text:
    WALTERS v. PITTSBURGH & LAKE ANGELINE IRON CO.
    1. Trusts — Resulting Trusts — Disposition oe Trust Funds on Failure on Trust.
    Where the employees of a mining company contributed a certain amount of their earnings to the company, to which the latter added a like amount, to be held by it and disbursed from time to time in the payment of injury and death benefits to the employees while the mine continued In operation, held, that when the mine ceased operations the trust became extinguished, and, there being no agreement or understanding, express or implied, providing for or contemplating the disposal of any balance in the fund, a resulting trust arose in favor of all who at any time contributed to the fund.
    2. Same.
    To permit those who happened to be retained as employees of the company at the time it ceased operations to divide the money in the fund, held, inequitable.
    3. Same.
    That it will be difficult to find all of those entitled to a part of the fund, does not demand application of any other rule.
    4. Same — -Accounting—Interest.
    Where there was testimony to the effect that the company never used any of the money in its business, and that it accounted for all of the interest received from the banking institution with which the fund was deposited since 1909, there being no question as to interest prior tó that date, held, the basis of accounting was correct.
    Appeal from Marquette; Flannigan, J.
    Submitted January 9, 1918.
    (Docket No. 32.)
    Decided June 3, 1918.
    Bill of interpleader by Thomas Walters against the Pittsburgh & Lake Angeline Iron Company and John Berriman and others to determine the title to a trust fund. From the decree rendered, certain defendants appeal.
    Affirmed.

      W. T. Potter, for plaintiff.

      Thomas Clancey (William P. Belden, of counsel), for defendant company.

      F. A. Bell, for other appellees.

      M. J. Kennedy, for appellants.
   Ostrander, C. J.

The court is asked to announce the applicable rule for the distribution of the fund which is now in the hands of the plaintiff, who, because of conflicting claims to the fund, filed a bill of interpleader. Defendants have interpleaded. The interesting and principal question presented in argument by the appellants is answered when the relation of appellants to the fund is determined. If they are surviving members of an association, voluntary or involuntary, which owns the fund which is to be divided, their rights are determined by a principle not controlling if there is no association owner.

In stating the contentions made in the court below, the trial judge said:

_ “The company claims, as does also a group of individual contributors, that the distribution should be made among all who, at any time, contributed to the fund, in proportion to the amount of their several contributions and that, in such distribution, it should receive one-half the fund. It is claimed by another group of individual contributors the distribution should be among all who contributed, except the company, in proportion to the amounts contributed by each; by another group that they are each entitled to participate in the distribution in proportion to the amounts contributed by them respectively but are silent as to whether or not the company should be allowed to participate; and by another group, in-substance, that the club was a voluntary unincorporated association; that by agreement of the members all miners and laborers upon entering the employment of the company automatically became members of the club which membership terminated upon their voluntarily leaving the employment of the company or being discharged thefefrom by the company; that all money paid into the fund by the company or the workmen became the property of the club; that the money paid by the company was on the consideration that all persons injured and the representatives of persons killed while at work in the mine, upon recovering benefit from the club would execute a release of the company from liability for all damages caused by such injury or death; that the money in the fund is the absolute property of the club and held in trust by the company for the club and that the company has no beneficial interest in the fund^ or any part of it; that on September 11, 1912, the ' company elected and did go under the so-called work- j men’s compensation law, that thereupon the mine club came to an end and that the total amount in the fund ; at present belongs to and should be distributed among : persons who were employees of the mine and there- ■ fore members of the club when it terminated Septem- ; ber 11, 1912.” ^

The appellants belong to the group of contestants last described.

The facts admitted or proven, omitting many details, are briefly stated: The fund in question is made up of the residue of contributions which were made by employees of the Pittsburgh & Lake Angeline Iron Company and by the said company for a certain' purpose. The purpose was to furnish money to pay employees (the official, engineering and office forces not included) injured in the service a certain sum and a certain sum when an injury resulted in death. The defendant company undertook to contribute as much . as the aggregate of all contributions of the men, and»; for years the mutual understanding was that each > employee should contribute 50 cents monthly, a sum ; later, on reduced to 25 cents monthly. In practice, this sum was deducted from the pay of the employee, . and this whether he worked one day or longer. The' money was retained by the defendant company and paid out by it, an account thereof being kept by it. Not long after the practice was introduced at defendant’s mine, releases were exacted of the injured men —releases of or waivers of claims for damages growing out of the injury of the employee. A similar institution, if it may be called that, a similar practice, obtained in practically all of the iron mining region of the upper peninsula. Men went from mine to mine, working longer or shorter periods, and at whatever mine they were employed it was understood that they should contribute to a similar fund and be thereupon entitled to the agreed upon benefit. There appears to have been some variations in details, but none in the general plan. There was no organization, no society, no association, formed. It was sometimes called a “club” and the fund spoken of as a “club fund,” but there were no officers, no salaries, no social or other purposes subserved. Arrangements were made for determining who were entitled to receive benefits, including a committee or committees of employees. This, apparently, for a convenience. No period of the duration of the practice was fixed, no' provision or agreement was made for the distribution of any surplus; money.

This practice was instituted at the defendant’s mine in the year 1885. The defendant ceased to operate the mine September 15, 1915. During the period 5,681 employees made some contribution to the fund. At one time the defendant company employed more than 700 men. In September, 1912, it employed about half of that number, and when operations were concluded but few men were on the pay roll. It turned over to plaintiff, for distribution, the sum of $37,333.58. An accounting has increased the fund so that the total is $54,515.53. It is said in the opinion of the learned trial judge,

“That this figure correctly represents the entire fund is conceded all around and the sole question left for solution is how it shall be distributed.”

The decree distributes it to those who at any time contributed to it, in proportion to the contribution. Some 480 of the defendants have appealed.

Broadly stated, it is the contention of appellants in • this court that the fund belongs or belonged to an' association or club, of which they are the surviving;; or remaining members, which was dissolved either upon the taking effect of the workmen’s compensation ; law, so-called (2 Comp. Laws 1915, § 5423 et seq.), at which time contributions to the fund ceased, or at 1 the time the defendant company ceased operations at , the mine. Upon the theory that the proper distribution date was the time when the workmen’s compensation law became effective, they further contend that payments made to employees thereafter injured (and there were such payments made) were improperly disbursed and the amount so paid should be accounted for by the defendant corporation.

This court held, O’Neil v. Iron Co., 63 Mich. 690, that such a fund is a trust fund and the mining company a trustee. The fund on hand is the aggregate of the over-payments made by each contributor — the aggregate of what was paid more than it was actually necessary to pay to accomplish the mutual purpose of contributing at all. There is no claim made that all persons entitled to benefits did not receive them.

It is true, as appellants contend, that the mere fact that the property was held by a trustee does not determine whether there was an association, a club. Nor, for that matter, do other facts relied upon by them in argument, namely, that the plaintiff who filed the bill of interpleader, the defendant company in its answer, first filed, and the other defendants in their answers describe (or agree to the description) the body of contributors as a voluntary, unincorporated association, or refer to it as a club, answer conclusively the question whether there was or is an entity entitled to the trust fund. That must be determined from all the facts. There was associated, mutual, action of individuals, but it did not take the form of creating an organization — a society. Consequences sought to be provided for were those attending the work of the individual, and payments contemplated out of the fund were payments to the individual. There was no idea of a fund owned by all or any of those who contributed; there was the idea of a fund created by individual contributions to be held in trust for the purposes indicated and to be used for no other purposes. There was no notion of contributing more than would be sufficient for the purposes indicated, none of accumulating money or of acquiring property. How much would be required was necessarily uncertain, since the number of accidents and deaths in any period could not be certainly anticipated. The business of the defendant ■ company might assume large proportions, or it might reduce the force of employees at pleasure. In this way, new employees would be added to the number entitled to'benefits or émployees driven to seek work elsewhere. The character of the fund is not changed by the fact that the defendant company might refuse to pay a claimed benefit until a release for damages was furnished. If it was the understanding that such a release should be given, compliance therewith would be necessary before the benefit was due. Frank v. Mining Co., 148 Mich. 637.

There is evidence of some rather confused and confusing ideas of officers of the defendant company while the practice of contributing continued, and of counsel after the contributing period ended and the subject of distribution of the fund was presented. No theory now presented affords reason for discontinuing the making of contributions upon the taking effect of the workmen’s compensation act, if further contributions were needed, and there were, it is admitted, disbursements made which although charitable in nature were not warranted when the purpose for which the fund was established is considered. Questionable disbursements have been repaid to the fund.

In the absence of a formal association of contributors, in an endeavor to fix the status of contributors to the fund with respect thereto, it is said by appellants that the contributions, especially those made by the defendant company, were not gifts, but based upon actual consideration, for which reason a trust in the; residue did not result for' the benefit of the contributor. They rely upon the principle stated in 1 Perry on Trusts and Trustees (6th Ed.), § 151:

“If a conveyance has been made upon a valuable consideration, there can be no resulting trust to the grantor, as the payment of a valuable consideration imports an intention to benefit the grantee in case the trusts declared fail, or are imperfectly declared, or do not take effect for any ether reason.”

