text:
    CARPENTER v. OSBORN. OSBORN v. CARPENTER.
    PRINCIPAL AND SURETY — MISAPPROPRIATION OF COLLATERAL BY Creditor-Release of Surety.
    A creditor who, having a surety for his debt, receives property from the principal as security for the same debt, becomes a trustee for all parties concerned; and if, without the consent of the surety, he misapplies the proceeds of such property, the surety is discharged to the extent of such misappropriation.
    Accordingly, where A. gave a mortgage to B. to indemnify him as accommodation indorser for C., and C. afterwards executed another* mortgage to B., as trustee, to secure certain debts, including those for which B. was liable as indorser, under which mortgage B. realized an amount sufficient to satisfy all of the debts so secured, but instead, without the knowledge of A., applied the moneys upon the debts of a firm of which both B. and C. were members, it was held that A. was entitled to a discharge of the mortgage given by him, although B. had been obliged to pay the indorsed notes.

      Appeal from Kent; Adsit, J.
    Submitted November 5, 1895.
    Decided December 10, 1895.
    Dill by Ellen E. Carpenter against James W. Osborn, administrator of the estate of Edwin Byles, deceased, to compel the discharge of a mortgage; and cross-bill by said administrator against said Carpenter and others to foreclose the same. From a decree directing the discharge of the mortgage and dismissing the cross-bill, the administrator appeals.
    Affirmed.

      Alfred J. Mills, for appellant.

      Bundy & Travis (Charles 8. McDonald, of counsel), for appellees.
   Long, J.

This bill was filed to compel the discharge of a real-estate mortgage, and a cross-bill was filed to foreclose the same mortgage. The mortgage was given by complainant, Ellen E. Carpenter, to Edwin Byles April 27, 1876, for the consideration, expressed therein, of $6,000, and contained the following condition:

“Provided ahuays, and these presents are upon this express condition, that, if Norman D. Carpenter, of Grand Rapids, Michigan, shall keep and save the said Edwin Byles free and harmless from all payments and expenses as accommodation indorser for said Norman D. Carpenter and Carpenter, Judd & Go., according to one bond bearing even date herewith, executed by said Norman D. Carpenter to the said party of the second part, then these presents and said bond shall cease and be null and void.”

The bond was executed by Norman D. Carpenter, the husband of complainant, on the same day of the execution of this mortgage, and contains the following condition :

“The condition of this obligation is such: Whereas, the said Edwin Byles, for the ensuing year, and longer if desirable, proposes to indorse the negotiable paper of tbe said Norman TJ. Carpenter and of Carpenter, Judd & Co., of Grand Rapids, Michigan, to an amount not exceeding $6,000 at any one time, for the accommodation of the said Norman D. Carpenter and Carpenter, Judd & Co.: Nmo, therefore, if the said Norman D. Carpenter shall keep and save him, the said Edwin Byles, free and harmless from all payments, costs, expenses, and' disbursements made by him on account of any indorsements that he may make as aforesaid for the accommodation of said Norman D. Carpenter and Carpenter, Judd & Co., without fraud or delay, then the preceding obligation to be void; otherwise, to remain in full force and virtue.”

The title to the property mortgaged was in the complainant, Ellen E. Carpenter, at the time of the execution of the mortgage, and had been for many years.. It was her homestead, consisting of one lot, with a dwelling house thereon, and was occupied by her and her husband as their home, and was of the value of $7,000 or $8,000, and appears to1 have been the only property of which she was possessed. At the time of the giving of the mortgage, her husband, Norman D. Carpenter, was engaged in business in Grand Rapids as one of the firm of Carpenter, Judd & Co., composed of himself and Elliott E. Judd, carrying on a hardware business. He was also engaged in several other lines of business, outside of Grand Rapids, in which Edwin Byles was also interested. At the time the mortgage was executed, Mr. Carpenter was somewhat financially embarrassed, as was also the firm of Carpenter, Judd & Co., which was asking considerable credit at the bank; and, as shown by the proofs, he induced his wife to execute this mortgage as collateral to the bond he had given to Mr. Byles. There was no consideration moving to the wife, which fact was well khown to Mr. Byles.

About the time of the execution of the bond and mortgage, Carpenter, Judd & Co. made an arrangement with the City National Bank of Grand Rapids for a loan of $5,000, giving its note therefor, upon which ,Mr. Byles was indorser. Carpenter, Judd & Co. continued to do business up to 1881, and Mr. Byles indorsed its paper from time to time, when, on June 2d of that year, the firm, as well as Carpenter, became considerably involved. A meeting of the principal creditors was held, in which the cashier of the City National Bank also participated, arid it was arranged that a chattel mortgage should be given by Carpenter, Judd & Co. to Edwin Byles, as trustee, to secure creditors. The mortgage was dated June 2, 1881, and covered all the stock in trade of Carpenter, Judd & Co., and secured to Samuel Judd, $5,575; Florence A. Carpenter, $3,105; the City National Bank, $5,079, upon four separate notes; Edwin Byles, $11,030,— and also to take up, in the event of its not being paid at maturity by the makers or prior indorsers, certain commercial paper held by the bank, upon which Carpenter, Judd & Co. was indorser, to the amount of about $6,000. Immediately upon the execution of this mortgage, Mr. Byles went into possession of the property thereunder. Soon afterwards, certain other creditors attached the property, subject to the mortgage, and an arrangement was thereupon made between Carpenter and Byles to take care of those claims, which Byles did by bidding in the property, subject to the trust mortgage. At this time the stock covered by the mortgage was worth at least $35,000, and the debts specified as secured by it amounted to $24,790, aside from the contingent liabilities of Carpenter, Judd & Co. on commercial paper in the bank, the payments on which amounted, according to the evidence, to about $1,000.

Byles, as trustee, continued the business as theretofore carried on by Carpenter, Judd & Co., kept his account at the City National Bank, and, out of the proceeds of sales, paid and discharged all of the debts in full, except that to the City National Bank. Certain portions of this indebtedness, in the form of notes, were renewed from time to time, so that there remained unpaid, at the time these proceedings were commenced, over $3,000 to the bank. After Byles, as trustee, took possession of the stock, and commenced to carry on the business, he left Norman I). Carpenter in charge, though from time to time Mr. Byles examined the books, and kept a general oversight of the business. Florence A. Carpenter, the sister of Norman D., was the bookkeeper.

A.t the time the chattel mortgage was given, Mr. Byles, as well as Norman D. Carpenter, was a member of the firm of Frank Seymour & Co., doing a lumber business at Trufaut and Maple Hill, and other places. This firm was largely in debt, and, according to the testimony, large sums of money were withdrawn from the sales of goods of Carpenter, Judd & Co., and paid upon the debts of Frank Seymour & Co. Within six months after the chattel mortgage was given, Florence A. Carpenter and Samuel Judd were paid in full, the City National Bank was paid $2,250, and upwards of $9,000 was paid on the debts of Frank Seymour & Co., from "the sales of goods of Carpenter, Judd & Co. In the meantime Norman D. Carpenter had purchased from Elliott E. Judd all his interest in the firm, so that Edwin Byles and Norman D. Carpenter had the whole matter in charge.

The complainant’s claim is — and we think it is substantiated by the evidence — that there came into the hands of Edwin Byles, as trustee under the trust mortgage, many thousands of dollars more than enough to have paid all the paper upon which Mr. Byles was indorser for Norman I). Carpenter and Carpenter, Judd & Co., and that, instead of paying and taking up the paper at the bank, given by the firm and indorsed by him, Mr. Byles permitted these trust moneys to be withdrawn and paid upon the debts of Frank Meymour & Co.; that, by reason of these moneys coming into the hands of Mr. Byles under this trust mortgage, he was bound to pay the debts in accordance with its terms, and save the complainant harmless under her mortgage. She further claims that, during all this time, she had no notice or knowledge that the funds were being misappropriated, or of the condition of aifairs between her husband and Edwin Byles, or the disposition that .Mr. Byles was making of the funds of Carpenter, Judd & Co. The mortgage on complainant’s property was not recorded until January 28, 188G, and it is claimed on the part of the defendant, the administrator, that Mr. Byles became dissatisfied with the conduct of the affairs of the firm by Mr. Carpenter, and, to protect himself against his indorsements, he then recorded the mortgage. Mr. Byles died in the month of September, 1888, and defendant, Osborn, was appointed administrator. The note of Carpenter, Judd & Co. to the bank, indorsed by Mr. Byles, was paid by the administrator after his appointment, and is the basis of the claim now made upon the mortgaged premises.

