author: Moore, C. J.

text:
      In re MORRIS’ ESTATE. MORRIS v. MORRIS.
    1. Estates — Standing Timber — Realty.
    In Michigan, a conveyance of land reserving the standing timber does not make of the standing timber personalty, but it continues to be an interest in real estate.
    2. Same — Estates by Entireties.
    A conveyance of standing timber to a husband and wife, reserving the land, does not make of said timber personalty, but creates an estate by the entireties, the title to which will go to the survivor.
    3. Same — Standing Timber — Title After Severance.
    Where standing timber is owned by a husband and wife by the entireties, the rule that the title to same vests in the survivor is applicable after it is severed from the land.
    4. Executors and Administrators — Allowance of Final Account.
    In the final account of an administratrix of an estate, an item for services for the sale of lumber, etc., was properly allowed, where it appears that this was but a continuation of the custom of intestate in his lifetime.
    Error to Kalamazoo; Weimer (George V.), J.
    Submitted January 14, 1920.
    (Docket No. 99.)
    Decided April 10, 1920.
    Minnie Morris, presented her final account as administratrix of the estate of Frank B. Morris, deceased. The account was allowed in the probate court, and Manley Morris and others appealed to the circuit court. Judgment for plaintiff. Defendants bring error.
    Affirmed.

      Lincoln H. Titus (Harry C. Howard, of counsel), for appellants.

      Mason & Sharpe, for appellee.
   Moore, C. J.

Frank Morris died intestate, leaving a wife but no children. His heirs besides his wife are a brother, Manley Morris; his sisters, Nellie DeVal, Rose Whitmore, Clara Waling, Ellen Earl; his nieces, Maud Taylor, Nora Sherman; and his nephews, Vern Blodgett and Will Blodgett. Mrs. Morris, the plaintiff, was appointed administratrix of his estate. He left an estate of about $14,000. On or about April 23, 1918, Mrs. Morris filed her final account. The defendants filed objections to the allowance thereof, claiming that there were items of property belonging to the estate which had not been placed in the inventory nor accounted for in the final account. Objection was also made because of the claim of certain commissions paid to one George Earl for the selling of certain lumber belonging to the estate, and for expenses paid to him by the administratrix, while he was making the sales, because it is claimed that the administratrix had claimed and received commissions under the statute as administratrix for the sale of the lumber, and if George Earl was paid for what he did it constituted a double commission against the estate.

It was also claimed that the expenses charged by him and paid by the administratrix were matters which belong to her to perform in the regular course of her duties as administratrix, and'if she chose to employ another to perform such services it was for her to pay out of the commissions which she received and was not a legitimate charge against the estate. Another objection to the final account concerned the claim for the amount paid attorneys for the estate. An objection also related to the claimed allowance for extra compensation to the administratrix of $250.

The probate court allowed the final account as presented, except the claim of the administratrix of $250 for extra compensation. The defendants took an appeal from the decision of the probate court to the circuit court where the issues litigated were:

(1) The item concerning the title to the standing timber. This timber was a' 14-acre tract of timber which had been deeded to Mr. and Mrs. Morris as husband and wife prior to his death. The deed was in due form, was properly acknowledged, witnessed and recorded. The grantor in the deed retained the fee of the land and the deed provided the trees should be cut and removed in a limited period. The timber was sold and Mrs. Morris took the- money and made no account of it to the estate claiming it was hers by right of survivorship.

(2) To the title to the logs and lumber, piled upon or near land owned by Frank B. Morris and Minnie Morris, his wife, which logs and lumber were severed from the soil prior to his death.

(3) To the item for commissions and expense of George P. Earl.

(4) To the item for attorneys’ fees claimed to have been rendered for the estate.

The jury, by consent of counsel, which had been impaneled was dismissed and the court entered judgment for the plaintiff affirming the order of the probate court.

The first proposition requiring attention is the title to the standing timber. It is the claim of the widow that she is the owner by right of survivorship of all the property described in the deed. We quote from the brief of counsel for appellant:

“It is the claim and theory of the defendants that the property described in the deed is personal property and is not subject to the law of survivorship, and that such property should be made a part of this estate and be accounted for by the administratrix.
“The question from our viewpoint presents one of law, the facts being conceded, and if the question of law is resolved in favor of Minnie Morris and her claim is substantiated that she is the owner of the property mentioned in the deed, that is, that the standing timber with title to the fee reserved to the grantor is real estate, and she takes it by right of survivorship, that puts an end to the matter. * * *
“We have been unable to find after a careful search of the reports of this court that this question has ever been passed upon by this court. * * * The revised statutes (statute of frauds) declare that ‘No interest in lands shall be created, unless by deed or conveyance in writing.’ Growing trees are an interest in land, and so long as they are annexed to the land and are neither actually or in contemplation of law severed therefrom, they cannot be sold or transferred by parol. But growing trees may be severed, in law, from the land and become personal property, without an actual severance; as where the owner of the fee in the land, by valid deed or conveyance in writing, sells the trees to a third person, or where he sells the land, reserving the trees. In both these cases the timber and trees become chattels distinct from the soil, and go to the executor; for in construction of law they are abstracted from the earth.
“There is a line of authorities on this proposition from the decisions of the courts of last resort, both ■ in England and in the United States, that hold the doctrine that such property is personal property, and these decisions contain, as it seems to us, sound reasonings on the proposition.”

Counsel then cite several authorities whicn undoubtedly sustain their contention.

The question is not a new one, however, in this State. In Fletcher v. Township of Alcona, 72 Mich. 18, a deed had been made:

“The reservation contained in the deed from Fletcher, Pack & Co. to Snow & Huber is as follows:

“ ‘Reserving all pine and hemlock timber and the right of way to remove the same, and the exclusive use of all landings on streams, flowage for dams, timbers for building log road, camps, skidways, and logging railroad, across said land.’”

The pine timber on these lands was assessed as personal property. The owners contested the right to assess it as personal property. In the opinion appears the following:

“The ownership of timber standing and growing on land is an interest in the land itself, and under this statute, assessable as realty. Cooley, Tax’n. (2d Ed.), 366-368; People v. Com’rs of Taxes, 82 N. Y. 462.
“This, assessment was placed on a part of the roll devoted entirely to the assessment of personal property, and separate from any assessment of real property. This timber standing and growing upon these lands, for the purposes of assessment and collection of taxes, was real property, and no valid charge could be created against the plaintiffs or lien acquired specifically upon the property by assessing it as personal.”

in Ward v. Township of Echo, 145 Mich. 56, the principle involved in the present case was under discussion. We quote from the opinion:

“In January, 1901, steps, were taken to incorporate the Detroit & Charlevoix Railroad Company to take over the railroad belonging to the estate, and a deed was made reserving and excepting all of the timber standing, lying or being on the land conveyed, with right to cut and remove the same within three years. * *
“It is clear that under the deed to the railroad company, there was a reservation of an interest in these lands which, if not taxable to the Ward estate, would escape taxation altogether. It is also clear that, in such circumstances, the standing timber may be assessed separately from the fee and assessed as real estate. Cooley on Taxation (2d Ed.), p. 366 et seq.; People v. Com'rs of Taxes, 82 N. Y. 462; County of Pine v. Tozer, 56 Minn. 288 (57 N. W. 796).”

In' Delaney v. Manshum, 146 Mich. 525, Justice Grant, speaking for the court, said:

“No contract of sale or conveyance made by the husband without the signature of the wife will operate to deprive her of her dower. Richmond v. Robinson, 12 Mich. 193. The right of dower attaches to all the realty. Growing trees are as much a part of the realty as the soil in which they grow, the clay, stone, mineral and other valuable deposits beneath the surface. Stout v. Keyes, 2 Doug. (Mich.) 184; Williams v. Hyde, 98 Mich. 152. The widow is entitled to dower in them all. In re Seager’s Estate, 92 Mich. 186 (16 L. R. A. 247). This right of dower will be jealously guarded by the courts. Bear v. Stahl, 61 Mich. 203, 214.
_ “Whatever right the husband may have to sell and dispose of any part of the realty, trees, gravel, clay or minerals during his lifetime, while his wife’s right of dower is inchoate, all rights of the vendee in such contracts cease with the‘death of the husband unless the wife joined in the conveyance.”

In Williams v. Hyde, 98 Mich. 152, a mortgage was given on standing timber. Instead of filing the mortgage for record in the office of the register of deeds, it was filed with the township clerk. We quote from the opinion in that case:

“Erickson, after the execution of the agreement between himself and St. Clair, but before the delivery thereof, executed a mortgage to plaintiff upon the sawmill and outfit, and also upon all the standing and down timber upon the same land, and plaintiff filed the same as a chattel mortgage, and now brings replevin against defendants for the shingles so sold to them as aforesaid. No actual notice to either St. Clair or defendants is shown. In the agreement between Erickson and St. Clair the lands are described as belonging to Erickson. The shingles were cut from timber which was standing at the time the mortgage to plaintiff was given.
“The mortgage to plaintiff, so far as it relates to standing timber, was a mortgage of an interest in real estate (Russell v. Myers, 32 Mich. 522), and the filing thereof in the clerk’s office was notice to no one (Booth v. Oliver, 67 Mich. 664).”