See, also, Everitt v. Duss, 197 Fed. 401, s. c. 206 Fed. 590; Schwartz v. Duss, 187 U. S. 8; Baltimore, etc., R. Co. v. Relief Ass’n, 77 Md. 566.

But how can this principle be applied here: Here was no public charitable use, no gifts for a charitable use for the benefit of the public. It is and it must be assumed that contributions were payments made for the advantage of the contributor, whether the contributor was an employee or was the employer. Suppose, for example, that the defendant company had made all of the contributions and upon going out of business claimed all of the residue in the fund. Could! any person, except one whose right to an indemnity * or portion of the fund had accrued, contest its rights to take the residue? 1

The applicable rule was stated by the learned trial judge when he said:

“The fund was deposited with and held by the company upon the express trust to disburse so much thereof as was necessary from time to time, in the payment of injury and death benefits, while the mine continued in operation. When the mine ceased operations the purposes of the trust were discharged and the trust became extinguished. Upon the happening of the event, there being no agreement or understanding, express or implied, providing for or contemplating the disposal of any balance in the fund, a resulting trust arose in favor of all who at any time contributed to the fund.”

It is the general rule that if a trust for a specific purpose fails by the failure of the purpose, the property reverts, to the donor or his heirs. 1 Perry on Trusts and Trustees (6th Ed.), § 159. And in 39 Cyc. p. 110, the rule is stated as follows:

“Where property is conveyed upon an express trust for particular purposes, but, by reason of its being ineffectually or illegally declared, the trust fails, or is otherwise extinguished or terminated, a resulting trust arises as against the trustee, in favor of the grantor, and those claiming under him, in the property conveyed, or in the residue of the property remaining at the time of the failure or extinguishment of the trust, or after the purposes of the trust have been discharged.”

In Coe v. Washington Mills, 149 Mass. 543, the society formed by employees and employer was more formal, there was more evidence of a voluntary association than here, but it was held, the employing corporation being dissolved, that as to money in the fund, created there as here by joint contributions of employees and the employer, a trust resulted for contributors.

It has been many times decided that persons who withdraw from a voluntary association are not entitled to any portion of its property and that those who remain have the right to the property of the association and its use so long as any of the members .remain, and, clearly, withdrawing members ought not to decide the right of those not withdrawing to continue the association. Sommers v. Reynolds, 103 Mich. 307; Schiller Commandery v. Jaennichen, 116 Mich. 129; Detroit Light Guard Band v. Independent Infantry, 134 Mich. 598.

In Hopkins v. Crossley, 132 Mich. 612, 138 Mich. 561, it appeared that an incorporated volunteer fire department preparatory to dissolution attempted to create from its property a trust fund, the income from which should be applied by trustees to certain benevolent uses. The trust was held to be void. 132 Mich.. 612. Thereupon the question of distribution of the fund arose, and it was held that it must be divided among the persons recognized as members at the time the corporation was dissolved and the personal representatives of deceased members.

None of these cases disturbs the obviously equitable doctrine of Coe v. Washington Mills, supra, or the decree appealed from in this case. To permit those who happened to be retained as employees of the defendant company to divide among themselves the money in this fund is manifestly inequitable, the fund having been continued for their benefit until the company ceased to do. business.

It must be held that title to the money contributed was in the defendant company as trustee. The period of trusteeship having ended, it was its duty to distribute what remained (the overpayments), to those who contributed it, in proportion to their contributions. It will be difficult to find all of those entitled to a part of the fund, but this fact does not demand application of any other rule.

With respect to the accounting, two contentions are presented. It is said, first, that the trustee should be charged with» all payments made by it from the fund after September 11, 1912, and, second, it should be charged interest on the trust fund during the time it was in its possession, not deposited and kept as a separate fund, kept with its own funds. It is not pointed out in the brief that money paid from the fund as benefits after September 11, 1912, was paid to any who had not before that date been a contributor to the fund.

The account of the defendant company credits the fund with interest at bank rates on balances, semiannually, from April, 1909, and it appears that it accounts for all interest it ever received since that date. There was, in the beginning, no surplus, and there was the necessity of meeting at all times lawful demands upon the fund so far as the fund could pay them. But some time in 1908 the fund was deposited in a banking institution in Cleveland. It does not appear that the question of interest prior to 1909 was raised in the court below. There is evidence (testimony) to the effect that the defendant company never did, in fact, use any of the money in its business. Trustees are chargeable with interest on trust funds upon the principle that—

“they have received interest, have used the money themselves, or that they have been negligent either in not paying over the money or in not loaning or investing it so as to render it productive.” Calkins v. Bump, 120 Mich. 335.

We find no reason for disturbing the decree, and • it is affirmed, but without costs to either party.

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


source: Caselaw Access Project

author: Ostrander, C. J.

license: Public Domain

text:
    DAVIDSON v. CHINESE REPUBLIC RESTAURANT CO.
    1. Principal and Agent — Master and Servant — Torts op Servant — Scope op Authority.
    It is the general rule that an employer is not liable for wanton, wilful, and malicious acts of an employee not authorized or ratified.
    2. Master and Servant — Assault by Servant — Directed Verdict.
    In an action by a patron of a restaurant against the proprietor for personal injuries received by plaintiff, where the case made by plaintiff’s testimony was that the head waiter, as plaintiff was about to leave defendant’s restaurant, made an unexpected, unprovoked, and wholly indefensible assault upon him, so sudden that there was no opportunity for any one else to interfere, the eourt below should have directed a verdict for defendant.

    3. Same — Trial—Instructions—Evidence.
    In view of the facts as testified to by plaintiff, an instruction by the court that defendant was hound to see that no assault was committed on plaintiff by an employee of the restaurant, was erroneous.
    4. Principal and Agent — Master and Servant — Torts op Agent —Scope op Authority.
    If a patron of a restaurant without provocation strikes a waiter and receives in return a harder blow than a jury may think it was necessary to deliver, the consequences are not for the proprietor and employer to settle, he neither aiding, abetting, nor counseling the .action of the waiter.
    5. Master and Servant — Argument op Counsel — Trial—Curing Error.
    Where plaintiff’s counsel, in his opening statement, referred to the head waiter as a “professional bouncer, as the evidence will show,” and the evidence was limited to two occasions within the past two years, the remark, while prejudicial, in view of the peculiar nature of the case and the fact that a question similar in its character was asked one of plaintiff’s witnesses, will not he considered reversible error, the court having properly cautioned the jury upon the subject.

      Error to Wayne; Mandell, J.
    Submitted January' 23, 1918.
    (Docket No. 151.)
    Decided June 3, 1918.
    Case by Peter Davidson against the Chinese Republic Restaurant Company for an assault and battery. Judgment for plaintiff. Defendant brings error.
    Reversed.

      Mittis, Griffin, Seely & Streeter, for appellant.

      Wilkinson, Routier & Hinkley, for appellee.

      See notes in 69 L. R. A. 642; 12 L. R. A. (N. S.) 1155.

   Ostrander, C. J.

If the testimony of the plaintiff is believed, he was wantonly and brutally assaulted and beaten by the head waiter of the defendant with an instrument suspected to have been a “billy,” rather than described and known to have been one, while leaving the restaurant where, with his wife and some friends, he had been served with refreshment. The bill had been paid, not by plaintiff, but by a companion, and nothing remained to be done but to leave, and plaintiff and his party were leaving. No one else connected with the restaurant, apparently, advised, instigated or approved of the conduct of the head waiter, whose action was unexpected, unprovoked and wholly indefensible, and so sudden that there was no opportunity for any one else to interfere. A peremptory instruction was asked for by defendant when plaintiff rested his case, and was refused.

If defendant’s testimony is believed, plaintiff misbehaved himself in a room in which were patrons of the restaurant, ladies among them, talked boisterously, used profane language, and, being requested to leave the place, was taking his leave accompanied to the door — a very short distance — by the head waiter, whom, without provocation, he struck in the face, who retaliated by striking him with a piece of wood used to fasten back the entrance door.

The declaration, which contains a single count, presents no tender of an issue upon the theory that defendant employed improper or vicious servants, and does not ■ suggest that too much force was used in ejecting plaintiff from the restaurant. The testimony presents no issue upon either subject. Although the notice given with the plea sets out as a possible defense that plaintiff misbehaved, requiring his removal, no one claims that he was being forcibly ejected when the alleged assault occurred.

The jury assessed plaintiff’s damages at $930, and judgment was entered on the verdict. A new trial and a judgment non obstante were refused.

In 42 assignments of error, 15 of which are based-upon the refusal of the court to charge the jury as requested, the defendant complains of the action and rulings of the trial court, the most important question being whether the court rightly advised the jury how to determine whether the proprietor of the restaurant was responsible for the consequences of the act of the waiter. Errors are assigned, also, upon rulings admitting and rejecting testimony, and upon alleged prejudicial remarks of counsel in the presence of the jury.