Most of the allegations in the bill of complaint are denied by the administrator, and it is claimed by him that the testimony shows that the balance of the original loan from the bank, after the payment of $2,250 made thereon, was always carried along by Edwin Byles and Carpenter, Judd & Co. as a transaction entirely separate from their other dealings, until the death of Mr. Byles. And defendant further insists that the record does not show that an excess over the indorsements of Mr. Byles upon the paper of Carpenter and of Carpenter, Judd & Co. was received by Mr. Byles as trustee, and that this fact could be ascertained only by an accounting between the parties; that, after Mr. Byles’ death, Norman D. Carpenter filed a claim with the commissioners upon that estate for many thousands of dollars, asserting that Mr. Byles was indebted to him in those amounts; and that such claim was disallowed by the commissioners. It is further insisted that the proofs show that' Mr. Byles was a loser in the transactions had with Norman D. Carpenter and Carpenter, Judd & Co., that the mortgage in suit has not been paid, and that the balance found due to the bank, and which the administrator has paid, is a legal and equitable claim under the mortgage given by complainant.

We think but one conclusion can be reached under the testimony in this case, and that is that Mr. Byles, as trustee under the mortgage, received from the business of Carpenter, Judd & Co., not only sufficient moneys to pay and discharge all the debts stipulated in the mortgage to be paid, including this debt to the bank, but also large sums of money which were paid in taking up and discharging the indebtedness of Frank Seymour & Co., of which he and Norman D. Carpenter were both members. The condition of complainant’s mortgage was that Mr. Carpenter should keep and save Mr. Byles free and harmless from all payments and expenses as an accommodation indorser for Norman D. Carpenter and Carpenter, Judd & Co., according to the condition of the bond; and the bond was conditioned to save Mr. Byles harmless from such indorsements and disbursements as he might make for them. The chattel mortgage was given for the purpose of enabling Mr. Byles so to dispose of the trust property that the debts therein enumerated should be paid; and among the debts enumerated is the one to the bank, upon which this claim is now being made. Mrs. Carpenter stood in the relation of a surety for Norman D. Carpenter and Carpenter, Judd & Co. to Mr. Byles. When he took into his possession .all the property of Norman D. Carpenter and Carpenter, Judd & Co., it was his duty so to dispose of it as to discharge the obligations therein enumerated, and thus save Mrs. Carpenter harmless under her mortgage. Instead of this, he used the funds for other purposes. He stood as trustee for all the parties concerned; and, we think, under well-settled rules, under the circumstances here stated, Mrs. Carpenter became discharged from all liability under her mortgage. Brandt, Sur. (2d Ed.) § 440. The rule is laid down in Colebrooke, Collat. Sec. § 239, that a creditor holding collaterals is chargeable with a trust concerning the same for the benefit of the surety, where he has notice of the existence of such relation between the parties. In Grand Rapids Savings Bank v. Denison, 92 Mich. 418, it appeared that a husband conveyed portions of his real estate to his wife. Afterwards the husband and wife mortgaged the entire property to secure the husband’s debt, which was further secured by a chattel mortgage on the husband’s stock in trade, and by his turning over to the mortgagee a number of notep belonging to him. It was held that the wife was entitled, even in the absence of an express agreement, and as a matter of law, to have the chattel mortgage exhausted and the notes accounted for before the sale of her real estate under the mortgage. The same principle was recognized in Alpena Nat’l Bank v. Greenbaum, 74 Mich. 157.

The complainant contends, further, that under the bond, to secure the performance of which the mortgage was given, her liability did not extend beyond the year. We need not discuss this question, as we are satisfied, beyond question, that there were sufficient moneys coming into the hands of Mr. Byles under the trust mortgage to pay and discharge this indebtedness, as well as all other indebtedness enumerated in the chattel mortgage.

The court below7 found, upon the whole record, that the mortgage had been fully paid and satisfied, and directed, in its decree, that the mortgage be discharged of record. That decree will be affirmed, with costs.

McG-rath, C. J., Grant and Hooker, JJ., concurred. Montgomery, J., did not sit.


source: Caselaw Access Project

author: Long, J.

license: Public Domain

text:
    OTIS v. KENNEDY.
    1. Executors and Administrators — Indirect Purchase op Lands op Estate — Bona Fide Purchaser.
    A sale of land by an executor under license from the probate court, made indirectly in his own interest, is voidable only, and not absolutely void, under 2 How. Stat. § 6042, and will therefore be sustained as to a subsequent purchaser ‘in good faith and for a valuable consideration.
    2. Same — Notice.
    There is no rule of law precluding an executor from purchasing land previously sold by him in good faith under license from the probate court. Hence, the fact, as disclosed by the records, that the purchaser at such sale reconveyed to the executor one month thereafter, is insufficient to charge a subsequent purchaser with notice of bad faith on the part of the executor, especially where the consideration recited in the deed to the latter is greater than that named in the first deed; and this is so although the first deed was not recorded until the time of the reconveyance.
    3. Recording Laws — Quitclaim Deed.
    The rule that the grantee in a quitclaim deed cannot be a bona fide purchaser under the recording laws is not to be extended to one taking by warranty deed under such grantee.
    Error to Wayne; Lillibridge, J.
    Submitted November 7, 1895.
    Decided December 10, 1895.
    Ejectment by Hattie Otis, an infant, by her next friend, Asa H. Otis, against George Kennedy and Samuel Kennedy. From a judgment for defendants, plaintiff brings error.
    Affirmed.

      James H. Pound, for appellant.

      John W. Beaumont and Fred A. Balcer, for appellees.
   Long, J.

This is an action of ejectment for the recovery of 18 acres of land in Greenfield township, Wayne county. Plaintiff and defendant George Kennedy both claim through a common source, to wit, George E. Pillard; plaintiff by devise, and defendant by executor’s sale. George E. Pillard died testate. He owned, at his death the 18 acres in suit, 30 acres in Dearborn township, and a policy of life insurance of $1,000, and a small amount of cash. The will divided the property into two parts, giving one moiety thereof to his nephew, Frank G. Pillard, a son of the executor, and directed the executor to take and hold the same in trust for said nephew until he was 21 years of age. Out of the other moiety he directed his executor to first pay Charles F. Pillard, a brother, $75, and the remainder of it he gave in equal shares to plaintiff, Hattie Otis, and to her sisters, Jennie and Emma Otis, directing his executor to take the same, and care for it, in trust, to be divided to each one her share when she arrived at the age of 21 years. George F. Pillard was appointed executor and trustee. The will was duly probated. At the testator’s death the Dearborn 30 acres were worth about $1,800 and the Greenfield 18 acres $3,150. There was a mortgage on both parcels of $1,700 to the Springfield Savings Bank of Vermont. The debts proved against the estate amounted to $3,449.94 in addition to the mortgage. George F. Pillard, under license of the probate judge, sold at executor’s sale both pieces of land, the 18 acres to one James Leonard for $3,000, and the 30 acres to Joseph Goodrich for $1,800, on March 13, 1886. Both sales were duly confirmed by the probate court, and deeds were executed to the purchasers on March 22, 1886. As far as the probate records show, these sales were legal, and the proceeds were used to pay the debts of the estate, and nothing was left for the devisees. Leonard’s deed for the 18 acres was not recorded until April 21, 1886, and on that day he executed a special warranty deed back to George F. Pillard, covenanting against his own acts only, for the consideration of $3,10.0. This deed to Pillard was recorded April 22, 1886. Pillard owned two acres of land lying at the northwesterly corner of the 18-acre parcel, and on April 27th he sold the entire parcel of 20 acres to William Kennedy for $3,600. Afterwards, on April 3, 1888, William Kennedy sold the 20 acres to George Kennedy for $8,000. Samuel Kennedy claims no title. At the time of the purchase by William Kennedy he had an abstract of title examined by Mr. Hoyt Post, an attorney at law, who pronounced the title good and sufficient. Defendant George Kennedy had a like examination made when he purchased it, and claims to have relied upon it in making his purchase. Both William Kennedy and defendant were bona fide purchasers without notice of fraud or irregularities, except such as may be imputed to them from the records. During William Kennedy’s ownership he built a house on the two acres of land at an expense of about $2,000. In addition to this, he built a barn, cleared the land, dug ditches, and thoroughly tiled it, and expended large sums each year in bringing it under cultivation. He also set out two acres of grape vines, and built new fences around it. During George Kennedy’s ownership an orchard of 800 fruit trees was set out, which is now alive and bearing. He also built two greenhouses and a bee and honey house. It is claimed that the land is now in excellent condition, and valuable, because of the improvements made by the defendant and his immediate grantor, and also by reason of the rise in values in Detroit suburban real estate. No claim is made for improvements, and counsel says for the reason that he had, previous to the inception of this suit, begun a suit in equity to quiet his title against all parties interested, and he relies upon that proceeding for a more effective and complete remedy.

