author: Moore, C. J.

text:
    SKELDING v. DEAN.
    Trusts — Misconduct of Trustees —Personal Dealings with Trust Funds — Repudiation by Beneficiaries — Laches.
    A trustee of funds invested in bank at a low rate of interest, being in need of ready money in his business, and owning houses let at good rental, proposed to the beneficiaries of the trust, who were intelligent women of mature years, that they purchase the houses with the trust funds, which, after consideration, they did, at what appeared at the time to be a fair valuation, and afterwards received the rents. Held, that the beneficiaries could not, more than four years afterwards, after the trustee’s death, and after the houses had depreciated in value owing to a general depreciation in the neighborhood, repudiate the transaction and have the sale set aside.
    Cross-appeala from Wayne; Mandell, J.
    Submitted April 13, 1905.
    (Docket No. 39.)
    Decided July 24, 1905.
    Bill by Fannie E. Skelding and Carrie E. Skelding against Lucretia A. Dean, executrix of the last will and testament of Janies N. Dean, deceased, Howard S. Dean, trustee of the estate of Samuel M. Skelding, deceased, and others to set aside a sale of real estate and for an accounting. From the decree rendered, all parties appeal.
    Reversed, and decree entered for defendants.

      Brennan, Donnelly & Van De Mark, for complainants.

      Russel & Campbell, for defendants.
   Moore, C. J.

The bill of complaint in this cause was filed March 5, 1903. From the decree entered therein both parties have appealed.

Fannie E. Skelding is the widow, and Carrie E. Skelding the daughter, of Samuel M. Skelding, who died June 27, 1894, leaving a will, by the terms of which all his property, real and personal, was devised and bequeathed unto James N. Dean, in trust for the use and benefit of his wife and daughter, the complainants in this suit. James N. Dean, the trustee named in the will, was also appointed executor. He was a second cousin of Mr. Skelding. Mr. Dean entered upon the discharge of the duties imposed upon him as executor and trustee. In January, 1898, he sold to the complainants the house and lot known as 35 Sibley street, the record title of which was in his son, and a deed of this property was made to the complainants. Mr. Dean drew from the trust fund as the consideration for the deed the sum of $9,000. In January, 1899, he sold to the complainants his house and lot known as No. 33 Sibley street, made a deed to them thereof, and paid himself out of the trust fund $8,500. James N. Dean died March 21, 1901. Upon the petition of the complainants Howard S. Dean was appointed trustee of their father’s estate in April of that year. Mrs. Dean was appointed executrix of her husband’s estate. Howard S. Dean and Harry J. Dean are sons of James N. Dean and Lucretia A. Dean. The bill of complaint was filed for an accounting, but principally for the purpose of having the two deeds to the Sibley-street properties set aside upon the ground of constructive and actual fraud. The trial judge filed a written opinion in the case, in which he used the following language:

“ I am satisfied from the proofs that in the purchase referred to the complainants depended for advice solely upon their trustee, and relied solely upon his integrity and judgment, and depended upon that confidence and watchfulness for their interests that the law presumes a trustee shall always give to the management of trust funds. I am constrained further to find from the proofs that the property in question was sold to the complainants by their trustee at a price $5,000 in excess of its real value. This, in my opinion, amounted to a breach of trust. I do not find that there was any intentional wrong committed. It is well known that Mr. Dean always bore in this community the very best of reputations for honesty and probity; but I believe that, moved by his own pressing needs, and with a thorough belief that this property was worth fully what he received for it, he deemed the bargain a fair one. * * *
“ Objection is made to these proceedings, it being claimed that the probate proceedings were final, and binding on complainants. The probate proceedings did not offer the same full relief that equity does. In view of what has been said, I find as fact:
“ 1. That the court of chancery has jurisdiction;
“2. That the sale of real estate mentioned in the bill of complaint worked as a constructive fraud on the complainants.
“3. That complainants are entitled to recover on the Dean and Carr notes.
“ 4. That defendant Howard S. Dean is not entitled to compensation for acting as trustee.
“5. That defendant Howard S. Dean is entitled to credit for amounts paid by him for expenses and attorney fees in the probate proceedings.
“A decree may be entered in accordance with these findings, but the defendants may have the option of either having the sale of the real estate set aside and accounting for the proceeds, or of paying the complainants the sum of $5,000 in lieu thereof.”

A decree was made in accordance with the opinion. The complainants appeal from that part of the decree allowing defendants the right to pay $5,000 and have complainants retain the Sibley-street property. They also appeal from the allowance made to Howard S. Dean for expenses and attorney fees. The defendants appeal from the decree generally.

At the outset the solicitors for defendants say the merits of the claim are not open for discussion, having been finally disposed of by the decree of the probate court, from which no appeal was taken. This claim is based upon the fact1 that the executrix of the estate of James N. Dean filed a final trustee account in the probate court in the estate of Samuel Skelding October 29, 1901. In this account the real-estate purchase was distinctly set forth, together wit'h the price at which the property had been purchased. Both the complainants certified in writing upon the account that they had examined 'It, found it correct, and consented to its allowance. After the account was filed, a day was set by order of the court for hearing. It was regularly advertised, and on the day fixed for hearing the account, December 3, 1901, the account was regularly allowed by the probate court. No appeal was taken from this order. In support of this claim the solicitors cite many cases. In view of the fact that we have reached a decision on the merits, we deem it unnecessary to deal with this contention.

It is the claim of complainants that they never knew how much Mr. Dean charged them for the two properties until after his death, and that he in fact charged them five or six thousand dollars more than it was worth. It is the claim of the solicitors for complainants that:

“In order for complainants to prevail, all they had to prove was: (1) The fiduciary relation of James N. Dean, and (2) the transfer of the Sibley-street property, and the appropriation of their trust fund by the trustee in payment therefor;” citing many cases.

They contend, and we quote from the brief:

“ If a person standing in a fiduciary relation makes use of his position to purchase an interest in the trust property with his own funds, * * * he cannot retain the same for his own benefit, but he must hold it upon a resulting trust for his beneficiary. The prohibition of the purchase of trust property by the trustee does not depend on any question of fraud, but is made absolute to avoid the possibility of fraud. The temptation of self-interest is too powerful and insinuating to be trusted.” 1 Perry on Trusts, § 129. “At law, fraud must be proved, but in equity there are certain rules prohibiting parties bearing certain relations to each other from contracting between themselves; and, if parties bearing such relations enter into contracts with each other, courts of equity presume them to be fraudulent, and convert the fraudulent party into a trustee; and herein courts of equity go further than courts of law, and presume fraud in cases where a court of law would require it to be proved; that is, if parties within the prohibitive relations or conditions contract between themselves, courts of equity will avoid the contract altogether without proof, or they will throw upon the party standing in this position of trust, confidence, and influence the burden of proving the entire fairness of the transaction.” 1 Perry on Trusts, § 194. “It is thus seen that the rule against purchasing by trustees of the cestui que trust amounts almost to prohibition; for, if a trustee purchases the property and sells at a profit, he must account for it as a trustee, not because there was any fraud in the transaction, but because it is against the policy of the law to allow such transactions. Nor is it material that there should be an advantage or profit arising out of a purchase by the trustee from the cestui que trust. It is not necessary to prove such advantage or profit. It is enough to show the relation and the purchase. The trustee can make no profit from his management of the estate, and he is bound not to put himself in any position where his private interests may conflict with the interests of the cestui que trust. If a trustee purchases the trust property the cestui que trust may have the purchase set aside and the property resold.” 1 Perry on Trusts, § 197.

These general propositions are not controverted by the solicitors for the defendants, but they say this case comes within well-recognized exceptions to the general rule. They insist the complainants were of full age; that they were fully advised of all the facts at the time the déeds were made; that the consideration was a fair one; and that, if the property had not depreciated in value since the purchase was made, this bill would never have been filed. In 1 Perry on Trusts, § 467, the following language is used:

“If trustees make an improper investment with the knowledge, assent, and acquiescence or at the request of the cestui que trust, they cannot be held to make good the loss, if one happens; but the cestui que trust to be affected by such consent or acquiescence must be sui juris, and capable of acting for themselves.”

See, also, 2 Beach on Trusts and Trustees, § 520, and cases cited; Poole v. Munday, 103 Mass. 174; 2 Perry on Trusts, §§ 849-852, 870.

In Campau v. Van Dyke, 15 Mich. 371, Justice Christiancy, speaking for the court, said:

“ The same rule of diligence and reasonable time applies when property is sold by a trustee and purchased by or for him on his private account. The purchase is void, at the option of the cestui que trust; but he will be held to affirm it by acquiescence for an unreasonable length of time, and three years has been held unreasonable. Jennison v. Hapgood, 7 Pick. (Mass.) 1. See, also, Davis v. Cotten, 55 N. C. 430; Monroe v. Delevan, 26 Barb. (N. Y.) 16.”

In Quimby v. Uhl, 130 Mich. 198, it was said:

Where beneficiaries either expressly or impliedly assent to the action of their trustee in managing their property not in strict accord with the terms of the trust, they will be held to have acquiesced in such action. See authorities above cited; also 11 Am. & Eng. Ene. Law, p. 841; Heyn v. O’Hagen, 60 Mich. 150. A party cannot complain when he has consented. Barton v. Gray, 57 Mich. 636.”

