text:
    HOME SAVINGS BANK v. HOSIE.

    1. Guaranty — How Construed — Surrounding Ciroumstanoes.
    A contract of guaranty should be construed so as to give effect to the intention of the parties as expressed in the instrument, read in the light of the surrounding circumstances.
    2. Same — Continuing Contract — Death op Obligor — Revocation.
    A bond executed by directors and stockholders to secure borrowed money which might be required for the corporate business during the ensuing year, not exceeding a specified sum, is a continuing guaranty for the time specified, and the estate of one of the obligors, who died within the year, is liable for paper discounted or renewed under it; his death not operating to revoke a contract which was irrevocable in his lifetime.
    3. Same — Renewal Bond — Consideration.
    A bank, under' an agreement with the stockholders of a corporation, accepted their bond as a continuing security for such discounts as might be required by the corporation in its business for one year. At the expiration of the year, this bond was surrendered, and a like bond was executed for the ensuing year, a large part of the indebtedness covered by it having been incurred under the former bond. Payment of this indebtedness would have been required, and further loans refused, by the bank, except for the giving of the new bond. Held, that there was a sufficient consideration for the renewal bond.
    4 Promissory Notes — Demand.
    A promissory note payable on demand, with interest, is not a continuing security, on which the indorsers will remain liable until actual demand, however long delayed, but, on the contrary, such a note must be presented within a reasonable time, in order to hold indorsers.
    5. Same — Delayed Presentment — Release op Indorsers.
    A delay of 2-J- years in presenting such a note for payment, where all the parties reside in the same city and might be' readily notified, will release indorsers.

      Error to Wayne; Lillibridge, J.
    Submitted November 22, 1898.
    Decided December 28, 1898.
    The Home Savings Bank presented claims against the estate of J. Huff Jones, deceased. The claims were allowed by the commissioners, and Robert Hosie and Griffin D. G. Thurston, executors, appealed to the circuit court. From a judgment there for claimant, defendants bring error.
    Modified and affirmed.

      Walker & Spalding, for appellants.

      George W. Radford, for appellee.

       Appellee’s application for rehearing denied January 20, 1899.

   Long, J.

This is an appeal from the action of the commissioners on claims in the estate of J. Huff Jones. The claims were allowed by the commissioners; and on appeal to the circuit court the claimant bank had judgment for $36,490.72; $30,600.81 on the first claim, and $5,889.91 on the second claim. The cause was heard before the court without a jury, and findings of fact and law made by the trial court.

It appears from the findings that the Detroit Motor Company is a corporation organized under the laws of this State; that, during the period covered by the transactions in controversy, J. Huff Jones and five others were stockholders and directors of the company; that, from the organization of the company until his death, J. Huff Jones was a stockholder, director, and vice-president of the company; that prior to September 13, 1890, the company was a borrower at the Home Savings Bank upon notes of the company, indorsed by the directors, and that, for the-purpose of facilitating the business and avoiding getting each note and renewal thereof indorsed by the directors, upon a resolution offered by Mr. Jones, a bond was given to the bank, with certain of the directors as sureties (among whom was J. Huff Jones), under which the secretary was authorized to negotiate and discount paper at the Home Savings Bank for the company to the amount of $30,000 during the ensuing year; that on May 32, 1891. the amount of the bond was increased fro $30,000. At the expiration of the first bond a second one was given for like purpose on September 13, 1891. A third one was given September 13, 1892. This last bond is in like form as the others, for $30,000, and, among other things, recites:

“ Whereas, for the successful and more advantageous management of the trade and business of the said corporation, it is necessary, from time to time, to borrow money to an amount not exceeding $30,000; and
Whereas, for that purpose, Francis A. Blades, the secretary of said corporation, has, by resolution of the board of directors thereof, been, and is hereby, duly authorized and directed to make or indorse negotiable paper of or for such corporation for such loans, from time to time, during the next ensuing 12 months, as he may find necessary to carry on the business of said corporation, not exceeding in the aggregate the amount of $30,000, upon the promissory notes of said corporation, or such commercial or business paper as said Francis A. Blades may discount at said Home Savings Bank upon the indorsement of said corporation or otherwise; and
Whereas, the above-bounden obligors have consented, and do hereby consent, to become security, jointly and severally, for the payment of such indebtedness in accordance with the terms of the negotiable paper issued or to be issued and discounted as aforesaid, and that this, their bond, shall stand as security therefor in the hands of the obligee above named, for the benefit of the holders of any such paper:
“Noiv, therefore, the condition of this obligation is such that, if the Detroit Motor Company shall well and truly pay or cause to be paid and discharged all the indebtedness to be evidenced by the commercial paper which has been or may hereafter be issued and discounted, as above provided, then this obligation to be void; otherwise to remain in full force and virtue.”

This bond was signed by the directors of the company, including J. Huff Jones. After its execution and delivery, the Home Savings Bank renewed certain notes given under the former bonds, and discounted for the Detroit Motor Company certain promissory notes which were secured by this last bond.

J. Huff Jones died December 16, 1892. At this time the discounts amounted to 130,000. After his death, and after the bank had knowledge of it, a large part of the paper so held by the bank was renewed by it. The notes for which the renewals were taken were in each case surrendered by the bank at the time of the renewals; but no paper was renewed by the bank after September 13, 1893, the date at which the said bond was to expire according to its terms. None of these notes or the renewal notes have been paid, and they amount in the aggregate to $30,600.81.

The court found further as follows:

“I specially find that J. Huff Jones and the other sureties on said bonds were the principal stockholders, officers, and directors of the Detroit Motor Company at the time said bonds were given; that it was the intention that the bank should loan to said Detroit Motor Company the amount of money named in said last bond, not for the ordinary short time of banking paper, but for such indefinite period as might be required in the company’s business, and that the same was intended as a permanent loan during the life of said bond; that the said bank had already so loaned large amounts during the two previous years under the first two bonds; that a large part of the indebtedness under the last bond — the one in question — had been incurred under the former bonds; that said former bonds had been for one year each, like the one in question in this case. Also that all the parties, the Home Savings Bank, the Detroit Motor Company, and the sureties on the last bond, — the one in question, — contemplated that, although the loan of money by the bank would be, in form, upon the comparatively short-time paper customary to a bank, yet, in effect, the Detroit Motor Company and the sureties on the bond were bound for such renewals or extensions as might be required by the company’s business during the term of said bond.
That the Home Savings Bank never, in terms, agreed that it would loan to the Detroit Motor Company the amount of $30,000, mentioned in the last bond set forth in finding 1, nor any other sum, and never, in terms, agreed that it would continue any of its loans beyond the period specified in the notes taken upon said loans, and made no agreement respecting said loans except that' implied by the acceptance of the bond in question, and by the course of business under the previous bonds and the one in question,' and gave no consideration for said bond other than that shown by the facts hereinbefore found.
“Based upon the foregoing, I find as conclusions of law:
“1. That J. Huff Jones could not revoke his liability on said bond during his lifetime; that at the time of his death, on December 16, 1892, he was liable under said bond to the full amount thereof.
“2. That the death of said J. Huff Jones did not operate as a revocation of his liability under said bond during the year for which the same was given.
“3, That the taking of renewal paper by the Home Savings Bank after the death of J. Huff Jones, and notice thereof, and before the expiration of said bond on September 13, 1893, was not in law such a payment as released his estate from liability thereon under the terms and conditions of the bond, and the purpose the parties had in view in giving and renewing the bond. I also hold as a matter of law that it was not contemplated by the sureties that each renewal of the notes should constitute a fresh indebtedness, but, on the contrary, it was the intention of all the parties to continue the indebtedness indefinitely, which was not extinguished because of any change in the commercial paper held by the bank by the renewal or extension of notes.
“ 4. That the Home Savings Bank is entitled, by reason of the foregoing facts, to recover from the estate of J. Huff Jones the entire amount due on said notes, Exhibits 2, and 4 to 24, both inclusive, as allowed by the commissioners on claims against said estate, which, with the interest to the date of their report, amounted to $30,600.81, and from which date interest should run thereon. ”

A certain note was also presented to the commissioners on claims for allowance against the estate. The court found upon that as follows:

“1. On or about January 15, 1891, the Home Savings Bank discounted for, and placed the proceeds to the credit of, the Detroit Motor Company, a note, of which the following is a copy:
‘“85,000.00. Detroit, January 15, 1891.
‘“On demand after date the Detroit Motor Company promises to pay J. Huff Jones, F. A. Blades, E. T. Hance, L. Van Derburg, ffm, C. Maybury, H. K. Jones, T. B. Rayl, Charles W. Casgrain, or order, five thousand dollars, at the Home Savings Bank, value received, with interest seven per cent, per annum.
“‘Detroit Motor Co.,
“‘By F. A. Blades, Treas.’
‘ Indorsers on back: • Wm. C. Maybury, Ellwood T. Hanoe, J. Huff Jones, T. B. Rayl, L. Van Derburg, Henry K. Jones, F. A. Blades, and Charles W. Casgrain.’ Interest indorsements: [Herein are enumerated various interest items.] * * *
“2. The indorsers on said note, with the exception of L. Van Herburg- and Henry Eh Jones, were the same persons as the sureties on the bond hereinbefore set forth.
“3. The interest was paid on said note quarterly from its date until January 15, 1893, during all of which time I find that said note was treated and intended as a permanent loan; that J. Huff Jones was a director and vice-president of the Detroit Motor Company, and knew that this loan was made, and was familiar with the .business of the Detroit Motor Company, as set forth in the general findings herein. I further find that, owing to his official business relations to the Detroit Motor Company, he was not a mere accommodation indorser on said note, but that he signed said note for the purpose of procuring from the Home Savings Bank a permanent loan of the amount of said note to the Detroit Motor Company.
“4. I further find that said note was duly presented at the Home Savings Bank, and. demand made for payment of said note, on July 24, 1893, and, on failure of payment upon such demand, was duly protested on said day.'
“5. I also find that through the spring previous to said presentation, demand for payment, and protest of said note, the cashier of the Home Savings Bank had a number of times spoken to F. A. Blades, secretary of the Detroit Motor Company, about said note, and requested him to come in and take care of the note; that during said time F. A. Blades was the secretary and principal financial manager of the Detroit Motor Company; that these requests were made at the bank, and that the note was then in the bank.
“6. I also find that on or about June 16, 1893, certain letters were mailed by the Home Savings Bank, and received- by the parties addressed, of which the following are copies:
“ ‘Detroit, Mich., June 16,1893.
“‘F. A. Blades, City.
‘Dear Sir: Our board of directors require immediate payment of demand loan for §5,000, made January 15, 1891, by Detroit Motor Company, and indorsed by you.
“ ‘Respectfully yours,
“ ‘ J. H. Haass, A. C.’
“ ‘Detroit, June 16, 1893.
“ ‘ J. Huff Jones’ Executors, City.
“ ‘ Gentlemen: Our board of directors require immediate pay-
ment of Detroit Motor Company demand note, dated January 15, 1891, for §5,000, indorsed by Mr. J. Huff Jones.
“ ‘Very truly yours,
“ ‘ J. H. Haass, A. C.’
“Also that similar letters were on the same day sent to and received by the Detroit Motor Company and the other indorsers of said note.
7. I also find that the conversations aforesaid between the cashier of the bank and the secretary of the Detroit Motor Company, and the letters aforesaid, were not, in bay opinion, anything more than requests to arrange for payment of the note; that they did not, in law, amount to a formal demand for absolute payment, but that the intention of the bank was thereby to call the attention of the parties to the fact that the bank desired arrangements to be made for payment; and I consequently find that the only time any actual presentation and demand for payment of the note was made was on the day of protest thereof.
“From the foregoing facts I find as conclusions of law that the Home Savings Bank is entitled, by reason of the foregoing facts, to recover from the estate of J. Huff Jones the entire amount of said note as allowed by the commissioners on claims, to wit, $5,889.91, that being the amount due thereon at the date of filing the report of said commissioners on claims, from which date interest is to run thereon.”

Certain amendments were asked to the findings, which were refused, and exceptions were taken, as well as exceptions to the findings of fact and law as made.

1. It is contended by counsel for defendants that the bond was nothing more than an offer to the bank to guarantee paper discounted by it within a year from date, and before revocation of tbe guaranty; that, as to discounts of paper from time to time before revocation, the obligors became liable therefor, but that any obligor might, at any time within the year, notify the bank that he would not be liable for discounts made thereafter; that the death of Mr. Jones, and notice thereof to the bank, had the same effect as a notice that he would not be liable for future discounts, given by him in life, would have had; and that his estate could not be held upon paper thereafter discounted, whether loans or renewals. It is also contended that the fact that Mr. Jones and the other signers of the bond were stockholders and officers in the Detroit Motor Company, and that the paper was discounted for the company, could not affect the question as to whether the instrument at its delivery became an irrevocable guaranty for the full time and amount, thus making the liability of the parties thereto different from what it would be if they were not stockholders in the Detroit Motor Company. On the other hand, it is the contention of counsel for the claimant bank that the bond, upon execution and delivery, became an irrevocable guaranty of all paper, to the amount of $30,000, that the bank might discount for the company during the year; that the right of the bank to discount such paper, and hold the obligors thereon, could not be affected by any notice of revocation, nor by the death of the obligors.

After a careful examination of the authorities cited and other authorities found on the subject, we conclude that the safe rule, and the one supported by the best-reasoned cases, is that the instrument must have that effect which shall best accord with the intention of the parties as manifested by the terms of the guaranty, taken in connection with the subject-matter to which it relates. As was said in Mussey v. Rayner, 22 Pick. 227:

“The next inquiry is, Was this a continuing guaranty ? The defendant insists that upon this point a strict rule of construction should prevail, and that it ought to appear unequivocally that it was the purpose of the defendant to guarantee tbe payment of debts contracted by Mr. Rayner, Jr., from time to time. Such a rule has often been stated by eminent jurists. Mason v. Pritchard, 12 East, 227; Cremer v. Higginson, 1 Mason, 336; Russell v. Clark’s Ex’rs, 7 Cranch, 69. On the other hand, there are authorities countenancing the doctrine that a liberal construction is to be given in such cases in favor of a person claiming rights under such a guaranty, and holding it to be the duty of the guarantor to limit his guaranty expressly to a single dealing if he would avoid a further responsibility. Thus, in the case of Merle v. Wells, 2 Camp. 413, where Lord Ellenborough says: ‘If a party means to be a surety only for a single dealing, he should-take care to say so.’ Probably the better rule of construction would be that applied to other contracts, — to give the instrument that effect which shall best accord with the intention of the parties as manifested by the terms of the guaranty, taken in connection with the subject-matter to which it relates, and neither enlarging the words beyond their natural import in favor of the creditor, nor restricting them in aid of the surety.”

This is the rule laid down in 1 Brandt, Sur. (2d Ed.) § 156, in which it.is said:

“The true rule for construing guaranties is to give effect to the intention of the parties as expressed in the instrument, read in the light of the surrounding circumstances.”

Willes, J., in Heffield v. Meadows, L. R. 4 C. P. 595, in deciding whether a guaranty was continuing or not, said:

“It is obvious that we cannot decide that question upon the mere construction of the document itself, without looking at the surrounding circumstances to see what was the subject-matter which the parties had in their contemplation when the guaranty was given. It is proper to ascertain that for the purpose of seeing what the parties were dealing about; not for the purpose of altering the terms of the guaranty by words of mouth passing at the time, but as part of the conduct of the parties, in order to determine what was the scope and object of the intended guaranty. Having done that, it will be proper to turn to the language of the guaranty, to see if that language is capable of being construed so as to carry into effect that which appears to have been the real intention of both parties.”

In Columbus Sewer-Pipe Co. v. Ganser, 58 Mich. 385 (55 Am. Rep. 697), the plaintiff claimed that the bond-sued upon contained a continuing guaranty. The rule laid down in Brandt on Suretyship was applied. It was said that “showing the circumstances under which the contract is made, and the subject-matter to which it relates, does no more than aid the court and jury to better understand the true sense in which the words are used and understood by the parties.” See, also, Bell v. Bruen, 1 How. 187; Weed Sewing-Machine Co. v. Winchel, 107 Ind. 260; Grocers’ Bank v. Kingman, 16 Gray, 473.

In the light of this rule, what construction is to be placed upon this bond ? It is admitted that notice of revocation would not affect the liability of the obligors upon previous discounts. The bond itself recites that the “obligors are stockholders and interested in the business of the Detroit Motor Company; ” that, “for the successful and more advantageous management of the trade and business of said corporation, it is necessary, from time to time, to borrow money to the amount of $30,000;” that “the secretary has, by resolution of the board of directors, been, and is hereby, duly authorized to make or indorse negotiable paper of or for such corporation for such loans, from time to time, during the next ensuing 12 months, as he may find necessary to carry on the business of said corporation, not exceeding in the aggregate $30,000.” It also recites that the “obligors have consented, and do hereby consent, to become security, jointly and severally, for the payment of such indebtedness in accordance with the terms of the negotiable paper issued or to be issued and discounted as aforesaid. ” It thus appears from the bond that the Detroit Motor Company was without cash capital to operate its business; that the obligors on the bond were its stockholders and directors, and interested in the successful management of the business. They recognized the necessity of borrowing money to carry on the business. They made a forecast of the needs of the business for the ensuing year, and concluded that it would require $30,000, and took this method of borrowing the amount decided ■upon; and the bond contemplated that the business should be carried on during that 12 months without interruption. This was evidently the construction put upon it by all the parties, as shown by their previous dealings under other and similar bonds.

