author: Brooke, J.

text:
    GORDON v. O’NEILL.
    Estoppel — Patents—Sales.
    Where defendant and plaintiff owned, in common with defendant’s wife, a license to manufacture certain patented articles, and plaintiff wrote defendant that he would take $2,500 for his interest, if defendant should be able to dispose of it with the other licensees’ rights, plaintiff’s interest was distinct and severable from the others, so that he could deal with it as a separate interest, and having permitted the deal to be consummated after notice of the amounts the other licensees were to receive, and that they were to obtain $7,500 for their interests, he was estopped from claiming that he was mistaken as to the proportion of the license belonging to him, and that he should have received half, in an action to recover an additional $2,500 of the purchase price.
    Error to Wayne; Codd, J.
    Submitted October 8,1912.
    (Docket No. 3.)
    Decided April 8, 1913.
    Rehearing denied July 18, 1913.
    Assumpsit by David A. Gordon against Frank O’Neill and Marion O’Neill, for money had and received. Judgment for plaintiff. Defendants bring error.
    Reversed.

      Keena, Lightner, Oxtoby & Oxtoby (Frederick N. McQlellan, of counsel), for appellants.

      John J. Gafill (Frederic T. Harword, of counsel), for appellee.
   Brooke, J.

The action is assumpsit for the recovery of $2,500 and interest, said to have been paid by plaintiff to defendants by mistake on May 30, 1908.

The relations between the parties are of long standing and complicated. Prior to 1899, plaintiff was engaged in the glass manufacturing business at Wallaceburg, Ont. At that time defendant Frank O’Neill, who was an inventor of glass manufacturing machinery, also resided at Wallaceburg. Prior to that time O’Neill had secured or applied for three patents identified in the record as A, B, and O. On March 15, 1899, the title to these patents was placed one-fourth in Christian Arducer and three-fourths in defendant Marion O’Neill.

On Sept. 30, 1899, plaintiff and defendant entered into the following contract:

“This agreement made this 30th day of September, 1899, between David Gordon, party of the first part, and Frank O’Neill, party of the second part, both of Wallace-burg, Canada, witnesseth, that whereas the party of the second part has invented a certain improvement in machines for manufacturing glassware, wherein the manufactured articles are partly pressed and partly blown, the same being known as a ‘combined pressing and blowing machine.’ And whereas, said machine contains certain improvements adapted as well for ‘ pressing machines ’ (machines wherein the articles are made entirely by pressing) as for ‘pressing and blowing machines.’ And whereas the party of the first part is desirous of acquiring an interest in said machine and in the letters patent to be obtained therefor. And whereas, the party of the second part is desirous of reserving to himself, within the territory of the United States, the exclusive right to make, use and sell such of said machines or parts thereof as are adapted for ‘pressing ’ alone, in contradistinction to ‘pressing and blowing,’ it being the desire of the parties hereto that the interest to be conveyed shall relate only to such machines as are constructed for pressing and blowing : Now, therefore, the parties have agreed as follows:
“ (1) The party of the first part agrees to pay all expenses incident to building one of said machines, including plans and patterns therefor; to pay all expenses incident to testing said machine and demonstrating its operativeness, said machine to be complete and operative; and to pay all expenses incident to procuring letters patent of the United States on said invention.
“ (2) The party of the first part agrees to pay all expenses incident to obtaining letters patent in such countries, other than the United States, as the parties hereto may hereafter agree upon.
“ (3) The party of the second part agrees, upon the faithful performance by the party of the first part of the covenants of article 1 hereof, to execute and deliver to the party of the first part, and at his cost, an assignment of an undivided one-half interest in the United States letters patent on said improved machine.
“ (4) The party of the first part agrees to execute and deliver to the party of the second part, concurrently with the execution and delivery of the assignment referred to in article 3 hereof, an exclusive license to make, use and sell said improved machine as a ‘ pressing machine’ or any part or parts thereof designed for such use, said license to cover the territory of the United States and the Dominion of Canada.
“ (5) The party of the second part agrees to convey to the party of the first part, when requested so to do and at the cost of the party of the first part, an undivided one-half interest in any and all letters patent coming within the terms of article 2 hereof.
“ (6) The parties mutually agree that any and all patents of which they may become joint owners, or in which they may be jointly interested, shall be operated under for their mutual benefit, with an equal division of any and all profits arising therefrom, whether such profits are derived from individual or from joint exercise of the rights secured by the patents.
“(7) The parties mutually agree that the ‘first machine,’ being the one referred to in article 1 hereof, shall belong to them jointly, share and share alike.
“ (8) The parties mutually agree that all patents of which they may become joint owners, or in which they may have common interest, shall be maintained at their joint expense.
“In witness whereof, the parties above named have hereunto set their hands the day and year first above written.
[Signed] ‘c Frank O’Nbill.
[Signed] “D. A. Gordon.
“Witness:
[Signed] “Thos. Harrison, Jr.”

After the execution of this contract, and in the years 1900 and 1901, defendant Frank ONeill took out three other patents known in the record as D, E, and F. The abstract of title of patents A, B, and C is as follows:

“(1) July 15, 1898, ONeill transferred to Arducer of Cicero, Ind., one-quarter interest.
“(2) December 22, 1898, Arducer and ONeill transferred their interests to Safe Glass Company.
“(3) March 15, 1899, the Safe Glass Company transferred one-fourth interest to Arducer and a three-fourths interest to defendant Marion ONeill.
“(4) January 13, 1902, Arducer transferred his one-fourth interest to plaintiff Gordon.
“(5) October 13, 1902, Marion ONeill transferred one-half interest in whole patent to plaintiff Gordon; their paper titles then stood one-fourth in Marion ONeill and three-fourths in Gordon.
“ (6) June 25,1903, Marion ONeill, Frank ONeill, and Gordon transferred their rights to Ball Bros., of Muncie, Ind.
“ (7) June 25,1903. On the same day Ball Bros, gave back a license to the ONeills and Gordon to all of the United States reserving to themselves the State of Indiana.
“ (8) May 15, 1908, Ball Bros, bought back, for $10,-000, the licenses they had conveyed to the ONeills and Gordon.”

The material entries from the abstract of title to patents D, E, and F are:

“ (1) October 13, 1902, Frank ONeill transferred one-half interest in said patents to Gordon.
“(2) June 25, 1903, Marion ONeill, Frank ONeill, and Gordon transferred license in these patents for State of Indiana to Ball Bros.”

On May 15, 1908, when the transaction out of which this controversy arises occurred, the three earlier patents were owned by Ball Bros., with a license outstanding in the plaintiff and defendants, covering all of the United States, except the State of Indiana. The three later patents were owned equally by plaintiff and Frank O’Neill, with a license outstanding to Ball Bros, for the State of Indiana. During the years from 1901 to 1905, plaintiff and defendant Frank O’Neill sold rights under one or other of the various patents, and likewise sold some machines. They divided the receipts equally to the extent bf perhaps $50,000. The largest single transaction was that of June 25, 1903, when the three patents, A, B, and O were sold outright to Ball Bros., with a license back to Gordon and the O’Neills, and a license under patents D, E, and F for the State of Indiana was granted to Ball Bros. Ball Bros, paid at this time $12,000.

In the spring of 1908, defendant Frank O’Neill was approached by Ball Bros., who desired to repurchase from the plaintiff and defendants the license which they (Ball Bros.) had conveyed to Gordon and the O’Neills on June 25, 1903.

Yery little business, if any, had been transacted between the parties to this suit with reference to the patents for some three or four years prior to this date. They had made no sales and issued no licenses during this period, except, perhaps, one transaction in May, 1906, involving a small amount, and had done no business under the license from Ball Bros. Upon receiving the inquiry from Ball Bros., Frank O’Neill wrote to plaintiff the following letter:

“Zanesville, O., March 31/08.
“ Mr. D. A. Gordon,
“ Wallaceburg, Ont.
Dear Gordon:
“Please advise me what you will take for your interest in the license given us by Ball Bros.
“ I do not know that I could accomplish anything by having it, but it occurred to me that perhaps I might do something with it, so kindly write me what is the least amount you will sell it for.
“ I expect to have my new beer bottle machine in working order within the next ten (10) days. Have been able to reduce the cost of building it from $2,500 to $400 and make a much better machine.
“ What has become of the case against the Owen people?
“Yours resp.,
[Signed] “Frank O’Neill.
“775 Market St., Zanesville, O.”
To this letter plaintiff replied as follows:
“Wallaceburg, Ont., Apr. 6, ’08.
“Mr. Frank O’Neill,
“775 Market St.,
“Zanesville, Ohio.
“Dear Mr. O'Neill:
“ I have your favor of the 3d. Regarding your inquiry as to what X will take for my interest in the license given by Ball Bros. X leave this matter entirely in your hand, and will accept whatever sum you may think right. Right off the bat I would be pleased to get $2,500.
“X am glad to learn that you are going to have your beer bottle machine working and would like well to see it.
“The case against the Owens Co. is still in the courts and X am now awaiting a reply from England regarding the success of the Ryland’s machine over there.
“ X shall be glad to hear from you at your convenience. With kind regards from the writer and Mrs. Gordon to both yourself and Mrs. O’Neill, I am,
“ Yours sincerely,
[Signed] “D. A. Gordon.
“D. A. G.”
O’Neill next wrote the following letter:
“Zanesville, O., 5 — 9—08.
“ Mr. D. A. Gordon.
“Wallaceburg, Ont.
Dear Gordon:
“ Reo’d your letter stating you would be satisfied with $2,500 for your interest in license referred to, so X have given an option for 60 days on said license, option dating from May 1.
“ If the deal should go through, I sacrifice a whole lot, as it practically cuts me out from making, at any time, any machine for automatically feeding the glass to a blowing machine. It would leave me only a hand fed machine for my beer bottles.
“ Of course it cuts no figure with you, though, and a bird in the hand may be worth two in the bush to me. *
“Yours truly,
[Signed] * ‘ Frank O’Neill.
“ 775 Market St.”
And Gordon replied:
“ Wallacebukg, Ont., May 11, 1908.
“Mr. Frank O’Neill,
“Zanesville, O.
My dear O'Neill:
“I have yours of the 9th, and note what you say regarding option, which is all right.
“I am glad to learn that you are making a success of your beer bottle machine, and trust you will be well repaid by your invention. Will write the parties in question regarding the machine they are working at Glenshaw.
“ I am usually home every Sunday, and could arrange to meet you at Pt. Lampton at any time, or if that would be inconvenient I could meet you at Chatham or here during the day on Monday, as I always leave for Ottawa on the train leaving Chatham at 5:18.
“ Yours very truly,
[Signed] “D. A. Gordon.
“Diet. D. A. G.”

