author: Montgomery, C. J.

text:
    LEE v. UNITED STATES GRAPHITE CO.
    1. Corporations — Contracts—Ultra Vires — Insurance.
    A corporation engaged in the business of mining graphite has authority to purchase a business of manufacturing stove polish made with graphite in consideration of a contract to pay the owner $100 a month for his services as manager during his lifetime; the contract not being a mere agreement foían annuity.
    2. Appeal and Error — Saving Questions for Review.
    The contention that such contract is in restraint of trade is not open for consideration when the point was not made in the trial court.
    S. Contracts — Ratification—Corporations.
    Where the corporate officer who made the agreement reported the results to the directors, without going into details concerning the time during which payments should be made, and the corporation thereafter made numerous yearly payments and carried on the purchased business, and there was evidence tending to show that the entire arrangement was known to the directors, the question of ratification was a question of fact.

      4. Same — Consideration—Sales.
    Sufficient consideration to support the agreement is found in the transfer of plaintiff’s business, his furnishing the names of customers and other information in accordance with the alleged agreement, which provided that he should not engage in the business and should aid the defendant as far as •possible.
    Error to Saginaw; Gage (William G.), J.
    Submitted February 24, 1910.
    (Docket No. 86.)
    Decided April 1, 1910.
    Assumpsit by John B. Lee against the United States Graphite Company for goods sold and delivered. A judgment for plaintiff is reviewed by defendant on writ of error.
    Affirmed.

      Humphrey & Grant, for appellant.

      John F. O'Keefe, for appellee.
   Montgomery, C. J.

This action was brought by the plaintiff to recover money claimed to be due him by virtue of a contract which he asserts was entered into in the city of Chicago on the 26th of January, 1904, with Edward C. Ewen, the then president of the defendant company. The record shows that the defendant company is a corporation engaged in the business of mining graphite in Mexico, refining the graphite in Saginaw, and marketing it and its products, including the stove polish known as the “Raven Stove Polish.” The plaintiff commenced work for the defendant in 1892 at a salary of $2,000 a year. He continued in this employment until January, 1894. When he commenced working for the defendant, it did not make the Raven stove polish. This name was proposed by plaintiff and adopted by the company. It afterwards developed that the name was an infringement of a trade-mark,' and defendant company became the owners by purchase of the trade-mark. In 1894 an arrangement was made between plaintiff and defendant by which all of the Raven stove polish business was turned over to the plaintiff, and he ceased to draw pay from the company. From this time until 1904 plaintiff conducted the Raven stove polish business as his own, bought the supply for his customers from the defendant company, paid for the same, and sold on his own account. By attention to business, advertising, and by reason of his acquaintance, the business rapidly increased under Mr. Lee’s management. ’ The gross sales for the 10-year period beginning January, 1894, amounted to upwards of $66,000. The plaintiff’s profits the first year were only about $300, but they increased from time to time until they reached about $3,000.

In November or December, 1903, Mr. E. C. Ewen, the president of the company, proposed to the board of directors buying the Raven stove polish business from plaintiff and again operating it on its own account, Mr. Lee in the meantime having become nearly disabled by sickness, and being compelled to rely upon his family and other assistants to carry on the business. The plaintiff thought his business was worth $10,000, and asked this sum. Mr. Ewen, the defendant’s president, met plaintiff in Chicago on the 26th of January, 1904, and according to the testimony of both Ewen and plaintiff, an agreement was then effected. A memorandum of this agreement was entered by Mr. Lee in his memorandum book, and reads as follows :

“Agreement made with Mr. E. C. Ewen, president of United States Graphite Co., Saginaw, at Great Northern Hotel, Chicago, today, January 26, 1904, regarding me selling stove polish business to United States Graphite Co. Mr. Ewen said my price of $10,000 cash for my business named to him in our talk Jan. 15, ’04, at the Union depot was satisfactory, but offered me instead the following whieh I have accepted; viz.: I turn over my stove polish business to the United States Graphite Co. now giving them my good will, referring all inquiries to them, and do no more stove polish business for myself or any one but them, for which the United States Graphite Co. will pay me $100 each month during my lifetime commencing next month (February) on my death no further payments to be made, and the stove polish business to belong to the United States Graphite Co. forever. I to help them with my advice and experience, and if my health permits help them as they may ask me to. Mr. Ewen said they might not ask any help from me but if they did, and it injured my health, I need not do it.
[Signed] “John B. Lee.
“ Correct. 1 — 26—04.
“E. C. Ewen, President U. S. G. Co.”

After this contract was entered into, the defendant took over the business, plaintiff turned over to defendant his list of customers and all the paraphernalia connected with the business, together with cuts, large and small, which he had caused to be made for use in the business, and sent his books of account over and appears to have been able and willing to tender and furnish all advice and assistance of which he was capable from time to time. The defendant’s president, the next day after the making of this contract, wrote the manager, inclosing a memorandum showing the agreement with the plaintiff. These communications read as follows:

“ The Hollenden, Cleveland, 1 — 27—1904.
“ Harry : The inclosed explains my deal with Lee. I think best to write it out for you so you can know all about it at once. Will talk program over with you on my return.
“E. C. E.”
“The Hollenden, Cleveland, Jan. 27, 1904.
“U. S. G. Co., Saginaw: Arrangements made with Lee in Chicago yesterday was as follows:
“U. S. G. Co. to take back Raven business, and put Lee in charge as mgr. at $100 per month. He as mgr. to go and come from office at his own pleasure on acct. of his health.
“ His salary to commence when business is turned over to us, and he can turn it over at once, or on Sept. 1st next when our new office will probably be done. If not turned over at once, Lee is to give us a list of his regular customers which he will continue to sell as at present (until Sept.), and we will leave these customers alone (until Sept. 1st) but we can sell any one else from now on, at any price or terms we see fit.
“E. C. Ewen, Pres.”

Mr. Ewen testifies that on his return home from this trip in the presence of all the directors he explained to them in detail the contract exactly as it was made, and it was approved. For a year and a half from February, 1904, the company paid Mr. Lee monthly by checks drawn for that purpose, signed by the officers of the defendant, $100 a month, and thereafter, until October 15, 1907, paid the plaintiff semi-monthly by checks drawn for $50. At no time during said period was Mr. Lee performing any service in Saginaw other than that provided for in his agreement signed by Ewen. There was testimony tending to show, also, that when this contract was máde the authority to deal with Lee and purchase the business back was reposed in Ewen. The jury gave a verdict for the plaintiff for the amount due up to the time the suit was commenced, and, from the judgment entered upon this verdict, the defendant brings error.

A large number of questions are discussed. It is first insisted that the corporation itself did not have the power to make this agreement, as it was in the nature of an agreement for an annuity, and that this agreement would show the corporation to be practically dealing with life insurance and granting and disposing of annuities. We think this is too narrow a construction. The agreement to pay the plaintiff so much per month during his life was based upon a good and sufficient consideration. It involved more than a mere purchase of annuity. It involved supposed benefits to accrue to the company from time to time. It. was only a means of measuring the extent of the consideration which should be parted with for the purchase of this business.

It is contended also that this contract would be void as in restraint of trade. This contention was not, so far as the record discloses, made in the court below. In fact in the opinion of the trial court it is stated that although all the questions of law supposed to be in the case were discussed at length by counsel on the motion to direct a verdict for defendant, no intimation was given by him that he claimed that the alleged agreement was void on this ground. We think the question ought not to be open for consideration at this time, by no means intending to intimate that if it were, it would be deemed to have merit.

It is next alleged that the corporation is not shown to Rave made the contract claimed. We think there was sufficient evidence to carry this question to the jury, both as to the question of contract and ratification. Indeed, the evidence as to the ratification was almost overwhelming. It is said that the report which Ewen made of his agreement the next day after it was made did not call attention to the full terms of the agreement. It is true •that it did not go into detail as to the length of time for which this compensation was to be paid, but that it was to be paid for some period, and that it was not expected to be wholly as compensation for future services, is apparent, and the first inquiry which the directors would make •upon receiving such a letter would be naturally for what period of time these payments were to continue. Mr. .Ewen testifies that upon his return the full details of this agreement were stated and thoroughly understood by all the directors, and after this occurred, for years payments were made in pursuance of this contract. It would be difficult to imagine a clearer case of ratification. Considerable argument is devoted to the discussion of the question of fact as to whether this contract was ever made as claimed. We do not think it necessary to enter upon that further than to say that there was evidence of such a contract. It was testified to not only by the plaintiff, but by Ewen and by plaintiff’s wife.

