author: Steere, J.

text:
    LANG v. LUNDY.
    1. Corporations — Rights of Stockholders — Ownership of Stock —Number of Holders Required.
    Acquirement by one party of all or practically all tbe stock in a private corporation does not divest it of its legal existence, although by reason of insufficiency in the number of stockholders it became dormant as a corporate entity.
    2. Same — Creditor’s Suits — Bill in Aid of Execution — Evidence — Burden of Proof.
    In an action of replevin involving the validity of an execution levy against a corporation which had become dormant because of the transfer to one holder of all or practically all the stock, the burden of proof was upon the sole stockholder and plaintiff to establish by a preponderance of the evidence that an assignment to him from the corporation of property seized hy the officer under the writ was legal and valid.
    3. Same — Assignment—Stockholders—Officers.
    Where plaintiff became the owner of all the stock in a corporation except a small number of shares held by one party, and thereafter procured the election of his attorney as president, who executed to plaintiff an assignment of the property of the corporation and the attorney had no financial interest in the corporation but was a nominal stockholder, there was not a sufficient transfer of the property of the company to invalidate a levy by a judgment creditor upon the transferred assets.
    4. Estoppel — Assignment—Fraudulf.nt Conveyances.
    Where the owner of substantially all the stock in a corporation wrote to a creditor stating that he was assignee of the property of the company and that he would see that the creditor was not defeated in his rights and caused him to forbear the enforcement of his claim so as to lose rights in the property by reason of plaintiff’s action, and where the stockholder also wrote that he would meet complainant and settle with him, he was estopped in equity from attempting to enforce any alleged rights under an assignment from the corporation to himself of its property.
    5. Same — Equity—Jurisdiction—Remedy at Law.
    In an action of replevin the court is authorized to enforce an estoppel in pais in the nature of an equitable estoppel and it need not be specially pleaded.
    Error to Cass; Des Voignes, J.
    Submitted January 11, 1915.
    (Docket No. 51.)
    Decided April 6, 1915.
    Replevin by Walter W. Lang against Edwin T. .Lundy to recover certain timber and property seized upon an execution. Judgment for defendant on a directed verdict. Plaintiff brings error.
    Affirmed.

      Asa K. Hayden, for appellant.

      Chester E. Cone, for appellee.
   Steere, J.

This action in replevin grew out of a levy by defendant in his official capacity as under-sheriff, made under authority of a process issued in an action brought against the Sheffer Lumber & Timber Company, a corporation, by Francis A. Judie to recover a balance which said company owed him for timber he had sold to it. While Lundy is the nominal defendant by reason of his official action in seizing the lumber, Judie is the real defendant in interest, and ■ the actual issue is between him and plaintiff, Lang, who replevied said lumber claiming title and prior right thereto through an assignment from said company. It is conceded that before the instant case was tried Judie had obtained a judgment against the Sheffer Lumber & Timber Company for a balance due him on timber he had sold it, amounting, with costs, to $902.87. The lumber levied upon was stock manufactured by said company in the course of its business from timber it had purchased from Judie or others for that purpose. The exact date of Judie’s judgment is not disclosed in this record, neither is the nature of the process under which the officer seized the lumber made clear; the court designating it as an execution levy after judgment, and counsel as a seizure under an attachment. Which it was, however, is apparently unimportant, as it is undisputed that a lawful seizure was made if the lumber belonged to said company, and this action is based on the claim that it did not, but was the independent and distinct property of Lang. At the conclusion of the evidence on trial of the instant case, counsel for plaintiff requested a directed verdict in his favor, and counsel for defendant, waiving return of the property, requested a directed verdict against plaintiff and his bondsmen for the conceded amount of Judie’s judgment (which was less than one-fifth of the appraised value of the lumber seized) ; counsel for each side urging that the case involved no material issue of fact for a jury and the court should dispose of the same as a matter of law. A verdict was directed in favor of defendant for $902.87, being the amount of the judgment in Judie v. Sheffer Lumber & Timber Co., to satisfy which the levy in question was made.

The points relied upon by plaintiff, as stated in his counsel’s brief, are:

“I. That the court erred in not instructing a verdict for the plaintiff at the close of the testimony for the following reasons: (1) That the assignment to plaintiff was uncontradicted, valid, and passed the property covered thereby, including the lumber in question, to him; (2) that the defendant could only attack the assignment on the ground that it was fraudulent; or (3) that it was an assignment for the benefit of creditors, and neither defense could be made because they had not been pleaded.
“II. That the court erred in instructing a verdict for the defendant for the same reasons.”

The Sheffer Lumber & Timber Company was organized as a corporation on the 13th of November, 1912, under Act No. 232, Pub. Acts of 1903, with a capital stock of $15,000 divided into 1,500 shares of the par value of $10, of which H. F. Griffin had -890 shares, B. F. Sheffer 600 shares, and Miss M. A. Carney, their stenographer, 10 shares, making the requisite number of persons to incorporate. Its office and place of business were at Kalamazoo, Mich., where it entered upon the business of purchasing timber and manufacturing the same into lumber. The articles of incorporation show that its capital stock was all paid in, consisting of $3,000 in cash and $12,000 in other property, mostly logs and timber. Timber was purchased by the company from various owners in the vicinity of Kalamazoo, and amongst others from Judie, with whom a contract was made shortly after the company was organized, in 1912. About the time of its organization plaintiff loaned said company $3,000 at the solicitation of Griffin, and not long thereafter appears to have become quite actively interested in its affairs. At what date he became a stockholder is not disclosed, but before June 13, 1913, he held all the 1,500 shares of stock of the corporation, except the 10 shares held in the name of Miss Carney, the stenographer, who was one of the original incorporators. H. K. Nicolls, who had charge of the books and looked after the general operations of the company, states that he was employed for that purpose by plaintiff in January, 1913, shortly after the organization of the company. Griffin and Sheffer, two of the three incorporators, and who, together, originally had all but 10 shares of the capital stock, dropped out of the organization and transferred all their stock to plaintiff at some time before June 13, 1913; Griffin disappearing with some money belonging to the company, as plaintiff testified. The dates of their retirement are not disclosed, though the circumstances indicate that their connection with the concern was of comparatively short duration, for Judie and others who sold timber to the company testify to receiving payments from plaintiff by checks of the company signed by him, personally, or as secretary and treasurer, during the early part of 1913, some as early as January, in which month he hired Nicolls to take charge of the books and look after operations, and on April 29, 1913, plaintiff wrote Judie, personally, in answer to a letter addressed to the company urging payment, in part as follows:

“Yours of recent date on hand addressed to the Sheffer Lumber & Timber Company, and will say that as- assignee of this company I am trying to straighten up all matters in an honest, peaceable manner and am now trying to do the same with you. While Mr. Sheffer is not in any way connected with this company he has kindly consented to call on you as soon as possible and come to some mutual agreement satisfactory to you. * * * I do not want you to feel that you are going to be beaten out of a cent as long as I am interested. I am very sorry we have had so much delay but I assure you I am very sorry and it is no fault of mine and will hurry everything along just as fast as I can, and will see that you get everything you have coming.”

On May 29, 1913, Judie wrote plaintiff asking for money due him for logs, and on June 9, 1913, Nichols replied for plaintiff as follows:

“Dr. Lang wishes me to advise you that just as soon as he can, possibly, he will be down to see you and settle up the outstanding account. We are getting our business settled up as fast as possible, and will be sure to call on you in the near future. With kindest personal regards, we remain, very truly yours.
“Sheffer Lumber & Timber Co.,
“By Hugh K. Nicolls.”

