text:
    BROWN v. WEEKS.
    1. Corporations — Creditor’s Suits — Liability of Stockholders— Subscriptions to Stock — Fraud—Evidence.
    In an action by creditors of an insolvent corporation to enforce payment for stock subscribed, tbe defense of fraud and misconduct on tbe part of tbe incorporators, held, wholly unsupported by tbe evidence.

      2. Same — Stock and Stockholders — Fraud—Presumptions.
    Tbe issuance of stock in a corporation in consideration of property will be presumed free from fraud unless tbe contrary clearly appears.

      3. Same — Stock and Stockholders — Good Will as Property.
    The good, will of a business, though intangible, is property for which the stock of a corporation may be issued under' statutes allowing stock to be paid for in property.
    4. Same — Stockholders’ Liability — Joint Liability — Trustee.
    Where the evidence in said suit showed that one stockholder subscribed for preferred stock as trustee for all of the incorporators, the court helow properly held that all were jointly liable.
    5. Same — Patents—Trade-Marks—Property Subject to Execution — Statutes.
    Since patents, trade-marks, and good will are sold under' process of the chancery courts, they must be held to be property subject to levy and sale on execution or “other process” under the provisions of section 2, Act No. 146, Pub. Acts 1907 (2 Comp. Laws 1915, § 9018), describing property that may be taken in payment for capital stock.
    Appeal from Kent; McDonald, J.
    Submitted October 6, 1916.
    (Docket No. 59.)
    Decided March 29, 1917.
    Bill by George C. Brown, trustee in bankruptcy of the Coronet Corset Company, against Eugene J. Weeks, Cornelius Kelly and others for a decree enforcing certain unpaid stock subscriptions. From the decree entered, plaintiff and defendants Weeks and Kelly appeal.
    Affirmed.

      Rolland J. Cleland and George C. Brown, for appellant Brown.

      Kleinhans, Knappen & Uhl, for appellant Weeks.

      Clapperton, Owen & Hatten, for appellees Jarvis, Wright, Joslin, Knott, and Conger.

      Hatch, McAllister & Raymond, for appellees Frick and Stowe.

      Smedley & Linsey, for appellees Otte, Mitts, and Thiele.

      - ’‘The question of bonus stock of corporations is taken up in note in 38 L. R. A. 490, particularly as to rights of creditors, see page 494 of same note.

   Stone, J.

The bill of complaint herein was filed against the defendants as stockholders and incorporators of the Coronet Corset Company, bankrupt, to enforce their alleged unpaid stock subscriptions, and to .compel them to pay a sufficient sum to liquidate the unpaid portion of the debts allowed against said bankrupt, in the bankruptcy proceedings.

As stated by complainant, the controversy centers chiefly around the questions whether the incorporators actually turned in for common stock the property stated in the articles to have been so turned in; whether such property, if actually turned in for common stock, was of the kind permitted by the statute, and was sufficiently itemized and the valuation of each item given; and whether there was actual fraud in the valuation of such property, if the statute was otherwise complied with.

The Coronet Corset Company of Grand Rapids, Mich., was incorporated on December 17, 1909, under Act No. 232, Pub. Acts 1903, and amendments (2 Comp. Laws 1915, § 9017 et seq.) ; its articles being duly recorded in the office of the secretary of State and of the county clerk of Kent county.

The case being at issue as to all of the defendants except Edward C. Weeks, the bill was dismissed as to him.

The learned circuit judge who heard the case, and heard and saw all of the witnesses testify therein, filed a written opinion as the basis of the decree entered below. After a thorough examination of the record and the numerous briefs, we are of opinion that the circuit judge reached the correct conclusion in the case upon the several issues raised; and we are so well satisfied with the statement' of the case by him that we insert the opinion here. It is as follows:

“This action is brought by George C. Brown, as trustee in bankruptcy of the Coronet Corset Company, to recover certain assets of the bankrupt.
“The Coronet Corset Company of Grand Rapids was. incorporated December 17, 1909, with an authorized capital stock of $150,000, divided equally into common and preferred, of the par value of $10 a share. The articles of association represent that of the preferred stock $50,000 was subscribed and paid for as follows: $44,000 in cash and $6,000 in property. The common stock was all subscribed for by the defendant Holden Joslin, and was paid for in property valued at $75,000. One-half of this, stock was turned back to the company by Joslin with the understanding that it should be issued to subsequent purchasers of preferred stock at par, as an inducement to the sale of that stock. .The details of this arrangement were that subscribers to preferred stock should receive, without additional cost, 50 per cent, of amount of their subscriptions in common stock. The property turned into the corporation by Joslin in payment for the common stock consisted of all the tangible and intangible assets of the Coronet Corset Company of Jackson, Mich., and of the P. Schultz & Company of Hastings, Mich.
“It is the theory of the bill of complaint that this property was intentionally and fraudulently overvalued, and that the general scheme of the organization was carried on in pursuance of a conspiracy to defraud the public and creditors. The liability of all the defendants is. based on the alleged fraudulently excessive valuations with an additional liability on the part of the defendant Jarvis for $1,500 of unpaid preferred stock subscriptions, and on the part of defendant Eugene J. Weeks and Edward C. Weeks for transferring their stock after debts had been contracted and with the knowledge of the failing condition of the business, and with the intention of escaping liability.
“The charges of fraud and misconduct on the part of the incorporators of this company are wholly unsupported by any evidence. I am not able to say from the evidence whether there was any very extravagant valuation placed on the property which was turned in by Mr. Joslin to pay for the common stock; but I am satisfied that, if there was, it was due to an honest error in judgment induced by an apparently well-founded enthusiasm as to the ultimate success of the business. It was at least a good faith valuation. I therefore find that there was no fraud in fact or in law, and that therefore no liability attaches to any of the organizers of the corporation because of the valuation placed upon the property for which the common stock was. issued.
-“Neither is there any evidence of conspiracy or unlawful purpose in the promotion and organization of the company. And, if there was no fraudulent overvaluation of the property, the common stock was fully paid, and, as it belonged to Mr. Joslin, he had a right to sell it or give it away as he pleased. It follows that there can be no recovery from any of those defendants who purchased preferred stock and received therewith, without cost, 50 per cent, of the amount in common stock.
“As to the claim of $1,500 against the defendant Jarvis, who subscribed for the-amount of preferred stock and did not pay for the same, I am of opinion that .the liability for the payment of this unpaid subscription should be shared by all the other incorporators. It affirmatively appears from the evidence that, when Jarvis subscribed for the $1,500 additional amount of preferred stock, he was acting for all of the incorporators and made the subscription at their request in order to make up the $50,000 for the preferred stock. It was not intended that he should pay for it, and it was in fact subsequently returned to the treasury and with their consent. As I said, the testimony shows that Jarvis subscribed for this stock to make up the $50,000 which the articles of association represented to have been paid in for the preferred stock. ' After the organization, he surrendered this stock with the consent of the company; but such surrender did not relieve him of liability. He is liable for the subscription, but, under the circumstances, I think that the other incorporators, should be required to share the responsibility with him and make good the amount of this subscription. I therefore find that all of the incorporators are jointly and severally liable for the payment of the amount subscribed by Mr. Jarvis,' as trustee.
“As to the claim that the Hastings business which was practically owned by Walter H. Wright, was transferred subject to a credit of $1,225, the original arrangement seems to have been that Mr. Wright was to have such a credit on his preferred stock subscription; that being the estimated value of the raw and manufactured stock of his company. When the articles of association were made, however, no mention was made of the credit of $1,225 to Mr. Wright; so that in fact the assets of the Hastings Company were turned in free from any incumbrance. Subsequently, some one acting without authority included this amount of $1,225 in a check for Mr. Wright’s manufactured stock. Wright immediately turned it back in partial payment of his preferred stock subscription of $5,000. As he was not entitled to the $1,225 credit, to that extent his preferred stock subscription is unpaid. I therefore find that Walter H. Wright is liable for $1,225 due on his preferred stock subscription.
“As to the liability of the defendants Eugene J. Weeks and Edward C. Weeks for transferring their stock to parties in Montana with the intention of escaping liability, I find that when the transfer was made the defendants Weeks did not know that the bankrupt was in a failing condition, and that they did not make such transfer with a view to escaping liability on the stock.
“Having found that there was no fraud in the organization of the company and that Joslin was the owner of common stock, which was fully paid, it follows that no liability attaches to defendants Stowe, Thiele, Frick, Conger, Kelsey, and Forrester, and as to them the bill should be dismissed.
“The defendants Jarvis, Eugene J. Weeks, Edward C. Weeks, Wright, Knott, Joslin, Mitts, Otte, and Kelly, are jointly and severally liable for the payment of $1,500 on the preferred stock subscribed by Jarvis.
“In view of the character of my conclusions of fact, it is not necessary to pass upon the questions of law which were so ably briefed by counsel.
“All the creditors are entitled to participate.
“A decree will be entered in accordance with these findings.”

The plaintiff has appealed.