It is next argued that the agreement was without consideration. It is hardly necessary to discuss this at length. There was enough of consideration in the property turned over to furnish a basis for a contract. But more than this, it might be open to question as to whether, when the business was turned over to plaintiff, it did not carry with it the right to maintain and establish a trade for himself which should be his independent property. At all events, he was under no obligation to furnish defendant with the names of his customers or any information which should aid them in the conduct of the future business, as the business then being conducted was his independent business. The furnishing of this information was a consideration, and it being deemed sufficient by the parties, would uphold the promise counted upon.

We have examined the other assignments of error with care, and find no prejudicial error committed on the trial, and think the judgment should be affirmed.

Ostrander, Hooker, Blair, and Stone, JJ., concurred.


source: Caselaw Access Project

license: Public Domain

text:
    JACKSON v. DETROIT & MACKINAC RAILWAY CO.
    1. Railroads —Negligence —Questions of Law and Fact — Lights and Lookout.
    In an action for the death of the yardmaster of a railroad whose tracks were used by the defendant, evidence showing that the defendant’s trains had been accustomed to carry a lookout and a light while backing up at night and that the neglect to follow such practice caused the death of plaintiff’s decedent, justifies the submission of the case to the jury.
    2. Same — Fellow-Servants.
    The employes of such defendant railroad company were not his fellow-servants.

      3. Evidence — Cross-Examination.
    Reversible error is not made out by a ruling excluding cross-examination of a witness as to the character of the house he kept, where the witness answered the question to which objection was made.
    4. Same — Harmless Error.
    Testimony that the rules of decedent’s employer prohibited backing across highways without a light, and that a car with an engine would be farther away from the engineer than the front of an engine is harmless.
    5. Same — Relevancy—Surroundings.
    Although the declaration did not count on any negligence in constructing a switch too close to the track, it was proper to show the distance from the switch to the track and that there would not be room for deceased to stand as it was claimed he did, and operate the lever in safety.
    6. Same — Conclusion.'
    Striking out a conclusion of the witness that the deceased would be safely situated was not error when the ground had been covered by showing the exact facts and situation.
    7. New Trial — Weight of Evidence.
    The refusal of a new trial is not erroneous where a clear question of fact was presented by the testimony.
    Error to Bay; Collins, J.
    Submitted February 25, 1910.
    (Docket No. 87.)
    Decided April 1, 1910.
    Case by Ida Jackson, administratrix of the estate of Oscar F. Jackson, deceased, against the Detroit & Mackinac Railway Company for the negligent killing of plaintiff’s intestate. A judgment for plaintiff is reviewed by defendant on writ of error.
    Affirmed.

      James McNamara (Weadock & Duffy, of counsel), for appellant.

      De Vere Hall, for appellee.
   Montgomery, C. J.

The plaintiff’s decedent, Oscar F. Jackson, was employed by the Pere Marquette Railroad Company in Bay City, Mich., as night yardmaster. The defendant’s passenger trains were operated over the tracks of the Pere Marquette Company from the station called “Foss,”about a mile from the passenger station of the Pere Marquette Company, into which station defendant’s passenger trains came. Decedent’s employment as such yardmaster extended over a period of eight years prior to his death. As yardmaster, decedent had full charge and direction of the movements of all trains, engines, and cars owned or operated by the Pere Marquette Company, and in defendant’s brief it is stated that he had charge of those operated by defendant company. But this statement should be taken with limitations. He had nothing to do with the actual operation of the Detroit & Mackinac trains. All he had to do in connection with the trains was to cut off the sleeper, and this was done, because, as stated by a witness, “it then became a Pere Marquette sleeper. In order to give through traffic from the north and carry passengers to Detroit, they would take off the Pere Marquette sleeper and not make the passengers get out.” He had nothing to do with the Detroit & Mackinac operators or operatives in doing that. He used his own labor, and the Detroit & Mackinac in no way assisted.

On the evening of June 15th, 1908, while the decedent was engaged in throwing a switch to permit the passage of a Pere Marquette train and standing at the switch between the track of the Pere Marquette and the defendant’s track, the defendant’s crew, in charge of this engine, backing out without outlook or headlight, on the track next to the switch whei’e decedent was standing, and where, in operating the switch, his person would be brought within striking distance of the engine, came into collision with decedent, and he was killed. The testimony tended to show that the practice and custom of the defendant company and its crew was to have an outlook and lights, and that it was the neglected adherence to this custom which caused the death of plaintiff’s intestate.

At the close of the testimony, a motion was made to direct a verdict for the defendant, and it is strenuously argued in this court that there is no legitimate evidence to sustain the plaintiff’s case. "We are all agreed, however, that there was sufficient evidence sustaining the plaintiff’s theory to carry the case to the jury if that theory is correct as a matter of law.

The plaintiff’s theory is that decedent had a right to assume that this work would be conducted by this train crew in the manner in which it had been accustomed to, and that he would receive the warning that had been customary, as defendant’s crew knew that decedent’s work would require his taking the position which he took on this occasion. The case in this respect presents very much the same questions that were involved in Fitzpatrick v. Railroad Co., 149 Mich. 194 (112 N. W. 915), and Shall v. Railway Co., 152 Mich. 463 (116 N. W. 432). We think no error was committed in submitting the case to the jury upon the question of fact and law. Nor can it be maintained that the decedent and the defendant’s trainmen were fellow-servants. See cases above cited and Kastl v. Railroad Co., 114 Mich. 53 (72 N. W. 28).

Numerous errors are assigned upon the admission and rejection of testimony. The first discussed is the refusal of the court to permit the defendant on cross-examination of the witness Tierney to go into the subject of the character of the house he kept. An examination of the record discloses, however, that the question which was propounded was answered. We think no harm resulted from the ruling.

Thomas Kennedy, the engineer of defendant’s engine, was sworn as a witness for the defendant, and testified as to the standard rules in force governing the company. .On recross-examination he was asked:

“Q. Does not Pere Marquette rule 102 say that trains must not be backed over nor across, nor cars cut from an engine or train and run over, a public or highway crossing, unless there is a man on the leading car who at night must display a light ?
“A. Yes.' sir.”

He was then asked:

“Q. Isn’t there the same danger in running an engine back over a crossing at night that there would be in pushing a car over the crossing at night? ”

This was objected to by defendant. The answer was permitted, and the witness testified:

‘‘A. The forward end of the car would be much further away from the engineer and fireman than the rear of the engine.”

While we think the examination might well have been omitted, still we cannot see how harm was done, as the answer given was favorable to defendant.

The next assignment of error discussed was on the cross-examination of Kennedy. As already stated, the decedent was injured while standing between the two tracks of the Pere Marquette and the defendant, operating the. switch. The evidence showed that when bending over to' turn the switch his body would be about eight or nine inches from the east rail of the track, or so close that the defendant’s engine passing along the track would strike him. Upon cross-examination Engineer Kennedy stated that the tender of his engine at the rear projected over the rails about 29 inches, and that the step on the side of the tender projected about 4 inches farther, so that there would be but seven inches between the switch stand and the step. He was then asked:

“Q. As you went by? That would not be room for a man to stand and operate the switch, would it ?
“A. No, sir.”

After the answer was taken, it was objected to as incompetent, irrelevant, and immaterial. It was urged in the objection that there was no claim made that the switch was too close to the track. We think this testimony was entirely competent. It was not necessary to aver that the switch was too close to the track. It was a part of the surroundings, and bore upon the question of whether the defendant was prudent in failing to keep a lookout or light, and warning the operator at the switch. It was one of the risks that'the train crew of the defendant knew was likely to be encountered. It was competent to show the exact situation. The negligence charged was not the location of the switch, but the operation of the engine.

The witness Wilkins for the defendant, testified, in answer to the question:

“ Where would Mr. Jackson be with reference to the ground that you would go over on engine 23 ?
“A. He was perfectly safe. ”

This answer was stricken out on motion of plaintiff. We think no error was committed. The answer stated a conclusion, and, even though competent, this ground had been fully covered by a description to the jury of the precise position in which Mr. Jackson stood, so that the only office left for this answer to fill was to furnish the witness’ opinion as to the safety of the position occupied by Mr. Jackson.

Error is also assigned upon the decision of the court overruling the motion for a new trial made upon the ground that the verdict was against the weight of the testimony. Without reviewing the testimony at length, we are agreed that the case is not so clear for the defendant as to justify the court in substituting our judgment for that of the circuit judge upon the question of whether a new trial should be granted. There was a clear question of fact for the jury.

