author: Carpenter, J.

text:
    DOLAN v. SUPREME COUNCIL CATHOLIC MUTUAL BENEFIT ASS’N.
    1. Life Insurance — Contract — Where Made — Conflict of Laws.
    A policy of insurance issued in Michigan by a mutual benefit association organized under the laws of another State having a branch in Michigan is a Michigan contract.

    2. Same — Beneficiaries—Insurable Interest — Public Policy.
    Public policy does not forbid an insured selecting as his beneficiary one not having an insurable interest in his life.
    3. Same — Mutual Benefit Insurance — Selection of Beneficiary — Change of By-Law.
    Where the designation of a beneficiary having no insurable interest in the insured’s life was not prohibited by the association’s by-laws when made, the subsequent adoption of a bylaw prohibiting such designations, not indicating that it is intended to apply to designations already made, will not invalidate suoh designation. 4
    Error to Wayne; Donovan, J.
    Submitted June 12, 1907.
    (Docket No. 39.)
    Decided October 4, 1907.
    Rehearing granted April 1, 1908; reargued April 7, 1908. Former opinion vacated May 1, 1908.
    Assumpsit by Rose Dolan against the Supreme Council of the Catholic Mutual Benefit Association on a policy of insurance. There was judgment for defendant on a verdict directed by the court, and plaintiff brings error.
    Affirmed.

      Frederic T. Harward and Henry C. L. Forler, for appellant.

      Keena, Lightner & Oxtoby, for appellee.
    Defendant is a mutual benefit association organized under the laws of the State of New York. On the 24th of March, 1884, it insured the life of James Dolan, one of its members. The certificate or policy of insurance named Anna Dolan, the wife of the insured, beneficiary. Anna Dolan having died, the insured on the 13th of March, 1900, took out a new certificate of insurance, in which one August Guerold was named as beneficiary. Said Guerold bore no relationship whatever to the insured. James Dolan died October' 7, 1904. Rose Dolan, the plaintiff in this suit, is his only surviving sister, and under the laws of defendant’s order is entitled to recover if the designation of Guerold as beneficiary is illegal, imperfect, or inoperative.
    There was nothing in defendant’s laws prior to 1903 prohibiting the insured making Guerold his beneficiary, and such designation was lawful under the laws of the State of New York where it was incorporated. Sabin v. Phinney, 134 N. Y. 423; Levin v. Ritz, 41 N. Y. Supp. 405, Subsequently, however, in 1903, and before Dolan’s death, the defendant order adopted a by-law which, if applicable, prohibited the designation of Guerold as beneficiary. That by-law reads:
    .“Any member shall have the right and power to designate any one or more of the following class or classes of persons to receive his beneficiary fund in case of his death, to wit: his wife, his children or any child by legal adoption, his father, mother, brothers or sisters, blood relations, or persons dependent upon him for maintenance, sustenance and support, and no other person or classes of persons shall be named.”
    Under the laws of defendant order the insured had a right at any time to change his beneficiary, and it is to be inferred that all the premiums for the insurance were paid by the insured.
    Defendant paid the insurance to Guerold October 28, 1904, and refused thereafter to pay it to plaintiff. Subsequently this suit was instituted. The foregoing facts were established by the testimony. A verdict was directed in defendant’s favor. We are asked to reverse the judgment entered thereon. Two questions are raised.

      First. Had the insured in 1900 a lawful right to designate Guerold as his beneficiary ?

      Second. Assuming that the insured had a right in 1900 to designate Guerold as his beneficiary, was he deprived of that right by the enactment of the by-law in 1903 ?

       For conflict of laws as to insurance contracts, see note to Johnson v. Mutual Life Ins. Co. (Mass.), 63 L. R. A. 833.

   Carpenter, J.

(after stating the facts). First. Had the insured a lawful right to designate Guerold as beneficiary ? Plaintiff contends that he had not; that he was prohibited from doing this upon grounds of public policy. If the contract in question were a New York contract, and its lawfulness determined by the law of that State, we should be forced to deny this contention, for the courts of that State, as heretofore stated, have determined this question adversely to plaintiff. The contract in question, however, is — and this is now conceded by defendant’s counsel — a Michigan contract. Its lawfulness is to be determined by the laws of Michigan. When this case was first presented to us, we reached the conclusion that according to the laws of Michigan, as determined by the decisions of this court, the designation of Guerold as beneficiary was forbidden upon grounds of public policy. We were led to doubt the correctness of this determination and therefore granted a rehearing.

There is no doubt that Guerold had no insurable interest in the life of Dolan, and had he himself obtained the insurance under consideration, the contract would have been a wagering one and void on the ground of public policy. Smith v. Pinch, 80 Mich. 332; Mutual Benefit Ass’n v. Hoyt, 46 Mich. 473; Michigan Mutual Benefit Ass’n v. Rolfe, 76 Mich. 146; Metropolitan Life Ins. Co. v. O’Brien, 92 Mich. 584. The insurance in question was not however obtained by Guerold. It was obtained by Dolan, the insured. It is to be inferred that Dolan, not Guerold, paid the premiums on the policy. Dolan had the right at any time to change the beneficiary named in his certificate. The question presented, therefore, is not whether a stranger may insure the life of another, but it is whether that other may himself insure his own life in favor of a stranger. (By “stranger ” I mean any one not having an insurable interest in the life.)

In Niblack on Mutual Benefit Societies (1st Ed.), § 177, it is said:

“ It is well settled that a policy of insurance, taken out on the life of another by a beneficiary who has no pecuniary interest in the continuance of the life so insured, is a wagering contract and void. This rule is as applicable to a contract of insurance issued by a mutual benefit society as to those issued by ordinary insurance companies. A person may, of his own accord, insure his life, pay the premiums himself, and make the policy payable upon his death to a third person who has no insurable interest in his life.”

To the same effect are the decisions of the Federal courts.

In Warnock v. Davis, 104 U. S. 775, it was decided that the same rule of public policy which prohibited a stranger taking out insurance on the life of another prohibited his being the assignee of a policy secured by the insured himself. Justice Brown of the Supreme Court of the United States, in referring to Warnock v. Davis in Langdon v. Insurance Co., 14 Fed. 272, says:

“It is now well settled in the Federal courts that a party cannot take out an insurance upon his own life and assign the policy, either contemporaneously with its execution or subsequently, to a person having no legal interest in his life. * * * But there is no case, to my knowledge, which holds that a party may not insure his own life and make the policy payable to any one he may select, though such person have no legal interest in his life.”

In Lamont v. Grand Lodge, 31 Fed. 177, Justice Shiras, of the Supreme Court of the United States, says:

“ Where a third party, without any insurable interést in the life of another, procures a policy of insurance on the life of such person, either by having a policy issued directly to himself, or by having the person whose life is insured take out a policy to himself, and then assign it, these facts, as is held in Warnock v. Davis, supra, conclusively show that the transaction is a mer6 speculation on the life of another, and as such is contrary to public policy, and therefore void. * * * Public policy requires that a person having no insurable interest in the life of another shall not be permitted to speculate on such life and thereby become interested in its early termination ; but public policy does not forbid a person from in good faith making provision for the future of another in whom he may be interested, even though the latter may not have an insurable interest in his life.”

To the same effect are the decisions of the supreme court of Pennsylvania. In Downey v. Hoffer, 110 Pa. 109; referring to Scott v. Dickson, 108 Pa. 6, it is said:

“A man may insure his own life and direct that the insurance money be paid to anybody he pleases — whether that person has any insurable interest or not — the insured paying the premiums. There is nothing speculative either in the origin or continuance of such a contract, as long as the insured beeps it within his own control and pays the premium himself, but it is a different case when he assigns the policy out and out to one having no insurable interest.”

Says the supreme court of Kentucky, in Hess v. Segenfelter, 105 S. W. 476:

“AH the courts of last resort, with possibly one exception, and the text-writers on insurance generally, are agreed that a person may take out insurance upon his own life and designate whom he pleases as the beneficiary.”

Says the supreme court of Georgia, in Union Fraternal League v. Walton, 109 Ga. 1 (46 L. R. A. 434):

“ Beyond all controversy,' a man has an insurable interest in his own life, and we fail to see, when, having that interest, he enters into a contract with an insurer, by which, for a stipulated sum, which he periodically pays, the insurer becomes liable to pay a given sum of money at the death of the insured, why he who is most interested, whether actuated by ties of relationship, motives of friendship, gratitude, sympathy, or love, may not make the object of his consideration the recipient of his own bounty. If it be replied that a temptation is extended to the beneficiary by improper means to hasten the time when he should receive the amount of the policy — and it is for this reason that such contracts will only be upheld when the idea of temptation is rebutted by the natural ties of blood or affinity — we might well ask ourselves why executory devises, bequests, provisions for support and maintenance provided for friends and even strangers, are not subject to the same inhibition as being against public policy.”

The authority of these cases and their reasoning warrants the statement that the rule of public policy which forbids one insuring a life in' which he has no insurable interest, does not prevent his being made a beneficiary in an insurance policy secured by the insured. And it should be added, too, that for the purpose of determining whether the transaction is prohibited, courts in accordance with well-settled principles will look not at its form, but at its substance. Thus, insurance obtained in the name of the insured payable to one having no insurable interest will be void if the beneficiary was the real party to the contract. Elliott on Insurance, § 59.

