text:
    PARKYN v. FORD.
    Res Judicata — Fraud—Waiver—Decision in Chancery Bab to Action on Law Side.
    Where, in a former decision, on a bill filed by plaintiffs to rescind a contract for an exchange of farms on the ground of fraud, the Supreme Court decided that the fraud was waived, plaintiffs are precluded from maintaining an action on the law side based upon the same fraud.
    Error to Hillsdale; Weimer, J., presiding.
    Submitted April 25, 1919.
    (Docket No. 108.)
    Decided July 17, 1919.
    Case by Joseph O. Parkyn and others against Julius C. Ford for fraud in an exchange of real estate. Judgment for defendant on a directed verdict. Plaintiffs bring error.
    Affirmed.

      F. A. Lyon, A. L. Guernsey and P. W. Chase, for appellants.

      W. H. FranJchauser and E. C. Shields, for appellee.
   Steere, J.

On March 11, 1913, plaintiffs exchanged their Hillsdale county farm for defendant’s farm lying near Summit, Mississippi. In so doing defendant assumed the mortgage of $3,544 on the Hillsdale farm and plaintiffs gave him a mortgage for a like amount on the Mississippi farm. Defendant also sold plaintiffs a quantity of personal farm property for which they agreed to pay $1,500. Soon after the exchange, the parties went into possession of their respective properties, and plaintiffs resided on the Mississippi farm until September, 1913, when they returned to Hillsdale and filed a bill praying for a rescission of the deal on the ground of defendant’s fraudulent representations concerning the Mississippi farm. Issue was joined in that case and a decision was reached adverse to the defendant. Upon appeal to this court the case was reversed on the ground that plaintiffs’ dealings with defendant had been such, after he had had an opportunity to discover the fraud, that he had waived his right to complain of the fraud. See Parkyn v. Ford, 194 Mich. 184. Subsequently an application for rehearing was denied. Plaintiffs then brought this action at law for damages, relying on the same fraud they had alleged in the previous case as a basis for rescission. The matter came on for trial and counsel made his opening statement and began a cross-examination of defendant. It soon became evident to the trial court that the facts were the same, or quite similar, to those involved in the former litigation. Some questioning of plaintiffs’ attorneys by the trial court developed that the parties, the property and the alleged fraud were the same in both controversies. After a running discussion between court and counsel a verdict was directed for the defendant based on the opening statement and concessions of counsel.

The third assignment of error raises the important question in the case. This assignment complains of the construction which the trial court gave to the former decision of Parkyn v. Ford. Counsel argue that what this court decided in Parkyn v. Ford was that plaintiffs had waived their right to a rescission of the contract.

It was said in Parkyn v. Ford, referring to the plaintiff, that:

“If he knew, or had ample opportunity to know, that defendant’s representations were untrue when he signed the receipt on July 12th and made no complaint nor protest, we think by so doing he affirmed the trade and waived his right to complain of the fraud.”

We are impressed that counsel for plaintiffs have misconstrued the opinion in that case. There is no basis in the opinion for arguing that this court held that the plaintiffs had waived their right to a rescission only, inasmuch as the opinion says in so many words that:

“By so doing he 'affirmed the trade and waived his right to complain of the fraud.”

Of course, if plaintiffs waived their right to complain of the fraud, they necessarily waived their right to a rescission on the ground of fraud. But the opinion goes further and determines that the act of signing the receipt, under the circumstances, waived their right to complain of the fraud. If the right to complain of the fraud were waived it would carry with it not only the right to a rescission but also any other action based upon the same fraud.

It is suggested that laches was the basis of this court’s conclusion. Nothing is said in the opinion about laches and it is clear that no such time had elapsed between the making of the contract and the beginning of the action, nor had the situation of the parties so changed, that laches could reasonably be made the basis of such a holding: The conclusion was put squarely upon the ground that plaintiffs’ dealings with defendant in signing the receipt had precluded him from making a claim that he was defrauded. It is perhaps true that had we determined, as counsel argue, that plaintiffs had waived their right to a rescission and nothing else, the present action might be sustained because it does not necessarily follow because one is not entitled to a rescission he is not entitled to an action for damages, but it is unnecessary to decide that in this case. It was said in Wylie v. Gamble, 95 Mich. 564, where a similar state of facts was being discussed, that:

“Instead of making complaint he still treated the land as his, obtained extension of time of payment, attempted to make contracts with complainants for permission to lumber it, knowing all the facts which he now sets up to avoid the contract for fraud. This must preclude him from making such a defense.”

In Draft v. Hesselsweet, 194 Mich. 604, it was said:

“His acts indicated that he intended to retain the premises and abide by his purchase, notwithstanding the fraud. He continued to live upon and operate the farm and to take the avails thereof. He made improvements on the buildings and paid an installment on the purchase price in 1912, and we think his testimony fairly shows that he would have paid the second note in 1913 had it not been for the lack of funds. Under these circumstances he must be deemed to have waived whatever right he had to complain of the fraud” — citing cases.

In St. John v. Hendrickson, 81 Ind. 350, it is said:

“It is undoubtedly the law, that there may be a waiver of the right to recover damages for loss resulting from false and fraudulent representations by an express affirmance. * * * We fully recognize and approve the rule that a party may retain what he received, stand to his bargain, and recover the loss caused him by the fraud. We do not mean to run counter to this rule. We neither hold, nor mean to hold, that affirmance by retention of the thing bar-:, gained for cuts off an action for damages. We do hold that, where a party with full knowledge of all the material facts, does an act which indicates his intention to stand to the contract and waive all right of action for the fraud, he- cannot maintain an action for the original wrong practiced upon him. Where the affirmance of the contract is equivalent to a ratification, all right of action is gone. * * * Nor are we unmindful of a settled rule that a defrauded party has an election of remedies. We heartily approve the rule that he may elect to rescind the contract, or to stand by his bargain and sue for damages resulting from the fraud practiced upon him. * * * We decide nothing that conflicts with this settled rule.”

For like holdings, see Simon v. Goodyear Metallic Rubber Shoe Co., 105 Fed. 573, 44 C. C. A. 612 (52 L. R. A. 745); Nounnan v. Sutter County Land Co., 81 Cal. 1 (22 Pac. 515, 6 L. R. A. 219) ; Sweetman v. Prince, 26 N. Y. 224; People v. Stephens, 71 N. Y. 527.

It is said in 12 Ruling Case Law, p. 412, that:

“Generally an election to rescind a contract constitutes a waiver of the right to maintain an action for damages suffered by reason of fraud in procuring it, since the action for damages is based on an affirmance of the contract.”

It was decided in the former case that the plaintiffs had waived their right to complain of the fraud. Now it is sought in this case to plant another cause of action upon the law side of the court upon the same fraud that we said in the former opinion had been waived. This practice cannot be approved. Plaintiffs had had their day in court on the question of fraud. It has been adjudicated in the former case and is no longer available as a basis for other actions.

There are other assignments of error involving complaints with reference to the direction of a verdict on the opening statement of counsel, but we think it is unnecessary to discuss these complaints. The trial court interrogated counsel to some extent as to the identity of the causes of action, and this was done for the purpose of shortening the trial and avoiding a long record. The trial court is to be commended for his effort in that direction. We are of the opinion that the verdict was properly directed.

The judgment will be affirmed, with costs to the defendant.

Ostrander, Moore, Brooke, Fellows, Stone, and Kuhn, JJ., concurred. Bird, C. J., did not sit.


source: Caselaw Access Project

author: Bird, C. J.

license: Public Domain

text:
    WILSON & CO. v. FRANZ.
    1. Sheriffs — Jail-Limits Bond — Forfeiture — Action Against Sheriff — Statutes.
    Under 3 Comp. Laws 1915, § 13000 et seq., where a jail-limits bond is forfeited by the one in custody going beyond the limits of the county, an action may be maintained by the party in interest against the sheriff, or the plaintiff may take an assignment of the bond and maintain an action thereon to recover his damages.
    2. Parties — Transfer of Claim — Plea in Abatement — Collateral Issue.
    Where, pending the original suit on its claim, plaintiff corporation became merged in another corporation, to which the claim was transferred, and no objection was thereafter raised in said suit that plaintiff had transferred said claim, and judgment followed, it cannot now he raised in a collateral proceeding.

      Error to Berrien; White, J.
    Submitted April 80, 1919.
    (Docket No. 84.)
    Decided July 17, 1919.
    Case by Wilson & Co., Inc., against Fred C. Franz, sheriff of Berrien county, for permitting a judgment debtor to escape jail limits. Judgment for plaintiff. Defendant brings error.
    Affirmed.

      John J. Sterling (George W. Bridgman, of counsel), for appellant.

      Cady & Andrews, for appellee.
   Bird, C. J.

In July, 1910, Schwarzchild & Sulzberger, wholesalers of meats in the city of Chicago, began an action of tort in the Berrien circuit court against one Edward Cryan. This resulted in a judgment for plaintiff in January, 1918, in the sum of $1,138.12. In March following an execution against the goods and chattels of Cryan was issued, but was later returned unsatisfied. Following this a writ of capias ad satisfaciendum was issued and Cryan was taken into, custody by defendant, who was, at that time, sheriff of Berrien county. Cryan gave a jail-limits bond to the sheriff. In October, 1916, Cryan forfeited his bond by going out of the county of Berrien and into the State of Indiana, and this suit was then commenced by plaintiff to recover against the defendant for permitting Cryan to escape the jail limits. The case was heard by the court without a jury and judgment was rendered for plaintiff in the sum of $1,441.62.

