author: Bbooke, J.

text:
    KELLY v. CLEMENTS.
    1. Fraud — Corporations—Liability of Directors — Evidence.
    Without actual evidence that the directors of a corporation authorized the issuance or use of á fraudulent circular, fraud should not be inferred as to a member of the board who did not profit personally by the representations.

    2. Same — Evidence—Parol Testimony.
    Parol proof of contents of a land contract, not within the jurisdiction of the court, was properly excluded, no evidence being offered to excuse the failure to produce the written instrument and no attempt having been made to procure competent evidence by commission. Phillips v. Benevolent Society, 125 Mich. 186 (84 N. W. 57).
    3. Same — Vendor and Purchaser — Stockholders.
    Representations made in a circular issued by a development corporation to the effect that the corporation owned certain lands, were not of a fraudulent character, where it appeared that the company owned an interest in the property under a land contract.
    4. Vendor and Purchaser — Freeholder—Land Contracts.
    The vendee of realty under a land contract is a freeholder.
    5. Fraud.
    Upon a record showing that representations regarding the value of land owned by a corporation as described in a circular were vague and uncertain, and that after being cleared and cultivated the property was more valuable than the circular stated, it was not erroneous to direct a verdict for defendant, a director, that plaintiff claimed participated in the fraud.
    Error to Wayne; Van Zile, J.
    Submitted January 27, 1913.
    (Docket No. 91.)
    Decided April 8, 1913.
    Case by Mary E. Kelly against Charles L. Clements for fraud. Judgment for defendant on a directed verdict. Plaintiff brings error.
    Affirmed.

      McHugh, Gallagher & McGann, for appellant.

      Walsh & Walsh, for appellees.

       The question of the rescission of a subscription to corporate stock for fraud or misrepresentation is the subject of a note in 33 L. R. A. 721.

   Bbooke, J.

The Central American Commercial Company of Honduras was incorporated under the laws of the State of Maine on June 8, 1901. The original incorporators were residents of Ohio. One Colonel Pennington of Cincinnati seems to have been the principal promoter of the concern. The object of the corporation was the purchase and development of banana plantations in Central America.

Pennington undertook to interest certain business men of Detroit in the undertaking, and succeeded in selling stock in the concern to the five defendants. Defendant Clements became connected with the company as stockholder, director, and treasurer prior to July, 1901. The other four defendants became stockholders and directors at a later date.

The company seems to have secured title by way of an executory land contract to a tract of 1,110 acres upon the Chameleeon river in Honduras. In order to secure capital with which to clear and plant, it proposed to issue and sell what it denominated a “Title Bond or Contract for Sale of Real Estate.” By the terms of this instrument the purchaser agreed to pay the sum of $5 per month for each share purchased until $150 per share had been paid. The contract recites that:

“Each share is the undivided one-thousandth part of one thousand acres in a tract Of land containing eleven hundred and ten acres owned by the Central American Commercial Company. * * * The said Central American Commercial Company agrees to clear the land described herein, and to plant same with banana plants, and to have the same in full bearing within twenty-five months from the date of this contract, and the said company further agrees to care for and cultivate said banana plants, to harvest and market the bananas and pay to the said......... his heirs, etc., all the net profit derived from the sale of the bananas raised upon said land except ten per cent, of the net profits thereof, which is to be retained by the company. The said........having the option, at any time after full payment, to have his one-thousandth interest for each share herein represented in said land set off to him and receive a deed for the same.”

On July 15, 1901, the plaintiff purchased one of these “Title Bonds” representing 10 shares or acres, and on that day and thereafter paid therefor to the company the full purchase price of $1,500. Her “bond” was executed by the corporation by J. S. H. Pennington, president, and Charles H. Clements, treasurer.

In all, the company sold some 128 of these acre-shares, some (perhaps most) of which were never fully paid up..

It entered into possession of its land in Honduras, which at the commencement of its operations was heavily timbered, and cleared and planted with bananas 528 acres. In June, 1902, Mr. Bruce Good-fellow, one of the defendants, became general manager. He spent much of his time upon the plantation up to 1905. The enterprise proved a failure because of the lack of adequate transportation facilities. It appears that the Ulua Transportation Company held a concession from the government of Honduras which gave it the rights of navigation upon the Chamelecon river. This company had entered into a contract with the Central American Commercial Company to transport the fruit to the port by way of the Chamelecon river. This river, it seems, is, in places, very shallow, and navigation is often obstructed by sunken logs or snags. The navigation company did not have boats of sufficient capacity to handle the fruit, and was slow in acquiring such, and in ridding the river of snags so as to permit them to be operated. By the summer of 1904, however, the transportation company placed in commission a boat it had procured to be specially built in Chicago, and had cleared the river from obstructions, so that it was possible to run this boat up the stream as far as the banana plantation. One or more trips were made, and considerable fruit was taken out and marketed.

At this point an unusually severe tropical storm or cloud-burst swept the country. The Chamelecon river rose 22 feet. Its banks, being apparently of alluvial character, were undermined, and much soil, as well as many trees, were swept down in the torrent and lodged lower down in the river, where the stream was wider and shallower. In some places the obstructions so created caused the river to leave its course entirely and seek new channels. This disaster rendered the river entirely unnavigable for the larger boat until the obstructions were removed. In the meantime the plantation was producing bananas abundantly, which, under the prevailing conditions, could not be marketed.

The record shows that the land is exceedingly fertile; that it is exceptionally suited for banana cultivation; and that it will produce from 750 to 1,000 bunches per acre. If adequate transportation facilities existed, the net profit on each bunch would be from 35 cents to 37 cents. Confronted by the situation described, the Commercial Company cast about for other means of reaching the market. The railroad was only 10 miles distant, but to build and equip a branch would cost $50,000 or upwards. It considered the feasibility of using traction road engines, but was advised against their practicability. Finally, in 1905 or 1906, the stockholders transferred their stock to one Carew, who in consideration thereof assumed the debts and obligations of the concern. The land seems to have been deeded directly to him at the instance of the company, though the record is not clear upon this point. At this time plaintiff’s contract had been fully paid up.

As a result of the whole venture the Detroit stockholders, including the five defendants, lost their entire investment, amounting to many thousands of dollars, and the bond or contract holders are in like plight.

The plaintiff seeks to recover her investment from the five defendants, who were directors at the time the company ceased to do business. Her declaration alleges that she was induced to invest by reason of false and fraudulent representations made to her at the time she purchased her “bond” in July, 1901. It appearing upon the trial that none of the defendants, except Charles H. Clements, was officially connected with the company at that time, she voluntarily discontinued as to all except him. A verdict having been directed in his favor, plaintiff reviews the case in this court by writ of error.

Her' allegations of fraud are based particularly upon a prospectus or circular which was shown to her by one Stevens, an agent of the company, who sold her the “bond.” This circular contains a series of letters from different individuals relative to the land in question, its fitness for banana culture, its title, its value, the probability of large profits, and the character of the transportation facilities. Plaintiff charges fraudulent misrepresentations as to (1) the title to the land; (2) the value of the land; (3) the character of the transportation facilities.

The prospectus which contained the alleged misrepresentations is not shown to have been issued at the instance or with the consent of any of the defendants; indeed, it is not shown to have been issued or authorized by the corporation. While the presumption that it was so authorized and, at the time of its issuance, had the assent of the then board of directors is persuasive, we do not think this presumption, suspicion, or belief should be accepted in place of actual evidence in a case of this character, where fraud is charged.

But, assuming that the prospectus was duly authorized by the corporation, and received the active assent of defendant Clements, and that the statements therein contained were false, it may still be doubted (there being no evidence that Clements profited personally by the sale to plaintiff) whether he would be liable. See Getchell v. Dusenbury, 145 Mich. 197 (108 N. W. 723); Massey v. Luce, 158 Mich. 128 (122 N. W. 514). We find it unnecessary, however, to consider this phase of the case, for the reason that we agree with the conclusion of the learned circuit judge that there is no competent evidence in the record tending to establish the falsity of the representations.

It is said that it was represented that the corporation owned the land, whereas it had at that time only an executory contract for its purchase.

Parol evidence of the contents of the alleged land contract to the corporation and of the deed to Carew was offered and excluded. These instruments were, apparently, beyond the jurisdiction of the court, but it was not shown that they were either lost or destroyed; nor was proof offered excusing the failure to produce the originals or copies thereof. Such evidence, it would seem, could readily have been procured by commission or otherwise. The evidence was properly excluded. Phillips v. Benevolent Society, 125 Mich. 186 (84 N. W. 57).