It is conceded by counsel for defendants that the obligors might, doubtless, have made themselves liable, as claimed by the bank, had the bank parted with any valuable consideration, but the contention is that, when the bond was given, no consideration passed; that the fact that the bank had previously discounted paper of the company does not affect the question; -that a past consideration will not support a present agreement. It is not the mere fact that the bank had discounted paper of the company, which it still held at the time this third bond was given, but the fact that the bank held the second bond as security for the paper which it had previously discounted, and then held, and refused to continue the loan unless a new bond was given. Undoubtedly, payment of the paper would have been required had not the new bond been given. This was not only a contract between the company and the bank, but also a contract between the sureties themselves, who were stockholders and interested in the continuance of the business. It was a contract, under the findings of the cohrt below, in which the entire consideration of $30,000 passed at the time of the acceptance of the bond and the surrender of the former bond, and, under well-settled, rules, could not have been revoked by the obligors, and consequently was not revoked by the death of Mr. Jones. That finding by the court has been fully set out. It is supported by the facts and circumstances surrounding the case. It was the intent of all the parties that this business should continue for the entire time fixed by the bond, and it was not contemplated that any one of the obligors might give notice and terminate the arrangement made with the bank to discount and renew paper.

It is the general rule that when the engagement of a surety is a contract, and not a bare authority; it is not usually revoked by his death, and his estate remains liable the same as he would' have been had he lived. Whether one undertakes for himself or others in regard to future transactions, the contingency that death may remove him before the obligation can be fulfilled must be regarded to be in the contemplation of the parties, and that the obligation will be unaffected by that event. 1 Brandt, Sur. (2d Ed.) § 133; Green v. Young, 8 Greenl. 14 (22 Am. Dec. 218); White’s Ex’rs v. Com., 39 Pa. St. 167.

In National Exchange Bank v. Gay, 57 Conn. 224 (4 L. R. A. 343), which counsel for defendants cite, it appeared that the bond, by its terms, did not provide for carrying on the business for a definite time, and it expressly provided for revocation on notice by any one of the obligors at any time. In Gay v. Ward, 67 Conn. 147 (32 L. R. A. 818),— a suit for contribution on the same bond as in the former case, — dhe court held that it was a continuing guaranty, which covered all renewals, substitutions, and extensions made while the contract was in force. In discussing the question of revocation, the court held that, unless its terms forbade it, the contract of continuing guaranty might be revoked on notice to the guarantee. The court also held that the bond was revocable for the reason that it contained a specific reservation to the sureties that they might cancel their liability by giving notice, and that the death of any one of the sureties, so far as his estate was concerned, operated the same as the notice provided for in the bond itself; but the court added:

“The question whether a guaranty will be revoked by notice 'of death, when, by the terms of the guaranty, the guarantor could not, in life, have revoked the guaranty, is not before us, and we express no opinion upon this point.”

It is evident, therefore, that these cases have no weight in determining the question here involved. •

The court below very properly held that, from the terms of the bond and the surrounding circumstances, the bond was not revoked by the death of Mr. Jones. It stood as a continuing guaranty for one year from its execution and delivery, and the bank had the right to discount and renew paper for the company up to the time of its expiration ; and the sureties on the bond, including the estate of Mr. Jones, must be held liable therefor.

2. The other claim is on the §5,000 note indorsed by Mr. Jones and others. The defense to this note is based upon the grounds:

First. That it was the duty of the bank, in order to hold the indorsers upon the note, to present it for payment within a reasonable time, which time would be much shorter than that which actually elapsed before presentment, and that that delay was such laches as to discharge the indorsers.
Second. That the indorsers are discharged because the bank did not notify them of the failure of the Detroit Motor Company to pay, and that no notice was given to them of the demands made verbally upon the company in the spring of 1893, or of the demand by letter on June 16, 1893

Upon the first point, counsel for the bank contends that the note was a continuing security, upon which the indorsers remained liable until presentment, however long the time which might elapse before it was presented, in view of the fact that the court below found it to be a permanent loan. Exception was taken by defendants’ counsel to this finding, and it is now claimed that there was no evidence to sustain such finding.

The testimony is returned in the bill of exceptions. The findings show that the note was given January 15, 1891; that no demand of payment was made, or notice of such demand given, until July 24,1893. We find no testimony in the record which warranted the finding that this was regarded as a permanent loan. Mr. Ellwood T. Hance, one of the indorsers on the note, and one of the directors of the Detroit Motor Company, was called as a witness for the claimant, and testified on cross-examination that, if the note had been presented in 1891, it would have been paid; that the financial difficulty came upon the company in the latter part of 1892. The note must, therefore, be treated as an ordinary demand note, and the rights of the parties settled by the rules applicable thereto. The cases are at variance upon this rule. The court of appeals of New York held in Merritt v. Todd, 23 N. Y. 28 (80 Am. Dec. 243), that a promissory note payable on demand, with interest, is a continuing security, and that an indorser remains liable until an actual demand; that the holder is not chargeable with neglect in omitting to make a demand within any particular time. This case has since been criticised, not only by other courts, but by that court; and in Parker v. Stroud, 98 N. Y. 385 (50 Am. Rep. 685), that court said:

“ Since the case of Merritt v. Todd, no determination contrary to the principles there laid down has been made in this State, and, although that decision has been somewhat criticised in later cases, it has now been acquiesced in too long as the law of the land to be open to question or dispute. ”

This doctrine has not been followed in other States, and the great weight of authority is that demand- notes must be presented for payment within a reasonable time, and, in case of nonpayment, notice must be given as in other cases to indorsers.

In Perry v. Green, 19 N. J. Law, 61 (38 Am. Dec. 536), the question was squarely presented. The action was upon a promissory note for $2,000, dated June 2, 1835, payable on demand, with interest. There was no demand of payment until March 19, 1839. Plaintiff claimed that it was understood between the parties that it was to be a permanent loan, though there was no time of payment agreed upon except as expressed in the note. The court, in stating the case, said that, if there had been any agreement as to the time when the note should be paid, it could not affect the rights of the indorser unless he was a party to the agreement; and even then it might well be doubted whether parol evidence of any agreement to extend the time of payment, thus altering the force of the written contract, would be admissible. The note was transferred to the plaintiff for money borrowed. Some contention was made that, the note being payable with interest, it was thereby taken out of the rule applicable to commercial paper. It was said that it was a note upon which immediate payment might be demanded; that the indorser contemplated a short credit, and that that was the consideration upon which he agreed to be responsible; that if it was the object of the borrower to effect a permanent loan, and a protracted day of payment was in the contemplation of the parties, a corresponding note would have been drawn, and that the borrower would not have put it in the power of the owner of the note to call upon him immediately for payment. It was held that the demand should have been made earlier, and that the judgment should have been directed for defendant.

In Field v. Nickerson, 13 Mass. 131, the note was payable on demand, with interest. It was given for money loaned. The action was against the indorser. No demand was made for eight months', and it was held that it should have been made earlier. The cases of Rice v. Wesson, 11 Metc. (Mass.) 400, Thielman v. Gueble, 32 La. Ann. 260 (36 Am. Rep. 267), Turner v. Iron Chief Mining Co., 74 Wis. 355 (5 L. R. A. 533, 17 Am. St. Rep. 168), are all to the same effect. In the last case the court said:

“It has been held in New York, and perhaps elsewhere, that an indorsed promissory note, payable on demand, with interest, is a continuing security, on which the indorser will remain liable until an actual demand, and upon which the holder is not chargeable with neglect for omitting to make demand within any particular time. Merritt v. Todd, 23 N. Y. 28 (80 Am. Dec. 243). But much of the reasoning in that case seems to have been disapproved by subsequent cases in the same court. * * * The case of Merritt v. Todd has been expressly repudiated in Louisiana, where it is held that a demand note must be protested, and notice given within a reasonable time, to hold an indorser; and, the fact that the indorsement was for accommodation, and that the note bears interest, makes no difference. Thielman v. Gueble, 32 La. Ann. 260 (36 Am. Rep. 267). This ruling_seems to be in harmony with the current of authority in this country, as appears from the valuable notes by Mr. Freeman in 80 Am. Dec. 250-254.”

The delay in the above case was 10 months. The case was followed and approved in Leonard v. Olson, 99 Iowa, 162 (35 L. R. A. 381, 61 Am. St. Rep. 230).

In Palmer v. Palmer, 36 Mich. 490 (24 Am. Rep. 605), the court said, in speaking of demand notes:

“If the note had been negotiable, and indorsed over, any long delay to present it would unquestionably have released the indorser. * * * It is now well settled that a note payable on demand is payable at once, and without demand, so that the statute runs from its delivery; and this rale has been applied where, from the form of the contract, it is manifest that immediate payment was not expected. Thus, in Norton v. Ellam, 2 Mees. & W. 461, the note called for interest, which indicated at least an expectation of some delay.”

In that case the action was on a note payable 30 days after demand, and it was held that it was barred by the statute, as against the maker, after the lapse of 6 years after the 30 days named in the note.

The courts are sometimes embarrassed with the question whether the time when demand is made, under the circumstances of the given case, is a reasonable time. In the present case, however, no such embarrassment arises. The parties all resided in the same city, so that the bank could have presented it at any time to the company, and notified the indorsers; and yet it carried it from January 15, 1891, to July 24, 1893, over 2£ years from its date, before taking any legal steps to demand payment or notify the indorsers. The demand was not made within a reasonable time to hold the indorsers on this paper. We need not, therefore, discuss the question as to the sufficiency of the demand and notice. This item of the claim should not have been allowed by the court below.