Defendant says the plaintiff, when he rested, had made a case on all fours with the case of plaintiff in Ducre v. Lumber Co., 168 Mich. 49, and that, conforming to the rule of that case, the court should have directed a verdict for defendant. Plaintiff insists that the plaintiff in that case was not upon the defendant’s premises by invitation, a fact mentioned in the opinion, which fact distinguishes the cases, and that, in any event, the relation of a restaurant keeper to his patrons is similar to that of an innkeeper to guests and of a common carrier to passengers — a relation which imposes a duty to protect patrons as well as the duty not to injure them — out of which relation may arise liability for the acts of a servant who wilfully or otherwise injures guests. Upon this subject the jury was advised by the court in different portions of the charge as follows:

“There is another matter that the defendant urges. The defendant says that if this assault was committed in the manner complained of by the plaintiff nevertheless no recovery could be had against the defendant because the defendant could not be liable under a principle of law that exists that one would be responsible only under a principle known as respondeat superior. If Miller was acting on his own account, by reason of any malice or hatred or anything of that kind and without justification made an assault upon the plaintiff then the defendant would not be responsible because that would be something outside- of the scope of Miller’s employment. Therefore, gentlemen of the jury, one is_ responsible only for the conduct of one who he retains or hires as long as that conduct is in and about the employment for which the person was engaged. * * *
“I charge you, gentlemen of the jury, that one conducting a restaurant as defendant in this case, in which he depended upon public patronage thereby invites persons into its place of business to patronize it and it is the duty of a restaurant keeper and his servants to treat those who patronize his place of business with civility and protect them from unwarranted assault by the employees of such place. And in this connection if you find while plaintiff was lawfully in the restaurant of the defendant and leaving there and before he could get out of the door the head waiter assaulted plaintiff without legal justification therefor and the manager and the cashier of the defendant as the evidence shows was present and used no effort to prevent the assault — the rest I will leave out.
“I charge you that while one such as the plaintiff in this case enters a restaurant open for the entertainment of the public the defendant is bound to see that he is properly protected both in entering and leaving the said public place of entertainment and the proprietor is bound to see that he is properly protected and that no assault is committed on his person by any of its employees. I charge you that the defendant in this case being the operator of a restaurant, the plaintiff was in the defendant’s restaurant by virtue of the general invitation which — I think I have said enough on that. * * *
“I charge you that it is the law of this State that an employer is not liable for wanton, wilful and intentional assault committed by his servants in wanton violation of the law even though the said agent may at the time be in the employ of the master and about his premises, and to render the master responsible the injury must arise in the course of the execution of some service lawful in itself but negligently or unskilfully performed. For a wanton violation of law by a servant, although occupied about the business of an employer such a servant is alone answerable. The general proposition that a person shall be answerable for any injuries which arise in carrying into execution that which he has employed another to do seems to be too large. His liability depends upon the nature of the employment, the occupation of a person employed and the control or authority of the employer over the person employed, as well as over the manner of the execution of the employment and also upon the occasion and nature of the injury.
“I charge you that there are many cases of wilful misconduct for which an employer will not be liable because in such cases the wrongdoer may be regarded as having renounced his service to that extent. I further charge you that if the servant steps aside from his master’s business for however short a time, to do an act not connected with such business, the relation of master and servant for the time being is suspended. If you find in this case that Miller wantonly, wilfully and intentionally struck Davidson upon the head as described by said Davidson he would not be acting within the scope of his master’s authority and the Chinese Republic Restaurant Company would not be liable.”

Counsel for appellee say they have—

“cited to the court certain cases which are on all fours with the case at bar and others involving assaults where the facts are perhaps not the same, but the rule of law therein announced is no different than that for which we contend.”

The cases cited have been examined. In citing them, but one, namely, Goodwin v. Greenwood, 16 Okla. 489, is said to be on all fours with the case at bar. The opinion in that case lays down no new doctrine, but applies the principles stated by this court in Ducre v. Lumber Co., and in other cases. Among other things, it is said:

“The instructions as a whole proceed upon the theory that to fix a liability upon a restaurant keeper because of an assault upon a patron by an employee, the employee. must be acting within the scope of his employment and the assault must be found to be unjustifiable. We are not able to distinguish the liability of a restaurant keeper from that of any other master for liability for the tortious acts of his servants committed within the real or apparent scope of the duties entrusted to him, and to the extent that Rahmel v. Lehndorff, 142 Cal. 681 (76 Pac. 659), is at variance with this proposition we do'not agree with that case. The facts in that case, however, are not shown to be analogous to the facts in the case at bar. In that case it appeared from the only statement of facts made that ‘the plaintiff was a guest in the defendant’s, hotel and while seated at the dinner table was assaulted and beaten by a dining room waiter.’ There is nothing in that record to show how the difficulty arose or what the provocation for the assault was, or who provoked it, and the court in that case states the general law of master and servant to be that the master is not liable for the malicious torts of the servant committed outside the scope of his employment.”

Appellee cites, also, Clancy v. Barker, 71 Neb. 83, 91, a case in which it was helcl that the tortious act of a servant of a hotel keeper injuring a guest constitutes a breach of the implied contract between the guest and the proprietor of the hotel for the entertainment of the guest, citing some cases in which, it is said, the duties of a hotel keeper to his guests are regarded as similar to the common law obligation of a common carrier to his passengers. One of the cases cited in the opinion is Rommel v. Schambacher, 120 Pa. St. 579, a case in which it appeared that plaintiff entered defendant’s saloon, became, intoxicated, and while in that condition, and in full view of defendant, an intoxicated companion attached a piece of burning paper to the plaintiff’s clothing, resulting in severe injury to v plaintiff. In Clancy v. Barker, 131 Fed. 161 (66 C. C. A. 469), in which the same facts were considered as were before the court in the Nebraska case, an opposed conclusion is reached, in an application of the general rule of the master’s liability for torts of his servants. In Chase v. Knabel, 46 Wash. 484 (90 Pac. 642, 12 L. R. A. [N. S.] 1155), it was held that the proprietor of a restaurant is fiable for unnecessary violence used by his servants in ejecting a patron, if they were acting within the scope of their duty, but not if they were actuated by personal ill will, jealousy, hatred, or other ill feelings.

It is unnecessary to state here the relation of the proprietor of an inn to his guests, because a restaurant is not an inn. One eats, perhaps drinks, in a restaurant, pays for what is served, and goes away. The business resembles more nearly that of the storekeeper who sells wares to the public, which is invited to come and inspect and buy or decline to buy what is offered for sale. The common carrier of passengers undertakes to transport the person of the passenger to an agreed upon destination, using the highest degree of care. Interference with the person of the passenger may amount to a tort. It is also á breach of the contract of carriage. In Johnson v. Railway, 130 Mich. 453, this court said:

“The principal contention of the defendant is that the company is not liable for this act of the conductor, because not within the scope of his authority. We think the rule relieving the master from liability for a malicious injury inflicted by his servant when not acting within the scope of his employment does not apply between a common carrier of passengers and a passenger, and that it is the duty of the carrier to protect its passengers against injury from the wilful misconduct of its servants while performing the contract to carry.”

In the opinion in Ducre v. Lumber Co., a number of the decisions of this court are cited, and some of them reviewed and applied. In that case, liability of the master for wanton and unprovoked assault made by its salesman clerk upon plaintiff was denied^ under an application of the general rule that an employer is not liable for wanton, wilful and malicious acts of an employee not authorized or ratified. Upon this record, and the case made by plaintiff’s testimony, it is the applicable rule, and, applying it, the court should have directed, a verdict for defendant, when plaintiff rested his case. Perhaps it is the rule which the trial court proposed to lay down in the charge, which of course must be read as a whole and with reference to the testimony adduced; but when the portions of the charge above set out are considered and read with the remainder of the charge, the charge as a whole appears to be inconsistent, and this is so whether the theory of the plaintiff or that of the defendant is regarded. The rule stated in the paragraph of the charge last above quoted, applied to the plaintiff’s case when he rested, required a directed verdict for defendant. There was an assault — the plaintiff was struck — by the waiter^ an employee of defendant. The instruction complained of, the third paragraph above quoted/ broadly advises the jury that the defendant was bound to see that no assault was committed on plaintiff by an employee of the restaurant. The jury may have accepted the facts as testified to by plaintiff, and, if they applied this instruction to their finding, it would seem that a verdict for plaintiff was inevitable.

The cause must go down for a new trial, in view of which a portion of the charge, addressed to defendant’s theory, and complained about, is noticed. The jury was instructed as follows:

“I charge you, gentlemen of the jury, that should you find from the evidence that the plaintiff struck or made a pass to strike Leo Miller, the defendant’s^ servant, and he did actually strike the said Leo Miller, the defendant’s servant would be entitled to retaliate with a blow, using no more force in such blow than was necessary to repel any further attack being made by plaintiff on the said defendant’s servant, and should you find from the evidence that plaintiff did strike the defendant’s servant and that the defendant’s servant used more force than was necessary, under all the circumstances, then your vedict will be for the plaintiff. In addition to that, you will have to find that in what was done the defendant’s servant acted in the scope of his employment, or for and on behalf of his employer, or in his interest.”