In Dunn v. Papenfus, 202 Mich. 131, the question arose as to whether a proper notice had been given as required by statute. In that case many years before the litigation therein arose, a deed had been made reserving the pine and hemlock timber. In disposing of the case it was said in part:

“A more serious proposition is presented by the last point raised. We have held that standing timber constitutes an interest in the land. Wait v. Baldwin, 60 Mich. 622. The statute (section 4138, 1 Comp. Laws 1915) provides that service must be made:
“ ‘Upon the person, or persons appearing by the records in the office of the register of deeds of said county to be the last grantee or grantees in the regular chain of title of such lands, or of any interest therein.’
“In Hansen v. Hall, 167 Mich. 7, it was held that the owner of a reservation of. mineral, rights was entitled to notice and it was- there said:
"‘Until this notice is duly served upon each part owner and the statutory proof thereof is made and filed, the right to redemption remains to all, — citing White v. Shaw, 150 Mich. 270, and Dolph v. Norton, 158 Mich. 417.’
“See, also, G. F. Sanborn Co. v. Richter, 176 Mich. 562.
“In the case at bar it is conceded that there is standing pine upon the land in question. True, under the testimony its value is small, and at the time plaintiff obtained his conveyance it was not merchantable in character. These facts, however, should not, in our opinion be permitted to disturb the principle involved. The tax title purchaser may readily satisfy himself from an inspection of the records who the person or persons are who are the last grantees of such lands or of any interest therein. According to the statute the notice must be served upon all such.”

The conclusion to be reached by a consideration of these cases is that in Michigan a conveyance of land reserving the standing timber does not make of the standing timber personalty, but it continues to be such an interest in real estate that it will go to the survivor where the grantees in the deed conveying the timber are husband and wife. We again quote from the brief of counsel:

“Having thus demonstrated by argument and citation of authorities that the standing timber was and is personal property, we come to the question, To whom did it belong at the time of the delivery of the deed, and consequently at the death of Frank B. Morris? The only guides by way of adjudicated cases that we are able to find, where our Supreme Court have mentioned the matter are the cases of Wait v. Bovee, 35 Mich. 425.”

Counsel cite several Michigan cases including City of Detroit v. Jacobs, 145 Mich. 395, 396; Hart v. Hart, 201 Mich. 207, and Ludwig v. Bruner, 203 Mich. 556, anci argue that joint tenancy in personal property with its. right of survivorship does not exist in this State.

We think counsel overlook the important fact that the title to the standing timber in the instant case came to Mr. and Mrs. Morris before it was severed from the land and while it was, as we have already shown, under the decisions in this. State, an interest in real estate and not personal property.

In 13 R. C. L., at p. 1114, it is said:

“In case of a joint tenancy the eotenants ,are deemed seized per my et per tout; in this respect a tenancy by the entireties differed; in such a tenancy the husband and wife were deemed seized per tout, but not per my, each being the owner of the whole but not of the half or undivided share. As has been said the parties do not hold by moieties, but take as one person, taking as a corporation would take.”

On page 1120 of the same authority it is said:

“Loss of Right of Survivorship. — In case of an ordinary joint tenancy one cotenant by a conveyance of his undivided share may defeat the right of survivor-ship in the other, because such a conveyance operates as a dissolution of the joint tenancy and the creation, as between the grantee and the other cotenant, of a tenancy in common. The rule is different, however, in. case of a tenancy by entireties and a conveyance by the husband will not affect the wife’s right of survivorship; and this is true though the conveyance is with the consent of the wife, and even the fact that she joined in the conveyance will not defeat her right, if her acknowledgment was not sufficient to render the conveyance operative against her. Since a husband cannot by any conveyance on his part, affect the wife’s right as survivor, a, fortiori on his death his creditors have no claim, even in equity as against the wife’s title as survivor, and no interest of the husband survives his death which can be subjected to the payment of his debts.”

In Dickey v. Converse, 117 Mich. 449, the question arose as to whether the creditors of the husband could levy upon crops grown upon land owned by the husband and wife as tenants by the entirety. In that case there is a collation of many authorities upon the subject. In the opinion it is said in part:

“It is claimed the holding of plaintiffs is. that of tenants by entirety, and that the husband is entitled to the full control of the rents and profits of the land during the joint lives, to the exclusion of the wife, and that the crops grown would be subject to the claims of creditors. A good many cases are cited in support of this proposition, but these cases are not in accord with the holdings of this court as will hereafter be shown. * * *
“This species of tenancy grows out of the unity of husband and wife, and is unlike that of joint tenants, who are each seized of an undivided moiety. The husband and wife are each seized of the whole, and not of undivided moieties. Hardenbergh v. Hardenbergh, 18 Am. Dec. 378 (10 N. J. Law, 42), note.
“What is the purpose of the use of a farm? Is it not a place to live upon? To grow crops for consumption and sale? If neither the husband nor the wife has an undivided moiety of the use of the farm, how can it be said each of them has an undivided interest or moiety in the result of that use? To hold that the husband is not entitled to an undivided moiety of the use of the farm, but is entitled to an undivided half of the results of that use, is, we think, illogical. While the precise question involved here has not been decided by this court, it has been before the supreme court of Indiana in Patten v. Rankin, 68 Ind. 245 (34 Am. Rep. 254), where it was held that ‘a crop -raised on land held by a husband and wife by entireties is held by them in the same manner and subject to the same law as the land itself, and such crop- is therefore not subject to levy and sale on an execution against the husband.’ ”

If crops grown upon the land are subject to the same law as the land itself we think it follows that this is true of the timber growing on the land, even after it is severed from the land.

We now come to the items paid to Mr. Earl for his services. We have already stated the claim of the appellants in relation to these items. The record shows that in his lifetime Mr. Morris employed Mr. Earl to do like work for him, and paid him for it. It was work that must be done before the lumber and other products from the timber could be converted into money. We can see no impropriety in Mrs. Morris, as administratrix, paying for this work and being allowed therefor.

We again quote from appellants’ brief:

“As to the charges for attorney fees, under the rule laid down by this court in Re McNamara’s Estate, 166 Mich. 451, 452, we are not satisfied that the trial court was not in error in holding that it was a matter for the court and not for the jury to pass view upon, and in view of the fact that there was some evidence to support the finding of the trial court upon this item, under the familiar rule of this court, that where there is any evidence to support the findings of a trial court, such findings will not be disturbed, we are compelled to be content.”

The other contested items are small; they have had our consideration though we will not discuss them. We find no reversible error.

The judgment is affirmed, with costs to the plaintiff.

Steere, Brooke, Fellows, Stone, Clark, and Bird, JJ., concurred. Sharpe, J., did not sit.


source: Caselaw Access Project

author: Bird, J.

license: Public Domain

text:
    MESSER v. DORNBOS.
    Appeal and Error — Findings op Fact and Law — Exceptions to Findings — Review.
    Where, in a case tried before the court without a jury, before the rendition of judgment the attorneys for appellant filed a request that the court file written findings of fact and law in the case, but presented no points of law nor any proposed findings of fact, and filed no exceptions nor requested any amendments to the findings of fact and law which were filed, and although errors are assigned it is not alleged that there is no evidence to support the judgment, under Circuit Court Rule No. 45 there is nothing for this court to do but to affirm the judgment of the court below.
    Error to Ottawa; Cross (Qrien S.), J.
    Submitted January 8, 1920.
    (Docket No. 38.)
    Decided April 10, 1920.
    Replevin by George .Messer against Cornelius Dornbos, sheriff of Ottawa county, for goods seized on execution. Judgment for defendant. Plaintiff brings error.
    Affirmed.

      Lillie, Lillie & Lillie, for appellant.

      Charles E. Misner, for appellee.
   Bird, J.

This controversy involves an action of replevin which was tried before.the court without a jury. Judgment for the value of the property replevied passed for defendant, he having waived a return of the property. It appears from the record that Fannie Westerhouse brought an action of tort in the circuit court for Ottawa county against one Bert Holstege. This suit went to trial and judgment was rendered in her behalf for $1,500, on the 21st day of August, 1918, and on the 14th day of November, 1918, she caused an execution to be issued and levied upon certain live stock and personal property belonging to Holstege. Soon after the levy was made plaintiff, George Messer, who claimed to have a chattel mortgage, executed on August 13, 1918, against the property levied upon, took out a writ of replevin and placed the same the hands of the coroner, who took the property from the hands of the sheriff. The question most litigated upon the trial was whether the mortgage was a good-faith mortgage. The trial court filed a short opinion in which, he found that the chattel mortgage was without consideration and was given for the express purpose of defrauding the creditors of Bert Holstege, and rendered a judgment for the defendant in the sum of $742.

The defendant raises the point that there is nothing for this court to review because of the failure of appellant to comply with Circuit Court Rule No. 45.

Before the rendition of judgment the attorneys for appellant filed a request that the court file written-findings of fact and law in the case, but presented no points of law nor any proposed findings of fact. There are certain findings of fact and law in the opinion which was filed, but no exceptions were filed, neither were any amendments thereto requested. Plaintiff has assigned several errors, but it is not alleged in any of them that there is no evidence to support the judgment. The practice under rule 45 (which was formerly rule 26), has been considered by this court on many occasions. In Haines v. Saviers, 93 Mich. 440, it was said:

“He who desires to review in this court a judgment, wherein a trial was had before the court without a jury, and to question the conclusions reached by such court upon the facts, and the law, must have a written finding, both of facts and law, and must take his exceptions thereto.”

Other and more recent holding's to the same effect are: Weist v. Morlock, 116 Mich. 606; Oudersluys v. Carstens, 194 Mich. 521; Cascarelli v. Railroad Co., 202 Mich. 304; Engel v. Tate, 203 Mich. 679; Marshall & Ilsley Bank v. Mooney, 205 Mich. 518; In re Crane’s Estate, 205 Mich. 673.