It is contended by plaintiff that this court is not at liberty to apply the foregoing principles in this case. It is insisted that we have already rejected them. It is insisted that we rejected them in Mutual Benefit Ass’n v. Hoyt, 46 Mich. 473; Michigan Mutual Benefit Ass’n v. Rolfe, 76 Mich. 146; Smith v. Pinch, 80 Mich. 332; and Metropolitan Life Ins. Co. v. O’Brien, 92 Mich. 584, and in those cases decided that upon grounds of public policy one is forbidden to select as a beneficiary in a policy secured by him one who has no insurable interest in his life. It is true that in each of these cases the insurance was applied for by the insured, and in each of them under the circumstances disclosed it was decided that the plaintiff who had no insurable interest in the life of the insured could not recover.

On the former hearing of this case we were of the opinion that these cases sustained plaintiff’s contention, and we so decided. In so doing we failed to perceive and properly apply the distinction herein pointed out between insurance procured by the insured and insurance procured by the beneficiary. Examining those cases with that distinction in mind, we are of the opinion that not one of them is authority for the broad proposition that public policy forbids the insured designating as a beneficiary in a policy secured by him one having no insurable interest in his life.

In Mutual Benefit Ass’n v. Hoyt, the beneficiary, Hoyt, not the insured, paid the premiums. The real party to the contract was the beneficiary, not the insured. As was said of that case in Carmichael v. Benefit Ass’n, 51 Mich. 496: “The whole transaction was palpably color-able and fraudulent.”

Smith v. Pinch was the authority which seemed to us the strongest in support of plaintiff’s position. This case, though perhaps less reprehensible from a moral point of view, was in all essential legal particulars precisely like the Hoyt Case. Both the Hoyt Case and the Pinch Case are then cases where the insurance, though in form procured by the insured, was in reality procured by the beneficiary, who had no insurable interest.

In Michigan Mutual Benefit Ass’n v. Rolfe, 76 Mich. 146, the insured made an absolute assignment of a policy upon his life to one having no insurable interest therein. This, the court decided, was forbidden by the. statute under which the insurance company issuing the policy there in question was incorporated.

Metropolitan Life Ins. Co. v. O'Brien, 92 Mich. 584, is similar to the Bolfe Case, though Mrs. O’Brien, the assignee in that case, became also the beneficiary. The assignment there was absolute and the assignee paid all the premiums thereafter. It was held that Mrs. O’Brien was not a lawful beneficiary. The reasoning of the court -is as follows:

“ The beneficiary named must, by clause 5 [the clause in the insurance policy], be a relative by blood or marriage, or in a position to expect some benefit or advantage from the continuance of the life of the insured, or the contract is a wagering one, and void on the ground of public policy. Michigan Mutual Benefit Ass’n v. Rolfe, 76 Mich. 151; Mutual Benefit Ass’n v. Hoyt, 46 Mich. 473. By the terms of the certificate attempting to nominate Mrs. O’Brien as the beneficiary, it appears that she did not sustain such a relation to the insured as to entitle her to be named as the beneficiary. She is therein described as the wife of the partner of the insured. She was not, therefore, entitled to hold under the nomination as beneficiary.”

I confess to a difficulty in understanding the ground of this decision. It is not however' authority for the proposition that one insuring his life cannot designate as a beneficiary one having no insurable interest therein. That proposition was- not presented, for there was an absolute assignment of the policy, and cases where there is an absolute assignment of the policy to one having no insurable interest are to be distinguished from cases where the insured selects the beneficiary. See Langdon v. Insurance Co., 14 Fed. 272; Lamont v. Grand Lodge, 31 Fed. 177; Downey v. Hoffer, 110 Pa. 109, heretofore referred to. Nor can it be fairly said that the court stated that one having no insurable interest could not be designated by the insured as his beneficiary. The language quoted indicates at most that this is true when such selection is prohibited by other provisions of the contract. Mr. Cooley in his Briefs on the Law of Insurance, p. 255, cites this case as an illustration “that the rule allowing the insured to designate as beneficiary one having no insurable interest must give way to positive provisions of the contract to the contrary.” Perhaps this is the correct ground of the decision. Of this I entertain a doubt, for I think it might have been said that the insurance company, by contracting to pay Mrs. O’Brien with the knowledge — and it had such knowledge — that she was without the class who could be beneficiaries, thereby agreed to waive the requirements of clause 5 which excluded her as a beneficiary. I am unable to see how, under the circumstances disclosed in that case, a holding that the contract to pay Mrs. O’Brien was void could be properly based on clause 5, standing alone.

I conceive the true ground of the O’Brien decision to be this — and this is placing upon it the construction most favorable to plaintiff — that as Mrs. O’Brien had no insurable interest whatever in the life of the insured, and as she was the absolute owner of the policy, the contract was a wagering one and void on the ground of public policy. Under this construction — and I confess its correctness is not free from doubt — the O’Brien Case merely decides that one not having an insurable interest is forbidden on grounds of public policy from becoming the absolute assignee of a policy of insurance secured by the insured. So construed, the case is distinguishable from the one under consideration by the reasoning of Langdon v. Insurance Co. and Downey v. Hoffer, supra.

No other case decided by this court need be considered, for no other case contains anything more than dictum— some of which are favorable to plaintiff and some favorable to defendant — touching the question under consideration. There is nothing in those cases to justify the statement that this court has decided that one insuring his own life may not lawfully designate as beneficiary another having no insurable interest therein. We are therefore free to approve the rule almost universally recognized outside this State — the rule which we conceive to be the true rule — that public policy does not forbid an insured selecting as his beneficiary one not having an insurable interest in his life. It follows therefore that the insured in this case had a lawful right to designate Guerold as his beneficiary.

Second. Did the by-law enacted in 1903 deprive the insured of the right — a right which he had already exercised —to designate Guerold as his beneficiary ? Does that bylaw apply to a designation already made, or is it confined in its application to designations to be thereafter made? That depends upon its proper construction. Its language does not indicate that it applies to designations already made. Indeed, it would be a strained construction to hold it so applicable. That construction could be adopted only because it is required by some presumption. But the presumption is exactly to the contrary. Davis v. Railroad Co., 147 Mich. 479; 1 Bacon on Benefit Societies and Life Insurance (3d Ed.), § 187. We conclude that the by-law has no application in this case.

Judgment affirmed.

Blair, Montgomery, Ostrander, Hooker, Moore, and McAlvay, JJ., concurred.


source: Caselaw Access Project

author: McAlvay, J.

license: Public Domain

text:
    MAYER v. DETROIT YPSILANTI, ANN ARBOR & JACKSON RAILWAY.
    1. Master and Servant — Street Railroads — Injuries to Motorman — Assumption of Risk — Question for Jury.
    In. an action by a motorman against a street-railway company for injuries resulting from his losing control of his car on a grade for want of sand to use on the rails, evidence examined, and held, that whether plaintiff assumed the risk of his car sliding on a slippery rail was for the jury.
    2. Same — Trial—Instructions—Sufficiency.
    Instructions examined, and held, not open to the objection that the court left a clear inference that the fact that the plaintiff allowed the car to slide was enough to convict defendant of negligence, in view of other portions of the charge in which the jury were told that plaintiff must himself have been free from negligence.
    3. Appeal and Error — Review—Questions of Pact.
    This court cannot determine the truthfulness or weight of a witness’ testimony.
    4. Master and Servant — Instructions to Servant — Reliance by Servant — Propriety.
    A street-car motorman, being fearful of the danger of operating his car without sand, on an incline, at a time when the track was slippery from frost, and communicating his fears to the superintendent, was justified in relying upon the superintendent’s assurance that sand was not necessary, and that with care the cars could be operated- successfully without it, the motorman having had no previous experience in operating cars upon a frosty track.
    5. Same — Safety of Appliances — Duty of Master — Instructions — Sufficiency.
    in an action against a street-railway company for injuries to a motorman claimed to have resulted from failure of defendant to provide sand and appliances for its use upon its cars, instructions examined, and held, not objectionable as charging that defendant was bound to use any known device for the protection and safety of plaintiff.

      6. Evidence— Opinions — Competency op Experts.
    In an action against a street-railway company for injuries to a motorman claimed to have resulted from failure of defendant to provide sand and appliances for its use upon its cars, witnesses who have worked as motormen for defendant for ,. several years, a part of that time upon the line upon which the accident occurred, are competent to state whether sand and appliances are essential to the safety of employés and passengers upon that line.
    7. Master and Servant — Injuries to Servant — Street-Railroad Company — Duty to Servants — Instructions — Sufficiency.
    In an action against a street-railroad company for injuries to a motorman claimed to have resulted from failure of defendant to provide sand and appliances for its use upon its cars, the use, in instructing as to the duty of defendant to use reasonable precautions to avoid danger, of the words “public” and “passengers” in connection with “motorman,” though unnecessary, is held, not misleading on the ground that the court submitted the case upon the theory that there was the same liability on the part of the defendant to its employés as to the public.
    8. Trial — Reception of Evidenoe — Admission Over Objection —Form of Ruling — Review—Question Considered.
    Where, upon defendant’s objecting to testimony offered by plaintiff, the trial judge stated that he left the responsibility with plaintiff’s attorney, the ruling did not relieve the court of the responsibility, and the question, upon review, is whether the court was in error in allowing the testimony admitted.
    9. Master and Servant — Injuries to Servant — Action —Evidence — Instructions to Servant.
    In an action against a street-railroad company for injuries to a motorman claimed to have resulted from failure of defendant to provide sand and appliances for its use upon its cars, plaintiff may testify whether he was ever notified by the company or its officers that it was necessary for him to have sand in pails or in boxes or any other way upon his car.
    Error to Washtenaw; Kinne, J.
    Submitted October 14, 1907.
    (Docket No. 34.)
    Decided May 1, 1908.
    Case by Albert E. Mayer against the Detroit, Ypsilanti, Ann Arbor & Jackson Railway for personal injuries. There was judgment for plaintiff, and defendant brings error.
    Affirmed.