But, in any event, the record clearly shows that, even if the title was evidenced by contract instead of by deed, that fact had no bearing upon the loss sustained by plaintiff. The purchase price was nearly, if not quite, paid at the time that the company abandoned its project. Had the company taken title to the land by way of deed and given a mortgage to the vendor to secure an unpaid portion of the purchase price, it would scarcely be contended that it was not the “owner,” within any ordinary definition of that term. The title it actually had, if the excluded evidence is considered, is in essence the same. We have held that the vendee in a land contract is a freeholder. Starkweather v. Chatfield, 149 Mich. 443 (112 N. W. 1071), and cases there cited. See, also, Bowen v. Lansing, 129 Mich. 117 (88 N. W. 384, 57 L. R. A. 643, 95 Am. St. Rep. 427) ; Convis v. Insurance Co., 127 Mich. 616 (86 N. W. 994); 28 Am. & Eng. Enc. Law (2d Ed.), p. 234.

We do not overlook the fact that plaintiff’s contract contains the following language:

“This contract represents ten shares of the one thousand shares in the property described as follows, to wit: Each share is the undivided one-thousandth part of one thousand acres in a tract of land * * * owned by the Central American Commercial Company.”

But, as before pointed out, such evidence as there is in the record indicates the substantial truth of the representation as to ownership. The representations-as to value in the prospectus are vague and uncertain. All the evidence upon the question in the record is to the effect that the land is valuable and, when cleared, planted, and producing, worth much more than the price which complainant paid.

The evidence upon the question of transportation facilities is based wholly upon statements contained in the prospectus. Again, assuming that defendant Clements is responsible for the contents of the prospectus, we are unable to find in the record any evidence that, upon this point, any untruthful representation was therein made. The plantation is located upon the Chamelecon river. In 1901, when the plaintiff secured her “bond,” that river was unquestionably navigable for boats of light draught. It continued so until the unusual tropical storm in the fall of 1904. That storm, followed by a devastating torrent, rendered the river nonnavigable for the large boat which the Ulua Transportation Company had provided at large expense to take care of the fruit shipments from the plantation in question. The smaller craft still able to navigate the river seem to have been entirely inadequate to handle the product; and therefore it could not be placed upon the market. This condition resulting from “an act of God” was in no sense attributable to the defendant Clements.

We are satisfied from a careful reading of the record that no fraud was practiced upon the plaintiff, but that her loss resulted from conditions which changed a probably profitable venture into an unworkable and disastrous speculation for all concerned.

We are of opinion that the motion for a new trial was properly denied.

The judgment is affirmed.

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


source: Caselaw Access Project

author: Ostrander, J.

license: Public Domain

text:
    DAVIS v. PUBLIC SCHOOLS OF THE CITY OF ESCANABA.
    1. Contracts — Schools and School Districts — Public Officers —Municipal Corporations — Superintendent of Schools — Employment.
    In employing a superintendent of schools for cities incorporated under the general incorporation act (1 Comp. Laws, § 3347), the school board, acting in good faith, has power to engage such officer for a reasonable time at a reasonable salary; no limitation of authority based on the length of terms of the members of the board is imposed by statute (1 Comp. Laws, § 3347, 2 How. Stat. [2d Ed.] § 5877), and the question of reasonableness is for the jury, to be determined from all the evidence.

    2. Same — Reasonable Time.
    Hence it was for the jury to say whether plaintiff, in an action against a municipal school corporation for breach of a contract of employment, should be entitled to recover on testimony showing that the school board employed plaintiff as superintendent of schools of the city for a year, and a few days afterwards, immediately prior to the expiration of the terms of two members of the board, by a vote of four to two, engaged plaintiff’s services for three years.
    3. Same — Good Faith.
    The question of the good faith of the school board was a question of fact, and a verdict for the defendant was erroneously directed.
    Error to Delta; Flannigan, J.
    Submitted January 28, 1913.
    (Docket No. 22.)
    Decided April 8, 1913.
    Assumpsit by F. Dayton Davis against the public schools of the city of Escanaba for breach of a contract of employment. Judgment for defendant on a directed verdict; plaintiff brings error.
    Reversed.

      John CummisJcey and Michael J. Doyle (Rollin H. Person, of counsel), for appellant.

      John Potver (Newton C. Spencer, of counsel), for appellee.
    The city of Escanaba is organized under Act No. 215 of the Public Acts of 1895 (2 How. Stat. [2d Ed.] § 5868 et seq.), which act includes compiler’s sections 3338 to 3357 [1 Comp. Laws], section 3347 providing for the employment of a superintendent of schools and teachers. The plaintiff became superintendent of the public schools of the city at the beginning of the school year 1904, and was superintendent until July 1, 1910. His first contract with the city was one for two years, and this, at the end of the first year, was extended to a three years’ contract. In 1907 he was re-employed for three years. In April, 1910, the parties entered into a new contract for one year, to take effect from the expiration of the then existing contract. On July 5, 1910, the new one-year contract having been in operation five days, the defendant passed the following resolution, at a special meeting of the board, at which all the members, six in number, were present, four of them voting for and two against the resolution:
    “Resolved, that F. Dayton Davis be, and he is hereby engaged and hired as superintendent of the public schools of the city of Escanaba, for a period of three (3) years, beginning July 1st, A. D. 1910, at a salary of twenty-seven hundred ($2,700.00) dollars per year, payable monthly; and that the president and secretary of the board be, and they are hereby authorized to make and execute a contract, in behalf of this board, and in accordance herewith, upon the proper release and surrender by the said F. Dayton Davis of the contract which he now holds with this board.”
    The three-year contract contemplated by this resolution was duly executed on the following day, and is the contract declared upon in this suit. When the resolution last above referred to was passed, and when the contract in question was executed, the members of the board of education were Matthews and Reade, whose terms expired in July, 1910, Bartley and O’Meara, whose terms expired in 1911, and McRae and Groos, whose terms expired in 1912. The annual school meeting of the district was held July 11, 1910, at which time two new members of the board of education were elected in place of Mr. Matthews and Mr. Reade. One of the retiring members voted for, and the other against, the resolution employing the plaintiff.
    The board organized for the ensuing year on the 12th of July, 1910, by the election of a president, secretary, and treasurer. There was some discussion of the matter of retaining the plaintiff as superintendent. A majority of the board was opposed to his remaining, and he was asked to resign. He declined to do so. On the contrary, under date July 15, 1910, plaintiff sent a written communication to the board, tendering his services under the contract of July 6th. In reply, and in writing, the board informed him, July 21,1910, that his services as superintendent were at an end, and directed him to deliver up to the secretary of the board the school property in his possession. Plaintiff remained ready and willing to perform his contract, although it appears that he sought employment elsewhere, and at the end of five months brought this action for his salary to that date.
    With its plea the defendant gave notice (1) that the plaintiff was not entitled to recover because the contract was entered into by the concurrent act of four members of the board of education without authority of law, was ultra vires and void, having been made to cover a time greater than the time of the life of the board, and that it was unreasonable and unlawful; (2) that the meeting at which the contract was directed to be made was a special meeting, held without notice, or without valid notice; (8) that the contract was void and invalid because entered into by the members of the board for an unlawful purpose, that is to say, to forestall any action that might be taken by the incoming board of education, to be elected one week from the date of the said contract; that the board of education in their action were not influenced by lawful considerations of official duty,. but acted under the spur and impulse of partisan feeling to secure the continued services of the plaintiff for an extended term, whether such action was favored by the people and the patrons of the schools or by the incoming board or not; (4) that the motives of the members of the board in voting in the affirmative on said resolution were unlawful, not influenced by official integrity or considerations of the public good or the good of the schools, but and to the knowledge and with the concurrence of the plaintiff were for partisan ends; (5) that the plaintiff was already under contract with the defendant, that no exigency whatever had arisen for the execution of the new alleged contract for three years; (7) that the defendant was justified in its action in dispensing with the services of the plaintiff because the public good and interest of the public schools demanded it, and in this connection it is set out that plaintiff’s work was imperfect and inefficient; that conditions had grown up under his management which gave much dissatisfaction and discontent; that students graduating from the high school attempting to go to higher institutions of learning in the State had been in many instances found deficient in the acquirements usually obtained at a high school; that this condition was manifested in the case of the class which graduated in 1908, when of six students who applied for admission to the University of Michigan four failed in the preliminary test. Other actions of the plaintiff as superintendent are criticised in the notice of special defenses. Finally, it is said, in justification of the action of defendant, that plaintiff agreed to the action taken by the board on the 12th of July, 1910, saying in response to an inquiry addressed to him by one member of the board, “I don’t want to stay in Escanaba, if this board does not want me to,” and that, while the matter of dispensing wi$h his services was under discussion, he said:
    “I wish to act entirely in harmony and wish to stay as long as you will have me; and wish to leave here with a good reputation; and will stand by whatever the wishes of this board are, and will not stand for any legal proceedings, and wish to ascertain your wishes as soon as you are ready, and will abide by them.”
    Upon the trial both plaintiff and defendant moved for a peremptory instruction to the jury, agreeing that the question presented was one of law. The court was of opinion that there was no evidence tending to show the existence of any fraud, collusion, or bad faith on the part of any member of the board nor any bad faith or collusion on the part of the plaintiff; that the validity of the contract must depend upon whether the board had power to conclude a contract for plaintiff’s services to extend beyond the- official life of all the members of the board. Being of the opinion that the board had no such power, a verdict was directed accordingly and judgment was entered on the verdict.
    The reasoning of the trial court is expressed in the following language:
    “Except where the situation and circumstances carry an element of necessity, an element not present in this-case, the trustees are without power to tie up the hands of the people in the important matter of the personnel of their superintendent and teachers beyond the time during which the affairs of the school are committed to them. Such a limitation of the power of'the trustees may perhaps be inferable from our school statute; but, however that may be, many reasons exist why the contract would be contrary to public policy. It might be desirable on occasions to enter into a long-term contract with a superintendent; when in an effort to get a very desirable man, the board might find itself confronted with that very condition. But because on an exceptional occasion a board meets with such condition that is no reason for saying that the power does or even should exist. In school affairs, gentlemen, it is better to lose the services of an exceptionally good superintendent for a term of three years than that the school should be shouldered with an incompetent and exceptionally poor superintendent for a year or a month or any length of time; the advantage of being able on an exceptional occasion to obtain the services of an exceptionally good man is more than offset by the disadvantage, which our common experience in school matters teach us would result from a long-term employment of an undesirable, not to say incompetent, man. Any public policy requires that the children be not put at disadvantage by a careless or culpable school board, at least beyond the time when the members of such board are charged with the school administration, without right in the parents of such children to act through their newly appointed agent to correct that condition. The court does not hold that the board of education is limited to contract for one year. A majority of the board having absolute control of the affairs of the school for a longer period might contract for the length of their official life, because during that period the people, through the election of new agents, would be powerless to disturb the statu quo. But the court does hold that it would not have the right to contract for a term of three years. If this contract had been for two years, instead of three, a different question would have been presented.”
    Defendant contends, broadly, that the contract is opposed to the policy of the constitution and laws of this State, and asserts that, whatever the opinion of the court may be respecting the general proposition, the particular contract was made under such circumstances that it is a fraud in law, and opposed to public policy on that ground.

