text:
    LILJA v. STANDARD ACCIDENT INSURANCE CO.
    1. Insurance — Policy — Contracts — Construction — Accident Insurance.
    An accident insurance policy should receive, as to ambiguous or uncertain provisions, that construction which most favors the insured.
    2. Same — Change of Employment — Application.
    Where the insured gave an order for the payment of his first premium on an accident insurance policy to be paid by his employer out of wages earned during the month of July, but during June, prior to the issuing of a policy, insured changed employment, and was injured June 30th, dying on July 4th, a clause in the policy and in the order assigning wages, providing that if any premium was not paid in pursuance of the arrangement so made, the insurance should cease, or if the insured should leave his employment before earning sufficient wages to pay the premium for the period therein specified, the policy should be void, precluded a recovery upon the policy.
    Error to Gogebic; Cooper, J.
    Submitted January 23, 1912.
    (Docket No. 142.)
    Decided July 22, 1912.
    Assumpsit by Alfred Lilja against the Standard Accident Insurance Company of Detroit, upon a policy of insurance. A judgment for defendant on a verdict directed by the court is reviewed by plaintiff on writ of error.
    Affirmed.

      O’Brien & Le Gendre and George O. Driscoll, for appellant.

      James A. O’Neill, for appellee.
    The defendant issued its policy, countersigned and dated June 29, 1910, insuring Walfred Lilja for a period beginning at 12 o’clock noon June 29,1910, against loss of time resulting from bodily injuries caused during the term of the insurance by external, violent, and accidental means, etc., and agreeing to pay the principal sum of $1,000 for loss of the life of the insured to plaintiff, father of the said Walfred Lilja. The. application for the policy of insurance was made at Ironwood, Mich., and received at the office of the company in Detroit, Mich., June 3, 1910. The policy was mailed to the insured in the Detroit, Mich., post office, July 5, 1910, and was received at Ironwood July 7, 1910. When the insured applied for this policy, he was employed as a machinist’s helper by the Chicago & Northwestern Railway Company at Ironwood, was 21 years of age, and was earning about $45 a month. Between the date of making his application and the date of the issuing of the policy, he left his position with the railway company and began to work as a fireman for the Oliver Iron Mining Company in the same city, firing the boiler of a stationary engine. While so employed, and on June 80, 1910, he was accidentally injured, and, as a result of his injuries, died July 4, 1910. It appears to be customary for the defendant to issue policies to workingmen and to take from them, instead of a present payment of the premium, an assignment of wages to be earned, and, in the instant case, the insured had delivered to the agent of the defendant an order or assignment for $15.50 on account of the policy to be issued; the order being addressed to the Chicago & Northwestern Railway Company, and reading in part:
    “ For value received, I hereby assign to the Standard Accident Insurance Company, of Detroit, Michigan, the amount of money herein stated, same to be deducted from my wages earned during the Several months respectively specified, and paid to said Standard Accident Insurance Company, or its duly authorized agent, who presents this order for collection: $3.90 from' wages earned in month of July, 1910; $3.90 from wages earned in month of Aug., 1910; $3.85 from wages earned in month of Sept., 1910; $3.85 from wages earned in month of Oct., 1910. These payments cover the premiums on a policy issued to me by said Standard Accident Insurance Company, bearing even number and date herewith; the first payment applying to the first insurance period of two months from date hereof; the second payment to the second insurance period of two months more; the third payment to the third insurance period of three months more; and the fourth payment to the fourth insurance period of five months more.”
    Notice of the accident and of the death of the insured were sent to defendant, and it in reply wrote the following letter:
    “We have before us your favor of the 20th advising us that your son left the employ of the Chicago & Northwestern Railroad and entered the employ of the Oliver Mining Company on or about June 1st. The policy which he had with our company was to be dated June 29, 1910, the premium to be paid by assignment of wages on the Chicago & Northwestern Railroad, deductions to be made from wages earned in the months of July, August, September, and October. This policy provides that if the " insured shall have left the employment of railway company upon which the order for the payment of premium is given without having earned sufficient in the first month from which the deduction is to be made to pay the premium, or if he shall have collected or disposed of .the wages so earned, then the policy is to be void from its date, and no claim entertained for an injury sustained.
    “It appears your son left the employment of the Chicago & Northwestern Railroad before the beginning of the month of July, and before our policy took effect, and according to the terms of the contract, therefore, the policy would not be in force and we regret to be obliged to decline to entertain any claim.”
    The policy recites:
    “The Standard Accident Insurance Company, of Detroit, Michigan, incorporated 1884, in consideration of the warranties made in the application for this policy, and of order or an assignment of wages for the moneys therein specified (copy of which application and order is endorsed hereon, and made a part hereof), hereby insures Walfred Lilja (hereinafter called the insured), by occupation, machinist helper, under classification, extra medium, for the period.or periods hereinafter .specified beginning at 13 o’clock noon standard time of the day this policy is dated, against loss of time resulting from bodily injuries caused solely during the term of this insurance by external, violent and accidental means which shall, independently of all other causes, immediately, continuously and wholly disable and prevent the insured from engaging in any work or occupation for wages subject to conditions before and hereinafter specified, will pay to the insured or to his beneficiary, Alfred Lilja his father, or in event of his prior death to the executors, administrators or assigns of the insured as follows
    It contains the following:
    “This policy is issued to and accepted by the insured subject to the following provisions: 1. The payments specified in the order or assignment of wages given for this policy are premiums for separate and consecutive periods of two, two, three and five months and each shall apply only to its corresponding insurance period. No claim for injuries sustained during any period for which its respective' premium has not been actually paid in full shall be valid under this policy, .except in case of just claim for injuries sustained before the end of the month from the wages of which first premium is to be deducted, as provided in said order, but no claim shall be valid in any such case if the insured shall have left the employment of the employer named in the order without having earned in the month designated therein, sufficient wages to pay said first premium, nor if he shall have collected or disposed of the wages earned in said month, so that there shall not remain sufficient wages for the payment of said premium. In making settlement of claims for injuries sustained as aforesaid, the amount due the insured shall be credited on his order as far as it will apply to the full payment of one or more of the separate payments called for by said order, and the balance, if any, shall be paid to the insured. In making settlement of any claim for injuries received during any insurance period, for which the premium has been paid, the amount of unpaid premiums for later periods will be deducted from the amount found due.
    “ Failure to deduct any of the premium payments called for by said order, from any cause, is at the risk of the insured, and if any premium payment be not deducted as called for by said order, the insurance hereunder shall cease at the termination of the last insurance period for which payments have been actually deducted from the wages of the insured, except in case of failure to deduct the first premium, in which event the insurance shall cease at the termination of the month from the wages of which the first deduction should have been made as called for by said order.”
    In the order or assignment, the corresponding clause is:
    “ I hereby agree that failure to deduct any of the above premium payments from any cause is at ray risk, and if any premium payments be not deducted as above provided for all my rights and the rights of my beneficiary under said policy shall be void at the termination of the last insurance period for which payment has been actually deducted from my wages, except in case of failure to deduct the first payment, in which event the insurance shall cease at the termination of the month from the wages of which the first deduction should have been made. I hereby waive for myself and my beneficiary under said policy notice of nonpayment of any premium and agree that no claim will be made for injuries sustained, nor for sickness commencing, during any period for which its respective premium has not been actually paid in full, except that in case of a just claim for injuries sustained or sickness commencing before the end of the month from the wages of which the first premium is to be deducted. If I have left the employment of the employer above named without having' earned in the month specified sufficient wages to pay said first premium and have collected or disposed of wages earned in said month, so as not to leave enough to pay said first premium, then this policy shall be void from its date. The amount due me upon said claim shall be credited thereon, so far as it will apply to the full amount of one or more of the separate payments indicated herein, and in case of just claim for injuries sustained or sickness commencing during any insurance period for which the premium has been paid, the amount of unpaid premiums for later insurance periods will be deducted from the amount due me, I hereby agree that I will not revoke, cancel or annul this order or assignment by notice to said railway company or otherwise.”
    In the application are the following clauses:

      “I hereby apply for a policy, to be based upon an order or assignment for moneys therein- specified, and upon the following statements of facts. * * *
    “I hereby agree that the policy applied for shall constitute one insurance contract' covering four separate periods of insurance, each period to stand by itself, and that the policy shall remain in force after the first insurance period, only as continued by actual payments of premium for the consecutive periods following. I agree that failure to deduct any of the premium payments as provided in the order above referred to, from any cause, is at my risk, and if any premium payment be not deducted as called for by the order, all my rights and the rights of my beneficiary, under the policy, shall be void at the termination of the last insurance period for which payment has been actually deducted from my wages, except in case of failure to deduct the first premium, in which event the insurance shall cease at the termination of the month from the wages of which the first deduction should have been made, as called for by said order. I hereby waive for myself and my beneficiary notice of nonpayment of any premium, and agree that no claim will be made for injuries sustained, or for sickness commencing during any period for which its respective premium has not been actually paid in full, except^ that in case of a just claim for injuries sustained, or for sickness commencing before the end of the month from the wages of which the first premium is to be deducted as provided in the order, the amount due shall be credited on the order so far as it will apply to the full payment of one or more of thó separate payments called for by said order, and in case of just claim for injuries sustained or sickness commencing during any insurance period for which the premium has been paid the amount of unpaid premiums for later insurance periods will be deducted from the amount found due.”
    Defendant moved for a directed verdict for the following and other reasons:
    “That the insured having left the employ of the Chicago & Northwestern Railway Company before the date of the policy of insurance counted on in the declaration, the order or assignment, which was the consideration for the policy, failed, and the contract of insurance with it. That, the insured having left the employment of the Chicago & Northwestern Railway Company without having earned in the month of July, 1910, sufficient wages to pay the first premium, the contract of insurance as a result ceased to be in force by its terms at its date.”
    The court directed a verdict for the defendant for the second reason above stated. The brief of appellant states the contention as follows:
    “ There is only one question involved in this case, and that is whether or not the court erred in directing a verdict in favor of the defendant and against the plaintiff, and this includes the questions, Did the court properly construe the insurance contract: (a) As composed of the application and order or assignment and their acceptance? (6) As composed of the application, order, or assignment and policy together ? And (c) if a forfeiture could be claimed under the terms and provisions of the contract, was such forfeiture waived by the failure of defendant to reject the application or its issuance. of the policy, or both ?”
    It does not appear that the defendant had any notice of the change of the employment of the applicant, or of the accident, until proofs of loss were submitted.
   Ostrander, J.

(after stating the facts). Whether defendant is liable depends upon the contract. It is a contract for indemnity, and its terms and provisions, if uncertain in meaning or contradictory of each other, must be given a meaning and construction most favorable to the insured, and to the plaintiff.

The fact upon which nonliability is rested is that the insured did not work for the Chicago & Northwestern Railway Company upon or after the date of the policy. The provision of the policy relied upon is:

“No claim for injuries sustained during any period for which its respective premium has not been actually paid in full shall be valid under this policy, except in case of just claim for injuries sustained before the end of the month from the wages of which first premium is to be deducted, as provided in said order, but no claim shall be valid in any such case if the insured shall have left the employment of the employer named in the order without having earned in the month designated therein, sufficient wages to pay said first premium, nor if he shall have collected or disposed of the wages earned in said month, so that there shall not remain sufficient wages for the payment of said premium.”

The policy, in terms and generally, provides certain indemnity for a period beginning at 12 o’clock noon standard time June 29, 1910. It is issued without payment of the first premium and upon the express agreement that the premium for the months of July and August may be paid out of wages earned during July. If nothing happens to the insured during the month, and if the premium is for any reason not deducted from his wages, “the insurance shall cease at the termination of the month.” These are some of the provisions of the policy which support the conclusion that it was intended that the policy should be in force and effect on June 29th and each day thereafter until the end of July, and thereafter in force if the first premium installment should be paid out of wages earned by the insured during July and deducted from his pay for that month; that credit was to be extended. And there is nothing in the policy to indicate that defendant would not have accepted, at any time, cash for the unpaid premium, whether the insured earned the money at one place or another, or paid it out of his savings. There is no direct prohibition of change of employers. If, however, we apply the language first above quoted according to the meaning given it by the defendant, the policy contract is this: There is no indemnity if the insured leaves the specified employment before.he earns $3.90 in the month of July. There is no indemnity if the insured remains in the specified employment during July until he earns $3.90 or more, if before he is injured he disposes of all his wages. On the other hand, if the insured earns $3.90, leaves it with the designated employer to pay the order he has given, quits the employment, and is injured, the policy is in force; or, if he remains in the designated employment and is killed, or otherwise injured, having $3.90 in wages due him, the policy is in force. In short, no credit whatever is extended. No indemnity is promised to one who is killed on or after June 29,1910, who has not earned, in July, the amount of the first premium, which amount is uncollected and undisposed of and due from the specified employer when the injury occurs.

The application contains no clause or provision with respect to change of employment, or any intimation that failure to earn, in a specified employment, in the month of July, sufficient wages to pay the first premium will avoid the policy applied for. On the contrary, the effect of the provision is that credit for a month is given for the premium exacted for the first insurance period, and, if an injury occurs during the month, or a sickness commences during the month, the premium for that and for succeeding periods is to be deducted from the amount due the beneficiary under the policy. The applicant does not agree in the application, as he does in the order or assignment of wages, that neither he nor his beneficiary will present a claim for injuries arising during the first month if he has left the employment designated in the order or assignment of wages, -and does not agree that, if he shall not have earned in a specified employment a sum equal to the first premium, or, if he has disposed of wages earned, neither he nor his beneficiary will present a claim for injuries received during the month. But the application refers to the order, and the policy is in terms issued in consideration of both. No doubt can exist with respect to the details of the transaction. The instruments do not contradict each other. Quite the contrary. It cannot be said that the policy contains provisions not included in the application. Therefore we cannot, as we are asked to do, apply the rule here which was applied in Dailey v. Accident Ass’n, 102 Mich. 289, 299 (57 N. W. 184, 26 L. R. A. 171), and in Robinson v. Benevolent Society, 132 Mich. 695, 700 (94 N. W. 211, 102 Am. St. Rep. 436).

I also think there is no ambiguity in the language of that provision of the policy relied upon by defendant, and have already stated what appears to be to me the clear effect of the provision. No question of waiver appears to me to be involved. The doubt I'have had concerning the proper disposition of the case arose from the fact that an insurance period is made to begin June 29th, and apparently a premium is exacted for a period beginning on that day when, according to the other provisions of the policy, no risk was or could be assumed by defendant until some time in July. If a liability or risk beginning June 29th at noon was charged for and was assumed, what was the nature and extent of it ? If the insured had returned to work for the Chicago & Northwestern Railway Company during the month of July, and, having a proper credit for wages earned, had been killed, would defendant in such case be liable? These questions are not presented by counsel except as the word forfeited is applied and the idea of a forfeiture is made use of in argument. They have occurred to me in considering whether the particular policy was ever in force. I am convinced that, however they may be answered, plaintiff’s intestate did not perform, on his part, the conditions necessary to enable himself or plaintiff to demand the contract indemnity.

No error was committed in directing a verdict for defendant, and the judgment below is affirmed.

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


source: Caselaw Access Project

author: Ostrander, J.

license: Public Domain

text:
    MOORE v. HILLSDALE COUNTY TELEPHONE CO.
    1. Partnership — Equity Pleading — Names—Parties.
    In the absence of a plea raising the objection that complainants, who constituted a rural telephone company, unincorporated, conducting its business as the Waldron Telephone Exchange, had not complied with the provisions of Act No. 101, Pub. Acts 1907, relating to persons doing business under fictitious names, the bill may be properly considered on the hearing as that of the individual complainants.
    2. Same — Winding Up — Telegraphs and Telephones.
    A telephone corporation could not become assignee of the rights of a portion of the members of a local telephone exchange, and as such forcibly dispossess the members having control of the assets and property, even though it be admitted that the association was a partnership.
    3. Same — Joint Stock Association.
    The members of a voluntary unincorporated telephone exchange, organized to provide service for the members, who were allowed to assign their interests or to give up the service without dissolving the organization, being unable to agree whether to merge with a connecting company or to remain independent, must stand upon their legal rights; in the absence of duly enacted by-laws authorizing such action, a part of the members could'not effect a consolidation without the consent of the others.
    4. Same — Contract—Voluntary Associations.
    There can be no partnership, generally, without an agreement to create one.
    5. Same — Joint Stock Company — Joint Venture.
    A joint stock company is an association of individuals for purposes of profit, possessing a common capital, contributed by the members and divided into shares transferable by the owner, who may possess one or more.
    6. Same — Dissolution.
    Such an association for the conduct of a telephone exchange, having no capital stock, or shares, not organized for profit, governed by a board of directors, subject to the action of a majority of the members, was not a partnership or joint stock company, but constituted a joint adventure, nearest like a partnership, and the court of chancery could interpose to dissolve, wind it up, or require an accounting of its property ; but dissolution and sale was improperly ordered, where no mismanagement or insolvency or dissension rendering its further transaction of business impracticable was shown: defendant telephone company claiming its assets, and in control thereof without the consent of the majority of the members is required to account and to surrender control.
    Appeal from Hillsdale; Chester, J.
    Submitted January 23, 1912.
    (Docket No. 12.)
    Decided July 22, 1912.
    Bill by Perry D. Moore and others against the Hillsdale County Telephone Company and others for an accounting. From a decree for defendants, complainants appeal.
    Reversed.

      Powell & Chase and Smith, Baldwin & Alexander {Frank A. Lyon, of counsel), for complainants.

      Frankhauser & Cornell and Fellows & Chandler, for defendants.
   Ostrander, J.

