text:
    CUDNER v. CLEMENT.
    Waters and Watercourses — Flooding Lands — Drains and Ditches.
    The owner of land over which surface water flows from, an adjacent higher ground, in a natural watercourse, is not entitled to enjoin the upper proprietors from connecting a tile drain built by them across their property in the natural watercourse with tile put in by complainant upon her land, to carry off the excess of flowage, on a showing that the upper part of the drain was constructed on the dominant estate by the proprietors and connected with complainant’s drain with the permission of her husband acting in her behalf, and in the absence of proof that more than the natural volume of water was cast upon complainant’s land.

    Appeal from Branch; Yaple, J.
    Submitted January 19, 1911.
    (Docket No. 123.)
    Decided May 8, 1911.
    Bill by Annagusta Cudner against Rebecca Clement and Jacob H. Swope, to enjoin the flooding of complainant’s land. From a decree dismissing the bill, complainant appeals.
    Affirmed.

      Campbell & Johnson and Palmer & Palmer, for complainant.

      L. F. Humphrey, for defendants.

      Rights as to flow of surface water, see note in 21 L. R. A. 593.

   McAlvay, J.

Complainant filed her bill in the circuit court for Branch county, in chancery, against defendants, asking for an injunction prohibiting them from using a .certain tile drain across her premises, and from discharging any water upon her premises through a tile drain constructed by them, and for damages claimed to have been caused her by flooding her land by said defendants. Defendants answered, denying that complainant was entitled to any relief, and claiming that the water discharged from lands, which were higher than the land claimed by her, came down through a natural watercourse along the bottom of which their tile drains had been laid, and whatever they had done was by license of all the lower owners, including complainant, and they also denied any damage had been caused complainant by reason of the use of the tile drain on their lands. Issue was joined between the parties, and the case was heard before the court. A decree was granted denying complainant any relief, and her bill was dismissed. An appeal has been taken by complainant. The questions involved are substantially questions of fact.

The accompanying diagram, showing a sufficient portion of the lands of the parties to the suit, gives the location and direction of the entire line of the tile drain across these lands.

Defendant Rebecca Clement owns the north half of the south half of the northwest quarter of section 35, and defendant Swope the south half of the south half of the same quarter section. These entire descriptions are not shown. This drain begins near the north line of the Clement land in two branches forming a Y, and runs in the directions indicated across all these lands, describing in its course a half circle, starting towards the south, and discharging towards the north into an open ditch in the highway on the north line of complainant’s land. The water discharged from this drain continues to flow northerly for a mile or more, and finally empties into Hog creek.

The fall of the land from the upper end of the drain down where it crosses to the west side of the highway onto the Yan Aaken farm is 5.25 feet; from that point to the manhole on the line between Yan Aaken and complainant the fall is 18.42 feet and from there to the north line of complainant’s the fall is 6.35 feet — making a total fall of 30.02 feet. The tile in the part of the drain on defendants’ land is 3 and 5 inches in diameter and connects with a 5-inch tile on the Yan Aaken farm, which discharged into the manhole, and from there over complainant’s land the tile is 10 inches in diameter.

Complainant’s contention is that the drain was put in by defendants and connected with the Yan Aaken tile wrongfully and has resulted in flooding her land and destroying her crops; that this was done without any right, authority, or permission; that water is brought upon her land in large quantities which would not otherwise reach it. Defendants urge that the line of this drain for its entire length is in a natural watercourse along which the water of this territory drained when the country was in a state of nature, and ever since, and that no more water is now carried by this tile drain than has always flowed in the natural watercourse. It is undisputed that 30 or 40 years ago Mr. Yan Aaken began to put in tile in the northeast corner of his farm, and by that means drained his barnyard across which it is claimed this natural watercourse ran; that he built a manhole on his north line, and by agreement with complainant’s father, through whom she acquired title by will, and who owned and occupied this land, Mr. Yan Aaken dug a ditch in this watercourse across her land, and for years kept it open its entire length; that later complainant’s husband, in the interest of better husbandry, desiring to cover up this open watercourse, made an agreement with Yan Aaken to put in tile, each to furnish a certain portion of the tile and expense of putting in and covering them up. This was done by the parties, and complainant’s farm work was no longer hindered with this open watercourse.

It is claimed by defendants that complainant’s husband on behalf of himself and wife gave permission, upon request of defendant Swope, that a line of tile over the lands of both defendants might connect with the Yan Aaken tile drain, under an agreement that Swope would clean out the outlet north of complainant’s land. This was before defendants put in the tile on their land and made the connection on Yan Aaken’s land, under agreement with him. Defendants further claim that no more water flows down this tile drain than has always flowed over the ground down the natural watercourse which the drain follows, and that the flooding of complainant’s land was caused by water which came upon it from land on the east side of this highway, farther north, through a sluiceway put in by the township, and that no more land is drained by the tile drain than formerly was drained through the old watercourse.

We agree with the learned trial judge that complainant has not sustained the allegations of her bill of complaint and is not entitled to relief. Nearly all of the contentions of defendants are either undisputed or supported by a preponderance of the proofs. The closely contested facts relate to whether more water than naturally came down this old watercourse is now cast upon complainant’s land by this tile drain; whether the flooding and consequent injury to crops was caused by water from this drain; and whether license was given by complainant to defendants to connect with the underground drain. Upon these propositions, we agree with the conclusion of the court in favor of the defendants. The great weight of the evidence shows that this land formed a natural watercourse the whole length of this drain on defendants’ lands, and that putting the tile in did not change conditions in any material respect, except to cover up the watercourse for the purpose of better husbandry; also, that the connection was made with the knowledge and consent of complainant’s husband acting for her. It is worthy of notice that complainant is not sworn as a witness to dispute this or any other disputed matter. It is also clear that the water from this drain did not cause the damage to crops claimed. The weight of the evidence of disinterested witnesses shows that the flooding came across the road farther north and caused this damage.

From the situation of these parties as the land was before any improvements or drains were made, the water from these dominant estates by natural laws escaped over the servient estate now owned by complainant. There was na other way for this water to find a way out. This watercourse was continuously kept open by defendants and their predecessors in title. The acts of lower owners in confining the watercourse over their lands in tile or otherwise would not deprive the dominant estates of their right of flowage, and, if no artificial means had been adopted by them, they could not be held responsible for the natural volume of water which would come down in the natural way.

Even under existing circumstances it is evident that, with the fall shown, this drain on defendants’ land in time of freshet would take off but a small part of the water. The natural conditions are such that all parties must have recognized this.

The decree is affirmed, with costs.

Ostbander, C. J., and Bibd, Hookee, and Moobe, JJ., concurred.


source: Caselaw Access Project

author: McAlvay, J.

license: Public Domain

text:
    LAMBERSON v. LOVE.
    1. Bills and Notes — Accommodation Maker — Principal and Surety.
    Defendant’s son defaulted on a bond that plaintiffs had executed with the son as sureties. In order to settle the matter, plaintiffs caused defendant to execute his note to the obligee named in the son’s bond, and they indorsed the paper as sureties, the payee indorsing without recourse, and borrowed money at a bank on the separate note of the sureties secured by defendant’s obligation. The sureties were compelled to pay their note at maturity and brought action. Held, that defendant executed the note without consideration to him, and as to plaintiffs was an accommodation maker.
    2. Same — Evidence—Parol.
    Parol evidence is admissible to show the relations and liabilities of the parties to accommodation paper, and that a person who is on the face of the paper secondarily liable is in fact the principal debtor.
    3. Same — Payment—Discharge.
    Payment by the accommodated party to negotiable paper discharges it.
    Error to Kalamazoo; Knappen, J.
    Submitted February 20, 1911.
    (Docket No. 28.)
    Decided May 8, 1911.
    Assumpsit by Charles A. Lamberson and James C. Bogard against Charles M. Love. A judgment for defendant on a verdict directed by the court is reviewed by plaintiffs on writ of error.
    Affirmed.

      Frost & Farrell, for appellants.

      Jackson & Fitzgerald, for appellee.
   McAlvay, J.

Plaintiffs were guarantors or sureties for one George Love to secure the faithful performance of a certain contract between him and a medical company, which had agreed to furnish him as its salesman certain medicines, extracts, etc., upon certain terms and conditions, and for which he agreed to pay in time and manner provided in the written contract, George Love defaulted in the performance of this contract to the amount of $680.41. Later suit was brought against him and his sureties, upon this contract to recover this amount. George Love left for parts unknown. He is the son of the defendant. Plaintiffs undertook no defense to the suit against them. After it was begun they interviewed defendant for the purpose of being relieved from it and to avoid the payment of the amount claimed, and told him they came to find George, and that he was short about $700, and they had been called upon to settle. One of them mentioned the fact that George had made himself liable to arrest. Later; on September 30, 1908, the company’s agent, Hunter, came to Kalamazoo. One of the plaintiffs called defendant by telephone telling him that fact, and that he (plaintiff) wanted to get the matter settled and wanted defendant to pay it. The same day plaintiffs and the agent drove to defendant’s farm for the purpose of getting this obligation upon which suit had been brought, out of the way. After some talk it was agreed that, if defendant would give a note for $600, plaintiffs would sign it as sureties, and a note for that amount was drawn up by the agent payable to him, and was signed by the parties as agreed. - Plaintiffs signed on the back “as sureties.” The next morning plaintiffs met Hunter at the bank.. They borrowed $600 on their four months’ note, giving the money to Hunter; he having turned over to them the note executed the day before. This note they put into the bank as collateral to their note. Hunter also surrendered to them the contract with George Love upon which suit had been brought, and that suit was discontinued. Plaintiffs’ note at the bank was renewed from time to time until the note signed by defendant came due, which he upon demand refused to pay, and they were then called upon to pay their indebtedness, After such payment they brought this suit. This note reads as follows :

“600.00.
“Texas, Kalamazoo County, Mich.,
“Sept. 30,1908.
“ On or before one year after date, I promise to pay to R. A. Hunter or order six hundred dollars with interest at the rate of six per cent, annually from date. Yalue received.
“Payable at Kalamazoo, Mich.
“O. M. Love.”
With following indorsements on back:
“As sureties,
“C. A. Lamberson,
“ J. C. Bogard.”
“ Without recourse on me.
“R. A. Hunter.”