The case was properly submitted, and the judgment will be affirmed.

Ostrander, Hooker, Blair, and Stone, JJ., concurred.


author: Stone, J.

text:
    PEOPLE, for use of ESPER, v. BURNS.

    1. Chattel Mortgages — Record—Affidavit.
    In order to render a chattel mortgage valid as against a previous creditor of the mortgagor, the possession of the mortgaged property must be transferred to the mortgagee or a filing in strict accord with Aot No. 258, Pub. Acts 1905, must be shown, regardless of the good faith of the mortgagor.
    2. Same — Good Faith — Affidavit.
    Failure to annex the statutory affidavit showing the good faith of the parties and adequacy of consideration, and containing a proper jurat, renders the filing a nullity, although the oath was properly administered and the notary merely omitted to fill in the blank jurat.
    8. Same — Creditors Affected.
    And creditors whose accounts were created before the legal filing of the mortgage, as well as those who have obtained judgment or levied attachment, are protected by the statute.
    4. Same.
    As to subsequent purchasers and mortgagees notice of the chattel mortgage is equivalent to filing.
    5. Same.
    Actual notice to a creditor of the existence of the mortgage is not sufficient.
    6. Same — Record—Irregularity.
    One who seeks to benefit from the recording laws must incur all risks of failure to put his papers upon record, whether the fault be his own or that of an officer.
    7. Affidavit — Jurat—Definition.
    An affidavit is a sworn statement reduced to writing and evidenced by a certificate showing that it has been subscribed and sworn to before some officer having authority to administer oaths.
    Error to Wayne; Hosmer, J.
    Submitted March 1, 1910.
    (Docket No. 150.)
    Decided April 1, 1910.

      Debt by the people of the State of Michigan, for the use and benefit of Michael Esper, Joseph P. Esper, and Edward Esper, copartners as Michael Esper & Sons, against James D. Burns, principal, and the Bankers’ Surety Company, surety, upon a statutory bond. A judgment for plaintiffs on a verdict directed by the court is reviewed by defendants on writ of error.
    Reversed.

      H. M. & D. B. Duffield, for appellants.

      Charles Engelhard, for appellee.

       Rehearing denied July 15, 1910.

   Stone, J.

This is an action of debt on bond brought in the circuit court for the county of Wayne against James D. Bums, sheriff of said county, and the bonding company which furnished his general official bond, because of the seizure and sale of certain goods.

The facts in the case are as follows: On January 25, 1907, Twitchell Bros. Manufacturing Company, a corporation of Detroit, being indebted to the Independent Steel & Wire Company, an Illinois corporation, upon its promissory note which was past due, the latter company commenced suit in the Wayne circuit court against said Twitchell Bros. Manufacturing Company to recover for said indebtedness. On May 27, 1908, a judgment by consent and on withdrawal of plea was entered in favor of the plaintiff therein, and against the said Twitchell Bros. Manufacturing Company, for the sum due upon said promissory note, with interest and costs, the amount of which does not appear in this record. As soon as judgment was obtained, an execution was issued thereon and placed in the hands of said sheriff. With a view to the levying of an execution upon the personal property of said Twitchell Bros. Manufacturing Company, the attorneys for the Independent Steel & Wire Company examined the record in the office of the city clerk. There was found on file a chattel mortgage dated April 9, 1907, purporting to have been executed by Twitchell Bros. Manufacturing Company to Michael Esper & Sons in the sum of $876. To this mortgage was. attached the printed form of an affidavit which was signed by the president of the Twitchell Bros. Manufacturing Company, and there it stopped. There was no jurat attached. There was nothing about it to indicate that it had been sworn to. The law governing the recording of chattel mortgages (see Act No. 258, Pub. Acts 1905) is as follows:

“Sec. 10. Every mortgage, or conveyance intended to operate as a mortgage, of goods and chattels, which shall hereafter be made, which shall not be accompanied by an immediate delivery, and followed by an actual and continued change of possession of the things mortgaged, shall be absolutely void as against the creditors of the mortgagor, and as against subsequent purchasers or mortgagees in good faith, unless the mortgage, or a true copy thereof, shall be filed in the office of the township clerk of the township, or city clerk of the city, or city recorder of cities having no officer known as city clerk, where the goods or chattels are located, and also where the mortgagor resides, except when the mortgagor is a nonresident of the State, when the mortgage, or a true copy thereof, shall be filed in the office of the township clerk of the township, or city clerk of the city, or city recorder of the cities having no officer known as city clerk, where the property is; and unless the mortgagor named in such mortgage, or conveyance intended to operate as a mortgage, or some person for him, having knowledge of the facts, shall, before the filing of the same, make and annex thereto an affidavit setting forth that the consideration of said instrument was actual and adequate, and that the same was given in good faith for the purposes in such instrument set forth, no officer shall receive such instrument or file the same in his office until such affidavit is made and annexed thereto. Every person who shall knowingly make any false statement in any such affidavit, upon conviction thereof shall be deemed guilty of the crime of perjury.”

It will be observed that the date of the chattel mortgage is prior to the judgment of the Independent Steel & Wire Company, but it is subsequent to the debt incurred to the steel company, and subsequent to the commencement of suit by said company. There was nothing in the appearance of the chattel mortgage to indicate that the affidavit form had been sworn to. "When the sheriff levied upon the goods of the Twitchell Bros. Manufacturing Company, which goods were in possession of said company, he was notified by Edward Esper that there was a chattel mortgage upon the goods. The blank jurat was filled in and signed by John W. Eisman, notary public, and the date April 16, 1907 (the date of the filing of the chattel mortgage), was written in after the levy of the execution. There was a renewal affidavit attached to the chattel mortgage showing that the same had been sworn to March 30,1908, by Edward Esper before a notary public. The levy was made by the sheriff on execution May 29, 1908, and sale followed. This suit was begun August 20, 1908. It appeared upon the trial of the case that James E. Twitchell, at the time he filed the chattel mortgage, signed and swore to the affidavit, but that the notary public, who was also the chief clerk in the office of the city clerk, failed to fill out or sign the jurat. The circuit judge upon the trial of the case directed a verdict and judgment in favor of the plaintiffs, and against the defendants, for the value of the goods seized and sold by the sheriff, amounting to 1790.31»

The defendants have sued out a writ of error, and assign error upon the charge; and the single question is presented whether or not the chattel mortgage was entitled to be filed under the circumstances as above stated, and whether such filing was notice. It seems to us that the only question of law to be decided is whether the instrument placed on file in the office of the city clerk complied with the statute. The statute declares that such mortgage shall be absolutely void as against the creditors of the mortgagor, and nothing short of a change of possession or filing as the section requires can save it. Cooper v. Brock, 41 Mich. 488 (2 N. W. 660). Under this section of the statute, as to the creditor of the mortgagor, the questions of good faith and intention are immaterial. Buhl Iron Works v. Teuton, 67 Mich. 623-628 (35 N. W. 804).

In the absence of a change of possession — and none is claimed here — the statute requires that the mortgage or a copy thereof shall be filed in order to be effective. The statute above cited provides that, unless the mortgagor named in such mortgage or some person for him having knowledge of the facts shall, before the filing of the same, make and annex thereto an affidavit setting forth that the consideration of such instrument was actual and adequate, and that the same was given in good faith for the purposes in such instrument set forth, no officer shall receive such instrument, or file the same in his office, until such affidavit is made and annexed thereto. Nothing could be more explicit than this statutory provision, the object and purpose of which is apparent. Here, while the mortgagor may have taken the oath, the mortgagee did not have an affidavit annexed to the chattel mortgage when filed as the statute required. It must be held that a chattel mortgage filed in violation of the statute is not a compliance with the statute.

An affidavit has been defined to be a declaration on oath, in writing, sworn to by a party before and attested by some person who has authority to administer oaths. Bac. Abr. p. 146. This paper had only a blank jurat, and it did not show on its face, as it should, who administered- the oath, nor that any oath was ever administered. Such a paper must be held to be a nullity. Knapp v. Duclo, 1 Mich. N. P. 189. It must be held, therefore, that the mortgage was not entitled to record, and that the record of an instrument not entitled to record is notice to no one. Dutton v. Ives, 5 Mich. 515.