A few facts in support of the above should be stated:

This Grand Rapids corporation was organized by combining the business of the Coronet Corset Company of Jackson and of Walter G. Wright under the name of P. Schultz & Co. of Hastings, under options some time before given to defendant Holden Joslin. The Jackson company had been organized by defendant Eugene J. Weeks, and had been actively operating for 25 or 30 years, and its business had been profitable from the beginning. It had a thoroughly equipped plant, including upwards of 170 sewing machines (man-y of them multiple needle machines), a printing plant including its own stereotype for making plates, etc., .a cylinder press, a steel plant including a method for a secret process of water proofing corset steels, and machinery especially built therefor; a thoroughly equipped machine plant and an organization for building new machines. It was thoroughly equipped with work tables and had about 100 of what were termed highly accented machines for special work, as well as the regular machines. The plant had a capacity of 100 dozen corsets a day. It printed its own labels and advertising matter. It was doing a business of upwards of $100,000 a year, and in some years it had gone as high as $175,000. It had developed a large number of trade-marks and brands for its products. In the fall of 1909 when this sale was made, it was using actively in its business about 12 of these trademarks. They had all been well and extensively advertised, and thousands of dollars had been expended in advertising and pushing these brands. Two of the brands had been demonstrated extensively .at large expense throughout New England and the Middle West. Among the brands so demonstrated was the “Flexo-Waldo,” a front lace corset, at that time becoming very popular, which was being extensively pushed, advertised, and demonstrated in 1909 and the years just prior thereto. The company owned patents and had a large list of customers.

Defendant Eugene J. Weeks, in the fall of 1909, was the president and general manager of the Jackson business and company. Prior to this time his sons, who had been with him for years in the business, had engaged in business abroad, so that he had neither son to look forward to, to supplement or assist him in the business. He was 68 years of age, and was wealthy and anxious to retire from active business. It was in evidence-and undisputed that these patents, trade-marks, and customers’ lists, and the large amount of advertising that had been done during the past 25 years were of the value of many thousands of dollars to a going concern such as the Jackson company was. The secret process for making the corset stays was also worth thousands of dollars. The tangible assets of the company consisted of factory equipment, inventorying about $24,000, goods and raw stock valued at $17,479. It also had on hand orders for corsets to the amount of $20,000. It was an active, going business concern, with a large volume of business and operated at a profit.

The Hastings concern was also an active, going one, manufacturing corset accessories, including brassieres, bust forms, hip pads, etc., and had been in the business at Hastings for about five years. Although its capital was limited, it was doing a business of from $10,000 to $20,000 a year. It sold its product all over the country from New York to San Francisco. The business was capable of very great expansion with sufficient capital to push it. It not only had an established trade throughout the country, but it also had various trade-marks and names that had become generally known and were of great value. It also had patents and customers’ lists which were valuable.

The inception of the plan which finally resulted in bringing these two businesses to Grand Rapids, and uniting them in one company, was the offer of Mr. Weeks to Mr. Joslin to sell the Jackson concern to him. The latter had been with the Jackson concern 15 or 16 years and enjoyed the confidence of Mr. Weeks. In the summer of 1909, Mr. Weeks suggested to Mr. Joslin that he would like to get out of the business and that the latter might be able to organize a corporation to take the business over. He told Joslin that, if he could succeed in organizing such a corporation, he would give him a special advantage by selling out the entire business, exclusive of manufactured and raw stock and book accounts, for one-quarter of the value of the machinery and equipment, Mr. Joslin to take over the manufactured and raw stock at its inventory value; that he would turn in the good will and trade-marks so that the business could be capitalized at its real value, as compensation for Joslin’s efforts and success in organizing such a corporation; and that he would personally loan to Joslin $5,000 to. enable him to take a portion of the stock in any new corporation to be organized. Mr. Weeks testified:

“My ambition to get out of the business was what prompted me to sell the business. I felt that at that time I was making a great sacrifice in so doing. My relations with Mr. Joslin were' the very pleasantest. Doubtless, that had much to do with the matter of my offering him this opportunity as against other men in our employ. Undoubtedly, this friendship had much to do with the price named in the option I gave him. I think it was my suggestion that the' name Coronet Corset Company should be perpetuated, and very naturally I had an ambition in that I had made a success of the business.”

After getting this option on the Jackson plant and concern, Mr. Joslin, believing the business and accessories of the Hastings concern to be a valuable adjunct to the corset business, ■ took an option on that business at the inventory value of equipment and merchandise. Negotiations followed, all of which, as well as the subscriptions for the preferred stock, were based upon these options, which were fully understood by all of the subscribers. Defendant Jarvis and others went to Jackson to investigate that concern and its product, before subscribing. They were so impressed with the project that they interested a large number of other Grand Rapids people in the proposition. It was understood that the new company was to be capitalized upon the basis of the actual value of the property turned over under the options, with which the option prices had nothing to do. The incorporators knew the option prices and values of the businesses. Prior to the executing of the articles, several meetings of the incorporators were held. On December 14th, several of the incorporators had a meeting in the office of Clapperton, Owen & Hatten, in which the entire matter was discussed in detail, beginning with the options held by Mr. Joslin. The values of the property, the amount of stock, and methods of payment, were all discussed and fully understood. All knew that the company to be organized was to deal with Joslin through his options. They believed that the values of these properties were many times greater than the purchase price which Joslin was paying for them. It was proposed that the common stock should pay for the intangible property and a part of the tangible property, since all were to be utilized by the new company, $44,000 of the preferred stock was to be paid in cash, and $6,000 in property. Finally, the articles were drafted and signed. Article 7 is as follows:

“The amount of common stock actually paid in is the sum of seventy-five thousand dollars, all of which has been paid in property, an itemized description of which, with the valuation at which each item is taken, is as follows, viz.:
“The following described property now situate in the city of Jackson, Michigan, used in or incident to the business of manufacturing and selling of corsets and other kindred articles and accessories thereto, which business for many years last past has been and at the date of the transfer of said property to this company was owned and actively operated as a going concern by the Coronet Corset Company, a corporation of the said city of Jackson, Michigan, viz.:
“The miscellaneous machinery and appliances, including 70 sewing machines used in and connected with said business; the steam plant consisting of engines, boilers, pumps, and other equipment connected therewith; the machinery, equipment, materials and supplies constituting the printing plant of said company ; the office fixtures of every kind and nature; all the general equipment connected with the handling of the stock, material and output of said company and business, and all shafting and other miscellaneous articles of every kind and nature connected with said business; the following registered trade-marks used in connection with the sale of the output of said business, viz.: La Fillette, Colonial, Filrone, La Blanchette, B/C Flexibone, Flexo-Waldo, Coronet, La Crossine, Her Ladyship, and C. C. Co., Jaxon, the mailing lists and customers’ lists connected with said business; together with the corporate name and good will of said established business valued at sixty thousand dollars.
“Also the property and assets of every kind and nature used in or in connection with the business of manufacturing and selling corsets and other accessories, which for several years last past and at the date of transfer thereof to this company, was owned and. actively operated as a going concern by W. G. Wright at the city of Hastings, Michigan, under the assumed name of P. Schultz & Company, consisting of all the machinery, equipment and fixtures of every kind connected with said business, including a registered trade-mark ‘The Just Wright,’ used in connection with the output of said business, together with the trade and good will of said established business, of the value of fourteen thousand dollars; two letters patent of the United States, numbers-and-, of the value of one thousand dollars.
“All of the above-described property and established business of said above-described going concerns, namely, the Coronet Corset Company of Jackson, Michigan, and P. Schultz <& Company of Hastings, Michigan, of the total value of seventy-five thousand dollars, heretofore sold by said respective companies, has been taken over and is to be continued^ and operated as one going concern by this company in the said city of Grand Rapid's, Michigan.
“The amount of preferred stock actually paid in is the sum of fifty thousand dollars, of which forty-four thousand dollars has been paid in cash, and six thousand dollars has been paid in other property, an itemized description of which, with the valuation at which each item is taken, is as follows, viz., one hundred sewing machines for manufacturing purposes of the value of six thousand dollars.”

Holden Joslin subscribed for all of the common stock. Mr. Weeks and others testified that these properties were worth more than $81,000.

No impartial person can read this record, and especially the testimony of Mr. Weeks, Mr. Wright, Mr. Jarvis, and Mr. Clapperton, without being satisfied that the charges of fraud and misconduct on the part of the incorporators are wholly unsupported by any evidence. • The issuance of stock in consideration of property will be presumed free from fraud, unless the contrary clearly appears. Referring to the matter of good will, it may be said that the good will of a business, though intangible, is property, and stock of a corporation issued for such good will is issued for property actually received within the meaning of laws allowing stock to be paid for in property. 4 Thompson on Corporations (2d Ed.), § 3955, and cases cited in notes.

In White, Corbin & Co. v. Jones, 79 App. Div. 373 (79 N. Y. Supp. 583), where a corporation purchased with its capital stock the property, business, and good will of a firm, it was held that the value of such good will should be taken into consideration in determining whether the property of the firm as transferred to the corporation had an excessive valuation; and that a member of the firm who was thoroughly conversant with its business and its management was competent to give his opinion as to the value of its good will. Good will is often a valuable adjunct of a firm or corporation where the company has long conducted its business, has a reputation for fair dealing, and has by its conduct attracted customers to it.. That favorable impression and disposition may be a component part of its property value, and this element known as good will is held by the courts to be an asset in estimating the value of the property. Bininger v. Clark, 60 Barb. (N. Y.) 113; Mitchell v. Read, 84 N. Y. 556; Boon v. Moss, 70 N. Y. 465. While this is an intangible asset, it is still susceptible of being measured at a money value. Beebe v. Hatfield, 67 Mo. App. 609; Burckhardt v. Burckhardt, 42 Ohio St. 474 (51 Am. Rep. 842); Mitchell v. Read, supra.