The case of Hammond v. Hopkins, 143 U. S. 224, is in many respects like the case at bar. In disposing of the case Chief Justice Fuller used the following language:

“The main contention here is that the sale of May 10, 1864, should be set aside as to the purchases by the trustees through Chapman, on the ground of constructive, coupled with actual, fraud. Undoubtedly the doctrine is established that a trustee cannot purchase or deal in the trust property for his own benefit or on his own behalf, directly or indirectly. But such a purchase is not absolutely void. It. is only voidable, and, as it may be confirmed by the parties interested directly, so it may be by long acquiescence, or the absence of an election to avoid the conveyance within a reasonable time after the facts come to the knowledge of the cestui que trust. * * *
‘ ‘ If the party, in view of all the facts of the case, has slept upon his rights, a court of chancery will not intervene ; and in measuring laches there are two extremely important considerations always taken notice of by a court of chancery, which limit and narrow the measure of time which otherwise would be liberal. Where there has been no change of circumstances between the parties, and no change with reference to the condition and value of the property, a court of chancery will run very nearly, if not quite, up to the measure of the statute of limitations as applied in analogous cases in a court of law. But where there has been a change of circumstances with reference to the parties and the property, and still more where death has intervened, so that the mouth of one party is closed, and those who represent his interests are not in a predicament to avail of the explanations which he might have made, out of the charities of the law and in consideration of the fact that fraud is never to be presumed, but must always be proved and proved clearly, the courts limit very much, in such cases, the measure of time within which they will grant relief, because the presumption comes in aid of the dead man that he has gone to his account with a clear conscience.”

Apply these principles of law to the case at bar., When the first of these deeds was made the daughter was 30 years old, and the mother 60 years old. They were women of intelligence. When Mr. Dean proposed they should buy this property, after thinking the matter over a few days, they assented to it. There is no claim that anything was withheld from them except the consideration. They say they did not ask about the consideration, and were not told. The deeds were delivered to them, and they retained them in their possession. The daughter knew the property, and we cannot resist the inference that the mother also knew it. The daughter testified that before the deed was made she discussed with her mother the advisability of putting the money which was in the bank into this investment. They knew that one of the houses rented for $50 a month and the other for $45 a month. We have not overlooked the fáct that both of them testified they relied wholly upon Mr. Dean’s judgment, and had no knowledge of the consideration until after Mr. Dean’s death. And yet Miss Skelding prepared a paper in her own handwriting as early as October, 1899, showing that the value put upon the two properties was $17,500. Harry J. Dean testified he had a talk with Mrs. Skelding, in which she told him that the cost of one house was $9,000 and the other $8,500, and that he also had a talk with Miss Skelding, and as the result of it credited his father’s estate in the account of his mother as executrix by lots 33 and 35, $17,529.90. The final account of Mrs. JDean as executrix of her husband’s estate was filed in October, 1901. It contained the above credit. It also contained nearly 50 items of $45 and $50 each for rent received from the Sibley property. On the back of this report is the following indorsement:

“We the undersigned, sole beneficiaries by and under the last will and testament of Samuel M. Skelding, deceased, do hereby certify that we have examined the foregoing account, and find the same to be correct, and we do hereby consent to the allowance thereof, and ask the court to accept the same.
“Fannie E. Skelding.
“Carrie E. Skelding.”

The first item on the credit side was “ Bought lots No. 33 and 35 Sibley, $17,529.90.” It would seem that even a casual examination would discover this item. This final account was allowed, the trustee discharged, and the bond canceled December 3, 1901. We have not overlooked the claim of complainants that this indorsement was made at the request of Howard S. Dean without their knowing what the paper contained. The fact is, however, that this paper was sent to them. They had it for several days, signed it, and then returned it.

Nor have we overlooked the claim of counsel, and we quote from their brief :

“And now comes the most convincing act of all. This last lot was deeded in January, 1899. . On March 9th following he files his final account as executor, and purposely avoids mention of these purchases of real estate, but reports to the probate court that he has cash on hand. A comparison of this report with the journal from which it is taken shows how these real estate items were purposely omitted. In the disbursements commencing the year 1898 we have first the date January 27th, then February 8th. Turning to the journal we find interlined between thesó two dates the entry, ‘ February 2nd, Harry J. Dean, $9,000.’ Again, commencing with the year 1899, in the report we find the first item is January 31, ‘ Detroit WaterWorks, $2.95.’ Turning to the journal entry from which this was taken we find these two items were omitted, ‘January 26th, Harry J. Dean, $7,000;’ ‘January 28th, Harry J. Dean, $931.70.’ What possible object could the trustee have had in omitting these items but that of concealing the fact from the probate court, knowing that he had committed a gross breach of trust ? ”

We think an examination of the items of the account is a complete answer to the inference sought to be drawn. It purports to be the account of Mr. Dean as executor, and not as trustee. Attached to it is a receipt for the balance running from Mr. Dean as trustee to Mr. Dean as executor. In it Mr. Dean charges himself with 11 different items, $50 each, of rent received from Mr. Steinfeld, the tenant in the Sibley house, and credits himself with a payment made in 189'8, “ October 12, Gray for grate a\ 35 Sibley St. $6.00.” There is a signed statement on the back of this account, signed by the complainants, stating they have examined it, that it was correct, and asking that it be allowed; and it was allowed. If Mr. Dean was attempting to conceal this sale from the court, it is hardly credible he would have put in these eleven items about the • rent and the one about the grate.

It will not do to dispose of this case without remembering James N. Dean is not here to give his version of the transaction. In his lifetime he had the reputation of being an honest man. He had the confidence and respect not only of Mr. Skelding during his lifetime, but of Mrs. Skelding and her daughter. As late as July, 1900, Mrs. Skelding made a will, which provided that if she survived her daughter, in case he was then living, that James N. Dean should have the house and lot at No. 33 Sibley street and $5,000, evidenced by a note which she then held of the Harry J. Dean Company. The conclusion we reach from a careful reading of this voluminous record is that it was talked over between these adult women and Mr. Dean that he needed the money in his business which was invested in these two houses, and that it would be of mutual benefit for the complainants to use the money which was in the bank, drawing a low rate of interest, to buy these respective pieces of real estate which were bringing a good rental at the prices Mr. Dean credited himself; that after these suggestions were made they were discussed by the mother and daughter, and they decided it would be a good thing to do, and it was done, the first deed being made in January, 1898, and the second one in January, 1899; and that from that time until this bill was filed, more than four years later, and two years after the death of Mr. Dean, they regularly received rent for this property, it being collected by the trustees, and going into their account. It was not until two years after Mr. Dean’s death, and after property generally in that neighborhood depreciated in value, that, any attempt was made to repudiate this transaction. We think this attempt comes too late, and that complainants should retain the Sibleystreet property at the price charged.

We have considered the item allowed for expenses and attorney’s fees. Mr. Dean was allowed nothing for his services, and we are not inclined to disturb the allowance made him for these disbursements.

The decree is reversed, and one may, be entered here in accordance with this opinion.

Carpenter, McAlvay, Ostrander, and Hooker, JJ.. concurred.


source: Caselaw Access Project

author: Ostrander, J.

license: Public Domain

text:
    NESTLE v. CITY OF FLINT.
    1. Municipal Corporations — Defective Sidewalks — Personal Injury — Notice op Claim.
    A notice of claim fox- injuries from a defective sidewalk at a point near the lot line between two lots on a certain street examined, and held, sufficient to support recovery.
    2. Highways and Streets — Defective Sidewalks — Notice of Defects.
    Where the general condition of a sidewalk is the same all along a certain block, and an injury occurs near a lot line, the defective condition of the walk in front of the lot adjoining that in front of which the injury occurred, may be considered by the jury on the issue of constructive notice of the defect, though the charter of the city requires each abutting owner to build his own walk and in effect makes the walk in front of each lot a unit.
    3. Appeal and Error — Review — Questions of Fact — Discretionary Rulings.
    The refusal of the trial judge to set aside the verdict as against the weight of the evidence and for excessiveness of verdict will not be interfered with by this court unless, from a reading of the l'ecord, his duty to grant the motion is manifest.
    Error to Genesee; Wisner, J.
    Submitted May 5, 1905.
    (Docket No. 211.)
    Decided July 24, 1905.
    Case by Anna D. Nestle against the city of Flint for personal injuries. There was judgment for plaintiff, and defendant brings error.
    Affirmed.

      James S. Parker and Mark W. Stevens (W. S. Bun-dell, of counsel), for appellant.

      Brown & Parley, for appellee.
   Ostrander, J.

A judgment was obtained against the' city of Flint for injuries claimed to have been received January 2, 1902, by reason of a defective sidewalk. Notice of the injury, and of plaintiff’s claim based thereon, was given to the city. The notice stated that the injury was caused by—

“A defective sidewalk on the south side of Fifth avenue, just east and off from Saginaw street, said accident happening on west line of lot occupied by a Mr. Gale, the street number of such house being 508, and on or near the east line of the residence occupied by A. A. Riker, whose street number on Saginaw street is 724. * * * My right foot was caught by a plank or board that was tipped up in said walk. * -* * That such sidewalk at such time where I fell was out of repair, and had been unsafe and notoriously bad for travel or for reasonable use, and had been so for a long time.”