      Corliss, Leete & Joslyn, for appellant.

      A. J. Sawyer & Son, for appellee.
   McAlvay, J.

This is the second time this case has been before this court. In the opinion rendered on the former hearing, Mayer v. Railway, 142 Mich. 459, to which reference is had, appears a complete statement of the facts then before the court, which need not be here repeated. Such new facts as may appear in this record, which are material to the consideration and discussion of the questions raised, will be stated in connection with such discussion.

After the former decision the case was remanded for a second trial and an amendment was made to the declaration permitting evidence to show neglect of duty in not providing sand for use to control the cars when necessary by other means than automatic sand boxes. The case was tried and from a judgment for plaintiff defendant brings it to this court by writ of error for review. Defendant contended that under the undisputed testimony in the case plaintiff assumed the risks of his employment and cannot recover. The court refused to give a request to that effect. Upon the question of assumption of risk the court charged as follows:

“ It is claimed by the defendant that the plaintiff assumed the risk of injury in this case. If you shall find from the evidence in this case that the danger and risk which caused this accident was as open and apparent to the plaintiff as it was to the defendant, and that he remained in the employ and service of the defendant with this knowledge of this risk and danger, then he cannot be heard to complain, and must be regarded as having assumed these dangers, and he cannot recover. But if you find from the evidence in this case that he became uneasy and solicitous about his ability as a motorman to perfectly handle and hold the car without sand in pails or boxes or other like appliances, and that on the morning of the accident he went to the superintendent of the company, Mr. Carpenter, and communicated his fears to him, and that the superintendent of the company assured him that there was no danger if due care was exercised, and if you further find from the evidence that he relied upon this information and assurance of the superintendent, and that he did so because he believed that he could safely depend upon the opinion and judgment of the superintendent, who he believed was possessed of knowledge superior to his own, then, it seems to me and I so instruct you, that the defendant company ought not to be allowed to urge against the plaintiff that he assumed the risks and dangers which he sought to avoid and which he would have escaped but for the assurance of the superior officer of the company to whom he went for counsel and for safety to himself and the public.”

The injury for which plaintiff recovered appears from the record to have been caused by a slippery condition of the rails known as “greasy.” This condition is an unusual one and is caused by the frost, under certain atmospheric conditions, coming out on the rails. Plaintiff who entered defendant’s employment in July previous to January 7th, the date of the injury, had experienced no trouble with a ‘ ‘ greasy ” track. The car of which plaintiff was motorman, in going down a grade, got beyond his control on account of “greasy” rails and the injury resulted. On the preceding day another car, in charge of another motorman, named Whitnorr, on the same grade, and at about the same place, got beyond control and made the samé run down hill to the Michigan Central depot, striking and seriously damaging a hack standing near the end of the track.

Plaintiff, on the morning before his injury, talked with Mr. Carpenter, defendant’s superintendent of the Ann Arbor city line, relative to this accident which occurred the day before, and the need to use sand on this grade. His testimony upon this matter is explicit and of considerable length. In substance, it shows that he was assured by the superintendent that no sand was needed; that the trouble was with the man and not with the track; that any man with care could take a car down there with safety without the use of sand. He swears he believed and relied upon what the superintendent told him. Another witness, Huston, testified as to this accident a day or two before plaintiff was injured; that he saw the car off the track and it was necessary to pull it on with another car. Also that several cars ran off there during the same winter before this time; that Mr. Carpenter said sand was not needed to go down there.

Whitnorr testified as to his accident which occurred the day before the plaintiff was injured and also of conversations he had with Mr. Carpenter before that time, relative to slippery rails and the necessity of using sand, and that the superintendent told him sand was not needed. Plaintiff and Huston both testified that they had no sand on their cars and saw none on any car before that time. There was testimony tending to show that these cars could be controlled on this greasy track if sand was used on the rails. The court was not in error in submitting the question to the jury.

The portion of the charge covering the matter is not objectionable. Defendant is not correct in saying of this:

“ The court leaves a clear inference that tibe fact that the plaintiff allowed the car to slide is enough to convict the defendant of negligence.”

He had already charged that plaintiff must be free from negligence, and show that the accident was not due to his ,own carelessness and neglect. And later in the charge he said:

“ The plaintiff, on entering the employ of the defendant, assumed the obvious risks and dangers incident and connected with his employment, and the defendant in this case had a right to expect that the plaintiff would be alert to inform himself of the existent conditions as to the track and weather, and he cannot attack the defendant from the shelter of unjustifiable ignorance of the machinery and methods which he found in use at the time of his employment or which he was using at the time of his employment. ”

There is testimony in the case tending to show that Mr. Carpenter claimed to know and understand the danger in operating the car upon this grade. He was superintendent of the city lines, and, when plaintiff suggested the use of sand, assured him that it was not necessary. Plaintiff had never used sand. It was never furnished him, and he testifies he did not know that there was any to be had. This court cannot determine the truthfulness or weight of his testimony. The record tends to show plaintiff confronted defendant’s representative with the situation and was assured that with the exercise of care the cars could be safely operated, and that sand was not necessary. Plaintiff was justified in relying upon such assurance. Schlacker v. Mining Co., 89 Mich. 253; Shadford v. Railway Co., 121 Mich., at pages 226, 227; Burnside v. Novelty Manfg. Co., 121 Mich. 115, and cases cited.

The case of Ragon v. Railway Co., 97 Mich., at page 274, which defendant contends controls this case, is clearly distinguishable. In that case plaintiff relied upon the supposed condition of the track. This court said:

“Plaintiff says he supposed the road was smooth, and did not know there were any holes there. He had been for some time in the defendant’s employ, passing and re-passing the yard and switch in question. It is plain that the condition of this side track could be seen by the casual observer. Self-preservation should have prompted him to look at this track to see whether it was in such condition as to warrant his going between a moving train and engine, though he had never seen the road before. It was in daylight, and he was not incumbered by a lantern. But, relying upon a supposed condition, he tells us he entered, and stepped directly into the hole between the ties.”

In the case at bar we may assume from the record that the use of sand was necessary to make the running of the car under the conditions safe. Plaintiff did not know this. He was talking with the superintendent about the car which ran away the day before, and asked him whether he did not think there should be sand and sand boxes on the cars. He was informed by Mr. Carpenter that it was not necessary. In following and relying upon this assurance, using as he claims great care, his car ran away with him and injury resulted.

Defendant also claims that the court was in error in charging the jury upon the theory that defendant was bound to use any known device for the protection and safety of plaintiff. No requests were presented by defendant calling attention of the court to this matter nor any stating defendant’s views of the law upon it. The charge as given was not open to the objection made as will appear from reading it. The court charged upon this subject as follows:

The particular negligence of which plaintiff complains and which he charges against the defendant as causing this accident is the alleged failure of the defendant to provide its railway cars with sand and sand boxes, or other suitable appliances for the casting of sand upon the rails of said railway track when the rails were slippery and there was danger by reason of the wheels sliding and thereby of losing control of the car.

‘ ‘ If you shall find from the evidence in this case that some time prior to the time the plaintiff’s car ran away with him there were other cars of the defendant which had escaped the control of their motormen and ran way over substantially the same ground, going down the same hill under like circumstances, and from the same cause that caused the plaintiff’s car to run away with him; if you further find these things were reported to the manager or superintendent of the defendant, then that would be notice to the defendant, and it should have made all reasonable efforts to avoid danger of imperiling the lives and limbs of its employés and passengers; and if you shall further find from the evidence in this case that after learning of the fact of the running away of its said cars prior to the plaintiff’s injury, the defendant neglected to make all reasonable efforts to avoid a recurrence of such dangers, then the defendant would be guilty of negligence.

“If you shall find from the evidence in this case that by reason of the neglect of the defendant to make all reasonable efforts to avoid a recurrence of such danger, the plaintiff, without any fault or negligence on his part, but wholly by reason of the said negligence of the defendant, received the injuries of which he complains in this cause, then he is entitled to recover, unless you shall find that he assumed the dangers, about which I will state to you hereafter.

“If you shall find from the evidence in this case that reasonable care and prudence required the defendant to furnish the car upon which it required the plaintiff to go and which it required the plaintiff »to run over its tracks * * * with a bucket of sand and with a shovel with which to distribute the sand upon its track, or with sand and sand boxes or some other device or appliance or a mechanical contrivance which would be sufficient to control the speed of the said car while descending the decline on Detroit street from Division street to the Michigan Central passenger house, in all conditions of said tracks which might arise from the condition of the weather, and which were known to the defendant to occur at times, or which by the exercise of ordinary care and prudence it would have known did occur, and the defendant failed to do so, then it was guilty of negligence.