At the close of plaintiffs’ case, defendant moved for an instructed verdict, for the following reasons:

(1) Want of consideration for the note.

(2) That it was in fact plaintiffs’ obligation for their benefit.

(3) Defendant was an accommodation maker for plaintiffs’ benefit, and, having paid their own obligation, they could not recover from him.

This motion was granted, a verdict for defendant was accordingly returned, and upon it a judgment was entered.

But one question is raised in this court by appellants. They contend that the court erred in directing a verdict.

It is clear that at the time these parties met, and the note in suit was made, defendant was in no way related to or obligated upon the contract with his son George upon which suit had already been brought. It is undisputed that defendant received no consideration when he signed the note. The testimony shows why plaintiffs were there. Lamberson testified:

“It was for the purpose of getting this obligation that we had been sued upon settled, that we went out to Mr. Love’s farm.”

Plaintiff Bogard testified:

“We went out there for the purpose of getting this settled, and signed this note for the purpose of settling, so as to be relieved from this suit which had been started by the Eawleigh Medical Company. Mr. Love had agreed to settle this before. That was why I went out there; that is after the suit had been started against us. My only interest in this matter was to be relieved from the suit started against us so that we would not have to pay the $680. Mr. Love wanted us to sign the note, but we didn’t care about what Mr. Love wanted unless we were relieved from this obligation. Our sole purpose in signing this note was to get relieved from this suit.”

The record shows that the note was not signed by defendant at the request of the agent, Hunter, nor upon his agreement to discontinue the suit against plaintiffs. Nor was the money obtained by Hunter at the bank upon the note in suit.

Plaintiffs at the bank borrowed $600 on their note, paid it to Hunter, who indorsed the note to them without recourse, und surrendered to them their obligation to his company. These facts have been repeated to make clear the relations between the parties to this suit upon the note plaintiffs have paid. It is clear to us that this transaction was for their benefit. The consideration was moving to them. Their liability was reduced $81, and the suit was discontinued. In paying their note at the bank, they paid their own obligation. It follows that defendant upon this note was an accommodation maker for their benefit. This is shown by the evidence.

The weight of authority is that the relations and liabilities of the parties to accommodation paper may be shown by-parol evidence, and it may be shown that a person who is apparently liable only secondarily on the instrument is in fact the principal debtor. 1 Am. & Eng. Enc. Law (2d Ed.), p. 343.

It is settled law that the payment of accommodation paper by the party accommodated discharges the instrument. This is also now the express provision of our negotiable instruments law. Act No. 265, Public Acts 1905, § 121.

It follows that plaintiffs acquired no right of action against defendant, for as between them there was no consideration.

The trial court was not in error in directing a verdict for defendant.

The judgment is affirmed.

Bird, Hooker, Moore, and Stone, JJ., concurred.


author: Hooker, J.

text:
    LARNED v. VANDERLINDE.
    1. Evidence — Collateral Issue — Negligence — Dangerous Place — Stairways.
    In actions for negligence it is incompetent to show that other accidents have occurred at the place of injury to show the dangerous condition of the place, as a collateral issue would be raised by the evidence.
    2. Same.
    Nor is evidence that no other accidents have occurred at the place competent to prove its safe condition.
    8. Negligence — Stores — Duty to Guard Stairways — Merchants.
    Where a customer fell down a stairway at the end of a show counter in the back part of defendant’s store, in the daytime, and brought action claiming that the place was dark, a request to instruct the jury that if defendant neglected to place guards at the stairway or to warn plaintiff of the danger, she would be entitled to recover, was properly refused, because plaintiff’s obligation to use due care was omitted.
    4. Same.
    Plaintiff was not entitled to an instruction that she was not guilty of contributory negligence even though she might have seen the opening if she had looked, based on the theory that every one may assume that the floor of a store which he enters is safe.
    5. Same — Charge.
    An instruction that the evidence showed plaintiff’s sight was good was not erroneous because of the fact that plaintiff else. where testified that her eyes blurred, after she had admitted that her eyesight was good.
    6. Same.
    It was not negligence for a storekeeper to omit to place a gate or bar before a stairway in plain sight and out of the place where customers are expected to go.
    7. Same — Contributory Negligence.
    A customer who, on being asked by a clerk to step this way, followed him to the rear of the store, and at the end of a show counter stepped down an open stairway, guarded on either side by a railing, and visible in the daytime, the accident occurring about noon, was guilty of contributory negligence, in the absence of testimony that plaintiff could not see the stairway.
    Error to Muskegon; Sessions, J.
    Submitted January 17, 1911.
    (Docket No. 97.)
    Decided May 8, 1911.
    Case by Margaret Larned against Nicolas Gk Vanderlinde for personal injuries. Judgment for defendant. Plaintiff brings error.
    Affirmed.

      James E. Sullivan (Turner & Turner, of counsel), for appellant.

      Cross, Vanderwerp, Foote & Ross, for appellee.
   Hooker, J.

The plaintiff, a customer of the defendant, fell downstairs in defendant’s store. In an action for damages based on alleged negligence, the jury, who were permitted to view the premises, found a verdict in defendant’s favor, and she, the plaintiff, has appealed.

We have endeavored to make from the testimony a substantially accurate plat of the store, which we attach, that the situation may be more easily understood.

The store was a furniture store, and fronted north. On the east side shelving extended the full length. Tables 4 feet wide set 24 feet from the shelving, extended to within 4 feet of the stairway down which plaintiff fell. The tables or counters were feet high, and were used for displaying crockery. Plate glass windows covered the entire front, exclusive of doorway. We understand the doors were mainly of glass. The store was 40 feet or more wide. The stairway was four feet wide, with the opening exactly opposite the end of the counter, and four feet distant therefrom, as we have said. On the west side of the stairs an elevator was situated, and its wainscoted shaft extended to the ceiling. There was a newel post four feet high, and a railing extending to the end of the store on the east side of the stairway.

The plaintiff entered the store between 12 and 1 o’clock, on what she said was a cloudy day, to make a small purchase, and by invitation followed the clerk to the rear part of the store. He went in the passage back of the counters and she outside. He went to the. point marked “X,” some four feet beyond the newel post, and took down a lantern chimney, and, as he turned- to show or take it to her, he heard a noise and found that she had followed him beyond the end of the counter, and had fallen downstairs. She testified that she started to go where he was diagonally across from the end of the counter, and, not seeing the stairway, fell downstairs. She claimed that it was dark in the back end of the store; that she was not warned' that there were stairs there, and did not notice them, although she also testified that her eyesight was good. She was watching the clerk, had no thought of a stairway, and “supposed she walked directly through to the back down that stairway.” The court admitted testi- ' mony showing that for nine years the stairs had been used, and no accident had occurred there before. The errots relate, first, to the admission of testimony regarding the absence of accidents; second, omission to give two-requests to charge on the subjects of negligence and contributory negligence; third, instructions given upon those subjects.

There is an absence of harmony in the decisions on the subject of the admissibility of proof of other accidents in negligence cases. In Michigan testimony of that kind has been held admissible in sidewalk and other highway cases, but its use has been limited to the question of notice of defects. See Dotton v. Village of Albion, 50 Mich. 129 (15 N. W. 46); Moore v. Township of Kenockee, 75 Mich. 332 (42 N. W. 944, 4 L. R. A. 555); Campbell v. City of Kalamazoo, 80 Mich. 655 (45 N. W. 652); Girard v. City of Kalamazoo, 92 Mich. 610 (52 N. W. 1021); Corcoran v. City of Detroit, 95 Mich. 84 (54 N. W. 692); Alberts v. Village of Vernon, 96 Mich. 549 (55 N. W. 1022); Moore v. City of Kalamazoo, 109 Mich. 176 (66 N. W. 1089); Gregory v. Railway, 138 Mich. 368 (101 N. W. 546); Karrer v. City of Detroit, 142 Mich. 331 (106 N. W. 64); 28 Cyc. pp. 1487, 1491; 29 Cyc. p. 613. The general subject is discussed in 8 Enc. of Evidence, p. 926 et seq. See, also, Id. 878. We are of the opinion that it would not be competent under our cases for the plaintiff in a negligence case to make proof of other accidents for the only purpose of proving the condition, or dangerous nature of the defect complained of. One reason for this is that it would be the raising of collateral issues. Under such a rule, it would not be competent to prove an absence of accidents as tending to show an absence of negligence.