With considerable particularity, the notice described the injuries claimed to have resulted from the fall plaintiff had. It is argued here, as it was below, that the notice is insufficient. The objection made to the trial court was that “the claipa is not'broad enough to support the declaration, nor broad enough to support the proofs taken upon the former trial. The claim is insufficient. ” The objection was overruled, and an exception taken. We do not know what the proofs referred to were, but are of opinion that the notice fairly served the purpose for which such a notice is required, and discover no variance between the statements in the notice and declaration.

To an understanding of the questions presented, a brief statement of the facts existing at the time of the injury is necessary. The property lying along the south side of Fifth avenue, east of Saginaw street, in the city of Flint, is known as “ Lot 5.” It was owned and occupied by two persons; Mr. Hiker owning the west 82 feet, and Mr. Gale the east 50 feet. A sidewalk, made of stringers and plank, was in front of the lot on Fifth avenue, and extended across the block. In August, 1901, the sidewalk inspector examined this walk. He condemned the walk upon or in front of the Hiker property, reported his action to the common council, and on August 31, 1901, served upon Hiker notice to build a new walk. At the time of the alleged injury, in the following January, no new walk had been built. This inspector testified that he found no defects in the Gale walk, nor for six feet east of the east Gale line, requiring repairs. Counsel for plaintiff say that the case was tried upon the theory that plaintiff stepped upon a loose board in the walk at a point at or near the line between the premises occupied by Mr. Gale and Mr. Hiker on Fifth avenue; that “there was no attempt made on the part of plaintiff to show that the city had actual notice that the board in the walk which caused the injury to plaintiff was out of repair before the accident to plaintiff, but the general condition of the walk in that vicinity was shown, for the purpose of proving constructive notice to the city.”

The theory of counsel for plaintiff was in part embodied in a request to charge which the court gave, and which is here set out:

“Sixth. Upon the question of constructive notice, it is competent for the jury to consider the general condition of the walk in the vicinity of the place where the injury is alleged to have occurred, which in this case is limited to lot 5, or the premises occupied by Mr. Riker and Mr. Gale, and even if the walk at the exact place where the injury is alleged to have occurred was not apparently defective upon casual observation, yet if the walk in the vicinity was old, decayed, and some loose boards and rotten pieces of stringers, then the general condition of the walk in that vicinity might be considered as bearing upon the question of notice to the city of the defects complained of; that is, the defect at the spot next to the tree where the plaintiff claimed she fell. I add that.”

The testimony of the plaintiff, who was the first witness called, fixed the place where she fell, as we understand the record, at a point near or at the line dividing the property of Mr. Gale and Mr. Riker. A plat used upon the trial is not before us, which fact renders some of the testimony elicited upon the subject of no value or meaning to us. It seems to have been conceded that at the time of the injury each owner of property was required to build the sidewalk adjoining his premises. The plaintiff testified:

“ I caught my right foot in the board, and it threw me backwards. * * * When I regained consciousness I saw there was a hole. I pulled the board aside as I crept towards the tree with my left hand. My right arm was stunned. I was unable to help myself along at all. As I was using my left hand, where the board had been placed, it seemed as if the stringer, as I pressed on it, went down. There wasn’t much of it at all. It broke away from under my hand when I had my hand on it looking for my purse. I dropped my purse and hand bag. I couldn’t find them at first, but by feeling down I found my purse was over near where — near the board. I had not noticed the board before that. I moved the board aside after I had tripped on it — the same board that flew out from under me. I moved it off my feet towards the south. When I first discovered the board, it was across my skirts and across my left foot. I had to remove it in order to get up. There was quite a deep hole down from where the board had flew out from under.”

On cross-examination she testified:

Q. As you walked along over that walk, you saw nothing ahead of you looked bad ?
“A. No; I supposed I had crossed the dangerous part.
Q. You were looking, and you saw nothing in the appearance of the walk that indicated to you that it was bad or dangerous, did you ?
“A. No, sir; I'didn’t see nothing was wrong with that particular, not a thing. .
‘ ‘ Q. The boards seemed to be in place ?
* ‘ A. Everything seemed to be in place.
Q. There was none loose in sight ?
“A. I didn’t see any.
Q. Planks were level over there ?
A. Seemed to be all smooth.
“ Q. Wasn’t anything there that anybody passing along could see out of repair or wrong ?
A. No, sir; I didn’t see anything wrong.-
“ Q. When you was passing over it in December'you didn’t see anything in that place along there in front of Gale’s, that was wrong ?
“A. I didn’t notice anything.
Q. You did notice this here in December (indicating on plat in front of Riker’s property on Fifth avenue) ?
“A. I noticed that after I left Saginaw street.
Q. But up along in front of Gale’s, along in here (indicating near the tree), when you were over it in December, you didn’t notice anything wrong ?
“A. I didn’t take any particular notice of it. There might have been, but I didn’t see anything broken.
Q. Nothing there to attract your attention, was there ?
“A. No; when I was over this walk in December (indicating on map, in front of Gale’s property, near the tree) I didn’t notice anything wrong with the walk.
Q. Looked safe, didn’t it ?
“A. Looked safe as far as I could see.
‘£ Q. If there was anything about it that was unsafe at the place where you fell, it was hidden, and you could not see it ?
“A. I didn’t see it.
Q. A person walking along would not see it, would they ?
“A. No, sir; if their mind was on the sidewalk, I don’t know whether.they could or not. The boards seemed to be all right as far as I could see. I didn’t see the boards loose. I caught my toe in the board, and it threw me up.”

Counsel for plaintiff introduced testimony to show the condition of the sidewalk in front of the Riker premises. It was objected to, and, following the objection, considerable was said by counsel and by the court, the point and substance of which is best evidenced 1 r excerpts from the record:

“Mr. Stevens: I have no objection to their showing that this walk was defective at the particular place where the injury occurred. I have no objection to showing the actual notice to the city, if they can.
The Court: It doesn’t seem to me the Thomas Case [123 Mich. 10 (47 L. R. A. 499)] interferes with your showing the condition of the walk in the immediate vicinity of the accident upon the question of notice. But I am satisfied of one thing. Of course, it would be conceded that, under your system of building walks in the city of Flint, each abutting owner builds the walk, at least that was the condition at the time of the happening of this accident, and, that being the case, the piece of walk in front of each particular lot being an individual walk, I think you would be confined to that particular piece of walk abutting the premises of .each individual owner. Each piece between each lot stands entirely by itself under our system of building.
‘c Mr. Farley: If it should develop that the walk in front of these two was built the same time, and that the two lots were owned by the same individual at one time, would that change the rule ?
The Court: It don’t seem to me that it would.
“Mr. Brown: Would that change the rule of attaching the responsibility to the city ?
The Court: Not its responsibility. Of course, before this could be determined, unless I had it conceded, it would have to appear in the case what the system in this city was with respect to the building of sidewalks.
“Mr. Parker: The rule has applied that each abutting property owner is required to build the piece of walk directly in front of his own premises.
‘ ‘ The Court: I know that, but I cannot, take judicial notice of it.
“ Mr. Brown: I can’t see why that would be determining, even though that would be the rule covering the construction of sidewalks, for the reason that the city would be liable in any event.
“ The Court: Unquestionably; but the point that I think would be decisive of that is this :• That each one of these walks was independent. One may be built this year and another may be built next year. There may be 10 years’ difference in the age of a piece -of walk in five rods.
“ Mr. Brown: If that were true, and they were' defective — both of them — it would not matter, even though they were built 10 or 20 years apart, for the reason that liability would exist against the city just the same, and the property owners are not held responsible. It is the city that is to keep them and maintain the walks.
The Court: I understand that. I am simply speaking of the question of notice — whether you can say that a city has notice of the defective condition of the piece of walk which is an independent walk, by reason of defects existing near A.’s walk which is an entirely independent walk.
Mr. Brown: I don’t see where the doctrine would be any different than generally laid down by the courts. -
The Court: The proposition I speak of has never been before the court.
Mr. Brown: But why that should be the rule I can’t see, for the city would be liable in any event for a defective sidewalk — would not make any difference whether on A. ’s or B. ’s walk. If they were both defective, or if either of them were defective, that would be a matter of evidence. If either of them were defective, or both of them, it would be an equal liability of both of them against the city.
The Court: You don’t seem to get what I wish to convey. Solely on the question of notice, why should the city have constructive notice of the defects existing in B.’s walk, because it was found that there were defects which were patent in A. ’s walk ?
“Mr. Brown: That is probably true, without it is connected with the same part of the same walk.
The Court: Walks of necessity are continuous along the streets, except for street intersections; but yet they are divided up according to the ownership of the block. There may be across one block 20 years’ difference in the age of walks.
“Mr. Brown: I never have found any distinction among the cases.
“ The Court: I never have seen them myself. I don’t know that there is any case; but it looks to me as if that ought to have something to do with it. Of course, I don’t know what the condition is here. I have forgotten the very last word of what occurred on the trial, because we have had two or three cases. * * *
Mr. Farley: I can’t see, if the court please, where the declaration counts upon an injury upon a defective walk at or near a line between two walks, the division of these walks having been defective for a considerable space of time, and the evidence discloses that fact, I can’t see any reason why the general defective condition on either lot would not be notice to the city, which would require them to put the walk in a reasonably safe condition.
The Court: Suppose, in maintaining the case, plaintiff’s testimony is that the accident occurred on a certain lot?
Mr. Farley: We don’t know whose lot. The testimony so far don’t show. * * *
“ The Court: I think I will permit the taking of the testimony, and later on, if it should appear definitely, I will so instruct the jury, if they find this accident occurred in front of a certain lot, and in a sidewalk in front of that particular subdivision there were no patent defects, that it would not be notice to the city.”