The option given by Frank O’Neill to Ball Bros, as a result of this correspondence follows:

“Zanesville, O., May 1, ’08.
“ Ball Bros.
“Muncie, Ind.
Gentlemen:
“ I hereby grant you an option for sixty (60) days, on license granted by Ball Bros, to David A. Gordon, Frank O’Neill and Marion O’Neill. Purchase price of said license to be $10,000 (ten thousand dollars).
“Frank O’Neill.”

Thereafter Ball Bros., with the assistance of O’Neill, acquired, at a cost of several thousand dollars, the other licenses outstanding under patents A, B, and C. Having acquired the others, Ball Bros, then indicated their willingness to accept the terms proffered by O’Neill for the license owned by the three parties to this suit. An appointment was made with plaintiff for May 28, 1908, at Windsor, Ont., to close the deal. Ball Bros, were represented by their attorney, Mr. McClellan, and he was accompanied by Frank O’Neill. The parties met upon the arrival of plaintiff’s train and immediately proceeded to transact the business which had brought them together.

Plaintiff’s version of what occurred at this interview is as follows:

** They met me at the station in Windsor on the arrival of the train at 2:30. Mr. O’Neill and Mr. McClellan met me. Mr. O’Neill and I at the station discussed the matter two or three minutes, and then went up to the British American Hotel and sat down to talk a few minutes; I did not have time to read the documents through. There was some discussion as to the parties, also as to the patents; that is, the blowing and pressing patents. We went from there to Mr. Clark’s office to draw *he drafts and sign the documents. I was told within a short time the amount that they were going to give, and the proportion coming to the several parties. I said to Mr. O’Neill that I did not think that was right, and Mr. O’Neill volunteered first that it was the Arducer patent which I only had one-fourth interest. That was why I should get only $2,500. I think that was when we were going out of Mr. Clark’s office and walking down to the corner that that conversation passes between Mr. O’Neill and myself. I drew the drafts up at Mr. O’Neill’s request, $2,500 to his wife and $5,000 to himself, and that left $2,500 for myself. I drew them on Ball Bros. They brought the blank drafts with them. The drafts were drawn by myself. There was some conversation as to how the deal should be put through; I suggested making drafts out and attaching them to the documents and sending them through the bank at Windsor, giving the bank instructions.”

Following this interview, and after O’Neill and McClellan had gone to Detroit, plaintiff, who had arranged with the manager of a local bank to wait for him after the closing hour, caused the following letter to be written:

“The Traders’ Bank op Canada,
“Windsor, Ontario,
“33d May, 1908.
“The Cashier,
“ Merchants’ National Bank,
“Muncie, Ind.
Dear Sir:
“Inclosed please find three drafts amounting to $10,000 with exchange on Messrs. Ball Bros., of your city. On payment of these please deliver inclosed documents to Ball Bros., and issue New York drafts as follows: Frank O’Neill, $5,000, 61900; Marion O’Neill (his wife), Zanesville, O., $3,500, 61901; D. A. Gordon, Wallaceburg, Ont., $3,500, 61903. Kindly mail these direct. The exchange paid by Ball Bros, will pay for cost of the New York drafts issued by you. No protest.
“ Yours truly,
[Signed] “Geo. Mair,
“Manager.
“Mrs. O’Neill’s address is 775 Market St., Zanesville.”

The “ documents ” referred to in this letter were retransfers to Ball Bros, of the license in question. The contract follows:

“ This indenture, made this 15th day of May, 1908, by and between Ball Brothers Glass Manufacturing Company, party of the first part, a corporation organized under the laws of the State of Indiana, and Frank O’Neill, Marion O’Neill, of Zanesville, Ohio, and David A. Gordon, of W allaceburg, Ontario, Canada, parties of the second part, witnesseth:

“That whereas, on the 35th day of June, 1903, the party of the first part entered into a memorandum of agreement with the parties of the second part by the terms of which the party of the first part granted to the parties of the second part a license in and to United States letters patent, which memorandum of agreement is in the words and figures as follows, to wit:

“ ‘Memorandum of agreement, made this 25th day of June, 1903, by and between Ball Brothers Glass Manufacturing Company, party of the first part, a corporation organized under the laws of the State of Indiana, and Frank O’Neill and Marion O’Neill, of Detroit, Michigan, and David A. Gordon, of Wallaceburg, Ontario, parties of the second part. Whereas, parties of the second part desire to obtain certain right to said inventions and patents: Now, therefore, it is agreed by and between the parties hereto as follows: In consideration of the payment of one dollar and other valuable considerations, receipt of which is hereby acknowledged, party of the first part grants unto parties of the second part, and their successors or assigns, with the right to grant sublicenses or shop rights, or to sell or assign said license to others, at their discretion, a license for the full terms of said patents respectively to manufacture, úse and sell the said letters patent and inventions for the manufacture of all kinds of glassware, except fruit jars, such kinds as are sold to dealers to be distributed for domestic use, liners for fruit jar caps, fruit jar lids, or other parts pertaining to fruit jars: Provided, however, that the license hereby granted, and the sublicenses or other rights hereby authorized, shall not extend to or be exercised within the State of Indiana, or within the territory granted to the Cumberland Glass Co. And, provided further, that said letters patent No. 643,253, and the inventions covered thereby, shall not be used except on machines covered by said patents Nos. 605,648, 616,251, or other patents issued to said Frank O’Neill. It being expressly understood that the license and right hereby granted does not include the right to sell machines in the territory covered herein, for use in Indiana, nor the right to use said invention in Indiana. It is further agreed by the said first party that it nor its successors nor assigns will sell or offer for sale machines or parts of machines covered by the patents herein, in direct competition with the said second parties in the territory licensed herein.
“‘In witness whereof, said Ball Brothers Glass Manufacturing Company has signed its corporate name and affixed its corporate seal hereto by its president, attested by its secretary, and parties of the second part have hereunto set their hands and seals this 25th day of June, 1903.
“ ‘ Ball Brothers Glass Manufacturing Company,
“ ‘ By Frank C. Ball, president.
“ ‘Attest:
“‘William C. Ball, Secretary.
“ ‘ [Ball Bros. Glass Manufacturing Company. (Seal-1899) Muncie, Ind.J
“ ‘Frank O’Neill.
“‘Marion O’Neill.
“‘D. A. Gordon.’
“And whereas, the parties of the second part are desirous of reconveying all the right, title and interest which they and each of them were granted by reason of said memorandum of agreement by the party of the first part; and
“ Whereas, the party of the first part is desirous of purchasing the right and license granted by reason of the said memorandum of agreement of said second parties:
“Now, therefore, for and in consideration of the payment of $1.00 and other good and valuable considerations paid by the party of the first part to the parties of the second part, receipt of which is hereby acknowledged, the said Frank O’Neill, Marion O’Neill and David A. Gordon, hereby sell, grant and convey and reconvey unto Ball Brothers Glass Manufacuring Company, their successors or assigns, all the right, title and interest which they or either of them received and now hold by reason of said memorandum of agreement herein set forth in full, and they sell and convey for said consideration said license so granted to them. It is understood by and between the parties hereto, and this grant is made for the purpose of and said consideration is paid by the first party to second parties for the purpose of reconveying all the rights which said second parties were granted by said first party by said memorandum of agreement, made the 25th day of June, 1903.
“ In witness whereof, the said Frank O’Neill, Marion O’Neill and D. A. Gordon have hereunto set their hands and seals this 15th day of May, 1908.
“Marion O’Neill.
“Frank O’Neill.
“D. A. Gordon.
“ Signed in presence of “P. H. Tarmehill.
“H. W. Kuntz.
“The State of Ohio, )
“Muskingum County, j :
“ Be it remembered, that on this 15th day of May, 1908, before me, the subscriber, a notary public in and for said county, personally came the above named Marion O’Neill and Frank O’Neill, the parties executing the above named instrument, and acknowledged the signing of the same to be their voluntary act and deed, for the uses and purposes therein mentioned.
“ In testimony whereof, I have hereunto subscribed my name and affixed my official seal, on the day and year last aforesaid.
“P. H. Tarmehill,
“ Notary Public. [L. S.]
“Province of Ontario, County of Essex.
“Be it remembered, that on this 23d day of May, 1908, before me, the subscriber, a notary public in and for the province of Ontario, personally came David A. Gordon, one of the parties executing the annexed instrument, and acknowledged the signing of the same to be his voluntary act and deed for the uses and purposes therein mentioned.
“In testimony whereof, I have hereunto subscribed my name and affixed my official seal on the day and year last aforesaid.
“A. H. Clarke,
“ Notary Public, for the Province of Ontario. [L. S.]

Plaintiff, on his way from Windsor to Wallaceburg, upon thinking the matter over, became convinced that he was entitled to and should have demanded $5,000 of the $10,000 instead of $2,500. He immediately communicated with Frank O’Neill by telephone but did not stop the delivery of the assignment to Ball Bros, or recall the drafts. He demanded from defendant Frank O’Neill the payment of $2,500. This was refused by O’Neill and this suit followed. The declaration is in assumpsit, and the following bill of particulars was furnished:

“ To the sum of $2,500 paid by plaintiff to the said defendants by mistake, together with interest thereon from May 30, 1908, or thereabouts, total, $3,000.”

Plaintiff recovered a judgment for $2,873.27 against defendants.