1. The point is raised that inasmuch as Cryan gave a jail-limits bond the plaintiff cannot maintain a suit against the sheriff for the escape of Cryan, but is limited in its remedy to an action on the bond. A study of the several sections of the statute, prescribing the mode of procedure in such cases, leads to the conclusion that when, a jail-limits bond is forfeited, by the one in custody going beyond the limits of the county, an action may be maintained by the plaintiff or party in interest against the sheriff, or the plaintiff may take an assignment of the bond and maintain an action thereon to recover his damages. 3 Comp. Laws 1915, § 13000 et seq. These statutes recognize the right of action against the sheriff in many sections, and there is nothing therein to indicate that such right has been abridged by the provision that the plaintiff, or party in interest, may take an assignment of the bond. Section 13017 provides that if the plaintiff, or party in interest, accepts an assignment of the bond, it shall be a bar to any action against the sheriff. The inference from, this is that the acceptance of the bond is optional with the plaintiff. We are persuaded that the trial court was in no error in holding that the suit was maintainable against the defendant.

2. It is further contended by defendant that inasmuch as the original suit was commenced in the name of the corporation known as Schwarzchild & Sulzberger Company, and that during the pendency of the suit this company became merged in a corporation known as Sulzberger & Sons Company, such merger in effect destroyed the plaintiff corporation and thereafter it ceased to exist, and as a consequence thereof the suit abated. It appears from the testimony that the assets of the Schwarzchild & Sulzberger Company were transferred to its successor, known as Sulzberger & Sons Company, and that subsequently the name of that corporation was changed to Wilson & Co., Inc. The argument is made that when the Schwarzchild & Sulzberger Company was merged with the Sulzberger & Sons Company, the cause of action was destroyed. We cannot agree with this. It was an existing claim owned by one company and transferred to another, which latter company afterward changed its name. When counsel for Schwarzchild & Sulzberger Company attempted to take judgment against the defendant, had defendant’s counsel called the fact to the attention of the court that plaintiff had transferred its assets to Sulzberger & Sons Company, the suit might, and probably would, have been abated, but not having done so, and judgment having followed, proof that that judgment was owned by the plaintiff would authorize proceedings on the judgment by the plaintiff. Swartwout v. Railroad Co., 24 Mich. 404. In this case it was observed that:

“It is also objected that this suit could not be maintained, because pending it, the plaintiff consolidated with another company, and thereby ceased to exist. As, however, the cause of action did not die, but passed to the new company, this, if a valid objection in any form, should be considered matter in abatement merely; and, if so, it should have been pleaded puis darrein. If it had been so pleaded, perhaps the suit might have proceeded on the proper suggestion being made.”

Inasmuch as no objection was raised in that suit, that no proper plaintiff was named, it cannot now be questioned in a collateral proceeding.

We are of the opinion that the conclusions of fact and law reached by the court are justified by the record. The judgment will be affirmed.

Ostrander, Moore, Steere, Brooke, Fellows, Stone, and Kuhn, JJ., concurred.


text:
    PEOPLE, ex rel. HARRINGTON, v. BARNHART.
    Quo Warranto — Prosecuting Attorney — Authority to Maintain — Statutes.
    Where an information in the nature of quo warranto was filed to try ‘relator’s right to the office of prosecuting attorney, following the termination of his suspension from practice as an attorney at law for malpractice, during which time the office was filled by another by appointment of the judge, and the provisions of 3 Comp. Laws 1915, § 13550, were not complied with, in that special leave of the court was neither requested nor granted, the acting prosecuting attorney did not give h'is approval, and the consent of the attorney general was not obtained, and it does not appear to have been filed by any one authorized to file it, the court below properly dismissed the proceeding.
    Error to Otsego; Houghton, J., presiding.
    Submitted April 15, 1919.
    (Docket No. 47.)
    Decided July 17, 1919.
    Quo warranto by the- people of the State of Michigan, on the relation of William A. Harrington, against Wirt Barnhart to try the title to the office of prosecuting attorney of Otsego county. Judgment dismissing the writ. Plaintiff brings error.
    Affirmed.

      William A. Harrington, in pro. per.

      Wirt Barnhart (Cummins & Nichols, of counsel), in pro. per.

   Bird, C. J.

At the November election in 1916, plaintiff was elected prosecuting attorney of Otsego county. He entered upon the duties of his office on January 1, 1917. In July, 1917, he was adjudged guilty of malpractice, and suspended from practice as an attorney at law in every court in the State for a .period of six months, from and including the 31st day of July, 1917. On August 6th, Hon. Nelson Sharpe, judge of the Otsego circuit, appointed Willis L. Townsend to perform the duties of the office of prosecuting attorney. At the end of the six months period, namely, February 12, 1918, Townsend resigned, whereupon Judge Sharpe entered an order appointing defendant Barnhart prosecuting attorney of said county. Barn-hart accepted the office and discharged the duties thereof during the remainder of Harrington’s term.

On March 1, 1918, plaintiff filed an information in the nature of a quo warranto to test his right to the office of prosecuting attorney. Defendant filed an answer in the nature of a motion to dismiss the proceedings for the reasons:

1st. That said Harrington is not the prosecuting attorney and the proceeding not being authorized by the attorney general or the prosecuting attorney, he is without authority to institute and. maintain the same.

2d. As he, said William A. Harrington, was suspended as an attorney in a disbarment proceeding, he became disqualified to hold the office of prosecuting attorney and a vacancy was thereby created in said office. '

Plaintiff filed a replication thereto and the matter went to a hearing in May, 1918. After considering the matter for a time, the trial judge entered an order dismissing the proceeding on the second ground stated. The proceedings are now before us for review on writ of error.

First. This controversy was recently before this court on an application for a writ of mandamus to compel the circuit judge to vacate his order appointing respondent to the office. We there held inter alia that quo wárranto and not mandamus was the proper remedy to tést plaintiff’s right to the office. 204 Mich. 327.

The information in this proceeding was filed in pursuance of the following statute:

“Informations under this chapter may be filed by the prosecuting attorney of the proper county, on his own relation, or that of any citizen of the county, without leave of the court, or, by any citizen of the county by special leave of the court or a judge thereof.” 3 Comp. Laws 1915, § 13550.

It does not appear that the provisions of this statute were complied with before filing the information. Special leave of the court or judge was neither requested nor granted. The person who was in the actual possession of the office of prosecuting attorney did not give his approval. The consent of the attorney general was not obtained, in fact it does not appear to have been filed by any one authorized to file it, unless it can be said that because plaintiff claimed the right to the office of prosecuting attorney he was authorized to do so. The information which plaintiff filed is an admission upon the record that he was not in the actual possession of the office, and that respondent had such possession. Territory, ex rel. Hubbell, v. Dame, 13 New Mex. 467 (85 Pac. 473). We are of the opinion that the consent provided for in the foregoing section must be the consent of the acting prosecuting attorney, or one who is actually in possession of the office. Taking this view of the matter, the proceeding must be dismissed, with costs to the defendant.

Ostrander, Moore, Steere, Brooke, Fellows, Stone, and Kuhn, JJ., concurred.


text:
    ATLAS PRESS CO. v. EAMES.
    Specific Performance — Patents — Conveyance of Future Improvements.
    On a bill for tbe specific performance of a contract whereby a patent on an arbor or mandrel press was conveyed with “the full and exclusive right to said invention and to all improvements, present and future, which may be developed thereon,” an improvement consisting in putting added force behind the ram by means of a chain of gears, held, to be an improvement within the meaning of the contract, and not such a mechanical departure as to make it a new or independent invention.
    Appeal from Kalamazoo; Chester, J., presiding.
    Submitted April 10, 1919.
    (Docket No. 27.)
    Decided July 17, 1919.
    Bill by the Atlas Press Company against Gardner T. Eames and others to enjoin unfair trade competition, and for the specific performance of a contract. From a decree for plaintiff in part, it appeals.
    Modified, and affirmed.

      Harry C. Howard, for plaintiff.

      Alfred J. Mills, for defendants.
   Bird, C. J.

