author: Stone, J.

text:
    PETOSKEY & BAY SHORE GAS CO. v. CITY OF PETOSKEY.
    Taxation — Board of Review — Increase of Valuation.
    Of its own motion and without a showing of cause or notice to the taxpayer, the city board of equalization created by 1 Comp. Laws, §§ 3322, 3323, may increase the valuation of any property assessed in its jurisdiction.
    Error to Emmet; Shepherd, J.
    Submitted June 22, 1910.
    (Docket No. 128.)
    Decided July 14,1910.
    Kehearing denied December 8, 1910.
    Assumpsit by the Petoskey & Bay Shore Gas Company against the city of Petoskey for taxes paid under protest. A judgment for defendant on a verdict directed by the court is reviewed by plaintiff on writ of error.
    Affirmed.

      Henry T. Heald, for appellant.

      B. H. Halstead, for appellee.
   Stone, J.

The plaintiff is a corporation organized and existing under the laws of Michigan, owning and operating a gas plant in the city of Petoskey. The defendant is a municipal corporation organized under the laws of this State for the incorporation of cities of the fourth class.

This action was brought to recover for certain taxes paid under protest. The declaration consists of a special count in assumpsit, and the common counts. At the trial and after an opening statement made by plaintiff’s attorney, and as soon as the first witness for the plaintiff was sworn, the defendant’s counsel objected to the introduction of any evidence under the special count for the following reasons:

First. The protest set forth, which is the foundation of the claim of the plaintiff, does not show an illegal assessment.

Second. At the time this action was commenced the council of the city of Petoskey had neither rejected the claim of the plaintiff, nor had it had a reasonable opportunity to investigate and pass upon it.

In his opening statement to the jury counsel for plaintiff said:

“As you probably know, the city of Petoskey operates under what is known as the law governing cities of the fourth class. The taxes are assessed by the city assessor; they are returned by the city assessor to the board of review and equalization, on the third Monday in May, which, in 1909, was the 17th of May. The city assessor in 1909 assessed the personal property of the gas company at the sum of $27,000. This assessment was returned to the board of review and equalization at that sum. On the day when the board of review and equalization was to hold its first meeting, Mr. Wells, who is the manager of the gas company, came here to the city hálito discover what the assessment against the property of the company was. I think he came here a few minutes before the board of review and equalization were actually in session; but he did see the city assessor, and either the city assessor told him, or else he saw on the books, that the assessment against the personal property was placed at $27,000. That was the same amount at which it had been assessed the year previous, and the company found no complaint with that assessment. Prior to this time, of course, the board of review had published its notice of meeting in the paper, as required bylaw. Being satisfied with the assessment at that sum, he did not think it necessary to appear before the board of review further, and did not appear before the board of review. The board of review continued its sessions from the 17th day of May to the 24th day of May. On the 22d day of May, which was Saturday, the board, on motion of one of its members, raised the assessment of the company from $27,000 to $42,000 — a raise of $15,000. Neither Mr. Wells, nor any other person for the company, was given any notice that this raise was contemplated by the board; and so far as we know, there were no investigations made as to the value of the personal property. The company had no knowledge whatsoever that this raise had been made, and supposed that the assessment still remained at the sum of $27,000 until on or about the 6th of December, 1909, when Mr. Wells went to the city treasurer’s office to ascertain the amount of taxes that the company would be called upon to pay this year, and there, for the first time, learned that the assessment had been raised to the sum of $42,-000. Of course it was too late to consider the question with the board of review at that time, so the company, on January 6, 1910, within the time limited, paid these taxes on its personal property, under protest.”

During the discussion of the matter, the attorney for the plaintiff further stated:

“I understand that he (Mr. Wells) came up the first day they were to be in session, and was informed that the assessor was upstairs, and he came up and found the assessor, but the board of review had not been called.”

The court sustained the objections of the defendant, and directed a verdict and judgment for defendant. The ruling was excepted to by plaintiff, and the questions are properly raised by assignments of error.

It is the contention of the defendant that the law, applicable in this case, permits the raising of an assessment by the board of review, without other than the published notice, and that the assessment here was legal. We shall first consider this question, for if it shall turn out that the tax was legally assessed, the plaintiff has no standing in court, and the conclusion reached by the circuit judge was correct. Sections 3322 and 3323, 1 Comp. Laws, are controlling here. We quote section 3322 in full, viz.:

“ The supervisors of the several wards, the mayor, and the city attorney, shall constitute a board of equalization and review of the general assessment rolls of the several wards of said city, a majority of whom shall constitute a quorum for the transaction of business, but a less number may adjourn from day to day. They shall have power, and it shall be their duty, to examine said assessment rolls, and they shall have authority to, and shall, correct any errors or deficiencies found therein, either as to the names, valuations or descriptions; and of their own motion or on cause shown, may reduce or increase the valuation of any property found on said rolls, and to add thereto any taxable property in said city that may have been omitted, and to value the same; and to strike from said rolls any property wrongfully thereon, and generally to perfect said rolls in any respect by said board deemed necessary and proper, for which services such members of said board shall receive two dollars per day while actually employed. If on such examination they shall deem the valuation of the several wards to be relatively unequal, they shall equalize the same by adding to or deducting from the total valuation of the taxable property in any ward such an amount as, in their judgment, will produce relatively an equal and uniform valuation of the real estate in the city; and the amount added to or deducted from the total valuation in any such ward shall be so stated in the certificate attached to the assessment roll of such ward; and all taxes for State, county, school, general city, and sewer purposes shall be apportioned according to said equalization, in the manner hereinbefore provided, and said equalization shall not be changed with regard to the relative valuation of the several wards of said city, and the board of supervisors of the county in which said city is located shall equalize such .city as a unit the same as a township is equalized, and any amount added to or deducted from the total valuation of such city as a unit, shall be apportioned by the clerk of the board of supervisors among the several wards according to the equalized valuation of the real property in each ward as fixed by the city board of review.”

The next section provides that the board shall meet on the third Monday in May after notice of the meeting by the city clerk; at which time and place the several supervisors shall submit to said board their respective general assessment rolls. It provides for the organization of the board and that they shall continue in session at least four days successively, and as much longer as may be necessary to complete the review, and that any person or persons desiring to do so, may examine his, her or their assessment on said rolls, and may show cause, if any exists, why the valuation thereof should be changed, and that the said board shall decide the same and their decision shall be final. They may examine on oath any person touching the matter of his or her assessment, and keep a record of their proceedings, and all changes made in the rolls. The amount added to or deducted from the total valuation in each ward shall be entered upon such record, which record shall be deposited with the city clerk, who shall be clerk of the board. Said board shall have the same powers, and perform the same duties in all respects, as boards of review of townships, in reviewing and correcting assessments made by the supervisors of townships, except as in the act otherwise provided. It is worthy of note, that unlike boards of review in townships, this board holds but one session or meeting, to wit, the one commencing on the third Monday of May.

We think that there can be no doubt of the power of this board to raise valuations of property, of their own motion. They have—

“Authority to, and shall, correct any errors or deficiencies found therein, either as to names, valuations, or descriptions; and of their own motion, or on cause shown, may reduce or increase the valuation of any property found on said rolls, and to add thereto any taxable property in said city that may have been omitted, and to value the same.”

This statute makes no provision for any notice otner than the general notice which the statute gives, and that given by the clerk generally.

Ini Cooley on Taxation (3d Ed.), at pages 778 and 779, that author says:

“Sometimes the board has not jurisdiction to change the valuation except upon complaint or application; but frequently the board has power to make alterations of its own motion.”

These are clearly proper matters for statutory regulation. The eminent author last quoted says, at page 782:

“ Where a statutory board of review holds stated meetings, with power to increase assessments, everybody is notified of the fact, and is warned to attend if he deems it important; and it is often held that under such circumstances special notice of the raising of a particular assessment, or of the adding of omitted property, need not be given.”