It seems to be the contention of the plaintiff that the earlier patents A, J3, and C were “pressing and blowing patents,” as distinguished from “ pressing ” patents, which were by the agreement of September 30, 1899, reserved exclusively to Frank O’Neill, and therefore that they are subject to the terms of section 6 of the contract which provides for an equal division between plaintiff and Frank O’Neill of all profits arising from the joint operation of all patents in which they might become jointly interested. We do not find it necessary to determine to which class the patents in question belong, for the reason that another factor in the case is, in our opinion, controlling. At the time the contract of 1899 was entered into, neither plaintiff nor Frank O’Neill had any interest in the title to these patents, and thereafter Frank O’Neill never acquired such an interest. Plaintiff first secured a one-fourth interest from Arducer and later a one-half interest from defendant Marion O’Neill. When, in June, 1903, the sale was made to Ball Bros., plaintiff owned three-fourths and Marion O’Neill one-fourth. It was then for the first time (after 1899) that defendant Frank O’Neill acquired any interest in the patents in question, and this interest was acquired by way of a license which ran from Ball Bros, to the three parties to this suit. Defendant Marion O’Neill was not a party to the agreement of 1899, and no contract relations existed between her and the plaintiff at any time relative to a division of profits or receipts.

It is clear that the entire title to the patents A, B, and 0 passed to Ball Bros, by the sale in June, 1903. It is equally clear that the license which Ball Bros, gave back to the parties to this suit created in each of them individual interests. They thereafter had no interest in the title to the patents; nor did they own the license in aliquot parts. Each had an interest separate and distinct from the other, though derived through the same contract, and each had the right to use or sell the same without obligation to the other, in the absence of a contract controlling the matter. Blackledge v. Manufacturing co., 108 Fed. 71, 47 C. C. A. 212; Lalance & Grosjean Manfg. Co. v. Stamping Co. ( C. C.), 108 Fed. 77, and cases there cited.

Defendants’ tenth request should have been given. It follows:

“ I charge you that the rights of Frank O’Neill and Marion O’Neill and David A. Gordon, under the license agreement with Ball Bros, of date June 25, 1903, were equal, each one having a separate interest, capable of ezsrcise without the consent and co-operation of the other two, and that neither one was bound to account to the other two for moneys received under the license, in the absence of an agreement with the other two to that effect.”

The record nowhere shows an agreement between the parties to divide equally (or in any other proportion) the moneys received under the license; nor does it show the receipt or division of any moneys thereunder during the five years it was in existence.

But passing the question raised by the fact that Marion O’Neill was not a party to any contract with the plaintiff, and assuming that this license related to patents not excepted from the operation of the contract of 1899, there is another and, in our opinion, a more conclusive reason why plaintiff connot recover in this action under the evidence introduced. His suit is planted upon the theory that he paid $2,500 to defendants through a mistake. He does not charge fraud or misrepresentation on the part of either of them, yet the case was submitted to the jury under a charge which plainly raised that issue. The charge is in part as follows:

“Now, gentlemen of the jury, mistakes may be mutual. A mistake may be a mutual mistake (that is, the mistake of both parties), that they did not understand their interests and rights, that they thought that they had three-quarters and one-quarter; or it may be a mistake on the part of the plaintiff caused by some misinformation or lack of knowledge as to what he was entitled to receive. If you find that the plaintiff was misled by any representations that were made to him, or by lack of information which he should have had, or which should have been given to him by the defendant at the time of the transfer, and if you find that he acted under a mistake induced by the acts of the defendant, and that after notice of the fact acted with due diligence, he would be entitled to recover the money which he had paid out under such a mistake.”

We have been unable to discover from this record what -.particular mistake the plaintiff relies upon. He says he has had in mind the 1899 agreement, and that he knew he was disposing of his interest in the license of 1903. What his interest had been in the patents prior to the sale to Ball Bros, in 1903 seems to us to be immaterial, for, whatever it was, it was obliterated by the sale, and he acquired a new and altogether different interest under the license. The correspondence clearly shows that Ball Bros, were buying and he was selling his interest under the license. Before he finally consummated the transaction, he knew exactly what sum he was to receive for that interest; indeed, he fixed the price himself. He likewise knew the sums which were to be paid by Ball Bros, to Marion O’Neill and Frank O’Neill. The entire transaction was fully set out in the assignment which he executed and acknowledged in the presence of his own legal adviser; and the drafts were drawn by himself; and the letter of instructions accompanying the drafts and the assignment was prepared under his direction.

There was certainly no mistake on the part of either of the defendants. They had fixed the price for their several interests during the negotiations with Ball Bros., and they received that price, no more and no less. Knowing the figure at which his associates were selling, and being fully-advised by the instrument of conveyance as well as by the correspondence exactly as to what was being sold, it is impossible to escape the conclusion that it was his duty to speak before consummating the deal. Had the defendants been advised of his claim before the sale was consummated they would have had an opportunity to protect themselves by declining to proceed until plaintiff’s demands had been fully considered and adjusted. Assuming that he had a valid subsisting contract with Frank O’Neill covering this identical license, by the terms of which he was entitled to receive one-half of all the license brought, it is clear that he could agree to change the terms of that contract and accept less than he was entitled to receive. He knew that he was getting less than half; he knew that the O’Neills were getting more than half. Having permitted the sale to go through and the O’Neills to part with their interests upon the assumption that he was satisfied, with a full knowledge of all the controlling facts, he should now be held to be estopped from claiming any part of the purchase price paid to them. A verdict should have been directed in defendants’ favor.

The judgment is reversed, and a new trial ordered.

Steere, O. J., and Moore, Mo Alva y, Kuhn, Stone, Ostrander, and Bird, JJ., concurred.


source: Caselaw Access Project

author: Ostrander, J.

license: Public Domain

text:
    LOEHR v. ABELL.
    Automobiles — Motor Vehicle Law — Licensee—Constitutional Law.
    In the absence of evidence tending to show that defendant’s son was using defendant’s motor car as the agent of the owner, or under what authority the driver was acting, defendant should not have been held liable for the negligent or wrongful death of plaintiff’s decedent by the negligent driving of the son, under Act No. 318, Pub. Acts 1909 (2 How. Stat. [2d Ed.] § 2487 et seq.), since the section of the statute making the owner liable unless the car was stolen, is unconstitutional and void. (Daugherty v. Thomas, ante, 371 [140 N. W. 615].) It is to be inferred, where the facts were not shown, that the operator of the car was using it with defendant’s permission or license, and for the operator’s own pleasure.

    Error to Van Burén; Des Voignes, J.
    Submitted October 17, 1912.
    (Docket No. 145.)
    Decided April 8, 1913.
    Case by Adelpha B. Loehr as administratrix of the estate of Edwin A. Loehr, deceased, against Charles E. Abell for the negligent killing of plaintiff’s intestate. Judgment for plaintiff. Defendant brings error.
    Reversed.

      Thomas J. Cavanaugh and W. W. Holmes, for appellant.

      Jackson & Fitzgerald and L. Myrl Phelps, for appellee.

       Liability of owner for injuries where automobile is being used by a member of owner’s family, see note in 41 L. R. A (N. S.) 775.

   Ostrander, J.

Defendant owned a four-passenger automobile, which, on the evening of August 10, 1910, at about 7 :45 o’clock, was being driven by his son, a boy 15 years of age. Two of his young- associates were riding with him. He drove west, preceded by another motor car, called in the record the Buick, driven by a Mr. Donahue, and both cars were preceded for some way by an omnibus or carryall. The Buick ear turned out, passed the omnibus, and drove into a street opening onto Dyckman avenue on the north. Defendant’s machine, driven by his son, also turned out to pass the omnibus, and, having done so, swung into the north side of the street again, when plaintiff’s decedent, who was riding west on Dyckman avenue upon a bicycle, came into collision with the car, from the effects of which he never regained consciousness, and died in less than an hour. Claiming that the negligent operation and management of the motor car was the cause of his death, his widow, as administratrix of his estate, sued the owner of the motor car and recovered a substantial judgment.

At least one count of the declaration appears to be framed upon the theory that the person driving the car was servant and agent of the owner, who is responsible as principal or as employer for the damages resulting from the negligent operation of the car. Other counts of the declaration are framed upon the statute (Act No. 318, Pub. Acts 1909, 2 How. Stat. [2d Ed.] § 2487 et seq.). Defendant requested the court to charge the jury as follows:

“ Under the law of the State the defendant cannot be charged with the negligence of any person driving the automobile, to wit, Carlos Abell, at the time of the collision, and therefore your verdict should be for the defendant. * * * It appears from the undisputed evidence in this case that on the evening in question Carlos Abell was using the automobile for his own purpose, his own pleasure, and on his own time, and that he was the operator of the machine, and the action should therefore have been brought against him, and your verdict should be for the defendant because the evidence shows that Carlos Abell was not the agent, employé, or servant of the defendant on this occasion, but a mere licensee; therefore the statute does not apply to the facts in this case, and under the law of the State the defendant has not been shown to have been guilty of any negligence, and you are therefore directed to return a verdict for the defendant.”

The statute (Act No. 818, Pub. Acts 1909) is entitled “An act providing for the registration, identification and regulation of motor vehicles operated upon the public highways of this State, and of the operators of such vehicles.” Subdivision 3 of section 10 (2 How. Staf. [2d Ed.] § 2496) of the act reads:

“Liability of Owners. — The owner of a motor vehicle shall be liable for any injury occasioned by the negligent operation by any person of such motor vehicle, whether such negligence consists in violations of the provision of a statute of this State or in the failure to observe such ordinary care in such operation as the rules of the common law require; but such owner shall not be so liable in case such motor vehicle shall have been stolen.”

Act No. 33 of the same session (2 How. Stat. [2d Ed.] § 2506) provides for the punishment of persons who without intent to steal the same usa a motor vehicle without authority, including employés of the owner and others who have charge of the vehicle. The point that this provision of the statute if it is construed as applicable to the facts disclosed is not constitutional, but is invalid because imposing upon the citizen a liability for damages occasioned wholly by the negligent conduct of another, does not appear to be made by the appellant. It is said that upon the occasion in question the defendant’s machine was taken by his son without his permission, and the point which is made is that in view of the provisions of Act No. 33 the word “stolen,” in Act No. 318, means taken without permission of the owner; that the word “stolen” is not used in the last act in its technical sense, but in the sense of an unlawful taking.