The plaintiff claims that the defendants are not bona fide purchasers for the reasons:

1. That an examination of the records showed fraud, as any person inspecting them would have ascertained that, while the- land purported to have been sold to James Leonard, yet Leonard within a short time deeded back to George F. Pillard, the executor, and that under the statute such conveyance is void.

2. That the defendants knew, and had known all their lives, the people affected, and were advised of the fact that George F. Pillard, through whom they derived title, was the executor of the estate of George E. Pillard, deceased; that defendant’s grantor, William Kennedy, was his brother, and a partner in the business, and was a commissioner on claims and appraiser of the Pillard estate; that the evidence shows a conspiracy between William and George Kennedy and George F. Pillard to defraud the plaintiff out of the land, or that at least there was sufficient evidence to go to the jury for their consideration of that question.

8. That the sale by the executor to Leonard was not tona fide, but was an indirect sale to Pillard himself, as Leonard paid no money to Pillard; and that $3,0.00 of the money paid by William Kennedy was paid in to the estate, and accounted for by the executor, to pay the debts of the estate; and that the executor fraudulently manipulated the estate, and appropriated it to his own use.

We shall dispose of the last two questions first. The evidence shows that William Kennedy was one of the commissioners on claims on the estate, but it fails to show that he had any knowledge, or that George Kennedy had any actual knowledge, that the sale from Leonard back to the executor was not a tona fide transaction. The record discloses that the sale of the lands was necessary to meet the debts preferred against the estate, which appear to have been in an amount almost equal to its value. But, whatever may be said of the knowledge of William Kennedy, or notice to him by reason of his having been one of the commissioners on claims, there is nothing to show that George Kennedy had knowledge or notice of the situation of the estate, or that he had knowledge or notice that the sale to Leonard was not made in good faith and for a valuable consideration, except such notice as the recording of the deeds would disclose; so that the only question which need be discussed is whether, under the circumstances, George Kennedy can be said to be a bona fide purchaser.

2 How. Stat. § 6042, provides:

“The executor or administrator making the sale, and the guardian of any minor heir of the deceased, shall not, directly or indirectly, purchase or be interested in the purchase of any part of the real estate so sold, and all sales made contrary to the provisions of this section shall be void,” etc.

Counsel for plaintiff contends that under this statute the transfer from Leonard to the executor was absolutely void, and therefore defendant took no title.

At the common law, a purchase by an executor or other person acting in a trust capacity was forbidden, as it is by the above statute. This statute was before this court in Hoffan v. Harrington, 28 Mich. 90. That was an action of trespass, and plaintiff claimed title under administrator’s sale. Hamilton, as administrator of the estate, sold the land to one Minnie, and Minnie’s heirs conveyed back to Hamilton, and he conveyed to plaintiff. Chief Justice Christianot held that under this statute all sales made contrary to its provisions were null and void. He said: “There is no exception or qualification, and no saving of rights in favor of purchasers of any kind, with or without notice, nor in favor of any person whatever.” That opinion was concurred in by Mr. Justice Cooley. Mr. Justice Graves dissented „ from those views, and said that the provision was a mere enactment of the rule which the courts had laid down prior to its passage, and, like many others, was simply intended as a legislative recognition of a doctrine developed by the tribunals, and considered worthy of being made stable by adoption into the statute book. Speaking of the methods and principles guiding the courts in the application of the rule before it was crystallized into a statute, he says:

“These principles were not set aside or impugned. They remained as vital as ever. And since the only change effected was in carrying this rule, which was already law, from the unwritten to the written code, T cannot see why it should be administered in a new spirit, and contrary to the principles natural to it. They accompanied the rule into the statute book, as I think, and should be recognized in applying it. If we reject these principles, and take the provision as one to be applied in a sense as universal as the terms will literally allow, then every sale by an executor, administrator, or guardian in which the trustee has an interest, however secret, is ipso facto void in the sense of being a nullity. It has no force whatever. It is bad as to everybody and all transactions. No one is bound by it, and no one can be benefited by or through it. Whether the deed given on the public sale is recorded or unrecorded, whether a full price was or was not paid and applied for the estate, whether the sale was or was not confirmed in regular form by the court, whether or not the party claiming title under it through a subsequent purchase bought in good faith for a full price and without notice, can make no difference. It never had effect, because the law forbade it. We are compelled to go to this length, or confess that such a sale is not made positively illegal and so completely nugatory, if not void as a sale, it must have some of the legal possibilities of a valid sale. There is no practical middle ground. We cannot stop short of the extreme view without confessing that the law was not intended to make such sales wholly ineffectual and inoperative as to all persons and circumstances, nor without admitting that they may- avail to some purposes, and for and against particular parties, and hence that they are to be regarded simply as voidable, and not as nullities; and, if we accept this conclusion, we tacitly admit that in applying the act we are not only authorized, but required, to mitigate its scope. Now, I understand it to be conceded that we ought to qualify its operation. If we may. do this, if we may say that such a sale is not a nullity, but may have some force, by what.principle are we to be governed? Where shall we pause? What reason can be given for halting short of the view which was settled when the rule was worked into the statute?”

Upon such reasoning as this, which was concurred in by Mr. Justice Campbell, they held that under such sales, when the property has been resold to a bona fide purchaser without notice before an attempt to impeach the sale, it will stand, and such purchaser will be protected ; and it was said, “This was the doctrine when the legislature transferred the rule, and it belongs to the rule.” This was the rule before the enactment of this statute, as clearly held in Wyman v. Hooper, 2 Gray, 141; Jackson v. Walsh, 14 Johns. 407; Robbins v. Bates, 4 Cush. 104; Blood v. Hayman, 13 Metc. (Mass.) 231; Lessee of Lazarus v. Bryson, 3 Bin. 54; Sweet v. Southcote, 2 Brown, Ch. 66; Lowther v. Carlton, 2 Atk. 242; Brandlyn v. Ord, 1 Atk. 571; Ferrars v. Cherry, 2 Vern. 383.

We think the true principles of construction of this statute were stated by Justice Graves, and under the circumstances stated in the present case Mr. Justice ChristiaNCy might have reached a different conclusion. There was a link missing in the chain of title in that case in the claim under the administrator’s sale. The deed from the administrator to the purchaser at such sale had been lost, and was never recorded. Justice Ohristiancy, commenting upon this, said:

“As the administrator’s deed to Minnie [the purchaser at the administrator’s sale] was not recorded, the plaintiff did not purchase on the faith of its record. Had it been recorded, and had the plaintiff purchased on the faith of its record, without notice that the purchase was made for the administrator, the case would probably have come within the registry laws, upon the same principle that the deed from Thorn [the deceased] himself would have come within them, so far, at least, as regards questions of the kind here presented.”