The author cites cases in United States Supreme Court, in Arkansas, California, Illinois, Indiana, Missouri, New York, Oregon, Tennessee, and Michigan.

In Detroit Citizens’ St. Ry. Co. v. Common Council of Detroit, 125 Mich. 673 (85 N. W. 96, 86 N. W. 809, 84 Am. St. Rep. 589), it was decided that the common council, sitting as a board of review, was not required to notify appellant to attend when it was considering appeals from the board of assessors, and that, if appellant desired to be heard it should have been present and requested it.

In Township of Caledonia v. Rose, 94 Mich. 216 (53 N. W. 927), it was held that a taxpayer who fails to appear at the time and place provided for the board’s sessions is estopped from attacking the assessment.

It was said in Hinds v. Township of Belvidere, 107 Mich. 664 (65 N. W. 544), that a taxpayer must be presumed to know the powers and duties of the board of review, and the time fixed by statute for its meeting, and that he cannot excuse his failure to appear before that body by showing that he was out of the State at the time.

In Michigan Savings Bank v. City of Detroit, 107 Mich. 246 (65 N. W. 101), it was held that boards of review are the proper tribunals for the correction of unjust assessments, and that parties will not be heard in the courts, until they have exhausted their remedy before these tribunals. See, also, First Nat. Bank of St. Joseph v. Township of St. Joseph, 46 Mich. 526 (9 N. W. 838); Williams v. City of Saginaw, 51 Mich. 120 (16 N. W. 260); Comstock v. City of Grand Rapids, 54 Mich. 641 (20 N. W. 623); Peninsula Iron & Lumber Co. v. Township of Crystal Falls, 60 Mich. 510 (27 N. W. 666); Detroit River Sav.Bank v. City of Detroit, 114 Mich. 81 (72 N. W. 14); Traverse Beach Ass’n v. Township of Elmwood, 142 Mich. 78 (105 N. W. 30), 142 Mich. 297 (105 N. W. 768). Many more cases might be cited to the same effect.

The plaintiff relies upon the case of Avery v. City of East Saginaw, 44 Mich. 587 (7 N. W. 177). That case involved a tax levy under the charter of that city. We have taken some pains to find and examine the charter provisions under which that proceeding was had. Act No. 246 (Laws 1859, tit. 5, §§ 5, 6) is as follows:

“The supervisors of said city shall complete their assessment of all taxable property in said city within such time as is or may be prescribed for the supervisors or assessors of townships by the general law of this State, and upon the completion thereof shall file a notice thereof with the city clerk, who shall report the same to the council at their next meeting.
“Sec. 6. The supervisors, comptroller, treasurer, and city attorney shall constitute a board of review, four of whom shall constitute a quorum. They shall have power and it shall be their duty to examine said assessment and correct any errors found therein, and on cause shown to reduce, equalize, or increase the valuation of any property found on said roll, and to add thereto any taxable property in said city that may have been omitted, and to value the same. They shall meet at such time and place as shall be appointed by the common council, of which time and place notice shall be given by said council at least two weeks prior to the time of meeting, by publishing a notice thereof in some newspaper published in said city, and also by posting the same in three public places in each ward of said city, and shall continue in session at least three days successively, and as much longer as may be necessary, at least six hours in each day during said three days; and any person desiring so to do may examine his or her assessment on said roll, and may show cause, if any, why the valuation thereof should be changed, and the said board shall decide upon the same, and their decision shall be- final; and the said board shall keep a record of their proceedings and all changes made by them in said roll, and their record shall be deposited with the city clerk.”

The general tax law referred to by Justice Campbell in the Avery Case, being section 986 of the Compiled Laws of 1871, made the supervisor the reviewing officer, and provided that:

“On the request of any person, his agent or attorney, considering himself aggrieved, on sufficient cause being shown, to the satisfaction of the supervisor, he shall alter the assessment as to the valuation thereof and he shall also, upon sufficient cause being shown by any credible person on behalf of any other person whose property is assessed, alter the assessment in such manner as shall to him appear just and equal; and to this end he may in either case examine, on oath, the person making the application, or any other person present, touching the matter, which oath the supervisor is hereby authorized to administer.”

As said by Justice Campbell on page 589:

“ The powers of the city board of review are broader in some respects than those of the township assessing officer, because they can enlarge the assessment in some cases. But there is nothing in the charter indicating an intention of allowing this to be done with any less care or responsibility than that required of the original town assessors. The board is to value the property it deals with £ as provided in the general tax law of the State.’ The general tax laws do not allow any change of valuation except on a proper examination, and they allow no valuation to stand, until there has been an opportunity of investigating it on the part of the property owner. The assessment must in the language of the law be ‘complained of,’ which signifies at least some distinct reason to be so suggested that it may be examined into in some responsible way.”

The difference between the provisions of the statute in that case, when compared with the charter provisions we are dealing with, is very striking. In the Avery Case neither the charter nor the general statute gave the power to change an assessment except on cause shown. Neither officers nor board could increase an assessment upon their own motion or initiative, as is the case here. They had not the almost plenary power to deal with the assessment possessed by the board in the case we are considering. The time of the meeting of the board even was not fixed by the statute, as is here the case. We must agree with counsel for the defendant that the Avery Case arose under statutes so different from those now in question, that it can in no sense be said to be controlling. In fact we think that the case is readily distinguished. The dissenting opinion of Justice Marston in that case would probably have been the majority opinion, had the statutes then under consideration been as we find them in this case.

Counsel for plaintiff cites the following cases: Griswold v. School District, 24 Mich. 262; Woodman v. Auditor General, 52 Mich. 28 (17 N. W. 227); Phillips v. Township of New Buffalo, 64 Mich. 684 (81 N. W. 581); Monroe Water Co. v. Township of Frenchtown, 98 Mich. 431 (57 N. W. 268); Common Council of Three Rivers v. Smith, 99 Mich. 507 (58 N. W. 481); Auditor General v. Sessions, 100 Mich. 343 (58 N. W. 1014); Auditor General v. Sparrow, 116 Mich. 574 (74 N. W. 881).

In Griswold v. School District the charter of Bay City was under consideration, and it was held that the power conferred upon the board of review could only be exercised on the application of a party concerned, and when upon such application they have acted, and reduced a valuation, they could not change it without notice. There was no power in the board under that charter to change a valuation of their own motion, and certainly when they had once acted upon the party’s application they could not alter the determination without notice. In Phillips v. Township of New Buffalo, the doctrine of the last-cited case was applied, when the board had acted on application. We do not think that the case of Monroe Water Co. v. Township of Frenchtown applies here. The plaintiff knew that there was a personal tax assessment in the case at bar. In Common Council of Three Rivers v. Smith it was held that the right to a hearing was one. that the taxpayer could not be deprived of. There the entire assessment of personal property was first entered on the last day of the meeting. Until that time there was no assessment; and it was held that there was no waiver, and the action was without authority under the charter. In the other two cases cited, it may be said to he assumed without question that assessments may be raised by boards of review under the general tax law, or under a charter giving that right without notice, at a proper time, but it cannot be done after the time limited. In the Sparrow Case, where the general tax law applied, it was held that sweeping changes could not be made at the last meeting, on the board’s own motion, and the statute is cited. In the Sessions Case that right was only given during the first five days, by charter, and increase made after the five days was held void, as it clearly should have been.

We are of opinion that none of the cases cited can be held to support the contention of plaintiff, that the assessment here made and tax here levied were illegal. The charter in question provides for but one session, or meeting, unlike the general tax law. The plaintiff did not appear before the board. That body, of its own motion, had the authority to increase this assessment, and the plaintiff should be held to be estopped to complain of the action taken. Having reached the conclusion that, upon this record, the tax levy appears to have been legal, it is unnecessary to consider the other questions.

