text:
    LONIER v. STATE SAVINGS BANK.
    Banks and Banking — Checks — Payment — Fraud op Payee’s Agent — Liability op Bank.
    Where plaintiff’s agent accepted a check in payment of an account, and without authority indorsed plaintiff’s name upon it, presented it at the bank upon which it was drawn, received the money upon it, and absconded without accounting to plaintiff, and the bank charged the check to the drawer and returned it to him as paid, the bank is not liable to plaintiff for the amount of the check, either oh the theory that it received the money from the drawer for plaintiff’s use, or that money was paid to the bank for plaintiff’s use.
    Error to Washtenaw; Kinne, J.
    Submitted June 14, 1907.
    (Docket No. 95.)
    Decided September 20, 1907.
    Assumpsit by Louis Lonier and William J. Hoffer, co-partners as Lonier & Hoffer, against the State Savings Bank for money had and received. There was judgment for defendant on a verdict directed by the court, and plaintiffs bring error.
    Affirmed.

      A. F. & F. If. Freeman, for appellants.

      Arthur Brown, for appellee.
   Hooker, J.

This cause was disposed of on the conclusion of plaintiffs’ testimony, a verdict for defendant being directed.

The testimony was in substance that plaintiffs were merchants and defendant the banker of Staebler &Co., their customer. They employed one Donaldson as a drummer, and it was his duty to sell goods, and sometimes he was directed to settle accounts. On June 13, 1906, Staebler & Co. were indebted to the plaintiffs. Donaldson called upon them and settled the account, taking their bank check payable to plaintiffs or their order for $92.30. Donaldson took the check to the bank upon which it was drawn and without authority indorsed the names of the payees upon the back of the check and received the money upon it. The bank charged the check to Staebler & Co. and returned them the check marked paid. Donaldson never accounted to the plaintiffs for the money. About a month later Donaldson again called on Staebler & Co. to sell goods, and again made a settlement of account, Staebler & Co. again giving their check, payable as before, for $101.50, and again Donaldson collected the money in the same way and without authority, and in due time the check was returned to Staebler & Co. in the course of business, being charged by the bank against their account. Donaldson never accounted for this money, but absconded.

This action is brought against the savings bank to recover the amounts of plaintiffs’ claims represented by the checks. Donaldson violated his instructions, which were to send such checks to the payees, and he was never authorized to use their name upon commercial paper. Plaintiffs were ignorant that he had so used their name until after he absconded. The declaration contained a special count alleging the foregoing facts, and a count for money had and received for plaintiffs’ benefit. We understand that counsel for plaintiffs do not claim a recovery upon the checks, but upon the theory that the bank has received money for their use and benefit.

The facts are that Staebler & Co. had money in the bank upon deposit, and drew these checks against their account. The bank paid the checks and charged them against Staebler & Co., and in due course of business passed them to Staebler & Co., presumably on a periodical balancing of Staebler & Co.’s bank book. Apparently these things were done when both the bank and Staebler & Co. supposed that the checks had been paid to one authorized to collect them.

Counsel for the plaintiffs maintain that this was in effect a settlement of the drawer’s account with the bank, after which it was in possession of a fund equitably belonging to the true owner of the checks.

Counsel for defendant rely upon three cases in alleged contravention of this claim: First Nat. Bank of Washington v. Whitman, 94 U. S. 343, and our o^n cases of Brennan v. National Bank, 62 Mich. 346, and Grammel v. Carmer, 55 Mich. 201. See, also, Cincinnati, etc., R. Co. v. Bank, 54 Ohio St. 60 (31 L. R. A. 653).

Under the Michigan cases cited, this court is committed to the doctrine that the holder of an unaccepted check has no right of action against the drawee, and that the check does not operate as an assignment of the amount named in it, in the drawee’s hands, a doctrine supported by the Federal case mentioned. Although there is a want of harmony in the cases, those in Illinois especially indicating a different doctrine, we see no occasion to depart from the rule as heretofore settled for this State.

Neither is this a case where it can be said that plaintiffs have a cause of action for money paid to the bank for their use and benefit. The money was deposited in the bank, not to the plaintiffs’ use and benefit, but for Staebler & Co. This deposit created the relation of debtor and creditor as between them, and it has never been changed either by an assignment of Staebler & Co.’s claim against the bank, or in any other way. See Tiffany’s Justice’s Guide (6th,Ed.), p. 788 et seq.; Perley v. County of Muskegon, 32 Mich. 132, 135. See, also, Grammel v. Carmer, supra, citing Gibson v. Cooke, 20 Pick. (Mass.) 15, of which it says:

“.In Gibson v. Cooke, 20 Pick. (Mass.) 15, it appeared that a party had drawn a bill which was dishonored for want of funds. Afterwards the drawer remitted funds expressly to meet that and another small bill which had previously been drawn. The drawee paid the small bill, but refused to pay the other. It was held that the payee could not maintain an action against the drawee for the amount, there beingno privity of contract between them. .If any case could be conceived whose facts would support such an action, this must be such a case, for here the funds were remitted for the express purpose of paying the bill sued upon.”

The judgment is affirmed.

McAlvay, C. J., Caepentee, Geant, and Mooee, JJ., concurred.


source: Caselaw Access Project

author: Carpenter, J.

license: Public Domain

text:
    RANSIER v. DWYER.
    1. Contracts — Rescission — Fraudulent Representations — Failure to Deceive.
    Where, on abill to rescind a contract for the sale of land on the ground of fraudulent representations, it appears that before complainant entered into the contract of purchase he had investigated and learned the falsity of every fraudulent representation alleged in his bill, only an extraordinary case will prevent‘denial of relief.
    2. Vendor and Purchaser — Rescission — Affirmance of Decree-Relief on Ground not Alleged.
    Where, on a bill to rescind a contract for the sale of land on the ground of fraudulent representations, it appears that at the time defendant entered into the contract to sell to plaintiff he had already made a binding contract to sell to another, of which fact complainant was not apprised until after the filing of his bill for rescission, a decree granting rescission will' be affirmed though the making of the contract was not induced by the fraudulent representations.
    Appeal from Wayne; Donovan, J.
    Submitted June 14, 1907.
    (Docket No. 60.)
    Decided September 20, 1907.
    Bill by Bertrand W. Bansier, John Funke, and William Smith against Mary L. Dwyer, executrix of the last will and testament of John M. Dwyer, deceased, to rescind a land contract on the ground of fraud. From a decree for complainants, defendant appeals.
    Affirmed.

      George B. Greening, for complainants.

      John H. McDonald {Edward 8. Grece, of counsel), for defendant.
   Carpenter, J.

The circuit court found that a contract whereby complainants purchased from defendant’s testator the hotel called “Hotel Barry,” in the city of Hastings, was procured by fraud, and entered a decree for its rescission. Defendant asks us to vacate that decree.

It appears by the testimony that before complainants entered into the contract of purchase they had by investigation learned the falsity of every fraudulent representation alleged in their bill of complaint. Under' these circumstances it must be held that they were not defrauded by these representations, and if the case were not an extraordinary one, it would be our duty to reverse the decree and dismiss their suit; but the case is an extraordinary one.

It appears, from the testimony that when the contract in question was made, defendant’s testator had already contracted to sell said property to another, one Lura Gregory Powell, and that she, Mrs. Powell, had commenced'suit in the circuit court for the county of Barry, where the property was situated, to enforce said contract. This suit resulted in a decree in favor of Mrs. Powell, which decree has just been affirmed by this court. See Powell v. Dwyer, ante, 141. Complainants had no knowledge of said contract of purchase until after they commenced this suit (and there is, therefore, no reference to the same in their bill of complaint), but their rights were subject thereto, because a proper and legal notice of lis pendens was upon file when they entered into their contract of purchase.

Under these circumstances it would be an idle ceremony to observe the rule — generally a most meritorious one — that relief will not be given upon any ground not alleged in complainants’ bill. For if complainants were permitted — and it would be unjust to refuse to permit them — to file a new bill setting forth the established facts, they would be entitled to relief. * No defense could possibly be made to such a bill.