Being of the opinion that the objection is well taken, there is nothing left for us to do but to affirm the judgment of the lower court, with costs to the defendant.

Moore, C. J., and Steere, Brooke, Fellows, Stone, Clark, and Sharpe, JJ., concurred.


text:
    BURCH v. STRINGHAM.
    1. Fraud — Cancellation oe Instruments — Chattel Mortgages — - Evidence — Sueeiciency.
    In proceedings to enjoin defendant from disposing of a note and chattel mortgage given for a half interest in a livery -business, and for the cancellation of the same on the ground of fraud in said sale, the finding of the court below that plaintiff had failed to establish fraud, held, sustained by the record.
    2. Same — Representations as to Earnings — Falsity.
    Representations of defendant that if plaintiff would give his time to the business he could make $1,000 a year over and above his expenses, held, fairly construed, to mean that plaintiff could make $1,000 a year over and above tbe expenses of the business, not including his living expenses.
    3. Same — Future Earnings — Expression oe Opinion — Falsity.
    "Where plaintiff did not give the business his personal attention, but hired a man in his place, who was paid out of the business at the rate of $780 a year, even if defendant’s statement as to future earnings amounted to something more than a mere expression of opinion, plaintiff must fail because he has failed to show that the statement was untrue.
    Appeal from Calhoun; North (Walter H.), J.
    Submitted January 22, 1920.
    (Docket No. 14.)
    Decided April 10, 1920.
    Bill by Elmer U. Burch against George E. String-ham to enjoin the collection of a note and mortgage, and to set aside a sale on the ground of fraud. From a decree dismissing the bill, plaintiff appeals.
    Affirmed.

      James M. Powers, for plaintiff.

      Joseph L. Hooper, for defendant.
   Bird, J.

In June, 1918, plaintiff was a tenant on a farm a few miles distant from the city of Battle Creek. Defendant was engaged in the livery business in Battle Creek. On June 4th plaintiff, after some negotiations, purchased a one-half interest in the livery business of defendant for $750, and gave him a chattel mortgage thereon, also on his horses, live stock and farming implements'for $975, to secure the purchase price, and included therein $225 which defendant was to pay in taking up an existing mortgage then on the property, and which he afterwards paid. At the time the trade was made it was agreed that plaintiff should remain on the farm and finish up his year’s work, and defendant should manage the livery business with the help of one man, who should be paid by plaintiff. It was also agreed that defendant should make and deliver to plaintiff a monthly statement of the business transacted. In the latter part of December plaintiff began to give some attention to the business and books of account. He requested defendant to let him have $25 on account of profits. Defendant replied that there were no profits; that after deducting $15 a week for the man employed and paying for feed, there was nothing left. Plaintiff claims that it was then that he discovered that he had been defrauded. Being unable to adjust his differences with defendant, he filed this bill praying for a temporary injunction to restrain defendant from disposing of the note and chattel mortgage, also that the note and chattel mortgage be canceled upon payment to defendant of the $225 which he advanced to pay the existing mortgage.

Plaintiff’s claim is that defendant represented to him that he could make $1,000 a year above expenses by giving his attention to the business, and that, as a further inducement for him to purchase, he promised him that, in .the event matters were not just as he represented, he would take back the livery stock and refund to him all that he had paid therefor.

At the hearing several witnesses were sworn, the principal ones being plaintiff and his wife and the defendant. At the conclusion of the case the chancellor reviewed the claims of the parties and the testimony and announced that in his, judgment plaintiff had failed to establish the fraud which was alleged in the bill, and therefore dismissed the same.

It appears that the deal was first talked over by plaintiff’s wife and defendant. It was her habit when she drove to the city to keep her horses in defendant’s barn. In so doing she became acquainted with, him. She' was very anxious to get off from the farm and move to the city, and she so indicated to defendant, whereupon he suggested a sale of a half interest in his business to plaintiff. Mrs. Burch stated that plaintiff had .formerly (been in the employ of the Advance Pump Company and earned from $22 to $25 a week. She testified that defendant replied:

“A man that takes care of this business, a half interest here, I will guarantee that he can make more than that. He will make between $25 and $30 a week, if he takes care of it.”

And that defendant further said:

“I will tell you what I will do with you. If your husband buys a half interest in this business and if he does not make exactly what I said he will, and if he is dissatisfied in any way, shape or manner, I am buying it back and I will pay him every dollar he puts into it.”

Defendant requested Mrs. Burch to inform her husband of his offer and she testified that she did so. Mr. Burch testified in part, as follows:

“In one of the conversations that I had with him he told me he had been earning $1,000 a year over and above his expenses. If I entered a partnership with him at this time I expected, of course, to divide the profits with him, over ana above living expenses. I did not talk with him about what his living expenses were.”

He further testified that:

“I asked him if he was sure if there could be a living made in it. He says, ‘if this thing is not as I represent it to you, and you do not make good, and you do not make a good living and pay $1,000 a year above all expenses, I will take this back and pay every dollar that you have put into it. I am taking the risk.’ ”

Plaintiff appears to assume in his testimony, and his counsel argues, that the representation was made that he could make $1,000 a year over and above his living expenses. Taking plaintiff’s own version of the language used we do not think it will admit of this interpretation. This statement was that he could make $1,000 over and above his expenses. This fairly construed would mean that he could make $1,000 a year over and above the expenses of the business. The talk between defendant and plaintiff’s wife indicates that this was what was meant by the defendant.

Assuming this is what defendant intended, does it sufficiently appear that the business would not do what was represented by defendant it would do? It is true the books did not show at the end of six months that anything by way of profits was coming to plaintiff, but it must be remembered in this connection that during the six months plaintiff had given no time to the business, and was obliged to pay at the rate of $780 a year for a man to take his place. This man was paid and his wages were charged to plaintiff. Had plaintiff been in a position to give the time and attention to the business that one usually does to his own, he would have had what was paid the hired man and doubtless would have increased the business to some extent. Before plaintiff is entitled to ask equitable relief on the ground of defendant’s promise to take the property back and refund the purchase price if it did not yield what he represented it would, he should make some effort to demonstrate by actual trial that defendant’s representations in that regard .were untrue.

The fraud complained of was not that the property was worth very much less than was represented, but the fraud relied upon was in connection with defendant’s statement as to the amount of business he, plaintiff, could do. This statement was concerning a future fact and not a past or present one. But even if it could be said that the statement amounted to something more than a mere expression of opinion we think plaintiff must fail because the record fails to convince us that the statement was untrue. For the reasons given, we are inclined to agree with the chancellor that plaintiff is not entitled to the relief which he seeks.

The decree of the lower court will be affirmed, with costs to the defendant.

Moore, C. J., and Steere, Brooke, Fellows, Stone, Clark, and Sharpe, JJ., concurred.


author: Sharpe, J.

text:
    DICKINSON ISLAND LAND CO. v. HILL.
    1. Corporations — Transfer of Property — Principal and Agent.
    The property interest of a corporation can only he transferred by its board of directors or some one duly authorized to act for it.
    2. Trespass — Contract to Purchase Land Subject to Approval —Injunction.
    Where defendants had negotiated with a selling agent for the purchase of certain lots subject to the approval of the corporation owning the same, they were properly restrained as trespassers in going upon the land and cutting and removing timber thereon before said approval was given, although they had been assured by said agent that approval would be given.
    Appeal from St. Clair; Tappan (Harvey), J.
    Submitted January 22, 1920.
    (Docket No. 78.)
    Decided April 10, 1920.
    Bill by the Dickinson Island Land Company against Edward E. Hill and another to enjoin a trespass upon land, and for an accounting. From a decree for plaintiff, defendants appeal.
    Affirmed.

      Walsh & Walsh (William Friedman, of counsel), for plaintiff.

      Fitzgibbon & Quail and Charles C. Stewart, for defendants.
   Sharpe, J.

The Dickinson Island Land Company became the owner of a part of Dickinson island, at the mouth of the St. Clair river, in January, 1917. Its board of directors entered into an oral agreement with! Ben V. Jacobs and Julius Berman, two of their number, who were real estate men, to sell the lots on commission. They in turn hired one Andrew L. Arthur as sales manager. He was to receive a part of their commission for his services. The cheaper lots were to be sold for cash, and the others on a 50 per cent, down payment. Arthur opened an office in the Bowles building in Detroit, advertising himself as sales manager, Dickinson Island Land Company.

The defendant Hill called at Arthur’s office, and met Arthur and Elon J. Dwyer, Berman’s partner in business and one of the directors of the company. After some negotiation, he paid Arthur $250 and received the following receipt:

“Detroit, Mich., Sept. 8, 1917.
“Received of Edward E. Hill, two hundred and fifty dollars to apply on contract to be drawn this day, balance of contract two hundred and fifty dollars ($250), to be paid when property is staked out.
“Above contract subject to approval of directors.
“Dickinson Island Land Co.,
“Per A. L. Arthur.”