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

Bird, C. J., and Ostrander, Hooker, and Blair, JJ., concurred.


source: Caselaw Access Project

author: Moore, J.

license: Public Domain

text:
    STOEPEL v. SATTERTHWAITE.
    1. Trusts — Wills—Particularity.
    A legacy of $2,000 in stock to a physician, for the purpose of carrying on the work of relieving suffering through a sanitarium conducted by him, is void for uncertainty of its beneficiaries.
    2. Same — Statutes—Wills—Estates oe Decedents.
    Since a will speaks from the death of the testatrix, it is not. affected by a statute which took effect after her decease. (Act No. 122, Pub. Acts 1907.)
    Appeal from Lenawee; O’Mealey, J.
    Submitted April 14, 1910.
    (Docket No. 40.)
    Decided September 27, 1910.
    Bill by Anna R. Stoepel and Mary S. Wilson against J. Newton Satterthwaite, executor of the last will and testament of Mary E. Sutton, deceased, and William H. Jones for a construction of said will. From a decree for defendants, complainants appeal.
    Reversed, and decree entered for complainants.

      William J. Ingersoll, for complainants.

      Garland Gillespie and Bird & Sampson, for defendants.
   Moore, J.

This is a suit to obtain a judicial construction of a provision in the last will of Mary E. Sutton, deceased. The testatrix drew the will herself. Her husband was dead. Her daughters were both married and had good homes. Mrs. Sutton had some ailment and was in the habit of going to Dr. Jones’ Sanitarium at Adrian for treatment. After her death, which occurred December 30, 1906, her will was admitted to probate. The complainants, her daughters, filed this bill. Clause 6 of the will is as follows:

“ Having been at the Sanitarium many times and knowing personally the amount of charity work done in connection with his business, and feeling the importance of this work, I hereby give and bequeath to William H. Jones the sum of two thousand dollars ($3,000) or four shares of Calumet & Hecla copper stock, to be used as he sees best for carrying on the work of relieving suffering.”

The court below considered the bequest as an absolute gift to Dr. Jones, and held that the testatrix did not intend to create a trust fund of the said bequest. In his opinion occurs the following:

“It was conceded on the argument by counsel for the defendant Jones that if the language in said paragraph can be interpreted and construed as creating a trust that it is void, and cannot be sustained, for the reason that the beneficiaries of the bequest are too indefinite and uncertain, being practically afflicted and suffering humanity.
“ I think Mrs. Sutton had a kindly heart, easily moved and affected by human suffering, particularly the afflictions of the poor and indigent, and that she, when at the sanitarium, had noted the amount of charity extended there to the needy, and, being pleased with and feeling very friendly towards Dr. Jones by reason thereof, gave him absolutely $3,000 or four shares of Calumet & Hecla copper stock to encourage the continuance of the work then being done by him in behalf of and for the relief of the needy and afflicted poor.
“ It would be clear as to the character of the legacy if the words of gift stood alone. They would constitute an absolute gift of the legacy to Dr. Jones, and the language which precedes them was, I think, intended by the testatrix to state, express, and declare her reason, motive, and purpose in making an absolute gift of the legacy to Dr. Jones, and the language which follows them I do not think can be construed as cutting down or affecting the absolute character of the gift which she had previously made to him. They are expressions of faith and confidence on her part that the good work in which she found the doctor engaged would be carried on by him in the future as she had observed it in the past, and she doubtless expected that he would use the money she was giving him in relieving suffering, but there is nothing in the clause which can be construed as indicating an intention on the part of the testatrix to make it obligatory on him to do so, and therefore the features of a precatory trust are wanting.”

There is not very much conflict as to the law in this State, though counsel have cited many authorities. The decisions made in this State which bear upon the questions involved are Hopkins v. Crossley, 132 Mich. 612 (96 N. W. 499); Trustees of Hillsdale College v. Wood, 145 Mich. 257 (108 N. W. 675); Abrey v. Duffield, 149 Mich. 348 (112 N. W. 936); and McPherson v. Byrne, 155 Mich. 338 (118 N. W. 985), and the cases cited in the opinions filed in those cases.

The important question is What is the meaning of the language used by Mrs. Sutton? Was she interested in Dr. Jones as an individual, or was it the charitable work he was doing which she thought was important? Was the money to be used by him for his own personal use, or was it to be used to carry on the charitable work of relieving suffering humanity ? To ask these questions is to answer them. It is clear the gift could be used only for the purpose of relieving suffering, if the will of the testator was to be given effect. For this reason, the gift must fail under the authorities cited. It is said the gift may be saved by reason of Act No. 122 of the Public Acts of 1907. It is not necessary to construe the provisions of that act, for the reason that it did not go into effect until nine months after the death of Mrs. Sutton, and the will must speak from her death.

The decree of the court below is reversed, with costs, and one may be entered here in accordance with this opinion. .

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


author: Montgomery, C. J. Stone, J.

text:
    PEOPLE v. DETROIT UNITED RAILWAY.
    1. Street Railways — Franchise—Extension—Municipal Corporations.
    In a prosecution for violation of a municipal ordinance requiring the sale of 8 street railway tickets for 25 cents for transportation anywhere in the city, and giving the railway company a right to extend its tracks to the easterly limits of the city, a purchase of the rights of a street railway outside the city which subsequently changed its boundaries so as to include the purchased line, is properly treated as an extension of the railway system. 2 Comp. Laws, § 6448.
    2. Same — Franchise—Words and Phrases — Statutes.
    There are two methods of extending street railways within the meaning of 2 Comp. Laws, § 6448; by construction and by purchase.
    8. Same — Franchise—Interpretation—Contracts.
    A franchise requiring the sale of tickets at a certain rate, to be good within the city, contemplates the growth and extension of the city, and provides for single fares within the city limits as they may from time to time be fixed, so as to include any street railway subsequently purchased and thereafter included in the city by a change of boundaries.
    ON REHEARING.
    1. Same — Municipal Corporations — Operation of Ordinanoes.
    A municipal ordinance, regulation, or contract, designed for a city at large, operates throughout its boundaries as enlarged or extended from time to time.
    2. Same — Franchise — Construction — Constitutional Law — Vested Rights.
    Franchises being strictly construed as against the grantee, no vested rights claimed under the franchise of that portion of railway which respondent purchased are injured.
    Certiorari to the recorder’s court of Detroit; Phelan, J.
    Submitted February 7,1910.
    (Docket Nos. 110 and 111.)
    Decided April 1, 1910.
    Rehearing granted May 7, 1910. Reargued July 1,1910.
    Former opinion affirmed September 28, 1910.

      The Detroit United Railway was convicted of violating a city ordinance, and sentenced to pay a fine of $100.
    Affirmed.

      John J. Speed and Charles D. Joslyn (William L. Carpenter and John C. Donnelly, of counsel), for appellant.

      Bernard IP. Weadock (P. J. M. Hally, of counsel), for the people.
   Montgomery, C. J.

The Detroit City Railway Company obtained a franchise from the city of Detroit in 1863. At that time the city limits were located at Mt. Elliott avenue. In 1885, by amendment of the charter, the city limits were extended to Baldwin avenue. In 1889 an ordinance was passed by the council and accepted by the Detroit City Railway Company, providing for the sale of workingmen’s tickets, so called, 8 for 35 cents during certain hours of the day, good over any of its lines in said city for a single fare. This ordinance also gave the right to the company to extend its double track on Jefferson avenue to the easterly limits of the city of Detroit. The Detroit City Railway Company continued to operate the line until 1890. Its rights and franchises were subsequently assigned to the defendant. A later ordinance imposes the duty of keeping these workingmen’s tickets on sale by conductors. The defendant subsequently purchased a street railway located wholly without the city limits, and maintained under authority of a franchise from the township of Grosse Pointe and the village of Fair-view.