The statute as affecting creditors has been discussed in this court in many cases. Montgomery v. Wight, 8 Mich. 143. A chattel mortgage is invalid as against creditors if not put on file when the goods remain in the mortgagor’s possession, and this applies to those who become creditors during the interval while the mortgage is not on file, and not merely to those who have obtained judgment or levied attachment before filing. Fearey v. Cummings, 41 Mich. 376 (1 N. W. 946). A chattel mortgage not filed is void as against creditors of the mortgagor by the express terms of the statute. Putnam v. Reynolds, 44 Mich. 113 (6 N. W. 198). A chattel mortgage, where possession is not given, is void as against the mortgagor’s creditors, if not put on file in the proper office, even though recorded elsewhere by mistake. Talcott v. Crippen, 52 Mich. 633 (18 N. W. 392); Crippen v. Fletcher, 56 Mich. 386 (23 N. W. 56); Haynes v. Leppig, 40 Mich. 607; Charles Root & Co. v. Harl, 62 Mich. 420 (29 N. W. 29); Johnson v. Stellwagen, 67 Mich. 10 (34 N. W. 252); Corbett v. Littlefield, 84 Mich. 30 (47 N. W. 581, 11 L. R. A. 95, 22 Am. St. Rep. 681); Cutler v. Steele, 85 Mich. 627 (48 N. W. 631); Dempsey v. Pforzheimer, 86 Mich. 652 (49 N. W. 465, 13 L. R. A. 388); Ramsdell v. Power Co., 103 Mich. 89 (61 N. W. 275); Campbell v. Remaly, 112 Mich. 214 (70 N. W. 432, 67 Am. St. Rep. 393); Vining v. Millar, 116 Mich. 144 (74 N. W. 459).

But as to subsequent purchasers and mortgagees notice is equivalent to filing. American Cigar Co. v. Foster, 36 Mich. 368; Read v. Horner, 90 Mich. 152 (51 N. W. 207). It is well that we keep this distinction in mind in considering this statute, for actual notice to the creditor of the existence of the mortgage does not appear to be sufficient. One who seeks to benefit from the recording laws must incur all risks of the failure to put his papers duly upon record, whether the fault shall be his own or that of an officer. Barnard v. Campau, 29 Mich. 162; Grand Rapids Nat. Bank v. Ford, 143 Mich. 402 (107 N. W. 76, 114 Am. St. Rep. 668).

We have not overlooked the case of People v. Bristol, 35 Mich. 28. In that case the mortgage when made was at once duly filed with the town clerk, who in this instance was the mortgagor himself. The clerk received and properly indorsed it. He omitted, however, to make the entries which he should have done, and did not put the document in the files of mortgages where it was customary to place such instruments, but left it in another pigeon hole. It was held by this court that the filing was all that was required to be done by the party, and that the mortgagee, having done all that the statute requires of him, cannot be prejudiced by the failure of the officer to do his duty. We think that this case is easily distinguished from People v. Bristol, supra. In this case the statute prohibited the filing of the chattel mortgage until the proper affidavit was annexed thereto. The language of the amendment of 1905 is very significant. The affidavit must not only be made by the proper person, but must be annexed before the instrument is entitled to be filed. An instrument which conforms to the recording laws, and which is recorded, is notice to every one, but an instrument which does not comply with the statute is notice to no one, even if recorded. Whatever view may be taken as to whether an affidavit was made in this case, it is very clear that it was not annexed to the instrument in a complete form before filing. An affidavit is a sworn statement reduced to writing, and evidenced by the fact that it has been subscribed and sworn to before some officer having authority to administer oaths. Any other definition would make the requirement concerning annexation idle. It was clearly the duty of the mortgagee, if he wished to take advantage of the statute, to see that all its requirements had been complied with, and, if the mortgagee is content, as in this case, to take chances in that regard, and to leave it to the mortgagor, and the mortgagor does not comply with the statutory requirements, then the. mortgagee should suffer the consequences, and not the creditor who seeks to collect his judgment.

For the error pointed out and discussed, the judgment is reversed, and a new trial ordered.

Montgomery, C. J., and Ostrander, Hooker, and Blair, JJ., concurred.


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    LAPHAM v. LACY.
    Executors and Administrators— Wills — Estates oe Decedents — Presentation oe Claims — Notice.
    As a fiduciary towards those interested in decedent’s estate, an executor who was decedent’s nephew is required, in the exercise of good faith, to give the beneficiaries notice of filing a claim for board and services rendered to the decedent, in whose house the executor and his wife lived for many years, and after decedent devised the'homestead and half of the residue of his estate to the executor and his wife, with apparent intention to pay any obligation due to the latter, and particularly where the executor and his wife led the other beneficiaries to believe by words and conduct that they were content with their share and had no claim against the estate.
    Appeal from Ingham; Wiest, J.
    Submitted March 1, 1910.
    (Docket No. 157.)
    Decided April 1, 1910.
    Rehearing denied July 15, 1910.
    Bill by George H. Lapham and others against Philo E. Lacy and another to set aside the allowance of a claim against the estate of Horace Lapham, deceased. From a decree dismissing the bill, complainants appeal.
    Reversed, and decree entered for complainants.

      C. W. & W. S. Foster and Thomas, Cummins & Nichols, for complainants.

      Jason E. Nichols (Rollin H. Person, of counsel), for defendants.
   Montgomery, C. J.

Horace Lapham died on September 25, 1904, leaving an estate valued by the appraisers, at $35,651. He left a will dated April 29, 1903, in which he disposed of his estate. By the terms of the will, defendant Philo E. Lacy and his wife were specifically devised real and personal estate amounting to $13,675, and. the defendant Philo E. Lacy shared equally with the complainants in the residuary portion of the estate. The complainants in this case are either nephews or nieces of Mr. Lapham, with the exception of two or three who are children of the nephew, Frank Lapham, deceased, and by the terms of the will share equally with the defendants in the residuary portion of the estate only. The claims allowed by the commissioners amounted to $10,135.28. In addition there were mortgages of $6,500, which the executor was directed to pay. This will was duly admitted to probate, and the defendant Lacy was appointed and qualified as executor. Commissioners on claims were appointed, and defendant also some time prior to the last meeting of the commissioners on May 18, 1905, filed his claim against the estate for the board of Mr. Lapham during the last six years of his life, and for nursing during the last four years of his life, amounting to $4,660.

The relations between defendant Lacy and Horace Lap-ham are important. The deceased was an uncle of Lacy. He always remained a bachelor, and, when the defendant came to Lansing in 1878, he made his home with his uncle, not paying his board. In January, 1884, the defendant married his present wife, Helen Lacy, and they commenced housekeeping on Larch street, a short distance from the home of their uncle. In 1888 Jane Lapham, sister of Horace Lapham, died, and, as Horace had no other relatives in Lansing except the defendant and his wife, the defendant and his wife went to live with their uncle, and they continued to live with him until his death, a period of over 16 years. From 1888 until 1896 Mr. Lapham paid the defendant $5 a week for his board. In 1896, having met with some financial reverses, he discontinued this payment, and it was never resumed. He said he could not pay, and to let it run. No definite arrangement was ever made thereafter for the payment of board, and the bill in this case was made up from recollection. It was not made out until after the death of Horace Lap-ham. The defendant never made any charge for either board or services at the time they were rendered, and, in fact, made no charge on his books of any kind. The claim as filed by the defendant was allowed by the commissioners on claims at the amount stated, without any proof being offered by the claimant, and without being sworn to. The legal notices to the creditors of the commissioners’ meeting were duly published, but no personal notice was given to the complainants, and they never learned of the same until notified by their attorney whom they had employed in the meantime, Mr. Charles W. Foster, of Lansing, on or about the 1st of May, 1908. The defendant Lacy knew the address of all the complainants, knew where they all lived, because he notified them all of the ■death of their uncle, and that they were beneficiaries under the will.

This bill was filed to set aside the allowance of the claim on the grounds, first, that the filing and the allowance of this personal claim by the defendant, without any notice to complainants and without any opportunity given ■them to defend against it, constituted a fraud upon the complainants and the court; and, second, that the claim does not rest on any contract, but was trumped up by defendant after the death of Mr. Lapham, and is therefore in fact illegal and fraudulent.