Thereafter considerable testimony was taken tending to prove that the sidewalk in front of the Riker property was at the time of the injury, and for a long time had had been, in an unsafe condition. When plaintiff’s case was rested, counsel for defendant, calling the attention of the court to the provisions of the charter of the city of Flint, which place upon lot owners the duty to construct and maintain sidewalks, moved to strike out the testimony relating to the condition of the Riker sidewalk. This was refused.

It is a matter of common knowledge that a new or a good and safe board and stringer sidewalk sometimes marks the boundaries of a particular lot, and is continued, in front of adjoining premises, by a defective sidewalk. If an injury occurs from an alleged defect in the new and apparently sound sidewalk, it might well be said that constructive notice of the particular defect could not be shown by proof of the general, patent, and continuing defects in the adjoining walk. In a given case, the city might even have admitted notice of the condition of the defective walk by ordering it to be replaced, and still have had no notice or knowledge sufficient to create liability, under the statute, to one injured upon a continuation of the sidewalk.

A careful reading of the record discloses that the case supposed is not the case at bar, that there was testimony tending to show that the particular defect had been a longstanding one, that the particular plank had been found removed and lying at the side of the walk, and that the admitted condition of the sidewalk west of the point where the injury occurred continued to and beyond that point. This being so, and there being some uncertainty about the precise place of the accident, we are of opinion that the court committed no error in _leaving the whole matter to the jury.

In the same way and for the same reasons we should, we think, dispose of another contention. It is stated by counsel for appellant in the following language:

“The defendant does not make the claim that the stringers under the planks near and at the location of. the tree referred to as the westerly [tree where plaintiff claimed to have fallen], were not defective; but it does claim that such defect in the stringers was a latent defect, and that the defendant city could not be held liable in the absence of actual knowledge of such defect.”

We are of opinion, also, that the charge to the jury was sufficiently favorable to defendant, and that for none of the alleged errors occurring at the trial should the judgment be reversed.

The jury were limited in estimating damages to an allowance for pain and suffering of the plaintiff to the time of the trial, plus the cost of medical attendance and expenses for nursing and care. The verdict was for the sum of $3,800, and was followed by a judgment for that amount. It is claimed that the trial judge improperly denied defendant’s motion to set aside the verdict and grant a new trial, because as to liability of defendant the verdict was against the weight of the evidence, and because the damages found were excessive. The case is one in which much might be said in support of both the reasons asserted. Testing the duty of this court in the premises by the rules laid down in Hintz v. Railroad Co., 132 Mich. 307, 308, we conclude that the determination of the trial court should not be disturbed.

The judgment is therefore affirmed.

Moore, C. J., and Carpenter, McAlvay, and Hooker, JJ., concurred.


author: McAlvay, J.

text:
    BENNETT v. HOUGH.
    1. Partnership — Title to Land — Evidence.
    Evidence with respect to lands, paid for by a partnership largely with funds paid into the partnership by one partner, title to which was taken in the name of the partner who furnished the money, examined, and held, to show that the lands were in fact purchased as partnership lands.
    2. Same — Deeds Between Partners — Effect.
    A quitclaim deed from one partner to another, in consideration of “one dollar and other considerations,” made so that the latter can expedite the sale of partnership lands, leaving the accounts between the partners to be settled afterwards, does not deprive the lands covered by the deed of their character as partnership property.
    Appeal from Wayne; Hosmer, J.
    Submitted April 4, 1905.
    (Docket No. 8.)
    Decided July 25, 1905.
    Bill by Fred F. Bennett against Edward C. Hough, administrator of the estate of Lewis C. Hough, deceased, and others for a partnership accounting. From a decree for complainant, defendants appeal.
    Affirmed.

      Maybury, Lucking, Emmons & Helfman, for complainant.

      Nichols & Durfee (George Gartner, of counsel), for defendants.
   McAlvay, J.

The bill of complaint was filed by complainant against the administrator and heirs of Lewis C. Hough, deceased, for an accounting and settlement of the partnership affairs of Hough & Bennett, a copartnership composed of complainant, Fred F. Bennett, and Lewis C. Hough, deceased. The main contention is that certain lands held in the name of Lewis C. Hough at the time of his death are partnership property. From a decree in favor of complainant, defendants have appealed.

The facts, briefly stated, are as follows: In June, 1890, complainant and his uncle, Lewis C. Hough, deceased, entered into copartnership in the lumber business in Mississippi. They resided in Plymouth, Mich. There were no written articles of copartnership. Complainant went to Mississippi, where a sawmill was leased and some stumpage purchased, known as the “ Eastman Mill and Lands,” near Ellisville, Jones county. The firm name was Hough & Bennett. Complainant was active manager and superintendent. Mr. Hough remained in Michigan and occasionally went to Mississippi. The timber on the Eastman lands, instead of amounting to 3,000,000 feet, as represented, on estimate proved to be between 700,000 and 800,000 feet. A verbal option on the lands in dispute, known as the “ Bynum Lands,” at the request of Bennett, was secured from the owner by George F. Maxwell to purchase 2,105 acres for $10,525. The estimated timber on these lands was 14,000,000 feet. The purchase was made for the price stated, November 13, 1890. The deed was made to L. C. Hough. Of the purchase price, $10,-000 was forwarded by Mr. Hough from Plymouth, Mich., in a draft from the Plymouth Savings Bank, payable to the order of L. C. Hough, indorsed by him to the order of Hough & Bennett. This draft was indorsed by Hough & Bennett (by Bennett) to the order of John H. Bynum, and delivered by Bennett to him. The balance of the purchase price, $525, was procured from Baum & Sons, of Ellisville, and given by Bennett to Mr. Maxwell to hand to Bynum. -The $10,000 above mentioned was furnished by Mr. Hough by a loan, secured by a mortgage of $8,000 given by him upon his farm and a mortgage of $2,000 upon the Bynum lands. The Bynum lands were 1J miles west from the Eastman lands at the nearest point, and about 3J miles west from the mill. The firm purchased, December 21,1891, 40 acres from B. Du Bose, and on July 23, 1892,160 acres from Anderson. The Du Bose land adjoined part of the Bynum lands. The Anderson land was 8£ miles farther west, After the purchase of the Bynum lands, the firm built a tramroad from the mill at Ellisville to within 1£ miles of the Bynum lands. The purpose of the tramroad was to convey logs to the mill. The route was “ blazed ” or laid out by Maxwell all the way across the Bynum lands. By reason of hard times and low prices for lumber, the Hough & Bennett mill ceased operations in December, 1891. No timber was cut from the Bynum lands. The Bynum, Du Bose, and Anderson lands were assessed to Hough & Bennett up to and including the year 1900. The taxes for most of these years were paid by Maxwell with money sent by Hough, and the tax receipts issued to Hough & Bennett, and sent to Hough.

It 'is stipulated in the case that Bennett contributed $2,100, and Hough about $2,500, to the business up to the cessation of operations in 1892. This does not include payment for the Bynum lands and interest, nor taxes thereon, or taxes on the Du Bose and Anderson lands. January 27, 1900, Bennett quitclaimed his interest in the Du Bose and Anderson lands for $1 and other valuable considerations. On February 15, 1901, Hough sold by land contract all the Du Bose, Anderson, and Bynum lands to N. M. Parker, of Ellisville, Miss., for $34,800, upon which about $20,000 had been paid when this suit was begun. Hough died January 11, 1902. From the time the mill closed in 1892, until the sale of the lands by Hough to Parker in 1901, the firm did no partnership business. The books used by the firm in their business and the firm papers and letters were not produced upon the hearing. They were in Hough’s possession at Plymouth until 1902, and have either been lost or destroyed.

The question in the case is whether or not these lands were purchased as partnership property. Mr. Bennett was the active partner and manager of the business in Mississippi. It was early discovered that the timber on the Eastman lands fell far short of the amount represented when the stumpage was purchased. An actual estimate disclosed that there were not more than 800,000 feet of timber out of 3,000,000 supposed to have been purchased. Maxwell, the estimator, first brought to the attention of Bennett that the Bynum lands were in the market, and at his request secured an option for Hough & Bennett at $5 an acre. The estimated amount of timber on these lands was 14,000,000. All the dealings relative to the Bynum purchase were with the firm, through the managing partner, Bennett. The draft sent by Hough was indorsed by him to the firm, and by the firm indorsed and paid to the owner. The $525 balance of the purchase price was paid by the firm in cash, secured by Bennett from Baum & Sons and by them charged to the firm. The deed, at the request of Bennett, was made to Lewis C. Hough as grantee. For the reason that Mr. Hough is dead and Mr. Bennett is prohibited by statute from testifying, it does not appear why the property was taken in Mr. Hough’s name. From the fact that he was obliged to make a loan for the $10,000, sent by draft, and furnished security for the same by mortgages upon this and other property, it is reasonable to presume that it was because of that fact. Other small parcels of land were purchased soon afterward in the firm name. There is no question but that they became partnership property. The Bynum lands were assessed to Hough & Bennett until 1900, and tax receipts issued in their name sent to Hough. Hough never saw these lands until after their purchase. Afterwards he went over them with Maxwell twice — once alone, and once in company with Mrs. Hough. The route of the tramway was blazed out by Maxwell from the.mill to the further side of these lands, and Hough was taken with him along the whole line, and talked about getting the timber out over the tram. The record also discloses the statement made by Hough to many witnesses during a period of years, calling' the Bynum lands firm property, and stating that Bennett had an interest therein.