The decree will, therefore, be affirmed. Defendant “will recover costs in the circuit court. No costs will be awarded in this court:

McAlvay, O. J., and Grant, Hooker, and Moore, JJ., concurred.


author: Ostrander, J.

text:
    WEBSTER v. YPSILANTI CANNING CO.
    1. Corporations —Insolvency —Mortgages —Preference—Distribution of Assets.
    Certain, stockholders of a manufacturing corporation having lent it money and being about to indorse its notes at the bank to raise funds for a working capital, the board of directors, all of whom were creditors^ authorized the giving of a mortgage upon all the property of the corporation to secure the stockholder creditors and indorsers. The corporation was insolvent within the rule laid down in Munson v. Ellis, 58 Mich. 381, but the annual report, subsequently made, showed assets of $11,400 and liabilities of $4,800. Held, that the mortgage was, not,invalid as given in anticipation of discontinuing the business or for the purpose of distributing the assets of a non-going concern.to preferred creditors.
    2. Same — Mortgages — Validity — Preference of Stockholders.
    A mortgage on the assets of a corporation is not ineffective because ordered by directors who are personally secured thereby.
    3. Mortgages — Execution Creditors — Priority of Lien.
    A corporation gave a mortgage covering its real and personal property to a trustee to secure certain creditors, and thereafter an unsecured - execution creditor levied on the real estate. Subsequently the trustee foreclosed the mortgage as to the real estate and bid it in for a sum sufficient to pay the entire debt, and later during the period of redemption foreclosed the mortgage as to the personal property, bid for it a sum sufficient to pay the entire debt, took the property and disposed of it. Held, that the execution creditor is entitled to a lien upon the real estate superior and prior to the title asserted by the trustee, and in default of payment of his debt, to the right to sell the real estate to satisfy the same.
    Appeal from Washtenaw,: Kinne, J.
    Submitted June 14, 1907.
    (Docket No. 17.)
    Decided September 20, 1907.
    Bill in aid of execution by Hiram P. Webster, George W. Webster, Fred C. Cobb, Charles S. Cobb, and Miny E. Miller, copartners as Webster, Cobb & Co., against the Ypsilanti Canning Company, and Robert W. Hemp-hill, trustee. From the decree rendered, complainants appeal.
    Reversed.

      Choate & Webster and A. J. Sawyer & Son, for complainants.

      Tracy L. Towner and John P. Kirk, for defendants.
   Ostrander, J.

The complainant partnership is a judgment creditor whiclf levied upon the real estate formerly owned by defendant corporation, which real estate was, subsequent to the making of the levy, sold in foreclosure proceedings to, and is now held by, defendant Hemphill, as trustee, for those whose obligations against the company Were secured by the mortgage. ' The mortgage, which conveyed all property, real and personal, belonging to defendant corporation, was given by sole authority of the board of directors, each of whom was a creditor of the corporation and each, with some 37 other creditor stockholders, was secured by the mortgage. No other creditors were secured. It is claimed that the mortgage was given when the defendant was insolvent, was not a going concern, and had no intention of continuing business; was intended as and was in effect a distribution of all of- the assets of the corporation to its stockholders.

It appears,, that a canning factory was built by a Chicago concern with money subscribed for that purpose by citizens of Ypsilanti and vicinity; after which the subscribers received stock in defendant corporation, which was organized to operate the factory, to the amount of their several subscriptions. The factory was built in 1901, and was turned over to the defendant corporation in February, 1902, having cost more than $11,000. There was no money for operating expenses; there were nearly 100 stockholders. Some of the stockholders lent the concern money, taking its notes. On June 9, 1902, $1,000 was borrowed at a bank and the note of the company, indorsed by the directors, given therefor. Prior to this transaction, and on June 6, 1902, the directors adopted the following resolution:

“Whereas, The Ypsilanti Canning Company is unable to procure money with which to carry on the business for the season 1902 except by individual indorsement of its paper by members, of said company: Resolved, That the members of said company who so indorse or become liable upon the paper of said company shall have a lien in the nature of a first mortgage upon all the property and effects of the said Ypsilanti Canning Company, to save and indemnify them and each of them from all loss caused by such indorsement or liability.”

From May to August, 1902, some $2,900 was raised among stockholders in addition to the $1,000 borrowed at the bank. The mortgage was executed November 21, 1902, and the condition was that the corporation pay—

“All notes given or indorsed or which shall be given or indorsed during the life of this mortgage which matures in three years from date hereof, by the said Ypsilanti Canning Company or by any one or all of its directors for and on behalf of said company, or for which said directors are jointly or individually liable, according to* the terms and conditions of a certain bond bearing even date herewith executed by the said 'Ypsilanti Canning Company to the said party of the second part, to which this indenture is collateral security.”

The bank note was paid before the mortgage was foreclosed. The mortgage was recorded February 24, 1903, and was foreclosed by advertisement in November, 1904, and the real estate bid in by the trustee for $2,327.84, which was the amount then secured thereby, with interest and costs. Complainants’ debt is for lumber furnished defendant corporation in August, 1902. Judgment was rendered in justice’s court March 24,1903,_and on July 8, 1903, transcript of the judgment was filed and judgment in the circuit court .entered. The execution, calling for the collection of $231.15, was levied on the same day. It is not shown that other than honest debts, representing money advanced by stockholders to afford capital for the business, were secured by the mortgage. The argument made by counsel for complainants supports the proposition that if the mortgage had been given before or at the time the advancements were made, it could not be successfully assailed.

Bad faith cannot be, upon this record, imputed to the secured creditors, or to the directors as officers, although the intention was to give a first lien upon the property to those who had advanced money to carry on the business'. The corporation was insolvent, as insolvency is defined in Munson v. Ellis, 58 Mich. 331, when the mortgage was given; but the record does not support the claim that it was then hopelessly insolvent and it does not now appear that the property owned by it was not of sufficient value to pay the debts. Whether it had ceased to be a going concern and reasonable hope of continuing the business had been abandoned, is not, perhaps, so clear. The season of 3 903 was wet and exceedingly bad for the canning business. Some business was done. With this exception, the company never operated the plant. They usecf up the funds raised by loans from stockholders and no new plan was formulated for sécuring needed capital. They leased and attempted to lease the factory, but there was no income therefrom. That they were, as one of the witnesses expressed it, “ all hoping, though hoping against hope,” is showp. by various circumstances, among which is the date of the maturity of the mortgage. The annual report of the company, made February 38, 1903, and filed in March, 1903, shows the mortgage in question, gives the value of real estate as $3,500, value of personal estate, including credits, as $8,915.61, total indebtedness, $4,813.-17. Upon the whole record, we are convinced that the mortgage was not given in -anticipation -of discontinuing the business or for the purpose of distributing the assets of a non-going concern to preferred creditors. Unless the security was legally ineffective because ordered by directors who were personally secured thereby, it must be held that the case is, upon this point, ruled by the principle applied in Bank of Montreal v. Lumber Co., 90 Mich. 345; O. W. Shipman Co. v. Railway, 140 Mich. 589; Sanford Fork & Tool Co. v. Howe, Brown & Co., 157 U. S. 312.

As to the action of the directors. We find no authority, in those jurisdictions in which the rule of Bank of Montreal v. Lumber Co., supra, is recognized, for the proposition that the mere fact that directors are preferred by action of the corporation instituted by themselves is sufficient to invalidate the security. The case of Rickerson Roller-Mill Co. v. Machine Co., 75 Fed. 554, 23 C. C. A. 302, relied upon by counsel for complainants, is not like the case at bar. In that case, Judge Lurton, citing and commenting on the rule of Bank of Montreal v. Lumber Co., says:

“ If such a corporation may prefer a stranger who is a creditor, it may likewise prefer one of the corporators. In the latter case, however, the utmost good faith must appear, not only in respect of the bona fides of the debt paid or secured, but in regard to all the steps taken to secure the preference. In the case before us the preference is given to persons who at the time constituted three-fourths of the directors who assented to the arrangement.”

After finding that the directors had given certain assurances to the attacking creditors, the learned judge, continuing, says:

“ Under such circumstances, it is not enough for directors taking a preference out of the assets of an insolvent corporation to establish the fact of the debt due to themselves. They secured the opportunity to prefer themselves by assurances that they would not do so.”

The reasoning employed applied to the* facts of the case before us sustains the validity of the mortgage, and we are of opinion that it was a lawful security.

But the trustee, as mere matter of- form, it is said, also foreclosed the chattel mortgage. Sale was made in February, 1905. We do not know what property was covered by or sold under the chattel mortgage or the real value of it. There was some property. Manifestly, one purpose of foreclosing the chattel mortgage was to put title to the property in the trustee. He asserted title thereto. The inference drawn from the record is that this property is not now in the possession or under the control of the trustee. It, or the most of it, has disappeared. We have, then, this situation: A mortgagee whose mortgage covers real and personal property forecloses it, by advertisement, as to the real estate, and bids in the property for a sum sufficient to pay the entire debt. A judgment creditor of the mortgagor has, at the time, a lien upon the property subsequent to the mortgage lien. Later, during the period of redemption, having acquired no title to the real estate, the mortgagee forecloses his lien upon the personal property, bids for it a sum sufficient to pay the entire mortgage debt, takes possession and disposes of the property. Title to the real estate is asserted by virtue of the sheriff’s deed. Thereafter, no other rights having intervened, the execution creditor, in aid of his executiqn and lien, seeks a decree postponing the mortgagee’s title to his lien. The court below held the foreclosure of the chattel mortgage unlawful and the apparent title acquired' thereby to be void, and gave no other relief.