If a patron of a restaurant without provocation strikes a waiter, and receives in return a harder blow than a jury may think it was necessary to deliver, the consequences are not for the proprietor and employer to settle, he neither aiding, abetting, nor counseling the action of the waiter. Applying the particular instruction to the testimony, it referred to a blow claimed by defendant to have been struck by plaintiff at the entrance of the restaurant when he was leaving it. Plaintiff denies having struck or offered to strike the waiter. If he struck him, then in any view of the testimony, whether for plaintiff or for defendant, it was an unprovoked assault, the consequences of resenting which, by the waiter, using such force as reasonably seemed to him to be necessary, cannot be charged to the employer, whether the waiter in accompanying plaintiff to the entrance was or was not acting within the scope of his employment. There is no testimony tending to prove that the plaintiff proposed to remain in the restaurant, whether he was or was not asked to leave it, nor to prove that the waiter was using force to remove him. There is testimony, for defendant, that the waiter asked him to leave and that he accompanied plaintiff to the entrance, having his hand upon plaintiff’s arm. Upon the testimony submitted to the jury,.either the defendant’s waiter, at the entrance door, pushed and struck the plaintiff, without provocation, or the blow he struck was in retaliation for an unprovoked blow given the waiter by the plaintiff. And although there is testimony, disputed by plaintiff, tending to prove that what the waiter said in asking plaintiff to leave and what he did in accompanying him to the entrance were advised or assented to by the manager, there is none tending to prove that the blow delivered by the waiter was advised or assented to or was apprehended by the manager.

Before plaintiff had rested, he called a witness by whom he sought to prove that upon previous occasions assaults had been threatened or made by employees of the restaurant upon patrons. Upon objection, the testimony was excluded. Its purpose was announced by counsel for plaintiff, who said to the court:

“There may be a motion for the direction of a verdict on the ground .that there is no showing of any assault with connivance, and it is competent to show that this is not a single occurrence but a common occurrence.”

Later on, the jury having withdrawn, the witness was again introduced and plaintiff offered to prove that other people had been assaulted in practically the same way that plaintiff claimed to have been assaulted, and that “billies” had been seen in the hands of different waiters at that restaurant for “a period of the last two years; that they were unprovoked assaults.” Something of the sort was indicated in the opening statement of counsel for plaintiff who, in describing what it was intended to prove, spoke of the particular waiter, Miller, as a professional. bouncer “as the evidence will show.” The offer to prove was confined to two occasions “within the past two years.” On one occasion, the witness and another had'ordered refreshment at about 1:30 a. m., and, the delay in serving it being considerable, started to go out before being served. The man at the desk inquired of them whether they intended to wait and eat the chop suey they had ordered and was answered “no,” whether they intended to pay for it and was answered “no.” That thereupon one Chinaman engaged the witness in conversation and another took from the cigar case a “billy” and from behind attempted to strike the witness upon the head, the blow falling on his shoulder. Upon the other occasion, at a later time, the same witness was in the restaurant and some boys who were at another table were served with refreshments. A dispute arose between them and the Chinaman, and the boys refused to pay the check. Three Chinamen, with their “billies,” were demanding payment when the witness interfered. The offer to prove contained, also, the following:

“We offer testimony at this time to show that the manager of this restaurant repeatedly permitted and allowed their employees up there to carry billies and knew that they had them.”

The offer was excludéd. Appellant complains about the opening statement which I have referred to. It is said in appellee’s brief:

“We were of the opinion that the commission of assaults upon other patrons of the restaurant, with the same sort of instrument, in the-presence of the operators of this restaurant and officers of the'corporation, was clearly competent as the establishment of the aiding and abetting of such unlawful acts.”

It may be doubted if the offered testimony tended in any way to prove that the waiter Miller was a “professional bouncer.” The remark was prejudicial, especially in view of the peculiar nature of the case and the fact that a question similar in its character was asked one of plaintiff’s witnesses. But the court properly cautioned the jury upon the subject and, assuming the good faith of counsel, this alleged error, alone, will not be considered reversible error.

Other matters discussed by appellant are not likely to arise upon a new trial, and therefore will not be considered.

The judgment is reversed, with costs to appellant, and a new trial is granted.

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


text:
    WOODHALL v. IRWIN.
    Master and Servant — Workmen’s Compensation Law — Independent Contractor. '
    Where decedent was engaged by defendant, a general contractor, to do a job of plaster patching for a customer, decedent undertaking to do everything connected therewith, to furnish the help and materials, to do and complete the job according to his own methods, he keeping an account of the materials used and the time of the men whom he employed and paid, the relation of master and servant did not exist so as to render defendant liable, under the workmen’s compensation law, for the death of decedent, caused by a fall from a ladder while doing the work.

      See notes in L. R. A. 1916A, 28; L. R. A. 1917D, 80.

      Certiorari to Industrial Accident Board.
    Submitted January 24, 1918.
    (Docket No. 66.)
    Decided June 3, 1918.
    Minnie Woodhall presented her claim for compensation against John B. Irwin for the accidental death of her husband in defendant’s employ. From an order awarding compensation, defendant and the Southern Surety Company, insurer, bring certiorari.
    Reversed, and award vacated.

      Sherman T. Handy, for appellants.

      M. M. Larmonth, for appellee.
   Ostrander, C. J.

Told in outline, the story in the record is a very ordinary and simple one. The owner of a store building wanted some repairs made to the front of it. What were needed to make the repairs were some mortar, a ladder, and a man with a trowel and bucket who knew how to do the work. It was a two or three or four-dollar job. The owner called up a general building and repairing contractor, Mr. Irwin, one of three contractors whom he had at times engaged to repair his buildings, and asked him to take care of the matter — to do the work. After some delay, Mr. Irwin sent Alfred Woodhall, a plasterer, to do the work. On June 7, 1916, Mr. Woodhall, using a ladder belonging to Mr. Irwin, undertook to make the repairs. He, assisted by Mr. Irwin, who did not remain, erected the ladder, carried sorne mortar up in a pail or bucket, fell from the ladder while at work, and sustained injuries which resulted in his death. No one saw him immediately before — at the instant before — he fell. The consequence to Mr. Irwin is not simple. It is a finding and award of the industrial accident board which requires him to pay to the widow of Mr. Woodhall $3,000 — $10 a week for 300 weeks— an award which he and his surety, plaintiffs in certiorari, seek to have set aside.

From the testimony produced it is made to appear that Mr. Trempe, in charge of the particular building, frequently employed Mr. Irwin, the contractor, to estimate fire losses, to repair buildings. It was the rule when a job of repairing was involved for him to tell Mr. Irwin about- it — tell him to do the work. In such cases Mr. Irwin charged him the cost of material and ten per cent, for supervision, employing whomsoever he pleased to do the work. In such cases, Mr. Irwin called upon Mr. Woodhall, if the work was in his line as plasterer, to do the work. Woodhall employed whomsoever he pleased to help him, if help was necessary, bought his material, charged 60 cents an hour for his own time and charged also the sum he paid for help if he employed help. Woodhall rendered his bill to Irwin, who paid it. A considerable number of such accounts appear in the record, made out in the form, “Mr. J. B. Irwin,, To A. Woodhall, Dr., containing items for material and for work. Sometimes, for a job of “patching” no time is specified, as for example:

“Mar. 20 — Patching, plastering at McPike’s ......$0.75
Mrs. Haerle’s .......................... 3.75
Mar. 22 — Hickler’s .............................. 2.00”

There is one statement like this:

“April 11 — Patching, Cor. Kimball and Dawson St.................... $5.60
19 — Patching, Cor. Kimball and Dawson St..................... 5.60
12 — At 717 Peck St...................... 1.50
19 — At 610 South St..................... 4.00
20 — At 409 Portage Ave. W.—
12 sks. wood fibre, at .45, $5.40; 8 bours, plasterer, at .60, $4.80; 8 brs. laborer, at .25, $2.00..........$12.20
$25.70”

Another example may be given:

“Feb. 11, 1915.
Plastering at 802 Brown St.—
10 sacks wood fibre, at $.40......$4.00
5 bours plasterer .............. 3.00
5 bours laborer................ 1.50
- $8.50
5 bours laborer tending fires... 1.50
■ $10.00”

Mr. Woodhall kept books of account. He kept an account of material and of the time of men whom he employed. He paid the men whom he employed to help him. For some time before he was killed, Mr. Woodhall, although occasionally taking a piece of work for a stated sum, usually, nearly always, charged for his time by the hour. He worked for others than Mr. Irwin. One general contractor testified that he had done all of his plastering for a period of about seven years, that he paid him by the hour, Woodhall keeping account of his time, Woodhall ordering material for the job, the bills for which were, however, rendered to the contractor. He was asked:

“Q. Mr. Woodhall, when he completed the work, would make out a bill for the expenses he had incurred in doing that work and his time at so much an hour, and you would pay it if it was correct, just the, same as you would a plumber’s bill or any one else who had come in to do some work for you? You simply told Mr. Woodhall what kind of work you wanted done and left it to him?
“A. Yes.”