In plaintiff’s second request, the court was asked to charge that it was the duty of defendant to guard the stairway by a railing or bar, or warn plaintiff, if that was impracticable, by actual notice, and that if the jury should find that defendant did neither, and the stairway was located where a person trading might step into it unawares, they should render a verdict for the plaintiff. The judge properly refused this for it imposed no duty of care on the plaintiff. Doubtless she stepped down the stairs without noticing that they were there, but she owed some care. The learned circuit judge said that it was not negligent to have the stairs there, but he did not relieve the plaintiff from the responsibility of care in their use.

The fifth request went so far as to ask an instruction that she could not be found guilty of contributory negligence, “even though she might have seen the opening had she looked,” upon the theory that every one has the right to assume that the floor of a store is perfectly safe. Counsel asks us to apply to stairs rules that would be quite strict enough in cases of trapdoors or holes in the floor, where there was no reason to expect them, and where naturally they would not be seen. There was no error in refusing this request.

Counsel complains of the statement in the charge that “it appears by the undisputed evidence of the plaintiff herself that her sight was good, and not defective.” It is said that, although she said so, the court should not have made this statement, in view of the testimony that her eyes blurred. She did not testify that her eyes were blurred. It was shown that she told defendant a week after the accident that “the light blurred her eyes when she went into the store.” No request to charge on this subject was made, and the fact stated by the court was unqualifiedly stated by plaintiff herself. Counsel argued this to the jury, and there is no reason to doubt that it was considered by them.

Error is assigned upon the following charge:

“ The maintenance of this stairway was not in itself an act of negligence. You examined the premises and saw where the stairway was situated. You have heard all of the evidence in the case also as to the location and situation and condition of the stairway. This stairway was located at the rear, or nearly at the rear of this storeroom. It was located in a place where it was not negligence to maintain a stairway. In this day and age it is necessary and usual for merchants in their stores to have stairways, and there is nothing out of the ordinary in this stairway, and the question as to whether not it was a dangerous place is dependent upon the conditions surrounding its location and dependent upon the circumstances surrounding this particular occurrence. One of the questions for you to determine in this case is whether or not it was light enough so that the plaintiff could have seen the stairway if she had looked. It was her duty to exercise and use her eyes. It was her duty to see what there was there, where she was going, provided it was light enough so that she could see by the exercise of ordinary diligence and care.”

Preceding this excerpt is the following:

“ It was the duty of the defendant to keep the floor of his storeroom, to which he expressly or impliedly invited the public to trade, in a condition reasonably safe for his customers at the time. When merchants invite their customers to walk over their floors for the purpose of examining their goods and making purchases, such customers have a right to rely on the safety of the floor; and it was the duty of the defendant in this case, when he invited, as he did, the public to enter his store, and to trade with him in that store, to see to it that the floor of the store was in a reasonably safe condition so that his customers might not suffer an injury.”

Unless we are prepared to lay down the rule that inattention was necessarily not negligence under the facts in this case, we cannot say that the judge erred in his charge on the subject of contributory negligence. We cannot lay down such a rule for there are no circumstances that can be said to excuse inattention. Counsel relies on a number of trapdoor and elevator cases, and not upon any case of a conspicuous and obvious stairway.

We have endeavored to go carefully over the assignments of error in this case, and are of the opinion that there is no cause of complaint in the charge under the facts as proved. We approve it in the statement that it is not negligence to omit to bar or warn a customer against such stairs where they are in plain sight and out of the place where customers are expected or asked to go, and we also think the law justified the instruction that one is negligent if he allows such a flight of stairs to escape his notice, from no other reason than mere inattention to his surroundings. The attention of the jury was directed to those circumstances which under the testimony tended to excuse the plaintiff, and to the fact that only the ordinary care of ordinarily prudent persons was required of her.

The fourteenth assignment is as follows:

“ The court erred in instructing the jury as follows:
"'If it was dark upon that occasion at the place where the stairway was located, and this plaintiff received an invitation from the clerk or had a right to believe that his actions and statements were an invitation to go to that place and she acted with due care and caution, and the place was not lighted, then you will be warranted in finding the defendant or his servant, which is the same thing, guilty of negligence in not warning her of the opening down which the stairs led, the opening in the floor. If it was dark there so that she could not see and she was invited to go to that place, it was the duty of the clerk either to have lighted the light which was there so that she might see, or to have warned- her of the opening in the floor, and if he failed either to light the light or to give her any warning, and invited her to that place and she could not see by the exercise of reasonable diligence and care, then the defendant or his servant, which is the same thing, is guilty of negligence.’ ”

Counsel has not alluded to this in his brief, so far as we have discovered, and we do not know what his complaint is to it. It seems to us a fair statement unless, as plaintiff claims, she was entitled to have the jury instructed that inasmuch as the clerk when near the front door asked plaintiff to follow him Come back this way,” it was an invitation to go beyond the counter, and that she was under no obligation to use her eyes, but might assume that there would be nothing that she could receive an injury from, or unguardedly step into, and was therefore entitled to omit all care. We think she was not entitled to such direction. The allegation of negligence in the declaration is that the defendant allowed an opening in the floor near the rear of the store for a stairway leading to the basement to remain open and unguarded without a light or any other thing to point out its dangerous character.

But for the error in admitting testimony regarding the long use of the stairs without accidents we should affirm this judgment without further comment. We do not reverse the judgment on this ground, for the reason that the court might properly have taken the case from the jury, and directed a verdict for the defendant.

The testimony shows conclusively that this stairway was in plain sight, and that the only reason plaintiff failed to see and avoid it was heedlessness of her surroundings. It is true that she stated that it was dark there, but it is clear that the term “ dark,” as used by her, was a comparative one. We quote her testimony:

“ It was between 12 and 1 o’clock and it was a cloudy day at the time I was hurt. * * * Quite a little ways back in the store I noticed a table I think with some fancy lamps on, and I went right on and followed him right back so I don’t know what they had. There was some furniture. It was dark. There were no lights burning. I stepped into the basement, and was severely hurt. Down the stairway, I must have walked into the open space and fell to the foot of the stairs.”

This was all of plaintiff’s evidence in support of the claim of counsel that the stairway was not readily visible. It is noticeable that she did not say that there was any difficulty about seeing it and her cross-examination'makes it still more obvious that it was visible, and that the accident was due to inattention. We quote:

“The sun was not shining at that time. In the morning it shone some.”

And:

“Q. As you approached the rear end of the store, did you look in any particular direction to see anything ?
“A. I was watching the clerk.
“Q. You were watching the clerk ?
“A. Yes, sir; on my left-hand side and he was a little ahead of me all the way. * * *
“Q. As you went back to the rear of the store, did you notice the office in the center of the room ?
“A. I did not.
“Q. Did you notice those chairs that you tell about, one of them that you sat in when you came up later ?
“A. I noticed chairs there — that is, there seemed to be furniture piled up real high. I don’t know whether it was chairs or couches, or what, something like that. That was in the back of the store somewheres. I don’t remember whether I saw that chair or the other chairs as I went back towards the rear that day.
“Q. Your eyesight is good, I take it?
“A. Yes, sir.
“Q. Always has been ?
“A. Yes, sir.
“Q. You don’t mean to say you walked directly through to the back down that stairway, do you ?
“A. I supposed I did.
“Q. Did you notice an elevator as you approached the rear there at all?
“A. No; I did not. I was watching the clerk.
“Q. You didn’t look for the elevator ?
“A. No, sir.
"Q. You didn’t look to see anything except to watch the clerk, as I understand it ?
“A. I was watching the clerk and where I was going, but it was dark back there. I had no occasion to think of the elevator because I had no occasion to use it.
“Q. Did you notice the counters as you went along to your left, as you went along that thoroughfare ?
“A. Not after I left the door. * * *
“Q. Did you notice whether or not the place where the clerk went was to the left in a place farther back than the stairway where you fell ?
“A. No; I think not. * * *
“Q. And you say you don’t recollect turning either to the right or left ?
“A. No, sir.
Q. You didn’t see the elevator standing there ?
“A. No, sir; I wasn’t looking for it.
“iQ. You were looking all the time, you say, at the clerk ?
“A. I was looking where I was going; that is, I was walking along and following the clerk. Of course, I wasn’t looking for any opening.
“Q. You know it must be an opening because you fell down ?
“A. Yes, sir.
“ Q. You didn’t notice it, you say, as you went towards it?
“A. No; it was dark. There was no light over it.
“ Q. You didn’t have any trouble about seeing to walk from the front of the store back along by the counter ?
“A. No; I walked right along.
"Q. Your eyesight was able to distinguish things readily ?
“A. Yea; in the front part of the store.
“Q. So far as this stairway is concerned, you don’t have any distinct recollection just how it was located in that building ?
“A. No; I don’t know just how it is located in that building.
“Q. It is your idea now that you went straight back there and walked right in that stairway, is it ?
“A. Yea; it seems to me that I did..
“Q. Did you think that because you were there in the store that you wouldn’t have to observe about you to see where you were going ?
“A. Why, no; I didn’t expect to go into a store and find any opening without any warning or without any light.
“Q. Then your idea is that it was so dark back there at the rear end of the store that you couldn’t see anything at all, couldn’t see the opening ?
“A. I didn’t see it; no, sir.
"Q. You had your mind on this lantern globe, I suppose ?
“A. Yes, sir.”