The judgment of that court must be modified in accordance with these views, and, as modified, will be affirmed. Defendants will recover costs of this court.

The other Justices concurred.


source: Caselaw Access Project

author: Montgomery, J.

license: Public Domain

text:
    DETROIT, GRAND RAPIDS & WESTERN RAILROAD CO. v. COMMISSIONER OF RAILROADS.

    1. Railroad Companies — Taxation—Gross Income.
    Sums received by a railroad company for switching, rental of tracks and terminals, and interest on loans and deposits, are a part of its gross income, and taxable as such, under Act No. 228, Pub. Acts 1897.
    2. Same — Mileage.
    Under Act No. 228, Pub. Acts 1897, requiring railroad companies to pay a specific tax, to be computed upon the gross income per mile of road “actually operated within this State,” the computation should exclude tracks over which the company runs its trains, but which are operated by another company as a part of its own separate system.

      Mandamus by the Detroit, Grand Rapids & Western Railroad Company against Sybrant Wesselius, commissioner of railroads.
    Submitted November 22, 1898.
    Writ denied December 28, 1898.

      Smith, Nims, Hoyt & Erwin, for relator.

      Fred A. Maynard, Attorney General, for respondent.

       Rehearing granted July 11, 1899. Former decision affirmed December 12, 1899.

   Montgomery, J.

This is an application for mandamus to compel the railroad commissioner to change the assessment made against the relator for the present year. The company’s report showed an operation of 451 miles of road, and that its gross income was $1,316,739.50. The respondent required a further report, which was furnished, showing gross receipts for switching of $5,052; rental of approaches, tracks, and terminals, $5,445.12. The report also showed that relator received during the year interest on deposits, $5,052. These three last-named items were not included in the original amount of the gross receipts, and were added to the amount first reported in making the assessment. It further appears that the relator included, in its report of mileage operated, 4.6 miles from Detroit to Delray; 8.4 miles from Delray to Oak; 1 mile from Lansing to North Lansing; 7.3 miles from Paines, in the county of Saginaw, to the city of Saginaw; 15.5 miles from Grand Rapids to Sparta; and 34.2 miles from Sparta to Sheridan, — a total of 71 miles, over which relator ran its trains, but as to which road it did not have exclusive control. On the contrary, these lines of road were used by other railroad companies as a part of their several systems. Four questions are presented:

(1) Whether the item for switching is a part of the gross income.
(2) Whether the interest on deposits is to be so treated.
(3) Whether rental for tracks is to be so treated.
(4) Whether, in making the computation, the mileage should be that exclusively operated by the relator, or should include other roads, over which it ran any of its trains, to the extent so used.

1. The act under which the assessment is made is Act No. 228, Pub. Acts 1897, which provides for a specific tax upon the property and business of railroad companies operating within the State, computed in the following manner: Upon all such gross income, not exceeding $2,000 per mile of road actually operated within this State, 2£ per cent, of such gross income; on such gross income in excess of $2,000, and not exceeding $4,000, per mile, 31 per cent., etc. Was the sum received for switching a part of the gross income? We think it was. It is claimed by relator that this item, being paid or credited to relator by other railroad companies, and charged to their customers, would be included in the amounts reported by such other companies as their gross earnings. There was no direct proof of this before the railroad commissioner, although it was claimed in a letter filed by the president; but we do not well understand how this could be. Certainly, the relator received the amount of $5,000 and upwards for services in switching. It was certainly a part of its gross income, and if the charges were collected by other railroad companies, and paid over to the relator, it is not quite clear why it should be treated as a part of the gross incomes of such other companies, any more than the freight charges advanced. In relator’s petition in this case it is represented that the sum set forth as received for switching was a sum received of its customers, and paid over to other companies, for switching done by such other companies, the relator simply acting as a collecting agent. If the relator had shown this by its report, we should not regard the sum so received as a part of the gross earnings ; but we do not so read the report. If any mistake has been made in the report, doubtless the railroad commissioner will permit a correction.

2. We are unable to see why the sum received for rental of tracks and terminals is not a part of the gross income received by relator.

3. The report shows there was received by the relator, interest on loans and deposits, $5,013.90. It is contended that this was not a part of the gross income received in carrying on the business, within the meaning of the statute. We think it is clearly within the language of the statute.

4. The most important question in the case is whether, in computing taxes, tracks over which relator runs its trains, but not exclusively controlled by relator, should be computed as a part of its mileage. The language of the statute is “road actually operated within this State.” The contention of relator is that it is immaterial whether this company operates this road exclusively, or whether it is operated in conjunction with other companies. On the other hand, while it is conceded by respondent that the statute does not require that the road should be owned by the company, yet it is contended that it does require that if not owned, but merely operated, it shall.be operated exclusively, and not merely in common with other companies. This would be the ordinary meaning of the language; and, looking somewhat to the consequences, it will be seen that, if the relator’s contention be allowed, two connecting roads of equal mileage might, by running trains at intervals over the whole length of the two roads by mutual consent, each be said to be operating a road of the entire length, thereby materially reducing the rate of taxation. We think the contention of respondent’s counsel should prevail.

It follows that the writ will be denied.

The other Justices concurred.


author: Per Curiam;.

text:
    CHICAGO & WEST MICHIGAN RAILWAY CO. v. COMMISSIONER OF RAILROADS.
    Railroad Companies — Taxation — Gross Income — Switching Receipts.
    A sum received by a railroad company for switching cars is a part of its gross income, and taxable as such, under Act No 328, Pub. Acts 1897.

      Mandamus by the Chicago & West Michigan Railway Company to compel Sybrant Wesselius, commissioner of railroads, to amend his computation of relator’s taxes.
    Submitted November 22, 1898.
    Writ denied December 28, 1898.

      Smith, Nims, Hoyt & Erwin, for relator.

      Fred A. Maynard, Attorney General, for respondent.
   Per Curiam;.

This case presents the general question as to whether the sum received by a railroad company for switching cars should be treated by the railroad commissioner as a part of its gross earnings. The case is ruled by Detroit,.etc., R. Co. v. Commissioner of Railroads, ante, 132.


author: Hooker, J.

text:
    GORE v. CANADA LIFE ASSURANCE CO.

    1. Principal and Agent — Authority—Evidence.
    A person’s authority to contract on behalf of another cannot be proved by his own declarations, or by the mere fact that he assumes to enter into the contract.
    2. SXme — Insurance—Presumptions.
    It will not be presumed, because one is inspector or superintendent of agencies for a life-insurance company, that he has authority to bind the company by appointing agents and making contracts with them on its behalf.
    3. Same.
    Nor will it be presumed that the manager of a State branch of the company, having charge of the business brought to the office by the various subagents in the State, and transmitting the same to the company, possesses any such authority.
    4 Same — Commissions.
    Whether an insurance agent is entitled to his commission only when he obtains and presents an acceptable application depends upon the nature of his contract with the company.
    Error to Wayne; Frazer, J.
    Submitted November 23, 1898.
    Decided December 28, 1898.

      Assumpsit by Henry H. Gore against the Canada Life Assurance Company for agent’s commissions. From a judgment for plaintiff, defendant brings error.
    Reversed.

      Russel & Campbell, for appellant.

      Maybury & Lucking, for appellee.

       Rehearing denied May 23, 1899.

   Hooker, J.

The plaintiff brought an action against the defendant, and recovered a judgment, for a balance claimed to be due him for commissions upon insurance premiums obtained from policies written for defendant’s patrons upon his solicitation. The defendant has brought the case to this court by writ of error.

At the threshold of the case is the question whether the plaintiff sustained contract relations with the defendant. His claim is that he was employed on behalf of the defendant by one Glass, with the subsequent approval of Bucknell, who was called the “manager of the Michigan branch.” The defendant asserts that it made a contract with some men named Cox, living in Toronto, Ontario, by which they had control of its business in Michigan and some other States, upon a commission of 50 per cent, upon new business, they to employ and pay their own subordinates ; and that they established a branch office for Michigan, which they maintained under the charge of Bucknell, who was called “manager of the Michigan branch of the Canada Life Assurance Company,” who was paid by a share of the commission on Michigan business and an allowance made by the Coxes. It is claimed that Glass was engaged by them upon similar terms; that he was designated “inspector of agencies;” that he was not authorized to employ any agents for the company, but was at liberty to divide his own commissions, as he pleased, with any whom he should see fit to engage to help him.

Thomas Donnelly, a witness called by the plaintiff, testified as follows:

“I am secretary of the Michigan branch of defendant, and was previously general manager for Michigan. Geo. A. and E. W. Cox are general agents for Eastern Canada, and also have charge of Michigan. They are over Mr. Bucknell, superior to him.”

