the lands, estopped him from questioning the right of defendant to the fund: evidence also held, to show want of notice to defendant or his customer of a land contract existing between the principal and agent whereby the sum of $10,000 was to be paid to the complainant before transferring title to a third party.
    4. Same — Following Trust Fund.
    A tona fide purchaser of land from a trustee or agent without notice of any trust or restrictions upon the agent’s authority takes the property free from any obligation to account to the principal or beneficiary.
    5. Same — Consideration.
    A valuable consideration, in a legal sense, may consist in some right, interest, profit or benefit accruing to one party or some forbearance, loss, or responsibility given, suffered or undertaken by the other: it may be other than the actual payment of money and may consist of acts to be done after the conveyance.
    6. Evidence — Parol Evidence Rule — Consideration.
    Parol evidence is admissible to show the actual consideration of a deed which contained a recital that it was for one dollar.

    Appeal from Wayne; Murphy, J.
    Submitted October 7, 1914.
    (Docket No. 12.)
    Decided June 7, 1915.
    Rehearing denied October 29, 1915.
    Bill by Samuel L. Smith against John O. Maxey for an accounting. From a decree for complainant, defendant appeals.
    Reversed.
    /. O. Murfin, for complainant.

      Joseph J. O’Connor (William P. Belden, of counsel), for defendant.

       The question of parol evidence as to consideration of a deed is fully discussed in notes in 20 L. R. A. 101, 25 L. R. A. (N. S.) 1194; see, also, note in 68 L. R. A. 928.

   Steere, J.

Complainant filed this bill in the circuit court for the county of Wayne, in chancery, praying for an accounting by defendant as a trustee ex maleficio; the primary purpose of said bill being to impress a trust in behalf of complainant upon the sum of $9,000 claimed to be in possession of defendant as the proceeds of a sale of certain land, title to which is charged to have been obtained from complainant without compensation, through fraud, misrepresentation, and betrayal of trust. Avoiding matters most seriously in controversy, and following closely the well-sustained findings of fact painstakingly extracted from this voluminous record by the learned chancellor who heard the case, a general history of the events leading up to this litigation, essential to an understanding of the issues, is as follows:

Before and at the time of the transactions in question defendant was a resident of the village of L’Anse, in Baraga county, and complainant resided in the city of Detroit. Complainant held in his name, both in individual capacity and as trustee for others, title to various parcels of land in and around L’Anse, the management of which was intrusted to one William L. Mason, an attorney residing and practicing in said village. Complainant had held the lands for many years, and, prior to its care being intrusted to William L. Mason, the latter’s father had acted in the same capacity for complainant in affairs connected with his land holdings in that part of the country.

Amongst other activities, defendant had interested himself in timber lands in the vicinity of L’Anse, and during the winter of 1910-11 held under option several thousand • acres with a view to purchasing and lumbering them. In connection with others he proposed and planned to organize a company to take over these lands and erect a mill in the village of L’Anse to manufacture into lumber the logs cut therefrom. To that end he and his associates organized, on March' 16, 1911, the L’Anse Bay Lumber Company. Preliminary to and in connection with the project, public interest was aroused, and meetings of citizens were held in the town hall of L’Anse looking to public support and co-operation in promoting and financing the same, at which the advantages to that locality from the erection and operation of a mill were presented and urged; the matter being a subject of general discussion in that community. At some of these meetings, and at other times and places, William L. Mason stated that the interests which he represented in the village would donate a site for such a mill as was proposed. The details of those representations are somewhat in dispute, but it is clearly shown that such overtures and assertions were generally and freely made by Mason.

Upon February 6, 1911, while this matter was rife, and at a time when Mason was confined to his home by illness, defendant, accompanied by two gentlemen who expected with others to be subscribers for stock in the proposed company, and by their attorney, called upon Mr. Mason and discussed the project, at which conference he clearly stated to them that the Smith interests, so called, were ready to and would, through him, donate a site proposed for the mill located on the bay shore, known as lot 3, section 5, town 50 N., range 33 W. Whatever uncertainties had previously existed as to his overtures, he there distinctly told these parties that in his proposal to furnish a mill site for the company, which they intended to form, he represented and was acting for complainant. Defendant and his associates (including Mason himself) thereafter proceeded with their promotion, assuming that Mason had authority to make and carry this offer into execution. Mason, however, never paid his stock subscription and after-wards dropped out of the company.