The last quotation is significant of her unwillingness to say that she could not see the stairway by reason of the want of daylight, while the whole testimony indicates most plainly that she was inattentive to her surroundings. If a jury may upon such testimony find that it was negligent to have this stairway unlighted, it is difficult to imagine a stairway in a store which would not be open to the same claim. It is a common thing in stores to find stairs from story to story. Even where there are elevators they are essential to safety and should not be dispensed with nor concealed, and we all know that some stores have no elevators. Every dwelling house has such stairways, yet invited guests do not expect that the owner will have gates or bars, or that they will be lighted on cloudy days. The only legitimate questions upon this record are whether this defendant was negligent for not lighting or barring the stairs by reason of darkness, and whether plaintiff was herself negligent. The plaintiff has failed to make a prima facie case upon the first, and has pretty clearly established the second proposition. The opening, railings, newel posts, and elevator were in plain sight, and, though she walked directly toward them, she was oblivious to their presence. There is no opportunity for . any other inference from the testimony.

The judgment is affirmed.

Ostrander, C. J., and Bird, Moore, and McAlvay, JJ., concurred.


author: Moore, J.

text:
    HINKLEY v. WABASH RAILWAY CO.
    ON REHEARING.
    Former opinion affirmed May 8, 1911.
   Moore, J.

A decision was rendered in this case in September last. The opinion is found in 162 Mich. 546 (127 N. W. 668). Later a reargument was ordered. We have again considered the ease, and still think the judgment should be affirmed, for the reasons stated in the opinion to which reference has been made.

Judgment is affirmed.

Ostrander, O. J., and Hooker, McAlvay, Brooke, Blair, and Stone, JJ., concurred.


author: Stone, J.

text:
    HAKES v. THAYER.
    1. Fraud — Bills and Notes — Rescission—Waiver.
    The purchasers of a stallion, who signed joint promissory notes for the purchase price, on the representation of the seller’s agent, and who, instead of rescinding the transaction after they had discovered the falsity of such representations, kept, used, and controlled the horse, thereby waived the right to avoid the transaction on the ground of fraud.
    2. Same — Sales.
    The purchaser of property who seeks to defend an action for the purchase price on the ground of fraud, must show that he rescinded the contract and refused to retain the subject matter thereof.
    3. Same — Rescission for Fraud.
    And by keeping and using the horse, after they had attempted to rescind the contract for fraud and breach of warranty they waived the right of rescission.

      L Bills and Notes — Bona Fide Holder — Breach of Warranty as Defense.
    That the purchaser of promissory notes, given by several joint makers for a stallion, knew that the payee had warranted the horse, and that the notes were the consideration of the sale, but did not know the warranty was broken, having purchased them before the horse had shown any of the alleged defects, was insufficient to charge plaintiff with bad faith.
    5. Same.
    Failure of consideration, in whole or in part, after a bona fide transfer, does not affect the character of the indorsee, although he may have known the consideration for which the negotiable instrument was given.
    6. Same.
    Nor was such a transaction against public policy. (Distinguishing People’s Building & Loan Ass’n Co. v. Rutz, 158 Mich. 440 [123 N. W. 6].)
    7. Same — Negligence—Bad Faith.
    The court erred in saying in his charge that if the plaintiff, from circumstances brought to-his knowledge, as an ordinarily prudent man, had reason to believe that some defense might be made to the notes that he held, he would not be a bona fide purchaser; since neither suspicions nor gross negligence constitute bad faith.
    8. Same.
    It is not a ground of defense that the holder in due course was informed that the note was made in consideration of an executory contract, unless he was also informed of its breach.
    Error to Kalkaska; Lamb, J.
    Submitted February 15, 1911.
    (Docket No. 167.)
    Decided May 8, 1911.
    Assumpsit by Elisha H. Hakes against F. Thayer and nine others on three promissory notes. Judgment for defendants. Plaintiff brings error.
    Reversed.

      Louis E. Howlett R. D. Roche, of counsel), for appellant.

      Ernest C. Smith, for appellees.
   Stone, J.

This is an action of assumpsit brought upon three promissory notes made by the defendants and others. The first one of said notes reads as follows:

600.00 Kalkaska, Michigan, July 22, 1901.

On September 1, 1903, after date for value received I promise to pay Russell lams or order six hundred dollars at the Kalkaska City Bank with interest at six per cent, per annum, interest payable annually.

Tyler & Son.
J. A. Doherty.
A. B. Doherty.
F. Thayer.
George W. Puffer.
Paul Seitung.
James A. Drake.
H. V. Beaver.
George Priestly.
John G. Waltz.
A. J. Montgomery.
J. D. Brown.
George Seitung.

The other two notes were exactly the same as the above, except that they became due on September 1, 1904, and September 1,1905, respectively.

The evidence is undisputed that the plaintiff purchased these notes of said lams on September 30, 1901, and that he paid $1,665 for them in checks upon the Second National Bank of Toledo, Ohio, which checks were subsequently cashed by said lams, and passed through the clearing house of Toledo. At the time of the purchase of these notes, they were each indorsed as follows:

“For value received I hereby guarantee the pay of the within note when due, and waive demand of notice and protest when due, and X agree to pay all costs and expenses in collecting the same.
“ Russell Xams.”

Whether or not the plaintiff was a bona fide purchaser and holder of these notes was a disputed question at the trial, and evidence was given at great length by plaintiff, tending to show that he was such bona fide holder, and detailing the circumstances under which he became the purchaser of these notes, as well as other notes which he, both before and after this transaction, purchased from said lams.

The payee of these notes was a dealer in horses, and had been for some years engaged in buying and selling stallions. The notes in question were given for the purchase price of a stallion known as Gordon. The plaintiff, when he purchased these notes, knew that they were what might be termed “ stallion notes,” but he claimed and testified that he had no knowledge of the contract between lams and the makers of the notes. Prior to the purchase of the notes in question, the plaintiff had purchased other sets of “ stallion notes ” from Mr. lams, and he testified that up to the time of the purchase of the notes in question he had never had any trouble or litigation over any of the notes so purchased, and that at the time he purchased these notes he did not know of any defense that the defendants, or any of them, had to the notes, and that he purchased them in good faith, knowing that they were “stallion notes.”

The defendants at the trial claimed that the notes were never delivered; that the execution of the notes was procured by fraud, and also that there was a warranty that the stallion for which the notes were given was a reasonably sure foal-getter, and that he was not. They offered evidence, which is undisputed, to show that about July 1, 1901, a man by the name of Ritter, who claimed to be an agent of Russell lams, was at the village of Kalkaska with a stallion by the name of Gordon, and solicited them to join with 18 men, who were to be good responsible men, in the purchase of this horse for $1,800, each paying the sum of $100 in three equal annual payments; that after Ritter had secured the promises of 18 such, men a man by the name of May, who also claimed to be an agent of lams, appeared at Kalkaska with the notes in question, and interviewed each maker at his home, and asked them to sign the notes. They claim that he stated to them that, unless 18 good, responsible men signed the notes, they were to be “no good,” and that a meeting was to be held at Kalkaska village on the Saturday evening following, for the purpose of organizing the makers into an association to be known- as the “Kalkaska County Horse Breeders’ Associationthat at. said meeting they were to determine whether or not the men whose signatures were upon the notes were acceptable, and, if not, to procure others that were; that, after obtaining the signatures to the notes as they now appear, both Ritter and May left Kalkaska with the notes, leaving the horse under the control of a groom.

It appears that the makers of the notes met on the Saturday evening following the signing of the notes, and at that time learned that Ritter and May had left town with the notes, and that they did not procure the 18 signatures of good responsible men as they had agreed to do, and did not organize them into an association, and that they had signed notes for $1,800, which might be bought by an innocent purchaser. After discovering the matter, they concluded to take the horse with a written guaranty, signed by lams, and dated at Gibsonburg, Ohio, providing that, if the horse, Gordon, under proper care and treatment, should not prove to be a reasonably sure foal-getter, and they would return the horse to him, he would replace him with another horse of like kind and value, or return the notes or refund the cash, and to pay the $1,800 for the horse. The signers of the notes on that evening-organized themselves into the “ Kalkaska County Horse Breeders’ Association,” electing a president, secretary, and treasurer, and a board of directors, and accepted the horse, all of which appears in evidence in the record. At a meeting held the following month, they hired a man to care for the horse, and they continued to own, operate, and control the horse until its death, which occurred in the year 1909. It appears that this association never owned any property, except this horse.

All of the defendants testified that at the time they signed the notes they knew that they were signing promissory notes for $1,800; that they could read, and that they knew that they were making themselves individually liable for that sum, but trusted the man May to procure the other signatures, and permitted him to take the notes with him. When they accepted the horse, they knew of the fraud of lams’ agent in getting the notes. The evidence on the part of the defendants tended to show that the horse was not as warranted, and was not satisfactory, and that, on December 11, 1902, the secretary of said association, under instructions, wrote the following letter to the said lams:

“South Boardman, Mich., December 11, 1902.
“Mr. R. Iams, G-ibsonburg, Ohio.
Dear Sir: The Percheron stallion named Gordon, No. 26,650, that we bought of you a year ago last July proved to be no good as a foal-getter; of the mares served by your man while here in charge of the horse not one had a colt, and of the others served during the season only'five had colts; this year is no better as far as we can learn. Of the folks that used the horse last year very few would use him this year; said they wanted a horse that would get colts. He has been a pretty expensive piece of property to us so far. Now we want you to give us back our notes or send us another horse that is all right.
“Yours respectfully,
“ J. D. Brown,
“ Secretary, Kalkaska County Horse Breeders’ Association.”