He also testified:

“Well, if we wanted a job of plastering done we would call him in and we would ask him to get his men and come and do a job of plastering and get what materials were required and when he got through the job he would simply bring us any statements of his time and we would get the bill of materials from the supply house, Mr. Kemp usually, and that is the way our work was always done.
“Q. And who paid, that is, who turned the money to the supply house?
“A. We did.
“Q. You did, you made the check direct to Kemp himself, if dealing with Kemp?
“A. Yes.
“Q. And how about the others, the laborers?
“A. We turned it over to Mr. Woodhall.
“Q. Who kept the time of Mr. Woodhall and those working with him?
“A. He kept it himself. * * *
“Q. How did you regard him, as a contractor, jobber, employee, or what?
“Mr. Handy: I object to that.
“A. He was not a contractor.
“Q. Was he the foreman on that work?
“A. Yes, he had charge of it.
“Q. And what control did you have over that work?
“A. We had absolute control over it.
“Q. Could you direct a change?
“A. Certainly.
“Q. Could you direct more or less plastering.
“A. Yes.
“Q. Could you discharge him whenever you wanted to?
“A. Yes.
“Q. Or any man he had working?
“A. Yes.
“Q. You absolutely controlled them?
“A. Yes.
“Q. During all those years that he worked for you?
“A. Yes.
“Q. Do you carry industrial insurance?
“A. We carry our own insurance.
“Q. Was Woodhall and these men on your list of insured?
“A. Yes.”

On cross-examination this witness testified:

“Q. In other words, when you have plastering to do you go to Mr. Woodhall or some other competent plasterer to do the work and give him instructions of what you want done, just the same as you would go to a plumber?
“A. Yes.
“Q. Now, if Mr. Woodhall was not on your pay roll how do you figure that you carried him in your insurance?
“A. Simply because we paid him so much an hour and we always charged compensation to the man whom we did the work for.”

There is no occasion to set out more of the testimony. There is and can be no question about the facts, which in substance and as. affecting the point under discussion do not differ from those appearing in the case of Holbrook v. Hotel Co., 200 Mich. 597. In that case claimant’s decedent operated very much as Mr. Woodhall did, but dealt directly with the owner of the property and not with a general contractor. In that case, as. in this, decision of the board was rested, in part at least, upon Tuttle v. Lumber Co., 192 Mich. 385, attention being called to the following language employed by the court:

“We are of the opinion that the test of the relationship is the right to control. It is not the fact of actual interference with the control, but the right to interfere, that makes the difference between an independent contractor and a servant or agent.”

It seems to be too clear to require argument that the relation of Irwin and Woodhall was not the relation of master and servant. Nothing that Woodhall could have done would be imputed to Irwin. Gall v. Journal Co., 191 Mich. 405. Impliedly, the contract was that Woodhall would do the job, selecting and furnishing proper material therefor, in a workmanlike manner. The reserved right of interference with the actions of á servant which the master possesses is negatived by all of the testimony touching the agreement between them. What one or the other party to such a contract, the contract being established, says he could have done, his conclusion about his rights in the premises, does not affect the question. The consequences to Irwin, Woodhall having entered upon performance of his contract, if Irwin refused to let him complete it, might be negligible so far as injury and resulting damage to Woodhall were concerned. The principle remains. A general contractor, erecting a building, in a sense controls a subcontractor to whom he has, for example, sublet the job of plumbing. In a particular case he might be excused for compelling him to stop the work and to vacate the premises, not, however, in the exercise of the reserved right of interference with the servant’s actions which the master possesses. It is evident that when Woodhall had agreed with Irwin to do a job of patching such as this-was, he undertook to do everything connected therewith, to furnish help and materials; to do and complete a good job according to his own method. He could charge for it in terms of hours of labor and cost of material or in terms of a charge for the completed work. But Woodhall was his own master, accepting jobs of work to be done in his own way, or refusing them, as. he pleased. He, and not Irwin, or any other man, determined the necessary time to be employed, the necessary help required, the quantity, etc., of material to be used, the way of doing the work, the terms in which his account should be rendered.

The award must be vacated, and with costs to plaintiffs in certiorari.

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


text:
    STONE-ORDEAN-WELLS CO. v. NEW ENGLAND PIE CO.
    1. Corporations — Principal and Agent — Officers—Contracts— Presumptions.
    In the absence of any provision to the' contrary contained in the charter of a corporation, it will be presumed that its president, secretary, and treasurer have the authority to make all necessary contracts in transacting the ordinary business of the corporation within the legitimate scope, object, and purposes of its organization.

    2. Same — Ultra Vires Contracts — Principal and Surety.
    An undertaking by a corporation to repurchase all of a certain quantity of prepared flour left on plaintiff’s hands after 60 days, sold to it by another corporation, certain ' stockholders of which were officers of defendant, was ultra vires and void; the only consideration being to promote the business of another. ' |
    3. Same — Estoppel.
    In a suit to enforce said contract, defer40 ■"'vf profited from the transaction, nor dc the stockholders had knowledge of and acquiesced in, or did not complain about, the unauthorized acts of the officers. from urging the defense of ultra

    Error to Wayne; Brown, J., presiding.
    Submitted January 24, 1918.
    (Docket No. 132.)
    Decided June 3, 1918.
    Assumpsit by the Stone-Ordean-Wells Company against the New England Pie Company on a contract for the repurchase of unsold goods. Judgment for plaintiff on a directed verdict. Defendant brings error.
    Reversed.

      Berger & Milburn (Monaghan, Monaghan, O’Brien & Crowley, of counsel), for appellant.

      Beaumont, Smith & Harris, for appellee._

      The declaration sets out, and alleges a breach of, a written contract, reading:
    “New England Pie Company,
    “Strictly Home Made Pies,
    “Fourth & Beech Streets.
    “Detroit, Michigan, July 2,1914.
    “Stone-Ordean-Wells Company,
    “Duluth, Minn.

      “Gentlemen: On May 27, 1914, you ordered 2,250 dozen Ovengold from Allmade Bakeries, Inc. The order was made by you subject to an agreement satisfactory to you to take back all of the Ovengold which you had unsold 60 days after date of arrival of the car at Duluth. The undersigned, New England Pie Company, is interested in the sale of Ovengold to you, and in consideration of that sale, and for the purpose of complying with the agreement therein contained with reference to the taking back of the unsold portion of Ovengold, the New England Pie Company agrees to pay you at the rate of $2.25 per dozen for all of Ovengold shipped to you under this order, which you have on hand in your warehouse unsold on August 10, 1914, being 60 days, after the arrival of the shipment of the same at Duluth.
    “All of such Ovengold in your hands at the close of business on August 19th, will be our property, and we will later give you shipping directions for the same, and upon receipt of invoice from you showing the amount held by you for us, will send you check at the rate of $2.25 per dozen for the same.
    “Yours truly,
    “New England Pie Company,
    “By H. J. Boerth, Sec. & Treas.
    “H. H. Jones, Vice-Pres.
    “A. J. Potter, Member Board.”
    —and contains, also the common counts in assumpsit. The plea is the general issue, with notice that defendant would prove (1) that the instrument purporting to be and relied upon as a contract, set out in the declaration, is invalid because ultra vires the scope and power of defendant and that the action of the persons executing it was “without authority in law, contrary to the statute,” and amounts to a legal fraud upon the stockholders of defendant, (2) that it was without consideration and for that reason illegal and void, (3) that it is—
    “invalid and without binding effect in that so far as the defendant ever promised and became liable, as set forth in the plaintiff’s declaration, it was afterwards absolved from such a promise and released from such liability by the plaintiff by a practical waiver thereof due to the fact that if there was any liability at all, same became fixed on August 10, 1914, but the plaintiff undertook to adjust its difficulties with the All-made Bakeries, Inc., of Detroit, Michigan, by correspondence and received a reply to many proposals and counter-proposals of adjustment of its claims, and did not until the first day of December, 1914, make any demand of any kind upon this defendant for payment of the amount claimed to be due, or tender delivery of the merchandise on hand as of August 10, 1914, or make any other effort, tender or demand upon this defendant in accordance with said alleged contract. Wherefore, by reason of the granting of said extension of time, the plaintiff waives its right to insist upon performance of said contract by this defendant.”
    Defendant filed an affidavit denominated an affidavit denying execution of the contract. A trial resulted in a directed verdict for the plaintiff, and a judgment thereon, no question of fact being presented, and counsel for both parties having requested a peremptory instruction. A motion for a new trial was refused. Defendant, appellant, alleges error in directing a verdict for plaintiff and in refusing to direct one for defendant, in refusing a new trial, in refusing certain testimony offered by defendant, and in striking out on plaintiff’s motion certain testimony given by defendant’s witness Boerth.
    The substance and effect of the testimony is: Plaintiff is a corporation engaged in selling groceries at’ wholesale at Duluth, Minnesota. Defendant is a Michigan corporation, with its principal place of business in Detroit, Michigan, and is. engaged in baking and selling pies. Its corporate business as stated in its articles of association is:
    “The baking, manufacture • of, and dealing in and selling of pies of all kinds; and also the baking, manuI facture of, and dealing in and selling of all other kinds \pastry — bread, cakes, etc., both at wholesale and retail.”
    On July 2,1914, its authorized capital was $100,000, stock representing $83,000 had been issued, and of this Mr. Boerth held $38,000, Mr. Jones $2,000, Mr. Potter $2,000. The Allmade Bakeries, incorporated, is a Michigan corporation, in which Mr. Boerth and Mr. Jones were interested, they holding, respectively, 251 and 180 shares of 721 issued shares of its capital stock, which they acquired in consideration of a certain formula for .making “Ovengold,” which they turned over to the company. The company (its articles of association do not appear in the record, but certain facts, were given in testimony) was organized to manufacture prepared flour for making cakes, containing flour, shortening, baking powder, eggs, and milk. Two kinds of prepared flour were made by it, one for biscuits and one for cake. The one prepared for making cake is called Ovengold. It was packed and sold in cartons weighing one pound. All the housewife had to do was to mix it with water and-bake it. In the year 1914 the products of the Allmade Bakeries were being introduced to the trade.and to the public, by a campaign of advertising and otherwise. In May, 1914, representatives, of this company called upon the buyer for plaintiff at D.uluth, expressing the desire to have plaintiff act as distributing medium or agent for Ovengold. After certain negotiations, plaintiff gave an order in the following form:

      “Allmade Bakeries, Inc., Detroit, Michigan,
    “1254-60 Twelfth Street.
    “Date — 5/27/14.
    “Ship at once to Stone-Ordean-Wells Company,
    “Duluth, Minn.
    “Via Northern Navigation Company, from Detroit,
    “Mich.
    “2250 dozen Ovengold at 2.25.
    “The New England Pie Co., Detroit, Mich., agree to purchase at $2.25 per doz. any of this order on hand 60 days after date of arrival.
    “J. M. Van Riper.
    “Terms: Less 15% — 2% Ten days.
    “These goods are not consigned. No conditions except when written on their order apply to the terms of fJxxS SH/1.6
    “Buyer S. O. W. Co. O. Kincaid, J. M. Van Riper, Salesman.” ,
    Pursuant thereto, the Ovengold was shipped, the invoice, produced by plaintiff, reading:
    “Allmade Bakeries, Inc.
    “1256-70 Twelfth Street,
    “Detroit, Michigan.
    “June 1, 1914.
    “Sold to — Stone-Ordean-Wells Co.,
    “Duluth, Minn. Terms: Net, 30 days
    “ 2% 10 days
    “Shipped via-
    “2250 Dozen Ovengold at $2.25.. $5062.50
    “Less 15%.. 759.37
    $4303.13
    “Less Soo Pro 972 — 6/11/14.. 98.00
    $4205.13
    “Endorsed on the face of the above are — Stamped on — ‘Duluth, Minn. Paid. Jul 13, 1914, Stone-OrdeanWells Co.’; ‘Posted, Jun. 22, 1914’ and ‘Jun. 4 Rec’d.’ In Pencil — ‘Frt. ded.’; ‘829-6/11/14’ and ‘Don’t Pay.’ ”
    The notation “829-6/11/14”' was made by a clerk and it refers to the invoice number and date of arrival of car. The notation “Jun. 4 Rec’d” means date when invoice was received by mail. The deduction of $98 was made by clerk to cover freight charges, the goods having been sold f. o. b. Duluth.
    The goods arrived at Duluth June 11, 1914. Payment was withheld until plaintiff received from defendant the written promise hereinbefore set out. Then the amount called for by the invoice, $3,212.33, was paid by plaintiff to Allmade Bakeries, Inc.
    The product was not all of it sold, so that on August 10, 1914, it had on hand, unsold, 1,433 of the 2,250 dozen packages. The unsold goods were later, and after certain correspondence, stored with the Northern Cold Storage & Warehouse Company at Duluth, and remain there. Not all of the correspondence of the parties after August 10, 1914, appears in the record. Some of it does, the first letter being one addressed to defendant by plaintiff, enclosing one written by plaintiff to Allmade Bakeries, Inc., both dated October 26, 1914. Both letters refer to one of date October 7 from Allmade Bakeries, Inc., to plaintiff. The significance attributed by defendant to the correspondence is, principally, that some of the letters refer to its undertaking as a guaranty and that it evidences an effort on the part of plaintiff to adjust the matter with the Allmade Bakeries, Inc., before looking to defendant, and that it appears from the correspondence that no demand was made upon defendant by plaintiff until December 1, 1914, upon which date it enclosed to them in a letter an invoice for the unsold Ovengold at $2.25 per dozen, the amount claimed being $3,224.75. The letter of October 26th written to defendant by the plaintiff, contains the following:
    “Would be glad to hear from you as to your position in this matter. As to whether or not we shall turn to you directly in this, or shall work first through the Allmade Bakeries for the recovery of our moneys invested in these goods. We dislike entering 'nto suit in this matter, but if they continue to handle the matter as they intend to in their letter of the 7th, or in accordance with their attitude, we shall have but one thing to do, and that would be to enter suit in this matter both against your good selves and the Allmade Bakeries.
    “We are advising you of our position in this matter, and beg to remain.”
    On October 30/ plaintiff again wrote to defendant as follows:
    “New England Pie Company/
    “Detroit, Michigan.
    “Attention — Mr. H. J. Boerth.

      “Dear Sir: Will you please note the attached copy of letter Mr. Boerth, which bears again upon the subject of the invoice of the Allmade Bakeries to the Stone-Ordeans-Wells Company, all of which is protested” (protected) “by guaranty of the New England Pie Company, which correspondence we desire you to. have before you to form a copy of said correspondence?
    “We wish to ask you to personally see that this matter is given the consideration that it deserves and which we are entitled to under the New England Pie Company’s guaranty, as well as the guaranty of the Allmade Bakeries, Incorporated.”
    Again, on November 9th, plaintiff wrote to defendant:
    “New England Pie Company,
    “Detroit, Michigan.

      “Gentlemen.: That you may he. ad.vised, we attach herewith copy of our letter to the» Allmade Bakeries, Incorporated.”
    It does not appear that defendant made any reply, and on December 1st, plaintiff sent to it the letter already referred to, reading:
    “New England Pie Company,
    “Fourth and Beech Streets,
    “Detroit, Michigan.

      “Gentlemen: We have sent you from time to time, ■copies of such correspondence as we have had with the Allmade Bakeries, Incorporated, concerning the Ovengold flour on hand, which was covered by the guaranty in your letter of July 2, 1914.
    “We have been unable to work out a satisfactory arrangement with the Allmade Bakeries, Incorporated, closing this account.
    “We now have on hand 1,433 dozen of Ovengold . which is contained in 1,424 cases, one case being a repacked case containing ten dozen. Invoice for this is enclosed.
    “On your agreement you ought to send us check at $2.25 per dozen for the amount in our hands on receipt of this invoice. Please send us your check at once and give us shipping instructions.”
    No accommodation of the matter resulted, and this suit was brought.
    Appellant says that the court was in error:
    “1. In failing and refusing to grant defendant’s motion to direct a verdict in its favor, and in granting plaintiff’s motion, on the ground that the contract was one of guaranty and_ totally without consideration, and —therefore ultra vires, illegal, and void.
    “2. In failing and refusing to grant the defendant’s motion for new trial, because the verdict and judgment, entered thereon, are against the great weight of evidence and the other grounds set forth in said motion.
    “3. In refusing to admit evidence as to the preliminary negotiations leading up to the contract, relied upon by the plaintiff.
    “4. In- striking out the answer to the following question".
    “ !Q. Now, would tbe New England Pie Company, in tbe manufacture of its pies and cakes, or pastry, bave any use for, or be able to use tbe kind of flour sold by tbe Allmade Bakeries Co.?
    “ ‘A. No.' ’’

    Appellee, on the contrary, contends:
    (1) That the contract is not a guaranty but one of purchase and sale.
    (2) It is not ultra vires.

      (3) It is supported by a sufficient consideration.

      See note in 7 L. R. A. (N. S.) 376.

   Ostrander, C. J.

(after stating the facts). Whatever may have been the interest of certain officers of the defendant, who were also shareholders in the All-made Bakeries, Inc., in the success of the last-named company, the case must be considered and decided with regard to the powers and the legal rights of the defendant. The record furnishes no evidence of any corporate action of defendant in the premises. None Was required if its undertaking, relied upon here, was one which its. agents, acting for it, could engage it to make.

“In the absence of any provision to the contrary contained in the charter of a corporation, it will be presumed that its president, secretary, and treasurer have the authority to make all necessary contracts in transacting the ordinary business of the corporation within the legitimate scope, object, and purposes of its organization.” Eureka Iron & Steel Works v. Bresnahan, 60 Mich. 332, 339.

See Galvin v. Windshield Co., 176 Mich. 569; Timm v. Brewing Co., 160 Mich. 371; Harrison Wire Co. v. Moore, 55 Mich. 610.

This elementary rule is not denied but is relied upon by counsel for appellee, who assert that what defendant undertook was a purchase — upon conditions, -it is true — of a commodity which it could use in its business, as the business is defined and delimited in its articles of association. It could purchase, they say, flour in quantities, therefore prepared flour, and although the prepared flour could not be used to make pies, and it had theretofore made only pies, it could' be used to make cake, and it was organized with power to make cake.