We think that the views expressed by Justice Graves upon this question have been followed by the later decisions of this court. In Taylor v. Brown, 55 Mich. 482, at the sale of land by executors under license of the probate court, the purchaser was the legal guardian of the minor heirs of the deceased. The full cash value of the land was paid, the sale fairly made, and the fact of guardianship was known to the executors and to the probate judge, who confirmed the sale. The guardian’s deed was recorded May 23, 1873. On October 5th of that year she sold to one of the defendants. His deed was recorded January 4,1875. On May 8th following he sold one-half of the land to another defendant. Neither of the defendants. knew, at the time of his purchase, of the guardianship of the original purchaser. The probate records, however, showed fully the fact that the purchaser at the original or executors’ sale was the guardian of the infant, heirs of the deceased owner of the land. The action was in ejectment by one of the heirs. This statute was under consideration in that case, and the circuit judge held that the defendants’ title, under the facts stated, was fully protected, and that the plaintiff could not recover. It was said by this court:

“The plaintiff’s case is devoid of all equity, and both the letter'and spirit of the law require that these defendants should be protected in the enjoyment of the property they have in good faith and for a full and valuable consideration purchased and paid for. The statute (2 How. Stat. § 5683) does not require a person, in order to keep within its provisions in a case like this, to examine beyond the registry of deeds for outstanding claims when he makes his purchase. It is very clear from the record that both the guardian and executors acted in perfect good faith, and, so far as we can discover, for the best interests of the wards as well as that of the estate.”

The statute referred to in that case provides:

“Every conveyance of real estate within this State hereafter made, which shall not be recorded as provided in this chapter, shall be void as against any subsequent purchaser in good faith and for a valuable consideration of the same real estate, or any portion thereof, whose conveyance shall be first duly recorded.”

In Larzelere v. Starkweather, 38 Mich. 96, while a construction of this statute was not necessary to the decision, as the party purchasing at the administratrix’s sale did so in the interest of the heirs, yet it appeared that the heirs of the purchaser afterwards transferred the title to the administratrix; and Mr. Justice 'Marston, speaking of the rule, said:

“I am not prepared to hold, under such circumstances, that third parties, acting in good faith, could not acquire rights under such a conveyance, even although it might afterwards be shown by evidence éeliors the record that the administratrix was indirectly and secretly interested.”

In McKay v. Williams, 67 Mich. 547, Mr. Justice Champlin, referring to section 6042, 2 How. Stat., said, “This statute was merely an affirmance of the common law.”

We are therefore compelled to hold, both upon reason and authority, that sales of the kind in question are voidable only. The statute must be read in connection with the registry laws. 2 How. Stat. § 5683.

Upon the question of whether there was evidence upon the face of the record to create in the minds of the defendants such a suspicion of bad faith in the executor as to put them upon inquiry, it appears that Pillard did not purchase until one month after the sale to Leonard. It is true that the deed to Leonard was not recorded until the date of the execution of the deed back to Pillard; but it frequently occurs that deeds are not put upon record on the date of their execution. We think this fact could not be construed as notice to a subsequent purchaser that anything was wrong about the purchase by Pillard, especially in view of the fact that the consideration in the deed to Pillard was greater than the purchase price recited in the Leonard deed, and also in view of the settled rule that the subsequent purchase by an executor of land which he has previously and in good faith sold under license of the probate court is legal. That such purchases are legal is held by Woerner in his work on the American Law of Administration (section 334, p. 702), in which the author says: “But the rule that an administrator cannot buy indirectly, or acquire the property sold by him as administrator by the interposition of a third party, does not extend to a subsequent bona fide purchase by him from one who himself purchased in good faith at the administrator’s sale.” This doctrine.is supported by Wayland v. Crank, 79 Va. 602; Welch v. McGrath, 59 Iowa, 519; Staples v. Staples, 24 Grat. 225; Silverthorn v. McKinster, 12 Pa. St. 67; Creveling v. Fritts, 34 N. J. Eq. 134.

As to the proximity of the date of record of Pillard’s deed to Leonard and the date of the deed from Leonard to him being notice of bad faith, this case is distinguishable from Winter v. Truax, 87 Mich. 324, and McKay v. Williams, 67 Mich. 547. In both of those cases the conveyances by the trustee to the purchaser and back to the trustee were made upon the same day, and for the same consideration, and the decisions are justly based upon the principle that the notice upon the face of the records was that both conveyances were a part of one and the same transaction; but such notice does not appear in this case.

The fact that the deed from Leonard to Pillard was a special warranty was not evidence of bad faith. While it is held in Peters v. Cartier, 80 Mich. 129, that a grantee in a quitclaim deed cannot be a bona fide purchaser under our recording laws, yet the rule is otherwise where a grantee obtains title through a warranty deed, as in this case. William Kennedy had a deed of warranty from Pillard, and conveyed to George Kennedy by warranty. See Culbertson v. Witbeck Co., 92 Mich. 469. But the deed from Leonard to Pillard was something more than a deed of quitclaim. It was in fact an assertion that the executor’s sale to him was bona fide.

In addition to these facts, the defendant George Kennedy found Ms brother in possession for two years, holding and improving the property; yet before purchasing he had the abstract examined by one of the leading attorneys of Detroit, by whom the title was pronounced perfect. To him nothing appeared suspicious. Whatever puts a party on inquiry amounts to notice, provided it would lead to the knowledge of the requisite fact by the exercise of ordinary diligence and understanding. Wilson v. McCullough, 23 Pa. St. 440. The only fact that can be claimed, under the circumstances stated, is that some secret understanding existed between Leonard and Pillard; but the record would not' disclose this, and there was nothing upon its face that would arouse a suspicion that any secret arrangement had been made by which Leonard was to purchase in the interest of Pillard. They gave it the outward appearance of a dona fide transaction by Leonard’s holding the title a month, and by making the consideration greater when the conveyance was made back to Pillard. The principle which governs such cases is stated in Millar v. Olney, 69 Mich. 560, as follows:

‘‘The extent, to which the cases have gone is that, where the fact of a prior conveyance or incumbrance is brought to the knowledge of the subsequent purchaser or incumbrancer, he must be held to take subject to such prior conveyance or, incumbrance; or, when such circumstances are shown to exist as would put an ordinarily prudent business man upon inquiry as to such prior conveyance or incumbrance, then he is charged with notice of such facts as, upon inquiry, he could have ascertained; but, where circumstances alone are relied upon, with no proof of actual knowledge, they must be of such character that failure to make the inquiry amounts to bad faith.”

No such facts were shown by the record.

.The learned circuit judge before whom the case w7as tried held in accordance with the views here expressed, and directed a verdict in favor of defendants. The judgment must be affirmed.

The other Justices concurred.


author: Grant, J. Long, J.

text:
    KNOP v. NATIONAL FIRE INSURANCE CO.
    1. Fraud — Instructions to Jury.
    An instruction in a civil action that, where fraud is sought to be proved by circumstantial evidence, “all of the circumstances must point to the one thing claimed, and admit of no other reasonable explanation,” is erroneous, in that it requires such fraud to be established beyond a reasonable doubt.
    2. Fire Insurance — Breach of Conditions — False Swearing.
    ' A fire policy provided that, in case of loss, the insured should submit to an examination under oath, if required by the insurer, and that any fraud or false swearing by the insured should avoid the policy. Upon an examination so had, the insured included in his statement of loss a sewing machine, which had not been destroyed. In an action on the policy, he testified that, at the time of making such affidavit, he thought that the machine had burned, but that he afterwards ascertained to the contrary. The machine was subsequently discovered in an out-building, underneath some wood, admitted to have, been drawn and piled by the insured the day before the fire. Held, that an instruction that the policy was avoided by the false statement of the insured was properly refused.
    Grant, J., dissented, being of the opinion that, if the affidavit was not intentionally false, the facts showed it to have been made in such disregard of plaintiff’s duty under the contract as to vitiate the policy.
    Error to Wayne; Donovan, J.
    Submitted November 7, 1S95.
    Decided December 10, 1895.

      Assumpsit by August Knop against the National Fire Insurance Company of Hartford, Connecticut, on a ñre policy. From a judgment for plaintiff, defendant brings error.
    Reversed.

      Mbriclge F. Bacon, for appellant.

      F. S. Clarkson, for appellee.
   Grant, J.

This is an action to recover for loss by fire upon a policy of insurance which covered $300 on a one-story dwelling house, and $300 on household furniture and other contents. The principal defense was that the plaintiff had made a false statement under oath of the amount of the loss, and that he himself set the fire with intent to defraud the defendant.