It is clear that if the mortgagor had paid the debt or if the amount bid at the chattel-mortgage sale had been paid in cash, the execution levy would have remained a first lien on the real estate. In the absence of some controlling equity in favor of defendants, we think that as to complainants the case is not different in law from what it would be if the sale of the personal property had been for cash. Indeed, equitable considerations favor complainants, since the personal property out of which, presumably, they might have made their debt, has been dispersed by.the trustee. We are of .opinion that the execution creditor should be held to have a lien upon the real estate superior and prior to the title asserted by defendant Hemp-hill, trustee, and, in default of payment of the debt, the right • to sell the real estate to satisfy the same. See James v. Brown, 11 Mich. 25.

The decree below is reversed, and a decree will be entered here in accord with the views herein expressed.

Complainants will recover costs of both courts.

Carpenter, Grant, and Montgomery; JJ., concurred with Ostrander, J. Blair, J., concurred in the result.


text:
    NORTH MICHIGAN LAND & LIVE STOCK CO. v. KNEELAND.
    1. Saving Questions for Review — Failure to- Except — Necessity of Motion for New Trial.
    Where the attorney who tried a case was disconcerted by a prompt ruling of the court, and inadvertently failed to except, and out of diffidence neglected to offer testimony which he might otherwise have offered, the matter should have been brought to the attention of the trial court by motion for a new trial in order to secure review in this court.
    2. New Trial — Excessive Verdict — Evidence.
    In an action of trespass for cutting timber, a new trial will not be granted, on the ground that the verdict .is excessive and against the weight of'the evidence, where it appears that defendant had full notice of plaintiff’s claims, and, instead of keeping an account of the timber cut from plaintiff’s land, intentionally mingled it with a large amount of other timber then being cut by defendant in carrying on extensive lumbering operations.
    S. Same — Absent Witness — Cumulative Testimony.
    A new trial will not be granted because of the absence of a witness whose testimony would have been merely cumulative on the question of damages, and whose intended absence was known to counsel, if not to the party, before the trial was proceeded with.

      4. Trespass — Treble Damages — Liability — Instructions — Harmless Error.
    Error in instructions on the liability of defendant for treble damages for cutting timber is harmless, where the jury relieve the defendant from liability beyond single damages.
    5. New Trial — Excessive Verdict — Reduction by Court — Effect.
    Where, on a motion for a new trial, in an action of trespass for cutting timber, on the ground of excessiveness of the verdict, the trial court, after considering the affidavits filed in sup. port of the motion, concludes that the verdict is excessive and orders a remittitur, a claim that he should have submitted the matter to another jury, instead of fixing the amount of damages, is not well taken, where the court did not find defendant excused for the failure to produce at the trial better evidence of the amount of timber cut.
    Error to Montmorency; Emerick, J.
    Submitted June 17, 1907.
    (Docket No. 59.)
    Decided September 20, 1907.
    Trespass quare clausum fregit by the North Michigan Land & Live Stock Company against Otis S. Kneeland. There was judgment for plaintiff, and defendant brings error.
    Affirmed.

      Lewis P. Cowmans, for appellant.

      I. S, Canfield, for appellee.
   Ostrander, J.

The only contention open to appellant upon this record is the one that the court erred in refusing to grant a new trial. Other errors are assigned, based upon rulings made on the trial and upon a charge in agreement with these rulings. Counsel apparently acquiesced in the rulings made by the court. It is said in the brief:

* ‘ Perhaps it might be said that the attorney for defense instead of acquiescing in the court’s determination in regard to the deed should have persisted in seeking to make additional proofs of the regularity of the proceedings previous to the deed, introducing the decree of the court, etc., but the terse and positive statement of the court in regard to the deed evidently stopped him from proceeding farther on that subject.”

It is a sufficient answer to the argument made upon this proposition to say that if the attorney who tried the case was disconcerted by the prompt ruling of the court, and out of diffidence (these reasons are suggested in the brief) neglected to offer testimony which he might otherwise have offered, it was a matter which should have been brought to the attention of the court on the motion for a new trial. Especially is this true if the failure to except to the rulings of the court was also a matter of inadvertence. No such reason for granting a new trial was asserted.

A proper understanding of the issues may be obtained from the reasons, which are here set out, given by the circuit judge for refusing a new trial:

“ This is an action of trespass, brought by the plaintiff to recover damages for the cutting and removing by defendant, of certain kinds of timber from off the southeast quarter of the southeast quarter of section 27, in township 29 north, of range 2 east, in said county.

, “Upon the trial the plaintiff established a complete chain of title from the government to itself to the land in question.

“ The title of the plaintiff to the land in question, at the time of cutting and removal of the timber, was conceded by the defendant.

“ While the defendant held under certain conveyances of various parties to the timber in question, it was admitted that these conveyances were all invalid, and that the defendant had no legal title to enter upon the land or cut and remove the timber therefrom.

“ Two questions were-litigated upon the trial:

“First, the amount and value of the timber actually cut and removed from the land by the defendant; and

“Second, whether the defendant cut and removed such timber under such circumstances as would render him liable for treble damages therefor, under the statute in such case made and provided.

“ The trial at the last May term of this court resulted in a verdict for the plaintiff for the sum of 11,505.80 for single damages, upon which judgment was entered for the plaintiff.

‘ ‘ The defendant has moved for a new trial upon various grounds, which may be reduced to the following:

“Because the verdict is against the weight of evidence and is excessive in amount.

“Because of newly discovered evidence, and because the defendant was unable, upon the trial, to procure the attendance of one George H. Cross as a witness, and

“ Because the court erred in certain particulars in charging the jury.

“After a careful consideration of the affidavits submitted upon both sides and the showing made upon such motion, the court came to the conclusion that the verdict was excessive in amount, and entered an order that unless the plaintiff filed its consent in writing that the verdict be reduced to the sum of $1,000, and remitting the sum of $505.80 in excess thereof, the defendant would be granted a new trial.

“ Such consent was then duly filed in the case, and the judgment now stands in favor of the plaintiff for the sum of $1,000.

“ Before any of the timber was cut or removed by the defendant he had ample and repeated notice from the plaintiff that it was the owner of the land in question, and that, if any timber was cut and removed from the same by the defendant, he would be held responsible therefor in an action at law.

“Under these circumstances, the least he could do, in justice to the plaintiff and the court, would have been to have kept an accurate account of the timber thereafter cut and removed by him from the land in question and the market value and prices obtained therefor by him.

“Nothing of the kind was done, but the timber was apparently intentionally mingled with a large amount of other timber, then being cut and put in by the defendant in carrying on his extensive lumbering operations.

“I do not think that the presence of the witness, George H. Cross, would have changed the result in any particular. His testimony would have been purely cumulative to that of the plaintiff as to the amount of timber upon the land in question before any was cut by the defendant. It would have amounted, at the most, to his estimate of what timber was standing upon the land at the time it was purchased by the defendant, and also of the amount of timber which had been cut off therefrom at some earlier period or periods.

“And, again, while the defendant may not have known that Mr. Cross would not be present at the trial at the time the jury was sworn, his counsel did know before the trial was proceeded with that he would not be present at the trial, and voluntarily elected to proceed therewith in the absence of this witness.

“ The verdict and judgment, as reduced by the court, in my opinion is not excessive.

“All the errors of the court, in charging the jury, which are set up in the motion for a new trial, relate to the manner of submitting the question to the jury of the liability of defendant for three times the value of the timber cut and removed by him. - This question was determined by the jury in defendant’s favor, and if any errors were committed by the court therein, they are now of no importance.”

We find no reason for disturbing these conclusions. The point is made that the court, after considering the affidavits filed in support of the motion, found the verdict excessive and should therefore have submitted the matter to a new jury instead of fixing the amount of the damages. The court did not find the defendant excused for the failure to produce at the trial better evidence of the amount of timber cut and removed. See Canfield v. City of Jackson, 112 Mich. 120.

The judgment is affirmed.

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


author: Blair, J.

text:
    HULL v. HULL.
    1. Wills —Contract Between Executor and Legatee —Cancellation — Undue Influence.
    On a bill by an executrix and legatee against her co-executor to cancel a contract between them by which the entire management of the estate was to be given to defendant and complainant was to accept a specified sum per year in lieu of the provision for her support contained in the will, evidence examined, and held, that complainant failed entirely to support her contention that she was deceived or misled or did not understand the contract when she signed it.
    2. Same — Validity of Contract.
    A will provided that testator’s widow should receive the entire income of the estate and such further sum from the principal as should be agreed upon by the executors or ordered by the court, as her necessities might require, and appointed the widow an'd a nephew executrix and executor. By a contract consented to in writing by all others interested in the estate, it was agreed that the executrix should have a stipulated sum annually and an additional allowance if her necessities required it in lieu of the provision for her support contained in the will, and that the executor should have the entire management of the estate. Held, that the contract was a fair contract, and that it was competent for the parties to enter into it.
    3. Same — Allowances to Legatee — Construction.
    The provision for an additional allowance, in case her “actual necessities” should require it, has reference to the necessities for support and comfort provided for in the will, and does not invalidate the agreement as depriving the legatee of rights given her by the will.
    4. Courts — Jurisdiction — Conferring by Consent — Probate Courts.
    A contract between a legatee, for whom provision for support was made by the will, and the executor, under which the legatee agrees to accept, in lieu of the provision for support, an annual allowance, and such further sum in case of actual necessity as the probate court should allow, is invalid as to the provision respecting application to the court, since the court would not have jurisdiction independent of the contract, and consent cannot confer jurisdiction of the subject-matter.
    Appeal from Eaton; Smith', J.
    Submitted June 18, 1907.
    (Docket No. 58.)
    Decided September 20, 1907.
    Bill by Margaret A. Hull against John Hull, executor of the last will and testament of Tyler Hull, deceased, to set aside a contract on the ground of fraud. From a decree dismissing the bill, complainant appeals.
    Modified and affirmed.