Gardner T. Eames, of Kalamazoo, the defendant herein, is an inventor. In 1911 he brought to the patentable stage an arbor or mandrel press, a device used in the mechanical world to remove wheels or pulleys from line shafts and for similar operations. Like most inventors, he was without means to secure and promote his invention. He applied to, and received the aid of, Herbert H. Everard, of his city, in consideration of a one-half interest in the invention. The patent was secured and a company .organized to manufacture and place the press upon the market. The name given to the corporation was the “G. T. Eames Company.” To this company both Eames and Everard joined in an assignment of the patent. They conveyed “the full and exclusive right to said invention and to all improvements, present and future, which may be developed thereon.” The company began manufacturing, advertising and selling the presses to the trade, under the name of “Eames Presses.” It gave evidence of being a success. In 1913, Mr. Everard, who had given the defendant and the company such generous financial and business assistance, died, and his interest passed to his daughter, Mrs. John H. Penniman. Mr. Penniman, her husband, succeeded Mr. Everard in the business management. Differences soon arose between Mr. Penniman and Mr. Eames and this resulted in taking the keen edge off from the business. Debts accrued with no funds to pay them. Legal proceedings were threatened by creditors. Finally matters became so acute that Eames sold and transferred his interest in the G. T. Eames Company to Penniman for $5,000. Penniman then moved the plant to another location in the city of Kalamazoo, and changed the name of the corporation to the “Atlas Press Company.” Following this Eames opened a machine shop in the old quarters where he manufactured other devices which he owned. In a few months he received a patent on another arbor press. He then organized a new corporation, taking the abandoned name of the old company. Located in the old quarters, at 410 Oakland drive, with the old corporate name, he began to manufacture, advertise and sell his new press under the old name of “Eames Presses.” In a short time this resulted in friction between the companies, and much confusion and mixing of their mail. To settle the controversy plaintiff company filed this bill praying for an injunction against unfair trade competition by defendant, and further to compel him to transfer his new or improved, patent to plaintiff under his original assignment. The hearing resulted in- a decree granting plaintiff relief from the unfair trade competition but refusing to compel defendant to transfer the patent. Plaintiff appeals from that portion of the decree refusing specific performance.

' The contentions of the parties present the question for solution, whether the new press of defendant is, within the meaning of the contract, an improvement on the old one, or whether it is such a mechanical departure from the old machine as to make it a new or independent invention.

In the new patent defendant has described the objects as follows:

• (1) To provide a mandrel press having an improved ram driving mechanism.

(2) To provide an improved mandrel press which is comparatively economical in structure, is very powerful, and one in which the parts are so disposed that the strain thereon is very effectively distributed and well balanced.

In his testimony defendant describes the difference between the two as follows:

“I made this more powerful, the ram is driven by a more powerful arrangement of the parts, and that consists of these exposed gears. I added to the art this chain of gears over the other patents. I presume the earlier art had frames like the frame in my invention, or similar ones. Instead of using one lever and a broken pin as a bearing for the two movements, I put on a second lever. I think that was old in the art. The chain of gears as here applied is the new thing I put in. I put another set of teeth in the ram part. When it operated as in the old invention with one set of teeth, it gave power enough to the ram, but put too much friction on it: too much friction of the ram against the face or plate so instead of that I put a chain of gears in there on this frame. I think that was an improvement over this.”

The witness Collins testified that:

“The mechanical purpose of the chain of gears in this patent is to obtain power. In our old patent we obtain power by compounding the leverage. He compounds the leverage the same way we do and he has the added feature of the gear.”

Mr. Otis Earl, defendant’s patent attorney, testified:

“It was a combination patent and so was the other. In the other they combined the whole mechanism, the ram' and all those things. The art was old when the inventor applied for his first patent, and was still old when he applied for the second; deals largely with specific details of each inventor; there is nothing broadly involved in either one of them. This one (meaning the latter) is an improvement, in the sense it appears to have some added points over the earlier one; some improvements over the other.”

He further testified that:

“Mandrel or arbor machines have been in use probably thirty or forty years. There are several types of mandrel presses. They have long standing in the literature of the profession and the literature of the art. A mandrel is not a new invention and the several mandrels that have been made subsequently are all a culmination of new ideas that are used in connection with the old machine, some new power or table, or something of that sort.”

Mr. Taylor, another witness of defendant, testified that:

“The increased power in the last invention is attributable entirely to this chain of gears. * * * The practical difference between the two resides in this chain of gears; that is where they get the compound. There is no compound in the other, and, of course, they have cogs on the ram. * * * My opinion would be this is an improvement over that; you would get more power exerted on the end of your ram.”

We think it is to be gathered from this testimony that the cardinal difference between the old and new press is that defendant has added a chain of gears to the old machine and thereby produced the new one. In doing this the efficiency of the new press was greatly increased over the old one. This, to my mind, is an improvement and is such an improvement as was contemplated by the parties when the assignment was made to include “all improvements past, present and future which may be developed thereon.” While the construction of the two machines is somewhat dissimilar it would probably be very difficult to make an improvement on an existing machine and one which would materially increase its efficiency unless it was more or less dissimilar in construction. But, notwithstanding this dissimilarity of construction the essential features, namely, the ram and the object to be accomplished, are the same. The sole' improvement consists in putting added force behind the ram by means of a chain of gears. This would appear to increase the power of the old machine instead of creating a new one. If this change can take the new machine out of the domain of an improvement and make an independent invention of it, it will do, in my judgment, what was not contemplated by the parties at the time the agreement was made, and it will also open the way for inventors in the future to dispose of the rights of their assignees to whom, for a valuable consideration, the patent, or some interest in it, has been transferred.

To hold that the new press is an improvement on the old one will, we think, be giving a construction to the agreement of the parties which they themselves intended at the time it should have. That defendant’s understanding of the agreement was in accord with this view when he was associated with the company, is evidenced by the fact that he assigned to the company a subsequent patent, which was issued to him, on the table of the press, which he declares in his testimony was more of a departure from the old table than the present improvement is from the old press, and he further stated that he made the assignment because he thought it was within his agreement.

The case of Westinghouse Air-Brake Co. v. Chicago Brake & Manfg. Co., 85 Fed. 786, contains an interesting discussion on this subject. The question there was whether certain changes made in the air brake which increased its efficiency was an improvement or a separate invention. It was there said in part:

“But, were they much more dissimilar, such fact would not change my conclusion. Identity of purpose and function of the two mechanisms controls the question whether the one stands in the relation of an improvement to the other. Dissimilarity of the mechanical means employed to reach the purpose, or perform such function, only measures the merit and character of the improvement. Park may, in his later invention, in the narrow sense of particular arrangement and adjustment of valves, have started out on new lines; but, in the broader idea that dominates these air-brake devices, he remained, in 1895, precisely where he was in 1888. In the later patents he only perfects, in mechanical details, the fundamental conception upon which his former invention was built. The two groups of inventions, in my judgment, stand indisputably, in the relation of consecutive mechanical growth — in the relation of an imperfect machine, somewhat perfected. In every view of the meaning to be given to the word ‘improvements’ as used in the assignment, I can find nothing that fairly excludes these later inventions.”

See, also, on this subject: 1 Robinson on Patents, § 215; Walker on Patents (5th Ed.), § 285; Aspinwall Manfg. Co. v. Gill, 32 Fed. 697.

Entertaining the view that we do, the decree made by the trial court must be modified and specific performance decreed in accordance with the prayer of the bill.

The decree will be modified in this respect and affirmed, with costs of both courts to the plaintiff.

Ostrander, Moore, Steere, Brooke, Fellows, Stone, and Kuhn JJ., concurred.


text:
    HILLIER v. CARPENTER.
    1. fraud — Exchange of Property — False Representations — Good Faith — Reformation of Instruments.
    On a bill to reform a contract for an exchange of real property on the ground, of fraud, if the representations were actually made and were false it is unnecessary to determine whether they were made in good faith.
    2. Same — Negligence of Injured Party.
    No duty to discover the fraud is imposed upon the injured party.
    3. Same — Representations as to Value — Right to Rely Thereon.
    Where plaintiff had no knowledge as to the value of the property he was to receive, he had a right to rely on the representations of defendant in regard thereto.
    4. Same — Appropriate Relief — Amended Pleadings — Rescission.
    Where the record contains propositions of settlement from counsel for both parties based upon a rescission of the contract, in view of these offers and the opinion of this court that plaintiff was defrauded and that rescission is the appropriate relief, the pleadings will be amended and rescission decreed in lieu of the relief granted plaintiff by the court below. '
    For authorities discussing the general rule as to right to rely upon representations made to effect contract as a basis for a charge of fraud, see note in 37 L. R. A. 593.

      Appeal from Genesee; Brennan, J.
    Submitted April 15, 1919.
    (Docket No. 37).
    Decided July 17, 1919.
    Rehearing denied October 6, 1919.
    Bill by Perry E. Hillier and another against Edbert M. Carpenter and another to reform a contract for an exchange of real estate on the ground of misrepresentation and fraud. From a decree for plaintiffs, defendants appeal.
    Modified, and affirmed.

      Farley & Selby and George W. Cook, for plaintiffs.

      Brownell & McBride and Charles A. Withey, for defendants.
   Bird, C. J.

Prior to March 12, 1918, plaintiff was a farmer and resided within a few miles of the city of Flint. Defendant was a real estate dealer and resided in Flint. They were acquainted. They met on the street on the 12th day of March, 1918, and fell to talking about their respective properties, and they had some talk about exchanging them. Later they talked more about it. On March 12th they arrived at an agreement and plaintiff conveyed his 248-acre farm near Flint, together with a herd of Holstein cattle and other personal farm property, subject to certain mortgage indebtedness thereon, in exchange for a conveyance of defendant’s six-family flat in Flint, and in addition to the farm and personal property plaintiff gave defendant a mortgage on the flat for $35,000. A mortgage of $5,000 on the flat was to be paid by defendant. On March 16th the conveyances were delivered and each took charge of the property traded for. Soon after the deal was consummated the plaintiff began to think he had been deceived and defrauded. On April 1, 1918, he filed his bill charging defendant with fraud and deception in connection with the following representations:

(a) That the flat property was worth $75,000, and that it would readily sell in the market for more than $67,000.