1. The circuit court instructed the jury as follows:

“Now I come to a very important question. It is called in law ‘fraud.’ Fraud is a trick, a deceit, a device, whereby one misleads another to do something to his prejudice. In law, however, it is not to be presumed. It is not even to be guessed at, and not arrived at by slight circumstances. It must be proven the same as any other substantial fact in the case. The burden of proving fraud is upon the one that claims it, — the one that charges it, — because it is out of the ordinary. It may be proven by circumstantial evidence; but if proven by circumstantial evidence, the rule of circumstantial evidence being a rather strict one, it must be proven with force and conclusiveness to this degree, — that all the circumstances (where circumstances are relied upon to make the proof) must point to the one thing claimed, and admit of no other reasonable explanation. That is the rule always for circumstantial evidence, — that this must always converge or direct your mind between the points, and not admit of any other reasonable explanation.”

The error in this charge is manifest. It virtually instructed the jury that the defense must be established beyond a reasonable doubt. Morley v. Insurance Co., 85 Mich. 219. In that case the erroneous instruction was as follows: ’“Proof of fraud should be of such a character as to be inconsistent with any other view than that Mr. Lenhoff was guilty of fraud.” In the present case the court instructed them, in substance, that the facts relied upon to show fraud must not admit of any other reasonable explanation. It is perhaps fair to the jury in this case to say that they must have understood this instruction to mean that they must find the fraud proven beyond any reasonable doubt, for they were not controlled in their verdict by the clear preponderance of the evideuce. The above instruction was given near the close of the charge, and there is no other language in it to explain or modify it. The charge, in fact, is entirely silent as to the preponderance of evidence.

2. Shortly after the fire, the general agent of the defendant investigated the loss. An examination of the house, which was not entirely destroyed,. and the contents, aroused his suspicion. Plaintiff! had made a list of the property which he claimed to have been destroyed. By the terms of the policy (a Michigan standard policy), he was entitled to place the plaintiff under oath, and examine him in regard to the loss. To this plaintiff made no objection, and they went before a justice of the peace with a stenographer and an interpreter. Among other things, plaintiff said in his affidavit that “there was in the house when it burned one Domestic sewing machine, which I purchased from Albert Janlie. * * * This sewing machine was burned up in the dwelling. I found some of the castings after the fire. They are now in the stable.” The machine was not burned, but, with other household goods, was covered up by firewood in a small barn or shed in the rear of the house. Plaintiff admits that on the Sunday morning before the fire, about half past á, he commenced to wheel two one-horse wagon loads of wood into this shed, and that he wheeled it all in that morning. This was stated in his affidavit before the justice. The fire occurred the next morning, about 10 o’clock. The plaintiff was at his work in a factory near by; his children had been left at a neighbor’s; and his wife had gone to Detroit. It is insisted by the defendant that the statement above quoted was false in fact, and ‘therefore rendered the policy void. It is conceded by plaintiff’s counsel in his brief that plaintiff stated that the machine was burnt up, but it is contended that he made a reasonable explanation of this when he testified that when he made out the list, and swore to it, he thought the machine had burned up, but he found out afterwards that it was in the barn. This is the only explanation given by him of his' false affidavit.

The policy contains the following clause:

“This entire policy shall be void if the insured has concealed or misrepresented, in writing or otherwise, any material fact or circumstance concerning this insurance, or the subject thereof; or if the interest of the insured in the property be not truly stated herein; or in case of any fraud or false swearing by the insured touching any matter relating to this insurance, or the subject thereof, whether before or after a loss.”

The defendant requested the court to instruct the jury that this false statement rendered the policy void. This was refused, and the court instructed the jury as follows:

“If any of the property which the plaintiff swore was burned was not in fact destroyed, and the plaintiff knew of that fact when he made an affidavit, such swearing would be false swearing, within the meaning of the policy, and would void the policy, and the defendant would be entitled to a verdict. An intentional false affidavit made by the insured in regard to the loss of personal property would void the policy, not only as to personal property insured in the policy, but also as to the buildings insured in the policy; and the plaintiff would not be entitled to recover for any part of his insurance if such false affidavits were made, and intentionally made, because that would be deceiving. If you ñnd from the'testimony that the plaintiff made a false statement in regard to the property burned up for the purpose of defrauding the company, such statement would render void the policy, and the plaintiff could not recover.”

This policy was in the form authorized by the insurance law of this State. The purpose of the examination of the assured under oath is to give the insurer the opportunity to investigate promptly into the circumstances of the loss, and to ascertain what property was destroyed while the facts are fresh in the mind of the assured. Usually, the assured alone knows what articles of personal property were destroyed by the fire. The insurer is usually compelled to rely upon his statement. He is therefore hound to act in good faith, and to base his sworn statement of the loss upon his own actual knowledge. The law will not permit him to make reckless statements, which are untrue, and then say that he Was mistaken, and honestly thought the articles were destroyed. The affidavit must be based upon his knowledge, not upon his belief or his thoughts; otherwise, this provision of the law and of the policy is substantially worthless to the insurer, who in most cases has no alternative but to rely upon this sworn statement. In a similar case the court used this language:

“A policy of insurance is a contract, in the making of which peculiar and great confidence must, of necessity, be reposed by the insurer in the insured. Good faith and fair dealing are especially required by the former of the latter. The former must mainly depend on the oath of the latter, and the account he may render, to show the fact of the loss of the property insured, and the amount of the damage incurred by him, for which he claims indemnity under the policy.” Moore v. Insurance Vo., 28 Grat. 517.

In another case it was held that where the assured relied upon the statement of his wife as to the articles destroyed, which was in fact false, he could not recover, although he intended no fraud. It was said: “If he made representations assuming to know the facts, when he had no knowledge, and such statements turned out to be false, it was a fraud within the meaning of the policy.” Mullin v. Insurance Co., 58 Vt. 113.

In a similar case the Supreme Court of the United States said: atory that was relevant and pertinent in such an examination was material, in the sense that a true answer to> it was of the substance of the obligation of the assured.” Claflin v. Insurance Co., 110 U. S. 94.

“'The object of the provisions in the policies of insurance, requiring the assured to submit himself to an examination under oath, to be reduced to writing, was to enable the company to possess itself of all knowledge, and all information as to other sources and means of knowledge, in regard to the facts material to their rights, to enable them to decide upon their obligations, and. to protect them against false claims. And every interrog-

If the testimony of the plaintiff’s wife was true, the sewing machine had not been in the house for two months. The day before, he had piled the wood around and above this machine and other household goods in the shed. If he did not know that the statement was false, he could readily have ascertained the fact from his wife, of whom he would naturally inquire, and whose assistance he would obtain in making’ out the list of her own and the children’s clothing and household goods. He gave no intimation that any goods were covered up in the barn, and did not disclose the fact, until several days after the fire, when Mr. Row (defendant’s agent) had removed the wood, and discovered the machine and the other concealed property. Plaintiff assumed to speak positively and from actual knowledge, upon which he intended to rely in settling the loss. If the affidavit was not intentionally false, it was made in utter disregard of his duty under the contract, and was a false statement, within the language of the policy, and vitiated it.

J udgment should be reversed, and no new trial ordered.

Long, J.

We concur with Mr. Justice Grant on the first point in his opinion, and for that reason a new trial must be granted. Upon the second point, we think the court properly refused the request to charge.

McGrath, O. J., Montgomery and Hooker, JJ., concurred with Long, J.


author: McGeath, C. J.

text:
    MENERY v. BACKUS.
    1. Log-Lien Proceedings — Apportionment oe Time Employed.
    An employe of one operating a sawmill and a farm, whose time is kept but not apportioned, is entitled to a lien upon the products of the mill for the labor performed thereon, and to that end may estimate the time devoted to that branch of the work.
    2. Same — Form oe Verdict — Appeal.
    An objection that the verdict in a log-lien proceeding, declaring the amount returned for the plaintiff to be a lien upon the property, does not expressly find that such amount is due for work and labor performed upon the products described in the declaration, as required by the statute (3 How. Stat. § 8427Q, will be disregarded, when raised for the first time on appeal.
    Error to Alcona; Simpson, J.
    Submitted November 8, 1895.
    Decided December 10, 1895.
    Proceedings under tlie log-lien law by George Menery against Absalom Backus, Jr. From a judgment for plaintiff, defendant brings error.
    Affirmed.
    O. II. Smith (II. J. Kelley, of counsel), for appellant.