       The authorities on the power of a board to appoint superintendents or teachers for terms extending beyond its own term are considered in a note in 29 L. R. A. (N. S.) 657.

   Ostrander, J.

(after stating the facts). The question is whether a correct rule was stated and applied by the trial court. It has been presented in other jurisdictions. In some, decision has turned upon some provision or the construction of a statute, in others the rule applied by the trial court is announced; while in still others a contrary rule is followed. Among the cases which have been examined are City of Denver v. Hubbard, 17 Colo. App. 346 (68 Pac. 993); Reubelt v. School Town of Noblesville, 106 Ind. 478 (7 N. E. 206) ; Board of Commissioners of Jay County v. Taylor, 123 Ind. 148 (23 N. E. 752, 7 L. R. A. 160); Board of Commissioners of Pulaski County v. Shields, 130 Ind. 6 (29 N. E. 385); Wait v. Ray, 67 N. Y. 36; Moon v. School City of South Bend (Ind. App.), 98 N. E. 153; Smith v. School District No. 57, 1 Pennewill (Del.), 401 (42 Atl. 368) ; Fitch v. Smith, 57 N. J. Law, 526 (34 Atl. 1058) ; Wilson v. East Bridgeport School District, 36 Conn. 280; Burkhead v. Independent School District of Independence, 107 Iowa, 29 (77 N. W. 491); Stevenson v. School Directors of District No. 1, 87 Ill. 255; Davis v. School Directors, 92 Ill. 293; Millikin v. County of Edgar, 142 Ill. 528 (32 N. E. 493, 18 L. R. A. 447); Chittenden v. School District, 56 Vt. 551; Hemingway v. Joint School District, 118 Wis. 294 (95 N. W. 116) ; School District in Natick v. Morse, 8 Cush. (Mass.) 191; Sparta School Township v. Mendell, 138 Ind. 188 (37 N. E. 604). Not all of these cases relate to schools, or school districts or affairs; but, excepting the Colorado decision, they all involve the power of boards or officers representing municipal or quasi municipal corporations to make contracts for the services of others for periods beginning or extending beyond the official lives of such boards or officers, or of some of them.

The statute of Michigan, heretofore referred to, makes each city incorporated under it a school district and body corporate with the usual powers of corporations organized for public purposes, expressly giving the right to sue and be sued, to acquire, hold, and dispose of real and personal property. The board of education is made to consist of six trustees, each elected for a term of three years, at a regular annual election held on the second Monday in July in each year. At the first regular meeting after each annual election the board is required to organize by electing from its members a president, and by electing a secretary who may or may not be a member of the board. This board has control and management of the property interests and affairs of the district, and is directed to establish such primary and graded schools as the public interests may require, and, if deemed expedient, to establish a high school. It is provided that:

"The board of education shall appoint and employ a superintendent, and the teachers and instructors for the public schools, and determine their salaries and define their duties. They shall prescribe the courses of study to be pursued, the books to be used, classify the pupils as may be expedient, and provide the necessary apparatus and facilities for instruction, * * * determine the length of time the schools shall be taught each year, adopt rules for the regulation and government of the schools, and do whatever may be required to advance the interests of education.”

These are some of the powers bestowed out of many, among which others is the power to designate and establish sites for schoolhouses, purchase and procure land therefor, and erect and maintain schoolhouses and buildings for use of the public schools, with proper furniture and appurtenances for buildings and grounds.

In some of the States, with respect to district schools, it is the right and duty of the taxpayers of the district, at the annual meeting, to determine how long school shall be taught during the current year, what studies shall be pursued, and whether a male or a female teacher shall be employed. This right so reserved to the taxpayers is in a number of the cases above referred to the ground upon which the court denies to trustees, or to a trustee, elected annually, the power to engage a teacher for the ensuing, or succeeding, year. In Wisconsin (Webster v. School District, 16 Wis. 316; Hemingway v. Joint School Dis trict, supra), the rule stated is that the power of the board to contract is general, in the absence of an inconsistent determination of the voters at the last annual meeting and subject to their power at the next (or of the new board) to determine with respect to the length of time a school shall be taught, whether by male or female teachers, or both, and the application of the school moneys. In Illinois (Stevenson v. School Directors of District No. 1, supra) it was held that in respect to district schools the power of directors to employ teachers is limited to the current year. Reasons for the conclusions were found in a construction of the statute which, as in Wisconsin, reserved to the taxpayers of the district the right to determine at the annual election what branches of learning should be taught in the schools. The court uses this language:

“There is, doubtless, no objection to contracts for the teaching of terms extending for a reasonable time beyond the current school year, when such contracts are entered into in good faith, and not for the purpose, merely, of forcing upon the district an unsatisfactory teacher or defeating the will of the voters at the annual election.”

See, also, Davis v. School Directors, supra, and Millikin v. County of Edgar, supra. In the Millikin Case the doctrine of the earlier cases is applied in considering the validity of a contract made by a board of supervisors with a person engaged as keeper of a county poor farm for a term of three years. It is pointed out that the term of office of a supervisor is one year, the board is clothed with power to levy taxes to raise funds to support paupers, a power to be exercised annually, and, in view of these considerations, it would be an unreasonable construction of the statute to hold that the legislature, although it had imposed no limit upon the time for which a keeper of the poorhouse might be appointed, intended to clothe the board with authority to enter into a contract to run for a period of three years. The rather stereotyped argument is employed that, if the board has authority to enter into a contract for three years, no reason could be perceived for denying the validity of a contract for ten years, and, if so long a contract could be made, hands of succeeding boards would be bound and their powers taken from them. The Illinois decisions are referred to with approval in Chittenden v. Waterbury, supra.