We do not find in the record testimony tending to establish the common-law liability of defendant, nor any affirmative testimony upon the subject of the authority of the son to use the car. It is to be inferred that the son used the car by permission of his father, the owner, but for his own pleasure. We have, since the case at bar was tried, distinctly held that the provision of the act of 1909 above set out is void. Daugherty v. Thomas, ante, 371 (140 N. W. 615). The request to charge preferred by defendant, and last above set out, contains a correct statement of the law under our decision in that case. We reverse the judgment, with costs to appellant. In view of the pleadings, the right to a new trial, if plaintiff shall be advised thereto, is granted.

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


author: Stone, J. Moore, J.

text:
    KOCH v. BIRD.
    1. Reformation of Instruments — Deeds—Mistake in Acreage.
    By an equally divided court, a decree based on conflicting testimony granting reformation of a land contract and deed as to amount of land and requiring defendant to refund a part of the purchase price equivalent to the shortage, is affirmed. Moore, McAlvay, Brooke, and Kuhn, JJ., dissenting.
    3. Same — Fraud.
    One who leads another to believe and rely on his statements of facts, and to part with money or property, is liable as foi fraud, whether the representations were based on an honest mistake or not. Per Steere, O. J., and Stone, Ostrander, and Bird, JJ.
    3. Same.

      Held, also, that a deed describing premises as 110 acres, more or less, when, in fact, the description conveyed contained only 104} acres represented a sufficient shortage to warrant relief. Moore, McAlvay, Brooke, and Kuhn, JJ., dissenting.
    4. Same.
    Per Moore, McAlvay, Brooke, and Kuhn, JJ., dissenting: Complainant, having obtained knowledge that the land covered by the contract amounted to less than 110 acres, before accepting a deed of the premises, and having made no attempt to repudiate the contract, was not misled.
    Appeal from Clinton; Searl, J.
    Submitted November 19, 1912.
    (Docket No. 78.)
    Decided April 8, 1913.
    Bill by George E. Koch against C. Fred Bird and another for reformation of a land contract and deed. From a decree for complainant, defendants appeal.
    Affirmed.

      William M. Smith, for appellants.

      Lyon & Moinei. for appellee.
   Stone, J.

The bill of complaint in this cause was filed to obtain the reformation and correction fo a certain contract and deed of real estate by reason of an alleged mutual mistake made by the complainant and the defendants relative to the quantity of land embraced in a certain farm purchased by the former from the latter, and to require the defendants to repay to complainant the amount of money represented by such deficiency.

The bill represents: That on or about the 15th day of September, 1910, complainant for the first time met the defendant C. Fred Bird, and negotiated with the defendants to purchase from them a certain farm in the township of Ovid, Clinton county (the defendant C. Fred Bird, representing himself and his wife, who were the owners of said farm as tenants by the entirety), and said farm was represented to said complainant by said defendant C. Fred Bird to contain 110 acres. That relying on said statement, after said defendants had offered to sell said farm to complainant for $85 per acre, and after said complainant had offered said defendants $80 per acre therefor, complainant and defendants, after some negotiations, agreed and settled upon a price of $82.50 per acre for said farm. That upon reaching said conclusion and agreement the complainant and another man present, in the presence of C. Fred Bird, made a computation upon the basis of $82.50 per acre for 110 acres, and reached the result of $9,075, and, after some bantering to reduce the amount to $9,000, the price was agreed upon at $9,075, and the parties, complainant and defendants, by appointment, met on the 16th day of September at the office of one Flynn, a justice of the peace of said county, at which time and place a contract of purchase was executed, acknowledged and delivered, each party taking a duplicate thereof, which contract stated a consideration of $9,075, which complainant agreed to pay as follows: Five hundred dollars on the signing of the contract, and the balance of said principal sum on or before March 15, 1911. The premises were described in said contract as follows:

“ All the following described land situated in the township of Ovid, county of Clinton and State of Michigan, to wit: All that part of the south half of section seven in township seven north of range one west in said State of Michigan, lying south of the right of way of the Detroit, Grand Haven & Milwaukee Railway, and west of the center line of the Sturgis drain as now located across said land, and containing 110 acres of land, more or less.”

The amount of $500 was paid to the defendants according to the terms of said contract, and the complainant returned to the State of Ohio, where he was then residing, and made preparation to come to Michigan and take possession of said farm the following spring. That on the 14th day of March, 1911, the parties, complainant and defendants, again met at the office of said justice of the peace, and a warranty deed was made, executed, and delivered by the defendants to said complainant, expressing the consideration to be $9,075, and describing the land in the same way it had been described in the contract aforesaid. Whereupon complainant paid the remainder of the purchase price and entered into possession of said farm.

The bill alleges, distinctly, that during all this time both complainant and defendants understood and believed that said farm contained 110 acres of land, and that the same was sold at and for the price of $82.50 per acre. The bill further alleges that some time after complainant began to reside upon the farm the question arose as to the number of acres it contained; that complainant caused the same to be measured with substantial accuracy, and ascertained that instead of containing 110 acres, as represented by said defendants, said farm contained only substantially 104£ acres; that as a result thereof complainant paid said defendants $82.50 per acre for 5£ acres of land, or substantially that amount, that he did not get. And the bill prays for relief as first above stated.

The joint and several answer of the defendants admits the making of the sale and transfer of the property in so far as the written contract and deed are concerned, but denies that the defendants, or either of them, ever knew or stated precisely how many acres there were in the farm; that said defendant O. Fred Bird stated to the said complainant that his deed called for 110 acres of land more or less; and that, if he sold the farm, he should sell it in the same way that he had purchased it, and the answer denies that there was any mutual mistake or fraud.

The record contains nearly 200 pages of testimony in the case, and the principal conflict is as to what took place in the conversations and negotiations between the parties leading up to the making of the written contract.

The circuit judge granted the relief prayed for in the bill, placing the shortage at five acres, which, at $82.50 per acre, made the amount decreed against the defendants $412,50, and decreed that the land contract and deed be corrected by striking out the words “more or less ” following the description of said land. The defendants have appealed from said decree. It would not be profitable for us to here attempt to set out the testimony relating to this conflict between the parties. The same has been read and considered with care, and it may be said that we have reached the conclusion that though a sale by the acre was not specifically expressed, either in the contract or in the deed, yet that such was the understanding of the parties.

' While the language stating the consideration in the contract and deed would, standing alone, be consistent with a sale in gross, yet, under the authorities, we are satisfied that in such a case as this, where the claim is that of a mutual mistake, it is not only competent but it is the duty of the court to look into the testimony as to all of the surrounding circumstances and conversations, leading up to the sale to ascertain and determine whether the sale was by the acre or in gross. While it is true that such prior negotiations become merged in the contract, and later in the deed, yet for the purpose of ascertaining whether there has been a mutual mistake a court of equity will inquire into the preliminary conduct and negotiations of the parties.

The trial judge filed a written opinion, in which he used the following language:

“ It is claimed that, because the contract and deed contained the words ‘ more or less,’ therefore Koch took his chances as to the shortage, and should be denied relief. While this might be so as to a slight shortage such as would be covered by difference in surveys amounting generally to but a fraction of an acre, it is not the rule where land is purchased by the acre at an agreed price and the shortage is of considerable amount, as it is here, as will be seen by a careful perusal of the following authorities: Hodges v. Denny, 86 Ala. 226 (5 South 492); King v. Brown, 54 Ind. 368; Rathke v. Tyler, 136 Iowa, 284 (111 N. W. 435); Skinner v. Walker, 98 Ky. 729 (34 S. W. 233); Frenche v. Chancellor, 51 N. J. Eq. 624 (27 Atl. 140, 40 Am. St. Rep. 548); Cardinal v. Hadley, 158 Mass. 352 [33 N. E. 575, 35 Am. St. Rep. 492]. It is further claimed that Koch waived his right to take advantage of it after full knowledge of the facts. If he ever had full knowledge before he paid his money and took the deed, which is doubtful, he had no knowledge until after he had bound himself by the contract, and changed his circumstances so that it would be inequitable for Bird to raise this defense. Whatever may have been the rule in this and other States in the early history of our jurisprudence, it is now well settled in Michigan, at least in cases of this kind, a man is chargeable with fraud, where by his statements of facts he leads another to rely on the same and part with his money or property, and the rule is the same where there is an honest mistake as when there is actual intent to defraud. So in any event here the defendants must make good the representation as to the acreage of this farm. Holcomb v. Noble, 69 Mich. 396 [37 N. W. 497]; Aldrich v. Scribner, 154 Mich. 23 [117 N. W. 581, 18 L. R. A. (N. S.) 379], and cases cited. Koch purchased this farm by the acre, and was led to believe that he was getting 110 acres, and the fact that he was shown the lines does not alter the case in any way. He is entitled to a decree reforming the contract and to be compensated for the shortage with interest. But inasmuch as there may be a chance for slight mistakes in the survey, and in order that no injustice shall be done the defendants, the court finds the shortage to be five acres only and therefore the amount upon (which) interest shall be figured will be $412.50. Complainant will recover his costs to be taxed. A decree may be entered accordingly.”

Not only is here a case where the circuit judge saw and heard the witnesses testify, but upon a review of the evidence we fully agree with him upon the facts and conclusions found by him. We are of opinion that there was a mutual mistake of fact in respect to the number of acres in the farm which pervaded the whole dealing, including the making of the deed, and that this mistake was to an essential and material element of the contract. In so far as the sale of real estate is concerned, we think that this is a new question in this State, and we have therefore the more carefully examined not only the authorities cited by the learned circuit judge but other authorities as well.