The evidence appears to us to be conclusive that these Bynum lands were purchased as partnership lands. It is claimed that the Du Bose and Anderson lands, after the quitclaim of 1900 by Bennett to Hough, ceased to be partnership property. The consideration for such deed was “one dollar and other considerations,” and the testimony of the notary is that Hough’s explanation was that he “ wanted the deed made so that he could expedite the sale; that he would not be troubled to get another conveyance ; that they would arrange it among themselves; they would settle the matter among themselves afterwards.” The sale afterwards made included all of the lands in Mississippi. We are satisfied that the quitclaim was given to Hough by Bennett for the purpose stated by Hough at the time. The record does not indicate that there was ever any settlement at any time made between the co-partners of the partnership affairs, or a division or disposition of its real estate. The clear intention of the parties at the times of the purchases of these properties was that these lands were to be held and used for partnership purposes. That the Du Bose and Anderson lands were so purchased with partnership funds is not disputed. The $10,000 of the purchase price paid for the Bynum lands, by the manner in which it was paid into the firm and was afterwards paid to the seller by the firm, thereby became and was, for the purposes of the transaction, funds of the copartnership. The balance of" $525 was procured as firm funds beyond dispute.

These conclusions have been arrived at without any consideration of the testimony of complainant, except as to such transactions on his part for the copartnership in Mississippi, of which his partner could have no equal knowledge, and of which he could have known only by hearsay. The lapse of time and delay on the part of complainant before asking for an accounting have been considered. Under the circumstances of the case, we do not think that these facts are sufficient to work as an estoppel against him of the relief sought. We find that he was owner of a one-half interest in all the lands herein mentioned, and is entitled to an accounting with defendants for his interest in the proceeds arising from the sale thereof, and also of all the partnership affairs of said firm of Hough & Bennett.

The decree of the circuit court is affirmed, with costs.

Moore, C. J., and Grant, Montgomery, and Hooker, JJ., concurred.


text:
    PERRIZO v. TOWNSHIP OF STEPHENSON.
    Highways and Streets — Highway Taxes — Labor and Money Tax — Road Districts — Inoorporated Villages.
    Since the amendment of 1887 (Act No. 156) of the highway law (subchap. 2, chap. 101, 2 Comp. Laws) the labor tax cannot be assessed upon property situated in incorporated villages and therefore not in any road district, but the money tax assessed to supply any insufficiency in the amount raised by labor tax must be assessed upon all the property of the township, including the villages therein, in like manner as was done before the amendment referred to was passed.
    Case made from Menominee; Stone, J.
    Submitted June 22, 1905.
    (Docket No. 51.)
    Decided July 25, 1905.
    Assumpsit by Pollet Perrizo, Edward Perrizo, and Paul Perrizo, Jr., copartners, as Perrizo & Sons, against the township of Stephenson for taxes paid under protest.' There was judgment for defendant, and plaintiffs assign error.
    Affirmed.

      P. J. Trudell, for appellants.

      N. G. Spencer (R. G. Flannigan, of counsel), for appellee.
   McAlvay, J.

Plaintiffs brought suit to recover certain highway taxes paid under protest. The case was tried before the court without a jury, and judgment rendered in favor of defendant.

The facts in the case were stipulated as follows:

“1. That the highway taxes of the defendant township are not assessed on a money basis, as provided in subchapter 4 of chapter 101 of the Compiled Laws of 1897, but are assessed on a labor basis, as provided in subchapter 2 of said chapter 101.
“2. That the electors of said township, at the annual meeting of said township in the year 1904, neglected to vote a money tax, as provided by the second subdivision of section 4074 of said Compiled Laws, and that the township board of said township, at a meeting thereof held on the 26th day of September, 1904, ordered to be levied a surp, within the limit provided in said second subdivision, for the improvement of the roads of said township; and the township clerk of said township certified such action of the township board to the board of supervisors of the county of Menominee, and said board of supervisors, at their annual session in October, 1904, directed such sum to be spread upon the assessment roll of said township.
“ 3. That the supervisor of said township, in said year of 1904, assessed the sum so ordered to be levied by said township board upon all the estate, real and personal, of every inhabitant of said township, including every inhabitant within the incorporated villages of Stephenson and Daggett, and upon each tract or parcel of land therein belonging to nonresident owners; and that in making said assessment said supervisor did not apportion said sum, so ordered to be levied, among the different road districts of said township, but assessed the same against all the property within said township and villages, without reference to said road districts.
“ 4. That the commissioner of highways of said township, prior to the year 1904, divided said township into 10 road districts.
“ 5. That the villages of Stephenson and Daggett are incorporated under the general law for the incorporation of villages, being Act No. 3, Pub. Acts 1895, and are located within the limits of said township.
‘ ‘G. That the property of the plaintiffs, at the time of the levying and assessment of said highway tax for the year 1904, was located within the corporate limits of said village of Daggett.
“7. That of said highway tax the sum of $89.15 was assessed against the real and personal property of the plaintiffs.
8. That on the 6th day of January, 1905, the plaintiffs paid highway tax to the township treasurer of said township under protest, said protest being in writing and signed by the plaintiffs, and the grounds specified therein were based upon the facts as herein stipulated; and the treasurer, at the time of the making of such payment by the plaintiffs, made a minute of the fact of such protest on the tax roll of said township, and in the receipt given by him to said plaintiffs.
“9 That within 30 days after making such payment under protest, to wit, on the 9th day of January, 1905, the plaintiffs sued said township for the amount so paid by them.”

Upon the payment of said highway tax, plaintiffs protested in writing upon the following grounds:

“1. Because such tax is levied against all of the property of said township indiscriminately, instead of being levied against the property of each road district of said township.
2. Because the law provides that in levying such tax the same shall be levied against the property of each road district, and that incorporated villages shall be excluded in making the assessment and levying of such tax.”

The only evidence introduced in the case was the foregoing stipulation of facts and written protest. These constitute the findings of fact by the court in the case, from which findings of fact the conclusion of law of the court was that the plaintiff was not entitled to recover, and a judgment of no cause of action was rendered. The only question in the case is whether the court erred in construing the statute under which the highway tax in question was assessed and levied.

The highway taxes of defendant township were assessed on a labor basis, as provided in subchapter 2 of chapter 101 of the Compiled Laws of 1897. Section 1 of said sub-chapter 2 (section 4072, 2 Comp. Laws) reads as follows:

“ The highways in this State shall be opened, improved, and maintained by the labor of the inhabitants residing in and by assessments upon the property situated within the several townships, and for the more convenient expenditure of such labor and for making such assessments the commissioner of highways in each township shall divide his township, excluding incorporated villages, into so many road districts as he may judge convenient, and may vacate, alter, divide or consolidate such districts, his action in all such cases to be entered of record in the township clerk’s office, but no such division shall be made within five days next preceding the annual township meeting.”

Section 2 (section 4073, 2 Comp. Laws) requires the commissioner of highways to render his report or statement in writing to the annual township meeting, which shall set forth among other things required as follows:

“ Fourth. An estimate of the amount of highway labor which in his judgment should be assessed upon the taxable property of the township for the next ensuing year. * * *
“Fifth. The improvements necessary to be made in the highways and bridges during the year, and the amount^ of money tax that should be levied for that purpose beyond what such estimated highway labor will accomplish, not exceeding fifty cents upon each one hundred dollars of valuation, according to the assessment roll for the last preceding year, or in townships whose aggregate valuation is less than fifty thousand dollars, a gross sum not exceeding two hundred and fifty dollars.”

Section 3 (section 4074, 2 Comp. Laws) provides that this statement shall be presented to the next annual township meeting, and such meeting—

“ May determine by a majority of the electors present and voting:
“ First. Upon the amount of highway labor to be assessed, which shall be within the limit named in the fourth subdivision of the last preceding section.
Second. Upon the amount of money tax to be assessed within the limit prescribed by the fifth subdivision of the last preceding section, [and] the sum so voted shall be levied and collected in the same manner as other township expenses.”

Section 4 (section 4075, 2 Comp. Laws) provides that, in case the electors at said annual meeting neglect or refuse to vote any rate of highway labor to be assessed as above required, the highway commissioner may assess not exceeding one-half day’s labor upon each $100 of valuation.

“And in case such electors shall neglect or refuse to vote a money tax as, by the second subdivision of the preceding section provided, the township board may order to be levied such' sum within the limit hereinabove provided as such board may deem necessary for the improvement of roads and bridges.”