In Washburn v. Wall-Paper Co., 26 C. C. A. 312 (81 Fed. 17), it was said:

“The good will of a business is property, and may have a value independent of any particular locality or any specific tangible property, and stock of a corporation issued for such good will is issued for property actually received, within the meaning of the New York stock corporation law.”

In Bininger v. Clark, supra, it is said that the good will of a business is an important part of its property, and will be protected by a court of equity whenever a proper case arises.

Referring to the claim of $1,500 against the defendant Jarvis, which is for unpaid preferred stock, subscribed by him, we think that the circuit judge properly held that all of the incorporators were liable therefor, for the reason stated by him. This holding was the basis of the appeal of defendants Weeks and Kelly.

The defendant Wright has not appealed from the decree holding him liable for $1,225 due on his preferred stock subscription. (

What we have said of good will applies with equal force to patents and trade-marks. We are of the opinion that the description, itemization, and valuation of the property in the articles were a substantial compliance with the terms of the statute, and that the same are conclusive in the absence of fraud.

Attention is called by plaintiff to the sixth subdivision of section 2 of Act No. 146, Pub. Acts 1907, which contains the following (2 Comp. Laws 1915, § 9018):

“Provided, that only such property shall be so taken in payment for capital stock as the purposes of the corporation shall require, and only such property as can be sold and transferred by the corporation, and as shall be subject to levy and- sale on execution, or other process issued out of any court having competent jurisdiction, for the satisfaction of any judgment or decree against such corporation.” i

It is urged that no levy of execution can be made upon the intangible property mentioned. The bill made no claim of this kind; but, passing that point, we think that the “other process” referred to in the statute should be held to be broad enough to include decrees and orders of a court of chancery. That patents, trade-marks, and good will can be, and often have been, sold under process of the courts of chancery, must be conceded. The fact that good will cannot be sold separately we do not deem important.

The decree of the court below is in all things affirmed, and no costs in this court will be allowed to either party.

Kuhn, C. J., and Ostrander, Bird, Moore, Steere, and Brooke, JJ., concurred. Person, J;, did not sit.


source: Caselaw Access Project

author: Stone, J.

license: Public Domain

text:
    BRANSFIELD v. WALLACE.
    1. Appeal and Error — Ejectment—Findings of Court — Amendments — Immateriality.
    In an action of ejectment, tried before the court without a jury, it was not error for the court to reject a proposed amendment to the findings of fact that was neither material nor controlling.

      2. Same — Findings of Court — Presumptions—Evidence—Review.
    In such action, where the finding of the court was based upon a plat made by the government’s surveyor, which is presumed to be correct, and which there was evidence to sustain, it not being within the province of this court to weigh the evidence pro and con, the finding of the court will not be reversed.
    Error to Muskegon; Sullivan, J.
    Submitted October 17, 1916.
    (Docket No. 81.)
    Decided March 29, 1917.
    Ejectment by Redmond Bransfield against Thomas O. Wallace and another to recover the possession of certain real property, before the <^>urt without a jury. Judgment for defendants. Plaintiff brings error.
    Affirmed.

      Bolton & Moriwrty and Carpenter & Jackson, for appellant.

      Cross, Vanderwerp, Foote & Boss, for appellees.
   Stone, J.

This is an action of ejectment to.recover the possession of lots 1 and 2 of section 2, town 11 N., rangé 16 W., being in the county of Muskegon, Mich. The case is brought to this court by the plaintiff upon writ of error to the circuit court for the county of Muskegon, where it was tried by the court without a jury. Written findings of fact and conclusions of law were filed, and a judgment was entered for the defendants.

The plaintiff is the owner in fee simple, by patent from the United States bearing date August 30, 1909, of the premises above described. The defendants are the owners of lot 3 of the same section. The land in issue was surveyed by the United States government in 1837. This record does not show when the United States conveyed lot 3. The findings of fact and conclusions of law of the trial court were as follows:

“Findings of Fact.
“I. Plaintiff is the owner in fee of lots 1 and 2 of section 2, town 11 N., range 16 W., having acquired title thereto by patent from the government of the United States of date August 30, 1909, wherein the lands conveyed are described as follows:
‘ ‘Lots one and two of section two in township eleven north of range sixteen west of the Michigan meridian, Michigan, containing one hundred one and twenty-four hundredths acres, according to the official plat of the survey of said lands returned to the General Land Office by the Surveyor General.’
“II. Defendant is the owner of lot 3 of said section 2, town 11 N., range 16 W.
“III. A reference to the government plat shows that all of the upland on said lots 1 and 2 lies north of an inland lake (Twin Lake), which is shown by the government plat to extend both easterly and westerly across and beyond what would ordinarily be described as the N. E. % of said section 2; and said lot 3 is shown to embrace all of the upland on said quarter section abutting upon the south side of said lake.
“IV. Lot 4 of said section 2 lies immediately west of said lots 2 and 3.
“V. According to the government plat, said lot 4 has an easterly frontage on said inland lake, but at the present time the waters of said lake have so receded that the western end of said lake is some rods east of the north and south quarter line, which forms the dividing line between lot 2 and said lot 4, although there are yet remaining physical evidences that the lake at one time extended westerly of said north and south quarter line.
“VI. No part of said lots 1 and 2 are shown by the government plat to include any lands south of the lake, or beyond the center of the lake. The government plat shows that said lot 3 embraces all the land bordering upon the south side of the lake directly opposite said lots 1 and 2 bordering the lake on the north.
“VII. The real controversy in this case is over acres of land in the southwest comer of the whole quarter section had the section not been fractional, and 3.33 acres of land in the south central part of said quarter section had the section not been fractional. Plaintiff claims that lots 1 and 2 include all the land and water that would be embraced if the lines of his property were' so extended as to make the description thereof the N. E. 1/4 of said section 2, and that to reach the south boundary thereof he may extend the lines of his subdivisions into and across the entire width of the lake, thereby excluding defendants from the water frontage of said lot 3 as shown by the government plat, and can claim and hold as his own the property in dispute, although the same, as shown by the government plat, is a part of said lot 3.
“VIII. The property really in dispute is no part of -either said lot 1 or said lot 2, but is a part of said lot 3, and plaintiff has no right, title, or interest therein.
“From all the testimony admitted in said cause, I find the facts as above stated, and I find as conclusion of law that plaintiff has no cause of action against said defendants.
“Let judgment, therefore, be entered for the defendants, with costs to be taxed.”

Plaintiff’s Exhibit 2, appearing in the record following page 44, is hereto attached. It is claimed by the plaintiff that it shows the conditions when he purchased. It is as follows:

The real controversy is as to the ownership of the 3.36 acres lying south of the middle of the lake, and the 3½ acres in the southwest corner, of said Exhibit 2.

The government plat being a part of plaintiff's Ex~ hibit 4, and found in the record at page 51, is also attached, and is as follows;

Exceptions to the findings were duly filed by the plaintiff, and numerous amendments were proposed, but refused by the court, all of which appear by reference to the assignments of error.

By the first assignment of error it is claimed that the court erred in refusing to find as follows:

“A reference to the government plat shows that all of the upland on lots 1 and 2 lies north of an inland lake (Twin Lake), which is shown by the government plat to extend easterly and westerly across and beyond what would ordinarily be described as the N. E. % of said section 2; and also to extend southerly beyond said quarter section and upon the S. E. % of said section; that said lot '3 is shown to be entirely on the S. E. % of said section, and abutting on the south of said lake.”

(2) That the court erred in refusing to find as proposed, as follows:

“According to the government plat said lot 4 has. an easterly frontage on said inland lake, but it is evident that a mistake was made by the surveyor in making the said plat, and the westerly line of said lake did not extend to the west line of the said N. E. 1/4 of section 2.”

(3) That the court erred in refusing to find, as requested, as follows:

“The north and south quarter line is the dividing line between lots 2 and 4, and is the west boundary line of said lot 2. At the time the patent was issued to the plaintiff, to wit, the 30th day of August, 1909, the said lake did not extend to the north and south quarter line, and lot 2 then embraced all the upland lying between the north and south quarter line and the_ lake, and north of the east and west quarter line which forms the dividing line between the N. E. 14 and the S. E. 14 of said section 2, including the 31/2 acres of land, or thereabout in the southwest corner of the northeast quarter mentioned above.”

(4) That the court erred in refusing to find, as requested, as follows:

“The real controversy in this case is over 3% acres of land in the southwest corner of the N. E. % of said section 2 and 3.33 acres of land in the south central part of said quarter section. Plaintiff claims that lots 1 and 2 include all the land and water that would be embraced if the lines of lots 1 and 2 were extended to the east and west quarter line forming the southern boundary of the N. E. 14 of said section 2.”

(5) That the court erred in refusing to find, as requested, the following:

“Said lots 1 and 2 embraced and now embrace the 3.33 acres of land or thereabout, being a part of said N. E. i/4 lying south of said lake, and the same are not a part of said lot 3.”

(6) That the court erred in refusing to find, as requested, as follows:

“Conclusion of law: The plaintiff is the owner of all that part of the N. E. % of section 2 * * * described as follows: The 31/2 acres of land in the southwest corner of said northeast quarter lying north of the east and west quarter line and west of the lake, being a part of lot 2 of said section 2. He is also the owner of 3.33 acres of land in the south central part of said N. E. %, being all the upland, bounded on the south by the east and west quarter line and on the east, north and west by the lake, and being a part of lots 1 and 2 of said section 2. That at the time this suit was begun, the defendant was in possession thereof, and that he unlawfully withholds the same from the plaintiff, and that the plaintiff should have judgment therefor.”