The reply to this letter was destroyed by fire. The witness stated the contents to be that lams said in the letter that they didn’t want another horse; that all the matter with the horse was that he was a masturbater; and that if they would put a proper shield on him he would be all right. The defendants claim that they tried the shield, but with no better or different result.

It is further claimed that in the fall of 1904 the defendants employed one William D. Totten to act in their behalf in said matter. Mr. Totten testified that he wrote a letter to Mr. lams at his post-office address in Ohio. The answer to this letter was also shown to have been destroyed by a fire which occurred in Kalkaska. In answer to the question as to the contents of the letter, he said:

’ “According to the best of my recollection, I received a letter in which he declined to give any shipping instructions, and also refused to receive the stallion.”

This answer was objected to as stating a conclusion, but the court permitted the answer to stand, to which plaintiff’s counsel excepted.

The witness John L. Boyd testified along the same line as did Mr. Totten, and also to a conversation with lams, whom he visited in 1907 in connection with the matter. There was also evidence on the part of the defendants tending to show that the plaintiff stated that, at the time he purchased the notes, he knew there was a contract back of these notes, or between the makers and Russell lams, and knew that the contract guaranteed the horse to be a reasonably sure foal-getter with proper care and handling.

The plaintiff claimed that there was no evidence in the case of a rescission of the contract. At the close of the trial, plaintiff’s counsel moved the court to strike from the record all the testimony tending to prove a fraud in the sale of the horse, for the reason that it fails to appear that these defendants ever rescinded, or attempted to rescind, the contract, and the defense of fraud could not be made by a party to a contract until he had rescinded the same, -which motion was denied, and to which counsel for plaintiff duly excepted. Counsel for plaintiff thereupon requested the court to charge and instruct the jury in part as follows:

“(2) It appears that after Ritter, May, and the groom had made certain false statements to the defendants which induced them to sign the notes in question, and after the defendants knew the representations, or some of them, were false, that they met and by concerted action accepted the horse, controlled him, and thereafter claimed to own him. Therefore I charge you that the defendants cannot now be heard to urge these false statements so made and within their knowledge at that time to defeat this action, and you should disregard them.
“(3) It appears that at the meeting held by these defendants when they determined to accept the horse, that Mr. lams, as a part of the contract, warranted the horse to be a reasonably sure foal-getter, and that if he failed so to be, and the defendants would return the horse to him, he would replace him with a horse equally as good, or return the notes. It further appears from the evidence that the horse was not a reasonably sure foal-getter, but defendants did not return the horse. I therefore charge you that defendants cannot now urge that reason as a defense to this action, and you should disregard it.
“ (4) I charge you that the defense of fraud to an action on a contract cannot be successfully made, unless the contract be rescinded promptly after discovery of the fraud, and the property returned.
(5) I charge you that, in view of defendants’ conduct in continuing to keep this horse after they found the statements and representations made to induce them to enter into this contract to be untrue, that in failing to return the property afterward, your verdict in this case must be for the plaintiff for the amount of his claim.
“ (6) I charge you that any breach in the warranty, that this horse should be a reasonably sure foal-getter cannot defeat the plaintiff’s recovery, provided you find him to be a bona fide holder for value of this property.”

All of said requests to charge were refused. The jury returned a verdict for the defendants, whereupon judgment was duly entered against the plaintiff of no cause of action, and for costs.

Plaintiff brings the case here by a writ of error, and the record contains 36 assignments of error. We shall only consider such as were discussed by appellant at the hearing, and in his brief.

It is the contention of plaintiff that the defendants, not only by express agreement among themselves, accepted the horse, but by their conduct had waived the right to make any complaint because of the fraud perpetrated upon them in the sale of the horse, or the execution of the notes. And by the twenty-seventh assignment of error plaintiff claims that the court erred in not giving his second request to charge. We are of opinion that the court was in error in refusing to give this request. This would apply to any fraud or false statements within the knowledge of the defendants at the time they accepted the horse. By the undisputed evidence, it appears that they then knew that the requisite number of signers had not been obtained, and that the company had not been formed. The defendants must certainly be treated as having waived any fraud in that connection, and they should not be permitted to urge it to defeat this action, and the plaintiff was entitled to have the jury instructed to disregard such fraud. Craig v. Bradley, 26 Mich. 353; Wright v. Peet, 36 Mich. 213; John A. Roebling's Sons Co. v. Hematite Co., 70 Mich. 346 (38 N. W. 310); Dailey v. King, 79 Mich. 568 (44 N. W. 959); Eames v. Manley, 121 Mich. 300 (80 N. W. 15); Smith v. McDonald, 139 Mich. 225 (102 N. W. 738); Mestler v. Jeffries, 145 Mich. 598 (108 N. W. 994).

It is urged by plaintiff that there was no rescission of this contract at any time; that the letter of the secretary, wherein he said, “Now we want you to send us back our notes or send us another horse,” instead of amounting to a rescission, was a request to lams to perform the contract in accordance with its terms; and that the defendants never returned the horse as provided in the contract; and that the same is also true of the efforts made by the witnesses Totten and Boyd.

This court has held, as a general proposition, that a person cannot claim that a contract has been annulled because of fraud, unless he rescinds and abrogates the contract. In other words, that a party could not claim to own the property purchased, and at the same time claim there was no sale. In Rumsey v. Fox, 158 Mich. 248 (122 N. W. 526), this doctrine was held:

“ The purchasers of a stallion who received the property and who at no time attempted to rescind the contract, cannot question its validity on the ground of fraud, in an action on notes given for the purchase price.”

And by the twenty-fifth assignment of error the plaintiff claims the court erred in refusing to grant his motion at the close of the testimony, and, by the thirty-sixth assignment of error, that the following language used by the court in its charge was erroneous:

“Now, as to the rescission of the contract, if you find. from the evidence in the case bearing upon that proposition that the defendants did all that was required of them to carry out their contract in the rescission of this contract, then the contract can be said to have been rescinded, so far as they are concerned.”

The defendants insist that they did all that was in their power to rescind this contract; that lams refused to receive the horse or to make any provision for its shipment; and that defendants ought not to be required to assume the position of consignors of the horse, or to pay charges of shipment, and in support of their position they cite the following cases: Osborn v. Rawson, 47 Mich. 206 (10 N. W. 201); Housding v. Solomon, 127 Mich. 654 (87 N. W. 57); Westinghouse Co. v. Gainor, 130 Mich. 393 (90 N. W. 52); Lyon v. Lindblad, 145 Mich. 588 (108 N. W. 969); J. I. Case Threshing Machine Co. v. Huber, 160 Mich. 92 (125 N. W. 66). In the light of these authorities we might hesitate to say that the offer of the defendants to return the horse might not have operated as a rescission of the contract, had defendants’ subsequent conduct been consistent therewith; but such was not the case, and this brings us to the next point urged by the plaintiff.

We are of opinion that these defendants have waived the right to claim a rescission of this contract by continuing to keep and use the property. Upon this subject this court has spoken very clearly in the case of Foster v. Rowley, 110 Mich., at page 67 (67 N. W. 1079). In that case it was held that the use of chattels by a purchaser thereof for 30 days after he discovers the falsity of representation which induced the sale, constitutes a waiver of the right to rescind. In that case this court said:

“ It was the duty of defendant, as soon as he learned of the misstatements, to rescind the contract; and notice of such rescission must have been promptly given, and adhered to, in order to bind the parties thereto. The continued usé of the property for some 30 days after he had learned the facts would be a waiver of the right of rescission, even though notice of such rescission had been given. Hubbardston Lumber Co. v. Bates, 31 Mich. 158; Dunks v. Fuller, 32 Mich. 242; Campau v. Lafferty, 50 Mich. 114 (15 N. W. 40); Craig v. Bradley, 26 Mich. 353; Gridley v. Tobacco Co., 71 Mich. 528 (39 N. W. 754); Beal v. Congdon, 75 Mich. 77 (42 N. W. 685); Dailey v. King, 79 Mich. 568 (44 N. W. 959). While the court left the question of rescission to the jury, we think, under the defendant’s own testimony, the court should have instructed them to find a verdict for the plaintiff. We think defendant’s continued use of the property for 30 days after he learned of the alleged fraud amounted to a waiver of any intent to rescind the contract. Marthinson v. Insurance Co., 64 Mich. 384 (31 N. W. 291); Cobbs v. Fire Association, 68 Mich. 466 (36 N. W. 788); Peninsular Stove Co. v. Osmun, 73 Mich. 570 (41 N. W. 693).”