The Waldron Telephone Exchange appears to have originally been a neighborhood arrangement. I find no material contradiction of testimony fpr complainants here set out:

“Mr. J. M. Barnes and myself were the originators of it. We thought it a good thing to have an exchange among ourselves in the village, and went around and got all together into it that would, with the understanding that each one would share pro rata with the expenses. We bought material and divided the cost amongst us. I think there were 15 of the original starters of the phone. We estimated the probable cost, and they each agreed to take one. Mr. Gorsuch had two phones, Mr. Boyd, W. G. Boyd, had two phones, Mr. Hadley two phones, and Masters & Spray one phone, Jim Barnes one phone, A. D. Way one phone, myself one phone, C. W. Abbaduska one phone, W. F. Barnes one, I think Gish Bros, had one, and Gleason Bros. I am not sure about Gleason Bros. being put in the first, though. I think there was 14 or 15 phones. They were all in the village of Waldron. From time to time after that others from the country around came in — different times they would try to get a line to come in and hook on with us. We would let them come in in the same way as we went in. They would either put it in themselves, stand their expense and pay, I think, it was $6 for the use of a drop on the board, or they could hire it done, just as they wished, but, after they came and hooked onto the board, they were considered as a member according to our by-laws. This went along until we had something like 175. * * * Westerly our farthest phone would be three miles, and east about three miles, south about two miles and a half, north about four miles. This organization or association has always done business under the name of Waldron Telephone Exchange. The first year we ran without any by-laws. Later we had by-laws. I think that I was secretary and treasurer and J. M. Barnes president. Later on we had credit and credit standing as an organization. We always got goods whenever we ordered them. They were first shipped to me for about two years, after that in the name of Waldron Telephone Exchange.”

Later, the exact time does not appear, the usefulness of the system was increased by connections with other systems. The same witness testified:

“We have connections with toll lines with Fayette over the Fayette County Telephone Company’s lines, and with the Williams county lines. Those were built in by themselves, and we merely received a per cent, for messages sent over them. We also have connections with the Hillsdale County Telephone Company and with the Bell Company, and have had ever since a year or two after we started. * * * We had an exchange and transmitted messages. When we first started, we put in a small switchboard, and had an operator to start with. We have had an independent building for our exchange since 1899 or 1900. We had booths, toll booths, in which people might talk.”

The by-laws of the association are 18 in number, and give the name of the association, provide for officers, and their duties, including a manager. The by-laws of most consequence in this discussion are numbered 9, 10, 12, 13, 14, 15, 17, 18, and are, with the preamble, here set out:

“ Whereas, it has become customary and virtually necessary by modern invention and competition to organize into co-operative bodies to facilitate business and communicate messages to the several different individuals which we are now or shall hereafter be in communication with; therefore, be it resolved, that-the following rules, regulations and by-laws be adopted for the conducting of the business of the several individuals that compose the said body: * * *
“ (9) Any person or persons may become a member of this exchange by constructing or causing to be constructed a line known as a metallic circuit (two wires) from their residences or places of business to run over the poles already set so far as possible for which said party or parties shall pay in to the treasurer the sum of ten cents (10) per pin for pins used, also an amount of six dollars ($6.00) for a drop on said board.
“(10) Each member of this association shall pay for the services of the operator the sum of two dollars ($2.00) each year unless otherwise provided for by the association. Said sum shall be paid semi-annually in advance to the secretary, who shall receipt the same. Any person refusing to pay said amount together with other assessments inside of sixty days from such notification shall not be entitled to switch service, and said line shall be disconnected from said exchange and to remain so until said payments shall be made. * * *
“ (12) Each toll line or line doing toll service now in or that may hereafter be installed shall pay into the treasury the same sum as party lines for construction, and said lines shall pay 25 per cent, of all the moneys received for toll line work into this exchange, 15 per cent, to go to the operator and 10 per cent, to go into the general fund of the exchange.
“(13) All assessments for repairs on the switchboard shall be prorated per drop. All other repairs on the line shall be prorated by phone, said expenses for repairs to be paid out of general fund.
“ (14) Each drop or line shall be entitled to one vote or representative at all meetings where assessments or business is to be adjusted pro rata per drop or line, and each phone or member of a party line shall be entitled to a vote or representative in all assessments or business that shall be adjusted not pertaining to drop or switchboard.
“ (15) There shall be an assessment levied of fifty cents (50) on each phone whenever the amount in the treasury shall be less than twenty-five dollars ($25.00). Other assessments may be levied as directed by a majority of the members present at any legal meeting. * * *
“(17) Ño business shall be transacted pertaining to the governing of this association at a meeting at which a quorum is not present. A quorum shall be deemed lawful if either the president or vice president, secretary or manager, together with one-fourth of the legal voters or their representatives are present.
“ (18) These by-láws may be altered or amended at any regular or special meeting by presenting to the president a written statement setting forth the facts, together with the proposed amendment, signed by five legal voters. It shall be the duty of the president to notify each voter when such amendments are to be voted on, either by written or verbal notice.”

The same witness, continuing, testified:

_ “ We got some funds from tolls for long-distance service. We never made any charge for anybody that wished to talk without they wanted to go off of our own lines, but, if they wished long-distance service, why, they would charge the regular rate. If some one in Waldron wanted to talk with Fayette, Ohio, there was originally a 10 cent charge. Now it is five. If they wanted to talk with Ransom, that was free, and Pittsford, and there was a time when we had free exchange with Camden and other parts of the county, but the last two or three years we only had the Hillsdale County Telephone Company’s funds. There was not much for this all the while, but was part of the time. We talked with Hudson over the Bell phone, and there was a charge of 10 cents, which we paid to our own board and our operator settled with Bell Company. Through the Bell we got all the world pretty near. That is the way we got our service. Through the Bell and those other phones, the Williams county and the Fayette line and the Hillsdale county line. We could get most any place in Ohio or Michigan, anywhere there was a telephone. For the long-distance calls we had 25 cents, and originally the operators had 10 per cent., and the company or exchange had 15 per cent., but the last few years the company has taken the 25 per cent. The operator gets none. The opérator is the one who tends the switchboard. We had printed matter, the telephone subscribers’ lists, which were distributed among the members, headed up, ‘ Waldron Telephone Exchange.’ We kept books all the while, and a minute of our meetings. We have all the while had the officers provided for by the bylaws, and have been all that time supplying people with telephone service. * * * I think some of the people who went into the exchange originally have sold and their purchasers are using the same phone, recognized by the company as having the right to use them. A man who wanted to come in built his newline to what we called the terminal pole, the last pole, and then we connected his wire with our cable.' He paid for his drop $6. He became a member of the company and had the same rights as any other member. He voted,- and, if he sold his farm and sold his phone, the man who bought out took his rights, and had a right to use the phone and had the right to vote. * * * "We had a free exchange with Ransom and Pittsford before the arrangement was made with the Hillsdale County "Company. It was through arrangements with that company that we got this free service. When we first started, they paid us so much for the use of our lines somewhere between $50 and $60 for the first year. They gave us free service with the Hillsdale County Telephone Company, which extended over all the exchanges with which the Hillsdale Company had arrangements. They gave us $1 apiece for the use of our phone, but we did not give them anything. Later we made an arrangement whereby we had free exchange with them, and they had free exchange with us.”

The Hillsdale County Telephone Company is a corporation, and in the pleadings it describes itself as a mutual company not organized for profit, but for convenience of the farmers of Hillsdale county, and of others, its patrons. Its stockholders are persons who actually own and use telephones of its exchange, its service is devoted to maintaining and extending its lines and service, no dividends are declared or paid, and its stock certificates of the par value of $50 each are sold, one share for each telephone owned, to actual. patrons. On the morning of January 11,1910, the agents of the Hillsdale County Telephone Company took possession of the building, switchboards, exchanges, wires, and apparatus of the Waldron Telephone Exchange, and have since possessed and controlled the same and offered to furnish, and furnished as required, telephonic communication for patrons of the last-named organization. This aotion, which, if not lawfully authorized, was a trespass, is complained about in the bill filed by the Waldron Telephone Exchange and by some 70 members thereof, who pray for a restoration of the property and an accounting.

In its defense the Hillsdale County Telephone Company asserts that a majority of the members of the Waldron Telephone Exchange authorized the action complained of, and that it is the successor in interest of these members, or of some of them, in the said exchange, which it alleges to be a copartnership, or joint association having the attributes of a copartnership. It avers that it is willing, and has at all times been willing, to issue to the complainants stock in exchange for their interest in the said Waldron Telephone Exchange, and in its answer prays that if complainants, or any of them, decline to accept the stock, a receiver may be appointed of the copartnership assets and sell them under direction of the court, and distribute the proceeds among those legally entitled to them.

The pleadings raise some questions concerning the proper parties complainant and defendant, and the defaults of some were entered. Complainants insist that, other questions aside, the action of the defendant corporation in possessing itself of the property of the Waldron Telephone" Exchange cannot be defended, and that no rights or advantages can be built upon such action and possession. But the principal contention is over the right of a majority or any of the members of the Waldron Telephone Exchange to dissolve it or to transfer, by sale or otherwise, an interest therein to the defendant corporation.