      Black, Reasoner & Hayden and S. B. Roe, for complainant.

      Huggett & McPeek, for defendant.
   Blair, J.

Complainant and defendant are joint executors of the last will and testament of Tyler Hull, deceased. The will was construed, upon a bill of complaint filed by the above-named complainant for that purpose, in Hull v. Hull, 122 Mich. 338. After that decision, and on July 25, 1901, “Margaret A. Hull, as executrix named in the last will and testament of Tyler Hull, deceased, and as a legatee named in said will, as party of the first part, and John Hull as executor named in said will, of the second part,” entered into an agreement in writing reciting that:

“Whereas by the terms of said will of Tyler Hull, deceased, the said party of the first part as a legatee named therein, is to receive the income of said estate and such further sum to be paid out of the principal of said estate as may be agreed to by the said executors or ordered by the court, as her necessities may require, for the purpose of saving expense to said estate, this agreement is made.”

The agreement provided, in substance, that the executor John Hull should “perform the entire work as executor of said estate for the sum of two hundred dollars per annum;” that the executrix should surrender the entire management to her co-executor and continue as a nominal executrix, her bond being reduced to the sum of $1,000, and she to receive no compensation as executrix—

“That said Margaret A. Hull shall have and receive from the said estate the sum of one thousand dollars per annum to be paid to her by the executor of said estate as the income thereof, the same to be paid to her quarter yearly, the first payment to be made three months from the date this contract takes effect, and up to the date this contract takes effect she is to have the income of said estate to be ascertained and paid to her, that such quarter yearly payments of two hundred and fifty dollars each, together with the use of the dwelling house and premises and the personal property now in use therewith shall be in lieu of all her interest as legatee named in said will, provided, however, that in case her actual necessities by reason of ill health or otherwise shall necessitate a greater sum shall be paid to her, the said Margaret A. Hull shall have the right to apply to the probate court for such additional allowance as may be necessary without in any way invalidating the other provisions of this contract.”

That all taxes should be paid by the estate, but Mrs. Hull should pay for real estate repairs. The agreement was also signed by the other legatees.

The primary purpose of the bill of complaint in the present suit is to set aside this agreement. The specific prayers for relief are as follows:

“2. That the court may assume jurisdiction of the rights and claim of your oratrix as above set forth, and determine whether said agreement, Exhibit B, should be binding on your oratrix, and

“8. That the court may decree the same void and of no effect; and that it be canceled.

“ 4. That the defendant may be decreed at once to pay to your oratrix out of said estate the sum of about four hundred dollars and thereafter to make, quarterly payments of three hundred and seventy-five dollars each quarter, or such sums as to the court may seem just, at the time and place required in said contract or agreement described herein as Exhibit B, and in lieu of the payments therein mentioned.”

The parties had acted under the agreement for nearly five years prior to the filing of the bill of complaint.

The reasons set up for invalidating the agreement, as stated in the bill, are, in substance, that, at the time she signed it, she was in a state of nervous collapse and in ill health and was unable to and did not understand the import and effect of the agreement; her attorney falsely represented to her “that the judge of probate of said county of Eaton, under whose direction and supervision your oratrix had been administering said estate, had directed that she sign said instrument and that it was necessary and advisable for her to do so;” that the provision that she should surrender the management and not interfere with the assets of the estate was against public policy; that no consideration has been paid to which she would not have been entitled under the terms of the will.

The circuit judge dismissed the bill of complaint for the reason, as stated in his opinion:

“ That the disposition of this case hinges upon what the court finds as to the fact regarding the execution of the contract which she seeks to set aside and have the court declare void. That if she is not entitled to have this done, this court has no jurisdiction to give to her the relief she asks regarding an increase of her allowance but that her remedy is to apply to the probate court under the contract for additional allowance.

“I do not think any good purpose will be served in a discussion of the evidence taken. It is sufficient to say in disposing of the case that I am of- the opinion she has failed entirely to support her contention that she was deceived or misled, or did not understand this contract which she signed. I am of the opinion that at the time she fully understood it and knew what she was doing and was in no way coerced or deceived.”

Complainant appeals to this court.

The questions involved are stated by counsel for appellant, as follows:

“ The principal question raised by the pleadings and proofs is whether or not the complainant is entitled to a greater allowance than she has been receiving. This question it is claimed does not depend on the validity of the contract referred to as Exhibit B. Incidentally, another question involved is, whether or not the contract, Exhibit B, should be held to bind the complainant, the claim of the complainant’s solicitors being that it should not be held to limit her, for the following reasons:

“First. Because her consent was, owing to her illness and consequent mental incapacity, never obtained in a manner which would constitute a valid meeting of minds.

Second. Because the contract being between a trustee and the cestui que trust, and the trustee being interested as a legatee under the will in the subject-matter concerning which the contract was made arid since he receives an advantage from it, the contract, except in so far as it was required by the terms of the trust, is invalid, because it is not fair or conducive to the best interests of Mrs. Hull.

Third. Because the agreement was wholly without consideration.”

We agree with the circuit judge that the primary question presented by the pleadings and proofs concerns the validity, of the agreement, and we also agree with him in the finding that “she has failed entirely to support her contention that she was deceived or misled or did not understand this contract which she signed.”

We are satisfied, after a careful consideration of the testimony, that complainant’s attorneys acted in good faith in advising her to sign the contract, and that, as a matter of fact, she acted wisely in following their advice. At the time the contract was executed, and for a considerable time prior thereto, the relations between complainant and defendant were unfriendly, and, because of their inability to agree, several thousands of dollars had been expended in litigation over the construction of the will and the settlement of their respective accounts. As complainant testified, “We never agreed on anything.” Under the will, it was essential that the executors should agree, and, in view of the hostile relations between them, they acted prudently in entering into the agreement .in question “ for the purpose of saving expense to said estate,” if the law permitted such a contract to be made.

In determining the validity of this agreement, it is important to bear in mind that its execution by complainant and defendant was consented to in'writing and bore the signatures of all the other parties interested in the estate under the will and who were all competent to contract. The apparent purpose of the agreement is not to overturn the will or radically change its provisions but to make definite, so far as possible, the provision for complainant’s comfortable support, which, under the will, would probably vary from year to year and might be seriously impaired by litigation reasonably certain to arise between the executors. It is conceded by counsel for complainant, and the record clearly indicates, that a diminution of the principal of the estate is reasonably certain and the principal may be entirely exhausted before the death of complainant, though this is, perhaps, not probable. It may, however, be reasonably anticipated that the income will fall considerably short of $1,000 a year, since it is now necessary to use a portion of the principal, and contingencies may arise to diminish the principal. Under the contract, however, the complainant is assured of $1,000 a year and her home and its personal property tothe'end of her life,-although the entire income-producing estate may be exhausted. It is further to be considered that the will contemplated the comfortable support of complainant during her natural life, and in determining the amount needed for such comfortable support, some reference must be had to the probable duration of her life.

It is further urged that the contract limits complainant’s right to further allowances to cases of actual necessity. Whether such limitation would invalidate the contract, we need not determine, since we are of the opinion that the provision relative to “her aactual necessities,”contained in the fifth clause of the contract, should be construed to refer' to the same necessities mentioned in the recital of the first clause, being the necessities for support and comfort provided for in the will.

In view of all the circumstances, the unfriendly relations of the parties, and that there were no creditors interested, we think the contract was a fair contract, whose enforcement will be much more for the benefit of the parties than its cancellation, and, apart from the provision hereafter referred to, that it was competent for the parties to enter into it. Foote v. Foote, 61 Mich. 181; Letts v. Letts, 73 Mich. 138; Bean v. Bean, 144 Mich. 599.

It is also contended that the probate court has no jurisdiction to determine the needs of complainant and the provision giving such jurisdiction invalidates the contract. We are of the opinion that this contention is well founded and must prevail. Independent of the contract, the probate court would not have jurisdiction. Knorr v. Millard, 52 Mich. 542; Hull v. Hull, 122 Mich. 338. And jurisdiction of the subject-matter cannot be waived nor conferred by consent. 11 Cyc. pp. 673, 697; Kirkwood v. Hoxie, 95 Mich. 62; Hagar v. Coup, 50 Mich. 54.