In Kupfer v. Clothing Co., 141 Mich. 325 (104 N. W. 582), Justice Blair, in speaking for the court upon this subject, said:

“ If defendant’s claim that the goods were not in accordance with the contract was correct, then, upon its refusal to accept them and return to plaintiffs, the goods belonged absolutely to the plaintiffs, and the reshipment of them by defendant would constitute an unlawful conversion of them. Defendant, having taken its position, must adhere to it, and its dealing with the property in such manner as would be unlawful, if it were the property of another, constitutes an acceptance of the goods. Farrington v. Smith, 77 Mich. 550 (43 N. W. 927); Cream City Glass Co. v. Friedlander, 84 Wis. 53 (54 N. W. 28, 21 L. R. A. 135, 36 Am. St. Rep. 895); Benjamin on Sales (6th Ed.), § 703; Chapman v. Morton, 11 M. & W. 534.”

These defendants could not play fast and loose in this matter. Their keeping the horse and using it and treating it as their own for years, until it finally died in their possession, is wholly inconsistent with their claim that they relied upon a rescission or abrogation of the contract. Upon this point the cases cited by defendants’ counsel can be readily distinguished from this case. We think that the plaintiff’s thirtieth assignment of error, in which he complains because the court refused to give his fifth request, is well founded.

So far we have treated this case as though the plaintiff occupied no better position than the payee of the notes. The plaintiff gave evidence tending to show that he was a bona' fide holder of the notes, and that question should have been properly submitted. There was some evidence in the case that at the time the plaintiff purchased them he knew that they were “stallion notes,” and that lams sold the horse with such a warranty as was given. There is no evidence that at the time the plaintiff purchased these notes — which was a few months after they were made — there had been any breach of the warranty, and certainly no evidence that the plaintiff had any knowledge of a breach of the warranty.

By the thirty-fifth assignment of error, complaint is made of the following instruction, relating to the notes, by the court:

“ If you find that these notes were procured by Russell lams by fraud, or that there was a contract back of such notes, and that that contract had not been fulfilled by the payee, and that the plaintiff at the time he became the purchaser of these notes had notice or knowledge of such fraud or such contract, then the plaintiff cannot be considered a purchaser in good faith, and he cannot recover in this case.”

We think that this instruction was clearly erroneous. Miller v. Ottaway, 81 Mich. 196 (45 N. W. 665, 8 L. R. A. 428, 21 Am. St. Rep. 513); Bottomley v. Goldsmith, 36 Mich. 27; 7 Cyc. pp. 947, 948.

There is no evidence of any breach of the contract subsequent to the sale of the horse, and taking possession thereof by the defendants, before the purchase of these notes by the plaintiff on September 30, 1901. A failure of the consideration in whole or in part after a bona fide transfer does not affect the character of the purchaser, although he had full knowledge of the original consideration for which the note was given. There is no evidence of notice, or knowledge of the breach of this contract, in so far as the failure of the horse to comply with the warranty is concerned, before the transfer of these notes. The purchaser of notes may have knowledge of a collateral agreement, but is not obliged to inquire whether the seller has performed his agreement, or will be able to perform the agreement into which he has entered. The contract of warranty in this case was a lawful contract, not fraudulent or against public policy. In this connection we may as well say that the Bohemian Oats Cases, cited by defendants’ counsel, have no application here. Knowledge of those contracts, or bonds, was knowledge of fraud, and of contracts made in violation of law and against public policy. Not so with this warranty. Upon this branch of the case counsel for defendants has also cited the recent case of People’s Building & Loan Association Co. v. Rutz, 158 Mich. 440 (123 N. W. 6). In that case the circuit judge had charged substantially as the trial judge did in this case. Yerdict went for the plaintiff; the defendant appealed, and this court simply said:

“The limitation placed upon the plaintiff’s honafides was certainly as favorable to the defendant' as could be expected.”

This is very far from approving the correctness of the charge. This brings us to the next proposition.

Was there error in the charge of the court as to what would constitute bad faith ? Upon this branch of the case, the thirty-third assignment of error alleges that the court erred in instructing the jury as follows:

“If you believe from the evidence that the plaintiff, before he purchased said notes, knew, or as an ordinarily prudent man had reason to believe, from circumstances brought to his knowledge before he purchased them, that the defendants had or claimed to have a defense to said notes, or to some portion of them, then the plaintiff is not an innocent purchaser of said notes, and would not be entitled to recover.”

We think that there was error in this portion of the charge. It was at one time held that circumstances which ought to excite the suspicions of a prudent and careful man constituted notice and put the purchaser upon inquiry. This rule has been abandoned, and it is the almost universal rule now that neither suspicions, nor even gross negligence on the part of a taker will affect his right, unless the suspicions or circumstances amount to bad faith. Suspicions or even knowledge of facts which will fall short of bad faith do not amount to notice. Davis v. Seeley, 71 Mich. 209 (38 N. W. 901); Helms v. Douglass, 81 Mich. 442 (45 N. W. 1009); Detroit Nat. Bank v. Union Trust Co., 145 Mich. 656 (108 N. W. 1092, 116 Am. St. Rep. 319); Custard v. Hodges, 155 Mich. 361 (119 N. W. 583); Armstrong v. Stearns, 156 Mich. 597 (121 N. W. 312); 7 Cyc. p. 945. We think, therefore, that the court erred in saying to the jury that if the plaintiff, from circumstances brought to his knowledge, as an ordinarily prudent man, had reason to believe that some defense might be made to the notes, that he was not a bona fide purchaser. At most, such knowledge would put him upon inquiry for further information, and would not itself be evidence of bad faith.

These authorities are so recent and so well known that we refrain from quoting from them, and will only add that the correct doctrine appears to be that it is not a good ground of defense against a bona fide holder for value that he was informed that the note was made in consideration of an executory contract, unless he was also informed of its breach. If he had knowledge of the breach, the defense may be interposed. The question is now one of good or bad faith. Circumstances of suspicion, or even gross negligence, are merely admissible as evidence tending to show mala fides, but do not of themselves preclude the holder from recovery.

Some complaint is made by the assignments of error of rulings of the court upon the admissibility of evidence. We have examined them, and are of opinion that these questions will not likely arise upon a new trial.

For the errors pointed out, the judgment below must be reversed, and a new trial granted.

Moore, McAlvay, Brooke, and Blair, JJ., concurred.


text:
    MEADE v. DETROIT, JACKSON & CHICAGO RAILWAY.
    1. Evidence — Hearsay.
    Testimony that a witness heard plaintiff, a conductor of defendant’s car, repeat to the train dispatcher of defendant, over the telephone, an order just given to plaintiff to meet another car at a specified point, was not objectionable as hearsay, in a personal injury case, in which plaintiff claimed that he wag negligently ordered to meet the other car at the wrong place and a collision resulted from the mistake.

      2. Appeal and Error — Necessity op Exception — Argument.
    A judgment will not be reversed for alleged improper argument of plaintiff’s counsel, on a record which does not show that the objection was raised at the trial.
    Error to Washtenaw; Kinne, J.
    Submitted February 16, 1911.
    (Docket No. 47.)

    Decided May 8, 1911.
    Case by George H. Meade against the Detroit, Jackson & Chicago Railway for personal injuries. Judgment for plaintiff. Defendant brings error.
    Affirmed.

      M. J. Cavanaugh and George J. Burke, for appellant.

      John P. Kirk and Arthur Brown, for appellee.
   McAlvay, J.

This is a personal injury case in which plaintiff recovered a judgment against defendant upon the verdict of a jury.

The statement of facts and claims of the parties presented in appellant’s brief is as follows:

“Claim of plaintiff may be briefly stated as follows: That on the 28th day of April, 1908, the defendant was operating a line of interurban cars east and west from the city of Detroit to the city of Jackson, over its line of railway, passing through the cities of Wayne, Ypsilanti, and Ann Arbor; that on said line of railway, about two miles east of Ypsilanti, was located a switch known as Harris, and about a mile and a half east of Harris a switch known as Burrell, and about a mile east of Burrell a switch known as Smith, at which said switches its cars going east passed those going west; that on said day the plaintiff, George H. Meade, was in the employ of the defendant as conductor on one of its said interurban cars known as No. 103, and was running the same over its said line from said city of Jackson to said city of Detroit; that said line of railway consisted of a single track; that on said day one L. A. Harrington was in the employ of the defendant as its train dispatcher, located at Ypsilanti, and as such directed the movement of such cars as were not running upon scheduled time; that on said day one George Cullom was in the employ of defendant as conductor of one of its cars, known as No. 44, and was engaged in running the same from Detroit west to Jackson; that one Isa Fay was in the employ of defendant as a motorman of said car 103 under charge of plaintiff, and one George Wingrove was in the employ of defendant as motorman of said car No. 44 in charge of said Cullom; that between said switch known as Burrell’s switch and said switch known as Smith’s switch a head-on collision took place between said car No. 103 going east, in charge of said plaintiff, and said car No. 44 going west, in charge of said Cullom; that as a result of said collision said plaintiff was injured; that the cause of said collision was the negligence of said Harrington, said train dispatcher of defendant, in directing said plaintiff to run his car from Ypsilanti to said Smith’s switch, and omitting to direct said Cullom to hold his said car at said Smith’s switch until plaintiff’s car had passed said switch.
“The claim of defendant may be briefly stated as follows: That said Harrington did not direct plaintiff to run his car to Smith’s switch; but, on the contrary, cautioned plaintiff at Ypsilanti to remember said car No. 44 at Harris’ switch, and directed him when he reached the latter place to call up the dispatcher for further orders; that plaintiff’s injury was due to the negligence of himself, or that of his fellow-servants, Cullom, Wingrove, or Fay.”