On cross-examination he said:

“ I am the direct representative of the Canada Life Assurance Company here. The Michigan business is managed by Mr. Bucknell, who is under Mr. Geo. A. Cox and Mr. E. W. Cox, who are general agents, having the territory of part of Ontario and Michigan. They have entire charge of the soliciting and placing of insurance until it is presented to the company for acceptance. The appointment of agents is subject to their approval. All agents are not appointed by them; some are appointed by the manager. The company allows to Messrs. Cox, the agents of territory, a percentage for all business that is transacted, and Cox appoints agents and carries on the business, and pays all the expenses of that business out of the fund that is coming to him. The commissions of Michigan come out of the commissions allowed by the head office; that is, allowed to Mr. Cox. I know of the arrangements from having charge of the- books of the company here, and I know how the business is conducted. That is all I do know. I do not know whether the arrangement with Mr. Cox is in writing or not. * * * The head office pays Mr. Cox 50 per cent, on first year’s business and 7% per cent, on renewals. Geo. A. and E. W. Cox select the manager for Michigan, and recommend the appointment to the head office. His salary comes direct from Cox out of the commissions. He is paid a salary and commissions. * * *
“Q. Who pays Glass?
“A. Well, Cox. Of course it comes out of the commissions of this branch, — commissions and allowance that is made to the branch for expenses of the branch. If there is any profit, it goes to the Coxes; if a loss, they bear it. Mr. Glass had a number of agents; Mr. Bucknell had some agents of his own, — what we call subagents, more particularly. Those agents make their contract with the subagents. The agent receives a certain proportion of the commission, and it is true that he can make such arrangements with the subagents as he sees fit, by way of dividing the commission". The extent of authority of an agent to make a contract with a subagent is to make a contract to divide whatever commissions may be obtained from the insurance from the company between them.”

Bucknell, who is said to be next in authority to the Coxes, was a witness for the defendant. He said that he was- agent for the Canada Life Assurance Company, manager of the Michigan branch, and had been connected with the company for 17 years; that he had been manager of such branch since March 1, 1893, under Geo. A. and E. W. Cox, “who are the general managers for Eastern Ontario and the United States departments.” He said further:

“ I have no contract of employment with the defendant. My contract was made with Geo. A. and E. W. Cox, and always has been. It is in writing. I cannot produce it. It is by letter, and I could have produced it had I been asked for it. I would be willing to swear to the written agreement, and it can be verified by Geo. A. and E. W. Cox.”

We have in this testimony the statement by one of the defendant’s witnesses that the Coxes were general managers of the company, and this is not contradicted.

The next lower in authority appears to have been Mr. Glass. He testified as follows:

“When I came to Detroit, and began the business of soliciting insurance for the Canada Life, I made my contract or arrangement with Mr. G. A. Cox and E. W. Cox, of Toronto. My whole dealings were with them. My arrangements were exclusively with Mr. Cox. I never wrote to the company but once in my life, and then they turned me down, and referred me to Mr. Bucknell, who was under Mr. Cox. All of my dealings were in connection with the general agent of the territory of Detroit, or Michigan,, and Ontario. I had a peculiar arrangement in this way: That Mr. Cox gave me the exclusive right to the south half of the State, with the right to appoint my own subagents. My arrangement was in writing. The contract is with my furniture, which is stored. I have no way of getting at it.”

From the foregoing we think it evident that the arrangement made with the Coxes, and through them with others, did not contemplate authority to pledge the credit of the company in the employment of agents, and that neither Cox nor Bucknell understood that he had such authority. Glass, who was employed as superintendent or inspector of agencies, or, as he says, given exclusive right to work the south half of Michigan, had no greater authority. "We think, therefore, that the plaintiff’s claim must fall, unless it can be said, that he had a legal right to understand that he was to look to the defendant for his pay by reason of its holding out Bucknell and Glass as its agents with authority to bind it in such matters.

The plaintiff, Gore, testified that he entered the employment of the defendant upon terms made by Mr. Glass, whose position was inspector of agencies. On being asked to state his arrangement with Mr. Glass, he said:

“Mr. Glass, when I first arranged with him, told me that 40 per cent, was the amount paid all agents. I was to solicit insurance, and whenever it was necessary I was to call upon him to go with me, to assist in closing up any insurance I might get in process of working. I was to work in Detroit. He told me a written contract was not necessary.”

On cross-examination he said:

“ I did not know anything about his arrangement with the company except such as he had told me. It was later that I made a contract with him, and then I came to Detroit. The day I reached Detroit I talked it over with Mr. Glass. We talked it over. I did not make any definite arrangement that day. I said I would see, and let him know later on. The next day I had another talk, when I made the final arrangement, and decided to go to work for the company. The arrangement was that I was to have 40 per cent, of the first year’s premiums. It was not in writing. A few days after," I asked him if it was not better to have it in writing, and he said it was not necessary. Then my arrangement was that the company was to pay me 40 per cent, of the first year’s premiums of all insurance that I had. He said he was the authorized agent of the company, and I was to work for the Canada Life, and I could advertise as such. He said he was the agent of the Canada Life Company, and that he would employ me for the company, and the company would pay me 40 per cent, of the first year’s premiums of any insuranee I procured, but I was to have no renewal premiums. That was the agreement that was made between Mr. Glass and me. * * * I was working under Glass; that is, I was working for the company under his instructions. * * * I was not under Bucknell until Mr. Glass left. * * *
“Q. As late as May, 1894, you were with Glass, and not with Bucknell, — your arrangement was with Glass?
“A. As long as Glass was there, I was with him. It was as late as May anyway, and I think quite a little after that. * * * I was not under Bucknell until Glass left.”

There are two theories upon which the plaintiff might recover his compensation from the company: First, that Glass actually had authoi’ity to make a contract that it should pay him; and, second, that the company’s conduct was such as to justify his belief that Glass had such authority, though in fact he was not authorized to do so. Under the uncontradicted testimony, we must say that the, company never authorized Glass to make such a contract. If the plaintiff is to recover, it must be by reason of a holding out by the company of Glass as having such authority. To sustain this theory, the agreement of Glass has no force. It was admissible for the single purpose of showing the plaintiff’s understanding upon the subject, but it was no direct evidence of authority.

“Persons dealing with .an agent must ascertain his authority. In approaching the consideration of the inquiry whether an assumed authority exists in a given case, there are certain fundamental principles which must not be lost sight of. Among these are, as has been seen, that the law indulges in no bare presumptions that an agency exists; it must be proved or presumed from facts; that the agent cannot establish his own authority, either by his representations or by assuming to exercise it; that an authority cannot be established by mere rumor or general reputation; that even a general authority is not an unlimited one; and that every authority must find its ultimate source in some act of the principal. Persons dealing with an assumed agent, therefore, whether the assumed agency be a general or a special one, are bound at their peril to ascertain not only the fact of the agency, but the extent of the authority; and, in case either is controverted, the burden of proof is upon them to establish it.” Mechem, Ag. § 276.

There was nothing in Glass’ relation to the company which gave the plaintiff to understand that he had such authority. Glass says that he was an inspector of agencies. Plaintiff’s counsel say that he was superintendent of agencies. There is nothing in the testimony to show that an inspector or superintendent of agencies was given such • authority, and there is no such legal presumption. If, as the word imports, his business was to superintend or inspect the work of agents, it does not imply the right to appoint agents, and make contracts with them upon behalf of the company. So that, at the time Gore made the contract with Glass, he had no right to assume that Glass had such authority from anything except the statements and acts of Glass.

It may be said that Bucknell stated to Gore that Glass had authority to make the contract. Gore’s testimony upon that subject is as follows:

' “I asked Mr. Bucknell if the arrangement made with Mr. Glass was as though it was made with him, and if Mr. Glass had authority to act in that capacity, and he told me he had. * * * I asked Mr. Bucknell if it was necessary to have a written contract with Mr. Glass, and he said it was not. He said he was authorized to act for the company just the same as he was. I told him that, if it was necessary, I wanted a contract; and Mr. Glass told me it was not necessary, and Mr. Bucknell himself told me it was not necessary. I do not know anything about the private arrangement between Bucknell and the Ganada Life Assurance Company.”

It does not appear that Bucknell was told that Glass had attempted to contract that the company should pay Gore his commissions, and, if it did, any opinion he might have given, and any statement he might have made, concerning it, would not bind the company, unless he in turn either had, or was held out by the company as having, authority to bind it by such statements. The evidence shows clearly enough that he was acting under a contract made with the Coxes, and there is no evidence that he was authorized to bind the company. He testified that he was not authorized to do so.

The claim is made that Bucknell was held out as a general agent, and therefore that Gore had a right to assume that he was authorized to employ him, or ratify the act of Glass. Bucknell had charge of the Michigan branch or office for Cox, who had a contract to work the territory. The Coxes were the ones who were held out as general agents, if there were any general agents, and we do not find anything showing that Bucknell was a general agent of the company. Gore himself testified that he did not know what his arrangement was. There is nothing to show that he was misinformed by the company, or that he even tried to ascertain. He may, perhaps, have known that the circulars of the company contained his name as manager of the Michigan branch, but that is all. We do not intend that it shall be understood that we are of the opinion that a general agency, so called, necessarily carries with it the authority to appoint special agents for the company. Manifestly, any agency, general or special, is no more than the principal chooses to make it, unless he undertakes to limit the effect of the power which others have a right to suppose he has conferred, when he will be estopped to deny such power.