It cannot be said that any general doctrine of the law of contracts or of municipal corporations is announced or is applied in decisions which rest primarily upon the meaning and effect of a statute or of statutes. If in terms a power is in one part of a statute given without words of limitation, but in another part of the statute is limited expressly, or by necessary implication, it is limited, and by the statute. The reasons which affected the. conclusions of the Illinois court, reasons based upon the provisions of the statute itself, were urged in this court in a case involving a contract made for teaching a graded school. The validity of the reasons was denied because the statute provisions relied upon did not relate to graded schools. In other words, the asserted limitation of a power, conferred generally, was not found in other portions of the act, and was therefore denied. Tappan v. School District, 44 Mich. 500 (7 N. W. 73). See, also, Cleveland v. Amy, 88 Mich. 374 (50 N. W. 293); Farrell v. School District, 98 Mich. 43 (56 N. W. 1053).

The power to employ a superintendent for the Escanaba schools is a general power, conferred in general terms. The general grant found in the statute is not in some other part thereof limited, expressly or by necessary implication. It is said for defendant that nevertheless the court should find and declare that public policy fixes a limitation upon the exercise of the power, a limitation which the court may, and should, state in the form of a rule applicable to all like cases. “Appellant’s counsel argue,” it is said in the brief for defendant—

“ ‘That a contract made by a board of education is valid.’ .Defendant’s counsel presents the same proposition, and thus far they are in accord. Appellant’s counsel then place a limitation upon the power of the board which is ‘if made for a reasonable time.’ Defendant’s counsel likewise places a limit to the board’s power, which is ‘if made for a term within the official life of a majority of the board.’ Now is it not perfectly apparent that the quality of these lines of reasoning is exactly the same, and that the only difference is quantitative? Upon the proposition that these contracts are valid we are agreed. Upon the further proposition that the board is limited in its power to make them, we are also agreed. The difference between us is upon the quantity of such limitation, and only upon that.
“Appellant’s counsel urge,the adoption of a rule respecting such quantity which is indefinite, vague, and uncertain. Under such a rule, no lawyer would be able to advise a man or board whether a particular contract was valid or not. It would first have to be adjudicated and such adjudication would add but little certainty to the law governing such contracts; successive adjudications would be necessary, until the court reached such a time as would give the word ‘reasonable’ definition and certainty. When such time limit had finally been reached, the court would have ‘legislated’ into its decision just the thing which counsel for appellant argues it has no right to do, namely, the making of such time limit definite and certain. Is not such a result inevitable, and is it not as much of an assumption of legislative power on the part of the court to declare a contract for ten years void as to say that one made for a greater period than the official life of a majority of the members of the board is invalid? And upon what ground does the rule that the limit of these contracts is for a reasonable time rest for its justification? Is it not palpable that such justification can be found only in considerations of public policy? Where do we find any such limitation placed by the legislature? We submit that it is to be found nowhere in the statutes.
“Counsel argues that to make such limitation at once specific would amount to judicial legislation, but can they deny that the limitation which they concede amounts to the same identical thing, except that it contains the objectionable feature of uncertainty, which objectionable feature is to be eliminated by the courts only by a multiplication of lawsuits, which but lead to a result of certainty so insistently objected to by appellant’s counsel? The recognition of any time limit to the power of the board to make these contracts is but a concession of the right of the voters at some time to control the subject-matter of such contracts. * * * Defendant’s counsel insist that the limitation of the board’s power should be given precision and certainty, and that the exercise of the right of the voters should not be denied for any time whatever after it accrues. That is the only difference between us upon this question. The reason for either limitation is obviously the same, and the desirability of certainty in the law should leave no question as to which is the better rule. The voters can change the personnel of a majority of the board of education in any two successive years, and it is nothing to the purpose to argue that it might be done in one year. It cannot necessarily be done in that time.”

The difference between counsel is more fundamental than this statement indicates that it is. There are many contracts and many acts, official and other, which are enforceable at law and receive judicial recognition only if they are reasonable. To say that a contract is valid if reasonable is not to apply an indefinite and uncertain legal test. The facts in each case having been determined, the test is as definite and certain as any applied in the administration of the law. By this I mean that the rule of law certainly and definitely holds a contract good or bad as its reasonableness or its unreasonableness is determined. But beyond this the rule contended for by appellee and applied by the court ought to rest upon some sufficient reason. Certainty and universality of application of a rule are desirable but do not, after-all, furnish reasons for the rule itself. The legislature has made the board of education a continuing body, and has confided to it the matter of selecting and employing a superintendent of schools. Why should the court say that the power of the board in this behalf does not extend so far as to permit it to hire a superintendent for more than two years? The court cannot extend or diminish the legislative grant of power; what it may do, in a particular case, is to determine whether the action of the board which is questioned is within the power conferred.

I am of opinion that the limits, and only limits, to the exercise of the power of the board to employ a superintendent of schools are those fixed by reasonableness and good faith. The board of education does not derive its powers from the district but from the statute. That courts or juries might differ concerning the effect of particular action, as indicating good faith or the contrary, is no reason for refusing the rule. If the board should make a contract for the services of a superintendent for 50 years, or for a year at a salary of $50,000, a court, without the intervention of a jury, would promptly set the contract aside as fraudulent. In cases like the one at bar, the question of good faith is one for a jury, which should be instructed that in considering the question all facts bearing upon the propriety and reasonableness of the contract, as well as the actual motives and purposes of the board, may be considered. If a district had never paid more than $8,000 salary to a superintendent, a contract calling for $6,000 salary might be found to be so unreasonable as to be fraudulent. So, if the size and needs" of the district reasonably demanded a schoolhouse costing not more than $10,000, a contract to build a schoolhouse costing $50,000 would be open to the charge that it was unreasonable, and legally fraudulent, no matter what optimistic and utopian reasons the board might entertain about the matter.

The power and the exercise of it are assumed with reference to, and restricted by, the purposes for which it is conferred and the reasonable necessity for its exercise. Within reason and in good faith the powers conferred by the legislature upon the board should be exercised by the board. There is nothing novel in this doctrine. Moon v. School City of South Bend, supra; Wilson v. East Bridgeport School District, supra; Burkhead v. Independent School District of Independence, supra; City of Denver v. Hubbard, supra.

The judgment is reversed. Inasmuch as the admitted facts respecting the making of the contract in suit are such that an inquiry into the good faith of the parties is suggested thereby, a new trial is granted.

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


author: Kuhn, J.

text:
    ALGER v. CHENEY LUMBER CO.
    Contracts — Specific Performance — Accounting—Stockholders’ Suit — Corporations—Parol Agreements.
    In a suit for an accounting between stockholders of a bankrupt corporation and stockholders of another corporation defendant, which the bill charged with breach of a parol agreement to buy all the property of the bankrupt under judicial proceedings and sale, the defense that the minds of the parties never met and no contract was executed, held, properly sustained by the finding and decree of the lower court.

      Appeal from Wayne; Donovan, J.
    Submitted January 29, 1913.
    (Docket No. 77.)
    Decided April 8, 1913.
    Bill by Herbert O. Alger and others against the Cheney Lumber Company and others for an accounting and other relief. From a decree for defendants, complainants appeal.
    Affirmed.

      Smith, Baldwin & Alexander, for complainants.

      Stevenson, Carpenter & Butzel, Gray & Gray, and Walter B. Hayes, for defendants.
   Kuhn, J.

The Cheniere Land & Lumber Company was a corporation which was the owner of about 5,208 acres in Ouchita parish, in the State of Louisiana, known as the Cheniere Brake. In the winter preceding the spring of 1907, this company had been declared bankrupt and its affairs were in charge of a trustee in bankruptcy. Its property being advertised for sale, E. C. Drew, who was interested in the affairs of this company, and Charles^ E. Cheney entered into an arrangement to form a new company to acquire the property of the bankrupt company, including the Cheniere Brake. Each was to furnish one-half of the required money, and each was to get half of the stock of the new company. The capitalization was at first intended to be $100,000, but, at Drew’s suggestion, this was increased to $200,000. The exact amount needed was not agreed upon, but it was understood that the property, after it had been acquired at bankruptcy sale, should be turned into the corporation at $150,000, subject to a mortgage debt of $35,000, and that $50,000 of working capital, in addition, would have to be furnished. For personal reasons Drew did not care to appear as a stockholder, and stated that in the organization of the company he would be represented by G. H. Haynes and his son, W. B. Haynes.