(&) That the net yearly rentals from said flat property were $4,200 and upwards.

(c) That the total annual expense connected with said property would not exceed $550 to $600.

(d) That all the apartments except the one in the basement were then rented for $65 per month, and that the seven garages on the premises were all rented at $5 per month each.

(e) That the barn on said premises could, at an expense of not exceeding $1,000, be made into living apartments, and that the total rental of all the apartments could then be made to yield upwards of $500 per month.

(/) That the only incumbrance on said property 'was a mortgage of $5,000. < 1

The relief prayed for was:

(1) That the $35,000-note and mortgage be declared invalid and that they be canceled and surrendered to plaintiffs.

(2) That defendants be enjoined from recording the said mortgage and from taking any proceedings in law or equity to enforce either the note or mortgage.

(3) That defendants be ordered to pay the mortgage indebtedness of $15,000 on the flats, and that a lien for that amount be declared on the farm until the same is released.

(4) That plaintiffs be decreed their damages on account of the fraud.

(5) A general prayer for relief.

Defendants filed an answer taking issue with plaintiffs as to the truth of some of the representations and denying that others were made. The matters in issue went to a. hearing and a large amount of testimony was taken bearing on the value of the respective properties and on the other issues in the case. The chancellor reached the conclusion that defendant Carpenter made the representations substantially as alleged and that the representations concerning the market value of the flats and the annual net income therefrom were exaggerated and untrue. He also found that plaintiff relied upon such representations and that they were the inducing cause for making the exchange of the properties. He found the value of the farm and personal property, which plaintiff turned over to defendant, less the mortgages thereon, to be $32,000. He found the value of the flats to be $32,000. He ordered that the $35,000 mortgage be canceled and surrendered to plaintiff, and in addition gave to plaintiff a lien on the farm until the mortgages on the flats, aggregating $15,000, should be released.

It would be difficult for one to read the record in this case without reaching the same conclusion that the chancellor did, namely, that the representations were all made as alleged, and that the representations with reference to the market value and the net income of the flats were exaggerated and untrue. The market value and the net income were greatly overstated. After taking into consideration the fact that the average man ordinarily has an exaggerated notion of the value of property which he owns and after making due allowance for real estate optimism and errors of judgment, the market price stated by defendant would then be so far out of the range of its real or market value that it is difficult to believe the statements were made in good faith. But if they were actually made and were false it is unnecessary to determine whether they were made in good faith. Yanelli v. Littlejohn, 172 Mich. 91; Houder v. Reynolds, 195 Mich. 256. The reckless mood that defendant was in when making these representations is further illustrated by his statement that the mortgage indebtedness on the flats was $5,000, whereas in fact it was $15,000.

Although plaintiff owed no duty to defendant to discover the fraud (Yanelli v. Littlejohn, supra) it does seem, as counsel suggests, that plaintiff ought to have discovered the reckless character of these statements in the interim between March 12th and 16th. Had he advised with one or two of the real estate men, who subsequently testified in his behalf, he would undoubtedly have had an awakening. Of course, if plaintiff did not know the value of the flats he had a right to rely upon the representations made by defendant, and we are forced to the conclusion that he did not know and that he did rely on the representations, because in no other way could one account for his making a trade which amounted to little less than donating his farm to the defendant.

It will be of no advantage to any one to go further into a discussion of the fraudulent representations. We are in accord with the decree down to the point where the relief is granted. We are all of the opinion that a decree of rescission, which would place the parties back in the ownership and possession of their respective properties, would'be the more appropriate relief under all the circumstances of the case.

During the hearing counsel for the parties discussed in open court the question of an amicable settlement of their differences. This talk resulted in both counsel making propositions of settlement and reading them into the record. Both offers appear to be based upon a rescission of the contract. In view of these offers and the opinion of this court that rescission is the fitting relief, the pleadings will be amended and a rescission decreed. With this modification the decree will be affirmed. The record will then be remitted to the trial court where further testimony will be taken, if the parties are unable to agree, in order to determine what the net income of each property has been since the date of the exchange. Should a balance be found in favor of either party, it will be made a lien, until paid, on the property of the other party. Plaintiffs will recover costs of both courts.

Ostrander, Moore, Steere, Brooke, Fellows, Stone, and Kuhn, JJ., concurred.


author: Steere, J.

text:
    ZIMMERMAN v. MILLER.
    1. Courts — Jurisdiction—Pleading—Costs in Circuit Court— When Awarded Defendant.
    In actions arising out of contract, jurisdiction of the court is determined by the amount demanded in the plaintiff’s pleadings, and not by the sum actually recoverable or that found by the judge or jury on the trial; the only effect of failure to recover in the circuit beyond the amount the party could have recovered in justice’s court being the award of costs against him.
    2. Tender — Private Check,
    Where defendant as agent contracted to sell plaintiff a house and lot "subject to owner’s approval,” and later notified plaintiff that he had been unable to secure the owner’s consent, and sent his personal check to return the amount deposited, which plaintiff refused, held, not a legal tender.
    3. Contracts — Construction—Subject to Approval.
    The plain provisions of a contract for the sale of a house and lot, that $50 deposited by plaintiff was but half of the first payment, the sale to be closed when the other half was paid, and “this deposit accepted subject to owner’s approval,” held, to leave no room for construction.
    4. Same — Validity.
    Until approved in writing, a written agreement to sell real estate, made subject to approval, depends for its value, like an oral agreement to sell real estate, chiefly1 on the integrity of the owner or his agent.
    5. Same — Breach—Measure of Damages.
    If the writing was a valid contract to sell, which was breached by defendant’s refusal to proceed, plaintiff’s measure of damages was the difference in value of the property at the time of the contract and its value at the time of the breach, and not its value “at the present time.”
    6. Same — Damages—Evidence—Costs.
    The only evidence of damages sustained by plaintiff being the $50 deposited with defendant, plaintiff was entitled to a judgment for said amount, with interest, but with costs against him.

      Error to Wayne; Codd, J.
    Submitted April 24, 1919.
    (Docket No. 125.)
    Decided July 17, 1919.
    Assumpsit by William Zimmerman against Frank P. Miller for breach of a land contract. Judgment for defendant on a directed verdict. Plaintiff brings error.
    Reversed.

      Proctor K. Owens, for appellant.

      Albert McClatchey and Firmón Lush, for appellee.
   Steere, J.

At a time when the unearned increment of realty values in the village of Highland Park was under active exploitation, plaintiff had an affair in that line with defendant resulting in this litigation, the documentary evidence of which, shorn of defendant’s advertising matter, is as follows:

“Agreement, made this 18th day of November, 1915, between Frank P. Miller, of Detroit, Michigan, representing____party of the first part, and Wm. Zimmerman and wife____Street 109 East Milwaukee, city of Detroit, Mich., parties of the second part:
“Witnesseth: That the party of the first part agrees to sell and convey, and the parties of the second part agree to purchase all that certain piece or .parcel of land described as follows: ......6 rooms and bath, house located on .... Lot No. 421 Subdivision Hamilton Park, Price $8,250.00. The terms to be $100.00 ......as first payment and the balance to be paid as follows: $30 or more per month......interest at six (6) per cent, per annum, subject to all taxes from date hereof.
“Parties of the first part agree to furnish Abstract of title free and clear from all liens and incumbrances.
“Deposited $50.00, balance to be paid and sale to be closed on or before December 18, 1915.
“This deposit accepted subject to owner’s approval.
“Remarks: House to be completed about December 18th.
“No verbal agreements shall be binding on either party hereto.
“The stipulations aforesaid are to apply to and bind the successors, heirs, executors, administrators and assigns of the respective parties.
“Witness the hands and seals of the above parties.
“Wm. Zimmerman (L. S.)
“F. P. Miller (L. S.)
“In presence of “John Price,
“C. L. Lovejoy,
“Salesman.”
“Detroit, Mich., December 13th, 1915. “Mr. William Zimmerman,
“109 Milwaukee Ave. East,
“Detroit, Mich.
“Dear Sir: We are returning herewith deposit of fifty dollars ($50) made by you, under date of November 18, 1915, on account of the proposal to purchase house being erected on lot 421, Hamilton Park, for Mr. Hullinger.
“We have been unable to secure Mr. Hullinger’s consent to this sale, owing to the fact that the Highland Park schQol board has been contemplating the purchase of the lots in this vicinity, and it has only been definitely decided upon a few days ago that the site will include the lot upon which the proposal was made upon by you.
“This house has been removed to lot 406 of the same subdivision, across the street, but as we have no word from you that you want same under the conditions, we hasten to return the deposit as stated. Kindly look this matter over at once, and advise if it is still your desire to purchase the house on the lot mentioned.
“Regretting our inability to serve you in this matter, and with thanks for the business offered to us, we are,
“Yours very truly,
“Frank P. Miller, “Sales Department.”