We are aware that the case of Equitable Life Assurance Co. v. Brobst, 18 Neb. 526, is authority for the proposition that, where the company conceded that one Craine was the agent for all of its' business for the Northwest, the company would be bound by his employment of an agent, notwithstanding a private understanding that payment of all agents appointed was to be made by the agent. There the general authority to appoint is apparent. But here we have no employment by a general agent, nor by any one held out or advertised as such. Bucknell was advertised as manager of the Michigan branch, and neither Glass nor Bucknell, nor even the Coxes themselves, had authority to issue a policy, but merely to obtain and submit applications to the head office, as the witnesses call it, of the company. The true test, after all, is not a real or imaginary distinction between the general or special agents. It is a question whether the agent, general or special, as the case may be, has acted within the apparent scope of the authority confided. In the Nebraska case cited, the holding of the court was based on the fact that the agent was authorized to transact all of the business of the company, not because he was called a general agent. The act was held to be within the general scope of his authority; and, while secret instructions might take away the power, one ignorant of them could not be permitted to suffer loss because of his ignorance of such secret instructions, having in good faith relied upon the general authority conferred. This rule is as applicable to a case where one authorizes an agent to sell a particular horse, the authority being general. The secret instructions as to price or warrant cannot bind the purchaser, as these are ordinarily within the scope of the general authority to sell the horse. Hatch v. Taylor, 10 N. H. 538; Hunter v. Jameson, 6 Ired. 252; Bradford v. Bush, 10 Ala. 386.

There is no testimony in this case that warrants the conclusion that Bucknell had general authority to appoint agents and conduct defendant’s business in Michigan. He was advertised as the manager of the branch. Apparently he had charge of the business brought to the office by the various subagents, and was the medium through which such business reached the company. But, unlike the Nebraska case, there is a lack of evidence to show that he had charge of all of the defendant’s business in Michigan. He was manager of the Michigan branch, but that does not justify a guess by court or jury that binding the company by the appointment of agents for it was within the general scope of the authority actually given him. In 1 Pars. Cont. 43, it is said :

“We think the distinction between a general agency and a special agent useful, and sufficiently definite for practical purposes, although it may have been pressed too far and relied upon too much in determining the responsibility of a principal fpr the acts of an agent. It may, indeed, be said that every agency is, under one aspect, special, and, under another, general. No agent has authority to be in all respects and for all purposes an alter ego of his principal, binding him by whatever the agent may do in reference to any subject whatever; and therefore the agency must be special so far as it is limited by place or time, or the extent or character of the work to be done. On the other hand, every agency must be so far general that it must cover not merely the precise thing to be done, but whatever usually and rationally belongs to the doing of it. Of late years, courts seem more disposed to regard this distinction, and the rules founded upon it, as altogether subordinate to that principle which may be called the foundation of the law of agency, namely, that a principal is responsible either when he has given to an agent sufficient authority, or when he justifies a party dealing with his agent in believing that he has given to this agent this authority.”

We cannot say that this evidence tends to prove that the appointment of agents usually and rationally belongs to the doing of the business confided to Bucknell, and we certainly cannot say it as a matter of law.

Among the disputed items is one for commissions upon policies issued to some of the stockholders of the Detroit Electric Light & Power Company in connection with a loan made through the Coxes. An attempt appears to have been made to adjust this matter, and Gore received a sum of money which is claimed to have been his full share of the commission. His receipt in full is shown. He says that he signed it because he could not get any money unless he did, and because Mr. Glass promised that the balance in dispute should be settled by the head officers of the company, and under what the plaintiff claims to have been a false representation, viz., that one-half of his commission was taken from him by Cox’s order. Another claim was that he was instrumental in procuring the policy issued to Muir, and that Bucknell, ascertaining the fact, secured it surreptitiously upon Sunday, through another agent. It is contended on the part of the defendant that an agent is entitled to his commission only when he obtains and presents an acceptable application; but this must • depend upon the nature of the contract. A similar claim is made in relation to what is called the Moran insurance, and plaintiff asserts that he was deprived of a portion of his commission by Bucknell. Bucknell claims' that he secured that application, and that the plaintiff was not entitled to the commission. We are of the opinion that questions of fact calling for submission to the jury would be found in all of these matters if it could be said that the defendant is responsible for the conduct of Bucknell and Glass. We have found otherwise upon the record, but have alluded to these questions in view of a possible new trial.

We think that it was error to permit the plaintiff to testify to the statements of Bucknell that he and Glass had authority to bind the company by a contract. It was testifying to a conclusion upon the main controversy in the case.

It was also erroneous to allow plaintiff to testify to the alleged statement of Cos that he had not received a portion of the commissions in the Electric Light matter. It. was hearsay.

We think it unnecessary to discuss other assignments, as they are substantially governed by the foregoing.

The judgment is reversed, and a new trial ordered.

Montgomery, Moore, and Long, JJ., concurred with Hooker, J. Grant, O. J., concurred in the result..


author: Per Curiam.

text:
    FITZSIMMONS v. BOARD OF CANVASSERS OF DETROIT.
    Contempt — Jurisdiction.
    A contempt proceeding against a party who disregarded an order of the circuit court after it had been affirmed on appeal, and while it retained the original papers, should be initiated-in that court.

      Certiorari to Wayne; Frazer. Carpenter, and Hosmer, JJ.

      Mandamus by Thomas W. Fitzsimmons t¿ compel the board of canvassers of the city of Detroit to issue to relator a certificate of election as justice of the peace. An order granting the writ was affirmed in the Supreme Court, on certiorari, December 14, 1898, without the filing of a written opinion. Subsequently relator applied to the Supreme Court for a contempt order against the board of canvassers, who had disregarded the order of the circuit court, and issued a certificate of election to Fred E. DeGaw.
    Petition dismissed December 28, 1898.

      Charles W. Casgrain and Charles B. Warren {Jasper C- Cates, of counsel), for relator.
   Per Curiam.

The order or judgment brought into this court by certiorari was simply affirmed. The rules adopted after the amendment to the Constitution in 1893 prescribe the method for bringing this class of mandamus cases to this court. The original papers are in the court below. We are of the opinion that the proceeding is still in that court, and that further steps in the case, if necessary, must be initiated there. That court has jurisdiction of the case, and the contempt proceeding must be there instituted.


author: Long, J.

text:
    SMITH v. SPRAGUE.
    Estoppel — Parol Lease — Surrender—Growing Crops.
    The lessee under a parol lease for one year, with privilege of harvesting his wheat the next, moved away when the lease expired, and later returned, and cut and stacked the wheat, unmolested by the landlord, who erroneously supposed he had only a lien on the wheat for his rent, and afterwards attached it as the property of the lessee. Being advised that the title was in him, the landlord dismissed the attachment, and converted the wheat to his own use. Held, that the landlord, having acted in good faith, and in ignorance of his legal rights, in levying upon the wheat, should not he held estopped to assert his title; the lessee having had equal knowl- * edge of all the facts.
    Error to Oakland; Smith, J.
    Submitted June 17, 1898.
    Decided January 3, 1899.
    Trover by William T. Smith against Caleb J. Sprague. From a judgment for defendant on verdict directed by ' the court, plaintiff brings error.
    Affirmed.

      C. C. Yerkes, for appellant.

      A. & S. H. Perry, for appellee.
   Long, J.

This is-a suit in trover for the conversion of a quantity of wheat. Plaintiff’s contention is that in the winter of 1894-95 defendant, Sprague, orally leased his farm for one year to one Orrin Cook, for money rent. The lease commenced with Cook’s occupaney, about March 1, 1895. At that time there was growing on the farm a field of wheat of about 18 acres, and in the lease it was agreed that Cook should have the privilege of sowing ant equal acreage that year, and of harvesting it the next. At the expiration of the first year, the parties settled satisfactorily; and it was then verbally agreed that Cook should have the place for another year at substantially the same terms as the first year. The arrangement for the second year was made in February, 1896, and Cook occupied the farm up to about March 1, 1897, when he moved away. On July 15, 1897, he went back to the farm, and cut and stacked the wheat now in question, and which was produced from the wheat he had sown in the fall of 1896. On September 3, 1897, he executed a bill of sale of the wheat to the plaintiff, the consideration of the sale being $225, which Cook owed plaintiff for work done on the farm. September 21, 1897, defendant went before a justice, and swore out a writ of attachment against Cook, and directed a constable to levy it on the stacks of wheat. Before this attachment suit became returnable, defendant caused the same to be discontinued, and then threshed the wheat, sold it, and kept the proceeds; and on the trial it was conceded that defendant converted it to his own use. The court instructed the jury to find for the defendant.