In the court below the bill was dismissed and a decree favoring defendants was granted. Complainants and certain individual defendants in the cross-bill were given 60 days in which to transfer to the Hillsdale County Telephone Company, in exchange for certificates of stock therein, their interest in complainant organization and its property. If any of them refuse to make the transfer, the Waldron Telephone Exchange is to stand dissolved, and a person named in the decree is to act as a receiver, take possession of the property, convert it into cash, and bring the funds into court. Complainants, or some of them, have appealed. . . ,

A preliminary question will first be disposed of. There has been no compliance on the part of the associating members, complainants, with the requirements of Act No. 101, Pub. Acts 1907,' and it is said by defendant that the Waldron Telephone Exchange has no right to sue in the name it has assumed. No plea was interposed; for which reason, the cause having gone to hearing, if the point made has any force, we may treat the bill as a pleading of the individual complainants, whose right to file the same is not disputed. There is a further observation applying to this point and to the case generally which may be made here. The case does not involve the rights of the public or of creditors, but only the mutual rights of the associating members. The legal character of the association is important, if at all, as it affects and defines those rights.

A second point must be decided adversely to defendants. If the claim of defendant that the members of the Waldron Telephone Exchange were copartners is admitted,the seceding or outgoing partners could not forcibly dispossess those in possession, nor authorize an assignee of their interests to do so. The courts were open, as well before as after the alleged trespass, to such partners, or their assignee, for the purpose of preserving the property and determining the rights of members of the association. Little harm appears to have been done because the telephone service was continued, and, as the mutual rights of members of the exchange must be determined before a final adjustment of the trouble can be made, the meritorious question is considered.

There are some disputed questions of fact which seem to be regarded by the parties as important. As to them, we find that the by-laws of complainant association were never regularly amended, and therefore the adoption of a by-law which provided for a governing body, called directors, did not in fact change the existing order of things. We find, too, that the votes of members, at various meetings, relied on by defendant as evidence of its right to assume possession and control, are of no force in fact or in law in determining the question now considered.

Certain members of complainant association, whether they are a majority of all members we cannot determine, have assumed to transfer to the defendant corporation their interests in the complainant, and in consideration of such transfer have been given stock in defendant corporation. These members and perhaps others have expressed the desire by voting at meetings and otherwise to connect or consolidate the property and the service of complainant association and the defendant corporation. So far as they could do so, they have given the desire effect. Other members of the complainant association prefer to continue the association and its service. Unable to agree, they must all of them stand upon their legal rights. The case is in many respects a peculiar one. It has not been the purpose of any seceding member to simply withdraw himself from the association. The purpose has been, and is, a consolidation, which, if accomplished, will leave each member, as before, with his telephone and his connection with an exchange, but able to communicate with more people and, perhaps, to secure better service. In other words, it is proposed to employ the property of the Waldron Telephone Exchange in connection with that of the Hills-dale County Telephone Company, the effect being to destroy the identity of the complainant association. The by-laws of complainant association, which we must assume are the rules which its members have mutually agreed shall control them, do not provide for such a contingency. They provide for admitting, but not for dismissing, members who are not in default. In a copartnership the withdrawal of a member generally works a dissolution. In a joint-stock company, or a joint adventure which is neither a partnership nor joint-stock company, the effect of the withdrawal of a member, there being no express agreement upon the subject, would not ordinarily work a dissolution. The practice of permitting one who purchased the property and the telephone of a member of complainant association to “step into the shoes of the man he bought'of” seems not to have been intended as a recognition of the right of a withdrawing member to sell an interest in the association, but amounted to receiving a new member in place of the^one going out.

As a general rule, there can be no partnership where parties have not by agreement created one. This may be said also of joint-stock companies, and, indeed, of all joint adventures. < They are, with greater or less particularity, agreed to. by the adventurers.

“A partnership is a voluntary unincorporated association of individuals whose legal relation is based upon their agreement, and needs no special statutory authority to give it force and effect. They continue to act in this relation as individuals. They sue and are sued only in their individual names. The death of one operates usually to terminate the relation. The transfer of the interest of one has usually the same effect, and operates, not to introduce the transferee into the relation, as a party to it, but merely to give him such share as his transferer would have upon a dissolution. Each partner is, in general, personally responsible for all the debts of the partnership, notwithstanding that he has fully paid into it his agreed contribution.” Mechem on Partnership, § 6.

A joint-stock company has been defined as an association of individuals for purposes of profit, possessing a common capital contributed by the* members composing it, such capital being commonly divided into shares, of which each member possesses one or more, and which are transferable by the owner. Shelford on Joint-Stock Companies, 1; Bouvier’s Law Dictionary. The complainant association never had any capital and never had any shares of stock. As between the members, it was not a corporation, a partnership, or a joint-stock association. It was not organized for profit. Neither was it a club nor other social or benevolent institution. It was not intended by those associating that the withdrawal of a member should work á dissolution of the association, or that any interest in it should be transferable except that, when a member did in fact sell his home or place of business and his telephone, the purchaser might as owner of the telephone become a member if he cared to do so. It was intended and agreed that the internal affairs of the association should be controlled directly by its officers, ultimately by a majority of its members. There is no reason why these mutual and innocent agreements and understandings of members should not be given effect, and we find in them and in the business carried bn no foundation for the claim that less than all of the members may by withdrawal or by an attempted transfer of interests to a third party compel either a sale of the property of the association or a dissolution. We are not required to give the association a name indicating its legal status. It is a joint adventure. For purposes of judicial control we regard it as nearest like a partnership. If there are reasons growing out of internal dissensions, or debts, or a failure to secure the joint benefit sought for by the associates, for the interference of a portion of its members in behalf of all of them in judicial proceedings, we have no doubt of the powers of a court of chancery to investigate and to grant relief as it would do in case of a partnership. No such action has been begun. No such action could be begun by the Hills-dale County Telephone Company, which is not, and could not become a member of the complainant association. It is recited in the decree as one of the premises for the relief granted that there has been such dissension among those interests of Waldron Telephone Exchange as to render its further continuance unprofitable and unsatisfactory under the present conditions nnd to require its dissolution.

There is, perhaps, some testimony tending to prove dissension, but there is little evidence of dissension with respect to the internal affairs of complainant association. We have stated the cause of the trouble. It was found by the trial court that the Hillsdale County Telephone Company is the owner of a majority of the stock and interests of, in, and to the Waldron Telephone Exchange. We hold it is not such owner, that it is wrongfully in possession of the property of the Waldron Telephone Exchange, and should áccount for its use to the association. Those members of the Waldron Telephone Exchange who have formally transferred their interests to defendant are for the purposes of this case regarded as still members of such exchange. We do not find evidence which convinces us that the members of the Waldron Telephone Exchange desire, because of its insolvency, or mismanagement, its dissolution, and a sale of its assets, or that there is such cause, as in case of a partnership, as would require its dissolution.

The decree of the court below is reversed, and a decree will be entered in conformity with this opinion. Complainants will recover from the Hillsdale County Telephone Company the costs of both courts.

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


text:
    MOORE v. ROYAL OAK LUMBER & SUPPLY CO.
    1. Appeal and Error — Exceptions to Findings oe Lower Court — Trial without Jury — Practice.
    In a case tried by the court without a jury, «n opinion of the court filed, but not excepted to, as required in the case of findings of fact or law, plaintiff having failed to request findings, is not reviewable on error.
    2. Same — New Trial — Motions.
    Denial of plaintiff’s motion for a new trial, though duly followed by exception, does not perform the office of supplying exceptions omitted upon the trial.
    3. Corporations — Stock—Lien by Debt oe Stockholder — Sales —Waiver.
    The secretary of a lumber company, having no authority to waive the lien of the corporation upon stock the owner of which was indebted to such corporation, did not waive the lien of the company by failing to claim a lien of that nature when a stock certificate was presented to him by the purchaser for transfer on the books, or by waiting until the transferee had paid out funds in reliance upon the alleged assurance or promise of the secretary to transfer the certificate, where the purchaser or transferee had notice of the indebtedness due from the original holder to the corporation,
    4. Same — Foreclosure oe Lien.
    A corporation may refuse to transfer stock upon which it claims a lien for a debt of the transferer without being required to foreclose its lien, as a condition precedent.
    Moore, O. J., and Brooke, J., dissenting.
    Error to Oakland; Murphy, J., presiding.
    Submitted January 17, 1912.
    (Docket No. 87.)
    Decided July 22, 1912.
    Assumpsit by Andrew L. Moore against the Royal Oak Lumber & Supply Company for the conversion of certain shares of stock. Judgment for defendant. Plaintiff brings error.
    Affirmed.

      Andrew L. Moore, in pro. per.

      Patterson & Patterson, for appellee.
   Ostrander, J.