In 1907 the city limits of Detroit were extended to include a large portion of this territory. These two cases were brought to enforce penalties in the one case for refusing to accept a ticket good in the city of Detroit for passage over this last-named territory, and the other to recover a penalty for failure to keep tickets entitling a passenger to ride over this territory from any point in the city on sale. The question in each case is therefore whether the requirements of the ordinance of 1889, that passengers should be conveyed to any point in the city limits binds the defendant, as assignee of the Detroit City Railway Company, to transport passengers to the easterly limits of Jefferson avenue as extended, notwithstanding that the defendant company is the assignee of the franchise granted by Grosse Points township and approved by the village of Fairview.

It is the contention of the city that, when the provision was made in the ordinance for transporting passengers anywhere within the city limits, it means the city limits as they may from time to time be fixed. On the other hand, the defendant contends that the defendant occupies the position of an assignee of the Grosse Points Railway Company, and that it is not, as to the railway in the late village of Fairview, an assignee of the Detroit City Railway Company. There are two methods of extending street railways. One is by construction, and the other may be by purchase under section 6448, 2 Comp. Laws. The purchased railway becomes as much a part of the system as does the railroad as constructed. So wé think it after all gets back to the question of whether the real intent of this ordinance was to provide for single fares within the city limits as such limits should from time to time be fixed.

We think it not unreasonable to hold that this mutual contract was made in view of the power of the legislature of the State to increase or diminish the territory within the city, and that neither the city nor the company contemplated that in case of an extension of the lines of the company within the city, either by purchase or acquisition from another company, an increased fare should be demanded. The case of Township of West Bloomfield v. Railway, 146 Mich. 198 (109 N. W. 258, 117 Am. St. Rep. 628), involved a question not entirely dissimilar. In that case the company had contracted that the fare from any point in said township to the city of Detroit and vice versa should not exceed the rate then charged by the company from Pontiac and Detroit and vice versa. The company while in competition with another line maintained a fare of 25 cents. It subsequently purchased the competing line, and over the line passing through West Bloomfield increased the fare from Pontiac to Detroit to 35 cents. It was held that the language of the provision that the rate of fare from any point in the township to Detroit should at no time exceed the rate then charged from Pontiac to Detroit and vice versa referred to the company mentioned in the franchise, and it included any line which that company or its assignee might at any time build or purchase.

A case almost on all fours with the case at bar is that of Indiana R. Co. v. Hoffman, 161 Ind. 593 (69 N. E. 399). Its reasoning is convincing, and we think the case should be followed. The case presented does not involve in this view an interference with any vested right of the company as assignee of the Eairview Railway, but resolves itself simply into a question of the construction of the ordinance, and we construe the ordinance to include any street railway constructed or purchased by the defendant which shall be within the city of Detroit as the limits of said city may from time to time be fixed by the legislature.

The convictions are affirmed.

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

ON REHEARING.

Stone, J.

A rehearing having been granted in these cases, they have been reargued and reconsidered. The sole question here involved, as we view it, is the construction to be placed upon an ordinance granted the Detroit City Railway in 3889. Subdivision D of section 3 of such ordinance reads as follows:

“Such arrangements shall be made by said company that within two months after this ordinance shall have been accepted by said company it shall carry such passengers as shall have taken passage on the cars between the hours of five-thirty o’clock and seven o’clock in the morning, and between the hours of five-fifteen o’clock and six-fifteen o’clock in the afternoon,' over any of its lines in said city for a single fare, to be paid for by a ticket sold at the rate of eight tickets for twenty-five cents, for one continuous trip, with all the rights of transfer and through carriage provided for in paragraphs ‘A,’ ‘B’ and ‘C’ of this section.”

The ordinance was duly accepted. It is conceded that the Detroit United Railway has become the successor and •assignee of the Detroit City Railway Company by purchase. This being so, we think it accepted the benefits of the franchise granted, as well as assumed the obligations -imposed upon it.

Does the ordinance relative to workingmen’s tickets ’have application to that territory now a part of the city, but without its confines at the time the ordinance was granted? A further investigation of the questions involved satisfies us of the correctness of the reasoning and conclusion of Chief Justice Montgomery who wrote the former opinion in these cases (ante, 416), to which opinion reference is here made. He cited and followed the case of Indiana R. Co. v. Hoffman, 161 Ind. 593 (69 N. E. 399), decided by the supreme court of Indiana. That case is well reasoned, and is supported by the authorities therein cited, and we think it should be followed in these cases. It may be asserted as a general proposition, applicable here, that a municipal law or ordinance designed for a city at large operates throughout its actual boundaries, whatever they are, and is not affected by the fact that these are enlarged from time to time. The following authorities support the proposition that a municipal ordinance, regulation, or contract designed for a city at large operates throughout its boundaries whatever their change: McQuillin on Municipal Ordinances, § 218; 1 Dillon on Municipal Corporations (4th Ed.), § 185, citing St. Louis Gaslight Co. v. City of St. Louis, 46 Mo. 121; Town of Toledo v. Edens, 59 Iowa, 352 (13 N. W. 313).

In St. Louis Gaslight Co. v. City of St. Louis, above cited, which involved the amount due the company for gas furnished the city in its enlarged boundaries, the court said:

“The additional orders for lamps were all to be within the city, and the city is a unit, though with changing boundaries. There might be a question as to the extension of the exclusive rights of the plaintiff, for grants of monopolies are to be strictly construed; but there is no doubt that a city ordinance, or a city contract, designed for the city at large, operates throughout its boundaries whatever their change.”

In Town of Toledo v. Edens, it is said:

“If an ordinance be enacted and afterward the city limits be extended by adding thereto adjacent territory, no one would contend that a new ordinance must be passed in order to be operative in the newly acquired territory.”

It is true that that case involved a police regulation, but the authorities cited seem to make no distinction between such a regulation and an ordinance or contract relating to traffic regulation.

We agree with Chief Justice Montgomery that the cases presented do not involve an interference with any vested right of the company as assignee of the Fairview Railway, but resolves itself into a question of the construction of the ordinance. The rule that the terms of the franchise must be construed strictly against the respondent, as held in Township of West Bloomfield v. Railway, 146 Mich. 198 (109 N. W. 258, 117 Am. St. Rep. 628), is applicable here.

We see no reason to recede from the former ruling in these cases, and the convictions are affirmed.

Bird, C. J., and Ostrander, Hooker, Moore, Mc-Alvay, Brooke, and Blair, JJ., concurred.


author: Stone, J. Stone, J.

text:
    ELY v. OAKLAND CIRCUIT JUDGE.
    1. Insurance — Mutual Companies — Statutes —Authority to Issue Policies — Fire Insurance.
    A mutual fire insurance company organized under chapter 195, 2 Comp. Laws, whose charter contemplates the issuance of policies, not mutual, for a cash premium, has no power to issue such policies, which are expressly prohibited by statute. 2 Comp. Laws, § 7256.
    2. Same — Assessments—Insolvency—Receivers.
    Policies of such mutual insurance company in the standard form, containing an additional clause declaring the policy subject to the statutory assessment liability, although the policy provides for a fixed premium, are subject to assessment as mutual policies, although those issued without the
    . additional clause are void.
    3. Same — Marshaling Assets — Insolvency op Fire Insurance Companies.
    The assessment made by the receiver after insolvency should be determined in amount by including, as a liability to be met, unearned premiums of all outstanding cash premium policies and all valid loss claims.
    4. Same — Void Policies — Remedies—Illegality op Contracts —Farm Policies — Fire Insurance.
    Policies of insurance on farm property issued ultra vires in violation of statute are illegal and void, and the holders are equitably entitled to a return of the unearned premiums paid.
    5. Same — Set-opp and Recoupment — Assessment op Mutual Policy Holders — Depenses.
    Unearned premiums on cash premium policies subject to assessment may be set off by the holders against pro rata assessments by the receiver of the insurer.
    6. Same — Receivers—Assessments.
    An assessment to pay liabilities of an insolvent mutual fire insurance company in a receiver’s charge, should be based on the number and classes of policies, the amount of unearned premiums due on them, the amount required to pay losses under valid insurance, and the costs and expenses of administration.