The defendant Lacy occupied the positon of trustee for complainants. It appears by the testimony of Mrs. Kim-ball, one of the complainants, who is a niece of deceased, that she was in Lansing at the time the will was read, and that after the will was read, as Mrs. Kimball testifies, Mrs. Lacy said that such special provision for them as was made by the will was doubtless for and in recognition of and compensation for their care of Mr. Lapham, and that Mrs. Lacy seemed both pleased and satisfied with the will, and no dissatisfaction was expressed by Mr. Lacy at that time; that no claim was made by either Mr. or Mrs. Lacy that there was any agreement or contract between Philo E. Lacy and Mr. Lapham that the former should be paid for the care and nursing of the latter; that, on the contrary, both Mr. and Mrs. Lacy stated that the services were rendered because of their love and affection for their uncle, and no money consideration was ever mentioned in any way. Shortly before the bill in this case was filed, Mr. Charles W. Foster had a conversation with Mr. Lacy concerning his claim, and he asked Mr. Lacy whether this claim arose out of any arrangement or agreement, and that Mr. Lacy replied that he had charged what he thought the services were worth, but that there was no agreement between Mr. Lacy and Mr. Lapham. These statements are denied in part, but we think they are substantially true.

We have examined the testimony of Mrs. Lacy with great care, and, while in the main she doubtless aims to state the circumstances as they occurred, we are convinced from the reading of her testimony that there never was any intention on the part of the defendant to charge his uncle for board or for the services rendered. Defendant was living in his uncle’s house, rent free. For a time he paid $5 a week board. When it became a burden to him to do so, he ceased to pay, and the testimony of Mrs. Lacy upon this point is as follows:

“Q. You regarded your uncle as a man of some means, did you not ?
‘‘A. Yes, sir.
Q. And you felt, if he was able to pay $5 a week board and wanted to, why it was agreeable ?
“A. Yes, sir.
"Q. And, if he could not do it, why that was agreeable ?
“A. Yes, sir.
“Q. Living there with your uncle as you did, you had no idea of charging him anything for what you did or what you furnished him ?
“A. Only as he offered it. He wanted to do it. May I tell you what he said ? We were the only ones that did for him, and he wanted to.”

On redirect examination the witness had stated that Mr. Lapham had said it should be paid, and that she expected to be paid. And in answer to the question by the court, “Did he ever explain to you how you were to be paid for it, in what way ? ” the witness replied:

“A. He told me that. He said: ‘There is a sentiment in connection with this house. I built it, and have lived here all this time, and I want you to have it. If I didn’t give it to you, they would not let you stay here two weeks, and this is just as a sentiment.’ He says: ‘ I want you to keep it, and you shall have pay for my care extra if there is enough left.’ ”

Now, when it is understood that the will gives to the defendant and his wife the homestead, to which reference was made in this testimony, it is manifest just what was intended by any promise to pay. The record is barren of any promise made to the defendant Lacy, and it does not appear that he was informed of the statements claimed to have been made to Mrs. Lacy. We think that from the case the complainants have made out there never was a contract; that the defendant filed this claim as an afterthought; and that its extraordinary character was such that he was called upon in good faith to acquaint the complainants of the fact, particularly as he had thrown the complainant Mrs. Kimball off her guard by the statements made as to the compensation for services being provided by the will.

The decree of the court below will be reversed, and the relief prayed for will be granted, with costs of both courts to complainants.

Ostrander, Hooker, Blair, and Stone, JJ., concurred.


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    GRAND RAPIDS & INDIANA RAILROAD CO. v. CHEBOYGAN CIRCUIT JUDGE.
    1. Attorney and Client — Compensation — Lien by Special Agreement.
    By a writing executed by the plaintiff, in a personal injury case, to his attorneys, providing that they should have a lien upon the amount of any judgment or settlement obtained by the client of fifty per cent, of the same, a lien for the attorney’s services is created for half the judgment or settlement, if the contract is made in good faith; and an assignment to the extent of their lien is thereby obtained, preventing a discharge of the claim to the prejudice of such lien by settlement between the parties to the action, provided the defendant has notice of the special agreement.
    2. Same — Lien—Judgment.
    Except by special agreement no lien exists prior to judgment.
    3. Same — Notice—Sufficiency.
    A letter of the attorneys notifying the defendant of the existence of a lien is sufficient to put the latter upon notice.
    4. Same — Right to Compensation.
    A discharge of a cause of action obtained under circumstances which ought to put the party on inquiry as to the claim of plaintiff’s attorneys in the case, for a lien, is void as to the attorneys as it would be after actual notice of their rights.
    5. Same — Notice.
    Notice of a lien on the amount of any settlement obtained is equivalent to notice of a special agreement, without specifying the exact terms of the contract.
    6. Same — Agreement for Lien — Settlement by Client.
    In a contract for an attorney’s lien, which provides that in case the client does not recover a judgment or obtain a settlement the attorneys shall receive no compensation, the right of the client to compromise his action is recognized.

      7. Same — Lien—Enforcement—Practice.
    In order to enable the attorneys to proceed in the original suit to recover their fees under the agreement, it is necessary to have the stipulation of settlement and discontinuance set aside or stricken from the files.
    8. Same — Compromise and Settlement.
    The defendant may thereafter prove the compromise agreement at the trial of an issue framed.
    9. Assignments — Cause of Action — Survival.
    An action for injuries to the person which survives is assignable for the purpose of creating an attorney’s lien.
    10. Attorney and Client — Enforcement of Lien — Procedure after Compromise.
    The lien is enforceable by proceeding in the case upon the formation of the proper issue, to recover the amount of attorney’s fees, upon a petition showing the agreement and the consequent olaim.
    11. Same — Pleading—Procedure—Plea Puis Darrein Continuance.
    The defense of settlement made after suit brought may be presented in a plea puis darrein continuance filed to the petition.
    12. Same — Trial of Issue as to Lien.
    On the trial plaintiff’s attorneys must show the making in good faith of the special agreement, defendant may prove the compromise agreement and the settlement in accordance therewith, and the attorneys will thereupon be entitled to recover in plaintiff’s name the amount of their fees as shown by and based upon the compromise agreement: while a failure to show the compromise and settlement made on it, will entitle the attorneys to prosecute the original suit; or failure to show the alleged agreement for a lien will defeat the cause of action.
    13. Mandamus — Affidavits—Findings.
    On motion to discontinue a cause on the ground of a compromise, and on a counter motion to strike the settlement agreement from the files, the findings of the circuit judge, without framing an issue, that the agreement of a plaintiff for a contingent fee and lien of his attorneys is binding, and that a compromise was made fraudulently without the consent of plaintiff’s attorneys, is reversed on mandamus as unwarranted where the findings were made upon affidavits.
    Mandamus by the Grand Rapids & Indiana Railway Company to compel Frank Shepherd, circuit judge of Cheboygan county, to vacate an order setting aside a settlement of an action at law.
    Submitted April 5, 1910.
    (Calendar No. 23,862.)
    Writ granted in modified form
    April 25, 1910.

      James H. Campbell, for relator.

      Benjamin & Quay (De Vere Hall, of counsel), for respondent.
   Stone, J.

The case of Foley v. Railway Co., was before this court in 157 Mich. 67 (121 N. W. 257). Another phase of the case was before the court in Grand Rapids, etc., R. Co. v. Cheboygan Circuit Judge, 159 Mich. 210 (123 N. W. 591). The original suit was brought by Foley to recover damages for personal injuries. Plaintiff recovered a verdict and judgment for $10,000, which judgment was reversed, and a new trial ordered in the case> first above cited, May 26, 1909. Thereafter, and on December 22, 1909, the relator effected a settlement of Foley’s claim for damages. The agreement of settlement, and the memorandum agreement made contemporaneously are as follows:

“State of Michigan.
“In the Circuit Court for the County of Cheboygan.
“James Foley,
“ Plaintiff,
v.
“The Grand Rapids & In- ’ diana Railway Company,
“Defendant.
“I, James Foley, plaintiff in this cause, do hereby acknowledge the payment to me by the Grand Rapids & Indiana Railway Company of the sum of five thousand one hundred forty dollars, in full settlement and satisfaction of all claims, demands, damages, and cause of action which I now have or might hereafter have against said railway company on account of personal injuries sustained by me on or about the 9th day of September, 1906, at Kegomic, Michigan, when I was run over when getting off a train on which I had ridden from Petoskey. The suit begun by me against the said railway company, and now pending in said circuit court, is hereby discontinued and dismissed without costs to either party, and an order accordingly shall be entered on filing this stipulation.
“Dated, December 22, 1909.
“James Foley.
“Witnessed by
“B. T. Halstead,
“John Fochtman.
“State of Michigan, )
“County of Emmet, j ss:
“On this 22á day of December, 1909, before me, a notary public in and for said county 'of Emmet, personally appeared James Foley, to me personally known, and known to me to be the same person named in and who signed the foregoing instrument and acknowledged that he had executed the same of his own free act and deed.
“B. T. Halstead,
“Notary Public in and for Emmet County, Michigan. [Notarial Seal.]
“My commission expires February 17, 1918.”
“ Memoranda of agreement made and concluded, this 22d day of December, A. D. 1909, by and between James Foley of Kegomic, Mich., party of the first part, and the Grand Rapids & Indiana Railway Company, a corporation, party of the second part.
“The said party of the second part as part consideration for settlement, this day made by and between the parties hereto, hereby covenants and agrees with said first party to pay to the attorneys of said first party as compensation for their fees and disbursements for and on behalf of said first party, an amount not to exceed the sum of one thous- and dollars ($1,000).
“In witness whereof the said parties aforesaid have hereunto set their respective signatures in duplicate the day and year above written.
“G. R. & I. Ry. Co.,
“By C. W. Jones.”