Zimmerman testified that he had a talk with Miller in relation to purchasing lots in Highland Park and says:

“I bought a house and lot of him. This is the contract I made. I signed it and paid $50 down.”

The instrument he then identified as the contract and introduced in evidence as his muniment of title is necessarily the measure of his rights. He admittedly was never in possession of the property he claimed to have purchased, identified as that described in his contract which he says Mr. Lovejoy brought to him with an invitation to read .it and request to sign it, and after he signed Lovejoy took it to Miller'to sign. Of the consummation of that feature of the business he testified:

“I paid $50 cash and received the contract about a week later. After that I went out and looked at the property and I liked it.”

The house which he then saw in process of construction on the lot proved somewhat ambulatory under Miller’s manipulations and when Zimmerman went out to look at the property later he found, as he tells it,—

“no house there at all; it had been moved across the road. I then went to Mr. Miller’s office to find out the trouble, and he said they could not — they- said it was turned over to the Highland Park school board, and they had taken it and it was sold to them. * * * He offered me the same house on a lot across the street at that time and I refused to take it,”
“That time” was when he called at Miller’s place of business after receiving the letter of December 13. He states that on December 18, 1915, he tendered back the check which had been mailed him and says:
“When the balance was to be paid about 18 months ago I went to Mr. Miller’s office and he would not accept it. I offered him $50 United States money. That completed the amount I was to pay, $100.”

The case was tried June 20, 1918. “About 18 months ago” would be about a year after it was due. His agreement provides: “The terms to be One Hundred $100.00......as first payment. * * * Deposited $50.00, balance to be paid and sale to be closed on or before December 18, 1915.”

On March 22, 1917, plaintiff commenced this action to recover damages for “nonperformance,” stated by his counsel during the progress of the trial, when asked what was claimed, to be—

“the amount we should have been entitled to if the contract had been performed up to the present time. We did not break the contract. * * * This man was deceived into purchasing the property. We claim that he sustained damages which the jury can find.”

It was shown that in December, 1915, Miller, who was agent for the Michelson Land & Home Company and had been selling lots for it in the Hamilton Park subdivision, assisted in negotiating a deal with the school board of Highland Park by which the latter purchased through him for a school site several lots of that subdivision, including lot 421 named in Zimmerman’s contract. Miller’s letter to Zimmerman indicates that “Mr. Hullinger,” whose refusal to consent to Zimmerman’s, “proposal” is given as an excuse or justification for dropping the latter, was owner of that lot. The attorney for the school board found the legal title to lot 421 and others in that subdivision purchased by it to be in the Michelson Land & Home Company, which deeded the same to the public schools of Highland Park on December 16, 1915. The attorney who represented the school board in the purchase testified that a partially completed house was then under roof with the rough flooring in, on lot 421, of which he says,—

“Mr. Miller told me this house was being built for a man by the name of Hullinger, in Royal Oak. He said that he could get the title for me, and did get it.”

On motion of defendant’s counsel the trial court directed a verdict of no cause of action, telling the jury in a charge of some length the reasons for so doing. Numerous errors are assigned by plaintiff against various portions of the charge, but one of which calls for serious consideration. In concluding the charge, during which other issues, involved were disposed of as questions of law, the court stated that while plaintiff would be entitled to recover in the proper tribunal the $50 paid defendant to apply on the purchase, he could do so only in a justice’s court where rested exclusive original jurisdiction in all civil actions wherein the amount involved did not exceed $100.

While counsel for plaintiff claimed at one time during the trial that he was deceived into purchasing the property and his action is not planted on a breach of the contract, apparently upon some theory of fraudulent inducement to enter into the contract, his grievance as disclosed by his pleadings and proofs is that defendant would not, and after the lot was conveyed to others could not, perform the contract, while plaintiff was always ready and anxious to perform on his part. He so asserts in his declaration, which sounds in assumpsit, and in it “alleges that by reason of the nonperformance of this contract by the said defendant, he has sustained damages in the sum of twenty-five hundred dollars.” The fact that he failed on the trial to prove recoverable damages exceeding $100 did not divest the court of jurisdiction to give him judgment for whatever he was able to prove. Defendant as agent for an undisclosed principal received the money from plaintiff under this contract for a specified purpose to which he did not apply it.

It was early held in this. State after a full discussion of the subject that in actions arising out of contract, jurisdiction of the court is determined by the amount demanded in the plaintiff’s pleadings, not by the sum actually recoverable or that found by the judge or jury on the trial, the only effect of failure to recover in the circuit beyond the amount the party could have recovered in justice’s court being the award of costs against him. Strong v. Daniels, 8 Mich. 466. This case has been cited with approval and followed when applicable in later decisions. King v. Railroad Co., 16 Mich. 132; Inkster v. Carver, 16 Mich. 484; Stortz v. Ingham Circuit Judge, 38 Mich. 243; Meyer v. Wood, 38 Mich. 297; Nelson v. People, 38 Mich. 618; Lewis v. Railway Co., 56 Mich. 638; Berndt v. Ionia Circuit Judge, 111 Mich. 359; Reed v. Overlie, 192 Mich. 444. Defendant’s claim that the $50 was tendered back is not tenable. Mailing plaintiff his private check, which was refused, did not serve as a legal tender. Whether his check would have been good is immaterial. Each of these parties stands strictly on his legal rights. The court is not required in this proceeding to pass upon the financial responsibility or moral code of this real estate agent, nor the business wisdom of plaintiff in accepting from him so loose and plainly unilateral an instrument as that upon which he relies, and must necessarily rely, for he never was in possession of the realty to which it relates and any oral agreements made between them in relation to it are of no validity.

Plaintiff presumably read or heard read this paper before he signed it, and knew- what it provided. He does not claim any misrepresentations were 'made to him as to its contents at the time he signed it or before. He stated that the matter of reading it was called to his attention by the man who brought it to him. ■ His only testimony as to Miller’s representations before the paper was signed is:

“I had been up there prior to signing the contract and looked at it and then talked to Mr. Miller about it. In boosting the proposition he said that it was nice property, it would be worth more, pretty near double the amount it was worth then, that it was near the schools and near the Ford factory, and I could get a job in the Ford factory, and all those things he told me. I relied upon his statement and representations, and a day or two after that they came down with the contract and I signed it.”

While this crude writing which plaintiff accepted and signed was defendant’s composition and where construction is permissible should be most strongly construed against him, its plain provision that the $50 then deposited is but half of the first payment, the sale to be closed when the other half is paid, and “This deposit accepted subject to owner’s approval,” leaves in that simple wording no room for construction. In its opening paragraph Miller is shown to be an agent representing an unnamed principal who never signed the agreement or approved it so- far as shown. It must be admitted that other provisions, are noticeably less clear and definite. It is left to construction whether Miller or the party he represented, or both of them, constitute the “party of the first part,” multiplied to “parties of the first part” where last referred to; but construing it most,strongly against Miller, he as party of the first part agrees to sell and convey to the parties of the second part “6 rooms and a bath,” appurtenant to which it is fairly inferable are a house and designated lot which the parties had in mind and intended to include in the deal, followed by price and terms with provision for a “deposit accepted subject to the owner’s approval.” The writing nowhere states Miller is the owner, but on the contrary that he represents some one else, and the proof is that he was not the owner. Until approved in writing, a written agreement of this kind made subject to approval depends for its value, like an oral agreement to sell real estate, chiefly on the integrity of the owner or his agent.

But, even conceding that this writing upon which plaintiff relies did amount to a binding contract to sell which defendant has breached, entitling plaintiff to recover damages, his proposed proof upon that subject was not directed to the proper measure of damages, which the trial court explained in sustaining objections to it. The claimed breach occurred December 16, 1915, when the lot was deeded to the school board. No attempt was made to prove the difference in value of the property at the time of the contract and its value at the time of the breach. Plaintiff’s counsel contended on the trial that the measure of damages was “the difference between the price at the time this property was sold and the amount of value of the property up until the close of this litigation” and directed his questions, objection to which was sustained, to the' value of the property “at the present time” (June 20, 1918). There was no error in the rulings of the court in that particular.

The record contains no legal evidence of damages sustained by plaintiff beyond the deposit of $50 with defendant for 'which amount, with interest, he was entitled to a judgment, with costs against him.

For this error the judgment is reversed with costs to plaintiff, and a new trial granted.

Bird, C. J., and Ostrander, Moore, Brooke, Fellows, Stone, and Kuhn, JJ., concurred.


author: Fellows, J.

text:
    WHITE v. WADHAMS.
    1. Appeal and Error — Modification of Decree of Supreme Court by Court Below.
    A supplemental bill filed by plaintiff in. tbe court below, after the case was remitted to be there enforced under 3 Comp. Laws 1915, § 13761, by which it is sought to increase the amount found by this court to be due plaintiff by adding by way of penalty the amount of costs which plaintiff has since said decree was entered been required to pay, held, to be an attempt to change the decree.
    2. Same — Judgment—Decree of Supreme Court — Modification by Court Below.
    In a chancery appeal the Supreme Court hears the case de novo-, and the decree entered is a finality; therefore the trial court may not, where the case is remitted to be there enforced, without first obtaining leave of this court, reopen the case and change or modify the decree of this court.
    3. Same — Laches—Pleading.
    Where plaintiff is seeking by this supplemental bill to recover costs incurred in this court on the former appeal, he cannot be said to be precluded by laches although some of the facts alleged came to his knowledge on the hearing in the court below.
    4. Same — Pleading—Contempt—Remedy—Statutes.