“ If you shall find from the evidence in this case that from Division street to the Michigan Central passenger house along the line of the defendant’s railroad there is an incline, and that the defendant knew, or by the exercise of ordinary prudence would have known, that said tracks were liable under certain conditions of weather to become slippery or greasy and dangerous to its motormen and passengers upon its cars, then and in that case it is the defendant’s duty to supply the car upon which it required the plaintiff to perform the service as motorman with pails or boxes of sand and with a shovel with which to distribute said sand upon the rails of said track, or with the device known as sand boxes and sand, or with some other device or mechanical contrivance which should be sufficient, if properly used or applied, to control the speed of said car while passing from said decline from Division street to bridge point or to the depot in any condition in which said track was liable to be by reason of the change of weather, and if you shall find from the evidence in this case that said defendant failed or neglected so to do, then the'defendant was guilty of negligence.”

Defendant next urges that “ witnesses were allowed to state their opinions as to whether sand appliances were used by other railroads under like conditions.” The record shows that defendant is mistaken in this claim. These witnesses had worked as motormen for defendant for several years and each had run part of that time on the qity line with these cars, and the question asked each was: “ Whether or not sand boxes and sand or some sand appliances or device on the city cars was and is essential to the safety of the employés and passengers ? ” The witnesses were qualified to testify and the testimony related to these city cars, and to no other railroad. As already stated the record shows that the use of sand was necessary. The charge of negligence is that it was not furnished plaintiff. Defendant claims that sand was at hand for use and was used generally by the motormen. This testimony was therefore material even from defendant’s point of view.

The court in his charge used the words “public” and “passengers” in connection with “motormen,” but by doing so it cannot be claimed that the court submitted the case upon the theory that there is the same liability on the part of defendant to its employés as to the public. These portions of the charge are already given in this opinion. These words used were not necessary, but such use was not misleading.

During the direct examination of the plaintiff, after he had testified that he never had sand on his car nor was instructed that its use was necessary, he was asked:

“ State whether or not you were ever notified that it was necessary — notified by the company or its officers— that it was necessary for you to have sand in pails or in boxes or any other way upon your car ? ”

Defendant objected for the reason that it was incompetent and immaterial.

1 ‘ The Court: I leave the responsibility with Mr. Sawyer [plaintiff’s attorney].

“Mr. Sawyer: I will take it. Exception for defendant.

“A. I never had any such instructions. I did not know at any time during my entire service of anybody else, or any other motorman upon the cars, using sand in pails or boxes or in any other form to control the cars.”

The objection defendant raises to this is:

It was error for the court to leave the responsibility of putting in incompetent testimony with the plaintiff’s attorney.”

The real question is whether the court was in error in allowing the question to be answered. The form of the ruling upon the question is unusual, but it does not for that reason shift the responsibility from the court. The objection to the question was properly overruled. We have considered all of the errors assigned, which are discussed by defendant, and do not discover any reversible error in the ease.

The judgment is affirmed.

Grant, O. J., and Blair, Montgomery, Ostrander, Hooker, Moore, and Carpenter, JJ., concurred.


text:
    MIDDLEBROOK v. SLOCUM.
    1. Work and Labor — Implied Contraot — Recovery.

      f Plaintiff was employed by defendant to work in his flouring mill at a specified wage per week, and subsequently defendant erected an electric lighting plant in which plaintiff worked during hours not contemplated in the express agreement and after work had ceased in the mill and plaintiff was occupied at other employment, no price for the work in the plant being agreed upon. Held, that the work in the plant was not included in the express contract, and that plaintiff was entitled to the reasonable value of his services in case there was an implied contract therefor.
    2. Same — Implied Contract — Existence.
    Where services are rendered without any express agreement therefor, but under circumstances creating in the mind of the recipient a belief that he is to be required to pay therefor, and in the mind of the person rendering them the expectation of pay, there is an implied agreement to pay the reasonable value of the services.
    3. Evidence — Payments—Materiality.
    Where defendant claims to set off certain payments made on a contract for plaintiff’s benefit, a part of which plaintiff claims to have made himself, the fact that plaintiff gave his wife a sum of money which he claims represents one of the payments is material.
    4. Trial — Instructions—Statements op Fact — Error—Correction.
    Where a mistake of fact is made by the court in stating the claim of a party in the instructions, it is the duty of counsel to correot it at once.
    5. Husband and Wipe — Support op Wipe — Liability op Husband.
    While a husband ordinarily is liable for his wife’s board, where she is guilty of such misconduct, while living with her hus. band in her father’s house, that her husband cannot remain with her there, and her father, with knowledge of her conduct, approves it and harbors her, he cannot recover for her board.

      Error to Ionia; Davis, J..
    Submitted October 15,190?.
    (Docket No. 58.)
    Decided May 1, 1908.
    Assumpsit by Lee F. Middlebrook against Harley B. Slocum for work, and, labor. There was judgment for plaintiff, and defendant brings error.
    Affirmed.

      B. A. & W. E. Hawley, for appellant.

      Scully & Davis, for appellee.
   McAlvay, J.

This suit was begun by plaintiff before a justice of the peace in Ionia county. Defendant appealed to the circuit court from a judgment of $300 rendered in favor of plaintiff. From a judgment of like amount rendered in the circuit court, upon a verdict of a jury, the defendant upon a writ of error brings the case to this court for review. Plaintiff’s claim is for work and labqr which he alleges was performed in defendant’s mill under an express contract at the rate of $3 per week and board, which he says was later increased to $4 per week and board. This board, he claims, included also the board of his wife and child. He also claims for work and labor performed in running defendant’s electric light plant for 450 nights at $1 per night. Both parties filed bills of particulars, and in their briefs state that most of the items in the same are admitted'.

Appellant claims that the only items of account important to be considered in this court are:

Plaintiff’s claim for work at the electric light plant for 450 nights at $1 per night, $450.

Defendant’s claim for" board of wife and child of plaintiff for 26 weeks at $4, $104.

Payments made by defendant on plaintiff’s piano contract, $325.88.

The value of one horse of defendant sold by plaintiff, - $150.

Plaintiff, at the request of defendant, when the electric lighting plant which was to furnish lighting for the village was installed, was instructed by the superintendent of installation how to run the plant, do wiring, etc., and became competent to do the work. It was done by him at the request of defendant. No price for the services was ever agreed upon between the parties, and defendant’s counsel claim that as they were performed while plaintiff was working under an express contract by the week for defendant there was not sufficient evidence in the case to warrant the submission of this item to the jury, and that there must be proved an express agreement for extra pay under such circumstances, citing Schurr v. Savigny, 85 Mich. 144, and other cases.

The contract as made between the parties in the first instance was that plaintiff would work in the flouring mill learning the business, and receive as his compensation $3 per week and board. This is undisputed. Plaintiff claims that this continued until June 1, 1901, when the wages were increased to $4 per week and board. He married defendant’s daughter in February, 1901, and claims that it was agreed that the last contract should include the board of his wife and child. The electric light plant was installed and plaintiff’s work in that plant began November 26, 1902. It was therefore impossible that any such work as this was within the contemplation of these parties in June, 1897, when they entered into the contract at $3 per week and board, nor later in June, 1901, when plaintiff claims the wages were increased. The work is entirely different from the work under the original or modified contract. It was performed during hours not contemplated in the express agreement. 175 nights of the work charged occurred after work in the mill ceased and when plaintiff was driving a mail route. The case is not within the rule laid down in Schurr v. Savigny, supra. Nor do we think that the other cases cited are in point. ^ The only question is whether the testimony on the part of plaintiff was sufficient to submit to the jury the proposition of an implied agreement as to the work in the lighting plant. The court submitted the question to the jury, instructing them as follows:

“In the first place whether rendered under circumstances creating in the mind of the'defendant the right to believe he was to be required to pay, and whether there was an expectation of pay on the part of the plaintiff at the time he rendered these services, if one expected pay and the other expected to pay for the services, then the law says he should receive such amount as would be reasonable and just under the circumstances for his services. If there was nothing said about how much was to be received and the circumstances were such a reasonable man could not say,that defendant expected under the circumstances he would be required to pay anything, and that the other party did not expect at the time to receive anything, then the law says there is no contract liability and he should not receive anything.”

There was evidence in the case which justified the submission of this question to the jury, and the oharge above quoted was not erroneous.

The other matters relied upon by appellant relate to claims made by him against plaintiff. Plaintiff had bought a piano for his wife on contract. Payments had been made upon this contract for plaintiff by defendant. The amount of such payments was in dispute. Defendant claims that the court erred in submitting to the jury the matter of a payment of $75 on this contract which plaintiff claimed to have made through his wife, giving her the money for that purpose. This testimony was brought out on cross-examination of plaintiff by defendant’s counsel relative to the piano contract, which contract and a computation showing payments and amount due thereon, March 20, 1908, were then produced by defendant in evidence. Part of his testimony may have been hearsay, but the fact that he gave his wife $75 was material because it appeared from other testimony that a payment of $75 had been indorsed on a copy of the contract, which was produced at the former trial, but was not produced at this trial and defendant’s computation did not contain any such payment, nor did he claim credit for a payment of that amount. It was proper to submit the matter to the jury.