As a result, the Cheney Lumber Company, Limited, was organized March 14, 1907, with a capital stock of $200,000; one-half of the stock being subscribed for by the Cheney interests and the other half by the Haynes interests, and the stock - was subsequently issued in the same proportion. At the bankruptcy sale on June 3,1907, the property was bid off by the Bankers’ Trust Company, of St. Louis, Mo., and, on August 8, T907, the Cheney Company took it over at a valuation of $150,000, and the deed recites that the Bankers’ Trust Company had acquired the mortgage debt of $35,000 and had applied it pro tanto upon its bid, and that the remainder of the price had been furnished by the Cheney Company.

The Cheney Company went into possession of the property and proceeded to erect a mill, construct a dam, and make other improvements, and, about a year later, began the manufacture of lumber from timber taken from the land, and continued such business until January, 1910, when it was succeeded by the Dixie Lumber Company, which had acquired the title of the property. In the fall of 1908 the Bankers’ Trust Company threatened foreclosure of its mortgage because of default of the Cheney Company in its obligations, and, in order to pay the debt, the Cheney Company gave to the Security Trust Company of Detroit, one of the defendants herein, a mortgage upon the property for $34,670.88, which represented the unpaid amount due the Bankers’ Trust Company. A year later default was made in this mortgage, and it was foreclosed and the property was sold to John W. Staley, who then conveyed it to the Dixie Lumber Company, from whom the Security Trust Company took a new mortgage for $36,270.93, being the amount of the old mortgage, with interest. While the Cheney Company was doing business, it borrowed money from the First National Bank of Detroit, also defendant herein, amounting in the aggregate to $90,000, and in the spring of 1908 gave the bank a bill of sale of some of the lumber. This lien was not foreclosed, but suit was brought upon this indebtedness and judgment obtained by the bank, under which the mill and some other property of the Cheney Company was sold on January 15, 1910, to Mr. Staley, who conveyed it to the Dixie Lumber Company, which has since been in possession of the property.

The complainants in this litigation were stockholders in the Cheniere Land & Lumber Company, and it is their claim that Drew, representing them, and Cheney, on behalf of the Cheney Lumber Company, Limited, made an oral agreement with reference to this property, which was reduced to writing but not signed, under date of April 17, 1907. This agreement was drawn by Allan Scholars, an attorney. The complainants claim that the property was worth about $500,000, and that the agreement provided that the Cheney Company should purchase the entire property of the Cheniere Land & Lumber Company at the bankruptcy sale and should, within 60 days thereafter, convey the brake to the Cypress Pine Lumber Company, Limited, a corporation, which was to be organized by Drew, made up of stockholders of the old Cheniere Company, for a consideration of $150,000, to be represented by five promissory notes, each in the sum of $30,000, payable in five years, with interest at 8 per cent, per annum, subject to a reservation in the Cheney Lumber Company, Limited, of the timber, with a right to re-enter and build the mills and make other improvements; the cost thereof to be added to the consideration price and to be paid therewith, with like interest; the Cheney Lumber Company to account at specified prices for all timber taken until said indebtedness should be extinguished, whereupon all rights of the Cheney Lumber Company should cease and the land belong absolutely to the Cypress Pine Lumber Company, Limited, the latter in no case to be personally liable; the said purchase price to be paid from the timber taken from the land at the stumpage prices named in the contract.

It is not claimed that the contract was ever signed; but it is urged that the execution of the contract was postponed, at the request of Cheney, in order that the credit of the Cheney Company might not be affected. It is not claimed that either company took any corporate action with regard to this contract. It is conceded that in Louisiana as in Michigan oral contracts relating to lands are void; but the claim is made that the contract was partly performed; that the Cheney Company had accepted its benefits; and that it appears that at least $18,000 was paid to the Cheney Lumber Company by Drew, which moneys had been advanced by stockholders of the Cheniere Company or the Cypress Pine Lumber Company, which went into improvements on the property. It appears from the testimony of Drew that approximately that amount of stock of the Cheney Lumber Company was issued to the stockholders in the Cypress Pine Lumber Company.

The complainants ask to have this agreement enforced and claim that the Dixie Company is but a trustee holding said property and should be made a party defendant to the cause; that the First National Bank of Detroit should account in a subsequent proceeding for all moneys which it has loaned or advanced to the Cheney Lumber Company, and also for moneys received, and that it be determined whether its loans were made in good faith. Counsel for complainants in their brief state that “the claim of the Security Trust Company is undoubtedly a bona fide claim, as there is no proof in the case to the contrary.” The defendant Cheney Lumber Company denies that the oral contract of April 17, 1907, was ever agreed upon. This presents the first and real issue in this case.

The testimony of Mr. Drew, which was taken by deposition, was offered in support of complainants’ case. He states that the contract was made and that its execution was purposely postponed at the request of Cheney so as not to affect the credit of the Cheney Company. In this he is supported by the testimony of J. H. Koch, A. T. Burton, Wm. H. Platt, and H. O. Alger, who stated that Mr. Cheney said, at a meeting of the stockholders who resided in Erie, Pa., held at that place in the fall of 1908 (which meeting was attended by Mr. Cheney and Mr. Drew), that he was ready to sign the contract at any time. This testimony is contradicted by the testimony of Mr. Trask and Mr. Murray and by Mr. Cheney. In addition to this testimony, the complainants offered in evidence a series of circulars and correspondence, some of which recite the agreements in the same way as they are now contended for by complainants, and consist largely of appeals for money to aid in the operation of the Cheney Lumber Company. Mr. Cheney, whose testimony was taken in open court, positively denied that such an agreement was ever made, and stated that, when the claimed agreement in writing was presented to him, he refused to sign, never did sign it, and repeatedly said that he never would. He was supported in this testimony by Mr. G. B. Haynes, one of the incorporators of the Cheney Lumber Company, Limited, and its secretary, who stated that Cheney had told him that he would never sign the contract.

Allan Scholars, the attorney, appeared in court as a witness and testified with reference to this contract as follows:

“I drew that contract in part [referring to the unsigned contract purporting to be between the Cheney Company and the Cypress Pine Company]. I think I took it as Drew presented it to me, and remodeled the articles and reframed it, and the first paragraph read, I think, just as it is now before it was given to me. Just what parts I prepared I do not know. I know I prepared parts of it. I could not give the date of its completion; in fact, I do not think I ever did complete it. I undertook to prepare it as he wanted it, or so it would meet thé approval of Mr. Cheney, and he never did approve it. I submitted it to him several times, and there was always some objection to it, and I would word it again at odd times, and kept on and kept it in my possession for some little time. This was before the sale June 3, 1908, and then the negotiations seemed to drop, and I never prepared it to Cheney’s satisfaction, and he never approved it at all, and, as I recollect, it was never authorized by the directors of the company. It is not true that the Cheney Lumber Company was acting under this contract when it took over the brake from the Bankers’ Trust Company. Mr. Cheney and Mr. Drew had arranged, prior to the organization of the Cheney Company, with an appeal which I had pending for the bankrupt company in the United States circuit court of appeals for the sale of that property; that the same should be discontinued, so that the trustee himself should sell the property at the trustee’s sale; and that the lumber company would buy it in through the assistance of the Bankers’ Trust Company, just as was done; and afterwards the question was again taken up regarding the contract between the Cypress Pine Lumber Company and the Cheney Company after the sale in June, and it was not confirmed until July, and after that it again came up, and Mr. Cheney absolutely refused to enter into any agreement of that kind; and another instance'I remember is that Mr. Cheney and Mr. Drew came from Erie, where a meeting had been held of some of the stockholders, where all knew he and Drew had come together, and they had had some sort of a row because Cheney had refused to sign a certain statement, or would not sign it.
“The Court: Then you know their minds never met on that?
“A. Because I was trying to prepare a document, which gives to me a certain case, as I saw it’ only I could not get it as they wanted it. I don’t think they themselves knew how they wanted it; I know that.”

After hearing this testimony, the trial court, who' saw and heard the witnesses and who considered the testimony of Scholars persuasive, made the following finding of fact:

“The Cheney Lumber Company, Limited, never agreed to the contract alleged by the complainants, the provisions of which appear in the written draft of April 17, 1907, as it is clear that the minds of the parties never met, and is not obliged to account to the complainants, as prayed for in the bill of complaint.”