Among the cases cited by the circuit judge is that of Rathke v. Tyler, 136 Iowa, 284 (111 N. W. 435). That is a unanimous opinion of the supreme court of the State of Iowa, and is a well-reasoned case. The court in that case draws the distinction between a sale in gross and a sale by the acre, which distinction seems to run through all of the well-considered cases. And it is there pointed out that there is really no distinction between ex-ecutory and executed contracts as to what will entitle to equitable relief. We quote from that opinion as follows:

“ It will be noted that the description is followed by the words ‘containing one hundred acres, more or less. ’ These words indicate a sale in gross, even though the price stated may be an exact multiple of the number of acres mentioned ; but they do not indicate an engagement that the purchaser took the risk, ipso facto, of the quantity of the land conveyed. In connection with a quantitive recital in the deed, they are to be construed as indicating that the acreage mentioned is approximately the number of acres within the metes and bounds, or subdivision, name, number, or lot by which the tract of land conveyed is designated. The expression cannot enlarge the boundaries mentioned in the deed. Poague v. Allen, 26 Ky. [3 J. J. Marsh. ] 421; Brady v. Hennion, 21 Super. Ct. (N. Y.) 528. Nor do they have reference to the state of the title. Williamson v. Hall, 62 Mo. 405. They indicate that all the land within the boundaries defined by the deed is included, and in the absence of other evidence, unless the discrepancy is great, that the parties to the instrument take the risk as to quantity. In such a case the expression is to be regarded as descriptive merely, and not as of the essence of the contract.
“But, where the discrepancy between actual quantity and that estimated is very great, the doctrine seems to prevail that a court of chancery will relieve on the ground of mistake. Nelson v. Matthews, 12 Va. 164 (3 Am. Dec. 620); Harrison v. Talbot, 2 Dana (Ky.), 258. This is on the theory that the difference is relatively so great as in itself, in connection with other recitals in the deed, to import the probability of a mistake having been made by the parties. Hill v. Buckley, 17 Ves. Jr. 394; Harrell v. Hill, 19 Ark. 102 (68 Am. Dec. 202); Couse v. Boyles, 4 N. J. Eq. 212 (38 Am. Dec. 514); Paine v. Upton, 87 N. Y. 327 (41 Am. Rep. 371); Smith v. Fly, 24 Tex. 345 (76 Am. Dec. 109); Pratt v. Bowman, 37 W. Va. 715 (17 S. E. 210); Bigham v. Madison, 103 Tenn. 358 (52 S. W. 1074, 47 L. R. A. 267), and cases collected. The risk taken is of a reasonable excess or deficiency only. Hosleton v. Dickinson, 51 Iowa, 244 (1 N. W. 550).
“ But where the sale is by the acre, the differences presumed to have been contemplated by the parties are only such as are due to the errors incident to measurements by different surveyors and the variation in the instruments used, and the words ‘more or less5 in the deed are treated as words of safety or precaution merely, and intended to cover but slight and unimportant inaccuracies. Belknap v. Sealey, 14 N. Y. 143 (67 Am. Dec. 120); Hoffman v. Johnson, 1 Bland (Md.), 103; Triplett v. Allen, 67 Va. 721 (21 Am. Rep. 320); Oaks v. De Lancey, 133 N. Y. 227 (30 N. E. 974, 28 Am. St. Rep. 628). And this rule has been applied to executory contracts of sale in gross. Harrell v. Hill, supra; Hill v. Buckley, supra. But in Paine v. Upton, 87 N. Y. 327 (41 Am. Rep. 371), it was held that there is no distinction between executed and executory contracts as to what will entitle to equitable relief. In a case where the difference is slight as compared with the whole number of acres, the courts, inasmuch as the parties have expressed themselves as being satisfied, whether the tract be more or less, will not aid either party. Frenche v. Chancellor, 51 N. J. Eq. 625 (27 Atl. 140, 40 Am. St. Rep. 548). In the last case there was a difference of but 1.58 acres in a tract of 195.98 acres. The authorities are numerous and will be found collected in 20 Am. & Eng. Ency. of Law (2d Ed.), 873 et seq., and 13 Cyc. 639. The result of their examination is that much depends on the circumstances of each particular case, though the decisions may be separated into two general classes treating of (1) sales by the acre and (2) sales in gross or by boundaries. Again, sales by the acre may be subdivided into (1) those wherein this is expressed in the conveyance, and (2) those wherein this was not so expressed, but such was the understanding of the parties. In both of these classes a court of equity will grant relief if it clearly appears that there is considerable excess or deficiency between the quantity actually conveyed and that named in the deed, even though this be followed by the words ‘more or less.’
“Sales in gross or by boundary are divisible into three subclasses: Those strictly by the tract, with reference to negotiation or estimated quantity of acres; (2) those in which the quantity may be referred to in the contract, but this is only by way of description, and under such circumstances or in such manner as to show that the parties intended to risk all contingency as to quantity, however much the discrepancy might be; and (3) those in which it is reasonably probable, from the price stated, in connection with the value and the extent of the discrepancy, or from extraneous circumstances, such as locality, value, price, time, and the conduct and conversation of the parties that they did not intend to risk more than the usual rate of excess or deficiency in such cases, or than such as might reasonably be calculated on within the range of ordinary contingency. It is manifest that contracts within the first two subdivisions, in the absence of any proof of fraud, will not be interfered with by a court of equity, for the evident reason that the parties have intended to hazard the quantity regardless of the extent of any possible discrepancy. But under the third subdivision any unreasonable surplus or deficiency will entitle the injured party to equitable relief, unless in some way he has waived or forfeited this right to demand the same. The discrepancy in this case is not sufficient to bring it within this subdivision. The shortage was 6.49 acres in 100, and we have discovered no case declaring this so unreasonable as to justify relief. In Yearly v. Morris’ Adm’r, 9 Ky. Law, 703 (6 S. W. 433), a description of 282 acres fell short 20 acres, and the deficit was held insufficient, in the absence of proof that the sale was by the acre. While the words do not extend to a variation of one-half of the tract, as held in Lee v. Hester, 20 Ga. 588, or one-quarter, as decided in Smith v. Fly, 24 Tex. 345 (76 Am. Dec. 109), or to one-fifth, as declared in Gentry v. Hamilton, 38 N. O. 376, yet in a case like this it cannot well be said that the proportion may be greatly lowered below that in the last case, in view of the nature of the description, without impinging on what the parties may be assumed to have intendod. It will be observed that one of the boundaries is the middle of ‘Mosquito creek.’ This may be assumed to have a sinuous course, as is usual with streams of like magnitude, and two of the boundary lines extend to the middle of that stream, with their length not designated. In view of the uncertainties involved in these boundaries, and the fact that the deed was copied from that conveying the land to defendant, we are not inclined to say that the deficiency alone is such as to warrant the inference of mistake or fraud in the execution of the deed.
“ The evidence, however, was such as to warrant the conclusion that, though a sale by the acre was not expressed in the deed, such was the understanding of the parties. * * *
“ Both supposed the acreage to be as represented, but were mutually mistaken. Precisely such a case was made out as brings it within the second subdivision of the first class mentioned, and under the rules laid down justify relief by a court of equity. The deficiency was substantial, not slight, and much greater than could have been contemplated as likely to arise from the incidental differences due to different measurements and instruments employed.”

In addition to the authorities cited by the circuit judge, we add the following: Paine v. Upton, 87 N. Y. 327 (41 Am. Rep. 371); Belknap v. Sealey, 14 N. Y. 143 (67 Am. Dec. 120); Gallup v. Bernd, 132 N. Y. 370 (30 N. E. 743); Nelson v. Carrington, 18 Va. 332 (6 Am. Dec. 519); M’Coun v. Delany, 3 Bibb (Ky.), 46 (6 Am. Dec. 635); Hodges v. Kowing, 58 Conn. 12 (18 Atl. 979, 7 L. R. A. 87); Bigham v. Madison, 103 Tenn. 358 (52 S. W. 1074, 47 L. R. A. 267); Newman v. Kay, 57 W. Va. 98 (49 S. E, 926, 68 L. R. A. 908, 4 Am. & Eng. Ann. Cas. 39, and note); Kitzman v. Carl, 133 Iowa, 340 (110 N. W. 587, 12 Am. & Eng. Ann. Cas. 296, and note).

We wish to call especial attention to the leading case of Paine v. Upton, supra. In that case it appeared that upon an examination of the farm the plaintiff, who was the purchaser, asked the defendants how much land there was in the farm, and at what price they would sell it. They informed him that the farm contained 220 acres and upward, and that they had asked for the same $150 an acre, but would sell it for $33,000. At the same time they exhibited to the plaintiff a printed description, describing the farm by metes and bounds in three parcels; one parcel was described as containing 191.50 acres, more or less, another as containing 30 acres, more or less, and the third as containing 1 acre, making in the aggregate 222.50 acres. The plaintiff declined to purchase the farm at the price fixed by the defendants, but made a counter offer of $30,000, which the defendants declined. But on the 28th of February, 1872, the negotiation was concluded by an agreement for the sale of the farm to the plaintiff for the sum of $31,687, and written articles were entered into between the parties in which the farm was described in general terms as the homestead farm of the late James Upton on the lots named, “ containing about 222 acres of land be the same more or less.” The deed was to be executed April 2, 1872, and was executed and delivered on that date, at which time a mortgage was executed by the plaintiff as provided in the articles. The deed described the farm in three parcels, as in the printed description exhibited to the plaintiff.