      M. J. Oonnine and J. II. Killmaster, for appellee.
   McGeath, C. J.

Morrill Bros, were operating a sawmill, lumber camp, and farm. The farm, timber land, and products belonged to defendant. Plaintiff was engaged in and about the mill, in the lumber camp, and upon the farm, and claimed a lien on the products of the mill for the work done in camp and about the mill. His time had been kept, but was not apportioned; and the objection raised is that he was not able to state the whole time that he was employed upon the products sought to be charged. A recitation of the testimony would serve no good purpose. Plaintiff was compelled to estimate the-proportion of time which was devoted to the several departments of work, and did apportion it. The case is not different in principle from any case where no time is kept, and plaintiff is called upon to give the time employed. The question is one of fact for the jury, and was •submitted under proper instructions.

Objection is made that the form of the verdict does not follow the statute. The bill of exceptions recites that—

“The jury returned into court, and find for plaintiff, -and say that is a lien for the whole amount upon the .property, and that their verdict is for $110.84.
“By Mr. Kelley: ‘I would like to have the jury polled.’
“Thereupon the jury is polled, and each man returns the amount of his verdict as $110.84, and that the same is a lien.”

The amount found was some $30 less than the whole account for labor. No question was raised as to the form of the verdict, and none as to the entry of judgment, which is in form under the statute.

The judgment is affirmed.

The other Justices concurred.


author: Per Curiam.

text:
    CARTER v. BACKUS.
    Xog-Lien Proceedings.
    Case ruled by Menery v. Backus, ante, 329.
    Error to Alcona; Simpson, J.
    Submitted November 8, 1895.
    Decided December 10, 1895.

      Proceedings under the log-lien law by William Carter against Absalom Backus, Jr. From a judgment for plaintiff, defendant brings error.
    Affirmed.

      0. IE. Smith (li. J. Kelley, of counsel), for appellant.
    iff. J. Connine and J. B. Killmaster, for appellee.
   Per Curiam.

This case is ruled by Menery v. Backus, ante, 329, the first question raised in that case being the only one raised here.


text:
    WILSON v. BACKUS.
    Log-Lien Proceedings.
    Case ruled by Menery v. Backus, ante, 329.
    Error to Alcona; Simpson, J.
    Submitted November 8, 1895.
    Decided December 10, 1895.
    Proceedings under the log-lien law by Charles Wilson .against Absalom Backus, Jr. From a judgment for plaintiff, defendant brings error.
    Affirmed.
    O. B. Smith (B. J. Kelley, of counsel), for appellant,
    iff. J. Oonnine and J, B. Killmaster, for appellee.
   Per Curiam.

The same questions are raised here as were raised in Menery v. Backus, ante, 329. The record is substantially the same, and the case is therefore ruled by the Menery case.


author: Grant, J.

text:
    JACKSON v. LEELANAW CIRCUIT JUDGE.
    Garnishment — Costs.
    Where, upon the trial of the statutory issue in garnishment^ judgment is rendered against the garnishee for a greater amount or for other property than he would have been chargeable for on his disclosure, the plaintiff is entitled to full costs, as a matter of right. 2 How. Stat. § 8073.

      Mandamus b,y John A. Jackson to compel Roscoe L. Corbett, circuit judge for Leelanaw county, to vacate an order setting aside the taxation of costs against a garnishee defendant.
    Submitted November 19, 1895.
    Granted December 10, 1895.

      Tweddle & Gross, for relator.

      Pratt & Davis, for respondent.
   Grant, J.

The relator brought suit in assumpsit against one Martin, and garnished one Dailey. Dailey filed a written disclosure denying any indebtedness, or the possession of any property, etc., belonging to Martin. Relator obtained judgment against the principal defendant. He also filed a demand for the examination of the garnishee, and a trial was had, which resulted in finding that he had in his possession $280 belonging to the principal defendant, and a judgment was rendered against him for enough to satisfy the judgment against the principal defendant. Relator then gave due notice of the taxation of costs by the clerk, which were taxed at $45.20. Upon appeal to the court, the judge set this taxation aside, and ordered that neither party should recover costs.

The plaintiff was entitled to his costs' against the garnishee, under 2 How. Stat. § 8073. Strong v. Hollon, 39 Mich. 411.

The writ must issue.

The other Justices concurred.


text:
    BURTRAW v. CLARK.
    1. Appeal — Res Judicata.
    Where a case has been retried in accordance with the directions given on appeal, the judgment so obtained will be affirmed on a second appeal.
    A Trespass — Damages.

      It seems that, under the ruling in Burtraiv v. GlarJc, 103 Mich. 383, the plaintiff in an action of trespass for unlawfully digging a drain across his land is entitled to recover the cost of refilling the same, should he see fit to refill it, irrespective of any benefits that may have been derived from the construction of the drain, such cost not exceeding the value of the land.

    Error io Ionia; Dodds, J., presiding.
    Submitted November 19, 1895.
    Decided December 10, 1895.
    Trespass by Louisa Burtraw against Henry C. Clark and Hiram Little for digging a drain across the premises of the plaintiff under void proceedings. Plaintiff recovered a judgment, which was reversed in this court. (See 103 Mich. 383.) After the determination of the case on appeal, plaintiff proceeded to fill the ditch. Upon the second trial, the court instructed the jury, in part, as follows:
    “If j^ou find that, at the time of the commencement of this suit, it was the desire of the plaintiff, and she intended as soon as convenient for herself, and as soon as she could determine ,that she had the right so to do, to fill the ditch, and place the land in the same condition as before, then I charge you, gentlemen, that her damage ought to consist of the amount that it was actually necessary for her to expend to restore the ground to the condition it was in preceding the trespass, and also whatever damage you find was done to the crops, or damage that may be done — if you find that there was no such damage by reason of the trespass itself, in damaging the land itself — in the raising of crops in the future. But, gentlemen, on the other hand, if you find she had no intention at the time she commenced the suit, and it was not her desire, to restore the land to its original condition, the condition it was in previous to the trespass, then I charge you that the measure of damages in this case is the difference between the value of the land before the trespass was committed and the value of the land after the trespass was committed. * *
    “T am asked to charge you by the defendants that, as a matter of law, if the land was damaged at all, then the true measure of damages will be the difference between the value of the land before and after the ditch was dug, or the diminution of the value of the land because of said drain. I charge you, gentlemen, this measure of damages, provided you find that the plaintiff’s liona fide intention was not to fill the ditch and restore the land to its former condition; but, in case you do find that she had that intention, the rule I have heretofore given you must govern upon that point. So you may not misunderstand: The request just read to you is a proper measure of damages in case you find that she did not intend to restore the land to its former condition at the time of the commencement of the suit.”
    Judgment was again rendered for plaintiff, and defendants bring error.
    Affirmed.

      Ghaddoclc & Scully, for appellants.

      John Nichol and F. II. Stowe, for appellee.

       As bearing upon the consideration of the question of benefits in Actions of this nature, see Fisher v. Naysmith, 106 Mich. 71.

   Long, J.

This case was in this court at the October, 1804, term, and is reported in 103 Mich. 383. It was then r ever sed, and a new trial ordered. The case has been retried, and verdict found in favor of the plaintiff. Defendants appeal.

In the former opinion, the rule to be followed upon a new trial was carefully laid down, and the case was retried according to the directions there given. We thiulr the case needs no further discussion.

The judgment must be affirmed.

The other Justices concurred.


text:
    GRANT v. CITY OF ALPENA.

    1. Statutes — When Operative.
    No law, nor any single provision thereof, can begin to speak until it takes effect.
    2. Municipal Corporations — Amendment oe Charter — Power to-Remove Oeeicers.
    A charter provision authorizing the common council to appoint a certain officer, and to remove him at pleasure, remains in force-after the taking effect of an amendment providing for the creation of a municipal board at a specified time in the future, which should have the appointment of such officer, until the provision last mentioned becomes operative.
    Error to Alpena; Kelley, J.
    Submitted November 20, 1895.
    Decided December 10, 1895.
    Case by James F. Grant against the city of Alpena for-maliciously preventing plaintiff from performing the duties of city marshal. From a judgment for plaintiff,, defendant brings error.
    Reversed.

      I. 8. Canfield, for appellant.

      J. D. Turnbull, for appellee.

       Rehearing denied January 30, 1896.

   Grant, J.