In this suit, the plaintiff is not asking that the defendant be compelled to transfer to him upon its books shares of defendant’s capital stock. He sues for money, declaring upon the common counts in assumpsit, and also upon the following special count:

“For that whereas, heretofore, to wit, on the 6th day of December, 1910, the said plaintiff was the owijer of certificate No. 22 of the common capital stock of the said Royal Oak Lumber & Supply Company for forty (40) shares, at the par value of ten ($10.00) dollars each, originally issued to H. R. Bachert, and by the said H. R. Bachert transferred and assigned, sold and delivered to the said plaintiff herein for the valuable consideration, to wit, the sum of six hundred ($600.00) dollars. That on, to wit, the 6th day of December, 1910, the said plaintiff herein mailed said certificate to the said Royal Oak Lumber & Supply Company, accompanied with a request to transfer said certificate to said plaintiff, subject to the bylaws of said corporation. That said defendant company, upon receipt of said certificate, in conformity with the provisions of the by-laws of said company, issued a notice to the stockholders thereof on the 2d day of January, 1911, of the intended sale and transfer of said stock from said Bachert to said plaintiff. That on the 9th day of January, 1911, said defendant company notified said H. R. Bachert that his stock had been purchased by one of the stockholders of the company, Mr. Robert Barkley, and that he would settle with said Bachert for said stock. That subsequent thereto, said defendant company notified said plaintiff that they refused to recognize any interest which said plaintiff had in said stock in any manner whats'oever, and claimed to have a lien thereon for an indebtedness alleged to be due said company from said H. R. Bachert. The plaintiff avers that by the provisions of the by-laws of said defendant company in force on the 6th day of December, 1910, to and including the 10th day of January, 1911, the board of directors of said defendant company had the first option to purchase said stock at a price equal to that paid therefor by said plaintiff. That when the option to purchase said stock was exercised by the stockholders or stockholder of said defendant company, the proceeds from the sale of said stock to said stockholders or stockholder belonged to this plaintiff, and that upon the delivery of said stock by said defendant company to said stockholders or stockholder, the said defendant company then and there became and was indebted to this plaintiff in the sum which he originally paid for said stock, to wit, the sum of six hundred ($600.00) dollars.”

The judge before whom the cause was tried, without a jury, filed an opinion, but filed no finding of facts and law. It does not appear that he was requested to make findings. It does not appear that exceptions were taken to such conclusions, as from the opinion appear to have been reached. Various errors are assigned by the plaintiff, but one of which — the last — which refers to the refusal of a new trial, appears to be based upon an exception. If there are others, they are not pointed out either by the record or by the brief. A motion for a new trial does not perform the office of supplying exceptions not taken at the trial. It has been repeatedly held that, where no request is made for a finding either of law or facts as required by the rule, and the trial judge does not make any such finding, there is nothing for this court to review. Child v. City of Jackson, 98 Mich. 503 (53 N. W. 629); Haines v. Saviers, 93 Mich. 440 (53 N. W. 531); Rice v. City of Muskegon, 150 Mich. 679 (114 N. W. 661). In the last-mentioned case, it is said:

“ Even if the opinion of the court could possibly be treated as findings, as there are no exceptions to such findings, this case must be affirmed unless there was reversible error on the trial or unless there is a total want of evidence to support the judgment.”

Upon the subject of the practice to be pursued in such cases, see Griffin v. Johnson, 37 Mich. 87; Plumer v. Abbey, 39 Mich. 167; Cumming Township v. Schick, 94 Mich. 222 (54 N. W. 40); Wertin v. Crocker, 47 Mich. 642 (6 N. W. 683); Keystone Lumber, etc., Co. v. Jenkinson, 69 Mich. 220 (37 N. W. 198); Irwin v. Schlief, 48 Mich. 237 (12 N. W. 220); Butts v. Davis, 50 Mich. 310 (15 N. W. 486); Gemberling v. Lazarus, 100 Mich. 324 (58 N. W. 1005); Daniels v. Crane, 141 Mich. 499 (104 N. W. 736); Dodge v. Kennedy, 93 Mich. 547 (53 N. W. 795); Crusoe Bros. Co. v. Kudner, 136 Mich. 583 (99 N. W. 788); Employers, etc., Corporation v. Bridge Co., 139 Mich. 351 (102 N. W. 975); McDonell v. Union Trust Co., 139 Mich. 386 (102 N. W. 953); Markey v. Insurance Co., 164 Mich. 350 (129 N. W. 694). These are but a few of the many decisions denying to plaintiff a review of the proceedings below in the case at bar. This court sits, not to try suits de novo, but as a court for the correction of errors..

Neither in the brief nor at the hearing did counsel for appellee criticise the practice which has been followed, but that fact is immaterial. The appellant, under the rules, is not entitled to a review, and, if the silence of opposing counsel was permitted to secure him such a right, the rules of the court would be of little account. Since the hearing and since the condition of the record was discovered, it appears that counsel for both parties have been advised thereof. In reply, a stipulation has been forwarded to the clerk, signed by counsel for the respective parties, which amounts in substance to an agreement on the part of counsel to waive exceptions, and contains the statement that counsel have considered and treated the short opinion filed by the trial judge as findings of fact and of law. If this practice may be pursued in one case, it is only fair that it be adopted in all cases. If it is discovered in this court — it may, of course, happen that it is not discovered — that an assignment of error is not based upon an exception, counsel should in all cases, if in any, be notified, and, if opposing counsel are agreeable, we should permit the record to be supplemented by a stipulation that the failure to except was an inadvertence and that the cause may be considered in this court as if the required exception had been taken. But, if opposing counsel object, what then shall be done ? Manifestly the court, if it follows its own innumerable precedents, must decline to consider the cause.

I have not supposed that appellate courts, at least, enforced or declined to enforce rules of practice as counsel did or did not object to their infraction. It is evident that infractions, when discovered, should not be passed over in one case and made the ground of decision in another. In numerous cases it will be found that assignments of error relied upon by the appellant, and debated by the appellee, are dismissed from consideration because not specific, or are insufficient for some other reason based upon the rules. In other cases, like the present one, the judgment has been affirmed without notifying counsel and without permitting them to arrange with opposing counsel to waive the irregularity. I am not now advocating a particular rule of practice, but insisting that, at least until by general rule the practice heretofore followed is changed, it should continue to be followed. I think the appellant has presented no case for review, for which reason the judgment below should be affirmed. But the members of the court are not all agreed upon this proposition, for which reason, as I cannot concur in the opinion of Mr. Justice Moore, I state my reasons for thinking that, upon the merits, the judgment below must be sustained.

It is undisputed that plaintiff took the certificate of stock from the registered holder and owner as upon a sale and purchase of said owner’s interest; the'transfer being evidenced by a written assignment dated December 6, 1910. The par value of the shares (40) was $400. When the assignment was made, the defendant company had a lien upon the vendor’s stock, amounting to more than the par value thereof, on account of the vendor’s indebtedness to the company. Plaintiff made no inquiry of defendant before purchasing the stock. The lien of the corporation upon the stock of its members for all debts due from them to the corporation is created by general law, of which all persons are bound to take notice. Let it be assumed — I shall hereafter point out why the assumption is not warranted, but let it be assumed — that, when plaintiff bought the stock, he had no notice that his vendor was indebted to defendant. Having thus acquired an interest of little, if of any, value, it is proposed, by judicial aid, to release the lien of the corporation and to compel it to acquire the stock, not at its par or at its real value, but for the sum of $600, which sum it is contended it ought to be required to pay to the plaintiff. The right to such a recovery must be based upon the theory that defendant has, in law, converted the stock or deprived plaintiff of its beneficial use and value, and should therefore pay him its value; that its valué is $600.

Plaintiff delivered the certificate of stock to defendant with a request that it be transferred to him on the books of the company. The certificate came in this way into the possession of the company. The letter inclosing the stock is set out in the opinion of Mr. Justice Moore, and is dated December 6,1910. Later, under date January 18, 1911, the defendant wrote to plaintiff a letter, also set out in that opinion, saying, in substance, that it had been advised that plaintiff was not entitled to a transfer of the stock for the reason that his vendor was indebted to the defendant, which indebtedness was a lien upon the stock, adding:

“We therefore respectfully decline to recognize any interest you may have in the stock, at least until the indebtedness held by this company against Bachert is paid and satisfied.”

To this, plaintiff, on the next day, replied, and this reply, which is not set out in the opinion of Mr. Justice Moore, contains the following:.

“ There is no provision in the law by which you can prevent the sale of Mr. Bachert’s stock or any other stockholder’s simply because they are indebted to your company. Your circular letter of Jan. 2d recognized Mr. Bachert’s right to sell his stock, and so does your letter of Jan. 9th. I don’t feel like spending a lot of time writing letters about the matter, and.I am not looking for any litigation over it, but I have paid my good money for this stock and I propose to have either the stock or the money. You have no legal right to take my property to pay some other man’s debts with, and when Bachert assigned the certificate in question to me, I thereupon acquired all of the interest which he had in that certificate, and I am entitled either to the stock or the money, and you have no legal right to sell it under the by-laws for less than $1.50, which I paid for it.
“If the matter is not adjusted at once, I shall bring suit for the same in the circuit court of this county, and we will find out whether you can take my property to pay some one else’s obligations with.”

This, the last letter of the correspondence, indicates plaintiff’s views bf his rights and is clearly a denial of any right of defendant to assert a lien against the stock after it passed into plaintiff’s hands.' The two letters last above referred to announce the real positions of the parties before this suit was brought.