The court also determined that the loans of the First National Bank to the Cheney Lumber Company, aggregating the principal sum of $90,000, and the mortgage loan of the Security Trust Company to the Cheney Lumber Company, were made in good faith.

A careful reading of the record satisfies us that the court was justified, under the evidence, in coming to this conclusion, and his determination will therefore not be disturbed.

The decree is affirmed, with costs.

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


author: Moore, J.

text:
    SOULE v. OTTAWA CIRCUIT JUDGE.
    1. Arrest — Capias ad Respondendum — Affidavit.
    Before the writ of capias will be allowed and a party beld to bail, the plaintiff must comply strictly with the requirements of the statute.
    2. Same — Sufficiency.
    It was insufficient to present an affidavit of the plaintiff setting up in detail the mailing and receipt of certain libelous letters addressed to residents of the county in which plaintiff was a candidate for office, where the affidavit did not aver that plaintiff had ever seen the letters or that he was present and saw them received or mailed.
    Mandamus by Charles E. Soule against Orien S. Cross, judge of the circuit court for the county of Ottawa to vacate an order refusing to quash a writ of capias.
    Submitted January 28, 1913.
    (Calendar No. 25,372.)
    Writ granted April 8, 1913.

      Corie C. Coburn, for relator.

      Diekema, Kollen & Ten Cate (Walter I. Lillie, of counsel), for respondent.
   Moore, J.

This proceeding was commenced by writ of capias. The relator was held to bail in the sum of $10,000. He gave appearance bail and moved to quash the writ for various reasons. It was stipulated in the case as follows, omitting the formal part:

“That the motion to quash, set for hearing upon the 25th day of July, 1912, be heard on the 5th day of August, 1912, at 2 o’clock, or as soon thereafter as counsel can be heard, and that all proceedings be stayed in said matter until said motion has been disposed of.”

The motion to quash was overruled, and this is a mandamus proceeding to review that action.

It will not be necessary to refer to all the reasons given by relator in his application to have the writ of capias quashed. The sixth reason assigned is:

“The affidavit does not aver in terms that the facts and circumstances enumerated in said affidavit are within the personal knowledge of affiant.”

The seventh reason assigned is:

“And as to those facts which affiant swears to positively, said affidavit shows from its very nature that they are not necessarily in the affiant’s personal knowledge, but are of such a nature that affiant does not of his own knowledge know the facts enumerated in said affidavit, but is dependent for his information in regard thereto upon the advice and information of others, and he has not attached to his affidavit the affidavits of those who have personal knowledge of the facts complained of.”

The affidavit was a very long one. It charged, in substance, that one Kirby had a cause of action growing out of the writing and mailing, by the relator, of four certain letters, copies of which are set out in full in the affidavit.

The following is contained in the affidavit:

“And that each and every one of said letters were sent through the United States mail from Grand Haven, Mich., to each of said parties at the places directed, and each of said parties received said false, malicious, and slanderous and libelous letters through the United States mail at the several places above mentioned as aforesaid, each of which places is located in the county of Ottawa and State of Michigan for the purpose of injuring affiant in his good name, fame, and credit, and, among other things, the false, slanderous and malicious, defamatory, slanderous, and libelous matter of and concerning the affiant, and of and concerning his aforesaid office as probate judge, and of and concerning affiant’s conduct in said office of probate judge, for the purpose of injuring the good name, fame, and credit of affiant and defeating the affiant .at the primary election on the 27th day of August, 1912, aforesaid.”

There is no statement in the affidavit that affiant ever saw the letters or had them in his possession, or that he saw the letters written or mailed, or that he was present and saw the recipients receive them. The originals were not attached; nor were any affidavits of the recipients of the letters attached. It is clear that the affiant failed to establish, except by hearsay, the mailing and receipt of these letters.

The writ of capias is an extraordinary one; and, before it will be allowed and a party held to bail, there must be a compliance with the well-settled rules of law.

Counsel for respondent says in his brief:

“There is but one question to be decided in this case, and that is, Should the motion to quash have been granted and the sureties on the bond discharged?”

The question involved is not new in this State. In Sheridan v. Briggs, 53. Mich. 569 (19 N. W. 189), the following language is used:

“An affidavit for a capias ad respondendum, or for any writ that will deprive one of his liberty, must set forth in detail the facts and circumstances on which it rests, and not merely inferences and conclusions from such facts; and the facts must be within deponent’s personal knowledge.”

See, also, Stensrud v. Delamater, 56 Mich. 144 (22 N. W. 272) ; Pease v. Pendell, 57 Mich. 315 (23 N. W. 827); Shaw v. Ashford, 110 Mich. 534 (68 N. W. 281) ; Graham v. Cass Circuit Judge, 108 Mich. 425 (66 N. W. 348); Church v. Calhoun Circuit Judge, 129 Mich. 126 (88 N. W. 403) ; McCrea v. Muskegon Circuit Judge, 100 Mich. 375 (58 N. W. 1118); Robinson v. Branch Circuit Judge, 142 Mich. 70 (105 N. W. 25) ; Conrad v. Van Buren Circuit Judge, 144 Mich. 492 (108 N. W. 347) ; Gardiner v. Wayne Circuit Judge, 155 Mich. 414 (119 N. W. 432); Martin v. Saginaw Circuit Judge, 173 Mich. 22 (138 N. W. 273). We have not overlooked the case of Robinson v. Branch Circuit Judge, 142 Mich. 70 (105 N. W. 25). An examination of that case will show it is clearly distinguishable from the case at bar.

The brief of relator concludes as follows:

“The foregoing completes relator’s argument for mandamus to compel the circuit judge to set aside the capias and discharge his bail for want of jurisdiction shown in the affidavit; but it is conceded the writ will stand as a summons, and relator asks the Supreme Court to so rule.”

In view'of this concession, we will not consider the question of whether the writ performs the office of a summons in this case.

The affidavit for the writ was fatally defective, and the order to hold to bail is set aside, with costs to relator.

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


author: Bird, J.

text:
    KENDRICK v. LOUK.
    1. Easements — Path—Reservation—Deeds.
    Where the owner of a plat on St. Clair river reserved a pathway along the water front, 20 feet distant therefrom, extending across all the lots sold, between two rows of trees, and joining on a similar walk established by an owner of adjacent lots, and where the path was also excepted or reserved from all the deeds of the platted lots, .and used by the several proprietors in common, and where one of the conveyances declared that the strip was reserved for the use of the vendor and his grantees, and was shown on the recorded plat, it will be construed as an easement for the benefit of all the grantees, and not of the original grantor alone.
    2. Same.
    A grantee of the path or strip so reserved, having known of the use to which it was put for about two years, and having used it in a similar manner, was not a bona fide purchaser under a deed which referred expressly to the prior grants, where it appeared that she purchased property of the original grantor by a conveyance excepting the same strip “for travel purposes.”
    Appeal from St. Clair; Tappan, J.
    Submitted June 10, 1912.
    (Docket No. 49.)
    Decided May 28, 1913.
    Eehearing denied July 18, 1913.
    Bill by Frederick C. Kendrick and others against Elizabeth B. Louk and others to restrain defendants from obstructing an easement. From a decree for complainants, defendants appeal.
    Affirmed.

      Frederick B. Brown, for complainants.

      Moore & Wilson, for defendants.
   Bird, J.

The thing sought to be accomplished by this chancery proceeding is to permanently enjoin the defendant and her husband from erecting a summer cottage on or over a footpath five feet in width, extending along the north bank of the St. Clair river. The relief prayed for was granted by the chancellor, and the defendants have appealed, claiming that the case made by the complainants does not justify the relief grante'd.