There was much discussion about the down payment, but Arthur assured Hill that he would endeavor to get the board of directors to approve it. The board at that time 'consisted of Jacobs, Berman, Friedman, Lipson and Marshall, five of the original incorporators. On September 10th, an agreement for a contract was prepared by Arthur and submitted to Hill. It provided that the corporation would enter into a land contract for the sale to Hill of lots of the value of $11,150; that a further down payment of $250 should be made on the completion of á survey of the lots, and the balance be paid within one year. It permitted Hill to cut, remove and dispose of all timber on the streets bounding the lots included in his purchase. In the last paragraph, it provided that all moneys received by Hill on the sale of timber should be applied on the purchase price. To this Hill objected. He claims that, after telephoning, Arthur told him that Jacobs would see Berman and for him to come in again. He did so the same day, and was told by Arthur that Friedman “was the only man who kicked on it,” but that the board had authorized the contract. Arthur denies this. He says he struck out the paragraph on the authority of Berman. This contract was signed by Arthur as sales manager of the company and Hill. On October 26th, Arthur notified Hill to come in and make the additional $250 payment. He did so and received a receipt in which appeared: “Contract to be executed at once.” Arthur testified that he then told Hill—

“there was a very strong objection on the part of Mr. Friedman to entering into that contract; that he was objecting strongly to it and I had the assurance of Berman and Jacobs that the contract would go through, and. he paid the $250 and said that he would take his chance on getting the contract.”

While Hill does not admit this conversation as stated by Arthur, he does say that Arthur “said that Friedman still insisted he didn’t want to go through with it, something like that.”

Hill, in the meantime, had associated the defendant Harsen with, him in the purchase. It is their claim that, relying on these writings, they went to an expense of about $3,000, fitting up camps and getting horses and machinery for taking off the timber on the streets, that they had sold about $2,500 worth, of wood, and were in full operation when stopped by the injunction issued on the filing of the bill of complaint herein.

It is unnecessary for us to enter into any discussion of the express or implied power of Arthur as an agent to bind the company. The defendant Hill knew that he did not assume to have or exercise such authority. He relied entirely, as he admits, on Arthur’s assurance that the board would approve of the terms of the agreement of September 10th and give him a contract in conformity therewith. Consideration need therefore only be given to the occurrences on and after that date.

Jacobs and Berman, as well as Arthur, were financially interested in having the sale consummated. It is apparent that they were hopeful they could secure the approval of the other members of the board. But, unless we assume facts not established by the proofs, or draw inferences not justified by the acts and conduct of the parties, the board of directors never assented to this sale. Jacob N. Marshall, one of the original incorporators and a director in 1917, testified that he had no knowledge of the Hill contract of September 10th until the board met in February when the cutting of the timber was discussed. The writing Hill received on September 10th was not a contract for the sale of the land, but an agreement on the part of the company, signed by Arthur as sales manager, that a contract would be made on the completion of the survey and on Hill’s making the additional down payment. When this was made on October 26th, the receipt given defendants by Arthur stated: “Contract to be executed at once.” The defendants should have awaited the receipt of such contract before beginning their operations on the land. They knew that some of the directors had theretofore objected to the sale on account of the small down payment, and when they began work in reliance on the assurances of Arthur that they would get a contract they acted at their peril. We have no doubt of their good faith in the matter, but the property interest of a corporation can only be transferred by its board of directors or some one duly authorized to act for it. Lawrence v. Theater Co., 190 Mich. 44; Robinson v. Taber, 198 Mich. 767, and cases cited. The receipt given Hill when he made the first payment advised him that his contemplated purchase was subject to the approval of the board of directors. The delay in closing the deal was due to the lack of such approval. This the defendant Hill well knew, and in proceeding with his work before obtaining a contract with the board, or its approval of that of September 10th, executed by Arthur, Hill and his codefendant became trespassers, and the decree of the circuit court restraining further action on their part was justified and must be affirmed, with costs to plaintiff.

Moore, C. J., and Steere, Brooke, Fellows, Stone, Clark, and Bird, JJ., concurred.


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    RUGGLES v. BUCKLEY & DOUGLAS LUMBER CO.
    1. Corporations — Powers—Contracts—Ultra Vires.
    Where, by a former opinion (164 Mich. 625) it was determined that defendant lumber company had the right to manufacture salt, even to the extent of purchasing coal to supplement its waste wood product as fuel, and it appears from the record that defendant has sufficient timber to operate its mill during the lifetime of its charter, a contract for the installation of new evaporating pans, and a new system of applying the steam thereto, held, not ultra vires, even if an unwise act.
    2. Same — Rights of Minority Stockholders.
    Where it appears that unless something unforeseen occurs the expenditures under the contract will be met by the proceeds of the increased production of salt, it cannot be said that the making of said contract was a legal fraud upon the rights of plaintiffs, minority stockholders, and where the directors acted in good faith, the performance of said contract will not be restrained.
    3. Same — Right to Wind Up Business After Expiration of Charter.
    Under 3 Comp. Laws 1915, § 11335, a corporation may continue as a body corporate for the term of three years after the expiration of its charter, for the purpose of winding up its affairs, thus enabling it to continue its general business for its full charter period.
    Appeal from Manistee; Cutler (Hal L.), J.
    Submitted January 13, 1920.
    (Docket No. 64.)
    Decided April 10, 1920.
    Rehearing denied June 17, 1920
    Bill by Charles F. Ruggles and another against the Buckley & Douglas Lumber Company, the Manistee Iron Works Company and others to enjoin the performance of an alleged ultra vires contract. From a decree dismissing the bill, plaintiffs appeal.
    Affirmed.

      Musgrave, Oppenheim & Lee, Charles N. Belcher, and Stevenson, Carpenter, Butzel & Backus (Thomas G. Long, of counsel), for plaintiffs.

      Thomas Smurthwaite, for defendant Manistee Iron Works Company.

      Travis, Merrick, Warner & Johnson, for other defendants.
   Sharpe, J.

The plaintiff Ruggles is the owner of three-eighths of the stock of the defendant company, less one share held by Mr. Rademaker. The defendant Buckley owns the remaining five-eighths, less one share held by each of the other defendants. The corporation has been engaged in the business of manufacturing lumber since 1893, and since 1896 has manufactured salt in connection therewith. The relationship of Mr. Ruggles and Mr. Buckley has not been friendly for many years. They were copartners in the lumber business at the time the corporation was organized.

In 1910, the attorney general of this State, on the relation of Mr. Ruggles, filed an information in the nature of a quo warranto in the circuit court for the county of Manistee against the defendant corporation, seeking to forfeit its charter for the reason that it was unlawfully engaged in the manufacture of salt thereunder. That case reached this court (Attorney General, ex rel. Ruggles, v. Lumber Co., 164 Mich. 625), where the judgment of the circuit court in favor of defendant was affirmed. A reference to this case will disclose the conditions which led the company to engage in the manufacture of salt and the claims then made relative thereto.

After that decision, the corporation continued the manufacture of salt, very profitable returns resulting therefrom. A considerable amount of coal was used for fuel from the first in addition to the waste wood product consumed. This has increased as the salt business was extended, and to a greater extent of late years as the quantity of logs sawed has diminished. A second salt block was purchased in 1910, but with this we are not concerned. In plant No. 1, the amounts paid for coal for fuel were: in 1897, $6,806; in 1910, $46,897; in 1915, $45,435; in 1917, $86,468, and in 1918, $153,575. The value of the salt block and equipment in 1910 was about $225,000, and in 1918 about $350,000.

The plaintiffs, both of whom were directors of the corporation, were notified that a meeting of the board would be held on September 10, 1918, to consider the execution of a contract with the defendant Manistee Iron Works Company for the installation in plant No. 1 of new pans and a new system of applying the steam thereto, whereby it was claimed that the same quantity of salt could be produced by the use of one-fourth the amount of fuel. The plaintiffs attended this meeting, all of the members of the board being present. A resolution was adopted, against the objection and vote of plaintiffs, directing that the contract should be-entered into. The purchase price of the new equipment was $238,650 and, together with the expenditures necessary to be made by the company in its installation, would make the total cost thereof about $300,000.

The plaintiffs, on the day following, served a written protest on both of the defendant companies, insisting that it was unlawful for the lumber company to enter into such a contract, and on September 14th served an additional notice, setting forth at greater length the reasons for their complaint. The contract had, however, been executed by both companies on the 10th- and the down payment of $23,000 made as therein provided for.

On September 27, 1918, plaintiffs filed the bill of complaint herein, praying that the contract be declared ultra vires and void and that all of the defendants be restrained from doing any act in the performance of the same. They also ask that the individual defendants be held personally liable for any sums paid thereunder and for any loss the corporation may sustain by reason of its execution. No temporary injunction was asked for or granted. The proofs were taken in open court. The trial judge made exhaustive findings. It appeared that the Iron Works Company was then engaged in performing the contract and that the equipment would be fully installed on the date agreed upon therefor, June, 1920. H'e made a decree dismissing plaintiffs’ bill, and they appeal.

The questions presented by counsel for appellants may, we think, be fairly considered under the headings following:

(1) Had the board of directors of the defendant corporation, under its charter, the power to enter into the contract with the Iron Works Company?

(2) If they had such power, was the making of such contract a legal fraud upon the rights of the plaintiffs as minority stockholders?

Counsel differ as to the effect of the decision in the quo warranto case. It is, however, conceded by plaintiffs that under that decision the lumber company had a right to engage -in the manufacture of salt as an incident to the business of manufacturing lumber. In their brief, they say:

'“The Buckley & Douglas Lumber Company had the incidental power to erect its salt block to consume a waste product arising in its lumber business under the facts existing and which were presented to this court in the quo warranto proceedings on the former hearing.”