It is the contention of complainant that in making such representations and proposals Mason acted absolutely without authority. At the time of these transactions he was prominent in local matters, in good standing, and had the confidence of both complainant and the community in which he resided, and was at first active in promoting the L’Anse Bay Lumber Company, although, before trial of this suit, following disclosures of a serious nature, he disappeared from L’Anse under a cloud, concealing his whereabouts, if alive, and his testimony could not, therefore, be obtained. It developed, also, that he had continuously grossly misrepresented the situation as to the mill site project to complainant, who was in Detroit, leading him to believe that it was proposed to purchase the site for the sum of $10,000, the price complainant wanted for it.

Some time in the summer of 1911 a tentative agreement was entered into between complainant and Mason, who had proposed to himself purchase on contract numerous descriptions of complainant’s property in that locality, including lot 3, for $60,000, of which $10,000 was to be paid down and time given for the balance — lot 3 to be released from the contract and' conveyed as soon as the first payment of $10,000 was made. This lot was claimed to be the most desirable and suitable site for the proposed industry near the village, though defendant and his associates contended that independent of the interests of the village others equally good were available. A form of land contract embodying the terms of their agreement, prepared in duplicate and executed by complainant, was sent from Detroit to the .National Bank of L’Anse by complainant’s Detroit attorney, accompanied by a letter of instruction to the bank, dated September 6, 1911, directing that, when Mason signed the same and paid $10,000 thereon, one copy should be delivered to him and the other returned to Smith with the payment. Mason failed to perform on his part, and the papers remained in possession of the bank until the spring of 1913. Defendant was president of said bank.

While this matter was still under negotiation, Mason went to Detroit, near the 1st of September, 1911, and had a conference with complainant and his two sons on the subject, urging the desirability of a deed to himself of said lot 3 being put in his hands, that he might have it available at any time, to close a sale then pending, should a consummation be reached. As the result of this interview and a series of letters between Mason and complainant, in which Mason emphasized the progress and anticipated benefits of the mill project, and pending deals with the “mill people,” complainant executed and delivered to Mason a full-covenant warranty, deed of' said lot 3, with a stated consideration therein of $1, and in return, as stipulated, Mason, on September 22, 1911, gave complainant a written agreement obligating himself neither to convey the property nor record said deed to him until his note to Smith for $10,000 had been paid, as provided for in the prior land contract to him, at the same time also giving complainant said note, payable within 20 days after September 22, 1911, which note was later renewed but never paid. The testimony abundantly shows that during-all these transactions, and almost until the time Mason disappeared from L’Anse, Smith believed that $10,000 would be paid for lot 3 before Mason parted with the title.

Having thus obtained a deed of the property to himself, Mason, in direct violation of his trust and of the written conditions under which he held the deed, proceeded forthwith to carry out the assurances which he had made to the promoters of the L’Anse Bay Lumber Company, and on September 30, 1911, deeded to defendant Maxey said lot 3, for the stated consideration of $1, no actual consideration then passing; complainant’s deed to Mason and Mason’s deed to defendant being recorded, on October 21, 1911, in the office of the register of deeds of Baraga county.

The promotion and financing of the L’Anse Bay Lumber .Company was not as successful as had been hoped, and defendant devoted considerable time during the winter of 1911-12 to visiting different localities in an effort to interest capital in it. Finally, early in 1912, he attracted to the project Marshall Butters, of Chicago, who, with' various associates, consented to investigate a proposition to purchase outright the assets of the L’Anse Bay Lumber Company, previously organized. Negotiations to that end were brought to a close May 22, 1912, by the acceptance of certain propositions, the details of which need not here be given, followed by some trouble and delay in the adjustment of various details, among which was the amount claimed by defendant and others for promoting the L’Anse Bay Lumber Company, a greater amount for this being asked than the Marshall Butters people were willing to allow; but the deal was finally closed August 10, 1912. Among the property so purchased and conveyed to the Marshall Butters Lumber Company, the organization formed to take over the enterprise, was the lot 3 in question. Maxey did not deed this to the L’Anse Bay Lumber Company until July 24, 1912, and the L’Anse Bay Lumber Company conveyed it to the Marshall Butters Lumber Company upon the same day; both deeds being recorded on July 30, 1912, and the consideration in each deed being $9,000. For this the Marshall Butters Lumber Company paid $9,000 by a check to “T. D. Tracy, Treas. of L’Anse Bay Lumber Co.” (and cashier of defendant’s bank), who paid the same to Maxey, and this is the money upon which it is sought to impose the trust in behalf of complainant.