By tlie defendant’s charter, as it was prior to the amendment of 1891, the common council was authorized to appoint a marshal, and to remove him at pleasure. May 20, 1891, plaintiff was appointed marshal for the ensuing year, at a salary of $1,000. A new common council went into office early in August, under the amended charter of 1891, approved July 2, 1891, and ■ordered to take immediate effect, and August 17th declared the office of marshal vacant, and appointed a new man to fill the place.

The amended charter provided for a board of police commissioners, to be appointed on the nomination of the mayor after the annual election in 1892, the first Monday in April, and before May 1st. To this board, when so •appointed, were committed the appointment of a marshal and the control and'management of the police department of the city. By this amendment, the power to appoint a marshal was taken away from the common council, and lodged in this board. The effect was either to abolish the office of marshal during the interim from July 2d to some time after April 1st, when the board should be appointed, or to leave the office in the control ■of the council until that time. The result of either holding would be to defeat the plaintiff’s claim.

A law or any single provision thereof cannot begin to speak until it takes effect. Rice v. Ruddiman, 10 Mich. 125; Price v. Hopkin, 13 Mich. 318. Had the act provided that it should go into effect at the election in April, 1892, clearly the old charter would have remained in force until then. The same rule applies to any provision of the act. The police department was left in the control of the council until transferred to the board of commissioners, which could not be done until April, 1892.

The object of this suit is to recover the salary for the remainder of the term for which plaintiff was appointed. The court should have directed a verdict for the defendant.

Judgment reversed, and no new trial ordered.

McGrath, O. J., Long and Montgomery, JJ., concurred. Hooker, J., did not sit.

       Ac.t No. 393, Local Acts 1891.


author: Hooker, J.

text:
    PEOPLE v. HANAW.
    1. Constitutional Law — Embezzlement—Sufficiency of Information.
    2 How. Stat. § 9421, providing that, under an information charging the embezzlement of money only, a conviction may be had for the embezzlement of any check, draft, bill of exchange, etc., does not violate the constitutional right of the respondent to be informed of the nature of the accusation against him, since he may in such case have the charge made certain by examination or by bill of particulars.
    2. Embezzlement — Amendment of Information.
    An information for embezzlement under 3 How. Stat. § 9176os, alleging that the money embezzled belonged to the complainant, and that it came to the possession of the respondent by virtue of his employment as agent or collector, may be amended by inserting an averment that the money was so received “ for the use of ” the complainant.
    8. Same — Agent for Collection — Receipt of Draft.
    An agent for the collection of a claim may be convicted under 3 How. Stat. § 9176», of embezzling a draft received by him thereon, where he deposits the same on his own account with intent to appropriate the entire proceeds, even though the draft was payable to his order, and he had the right to convert it into cash and take out his commission.
    4. Same.
    One who intrusts paper to another for collection on commission has such an interest in a draft received by the latter in payment of the debt as to support a prosecution for its embezzlement, although, at the time of leaving the paper, he took the agent’s receipt to “ account for the proceeds when paid.”
    5. Trial — Bequests to Charge.
    While, within bounds, requests to charge may properly allude to the effect of certain testimony, they should not be argumentative.
    Exceptions before judgment from Jackson; Peck, J.
    Submitted November 22, 1895.
    Decided December 10, 1895.
    Joseph Hanaw was convicted of embezzlement.
    Conviction affirmed.

      Parkinson & Campbell and Smith & Ware, for appellant.

      Charles A. Blair, Prosecuting Attorney, for the people.
   Hooker, J.

The defendant is charged with embezzlement, and the evidence indicates that complainant indorsed and gave to him for collection, for his use and benefit, a check held by complainant upon a firm in New York. The defendant sent the check to New York, and received a draft payable to his order for a part of the sum, and deposited this draft with his banker, at Jackson, receiving credit for the amount. The complaint and warrant charged the embezzlement against him as “agent, clerk, servant, and collector,” and as an embezzlement of a large amount of money, to wit, $398.50, of the value of $398.50, of the goods and chattels then and there belonging to the complainant, and that said goods and chattels then and there came to the possession of the defendant by virtue of his employment, etc. A bill of particulars was filed, stating the facts hereinbefore set forth with regard to the draft. A motion to quash being made, the court permitted an amendment to be made to the information by inserting the words, “For the use of and belonging to the said James A. Follett [the complainant].” A conviction followed, and the defendant has appealed.

The statute under which the proceeding was instituted! is section 9176a, 3 How. Stat., and is as follows:

“If any officer, agent, clerk, or servant of any incorporated company, foreign or domestic, or if any clerk, agent, or servant of any private person or of any copartnership, except apprentices and other persons under age of sixteen years, or if any attorney at law, collector, or other person who, in any manner, receives or collects money or any other property for the use of and belonging to another, embezzles or fraudulently converts to his own use, or takes and secretes with intent to embezzle and convert to his own use, without the consent of his employer, master, or the owner of the money or goods collected or received, any money or property of another, or which is partly the property of another and partly the property of such officer, agent, clerk, servant, attorney at law, collector, or other person, which has come to his' possession or under his care in any manner whatsoever, he shall be deemed to have committed larceny, and, in a prosecution for such crime, it shall be no defense that such officer, agent, clerk, servant, attorney at law, or other person was entitled to a commission out of such money or property, as commission for collecting or receiving the same for and on the behalf of the owner thereof: Provided, That it shall be no embezzlement on the part of such agent, clerk, servant, attorney at law, collector, or other person to retain his reasonable collection fee on the collection, or any other valid interest he may have in such money or property.”

2 How. Stat. § 9421, provides:

“In any prosecution for the offense of embezzling the money, bank notes, checks, bills of exchange, or other securities for money of any person, by a clerk, agent, or servant of such person, it shall be sufficient to allege generally in the indictment an embezzlement of money to a certain amount, without specifying any particulars of such embezzlement, and on the trial evidence may be given of any such embezzlement committed within six months next after the time stated in the indictment; and it shall be sufficient to maintain the charge in the indictment, and shall not be deemed a variance, if it shall be proved that any money, bank note, check, draft, bill of exchange, or other security for money of such person, of whatever amount, was fraudulently embezzled by such clerk, agent, or servant within the said period of six months.”

It is said that this last-mentioned statute is unconstitutional, for the reason that it does not, in a case like this, apprise a defendant of the charge against him. We are cited to the case of Brown v. People, 29 Mich. 237, where, under a similar statute pertaining to larceny (2 How. Stat. § 9541), Mr. Justice Christiancy held that the statute was valid when the charge was larceny of coin or bank, notes, but expressed strong doubts of its validity as to promissory notes or bills of exchange generally, the same not being used and recognized as money in' the community. He added: “It is unnecessary here to determine this question.” In Com. v. Smith, 129 Mass. 110, a similar statute was said to permit proof of a bank check to sustain an indictment for the embezzlement of money. It should be said, however, that the constitutional question was not raised. We think that it is within the power of the legislature to ' prescribe the form of indictments, keeping in view the constitutional right asserted in this case; and where, as in embezzlement, a defendant has a right to have the charge made certain by examination or by bill of particulars, it cannot be said that he is not informed of the nature of the charge. See People v. McKinney, 10 Mich. 92; Rex v. Hodgson, 3 Car. & P. 422. If this is permitting a bill of particulars to take the place of a substantial averment in the indictment, it is by legislative sanction, under circumstances which do not deprive the defendant of the information guaranteed by the Constitution.

We will next consider the question of amendment. It is true, as contended, that a statutory offense must be so charged as to include all its elements, and the cases cited that require an information for the statutory breaking of a store in the night-time to allege that it was “not occupied with nor adjoining to a dwelling” sustain the proposition; and it is also settled that a charge of one offense cannot be substituted for another by amendment. See People v. Handley, 93 Mich. 40, and People v. Rathbun, 105 Mich. 699. But there is a radical difference between doing this and supplying omissions in an information. It is plain that the pleader sought to charge embezzlement in the first information, which followed the warrant. The words “for the use of” were omitted, but there is no other inference to be drawn from these papers than that the properly was so received. It is alleged to have belonged to the complainant, and it is said to have been received by the defendant by virtue of his employment as agent or collector. It follows, as a legal proposition, that it was received for the principal’s use, and an amendment-was proper.