      7. Same — Costs—Receivers.'
    The costs of an application of a receiver to the court for instruction may be paid out of the assets of the insolvent.
    Mandamus by Francis G. Ely, receiver of the Citizens’ Mutual Fire Insurance Co., of Holly, Michigan, to compel George W. Smith, circuit judge of Oakland county, to enter an order for an assessment upon the members of said company for the payment of losses and expenses.
    Submitted February 8, 1910.
    (Calendar No. 23,658.)
    Writ granted March 19, 1910.
    Rehearing granted May 25, 1910.
    Resubmitted on briefs July 1, 1910.
    Former opinion modified September 28, 1910.

      Kleber P. Rockwell and Henry M. Zimmer mann, for relator.

      Harry E. Hooker, J. Arthur Tillson, and Frank L. Covert, for respondent.

      Franz C. Kuhn, Attorney General (Arthur P. Hicks, of counsel), amicus cur ice.

   Stone, J.

The petition for mandamus against the circuit judge in this case is made by Francis G. Ely, receiver, and represents:

(1) That he was appointed receiver of the Citizens’ Mutual Fire Insurance Company of Holly, Mich., by the circuit court of Oakland county on December 28, 1908, and gave the required bond.

(2) That said company is a corporation organized under Act No. 82 of the Laws of 1873, as amended in 1895 (2 Comp. Laws, chap. 195). That said company, availing itself of the provisions of said amendment, amended its charter January 8, 1896, and that said company has been engaged in the business of insuring property against loss by fire since its incorporation in April, 1874.

(3) That said company did a general fire insurance business in the State of Michigan, having at risk at the date of suspension insurance amounting to $5,064,139, with approximately 6,000 policy holders, scattered throughout the State of Michigan.

(4) That three forms of policies were written by said company; the usual mutual policy providing for assessments, and written on application made to the company, in writing by the insured. The second class of policies known as 51 cash premium policies,” were written for one, two, and three years, for which in every instance a cash premium was paid in advance; the premium charged varying according to the character of the property insured. The policies of this class were labeled Michigan standard form,” and were in fact Michigan standard form, except that at the bottom of the policy was printed a clause in the following language, which is worded differently from the language in the ordinary Michigan standard form policy:

“This policy is subject to the conditions of the charter of this company, and of the act under which the company is organized, as to liability of members to assessment for losses incurred.”

The third class of policies were also cash premium policies, written for one, two, and three years, for which in every instance a cash premium was paid in advance; which were in language and form exactly like those in the second class above described, except the assessment clause above quoted was wholly omitted from the policy.

(8) That said company is a mutual company entirely, and carried no reserve fund to meet extraordinary losses or liabilities.

(6) That during the month of October, 1908, serious fires occurred in the northeastern part of the State of Michigan, burning whole areas of territory, and some towns entirely.

(7) That claims for losses amounting to $19,589.90, or thereabouts, are outstanding and unpaid against said company.

(8) That of said claims outstanding and unpaid against said company for fire losses, $12,071.13 are due on farm risks, which it appears by the terms of the statute, under which said company was doing business, were prohibited, and which the said company, in consequence, had no legal right to take.

(9) That claims for unearned premiums amounting to $20,000, or thereabouts, largely on policies terminated on the appointment of receiver, have been filed for allowance.

(10) That there were no funds available with which to-meet the outstanding and unpaid obligations of said company, on account of said fire losses, unearned premiums claimed, if the latter could be legally allowed, or to meet the usual necessary expense incident to the receivership and winding up of said corporation, and neither will there be unless an assessment on the members and persons insured in said company can be made to meet the same.

(11) That soon after the appointment of the receiver, as aforesaid, he petitioned the said circuit court for instructions, as to whether an assessment could lawfully be made against all of the policy holders irrespective of the particular form of the policy held in said company, and as to the amount of the proposed assessment, the manner of levying the same, whether upon both the cash premium and mutual holders alike, or otherwise, and for such further instruction, direction, and authority as the court might deem necessary and proper to grant.

(12) That petitioner, at the time of filing his said petition, also filed another petition praying for the instruction of said court whether, as receiver, he should allow unearned premiums in offset to the assessment by him proposed to be made on the members and persons insured in said company; that the court determine whether the members and persons insured in said company were entitled to unearned premiums on the cancellation of their policies, either before or after said appointment of receiver, and, if to be allowed in either or both cases, how, and in what manner the same ought to be paid; what proceedings, if any, said receiver should take with reference to the premiums due on policies returned as “refused,” “canceled,” etc., after his said appointment; also praying for such further instruction, direction, and authority in the premises as to said court might seem proper.

(13) That orders were made by said court on the filing of said petitions, requiring notices to be given to all members and persons insured, fixing a time within which objections might be filed by persons interested therein, and a time for hearing said objections.

(14) That proof of service of notice in accordance with said orders was made and filed by petitioner; numerous objections to said proposed assessment were filed by members, and persons insured in said company; certain of the cash premium policy holders objecting to an assessment, yet claiming unearned premiums.

(15) Testimony was taken and hearing had on said objections, in said court, disclosing the character and mumber of the policies issued, the losses suffered, and the necessity for the appointment of a receiver for said company, a transcript of which, with the findings of the court, are attached to said petition.

(16) That, after said hearing, a further petition was filed in said circuit court by certain mutual policy holders, praying for a further disclosure on the part of said receiver, as to the nature and character of the property insured by said company, on which losses occurred, and on account of which said receiver desired to levy an assessment. Hearing on said petition was also had, which disclosed that losses aggregating the sum stated in the eighth paragraph were on farm risks; objection being made to any assessment to cover those losses for the reasons above stated.

(17) That on June 36, 1909, orders were made by said circuit court as follows:

(a) The prayer of the first petition was denied, and the receiver was instructed to make no assessment for any purpose whatsoever; said order being made in anticipation of these proceedings to obtain a ruling of this court as to the status of the policy holders in each class, as to the question of membership in said company.
(b) That no assessment for return premiums be made. That the members and persons insured are not entitled thereto in the opinion of said circuit court.
(c) That no assessment be made to pay losses on risks on farm property, declaring said risks void.

Said receiver prays for mandamus directing said circuit court to order:

(1) An assessment on all members and persons insured in said company, excepting those only who held, or now hold, policies on farm property, to pay losses and expenses.

(3) That the order of the circuit court, holding that no assessment for return premiums be made, be affirmed.

(3) That the order of said circuit court holding that policies issued on farm property are void, and that no assessment for the payment of losses on such risks be made, be affirmed.

(4) And for such further relief by mandamus as justice may require.

The answer of the respondent, the circuit judge, shows that the facts stated in said petition are true.

Section 17 of the act under which said company was organized provides for the appointment of a receiver, and it is made his duty to ascertain the amount due from said company on property insured, and to at once proceed to assess upon all of the members and persons insured in .such company such sums of money as will in the aggregate be sufficient to pay all the losses and liabilities of said company, together with the services and expenses of such receiver, according and in proportion to the amount of their insurance or interest in such company.

The charter of the company clearly contemplates the issuing of cash premium policies. It provides that no risk, except dwelling house risks, shall be written on the straight mutual plan; that all cash premium business .shall be written at the full tariff rate, as adopted by the State board of underwriters; the percentage of the tariff rate the company shall be netted, etc.; that the company may take cash premiums, or notes from the assured, which shall also be the basis for future assessments; that premium notes shall not be transferable, and shall not exceed five times the cash premium paid in one year; that once in each year the directors shall, if deemed necessary, make an assessment on all policies insured in the company, to raise money to liquidate the losses and incidental expenses of the company; that each member insured on the .assessment plan shall be notified of any assessment made against his policy, etc.