The plaintiff on the purchase of the farm took possession, and at the hearing was in possession. About nine months after the deed was given plaintiff’s suspicion was excited as to the accuracy of the representation of the quantity named by the defendants, and upon investigation he ascertained that the farm, instead of containing 220 acres and upward, contained only 206.35 acres, there being a deficiency in reference to the quantity which the defendants represented it to contain of more than 13 acres, the value of which at the average price per acre paid for the farm, upon the assumption that it contained 220 acres, would be $1,953.93. The trial judge found that all the parties believed during the negotiation for the sale of the farm, and at the time of executing the contract and deed, and until about nine months after the making of the deed, that the farm did contain 220 acres of land and upward, and that such negotiation and agreement were had and executed on both sides upon the basis of such common belief and understanding, and that all the parties were mutually mistaken in the belief that the farm contained at least 220 acres. The precise question presented was whether upon the facts found the plaintiff was entitled to abatement from the bond and mortgage given for the purchase money, proportionate to the deficiency of acreage in the farm. Chief Justice Andrews, speaking for the entire court, in a very able and learned opinion, which is too lengthy to be copied.here, held that the general jurisdiction of a court of equity to set aside or reform a contract on the ground of mutual mistake includes executed as well as executory contracts; that the consummation of the transaction, in ignorance of the mistake and without laches on the part of the party injured, gives the other party no immunity from making recompense, nor does it deprive the court of the power to remedy the injustice; that where the owner of the farm innocently, but untruly, states the quantity of the land contained therein, and a purchaser, in reliance upon the statement, enters into a contract and takes a deed, and subsequently discovers that the quantity is materially less than that stated, he is entitled to the interposition of a court of equity to correct the mistake. He further held that the purchaser in such a case is not deprived of his remedy by the addition of the words “more or less to the statement of the quantity contained in the deed; that these words do not import a special agreement that the purchaser takes the risk of the quantity, nor are they equivalent to -a stipulation that the mistake, if one is subsequently discovered, shall not be ground for relief; and that, in the absence of any special facts and circumstances, the presumption is that in the sale of agricultural land for agricultural purposes the element of quantity enters into the transactions and affects the considerations agreed to be paid.

It seems to be held by the weight of authority that the measure of the compensation to be made for a deficiency in case of the sale of land by the acre, unattended with any particular circumstances, is the average value of the whole tract, without regard to the fact that the deficiency was in a certain quality of land. Nelson v. Carrington, supra; M’Coun v. Delany, supra; Harrell v. Hill, 19 Ark. 102 (68 Am. Dec. 202); Nelson v. Matthews, 12 Va. 164 (3 Am. Dec. 620).

In view of these authorities, we are constrained to hold that the circuit judge reached the right conclusion in this case, and the decree of the circuit court is affirmed, with costs to the complainant.

Steere, C. J., and Ostrander and Bird, JJ., concurred with Stone, J.

Moore, J.

(dissenting). I cannot agree with thq conclusions of fact or law expressed by Justice Stone in his opinion. Before complainant had any considerable talk with Mr. Bird, he had been over the farm; he knew it was bounded on the east by an open ditch, on the north by a railroad, and upon the other sides by a highway. The parties do not agree about what was said about the acreage. It is clear Mr. Bird never had the farm surveyed, and it is not clearly shown that any one else had it surveyed with the desire to learn its accurate acreage until complainant had it done. The defendant testified, among other things, that he told complainant “that I bought it for 110 acres, more or less; and, if I sold it, I should sell it the same way.” It further appears that, when they went to the scrivener to have the contract drawn, the deed given to Mr. Bird was taken along and handed to the scrivener. A contract was drawn on the 16th of September, 1910, containing, among other things, the following:

“ Witnesseth, that the said parties of the first part, in consideration of the sum of nine thousand seventy-five dollars to be to them duly paid as hereinafter specified, hereby agree to sell and convey to the said party of the second part, all the following described land, situated in the township of Ovid, county of Clinton, State of Michigan, to wit: All that part of the south half of section seven in township seven north of range one west in said State of Michigan, lying south of the right of way of the Detroit, Grand Haven .& Milwaukee Railway and west of the center line of the Sturgis drain, as now located across said land, and containing one hundred and ten acres of land more or less. * * * It is also agreed by the parties hereto, that the said party of the second part, shall have possession of said land under this contract on the 30th day of March, 1911, or sooner if said deed is made. And it is agreed that the stipulations herein contained are to apply to and bind the heirs, executors and administrators and assigns of the respective parties hereto.”

It is not claimed the scrivener misunderstood either of the parties in drawing this contract.

The complainant either read or heard read this contract, and, knowing what it contained, signed it. Later an abstract of title was furnished him. The first description in this abstract was the same as that contained in the contract, and the same as the one in the deed to Mr. Bird. One description in the abstract furnished complainant says:

“Conveys description abstracted 103f acres more or less.”

Another description is:

“ Conveys description abstracted 104 acres more or less.”

The last one is:

“Grantor: Charles I. Sowle and wife Johnanna. Grantee: C. Fred Bird and Mary B. Date of instrument: Oct. 10, ’07. Date of record: Oct. 13, ’07. Liber 119; page 432. Instrument: W. D. Description and remarks : Conveys description abstracted. 110 acres more or less.”

While this abstract was in his possession, the complainant wrote defendant from Ohio under date of February 13, 1911, a letter containing this language:

ci Another thing I could not understand is the number of acres. In one transfer it is given 103|- acres and another 104 acres, more or less, where the deed was made to you, was 110 acres more or less. Do you know that the boundary lines were changed or the land measured to bring it up to 110 acres? Of course actual measurement will show what it is.”

Mr. Bird promptly replied to this letter. Mr. Koch does not produce this letter, but testified in relation to it:

“Q. You may state what he wrote you in that letter; what did he write you ?
“A. Why, he says, ‘ I told you that if you didn’t want that farm, and if I hadn’t bought, I would be very glad to keep it.’
‘ The Court: I didn’t quite get that.
“A. He says, ‘I told you that if you didn’t want the farm, you didn’t need to take it, and, if I hadn’t bought yet, I would be very glad to keep it.’ He says, ‘ I would be tickled to death to keep it.’
“Q. Was that in the letter that he wrote in reply to that first letter ?
“A. Yes, sir.
<cQ. You say he says I told you; had he told you that before ?
“A. No, sir; he never told me I didn’t need to take it if I didn’t want to. No; that was the first I knew about it.
“Q. Do you know why he said in that letter that he told you that ?
“A. No; I don’t know.
“Q. Did he explain to you how the discrepancy arose in the recital of the descriptions upon the abstract ?
“A. No, sir; not a word said about that.”

The complainant said he attached no importance to what was contained in the letter, and accounts for its being mislaid in that way. Mr. Bird’s recollection, as testified to, is that he replied that he did not know how the discrepancies came, and that, if the complainant did not want the farm according to the terms of the contract, he need not take it. On the 21st of February complainant replied to this letter; we quote:

‘‘Bryan, Ohio, February 21st, 1911.
“ Mr. Fred Bird :
Dear Sir:
“ Yours received and would say I believe you did not catch my meaning in regard to number of acres. I simply meant to ask whether there had been any measuring or change of lines to your knowledge that changed the amount on the several different transfers ? I didn’t think for a minute you were trying to sell something you knew you didn’t possess. I only wondered why it appears as it does. I have not owned the farm yet that I would not let go provided there was something in it. I would pay you well if you can send one of those parties that would give a long price if it is long enough or you can make $75 by furnishing me a buyer at ten dollars more per acre for the 110 acres, more or less, provided it was done inside of a week.”

No further correspondence was had. The complainant gave no indication that he did not want the farm according to the terms of the contract. He came on from Ohio, and on the 14th of March, 1911, a warranty deed of the farm was made to complainant, in which the description was precisely the same as contained in the contract. He paid for the farm and was put in possession. This bill of complaint was filed August 31, 1911.

I think the contract, the letters, the warranty deed, and the conduct of the complainant are utterly inconsistent with the idea that he was buying a farm guaranteed to contain 110 acres at the price of $82.50 an acre, and is entirely in harmony with the claim of defendant that he was selling a farm for $9,075, which he bought as being a farm having certain metes and bounds, and described in the deed to him as containing 110 acres, more or less. Whatever may be the law in other States, I think it is clearly settled in this State in relation to cases like the instant one.

In the early case of Martin v. Hamlin, 18 Mich. 354 (100 Am. Dec. 181), a similar question was involved. I quote from the opinion by Justice Christiancy :