      Held, that this supplemental bill seeks something more than statutory contempt proceedings, which might have been instituted under 3 Comp. Laws 1915, § 12270.
    5. Same — Nunc Pro Tunc Order — Conditional Order — Payment of Costs.
    On condition that plaintiff pay the taxed costs of this appeal within 30 days, an order will be entered in this court granting nunc pro- tune leave to file this bill, when order appealed from will be affirmed.
    Appeal from Kent; Brown, J.
    Submitted June 6, 1919.
    (Docket No. 70.)
    Decided July 17, 1919.

      Bill by Marl S. White against Frederick N. Wad-hams and others for an accounting. From an order denying a motion to dismiss, defendants appeal.
    Affirmed conditionally.

      Sioarthout & Master, for plaintiff.

      Colgrove & Potter and Arthur Brown (E. R. Sunderland, of counsel), for defendants.
   Fellows, J.

The plaintiff, Marl S. White, filed his bill in the Kent circuit court for a partnership accounting against defendant Frederick N. Wadhams. The Hastings City Bank was also made defendant upon the theory that the partnership funds were deposited with it. Injunction was granted to prevent the disposition of the partnership funds by Wadhams, or payment of them by the bank. Upon the hearing of the case it developed that defendant Wadhams had taken a certificate of deposit for such funds and had transferred the same to his sister Ida E. Wadhams, who had cashed it at the State Savings Bank of Ann Arbor, which bank intervened in the suit, claiming to be a bona fide holder of the certificate of deposit. After such intervention the trial judge filed his findings. He found that there was due to the plaintiff from defendant Wadhams the sum of $492.24 and interest, and allowed an attorney fee of $75 payable out of the partnership funds. He also found that the State Savings Bank of Ann Arbor was not a bona fide holder of the certificate of deposit. A decree was entered dissolving the partnership between plaintiff and defendant Wadhams, provided for the payment of the amount found to be due from Wadhams out of the partnership funds originally deposited in the Hastings City Bank and required that bank to turn over the balance to the clerk of the court. From this decree the State Savings Bank of Ann Arbor appealed. This court did not agree with the trial judge as to the bona, fides of the bank (White v. Wadhams, 204 Mich. 381), and on December 27, 1918, a decree was here entered affirming the decree of the court below as to the accounting between plaintiff and' defendant Wadhams and reversing the decree as to the State Savings Bank of Ann' Arbor. The case was remanded and the files .returned to the court below. Thereafter plaintiff petitioned the circuit court for permission to file a supplemental bill without having first obtained leave of this court so to do. The prayer of such petition was granted and the supplemental bill was filed. To review an order overruling a motion to dismiss such supplemental bill, this appeal was allowed.

The facts relative to the transfer of the certificate of deposit will be found in the opinion of the court when the case was here before. The supplemental bill sets up such facts and charged a conspiracy on the part of defendant Wadhams, his sister Ida E. Wad-hams, his sister Clara E. Straith and her husband, Fred W. Straith, who are made defendants in the supplemental bill, to defraud plaintiff out of the amount due him on such partnership accounting. It sets up the proceedings in the trial court and in this court and the amount plaintiff has been required to pay by way of costs and prays for a decree against all these parties for the amount found due him by the court, together with the costs he has been required to pay, the latter by .way of penalty under the provisions of section 12288, 3 Comp. Laws 1915.

We agree with the contention of defendants’ counsel that the purpose of this supplemental bill is to change the decree of this court as entered when the base was here before. By the decree of this court the “findings and decree relative to the accounting between the said plaintiff Marl S. White and the said defendant Frederick N. Wadhams be and the same is in all things affirmed.” By such findings an amount was found to be due from Wadhams to this plaintiff. By this proceeding it is sought to increase that amount by adding by way of penalty the amount of costs which plaintiff has since said decree was entered been required to pay, thereby changing and increasing the amount as decreed by this court. May the trial court to which a chancery case has been remanded by this court after final decree here, without leave of this court having been obtained, reopen a case and change and modify, enlarge or detract from the decree of this court? We think not. This court hears chancery cases de novo, and the decree of this court is a finality. The recent case of Thompson v. Hurson, 206 Mich. 139, is in point. By the provisions of the statute (section 13761, 3 Comp. Laws 1915), upon the final determination of a chancery case by this court, it is remitted to the circuit court to be there enforced. But it is not for that court to determine whether it shall be enforced, changed, added to, or taken from.

We do not think this case one where it may be said that plaintiff is precluded by his laches from filing this bill. While some of the facts alleged in the bill came to the knowledge of the plaintiff on the hearing in the court below, others (i. e., the incurring of the various items of costs) occurred considerable time after the case was there closed, a decree there entered, and an appeal taken therefrom. It was not until the decision of this court that plaintiff learned that he could not follow the funds into the hands of the State Bank of Ann Arbor and that he was liable for the costs he now seeks to recover from the present defendants. Promptly upon learning these facts and upon the remand of the case to the court below he filed his supplemental bill. It is unnecessary for us to consider or controvert the contention of defendants’ counsel that a supplemental bill must be filed promptly on learning the facts. In the instant ease plaintiff is now seeking to recover, at least in part, from the present defendants by way of penalty the costs he incurred in this court, as well as in the court^below. • We have held that to permit such recovery adds to and changes the decree, and for that reason may not be done by the trial court without leave of this court. At the time the decree, later affirmed by this court, was entered in the court below there was no such liability, if such liability exists, and no facts then existing upon which such a decree could have been entered. Such facts have occurred, and necessarily came to the knowledge of the plaintiff since the case was first disposed of there. Under these circumstances there is no occasion to apply the doctrine of laches.

We do not perceive force in the contention of defendants’ counsel that this supplemental bill is a proceeding to punish defendant Wadhams for contempt of court in violating the injunction prohibiting him from disposing of the partnership money, whch proceeding, counsel urge, may be instituted solely by affidavit under section 12270, 8 Comp. Laws 1915. This supplemental bill seeks something more than statutory contempt proceedings, and is duly sworn to.

Plaintiff’s counsel asks that an order be entered in this court granting, nunc pro tunc, leave to apply for permission to file this bill in case we determine such leave is necessary. This we are inclined to do; but it must be on condition that plaintiff pay the costs of this appeal.

If plaintiff shall within 30 days from the filing of this opinion pay the taxed costs of this appeal such nunc pró tunc order will be entered and the order appealed from will be affirmed. Otherwise the order will be reversed and the bill dismissed with costs to the defendants.

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


text:
    BECKER v. WELCH.
    X. Equity — Jurisdiction—Reuef from Judgments at Law.
    A court of equity in proper cases may afford relief from judgments at law, where the facts are such as to invoke its jurisdiction.
    2. Same — False Testimony in Suit at Law — Insufficient to Invoke Jurisdiction.
    A court of equity may not, in the exercise of its jurisdiction, entertain a bill to set aside a judgment at law on the ground that false testimony was given upon the trial of the issue on the law side of the court.
    3. Same — Unfamhiarity with Practice.
    That plaintiff was not familiar with the practice in this State, although he had reputable attorneys employed who were, is not so extraordinary as to invoke equity jurisdiction.
    Appeal from Genesee; Brennan, J.
    Submitted June 5, 1919.
    (Docket No. 51.)
    Decided July 17, 1919.
    Bill by Christian Becker against James A. Welch to set aside a judgment and settlement on the ground of fraud. From an order granting a motion to dismiss the bill, plaintiff appeals.
    Affirmed.

      L. B. Gardner and O. J. Hood, for plaintiff.

      Farley & Selby, for defendant.
   Fellows, J.