We think that the allowance of $1,000 a year, payable quarterly, as provided in the contract, is a reasonable and proper allowance, but, in addition thereto, complainant will be allowed the amounts expended or agreed to be paid for putting in the furnace, reconstructing the tenant house, erecting the wind-mill, digging the drain and introducing the water system into the house, which improvements we think were reasonably necessary for her comfort. If the parties cannot agree as to the amounts to be so allowed for the improvements, a reference may be had to a circuit court commissioner to determine the same.

A decree may be entered in accordance with this opinion, with costs of this court to complainant.

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


text:
    ROBERTS v. FIRST NATIONAL BANK OF YALE.
    1. Trial — Direction or Verdict — Propriety.
    Where, after a ruling that there is no basis for the damages claimed by the first two counts of a declaration, plaintiff abandons the remaining count, the ruling disposes of the case and a verdict for defendant is properly directed.
    2. Principal and Surety — Rights or Surety — Action Against Creditor — Declaration.
    In an action by the, indorser against the indorsee of a promissory note, a declaration alleging in the first count that defendant allowed a chattel mortgage securing the note to lapse, and in enforcing its judgment against plaintiff upon the note caused him great damage by levy upon his lands, and in the second count that defendant represented to plain- . tiff that the note had been paid, inducing plaintiff to give no further attention to the mortgage security but to allow it to lapse, resulting likewise in damage from defendant’s levy, sets out no cause of action based on the duty of the defendant to enforce the mortgage security for plaintiff’s benefit.
    3. New Trial — Newly-Discovered Evidence — Diligence—Surprise — Surrioiency or Showing.
    A motion for a new trial on the ground of newly-discovered evidence showed that plaintiff made unsuccessful inquiries to discover the desired evidence and that he was misled concerning the testimony which one witness would give, in that upon close inquiry it was found he knew the facts only from hearsay. The witness was not swdrn, the inference being that his want of knowledge was discovered before or during , the trial. Held, that though the -showing of diligence might have influenced the court to grant a continuance, and the showing of surprise might have secured an order permitting a voluntary nonsuit with leave to set the same aside, neither showing appeals to a court of review on an application' to reverse an order denying a new trial.
    Error to Sanilac; Beach, J.
    Submitted June 18, 1907.
    (Docket No. 61.)
    Decided September 20, 1907.
    Case by William Roberts against the First National Bank of Yale for fraud. There was judgment for defendant on a verdict directed by the court, and plaintiff brings error.
    Affirmed.
    It is the claim of the plaintiff that, being himself the owner of a certain note, made by Robert S. Hesson and Susie E. Hesson, his wife, payment of which was secured by a chattel mortgage on household and other goods, he sold the note ‘ to the defendant through its agent, W. W. Lord, and at Lord’s suggestion that the bank form of note was desired, procured the makers to make a new note upon such a form, corresponding in all respects to the old note except that defendant was named as payee therein. The note, produced in evidence, is dated December 31, 1901, due in one year, with interest at 7 per cent. It contains no reference to a chattel mortgage. It is indorsed by plaintiff and by Lord. The makers of the note also executed a new chattel mortgage, running to B. R. Noble, who was president of defendant bank. The note was paid for by Lord’s check on the defendant bank. The chattel mortgage was filed in the office of the clerk of the township of the makers’ residence by plaintiff. Plaintiff was sued upon this note by the defendant and he paid, after levy had beén made upon his real estate, the judgment which was rendered against him thereon.
    Plaintiff’s declaration contains two counts. A third count was abandoned at the trial. The averments in the first count present the theory that upon receiving the said note, indorsed by plaintiff, it became the duty of defendant to preserve and later to exhaust the chattel-mortgage security before enforcing the liability of the indorser. It is charged that defendant negligently and carelessly permitted the mortgage security to . lapse and be lost, and in enforcing its said judgment against the plaintiff by levy upon his lands—
    “Plaintiff lost the sale of certain and divers village lots and other parcels of his said lands, and thereby the said plaintiff was deprived of and lost certain large gains and profits, which he, the said plaintiff, would otherwise have had, * * * and thereby the said plaintiff was greatly damaged in his property and estate, to wit, in the sum of three hundred dollars.”
    In the second count, it is charged that defendant falsely and fraudulently represented to the plaintiff that the note had been paid by the makers and, relying upon said statement, plaintiff was induced to give no further attention to the payment of the note and allowed the chattel mortgage to lapse and become worthless, after which defendant brought suit on the said note, obtained judgment, took a transcript judgment, levied execution on plaintiff’s lands, and required plaintiff to pay the said judgment with costs in order to relieve his lands of the levy; that by reason of the recording of the levy plaintiff lost the sale of certain lands and gains and profits which otherwise he would have made and was “wronged and damaged in his property and estate in a large sum, to wit, the sum of $300.”

      A verdict for defendant was directed by the court and a motion for a new trial was denied.

      H. 0. Babcock and W. H. Burgess, for appellant.

      O. F. Gates, for appellee.
   Ostrander, J.

(after stating the facts). The testimony introduced on the part of plaintiff tended to prove that Lord was agent for defendant and acted in that capacity in buying the note; that plaintiff w;as sued as indorser of the note, by defendant, a judgment recovered, a transcript judgment entered and levy made; that he paid to the sheriff the amount of the judgment and costs. There was no testimony tending to prove the value of the mortgaged property or the disposition made of it. The defendant bank claimed, and testimony offered in its behalf tended to prove, that it never had knowledge of the chattel mortgage and was not chargeable with the knowledge possessed by Lord because Lord was not its agent in purchasing the note; that it bought the note of Lord in the regular course of business with notice of no facts affecting it except such as were disclosed by the note itself.

As to the claim of damage resulting from the levy, the court said:

I think I will dispose of that phase of damages. * * * As a matter of damage the plaintiff could have relieved himself of it at any time, and this matter sued on in this case was available as a defense in the original case. There is no basis for damages.”

To this ruling, an exception was taken and upon the exception error is assigned. The subject is not referred to in the brief. After this ruling had been made, counsel for plaintiff abandoned the last count of the declaration, which was in trover for conversion of the mortgaged property. Therefore, the ruling disposed of the case which plaintiff made and it was repeated, and properly so, in directing a verdict. If it is assumed that it was the duty of defendant either to preserve or to enforce for the sureties on the note the security which it held for payment of the note, that if it did neither it is liable to plaintiff, the surety who, after judgment, paid the debt, for the value of such security, and that it is open to plaintiff in a suit brought by him against defendant to assert such liability, the first two counts of the declaration set out no such cause of action.

The reasons asserted as grounds for a new trial were that since the trial the plaintiff had discovered new evidence “ which will lead to a different result in said cause,” and, surprise at the testimony given by a certain witness. The evidence said to be newly discovered relates to the value of the mortgaged property, to the disposal of it by the mortgagors, and to the agency of Lord. A new trial was refused because the evidence was obtainable for the trial, by diligence, and because upon the whole of the evidence the case was a doubtful one at law. Upon the subject of diligence, it is said in the brief that plaintiff, as Ms affidavit shows, made three trips and many inquiries to discover evidence of the value and disposition of the mortgaged property, and could not obtain it; that he was misled concerning the testimony which one of his witnesses would give.- It is also said that upon close inquiry of this witness it was found that he did not know the alleged facts except from hearsay. It does not appear that this witness was sworn, the inference being that his want of knowledge was discovered before the trial began or during the trial. The trial was begun January 16, 1906. Early in March of the same year, the affidavits relied upon were procured. The showing of diligence now made might have influenced the court to grant a continuance, if one had been asked for, and the showing of surprise might have secured an order permitting a voluntary nonsuit with leave to set the same aside, but neither* showing appeals to a court of review on an application to reverse an order refusing a new trial.

The judgment is affirmed.

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


text:
    PRESTON v. NEWCOMB.
    1. Judgment — Bankruptcy—Collusiveness op Proceedings— Collateral Attack.
    The title of a purchaser at a bankruptcy sale is conclusive against collateral attack in any other court or proceedings and cannot be avoided by showing in another court that the' purchaser really took title as trustee for the bankrupt and not as a good faith purchaser.
    2. Same — Persons Concluded.
    A creditor of a bankrupt, who was a party to the bankruptcy proceedings, and recognized the validity thereof and the discharge of his claim, and accepted a note to revive his claim after the sale in bankruptcy was held, cannot question the title of a purchaser at the sale.
    3. Same — Subsequent Creditors.
    A creditor who becomes such after the conclusion of bankruptcy proceedings against his debtor cannot question the validity of the sale in bankruptcy nor the title of a purchaser at such sale.
    4. Attachment — Issues —Title to Property — Evidence — Sufficiency.
    Where the claimant of property, attached in the possession of plaintiff’s debtor, proves title by purchase at a sale in bankruptcy proceedings against the debtor, and proves by a written agreement, the execution of which is not controverted, that the debtor had possession of the property in recognition of that title, he is prima facie entitled to the property, in the absence of evidence that he parted with the title after he acquired it.
    5. Same — Evidence—Admissions—Competency.
    On the issue of the ownership of property attached in the hands of plaintiff’s debtor, statements of the debtor as to the title to that and other property and as to the validity of the claims of the claimant, not made in the presence of the claimant nor brought to his knowledge, are not competent.
    Error to Ionia; Davis, J.
    Submitted June 18, 1907.
    (Docket No. 114.)
    Decided September 20, 1907.