There was a dispute between the parties relative to the value of a horse of defendant. Plaintiff had a horse which defendant took away for purposes of sale. It was injured by being kicked, and defendant sent one of his horses to plaintiff for his use. He admits that plaintiff’s horse when he took it was worth at least $100. It is claimed by defendant and his wife that he wrote to her that plaintiff might sell the horse for $150 and take $100 out of it. The wife testified that she told plaintiff of this. The letter is not produced. Plaintiff testified that she told him she had received a letter authorizing him to sell the horse and it ought to be an easy matter to get $150 for it; that she finally told him to do the best he could. She testified that she told him to sell it for $135. There was clearly a question for the jury. Defendant and his wife did not agree as to what the letter contained.

The court in his charge said:

“ Now the defendant also claims for $35 difference on horses. You have heard the evidence as to the value of those horses, the circumstances under which defendant, the father-in-law, took this horse north, the circumstances under which it was brought back, the disposition of the two horses; it is claimed on the part of the defendant that his wife told this young man he could sell the horse for $135 and to take no less. On the other hand this is disputed on the part of the plaintiff.”

Defendant now takes the position that this charge was entirely unwarranted. No such intimation was made at the time to correct the above statement of defendant’s claim made bjy the court.

We have examined the evidence and are satisfied that the question should have been submitted to the jury. If any mistake of fact was made by the court stating defendant’s claim ( and the presumption is there was not) counsel for defendant should have corrected it at once.

Defendant claimed $104 for board of plaintiff’s wife and child for 26 weeks after plaintiff left. Plaintiff claims he left defendant’s house on account of the conduct of his wife with one Clark who visited there; that his wife refused to come away with him; that this was the only cause of difference between them. He told his troubles to defendant and Mrs. Slocum, and defendant heard from other sources what plaintiff claimed. Plaintiff testified that he was ordered out of the house and was told that he was not wanted there any more. The testimony on the part of defendant contradicted much of plaintiff’s testimony upon these matters. Later plaintiff’s wife secured a divorce from him, and married Clark.

Error is assigned upon the charge of the court in submitting this claim for board to the jury. This portion of ■the charge is too long to quote. Taken as a whole, we find that the court told the jury that ordinarily the law would require plaintiff to pay such board, but if by reason of her conduct plaintiff could not remain with her there and defendant with knowledge of her conduct approved it and harbored her he could not recover; that such conduct must have been without any wrong or connivance of plaintiff, and that he must show the truth of all this by a preponderance of evidence; that if the jury were satisfied by a preponderance of the proof that her conduct was such that a man could not keep his self-respect, and he believed she was guilty of misconduct, and that was the reason he left, and defendant had full knowledge of all the facts, and kept her as a boarder, he could not recover, otherwise, he could. The jury had heard all the testimony and knew to what facts the court referred. It was not necessary for the court to repeat the evidence bearing upon the question. The question was one of fact for the jury. No requests to charge were presented by defendant and the charge cannot be said to have been prejudicial to defendant.

We do not find any reversible error in the case.

Judgment is affirmed.

Ostrander, Hooker, Moore, and Carpenter, JJ., concurred.


author: Carpenter, J. (Grant, C. J. Ostrander, J.

text:
    PEOPLE, for use of HOUGHTEN, v. NEWBERRY.
    1. Municipal Corporations — Public Contracts — Bonds —Statute — Application.
    Sections 10743-10745, 3 Comp. Laws, which require public officers contracting for public buildings and works to take a bond from the contractors for the protection of laborers and materialmen, do not require such a bond when a municipality itself makes a contract to purchase materials for municipal purposes.
    2. Same — Bonds—Unnecessary Bonds — Validity.
    A bond given by a contractor furnishing materials to a city, which states that the contract is within sections 10743-10745, 8 Comp. Laws, requiring such bonds, is available to a person furnishing materials to the principal, though the contract was not within the purview of the statute, and a bond was not required by law. Ostrander, Hooker, and McAlyay, JJ., dissenting.
    Error to Wayne; Brooke, J.
    Submitted October 17, 1907.
    (Docket No. 83.)
    Decided May 1, 1908.
    Assumpsit by the People of the State of Michigan, for the use and benefit of Henry Houghten, against Truman H. Newberry and others on a statutory bond. There was an order overruling a demurrer to the declaration, and defendants bring error.
    Affirmed.

      Angelí, Boynton, McMillan & Bodman, for appellants.

      Gray & Gray, for appellee.
    The declaration in this case sets forth the following bond:
    “Know all men by these presents that we, Michigan Stone & Supply Co., of the City of Detroit and State of Michigan, as principal, and Truman H. Newberry and Cameron Currie, of the same place, as sureties, are held and firmly bound unto the people of the State of Michigan in the sum of five hundred dollars, to the payment whereof, well and truly to be made, we bind ourselves, our heirs, executors and administrators, firmly by these presents.
    “ Sealed with our seals and dated this 9th day of April, A. D. 1904.
    “Whereas, The above named principal has entered into a contract with the city of Detroit, dated the 9th day of April, A. D. 1904, wherein the said principal hath covenanted and agreed as follows, to wit:
    “To furnish six hundred (600) tons, more or less, of limestone dust for street asphalt paving mixture — all limestone dust to be approved by the asphalt expert of the city of Detroit, and to be according to the specifications for street asphalt paving adopted by the common council February 33, 1904, and to be delivered f. o. b. at the municipal asphalt plant in the city of Detroit, western district yard, at such times and in such quantities as may be required and ordered by the department of public works of said city of Detroit.
    * ‘ Stone dust to be furnished in sacks; sacks to be the property of the Mich. S. & S. Co., and to be ret’d to them by the department of public works.
    “And whereas, said contract is within the provisions of ‘An act to insure payment of wages earned, and for materials used in constructing or ornamenting public buildings, and public works.**' Approved May 16, 1883, as amended by an act approved April 15, 1885.
    “Now, the condition of this obligation is such that if the said Mich. Stone & Supply Co., the said principal, shall, in all respects, well and faithfully execute and perform, live up to and abide by the terms of said contract, and if said principal, and any subcontractor to whom the whole or any part of said contract may be assigned or let, shall well and truly pay, as the same may become due and payable, all indebtedness which may become due to any person, firm or corporation' on account of any labor performed or' material furnished in the construction, erection, repairing or ornamenting of such building, works or improvement, then this obligation shall be void and of no effect, otherwise, the same shall be in full force and effect.
    “Michigan Stone & Supply Co. (L. S.)
    “T. H. Newberry, Treas. (L. S.) -
    “Cameron Currie, Secy. (L. S.)
    “T. H. Newberry. (L. S.)
    “Cameron Currie.” (L. S.)

      It avers that “Henry Houghten did furnish and deliver to the city of Detroit at the request of said Michigan Stone & Supply Co. certain material to apply upon said contract herein above referred to and for the payment of which said bond or written obligation was given. ” That a balance of $840.65 is due the said Houghten for which he has recovered judgment against said Michigan Stone & Supply Co. in the circuit court for the county of Wayne. It also contains other formal and appropriate averments. Appellants demurred upon the ground that the bond was not required by the statute referred to therein and that the facts set forth gave plaintiff no right of action. This demurrer was overruled and the case is brought before us for review by writ of certiorari.
    The statute referred to in the bond is found in sections 10743, 10744, and 10745, 3 Comp. Laws. Section 10743 reads as follows:
    “That when public buildings, or other public works or improvements are about to be built, repaired, or ornamented under contract, at the expense of this State, or of any county, city, village, township, or school district thereof, it shall be the duty of the board of officers, or agents, contracting on behalf of the state, county, city, village, township, or school district, to require sufficient security by bond, for the payment by the contractor, and all subcontractors, for all labor performed, or materials furnished in the erection, repairing, or ornamenting of such building, works or improvements.”
    Section 10744 provides:
    “Such bond shall be executed by such contractor * * * and conditioned for the payment by such contractor * * * as the same may become due and payable, of all indebtedness which may accrue to any person, firm, or corporation on account of any labor performed, or materials furnished in the erection, repairing, or ornamenting of such building or works. Such bond shall be deposited with, and held by, such board, officer or agent, for the use of any party interested therein.”
    Section 10745 reads:
    “Such bond may be prosecuted, and recovery had, by any person, firm or corporation, to whom any money shall be due and payable, on account of having performed any labor, or furnished any materials in the erection, repairing, or ornamenting of such buildihg or works, in the name of the people of this State, for the use and benefit of such person, firm or corporation.”
   Carpenter, J.