I assume that, if nothing more appeared than the facts above referred to, no conversion of the stock would be made out. And I assume, also, that this assertion of a lien cannot be construed to be evidence of a waiver of the lien. Plaintiff’s right to recover must rest upon some other action of defendant or upon some failure to act between the time when plaintiff asked for a transfer of the stock and the time when a transfer was refused, unless the lien was discharged. When plaintiff acquired the stock, it was subject to defendant’s lien. Defendant, before suit was brought, recognized his interest, subject to the lien.

In his opinion, Mr. Justice Moore finds that the lien of defendant was waived after plaintiff acquired the stock. The facts relied upon to support his conclusion are, first, that the by-laws of defendant authorized the secretary of the defendant, upon the proper order of the owner of shares, to transfer the stock upon conditions. One express condition of the by-law is that the right of transfer is subject to the provisions of the statute under which the company is organized. He says that the statute and by-law should be construed together and harmonized, if possible, and, if harmonized—

“It is apparent that, when a stockholder has notified the secretary that he intends to sell his stock, the company, if it intends to assert a lien against it, should at once say so.”

This conclusion may seem harmonious to the plaintiff and very discordant to defendant.

It may be asked here what difference it made to the plaintiff whether the defendant’s secretary at once asserted a lien or did so after some days’ delay. Bachert, who sold the stock to plaintiff, did not, before sale, notify defendant or its secretary of an intention to sell. The sale was accomplished before defendant had any knowledge or notice thereof.' Bachert had no valuable interest in the stock after the sale, and apparently he had none before the sale. Plaintiff lost nothing by the delay of the secretary. What plaintiff bought is worth as much today as it was when he bought it. But it is said that the secretary of defendant sent out to shareholders the notice provided for in the by-laws in cases where a shareholder desires to sell his stock, and that finally it was asserted by him, to Bachert, that the stock had been purchased by another shareholder who would settle with him. In this action, contrasted with the asserted duty of the secretary to at once claim a lien, is found evidence that defendant had waived its lien; rather that the secretary had waived it for defendant. I do not regard this action as necessarily inconsistent with the retention of the lien, assuming that the secretary had authority to waive, or to assert, statutory liens at his pleasure. See Bishop v. Globe Co., 135 Mass. 132. It turns out that defendant did not sell the stock and did not mean by its action to waive, but to secure, satisfaction of its lien. The trial judge found, and there is evidence tending to support the finding:

“ It does not seem to me that this method indicated any waiver of the defendant’s rights, but rather disclosed a somewhat devious course of pursuing them.”

Treated as a finding of fact, this is conclusive.

Without desiring to enter at length upon the subject of the apparent authority of the secretary to waive defendant’s lien by any action less than actually transferring the stock, it is proper to state that I have found no authority which I think supports the conclusion that his apparent authority extended so far as to permit him, by any other action, to waive the lien. It is said, in Oakland County Sav. Bank v. State Bank, 118 Mich. 284, 286 (71 N. W. 453, 67 Am. St. Rep. 463):

“Undoubtedly, as to one having knowledge of the fact of an indebtedness owing by the owner of the stock to the bank, the cashier would be without authority to waive the bank’s lien.”

So here, if plaintiff had known of the lien of defendant before he purchased the stock, he could not have relied upon an express waiver thereof by the secretary, because the secretary had no apparent authority to make such a waiver.

In Citizens’ State Bank v. Kalamazoo County Bank, 111 Mich. 313 (69 N. W. 663), it appeared that a by-law of the defendant bank provided that any stockholder, desiring to sell his shares, should notify the president or cashier of the fact, giving him and the board of directors 10 days in which to purchase them; “at the expiration of said 10 days’ time, the stockholder may then sell at pleasure.” It was insisted that this was a waiver of the statutory lien, and the contention was refused. And it must be kept in mind that the power of the secretary to transfer the shares is not the power claimed to have been exercised by him. The governing rule is well stated in New York, etc., R. Co. v. Schuyler, 34 N. Y. 73, as follows:

“Where the principal has clothed his agent with power to do an act upon the existence of some extrinsic fact necessarily and peculiarily within the knowledge of the agent, and of the existence of which the act of executing the power is itself a representation, a third person dealing with such agent in entire good faith pursuant to the apparent power, may rely upon the representation.”

It is cited with approval in Union Trust Co. v. Preston Nat. Bank, 136 Mich. 460, 475 (99 N. W. 399, 112 Am. St. Rep. 370, 4 Am. & Eng. Ann. Cas. 347). It is the rule which is in fact applied in Oakland County Sav. Bank v. State Bank, supra.

It is said, finally, that the secretary of defendant told the plaintiff one day that the transfer would be made, and that, acting upon the assurance, plaintiff paid out considerable sums of money which he would not otherwise have paid. Upon this point the record discloses the following facts: Some days after plaintiff sent the certificate of stock and the assignment to the secretary of defendant, by mail, and before He had received a reply, he saw the secretary on the street, and said to him, “What about the transfer of that stock; when will that stock be transferred ? ” or words to that effect, and received the reply, in substance, that he (the secretary) had been busy but would take care of it in a few days and send it up. This is the testimony of the plaintiff. He further testified that afterwards, and before notice of the assertion of the lien, he paid certain claims, a part of those considered when he acquired the stock. From his testimony it further appears that, during the summer of 1910, Henry Bachert, a contractor and builder, agreed with plaintiff to construct for him two houses for an agreed price. While the work was in progress, it was discovered that the contractor was losing money, and that the contract price unpaid would not settle outstanding bills and complete the structures. It was estimated then that the deficit would be about #800. It was then agreed that if Bachert would give the stock in question to plaintiff, plaintiff would assume and pay outstanding obligations. About the 1st of December it was learned that the deficit would be approximately #1,200.

st I said to him that, if he would turn in the stock, I would accept it as one-half of the loss, and pay the rest of the bills.”

On the date the stock was transferred, plaintiff paid bills amounting, as I understand the record, to $733.51, and did not pay the remainder of the bills until December 17, 1910.

On cross-examination he gave testimony as follows:

“Q. Now, as far as the amount you paid on these claims, you would have to pay for them anyway, wouldn’t you?
“A. No, the lien, time for the lien on some of the claims, I don’t know how much, had expired, Mr. Patterson, and some of them still within the provisions of the lien law.
“Q. What items that was a lien and could be collected had expired ?
“A. Well, sir, I couldn’t tell you that now, Mr. Patterson. Mr. Gaukler had availed himself of a lien at that time, and Mr. Gaukler’s claims I presume still stands unsettled pending the determination of this case, that is true also of Mr. Sibley’s case and one other claim, the name I do not just recall at present, then time for a lien has expired and long since expired. I think Mr. Gaukler’s claim had expired, but I cannot. say for that, his claim aggregated about — ”

Bachert, sworn for plaintiff, testified on cross-examination that the buildings cost $1,200 more than they were estimated to cost.

“Q. Now, how did you come to say anything to Mr. Moore about this stock in the Royal Oak Lumber & Supply Company ?
“A. Well, I don’t know as I could tell you how it did come up. He knew I had some stock. I don’t know as I told him at that time that 1 was owing the Royal Oak Lumber & Supply Company. I told him some time during the transaction. I don’t just remember when.
(,Q. How much did you tell him you owed the Royal Oak Lumber & Supply Company ?
“A. If I told him at all, somewhere about that amount. I remember that I did tell him at some time. I presume it was somewhere about the time I was talking about transferring the stock. I don’t know as I spoke of the note. I had no talk wilh him about when the indebtedness was due. He asked me nothing about it.”

I do not find this testimony disputed. In the face of this testimony, how can it be said, as a matter of fact, that plaintiff, relying upon the casual statement of defendant’s secretary, paid out money which otherwise he would not have paid ? The conclusion involves a finding of fact about which the testimony is not undisputed. The trial judge found that the lien was not waived. Presumably the conclusion was reached after consideration of all of the testimony.

So far I have proceeded upon the assumption, heretofore stated, that plaintiff had no knowledge or notice of the indebtedness of his vendor to defendant. With that assumption, I think no waiver of the lien is made out. The testimony of the vendor, above quoted, excludes the assumption. The assumption can no longer be employed without finding that, notwithstanding this testimony, plaintiff did not know of the indebtedness. The trial judge did not specifically find the good faith of plaintiff and was not requested to do so. The trial court reached a conclusion which it was bound to reach, upon all of the testimony, if plaintiff had the knowledge which this testimony imputed to him. There ought to be no confusion of ideas upon this point, and there is no confusion in the authorities. If plaintiff was informed before or at the time he took the stock that his vendor was indebted to the defendant, no act and no failure to act on the part of the secretary of defendant would, without acquiescence on its part, estop defendant to assert its lien. The express agreement of the secretary would not estop it, nor would the transfer of the stock. If plaintiff had inquired of the secretary before buying the stock, had been told that there was no indebtedness, and had then purchased, the defendant would be estopped because the answer to the inquiry was one which the secretary had apparent authority to make, and therefore one might rely upon his answer. If plaintiff had no knowledge of the indebtedness, and had secured a transfer of the stock, defendant would be es-topped, because the secretary had apparent authority to make the transfer, and in the act of making it would represent that no lien existed. In this case no inquiry was made; the stock has not been transferred; a lien is asserted. There is testimony tending to prove that plaintiff was informed about the indebtedness of his vendor to defendant.