Plaintiff’s claim of distinct ownership of and right to replevy the property seized is predicated on an alleged assignment of it made to him by the company on June 14, 1913, at a time when, as he describes it, he was “practically the whole company.” Just at what time Griffin and Sheffer assigned their stock to plaintiff he was unable to say, but he testifies that hoping to “carry on the business to clear some of the money for myself that I had put into it, and I knew that it was necessary to have three stockholders,” he went to an attorney named Grace, who had his office in the Majestic building in Chicago, and asked “if he would take a little stock to make a third party.” Grace testified that, as attorney for plaintiff and to protect his interest, he became a “nominal stockholder” to the extent of 10 shares and accepted the position of president of the company; that he did not then, nor at the time of the trial, know the capital stock of the corporation, when it was organized, never saw its articles of incorporation, did not know what assets it had or what debts it owed, nor whether it was insolvent or not, did not care, and it did not concern him. After Grace accepted the stock, they proceeded to revive the moribund corporation by holding a meeting at which Grace was elected president, Miss Carney vice president, and Lang secretary and treasurer. Thereupon a resolution was at once introduced and unanimously carried authorizing the president to give Lang a note of the corporation for $11,890 and assign the assets of the company to him to secure payment of said note, with full power to sell and dispose of the same “for the purpose of reimbursing himself to the amount of said note and the accrued interest,” reciting that the action was in consideration of moneys loaned from time to time to the Sheffer Lumber & Timber Company to enable it to carry on its business.. On the following day Grace executed said note and assignment accordingly. The assignment was never filed or recorded, and no copy of the resolution or record of these meetings was produced; it being claimed they had been lost.

An annual report of said Sheffer Lumber & Timber Company filed with the secretary of State was made and sworn to by plaintiff purporting to give its condition December 31, 1912. It shows that all the debts owing by the corporation were but a single item of $3,000 unsecured, and assets amounting to $14,500 including $2,500 cash on hand. Lang is shown to have had 1,390 shares of stock, and the officers are given as Grace president, Carney vice president, and Lang secretary-treasurer. The time of filing this document is not disclosed, but its manifest inconsistencies may perhaps be accounted for by it apparently having been sworn to by Lang on the 21st of August, 1913.

The fact that plaintiff acquired ownership of all, or practically all, the stock of the company, did not destroy its legal entity as a corporation, nor divest it of legal title to its property, although it thereby became for the time dormant owing to lack of sufficient members and requisite officers to legally conduct its business as a corporation. Plaintiff later revived it into legal form for corporate activity by adding a dummy stockholder and electing a dummy president. His only suggestion of title and right to the property in question is based upon an assignment obtained through that channel. His counsel well presents the controlling question in the point urged that the assignment to plaintiff was uncontradicted, valid, and passed the property covered thereby, including the lumber in question, to him.

The burden of proof is upon plaintiff to establish by a preponderance of evidence that this assignment is valid and did pass the property to him, as between him and the judgment creditor, Judie. A lack of distinct dates and details in matters peculiarly within his knowledge or available to him cannot be supplied by inferences in his favor; but it is shown without controversy that almost from the beginning he was understood by those dealing with the company to be a member of it, that he hired Nicolls for a responsible position with the company, assumed to do business for it both in its name and his own, fairly justifying the inference that he was an important, responsible, and controlling member of the concern, even advising Judie in April, over his own signature, that he was in control as an assignee, and promising that he would hurry everything along and see that Judie got all that was coming to him. So far as the record discloses, he did all these things without any legal authority emanating from the corporation itself by proper official action and at a time when, according to portions of his own conflicting testimony, he was not an officer, nor even a stockholder, of the lumber company.

Of the corporation and his relations with it, plaintiff testifies in part as follows:

“I couldn’t say how many shares there were. $10 was the par value of them, I think. I think Miss Carney has 10, Grace has 10, the rest I have on assignment, assigned to me. I am practically the whole company. I know nothing about whether the company had cash and timber on hand or not when it was organized. I don’t think there has been any change in the capital stock. As secretary and treasurer, it has been my duty to make reports to the secretary of State, and I have done so. When I made such reports, I had to have knowledge of the condition of the company, and the reports were truthful. * * * I bought no stock. The stock was assigned to me. I got my stock from Sheffer and Griffin. * * * After they had organized and started, I loaned them money. So far as I know, all the stock is paid up. When I made the annual report I made, the company was insolvent. My report will show the insolvency.” (His only report shows but $3,000 indebtedness and assets amounting to $14,500.) “I was acting as secretary and treasurer of the company in January, 1913. I was elected to that position in June, 1913. I did make some checks signing my own name personally, not the Sheffer Lumber & Timber Company, made some checks to individuals in payment and taking security from the company in payment of these deals. * * * If I am not mistaken, I signed checks at that time ‘Sheffer Lumber & Timber Co., W. W. Lang,’ and also ‘Acting Secretary and Treasurer,’ and probably some of them may not have had ‘Acting’ on.”

Plaintiff also stated in one portion of his testimony that he had a chattel mortgage upon the assets of the company to secure money he loaned it, which was never filed, and which his own counsel said at the trial he had not before heard of, but later in his testimony said “it would be better to say” an “assignment” of some “contracts which are not in existence now,” and he did not know where the assignments were. Further testifying, he said:

“I meant, by saying that I was assignee, that owing to the note that I had for $3,000 backed by a mortgage of all- the assets of the company was past due, and I consulted an attorney at the Bank building, the same building I am in, and he advised me to consider that an assignment. I can’t say just when it was that Sheffer and Griffin made an assignment, to me of their stock. It was before the time that Mr. Grace became president. There was no assignment to me or transfer to me to secure the note until Mr. Grace became president.”

The acquisition of practically all stock of this company by plaintiff, thus reducing the stockholders below the minimum number requisite to organize and officer it as a corporation, while it did not dissolve of divest it of the legal title to its property, suspended its powers and the exercise of its franchise rights until the stock was again distributed in good' faith among sufficient owners to meet the statutory requirements, and its powers of corporate activity revived by proper organization and election of officers to manage its business. In the meantime it retained, however, an artificial personality distinct from its stockholders,' and its assets were holden for its lawful debts.

'Just when this corporation reached that condition of suspense -is not shown, and- plaintiff states he does not know. It is fairly inferable that it was before his letter of April 29th, when he- claimed to be in charge as assignee. He continued thereafter to transact business in the name of this dormant corporation as though-it was active and operating with corporate vitality according to law. He could not thereby impose upon it, while in that condition and incapable of corporate action, any indebtedness arising from his management of the business in its name. Owning and controlling this corporation in fact and effect, if not in law, by reason of his ownership of its stock, he proceeded to use its abstract corporate entity as .an instrument to get direct title to its assets against other creditors by nominally, and for that particular purpose, transferring 10 shares to his attorney, electing him president and having him as such sign the assignment asserted here against the levy of a creditor of the corporation upon its property to collect a valid corporate' debt.

“The abstraction of the corporate entity should never be allowed to bar out and pervert the real and obvious truth.” Seymour v. Cemetery Ass’n, 144 N. Y. 333 (39 N. E. 365, 26 L. R. A. 859).

It is obvious that Grace had no actual interest in this corporation as a bona fide stockholder. His only interest or concern in relation to it was as attorney, to assist his client. Beyond that the corporation as such was nothing to him, and he so states. He was but a nominal stockholder and a figurehead president, made so at the behest of his client for the particular purpose of making this assignment to his client, with no thought of the rights or interests of the corporation of which he assumed to be chief officer. However near the proceeding on its face came within the letter of the law, in the spirit of the law it approximated a sham.