      Assumpsit by Thad B. Preston against Cassius C. Newcomb and Herbert B. Webber for the amount of certain bonds. There was judgment for plaintiff, and defendants bring error.
    Reversed.

      A. A. Ellis, for appellants.

      JR. A. & W. E. JELawley, for appellee.
   Blair, J.

This is an action on two bonds given March 10, 1904, under section 733, 1 Comp. Laws, by the defendant Newcomb, as principal, and defendant Webber, as surety, to procure the release of a horse which had been seized upon two separate writs of attachment issued out of justice’s court. One of the attachment suits was begun by the plaintiff, Preston, against Joseph T. Webber, the other by the Michigan Clothing Company against the same defendant, both of which suits proceeded to judgment. The condition in each bond was that—

“If in a suit to be brought on this obligation within three months from the date hereof the said Cassius C. Newcomb shall establish that he was the owner of the said above goods and chattels at the time of said seizure; and in case of his failure to do so if the said Cassius C. Newcomb shall pay the value of such goods and chattels with interest to the said plaintiff, then this obligation to be void,” etc.

Prior to the institution of this suit, the bond to the Michigan Clothing Company was assigned to the plaintiff, Preston.

The defendants waived the plea of the general issue and claimed the benefit of Cir. Ct. Rule M in the opening and closing and the introduction of testimony in the cause. Defendants claimed title to the horse under and by virtue of certain bankruptcy proceedings against Joseph T. Webber in the United States district court for the western district of Michigan, resulting in the final discharge of the bankrupt on FebruarylO, 1903. Upon a regular sale of the bankrupt’s effects, the horse in question was sold to and, on September 8, 1903, regularly conveyed by bill of sale to the defendant Newcomb, “subject to the encumbrances running to C. C. Newcomb and S. W. Webber & Co.”

The indebtedness of Joseph T. Webber to Preston, which was the basis of his attachment suit, was released by Webber’s discharge in the bankruptcy proceedings, but was afterwards revived by Webber giving his note therefor, upon which the judgment was rendered. The indebtedness of the bankrupt to the Michigan Clothing Company, upon which its judgment in the attachment cause was based, was incurred after his discharge.

Defendant Newcomb; after proving the bankruptcy proceedings, among other things, put in evidence a written agreement dated September 11, 1903, and signed by C. C. Newcomb and Joe T. Webber, whereby it was agreed that said Webber, on certain terms and conditions, should look after and care for the horse, and the horse was attached in his possession.

The plaintiff put in evidence, against numerous objections, tending to show that no indebtedness really existed between Joseph T. Webber and Newcomb but that New-comb’s notes and mortgages were fraudulent and intended as a cover to protect Webber and he really purchased at the sale in bankruptcy as a trustee for Webber and not as a purchaser in good faith. It was conceded that the decree in bankruptcy could not be questioned, but plaintiff claimed and was granted the right—

“Not only to ^showwhat the facts were so far as the possession 'and handling of the property sold at bankrupt sale to Newcomb subsequent to said sale was concerned, but also to examine into the real bona fides of the alleged indebtedness from Webber to Newcomb under the note and chattel mortgages involved in. this cause, not for the purpose of attacking the bankrupt sale but as bearing upon the relations between Webber and Newcomb and as shedding a flood of light upon the dealings between Webber and Newcomb subsequent to said sale.”

The court charged the jury, among other things, as follows:

“ This court has no power or right to set aside that sale, even if it should discover that fraud had taken place. But if you should discover that there was any fraud, or that the property was disposed of to Newcomb and he taking it in trust for the benefit of Webber, that is a circumstance you may take into consideration together with all the other facts in the case in order to determine whether a year and a half later, in March, 1904, the title was really in him in good faith, or whether he was holding it in trust and the real title in Webber — the property being in his possession- — whether it was for the benefit of Webber or not that may be taken as a circumstance.”

Plaintiff’s counsel were also permitted to show, against defendants’ objections, the conduct and statements of Webber, after the sale of the horse, as to the stock of goods and other property as to which there was no evidence that defendant Newcomb had any knowledge whatever. The jury, having found a verdict in favor of plaintiff, defendants have removed the record to this court for review upon numerous assignments of errors.

We are of the opinion that the court erred in permitting evidence to be introduced tending to show fraud in the purchase of the horse at the sale in bankruptcy and that defendant Newcomb really took title as a trustee for Webber and not as a good faith purchaser.

“ An adjudication in bankruptcy partakes in part of the nature of a judgment in rem, and in part of the nature of a judgment in personam. With regard to the estate of the bankrupt debtor, which has been by the court’s warrant of seizure, or by the surrender of the debtor, brought within the possession • and jurisdiction of the court, its orders, decrees and judgments as to the right and title to the property, or as to the disposition of it among the parties interested, are binding upon all persons and in every court. As a determination of the legal status of the bankrupt, or of the relations of the creditors to both, its judgment is conclusive in all courts where it is pleaded.” Abendroth v. Van Dolsen, 131 U. S. 66.

See, also, Michaels v. Post, 21 Wall. (U. S.) 398; Sloan v. Lewis, 22 Wall. (U. S.) 157; Benedict v. Smith, 48 Mich. 593.

The decree of the Federal court was treated by court and counsel as conclusive of the title of Newcomb to the horse under the bill of sale as against collateral attack in any other "court or proceedings, but it was sought to avoid the effect of the bankruptcy proceedings by showing that Newcomb’s title was obtained by fraud and in reality was not what the record declared it to be. The plaintiff, Preston, was a party to the bankruptcy proceedings and, as* to his individual indebtedness, was bound by the adjudication in those proceedings. Furthermore, he recognized the validity of the proceedings and the discharge of his claim and took a note to revive the same after the title to the horse had passed to Newcomb. The indebtedness of the Michigan Clothing Company having entirely accrued after the conclusion of the bankruptcy proceedings, no pre-existing right of such company was affected by the adjudication, and it, therefore, is not in position to call it in question.

Defendant showed an unassailable title, in the first instance, under the bankruptcy proceedings.. He further showed, by written agreement, the execution of which was not controverted, that Webber held the horse in recognition of his ownership, and until this showing was met by evidence tending to prove that he had parted with his^itle after he acquired it, he had sustained the burden of proof upon his part and was entitled to the horse.

Statements of Joseph T. Webber, as to the title to the horse or other property or the validity of defendant’s claims, not made in the presence of defendant or brought to his knowledge, were not competent and should not have been received in evidence.

Judgment reversed, and a new trial granted.

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


author: Hooker, J.

text:
    GILLETT v. MASER.
    Specific Performance — Oral Contract to Convey —Evidence —Sufficiency.
    On a bill for specific performance of an oral contract to convey land in consideration of complainant’s agreement to move upon one of the parcels of land involved and furnish board and lodging for defendants’ testator, evidence examined, and held, not to show the making of the alleged agreement.
    Appeal from Ingham; Wiest, J.
    Submitted June 18, 1907.
    (Docket No. 108.)
    Decided September 20, 1907.
    Bill by Clara Gillett and Charles Gillett against John J. Maser, executor of the last will and testament of William S. Allen, deceased, and others, for the specific performance of a land contract. From a decree dismissing the bill, complainants appeal.
    Affirmed.

      L. B. Gardner, for complainants.

      Charles F. Hammond (Jason E. Nichols, of counsel), for defendants.
   Hooker, J.

Complainants’ bill prays the specific performance of an alleged oral contract for the conveyance of real estate, in consideration of complainants’ agreement' to move upon one of the two parcels of land involved, and furnish board and lodging for one W. S. Allen, the owner, during the remaining years of his life.

The case is purely one of fact, and the controlling question relates to the terms of the agreement, under which the complainants moved upon the premises and rendered service for- Mr. Allen. It is unnecessary to discuss the testimony at great length. The complainants’ mouth is closed by the statute, and there is no positive evidence of the transaction. Mrs. Gilbert’s children testify to admissions made by Allen, tending to show the terms of the agreement to .have been as claimed by the complainants, while acquaintances of the parties relate conversations corroborative of such claim. The former are shaken by some inconsistencies, while the latter are consistent with another version. But the conduct of the complainant and her husband, both before and after Allen’s death, is out of harmony with the claim now made, and we are convinced that the agreement alleged was not made, although we incline to the opinion that the deceased at times contemplated, if he did not intend, to give the property to the complainants at his death. This result was reached by the careful judge who tried the cause below, and who saw and heard the witnesses, which increases our confidence in the correctness of our conclusion.

The decree is affirmed, with costs.