Something appears to be claimed for the fact that the defendant has not foreclosed its lien. I do not think it is under any obligation to do so; I take it that any such corporation may refuse to transfer stock, claiming a lien thereon, without being under necessity to foreclose its lien.

In my view of the case, the judgment below should be affirmed.

Steere, McAlvaYj Blair, and Stone, JJ., concurred with Ostrander, J.

Moore, C. J. The plaintiff sued to recover the value of certain stock. The case was tried before a judge without a jury. He rendered judgment in favor of defendant. A motion was made for a new trial which was overruled. The case was brought here by writ of error.

The Royal Oak Lumber & Supply Company is a corporation organized under the laws of this State. Henry Bachert was one of the original stockholders of the company; 40 shares of the capital stock of the company, at $10 per share, were issued to him. It was fully paid. During the summer of 1910, Mr. Bachert made a contract with plaintiff to construct two houses at an agreed price. When the work was partially completed, it was found the contractor was losing money, and the balance due on the contract would not be sufficient to pay the outstanding bills and complete the job. Plaintiff agreed with the contractor, that, if he would transfer to plaintiff the 40 shares of stock in defendant company, plaintiff would pay the outstanding bills. At the time the stock was transferred, it was found the outstanding bills amounted to over $1,200.

On the 6th day of December, 1910, the 40 shares of stock were assigned to the plaintiff and delivered to plaintiff. Upon receipt of the stock December 6, 1910, plaintiff forwardéd the stock by mail to the defendant company, and the following correspondence occurred:

• “Pontiac, Mich., Dec. 6th, 1910. “Royal Oak Lumber & Supply Co.,
“ Royal Oak, Mich.
Dear Sirs:
“Inclosed find certificate No. 22 of the capital stock of the Royal Oak Lumber & Supply Company, for 40 shares, issued to H. R. Bachert, and by Mr. Bachert transferred to me. The consideration for this transfer is better than $1.50 per share, and I assume that none of the owners of common stock will care to avail themselves of the option to purchase any portion of the stock at that price. If they do, I will be glad to let it go. I speak of this because I think your by-laws provide that when stock is sold, the other stockholders shall have the option to take their pro rata share of it if they desire. Please transfer the stock to my name, and reissue same, mailing to me at Pontiac, Michigan.
“ Will you kindly advise what the status of the company is, whether they expect to pay a dividend this January, and is there any market for the stock ?
“Yours very respectfully,
“A. L. Moore.”

The certificate of stock inclosed with this letter bore on the back the following assignment:

“ For value received, I hereby sell, assign and transfer to Andrew L. Moore, 40 shares of capital stock represented by this certificate, and do hereby irrevocably constitute and appoint the secretary of said company to transfer said stock on the books of the within named corporation, with full power and substitution in the premises.
“Dated, December 6, 1910.
[Signed] “ H. R. Bachert,
“ In the presence of A. -L. Moore.”

The reply was as follows:

“Royal Oak, December 8th, 1910. “Mr. A. L. Moore,
“Pontiac, Mich.
“Dear Sir:
“Yours of the 6th inclosing the H. R. Bachert certificate received. Please advise us what you mean by the consideration being better than $1.50 per share. As we understand it you are taking the stock at the rate of $11.50 per share. Please advise us if we are correct.
“ Yours truly,
“Royal Oak Lumber & Supply Co.,
“ Treas.”
“Pontiac, Mich., Dec. 9th, ’10.
“ Royal Oak Lumber & Supply Co.,
“Royal Oak, Mich.
“Dear Sirs:
“ Replying to yours of the 8th, we beg to advise you that we are paying $1.50 on the dollar for the stock. In other words, the $400 of stock cost us $600. It may not be worth it, but that is what I have in it. In fact, more than that. If you can place it somewhere for par, I will let it go.
“Yours very respectfully,
“A. L. Moore.”

Mr. Moore testified:

“ On the date that the stock was transferred-1 paid approximately one-half of the outstanding obligations against the job at that time, amounting to $569.51, to A. A. Cor-win & Son, and $164 to Hazelton & Detwiler, but the remaining of the outstanding obligations were not paid at that time. About the 12th or 15th of December, while on my way from Rochester to the city of Pontiac, I stopped at Royal Oak to see what had been done with the stock, and whether it had been transferred. I called at the office and there seemed to be no one there but the clerk of the company, and I inquired for Mr. Merritt, and they said he wasn’t there, and I came over to the station to take the car, and when I got on the front end of the car Mr. Merritt got off from the car, and I Baid to him, ‘ What about the transfer of that stock; when will that stock be transferred ? ’ or words to that effect, and his reply in substance was that he had been busy, but that he would take care of it in a few days and send it up. Following that, on the 17th of December, I paid the balance of the outstanding claims with two or three exceptions; Mr. Burlingham, $100; A. A. Corwin & Son $700; Mr. Burlingham, $36.53.”

The following letters were received by Mr. Bachert:

“Royal Oak, Mich., Jan. 2, 1911.
“You are hereby notified that 40 shares in Royal Oak Lumber & Supply Company, held by H. R. Bachert, are for sale to A. L. Moore, at $1.50. 52 shares of Thos. Bell’s stock to J. A. Merritt, at par.
[Signed] “ J. A. Merritt, Secretary.”
As to this notice Mr. Merritt testified:
“ It is the notice that was sent out to the stockholders in accordance with our by-laws, January 2d, by me as secretary.”
“ January 9, 1911.
“ Mr. H. R. Bachert,
“Pontiac, Michigan.'
Dear Sir:
“Your stock was purchased by a stockholder in the company, Mr. Robert Barkley. He will settle with you for the same.
“ Yours truly,
“ J. A. Merritt, Secretary,
“Per A. G.”

As to this letter Mr. Merritt testified in July, 1911, on direct examination:

“ Letter of January 9th is the letter that was sent to Mr. Bachert stating that Barkley had purchased his stock.
“Q. What is the fact as to whether Mr. Barkley did purchase the stock ?
“A. He did not.
“Q. What is the fact as to whether the stock has ever been sold?
“A. No, sir, it has not. The stock still stands on the books of the company in the name of H. R. Bachert, and we have been holding his certificate abiding the result of this suit.
“ Q. Now, the position of your company is that you do not lay any claim to this stock except that you have a lien on it for Mr. Bachert’s debt ?
tlA. Yes, sir. I think that is all there is to it.”

It does not appear that any steps have been taken to foreclose any lien. When Mr. Bachert received the letter of January 9th regarding the stock as belonging to Mr. Moore, he turned the letter over to him. After a telephone talk with Mr. Merritt, Mr. Moore wrote the defendant a letter which contained the following:

“ I have your notice of January 2d and also of January 9th with reference to the stock which you mailed to Mr. Bachert, and I beg to advise you that Mr. Robert Barkley will settle with me for the stock and not with Mr. Bachert. I bought Mr. Bachert’s interest in the stock, and paid him for it. The stockholders of the Royal Oak Lumber & Supply Company have the option to purchase this stock at the price I paid for it, and if they exercise that option, then the money comes to me, not to Bachert, for he has already had his money once. You having accepted the stock at the price sold, I shall expect the Royal Oak Lumber & Supply Company to favor me with check for $600 by early mail. Please give the matter your early attention.”

To which letter Mr. Merritt replied as follows:

“Royal Oak, Mich., Jan. 18, ’ll.
“A. L. Moore,
“Pontiac, Mich.
Dear Sir:
“Replying to your letter of Jan. 16th regarding the stock of H. R. Bachert, of the Royal Oak Lumber & Supply Company, would say that we are advised you are not entitled to a transfer of this stock for the reason that H. R. Bachert has been for a long time indebted to the Royal Oak Lumber & Supply Company, and such indebtedness is a lien upon the stock standing in his name, and we therefore respectfully decline to recognize any interest you may have in the stock, at least until the indebtedness held by this company against Bachert is paid and satisfied.
“Very respectfully yours,
“ J. A. Merritt, Secretary,
“ Per A. G. G.”

This is the first intimation in the record that defendant claimed a lien. Other correspondence occurred which it is not necessary to incorporate here.

The defendant is incorporated under Act No. 232, Pub. Acts 1903. Section 16 of the act reads as follows:

“ The stock of every such corporation shall be deemed personal property, and be transferred only on the books of such corporation, in such form and manner as their bylaws shall prescribe, and such corporation shall at all times have a lien upon all the. stock or property of its members invested therein, for all debts due from them to such corporation.”

Section 24 provides that the company may enforce its lien by giving notice to the stockholder “ that unless he shall pay his indebtedness to said corporation within three months from the time oí giving such notice, then such corporation will proceed to sell,” etc. Section 25 provides that, after this notice, another notice shall be given in one or more newspapers of the intention of the company to sell and it may sell at public auction.