This lease was not in writing, and, under the holding of this court in Carney v. Mosher, 97 Mich. 554, it .expired one year from the date it was made; that is, one year from February, 1896. In March, 1897, Mr. Cook moved off-the farm, and presumably surrendered it to the defendant. He then sold the wheat to plaintiff, and, under an arrangement with plaintiff, went to the farm in July following, cut the wheat, and stacked it. Under the rule in Carney v. Mosher, supra, Mr. Cook, the lessee, would have had no right to the wheat after the surrender of the premises, and could not have maintained an action therefor. The plaintiff had no greater right.

But the plaintiff maintains that the defendant is now estopped from setting up title to the wheat, because he stood by and saw Mr. Cook cut and stack it, and thereafter commenced proceedings by attachment against Cook, levying upon the wheat as his (Cook’s) property. It is apparent that both defendant and Cook were mistaken as to their legal rights. Cook undoubtedly supposed when he left .the farm that he would have the right to return and cut and harvest the crop, as it was agreed he might. He owed defendant for a year’s rent, and defendant claimed a lien on the wheat for the rent, and most likely understood that that was the extent of his right in the crop. Under the rule in Carney v. Mosher, the defendant was the legal owner of the crop. When Cook undertook to cut it, defendant claimed that he must be paid his rent out of it. He was then trying to save his rights as he then understood them, and, in making the levy of the attachment, he was undertaking to enforce that right. Subsequently, he was advised as to his legal rights, advised that he had the title, and then sought to enforce those rights by retention of the crop. Defendant apparently acted in good faith, and without knowledge of his legal rights, when making the levy of attachment. We think it is not a case for the application of the doctrine of equitable estoppel. To constitute an estoppel of this character, such as will prevent a party from asserting his legal rights to property, there must be some degree of turpitude in the conduct of the party to the estoppel, which .has misled others to their injury. Conduct or declarations founded upon ignorance of one’s rights have no such ingredient, and seldom work any such result. Henshaw v. Bissell, 18 Wall. 255. No deception was practiced upon Cook. He knew the facts as fully as the defendant did. The plaintiff is in no better position than Cook would be had he brought the action. The property was on the defendant’s farm at the time plaintiff took his bill of sale, and he knew all the facts which defendant knew. He also took the wheat on a past-due indebtedness from Cook to him9 and was not, therefore, a bona fide purchaser. Upon the whole record, the court was not in error in directing the verdict for defendant.

The judgment must be affirmed.

The other Justices concurred.


author: Grant, C. J.

text:
    MALICKI v. CHICAGO GUARANTY FUND LIFE SOCIETY.
    1. Life Insurance — Application — Misrepresentations — In-
    STRUCTIONS.
    In an action upon a life-insurance policy issued upon the rep, resentation of the insured that a bar which he maintained
    in connection with his grocery was attended to “exclusively ” by his clerk, an instruction that, if the insured “occasionally” tended bar, it would not avoid the policy, is erroneous-where coupled merely with the general instruction that an habitual tending of the'bar would have that effect, since the jury might infer that nothing short of such habitual tending would work a forfeiture.
    2. Same — Issuance of Policy — Dating.
    The fact that a life-insurance policy is dated the day before a supplemental application, containing the answers of the insured to certain special questions submitted by the company, was received, does not show that it was not issued in reliance upon the statements contained in the application, since a policy is*not issued until delivered.
    3. Same — Use of Spirituous Liquor.
    An applicant for insurance, in reply to the question, “Do you drink beer, ale, wine, or spirits, and, if so, state what, how often, and how much,” answered, “Yes; two or three glasses of beer daily.” Held, that if the insured was in the habit of using spirituous liquors, though not to excess, the policy was avoided.
    4. Same — Violation of Conditions — Burden of Proof.
    The burden of proof is upon an insurance company to show a violation of conditions avoiding an otherwise valid policy
    Error to Wayne; Corbett, J., presiding.
    Submitted October 5, 1898.
    Decided January 3, 1899.

      Assumpsit by Teófila Malicki against the Chicago Guaranty Fund Life Society on a policy of insurance. From a judgment for plaintiff, defendant brings error.
    Reversed.

      This is an action upon a policy of insurance issued upon the life of John Malicki, the husband of plaintiff, who was the beneficiary named in the policy. The application contained the following questions and answers:

      “Q. Do you drink beer, ale, wine, or spirits? If so, state what, how often, and how much.

      “A. Yes; two or three glasses of beer daily.

      “ Q. Have you ever drank beer, ale, wine, or spirits to excess ?

      “A. No.

      “Q. Have you now, or have you ever had, any interest in the manufacture or sale of intoxicating liquor of any kind, either directly or indirectly ?

      “A. Yes; keep liquors in my store.”
    Additional information was asked, to which Mr. Malicki replied as follows:
    “In regard to my occupation, would say that I am proprietor of grocery, and have a bar in connection. I have a clerk that attends to the bar trade, and I attend to the grocery, and the buying and marketing. My bar trade is attended to exclusively by my clerk.”
    These statements formed the basis °for the issue of the policy.
    The body of the policy is general, and insured the life of Mr. Malicki against death. But for the clause next below quoted, liability would have attached for any cause of death. This clause is as follows:
    “This policy is issued upon the agreements contained in the application therefor, and upon condition that the answers and statements in said application are full, complete, and true. Said application, together with all privileges, conditions, and requirements indorsed hereon, whether written or printed, are hereby made a material part of this contract.”
    The condition upon the. back of the policy, so far as it is material, reads:
    “Death caused or superinduced by the use of intoxicants, * * * within three years from the date of the within policy, is a risk not contemplated or covered by said policy, and, in case of death from any of the aforesaid causes, the amount recoverable shall be limited to the premiums paid on said policy, with interest. * * * If this policy is obtained by fraud, or if any statement contained in the application on which this policy is based, or in the proof of death, is found to be fraudulently untrue, then this policy shall be ipso facto null and void.”
    Mr. MalicM died October 23, 1896, eight months after the issue of the policy. Plaintiff notified the company of his death, and asked for blank proofs of loss, which were furnished. These were filled out, signed, and sworn to by plaintiff, October 31, 1896, and forwarded to the company. The cause of death was stated to be a severe cold. She gave the name of the physician who attended him in his last illness as Dr. W. J. Brand. A blank proof appears to have been sent to Dr. Brand, who filled it out and swore to it on the 19th day of November, 1896, and forwarded it to the company. In this affidavit the immediate cause of death was said to be delirium tremens.
    Plaintiff made her case by introducing the policy of insurance and proofs of death which had been submitted to the company, and rested. Defendant then introduced Dr. Brand, who testified that he attended Mr. Malicki in his last illness; that the report he sent the company was true, and correctly stated the cause of death, which report was received in evidence. Defendant then introduced testimony tending to show that Mr. Malicki was frequently intoxicated, that he drank spirituous liquors, and that he frequently attended the bar. One witness testified that she was frequently in the grocery for several years, and that Malicki, most all of the time when she was there, was attending the bar, “selling drinks to whoever wanted to buy.” The record then states that the plaintiff produced evidence “in rebuttal of the evidence produced by the defendant.” Yerdict and judgment were for the plaintiff.

      Moore & Moore and E. C. Bolton, for appellant.

      T. E. Tarsney and George B. Greening, for appellee.
   Grant, C. J.

(after stating the facts). 1. If all the testimony on the part of the defendant was true, the policy was void, and the court should have so instructed the jury. But the record does not contain all of the evidence, and, in view of the statement that there was testimony in rebuttal of that of the defendant; we cannot hold that the jury should have been so instructed. The court instructed the jury as follows:

“It is further claimed by the defendant that this policy was issued on condition that the deceased should not attend bar in his saloon. It appears from the evidence that the occupation of the deceased was grocery and saloon keeper. It also appears from a part of the application for insurance that the deceased stated that he did not attend bar, but that his business was in the grocery, and that the bar was attended exclusively by his clerk. That is a material condition, gentlemen of the jury. It was competent for the defendant to make that a condition, and having made it such, and the deceased having subscribed to it as a part of the application, it becomes binding upon the plaintiff. Now, .gentlemen of the jury, if you find from the evidence that John Malicki was in the habit of attending bar, — that is, if that was his business; that he attended bar habitually, instead of attending to the grocery, — in other words, if his business was to attend bar in that saloon, then your verdict must be for the defendant. But you are instructed, if he occasionally attended bar, if he went behind the bar occasionally, and dealt out liquors to customers, it should not avoid the policy; but if that was his business, if he was in the practice and in the habit of doing so, it would avoid the policy, but an occasional sale by the deceased to the customers would not.”

There is no doubt about' the terms of this contract. Mr. Malicki, in order to obtain this insurance, represented that he did not attend the bar, but that his bar was exclusively attended to by his clerk. Relying upon this representation, this policy was issued. The vice of the instruction lies in the fact that under it the jury might have found that nothing short of an habitual tending of the bar, and making that his business, would avoid the policy, and that anything short of that would be an occasional act. Clearly, if Mr. Malicki daily tended the bar while the regular bartender was absent at his meals, or on other occasions, this would be contrary to the terms of the policy. If he wanted a policy upon that basis, he should have stated the facts. Whether a single act or a few acts of tending the bar would avoid, the policy, we need not determine. The jury evidently received no instruction as to what occasional acts would or would not have that effect.