It is not claimed that Maxey was a direct trustee of Smith, or that any primary fiduciary relations existed between them; but it is claimed that by reason of Mason’s agency, or- trusteeship, the transaction, considered in its entirety, stamped by operation of law a resulting (or, more properly, constructive) trust on the ultimate proceeds of the sale of this lot by Maxey, a third party to whom it was conveyed by Mason in violation of his trust, so that Smith,. Mason’s cestui que trust, could follow and claim such proceeds. Counsel for complainant plant his suit on the following propositions quoted from 2 Pomeroy’s Eq. Jurisprudence (2d Ed.), § 1048:

“Wherever property, real or personal, which is already impressed with * * * a trust of any kind, express or by operation of law, is conveyed or transferred by the trustee,' not in the course of executing and carrying into effect the terms of express trust, or devolves from a trustee to a third person, who is a mere volunteer, or who is a purchaser with actual or constructive notice of the tfust, then the rule is universal that such heir, devisee, successor, or voluntary transferee, or such purchaser with notice, acquires and holds the property subject to the same trust which before existed, and becomes himself a trustee for the original beneficiary. * * * It is not necessary that such transferee or purchaser should be guilty of positive fraud or actually intend a violation of the trust obligation. It is sufficient that he acquires property upon which a trust is in fact impressed, and that he is not a bona, fide purchaser for a valuable consideration and without notice.”

The concluding qualification in the above statement of the well-settled rule upon which complainant relies is thus more fully elaborated in 39 Cyc. p. 559:

“The right to follow trust property in the hands of a third person, and impress the trust thereon, ceases when the property comes into the hands of one who stands in the position of a bona fide purchaser for value without notice, as where the legal title to the property comes into the hands of one who acquires it for a valuable^ consideration without notice of its trust character, including a purchaser without notice from a purchaser with notice.”

Unquestionably this case turns on whether or not it appears that Maxey took title to this property without notice of its trust character, as between Mason and Smith, and for a valuable consideration. Complainant claims that Maxey knew, or should have known, the real status of the lot when he took his deed from Mason, that he paid no consideration therefor and realized from it $9,000, for which, as a constructive trustee, he should account. Maxey claims that the valuable consideration which he promised and performed was securing the contemplated industry to locate at L’Anse; that Mason tendered him a deed for a site, showing a good title from Smith, as he had often asserted he could and would, and Maxey accepted the same without suspicion, in good faith, proceeding thereupon to perform on his part, ultimately deeding the lot to the company he promoted, which sold it, with all its other assets, to the company which built the mill; and that the L’Anse Bay Lumber Company paid him the $9,000 for time devoted to and expenses incurred in its interest.

It is undisputed that no confidential relations existed between Maxey and Smith. They lived the length of the State apart and were not in touch with each other. Smith testified he did not know Maxey, and did not believe he ever saw him. The magnitude of Mason’s perfidy and breach of trust with Smith could have no bearing, unless known to Maxey; and, if unknown, Maxey’s questionable conduct in getting from the Butters Company and absorbing this money by a subterfuge, which is urged and emphasized by complainant, and by which the trial court was apparently largely influenced, cannot operate to attach a constructive trust to what he realized from that source. Evidently each of them was -deceived by and acting upon Mason’s misrepresentations to him. Smith was led to believe that the lumber company, or Mason for it, would pay him $10,000 for the lot; and Maxey, that Smith, or the Smith people, through Mason, would contribute the lot in consideration of the resultant benefits to his or their other holdings in that locality by reason of the proposed industry. Complainant owned practically all the unoccupied land in L’Anse and near 1,000 acres close by.

As it ultimately developed, the initial mischief in this case was done by Smith executing and delivering to his agent, Mason, a full-covenant warranty deed of this property, on its face conveying absolute title, thus apparently clothing him with unlimited ownership and control, and the right to dispose of it, at any time to any one for whatever consideration he chose, only limiting his authority by separate, private written instructions, of which there is not a scintilla of evidence that Maxey or any other person in L’Anse had any knowledge whatever. Had Smith sent his deed to the bank, to be delivered to Mason on payment of what he demanded, as he previously did the land contract, it would have been just as available for Mason to show the “mill people” he could deliver a good title when they were ready to perform, if his representations to Smith were true; yet, though he apparently trusted in and believed Mason and sent him the deed direct, taking Mason’s note for the purchase price, with a private promise not to use the deed until the note was paid, he now urges that Maxey should not have believed Mason and was not deceived by him, although fortified by the convincing muniments of title with which he had equipped him. Smith did in law pass a legal title to Mason.