. The remaining assignments of error are to the effect that the court erred in its several findings and conclusions as filed.

The plaintiff introduced in evidence as part of his case, which was received without objection, the following letter:

“Department of the Interior, United States Land
“Office.
“Marquette, Michigan, Sept. 16, 1912.
“Redmond Bransfield,
“Twin Lake,
“Michigan.
“Dear Sir:
“Referring to yours of the 18th inst. According to the plats of this office lots one and two of sec. 2, T. 11 N, R 16 W, cover all the land in the N. E. % of said section. In fact said lands cover from the northern boundary line of the township in N. E. % to the water edge on the south.
“Yours truly,
“Thomas H. Dawson, Receiver.”

' We are of the opinion that the first assignment of error does not raise any controlling question. The proposed amendment merely referred to the government plat which was in evidence. That part of the proposed finding relating to lot 3 was neither material nor controlling. The court was concerned or interested with lots 1 and 2, and not with lot 3.

We do not think that there was evidence sufficient to warrant the court in finding as a fact that a mistake was made by the government’s surveyor in making the government plat. At least there was evidence to the contrary, and upon this record we are not required or permitted to weigh the evidence pro and eon. We may say that the presumption is that no mistake was made.

We do not think that this proposed finding is controlling. While the meander lines of the government plat might not be controlling. in case an error was shown in the original survey, yet in the absence of such showing the lines will be presumed to be correct. The communication from the Receiver of the United States Land Office, written three years after plaintiff’s patent, is to the effect that “said lands cover from the northern boundary line of the township in N. E. % to the water edge on the south.” This excludes the idea that lots 1 and 2 embraced any lands south of the lake.

This proposed finding as to the claim of the plaintiff was wholly immaterial, and the assignment raises no question of law.

This proposed amendment raises the whole question involved, and the court’s finding upon the subject finds support in the evidence.

In our opinion the court did not err in refusing to find as requested upon the law of the case.

The property in question was conveyed by the government not as fractional parts of the N. E. % of section 2, but as lots 1 and 2 of that section. There is nothing in the record to indicate that the government intended to convey any land south of the lake, but the evidence and the presumption of law indicate the contrary, and that no mistake was made. But it is said that the plaintiff is short in his acreage; that is not a controlling consideration. If we were to give him all he claims in the case, he would still be short in acreage.

Many legal propositions are discussed by plaintiff’s counsel, but in our opinion none of them is decisive of the instant case. The dates and contents of the patents of lots 8 and 4 might throw some light upon the case, but the record is silent upon the subject. In any view of the case presented by this record, we think the trial court reached the correct conclusion, and the judgment below is affirmed.

Kuhn, C. J., and Ostrander, Bird, Moore, Steere, and Brooke, JJ., concurred. Person, J., did not sit.


author: Kuhn, J.

text:
    SIKORA v. FELLOWCRAFT CLUB.
    1. Carriers — Elevators — Death — Negligence — Contributory
    Negligence — Question for Jury.
    In an action for the death of plaintiff’s decedent, alleged to have been caused by the negligent operation of an elevator by defendant’s servant, .the questions of defendant’s negligence and decedent’s contributory negligence were properly submitted to the jury.

    2. Same — Negligence—Question for Jury.
    The operator of defendant’s elevator was not relieved of the duty of exercising care in starting because he received instructions to go ahead from a passenger who had nothing to do with its operation, and whether this duty of attention to decedent was excused by the talk, presented, at most, a question for the jury.
    Error to Wayne; Mandell, J.
    Submitted October 26, 1916.
    (Docket No. 164.)
    Decided March 29, 1917.
    Case by Frances Sikora, administratrix of the estate of Adam Sikora, deceased, against' the Fellowcraft Club and others for the unlawful killing of plaintiff’s decedent. Judgment for plaintiff. Defendant club brings error.
    Affirmed.

      Clark, Bryant & Klein, for appellant.

      Samuel G. Thompson, James H. Cullen, Charles W. Casgrain, Harry W. Cullen, and F. Henry Wurzer, for appellee.

       On' the question of liability for injury to elevator passenger, see notes in 25 L. R. A. 33; 2 L. R. A. (N. S.) 744; 29 L. R. A. (N. S.) 816; L. R. A. 1915E, 722.
      On presumption of negligence from injury to passenger, see note in 13 L. R. A. (N. S.) 601, particularly as to elevators, see p. 619 of the same note.

   Kuhn, J.

By the decision of this court in the case of Sikora v. Fellowcraft Club, 189 Mich. 235 (155 N. W. 495), a judgment obtained on the trial of that case was reversed, and a new trial ordered. A detailed statement of the facts of the case is there found. The new trial also resulted in a verdict and judgment for the plaintiff, and the case is again brought here by-writ of error.

It is conceded by the appellant that all the assignments of error be treated under the one head of whether or not the plaintiff has produced any competent evidence which would warrant the submission by the court to the jury of the question of the negligence of the defendant by its servant, the elevator operator. On the former trial judgment was had against both the defendant and the executors, of the estate of Thomas W. Palmer, deceased, owner of the building, but by the opinion of this court the liability of the owner of the building was disposed of, leaving for consideration on the new trial only the question of the negligence of the defendant. It is now urged that the elevator operator was authorized and justified in relying upon the signal or direction of Kottelfski, who was the superior of the plaintiff’s decedent, and who, together with him, was at the time of the accident delivering beer to the quarters of the defendant, who occupied the fourth, fifth, and sixth floors of the Palmer Building, in the city of Detroit, and that therefore a verdict should have been directed in favor of the defendant.

We are of the opinion upon this record that the question of the negligence of the defendant and the contributory negligence of the plaintiff’s decedent were questions of fact for the jury. Upon the new trial the evidence as to what was said by Kottelfski to the elevator conductor, which had been rejected upon the first trial, was admitted.

In our opinion, it does not follow that because the elevator operator received instructions to go ahead from Kottelfski, who was a passenger, and who had nothing to do with the operation of the elevator, that he was relieved of the duty of exercising care in starting the elevator. Whether this duty of attention to the plaintiff’s decedent was excused by the talk between Kottelfski and the conductor of the car presented, at most, a question for thé jury. See Roulo v. Minot, 132 Mich. 317 (93 N. W. 870).

We have carefully examined the charge of the court, and find that the questions of defendant’s negligence and the plaintiff’s decedent’s contributory negligence were submitted to the jury with proper instructions. We discover no reason why the judgment complained of should be disturbed, and it is therefore hereby affirmed.

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


text:
    MARION v. BALSLEY. SAME v. BLEIL.
    Adverse Possession — Boundaries—Acquiescence. '
    Where a lane for its entire length was well defined and recognized as such for a period of more than 30 years-, and was used as such openly, notoriously, adversely, and continuously, to reach adjoining properties, the long ac quiescence of the parties in accepting the fences along the east and west sides of the lane as the boundary lines oi their properties must now be held to be conclusive against them.

      Appeal from Wayne; Codd, J.
    Submitted October 25, 1916.
    (Docket No. 98.)
    Decided March 29, 1917.
    Bill by Adolph N. Marion against George Balsley and others, for an injunction restraining defendants, from disturbing plaintiff’s possession of certain real property. From a decree for defendants, plaintiff appeals.
    Affirmed.

      William E. Henze, for appellant.

      John J. Danhof, Jr. (J. Walter Dohany and Frank E. Robson, of counsel), for appellees. Balsley.

      Paul W. Voorheis (Chas. H. JasnowsM, of counsel), for appellee Bleil.

      Anderson, Wilcox & Lacy, for appellee Wolf.

       As to effect of acquiescence in boundary lines, see note in' 4 L. R.. A. 643.

   Kuhn, J.

By this litigation it is sought to determine the rights of the parties in a strip of land about 32 feet in width and running along the line between the land of the plaintiff and the defendants from a creek near Dix Road to the Michigan Central Railroad right of way in private claim 216 of Wayne county, Mich. Two suits were started by the plaintiff against the defendants for this purpose, which were subsequently consolidated inasmuch as they involved the same questions and the same facts. The decree of the lower court dismissed the bill of complaint and adjudged that the land in controversy was a right of way for the use of all parties whose land adjoined thereto for ingress and egress to and from their respective parcels of land.

In the year 1812, the United States granted a patent of private- claim 216, an irregular piece of land containing approximately 360 acres, to James Baby. Defendants hold their land by mesne conveyances from James Baby, the first grant being made in 1809 to William Steers of the westerly part of said private •claim. All of the defendants’ land lies in the said westerly part. Plaintiff claims from his grandfather, Charles Campau, and his land covers the easterly part of said private claim 216. There is no deed, and it does not appear how or when Charles Campau obtained title to this land. Neither does it appear where the exact division line between these two parts of the private claim is; the descriptions in the deeds involving the westerly part stating that the said land is bounded on the east by the land of Charles Campau, and the deeds involving the easterly part of the land stating that the said land is bounded on the west by the land of Conrad Schweitzer, who was one of the owners in the chain of title coming from James Baby.