It is urged that the policy, being dated the day before this part of the application was made, was not issued in reliance upon this representation. The only proof on this point is that this paper, with the other two, constituted the application. The date of the policy does not control. The delivery is essential. It was not issued till delivered.

2. The court instructed the jury that if Mr. Malicki, at the time of effecting the insurance,—

“Was in the habit of drinking intoxicating liquors to excess, that would end the case, and your verdict should be for the defendant. If you find that he was not an intemperate user of alcoholic liquors, it would not avoid the policy. It is a simple question whether he was an excessive drinker. If he was an habitual excessive drinker, it would avoid the policy.”

Here, again, plaintiff is confronted with the terms of the policy. Mr. Malicki distinctly stated in his application that he only drank two or three glasses of beer daily. This was in reply to the question: “Do you drink beer, ale, wine, or spirits, and, if so, state what, how often, and how much.” The representation was clear and explicit that he did not drink spirituous liquors. Defendant asked this, and was entitled to know it. If he was in the habit of using spirituous liquors as a beverage, he should have so stated. The instruction was erroneous. ' The court should have instructed the jury that the habit of using spirituous liquors before the issue of the policy was contrary to the representation, and, if proven, avoided it. Cases like that of Knickerbocker Life Ins. Co. v. Foley, 105 U. S. 350, have no application. In that case the representations were that the applicant had always been of temperate habits. The very answer implied the use of intoxicating liquors, and it was very properly held that the occasional use, and an exceptional case of excess, did not justify the conclusion that he was a man of intemperate habits.

3. We think the court committed no error in instructing the jury that the burden of proof was upon the defendant to show that the deceased died from delirium tremens. A ■distinction is made between the principal contract as found in the body of the instrument, and conditions or stipulations indorsed thereon, “which are intended to avoid the defendant’s promise by way of defeasance or excuse.” The party relying upon the breach of such conditions to defeat his liability assumes the onus probandi. Coburn v. Insurance Co., 145 Mass. 226. The contract of insurance in that case was substantially identical with this. See, also, Piedmont, etc., Ins. Co. v. Swing, 92 U. S. 377; Redman v. Insurance Co., 49 Wis. 431.

Judgment reversed, and new trial ordered.

The other Justices concurred.


text:
    BOYCE v. BARKER.
    *1. Sale oe Logs — Disputed Scale.
    Where the buyer and seller of logs agree that each shall furnish a scaler, but the buyer subsequently directs his scaler to act independently of the seller’s, the seller cannot insist that his scale is conclusive, in the absence of a demand for a joint scale, but the question as to which was the correct scale is for the jury.
    3. Same — Evidence—Harmless Error.
    Error in admitting evidence of an ex parte rescale of the logs was cured by the court’s subsequently striking out such testimony, and instructing the jury to consider only the original scales.
    S. Same — Compromise.
    One who promised to pay a disputed balance for logs purchased if, on sawing a specified number of them, they did not go 70 per cent, culls, is not bound thez’eby, where the other party selected only the best logs for the trial, and did not attempt to get at their average.
    Error to Bay; Maxwell, J.
    Submitted October 4, 1898.
    Decided January 3, 1899.

      Assumpsit by Jonathan Boyce against Columbus C. Barker for goods sold and delivered. From a judgment for plaintiff for less than the amount claimed, he brings error.
    Affirmed.

      J. L. Stoddard, for appellant.

      T. A. E. & J. C. Weadock, for appellee.
   Montgomery, J.

This is an action brought by the plaintiff to recover the purchase price of a quantity of logs. The plaintiff recovered a verdict of $846.70, but has brought error, and insists that he was entitled to receive nearly $4,000, but failed because of erroneous rulings of the trial judge. The chief controversy arises over the scale of the logs. The plaintiff, by a written contract, agreed to sell, and defendant agreed to purchase, at least 5,000,000 feet of logs. It was agreed that e'ach of the parties should furnish a good, reliable, and competent scaler, each at his own expense, to scale by Scribner’s rule; that the logs should be scaled on the skids along the railroad track; and that the scalers should determine the amount of logs scaled. Plaintiff engaged one Oleson to scale under the contract, and defendant employed one Reilley, and both began scaling on October 27, 1896. The first day they scaled separately. Oleson’s scale was 920 pieces, scaling 165,140, and Reilley’s 923 pieces, scaling 156,060. The next day they began scaling together, and continued to so scale up to and including November 2d. The scale during this time substantially agreed. On the 5th and 6th of November, Reilley was absent at Bay City. Oleson scaled alone during this time, but on his return Reilley accepted Oleson’s scale, and reported it to defendant as his own. The scale of these two days is not questioned. It appears that when the two scalers commenced work they were not instructed to scale together. The plaintiff’s foreman told Reilley that he had better go ahead and mark what logs he wanted to leave, and that Oleson would leave the same logs out, and they so commenced this work, but at first no effort was made to harmonize the scale. As before stated, the two scalers did harmonize the scale between themselves for the two days, but on the return of Reilley, on November 9th, he began scaling by himself again, having been instructed by defendant’s foreman so to do. He continued scaling until November 13th, he and Oleson making separate scales. Mr. Hood, another scaler employed by defendant, took Reilley’s place, and scaled until December 18th, the two scalers acting independently. On the 21st the parties discovered a disagreement in the scale, and met at the camp, and, Barker being of the opinion that Oleson’s scale was faulty only with reference to the butt logs, it was agreed that plaintiff should take out the butt logs, and that defeñdant would accept Oleson’s scale from that ‘time forward. This was carried out, and no controversy arises over the subsequent scale. There was therefore a quantity of 3,429,680 feet as to which the parties agreed. But the scale of the remainder by Oleson was 2,114,940, while the scale made for the defendant by Reilley and Hood was but 1,843,060, showing a difference of 271,880.

The plaintiff’s counsel asked an instruction as follows:

“It appears from the undisputed evidence in this case , that the defendant broke the contract in forbidding his scaler to make a joint scale as provided in the contract, and that the plaintiff had at all times a competent and reliable scaler at the place agreed upon under the contract, and that, upon the refusal of defendant’s scaler to make a joint scale with him, he, the plaintiff’s scaler, did make a complete scale of the logs with a rule and at the place agreed upon; and I charge you that there is no evidence in this case of any fraud or gross mistake in such scale, that it is binding upon both parties, and that the plaintiff is entitled to recover in this suit for the logs sold and delivered according to the scale made by the scaler Oleson.”

This was refused, and in lieu thereof the court charged, on its own motion, that,—

“When Barker or his foreman told the inspector he sent there not to join Oleson in the inspection, Boyce might have terminated the contract, and refused to have it fulfilled, and Barker would have been liable for any damages that might have arisen for that reason. He did not do it. I suppose he waived it.”

We think this instruction sufficiently favorable to the plaintiff. No demand was made for a joint scale, and, under these circumstances, we do not think the plaintiff ■entitled to insist that his scale is conclusive. It was therefore a question for the jury as to which was the correct scale as to the logs in dispute.

It is insisted there was error in the admission of testimony bearing on this point. Testimony was offered of scales of 32 trains of logs, and of the mill scale of the lumber of the same logs. It was claimed that these 32 trains •of logs contained all the logs except those which were scaled by Oleson under tbe new agreement. The testimony was objected to on the ground that the scale included a rescale, ex parte, of logs which had been scaled by the two scalers under the contract, and which scale was conclusive. Counsel cites Busch v. Kilborne, 40 Mich. 297. It appears that the circuit judge struck out the testimony of these other scales, and in his charge to the jury limited the inquiry to the two scales. We do not think we should, under the circumstances, treat this trial as a mistrial.

The same consideration disposes of the question of the two witnesses Bennett and McClennan, as well as of the objections relating to the manner of making up the Hamet & Trumpour scale, which was afterwards stricken out.

The only other question which merits attention relates to an alleged settlement. Plaintiff testified that at one time defendant said to him:

“ If you will have 100 of these butt logs sorted out, and put them in a pocket by themselves, and saw them by themselves, if they do not go 70 per cent, culls, I will pay the difference without another word; that is, the difference between us.”

Lewis Koash, a witness for the plaintiff, did the sawing, and he testified in relation thereto as follows:

“Boyce told me he wanted sound butt logs selected. He told me to sort out the best of those butt logs I could get,- — -no defective logs; but they were all defective or shaky, and there was a lot of those logs that were rotten, and those logs he didn’t want put in. I guess I fell short about 15 logs, and I had to go back and sort over what I had left to even up my 100 logs, so that the 100 logs that I selected were the very best sound butt logs that I could find in the whole lot. I got the best I 'could, — the best there was, — and that was none too good.”

The agreement, as testified to by plaintiff, did not contemplate selecting the best logs. It is evident that the purpose was to get at the average of the logs. The method resorted to did not accomplish this result.

The judgment will be affirmed.

The other Justices concurred.