Plaintiff accepts these statements, with the addition that train No. 103 was known as a limited, while train No. 44 was known as a local, and that motorman Fay is sometimes called Pretchett in the record. This accident occurred east from Ypsilanti, at which place plaintiff reported, and a running order was given to him. The dispute in the ease between plaintiff and defendant is whether the order actually given was to meet No. 44 at Harris’ switch, as the train dispatcher claims, or, as plaintiff claims, at Smith’s switch, some miles further east. A new train schedule had gone into effect on the day of the accident.

The errors assigned and relied upon relate, first, to the admission of the testimony of Mrs. Bassett, a witness for plaintiff, who was allowed to testify as to what she heard on the day in question, when plaintiff and Fay, the motorman, were in the telephone booth, reporting and receiving orders from the train dispatcher. The telephone used by the railway company was in a booth separated from her place of business by a board partition. Her testimony was that she saw this car come in on that day from the west, and saw the plaintiff and the motorman go to the booth. She was sitting about four feet from the booth and heard what was said. She testified that it was the custom of the conductors to always repeat back the orders that were given, so that the motorman could hear. She was asked to state what she heard plaintiff say over the telephone relative to his orders, and defendant objected to any such testimony as incompetent and hearsay. The court overruled the objection and witness testified: “ Meet at Smith’s.” This was all that she remembered. She heard of the accident not more than half an hour after plaintiff was in the booth.

There is no dispute between the parties as to the method of giving train orders by telephone. Mr. Harrington, the train dispatcher, described in detail how orders were given by him to conductors and repeated back to him, and that they were written down by his assistants, in his presence, just as he gave them. This witness was not undertaking to testify as to a statement made by Harrington, the train dispatcher, to the plaintiff. She was testifying as to what plaintiff said while in the telephone booth. That a conversation between plaintiff and the officer of defendant was had at the time and place is undisputed. Mr. Harrington gave an order to plaintiff, which, according to rule, was repeated back to him by plaintiff, and then Harrington called “ correct,” which was repeated by plaintiff.

Defendant had provided a method of giving orders by telephone and with witnesses at each end of the line to verify such orders. The scheme of such operations of trains would miscarry if the safeguarding by witnesses were eliminated. This was the theory of the defendant. The train dispatcher and his assistants were sworn to sustain the defendant’s contention as to the order given. Both assistants testified what was said by him .over the wire to plaintiff. It cannot be contended that the motorman, Fay, could not have testified. The system adopted had made these parties all witnesses to the transaction, and their testimony is admissible, not as to declarations made by the parties as part of the res gestee, but necessarily as part of the transaction itself. We know of no rule of evidence which would make the assistants and motorman competent to testify and exclude others who had also heard one end of the conversation. This testimony was not hearsay and was admissible.

The defendant further assigns error based upon improper argument by counsel for plaintiff to the jury. The reeord does not show that the matter was called to the attention of the court and that it was passed upon. It is the duty of counsel to make such a record as will show that the objection made to arguments of counsel was passed upon by the court.

The judgment of the circuit court is affirmed.

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


text:
    CHASE v. MICHIGAN UNITED RAILWAYS CO.
    1. Appeal and Error — Briefs—Statement of Facts.
    Under Supreme Court Rule 40, the appellant’s statement of the facts will be considered correct unless the appellee points out errors which he claims are contained therein.
    2. Same.
    In reviewing a case on error, defendant, against whom a verdiet was directed, is entitled to have the evidence presented in his behalf considered as true.
    3. Street Railways — Use of Streets.
    Evidence that a plat of certain property included streets which were thereafter used by the public, that defendant electric railway ocoupied one of the streets continuously from a certain date, that the owners of the record title conveyed to such railway a right of way over the street, tends to support the claim of right of defendant to the use of the land in the highway.
    4. Same — Parol Evidence — Franchise.
    Parol evidence, in an action involving the right of an electric railway to use a street, is admissible to show action of a township board granting a franchise to the corporation, although the township records fail to show any action.
    Error to Ingham; Collingwood, J.
    Submitted February 17, 1911.
    (Docket No. 93.)
    Decided May 8, 1911.
    Ejectment by Charles H. Chase against the Michigan United Railways Company. A judgment for plaintiff on a verdict directed by the court is reviewed by defendant on writ of error.
    Reversed.

      Sanford W. Ladd (Justin R. Whiting, of counsel), for appellant.

      Charles H. Chase (Lyon & Moinet, of counsel), for appellee.
   McAlvay, J.

This is a case in ejectment where a judgment was entered for plaintiff on a verdict directed in his favor by the court, and is brought to this cotírt upon writ of error for review.

The statement of facts made by defendant and appellant in its brief will be considered by the court as sufficient and accurate, the plaintiff and appellee not having pointed out anything to the contrary, as provided by rule No. 40 of this court. The property in dispute is a portion of the right of way of defendant street railway company as it passes through College Grove, located in Meridian township, Ingham county, as platted and dedicated by Horace B. Angell and Clara E. Angelí, owners in fee thereof, on May 8, 1903. It appears that Angelí and wife on February 14, 1905, after the platting, by warranty deed, conveyed to the Lansing & Suburban Traction Company, the predecessor of defendant, a right of way along certain streets and through the entire plat of College Grove, which included all the premises claimed in this suit; that afterwards the traction company went into possession of all these premises, and built an electric street railway over - and along the same through and across the entire plat from south to north, and ever since the traction company and defendant, its successor, have continuously maintained and operated, the said road. All this was done with the knowledge of plaintiff, who assisted in preparing the deed and its reservations, and in writing agreed to sign this deed for the nominal consideration of $ 1, more than one year after he had filed his bill for an accounting and partition against Angelí, who with him had conducted a partnership business. The lands in College Grove plat were involved in that chancery' case. The case proceeded to a decree in Ingham circuit court. Both parties appealed to this court. Later a decree was granted determining that a partnership existed, and that its real estate on December 30, 1904, consisted of College Grove plat, except certain portions, and that it be partitioned. See Chase v. Angell, 148 Mich. 1 (108 N. W. 1105, 118 Am. St. Rep. 568). The cause was remanded for partition by commissioner. The parties stipulated and agreed upon a decree by the terms of which plaintiff was given certain lots, numbered and described according to College Grove plat, abutting on M. A. C. avenue, and a portion of lot 79 which includes the right of way of defendant north of M. A. C. avenue, as shown on the plat furnished with the record. Plaintiff’s claim is that the dedication of streets and highways was never accepted by the public, and he, having become the owner of certain lots abutting on this avenue, is the owner of the fee of the portions of the avenue in front of such lots to the center line thereof, and he claims all of the right of way of defendant north of Elizabeth street through lot 79 by virtue of the chancery decree.

Defendant sought to show a franchise granted to its predecessor by the township of Meridian to construct and maintain an electric railroad and interurban line in the highway and through the township, as described therein, which includes a right to go through College Grove plat, but the franchise and testimony relative to it was not allowed in evidence. Plaintiff made certain claims that defendant was' estopped from claiming these premises by reason of certain proceedings had in chancery. We do not think it necessary to state such claims in this opinion.

Defendant is entitled in this case, where a verdict was directed against it, to have the evidence presented in its behalf considered by this court as true. Upon the question of an acceptance of the dedication of the highways of this plat, there was evidence that such streets had been used by the public since the dedication, and the proof that these streets had been used and occupied by the street railroad continuously since 1905 was not contradicted. There was also evidence by conveyance from Angelí and wife tending to show the right of the railroad to occupy the premises in question, all tending to defeat the recovery by plaintiff, at least as far as the strips claimed in M. A. C. avenue are concerned. Michigan Central R. Co. v. Bay City, 129 Mich. 264 (88 N. W. 638). The court, therefore, was in error in instructing a verdict for plaintiff. As a new trial must be ordered, it will be necessary to consider the question whether the court was in error in excluding all testimony relative to granting a franchise by the township board. ■

Defendant offered to show a franchise duly granted by proper authority to use and occupy streets in Meridian township, including streets in College Grove plat. It was excluded for the reason that the record book of the township board did not show that any action had been taken. The defendant produced the original franchisé duly signed by the members of the board and filed in his office by the township clerk, and also produced the clerk and members of the board at the time as witnesses, and offered by their testimony to show the fact that the paper was genuine, that the meeting was had on the day it bore date, and .that the franchise was duly and regularly granted. The refusal to receive such testimony was excepted to and error is assigned upon it.

That “parol evidence in a collateral action cannot be received to contradict the record's of a public corporation required by statute to be kept in writing, or to show a mistake in the matters as therein recorded,” is well settled. 1 Dillon on Municipal Corporations (4th Ed.), § 299. In the instant case it was not sought to contradict a record, but to show certain facts omitted from the record. The weight of authority is that for such purpose parol evidence is admissible. Mr. Dillon, in the text-book above cited, says:

“But a distinction has sometimes been drawn between evidence to contradict facts stated on the record and evidence to show facts omitted to be stated upon the record. Parol evidence of the latter kind is receivable, unless the law expressly and imperatively requires all matters to appear of record, and makes the record the only evidence. ” 1 Dillon on Municipal Corporations (4th Ed.), § 300, cases cited and notes, Id. § 301.