This clearly implies that there may be members who are not insured on the assessment plan. We think there is both by the statute and the charter of the company a recognition of the intention and right of the company to insure on the cash premium plan. The doctrine of ultra vires cannot be applied to contracts not prohibited, either expressly or by necessary implication in the statute. Day v. Buggy Co., 57 Mich. 147 (23 N. W. 628, 58 Am. Rep. 352); Carson City Sav. Bank v. Elevator Co., 90 Mich. 550 (51 N. W. 641, 30 Am. St. Rep. 454); Dewey v. Railway Co., 91 Mich. 351 (51 N. W. 1063); Coit v. City of Grand Rapids, 115 Mich. 493 (73 N. W. 811); Rehberg v. Surety Co., 131 Mich. 135 (91 N. W. 132); Spier v. City of Kalamazoo, 138 Mich. 653 (101 N. W. 846); Peterson v. City of Ionia, 152 Mich. 678 (116 N. W. 562).

So while the cash premium policy plan is not expressly authorized by the statute, it is not prohibited, and this fact, coupled with the fact that it is authorized by the charter and by-laws of the company, makes it a valid and binding obligation upon the company. This brings us to an important question in the case: Is the cash premium policy subject to assessment ?

It is urged that this question is answered in the negative, and the question foreclosed, by the decision of this court in Osius v. O'Dwyer, 127 Mich. 244 (86 N. W. 831). That was a case where the receiver of a mutual fire insurance company sued a policy holder for an assessment. It was objected that defendants never became members of the company, and that objection was sustained. We have examined with care the record in that case. The company was organized under the same statute as was this company. The charter differed in many essential respects from the charter of this company. The contract or policy in that company differed from the cash premium policy containing the assessment liability clause, issued by this company, in the following particulars: It appears clearly that the policy in this case was issued by a mutual company (a point upon which we do not lay much stress). The policy referred to issued by this company contained the following clause, the substance of which did not appear in the policy in that case, viz.:

“Thispolicy is subject to the conditions of the charter of this company, and of the act under which the company is organized as to liability of members to assessments for losses incurred.”

The following clause contained in the policy in the Osius Case, viz.:

“ If this policy be made by a mutual or other company having special regulations lawfully applicable to its organization, * * * such regulations shall apply to and form a part of this policy, as the same may be written or printed upon, attached, or appended hereto ”

—is no longer a necessary clause in a policy issued by a mutual company.

The standard form policy act in force when the Osius Case was decided was declared unconstitutional in King v. Insurance Co., 140 Mich. 258 (103 N. W. 616), and mutual fire insurance companies . organized under the act of 1873 (Act No. 82, Laws 1873), as amended, are now expressly relieved from having attached to policies the charter and by-laws. See Act No. 277, Pub. Acts 1905, § 5. So we think that nothing can be claimed for that part of the decision in the Osius Case.

We are not disposed to extend the doctrine of the case of Osius v. O’Dwyer beyond its language, and, had the policy in that case contained the assessment liability clause found in the class of policies issued by this company, which we are now considering, we do not think that this court would have held that the assured was not a member of the company, in that case. We conclude that persons who accepted the cash premium policies containing the clause above named should be held to have become members of the company, and subject to assessment by the receiver to cover all losses and expenses. The Wisconsin supreme court held cash premium policies issued under a statute somewhat similar to ours liable to assessment. Rundle v. Kennan, 79 Wis. 492 (48 N. W. 516). The statute in that case authorized an assessment on all “the property insured,” while the Michigan statute authorizes the receiver to assess all “ members and persons insured.” We do not, however, in view of Osius v. O’ Dwyer, supra, feel authorized to hold that the cash premium policies issued by this company which did not contain the assessment liability clause are liable to assessment, or constituted the policy holders members of the company. We think that there is a clear distinction between these policies, and that such distinction should be recognized.

The next important question to be answered is: Should the assessment cover unearned premiums due the holders of the cash premium policies ? That there is such a liability is clear from the language of the policies. They provide as follows:

“ This policy shall be canceled at any time at the request of the insured; or by the company by giving five days’ notice of such cancellation. If this policy shall be canceled as hereinbefore provided, or become void or ■cease, the premium having been actually paid, the unearned portion shall be returned on surrender of this policy, or last renewal, this company retaining the customary short rate; except that when this policy is canceled by this company by giving notice it shall retain only the pro rata premium.”

We think that common honesty would dictate that, in case of insolvency, the unearned premiums paid on the stock policies are a part of the “liabilities” of the company. The contract creates the liability. They are just claims against the company. Fayette Mutual Fire Ins. Co. v. Fuller, 8 Allen (Mass.), 27; Clark v. Insurance Co., 130 Ind. 332 (30 N. E. 212); Warner v. Delbridge & Cameron Co., 110 Mich. 590 (68 N. W. 283, 34 L. R. A. 701, 64 Am. St. Rep. 367).

Unlike the case of Detroit Manufacturers’ Mut. Fire Ins. Co. v. Merrill, 101 Mich. 393 (59 N. W. 661), there was here a contract to pay unearned premiums on all cash premium policies. The logical view is that the company .has received under the contract more money than it has earned, and justice requires it, in a case like this, to make ;a refund. Nor can such a holding be deemed unjust. In the light of this record, the mutual members had knowledge and notice of the issuing of cash premium policies. The reports of the company showed the amount received from cash premiums, and the amounts received from assessments annually. And the same may be said of the cash premium policy holders.

The last matter to be considered is the one relating to farm policies. Section 7285, 2 Comp. Laws, expressly prohibits the insurance of farm property by such companies. It may be said, therefore, that the farm policies were issued and accepted in violation of the statute. They were void for illegality, and the issuing of them was ultra vires. The holders of these policies should be left where they are found, and they are not entitled to the return of unearned premiums. 25 Cyc. p. 759; Smith v. Barstow, 2 Doug. (Mich.) 155; Bagg v. Jerome, 7 Mich. 145; Niagara Falls Brewing Co. v. Wall, 98 Mich. 158 (57 N. W. 99).

From the foregoing considerations, we reach the following conclusions:

(1) The said company was authorized to write and issue cash premium stock plan policies, and the holders of such said policies as contain the assessment liability clause must be considered members of the company, with all the rights and subject to all the liabilities of membership, and are liable to assessment.

(2) The holders of such cash premium stock plan polices as did not contain the assessment liability clause will not be considered members of said company, and are not liable to assessment.

(3) That the holders of both classes of the cash premium stock plan policies are entitled to unearned premiums, in accordance with the terms of the policies.

(4) That an assessment upon the mutual policy holders, and also upon the cash premium stock plan policy holders, which contain the assessment liability clause, be made, not only to pay valid loss claims, but also to pay unearned premiums on cash premium stock plan policies of both classes, and also all necessary expenses.

(5) That farm risk policies being in violation of the statute are void and ultra vires, and the holders thereof are not entitled to unearned premiums, nor to any relief.

It logically follows that such of the cash premium stock plan policy holders as are liable to assessment should be allowed to offset the unearned premium. The unearned premium due policy holders by reason of the appointment of the receiver should be prorated.

It will be the duty of the receiver to ascertain and report to the circuit court the number of each class, of cash, premium stock plan policies, and the amount of unearned premiums due thereon, as well as the amount required to pay losses upon the basis of this opinion, together with the cost of services, and the expenses of the receiver. Whereupon an assessment shall be ordered by said court upon the basis of this opinion.

The order of the circuit court relating to policies issued on farm property is affirmed. The costs of this proceeding will be borne by the fund of the said company, to be provided for in the assessment.

The writ will issue accordingly.

Montgomery, C. J., and McAlvay, Brooke, and Blair, JJ., concurred.