{after stating the facts). I think it clear that this bond was not required by the statute. The contract with the Michigan Stone & Supply Co. to furnish limestone dust at the municipal asphalt plant did not make that company a contractor for the building, repairing or ornamenting of “public buildings, other public works or improvements.” If it did, one who furnished a single load of sand or who performed any service about the municipal plant would be equally a contractor. The consequence of holding persons furnishing such material or labor to be contractors would be quite disastrous. It would impose upon municipal authorities the duty of requiring bonds in all such cases, thus unnecessarily hampering the conduct of public business and placing upon public officials unlooked for and burdensome obligations. I think, however, that the facts averred in the declaration make a case on common-law principles. Appellants voluntarily executed the bond. They therein stated that the contract of their principal was within the provisions of the statute under consideration. It is made evident by this recital and by the language of the bond that they intended to take upon themselves the obligation which that statute imposed upon sureties. In other words, it was their intention to thereby become sureties for the payment of material furnished their principal to enable it to perform its contract. By giving this bond as a statutory bond it is to be presumed that appellants intended it “should be deposited with and held” by the officers exacting it “for the use of any party interested therein.” That is, that it was to be held for the use of Henry Houghten and others like him and placed where they could examine it. This was equivalent to a proposal to Houghten to guarantee payment of his account. By furnishing the material Houghten accepted that proposal and the proposal thereupon became obligatory. The proposal and its acceptance constituted a binding contract. People v. Taylor, 2 Mich. 253. It is true that the law did not require this proposal to be made. But that circumstance is unimportant. Appellants made it. The case would be very different if the bond had stated that liability was conditioned upon the applicability of the statute to the contract therein described. But it does not so state. It says that the contract is within the provisions of” the statute. Is it to be inferred from this language that the bond is void if the statute is not applicable ? Clearly not. The parties who have signed the bond, appellants and their principal, unequivocally state that the statute is applicable. This unequivocal statement is a part of their contract with the plaintiff Houghten. Houghten was under no obligation to determine for himself the doubtful question of the applicability of the statute. From that obligation he is relieved by the express terms of the contract. Legally speaking, the contract is the same as if it had stated:

“ Even if the -statute, sections 10743 to 10745, 3 Comp. Laws, inclusive — does not require the giving of this bond, we, the parties hereto, take upon ourselves the same obligation as if it were required.”

Any doubt respecting the binding force of such an obligation in ,a contract must rest upon the ground that common-law principles forbid its being entered into. Certainly that ground is untenable, for, according to those principles, appellants could have guaranteed the account of Houghten, and that, under the principles of this opinion, is precisely what they did. This same result would be reached by saying that appellants are estopped from denying that the statute applies to their case. I shrink from making such a statement. It would involve a consideration of the difficult question (see Bigelow on Estoppel [4th Ed.], p. 554), Can one be estopped by a statement of a proposition of law ? And if that question is answered in the negative, it raises another, viz.: Is that answer applicable to this case ? The ground upon which this opinion proceeds makes it unnecessary to consider those questions. It holds that appellants’ obligation to plaintiff rests not upon estoppel but upon contract. Appellants are responsible, not because they are estopped from denying the applicability of the statute, but because they have entered into a valid contract to perform the same obligation which they would owe were the statute applicable.

Appellants also contend that the bond “ cannot be made effective as a common-law bond ” as in that case ‘ a suit in the name of the people would not lie.” While this suit is brought in the name of “ The People of the State of Michigan,” the real plaintiff is Henry Houghten, for whose use and benefit the suit is brought. The contention under consideration is, then, merely technical. It should have been raised by demurrer. It was not, and therefore should not now be considered.

If these views are correct, the order of the trial court overruling defendants’ demurrer should be affirmed.

Montgomery and Moore, JJ., concurred with Carpenter, J.

(Grant, C. J.

I concur with my Brother Ostrander in holding that the work which this bond covers was not such as the statute contemplates, and would not have made the public officers liable for not securing a bond. It is true, however, that the public authorities, the principal of the bond, and the sureties understood that such a bond was required by the statute, or that the question was so doubtful that it would be wise to require it. ' Consequently the bond was executed and the creditors of the principal have undoubtedly relied upon it. I think the defendants are estopped now to deny its validity. They asserted in the bond that it was such as was required by the statute. They have put their own construction upon it. I think it immaterial in this case whether that construction was the correct one. It ought to bind them when parties have acted upon the faith and validity of it.

I am for the affirmance of the judgment.

Blair, J., concurred with Grant, 0. J.

Ostrander, J.

The bond sued upon is set out in the declaration. It runs to the people of the State of Michigan. It recites the contract with the city of Detroit to furnish limestone dust for street asphalt paving mixture, to be approved in quality, to be according to specifications, to be delivered at the municipal asphalt plant at such times and in such quantities as may be required and ordered by the department of public works. It is recited that “ said contract is within the provisions of ” 3 Comp. Laws, §§ 10743-10745, and the condition is that if the principal shall execute and perform the contract, and it, or any subcontractor to whom the whole or any part of said contract may be assigned or let, shall well and truly pay, as the same may become due and payable, all indebtedness which may become due to any person, firm or corporation on account of labor performed or material furnished in the construction, erection, repairing or ornamenting of “such building, works or improvements,” then the obligation to be void. It is averred that the bond was required under the laws of the State, that plaintiff, Henry Houghten, furnished and delivered to the city, at request of the principal, certain material to apply upon the contract, has not been paid for the material furnished, has sued the principal and recovered judgment, and that thereby the bond has become operative in his favor. It appears from the plaintiff’s bill of particulars that he furnished more than 350 of the 600 tons of limestone contracted for.

It is “when public buildings, or other public works or improvements are about to be built, repaired, or ornamented under contract, at the expense of this State, or of any county, city, village, township, or school district thereof,” that it becomes the duty of the public officers contracting to require security, by bond, for the payment by the contractor and all subcontractors for labor and materials “furnished in the erection, repairing or ornamenting of such building, works or improvements.”

I shall assume, because it does not seem to me to require argument, that when a municipality itself buys limestone, or wood, or coal, or paving bricks, for municipal purposes, no duty is raised by this statut'e to require the contractor to give a bond to pay his men employed in making delivery of the property sold, or to pay those from whom the material may be purchased. This bond was not, so far as the protection of those- in whose interest the statute exists, one which could be legally required.

The decisions of this court in Board of Sup’rs of St. Joseph Co. v. Coffenbury, 1 Mich. 355, and in Village of Evart v. Postal, 86 Mich. 325, relied upon by counsel for plaintiff, are neither of them authority for the proposition that such a bond, if given, is valid whether or not there was statutory requirement for it. In the case first cited, the statute did require a bond to be given; in the other it was executed pursuant to an order of the village council which had the power to make such an order. Using the term voluntary in the sense of not being required by law, the bond in question was, as to condition thereof relied upon, a voluntary bond. It is said that the sureties are estopped to assert this is not a statutory bond by the recital therein that it is within the provisions of the statute. It is the general rule that they may not deny facts recited in the obligation. The recital referred to here is of a legal conclusion. Whether sureties would be in any case concluded by such a recital, we need not consider, because, in any event, while a statutory bond, defective in form, may be interpreted according to the intent of the legislative enactment (County of Bay v. Brock, 44 Mich. 45; Brockway v. Petted, 79 Mich. 620 (7 L. R. A. 740); Board of Education of Detroit v. Grant, 107 Mich. 151; People v. Laidlaw, 120 Mich. 360), such interpretation cannot enlarge or modify a bond corresponding in form precisely with the statute. In assuming a bond to be sufficient to give the security intended by the statute, we may not go further and assume, contrary to its express condition, that it was intended to furnish other and farther security. Plaintiff has assumed, and his declaration proceeds upon such theory, that the bond is a valid statutory bond. No breach of the condition of this bond is alleged. On the contrary, the declaration sets up the case of a creditor of one who agreed to furnish the city with certain material and the court is asked to interpret the bond not as sufficient to satisfy the legislative intent, as in form it does, but as sufficient to support the case made by the declaration which clearly is outside of the legislative intent. It is not claimed, and the declaration does not conform to the idea, that the obligation was voluntarily given to secure the plaintiff, was, in fact, relied upon by him, and is a good common-law bond for his protection. The demurrer should have been sustained.

The judgment should be reversed, the demurrer sustained, and the record remanded with leave to plaintiff to amend if so advised.

Hooker and McAlvay, JJ., concurred with Ostrander, J.


author: Ostrander, J. . Blair, J.

text:
    FINDLATER v. DORLAND.
    1. Fraud — Misrepresentation — Sale of Corporate Stock — Damages — Evidence—Sufficiency.
    In an action for damages resulting from a purchase of mining stock upon the misrepresentation that the shares purchased were treasury stock when in fact they were transferred from other stockholders, evidence examined, and held, that there was none from which the jury could determine the damages resulting from the alleged false pretense, and that the refusal of an instruction to that effect was error.
    2. Same — Damages—Speculative Damages — Right to Recover.
    In an action for damages resulting from a purchase at a nominal price of mining stock having no market value, the purchase being induced by false representations, an instruction stating plaintiff’s damages to be the difference between the actual value of the stock and its represented value at the time of the sale, is erroneous as allowing speculative damages ; plaintiff’s right of recovery being limited to the amount he has paid, less the value of the stock received and retained by him.
    Error to Kent; Perkins, J.
    Submitted October 22, 1907.
    (Docket No. 9.)
    Decided May 1, 1908.
    Case by Charles W. Findlater against Walter A. Dorland and Cecil R. Luton for fraud. There was judgment for plaintiff, and defendants bring error.
    Reversed.

      Taggart & Taggart, for appellants.

      Dunham & Dunham, for appellees.
    The action is case for damages resulting from a purchase by the plaintiff of certain shares of the capital stock of the Little Frank S. Gold Mining Company, a Colorado corporation, which, it is alleged, plaintiff was induced to purchase by certain false and fraudulent representations of defendants, who had conspired together to sell said stock, by such means. In the brief, counsel for the plaintiff set out the particulars of the representations made and the fraud practiced, as follows:
    “(a) That they [the company] had placed upon the market for sale a certain amount of stock with which to develop and render said mines and mining claims more valuable.

      “(b) That they were anxious to sell stock to raise money with which to develop said property.
    “(c) That C. R. Luton had for sale quite an amount of stock of this company, for sale at 15c a share for the purpose of getting money to develop this property.