“It is a well-settled rule of law that, if the grantor does not intend that his deed shall take effect until some condition is performed, or the happening of some future event-, he should either keep it himself, or leave it with some other person as an escrow to be delivered at the proper time. That it should operate as an escrow it is necessary that the delivery should be made to a stranger, and not to the party; for if one makes a deed and delivers it to the party, to whom it is made as an escrow, upon certain conditions, in such case, let the form of the words be whatever it may, the delivery is absolute, and the deed shall take effect presently.” Dawson v. Hall, 2 Mich. 390.

Mason and Maxey, though acquainted and fellow townsmen, and both working in common with other citizens of that village to secure the industry, were not intimate, nor scarcely on friendly terms. They were opposed politically and rivals in other ways, were not in each other’s confidence, and Maxey had even expressed some doubts as to the. value of Mason’s assurances that he could get a deed of this lot as he had proposed, though it is the testimony of various witnesses that it was the general talk and common understanding that he would furnish a deed, just as he apparently did. His own law partner, testified in part as follows:

“Q. Did you ever hear Mason say upon what terms this site was to be given?
“A. Yes; the site was to be given for the erection of a sawmill that would employ 30 or 40 men. It was to be given away in consideration of Mr. Maxey bringing a mill into town. Such terms were made by Mr. Mason a great many times. We talked this over ourselves and with others very often from the time that the first letter was written until after the mill was erected.”

After the L’Anse Bay Lumber ■ Company was organized, with many small stockholders in the village, the people of Baraga, a neighboring village on L’Anse bay, offered a site as an inducement for the company to locate there, and meetings were held at L’Anse to discuss the subject. Of one of these meetings, at which Mason was present, a witness named Sicotte testifies:

“The talk was principally about the site, and Mr. Mason again said that a site would be donated, and that he would get busy at once and see that the deed was here in about a week or ten days, if I remember right. Mr. Mason said it would be without any cost to the people or the L’Anse Bay Lumber Company. At that meeting there was general talk about the plant, but the main object was to find out what Mason would do regarding the site. Every business man at L’Anse felt that something had to be done, and done quick.”

It was not long after this that Mason delivered the deeds to Maxey, enjoining him to “go out and make good.” This court has quoted with approval, in Marx v. King, 162 Mich. 258 (127 N. W. 341), the following from 31 Cyc. p. 1331, which appears particularly pertinent' to the facts involved here:

“While as between the principal and the agent the scope of the latter’s authority is that authority which” is actually conferred upon him by his principal, which may be limited by secret instructions and restrictions, such instructions and restrictions do not affect third persons ignorant thereof; and as between the principal and third persons the mutual rights and liabilities are governed by the apparent scope of the agent’s authority, which is that authority which the principal has held the agent out as possessing, or which he has permitted the agent to represent that he possesses, and which the principal is estopped to deny. The apparent authority so far as third persons are concerned is the real authority, and when a third person has ascertained the apparent authority with which the principal has clothed the agent,' he is under no further obligation to inquire into the agent’s actual authority.”