ON REHEARING.

Stone, J.

This cause has been before the full bench upon a rehearing granted on motion of the Lansing Insurance Agency et al. and by consent of the petitioner. Although the application for a rehearing is based upon the one question whether cash premium policies are assessable, yet the briefs of the several parties in interest, as well as that of the attorney general as amicus curice, have gone into nearly all of the questions considered by us in the original opinion. For a statement of the contents of the record, and the facts of the case, we refer to the original opinion {ante, 422), which we do not deem it necessary to enlarge or change, except as hereinafter set forth.

Upon the first hearing of the case, our attention was not called to section 7256, 2 Comp. Laws, which reads as follows:

“ It shall not be lawful for any company organized upon the mutual plan to do business, or take risks upon the stock plan, neither for a company organized as a stock company to do business upon the plan of a mutual insurance company.”

A careful examination of our statutes satisfies us that the section above quoted has not been repealed or modified, except as it may be said to be affected by Act No. 197, Pub. Acts 1909, with the provisions of which last act it is not claimed that the Citizens’ Mutual Eire Insurance Company of Holly has ever complied. Eor the purposes of this case, therefore, we must consider said section 7256, 2 Comp. !Laws, as still in force. There. can, we think, be no question that the company with which we are here dealing was organized upon the mutual plan under the provisions of Act No. 82, Laws 1873, being chapter 195, 2 Comp. Laws, and that the provisions of section 7256, 2 Comp. Laws, apply here. We are frank to say that, had we known of the existence of this statute, we should have held, as we now hold, that such of the cash premium stock plan policies as did not contain the assessment liability clause were void, as we held the farm policies to be, because issued contrary to the express provisions of the statute. An examination of the record and briefs in the case of Osius v. O'Dwyer, 127 Mich. 244 (86 N. W. 831), shows that section 7256, 2 Comp. Laws, was not referred to, nor considered by the court. It was not necessary to a disposition of that case to pass upon the validity of the policy. The case simply decides that the policy there considered was an ordinary contract of insurance, and did not make the defendants members of the company, and liable for assessment. That this was true cannot be questioned.

We are now satisfied that such of the cash premium stock plan policies as did not contain the assessment liability clause, and all of the farm risk policies, are in the same class and should be treated as void, because issued in violation of the statute. This brings us to the question whether the holders of these policies are entitled to a return of the unearned premiums. In our former opinion we held that the holders of the farm risk policies were not entitled to a return of unearned premiums in any case. A further investigation of the question satisfies us that this conclusion was not equitable or just under the circumstances. While the contracts are void and cannot be enforced, it does not follow that the holder of the cash premium stock plan policy of any class should not be entitled to a return of the consideration paid. If an insurance company issues today to A. a void policy, and receives the premium, both parties acting in good faith (as all the parties here seem to have acted), and tomorrow it is discovered that the policy is void, it would seem to be just and equitable that A. should be entitled to receive back the premium paid. If the risk did not attach, and in consequence the risk was never actually carried by the insurer, there has been a failure of consideration, and the insured is entitled to a return of his consideration paid, namely, the premium, as money had and received to his use. 19. Cyc. p. 609; Waller v. Assurance Co., 64 Iowa, 101 (19 N. W. 865), and the many cases there cited; 2 May on Insurance (4th Ed.), § 567, and cases cited. While no recovery can be had upon the contract, because ultra vires and void under the statute forbidding it, and such contract cannot be made binding by estoppel even, yet applying the equitable rule which this court has applied.to Sunday contracts, and void contracts of that nature, the parties should be placed as near as may be in statu quo. Tucker v. Mowrey, 12 Mich. 378; Winfield v. Dodge, 45 Mich. 355 (7 N. W. 906, 40 Am. Rep. 476); Brazee v. Bryant, 50 Mich. 136 (15 N. W. 49). This is a proceeding in equity, and certainly the rules which should apply in the equitable action of assumpsit for money had and received should apply here. The opinion of this court in the recent case of Hoyt v. Paw Paw Grape Juice Co., 158 Mich. 619 (123 N. W. 529), is very pertinent, and is, we think, controlling of this question. A distinction should be made between contracts merely ultra vires and void and those which are illegal or immoral, such as wager policies and similar contracts where the parties are in pari delicto. 15 Am. & Eng. Enc. Law (2d Ed.), p. 932; 19 Cyc. p. 759; Walhier v. Weber, 142 Mich. 322 (105 N. W. 772.

It may be said that, to be logical, we should hold that these policy holders are entitled to recover the entire premium paid, and not merely the unearned portion thereof. But we think that when we consider that this is an equitable rule to be applied in an equitable proceeding, where the holders of policies have only asked for the return of unearned premiums, and where the reports of the company have shown the manner in which the business was done from time to time, and the contracts were entered into in good faith and were treated as binding upon all parties, until the failure of the company, it would not be just or equitable to the members who must pay the. assessment to require of them more than the unearned, portion of the premiums. We are content with, and adhere to, the conclusion in our former opinion wherein we; held that the holders of such cash premium stock plan policies as contain the assessment liability clause must be considered members of the company, with all the rights and subject to all the liabilities of membership, and are liable to assessment. Their contracts were legal and binding, and it follows that they are entitled to unearned premiums under the terms of their contract. As we held before, we now repeat:

“There was here a contract to pay unearned premiums. * * * The logical view is that the company has received under the contract more money than it has earned,, and justice requires it, in a case like this, to make a refund.”

We think that a distinction should be made between this class and the members who hold mutual policies, and who paid assessments from time to time, as the obligations of the company required them to be made.

We conclude therefore:

(1) That the holders of the mutual or assessment plan policies and the holders of such of the cash premium stock plan policies as contain the assessment liability clause are. members of the said company, and are liable to assessment.

(2) That the holders of such cash premium stock plan policies as did not contain the assessment liability clause, and the holders of the farm risk policies, will not be considered members of said company, and are not liable to assessment, and their policies are void.

(3) That the holders of both classes of the cash premium stock plan policies and the holders of such of the farm risk policies as were issued on the stock plan are entitled to unearned premiums, the same to be prorated.

(4) That an assessment upon the mutual policy holders, including the cash premium stock plan policy holders which contain the assessment liability clause, be mad'e by the receiver, not only to pay valid loss claims, but also to pay unearned premiums on cash premium stock plan policies of all classes, including cash premium stock plan .farm risk policies, and also all necessary expenses and costs. The cash premium stock plan policy holders, here held to be liable to assessment, should be allowed to offset the unearned premiums. It will be the duty of the receiver to ascertain and report to the circuit court in chancery the number of each class of cash premium stock plan policies, and the amount of unearned premiums due thereon, as well as the amount required to pay valid losses, upon the basis of this opinion, together with the costs for services, and the expenses of the receiver. Whereupon an assessment shall be ordered by said court upon the basis of this opinion. The order of the circuit court relating to policies issued on farm property is so modified as to entitle the holders of cash premium stock plan policies in that class, if any, to unearned premiums.

The costs of this proceeding will be borne by the fund of the said company to be provided for in the assessment.

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


author: McAlvay, J.

text:
    PEOPLE, for use of BUHL SONS CO., v. FINN.
    1. Municipal Corporations — Public Buildings and Improvements — Statutory Bond.
    Under an agreement with the principal contractor to furnish hardware trimmings in accordance with plans and specifications of the original contract to construct a municipal fire station, a firm which furnished the hardware were not materialmen hut subcontractors, from whom a notice to the contractor and the board of fire commissioners was required as a condition precedent to an action on the statutory bond under Act No. 187, Pub. Acts 1905. Avery v. Board of Sivp’rs of Ionia Go., 71 Mich. 538 (39 N. W. 742).
    2. Same — Construction Bond — Statutes.
    In an action based on the statute, and tried on the theory that a statutory bond had been given, the plaintiffs were not entitled to recover on the theory that the bond had not been filed in accordance with the statute, and that they were thereby excused from complying with the law.
    Error to Wayne; Donovan, J.
    Submitted October 14, 1909.
    (Docket No. 11.)
    Reargued January 10, 1910.
    Decided September 27, 1910.
    Assumpsit by the people of the State of Michigan, for the use and benefit of Buhl Sons’ Company, against John Finn, principal, and John M. Spaulding and Michael Finn, sureties, on a statutory bond. A judgment for plaintiff on a verdict directed by the court is reviewed by defendants on writ of error.
    Reversed, and judgment entered for defendants.