The west side of the lane in controversy is fenced from the railroad track to within a few hundred feet of Steer’s creek, the land becoming marshy at that point. The east side is fenced from the Dix Road to within a short distance of the railroad right of way. From 1858 to 1871 the Campau land was leased to Conrad Schweitzer, who at that time owned land west of the lane, and again from 1879 to 1889 Conrad Schweitzer leased the Campau land, and from 1899 to 1901 Freiderick Schweitzer leased the land.

On August 27, 1914, the plaintiff notified George Balsley, one of the defendants, that he would no longer permit or tolerate him to pass through the lane, claiming that the title to the lane was in him and that the use thereof by the other adjoining owners had been simply permissive. Obstructions to free access to the land led to further controversy, and finally to the present litigation.

There seems to be no dispute but that the lane originally ran from the Dix Road to a few hundred feet beyond’ where the home now occupied by the defendant Bleil is located on the bank of the creek, and that it was fenced on the east and west sides except along the creek. As the land was gradually cleared, the lane was extended until it reached the upper end of the farm, where it was stopped by the right of way of the Michigan Central Railroad Company. Several buildings were at one time occupied along the lane. They were all removed except the Schweitzer home, now occupied by the defendant Bleil. There was also some testimony that there was a cemetery on the Schweitzer farm on the west side of the lane and that a number of old settlers were buried there.

Many witnesses were sworn as to the use which was made of the lane and as to the length of time of such use. It is unnecessary to here set forth in detail this testimony. It is sufficient to say that careful examination thereof satisfies us that the lane in question for its entire length was well defined and recognized as such for a period of more than 30 years, and that it has been used as such openly, notoriously, adversely, and continuously as a means of ingress and egress from the respective properties adjoining thereon. The long acquiescence of the parties in accepting the fences along the east and west sides of the lane as the boundary lines of their properties must now be held to be conclusive against them. See Diehl v. Zanger, 39 Mich. 601; Smith v. Hamilton, 20 Mich. 433 (4 Am. Rep. 398); Joyce v. Williams, 26 Mich. 332; Stewart v. Carleton, 31 Mich. 270; Wolf Brick Co. v. Lonyo, 132 Mich. 162, 166 (93 N. W. 251, 102 Am. St. Rep. 412).

The complainant having failed in sustaining by proof the allegations in the bill of complaint, the decree of the lower court is hereby affirmed, with costs to the defendants.

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


author: Kuhn, C. J.

text:
    VEENSTRA v. FARMERS’ MUT. FIRE INSURANCE CO. OF OTTAWA AND ALLEGAN COUNTIES.
    _ 1. Insurance — Origin of Fire — Fraud^Question for Jury.
    In an action on a fire insurance policy, the questions of plaintiff’s fraud and the origih.' of the fire were properly submitted to the jury. ;
    2. Same — Fraud—Forfeiture—Waiver.
    Where defendant’s records support, plaintiff’s claim that after he had submitted a list of' property destroyed which was admittedly inaccurate, and which defendant claimed was false and fraudulent, he was told to submit a new list and the matter would be adjusted, the defendant, as a matter of law, waived all defense based upon warranties and forfeitures. ;
    3. Appeal and Error — Insurance—Harmless Error.
    In an action on a fire insurance policy, where the insurer was liable as a matter of law, and the verdict was considerably less than the loss proved, error in the argument of counsel and the court’s instructions was without prejudice.
    Error to Ottawa;-Cross, J., presiding.
    Submitted October 24, 1916.
    (Docket No. 107.)
    Decided March 29, 1917.
    Assumpsit by Jelle Veenstra against the Farmers’ Mutual Fire Insurance Company of Ottawa and Allegan counties upon a policy of insurance. Judgment for plaintiff. Defendant brings error.
    Affirmed.

      Diekema, Rollen & Tencaie and Wilkes & Stone, for appellant.

      Smedley & Linsey, for appellee.
    Plaintiff was a farmer residing, in the county of Ottawa prior to November 21, 1912, and was insured in the defendant company in the sum of $6,150. Two thousand dollars was on his dwelling house, $500 on furniture, clothing, and provisions, $1,400 on his barn, and $800 on hay, grain, and other farm products, $1,400 on live stock and farm implements, and $50 on a henhouse. About 3 o’clock in the afternoon of November 21, 1912, fire started in the barn of the plaintiff, where he was working, and destroyed the buildings insured and the contents of the barn. The loss of the plaintiff as to the house, barn, henhouse, !hay, grain, and farm products exceeded the amount of the insurance on these items. The damage to the furniture, clothing, and provisions was less, than $500, and the damage to the live stock and farm implements was less than $1,400. The defendant company refused to pay the loss because it is claimed the plaintiff committed fraud in his proof of loss and in his statement as to the cause of the fire. The plaintiff denied any fraud on his part; and claimed that, if there was fraud, it was subsequently waived by the officers of the defendant company.
    The day after the fire he notified the company, and was, told to make out a list of the losses and that on the Saturday following representatives would come to his place and adjust the loss. He made out the list, and the representatives came, and, upon submission of the list to them, would not agree to his figures. In this list plaintiff valued everything lost as if it were new. Several things were included in this list which had not been burned, and a number of things were left out. Thereafter plaintiff was requested to come to Zeeland, and upon his arrival there he had a conference with the board of directors of defendant company. At this meeting he was told that he had sworn falsely and that he was liable to arrest, and after talking the matter over he was allowed to make out a new list and price all the items as secondhand. On November 25, 1912, he made out his new list and sent it to the company, and on December 20th following he received a letter from them stating that the company was not authorized to pay his claim. He answered by a letter asking that the matter be submitted to a board of arbitration, and received a reply that the matter could not be submitted to a board of arbitration, as the company did not consider themselves liable for any claim because of the fraud attempted to be perpetrated by him.
    Suit was commenced by the plaintiff on May 9, 1913, which resulted in a disagreement of the jury. The case was again tried, and again the jury disagreed. On the third trial a verdict rendered for the plaintiff was set aside, and on the fourth trial a verdict for the plaintiff of $5,038.35 was rendered, from which, defendant appeals. In the court below the defendant made a motion for a new trial because the verdict was against the weight of the evidence, because the answer of the jury to a special question submitted to them was against the weight of the evidence, and because of misconduct of plaintiff’s attorney in his argument-to the jury. This motion was denied, and this ruling of the trial court is one of the alleged errors upon which appellant relies.
   Kuhn, C. J.

(after stating the facts). The evidence of fraud relied upon by the defendant for a reversal of this case relates to the cause of the fire and the proof of loss. It was the plaintiff’s claim that he did not know the origin of the fire, but first saw the fire on the top of the mow in the barn. The only explanation he gives as to its cause is that it might have originated from spontaneous combustion from the silo which was on the inside of the barn at one end of the hay mow, as this had recently been filled with green corn and green clover. The defendant insists that this theory of the origin was highly improbable, and that from plaintiff’s conduct and his statements concerning the fire, it is established that he either set the fire or that it originated through gross carelessness on his part. Be that as it may, the question was submitted by the trial- court to the jury as a question of fact, and, we think, properly so.

The other claim of fraud relates to the overestimating of the value and quantity of the property destroyed. It is apparent from the record that in the first list prepared by the plaintiff property was overvalued, and some property listed which was not burned which plaintiff testified he thought had burned at the time he made the list. The records of the meeting of the directors of the defendant company held on December 2, 1912, which the plaintiff attended, shows the following:

“After a few more questions Mr. Jelle Veenstra was excused, and upon his request he was permitted to make a new list of the property burned or damaged and to send that to the secretary.”

An- attempt was made to impeacn the second list by showing that the action of the board in truth was not to allow the plaintiff to make a new list. On December 16, 1912, the board of directors of the defendant company again met, and the record of this meeting discloses that:

“The minutes of the preceding meeting were read by the secretary and approved by the board.”

Plaintiff was not notified that the company claimed a forfeiture until December 20, 1912. The question of the waiver by the defendant company of the fraud in the original list and resulting forfeiture of the policy was submitted to the jury with the following instructions:

“You are instructed that, if you find from the evidence that on December 2, 1912, at an official meeting of the board of directors at Zeeland, it knew all the facts which the company now relies upon as showing fraud or an attempt to defraud the company, and at that meeting they permitted him, to make out a new list of burned and damaged property and directed him to send it to the secretary and told him that they would then pay the loss, and you find that the plaintiff at some trouble did make a new list, and did send it to the company, I charge you that that would constitute a waiver of the forfeiture, if there was one, and the policy would still be in force, and the plaintiff would have a right to recover under it, and in that case, if you so find, your verdict should be for the plaintiff.”

At the meeting of December 2, 1912, the board of directors were in possession of all the facts which they are now relying upon as a defense to plaintiff’s action, and at this meeting the plaintiff claims he was told to go home and make out a new list and send it to the secretary and the matter would be adjusted. This claim finds strong support in the records of the company kept by its secretary above referred to, and, in our opinion, it must now be held to be bound by its own records. While the trial judge submitted this question of waiver to the jury, we are of the opinion that he might properly have directed the jury that as a matter of law the defendant had waived all defense based upon warranties and forfeitures. See Penn. Fire Ins. Co. v. Kittle, 39 Mich. 51; Marthinson v. Insurance Co., 64 Mich. 372 (31 N. W. 291); Granger v. Fire Assurance Co., 119 Mich. 177 (77 N. W. 693).