The Sheifer Lumber & Timber Company is not, as such, a party to this litigation, and protection of its individual corporate rights is not involved. The contention is between two parties claiming, each against the other, a right as creditors to certain of its assets. Judie as an outside judgment creditor claims under a levy, and Lang, owning practically all its stock and “Practically the whole company,” claims under an assignment from the company. Judie did not, and does not, seek to hold Lang personally liable as the sole owner or principal stockholder of the corporation, nor by reason of the promises made in writing to pay what was due him for timber sold the company. He is seeking to collect it by a levy on the property of the corporation, whose alleged corporate action under Lang’s direction, taken after Judie’s claim was due and payment demanded, is now interposed in Lang’s behalf to defeat the levy. Judie was manifestly pressing his claim and apparently in a position to protect it and enforce payment when Lang wrote him, on April 29th, claiming to be assignee of the company, proposing peaceful methods and forbearance, giving assurance .that Judie would not be beaten out of a cent while Lang was interested, and promising to see that he got everything due him. That Judie relied on these representations and assurances, forbore, changed his conduct, and thereby altered his condition, as subsequently developed, is fairly shown. On May 29th, just a month after receiving that letter, he wrote Lang stating that parties he owed were waiting for their money and urgently asked payment of what was due him for logs. On June 9th a letter, claiming to be at Lang’s dictation, signed “Shelter Lumber & Timber Co., by Hugh K. Nicolls,” advised Judie that Lang would be down as soon as he possibly could and settle his account. Having thus quieted Judie temporarily, Lang, on June 18th, went to his attorney Grace and created him a “nominal stockholder,” followed by proceedings resulting in the assignment on which he relies, executed, by Grace as president, on June 14th. Courts of law have jurisdiction to recognize an equitable estoppel in pais (Barnard v. Seminary, 49 Mich. 444 [13 N. W. 811]), and the same need not be especially pleaded (Dean v. Crall, 98 Mich. 591 [57 N. W. 813, 39 Am. St. Rep. 571]).

The salient features of this record as disclosed by plaintiff’s own evidence, as well as lack of evidence which if in existence was apparently at his command, sustain the conclusion of the trial court that the alleged assignment on which plaintiff relies cannot be recognized as valid to establish in him a paramount title as against Judie’s levy.

The judgment is affirmed.

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


source: Caselaw Access Project

license: Public Domain

text:
    LABADIE v. VILLAGE OF FORD.
    1. Municipal Corporations — Res Judicata — Sidewalks—Change of Grade — Damages—Villages—Streets.
    Complainant instituted an injunction suit to restrain defendant village from changing the grade of a sidewalk which he claimed had been previously established by the board of trustees; upon the hearing the court held that the grade had not been shown to have been established by the village prior to the alleged change. There was no evidence that the village had, by action of its council, recorded in its books of re'cord in the manner required by law, voted to establish the grade of the sidewalk adjacent to the premises. Held, in an action for damages by reason of .the change of the grade, that plaintiff was-barred by the decree in chancery and that in any event the steps taken by the village, if any, were not properly recorded so as to establish in legal form the grade of the first sidewalk.
    2. Same — Records—Grade, Establishment of.
    Villages are required by statute to keep a record of their proceedings which is the best and in most cases the only lawful evidence of official action. 3 Comp. Laws, §§2371, 2372; 3 How. Stat. (2d Ed.), §§ 5950, 5951.

      3. Same — Sidewalks—Damages.
    Before the enactment of the statute permitting a recovery for the change of grade, adjacent owners were not entitled to recover against a village for lowering the grade of a sidewalk.
    Error to Wayne; Halley, J.
    Submitted January 14, 1915.
    (Docket No. 98.)
    Decided April 6, 1915.
    Case by Eli D. Labadie and another against the village of Ford and others for damages because of the change in the grade of a sidewalk. Judgment for defendants. Plaintiffs bring error.
    Affirmed.

      Ignatius J. Salliotte, for appellants.

      Woodruff & Woodruff and Frank W. Atkinson, for appellees.
   Steere, J.

This action was brought by plaintiffs, who are husband and wife, against the village of Ford and James Rushlow, its contractor, who did the work complained of, to recover damages for lowering the grade of Biddle street, in said village, in front of plaintiff’s residence and place of business. Upon a directed verdict in favor of defendants, plaintiffs have brought the proceedings to this court for review on writ of error. .

Plaintiffs are and were owners of real property, consisting of a lot and a fraction in a certain subdivision lying on the west side of Biddle avenue in a business portion of the village of Ford, Wayne county, Mich. Upon this land was a store building erected by a previous owner and an addition built by plaintiffs after they purchased the property, in 1909; the ground floor and entrance of both conforming to the then existing sidewalk grade at that point, the buildings being two feet back from the lot line. Plaintiffs occupied and used the main building for a grocery and the addition for a confectionery store, also residing upon the property.

In 1911 the village of Ford lowered the grade in front of these premises over two feet, leaving plaintiffs’ buildings correspondingly high above the sidewalk line. This work was done by defendant Rush-low, as contractor for the village. Plaintiffs protested against the grade being lowered both to the contractor and the village authorities, and said Eli D. Labadie, joining with other complainants, filed an injunction bill in the circuit court for the county of Wayne, in chancery, against these same defendants, claiming, as here, that in 1905 a grade for sidewalks, in conformance with which complainants’ buildings were erected, had been established by the municipal authorities of the village of Ford.

Upon filing said bill a preliminary injunction was granted by the court temporarily restraining defendants from lowering said grade and holding up the work until the suit was finally decided. After pleadings were perfected, the suit was heard upon proofs taken in open court, resulting, on September 6, 1911, in a decree adverse to complainants, in which the court held, among other things, that it appeared “from the testimony offered in open court by complainants that no grade for sidewalks on the west side of Biddle avenue, in the said village of Ford, between the Goddard road and St. John street, was established by the said village of Ford, as charged in said bill of complaint, and that said complainants are not entitled to the relief prayed for in said bill of complaint;” whereupon the injunction was dissolved and said bill of complaint dismissed, with costs in favor of defendants. Plaintiff Marie Labadie was not a complainant in that suit, but upon the trial of this case her husband, plaintiff Eli D. Labadie, testified she knew of the injunction; that he acted for her in the equity suit, and she knew what he was doing.

Plaintiffs’ testimony showed, or tended to show, that over eight years prior to lowering the grade now complained of, on March 12, 1903, the board of trustees of said village passed a resolution to have the street levels and profiles placed on the map of the "village by one George P. Palmer. On March 26, 1903, said board also passed the following resolution:

“Resolved, that in the construction of cement sidewalks to be hereafter constructed in the village by owners of property abutting on the several streets of said village, it is hereby agreed on the part of said village that one-half of the cost of constructing such sidewalk shall be defrayed by said village: Provided, that said sidewalks be constructed according to the established grade of said village and under the superintendence and direction of the street commissioner of said village.”

On the 23d of June, 1904, said board passed an ordinance, sections 6 and 7 of which are as follows:

“Sec. 6. All sidewalks in this village shall remain as now laid and established until they are rebuilt or repaired, when they shall be rebuilt or repaired under the provisions of this ordinance, and shall be subject to the same in all respects.
“Sec. 7. All streets and sidewalks hereafter established shall be graded to the established grade, and the same proceedings shall be had in ordering, grading and providing for the payment thereof, as near as may be, as is herein ordered as to laying sidewalks. All crosswalks shall be ordained by resolution to be built under the direction of the street commissioner, contractor or other such person as the council may direct. The village council may at any time, by resolution entered upon its minutes, authorize any officer of the village, or other person, to perform the same duties as are hereby required to be performed by the village contractor, street commissioner, or other officer.”