It is contended ih behalf of complainant that the land contract from Smith to'Mason, sent by Smith’s attorney to the Bank of L’Anse, of which Tracy, treasurer of the L’Anse Bay Lumber Company, was cashier and Maxey president and principal owner, furnished such information of the situation as to put Maxey on inquiry, and therefore amounted to such notice as to preclude him from successfully interposing the claim of an innocent purchaser in good faith. Maxey denies knowledge of this contract; but, assuming that he did know, we are unable to give it the inferential force for which complainant contends. Had he read the contract and instructions to the bank, he would have learned that upon payment by Mason of $10,000 and signing the duplicates the bank was directed to deliver to him one copy and return the other with the payment; that the contract was for a sale of numerous descriptions of the Smith lands, including lot 3, to Mason for $60,000, one-sixth to be paid down and the remaining $50,000 on time. Nothing was indicated as to the price or value of any particular description. Lot 3, which Mason had promised for the mill site, was to be deeded, at his election, at any time after the payment was made and contract delivered. This contract was executed September 22, 1911, and subsequently sent from Detroit to the bank in L’Anse, where it remained. Mason’s deed to Maxey is dated September 30, 1911. Just when it was delivered to Maxey is not shown, but it was recorded October 21, 1911. Maxey had no knowledge that Smith had asked or placed any special price or value on this particular lot 3, and did know that Smith’s agent had freely and publicly asserted it would be given for a mill site in consideration of stimulated market and increased values which would result to Smith’s other holdings, from the contemplated industry. If Smith was anxious for the sale to go through, the industry would make it more probable Mason could perform on his part; if he failed, Smith would yet retain his lands, and the benefits from the new industry would result to him. Mason was Smith’s agent, and apparently in his confidence. Maxey was not. We see nothing in a knowledge of the unperformed contract which would or should lead Maxey to suspect, when Mason confronted him with and delivered to him a perfect title to lot 3, with the injunction to make good, as Mason had, that Mason was defrauding his principal and violating some secret trust.

Maxey testified that he never saw or knew of the contract, and there is no direct testimony of any witness to the contrary. What is proposed with that evidence is to build up inference on inference — to infer from the fact that the contract was sent for delivery to the bank of which he was president that he knew of it, and from the inferred fact that he knew of it that he read it, and from the inferred fact he read it that he knew, or ought to have known, that Smith’s full-covenant warranty deed to Mason was not what it purported to be, and the latter was perpetrating a fraud in deeding the lot to him in violation of a secret trust duty he owed to Smith. We are unable to conclude that complainant has shown defendant knew, or ought to have known, that the apparent authority conferred upon Mason by the deed to him was not what it purported to be.

It is; contended that complainant never received a cent for this property' from any one, and therefore Maxey’s deed is void, and no protection to him for want of valuable consideration. There were no dealings, nor contractual relations, between them. Maxey, as a third party, dealt with Mason on the apparent authority with which his principal had clothed him. Mason, as agent for complainant and in charge of his extensive land holdings in that locality, named the consideration and made the offer. He said to Maxey and others that he and those he represented “figured,” if they could secure such an industry at L’Anse, it would increase the value of their lands near by, and ultimately “the cost wouldn’t amount to anything of giving this land, as they would receive increased value for the balance of their property.” Of certain testimony which defendant was seeking to introduced on this subject at the hearing, complainant’s counsel, said:

“If the object of this testimony is simply to prove that the incoming of a substantial mill would benefit Mr. Smith’s holdings, we will concede upon this record that we hoped and expected that it would.”

The evidence that Maxey was the leading spirit and devoted much time and effort to this promotion, finally securing the industry as stipulated by Mason, is not controverted. A witness named Seavoy testified:

“The Marshall Butters Lumber Company this spring (1913) started operating their mill on the lot in controversy; they broke ground for that mill in September, 1912.”
“A Valuable consideration,’ in a legal sense, may consist either in some right, interest, profit, or benefit accruing to one party, or some forbearance, loss, or responsibility given, suffered, or undertaken by the other.” Words and Phrases, vol. 2, p. 1445.

There can be no question of the rule that extraneous and parol evidence is admissible to show the actual consideration for a conveyance of land independent of the amount or thing stated in the deed by which title passes. In Stanley v. Schwalby, 162 U. S. 255, 16 Sup. Ct. 754, a similar question to that raised here was thus settled in an opinion written by Justice Gray:

“A valuable consideration may be other than the actual payment of money, and may consist of acts to be done after the conveyance. Prewitt v. Wilson, 103 U. S. 22; Hintz v. Metropolitan Bank, 111 U. S. 722, 727 [4 Sup. Ct. 613]; 4 Kent Com. 463; Dart, Vendors (6th Ed.), 1018, 1019. The advantage inuring to the city of San Antonio from the establishment of the military headquarters there was clearly a valuable consideration for the deed of the city to the United States.”

We think it undisputed that by the terms of the agreement between Mason and defendant the conveyance was made for a valuable consideration, and that the stipulated terms were fully observed and performed by the grantee. For the foregoing reasons, we are led to conclude that no constructive trust, as contended for, is shown to have arisen between defendant and complainant.

The decree is therefore reversed, and complainant’s bill dismissed, with costs to defendant.

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