It also appears that, if the defendant company is liable, the amount of the verdict is considerably less than what the proofs show the loss to have been. It is therefore unnecessary to consider other assignments of error as to the argument of counsel and the charge of the court, because, if it should be found that there was error in this regard, it must be said to have been error without prejudice.

The judgment is affirmed.

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


author:
Stone, J.
      Per Curiam.

text:
    LOUD v. FEDERAL INSURANCE CO.
    1. Compromise and Settlement — Fraud—Mistake.
    Compromise settlements are favored by the courts, and will not be set aside except on satisfactory evidence of mistake,, fraud, or unconscionable advantage.
    2. Insurance — Marine Insurance — Compromise and Settlement —Rescission—Laches.
    The Federal government, under a Federal statute, straightened a Vessel, sunk in a narrow channel, so as to permit navigation, the expense of same being a charge against the vessel. The insurers contracted with a wrecking firm to raise the vessel and take it to port for' a stipulated sum or one-half of the salved value, optional with the insurers. After the vessel was raised and in port the owner-abandoned it to the underwriters as a constructive total, loss. After some negotiations he entered into contract of settlement with the insurers, withdrawing the abandonment, and agreeing to pay the bills in connection with the wrecking of the vessel in consideration of the payment of a fixed sum by the insurers, which was considerably less than he was entitled to receive under the abandonment. After receiving a part of said consideration the owner had notice that the wrecking contractors claimed the insurers had elected to pay the stipulated sum, the salved value being in dispute. The owner received the balance of the payment, without attempting todisaffirm said settlement, and waited nearly two years and a half after all the facts were in his possession before attempting to rescind said compromise on the ground of fraud. Held, the owner was guilty of laches, and not entitled to rescind.
    3. Same — Rescission—Statu Quo — Laches—Equity.
    Where the insurers could not be placed in statu, quo, the owner having allowed the vessel to be sold under libel proceedings before attempting to rescind the settlement, his right to rescind was barred by laches.
    4. Same — Principal and A®nt — Agent’s Authority — Fraud —Rescission.
    As to whether the insurers had elected to pay the stipulated sum instead of one-half of the salved value to the ■wrecking company, by its agent, and its representations to the owner in that regard, evidence held, insufficient to’ establish the agent’s authority to make a binding election, or that material representation' was relied upon by the owner in making the settlement.
    Appeal from Iosco; Connine and Widdis, JJ.
    Submitted October 20, 1916.
    (Docket No. 40.)
    Decided March 29, 1917.
    Rehearing denied June 1, 1917.
    Bill by Henry Nelson Loud against the Federal Insurance Company and others to set aside a compromise of an insurance loss, to reinstate certain policies of insurance and other relief. From a decree for plaintiff, defendants appeal.
    Reversed.

      Goulder, White & Garry, A. W. Black, and Angelí, Bodman & Turner, for appellants.

      Lucking, Helfman, Lucking & Hanlon {Henry, Henry & Henry and Charles E, Kremer, of counsel), for appellee.
   Stone, J.

The bill of complaint herein was filed to set aside a compromise of a marine insurance loss on the alleged ground of false representations and fraudulent concealment, to reinstate the written abandonment of the steamer in question to the underwriters as a constructive total loss, and .to recover as damages the full amount of insurance.

On May 21, 1910, the plaintiff herein was the owner of a steamer known as the “J. B. Ketcham 2d.” On that day, while on a voyage from Brimley, Mich., near Sault Ste. Marie, to Niagara Falls, N. Y., laden with a cargo of 730 cords of pulp wood, the steamer stranded and sank by reason of a dense fog, at the entrance to the West Neebish channel in the St. Mary’s river. The plaintiff was then the owner of various policies of hull insurance, issued and delivered to him by the several defendants in an aggregate amount of $48,500, on all of which the premiums had been paid. On margin of each policy in large type appeared the following:

“Any casualty to be immediately reported to R. Parry-Jones, Perry-Payne Building, Cleveland, Ohio.”

At the time of the wreck, the plaintiff was also the owner of $9,000 of so-called disbursement insurance which was payable to the owner in the event of an actual or constructive total loss of the steamer. Some of the defendant companies which issued hull policies on the steamer also issued disbursement policies. Each disbursement policy contained this clause, viz.:

“A total and/or constructive total loss paid by insurers on hull, to be a total loss under this policy.”

The hull policies in question stipulated that the agreed value of the boat was $48,500, and that in case of a wreck the boat might be abandoned to the underwriters as a constructive total loss, if the amount of the loss exceeded 75 per cent, of said $48,500, or $36,-375. It is the claim of the plaintiff that according to the conceded principles of marine insurance law, the amount of loss depended on what, in a high degree of probability, it would have cost to recover, salve, repair, and restore the boat to' its condition prior to the accident, free and clear of all claims, burdens, and liens against it for recovery, restoration, salvage, and repair, etc.; that the high probabilities of such cost were those in contemplation at the- time of the written abandonment of the wrecked boat by the owner to the insurance companies. The fraud complained of in the bill arose out of the claimed misrepresentations and concealment by the defendants of the amount of salvage claims to which the boat became subject by reason of the wreck, and while in possession of the underwriters; that as a result of such fraud, plaintiff had been induced to withdraw his abandonment of his steamer as a constructive total loss, to compromise his claims for total recovery for a smaller amount, and to assume certain salvage burdens to which the boat became subject by reason of the wreck. .

The Ketcham was 212 feet long, and had a 40-foot beam-. At the point where the boat sank, the channel was about 300 feet wide, and the boat lay lengthwise, at ’right angles across 'it, thus preventing navigation of the channel. The boat lay on a rock, and her deck was about 8 feet below the surface of the water. At the time of the wreck, C. M. Townsend, colonel of engineers, was stationed by the United States War Department at Detroit. His assistant, L. C. Sabin, was stationed at the Soo. Colonel Townsend, through Mr. Sabin, immediately took charge of the wreck, throwing the deckload overboard, and endeavoring to straighten the boat in the channel so as to permit navigation. Colonel Townsend acted under the provisions of section 20 of the United States river and harbor act, approved March 3, 1899 (U. S. Comp. Stat. 1913, § 9925). That section provided for the removal of boats which had sunk in navigable waters so as to block interstate commerce. It gave the Secretary of War, or his agent, the right to take possession of the wreck, and remove it from the channel. The act stipulated “that the expense of the removal of any such obstruction as aforesaid shall be a charge against such craft and cargo,” and also provided that if the owner failed to reimburse the United States within 30 days after notice, the officer -or agent of the United States might sell the craft or cargo, or any part thereof not destroyed in removal, and cover the proceeds thereof into the treasury of the United States.

Mr. Sabin ordered three tugs of the Great Lakes Towing Company to the wreck. These tugs tried to pull the boat straight in the channel, but failed to do so. Thereupon Colonel Townsend ordered the Reid Wrecking Company, Limited, of Sarnia, Ontario, to straighten the boat in the channel. That company sent four tugs and four pontoons with apparatus, divers, and crew, etc. They arrived at the wreck on May 24, 1910. The current at the place of the wreck was six miles or better an hour. The effect, of the 212-foot boat stranded across the 300-foot channel, was to increase the current. During the operations there were stiff northwesterly winds and gales which increased the current from 100 to 125 per cent., and at times knocking down the divers. It is the claim of the plaintiff that it was necessary to swing the boat around and straighten it in the channel in order to raise it; that during the operations the Reid Wrecking Company had in mind the ultimate raising and salvage of the boat. The men worked day and night, and finally, on June 4, 1910, the boat was swung straight in the channel. The bill of the Reid Wrecking Company, hereinafter referred to as the government bill was $18,459. During the subsequent negotiations for a compromise, this government bill was in dispute. Mr. Goulder, attorney for defendants, claimed that section 20 of the United States act, above referred to, was unconstitutional, which Mr. Oakes, attorney for plaintiff denied. Mr. Goulder, however, conceded that a portion of $18,459 expended in straightening the boat in the channel would have been incurred necessarily in straightening and raising the boat in the channel to take it to port. Upon the hearing Mr. Oakes testified that Mr. Goulder conceded $10,000 in this manner. Mr. Goulder testified that $8,000 were his figures. Mr. Oakes testified that in the negotiations he stated that he was prepared to show that between $12,000 and $16,000 was a proper charge,- even if the law were unconstitutional.

On June 4, 1910, and after the completion of the government job, the defendants (through R. Parry-Jones, their agent duly authorized so to do) made a contract with the Reid Wrecking Company to salve the boat and take it to its destination, Tonawanda, N. Y., upon the terms expressed in the following communication :

“Cleveland, Ohio, June 4/10.
“Reid Wrecking Co.,
“Port Huron, Mich.
“Ketcham. We -accept your offer to salve Ketcham and cargo now in vessel and deliver at destination for $12,000, or 50% of salved value at underwriter’s option, no cure no pay, you clearing channel of wreckage to satisfaction of local authorities.
“R. Parry-Jones.”
Mr. Oakes testified:
“By the Reid contract of ‘no cure no pay/ etc., is meant that the ship would havé to be raised and delivered, otherwise the wrecker would receive no compensation, and if delivered, the insurers had the option as to whether they would pay $12,000 or 50 per cent, of the salved value.”