The bill of complaint with accompanying exhibits covers 68 pages of this record, the amendments to it several additional pages. It is obvious that we cannot in this opinion set out in detail its allegations and it will be sufficient that we state the controlling facts alleged and the claims made. By this bill and the amendments the following facts are made to appear:

Plaintiff lives near Pontiac in the State of Illinois, defendant at Flint in this State. In the spring of 1917 defendant was the owner of 240 acres of farm land situated in the county of Genesee in this State and listed it for sale with the firm of Hoke & Smith, real estate dealers at Pontiac, Illinois. As a result of negotiations defendant’s farm was sold to plaintiff and a deed executed. Part of the consideration was paid in cash, part by the assumption of a mortgage, and $2,500 by the delivery of two stallions, Mr. Becker being a dealer in blooded stallions. After title to the stallions had been transferred to Mr. Welch, one of the stallions died and the other was shipped to him at Flint. It is alleged that there were no representations or warranties as to these : stallions. August 1, 1917, the defendant, Mr. Welch, commenced suit by attachment in the circuit court for the county of Genesee against Mr. Becker. In his affidavit for such writ he alleged that there was due him $1,490 on implied contract. There was no personal service, but publication was had. In his declaration he alleged the sale of the stallions to him on March 29th, and alleged a warranty as to their soundness and its breach. February 4, 1918, judgment was rendered in such attachment case for $1,490. It is alleged that in that case Mr. Welch falsely testified to a warranty and its breach.' On January 25, 1918, garnishment proceedings were instituted against John Curry, who disclosed $1,010.85 in his hands belonging to Becker. March 16th judgment was entered against the garnishee defendant for the amount disclosed to be in his hands. On February 20th Neithercut & Neithercut, a firm of attorneys located at Flint, having been previously employed by Becker, entered a special appearance in the attachment case and moved its dismissal. March 2d the motion was denied and at this time Mr. Welch’s attorney offered to consent to the vacation of the judgment and to permit Becker to come in and defend. About the middle of March, Becker employed Elmer Smith of the firm of Hoke & Smith, of Pontiac, Illinois, to come to Flint to negotiate with Mr. Welch for a settlement. During their negotiations Welch claimed the stallion shipped to him was diseased, that it had' been warranted to him, that if Becker appealed the case to this court he would have to enter his personal appearance, that Welch would take judgment for a further sum, and Becker would have the costs to pay. It is alleged that the horse was not diseased and Welch’s representations in that regard as well as to any warranty were false, that Becker was “in utter ignorance of the law of the State of Michigan and of the several steps necessary to be taken by defendant to obtain judgment against this plaintiff in the attachment proceedings,” and requested Smith to wire Welch that he would surrender the money in the hands of the garnishee defendant “upon dismissal of all judgments and attachments.” This Welch at first declined to do, but upon receipt of a letter from Smith importuning him to make such settlement he filed and also sent to Smith a satisfaction of the judgments. In the meantime the bill alleges Becker consulted his local counsel at Pontiac and on the 18th he wired Neithercut & Neithercut to enter Becker’s appearance, that he would fight the case on the merits.' The attorneys for the respective parties on at least one occasion went to the court house for the purpose of having the judgment set aside but' the judge was out of town; they had several conferences, during some of which Welch’s attorney was informed of the telegram to fight the case, and Becker’s attorney was informed by Welch’s attorney that he had advised Welch to settle the case. It is sought by this bill, filed June 15, 1918, to set aside the judgment and settlement on the grounds of fraud. Defendant filed a motion to dismiss in the nature of a demurrer. From a decree dismissing the bill plaintiff appeals.

Upon this motion to dismiss the facts alleged in the bill must be taken as true and it therefore must be accepted as a fact that the plaintiff here made no representations or warranties as to the stallions or either of them, and that the defendant testified falsely in the attachment case when he testified that he did; we must also accept as a fact that the stallion shipped to defendant was sound, and that defendant falsely testified in the attachment suit that he was not. We therefore have presented to us as the crucial questions in this case whether a bill in equity will lie to set aside a judgment at law obtained by perjured testimony; whether the giving of such testimony constitutes such fraud as gives the court of equity jurisdiction to vacate the judgment; whether a court of equity may grant a new trial or itself retry an issue which has been disposed of on the law side of the court and a determination reached as the result of false testimony. That courts of law have the inherent power to grant new trials of cases tried there, and that courts of equity possess inherent power to grant rehearings in cases heard there, cannot be questioned. Nor can it be questioned that courts of equity in proper cases may afford relief from judgments at law, where the facts are such as to invoke its jurisdiction. The question here, however, is much narrower. It is whether the giving of false testimony in a case tried upon the law side of the court is such a fact as invokes the exercise of equity jurisdiction on the ground of fraud.

In the early case of Miller v. Morse, 23 Mich. 365, Mr. Justice Cooley, speaking for the court, said:

“And we do not see why, if this bilí should be sustained, the defeáted party might not maintain a similar one in nearly every case which the courts of law dispose of.
“Generally, courts of equity do not permit cases to be retried therein which have already been disposed of in the courts of law upon the very point made by the bill. To do so would be to assume an appellate jurisdiction which, by the law, is not conferred upon them.”

A leading case on the subject is Gray v. Barton, 62 Mich. 186. In that case this court, speaking through Mr. Justice Morse, said:

“But it does not seem to me that the mere allegation that the defendant committed perjury upon the trial, and the belief of the complainant that he can 'establish such perjury upon a retrial, is such a fraud as will authorize a court of equity to interfere, after the judgment against him in a court of law has been affirmed by the highest tribunal. The establishment of such a right in the defeated party would open the way for another contest in equity in almost, if not every, suit decided at law. There is scarcely a controversy in the courts in which there is not a conflict of testimony, and there are quite often charges of false swearing, and seldom is a case tried and decided in which new evidence cannot be obtained after people suppose it to be ended.”

In Steele v. Culver, 157 Mich. 344 (23 L. R. A. [N. S.] 564), a bill was filed to set' aside a judgment based upon perjured testimony. Culver, the defendant, had obtained a judgment in an action for personal injuries of $19,200, which judgment had been affirmed by this court. After the affirmance of such judgment he confessed that his testimony on a material and controlling fact was false and that he and his attorney had suborned witnesses to swear falsely in corroboration of his testimony. This court in an opinion written by Mr. Justice Montgomery there fully reviewed the authorities and following them concluded that a cause of equitable relief was not made by the bill. We there quoted quite fully from the opinion of Mr. Justice Miller in the case of United States v. Throckmorton, 96 U. S. 61, including the following language:

“The mischief of retrying every case in which the judgment or decree rendered on false testimony given by perjured witnesses, or on contracts or documents whose genuineness of validity was in issue, and which are afterwards ascertained to be forged or fraudulent, would be greater, by reason of the endless nature of the strife, than any compensation arising from doing justice in individual cases.”

See, also, the following cases: Codde v. Mahiat, 109 Mich. 186; Valley City Desk Co. v. Insurance Co., 143 Mich. 468; Andrews v. Osborn, 159 Mich. 77; Cleveland Iron. Mining Co. v. Husby, 72 Mich. 61; Weisman v. Newton Beef Co., 154 Mich. 511; Farmers’ Fire Ins. Co. v. Johnston, 113 Mich. 426; Kelleher v. Boden, 55 Mich. 295.

It must be accepted as the settled law of this jurisdiction that a court of equity may not, in the exercise of its jurisdiction, entertain a bill to set aside a judgment at law on the ground that false testimony was given upon the trial of the issue on the law side of the court. To hold otherwise would be to overrule a long line of decisions of this court and would open the door for a hearing of all cases in equity which have been disposed of on the law side on conflicting testimony. The decisions of this court are harmonious on this question, they announce a correct rule, and one we should adhere tot Such a state of facts may justify a new trial, but it cannot be obtained through the interposition of the court of equity.

We do not perceive how plaintiff would be benefited by a decree setting aside the settlement unless the judgment is set aside. It is quite improbable that he desires such relief alone, as the settlement was for a considerable less sum than the judgment. But the bill does not justify a setting aside of such settlement except as an incident to the main relief asked. It affirmatively appears that Smith was employed by plaintiff to negotiate a settlement with Mr. Welch. It is not denied that the offer of settlement was authorized. That Smith wrote the letter importuning defendant to accept the offer without the knowledge of plaintiff, or that plaintiff finally determined to contest the case on its merits, do not make a case for equitable relief. The fact that plaintiff was not familiar with our practice, although he had reputable attorneys employed who were; is not so extraordinary as to invoke equity jurisdiction. If settlements are to be set aside because laymen do not understand the intricacies of the judicature act or the practice in this court, few, if any, settlements between business men will be free from attack.

The decree of the court below will be affirmed, with costs to defendant.

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


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    FURSTMAN v. FRANK.
    1. Partnership — Name—Certificate—Failure to File — Validity of Contract.
    In. a joint action to recover upon a contract entered into by plaintiffs in the firm name, if tbey were actually partners when the contract was entered, into and during its performance, and had filed no certificate under either Act No. 101, Pub. Acts 1907 (2 Comp. Laws 1915, § 6349 et seg.), or Act No. 164, Pub. Acts 1913 (2 Comp. Laws 1915, § 6354 et seg.), the contract was void and no recovery could be had.

      2. Same — Action—Parties—Joint Action — Individual Action.
    If one of the plaintiffs was the sole proprietor and the other only an employee, as now claimed, the action should have ■been brought in his individual name, and no recovery can be had in this joint action.
    Error to Wayne; Murphy, J..
    Submitted June 11, 1919.
    (Docket No. 22.)
    Decided July 17, 1919.
    Assumpsit by Samuel Furstman and another against Joseph Frank and another on a plumbing and heating contract. • Judgment for defendants on a directed verdict. Plaintiffs bring error.
    Affirmed.

      Beckenstein & Weinner, for appellants.

      Edward N. Barnard, for appellees.
   Fellows, J.