In the summer of 1905 a resolution was passed by said board recommending the building of a sidewalk upon Biddle street, passing in front of plaintiffs’ premises, the contract for construction of which was given to one Antoine Labadie; one-half of the cost being paid by the village and the other half by the owners of the property. Antoine Labadie, the contractor, testified that he had a grade to work by in the shape of a blueprint which he got from the council in the council room; that the street commissioner was there part of the time while the work was in progress and a committee of the council approved the work. This blueprint which Labadie states he then had appears to have been lost. The village clerk, who was custodian of the records and books of said village, testified that he yet had all ever turned over to him, including the first record book of the village, and had made search for a map of the sidewalk grades but was unable to find any. Testimony was also introduced by plaintiffs to show that their business had fallen off in consequence of lowering this grade, and the amount it would cost to lower their buildings to the grade.

The possible issues involved are well and concisely stated in the brief of defendants’ counsel as follows:

“(a) Is the decree of the equity court ‘res adjudieata’ and binding on the plaintiffs in the case at bar?
“(b) Does the testimony in the case at bar show the establishment of a grade as contended?
“(e) Does the testimony disclose any damages for which a recovery can be had?”

The assignments of error relied upon are that the court erred in admitting the record of the chancery suit in evidence, and in directing a verdict for the defendant; plaintiffs having shown that a sidewalk grade was established and a sidewalk built prior to the erection of their buildings and changed subsequent to their erection, entitling them to compensation for resulting damages, under, section 2784, 1 Comp. Laws, to be ascertained and awarded by a jury.

The trial court, without referring to the chancery suit, directed a verdict for defendants on the sole ground that:

“There has been no testimony that shows that any grade on the street had been established prior to the lowering of the sidewalk in front of plaintiffs’ premises.”

If this view is correct, admission of the chancery record becomes immaterial.

It is to be noted, however, that in the chancery suit an injunction was asked to restrain defendants from lowering the grade on the same ground that damages are asked here — that a grade for sidewalks had been previously established by the village board of trustees — and the court then held, even stronger than here, that complainants? own testimony not only failed to establish such claim but made it appear to the contrary. Plaintiff Eli D. Labadie was one of the complainants in that suit, and the defendants were the same as here. As to him, there was identity of parties, subject-matter, and controlling point in controversy, decided upon its merits, for it is well settled in this State that in the absence of the statute cited by his counsel, which makes a previously established grade a prerequisite, adjacent owners cannot 'recover damages against a municipality for changing the grade of the street in front of their property. City of Pontiac v. Carter, 32 Mich. 164; Cummings v. Dixon, 139 Mich. 269 (102 N. W. 751). The controlling issue in this case is res adjudicata as to him by reason of having been once litigated by and decided against him in the chancery suit, from which no appeal was taken. The question is not so clear as to his wife, who was not a party of record in that suit. She joins in this action as an owner of the property with him, but the nature of her ownership is not stated. Whether as a joint tenant by entirety, or only by inchoate right of dower, is left to surmise. He testified that he acted for her in the chancery suit, and she had full knowledge and notice of it. While the doctrine of estoppel by judgment has been applied to persons not of record, who had full knowledge and notice of the pendency of a suit in which they were knowingly, directly interested and represented by others authorized to protect their interests (24 Am. & Eng. Enc. of Law [2d Ed.], p. 736), that question need not be passed upon here.

Village councils are required by statute to keep a record of their proceedings, and it is well settled by abundant authority that their records are the best, and in most cases the only, lawful evidence of their official acts. Sections 2731-2752, 1 Comp. Laws, and cases cited. Even though not expressly required by statute, the importance of a record of such matters as the one under consideration is pointed out in Larned v. Briscoe, 62 Mich. 393 (29 N. W. 22), wherein it is said of the board of public works of Detroit, a subordinate body:

“Although the act authorizing the organization of such board does not, in terms, require that it shall keep a record of its proceedings, yet such record is required from the nature of the duties imposed. The preparation of plans for laying out streets, the approval of plats, the establishment of a system of grades and of sewers, cannot rest in parol, or upon fugitive papers, but the law plainly implies such important acts shall be evidenced in the permanent form of a record.”

The evidence in this case falls far short of showing that the alleged prior grade was established by competent municipal authority and put in permanent form of a record, in manner prescribed and required by law. What random steps are shown to have been taken in that direction were imperfect, informal, not properly of record, and lacked finality. They are clearly inadequate to prove a prior, legally adopted grade, under Cummings v. Dixon, 139 Mich. 269 (102 N. W. 751), which we deem controlling here.

The judgment is affirmed.

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


author: Moore, J.

text:
    NEELEY v. STRATTON.
    1. Master and Servant — Salary—Recovery.
    In an action by plaintiff for salary which he claimed the defendant copartners agreed to pay and which the defendants contended was to be paid by the corporation which succeeded to the business of the copartnership, the testimony being in conflict, presented an issue of fact which the court properly submitted to the jury.
    2. Trial — Special Questions — Jury—Issues oe Fact — Charge.
    On the trial of an action for salary claimed to be due to the plaintiff the trial court did not commit reversible error in refusing to submit to the jury several special questions presented by defendant’s attorney after the close of the charge to the jury: as matter of right defendant was not entitled to have such special questions presented at that stage of the proceedings.
    3. Same — Jury Trial — Verdict—Issues.
    Unless special questions are controlling of the issues in a case they should not be submitted to the jury.
    Error to Wayne; Mandell, J.
    Submitted January 21, 1915.
    (Docket No. 35.)
    Decided April 6, 1915.

      Assumpsit by Roy Neeley against Franklin Stratton and John A. Oleson for breach of a contract of hire. Judgment for plaintiff. Defendants bring error.
    Affirmed.

      Oscar M. Springer, for appellants.

      Frederic T. Hamoard, for appellee.
   Moore, J.

This case was commenced in justice’s court. From a judgment in favor of the plaintiff the case was appealed to the circuit court, where it was tried by a jury. From a judgment in favor of the plaintiff the case is brought here by writ of error.

The plaintiff claimed he was hired on March 8, 1911, by defendant partnership, to demonstrate a car with a convertible body, which defendants were endeavoring to place on the market. The defense was that a company known as the B-O-S-S Company had been formed and had taken over all the property of the partnership, and that the partnership thereupon ceased to exist, and that the plaintiff, if hired at all, was hired by this company.

There are three groups of assignments of error that should be discussed:

1. Did the court err in declining to direct a verdict for defendants?

2. Did the court err in declining to grant defendants a new trial?

8. Did the court err in declining to submit to the jury five special questions?

We will consider these in the order named:

1. It is said the plaintiff failed to make a case against defendants. The record shows beyond any question the existence of a partnership known as Stratton & Oleson, and that they were at work inventing and perfecting an automobile, which it was claimed was afterwards taken over by the B-O-S-S Automobile Company.

The testimony was very conflicting. The plaintiff and Mr. Stratton, one of the members of the firm of Stratton & Oleson, both testified that the plaintiff was hired by Mr. Oleson to work for Stratton & Oleson. Mr. Oleson denied this, and insisted he was at work for the B-O-S-S Company. Other testimony was given, tending to support each of the contentions. This raised a question of fact which was left to the jury in a carefully considered charge.

2. The same reasons that would justify the court in refusing to direct a verdict would justify a refusal to grant a new trial.