The records show that in the year 1901 George A. Phelps was the owner of a farm of 80 acres situate in Clay township, St. Clair county, the south end of which bordered upon the north channel of the St. Clair river, having a frontage thereon of 800 feet. Two hundred feet north of the river the 80 is traversed from east to west by the Rapid Railway System. A portion of that part of the 80 lying between the railway and the river was in 1901 platted into lots, and subsequently the remainder was platted and the lots sold. The original plat shows a five-foot path, located, as is stated in some of the conveyances, about 20 feet from high-water line, as indicated by the plat. The 800 feet of frontage was disposed of to several grantees by separate conveyances, and the same were duly recorded. Included among these grantees are the complainants and defendant Elizabeth Louk. In all of the deeds the five-foot strip is referred to in varying terms in the following manner:

(1) “Also first parties reserve the use of five feet of the river frontage of said land for a footwalk for travel purposes.”
(2) “Reserving to first parties that the building, and shore line of said lands shall be governed by the plat hereto attached, and said first parties also reserve the walk five feet wide between two rows of trees now established.”
(3) Fifty feet of frontage is conveyed and “also a right of way of a five-foot walk across the said land, which is hereinabove reserved.”
(4) “Saving and reserving a strip five feet wide across and lying between two rows of trees, now established, about twenty feet from high-water mark; said five-foot strip being part of a walk for use of first parties and their grantees.”
(5) “Excepting a strip of land five feet wide lying between two rows of trees hereinafter referred to. And also as appurtenant to the above-described parcel, a right of way for purposes of access thereto over said strip of land five feet wide lying between two rows of trees, now established, about twenty feet from high-water mark and running across the south part (of said eighty). * * *”
(6) “Excepting a strip of land five feet wide lying between two rows of trees now established about twenty feet from high-water mark and running east and west across the lands hereby conveyed.”
(7) “Excepting a strip of land five feet wide lying between two rows of trees now established about twenty feet from high-water mark and running east and west across the lands hereby conveyed.”
(8) ..“Excepting a strip of land five feet wide lying between two rows of trees now established, about twenty feet from high-water mark and run east and west across the lands hereby conveyed, together with, as appurtenant to said lands, the use of the rights of way mentioned in deed recorded in Liber 161, page 533.”
(9) “A strip of land twenty feet wide running from the right of way of the Detroit and River St. Clair Railway to the St. Clair river and bounded east by lands conveyed to Dixon, west by lands sold to Van Loon; also a strip of land twenty feet wide running along next south of the right of way of said railway and across the east half of the west half and the west half of the east half of Private Claim 190. Said strip being conveyed for the purpose of conveying a right of way for the use of second party and of any and all grantees of first or second party of any lands lying between said railway' and St. Clair river in said east half of west half and west half of east half of said Private Claim 190, for ingress or egress to said land conveyed or to be conveyed to said grantees to and from the said railway, river or the public highway, or the common frontage on said river.”
(10) “The party of the first part reserves the right that the building and shore line shall be governed by the plat and reserves a public walk five feet between the rows of trees now established, and grants the use and privilege of the walk and roads leading to and from the public highway.”
(11) The following exception appears in the conveyance to defendant: “Excepting a strip of land five feet in width across said land near the margin of St. Clair river for travel purposes.”

In August, 1911, after the said Phelps had disposed of all of said frontage, he made a conveyance to defendant Elizabeth Louk, as follows:

“A strip of land five feet wide extending across the (eighty) intending to convey any and all lands excepted and reserved in any deeds heretofore given by me in Private Claim 190 south of railway company and all easements and rights appurtenant thereto.

The question arises, under these conveyances: Have complainants an easement to use the five-foot path across defendant’s lot? Both parties agree that by the several conveyances an easement was created to use the footpath. The defendants contend that it was reserved for the sole use of Phelps, while the complainants insist that it was reserved for both Phelps and his grantees of the other lots.

It is a rule of construction that all grants must be construed reasonably and in the light of the surrounding circumstances. McConnell v. Rathbun, 46 Mich. 303 (9 N. W. 426); Newaygo Manfg. Co. v. Railway Co., 64 Mich. 114 (30 N. W. 910) ; Smith v. Smith, 71 Mich. 633 (40 N. W. 21) ; Wilson v. Terry, 130 Mich. 73 (89 N. W. 566).

If we apply this rule to the facts disclosed by the record, it becomes reasonably certain that complainants’ contention is the correct one. Phelps, the common grantor, caused the lands lying between the river and the railway to be surveyed and platted in January, 1901. This plat shows a reservation along the river for dock purposes. It also shows a reservation for a 20-foot roadway extending north from the dock to the railway and another of like width parallel with the railway. It further shows a “promenade” 5 feet in width extending along the bank of the river about 20 feet from high-water mark; it being the intention, as appears by the plat and conveyances, to locate it between two rows of trees, although the proof shows that only one row was set out. The evident purpose of doing all of these things was to make the place attractive and convenient as an inducement to a sale of the lots for summer homes. It is incredible that Phelps made all these reservations for his sole benefit. That he should have reserved an easement over these lots for a footpath and impressed upon it the idea of permanency by locating it between rows of trees and designating it as a “promenade” for his sole benefit is not in accord with his general scheme and purpose of platting the property for the purpose of making a sale of it. When we consider his treatment of the property in connection with the conveyances and their reservations and the provision in conveyances 2 and 10 “that the building and shore line shall be governed by the plat,” the express grant of the right in conveyance 10, and his express declaration in conveyance 4 that “said five-foot strip being part of a walk for use of first parties and their grantees,” it clearly indicates an intention upon the part of Phelps to create an easement, not only for himself, but for his grantees, of the other lots on the plat.

This view is -further strengthened by the fact that, prior to the time Phelps platted his land, his neighbor Reynolds, adjoining him on the east, had already platted his land for summer homes and laid out a five-foot path bounded by two rows of trees. The one established by Phelps was so laid out as to be a continuation of the one laid out by Reynolds.

But it is argued that defendant is a bona fide purchaser, and that she was not obliged to look beyond her deed to determine her rights. Her deed of the lot in question advises her of the five-foot path “for travel purposes,” and her deeds from former purchasers on the same plat advised her that others had rights in the path. For two years prior to her purchase of the lot in question, she lived a few feet west of this plat, and not only used the path herself, but knew that others used it. Under these circumstances, we think she is in no position to make the claim that she was a bona fide purchaser without knowledge of the actual situation.

The finding of the chancellor that the proposed construction would be an obstruction to the five-foot path appears to be justified by the testimony, and his decree will be affirmed. Complainants will recover their costs in both courts.

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


author: Bird, J. Ostrander, J.

text:
    McBRIDE v. THOMPSON.
    Specific Performance — Evidence—Injunction.
    Evidence in a suit for specific performance of a contract assigning a benefit certificate upon tbe life of de; fendant policy bolder to complainants in consideration of tbeir keeping up tbe premiums, tbat complainants carried out tbe arrangement for ten years, when a cash settlement was made with tbe insurer, on defendant’s becoming 70 years of age, pursuant to tbe provisions of tbe policy, tbat she bad made no complaint prior to tbat time of complainants' acts, and, several years after tbe contract of assignment, acknowledged in writing tbat complainants were entitled to all benefits, held, to refute defendant’s claim tbat she was overreached in tbe making of tbe agreement of assignment, and did not know of tbe surrender value at the age of 70 years, and to warrant a decree specifically enforcing tbe agreement and enjoining defendants from transferring the policy.
    Appeal from Montcalm; Davis, J.
    Submitted June 11, 1912.
    (Docket No. 76.)
    Decided May 28, 1913.
    Bill by Ellen McBride and others against Elizabeth Thompson and another for specific performance of a contract and other relief. From a decree for complainants, defendants appeal.
    Modified and affirmed.

      Edward J. Boivman, for complainants.

      Frank E. Jones, for defendants.
   Bird, J.

The bill of complaint in this cause was filed to enforce specifically a contract assigning the benefits arising from an insurance policy,, and for an injunction to restrain defendants from disposing of the proceeds of the policy. The decree was in favor of complainants in the trial court, and defendants have appealed.

The defendant Elizabeth Thompson is a half-sister of complainants and defendant Conde. She and Conde remained on the home farm in Washtenaw county until Conde was married, when she went to live with complainant Culver in Oakland county. In 1893, while she was living on the farm with her brother, she became a member of the Modern Maccabees and took out a benefit certificate for $1,000 with her brother as the beneficiary. She was possessed of a meager income, and soon after going to Mrs. Culver’s she indicated her intention of letting the policy lapse because of the frequent assessments. Mrs. Culver advised against this course, and suggested that Mrs. McBride, Arthur, and herself would keep up the assessments and divide the benefits arising therefrom equally between them. Mrs. McBride consented to this arrangement, but Arthur, refused; so the matter was undertaken by Mrs. Culver and Mrs. McBride. This arrangement was agreed to by defendant Thompson. The certificate was subsequently changed, and complainants were named as beneficiaries therein. They paid the assessments for 10 years to the aggregate amount of 167.50. In December, 1902, Elizabeth signed a writing, certifying that complainants had paid all assessments .since June, 1899, and were entitled to all the benefits received from the certificate. She made her home with the complainant Culver about five years, and then returned to the old home to keep house again for Conde, who had in the meantime separated from his wife. In 1909 she became 70 years of age, and while on a visit at Mrs. Culver’s a cash settlement of $598 was arranged for with the order, and the certificate was surrendered. A voucher for this amount was subsequently delivered to Elizabeth, and upon her refusal to indorse it over to complainants this shit was begun.