Sections 5-8 (sections 4076-4079,2 Comp. Laws) provide for the assessment of the highway labor tax upon all the property in each road district in his township by the highway commissioner upon separate lists, duplicates of which must be made by the township clerk, one of which lists for each district to be filed by said clerk in his office, and the other to be forthwith delivered by the commissioner to the overseer of highways of the proper district, with the warrant of the commissioner annexed thereto.

The requirements of the statute have been set out at length for the purpose of clearly understanding the method of raising highway taxes under this system known as the “Labor System.” This tax is to be raised, first, by the assessment of labor upon all the property in each highway district in the township; and, second, in case such highway labor is not sufficient to provide for the improvements necessary to be made in the highways and bridges during the year, by a money tax to be levied for that purpose, both the labor and the money tax to be restricted in amount by the statute. The labor tax is entirely in the hands of the commissioner, as far as its assessment and apportionment are concerned, and must be so assessed only upon the property included in the several road districts of the township. It is clear, from section 4072, that the road districts do not include the territory occupied by incorporated villages, and therefore that no labor tax could be assessed upon such territory or property therein.

The clause “excluding incorporated villages’’was inserted in this section by the amendment of 1887. [Act No. 156, Pub. Acts 1887.] It is claimed by the plaintiff that this amendment was made by the legislature to meet the decision of the court in the case of Ryerson v. Township of Laketon, 52 Mich. 509, and to grant relief to incorporated villages from the burden thereby imposed, and that, in the case of Auditor General v. Railway Co., 116 Mich. 122, the fact that section 4072, 2 Comp. Laws, had been so amended, was not called to the attention of the court. In both the cases above cited this court held that a highway money tax, under subchapter 2 of chapter 101 in question, must be levied upon all the property of the township, including that of any incorporated village within its boundaries. We do not think the section as amended will bear the construction for which contention is made in plaintiffs’ protest and before this court that incorporated villages are to be excluded from assessment for highway taxes levied under this chapter. The assessments referred to in section 4072 are the assessments of highway labor, which are made against all the property in the highway districts, and such assessments upon any lands not paid by labor or commuted are returned, and levied upon said lands, and collected in the same manner that the contingent charges of the township are collected. The statute as amended reads:

“For making such assessments the commissioner of highways in each township shall divide his township, excluding incorporated villages, into so many road districts as he may judge convenient.”

This amendment excluded from any road district the territory included in incorporated villages. To hold that anything further was intended would be a strained construction.

Section 4074, 2 Comp. Laws, provides for the levy and collection of the money tax for the improvements of highways and bridges in a township, beyond what the estimated highway labor will accomplish. With this levy and assessment of this tax the commissioner has nothing to do. It is voted by the electors at the annual township meeting. All the electors of the township, including those residing within incorporated villages, are entitled to participate. This section also provides that it shall be levied and collected in the same manner as other township expenses. In the case of Ryerson v. Township of Laketon, above cited, this court considered at length and with care the matter of raising this money tax under this statute. The court said:

“ It was perfectly competent for the legislature to provide that all the taxable property in the township should be assessed for the repairs and improvements of highways in the township, although those highways should lie wholly outside of the village. Not the least expense in keeping up highways is the building, repairing, and preservation of bridges.
“ There is no good reason why the property lying within the village limits should not bear its just proportion of this burden. The legislature was careful to provide that the whole township should bear the expense of keeping the bridges on its highways in repair, even when they are located within the corporate limits of the village.”

And, further, as to those entitled to vote this tax:

“ No distinction is made between those residing within and those without the corporate limits of the village. Those within are regarded as citizens of the township and as being mindful of its welfare, and the law had vested in all the electors indiscriminately the power of imposing this money tax. ”

The amendment referred to was part of the statute at the time this court passed upon the case of Auditor General v. Railway Co., supra. An examination of the record and briefs in that case shows that this amendment is not referred to. It had been upon the statute books for 10 years, and the presumption is that both court and counsel considered that no change had been made in the statute relative to the assessment of this money tax, rather than, as claimed by plaintiffs, that the amendment had been entirely overlooked. Our construction is that no change had been made in that regard, and we hold that this case is controlled by the two cases cited above. The contention of plaintiffs relative to this amendment cannot be sustained.

The judgment of the circuit court is affirmed.

Blair, Montgomery, Ostrander, and Hooker, JJ., concurred.


author: Hooker, J. Moore, C. J.

text:
    THOMPSON v. VILLAGE OF MECOSTA.
    1. Appeal and Error — Law of Case.
    A determination on review that the testimony of a certain witness was not sufficient to overcome the presumption of notice to a bank of the defects in municipal bonds of which it claims to be a bona fide purchaser, is binding on the court on a subsequent review of the same case, the testimony being the same.
    2. Municipal Corporations — Bonds—Bona Fide Holders — Evidence.
    Testimony by the donee of a municipal bond, unenforceable except in the hands of a bona fide purchaser, because given as a bonus, that he sold it to the manager of a bank, to whom he did not impart his knowledge concerning the character of the bonds, is sufficient to take the question of the good faith of the bank to the jury.
    3. Witnesses — Impeachment—Contradictory Statements. Evidence that the donee of municipal bonds, unenforceable
    except in the hands of a bona fide holder, had stated to councilmen that he could dispose of them to a certain bank and wanted them made payable at that bank to indemnify it against a bond signed by one of its directors, guaranteeing his performance of the contract for which the bonds were issued, none of the officers or agents of the bank being present at the conversation, had no tendency to contradict his testimony that he did not impart to the bank his knowledge of the character of the bonds, and was therefore not competent to impeach him on that theory.
    4. Same.
    The donee of municipal bonds, unenforceable except in the hands of a bona fide holder, having testified that he sold them to the manager of a bank, to whom he did not impart his knowledge of their character, testimony that, long after the sale, a third person, who was not sworn, stated, in the donee’s presence, that the sale to the bank was a mere pretense, which statement the donee did not deny, is inadmissible for the purpose of impeachment, the donee being under no duty to deny it.

      5. Evidence — Admissions—Prior Owner.
    Admissions of the president of a corporation receiving municipal bonds as a bonus cannot impair the right of the assignee of a bona fide holder to recover on them.
    6. Banks and Banking — Notice to Officers.
    That a director of a bank, which is claimed to have been a bona fide holder of municipal bonds issued as a bonus, wag surety on a bond given by the donee to secure performance on his part, is no evidence that the bank had knowledge of the character of the bonds, where there is no evidence that the director knew at the time that the village authorities had anything to do with the transaction, or that he was acting for the bank in signing the bond.
    7. Evidence — Admissions—Trustees.
    The declarations of one suing as the trustee of an estate are not admissible as the declarations of a party, since the estate is not bound by them.
    8. Witnesses — Impeachment—Declarations.
    Declarations of one suing as trustee, inconsistent with his testimony, on a proper foundation being laid, are admissible to impeach him.
    9. Municipal Corporations — Bonds—Bona Fide Purchaser— Inquiry .
    The test of whether the officers of a bank, at the time of its purchasing municipal bonds, had notice of facts and circumstances requiring inquiry, is not whether they were such as would naturally or reasonably lead an ordinarily careful and prudent man to make inquiry as to what the bonds were given for, but whether they were such as to make it bad faith not to do so.
    10. Banks and Banking — Notice to Officers.
    That the president or cashier of a bank which purchased municipal bonds had notice or knowledge of facts which would reasonably lead an ordinarily careful man to make inquiry as to what the bonds were given for, is not notice to the bank where the purchase was not made by the one of them having notice, but by the other, having no such notice or knowledge.
    Moore, C. J., dissenting.
    Error to Lenawee; Chester, J.
    Submitted January 10, 1905.
    (Docket No. 39.)
    Decided September 19, 1905.
    Debt by Anna Maria Thompson and William M. Thompson, trustees, etc., against the village of Mecosta, upon a municipal bond. There was judgment for defendant, and plaintiffs bring error.
    Reversed.

      Eugene Pringle and M. Brown, for appellants.

      Watts, Smith & Baldwin and Fellows & Chandler, for appellee.
   Hooker, J.

This action, brought to recover upon a municipal bond issued by the village of Mecosta, has been before us on a former occasion. See 127 Mich. 522. The bond was admittedly irregular, and in order that plaintiffs recover it is necessary that they show that the Jackson City Bank, from which they purchased it, was a bona fide purchaser of the bond for value. Id. The evidence offered to prove such purchase consisted of the testimony of Hutchison and a transcript of that of Newkirk, a former' cashier of the bank, now dead, taken upon the former trial. We held in our former opinion that Newkirk’s testimony was consistent with a want of bona tides, and therefore was not sufficient to overcome the presumption of notice. The same is necessarily true upon the present record. Hutchison testified that he, as owner of the bond, sold it to Emerson, who was manager of the bank and acting on its behalf in the transaction, and that he did not impart his knowledge concerning the character of the bonds. There was enough in this testimony to take the question of good faith to the jury, and, as the defendant was able to give no testimony regarding the transaction, it was prima facie evidence of a bona fide purchase, unless discredited either by such an impeachment of Hutchison as justified the jury in disbelieving his testimony, thereby leaving the case to rest upon the legal presumption of notice, or by testimony of facts and circumstances inconsistent with and outweighing his testimony.