3. The record shows the court had practically completed his charge, when the following occurred:

“These are the issues in the case, and it will be for you, as judges of the facts and judges of the credibility of the witnesses, to determine the truth of the issue. The form of your verdict will be either, that you find — ” '

Mr. Springer submits a paper (special questions) to the court:

“The Court: I cannot submit this at this time. It is too late. It will be for you to determine whether there was employment by the firm, whether the employment ceased at once, or ceased at any time during the time that employment was claimed to have continued, and therefore the form of your verdict will be that you find for the plaintiff, at the rate that has been mentioned here — I think it is $21 a week or $3.50 a day — from the time that you, from a study of the evidence, are convinced that employment lasted should you find it was employment by this firm. Now, of course, if the plaintiff comes in and seeks to recover under the claim he urges, the burden of establishing his claim falls upon him, and he must establish his case by a fair preponderance of the evidence. That means that he must produce that class of testimony that convinces you of its truth. If he has done so, he is entitled to a verdict, but if he has failed to do so, or the defendant has convinced you of the truth of their claims, the defendant is entitled to a verdict of no cause of action.
“The Court: It seems to me that after I have finished the charge to the jury it is too late to submit these special questions.
“Mr. Springer: I do not understand it so, and I think I want to insist upon an answer to these questions.
“The Court: Let it appear of record that counsel for plaintiff was here during the early part of my charge, when counsel for both sides handed up requests, and counsel for plaintiff is engaged in the trial of a case in another division of the court and was obliged to leave and has not examined these proffered questions, which are five in number; that these questions are submitted in typewriting, and evidently have been prepared prior to coming into court this morning, and were not submitted to the court or the counsel on the other side until after the court had charged the jury generally. Follow an officer.
“Mr. Springer: I take an exception to the refusal of the court to submit the special questions to the jury offered by counsel for defendant.”

The practice indulged here is not to be commended. Counsel may not, as a matter of right, have questions submitted when presented after the charge is begun.

In Cousins v. Railway Co., 96 Mich. 386 (56 N. W. 14), Justice Montgomery, speaking for the court, said:

“We think the court was right in refusing to submit these questions. Whatever the finding of the jury might have been thereon, such finding would not have been inconsistent with the general verdict for the plaintiff. It is not the duty of the trial judge to submit mere questions of evidence to the jury. The questions must be so framed as to call for an answer which may be controlling of the main issue.”

See Crane v. Reeder, 25 Mich. 303, 316; Fowler v. Hoffman, 31 Mich. 215, 219; Harbaugh v. Cicott, 33 Mich. 241, 250; Toulman v. Swain, 47 Mich. 82 (10 N. W. 117); Ward v. Campau, 161 Mich. 85, 88 (125 N. W. 734); Zucker v. Karpeles, 88 Mich. 413 (50 N. W. 373).

The questions offered come within these cases. The other assignments of error have been examined. We think them without merit.

Judgment is affirmed.

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


author: Bird, J.

text:
    LACHELT v. McINERNEY.
    1. Equity — Bill to Quiet Title — Remedy at Law — Possession— Ejectment.
    As against parties in possession of real property under a claim of title, a bill to quiet title will not lie: the remedy is at law.
    2. Execution — Sale — Previous Deed — Record and Recording Laws — Deeds—Notice of Levy.
    3 Comp. Laws, § 9224 (4 How. Stat. [2d Ed.] § 11386), providing that no levy of execution shall take effect until the notice of levy is filed and that such levy shall be a lien from the date of filing and have priority over prior mortgagees and grantees, of which the execution creditor did not have actual or constructive notice, confers a prior right upon the execution creditor who has filed his notice of levy before the registration of a previous deed, which was unrecorded at the time of the levy and sale, unless the complainant had actual or constructive knowledge of the existence of the deed or the rights of the grantee.
    3. Same — Deeds — Precedence — Presumption — Notice—Knowledge.
    A conversation between the debtor and the. execution creditor, as claimed by tbe latter, in which be informed the creditor that he had transferred his property to others, but which the evidence tended to show occurred after the levy, was not such actual notice as to subject complainant’s rights to the claim of the debtor’s wife under an unrecorded transfer or conveyance.
    Appeal from Wayne; Mandell, J.
    Submitted April 27, 1914.
    (Docket No. 148.)
    Decided April 6, 1915.
    Bill by William Lachelt against John F. Mclnerney and others to quiet title to certain real property. From a decree for defendants, complainant appeals.
    Reversed in part.

      Jay Fuller, for complainant.

      Cornelius & Ring, for defendants Pinson.

      John Boughton, for defendants Mclnerney.
   Bird, J.

Complainant recovered a judgment in justice’s court against one George Carnaski. On appeal he was again successful, being awarded a judgment for $41.50 damages, and costs taxed at $48.20. Judgment was rendered against both Carnaski and his surety, John F. Mclnerney, one of the defendants herein. On May 9, 1910, an execution issued against them, which was returned unsatisfied. On November 21, 1910, an alias execution was issued and levied upon certain lots, numbered 122, 123, 124, and 125, in Callaghan’s subdivision of part of lot 2 of the shipyard tract in the city of Detroit. The record title of these lots stood in John F. Mclnerney. They were later sold on execution and were purchased by the complainant, the sheriff’s deed therefor being recorded on April 25, 1912. On June 29, 1911, defendant Mclnerney placed of record a quitclaim deed of lots 124 and 125 to his wife, Florence Mclnerney, and on March 25, 1913, a warranty deed conveying lots 122 and 123 to defendants Pinson was duly recorded. In April, 1913, defendants Pinson started to erect a dwelling thereon. While the work was progressing, this suit was commenced by complainant to enjoin the erection of the same, and for the .further purpose of quieting the title to the lots in complainant. It was the claim of defendants that the conveyances to the Pinsons and Mclnerney’s wife were made in June, 1906, and that, while not placed of record until after notice of levy had been filed, the complainant had notice brought home to him before the said levy was made that McInerney was not the owner of them. The chancellor was impressed with this view of the proofs, and accordingly denied the relief prayed for and dismissed the bill.

On behalf of the defendants Pinson, the point is made that this bill to quiet title could not be maintained because they were in actual possession of and claiming title to the premises. This point appears to be well taken. They had erected a dwelling thereon, and it was nearly completed when these proceedings were instituted.

Lots 124 and 125 quitclaimed by defendant to his wife upon an expressed consideration of one dollar were vacant and unoccupied property. As to these lots it is made certain by the records that notice of complainant’s execution and levy preceded the recording of the deed. This being so, the rights acquired by the purchaser under the execution levy and sale were superior to the rights of the grantees mentioned in the unrecorded deed, even if the deed was actually executed and delivered in 1906 as claimed by them, if it can be said that the complainant had no actual notice of such transfer. Section 9224, 3 Comp. Laws (4 How. Stat. [2d Ed.] § 11386). This section provides:

“That no levy by execution on real estate, made after this act shall take effect, shall be valid against bona fide conveyances made subsequent to such levy, until a notice thereof, containing the names of the parties to the execution, a description of the premises levied upon, and the date of such levy, shall be filed by the officer making the same, in the office of the register of deeds of the county where the premises are situated, and such levy shall be a lien thereon from tfie time when such notice shall be so deposited; and the lien thus obtained, shall, from the filing of such notice, be valid against all prior grantees and [mortgagees] mortgages of whose claims the party interested shall not have actual nor constructive notice.” First National Bank v. Phillpotts, 155 Mich. 331 (119 N. W. 1); Monroe v. Carter, 167 Mich. 325 (132 N. W. 1023); Savidge v. Seager, 175 Mich. 47 (140 N. W. 951); Johnson v. Cook, 179 Mich. 117 (146 N. W. 343).