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


author: Hookee, J.

text:
    KEELEY INSTITUTE COMPANY OF WEST MICHIGAN v. SHAW.
    1-. Landlord and Tenant — Lease — Assignment — Right to Repairs.
    Where a lessee, by agreement separate from the lease, has a right to have made certain repairs and improvements, such right may pass by parol to an assignee of the lease, provided such be'the intent of the parties to the assignment.
    2. Same — Failure to Repair — Action—Evidence.
    In an action by the assignee of a - lease against the lessor for damages for failure to repair as agreed with the lessee by an agreement separate from the lease, the transaction between the lessee and the assignee is competent to show whether the rights to have repairs made were included, and it is immaterial whether the lessor was present, or a party to that bargain, she having consented to the transfer of the lease.
    3. Same — Agreement to Repair — Performance—Eppect.
    Where an agreement of a lessor to repair and improve has been performed and performance accepted by the lessee, there is no further claim and no right to repairs passes to an assignee of the lease.
    4. Same — Action—Declaration.
    Where a lessee of premises had a right by agreement separate from the lease to have performed certain repairs and improvements, and plaintiff acquired those rights by parol at the time of taking an assignment of the lease, a declaration alleging that plaintiff acquired such right by the assignment of the lease should not be so strictly construed as to exclude proof of the parol transfer.
    5. Same — Right to Repairs — Assignment op Lease — Effect.
    Where a lessee has, by an agreement separate from the lease, a right to have made certain repairs and improvements, such right does not pass by an ordinary assignment of the lease, but may pass by agreement, and an instruction that all the rights of the lessee passed by the assignment whether such was the intention of the parties or not, is erroneous.
    6. Same — Contract for Repairs — Merger in Lease.
    A contract by a landlord to make certain repairs and improve-merits upon the leased premises does not merge in the lease subsequently executed, where the lease does not contain the substance of the contract for repairs, nor refer to it in any way.
    7. Same — Separate Agreement — Eights op Assignee.
    Though an agreement to repair not contained in the lease is a separate collateral agreement, which does not run with the • land, the whole transaction between the lessee and his assignee may be considered on the question of the transfer of the right to repairs, udder the rule that where several instruments are made between the same parties at the same time they form one entire contract and are to be construed together as one transaction.
    Error to Kent; Perkins, J.
    Submitted June 19, 1907.
    (Docket No. 70.)
    Decided September 20, 1907.
    Assumpsit by the Keeley Institute Company of West Michigan against Louise B. Shaw for breach of contract to repair. There was judgment for plaintiff, and defendant brings error.
    Reversed.

      Butterfield & Keeney, for appellant.

      Carroll & Nichols (George El Nichols, of counsel), for appellee.
   Hookee, J.

The defendant, being the owner of a building, had negotiations, through her agents, with one Pritchard, regarding the leasing of the same to him, to be used as a “ gold cure ” establishment, or sanitarium. The negotiations were through correspondence, and on August 15, 1900, Tuttle Bros., defendant’s agents, wrote to Pritchard that if he would take a lease of the premises for three years, with the privilege of two years more, at a rental stated, the defendant would make certain specified repairs and improvements to the premises. August 25th, Mr. Pritchard answered stating terms upon which he would take such lease. It was a substantial acceptance of Tuttle Bros.’ offer, except that it fixed a definite time for the commencement of the lease, and specified in more detail the repairs and improvements to be made. Thereupon the defendant authorized her agents to contract for such repairs and improvements, and a lease in duplicate, signed by them in her behalf, was sent to Pritchard, with notice of her acceptance of his offer, who executed and returned one or both copies of the lease. It was an ordinary lease, in which no mention was made of the agreement underlying it, upon which the lessee’s consent to accept the lease was based. Rent began October 1, 1900. The work was contracted for by defendant, and much of it was done.

Pritchard conducted the business contemplated until about January 19, 1901, when the plaintiff corpoi’ation was organized to take the business, in consequence of negotiations with Pritchard, which had resulted in an agreement to transfer his interest in the business and to assign his lease. This arrangement was carried out. The assignment of the lease was as follows: “I hereby assign this lease to the Keeley Institute Company of West Michigan.” It was upon the back of the lease, upon which the defendant placed her consent to the transfer, and plaintiff placed its acceptance of the terms of said consent.

All of the correspondence leading up to the making of the lease was delivered with the lease to the plaintiff’s organizers during the negotiations with Pritchard, and there is testimony tending to show that they acquired all the rights to repairs, etc., that Pritchard had at that time. Plaintiff remained upon, the premises during the remainder of the three years, and elected to extend the lease according to its terms. A controversy arose over the question of defendant’s further obligation to make repairs, which culminated in the bringing of this action for damages, in which plaintiff recovered a judgment fpr $1,290, and defendant has appealed.

Among other claims of the defendant, it is asserted by counsel, that,—

1. This agreement to repair was no part of the lease, and rights under such agreement did not pass with the lease by virtue of the assignment, but remained in Pritchard, if there were any such rights remaining. Therefore there was no privity between the parties, and a verdict should have been directed for the defendant upon that ground.

2. That prior to the assignment of the lease defendant had substantially performed her promise, by making the repairs, etc., agreed upon, that she had varied them in some particulars, but that this was upon the request of Pritchard, who accepted all of such as were made, as satisfactory. Pritchard so testifies, and further that all wei’e completed, except the veranda and the sodding of the lawn, which the parties agreed before signing the lease should be put off until the following spring. This work was afterwards done.

Counsel say that these facts appear by the uncontradicted testimony of Pritchard and others, and that the plaintiff therefore acquired no rights under the agreement to repair, except as to the veranda and yard work which was performed, and therefore the court should have directed a verdict for defendant.

3. There are many questions arising upon rulings, which need not be stated here.

If it be conceded that the preliminary contract was separate from the lease of the promises, no one claims that it was any the less binding, or that rights under it could not be acquired in it by the plaintiff, without so providing in the assignment of the lease.. As in the case of the first transaction, the second involved more than the assignment of the lease. The right to carry on the business in western Michigan was included. How that was transferred from Pritchard we need not inquire. Its transfer, like the assignment of the lease, was an incident in the performance of the agreement. We understand that defendant’s counsel do not claim that failure to include said contract in the assignment of the lease is conclusive of the question, except as it is coupled with the claim that there was no other evidence of such transfer, and perhaps could not be, under the terms of the declaration, which is said to allege that it passed by that assignment.

We are of the opinion that rights under that contract, if there were any remaining in Pritchard, might pass by parol, if such were the intention of the parties, and that there is testimony in the case which made it a question for the jury. It need not be stated here, and it is sufficient to say that it will be found in the testimony of Beck-with and the cross-examination of the defendant.

In this connection we allude to some assignments based on questions relating to the contract between Pritchard and the plaintiff. That transaction was competent to show whether rights to repair were included, and it was of no consequence whether defendant was present, or a party to that bargain, because it in no way depended upon her consent. The transfer of the lease did. She consented to that, and defendant had a right to acquire Pritchard’s existing rights to improvements, under another contract.

It is true, as claimed by the defendant, that if the contract to repair and improve had been performed, and such performance had been accepted as a full performance of the whole or the particulars in which it had been performed, a right to further claim was thereby lost, and could not be acquired. The court could not safely have directed a verdict for the defendant. As to the declaration we think that it should not be so strictly construed as to exclude proof of such a transfer.

The instruction of the learned circuit judge concluded the question, for he instructed the jury that the lease and the preliminary contract were both parts of one transaction, and must be coñstrued together, and that all rights in both passed under the assignment of the lease. Hence they could not avoid finding that whatever rights Pritchard had were assigned with the lease, whether that was the agreement and intention of the parties or not. That the preliminary agreement was a valid contract when made does not admit of a doubt. Had Pritchard after-wards refused to execute the lease, defendant would have had a cause of action upon the contract. After he signed the lease his right of action for a failure to repair in case of a failure by defendant, would depend not upon the lease, but upon the contract.

This contract was hot merged in the lease, which neither contains its substance, nor refers to it in any way. Neither is the lease in any way inconsistent with its continuance ás a valid binding obligation of the parties.

Counsel for the defendant have cited many cases to the proposition that such are separate collateral contracts, and we list some of them in our opinion, without discussion: Angell v. Duke, L. R. 10 Q. B. 174; Clenighan v. McFarland, 16 Daly (N. Y.), 402; Hoby v. Roebuck, 7 Taunt. 157; Morgan v. Griffith, L. R. 6 Exch. 70; Erskine v. Adeane, L. R. 8 Ch. App. 756; McGrath v. City of Boston, 103 Mass. 369; Close v. Railway Co., 64 Iowa, 149; Tillman v. Fuller, 13 Mich. 123; Whiting v. Ohlert, 52 Mich. 462.

Counsel for the plaintiff insistently urge the application of the rule that where several instruments are made between the same parties at the same time they form one entire contract and are to be construed together as one transaction, a rule as well settled as any in our jurisprudence. All such may be read together to ascertain the interpretation to be put upon any of them, if it is uncertain. That is no more than interpreting an instrument in the light of the surrounding circumstances.