      “(d) That defendants were selling stock as rapidly as possible for the purpose of getting money into the treasury of the company, and that this property would soon be paying dividends.
    “(e) That this company was beyond the experimental stage and was in need of more money with which to push its developments in sinking shafts, etc., and claiming to be selling stock for that purpose only.
    “ (/) In taking from 15 per cent, to 20 per cent, commission on all the treasury stock that they sold, and did not put the entire proceeds of the treasury stock into the treasury, and in selling the private stock of the two Smiths, two Boyntons and Mullen instead of selling treasury stock and in selling plaintiff the stock of the Smiths and Boyntons instead of treasury stock.
    “ (g) In saying and claiming that the property was paid for; in accepting 50,000 shares of stock and commissions, and in selling private stock without informing the purchasers of stock of these facts, and in advertising this property as a mine, and that they were piling up valuable ore in ore bins, and in sacking high grade ore that would soon be shipped to the smelter, and that this property would soon be a splendid shipper and providing sufficient ore to pay the expenses and that then the treasury stock would be withdrawn from the market; and in keeping from the purchasers of stock the fact that C. R. Luton was the agent for the Smiths and Boyntons and Mullen for the purpose of disposing of their stock; and that the defendants were given the opportunity to take the escrow stock at less than 15c a share; and in permitting the taxes to remain unpaid; and in loaning money by defendant Dorland to the company without informing the purchasers of stock of any of these facts, and in so manipulating this property and the stock in it, by these two defendants, that Luton received more than $30,000 in valuable property and defendant Dorland the property itself at the expense of the stockholders.
    “ (h) In claiming the shares of stock were worth 15c and that that was its market value, and afterwards claiming it had gone to 20c a share, and would soon reach its par value of $1.”
    Plaintiff retains his stock which he says is of little or no value, for which, it, appears, he paid $900, and seeks to recover “the difference between the actual value of the stock and its represented value at the time of the sale.” He secured a verdict and judgment for $525; the jury having been instructed that the measure of damages was the difference, at the time plaintiff acquired it, between the value of the stock in fact and its value if the false representations relied upon, if they found such were made, had been true. The record contains all of the testimony. The defendants have appealed.
    It appears that the Little Frank S. Gold Mining Company, in 1896, purchased certain mining claims, paying for them the capital stock of the company which was $1,250,000, the par value of shares being one dollar. In April, 1900, one it. G. Mullen went to Grand Rapids, Michigan, from Colorado, and interested some of the business men of that city in the venture, induced a party of them to visit the property, at his expense, with the result that, upon their return, and in May, 1900, they, or some of them, issued a prospectus and set about a movement to obtain the ownership of the mining claims of the corporation by acquiring the stock. The plan appears to have been to set apart 250,000 shares of stock as treasury stock, to devote 200,000 shares to promotion, to sell to the owners enough stock at 15 cents a.share to make $25,000 (166,666 shares) and for the remaining 633,334 shares to pay to the holders $75,000 cash.' The stock was placed on sale in Grand Rapids at 15 cents a share. In July, at a special meeting of the directors, held in Colorado, two of the Grand Rapids men were elected to fill vacancies on the board. By August 1st, sales of stock had amounted to $29,124.50, of which sum $25,000 was paid to the original owners of the stock. Later, the plan seems to have been so modified that it was proposed, by purchase of stock from the original owners, to obtain control of the corporation. Plaintiff, at different times, purchased shares of the stock, at the nominal price of 15 cents a share, and received certificates therefor.
   Ostrander, J.

(after stating the facts). There is no testimony tending to prove that defendants ever expressed more than an opinion, and that an honest one, concerning the future payment of dividends, the future value of shares, or the condition of the property, and it appears that defendant Dorland, both before and after the plaintiff purchased his stock, was himself a consistent purchaser of the stock and became and is now owner of more than 300,000 shares. He at all times claimed and now claims that the company owns a valuable property, which development will prove. Dorland paid 15 cents a share for the most of his stock, more than that for some of it. Neither of the defendants controlled the company or its property. The company did not own and was never represented to be owner of its own capital stock which, in the first instance, was given to the owners of the property in payment for the property. Defendant Luton appears to have had no connection with the company until in August, 1900, before which time plaintiff had subscribed for a portion of his shares. It turns out that plaintiff’s stock was transferred from the, or some of the, original certificates, issued by the company in payment for the mining property, and the money he paid for it went, not into the treasury of the corporation, but to the original certificate holder who paid a commission, to defendant Luton, upon some of the sales made after the first plan to purchase had been abandoned. The original stockholders used some of their shares for promotion purposes and some of them were given to certain Grand Rapids gentlemen, including defendant Dorland. Interested parties received some rosy accounts of the prospects shown by development work at the mine, and such word as was received was handed about among shareholders, • and prospective shareholders. There is no testimony which I have been able to discover, none pointed out in the brief, which tends to prove that either defendant ever manufactured such news or ever retailed it for the purpose of injuring plaintiff or any other person. There is testimony, principally from plaintiff, tending to prove that these defendants represented that some treasury stock was being sold for the purpose of securing money to develop the property; that it was represented to plaintiff that his shares would be from the treasury stock; that plaintiff supposed he was buying treasury stock and would not have bought any other kind of stock. This is what, and is all, that the testimony of the plaintiff himself shows in the way of false representations made or fraud or deceit practiced by defendants to his injury. He obtained information concerning the shares and the property from many others besides these defendants. He testified :

“Q. Now in purchasing this first certificate of stock, upon whose representations did you purchase it ?

“A. I would say that I purchased more on Dorland’s representations than any one else. I banked more on his reputation than any of the rest of the crowd.

“Q. Did the statements that were made to you by C. R. Luton have any influence on your purchase ?

“A. Yes, sir, they did.”

Some treasury stock was sold and some money was used to exploit the property. The declaration in the suit was filed July 16, 1904. That is to say, plaintiff had three and one-half years in which to profit if the venture was successful. He still owns his stock. It is generally true, and was true in this case, that one share of stock in such a company is as valuable as any other share. As plaintiff himself confesses it, we are not required to make the not unreasonable assumption that when a man of his business experience learns that a gold mining proposition is capitalized at $1,250,000, the par value of shares being one dollar and the stock offered for sale at 15 cents a share, he buys, if he buys at all, an interest in a prospect and not in a mine. It is also true, I assume, that one might be induced to purchase shares of stock in such a company if the money he paid went into the treasury of the company issuing the shares, and was used to develop its properties, when he would not buy stock from the shareholders of the company. If, intending to purchase shares of treasury stock, he is given shares represented to be treasury stock, but which are in fact transferred from another shareholder, we are not prepared to say that he may not, acting promptly, rescind the sale, reassign the shares and recover his purchase money from those to whom he paid it. Hamilton v. American Hulled Bean Co., 143 Mich. 277. Suppose, however, he does not rescind, keeps his stock, and sues for damages for the fraud. How, in such a case, can his damages be measured ? Suppose, in such a case, that, after plaintiff’s purchase of stock, money is secured to explore the property. If a mine is developed, or if the property is found to be worthless, plaintiff’s stock is, in either case, worth no more, no less, than other stock. There is in this case no evidence from which the jury could determine the damages of the plaintiff, if any, resulting from the alleged false pretense that the stock he was getting was treasury stock. An instruction to this effect was asked for by counsel for defendants and refused. This was error.

As a new trial should be granted, it is necessary to review another ruling which is complained of. Assuming plaintiff’s theory of his case to be supported by evidence, the rule of damages which was applied is erroneous. Plaintiff relies upon Maxted v. Fowler, 94 Mich. 106. In that case, the stock was represented as having a stated market value. It was held that this was a representation of a fact. The action was assumpsit, upon the warranty, and it was held that the proper rule for damages was “the difference between the market value of the stock as it was represented to be and what it was worth in fact ” at the time it was transferred to the plaintiff. In the case at bar, the stock had no market valué and was not represented as having a market value. It was selling at a nominal price and every one who purchased hoped that it might some day have a market value in excess of the price paid for it. The distinction between the cases is clear. And assuming, as plaintiff asserts, that the shares were represented to have a market value of 15 cents a share, the rule of Maxted v. Fowler was not the rule applied. The jury were not limited to the represented market value. . In actions ex delicto no less than in those ex contractu, involving pecuniary loss, the courts, in the absence of an exact rule, while permitting the facts to be fully laid before the jury for the purpose of arriving at an estimate of the real damages, have denied the right to recover purely speculative damages. In a case similar in its facts to the one before us, the trial judge instructed the jury:

“The measure of recovery is generally the difference between the contract price and the reasonable market value, if the property had been as represented to be, or in case the property or stock is entirely worthless, then its value is what it would have been worth if it had been as represented by the defendant, and as may be shown in the evidence before you.”