The Reid Wrecking Company brought the boat to Port Huron, Mich., and then with the knowledge of R. Parry-Jones removed it to Sarnia. It was in evidence that the removal to Sarnia was not mentioned by the Reids to the Louds. About June 25, 1910, while the boat was at Port Huron, it was examined by Charles E. Benham, surveyor of the plaintiff, and John T. Webster, as surveyor for the defendants. Benham reported the cost of repairs at $14,743.25, and Webster at $10,000. On June 28, 1910, when the boat was at the port of Port Huron, the plaintiff owner abandoned in writing the Ketcham to the defendants. On June 30, 1910, the plaintiff supplemented the abandonment by proofs of loss served on the companies. The plaintiff set forth in the proofs of loss that the claims outstanding against the boat were wrecker’s bills of $30,459, an estimate of probable cost of repairing said vessel at “upwards of $14,000,” and expenses of the owner in traveling in and about saving the vessel over $1,000.

The defendants denied that there were grounds for abandonment as a constructive total loss; that is, they denied that it was in a high degree probable that the cost of restoration, recovery, salvage, and repair, etc., would exceed $36,375. Thereupon, in the fall of 1910, negotiations for a settlement took place between the parties. The plaintiff had placed his affairs in the hands of the law firm of which Mr. Oakes was a member, and negotiations were handled by Mr. Oakes, his client and the latter’s brother. Mr. Goulder and Mr. Ashley acted for the defendants, aided by information from R. Parry-Jones, when asked for. These negotiations finally culminated in a conference on Octomer 28, 1910, at Mr. Goulder’s office in Cleveland, at which were present the plaintiff, his brother, Edward F. Loud, and Mr. Oakes, their attorney, on the one side, and Mr. Goulder and Mr. Ashley, representing the underwriters,' on the other. It appears that Mr. Parry-Jones was not present at this meeting, and it is claimed by defendants that he had no part at all in negotiating settlement, or in recommending settlement to the underwriters. In fact it is claimed that the authority of Mr. Goulder and Mr. Ashley was limited, and that they could not close the settlement, but could make recommendations only. After making some figures, the exact import of which are in dispute, Mr. Goulder and Mr. Ashley said they would recommend $35,000 to be paid by the underwriters. In that connection the following letter is pertinent:

“Detroit, Mich., Nov. 1, 1910.
“Harvey D. Goulder, Esq.,
“Kockefeller Bl’dg.,
“Cleveland, Ohio.
“Dear Sir:
“Supplementing conferences Mr. Loud and ourselves -had with yourself and Mr. Ashley, the owners of the Keteham have finally concluded, if prompt settlement can be had, to accept the figures which Mr. Ashley and yourself say that you will recommend to the underwriters, namely, a payment to the owners of a lump sum of $35,000, the owners of the Keteham to take care of the sundry bills connected with the raising, wrecking and repairing of the steamer, and to assume the burden of disposing of the government claim against the steamer in connection with the moving and raising of the steamer from the bottom of St. Mary’s river. This suggested settlement to close the matter; in other words, so far as the liability of the Keteham underwriters to owners or others on account of this disaster is concerned. Of course, this is all made without prejudice to our claim for constructive total loss, and will only be considered, as we talked, on the basis of payment being made by all the hull underwriters promptly on the above basis. The owners feel that this is a material concession from the amount they think they are entitled to, but have concluded, as stated, to accept this on the basis, of prompt; payment. Trusting you will expedite the submitting-of this, and the replies from the underwriters, and! awaiting your further advices, we remain
“Yours very truly,
“Shaw, Warren, Cady & Oakes."

Whether the question of the election to pay $12,000, or 50 per cent, of the salved value, was discussed at the October meeting is in dispute. Mr. Oakes testified that Parry-Jones, in his Cleveland office, told him (Oakes) on two occasions “that there had been no. election; he said it was still open to them to accept— to pay $12,000, or 50 per cent, as they may desire.”' Parry-Jones admitted making such statements. It is the claim of the plaintiff that the boat then in its. wrecked condition and almost at the close of the navigation season was not worth to'exceed $12,000; and that the difference involved in the alternative of paying $12,000, or 50 per cent, of the salved value, amounted to about $6,000. Upon this subject Mr. Oakes testified at the hearing:

“It was a very vital point; in fact it meant, with -the $12,000 in there, there would be enough to safely make our total loss, or constructive loss absolute; if we were limited to 50 per cent, of the salved value our total could well have been honestly in the 75 per cent, limit. In other words, our constructive total loss would never have been abandoned — we never would have thought of a compromise with the $12,000 item there absolute.”

On November 28, 1910, a settlement was made between the parties whereby the defendant companies agreed to pay the plaintiff $35,000, and the plaintiff agreed to withdraw its abandonment, and take care of the sundry bills connected with the wrecking of the steamer, and assume the burden of disposing of the government claim, and to hold the defendants harmless on the Reid salvage contract. Shortly thereafter payments were commenced, and were made as follows:

Dec. 3, 1910 Commercial Union.......... $1,757 65
Dec. 14, 1910 Federal .................... 5,272 95
Dec. 14, 1910 Yang-tsze .................. 1,757 65
Dec. 14, 1910 Firemen’s Fund ............ 878 77
Dec. 14, 1910 Mannheim Ins. Co.......... 2,109 05
Dec. 14, 1910 Union Marine ....'.......... 3,163 59
Jan. 13, 1911 Lloyd’s, London............ 9,655 11
Jan. 13, 1911 Indemnity Mutual .......... 3,522 55
Jan. 13, 1911 Merchant’s Marine ----'..... 2,641 19
March 4, 1911 Great Lakes ............... 1,757 65
March 4, 1911 Atlantic Mutual ............ 2,636 84
Total.................................. $35,153 00

These payments were made through insurance brokers Willcox, Peck & Hughes, who, it appeared, desired some evidence of a complete settlement, and so asked the plaintiff to put in the form of a letter the terms of the settlement. This the plaintiff did as follows:

“Detroit, Mich., Jan. 12, 1911.
“Messrs. Willcox, Peck & Hughes,
“Ins. Brokers,
“Fidelity Building,
“Buffalo, N. Y.
“Gentlemen:
“In accordance with your recent request we write you the following letter, the purpose of the same being to put in written form my agreement to hold the underwriters herein named free from any liability under the contract made by underwriter’s representative with the Reid Wrecking Company in connection with the raising and delivery of the steamer J. B. ketcham II. on account of disaster of May 21,1910. This will acknowledge receipt from you of checks on account of the companies named below, on account of the above loss, the same having opposite the amounts paid for each company, such amount being in full of that particular company’s share of loss: (Listing payments that had been made.) My undertaking herein contemplates that I will save the underwriters harmless from all proper charges and claims of the Reid Wrecking Company, Ltd., under the contract which the underwriter’s representative has stated was made with them on the basis of a maximum payment of $12,000. You may hold this letter, if you desire, for the benefit of the underwriters named herein. We trust this will answer your purpose. Yours very truly,
“Henry Nelson Loud,
“Owner Stmr. John R. Ketcham II.”

Later, and on February 23, 1911, a bond of indemnity was given to defendants by plaintiff. In the meantime, and on December 6, 1910, the Reid Wrecking Company filed a libel and causéd writ to issue against the steamer in question in the exchequer court of Canada for the Toronto admiralty district, claiming $12,000 under the salvage contract. The plaintiff appeared in said admiralty case, and in its statement of defense appear the following:

“The plaintiff company (the Reid Wrecking Company, Ltd.) and the defendant (the plaintiff here) entered into a verbal agreement whereby the plaintiff company agreed to take the ship in payment of all their claims, and to transfer to the owner the amount which they were entitled to receive from the Lake Carriers’ Association or the government of the United States of America, which amount was upwards of $18,000. Acting on the strength of the said agreement the defendant settled with the underwriters his claim against them under the policies' of insurance covering the said ship, and notified the plaintiff company that he was ready and willing to carry out the said agreement, but the plaintiff repudiated the said agreement, and refused to carry it out, and claimed to be entitled to recover against the ship under the said R.' Parry-Jones contract, and the said contract referred to in the third paragraph hereof. * * * The said R. Parry-Jones had no authority to elect to pay the plaintiff’s claim for salvage at $12,000 under the said contract, and even if he had such authority, he did not elect to pay the plaintiff’s claim at such amount.”

Upon learning of the libel, and that the Reid Company was claiming $12,000, Mr. Oakes went to Cleveland and saw R. Parry-Jones on December 14, 1910, and the latter called his attention to a letter which he (R. Parry-Jones) had written to the Reid Wrecking Company on September 17, 1910, which contained the following language:

“Regarding your query as to what the underwriters intend doing regarding your bill, of course the contract bill of $12,000 will be paid by them as soon as the matter has become more adjusted. The other bill as you know is under consideration, and we trust will be assumed by the government authorities and the underwriters jointly, when it has been modified as desired; but as stated in my letter to you this morning, we are awaiting a letter from you on the subject, and no further step can be made until we hear from you.”

R. Parry-Jones also sent a copy of the above letter to Mr. Oakes on December 14,1910, writing Mr. Oakes as follows:

“Herewith copy of my letter of September 17, 1910, to the Reid Wrecking Company, which, as far as I can find, is the only letter in which I state that the underwriters will pay the contract price of $12,000 for raising and delivering the vessel. I may add, however, that in none of my letters have I ever used an expression stating that I had elected, or that the underwriters. had elected, to pay the $12,000 in preference to the 50 per cent, of value received.”