It cannot' be doubted that the undertaking of the defendant, promised'in the order for the goods, confirmed and made formally definite in the letter of July 2d, was the inducement which brought about the original sale from Allmade Bakeries to plaintiff. The undertaking of defendant, expressed in the letter, with the recitals, while not in form strictly an undertaking to answer for the debt, default, or miscarriage of another, does not guarantee the performance of anything which any one else had promised or undertaken, is nevertheless, plainly, evidence of something more than a mere agreement to purchase goods for the use, the business, of defendant. It refers to the order for the goods, reciting that it was made subject to the agreement sought now to be enforced. It imports that it is given pursuant to an arrangement according to which the order for the goods was given. To make this more conclusive, it is recited that the defendant is interested in the sale of Ovengold and that the undertaking is “in consideration of that sale.” Any idea of a purchase or an offer to purchase the goods — to repurchase them — in the course of the business of defendant is distinctly negatived. There is no uncertainty of meaning. The writing, especially when it is read with the order for the goods, is conclusive evidence that the credit of the defendant was intended to be pledged to plaintiff, to promote the business of the Allmade Bakeries Company. No other reasonable construction can be given it. Beyond this, no consideration moved to the defendant for the undertaking, and it does not appear that it would have gained for itself anything of considerable value if it had performed the undertaking. It is not a case where the corporation urging the defense of ultra vires has profited by the action it repudiates, or a case where it appears that all stockholders had knowledge of and acquiesced in, or did not complain about, unlawful, because unauthorized, acts of officers. The rule is well stated in 10 Cyc. p. 1156, as follows:

“Except in cases where the rights of the public are involved the plea of ultra vires, whether interposed for or against a corporation, will not be allowed to prevail when it will not advance-justice, but will accomplish a legal wrong. * * * The great mass of judicial authority seems to be to the effect that where a private corporation has entered into a contract in excess of its granted powers, and has received the fruits or be'nefits of the contract, and an action is brought against it to enforce the obligation on its part, it is estopped from setting up the defense that it had no power to make it.”

If the court could weigh one resulting injustice against another, it could not enforce this demand except by doing injustice to some, although a minority, of the unoffending shareholders of defendant.

It must be held that the undertaking is not that of defendant and that it is not estopped to so assert. This disposes of the case. The judgment is reversed, with costs of both courts to appellant.

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


author:
Bird, J.
      Ostrander, C. J.

text:
    LONDO v. NORTHWESTERN COOPERAGE & LUMBER CO.
    Work and Labor — Contracts—Value op Services — Implied Contracts.
    Where plaintiff’s brother had a logging contract with defendant which he abandoned before completing, and plaintiff began work on the same while his brother had charge, and continued to work until the contract was finished, although, under no legal obligation to do so, and defendant received the benefit of such services, he is entitled to recover for the services performed after the brother abandoned the, job.
    Error to Mackinac; Shepherd, J.
    Submitted January 25, 1918.
    (Docket No. 68.)
    Decided June 3, 1918.
    Rehearing denied October 7, 1918.
    Assumpsit by Arthur Londo against the Northwestern Cooperage & Lumber Company for work and labor. Judgment for defendant non obstante veredicto. Plaintiff brings error.
    Reversed and judgmént entered on the verdict, conditionally.

      Brown & Brown, for appellant.

      G. R. Empson, for appellee.
   Bird, J.

Plaintiff sued defendant to recover for the services of himself, wife, and teams in assisting defendant on a logging contract, which had been let to Clarence Londo, plaintiff's brother, and later abandoned by him. The matter was submitted to a jury and they returned a verdict for plaintiff in the sum of $903.93. Defendant moved for a new trial and upon the argument thereof the trial court indicated its intention of setting aside the verdict and granting a new trial, whereupon plaintiff's counsel advised the court—

“that he would prefer, rather than have a new trial granted, that the court enter a judgment for the defendant, notwithstanding the verdict.”

Defendant’s counsel then moved for a directed verdict, and the same was granted.

The trial court was of the opinion that the verdict was against the weight of the evidence. This is the only question which we need consider. It appears that plaintiff’s brother Clarence entered into a contract with defendant early in June, 1914, to get out and deliver certain logs, ties, posts, etc., to defendant’s mill at certain stipulated prices. He continued to work on the contract until January 7, 1915, when he abandoned it and went away. Plaintiff began work while his brother Clarence was on the job and continued to work until the contract was finished in June, 1915. He furnished three teams and an extra horse to haul lunches to the men. His wife cooked for the men at different times.before and after Clarence abandoned the job. From time to time plaintiff received orders on defendant signed by Clarence and they were paid, and there was one payment made after Clarence left. Defendant denies that it employed plaintiff and denies that it had any contract relations with him and insists that he was employed by his brother Clarence and afterwards undertook to execute Clarence’s unfinished contract.

We are impressed, after a review of the testimony, that that portion of the verdict which represents plaintiff’s claim for services prior to January 7th is against the weight of the evidence, but we are not able to reach this conclusion as to services which were furnished or performed by him after that date. After Clarence Londo abandoned the contract plaintiff was under ho legal obligation to continue to work, but he did, and defendant has had the benefit of his services, the services of his wife and seven horses, and it does not appear that he has been paid for the same. If plaintiff is willing to, and does, consent upon the record on or before July 1st, 1918, to a reduction of the judgment to cover this part of the work, the judgment may be affirmed for that amount, otherwise the judgment will be reversed and a new trial granted. Plaintiff will recover his costs in either event.

Moore, Steere, Brooke, Fellows, Stone, and Kuhn, JJ., concurred with Bird, J.

Ostrander, C. J.

In my opinion the most that the court can say is that the court below was,in error in entering a judgment non obstante because there was testimony supporting a verdict and judgment for plaintiff. I am also of opinion that other assignments of error ought to be discussed.


author: Bird, J.

text:
    HOUSEMAN v. KARICOFE.
    1. Automobiles — Personal Injuries — Liability of One in Charge —Question for Jury.
    In an action against a father, mother, and son for personal injuries caused by a collision with an automobile owned by the mother while plaintiff was riding a bicycle on a public street, testimony of the son, who was of age, that he was in the car with invited guests, that he took the car without the permission of either father or mother, that the driver was acting under his orders, that'the driver had no directions from either the father or mother concerning the car on that occasion, and his admission that on a previous trial he testified he was in. charge of the car on the trip in question, presented a question of fact as to whether he was in charge of the car, rendering him liable.

    2. Same — Directed Verdict.
    Testimony that the day’s outing was planned by the father and mother for the pleasure of the son and his guests, and that they arranged with the driver to go and drive the car by reason of the son’s incapacity, held, sufficient to present a question of fact for the jury, and the court below was in error in directing a verdict in their favor.
    3. Same — Credibility of Witnesses — Joint Defendants.
    The question as to whether the testimony was trustworthy was one for the jury; and the question should have been submitted to the jury as against all three defendants to find which one, if either, of conflicting theories was the proper one.
    4. Same — Witnesses—Servant or Agent oe Opposite Party.
    In such action, a servant in a hotel conducted by the father was properly called for cross-examination by plaintiff under section 12554, 3 Comp. Laws 1915, providing for the calling of the opposite party, or an employee or agent of the opposite party.
    Error to Kent; Perkins, J.
    Submitted January 17, 1918.
    (Docket No. 111.)
    Decided.June 3, 1918.
    Case by Glen Houseman against Gabriel Karicofe, Agnes Karicofe, and Oliver Karicofe for personal injuries. Judgment for defendants Gabriel and Agnes Karicofe on a directed verdict and for plaintiff against defendant Oliver Karicofe. Plaintiff and said defendant bring error.
    Reversed.

      Nichols & Shaw (James K. Nichols, of counsel), for plaintiff.

      Pleasant I. Phillips, for defendants.

      See notes in 41 L. R. A. (N. S.) 775; 50 L. R. A. (N. S.) 59, 63; L. R. A. 1916F, 223.

   Bird, J.

Plaintiff was injured while riding his bicycle on Division street in the city of Grand Rapids, by being in collision with a motor car owned by defendant Agnes Karicofe and driven by one Frank Kutchel. Plaintiff contends that the circumstances under which the collision occurred show that the driver was guilty of negligence. In response to a motion to direct a verdict in behalf of defendants, the trial court granted the motion as to Gabriel and Agnes but sent the issue to the jury as against Oliver, .and they returned a verdict for plaintiff of $500. The verdict pleased neither plaintiff nor defendant Oliver and both have assigned error.

Plaintiff’s principal contention is that the trial court was in error in holding, as a matter. of law, that Gabriel and Agnes were not liable, the contention being that the testimony presented an issúe of fact as to their liability which should have been submitted to the jury. Defendant asserts that the trial court was in error in refusing to direct a verdict in behalf of Oliver.

The record discloses that the relation of the defendants is father, mother and son; that Gabriel conducts the City Hotel in Grand Rapids and resides therein with his family; that the son, Oliver, is 28 years of age and assists about the work in the hotel; that he is a paralytic and the inference is that he is cared for and treated much as a minor, son would be. The mother, Agnes, owned a motor car in August, 1915. A fishing party was arranged, to take place on the 12th of that month, by some member or members of the family, and two guests were invited. When the day arrived only Oliver and the guests went on the trip, with a boarder at the hotel by the name of’Kutchel, who acted as chauffeur. While on their way to the lake the collision with plaintiff occurred.