Again, it is urged that the draft came lawfully into the. possession of the defendant; that he had a right to cash-it, inasmuch as a portion of the proceeds was his own; and that, inasmuch as this is true, embezzlement cannot-be predicated upon the deposit of the draft. It is true, that the defendant had a right to convert the draft into money, and take his commission, and pay the remainder-to his principal, but this is not what he did. He con-, verted into money or its equivalent, and did not pay his principal. He had no right to sell the draft with this unlawful design to misappropriate, and the 1-aw will not separate the act of sale from the intent to convert, but will say that wdth such an intent he had no right to sell the draft. The parties had a joint interest in this draft, and the statute is expressly aimed at the misappropriation'of the principal’s share in such cases. In the case of Com. v. Smith, 129 Mass. 110, it is said:

“The fact that the defendant received for the goods of his employers a check payable to his own order did not vest in him the title to the check or its avails. The relation of debtor and creditor did not exist, and the specific proceeds of the sales, whether in cash or in checks payable to their agent’s order, belonged to his employers, and were held in trust for them. * * * The transaction is the same whether the defendant received the price of the goods sold in bank bills from the hand of the purchaser, or in a check, upon which he received the money or a credit at the bank.”

It is said that, as collector, he had a right to mingle the money received with his own at the bank, and a subsequent conversion would not make him guilty. The circuit court so held. Evidence of his subsequent denials was not admitted as proof of embezzlement at a later date, but as showing a design to appropriate at the time of the deposit.

We cannot accede to the proposition that Follett “had no right, title, or interest” in this draft merely because he took defendant’s receipt to account for the proceeds of the check left for collection. On the contrary, his title was qualified only by defendant’s right to earn and obtain his commission. If he was justified in receiving a draft, it was Follett’s draft as much as his. See In re Johnson, 303 Mich. 114, and cases cited.

The evidence discloses that orders from the complainant w'ere accepted and paid by the defendant to a greater or less amount. ■ It is urged that this entitled the defendant to an acquittal, or, at least, to the submission to the jury of certain requests as to the effect of such evidence. On the other hand, it is contended that such payments were made as a matter of prudence, to prevent the holders from becoming interested in an investigation of the transaction. This was therefore a proper question for the jury.

We have examined the points raised upon the requests and charge, and think that the defendant has no cause for complaint. The points made by the requests were covered by the charge. Requests should not be made a means of reaching the jury by way of argument, with the added force of the court’s approval, though, within bounds, it may be proper to allude to tbe effect of certain testimony.

The conviction is affirmed.

The other Justices concurred.


author: Montgomery, J.

text:
    PEOPLE v. McCULLY.
    Careless Use oe Firearms — -Evidence—Directing Verdict.
    The absence of malice is an essential ingredient of the offense created by 2 How. Stat. § 9111, providing that any person who shall discharge, without injury to any other person, any firearm, while intentionally, without malice, aimed at or towards any person, shall be guilty of a misdemeanor, etc.; and where, in a prosecution under said statute, it appears from the undisputed testimony that a feud existed between the complaining witness and the accused, that the shooting was accompanied by threats, and that the weapon was deliberately aimed at such witness, and deliberately fired, verdict should be directed for the respondent.
    Exceptions before judgment from Genesee; Wisner, J.
    Submitted November 21, 1895.
    Decided December 10, 1895.
    James McCully was convicted of a violation of the statute relating to the careless use of firearms.
    Conviction reversed and prisoner discharged.

      Henry G. Van Atta, for appellant.

      George F. Brown, Prosecuting Attorney, for the people.
   Montgomery, J.

The respondent was convicted under an information charging a violation of section 9111, 2 How. Stat., which provides that any person who shall discharge, without injury to any person, any firearm, while intentionally, without malice, aimed towards-any person, shall be guilty of a misdemeanor, and shall be liable to a fine of not less than $100, or imprisonment in the county jail not to exceed one year, or both, at the discretion of the court. The court charged the jury that it was an essential ingredient of the offense that the absence of malice be shown. Respondent’s counsel asked that the jury be instructed to find a verdict for the respondent, on the ground that the evidence of the prosecution tended to show that there was malice.

A careful examination of the record convinces us that the instruction should have been given. The evidence shows that a feud existed between the complaining witness and the accused; that the shooting was accompanied by threats; that the weapon was deliberately aimed at the complaining witness, and deliberately fired. It was not permissible for the jury to ignore this proof, which was uncontradicted. As was said in People v. Chappell, 27 Mich. 486, this section, when construed in connection with the title of the act, which is, “An act to prevent the careless use of firearms,” must be held to have been designed to punish acts done carelessly, without design of doing mischief. We feel constrained to hold that that case rules the present.

Conviction reversed, and prisoner discharged.

The other Justices concurred.


author: McGrath, G. J.

text:
    PEOPLE v. KAHLER.
    Local Option Law — Jurisdiction—Procedure.
    Case ruled by People v. Berry, ante, 256.
    Exceptions before judgment from Hillsdale; Lane, J.
    Submitted November 21. 1895.
    Decided December 10, 1895.
    John Kahler was convicted of violating the local option law.
    Affirmed.

      William C. Chadwick, for appellant.

      Guy M. Chester, Prosecuting Attorney, for the people.
   McGrath, G. J.

This was a proceeding under the local option law. All questions raised are disposed of in People v. Berry, ante, 256.

The conviction is affirmed, and the court directed to proceed to judgment.

The other Justices concurred.


author: McGrath, C, J.

text:
    PEOPLE v. KILEY.
    1. Receiving Stolen Property — Evidence—Identification of Property.
    In a prosecution for receiving a quantity of scrap brass knowing it to have been stolen, evidence that the brass and a horse and wagon were taken at the same time; that the wagon, when afterwards found, had a broken axle; that respondent was seen on the road near by with a broken-down wagon laden with heavy material; that an expressman was employed, who conveyed the contents of the wagon, which proved to be scrap brass, to a certain place, where it was sold by respondent, — is sufficient to go to the jury upon the question of the identity of the property sold with that stolen.
    3. Same — Instructions to Jury.
    It is error, however, to instruct the jury in such case that, if respondent is the man who had charge of the brass, and the man who sold it, the identification of the property is sufficiently proved.
    Error to Wayne; Lillibridge, J.
    Submitted November 21, 1895.
    Decided December 10, 1895.
    David Kiley was convicted of receiving stolen property, and sentenced to imprisonment in the Detroit bouse of correction for two years.
    Judgment reversed.

      James Y. JD. Willcooo and George W. Ooomer, for appellant.

      Allan H. Frazer, Prosecuting Attorney, and Henry A. Mandell, Assistant Prosecuting Attorney, for the people.
   McGrath, C, J.

Respondent was convicted of knowingly receiving stolen property. A quantity of brass was taken from the Eureka Iron Works, at Wyandotte, in the latter part of August. The testimony tended to show that the amount taken was 1,700 pounds of new brass, made up into new bearings, and 1,300 pounds of scrap or old journals; that a horse and light buggy wagon were taken from another resident of Wyandotte; that the horse was afterwards discovered at Delray, a place on the road between Wyandotte and Detroit, and near the latter place, ■and the wagon was found in Wyandotte, with a broken •axle; that respondent, with two other persons, was seen with a broken-down wagon laden with heavy materials, near Delray; that an expressman from Detroit was employed, who brought the brass to Detroit, and to Applebaum’s scrap yard; that the materials transferred to the -expressman’s wagon consisted of scrap brass or old journals; that the brass was bought by Applebaum, and weighed 800 pounds. Applebaum and one Goldman, in the former’s employ, identified defendant as the man from whom the brass was bought, and testified that he gave his name as Wilson; that he was paid by check; and, when the check was made to the order of the name given, respondent requested it changed, and made payable to bearer. Applebaum sold' the brass, and it was melted up, so that identification of that bought with that stolen, by the ordinary means, was impossible.

The court was right in refusing to take the case from the jury on the ground that there was not sufficient evidence of identification of the property sold with that stolen; but the court erred in instructing the jury that: “If you believe the testimony that this defendant is the man who was in charge of the brass on the river Eouge, and the man who sold it to Applebaum, then I charge you the identification of the property is sufficiently proven; that the property sold was the property stolen from the Eureka Iron Works.” A finding that the property transferred to the expressman’s wagon was the stolen property depended upon inferences to be drawn from all the facts and circumstances, and that inference was for the jury.

The conviction must be set aside, and a new trial granted.

The other Justices concurred.