See, also, School District v. Union School District, 81 Mich. 339 (45 N. W. 993); Wheat v. Van Tine, 149 Mich. 314 (112 N. W. 933). The court erred in excluding this evidence offered by defendant. We do not find it necessary to decide other .questions discussed in the briefs.

The judgment of the circuit court is reversed, and a new trial ordered.

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


author: Ostrander, C. J.

text:
    HOUGHTELING v. GOGEBIC LUMBER CO.
    1. Pleading — Noticie of Defense — Practice—Usury.
    Under the statute of amendments, 3 Comp. Laws, § 10268, the trial court did not err, in an action on a contract which appeared to be usurious on its face, in permitting defendant, whose attorneys had notified plaintiffs’ attorneys five days before trial of their intention to rely on the defense of usury, to file a notice of the amendment to their plea of the general issue.
    2. Bonds — Mortgages—Sales—Loan.
    Bonds in the hands of the maker, like promissory notes, are not the subject of sale.
    3. Same — Usury.
    Where bonds are issued at ten per cent, discount from their par value to a firm of dealers in securities, in the absence of evidence that the discount was regarded by the parties as payment for services to be rendered, the transaction was usurious.
    4. Usury.
    Where the clear legal effect of a contract to issue bonds at a discount was usurious, the intent of the parties in considering the expense of furnishing the money and of resale, etc., does not affect the right of the corporation so issuing the securities to defend, on the ground of usury, an action for the profits lost by reason of its breach of the contract.
    Error to Kent; Perkins, J.
    Submitted January 6, 1911.
    (Docket No. 46.)
    Decided May 8, 1911.
    Assumpsit by James L. Houghteling, William R. Stirling, Augustus S. Peabody, Alexander Smith, and James L. Houghteling, Jr., copartners as Peabody, Houghteling & Company, against the Gogebic Lumber Company for breach of a special contract. A judgment for defendant on a verdict directed by the court is reviewed by plaintiffs on writ of error.
    Affirmed.

      Taggart & Taggart, for appellants.

      Bundy, Travis & Merrick, for appellee.
   Ostrander, C. J.

The suit is brought to recover damages for breach of a contract which is declared upon specially. The common counts in assumpsit are in the declaration. Upon the testimony introduced for plaintiffs, and upon the motion of defendant in that behalf, the court below directed a verdict for defendant, upon the ground that the contract sued upon was usurious.

We consider, first, a question of practice. The defendant pleaded the general issue to a declaration filed June 25, 1909. It advised plaintiffs’ attorneys, by mail, on April 8, 1910, that it would ask for leave to amend the plea and intended to make usury a defense. The cause came on to be tried April 13, 1910. It does not appear that leave to amend the plea was asked for until after plaintiffs had closed their case. Reference to the subject is made by the court in determining the motion to direct a verdict and in the following language:

“As to whether or not there should have been a notice under the plea to the effect that the defense of usury was claimed, I am not so clear. As I have already said, it seems to me that, inasmuch as this case is planted upon a contract usurious on its face, and that the plaintiffs claimed damages resulting from a breach of that contract on the part of the defendant, and the damages must necessarily include that part of the contract which is usurious, that such notice would be unnecessary, because the rule is under the statute that no part of the usurious interest or compensation is collectible at all, if the contract itself is usurious; and so the very basis of the plaintiffs’ damages would be swept away by the statute itself, if the contract is usurious. So the real question is as to whether it is usurious or not. I have held that it is usurious. Therefore no notice is necessary. But as counsel has expressed a wish to file a notice under the defendant’s plea, in an abundance of caution, such a notice may be filed to complete the record. While in my judgment it is not necessary, yet that judgment is not always correct.”

Notice of the defense of usury was actually filed April 18, 1910. It is not very clear that an exception to the ruling permitting the notice to be filed was intended. Resolving doubt in favor of plaintiffs, we are of opinion that the court had power to permit the notice to be then given, and that the power was not abused. 8 Comp. Laws, § 10268. The action is not brought to recover money lent upon interest, or to recover interest. The defense is that the contract relied upon by plaintiffs is not enforceable because involving in its enforcement usury. If it was usurious, it so appeared upon its face. It is not claimed that plaintiffs were surprised. The court having considered the defense as made and based decision upon its validity, we regard the delay in filing the notice as an irregularity which resulted in no prejudice to any one.

The principal question which, if answered in defendant’s favor, is decisive of plaintiffs’ rights to recover in this suit arises upon the contention of plaintiffs that defendant agreed to execute, secure, and sell to them an issue of $250,000 of bonds, drawing interest at the rate of 6 per cent, per annum, payable semi-annually, the principal payable at periods running from six months to six years, "at the price of 90 and accrued interest net to you,” and the refusal of defendant to perform the agreement. It is conceded that, if the discount of 10 per cent, should be treated as interest or as a price to be paid by defendant for the use of money to be furnished by plaintiffs, the contract is usurious. 2 Comp. Laws, § 4857.

Plaintiffs do hot act as mere agents or brokers, but buy bonds, employing their own capital, and sell or seek to sell bonds so acquired at a profit. They employ a considerable force of servants and agents, at considerable expense, to investigate the proposals of those who offer bonds for sale, and to sell such bonds as they buy. It is the modern business way for those intending to issue bonds to interest houses like that of plaintiffs, for the purpose of exploiting the bonds; because such a house, with a good reputation, is able to furnish a market for the bonds which the seller would enter with difficulty, and perhaps without securing buyers. Defendant proposed to issue a series of bonds aggregating $250,000, secured by a mortgage running to a trustee to be named by plaintiffs, the bonds to be indorsed by two men who are named in the proposal, and plaintiffs proposed to buy them. The terms employed in the option or proposal of defendant are, “We hereby agree to sell to you the bonds,’’etc.

The security, which consisted of timbered lands, was examined by plaintiffs. No expense connected immediately with the issue of the bonds or the examination of the security and the character of the business carried on by defendant, or the proposed indorsers, was borne, or was agreed to be borne, by plaintiffs.

It is the contention of the plaintiffs, that—

“ Where a bond house, engaged in the business of buying and selling securities, undertakes to purchase bonds at a discount, to be resold to its customers, the discount is not interest, but compensation for its services in marketing the bonds.”

Taken literally, this statement presents two contentions, one, that what was intended by the parties, and what the agreement provided for, was a sale of securities, and not a loan; the other, that the sum of money to be paid by plaintiffs, plus the value of plaintiffs’ services, was the real consideration moving to defendant. With respect to the first contention, it has been said:

“Surely the question whether a negotiation of bonds was a sale or a loan is ordinarily and prima facie a question of fact. To make it a question of law, some fact must be admitted or proved which is irreconcilable with one conclusion or the other.” Bradley, J., in Junction Railroad Co. v. Bank of Ashland, 12 Wall. (U. S.) 226.

We are of opinion that the facts in this case necessarily import a loan. It must be assumed that the plaintiffs have established themselves for their own profit, and that if they excel competitors in methods or in reputation it is evidenced by the volume of business transacted by them. We find nothing to sustain the conclusion that the discount demanded and agreed to be paid was regarded by either party as pay for services rendered or to be rendered. Plaintiffs appear to have offered the going price for bonds of the character and with the security of those proposed to be issued.

The bonds in defendant’s hands were not representative of property. They would become property or representative of property, and the subject of sale, only after the contemplated negotiation was completed and the money, repayment of which was promised and secured, as well by the indorsements as the mortgage, was actually turned over to, and became the property of, the defendant. The bonds were to have no inception, no action upon them could be maintained, as between these parties, until they were parted with, for money, to plaintiffs. It is the general rule that a note or other obligation in the hands of the maker thereof is not the subject of sale. 29 Am. & Eng. Enc. Law (2d Ed.), p. 476.

In a single case to which our attention is directed, namely, the Junction Railroad Co. v. Bank of Ashland, supra, a transfer of bonds by the maker thereof was found to be a sale, and not a loan. But decision was rested, at least in the appellate court, upon the fact that a statute authorized the obligor to borrow money and to execute bonds or promissory notes therefor, and to sell such bonds and notes at such prices as, in the opinion of the directors, would best advance the interests of the company.

That such a contract as we are considering is usurious, was decided in George N. Fletcher & Sons v. Alpena Circuit Judge, 136 Mich. 511 (99 N. W. 748). It is said we may take into account the price to be paid for the bonds, the expense of furnishing the money, and the expenses of resale, as affecting the intent with which the agreement was made. In other words, as showing that there was no intention to exact from the defendant unlawful interest. If there was a mistake of law, that, it is conceded, would be no excuse. There is also the rule of law that the clear legal effect of a contract makes unimportant the intent with which it was made, when it is sought to enforce it according to its terms. We were not inattentive at the hearing, and have not been at chambers, to the argument that modern business methods and business convenience may be judicially taken notice of, and that courts, in considering such questions as the one presented upon this record, should declare valid contracts which conform with, and are but expressions of, business necessities and convenience, when it is apparent that no actual wrong or oppression was intended, and where, from the business standpoint, none has resulted. The legislature has declared contracts, such as the one in question, usurious. The courts may not disregard the statute, invoked as it is by a party to the contract. It is the legislature alone which has power to amend the law.

The judgment is affirmed.

Bird, Hooker, Blair, and Stone, JJ., concurred.