The bond was payable at the bank in Jackson. Counsel offered testimony tending to show that the persons who constituted the village council required a bond for the faithful performance of the contract to build the mill, and that such .a bond was furnished, signed by William M. Thompson, who was a director of the bank. One of these councilmen, Streeter, was allowed to testify that at the time the negotiations were pending Hutchison said that, if he could get these bonds, he could turn them over to the Jackson City Bank, and that it would sign a bond of indemnity for $10,000, guaranteeing the performance of the contract, and that such a bond was afterwards presented to them — i. e., the bond signed by William M. Thompson— and that Hutchison said Thompson was a representative of the bank; also that Hutchison said he had the bonds payable at the bank to indemnify it against signing the indemnity bond, or so that he could use the funds through the bank. All of this related to conversation between Hutchison and the defendants, in the absence of the bank and its representatives, before the contract was made or the bond was issued. It was hearsay testimony, and it is not claimed that it was admissible, except by way of impeachment, to contradict Hutchison.

A Mr. Wilson was asked if Reynolds had not said in the presence of Hutchison that he understood that the bonds were void, of no value, but that they took them in their business and took their chances, and that they had gone through the form of putting this one into the hands of a bona fide or good faith holder. The testimony was admitted, although Reynolds was not a witness in the case. It is not disputed that the testimony is hearsay, but it is claimed to have been admissible to impeach Hutchison, who was a witness. The alleged conversation was long after the bank acquired the bond.

The conversation with Streeter regarding Hutchison’s intentions was not inconsistent with a bona fide purchase by the bank; neither was the fact that he presented a bond of indemnity, signed by the bank or its officer, nor the reason that Hutchison had for having the bond made payable at the bank. They constituted no testimony affecting the bank’s purchase, and the testimony, if given by Hutchison, would have been immaterial. It was, therefore, not a proper subject for impeachment. Nor was the testimony inconsistent with his original statement that the bank bought in good faith and for value.

The testimony of Wilson had no possible connection with Hutchison’s testimony. This testimony is said to be impeaching in its character, upon the theory that the statement of Reynolds was made in Hutchison’s presence, who, by his failure to deny it, may be said to have acquiesced in and adopted it, and tended to lessen the weight of his testimony that the sale to the bank was a bona fide one. The importance of this evidence is manifest when we consider that upon this record the burden of proving a bona fide purchase by the bank was upon the plaintiff. The only testimony tending to prove it was Hutchison’s. By impeaching Hutchison, the jury might be justified in disregarding his testimony, which would leave the claim of bona fide purchase unsupported.

It would have been competent to prove by Reynolds the fact that the sale was a fake, to give the appearance merely of a bona fide sale. Defendant did not attempt that, but sought to accomplish the same purpose in another way; i. e., by discrediting Hutchison. This was competent, and, if it had been shown that Hutchison had made this statement ascribed to Reynolds, it would have been proper. So if it had appeared that Hutchison had adopted the statement, or said that it was true, the same would have been the effect. State v. McGaffin, 36 Kan. 320; Patterson v. State (Tex. Cr. App.), 60 S. W. 557. This is an attempt to extend the rule a step further and make the mere silence of the witness equivalent to his affirmative assertion of the truth of the statement. This is by analogy to the rule that treats acquiescence or silence of a party to an action as an admission, when he is in duty bound to speak or it is unnatural that he should not speak. The primitive rule in impeachment was that, when one has made a contradictory statement, it is a contradiction of his testimony which tends to discredit him, but that it cannot be used as substantive proof of the fact stated. That there is great danger of such use by juries has been said by courts many times, and it is a tradition of the law that impeachment is not favored, but -must be in strict accordance with the rule. There may be a few modern text-books and digests in which the rule that silence may answer the purpose of an impeachment is stated. Thus in 30 Am. & Eng. Enc. Law (2d Ed.), p. 1113, it is said:

“Verbal statements or writings of persons other than the witness sought to be discredited, for which the witness is not responsible and which have not been approved by him, are inadmissible in evidence to contradict his testimony. But a statement made by another in the presence of a witness, assented to and adopted by him, Or heard by him without objection or contradiction, maybe proved where the statement contradicts his testimony in a material respect and the witness denies that the statement was made.”

The portion of the text italicised is hardly supported by the cases cited. Thus in State v. McGaffin, supra, the statements were assented to when made, and the same is true in Patterson v. State, supra. The case of Easterwood v. State, 34 Tex. Cr. R. 402, seems not to be in point, thus leaving the assertion of the text without support. It may have been inserted out of abundant caution, and illustrates how easily a trend may be given to the law by inaccuracies in text-boobs and digests.

Mr. Wigmore, in his work on Evidence, evinces his belief in the force of the analogy mentioned, and says that—

“A failure to assert a fact when it would have been natural to assert it amounts in effect to an assertion of the-nonexistence of the fact. This is conceded as a general principle of evidence (post, § 1071).” 2 Wigmore on Evidence, § 1042.

We concede that a witness’ testimony may be discredited in many instances by his failure to state all that he has previously stated, or by stating more than on previous occasions, where there had been a duty to speak, as shown by the various cases cited by the author; but the facts in this case show no such duty, even if it could be said that a denial of Reynolds’ alleged statement to Wilson would have been natural. Without affirming or denying that there are instances where proof of silence might be used to impeach a witness, we are of the opinion that this is not such a case. We have neither been cited to nor found a parallel case, where defendant’s position has been sustained. And see 2 Bouv. Law Dict. p. 1245; Goldsby v. U. S., 160 U. S. 70. All of this testimony was likely to lead the jury to a wrong conclusion.

The court refused to instruct the jury that admissions of John Hutchison could not impair plaintiff’s right to collect the bond. The request should have been given. He also refused to charge that the fact that William M. Thompson signed a bond of the Hutchison Manufacturing Company to secure a contract to build a mill is no evidence that the bank had notice or knowledge that the bond was invalid. This request also should have been given, as there is no testimony tending to show that at that time Thompson knew that the village authorities had anything to do with the transaction, or that he was acting for the bank in signing the bond.

Testimony was given as to statements made by Thompson at the time of the trial of this case, when the witness Wilson asked for further time upon the bond, in which conversation he said that he was president of the bank and was quite indifferent as to whether the village paid the bond or not, and that “ we are amply secured here in Jackson by the Hutchison Company for this bond, and any arrangement you can make with the Hutchison Company is agreeable to us.” The witness added:

‘ ‘And then I talked with him a little further in regard to it, and drew him out on the question of their knowledge of the character of the bond, and he said that we — using the term ‘ we ’ — signed the guaranty or indemnity bond which the Hutchison Company gave the village of Mecosta.”

Continuing, witness said:

“ I had never seen that bond. I just took his word for it that ‘ we signed it,’ as he said, and, said .1, ‘ Then you were familiar or knew something about the character of these bonds ? ’ and he says, ‘ Yes, we understood that they were bonus bonds.’ ”

This testimony came in under objection. We do not discover that defendant’s counsel claim that this was admissible as substantive proof that the bank was not a bona fide purchaser for value, and we do not, therefore, decide whether the admissions of the president of the bank were admissible as such, especially in a case where the bank was not a party. It is claimed that the declaration was admissible as one made by a party to the suit, but we think that this overlooks the fact that Thompson sued in a representative capacity, and therefore could not bind the estate (which was the real plaintiff) by his declarations. Fish v. Morse, 8 Mich. 34; Clark v. Davis, 32 Mich. 154; Barry v. Davis, 33 Mich. 515; Durfee v. Abbott, 50 Mich. 283; White v. Ledyard, 48 Mich. 264; Greee v. Helm, 91 Mich. 457; Miner v. Raymond, 113 Mich. 28; Hudson v. Saginaw Circuit Judge, 114 Mich. 116 (47 L. R. A. 345). It is possible that this testimony was properly admissible as impeaching testimony. Mr. Thompson had testified that he had no knowledge of the circumstances under which the bonds were purchased, and substantially claimed ignorance as to whether or not the bank bought without notice and for value. A foundation having been laid, we think that this testimony was admissible for such a purpose.

The court charged the jury that—

“Upon thi§ question of knowledge, of notice, gentlemen, you are instructed that when the Jackson City Bank got the bond in question it would not be a bona fide holder, if at the time its president or cashier had any notice or knowledge of facts and circumstances which would naturally or reasonably lead an ordinarily careful and prudent man to make inquiry as to what the bond was given for.”

This instruction was erroneous, for the reason that the test is, not whether the circumstances would naturally lead the ordinarily prudent man to investigate, but whether they were such as to make it bad faith not to do so. Brewster v. McCardel, 8 Wend. (N. Y.) 478; New York Iron Mine v. Citizens' Bank, 44 Mich. 353; Mace v. Kennedy, 68 Mich. 397; Stevens v. McLachlan, 120 Mich. 290; Glines v. State Sav. Bank, 132 Mich. 638. Again, if this instruction was intended to mean that knowledge by or notice to the officer purchasing the paper would bind the bank, it might not be erroneous; but it would be naturally interpreted as meaning that knowledge or notice to either of these officers would be notice to the bank, although the purchase was one made by one having neither such knowledge or notice. It would be a burden upon banks to hold that all of its officers must anticipate the offer to the bank of all doubtful paper of which he might have knowledge.