Mr. Oakes testified that owing to absence from home he did not receive this letter until December 22, 1910. At this time'upwards of $14,000 had been'paid plaintiff on the compromise. The boat was sold February 24, 1911, at Sarnia, on the libel, in advance of the hearing, for $12,650 to the Reid Wrecking Company. All of the parties hereto knew of the sale in advance thereof. On the trial of the Reid libel action in May, 1911, R. Parry-Jones testified that it was his intention by his letter of September 17,1910, to the Reid Wrecking Company to exercise the option at $12,000. On June 9, 1911, the Toronto admiralty court found that an election had been made.

In September, 1913, suit was brought by the United States against this plaintiff on the $18,000 claim, and is still pending. The instant case was begun on October 15, 1913. The grounds of defense will be stated later. A decree was granted to the plaintiff at the circuit, and the defendants have appeakd. The legal points discussed by plaintiff are:

(1) That equity has jurisdiction to set aside a compromise obtained by fraud, and will retain jurisdiction to adjudicate all the rights of the parties.
(2) That in equity, an actual design to mislead is not necessary, if a party is actually misled by another into a bargain.
(3) That a compromise will be set aside for false representations, or fraudulent concealment by a court of equity.
(4) That the right of abandonment in this case did not depend on the certainty, but upon the high probability that the loss 'would exceed 75 per cent, of the agreed value of the boat, which constituted it a constructive total loss.
(5) That if the court should set aside the compromise, then the plaintiff is entitled to recover as and for an actual total loss (as distinguished from a constructive total loss), since the boat was sold to pay a salvage lien, for a sum less than enough to pay all the expenses of recovering and. repairing the boat.
(6) That as matter of law, the total government claim of $18,459 was a proper item of expense to be considered in determining the amount of loss, and there was a constructive total loss.
(7) The defendants can ‘be placed substantially in statu, quo.
(8) That the decision of the exchequer court of Canada holding that the defendants had elected, prior to the compromise, to pay $12,000 to the Reid Wrecking Company, and not to pay 50 per cent, of the salvage value is res a&judicata.
(9) That the question of laches depends upon the facts of each particular case, upon the reasons for and the reasonableness of the delay, and upon the injury, if any, caused by the delay.
(10) That the amount realized from the sale of the boat is evidence of the value thereof.

It is the claim of the defendants upon this, record:

(1) That the plaintiff was guilty of such laches as. to take away any right of recovery.
(2) That the parties cannot be restored to statu quo.
(3) That there was no election of the underwriters, under the salvage contract, before the settlement between the Louds and underwriters in the latter part of October, 1910.
(4) The Louds did not rely upon any representations made to them respecting the election, and nothing was concealed from them that affected the settlement.
(5) That the Louds concluded the settlement with the underwriters on account of an arrangement they had made with the Reids, of which neither the under-, writers nor any of their representatives had any knowledge. ■
(6) That the salved value of the Ketcham at the time of the claimed abandonment, and at the time o^ the compromise settlement, exceeded $24,000, so it is immaterial whether there had been an election or not.

The other claims of the defendants we shall not discuss. I

It is unnecessary to refer to cases to support the proposition that settlements of controversies between parties by way of compromise, without litigation, are favored, and will not be set aside by courts except on satisfactory evidence of mistake, fraud, or unconscionable advantage. Were we to concede every proposition of the plaintiff, save the seventh, it seems to us that there are several insuperable objections to the granting of relief in this case.

The’ plaintiff was guilty of such laches and delay before suit as to take away any right of recovery. As a necessary allegation of the bill, and without which it would have been demurrable, it was stated:

“That as soon as your orator learned of the election as aforesaid, your orator disaffirmed said compromise, and the defendants were notified through their agent and attorney aforesaid of the disaffirmance by your orator; that negotiations were conducted to settle the difference between the said parties, and the intervening time consumed in said negotiations and the submission of briefs on the facts,” etc.

These allegations were denied, and in our opinion were wholly unsupported by the evidence. We have been unable to find any testimony that any .person authorized to accept a notice of disaffirmance in behalf of any of the defendants was ever given any notice! at all, until the filing of the bill of complaint, in October, 1913. It does appear that in the spring of 1913, about two years after the plaintiff had all the information he ever had on the subject, one Fred Meyer of Buffalo, N. Y., of the brokerage firm that had the insurance on the Ketcham’s cargo, but no connection at all with the insurance involved in this, case, 'at the request of the brother of plaintiff, asked Parry-Jones’ opinion, and was advised that he could make no recommendation, and of this the brother of plaintiff was advised in April, 1913, but even then nothing was done by way of disaffirmance, or giving notice thereof. Reference is made in plaintiff’s brief to Fred Macey Co. v. Macey, 143 Mich. 138 (106 N. W. 722, 5 L. R. A. [N. S.] 1036). There this court said:

“Where a corporation protested promptly upon learning of a fraudulent contract made by its promoters, and entered into negotiations for peaceable settlement, which failed, a bill for cancellation, filed within a reasonable time after such failure, is not barred by laches.”

We adhere to that doctrine. In the instant case the aggrieved party made no protest from December, 1910, to October, 1913, and indeed never protested before filing his. bill of complaint. If the contract of compromise had been rescinded promptly, there were several things that the underwriters might have done. In the event of rescission before the boat was sold, they might, if they had so chosen, have paid the Reids the $12,000, and thus canceled the one contract. They might have done something the same as the plaintiff said he tried to do; that is, made some adjustment with the Reids by which both the government claim of $18,000, and the other contract of $12,000, should be settled, and some disposition made of the ship. It is doubtful in the light of this record whether they would have contested the question that the Reids were entitled to at least $12,000, for, under the evidence as to the salved value of the Ketcham, it may well be said, that the $12,000 settlement was the best that could be made, as that salved, value exceeded $24,000.

The Ketcham had been insured under hull policies to the full extent allowed on tonnage basis, $48,500. As testified to by plaintiff, not considering that sum to be full insurance on what the owner deemed the value of the ship, and in order that she might be insured for full actual value, he secured $9,000 additional “disbursement” insurance, payable only in the event of the hull insurers paying for a total, or constructive total loss. Here is a value of $57,500. The important question is, what was the boat worth before and just after the disaster, and not what she brought at a forced sale, in a foreign jurisdiction, incumbered with $30,000 of liens. We have set out the dates when payments were made under the settlement. The plaintiff and his attorney, after receiving a copy of Parry-Jones’ letter of September 17, 1910, if they considered such letter to be an election, and were not satisfied with it, should have promptly disaffirmed the settlement and declined to receive further payments. More than one-half of the $35,000 was paid after full knowledge of this letter. Manifestly, and concededly, full knowledge of the so-called fraud was acquired at the trial in Toronto in May, 1911, and yet there was a delay of nearly 2% years before attempted disaffirmance.

It was held in Hubbardston Lumber Co. v. Bates, 31 Mich. 158, that the delay of plaintiff therein, in asserting his right to rescind for 12 months, was laches on his part, and barred his right of recovery; the doctrine being stated that one who elected to dis-affirm a contract must do so with all reasonable promptness, and cannot make any unnecessary delay in making the election. See, also, Wilbur v. Flood, 16 Mich. 40 (93 Am. Dec. 203); Lewless v. Railway Co., 65 Mich. 292 (32 N. W. 790); Foster v. Rowley, 110 Mich. 63 (67 N. W. 1077); Olson v. Williams, 185 Mich. 294, 301 (151 N. W. 1043); Linderman Machine Co. v. Shaw-Walker Co., 187 Mich. 28, 36 (153 N. W. 34); Grymes v. Sanders, 93 U. S. 55; 2 Pomeroy’s Equity Jurisprudence (3d Ed.), §§ 817, 965; 2 Black on Rescission and Cancellation, § 536.

What we have already said bears upon the proposition that the parties cannot be restored to statu quo. To reinstate the abandonment it is a prerequisite that the underwriters have whatever advantage there might be obtained from the transfer to them of the vessel. When the compromise settlement was made the ship had a value, and in our opinion the evidence shows that the value exceeded $24,000. Instead of bonding the ship, the plaintiff allowed it to be sold. Upon this branch of the case see Kimble v. Gillard, 177 Mich. 250-259 (143 N. W. 79) ; also the earlier cases of Jewett v. Petit, 4 Mich. 508; Crippen v. Hope, 38 Mich. 344; Galvin v. O’Brien, 96 Mich. 483 (56 N. W. 85); Hinchman v. Motor Car Co., 151 Mich. 214 (115 N. W. 48).

In conclusion, it should be said that this record fails to show that Parry-Jones had any authority to make an election binding upon the underwriters. Gore v. Assurance Co., 119 Mich. 136 (77 N. W. 650). Nor does it appear that he made any material representation that was relied upon by the plaintiff in the settlement.

It is unnecessary to discuss further claims or questions. The decree below will be reversed, and the bill of complaint dismissed, with costs to the appellants.

Kuhn, C. J., and Ostrander, Bird, Moore, Steere, and Brooke, JJ., concurred. Person, J., took no part in this decision.

Per Curiam.

In denying the motion for a rehearing, it may be stated that it has been suggested that the .opinion of the court imputes to counsel laches in not disaffirming settlement as early as December, 1910. It is proper to state that no such construction was intended by the court, as the circumstances upon which the rescission suit was here based did not arise until May or June, 1911, several months after former counsel’s connection with the case had ceased.