The question then gets round to this, whether complainant had notice that Mclnerney had transferred the title to his wife prior to the filing of the notice of levy in the office of the register of deeds. The testimony which is relied upon to show that complainant had notice is a certain conversation which defendant Mclnerney testifies that he had with the complainant with reference to the title to the lots. In that conversation he informed the complainant, in substance, that he was no longer the owner of the lots; that he had transferred them to others. The complainant, after showing that his notice of levy was first recorded, starts out with the presumption that his rights are superior to those of the defendants (Godfroy v. Disbrow, Walk. Ch. 260), and we are unable to find from the record that this presumption has been overcome. The conversation detailed by Mclnerney is of no persuasive force because it appears from his own testimony that it occurred after the notice of levy was filed. We are of the opinion that under the record that part of the decree dismissing the bill as to defendants Pinson should be affirmed.

That part of the decree dismissing the bill as to defendants Mclnerney will be reversed, and the title to lots 124 and 125 will be quieted in complainant as against the claims of defendants Mclnerney. The complainant will recover costs of both courts against defendants Mclnerney. Defendants Pinson will recover costs of both courts against complainant.

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


text:
    LYONS v. GRAND TRUNK RAILWAY CO. OF CANADA.
    1. Damages — Freight—Delay—Carriers.
    The damages recoverable against a carrier for unreasonable delay in transporting freight resulting in the deterioration of the goods are the difference between the value of the goods as delivered and the value of the shipment when it ought to have been delivered by the carrier to the consignee.
    2. Carriers — Abnormal Condition — Moisture — Evidence—Negligence — Unreasonable Time — Notice.
    Where the railroad company claimed that a consignment of beans contained an abnormal quantity of moisture, and that it had no notice of the condition of the freight and should not be charged with its deterioration during delay in transit, and where it appeared from the testimony that the freight could not be classed as perishable, and beans with the alleged amount of moisture would not ordinarily become damaged under four or five days, that the time required to transport freight between the point of shipment and the destination was about two days, and an unreasonable time had elapsed in making delivery, that plaintiff had no reason to think that the beans would spoil, the record sustained a judgment against the carrier for the price of the beans.
    3. Same — Measure oe Damages — Market Price — Evidence.
    Where the only evidence of market price at the place of delivery was the price at which the goods were sold under plaintiff’s contract, and defendant railroad company sold the beans and retained the amount received for them, the measure of damages was properly held, by the trial court, to be the contract price at destination at time delivery should have been made.
    Error to St. Clair; Tappan, J.
    Submitted January 15, 1915.
    (Docket No. 113.)
    Decided April 6, 1915.
    Case by John Lyons against the Grand Trunk Railroad Company of Canada for delayed delivery of a carload of beans. Judgment for plaintiff. Defendant brings error.
    Affirmed.

      L. C. Stanley (W. K. Williams, of counsel), for appellant.

      Elmer E. Stockwell (C. L. Benedict, of counsel), for appellee.
   Bird, J.

Plaintiff, a farmer living near Marine City, sold his crop of beans by sample, m.the fall of 1912, to the Michigan Farmers’ Elevator Company in Detroit, on the basis of $2 for 71 pounds. On November 19, 1912, he shipped them in 204 bags to the purchaser in Detroit, via the Rapid Railway and defendant’s line. The car arrived in defendant’s yards in Detroit on November 21st, and the consignee was notified the same day. The consignee paid the freight and ordered the car to be delivered to its elevator, which was situated on defendant’s line. Defendant neglected to deliver the car until the afternoon of November 30th. Upon inspection the beans were found to be heated and musty, and the consignee refused to accept them. The plaintiff was notified, and he at once went to Detroit and conferred with defendant, and through some arrangement (which is not disclosed) the beans were sold by the defendant for $244.80. After deducting the freight charges, it left a balance of $220.52, which it still retains. The plaintiff’s action was in tort, counting upon the defendant’s failure to observe its common-law duty to transport the beans within a reasonable time. He was awarded a verdict of $738.14. The only question made by the briefs for our consideration is whether the trial court gave to the jury a proper measure of damages.

The trial court in substance instructed the jury that, to entitle plaintiff to recover, they must first find that the delivery of the beans to the consignee had been unreasonably delayed by defendant, and that such delay was the proximate cause of the damage claimed, and in elaboration of the latter instruction he instructed them that, in order to entitle plaintiff to recover, they must find that the beans spoiled after a reasonable time had elapsed for the transportation of them; and that, if they spoiled during such reasonable time, the plaintiff was not entitled to recover. They were further instructed that, if they found that plaintiff was entitled to recover, he would be entitled to recover the contract price at Detroit at the time they should have been delivered.

Counsel are in substantial accord upon the proposition that, whether the action be tort or contract, the measure of damages for delay in transporting goods is the difference between the market value of the property at the time and place at which the delivery should have been made, and the same value when delivery was actually made, but their disagreement arises out of what elements enter into the market value. Defendant insists that, in arriving at market value, the only thing which may be considered is the difference in price for the same quality of goods, whereas the plaintiff contends that not only the difference in price of the goods may be taken into consideration, but also any deterioration in quality may be considered in arriving at the market value.

The general rule has been stated as follows:

"Where there is a delay for which the carrier is liable, the measure of damages is the difference between the market value of the property at the time and place at which the delivery should have been made, and the same value when delivery was actually made, whether the difference ill value was the result of a decline in the market, or of an injury suffered by the goods in consequence of the delayed delivery.” 5 Am. & Eng. Enc. of Law (2d Ed.), p. '384,

The case of Weston v. Railway Co., 54 Me. 376 (92 Am. Dec. 552), quotes with approval the following:

“ ‘Then comes the other question, whether he is entitled to recover the difference between the value of the goods to him, if they had been delivered in proper time, and their value at the time when they were actually delivered. I am of the opinion that the consignee is entitled to recover such difference in value.’ ‘It is admitted,’ remarks Byles, J., in the same case, ‘that deterioration in quality is to be taken in account in estimating the damage the plaintiff has sustained; it is admitted also that loss or diminution in the quantity is to be taken into account.’ ”

See, also, Nettles v. Railroad Co., 7 Rich. Law Rep. (S. C.) 190, (62 Am. Dec. 409).

We think the foregoing is a proper statement of the general rule, and that the trial court was in no error in including the question of the deterioration of the property as an element of market value, as the proofs tended to show that the deterioration of the beans was caused after a reasonable time had elapsed for their transportation.

The further contention is made tnat the beans were in an abnormal condition; that they contained 23 per cent, of moisture, whereas normal beans contain only 17 per cent.; that the rule of liability would apply only to normal beans; and that, before it could be charged with loss or damage to abnormal beans, it should have notice of their condition at the time they were tendered for shipment, the same as any other perishable property. The proofs do not disclose that the beans were in any such condition as would justify a classification of them with perishable property. A witness who appeared to be qualified to speak of such matters testified that beans with 23 per cent, of moisture would not take damage in a closed car under four or five days, and defendant’s own proofs showed that the usual time for transporting a car from Marine City to Detroit was two or three days. Furthermore, there is no claim that plaintiff had any knowledge that the beans would be likely to spoil in a closed car after four or five days. If neither had any reason to believe they would spoil after four or five days in a closed car, but in fact they did spoil by reason of the neglect of defendant, it should bear the loss. Illinois, etc., R. Co. v. McClellan, 54 Ill. 58.