The refusal of Elizabeth to carry out her contract with complainants is attempted to be justified on the ground that complainants, when making the agreement with her, did not advise her that the benefit certificate would have a cash surrender value when she was 70 years of age; that they did not deal fairly and openly with her; and that they drove a sharp bargain with her; and it is insisted under these circumstances that this court ought not to exercise its discretion to enforce specifically such a contract.

In her testimony Elizabeth admits that she contemplated dropping the policy. She admits that she entered into the agreement. The principal point she makes concerning the making of the contract is that she did not understand that any such cash settlement could be made when she became 70 years of age, but she does not say that she would have refrained from making the contract had she known of this; nor does she show that complainants had knowledge of it. Three years later, when she gave the writing, certifying that complainants were entitled to all the benefits arising from the certificate, she found some fault, because she thought it looked as though her sisters were unwilling to take her word for the contract; but she found no fault with the contract, and expressed no regret that she had made it. She made no complaint during the 10 years that complainants paid the assessments that she had been overreached in making the agreement, and when the cash settlement was arranged for she gave her consent, and the only excuse she now gives for her refusal to carry out her agreement is that she did not understand that complainants were to have any of the benefits arising from the certificate until after she was dead. Her own testimony does not bear out the claim made in her behalf — that she was dealt with unfairly.

The refusal of complainant’s husband to pay Elizabeth a few dollars interest money which he owed her, and the conduct and language of the son, Fred Culver, in his effort to induce his aunt to do as she had agreed and pay over the money to his mother, are made use of by counsel in his argument against the validity of the contract. It must be remembered that all this occurred 10 years after the contract was made, and after some ill feeling had been engendered by the refusal of Elizabeth to pay over the money, and is of little value in determining the validity of the contract.

The contract appears to have been made in good faith by all the parties, and to have been faithfully carried out by the complainants, and we are of the opinion that the trial court made a proper use of his discretion in ordering a specific performance of it.

The decree of the trial court will be modified by deducting therefrom the item of $20, paid by defendant Thompson for hive fees and per capita tax, and will then stand affirmed.

The complainants will recover their costs in this court.

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

Ostrander, J.

In my opinion there is no consideration for the paper writing relied upon.


text:
    OEST v. HENDERSHOT.
    1. Master and Servant — Instructions—Negligence.
    An employee who was familiar with the construction of a sausage machine operated by power, and who was 25 years of age, intelligent and of fair education, was not entitled to recover for injuries sustained to his hand that was drawn into the machine, where it was obviously dangerous and defendant instructed him in operating to keep his thumbs under the rim of the hopper, — that being a safe method of operation and where he failed to follow the instructions given him.

    2. Same — Contributory Negligence.
    Being advised of a safe method of doing the work, plaintiff could not recover for injuries sustained while he was violating instructions, even though a safer method of doing it might have been pointed out to him.
    Error to Kent; McDonald, J.
    Submitted June 21, 1912.
    (Docket No. 72.)
    Decided May 28, 1913.
    Case by Louis J. Oest against Edward Hendershot for personal injuries. Judgment for defendant on a directed verdict; plaintiff brings error.
    Affirmed.

      George E. & M. A. Nichols and Holmes & Holmes, for appellant.

      Lombard, Hext & Washburn, for appellee.

       The authorities on a master’s duty to warn or instruct servant, generally, are collated in an extensive note in 44 L. R. A. 33. And upon duty of master to adopt rules to protect servant, or to warn him, against dangers not reasonably to be apprehended, see note in 21 L. R. A. (N. S.) 89.

   Bird, J.

While plaintiff was operating a sausage grinder in defendant’s meat market, his right hand was in some way, which he is unable to explain, drawn into the hopper and against the auger and severely and permanently injured. The negligence which he charged defendant with was his failure to properly instruct him how to operate the machine. At the conclusion of plaintiff’s proofs, the trial court directed a verdict for the defendant on the ground that the dangers incident to the operation of the machine were obvious and no instructions were necessary. The question as to whether this was a proper disposition of the case is the one question which is presented for our consideration.

The sausage machine in question was constructed like the ordinary sausage machine in general use, save for the fact that it was very much larger and was driven by a five-horse power drive. When directed to operate the machine by Mr. Gearing, who was in charge of that department, the plaintiff inquired of him if there was anything with which to crowd the meat down into the hopper, and he replied, “Use your hands.” Plaintiff did as directed and as he had seen Mr. Gearing do, keeping his thumbs under the rim of the hopper so as to prevent his fingers from getting into the hopper far enough to come in contact with the auger. It is claimed this was an improper instruction; that a wooden plunger should have been furnished for that purpose.

It appears that the plaintiff was at the time of the injury a young man 25 years of age, who had been employed to do general work around the market. He had acquired a fair education and was possessed of more than the average intelligence for one of his age. He had been previously employed in a meat market and had- worked in several industrial plants where machinery was employed, and in one plant he had operated a machine. For some time previous to his employment he had lived in defendant’s building and had often been around the market and into the sausage room when the machine was in operation. On one occasion, before the day of the injury, he had operated the machine and had become familiar with its construction by reason of the fact that he had been required for two weeks to take it apart and clean it after its use through the day.

The plaintiff upon cross-examination testified in part as follows:

“Q. That is why in feeding it you kept your hands there so you would not get your fingers caught, did you not?
“A. Yes, sir.
“Q. So that you knew of one way of operating it that you would not get hurt?
“A. I think there was one way and that was the way.
“Q. It is plain, is it not, to anybody who looks down into this pocket, if there is not any meat there, you can see the auger?
“A. Yes, sir.
“Q. And when it is in operation you can see the auger turning?
“A. Yes, sir. I knew that the drive pulley was in operation when the auger was turning,' and I knew if I pushed my fingers into the hopper far enough to touch the auger I would get them cut. But I did not work there with the intention of sticking my hand in. Any one operating the machine would know if they stuck their hands onto the auger they would get their fingers hurt. There was nothing blind about that. * * *
“Q. It jerked after it caught your fingers?
“A. Yes, sir. I am five feet six inches tall and weigh about 160 pounds. I believe my hand is rather wide and short. The hopper had a flaring top. The upper edge or rim rolls outward, and the frame work of the shift on this machine in evidence comes right under the edge of the top of the hopper. If you keep your thumbs under the rim of the hopper, your fingers could not get into the auger.
“Q. Now the instructions, as I understand you, that Mr. Gearing gave you, and the manner in which you observed that he did the work, he put his -thumbs under this rim and then pressed the meat down with his fingers?
“A. He didn’t on the side, but he did on the front. It would not matter as long as you kept your thumbs under the rim. That is the way he showed me to do the work and the way he did it. As long as your thumbs were under the rim, it would be impossible to get your fingers caught.”

It is apparent from the record that plaintiff was acquainted with the construction of the machine and knew how it was operated, and whatever dangers there were were not only open to his observation, but were appreciated by him! It is not clear what instructions could have been given him which would have increased his appreciation of the dangers incident to its operation. It is argued that such instruction as he did receive was improper; that he should have been instructed to crowd the meat down into the hopper with a stick or wooden plunger, and that he should have been furnished one. It is quite probable that the use of a plunger would have been a safer way than the use of the hand, but plaintiff admits that the use of the hand was a safe way had he followed the instruction which he received, and that had he kept his thumbs under the rim of the hopper the injury could not have occurred. If he knew of one safe way to operate the machine, it was his duty to follow that way until, at least, he was advised of a better and safer way. Under the facts as disclosed by the record, we think the plaintiff failed to make a case under the law. Schroeder v. Car Co., 56 Mich. 132 (22 N. W. 220) ; Melzer v. Car Co., 76 Mich. 94 (42 N. W. 1078) ; Mackin v. Refrigerator Co., 100 Mich. 276 (58 N. W. 999) ; Hathaway v. Milling Co., 139 Mich, 708 (103 N. W. 164).

We are therefore of the opinion that the trial court was in no error in directing a verdict for the defendant.

The judgment will be affirmed.

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