“The agreement set up in the bill in reference to a guaranty of the quantity of land, a survey of the premises, and an indorsement to be made on the mortgage for any deficiency, was, if any such existed, wholly verbal. Whether such verbal agreement was ever made, is a question upon which the evidence is conflicting, and much of it directly contradictory, leaving the question open to considerable doubt. But, without going at all into the question of the weight of the evidence, we propose to consider the case in the most favorable aspect to the complainant which the testimony on his own part will warrant.
“ The case as presented by the evidence on the part of the complainant, including his own, is substantially this:
“The defendant was residing on the farm at the time of the sale, and had resided there for some 25 years. Complainant and his father, who aided him in the negotiation, had also been acquainted with the premises for many years. There is no pretense on the part of complainant that the actual boundaries of the land were not known by, and visible to, all the parties. But the defendant had never had it surveyed. At the time of the verbal arrangement for the sale, two or three days before the papers were executed, the defendant represented the land as containing 110 acres, and said he would warrant it to contain that quantity; and complainant thereupon verbally agreed to purchase the farm and pay $4,200 for it, if there should be that amount of land. This verbal arrangement was made at the defendant’s house on the premises; and the parties were to go in a day or two after to Pontiac, and have the writings drawn. They met at Pontiac accordingly for that purpose. Mr. Carhart, a justice of the peace, was employed at the suggestion of the defendant to draw the papers, a deed from defendant to complainant, and notes and a mortgage upon the land for part of the purchase money, and an assignment by the complainant to the defendant of another mortgage received as part of the purchase money.
“Immediately before the papers were drawn, as the parties were going up unto Carhart’s office for the purpose, on or at the foot of the stairs, a conversation was had between the parties in which it was verbally agreed that complainant should or might get the land surveyed by the county surveyor, and if it fell short (of 110 acres), an amount proportioned to such deficiency should be indorsed on the first payment, to be secured by the mortgage complainant was to give for $1,500 of the purchase money. If the land should overrun, complainant was to pay for the excess at the same rate, though it is not stated how or when. The parties then went into the office, and while Carhart was drawing the deed of the farm, the defendant wished him to insert the words 4 more or less ’ after the words at the close of the description, ‘ containing one hundred and ten acres.’ But to this, complainant’s father, acting on his behalf (though he was himself present), objected; because they did not know, as he says, how much land there was, and they were to have it surveyed, or, as stated by the father in his testimony, ‘ because the complainant had nothing but the defendant’s word for the amount of land, but expected one hundred and ten acres.’ The verbal agreement was not stated to the justice, or in his presence. The deed was drawn without the words ‘more or less,’ and the complainant executed his three promissory notes for $500 each, and a mortgage upon the farm to the defendant securing the notes; having paid him in cash and by the assignment of a mortgage the balance of the $4,200. Complainant says he delivered his mortgage and notes, relying upon the understanding above stated. The papers were exchanged. Complainant received the deed, and went into possession. No written agreement was executed or seems to have been contemplated by either of the parties as to the survey or the indorsement of any deficiency.
“ Upon survey, made some months after by the county surveyor, the farm was found to contain but 93£ acres; and the defendant, being called upon to. indorse the deficiency, refused.
“From this statement it is clear:
“ (1) That the verbal agreement, if made as claimed by the complainant, constituted, while the matter remained in parol, a part of the terms of the entire contract of purchase and sale.
“ (2) That the papers drawn by Carhart, and executed by the parties, together with the payment of a part of the purchase money, were intended and understood by both parties as the consummation of the sale by the one, and the purchase by the other.
“ (3) That the omission to insert in the deed or mortgage, or a separate instrument, any stipulation with reference to a survey to be had of the land, or the allowance or indorsement for deficiency, was not the result of any mistake of fact or of inadvertence from the subject not occurring to the mind of the complainant; but that the subject of such survey and deficiency was present to his mind during the drawing of the papers, and that the deed was drawn without the words ‘more or less,’with the idea that it would operate as a guaranty of the quantity. That the parties knew the contents of all the papers executed, that all were executed and exchanged without any oversight or mistake of fact, in the very form intended by all the parties, and that they contained all that the parties intended should be contained in any written evidence of the transaction between them.
“It is not denied that, upon the face of the papers executed, and according to their legal effect, the complainant took the farm at his own risk as to quantity. Roat v. Puff, 3 Barb. [N. Y.] 353, and cases there cited. If, in accepting the deed and exchanging papers, he did not intentionally abandon all claim of compensation for deficiency, he must have relied either, first, upon the quantity mentioned in the deed as a guaranty; or, second, wholly upon the contemporaneous verbal agreement; or, third, upon both together.
“If he relied upon the first, it was a mistake of the legal effect of the instrument, the contents of which he knew — purely a mistake of the law. This is no ground for relief. See Irnham v. Child, 1 Bro. C. C. 92; Townsend v. Stangroom, 6 Ves. 328, 332; Worrall v. Jacob, 3 Meriv. 267, 271; Hunt v. Rousmaniere, 1 Pet. [U. S.] 1; Id., 2 Mason [U. S.], 363 [Fed. Gas. No. 6,898]; Gilbert v. Gilbert, 9 Barb. [N. Y.] 532; Arthur v. Arthur, 10 Barb. [N. Y.] 9; Farley v. Bryant, 32 Me. 474; Hellish v. Robertson, 25 Vt. 603.
“ He can have no relief upon the ground of the verbal agreement alone, or in connection with the deed; because, first, to say nothing of the statute of frauds, it was a part of an entire contract for the sale of the land, made immediately preceding, and contemporaneous with the deed and other papers executed in consummation of the sale, and related to its very terms. It was, therefore, merged in or cut off by the deed and other writings by which the sale was consummated, and which must, in the absence of fraud, be presumed to contain all the terms finally agreed upon. Street v. Dow, Har. Ch. [Mich.] 429; Stevens v. Cooper, 1 Johns. Ch. [N. Y.] 429 [7 Am. Dec. 499]; Stark, Ev. 660-665; 1 Grreenl. Ev. § 275; Cowen and Hill’s Notes to Phill. Ev., note 948; and see especially Broughton v. Coffer, 59 Va. 184.
“ (2) Because the parol agreement would tend to contradict and vary the notes and mortgage given by complainant at the same time as a part of the same transaction. Jones v. Phelps, 5 Mich. 222; Adair v. Adair, 5 Mich. 204 [71 Am. Dec. 779]; Stevens v. Cooper, ubi supra; Cook v. Combs, 39 N. H. 593 [75 Am. Dec. 241]; Oelricks v. Ford, 23 How. (U. S.) 49; Crosier v. Acer, 7 Paige [N. Y.], 141; Austin v. Sawyer, 9 Cow. [N. Y.] 39, 49; Dix v. Otis, 5 Pick. [Mass.] 38; Powell v. Edmunds, 12 East, 6; Noble v. Bosworth, 19 Pick. [Mass.] 314; Conner v. Coffin, 22 N. H. 542-4; Gregory y. Hart, 7 Wis. 532; Hoyt v. French, 24 N. H. 199; Lang v. Johnson, 24 N. H. 302; Hoxie v. Hodges, 1 Or. 251; Underwood v. Simonds, 12 Metc. [Mass.] 278; Adams v. Wilson, 12 Metc. [Mass.] 138 [45 Am. Dec. 240]; Richardson v. Comstock, 21 Ark. 69; Oskaloosa College v. Stafford, 14 Iowa, 152; Parsons on Bills and Notes, 501, 503.
“And this rule applies as well in equity as at law. Wesley v. Thomas, 6 Har. & J. [Md.] 24; Chetwood v. Brittan, 2 N. J, Eq. 439; King v. Baldwin, 2 Johns. Ch. [N. Y.] 557, 558; Eveleth v. Wilson, 15 Me. 109; Richardson v. Thomas, 1 Humph. [Tenn.] 154.”

See, also, Ortmann v. Bank, 39 Mich. 518; Reynolds v. Campbell, 45 Mich. 529 (8 N. W. 581); Nichols, Shepard & Co. v. Crandall, 77 Mich. 401 (43 N. W. 875, 6 L. R. A. 412); Phelps v. Abbott, 114 Mich. 88 (72 N. W. 3).

I think the decree of the court below should be reversed, and the bill of complaint dismissed, with costs of both courts to defendants.

McAlvay, Brooke, and Kuhn, JJ., concurred with Moore, J.


author: Steere, O. J.

text:
    CLAY LUMBER CO. v. HART’S BRANCH COAL CO.
    1. Garnishment — Novation—Bills and Notes — Defenses.
    In garnishment proceedings brought by creditors of a corporation, the principal defendant, against two stockholders who had been indebted to the corporation on their note given for corporate stock, but claimed to have canceled their liability by a novation agreement whereby the corporation agreed to cancel the note in consideration of the garnishees’ assuming another note on which the corporation was liable to a bank, with them as indorsers, the court should have submitted to the jury the question presented by testimony tending to support such defense whether a novation had taken place, and whether the defense of payment by satisfying such note as alleged by defendant garnishees had been established.
    2. Novation — Debtor and Creditor — Garnishment.
    If by agreement of garnishees and principal defendant with a bank to which the principal defendant was indebted, the garnishees assumed the indebtedness to the bank, and the principal defendant released them in consideration thereof, so that a new obligation arose to pay the latter debt, due to the bank, the garnishees could not be held liable on their oanceled indebtedness to the principal defendant, although neither note had been surrendered at the time the suit was instituted.
    3. Fraud — Defenses—Garnishment.
    Garnishees who claim to have been defrauded in their subscription to corporate stock, for which they gave their note to principal defendant, are entitled to present the same defenses to garnishment proceedings as they might interpose against the principal defendant, although they claimed to have made a novation or compromise of their liability by assuming another note of the principal defendant, due to a creditor bank, if it should be determined by the jury, adversely to the claim of the garnishees, that the novation was not established by the evidence.
    4. Frauds, Statute of — Novation—Contracts.
    When a debtor promises his creditor to satisfy a valid indebtedness of the latter by paying a third party to whom it is due, and all three parties assent to the arrangement, the undertaking is not void, although it rests in parol; the statute of frauds does not affeot it, beoause the promise is not to pay the indebtedness of another, but to assume and pay it as the third party’s obligation.
    5. Contraots — Actions Against Third Parties.
    An action does not lie on a contract made by a third party for the benefit of the plaintiff,
    Error to Macomb; McKay, J.
    Submitted November 13, 1912.
    (Docket No. 54.)
    Decided April 8, 1913.
    Garnishment proceedings in justice’s court by the Clay Lumber Company against George Steffens and Charles Steffens as garnishee of the Hart’s Branch Coal Company, principal defendant. From a judgment for defendants plaintiff appealed to the circuit court. Judgment for plaintiff and said garnishees bring error.
    Reversed.

      John A. Weeks and William J. Dusse, for appellants.

      William S. Jenney, for appellee.
   Steere, O. J.

The contention in this controversy relates to garnishment proceedings against Charles and George Steffens, the garnishee defendants herein. They were stockholders and directors of the Hart’s Branch Coal Company, principal defendants, and are claimed to have been indebted to it. This claim of indebtedness and their denial present the foundation issue.

The action was commenced in justice’s court on November 6, 1908, by summons; two writs being simultaneously issued and served on that day, one against the principal defendant, the Hart’s Branch Coal Company, in an action in assumpsit, and one against Charles Steffens and George Steffens as garnishee defendants, whose alleged indebtedness to the principal defendant it was sought to reach and hold by garnishment to ultimately satisfy such judgment as might be recovered against the coal company. On January 5,1909, plaintiff recovered a judgment in said justice’s court against the principal defendant for the sum of $300 and costs, which judgment was not appealed from and now stands undisputed and unquestioned

The issue in the collateral garnishment proceeding was tried in the justice’s court before a jury, resulting in a verdict for the defendants, from which the plaintiff appealed to the circuit court of Macomb county, where a retrial by jury, on November 22, 1911, resulted in a verdict and judgment in favor of plaintiff and against said garnishee defendants for $346.13. A motion by said defendants for a new trial was denied, and they have removed the proceeding here for review upon a writ of error.

Out of the numerous assignments of error, the most important questions urged and argued center on the ruling of the court in denying defendants’ motion for a directed verdict in their favor, and in excluding testimony offered by them in support of their claim that a certain note for $500, given by them to the coal company in payment for some of its stock, was obtained through fraud and misrepresentation, and void.