Counsel relies upon an English case to enforce his argument, on the question of notice. In that case a quantity of rags were consigned. The delivery was delayed two weeks beyond the usual time for delivery. The rags were damp when offered for shipment, and as a result of the delay they heated and rotted. The court held that no recovery could be had because the carrier had no notice that the rags were damp and liable to spoil. Baldwin & Co. v. Railway Co., Law Reports 9 Q.B.582. The difference between that case and the one under consideration lies in the fact that proof was made in this case that the injury to the beans occurred after a reasonable time had elapsed for their transportation. If this fact had not been made to appear, a like result would doubtless have been reached in this case.

Inasmuch as the defendant retains the money for Which the beans were actually sold, and for the further reason that the contract price was the only evidence of market price at the place of delivery, we think the measure of damages directed by the trial court was correct.

The judgment will be affirmed.

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


author: McAlvay, J.

text:
    THOMAS v. BLAIR.
    1. Damages — Carriers — Delay — Measure of Damages — Freight —Bill of Lading — Wrongful Delivery.
    On the trial of an action for -wrongful delivery of freight under an order hill of lading which was forwarded to a hank, attached to a draft, with instructions to allow inspection of the car, which, however, was delivered to the purchaser without requiring the payment of the draft, plaintiff was entitled to recover from the carrier such damages as he sustained because of his inability to collect the purchase price.
    2. Same — Initial Carrier — Liability — Negligence — Wrongful Delivery.
    The initial carrier is liable in damages to the consignor pursuant to the Federal statute (34 U. S. Stat. 595) for failure of the carrier at the destination to require production of the bill of lading before delivering the shipment.

      3. Carriers — Freight—Delivery—Jury—Trial.
    Evidence tending to show that the consignor was unable to collect the purchase price of a carload of beans by reason of the wrongful delivery to the consignee without requiring the production of the original bill of lading, not contradicted by testimony offered on the part of the defense, presented a question of law, which the court properly determined in favor of plaintiff without submitting the question to the jury.
    Error to Kent; Perkins, J.
    Submitted June 9, 1914.
    (Docket No. 43.)
    Decided April 6, 1915.
    Case by Lindsay P. Thomas and others against Frank W. Blair and others as receivers of the Pere Marquette Railroad Company for the wrongful delivery of a car of beans. Judgment for plaintiffs. Defendants bring error.
    Affirmed.

      Norris, McPherson, Harrington & Waer (Parker, Shields & Brown, of counsel), for appellants.

      R. M. Shivel (Hall & Gillard and Beaumont, Smith & Harris, of counsel), for appellees.
   McAlvay, J.

Plaintiffs recovered judgment against defendants in the circuit court for the county of Kent in an action on the case for the value of 250 bags of beans. Defendants have removed the case to this court for review upon writ of error.

The material facts in the case are not complicated and require but a brief statement. Plaintiffs, copartners, who were engaged in the produce business at Lowell, Mich., on April 24, 1912, sold to A. J. Thompson Company, of Chicago, four cars of beans, and on April 26th received • an order in writing from the vendee to ship one car of these beans to their order to Evansville, Ind., giving directions as to the route, to notify Ragon Bros., of that place, and to “allow inspection.” According to these instructions, plaintiffs, on the day last mentioned, delivered said car of. beans, containing : 250 bags, to defendants, and received from them what is known as an “order notify” bill of lading. The material parts of this long document only require to be stated, as follows:

“Order Bill of Lading — Original.
“Received * * * at Lowell, Michigan, April
26th, 1912, from L. P. Thomas & Co., the property described below. * * * Consigned to order of A.
J: Thompson Co., Evansville, Indiana. Notify Ragon Bros, at same (place). * * *
“Allow inspection.
' “L. P. Thomas & Co., Shipper.
“M. B. Conklin, Agent.”

It also contained the following:

“The surrender of this original order bill of lading properly indorsed shall be required before the delivery of the property.”

• As this property was not paid for, plaintiffs immediately mailed this bill of lading with draft for the price of the beans attached to Kansas City for collection, as instructed by vendee. The car went forward to Evansville, Ind., and the beans were delivered to Ragon Bros, by the terminal carrier without the production of the original bill of lading, upon presentation of the following written order:

“Chicago, May 3rd, 1912.
“Car No. 42480, P. M.
“E. T. H. R. R.,
“Evansville, Indiana.
“Please deliver Ragon Bros. 250 bags of beans out of car 42480 P. M. on payment of charges without surrender of original B-L.
“Arthur J. Thompson Co., per Zima.”

Ragon Bros, having paid all the freight charges.

The draft sent to Kansas City with bill of lading attached was returned to plaintiffs June 6, 1912, unpaid. A second draft for the same amount with bill of lading attached, upon request of A. J. Thompson Company, was sent by plaintiffs, June 15, 1912, to Chicago for collection, and with the bill'of lading was returned unpaid July 1, 1912. The draft and bill of lading were afterwards again sent to Chicago, August 2, 1912, with instructions that if not paid on presentation to return at once. This draft was not paid and was returned to plaintiffs with bill of lading attached, August 8, 1912. Plaintiffs, not having been paid for these beans, began this suit. Issue was joined, and a trial was had before the court without a jury. Findings of fact and conclusions of law were made and filed by the court in favor of plaintiffs and against defendants, upon which a judgment in favor of plaintiffs was accordingly entered. - Certain amendments to these findings of fact and conclusions of law were proposed by counsel for defendants and considered and argued before the court, which, except as to immaterial omissions and modifications, were denied, and exceptions to such denials were duly taken.

The errors assigned and relied upon by appellants in this court are presented in three groups, which are stated by counsel as follows:

“(1) The court erred in refusing to hold that, the consignor having consigned the goods to the order of the consignee, the delivery of the goods on the consignee’s written order without the production of the original order bill of lading gave the consignor no right of action against the carrier.
“(2) The court erred in holding defendants liable as an initial carrier on a claim of the kind involved in this suit.
“(3) The court erred in holding that the evidence sustained the allegation that damage resulted to the plaintiff from the delivery of the shipment complained of in this action.”

Counsel for appellants base their argument in support of the first proposition upon the case of Nelson Grain Company v. Railroad Co., 174 Mich. 80 (140 N. W. 486), contending that this court so held in that case. In a recent decision handed down by this court where a like contention was made under a bill of lading in all respects similar to that which is the basis of the instant case, this court distinguished the Nelson Grain Co. Case, and held as follows (after stating the facts and the question involved therein) :

“In the instant case the plaintiff is the consignor, and not a stranger to the transaction, and gave no order for the delivery of the beans, and so it cannot be said that the surrender provision in the contract of shipment, the bill of lading, was waived. Here the shipper placed his property in possession of the carrier, which gave him a bill of lading making a contract between them which in most positive terms says that its surrender shall be required before the delivery of the property, and upon this agreement the shipper had a right to rely.
“It is true that prima facie the consignee is the owner of the goods shipped, but it is equally true, and the rule is well established, that, when there is an order bill of lading outstanding, the carrier delivering the goods without requiring the presentation of the bill does so at its peril, and is liable to a bona fide holder thereof. (Citing authorities.)” Turnbull v. Railroad Co., 183 Mich. 213 (150 N. W. 132).

As far as this first contention is concerned, this decision is conclusive. The trial court therefore was not in error in refusing to hold as requested by counsel for defendants.