There are many other assignments of error relating to the admission of evidence. They will not necessarily arise upon another trial, and we think it unnecessary to discuss them.

The judgment is reversed, and a new trial ordered.

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


author: Montgomery, J.

text:
    TAYLOR v. R. D. SCOTT & CO.
    1. Statute of Frauds — Contract to Sell Land — Corporate Action. '
    A written proposal to purchase real estate addressed to defendant corporation and to certain individuals as trustees of an estate, such persons constituting the board of directors of the corporation, upon which a majority of the individuals addressed indorsed their acceptance as trustees, there having never been any formal action taken by the hoard of directors, is not a contract in writing, binding on defendant corporation, and answering the requirements of the statute of frauds, though the trustees, by bill in • chancery, to which neither plaintiff nor defendant corporation were made parties, obtained authority to sell as proposed.
    2. Corporations — Sale of Property — Validity.
    Either corporate action formally taken, or the assent of all parties in interest, is essential to make a valid contract for the sale and disposition of real estate.
    Error to Oakland; Smith, J.
    Submitted June 21, 1907.
    (Docket No. 91.)
    Decided September 20, 1907.
    Assumpsit by Charles V. Taylor against the R. D. Scott & Company for breach of contract of sale. There was judgment for defendant on a verdict directed by the court, and plaintiff brings error.
    Affirmed.

      James H. Lynch (John G. Donnelly, of counsel), for appellant.

      Perry & Stockwell, Patterson & Patterson, and Andrew L. Moore, for appellee.
   Montgomery, J.

Robert D. Scott died May 11, 1904, testate. At the time of his death he owned 6,499 shares of the 8,000 shares of the capital stock of the defendant corporation, which was capitalized at $80,000, the shares thereof being of the face value of $10 each. The business of the corporation was the manufacture and sale of vehicles. By his will he left such stock to William R. Scott, Frederick L. Ward, Frank G. Jacobs, and Everett S. Todd, in trust, to be held and controlled by them for five years. At the end of five years his interest in such corporation must be distributed to certain beneficiaries named in such will, excepting the share bequeathed to one daughter, which then, under the terms of the will, must go to his daughter, Mary D. Ward, in trust. The will was probated and the testamentary trustees accepted such trusts and promptly entered upon their duties as such trustees. The board of directors, consisting of five members, was reorganized, and William R. Scott, Mary D. Ward, Everett S. Todd, Frank G. Jacobs, and Frederick L. Ward were the directors of such corporation at the time the negotiations with the plaintiff were conducted and to the time of the trial of this case in the circuit court.

The business had not proven profitable, owing, it is said, to want of capital, and on the 19 th of March the plaintiff made the following proposition in writing:

“Pontiac, Mich., 1906.

“ R. D. Scott & Company,

“E. S. Todd,

“W. R. Scott,

“F. E. Ward,

“F. G. Jacobs,

Trustees of the R.D. Scott Estate.

Gentlemen: I hereby submit to you for your consideration and acceptance the following proposition to purchase the plant, machinery, merchandise and business of the R. D. Scott Company.

“ I will purchase the real estate known as R. D. Scott & Company’s factory, situated on the D., G. H. & M. R. R. tracks in the west portion of the city of Pontiac; also the building used in connection as a warehouse, situated on the ground along by the D., G. H. Sc M. R. R. together with all the machinery, office fixtures, tools and equipment, and will pay you therefor the sum of $10,000 (ten thousand dollars).

“ The real estate referred to above is described as all that part of Out Lot 31 on the northeast quarter of section 33, lying west of Baum & Terbush’s lands, and east by the D., Gr. H. & M. R. R. right of way. Also Lot No. 7, subdivision of Out Lots 33 and 33, and part of 13, and the southeast quarter of section 39.

“I will also purchase all the material which you may have on hand on the first day of April, 1906, contained in thé above-mentioned factory and used in the manufacture of your present line of work, and pay you for the same eighty per cent, of the market price of said material.

“ Any other material not used in the manufacture of the present line as shown in your latest catalogue, you are to remove from the factory by May 1, 1906.

“Any complete jobs which are crated and ready for shipment April 1, 1906, are not to be considered as a part of this materia], but are to be shipped and billed by you as your property. I will, however, allow you to store them in the factory without expense until you are able to ship the same.

“Iam enclosing you my individual check for $5,000 (five thousand dollars) to apply on the purchase price when the property is properly deeded and transferred to me. It is my understanding that it will be necessary to have the sale, if made, approved by the probate court.

(Signed) “C. V. Taylor.”

Below and to the left are the words “Accepted ” and under it Frederick L. Ward, trustee; Frank Gr. Jacobs, trustee; William R. Scott, trustee; E. S. Todd, trustee. At the same time plaintiff prepared his personal check payable to R. D. Scott & Company on delivery of the plant, the check being for $5,000.

The trustees on the 39th of March filed a bill of complaint, in the circuit court of Oakland county, in chancery, in which bill all the persons who were interested in the R. D. Scott estate, either directly or in a representative capacity, were made parties; but neither the plaintiff nor the defendant corporation were parties. The bill proceeds upon the theory that the right of the trustees to consent to the proposed sale was doubtful, and that application should be made to the court of chancery for authority and direction in the premises and the prayer of the bill was that the court should so construe the will as to authorize the trustees to consent that the directors and stockholders of the corporation of R. D. Scott & Company might take the necessary steps and action to make a sale of the property embraced in the proposition above cited.

By the decree of the court the complainants in the case, the trustees, were authorized to consent to the sale by the corporation, R. D. Scott & Company, of the property embraced in the proposition signed by Taylor, and the completing, consummating, and carrying into effect of said sale. The decree was made on March Blst. On the evening of the day the decree was granted a waiver of notice of stockholders’ meeting and resolution to be passed by them and by the board of directors was prepared.

Immediately after the court announced the decree and before it was formally entered, Mr. F. G. Jacobs, with whom negotiations had been conducted by Mr. Taylor, called up Mr. Taylor by telephone and informed him that the court had granted authority to sell and that he could go ahead at once with the inventory. Taking the inventory, however, was delayed for the convenience of the defendant until Tuesday when the taking of an inventory was begun by a representative of Mr. Taylor and a representative of the defendant company; but before the inventory was completed, or any further steps taken, and on the morning of the 4th of April, the buildings were entirely destroyed by fire. Mr. Jacobs, who was the custodian of the check accompanying the proposition, tendered it back to plaintiff. All negotiations ceased, and this case is brought upon the theory of a completed contract to recover damages for the breach thereof.

It should be further stated that at no time was a formal meeting of the board of directors of the defendant corporation or of the stockholders called for the purpose of authorizing a sale of the corporate property. Those who constituted a majority of the directors of the corporation were also trustees under the will of R. D. Scott and signed a tentative acceptance of the proposition as such trustees. The only time that they were together as a body, and at this meeting Mary D. Ward was not present, was ón Sunday, March 18th, and the evidence shows that the signature of Frederick L. Ward was. affixed to the instrument on Sunday. The circuit judge at the conclusion of the testimony directed a verdict for the defendant, and the plaintiff brings error.

We think it cannot be held that there ever was a valid contract in writing, binding upon the defendant corporation, and answering the requirements of the statute of frauds. The proposition itself was addressed to R. D. Scott & Company, and also to E. S. Todd, W. R. Scott, F. E. Ward, and F. Q-. Jacobs, as trustees of the R. D. Scott estate. The only acceptance in writing was a purported acceptance by these trustees. There is nothing in the writing to indicate that in accepting the proposition as trustees of the R. D. Scott estate these parties were assuming to act as directors of R. D. Scott & Company.

The acceptance as given was subject to the approval of the probate court. But assuming that the chancery court was treated by both parties as a substitute for the probate court, that court was appealed to by the trustees of the estate as such. One of the directors was in the Philippines, and one of the resident trustees signed this tentative agreement on Sunday. We have a case, then, in which no corporate action was formally taken. We have no written contract purporting'to have been made on behalf of the corporation, nor do we have in writing in any form the assent of all interested parties.

If the rule of law be as contended for by plaintiff, viz., that the absence from the country of a member of the board of directors making service impracticable renders effort to make such service unnecessary, yet action by the other members of the board having notice, as members of the board, is in such case essential, and this we have not in the present case. Either corporate action formally taken, or the assent of all parties in interest, is essential to make a valid contract for the sale and disposition of real estate. Lockwood v. Boom Co., 42 Mich. 536; Peek v. Novelty Works, 29 Mich. 313; Doyle v. Mizner, 42 Mich. 332; Broughtons. Jones, 120 Mich. 462.

If it be assumed that the board of directors possess the power to close out the entire business of the corporation without a vote of the stockholders formally called or the assent of all the stockholders — as to which see 3 Thompson on Corporations, § 3983 — it is not too much to require that the formalities requisite to the making of a valid contract shall in such case be strictly observed.

The circuit judge reached the correct conclusion, and the judgment will be affirmed.

• Blair, Ostrander, Hooker, and Moore, JJ., concurred.