The Hart’s Branch Coal Company, a West Virginia corporation, was organized to engage in coal mining in that State, and was so engaged for a time, apparently unprofitably, though the full nature and extent of its operations are not disclosed. Its principal officers and stockholders were residents of Macomb county, Mich. The only records of meetings of stockholders and officers of the company put in evidence show that they were held at 48 Macomb street, Mt. Clemens, Mich. The president of the company, A. T. Donaldson, resided at Mt. Clemens, and was also president of the Citizens’ Savings Bank of that city. The coal company had an account in, borrowed money of, and did its banking business with, said bank. The garnishee defendants, Charles and George Steffens, father and son, resided at Frazer, in said county, where they were engaged in the lumber and coal business. They carried an account in said Citizens’ Savings Bank, in which Charles Steffens, the father, was also a stockholder. They had taken stock in said coal company, at the solicitation and on the representation of Donaldson and others who were engaged in its organization, as they claim, and had given in payment on their stock a 90 days’ note for $500, dated June 29, 1908, payable to A. T. Donaldson, as president of the Hart’s Branch Coal Company, at the Mt. Clemens Citizens’ Savings Bank.

On July 25, 1908, the coal company borrowed of said Savings Bank $300, giving its note therefor payable in 60 days, indorsed by the directors of the coal company, including the defendants Charles and George Steffens. The note was given to raise money to pay off certain labor claims in West Virginia against the principal defendant. Defendant George Steffens, then a director, went down to West Virginia with another member of the company and paid certain claims. President Donaldson testifies:

“They got the money and went down and paid all the claims against the company as we supposed. * * * When they came back and found the condition of things, the directors concluded that we wouldn’t do much of anything more and did not have money enough, and, if Mr. Steffens took care of that note and the interest, we would surrender the $500 note, and I saw Mr. Steffens and told him what we had decided on, and he said he would think it over. Afterwards he told me that he would take it up and would leave orders at the bank.”

Both the Steffenses substantiate this and testify that they accepted the proposition; the agreement being reached as a result of various negotiations arising from their objection to paying the $500 note and their claim of fraud and misrepresentations at the time it was obtained.

It appears undisputed that, in pursuance of the agreement reached, Donaldson, as president of the coal company, delivered the $500 note held by the company against the Steffenses to the cashier of the Citizens’ Savings Bank, with instructions that when Mr. Steffens paid the $300 note with interest, which it held against the coal company, the $500 note should be surrendered to Steffens, and that, in pursuance of the same agreement, Charles Steffens went to the bank and told the cashier to charge up the $300 note and interest to his account; he having at that time, and continuously thereafter, sufficient funds on deposit to cover the same. This occurred in October before commencement of this suit; but the $300 note was not charged to Steffens’ account nor the paper surrendered until January 22, 1909, at which time the $300 note was charged to Steffens’ account, with full interest figured to that date, canceled as paid on that date, and surrendered to the coal company, and the $500 note was surrendered to Steffens. The reason given by the officers of the bank for not doing this in October, at the time Charles Steffens authorized the cashier to charge the $300 note to his account, is that another note or evidence of indebtedness of the coal company to the bank for $30 was attached to the note Steffens was willing to pay, and it was sought to collect that also. Steffens declined to pay the $30, and the matter was held along in expectation or hope that he might ultimately consent to do so. Of this transaction Charles Steffens testifies:

“ I couldn’t tell exactly the date, but the company says I should pay that note and that would pay the other, and so I went to the bank, and they pinned another note to it, about $30 I think, and I told them it had nothing to do with that note, and I said I would pay that note but the other I wouldn’t. * * * I had money in the bank and I said, You can charge me with that note any time.’ ”

The time the bank selected was January 22, 1909, as stated.

When the proofs were closed, each side moved the court to direct a verdict in its favor, which motions were denied, and the court submitted to the jury, as an issue of fact, the one question of whether the $300 note was paid prior to the commencement of this action on November 6, 1908, saying:

If you are convinced by a fair preponderance of the evidence that the directions of Charles Steffens to Mr. Behnke, the cashier of the Citizens’ Savings Bank, in October, 1908, to charge his account with the payment of the $800 note and interest, operated as payment of the note in question, your verdict will be for the garnishee defendants, Charles and George Steffens.”

The court in similar language stated the converse of the proposition to the effect that, if not so convinced, the verdict should be in plaintiff’s favor.

The question of novation does not appear to have been disposed of by the court, as a matter of law, nor submitted to the jury as an issue of fact. It was the theory of the court that the new agreement, by which the defendants assumed payment of the $300 note, eliminated the $500 note, with all questions relating to it and any defense which might otherwise have been raised against it, and that whether or not the $300 note had been paid when this suit was begun was the only issue. It would unquestionably be a controlling issue if decided in the affirmative. If it had not been paid, but by a tripartite agreement between the coal company, the bank, and the garnishee defendants there arose a novation whereby the old debt represented by the $500 note was released by the coal company and replaced by a new obligation to pay the $300 note to the bank, defendants thereafter were not debtors to the coal company and could not be garnisheed for its debts. We are not able to say from the record before us that, on a retrial of the case, there may not fairly arise from the testimony introduced issues of fact on these questions. But should those issues be decided in the negative, and neither a novation nor payment be established, it is manifest defendants could not be held liable on both notes at the same time, under any theory of the case.

The question must necessarily be tested by conditions as they existed on November 6, 1908, at the time the garnishee summons was served on defendants. The two notes were then in the custody of the bank, uncanceled, and not yet surrendered to the makers. The $300 note was, at all times until paid, the property of the bank and payable to it. The $500 note was, at all times until paid, the property of the coal company and payable to it.

It is plaintiff’s contention that on November 6, 1908, neither note had been paid, and there had been no contract of novation as to the $300 note belonging to the bank. Had there been a novation, the $500 note would have been paid and the coal company released from all liability on the $300 note, for to constitute a novation the defendants must have assumed this note, and the bank, knowing this, consented to accept them in place of the original debtor and discharged the coal company. But plaintiff further contends that by virtue of the new contract between defendants and the coal company, to which the bank was not a party, and by which defendants agreed to pay the coal company’s $300 note held by the bank in consideration of the coal company canceling their $500 note to it, plaintiff can by its garnishment recover from defendants the $300 which they agreed to pay in liquidation of the bank’s note, and which up to the time of commencing this suit they had failed to pay; and that, this right of action being based on the new agreement, defendants are precluded from interposing the defense of fraudulent inducement which might have been interposed to an action on their $500 note.

This plaintiff, seeking by garnishment to reach debts owing by the garnishee defendants to the principal defendant, has no different or greater rights than the principal defendant. Conceding, for purposes of the inquiry, that the facts are as claimed by plaintiff, it becomes material to ascertain the significance of such agreement and the rights of the coal company in that connection. Though it might on first impression seem that a contract by defendants to pay a note of the coal company to the bank was a promise to pay the debt of another, and, not being in writing, was void under the statute of frauds, it was in effect and in fact not primarily a promise to pay the debt of another, but a new promise to pay their own debt in a particular way to another. Had the promise been to the bank, the holder of their creditor’s note, the statute might apply; but when the promisor, being a debtor, for a valid consideration, promises his creditor to satisfy his debt by paying some third party nominated by the promisor’s creditor, the agreement becomes a new, independent undertaking, and not a collateral promise which would be void if resting in parol. Green v. Brookins, 23 Mich. 48 (9 Am. Rep. 74). In this case the consideration to the defendants was twofold. They were not only to be credited in full for payment of their $500 note to the coal company, over which there was a controversy, but were to liquidate the note for $300 at the bank upon which they were indorsers.

Though in many jurisdictions such an agreement gives a right of action to the third party, as in this case the bank against the promisor, a contrary doctrine, following the English rule, obtains in this State (Knights of the Modern Maccabees v. Sharp, 163 Mich. 449, 455 [128 N. W. 786, 33 L. R. A. (N. S.) 780]), and only the coal company would have any rights against defendants under their new agreement. It is not definitely shown at what time defendants were required to perform; but, for the purposes of this inquiry, it may be presumed it was to be forthwith, as the note they were to pay was past due, and it may be assumed they were in default. Their agreement was not to pay the $300, or any other amount, to the coal company, but to the bank in liquidation of a specified note on which they themselves were indorsers and thereby contingently liable for its full value. Can it be said that on such an agreement the coal company could sue and recover for itself from defendants the $300 which by the contract was to be paid to the bank in liquidation of that particular note and leave the note unpaid ? If the coal company could not, the plaintiff cannot do so by garnishment. This note was commercial paper upon which both the coal company’s and defendants’ names appeared, and upon which both were liable. If the defendants defaulted in their agreement to pay it, the coal company could only change the payee in the agreement by itself paying the note and becoming subrogated to the rights of the bank. What it paid to liquidate the note and its necessary costs and expenses in that connection would be its measure of damages in an action against defendants for breach of the contract, otherwise, if an action would lie at all on the law side of the court, the damages would be nominal.

Plaintiff's counsel say in their brief:

“ The only thing certain from the testimony, as to what that agreement provided for, is that the Steffenses were not to be released from their $500 note until the directors of the principal defendant company had been released by the bank from liability as indorsers of its $300 note. * * * Until such release, defendants were liable on the $500 note. * * * ”

If, as claimed by plaintiff, the $300 note was not paid when the garnishee summons was served, the agreement to pay it was executory and defendants, not being released from the note, are liable on it to plaintiff in the same manner they were to the coal company at the date of garnishment. The plaintiff takes only that which the coal company could enforce. The right of recovery being based on the $500 note, it is subject to any defense the signers of the note could interpose against the coal company. That the defendants subsequently paid the $300 note is immaterial. That fact does not affect either plaintiff’s right to recover on the $500 note or defendants’ then existing defenses to the same.

The judgment is therefore reversed, and a new trial granted.

Moors, MoAlvay, Brooke, Kuhn, Stone, Ostrander, and Bird, JJ., concurred.