As the salt business was carried on at the time the proofs were taken in that case, in 1910, the lumber company was using a considerable quantity of coal as well as the waste wood product in the evaporation of the brine. The amount paid for coal in that year in plant Ño. 1 was $46,897. We do not find that the cost per ton for that year is mentioned in the record, but we may take judicial notice that such an amount would have purchased a large number of tons. We may therefore assume that the use of coal in addition to the waste wood product for fuel is permissible under the incidental power to manufacture salt. Counsel further say:

“When the incidental power of the Buckley & Douglas Lumber Company to manufacture salt ceased, its right to continue that industry ceased, and it could not change the primary purpose for which it was organized in order to maintain a good will which it may have theretofore secured in the salt business.”

The question then would seem to resolve itself into one of fact: Has such incidental power ceased by reason of the exhaustion of the company’s supply of forest products ? There is an abundance of proof that substantially all the other sawmills in the vicinity of Manistee have discontinued both the lumber and salt business for the reason stated. Counsel urge that the purpose of entering into this contract was not to provide a means of using profitably its waste wood product, but to engage in the business of manufacturing salt by the use of coal alone as fuel. We have carefully read the record and are satisfied that the lumber company had at the time the contract was entered into a sufficient quantity of timber to operate its mill at least during its lifetime under its charter. We find no little difficulty, in the determination of this question of fact, in distinguishing between the evidence affecting the power of the company to contract and that bearing on the propriety or wisdom of entering into such a contract. The latter has, of course, no bearing on the former. We cannot but find, under the proofs, that the pans used in the evaporation of the brine were fast becoming unfit for use. A number of expert witnesses so testified, one of them, Mr. Powell, saying:

“The pans are now 23 years old and judged by their interior condition, I think, they have lived their full useful life. It will be good luck if they last any length of time further.”

If the company had sufficient timber to justify the repair of the apparatus used in manufacturing salt and in replacing the wornout pans, and had authority so to do, the making of the contract for a new system was but an exercise of the same power and, though it may have been an improper or unwise act, yet, if not unwarranted, it would not be ultra vires. The board had a right to take such action as would prevent the loss of their waste wood product. They had an opportunity to enter into a contract for the installation of a plant, in the operation of which four times the amount of salt could be produced by the úse of the - quantity of fuel they were then consuming. It was not an experiment, as the record shows many such plants were then in successful operation. They were' fully protected by a guaranty and the right to test the apparatus for 120 hours before acceptance. The record shows that the value of the waste product and the coal used for fuel during the five years preceding 1918 had been relatively equal. It also shows that with the new equipment they will be able to manufacture as much salt as they were then producing by the use of the same amount of waste product alone.” Had they concluded to make repairs on the old plant, we apprehend that no question of power would have been raised. The right to replace wornout apparatus would follow the right to repair. The question seems to us rather one of judgment as to what it was best¡ to do than one of the exercise of power under the charter.

Under the contract, the company will manufacture salt .by the use of fuel, partly the waste product of the mill and partly coal, as it always has done. While the amounts paid for coal as fuel in 1917 and 1918 were much in excess of those paid in previous years, we find that this was largely due to the advance in the price of that commodity. As such manner of operation in the past has been within its corporate powers, we fail to see how operation under the contract can be said to be a usurpation of authority. The conclusion thus reached renders it unnecessary for us to consider the question of the express power of the company, or the estoppel of plaintiffs to complain, or the claim of defendants that its powers under its charter can only be attacked in a direct proceeding therefor, all of which, are discussed at length by counsel.

Was the making of such contract a legal fraud' upon the rights of the plaintiffs as minority stockholders? It is earnestly insisted by plaintiffs that, as the company’s charter will expire in 1923 and cannot be renewed without the assent of the plaintiffs, who own more than one-third of the capital stock, the consummation of this contract, involving a very large expenditure, against their protest, amounts to a legal fraud upon their rights as stockholders. While conceding that management of its corporate affairs is committed to its board of directors, it is contended that, when its life under its charter is about to expire, the creation of so large a liability should be enjoined by; a court of equity.

The facts heretofore stated and otherwise appearing in the record support the conclusion of the trial judge that the board of directors acted in good faith, and in what the majority of its members believed to be the best interests of the corporation. No objection was raised by the plaintiffs to the making of the contract for the reason that it would not be profitable. The board had the same right as a copartnership or an individual would have to enter into any contract reasonably adapted to further the business of the corporation, if within the powers conferred under its charter. They may generally do whatever an individual, acting intelligently and honestly, would do under similar circumstances. Plant No. 1 then consisted of different structures, including a warehouse with a capacity of from 350,000 to 400,000 barrels, five salt wells about 2,000 feet deep, railroad tracks, docks and shipping facilities, besides the apparatus for the manufacture of the salt. Its total cost to the company had been about $350,000. We think the board was justified in preserving this investment, and the way to do so, in their judgment, was to install the new equipment provided for in the contract. Unless something Unforeseen should occur, the expenditure under this contract will be met by the proceeds of the increased production of salt during the life of the corporation. At its expiration by limitation of law, the company will have a prosperous business in full operation to be disposed of in winding up its affairs.

The board was under no obligation to anticipate the expiration of its corporate existence by making preparations for its dissolution. Under the statute (3 Comp. Laws 1915, § 11335), it may continue as a body corporate for the term of three years thereafter, during which time its affairs must be settled. The purpose of this section was well stated in Bewick v. Improvement Co., 39 Mich. 700:

“The object of this clause was not to limit, but to enlarge the corporate privileges, so that corporations whose existence for general purposes was nearing its end might enjoy the advantage of doing general business during the whole charter period, instead of being compelled to begin winding up their affairs before it ended.”

We, much regret that counsel have permitted the apparently hostile personal feeling existing between Mr. Ruggles and Mr. Buckley to find expression in the supplemental briefs filed by them. Matters foreign to the record are referred to and the character of both of these parties, particularly Mr. Ruggles, is assailed in an unwarranted manner. Such matters are, of course, not considered by this court. They have no bearing on the merits of the controversy. We cannot but feel that on reflection counsel will themselves regret that their zeal has thus permitted them to indulge in such statements, which but detract from the ability displayed in their otherwise carefully prepared briefs.

After a careful reading of the entire record and giving due consideration to the claims of the plaintiffs, we are of the opinion that the decree rendered dismissing plaintiff’s bill was justified. It is affirmed, with costs to defendants.

Moore, C. J., and Steere, Brooke, Fellows, Stone, and Clark, JJ., concurred. Bird, J., did not sit.


text:
    WARD v. DE YOUNG.
    1. Negligence — Personal Injuries — Highways and Streets— Way of the Road.
    In an action for personal injuries caused by a collision at a street intersection between defendant’s truck and a bicycle on wbicb plaintiff was riding, admission by tbe driver of the truck that be cut diagonally across tbe street instead of keeping to tbe right of tbe center, held, aside from tbe proofs submitted by plaintiff, sufficient to carry tbe question of the negligence of defendant’s driver ta tbe jury.
    2. Same — Contributory Negligence — Question for Jury.
    Where plaintiff was at tbe very place be bad a right to be;, and be testified that be looked to tbe left, then to the! right, and then ahead, and made every effort to get out: of tbe way after discovering tbe truck, but was unablei to do so, bis contributory negligence was a question for tbe jury.
    3. Evidence — Admissions—Insurance—Prejudice—Trial.
    There was no reversible error in permitting plaintiff and bis wife to testify to conversations with defendant in wbicb be admitted bis liability, although incidentally tbe fact that defendant was protected by insurance was brought out, where there was no improper argument based on tbe incident, and no prejudice is reflected in tbe amount of tbe verdict.

      4. Trial — Restricting Cross-Examination as to Plaintiff’s Previous Condition — Discretion of Court.
    Where tbe cross-examination of plaintiff as to bis mental condition before bis injury covers many pages of tbe record, and bis previous condition, both physical and mental, was fully placed before tbe jury, tbe claim of defendant’s counsel that be was restricted in bis cross-examination of plaintiff in this respect, held, insufficient reason for reversal.
    5. Same — Remark of Court — Harmless Error.
    Where tbe trial court had fully and fairly instructed tbe jury on tbe question of defendant’s negligence, when, in answer to an interruption of defendant’s counsel tbe court made a remark directed to the question of counsel rather than to the evidence, such error is held, to be without prejudice, there being no claim that defendant’s negligence was not fully established by the proofs.
    6. Same — Contributory Neguegence.

      Held, that the question of plaintiff’s contributory negligence was fairly submitted to the jury.
    Error to superior court of Grand Rapids; Dunham (Major L.), J.
    Submitted January 20, 1920.
    (Docket No. 45.)
    Decided April 10, 1920.
    Case by Leonard Ward against Cornelius De Young for. personal injuries. Judgment for plaintiff. Defendant brings error.
    Affirmed.

      Willis B. Perkins, Jr., for appellant.

      Charles E. Ward, for appellee.
   Sharpe, J.

On September 18, 1918, plaintiff was riding a bicycle along the south side of Fulton street, in the city of Grand Rapids.' Proceeding easterly, he came to the intersection of that street with Diamond avenue. When near the curb across the intersection, he collided with a truck belonging to defendant and driven by an employee named Martin De Young. The truck had been stopped on the north side of Fulton street, and about 100 feet east from the intersection. .When started by the driver, it proceeded somewhat diagonally across Fulton street to the point where the collision occurred. The truck struck the rear wheel of plaintiff’s machine, causing him to be thrown violently to the pavement and somewhat seriously injured.