The second proposition of appellants, that there was no liability upon the initial carrier for a loss of the kind involved in this suit, for the reason that the Federal statute under which the action is brought does not cover such a claim, cannot be sustained. This question has been passed upon by the Supreme Court of the United States, followed twice by this court, holding that the initial carrier is liable. Atlantic, etc., R. Co. v. Mills, 219 U. S. 186 (31 Sup. Ct. 164, 31 L. R. A. [N. S.] 7); Sturges v. Railway Co., 166 Mich. 231 (131 N. W. 706); Perkett v. Railroad Co., 175 Mich. 253, at page 259 (141 N. W. 607).

Upon appellants’ third proposition, it is only necessary to state that the evidence in the case was undisputed that plaintiffs had, by reason of the unauthorized delivery of these beans by the terminal carrier, suffered a loss to the amount of their value.

The record does not disclose any error on the part of the trial court.

The judgment is affirmed.

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


text:
    SWARTHOUT v. SHIELDS.
    1. Frauds, Statute oe — Priority—Sale—Redemption.
    The purchaser of land which is subject to a mortgage who assumes payment of the mortgage debt may agree not only to relieve the grantor of the incumbrance but also charge himself as against the mortgagee with personal responsibility; the agreement may rest in parol and be valid under the statute of frauds.
    2. Evidence — Parol Evidence Rule — Assumption oe Mortoaoe Dert.
    Testimony in a suit to foreclose a mortgage that as a part of the consideration for the purchase of lands the grantee in the deed assumed and agreed to pay two outstanding mortgages was not improperly received and considered, although the deed did not purport to contain the agreement and merely excepted from the covenants the incumbrances in question.

      3. Mortgages — Contracts — Promise to Pay — When Tithe Does Not Inure to Mortgagee.
    Defendant purchased certain lands by a deed of conveyance which excepted two mortgages from the covenants. He permitted the senior mortgage to be foreclosed and purchased the interest after the expiration of the period of redemption. Complainant commenced to foreclose the second mortgage, claiming that the purchase should inure to her benefit, because defendant had agreed as part of the price paid for the real estate to satisfy both incumbrances. Held, that the interest obtained did not inure to her benefit.
    Appeal from Livingston; Miner, J.
    Submitted April 21, 1914.
    (Docket No. 95.)
    Decided April 19, 1915.
    Rehearing denied December 22, 1915.
    Bill by Melinda Swarthout against William H. Shields and others to foreclose a mortgage. From a decree for the complainant, defendants Shields appeal.
    Reversed.

      George F, MacNeal, for complainant.

      J. A. Tillson, for defendant Hoyt.

      William P. Van Winkle, for defendants Shields.
   Bird, J.

These proceedings were begun by complainant to foreclose a mortgage for $700, which was a lien on certain premises situate in Tyrone township, Livingston county, and described as:

“A piece of land commencing 20 rods south of the northwest corner of section 27; thence south 46 2/3 rods; thence east 240 rods; thence north 66 2/3 rods; thence west 160 rods; thence south 20 rods; thence west 80 rods to the place of beginning.”

The premises were owned by Ambrose Hoyt, and there were two mortgages thereon one for $1,750, and another for $700, which was a second mortgage and is the one involved in this controversy. With these two incumbrances thereon, Hoyt, on the 25th day of March, 1910, sold the premises to defendant Shields for an agreed consideration of $8,200. The consideration was made up of the following items: $1,750 mortgage, with accrued interest; $700 mortgage, with accrued interest; $100 to the tenant on the farm; $64 to a real estate broker; and $140 in cash to Hoyt. Shields paid nothing on either the principal or interest, and the first mortgage was foreclosed by advertisement by the Chamberlain estate, and bid in by the executors. The equity of redemption expired April 13, 1912. In October, 1912, six months later, defendants Shields purchased the premises from the executors of the estate for $2,401.41, and thereafter defendants Shields refused to recognize complainant’s mortgage as having any force or effect. In June, 1913, complainant filed this bill to foreclose her mortgage. The theory of the complainant was that by the covenants in the mortgage it was obligatory on both Hoyt and Shields to pay the mortgage; that, having made default therein, and Shields afterwards having acquired title thereto from another source, he was estopped from denying that the purchase of such title inured to the benefit of the complainant. The chancellor took this view of the case, and granted a decree of foreclosure and a decree for deficiency against both Hoyt and Shields.

The propositions argued by counsel for defendants Shields are: First, that the verbal promise to pay the mortgage would not bind the defendants Shields; second, that they now hold title to the land in question by warranty deed from the executor of the estate of Ezra Chamberlain, deceased, and that this title is paramount to and free and clear from the mortgage claim of the complainant; and, third, that in no case can they be held personally liable because the complainant’s bill does not ask for a personal decree as against them.

1. The deed from Hoyt to Shields did not recite either that the grantee assumed the mortgages or that he agreed to pay them. In warranting the title, however, the mortgages were excepted, but no further reference was made to them in the deed. It is the claim of Hoyt that the promise of Shields to pay the mortgage was a part of the consideration for the deed, and reliance is had upon the verbal promise of Shields to pay the mortgages and the accrued interest thereon. It is objected that this proof was not competent to establish the fact. We think it was. The testimony is convincing that the promise to make payment of the mortgages was a part of the consideration of the deed. Under such circumstances the general rule has been stated to be that:

“The purchaser of mortgaged land may assume the payment of the mortgage debt in such a manner as not only to relieve the grantor of the incumbrance, but also to make himself liable to the mortgagee, by any contract or agreement on his part which distinctly manifests his consent and intention to charge himself with such personal responsibility, * * * and the agreement may even rest wholly in parol, and in that case is not considered as being within the statute of frauds.” 27 Cyc. p. 1345; Strohauer v. Voltz, 42 Mich. 444 (4 N. W. 161).

Our conclusion is that it was competent to show by parol testimony that the promise to pay these mortgages was a part of the consideration for the conveyance.

2. We do not think it can be said that the title purchased by Shields from the Chamberlain estate inured to the benefit of complainant’s mortgage. The proceeding by which the mortgagors’ title is cut off is statutory and certain. It provides that:

“Unless the premises described in such deed shall be redeemed within the time limited for such redemption, as hereinafter provided, such deed shall thereupon become operative, and shall vest in the grantee therein named, his heirs or assigns, all the right, title, and interest which the mortgagor had at the time of the execution of the mortgage, or at any time thereafter.” 3 Comp. Laws, § 11142.

Under the proceedings had to foreclose the first mortgage on and after April 13th, the title of Shields was extinguished, and this necessarily carried with it the mortgage lien of complainant, and thereafter the title vested in the purchaser. If this be true, how and when and by what process was complainant’s lien revived or a new one created for her? It is argued that the situation is analogous to the buying of a tax title by a cotenant; that in such case the purchase of a tax title by one cotenant inures to the benefit of his cotenant. The difficulty with this argument is that the relations of the parties to this proceeding are not analogous to those existing between cotenants. The rule that the purchase of a tax title by one cotenant inures to the benefit of his cotenant arises out of the rules of law governing the relation of cotenancy. Complainant is not a cotenant with either Hoyt or Shields, but the relation is that of debtor and creditor, and therefore adverse.

In the present case the Chamberlain estate was clearly within its statutory rights in foreclosing its mortgage, and after'the sale Shields and complainant were given a year in which to redeem and protect their respective interests. Neither of them saw fit to embrace this privilege extended to them by the statute, with the result that the title interest of Shields and the mortgage lien of complainant were extinguished, and the Chamberlain estate became the owner thereof. Under such circumstances the theory of the complainant cannot be sustained. Some claim of bad faith and collusion is made against Shields and the executors of the Chamberlain estate, but we think the charges are not sustained by the proofs.

The decree of the trial court will be reversed, and the bill dismissed, with costs of both courts to appellants.

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