We are of the opinion that the trial court properly submitted to the jury the question whether Oliver was in charge of the car. His own testimony shows that he invited the guests to accompany him; that he took the car without the permission of either his father or mother; that he directed Kutchel to go to the garage and get the car, and that Kutchel did as directed, and that Kutchel had no directions from either the father or mother concerning the car on that occasion. It further appears that he was the only member of the family in the car and that by reason of his malady he was incapacitated to drive the car on such a trip. He further admitted that on a previous trial he testified that he was in charge of the car on the trip. This testimony would justify the jury in finding that Oliver was in the car and had charge of it at the time the collision took place.

We are likewise of the opinion that there was testimony from which the jury could have found that the day’s outing was planned by both Agnes and Gabriel for the pleasure of Oliver and his guests, and that they arranged with Kutchel to go and drive the car by reason of Oliver’s incapacity. If this testimony be accepted as true, Gabriel and Agnes would both be liable on the theory of master and servant, because it could then he said that at the time of the injury Kutchel was about his master’s business. King v. Railroad Co., 66 N. Y. 161 (23 Am. Rep. 37); Hartley v. Miller, 165 Mich. 115 (33 L. R. A. [N. S.] 81); Daugherty v. Thomas, 174 Mich. 371.

But it is said the testimony which tends to show this is not reliable. This may be so, but whether or not it is trustworthy was a question for the jury and not for us. We are, therefore, of the opinion that under the testimony the question should have been submitted to the jury as against all three defendants to find which one, if either, of these theories was the proper one.

2. The witness Inman was called by plaintiff 'for cross-examination, under Act No. 307, Pub. Acts 1909 (3 Comp. Laws 1915, § 12554). This was objected to upon the ground that she was neither a servant nor an agent of any of the defendants concerning the subject-matter in question. The act, in part, provides that:

“Hereafter, in any suit or proceeding in any court of law or equity in this State, either party, if he shall call as a witness in his behalf the opposite party, employee or agent of said opposite party, or any person who at the time of the happening of the transaction, out of which said suit or proceeding grew, was an employee or agent of the opposite party, shall have the right to cross-examine said witness, the same as if he were called by the opposite party.” * * *

This provision appears to make the regular agents and servants of either party subject to the act without qualification; also other persons who may have been acting temporarily as agents or servants for either of the parties in respect to matters out of which the litigation grew. Inasmuch as the record shows that the witness had been employed in the hotel as a servant for several months prior to the accident, and therefore was a regular servant, we think the objection was properly overruled.

For the failure to submit the case against Gabriel and Agnes Karicofe, the judgment must be reversed and a new trial granted, with costs to the plaintiff.

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


text:
    STEEL v. STEEL.
    1. Mortgages — Foreclosure—Sale—Time—Statutes.
    A deed of mortgaged premises sold under foreclosure proceedings is valid if in conformity with section 12677, 3 Comp. Laws 1915, which amended section 516, 1 Comp. Laws, by shortening the time for sale from one year to six months after the filing of the bill.
    2. ' Same — Redemption—-Title,
    Where the sale was made before the equity of redemption had expired, the title would vest in the buyer if no re¡ demption were had.
    3. Same — Foreclosure—Sale—Redemption.
    Where a son was made a party defendant in foreclosure proceedings on land of Ms father because he held a second mortgage and was assignee of certain rights under an execution levy, and not because of any claim of title to the premises, his subsequent purchase from the buyer at. the foreclosure sale did not amount to a redemption.
    4. Canceulation of Instruments — Deeds — Incompetency — Fraud.
    In proceedings to set aside a deed of a homestead from a father to a son and of a store building sold on mortgage foreclosure, on the ground that the father was mentally incompetent and was defrauded by the son, held, that the deeds should not be disturbed, the incompetency of the father and the charge of fraud not being established by the record.
    Appeal from Calhoun; North, J.
    Submitted January 16, 1918.
    (Docket No. 97.)
    Decided June 3, 1918.
    Bill by May Steel against Daisy Steel, E. Floyd Hoaglin, and others to set aside certain deeds. From a decree dismissing the bill, plaintiff appeals.
    Affirmed.

      J. M. Hatch & Son, for plaintiff.

      Jacob Steketee (Charles E. Ward, of counsel), for defendants Steel.

      Howard W. Cavanagh, for defendant Hoaglin.'
   Bird, J.

The bill in this case was filed in August, 1915, in the Calhoun circuit court to set aside two deeds conveying property theretofore owned by William Steel. The plaintiff is a daughter of William Steel, deceased, the defendants are the other children of William Steel, the widow and daughter of the deceased son Sidney, and E. Floyd Hoaglin, who claims title to the store property.

William Steel was engaged in the business of a jeweler in the city of Albion for many years and was thé owner of a home and a store in that city, both subject to mortgage. In his later years he did not appear to get on well financially and in consequence thereof he was assisted by his son Sidney, who lived in Grand Rapids. In 1905 he conveyed his homestead to Sidney subject to a mortgage of $1,100, reserving therein a life interest to himself. In 1908 the Commercial & Savings Bank of Albion commenced foreclosure proceedings, in chancery, on its mortgage against the store. Later it was sold and bid in by the bank and on July 3d was conveyed to Sidney and Dollie, his wife, for the amount due on the mortgage. In July, 1914, Sidney died intestate leaving his widow, Dollie, and a daughter, Gladys. In September, 1914, the widow and daughter joined in a conveyance of the store to defendant Hoaglin. The court is now asked to set aside this conveyance, and also the conveyance of the homestead to Sidney in 1905, on the ground that William Steel was mentally incompetent and was defrauded by his son Sidney. The chancellor found neither evidence of mental incompetency nor of fraud, and, therefore, denied relief and dismissed the bill. .

1. The first question raised by plaintiff is that Sidney had no title to the store because the foreclosure proceedings of the bank mortgage were defective. The point made against the proceedings is that the bill was filed on July 17, 1908, the sale was made April 3, 1909, and the conveyance made to Sidney by the bank was on July 3, 1909, all taking place within a year. Counsel calls our attention to section 516, 1 Comp. Laws, which provides that no sale shall take place under foreclosure proceedings until after one year from the filing of the bill. Counsel has evidently overlooked the fact that that section was amended by Act No. 200, Pub. Acts 1899 (3 Comp. Laws 1915, § 12677), shortening the time for sale from one year to six months, and providing that any time within six months after the sale redemption could be made by those entitled to redeem. Therefore, it appears that the deed to Sidney was not made by the bank until after the foreclosure sale, but was made before the equity of redemption had expired. This would vest the title in' Sidney and his wife if no redemption were had.

2. A further claim is made that payment by Sidney to the bank for the conveyance amounted to a redemption upon his part because of the fact that he was made a party defendant to the foreclosure proceedings. The foreclosure proceedings disclose that Sidney was made a party because he was the holder of a second mortgage and was assignee of certain rights under an execution levy, and not because of any claim of title to the premises. Under these circumstances it could hardly be said that his purchase of title from the bank amounted to a redemption of the premises.

3. The charge that William Steel was mentally incompetent and that he was defrauded by Sidney is not established by the record. The value of the store was about five thousand ($5,000) dollars. The mortgage claim of the bank plus the one thousand ($1,000) dollars, second mortgage, held by Sidney, together with his interest in the execution levy against the premises, amounted to substantially that sum. The homestead appears to have been worth about twenty-five hundred ($2,500) dollars with a mortgage thereon of eleven hundred ($1,100) dollars, at the time it was conveyed to Sidney and in addition a life use was reserved by the father. During the years that followed the conveyance of the homestead the father appears to have been in failing circumstances and the son Sidney came to his rescue and advanced money from time to time to pay interest, taxes and for repairs. He also assisted his father in his business and had he not done so his business career would doubtless have been cut short much sooner than it was. He further permitted his father to occupy the store free of rent after he received the title, and did not even require him to pay the taxes nor to keep it in repair. Not only did Sidney assist his father financially in these ways, but after doing so he manifested no disposition to demand his “pound of flesh.” Evidently in response to some criticism that he had gotten all the property of his father’s he wrote to plaintiff on May 30, 1914, just before his death, requesting her to have their father make a will, saying in part:

“Have Mr. Cooper, the lawyer, if he is there, or anybody you wish, make a will for father and send it up to me. You can fix it any way that you wish. All I want is the money I have put in.”

This suggestion was never acted upon and the record does not show whether it was ever brought to the attention of the father. The father, however, was in full possession of all the facts, and knew the extent to which Sidney had assisted him and he was content during the rest of his life to leave matters as they were, and we see no reason for disturbing them now.

4. Defendant Hoaglin, who purchased the store, testified that he knew nothing of these matters, and that he purchased the premises in good faith and for a valuable consideration, and that he had materially improved them since his purchase.

The decree made by the trial court will be affirmed with costs in this court to defendants Dollie and Gladys Steel, and also to defendant Hoaglin.

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