The specific allegations of negligence of the defendant claimed by plaintiff and submitted by the trial court to the jury were:

“that defendant did not continue west'from in front of the store where his truck was standing beyond the center of Diamond avenue before turning to the south; that in turning to the south and passing diagonally across Fulton street, as the driver of defendant’s automobile did, that he was violating all rules of the road, both the statute of this State.and the ordinance of this city, and in violation of the common law rules that he should so use his automobile as not to injure the life or limb of any person; that in doing that, that the defendant was not in the exercise of due care and caution.”

The plaintiff had verdict and judgment for $2,000, and the defendant' brings error. There are many assignments, but they may be fairly grouped in the order in which we now consider them.

Negligence of the defendant. On direct-examination, the driver of the truck testified:

“When I started, I went on a kind of diagonal course south on Diamond. I should judge I had gone about 75 feet before I crossed the center of Fulton street, something like that. No, about 25 or 50 feet, something like that. From where my machine was standing when I cranked up last to the intersection of the curb on Diamond street with the south curb on Fulton street was 75 feet, I should judge. From where my machine was standing in front of Van Du-zen’s from the southeast corner of Diamond, it was somewhere in the neighborhood of 95 feet. I traveled 20 feet of this by pushing, and the remainder of it I went under the machine’s power. In going towards the southeast corner of Diamond and Fulton streets, I went on kind of a diagonal course towards Diamond, south on Diamond. There was nothing' that I know of in the street at the time between me and the bank on the southeast corner of Fulton street or between me and two or three hundred feet west of that bank; I would have seen it if it had been there.”

On cross-examination, he said:

“Q. You cut across the corner of that street, didn’t you?
“A. I did some.
“Q- Did you know it was your duty to look for something there?
“A. Why, yes.
“Q. Why didn’t you?
“A. I don’t know just how— * * *
“Q. You were familiar with this corner?
“A. Yes, sir.
“Q. Stores all around there?
“A. Yes, sir.
“Q. And at times there is lots of traffic on that street?
“A. There is at times.
“Q. And you knew what your duty was, didn’t you?
“A. Yes, sir.
“Q. You knew it was to keep to the right-hand side of,the street?
“A. Yes, sir.
“Q. And you knew it was your duty when you turned a corner to keep to the right-hand of the intersection, that is, the center of the intersection?
“A. Yes, sir.
“Q. Knew that was your business?
“A. Yes, sir.
“Q. You deliberately violated your duty, didn’t you?
“A. Why, I did, yes.”

Aside from the proofs submitted by plaintiff, we think the above testimony of defendant’s employee carried the question of his negligence to the jury.

Negligence of the plaintiff. Plaintiff testified that, as he approached the intersection, he looked to the left, then to the right, and then ahead, and did not see the truck until it was so close to him that, notwithstanding he made every effort to get out of its way, he was unable to do so. He was entitled to have his wheel at the very place at which the collision occurred. Whether or not he did what a reasonably prudent person would do under the circumstances to avoid the collision, was a question for the jury.

Admission of testimony. Complaint is made that plaintiff and his wife were permitted to testify to conversations with defendant in which the statement was made by him that he was protected by indemnity insurance. It is insisted that this fact was injected into the record for the purpose of creating a prejudice in the minds, of the jury and that they were influenced thereby. If counsel’s claim in this respect be well founded, a reversal must be had under the repeated rulings of this court. Peter v. Railway Co., 121 Mich. 324 (46 L. R. A. 224) ; Hillman v. Railway, 137 Mich. 184; Kerr v. Manufacturing Co., 155 Mich. 191; Hughes v. City of Detroit, 161 Mich. 283; Morrison v. Carpenter, 179 Mich. 207 (Ann. Cas. 1915D, 319) ; Sherwood v. Babcock, 208 Mich. 536.

It is, however, the claim of the plaintiff that the record discloses no such intent, that the objectionable statement was a part of a conversation which plaintiff was entitled to have considered by the jury, tending to show an admission of liability on the part of defendant.

To maintain his suit, plaintiff was required to prove three facts: first, that the defendant was. the owner of the automobile truck by which he was injured; second, that his injury was due to the negligence of the driver of the truck; and, third, that he was himself free from contributory negligence. The plea was the general issue, thus putting plaintiff to his proofs on these several requirements. He also sought to explain the delay in bringing suit, his injury having occurred on September 18th and his declaration not having been filed until April 11th of the following year.

He sought to establish the first and second of these facts by the admissions of the defendant.. He had been informed that defendant called at his home while he was confined to his bed and talked with his wife about the matter. When able to go out, he went to defendant’s store to see him about it. As to what then occurred, plaintiff testified:

“Q. You had been informed he had been there?
“A. Yes, sir.
“Q. And said certain things?
“A. I was interested in what he said and I went over to ask him personally about what he talked about when he was at our house, because he didn’t come when I could talk with him. So afterwards, I went over'to his store and asked him if the insurance company was going to settle.”

An objection being made, plaintiff’s counsel said:

“I want the talk between him and Mr. De Young at that time.
“Q. I will ask you to tell the conversation between you and Mr. De Young.”

On objection again being made, plaintiff’s counsel said:

“It is part of an admission of liability here when we get to it, I think.”

After discussion, during which the jury were excused, the court permitted the witness to proceed, and he said:

“I asked him if he told my wife that the insurance company was going to send its agent to our house and arrange to settle for the damages that Mr. De Young had done me. He said that he had talked with the insurance agent about it, and had told him that his driver had cut across the corner, instead of going around it the way he ought to, and that he thought that they were liable — that he was liable, and that they were, too, and that they would have to settle it. He said that he told them that they ought to come up to see me and settle the case and he said that they had promised to come up within a week. He had seen them the day before. I talked with him, and they had promised at that time to come up within a week to settle the case so that we wouldn’t have to try it. $ $ ‡
“Q. Did you tell Mr. De Young, in the second talk, why you came to see him?
“A. I did.
“Q. Tell us what you said to him and what he said to you.
“A. Why, I told him that the reason I had come to see him was that we had waited for a settlement and he promised that the insurance company was going to make a settlement, but they hadn’t come near us, and I told him the reason that I had come to see him was to find out whether they were going to_ dispute their liability or not at the trial and I said if they expected to dispute their liability on the trial we would start suit.immediately because one of our chief witnesses was practically on his death bed, and we would not be able to get his testimony if we postponed the suit any longer and — he said that they did not intend to dispute their liability on the trial, and if I would wait just another week or two the thing would be all settled up.
“The suit was not settled.
“Q. At that time did he say anything more about how the boy drove across the corner there?
“A. Yes, sir; he said — I talked with him again on different occasions, and he was convinced that his driver was in the wrong, that he cut diagonally across the comer instead of going around the center of the street, and that he and the insurance company were liable for damages.”

The plaintiff’s wife, after stating that defendant had called at their home, was permitted to testify:

“Q. You say he came there several times?
“A. Yes.
“Q. I wish you would tell us what he said and who would come to see him?
“A. He said the insurance man would be up to see him.
“Q. Up to see Leonard?
“A. Yes.
“Q. How long after the accident was that?
“A. Why, it was just a few days, he was there several times and told me that.”

The defendant, when called as a witness in his own behalf, denied that he had ever had any conversation With plaintiff or his wife in which he admitted liability. On counsel for plaintiff pressing him, he admitted that he had, in substance, made the statements as claimed by them.

There is no allusion to the insurance in the opening statement of plaintiff’s counsel, which appears in full in the record, nor is there any claim that he said anything about it in his closing argument. The court instructed the jury:

“Gentlemen, I desire that you give particular attention to what I am about to say to you. One or more of the witnesses in detailing a conversation with the defendant, Cornelius De Young, made some reference to what such witness claimed to have been talked on the part of the defendant with reference to some insurance company. I do not recall exactly what his testimony was, but I desire to say to you that there is no insurance company a party to this suit. This is a suit between the plaintiff, Leonard A. Ward, and the defendant, Cornelius De Young, and you determine the liability or nonliability of the defendant in this case from the sworn testimony in this case as to just what occurred at the time of the accident, and you will dismiss from your mind entirely what was said with reference to any insurance company. You will determine this case in exactly the same way as if no reference had been made to any insurance company, and in disregard of anything that has been said in reference to any insurance company. * * *
“If you find that plaintiff is entitled to recover, he is entitled to recover just such a sum as will fully and fairly compensate him for all of his damages received in that collision, and you would not have to know anything about any insurance company. You do not determine it from any insurance policy or anything else in your jury room. Now, I want you to regard what I say on that, and let no juryman refer to anything concerning an insurance company, for you have nothing to do with it, you have no interest concerning it; it is a matter of no concern whatever to you.”

In denying the motion made by defendant for a new trial, the trial judge, in disposing of the error claimed to have been thus committed, said:

“Now, I have said there was no inflammatory or prejudicial argument made by plaintiff’s counsel. No argument was made by him that could possibly have prejudiced or intended to prejudice the jury. The size of the verdict, two thousand dollars, to my mind is conclusive that the jury were in no manner improperly influenced in reaching the verdict against defendant, or in determining the amount of damages to which the plaintiff was entitled.”

The injuries which the plaintiff sustained were serious and painful. He. was unconscious when taken home, and remained so until the next day. He did not recognize the presence of the doctor until the’ fourth day. He was confined to his bed for nine days, during which time he suffered much. He was affected with dizziness .for a considerable time, falling downstairs five or six weeks after his injury on account thereof. Dr. Tuttle, who attended him, diagnosed his trouble as partial paralysis, caused by a fissured fracture of the skull. He testified that there was much danger of a recurrence of the paralytic condition; that, in his opinion, “this was a serious injury and that it is a permanent one.”