The law firm of Benjamin & Quay had been the attorneys of record for Foley, and had tried the case in the circuit, and had argued the cases in this court. They claim to have had a written agreement with said Foley, made before suit was brought, in the words and figures following:

“This agreement made and entered into this 17th day of February, 1908, by and between James Foley of Petoskey, Michigan, of the first part, and Benjamin & Quay, of Cheboygan, Mich., of second part:
“Whereas, said first party has this day retained second parties as attorneys to begin suit against Grand Rapids & Indiana Railway Co., a corporation, for personal injuries received by said first party during September, 1906, it is hereby agreed that said second parties, as their fees, shall receive one-half of whatever judgment or settlement they shall obtain from said railroad company, and in case first party does not recover judgment or obtain a settlement, then second parties shall receive no pay for such services as they may render in said cause; and second parties shall have a lien on any judgment or money that may be obtained from said railroad company. First party to pay all witness fees, second party all other clerk and county fees.
“James Foley. [Seal.]
“Benjamin & Quay. [Seal.]”

It is undisputed that on June 11, 1909 the said attorneys for Foley wrote and mailed a letter to James H. Campbell, general counsel for relator, relating to a rumored attempt of relator to effect a settlement of Foley’s claim with him direct, in which the following language was used:

“ Also we wish to notify you that we have a lien upon any money which Mr. Foley may obtain, either by judgment or settlement, for our services rendered, and in case your company settles direct with Mr. Foley without our knowledge or consent, we shall have to hold you responsible for the amount of our fees.”

It is conceded that Mr. Campbell received this letter by due course of mail, and replied to the same on June 25, 1909. Again, on November 27,1909, De Vere Hall, Esq., who had been employed to assist Messrs. Benjamin & Quay in the retrial of said cause, wrote a letter to Mr. Campbell, in which he said, among other things:

I am advised that your claim agent called upon the plaintiff and offered to pay him $5,000.00 in full settlement of his claim, telling him that if he accepted this amount he would be under no obligations to pay his attorneys anything, and that it would be as much as he would getoutof it if he obtained another judgment for $10,000.00, and that if he did not accept, the case would be dragged along in the courts for the next four or five years. I am also advised that another offer of $6,000.00 is to be made to him by some of your claim agents, and I write you this that you may be advised of the situation.
“ It is apparent from the record of the former case that the attorneys for Mr. Foley have been representing his interests faithfully, and that they are entitled to full consideration, and I presume that it will be unnecessary to give the matter of attempted settlement any further consideration by them, and that if they are rightly advised, your claim agents will deal only with such attorneys.
I have no doubt that the attorneys for Mr. Foley have an arrangement with him under which they are to be paid a portion of the sum secured, either by settlement or by suit, and that the proposed settlement, if effected, except through them, would ignore their rights entirely.
“ Will'you please give this matter your earliest attention and advise me.”

On November 30, 1909, Mr. Campbell replied to this letter, and said in part:

“ It has always been my practice to deal only with attorneys in cases placed in their hands. * * * In writing Benjamin & Quay I made an offer of settlement, and wrote that if we could agree upon an amount, I would let judgment be entered for that sum, and pay it into court, or to the attorneys direct. We had some correspondence.
“ They wanted $10,000, and later wrote that they would take $9,000, if paid within fifteen days. I wrote them that the company would not pay that, and asked them if they had any better offer to make. That was about four months ago. I have had no reply.
‘ ‘ I have had no thought of doing anything that would deprive Benjamin & Quay of a fee in the case. Our claim agent has been in Petoskey several times within the last month or six weeks upon other matters. I said nothing to him about the Foley case and he tells me that lie had nothing to say about it when he was there, and did not see Foley.
“ I am still willing to make a reasonable settlement of the case; and shall be glad to have you say what in your judgment should be paid by the company upon a settlement. My own view of it is that if $3,500.00 was paid to Foley, and $1,000 to Benjamin & Quay, with $500 to you, making $5,000 in all, it would be about right.”

On December 10, 1909, Benjamin & Quay wrote Mr. Campbell referring to the correspondence between Mr. Hall and Mr. Campbell, and stating that they would accept $10,500, and nothing less, and that Mr. Campbell could have 20 days in which to take the matter up with the company. This seems to have ended the correspondence upon the subject of a settlement. Thereafter the case was settled with Foley as above set forth. On January 3, 1910, the said attorney for the railroad company paid into said court said $1,000, and the clerk’s fees, and caused notice of a motion to dismiss said cause without costs to either party, to be served upon the said attorneys for said Foley, based upon the said settlement agreement which had been filed in said cause and the affidavit of James H. Campbell. Said motion was to be heard before the respondent on January 7th. Whereupon the said Benjamin & Quay, as attorneys for said Foley, served and filed a counter motion to have the said settlement agreement and stipulation for discontinuance stricken from the files of said cause, and for an order permitting said plaintiff’s attorneys to proceed with the trial of this cause for the purpose of determining what amount of fees they were entitled to. Said motion was noticed to be heard before the respondent at the same time and place as defendant’s motion. Said motion of plaintiff’s attorneys was based upon the records and files in the cause, and the affidavit of Maxwell W. Benjamin, which is set out in this record. Affidavits of James H. Campbell and C. W. Jones were read in opposition to the motion of said plaintiff’s attorneys. They also appear in this record.

The said two motions were heard by the respondent at the same time, and were considered together. After the hearing of said motions, and on January 7, 1910, the said respondent made a finding and order substantially as follows:

(1) He found that the said Benjamin & Quay, attorneys for said plaintiff, James Foley, had a legal and existing contract for their compensation and fees to be paid them by plaintiff, for their services and expenditures in said cause, and that said agreement constituted a lien of 50 per cent, upon any judgment or settlement that the said Benjamin & Quay might obtain for said plaintiff, in said cause.

(2) That the said defendant had due and legal notice of said special contract for services, and the said lien of said Benjamin & Quay.

(3) That the settlement, made direct between James Foley, plaintiff, and the defendant, was collusive, and made with the intent to defraud said Benjamin & Quay, plaintiff’s attorneys, out of their just and legal costs, expenditures, and fees, to which they would have been lawfully entitled if settlement of said cause had been made through them, or if they had proceeded with the trial of said cause and obtained a judgment.

(4) It was ordered that the said motion of defendant for an order dismissing said cause be denied.

(5) It was further ordered that the said stipulation of settlement and discontinuance, dated December 22, 1909, and filed in said cause December 21, 1909, be stricken from the files in said cause.

(6) It was further ordered that Benjamin & Quay, attorneys for plaintiff, be permitted to proceed with the trial of said cause in the name of James Foley, plaintiff, for the purpose of determining the amount of their fees, under and by virtue of their special contract with said James Foley.

After a motion to vacate the above order was duly made and denied, the relator filed this petition for mandamus. It prays that the writ of mandamus issue to the respondent, requiring him to vacate and set aside the said order of January 7th, and to enter an order withholding an order dismissing the case until the claim of plaintiff’s attorneys against the defendant for their services and disbursements shall be presented in some proper form, and tried and determined and satisfied. The respondent has answered said petition, and the matter has been argued in this court, and many authorities have been cited by counsel for the respective parties. An examination of the questions involved satisfies us that most of them have already been ruled upon by this court.