The judgment should be reversed, and a new trial ordered.

Carpenter, McAlvay, Grant, Montgomery, and Ostrander, JJ., concurred with Hooker, J.

Moore, C. J.

(dissenting). This case has been here before, and is reported in 127 Mich. 522. A reference to the opinion of Justice Hooker will do away with the need of making a long statement of facts here. Upon the last trial each party asked that a- verdict be directed in its favor. The judge declined to do this, and submitted the case to the jury, which returned a verdict in favor of the defendant.- The case is brought here by writ of error.

The first assignment of error requiring attention relates to the admission of a bond given to the trustees of the village of Mecosta about the time the bond sued upon was issued. The objection was, first, the bond did not run to the village of Mecosta, and, second, that the fact that it was signed by William M. Thompson could in no way bind the Jackson City Bank. It appeared, upon the other trial and in this trial, that the bond sued upon was issued as part of a bonus to the John Hutchison Manufacturing Company to induce it to build a flouring mill which that company was to own. It was the claim of the village that the company agreed to secure the performance of its agreement by the giving of a bond indorsed by the Jackson City Bank, and that in performance of this promise it presented to the village a bond dated September 18, 1893, signed by William M. Thompson as surety, who was then one of the directors of the bank and who is one of the plaintiffs in this suit. We think the testimony was competent as being part of the history of the transaction.

Error is assigned upon the cross-examination of William M. Thompson, tending to show his knowledge of the business in which the Hutchison Manufacturing Company was engaged and of its contract with the village of Mecosta. Counsel say that, though Mr. Thompson was at the time a director of the bank, he had no control or management of the bank, and that, if he had knowledge that the bond was issued to the Hutchison Manufacturing Company for an illegal consideration, it would not be competent as evidence that the bank had notice of the consideration of the bond; citing Shaw v. Clark, 49 Mich. 384. We do not so understand the case cited. It does hold that the knowledge possessed by Mr. Shaw, a director who took no part in managing the bank, was not notice to the bank of the defect; but it does not hold it was not competent to show what knowledge Mr. Shaw had. The record discloses this bank had but four directors. Suppose each of them had been offered as a witness on the part of plaintiffs. Would it not have been competent to show by cross-examination what knowledge he possessed of the want of consideration of the bond ? To ask the question is to suggest its logical answer. Mr. Thompson was not only one of the four directors, but he was constantly employed in the bank, as a clerk most of the time; but in the temporary absence of Mr. Newkirk, the cashier, and Mr. Thompson’s father, the president of the bank, he did such of their work as he could, though he did not pass upon the discounting of paper. Upon the death of his father he became president of the bank. We think the testimony was competent. It is said:

“The court was requested to charge the jury that the fact that William M. Thompson signed a bond of the John Hutchison Manufacturing Company to secure a contract to build a mill at the village of Mecosta is no evidence that the Jackson City Bank had notice or knowledge that the bond upon which this suit was brought was invalid in the hands of the John Hutchison Manufacturing Company, which request was refused.”

This is said to be error. If this evidence stood alone, there would be a good deal of force in this suggestion; but it did not. As already seen, it was competent testimony in the case. It was coupled with other testimony, and with circumstances which made it proper testimony to be considered in deciding whether the bank had established it was a bona fide holder of the bond.

The following question was put to Mr. Wilson, and error is assigned upon it:

Q. Now, I ask you if Mr. Reynolds, in the presence of Mr. Hutchison — if Mr. Reynolds, secretary of the Hutchison Company, in the presence of Mr. Hutchison— stated to you that he understood that this bond was void, of no value, but that they took them in their business and took their chances, and that they had gone through the form of putting this into the hands of a bona fide or good faith holder, or this in substance ?”

Question was objected to by the counsel for plaintiffs as being irrelevant and incompetent, which objection was overruled, and counsel for the plaintiff excepted. Mr. Wilson was acting for the village. He sought an interview with Mr. Hutchison and Mr. Reynolds, the latter of whom had the same interest in and was clothed with the same powers in relation to the Hutchison Manufacturing Company possessed by Mr. Hutchison. The plaintiff called Mr. Hutchison as a witness, and he denied that either Mr. Reynolds or himself imparted any knowledge to the bank with reference to what the bond was given for. His attention was also called to the conversation between Mr. Wilson, Mr. Reynolds, and himself. He admitted a conversation, but denied such a conversation occurred. The testimony objected to was admitted only for the purpose of bearing upon his credibility. We think it was admissible for that purpose.

Error is assigned because the court permitted testimony to be given of what William M. Thompson, then president of the bank, said about extending the time of payment of the bond after it became due. It was the claim of defendant that the bank never bought the bond, that it was acting all through the transaction for the Hutchison Manufacturing Company, and that the statement made by the president of the bank at this time tended to support this claim. We think the testimony was competent as bearing upon that question. When the case was here before it was held the bond was not valid in the hands of the Hutchison Manufacturing Company, and that it was incumbent upon the plaintiffs to show the bond was purchased without notice of its infirmities. Without repeating what was said we call attention to the language of Justice Hooker in 127 Mich., at pages 528 and 529. The trial court, in a careful and impartial charge, left the question to the jury whether there was proof of a bona fide purchase. The jury found in favor of defendant.

Judgment should be affirmed.

Blair, J., did not sit.


author: Hooker, J.

text:
    WOLVERINE LAND CO. v. DAVIS.
    Taxation — Sales—Degree—Entry—Validity.
    Where a decree for the sale of lands delinquent for taxes was made on the date fixed for hearing the petition, but the court was in session 19 days thereafter before the decree was presented to the register in chancery, and no ob j ection was filed to the tax, the decree, not being a decree until received', countersigned, and entered by the register, was made after the expiration of the five days’ notice provided by Act No. 206, § 66,
    Pub. Acts 1893, and was therefore valid.
    Appeal from Oakland; Smith, J.
    Submitted January 12, 1905.
    (Docket No. 52.)
    Decided September 19, 1905.
    Petition by the Wolverine Land Company against Daniel L. Davis and others for a writ of assistance. Prom a decree dismissing the petition, petitioners appeal.
    Reversed.

      B. 8. Woodliff and D. W. Glosser, for petitioner.

      P. B. Bromley, for defendants.
   Hooker, J.

Petitioner appealed from a decree of the circuit court denying a writ of assistance to put it in possession of premises by virtue of a tax deed. The auditor general’s petition for the sale of delinquent tax lands- was filed July 29, 1896, and an order obtained setting September 21, 1896, as the date upon which the matter would be heard. The decree bore date September 21,1896, but was not presented to the register in chancery until November 11th following, on which date he countersigned and entered it. Sale was made December 7th, and a certificate of sale issued to-Baldwin, and on May 3, 1898, he received a tax deed. On May 29, 1903, the executors of his estate deeded the premises to the petitioner, and the petition for writ of assistance was filed. It was claimed on the hearing, and the circuit court held, that the decree was premature and void. The September, 1896, term of the circuit court convened on September 21st, and was in session 19 full days before November 11th. No objection was filed to the tax by any one at any time.

The testimony shows beyond dispute that this decree was not received by the register in chancery until November 11th, when he countersigned, filed; and entered it. Although it was dated September 21st, the date fixed by the order of publication as the date on which the tax petition would be heard, this cannot be considered to have been a decree before it was received by the register. See Sellers v. Botsford, 9 Mich. 490; Newbould v. Stewart, 15 Mich. 155; Kingsbury v. Kingsbury, 20 Mich. 215. It was therefore made after the expiration of the five days provided by the statute. We have held that where a decree has been rendered, and the court adjourned sine die without sitting five days after the time fixed for hearing the tax proceeding, the decree was void. We have never held, however, that this was so where the court was shown to have been -in session the requisite period, and we have intimated that, although a decree may be entered before the expiration of the five days mentioned in section 66, Act No. 206, Pub. Acts 1893, and no one has appeared and filed objections, with a showing that he had been prevented from filing them earlier without fault on his part, the decree is not rendered void. The law contemplates that the court will adjudicate upon such a showing; not that the application necessarily gives a right to file objections and have them heard. In such a case, if the judge should deny the application, his decision would be final, if not appealed from; and, as we have said, the fact that a decree had been entered would not preclude his granting the application. But, where the court has adjourned without sitting the requisite five days, another question is presented, and we have held that, there being in such case an abridgment of the statutory opportunity for presenting this application, the decree was made void. We think the subject is fully covered by the cases cited, viz.: Youngs v. Clark, 120 Mich. 528; Gates v. Johnson, 121 Mich. 664; Brown v. Mining Co., 123 Mich. 117; Brown v. Napper, 125 Mich. 117; Allen v. Cowley, 128 Mich. 531; Peninsular Sav. Bank v. Ward, 118 Mich. 93; McGinley v. Mining Co., 121 Mich. 89.

The decree is reversed, and a decree will be entered granting the prayer of the petition, and with costs of both courts.

Moore, C. J., and Carpenter, Montgomery, and Ostrander, JJ., concurred.