The purpose of a suit at law is to secure a fair trial of the issues presented before an impartial jury. To effectuate such purpose, the trial court should exclude all immaterial and irrelevant matter. If it becomes apparent to this court on appeal that counsel has sought to obtain an undue advantage by injecting into the record matters alien to the issue and of a nature likely to influence the jury to act other than impartially, and it is manifest from a consideration of the entire record that the verdict probably reflects the effect of such erroneous conduct, a reversal will be granted. We have quoted from the record at length and summarized the testimony as to plaintiff’s injuries. We think there is much merit in the contention of plaintiff’s counsel and the finding of the trial court in denying the motion for a new trial that the verdict in no way reflects any prejudice on the part of the jury. The testimony tending to establish defendant’s negligence and plaintiff’s lack of contributory npgligenee was of such a character as may be said to fairly negative any inference that the verdict in favor of plaintiff was in any way affected by prejudice or the consideration of the fact that defendant was protected by insurance. Neither can we find any indication that the amount allowed plaintiff was enhanced thereby.

Aside from these considerations, we are unable to say, after reading the entire record, that plaintiff’s counsel was intentionally seeking to get the fact that such insurance was carried before the jury. The fact that a defendant is so insured should not render him immune from having his admissions used against him when favorable to plaintiff, and if, in placing before the jury a statement made by him, or conversation indulged in, which tends to show such admissions, it appears as a part thereof that he is so protected, he has. only himself to blame therefor.

It is the claim of defendant’s counsel that he was restricted in his cross-examination of plaintiff as to his mental condition before his injury. Such examination covers, many pages of the record. The previous condition of plaintiff, both physical and mental, was fully placed before the jury. We find no sufficient reason for reversing the case for this reason.

Error in the charge. The court had fully and fairly instructed the jury on the question of defendant’s negligence. In answer to an interruption of defendant’s counsel, he said:

“If he went at a rate of speed of three miles an hour, and if you should find that that was not a safe rate of speed there in that business section of the city, then he would be negligent.”

As is said by defendant’s counsel, there was no evideuce that the street at the point was being used by any other persons than plaintiff and defendant’s driver at the time. It is apparent, however, that this remark of the court was directed to the question propounded by counsel rather than to the facts as appeared in evidence. There is no claim made that defendant’s negligence was not fully established by the proofs, and the error committed must be held to be without prejudice. The question of plaintiff’s contributory negligence was, we think, fairly submitted to the jury.

We’ have given consideration to the other assignments of error and find in them no sufficient reason for disturbing the verdict of the jury.

The judgment is affirmed.

Moore, C. J., and Steere, Brooke, Fellows, Stone,. and Clark, JJ., concurred. Bird, J., did not sit.


author: Steere, J.

text:
    BERKSHIRE LAND CO. v. MORAN.
    1. Principal and Surety — Surety por Hire — Surety Released by Substantial Breach — Strictissimi Juris.
    A surety who is prejudiced or suffers loss by reason of a substantial breach of the contract on the part of the assured is relieved of liability, although paid for the undertaking, and said holding is not in conflict with the former holdings of this court in applying the rule of strictissimi juris.

    2. Same — Prompt Notice op Breach — Reasonable Requirement.
    Under conditions as they existed in 1916, during the world war, when, according to testimony, the cost of excavation and similar work would jump up 10 or 15 per cent, every three or four months, it was not an unnatural or super-technical precaution to provide, in an indemnity bond for the faithful performance of a paving contract, that the surety should be promptly notified of any breach of the contract or any other act or omission on the part of the principal which might involve or cause a loss for which the surety might be answerable.

      On the question of discharge of surety on fidelity obligation by failure of employer to discover delinquency or to notify surety thereof within the time specified in the obligation, see note in L. R. A. 1916F, 715.

      3. Same — “Immediately”—Definition.
    The requirement in the bond that notice of default be given “immediately” does not mean “without any time intervening,” or “instantly,” but means that the notice should be timely or promptly given, without unnecessary delay, and with reasonable diligence, that the surety might take all available steps for its protection.
    4. Same — Breach of Condition — Delay of 30 Days — Release of Surety.
    A delay of about 30 days after the time fixed for the completion of the paving contract, in notifying the surety of the breach, helé, sufficient to discharge the surety, under the conditions shown by the record.
    Error to Wayne; Mandell (Henry A.), J.
    Submitted January 15, 1920.
    (Docket No. 8.)
    Decided April 10, 1920.
    Assumpsit by the Berkshire Land Company against William E. Moran, principal, and the Fidelity & Deposit Company of Maryland, surety, on a bond. Judgment for plaintiff against the principal only. Plaintiff brings error.
    Affirmed.

      Goodenough, Voorhies & Long, for appellant.

      Keena, Lightner, Oxtoby & Hanley, for appellee surety.
   Steere, J.

Plaintiff is an incorporated land company owning a subdivision in Crosse Pointe Park village traversed by a dedicated thoroughfare known as the Yorkshire highway. On March 25, 1916, it entered into a written contract with defendant Moran to pave said Yorkshire highway according to plans and specifications attached to and made a part of said contract. By the terms of this contract Moran was required to furnish a bond for its faithful performance and such bond of even date therewith was attached to the contract, defendant Fidelity & Deposit Company being surety thereon.

The specifications made a part of this contract required the work to be commenced on or before April 1, 1916, and completed within 120 days, or by August 1, 1916. Moran commenced préparation for the work early in April, that first required being certain rough grading, for which a steam shovel was obtained after some delay and put upon the job. Its work was finished in two or three weeks. Following this the work lagged and it is claimed comparatively little more was accomplished. In August, 1916, Moran threw up the contract and ceased all efforts, owing, as he testified, to his resources being exhausted. The first notice to the insurance company that he had failed in performance and was in default is dated August 80, 1916, to which no immediate reply was made. A second letter, dated September 9th, was sent the surety company referring to the first and saying in part:

“If it becomes necessary to relet the work, this action ought to be taken in the near future in order to prevent our client being put to the loss of having the property unimproved during the winter.”

'Under date of September 11th the surety company acknowledged the receipt of these letters, stating the. matter had been referred to its Detroit agent; and on October 7, 1916, its special agent wrote plaintiff that it would not exercise any right which it might have to complete the contract. On receipt of such notice plaintiff sought to obtain bids for its completion from all available contractors, many of whom were unwilling to bid under the then uncertain conditions as to cost of labor and material, but on October 26, 1916, a bid was received from a responsible contractor named Cook followed by a contract with him to complete the contract according to the original plans and specifications at an increased cost, as plaintiff claimed, of over $9,000 more than Moran's contract price. Cook eventually completed the work according to agreement and was paid in full by plaintiff.

This action was brought in the circuit court of Wayne county against Moran and his surety to recover damages resulting from delay and additional cost of completing the contract as to which he defaulted, Upon the trial a verdict was directed by the court in favor of the defendant surety company on the ground that plaintiff had failed to comply with the conditions of Moran’s bond requiring prompt notice to the surety of his failure to complete his contract, and the jury was instructed as to Moran’s liability that plaintiff was entitled to a verdict in an amount somewhere between a minimum of $5,000 and a maximum of $9,455.48, which was submitted for the determination of the jury within those limits and a verdict was rendered against Moran for $6,080.48, and judgment entered accordingly.

Plaintiff thereafter removed the case to this court for review on numerous assignments of error which, as stated in its counsel’s brief, involve for consideration the two questions:

“1. Whether the fact that plaintiff did not notify the surety company immediately after August 1st that Moran had not completed the contract discharged the surety. * * *
“2. Whether the verdict against Moran could under the testimony have been for any sum less than $9,494.48, the amount paid by plaintiff in excess of what it would have been obliged to pay Moran.”

The main contention is over the first question, to which the briefs of counsel are largely devoted. The trial court directed a verdict for the Fidelity & Deposit Company on the ground that it appeared by the undisputed testimony that plaintiff first breached the bonding contract by neglecting to seasonably notify the surety of Moran’s default, which was a condition precedent to its recovery.

The bond is in the sum of $25,000, runs to the Berkshire Land Company, called the “owner,” recites in the instrument that it is given by Moran as “principal” and the Fidelity & Deposit Company called the “surety.” It is conditioned in customary phraseology on the principal faithfully performing the described paving contract according to its terms, and is expressly made subject to certain stated conditions precedent and provisions, the material portions of which are as follows:

“1. The owner, as a condition precedent to any recovery hereunder, shall faithfully perform all the terms, covenants and conditions set forth in said contract and in this bond, or in either of them, to be performed by the owner at the time and in the manner specified.
“2. The owner shall notify the surety by registered letter, addressed and mailed to the surety at its home office in Baltimore, Maryland, of any breach of said contract by the principal, or any act or omission of the principal, or of any agent or employee of the principal which may involve or cause a loss for which the surety may be liable, immediately after which breach or act or omission shall have come to the knowledge of the owner or any representative of the owner authorized to supervise the performance of said contract and if the principal abandons said contract or is lawfully compelled by reason of a default to cease operations thereunder the surety shall have the right at its option to assume the contract and to sublet or complete the same.”