Defendant’s by-law No. 15 reads as follows:

“ Sale and Transfer of Stock. The stock of the corporation shall be deemed personal property, and shall be transferred on the books of the corporation by the secretary upon proper authority conferred upon him by the owners of the respective shares of stock, subject to the provisions of the statute under which this company is organized, and subject to' the following conditions: In case any stockholder desires to sell his stock, he shall give the secretary at least five days’ notice in writing of his intention to sell the same, to whom, and for what price. And upon receipt of such notice said board of directors shall thereupon have for the benefit of all other stockholders the first option to purchase the same at the price equal to any such bona fide offer as said stockholders may have for said stock. The secretary shall immediately notify each stockholder in writing of the receipt of such notice, and each stockholder shall have the right to purchase such a portion of said stock so offered for sale as is represented by the proportion his said stock holdings bear to the total capital stock of said company that is issued. And in case any stockholder shall not desire to purchase his said portion, then his option to purchase shall revert to all of the remaining stockholders in the same manner.

The foregoing notice and option shall be a condition precedent to the transfer of any stock on the books of the corporation. Stockholders desiring to purchase their proportion of said stock so offered for sale shall avail themselves of the opportunity within five days after the issuance of such notice by the secretary. If the stockholders of said company shall not avail themselves of the opportunity to purchase said stock, then the person so desiring to sell may have his stock transferred to the person from whom he received the bona fide offer.”

This case was tried in July, 1911. Up to that time no notice had been served under sections 24 and 25 of Act No. 232, supra. It has already appeared by the testimony of Mr. Merritt that, at the time of the trial, the company still held the certificate of stock which was transmitted to it by Mr. Moore December 6, 1910, with an assignment on the back thereof from Mr. Bachert to Mr. Moore, and that the stock still stood in the name of Mr. Bachert upon the books of the company.

It is conceded by the plaintiff that defendant had a lien by virtue of the statute under which it was organized, but claims defendant waived the lien. Defendant insists that Mr, Merritt had no authority to waive the lien. Section 16, supra, which we have quoted, gives the defendant power to provide how the stock shall be transferred. That power was exercised by the enactment of by-law 15, which we have quoted, which confers express authority upon the secretary upon proper authority of the owner of the stock to transfer it subject to the conditions there mentioned.

Sections 16, 24, and 25 of Act No. 232, supra, and bylaw 15, must be read together and harmonized, if possible. If this is done, it is apparent that, when a stockholder has notified the secretary that he intends to sell his stock, the company, if it intends to assert a lien against it, should at once say so. If, instead of doing that, the secretary “immediatelynotifi.es each stockholder in writing ” of the notice he has received from the selling stockholder, and some other stockholder avails himself of the right to buy it within five days, it would be unreasonable to say the company had not waived its lien. Why is it not equally anomalous to say that, after this notice is given by the secretary, and, “ if the stockholders of said company shall not avail themselves of the opportunity to purchase said stock, then the person so desiring to sell may have his stock transferred to the person from whom he received the bona fide offer,” the lien may still be asserted. To ask the question is to answer it.

In addition to the above supposed situation, it appears that Mr. Moore was assured by the sécretary 8 or 10 days after he had transmitted the stock to him that the transfer would be made, and, acting upon this assurance, paid out very considerable sums of money that he otherwise would not have paid. We think the defendant is now estopped from asserting a lien. See Oakland County Sav. Bank v. State Bank, 113 Mich. 284 (71 N. W. 453, 67 Am. St. Rep. 463).

The judgment should be reversed and a new trial ordered.

Brooke, J., concurred with Moore, C. J.


author: Bird, J.

text:
    WOLVERTON v. VILLAGE OF SARANAC.
    1. Municipal Corporations — Sidewalks — Negligence — Personal Injuries — Contributort Negligence.
    Plaintiff was not per se guilty of negligence barring her recovery foy injuries sustained by reason of a fall upon an alleged defective sidewalk, because she admitted having the defective condition in mind when she passed over it in the dark, stepping into a small depression in trying to avoid a larger one.

      2. Same — Evidence—Opinion.
    One, who claimed to have notified the street commissioner of defendant village of the dangerous condition of the walk, could state the conversation, but could not offer his opinion that the commissioner understood what walk was intended.
    3. Trial — Cross-Examination—Evidence.
    The extent of cross-examination as affecting the credibility of a witness, by showing unlawful acts, etc., is, in general, discretionary with the trial court.
    Error to Ionia; Davis, J.
    Submitted November 22, 1911.
    ( Docket No. 160.)
    Decided July 22, 1912.
    Case by Bessie A. Wolverton against the village of Saranac for personal injuries. A judgment for defendant on a verdict directed by the court is reviewed by plaintiff on writ of error.
    Reversed.

      H. E. Kidder and B. A. Hawley, for appellant.

      Scully & Davis, for appellee.

       Effect of knowledge of defect in street on question of contributory negligence, see note in 21 L. R. A. (N. 8.) 638.

   Bird, J.

On November 1, 1908, Bessie Wolverton, the plaintiff, was living with her husband in the defendant village. Late in the evening of that day they were informed that her husband’s mother was dying. They hurriedly dressed and started for the mother’s house, half a mile distant. When they had gone about half the distance, they came to a tar and gravel walk, in which were 10 holes of varying sizes, ranging from 6x7 inches to 36x 36 inches. The depth of them varied from 2 to 6 inches. The plaintiff and her husband were more or less familiar with the walk, and, as they approached the vicinity where the holes were, they slackened their pace and passed over several of them in safety. While attempting to avoid one of the larger holes, the plaintiff stepped into one of the smaller ones and either slipped or stumbled and was thereby thrown forward onto the walk and seriously injured.

After the trial court had listened to the plaintiff’s case, he came to the conclusion that plaintiff herself was negligent, and that her negligence contributed to her injury, and, upon motion of counsel, directed a verdict for the village. The plainfiff insists that this was error; that, if there was negligence on the part of plaintiff, it was a question of fact to be determined by the jury rather than by the court. It has been held many times by this court that one is not precluded from traveling upon a sidewalk simply because he knows it is defective. Lowell v. Township of Watertown, 58 Mich. 568 (25 N. W. 517); Schwingschlegl v. City of Monroe, 113 Mich. 683 (72 N. W. 7); Urtel v. City of Flint, 122 Mich. 65 (80 N. W. 991); Belyea v. City of Port Huron, 136 Mich. 504 (99 N. W. 740); O’Connor v. City of Detroit, 160 Mich. 193 (125 N. W. 277). '

The facts, as they appear in the record, seem to bring the case within the rule laid down in these cases. This rule is recognized by defendant’s counsel, but they seek to distinguish this case by calling attention to the testimony of the plaintiff that she had the defect in mind at the precise moment she was injured, and they argue from this that it conclusively appéars that she was not in the exercise of ordinary care. The fact that she had the defect in mind would not necessarily change the issue of fact to one of law. Lowell v. Township of Watertown, supra. If she knew of the defects and had them in mind, she would be held to a greater degree of care than she would if she had had no knowledge of them. Her knowledge of the defects should be considered in connection with her efforts to avoid them, the darkness of the night, the extent to which the holes were visible, and all the other circumstances of the case, in determining whether she exercised that care which an ordinarily prudent person would under like circumstances. We are of the opinion that the question of plaintiff’s negligence was one for the jury, and that the trial court erred in determining it as a matter of law.

Error is also assigned because certain testimony was rejected. A witness for the plaintiff had testified that some time previous to the injury he had called the attention of the street commissioner to the defective condition of the walk. Upon cross-examination the following occurred :

“Q. You wouldn’t want to swear you called his attention particularly to the Barber walk as the Barber walk ?
“A. I don’t know as I would, really; of course, I rather think I did.
' “ The Court: Did you say anything to him by which he
should know you were talking about the Barber walk ?
“A. I think he understood it well.
The Court: We will leave it out, then, if it was only a question of understanding.
“A. I think it was all understood the walk by what we talked; he understood what I meant; he said he would go and fix it.
“ Mr. Hawley: I think, in connection with what he said, he understood.
The Court: It may be he had some other walk in his mind; as far as the testimony goes, it is a little too uncertain to bind the village unless the walk is identified.”

It was undoubtedly competent for the witness to testify to the conversation he had with the street commissioner with reference to the walk, and it is equally clear that he would have no right to testify as to what the street commissioner understood from the conversation. If there were any question in regard to that, it was a question for the jury to determine and not for the witness.

Complaint is also made because the trial court ruled that plaintiffs husband should answer the following question upon his cross-examination:

“Q. How much did you pay for it (referring to the marker for his mother’s grave) ? ”

An examination of the record shows that an attempt was made by defendant to show by the witness that money had come into his hands to purchase a marker for his mother’s grave, and that he had used it for other purposes. It was being used to affect his credibility as a witness. We think it was one of those questions that are so far within the discretion of the trial court that we cannot say that he was in error in directing it to be answered.

Counsel for plaintiff argues the question of the sufficiency of the notice of the injury given to the village council, also the negligence of the defendant. As these questions were not decided adversely to the plaintiff by the trial court, we think it unnecessary to consider them.

The judgment of the trial court is reversed, and a new trial ordered.

Stbere, MoAlvay, Brooke, and Blair, JJ., concurred.