We are of opinion that the agreement of date February 17, 1908, by and between Benjamin & Quay and James Foley is upon its face a valid agreement between the parties, and, if made in good faith, constituted a lien of 50 per cent, upon any judgment that might be recovered, or upon any settlement that might be made of the plaintiff’s claim in said cause, and operated as an assignment to said attorneys of any judgment or settlement, to the extent of their said lien, and that the plaintiff could give no valid discharge of the claim to the defendant therein to the prejudice of the lien of said attorneys in said fund; provided defendant, relator here, had notice of such lien. We think that this view is fully supported by the following decisions of this court: Weeks v. Wayne Circuit Judges, 73 Mich. 256 (41 N. W. 269); Carpenter v. Myers, 90 Mich. 209 (51 N. W. 206); Heavenrich v. Alpena Circuit Judge, 111 Mich. 163 (69 N. W. 226); Simon v. Pack, 115 Mich. 669 (74 N. W. 185); 1 Jones on Liens (2d Ed.), §§ 43, 62, 223, 224. Of course we recognize the rule that in this State there would be no lien before judgment, except by special agreement.

Did the defendant in that suit, relator here, have notice or knowledge of said lien ? It will be borne in mind that Benjamin & Quay in their letter to Mr. Campbell, of date June 11, 1909, said:

“We wish to notify you that we have a lien upon any money which Mr. Foley may obtain, either by judgment or settlement, for our services rendered, and in case your company settles direct with Mr. Foley without our knowledge or consent, we shall have to hold you responsible for the amount of our fees.”

In our opinion this was sufficient notice to put the defendant in that suit upon inquiry. Weeks v. Wayne Circuit Judges, supra; Jackson, etc., R. Co. v. Davison, 65 Mich. 449 (37 N. W. 537).

In Young v. Dearborn, 27 N. H. 324, it is held that, if a party obtains a discharge of an action under such circumstances as ought to have put him on inquiry as to the claim of the attorney, the discharge will be void as to the attorney as it would be after actual notice of his lien. If the party defendant acts in the face of circumstances which are sufficient to put him on inquiry, he acts contrary to good faith, and at his peril. Defendant knew that plaintiff’s attorneys could have no lien before judgment, except by express agreement. We think that notice of lien on amount of settlement was equivalent to saying there was an agreement. It was not necessary that plaintiff’s attorneys should apprise the relator of all and the exact terms of their special contract in order to put it upon inquiry.

What would have been the effect had plaintiff’s attorneys served a copy of their agreement of February 17, 1908, upon the defendant, relator ? A careful examination of such agreement will show that there is nothing in its terms to prohibit Foley from settling his case with the defendant. It says:

“It is hereby agreed that said second parties, as their fees, shall receive one-half of whatever judgment or settlement "they shall obtain from the said railroad company, and in case first party does not recover judgment, or obtain a settlement, then second parties shall receive no pay for such services as they may render in said cause; and second parties shall have a lien on any judgment or money that may be obtained from said railroad company. First party to pay all witness fees, second party all other clerk and county fees.”

We think that here is a clear recognition of the right of Foley to settle said cause, but not to the prejudice of the lien of one-half thereof. In their letter to Mr. Campbell of June 11, 1909, Benjamin & Quay say:

“We wish to notify you that we have a lien upon any money which Mr. Foley may obtain, either by judgment or settlement, for our services rendered, and in case your company settles direct with Mr. Foley without our knowledge or consent, we shall have to hold you responsible for the amount of our fees.”

Manifestly, there is nothing here to prohibit a direct settlement with Mr. Foley, but there is notice that defendant will be held responsible for the amount of the attorneys’ fees.

We agree with respondent’s counsel that, in order for them to be able to proceed in the original suit for the purpose of recovering their fees under their agreement, it was necessary for them to have the stipulation of settlement and discontinuance set aside, or stricken from the files. Potter v. Hunt, 68 Mich. 242 (36 N. W. 58); Kittridge v. Railway Co., 53 Mich. 354 (19 N. W. 32). This does not interfere with defendant’s right to prove its agreement at the trial. Foley’s cause of action was one that would survive upon his death, and he had a right to assign an interest in it. We have already discussed the terms of that agreement. They were consistent with his right to settle the case, but not to the prejudice of his attorneys’ agreement for fees.

We have no doubt that the proper and better practice is for the plaintiff’s attorneys to proceed in the cause, upon the forming of a proper issue, to recover the amount of their fees. This is an adequate remedy, and seems to be supported by the decisions in this State, already cited upon the first point, and by the great weight of authority in other States. While it has been severely criticised as illogical and clumsy, yet it has been upheld. In Miedreich v. Rank, 40 Ind. App. 393 (82 N. E. 117), the court, in speaking of the practice, said:

“This procedure has been designated as clumsy, and it has been said that it was a device of the courts, not of the legislature, and sprang from the necessity of providing some remedy against fraudulent settlements. The necessity is no less at this time in Indiana than it was in England years ago, when the procedure was first followed.”

In our opinion the proper practice will require the plaintiff’s attorneys in said suit to present to the court in proper form, by petition or otherwise, their alleged agreement and their claim thereunder. The defendant in that suit will, under Circuit Court Rule 9, be permitted to give notice of its alleged settlement agreement, in the nature of a plea puis darrein continuance.

(а) Upon the trial it will devolve upon the plaintiff’s attorneys to show that their agreement with Eoley was duly made, and was in good faith.

(б) It will devolve upon the said defendant to prove the making of the alleged settlement agreement with Eoley, and that the settlement was made in accordance with its terms.

(c) Should both agreements be established by evidence, plaintiff’s attorneys will be entitled to recover, in the name of said plaintiff, the amount of their fees as shown by their said agreement with Eoley, upon the basis of said settlement.

(d) Should the said plaintiff’s attorneys establish their agreement with said Eoley as valid and binding, and should the defendant fail to show the making of said settlement agreement, and a settlement with Foley thereunder, then and in such case the plaintiff’s attorneys will be permitted to prosecute the said original action, and prove the plaintiff’s case, as though there had been no attempted settlement, and recover their contract share of any damages awarded.

(e) Should the plaintiff’s attorneys fail to prove and establish as bona fide their alleged agreement with said Eoley, then they will not be entitled to recover any sum whatever.

It follows logically from what we have already said, that the finding of the respondent, marked above “1,” wherein he found that the agreement of said plaintiff’s attorneys with said Eoley was legal and binding, should be vacated and set aside. The finding above marked “3,” wherein the respondent found that said defendant’s alleged settlement agreement with said Foley was collusive, and made with the intent to defraud said plaintiff’s attorneys, should also be vacated and set aside. Both of said findings were made upon affidavits, and were unauthorized. The statements contained in the affidavit of Maxwell W. Benjamin are largely hearsay, and such findings were not warranted by any evidence. Voigt Brewing Co. v. Wayne Circuit Judge, 103 Mich. 190 (61 N. W. 343).

That part of said order, marked above “6,” will be so modified as to permit an issue to be framed as above indicated. The remainder of said findings and order will stand. We have examined with care the authorities cited by counsel, but we refrain from quoting them here, for the reason that we find authority for the course here indicated in our own decisions.

The writ will issue in the modified form above indicated, but without costs.

Moore, McAlvay, Brooke, and Blair, JJ., concurred.


author: MoAlvay, J.

text:
    NILES BRYANT SCHOOL OF PIANO TUNING v. BAILEY.
    1. Municipal Corporations — Appropriations—General Fund— City Hall Site — Public Buildings and Improvements.
    A city having by charter authority to assess and levy taxes only for the purposes of street improvements, ordinary expenses, and to pay debts, is limited to such purposes in the apportionment of taxes and in the expenditure of the funds received from them.

      2, Same — Appropriations—Payment of Indebtedness.
    After funds received from taxes have been apportioned by the common council to various funds created by ordinance, without any provision being made to pay for a city hall site bought on contract by the city, no money can be ordered paid on the contract from the general fund, which had been reduced to a small amount, consisting in part of funds payable to support libraries, and which was made up of the same and of taxes levied for other purposes, the charter prohibiting the use of city funds except upon previous appropriations specifying the purposes.
    3. Same — Words and Phrases.
    Such expenditure of funds is not for ordinary municipal expense.
    •4. Same — Mandamus.
    The writ of mandamus will not run to compel the mayor to sign a warrant for the payment of funds from the city treasury on the contract in the absence of provision therefor by appropriation, taxation or issuance of bonds. Const, of 1909, art. 11, § 14.
    .'5. Same — Warrants—Presumptions.
    It appearing that an amount larger than the apportionment of taxes for the general fund had been paid out of it, no presumption can arise that the order of the council upon the general fund was valid or the fund sufficient to pay the order.
    Certiorari to Calhoun; Chester, J., presiding.
    Submitted April 19, 1910.
    (Calendar No. 23,962.)
    Decided April 30, 1910.
    Mandamus by the Niles Bryant School of Piano Tuning to compel John W. Bailey, mayor of the city of Battle Creek, to sign a warrant for the payment of an installment due on a land contract. An order granting the writ is reviewed by respondent on writ of certiorari.
    Reversed, and writ dismissed.