The agreed date for completion of this contract was 120 days after April 1st which, accepting plaintiff’s computation, was August 1, 1916. The undisputed evidence is that the contractor not only failed to complete the work within the contract time, but totally failed to subsequently perform his agreement at a later time, as urged to do by plaintiff’s agent without the surety’s knowledge, or consent to an extension of time. Plaintiff had covenanted with the surety that in the event of the contractor’s. breach of his contract, or if he was guilty of any act or omission “which may involve or cause a loss for which the surety may be liable,” it would immediately after such “breach, act or omission came to its knowledge or that of any representative,” notify the surety by registered mail. That this was not done within the plain meaning and intent of the condition precedent so requiring, is conclusively shown by plaintiff’s own testimony. In a case closely analogous, which was referred to by the trial court in directing a verdict for the surety, it is said:

“The plaintiff failed to keep his covenant before the surety company had in any way failed to comply with those which it had made. On this account, he cannot enforce the fulfillment of the covenant of the defendant. He who commits the first substantial breach of a contract cannot maintain an action against the other contracting party for a subsequent failure on his part to perform.” (Citing many cases.) National Surety Co. v. Long, 60 C. C. A. 623, 125 Fed. 887.

Of this decision plaintiff’s counsel urge that it followed the rule of strictissimi juris and is “out of line with later decisions,” citing and discussing many cases in support of their contention that the trend of modem authority departs from the strict rules of forfeiture laid down in the Long Case. We do not understand that those authorities depart from or modify the general rule relating to contracts stated in the Long Case, but do hold in construing various indemnity bonds given by paid securities that under the facts involved in the respective cases failure or delay in giving notice or some other deviation from strict compliance was not, or may not have been where facts are at issue, a material variance, or “substantial breach,” of the contract unless it appear that the paid surety was in some manner prejudiced or suffered loss by reason of the same. As the decisions of this court tend to that rule of construction it is unnecessary to discuss the many cases cited from other jurisdictions. People v. Bowen, 187 Mich. 257; People v. Traves, 188 Mich. 345; Ladies of the Modern Maccabees v. Surety Co., 196 Mich. 27.

Plaintiff’s secretary, and first witness, B. C. Spitzley, testified that he was the one immediately concerned with the details of the work as it was going on from day to day and reported it to the directors; that shortly after the paving contract was let to Moran some preliminary work was done while he was waiting for the steam shovel, over which there was delay. Of this he said:

“I think it was around the first of June the steam shovel arrived. That is the time the excavating commenced. After the steam shovel was on the ground, the work progressed very satisfactorily for a period of time — I should say for two or three weeks until the rough excavating was completed and then the work stopped entirely. I made numerous attempts to get in touch with Mr. Moran over the telephone. * * * With very few exceptions I had very poor success in getting into communication with him at all until about the fore part of August. * * * It was in the fore part of August, I couldn’t state exactly the day. * * * I went out to Mr. Moran’s house, * * * he promised me then as he had promised me a number of times before that he was going to resume the work immediately. * * * My argument with him, which he acquiesced in, was the fact that the quicker that he got the job through the less money he would lose. * * * The conditions were such that it was apparent about the last of June or first of July that the work could not be completed by August first.”

Plaintiff’s witness, Thomas M. Campau, the engineer it employed to prepare the specifications and superintend the contract, testified that the real work was not begun until between June 20th and July 1st and owing to the delay in starting it was apparent the job would not be done strictly within the terms of the contract; that he urged Moran to start paving as soon as the shovel was out of the way, about two weeks after it started, so that he might get through before frost set in, although Campau knew it could not be finished by August 1st because of the delay in starting.

George Cook, called by plaintiff, testified that Spitzley requested him to bid on finishing the contract, pointed out the work already done and stated he either had or expected low figures on the job; that in making his estimates according to the contract specifications he took into consideration the work done by the previous contractor and based his bid, made in the fall of 1916, on what remained to be done; that it was a reasonable bid from plaintiff’s point of view but not so for him as he subsequently discovered for it proved unprofitable owing to the rapid change in conditions, with increase' in prices and decrease in efficiency of labor; that the cost of labor and material began to rise in 1915 and kept increasing; that in October, 1916, the going cost of excavation on jobs like this was SO cents a yard and in March, 1916, when Moran took the contract it was about 25 cents. Spitzley was familiar with and testified to this constant rise ’ in cost of contracting owing to the world war, and said of it that in the building business “every three or four months the price would jump up 10 or 15 per cent, it never went down.” Campan also testified to the same effect and estimated an increased cost for excavation of 25 per cent, from the fall of 1916 to the spring of 1917.

Clearly under such conditions it was not an unnatural nor supertechnical precaution to provide in an indemnity bond for faithful performance of an improvement contract that the surety should be promptly notified of any breach of the contract or any other act or omission on the part of the principal which might involve or cause a loss for which the surety might be answerable. The reason for requiring such notice, even in normal times when not accentuated by the uncertainties of rapidly rising prices resulting from conditions caused by a great war, and the permissible method of construing it in practical application are thus stated in Hormel & Co. v. Bonding Co., 112 Minn. 288 (128 N. W. 12, 33 L. R. A. [N. S.] 518) :

“The object of requiring notice to be given of the contractor’s default which may involve loss was to enable the surety company seasonably to lake such practicable action as might prevent or minimize loss by reason of the default, and it is not to be strictly construed for or against either party, but reasonably as to both. So construing it, it is clear that the provision for immediate notice does not require notice to be given instantly upon learning of the default, but that it should be given within a reasonable time in view of all the circumstances.”

Unquestionably the requirement that notice of default be given “immediately” does not in the connection used mean “without any time intervening” or “instantly” as the lexicographers define the word; but it being plainly the purpose and intent of such provision that prompt notice should be conveyed to the surety to enable it to take all then available steps for its protection, a fair construction of the condition precedent to that' end is that the parties intended and understood it to mean the notice should be timely or promptly given, without unnecessary delay and with reasonable diligence. Plaintiff’s own testimony shows failure in those particulars. Timely warned by prompt notice of the situation the surety, with its right to take possession and complete the contract in case of default, could have conferred with the contractor before his resources were exhausted and he had “moved off the job,” about August 6th as he states, and aiding or co-operating with him might have pressed the work to completion in such an uncertain time of increasing' prices with much less loss than resulted.

Spitzley himself, early knowing of delays and familiar with existing conditions, of which the surety was not advised, recognized a probable loss and the advisability of prompt action while Moran was yet on the job, urging him that the quicker he got through the less money he would lose, and says, he “came to the conclusion that they (the improvements) could not be put in (that summer) unless Mr. Moran got busy the fore part of August”; but no notice of delays,, Moran quitting the job, or any other default was given, the surety in compliance with the condition precedent until on, or after August 30th, although the conditions as known to Spitzley had become such by the last of June or first of July that it was apparent the work, could not be completed by August 1st.

In Gamble-Robinson Co. v. Insurance Co., 113 Minn. 38 (129 N. W. 131), immediate notice to the surety of default by the principal was required. The employer learned of the default upon which his. claim was predicated the latter part of August and neglected to notify the surety until September 28th. It was held as a matter of law that under the circumstances a delay of approximately one month was unreasonable and discharged the surety. That court is in substantial accord with this on the rule of construction applicable to conditions precedent in the bonds of sureties for hire. In Hormel & Co. v. Bonding Co., supra, a delay of 20 days was held to release the surety, the court saying:

“The very purpose of the notice was to enable the surety company to investigate, exercise its judgment, and take steps to avert the threatened loss. The owner could not speculate upon the probability of loss, but was bound to give the notice as required by the contract.”

Here the owner not only speculated upon the probability of loss, but apparently appreciated that under existing conditions it was inevitable and the sooner the job was finished the less the loss would be. It is more than a presumption in this case that between the time that knowledge came to the owner of delays, omissions and breach of the contract on the part of Moran and the time at which the required notice of the same was given to the surety, there was such change in the cost and conditions that the surety would in all reasonable likelihood be seriously prejudiced by the delay. It is shown that during the summer and fall of that year, as for some time before and since, the market for labor and material .was rising. Moran’s contract price for this job, in March, 1916, was $26,238.62. Cook’s contract price of October, 1916, for finishing the work, which proved unprofitable, was $35,694.10. Campau’s estimate for the work Moran had done was $4,050. This would make the total cost of the finished work, as required by Moran’s contract, $39,744.10, or an increase in cost above his contract price of approximately 50 per cent.

Under the undisputed facts in this case the trial court rightly held as a matter of law that plaintiff prejudicially neglected to promptly and within a reasonable time give the surety due notice as contemplated in the contract between the parties. Under the circumstances shown such palpable and prejudicial default in a material condition precedent was a substantial breach of the contract which' discharged the surety.

As to the second proposition, counsel for defendants make no argument in their brief against plaintiff’s contention that the judgment, against Moran should under the undisputed evidence be the difference between his contract price and what full performance actually and necessarily cost plaintiff, or in other words the increased cost of the work to plaintiff by reason of Moran’s default. This plaintiff’s counsel compute at $9,494.48, and by the figures defendants’ counsel apply it amounts to $9,455.48. It was stated by defendants’ counsel in oral argument that as to plaintiff’s claim in that particular Moran did not desire reversal or re-trial on that issue but consented to the increase of judgment for which plaintiff contends. If plaintiff so desires, the judgment will be remanded with direction to the trial court to enter judgment in its favor against Moran for the increased amount claimed, otherwise the judgment as to him will stand reversed and a new trial granted with costs of this court to plaintiff.

The judgment of the trial court dismissing the case as to the defendant surety is affirmed,

Moore, C. J., and Brooke, Fellows, Stone, Clark, Bird, and Sharpe, JJ., concurred.