Of this charge the Supreme Court of the United States said:

‘£ The measure of damages was not the difference between the contract price and the reasonable market value if the property had been as represented to be, even if the stock had been worth the price paid for it; nor if the stock were worthless, could the plaintiff have recovered the value it would have had if the property had been equal to the representations. What the plaintiff might have gained is not the question, but what he had lost by being deceived into the purchase. The suit was not brought for breach of contract. The gist of the action was that the plaintiff was fraudulently induced by the defendant to purchase stock upon the faith of certain false and fraudulent representations, and so as to the other persons on whose claims the plaintiff sought to recover. If the jury believed from the evidence that the defendant was guilty of the fraudulent and false representations alleged, and that the purchase of stock had been made in reliance thereon, then the defendant was liable to respond in such damages as naturally and proximately resulted from the fraud. He was bound to make good the loss sustained, such as the moneys the plaintiff had paid out and interest, and any other outlay legitimately attributable to defendant’s fraudulent conduct; but this liability did not include the expected fruits of an unrealized speculation. The reasonable market value, if the property had been as represented, afforded, therefore, no proper element of recovery.

“Nor had the contract price the bearing given to it by the court. What the plaintiff paid for the stock was properly put in evidence, not as the basis of the application of the rule in relation to the difference between the contract price and the market or actual value, but as establishing the loss he had sustained in that particular. If the stock had a value in fact, that would necessarily be applied in reduction of the damages. ‘ The damage to be recovered must always be the natural and proximate consequence of the act complained of,’ says Mr. Green-leaf, Vol. 2, § 256; and ‘the test is,’adds Chief Justice Beasley in Crater v. Binninger, 33 N. J. Law, 513, 518, ‘ that those results are proximate which the wrong-doer from his position must have contemplated as the probable consequence of his fraud or breach of contract.’ In that case, the plaintiff had been induced by the deceit of the defendant to enter into an oil speculation, and the defendant was held responsible for the moneys put into the scheme by the plaintiff in the ordinary course of the business, which moneys were lost, less the value of the interest which the plaintiff retained in the property held by those associated in the speculation. And see Horne v. Walton, 117 Ill. 130, 141; Slingerland v. Bennett, 66 N. Y. 611; Schwabacker v. Riddle, 84 Ill. 517; Fitzsimmons v. Chapman, 37 Mich. 139.” Smith v. Bolles, 132 U. S. 125.

In Sigafus v. Porter, 179 U. S. 116, 122, the rule of Smith v. Bolles is restated and affirmed, with a considerable citation of other authority. These cases state the rule applicable to the case at bar.

It is impossible to tell upon what basis the jury estimated the damages of the plaintiff at the sum of $525. They may have been of opinion that the stock is now worth more than plaintiff paid for it. They may have believed that it is now worthless and if it had been as represented would have been worth only $525. This is improbable, but is, within the rule of damages given to them, possible.

The judgment is reversed, with costs of both courts, and a new trial is granted.

Grant, C. J., and Montgomery and Hooker, JJ., concurred.

. Blair, J.

I concur in the view that the damages of plaintiff growing out of the sale to him of private stock instead of treasury stock are wholly speculative and furnish no' basis for a recovery. I further concur in the opinion that no other actionable false representations of fact were proved, and I therefore concur in the result.


text:
    YOUNG v. STEIN.
    1. Building Contracts — Construction —Powers of Architect —Conclusiveness of Determination.
    Where, under the terms of a building contract, the determination of the architect as to what is required of the contractor by the plans and specifications is conclusive upon the contractor, a construction that such determination is not likewise conclusive upon the owner is unconscionable and will not be adopted unless imperatively required by the language used.
    3. Same — Certificate of Architect — Conolusiveness.
    Where a building contract indicates that acceptance “by the owner and architect” is to be evidenced by the certificate of the architect, which the builder obtains, such certificate, being made by the owner’s unquestioned agent, acting entirely within the scope of his express authority, binds the owner, in the absence of any showing of fraud or collusion, as much as though he himself had signed it.
    3. Same — Defective Workmanship and Materials — Acceptance-Question of Pact.
    Where a building contract provides that neither inspection or certification by the architect, nor payments by the owner, shall relieve the builder of his obligation in regard to materials and workmanship, the question of acceptance working an estoppel of the owner to claim a set-off for defective workmanship and materials is one of fact for the jury.
    Error to Wayne; Donovan, J.
    Submitted November 13,1907.
    (Docket No. 164.)
    Decided May 1, 1908.
    Assumpsit by Henry Young against Eugene Stein on a building contract. There was judgment for plaintiff, and defendant brings error.
    Reversed.

      Stellwagen & MacKay, for appellant.

      Isaac N. Payne, for appellee.
   McAlvay, J.

Plaintiff is a contractor and builder in the city of Detroit. He entered into a contract in writing to build a house for defendant for the sum of $1,892, according to certain plans and specifications. This suit was brought' to recover a balance of $560 claimed to be due under the contract and for some extras amounting to $104.50. The declaration was in assumpsit upon the contract, and on the common counts. Defendant, under the general issue, gave notice of special defense, admitting that the contract was entered into, but that it was not performed by plaintiff according to its terms, to his damage which he was entitled to recoup. He also gave notice of set-off. A verdict for $738.50 was rendered in favor of plaintiff, upon which a judgment was entered. The case is here for review upon writ of error.

The terms of the contract need not be set forth as it is of considerable length. The owner agreed to pay the contractor $1,892 for the work and materials as follows:

■ “ On certificates issued from time to time as the work progresses, reserving 10 per cent, until the work is entirely completed and accepted by the owner and architect. It being understood that the final payment shall be made within thirty days after this contract is completely finished ; provided that in each of said cases the architect shall certify in writing that all the work‘upon the performance of which the payment is to become due has been done to their satisfaction.”

The contract also provides:

“It is further mutually agreed by the parties hereto that the inspection of any work by the architect, or the issuance of certificates thereon by him, or payments made by the owner under this contract, shall not release the contractor of any obligation to perform the work in a good and workmanlike manner, and in case of any default or defects being found at any time, either in workmanship or materials, the same, with all damages due thereto, shall be repaired, replaced or made good by the contractor at his own cost and expense.”

Defendant insists that the house was not built according to plans and specifications and he was not bound by the certificates of the architect. Paragraph 1 of the contract requires the contractor to do the work under the direction and to the satisfaction of architect (acting as agent of said owner) agreeably to the drawing and specifications made by said architect. Under paragraph 2, in case of doubt ‘ respecting the true meaning of the drawings or specifications, reference shall be made to the architect, whose decision thereon shall be final and conclusive.” Paragraph 4 requires the contractor, on notice from the architect, “ to remove from the grounds or building all materials condemned by them * * * or take down all portions of the work which the architect shall condemn as unsound,” etc. Paragraph 8 provides:

“ The contractor shall make no claim for additional work unless the same shall be done in pursuance of an order from the architect.”

Paragraph 10 provides:

“Should the contractor at anytime refuse or neglect to supply a sufficiency of properly skilled workmen or of materials of the proper quality, or fail in any respect to prosecute the work with promptness and diligence, or fail in the performance of any of the agreements on his part herein contained, such.refusal, neglect or failure being certified by the architect, the owner shall be at liberty, after three days’ written notice to the contractor, to provide any such labor or materials, etc. * * *

“And if the architect shall certify that such refusal, neglect or failure is sufficient ground for such action the owner shall also be at liberty to terminate the employment of the contractor for the said work and to enter upon the premises and take possession of all materials thereon, and to employ any other person or persons to finish the work, and to provide materials therefor. * * *

“The expense incurred by the owner as herein provided either for furnishing materials or for finishing the work and any damage incurred through such default, shall be audited and certified by the architects, whose certificate thereof shall be conclusive upon the parties.”

It is clear that, under this contract, the determination of the architect as to what is required of the contractor by the plans and specifications is conclusive upon the contractor, and unless such determination is likewise conclusive upon the owner, we should have the anomalous and unconscionable result that the owner might contest the contractor’s right to compensation for work performed by him precisely as ordered by the owner’s agent, the architect, whose orders he was bound to obey. Such a construction of the contract ought not to be adopted unless imperatively required by its terms. Wildey v. School District, 25 Mich. 419.

The contract was drawn by the architect as the agent of the owner, and was signed by the architect and not by the owner, the owner adopting the' contract as his after its execution. The architect is described in the contract as agent of the owner. The provision in paragraph 13, “ that in each of the said cases the architect shall certify in writing that all the work upon the performance of which the payment is to become due has been done to their satisfaction,” indicates clearly that the acceptance ££by the owner and architect” is to be evidenced by the certificate of the architect. This certificate the contractor obtained, and being made by the owner’s unquestioned agent acting entirely within the scope of his express authority, it bound the owner, in the absence of any showing of fraud or collusion, as much as though he himself had signed it. Lamson v. City of Marshall, 133 Mich. 250. The trial judge correctly held that defendant was estopped by the architect’s certificates from raising the question of a failure on the part of the contractor to comply with the plans and specifications, so far as such failure Was not the result of bad workmanship.

Defendant was not allowed to show faulty workmanship, the court holding that he had accepted the house and was estopped. The question of acceptance upon this record was one of fact for the jury so far as the question of good workmanship and materials was concerned. Gier v. Daiber, 148 Mich. 190. '

-The question of damages from faulty workmanship should have been submitted to the jury, under the 14th paragraph of the contract. The testimony tended to show, and it was substantially admitted by plaintiff, that certain rooms were constructed with one side several inches longer than the parallel one; that on one side of the bay window 22-inch glass was used and. on the other 24-inch, which twisted the window around and threw it out of shape. Such constrúction is at least evidence of bad workmanship, which the parties undertook to cover by the 14th paragraph. The court was in error in excluding such evidence.

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

Grant, O. J., and Blair, Moore, and Carpenter, JJ., concurred.