      Ira A. Beck (Arthur B. Williams, of counsel), for relator.

      John W. Bailey (William E. Ware, of counsel), in pro. per.

   MoAlvay, J.

These proceedings arise on account of a claimed purchase, by the common council of the city of Battle Creek, of a certain tract of land within its limits for a city hall site, upon a written contract with petitioner, for the sum of $30,000, and the exact controversy relates to the refusal of respondent mayor to sign a warrant on the treasurer of said city “for the sum of $10,000, for part payment upon the purchase price of the proposed city hall site.” Demand that he sign the warrant was made upon respondent in writing by relator, and was refused. After the refusal of the respondent to sign the warrant for $10,000, as herein stated, relator filed a petition in the circuit court for Calhoun county, praying for an order to show cause why a peremptory writ of mandamus should not issue requiring him to sign such warrant. He answered said petition, and the hearing of the matter resulted in granting the prayer of the petition. The case is before this court upon a writ of certiorari by respondent to review the mandamus proceedings. The errors assigned, other than those that go to the regularity of the proceedings, which require discussion, briefly stated, are:

(1) No appropriation had been made by lawful authority to pay for a city hall site, and therefore there was in the treasury no funds upon which a warrant could be drawn to pay such indebtedness.

(2) The charter provides the manner for raising money to pay such indebtedness, by certain official action, and such action had never been taken, therefore that the warrant was not a lawful one, and respondent had no authority to sign it, and the court was in error in ordering the writ of mandamus to issue to compel him to sign it.

By its charter the city has general authority to assess and levy taxes only for three purposes: (1) To be used for general street improvements; (2) for ordinary municipal expenses; (3) for paying debts. By ordinance, different funds of the city, to the number of 16, were established and denominated, and among the names given to these different funds was one called “General Fund.” This ordinance further provided:

“ The money appropriated to the various funds shall be used for the payment of indebtedness incurred for improvement, expense or other cost to which the respective fund applies as defined herein, to wit: * * *
“Q. General Fund — All expenditures of the city of Battle Creek not otherwise provided for in this ordinance.”

Whether these funds named by ordinance cover all matters included in the three purposes for which the city authorities were entitled to levy general taxes, need not be considered, for the reason that the council would be limited by the grant of power given by the charter, as to the purposes for which it might lawfully apportion the taxes to be raised, and also for the purposes and in the manner which it might expend the money of the municipality received from taxes or other sources.

For the year 1909 the council of the city of Battle Creek, on July 28, 1909, ordered the following general taxes to be levied: (1) For general street purposes, $43,864.62; (2) for ordinary municipal expenses, $134,614.81; (3) for paying indebtedness of the city, $13,864.62. All of these general taxes assessed for that year were, on August 9th, according to the report and recommendation of the ways and means committee, theretofore made, appropriated, and apportioned to the various city funds, but no provision by such appropriation was made to pay for the land in question contracted for with relator December 21, 1908, for a city hall site. The details of these appropriations for different purposes to the different funds, other than as they relate to this general fund, are not important, for the reason that, if this warrant could not lawfully be paid from the general fund, it is admitted that it could be paid from no other fund. Of these general taxes for 1909 it is admitted that under this apportionment and appropriation $14,544.72 was placed in the “ General Fund.”

The record contains the sworn statement of the city treasurer, made in an' affidavit filed in support of some motion, from which it appears that the general taxes raised according to th9 foregoing statement “for ordinary municipal expenses ” were distributed to the following funds named in the ordinance: Salary; police; fire; public health and charity; plumbing; printing; lighting ; general. That at the time said statement was made by the city treasurer, all of said funds, except the general fund, were practically exhausted, and the balance on hand in that fund was $11,250.40; it having been reduced to that amount by orders under the authority of the council. Besides the amount of taxes apportioned to this fund, it was made up, among other things, of fines, penalties, and forfeitures collected by the municipal and recorder’s courts. What part or percentage of this fund is so made up does not appear. The charter provides that:

“No money shall be drawn from the treasury unless in pursuance of previous appropriations specifying the purpose thereof; and any order or warrant directing or requiring the payment of the same shall specify the object and purpose of such payment, and shall be signed by the recorder and countersigned by the mayor of said city.” Section 1, chap. 32, Act No. 430, Local Acts 1899.

The taxes apportioned to this fund levied in the year 1909 were taken from taxes levied for “ordinary municipal expenses.” The construction of the council as to what may be considered ordinary municipal expenses appears from the list of the funds into which such taxes were distributed. No fault can be found with such construction. It is a reasonable one. The purposes of all such funds above named are to defray ordinary municipal expenses. The taxes so levied and put into what is called a “general fund” cannot be diverted thereby to anything other than ordinary municipal expenses because the ordinance provides that such fund shall be used to pay “all expenditures of the city of Battle Creek not otherwise provided for in this ordinance.” In other words, the council by ordinance cannot contravene the provisions of the fundamental law under which the city is incorporated. Contracting an indebtedness of $30,000 for the purchase of a city hall site is not an ordinary .municipal expensé. No argument is necessary to show that it is an extraordinary expenditure of municipal funds. It follows that the moneys arising from taxes levied “for ordinary municipal expenses” cannot lawfully be used for such purpose. It is urged that moneys derived from sources other than taxation remaining in this fund are sufficient to pay this warrant. There was put into this fund taxes as stated, all fines, forfeitures, and penalties, per cent, on taxes collected, etc. These moneys were all commingled into one fund, and paid out as ordered by proper authority. We have said that the money taken from this tax levy could not be used for this purpose. The amount of fines, penalties, and forfeitures is not stated, but is considerable. Under the present Constitution of Michigan all such fines, penalties and forfeitures, “collected in the several counties, cities and townships shall be exclusively applied to the support of libraries.” Const, art. 11, § 14.

While it appears that an amount larger than the amount of taxes apportioned to this fund has been paid out of it, the court can indulge in no presumption, conceding that the order was a lawful one drawn on the proper fund, that there was sufficient remaining in the fund lawfully subject to such use, having the knowledge that a large part of it was not. The action of the council in drawing the warrant would not be conclusive, or even presumptive,' that there was. Relator’s argument is based upon the claim that ordering this indebtedness represented by this warrant to be paid out of the general fund was an appropriation within the meaning of the prohibition and requirement of the charter above quoted relative to drawing money from the city treasury, and permitted by the ordinance. The fallacy of this contention must already appear. The provisions of the charter must control. , This action of the council was not an appropriation contemplated by the charter, as construed by us, nor as construed by the city authorities when they made up the budget for the general tax levy for 1909, and appropriated and apportioned such taxes. This indebtedness was not at that time taken into consideration, or in any manner provided for.

The determining question, then, in the case is whether any warrant could lawfully be issued to pay this claimed indebtedness, in view of the prohibition of the statute already quoted that—

“ No money shall be drawn from the treasury unless in pursuance of previous appropriations specifying the purpose thereof.”

Whether this contract is a valid and binding contract is a question upon which we do not find it necessary to express an opinion. It is certain that, if it is valid, this indebtedness can only be paid in such manner as the charter permits and provides. We find that the charter authorizes the council to purchase and hold real estate for corporate purposes. Chapter 10, § 7, subd. 59. The price to be paid for such real estate would be an indebtedness of the municipality. Provision is made for the payment of any indebtedness in only two ways: By taxation (chapter 28, § 2); by issuing bonds (chapter 80, § 1). This indebtedness having been determined by us not to be included within “ordinary municipal expenses” provided for in the charter, and no action having been taken to provide for it by any appropriation, or under either of the two methods last above mentioned, our conclusion is that the order was unlawfully issued, and the respondent could not be compelled to sign such warrant. Smith v. Auditor General, 80 Mich. 205 (45 N. W. 136).

Much appears in the record and briefs relative to what steps the council had taken to ascertain public sentiment upon the question of which of several city hall sites should be purchased. These matters have no bearing upon the questions involved in this case.

The court was in error in granting the writ of mandamus. The judgment of the circuit court is reversed and set aside, and a judgment will be entered in this court in favor of respondent and against relator, with costs of both courts.

Ostrander, Brooke, Blair, and Stone, JJ., concurred.