Plaintiffs bring this joint action to recover upon a contract entered into by them in the firm name of Furstman & Applebaum with defendants in the firm name of Frank & Frank for certain plumbing and heating in a building being erected by defendants. They were met with the defense among others that they had not filed the certificate required by Act No. 101 of the Public Acts of 1907 (2 Comp. Laws 1915, § 6349 et seq.), or by Act No. 164 of the Public Acts of 1913 (2 Comp. Laws 1915, § 6354 et seq.). Conceding that they had filed no certificate under either act the plaintiffs advanced the claim that they were not partners in fact at the time the contract was made or during the time that such performance as was had under it took place; that plaintiff Furstman was the owner of the business and plaintiff Applebaum his employee. Testimony was taken on this subject and it conclusively appeared that Applebaum was held out as a partner; as to whether they were partners inter se the testimony was of such a character as to make this a question of fact. The trial judge was of the opinion that Act No. 164 of the Public Acts of 1913 applied as well to ostensible partnerships as to partnerships inter se, that both were within the purpose of the act and directed a verdict for defendants.

I do not regard it necessary to determine the correctness of the reason given by the trial judge for directing a verdict as I am persuaded that plaintiffs cannot recover in this joint action. If they were actually partners when this contract was entered into and during its performance and had filed no certificate under either of the acts above cited they could not recover. The contract was in violation of a penal statute and void. This question was finally put at rest so far as this court is concerned in the case of Maurer v. Greening Nursery Co., 199 Mich. 522, 526. On the other hand if it is admissible in this case, brought by these two plaintiffs on this contract, executed by them as partners in a partnership name, to prove that one of the named partners (Applebaum) had no interest, was but an employee, and that the business and contract were owned solely by Furstman, then a‘ case is established, if such testimony is believed, of a several liability to plaintiff Furstman and not a joint liability to plaintiffs. Manifestly if plaintiff Applebaum was but an employee of plaintiff Furstman he has no interest in a recovery in this case. If the plaintiff Furstman was the sole proprietor of the business and was conducting it under a firm name, and this is the most favorable theory for plaintiff that may be indulged in on the state of the record, he should have brought the action in his individual name. Bjorkquest v. Wagar, 83 Mich. 226. This case was decided before either of the acts in question was enacted. It was there said:

“There is but one other question. It seems that the plaintiff was doing business on his sole account, under the name of O. D. Bjorkquest & Son. This was stated in the affidavit attached to the account in the declaration, and the account was sued in the name of Otto D. Bjorkquest, and so stated in the declaration. There was no attempt on the part of the plaintiff to prove a partnership by the affidavit attached to the declaration, as is now claimed by the defendant’s counsel, but rather a claim was made that the plaintiff was the sole proprietor of the business of O. D. Bjorkquest & Son, and was doing business under that name, at the time the account was made with the defendant. Under such circumstances, the plaintiff had the right to sue in his individual name, and in fact he could sue in no other way.”

Upon this record I am unable to perceive that plaintiffs have established a case for the jury or a right to recover in this action.

The judgment should be affirmed.

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


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    KRIEG v. KAUFMAN.
    1. Waters and Watercourses — Flowing Lands — Evidence—Sufficiency.
    On a bill to restrain tbe erection of a dam and tbe flooding of plaintiff’s land, evidence held, sufficient to sustain tbe finding of tbe court below that plaintiff’s lands were flooded by tbe dam as originally built' and maintained, but that an additional sluiceway ordered to be built will be ample to relieve plaintiff.
    2. Appeal and Error — Propriety of Permitting Plaintiff to Elect Damages in Gross — Review.
    Where defendants did not appeal from tbe decree of tbe court below, tbe propriety of permitting *,j.aintiff to elect to accept bis damages in gross is not open for consideration on appeal.

      On tbe question of correlative rights of upper and lower riparian owners, generally, see note in 41 L. R. A. 737.

      3. Waters and Watercourses — Damages—Modification of Decree.
    Evidence held, sufficient to require modification of tbe decree of tbe court below allowing plaintiff $360 damages instead of $260; conditioned on acceptance within 30 days; if not accepted, decree requiring defendants to build additional sluiceway to be entered.
    Appeal from Marquette; Flannigan, J.
    Submitted June 13, 1919.
    (Docket No. 25.)
    Decided July 17, 1919.
    Bill by Frank E. Krieg against Samuel R. Kaufman and another to enjoin the flooding of plaintiff’s land. From a decree granting insufficient relief, plaintiff appeals.
    Modified, and affirmed.

      W. S. Hill, for plaintiff.

      E. A. Macdonald, for defendants.
   Fellows, J.

Sauk’s Head lake, a small inland lake, is located in Marquette county. It is about three-quarters of a mile long and about half that distance wide. Its outlet is Garlic river, a stream about a quarter of a mile long flowing into Lake Superior. At the head of the lake plaintiff owns 36.2 acres of land. Defendants own considerable land surrounding the lake and own the land on both sides of the outlet. Some of the plaintiff’s land is high; this is light soil and does not appear to be valuable for agricultural purposes. Nearer the lake is soil of a productive quality and is the most valuable of the entire piece. It is called by the plaintiff “meadow” land and by the defendants “swamp.” Some part of plaintiff’s land is a cedar swamp. Defendants are using and propose to use lands owned by them located on and near the outlet as a summer camp. At the time the bill was filed and pending the litigation they were engaged in the expenditure of from $25,000 to $30,000 in building a summer home and otherwise improving their property. In 1904 lumber operators constructed a dam in the Garlic river to aid in driving logs. After the lumbering operations were over it fell into disuse. When defendants acquired their lands and commenced their improvements the Garlic was in such condition as would be expected in a wild country. Defendants removed the debris and prepared to erect a dam on the site of the old one so that they might use the river for boating and to transport materials and supplies from the railroad station. For the purpose of restraining the erection of this dam and the flooding of plaintiff’s land this bill was filed. The dam was completed before the case was tried. It is a substantial structure and a driveway passes over it. It had two sluiceways said to be double the capacity of the sluice-way in the old dam. Defendants insist it does not flood or interfere with plaintiff’s rights; plaintiff insists it does, and that irreparable injury is done him thereby. The trial judge reached the conclusion that-the dam as erected did flood plaintiff’s premises and concluded that an additional sluiceway in the dam ten feet wide would be ample to restore normal conditions. Recognizing that the course was unusual he gave the plaintiff the election to take a decree fixing his damages in gross at $260 and provided that if such damages were accepted the defendants should be permitted to maintain the level of the lake and river at a fixed point. Plaintiff appeals. Defendants do not.

Plaintiff’s counsel not only takes issue with the conclusions of the trial judge as to the facts but most strenuously insists that a mandatory injunction should issue requiring defendants to remove the dam entirely. Counsel should not overlook the fact that the plaintiff, a riparian owner, is entitled that the waters of this lake adjacent to his land shall stand as they were wont to stand, that his lands should not be overflowed more than they were wont to be overflowed, but unless such rights are interfered with and invaded, the defendants, lower riparian owners, are entitled to the beneficial use of the stream. We are persuaded from a careful reading of this record and an examination of the exhibits that the trial judge correctly found that the plaintiff’s lands were flooded by the dam as. originally built and maintained, and we are equally persuaded that the additional sluiceway ordered to be built will be ample to relieve plaintiff from any overflow occasioned by the dam. In this regard we agree with the conclusion of the trial judge.

The defendants not having appealed, the propriety of permitting the plaintiff to elect to accept his damages in gross is not for our consideration. If such damages are to be fixed in this case and an election given to plaintiff .to accept them, and upon this record, and for the purposes of this case we must so assume without determining the propriety of such practice where objection is made, we are impressed that the amount found by the trial judge is not adequate for the damage to plaintiff, past, present and future. There is a conflict of testimony on the question of value of plaintiff’s premises. We have already noted that the' meadow land so-called is the most valuable. The testimony discloses that the high land is less valuable than the meadow and the cedar swamp also of less value. Some 12 acres of plaintiff’s land will be rendered worthless if the level is maintained at the point fixed by the trial judge in case of election to accept damages. in gross; of these 12 acres 7 are meadow and 5 cedar swamp.' While the testimony as to value varied somewhat, we are impressed that that given by the witness Robert Blemhuber is the most reliable and the most disinterested. He owns land adjoining that of the plaintiff, and in commenting on his testimony on another branch of the case the trial judge referred to him as “a well known resident of Marquette, who owns a frontage of 3,500 feet on the lake adjoining the plaintiff’s land, who was one of the wholly disinterested witnesses in the case.” Mr. Blemhuber fixes the value of plaintiff’s good land at $30 an acre and backs up his judgment with an offer under oath to-buy at that figure. He had before that offered plaintiff $1,000 for the piece. While the cedar swamp is not so valuable as the meadow which consists of 16 or 18 acres, we must bear in mind that some damage by seepage, which is difficult to estimate, will be done the balance of the meadow by the overflowing of the other land, and taking everything into consideration, and particularly the fact that plaintiff could have sold the entire piece for $1,000, we are impressed -that $30 per acre for the 12 acres rendered worthless, or $360, will, compensate plaintiff for his damages, past, present and future.

Plaintiff may elect within 80 days from the filing of this opinion to accept a decree for $360 damages in gross with the provisions attached by the trial judge in his opinion. In default of such election a decree will be entered requiring defendants to build the sluice-way as provided by the trial judge. If plaintiff elects to take a money judgment, costs of this court will be awarded to him. If not, no costs will be allowed to either party.

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