      Frank C. Cook, for appellants.

      Frederic T. Harward and Jefferson C. Thurber, for appellee.
   McAlvay, J.

Defendant John Finn was a building contractor, who on August 16, 1906, entered into a contract with the fire commission of the city of Detroit to build engine house No. 29, according to plans and specifications furnished by Donaldson & Meier, architects, and to their satisfaction, for the sum of $19,970.85. The other defendants were sureties upon a bond given by Finn as provided by Act No. 187, Pub. Acts of 1905, entitled :

“ An act to insure the payment of subcontractors and wages earned and materials used in constructing, repairing or ornamenting public buildings and public works.”

George Moynes was a subcontractor under Finn, under written contract, according to plans and specifications, to furnish the carpentry work, the builders’ hardware, and to line some bins and stalls in this engine house. Buhl Sons Company contracted with Moynes by letter to furnish the hardware trimmings as per plans and specifications for $154.50, and did furnish the hardware trimmings accordingly. Pudrith & Candler examined the plans and specifications to ascertain what would be required of them in lining the stalls and feed bins, and then agreed with Moynes to do this work according to plans and specifications, and did so do it, for $147. Afterwards Moynes became bankrupt and did not complete his contract. Finn, the principal contractor, completed it at a cost of $456 more than the contract price with Moynes. Finn made his last payment to Moynes May 10, 1907. The bond sued upon was not given until August 28, 1907, after the contract was completed and Finn had received his final estimate from the architects, and presented it to the commission for his final payment. The secretary informed him that on account of these two claims the commission would not pay him until the statutory bond was furnished. Claimants did not give the notice in writing to the fire commission or to the contractor, required by section 2 of Act No. 187, Pub. Acts 1905. Contractor Finn first received knowledge of these claims from claimants’ attorney on or about July 1, 1907. The trial resulted in a judgment for the full amount claimed upon a verdict directed by the court. Defendants assign error upon the refusal to direct a verdict in their behalf as requested, and upon refusal to give certain requests.

The question in the case is whether plaintiff and his assignors were subcontractors or materialmen. The suit was upon the bond required by Act No. 187, Pub. Acts 1905, and the court, without in terms holding plaintiff and his assignors to be subcontractors, in effect so held, in determining that all the requirements of the statute as to notices had been complied with by plaintiff. If these parties were subcontractors, the court was in error. The notices required by this statute in case of subcontractors admittedly were not given, either to the fire commission or the principal contractor. ,

Plaintiff argues: First, that it was a materialman; and, second, that if the court should hold that it was a subcontractor, in view of the fact that no bond had been filed by defendants, the notices which were given were sufficient.

This last contention is not tenable under the declaration, which is upon this statute. Defendants pleaded the general issue, and the case was tried by both sides upon the theory that a statutory bond had been given.

In the case of Avery v. Board of Sup’rs of Ionia Co., 71 Mich. 538 (39 N. W. 742), the principal question was. whether plaintiff was a subcontractor or a materialman. At that time and at the time the cases which followed that decision arose, the statute did not insure the payment of subcontractors. The act under which the case at bar was brought extends its protection to subcontractors, as well as materialmen. In the Avery Case, supra, it was held that “one who takes under the original contract, and is to perform in accordance with the original contract,” is a subcontractor. Approved and affirmed in People, for use of Winkle Terra-Cotta Co., v. Cotteral, 119 Mich. 27 (77 N. W. 312). Later, in People, for use of Davis, v. Campfield, 150 Mich., at page 677 (114 N. W. 659) the same question was before the court. Mr. Justice Carpenter, speaking for the court, quotes the definition of a subcontractor from the Avery Case, and says:

“Under this definition, which we think correct, we determine whether a person furnishing material is a subcontractor * * * by this test, viz.: Has he agreed that the original contract shall be the standard by which the performance of his contract shall be judged ? If he has, he is a subcontractor. * * * If he has not made that agreement, he is an ordinary materialman. * * * Under this definition, and according to this test, a manufacturer who agrees to furnish doors and sashes for a building in accordance with the terms of the original contract is a subcontractor, while if he merely agrees to furnish them in accordance with certain measurements, he is a materialman.”

The same rule was announced by this court in People, for use of Reynolds, v. Banhagel, 151 Mich., at page 46 et seq. (114 N. W. 669).

Plaintiff’s proposition in writing to Moynes was:

“ As per request we are pleased to quote you on Yale and Towne hardware trimmings for engine house No. 29 as per plans and specifications, at $150.50.”

Plaintiff’s assignors of part of its claim “went all over the plans and specifications prepared by Donaldson & Meier for this job,” and from them ascertained what work would be required, and agreed to do the work according to such plans and specifications. These plans and specifications were a part of the original contract, which required the contractor to furnish material and articles in conformity therewith, under the direction and to the satisfaction of the architects. The case at bar must be controlled by the cases above cited. Both plaintiff and its assignors were subcontractors. They are classified as such by the contracts entered into by them. They insist that these articles were the ordinary trade goods upon their shelves and in stock, and were furnished as such. They might have done this; but it is not that which was done. „ These materials, articles, etc., they assumed to furnish in accordance with the terms of the original contract, making that “the standard by which the performance of their contracts shall be judged.”

This case is distinguishable from the case of People, for use of Kuenzel, v. Construction Co., 159 Mich. 133 (123 N. W. 801), heard at the term of court when this case was first argued. In that case there was no proposition to manufacture certain concrete blocks according to plans and specifications. Plaintiffs made no agreement with reference to the original contract. They agreed at 22 cents apiece to furnish such number of blocks as should be required to be used in. the construction of the sewer. The molds for the blocks were furnished by the construction company. The opinion states:

“ * * * It is clear that plaintiffs were concerned only to manufacture blocks of proper material in the forms or molds which were furnished, to allow them to properly harden, and to deliver them on the line of the sewer. * * * We think that it is made clear in this case that plaintiffs never undertook to perform any part of the original contract with the city, however complete their knowledge of its requirements may have been.”

The court distinguishes the case from the cases of Avery v. Board of Sup’rs of Ionia Co., People, for use of Winkle Terra-Cotta Co., v. Cotteral, and People, for use of Reynolds, v. Banhagal, supra.

In the instant case plaintiffs and their assignors, by specific agreements, each for a lump sum, did undertake to perform, and did perform, certain parts of the original contract according to plans and specifications. In People v. Campfield, supra, the class of cases one of which actually arose in the Kuenzel Case, supra, was discussed and distinguished. The rule laid down is a reasonable one, and the only one which this court has been able to formulate applicable to all cases.

It follows that plaintiff cannot' recover in this action. The requirements of the statute, relative to notices which subcontractors must give, were not followed. The judgment is reversed, and, as there is no dispute as to the absence of these notices, no new trial is ordered.

A judgment for defendants will be entered in this court.

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


text:
    FELDMAN v. DETROIT UNITED RAILWAY.
    1. Negligence — Infant — Imputed Negligence — Parent and Child.
    In actions brought by an infant in its own right the negligence of the parent is not imputable to the child; in actions brought by the parent for loss of services, the want of care of the plaintiff will bar recovery; in actions brought under the “death act” (3 Comp. Laws, § 10427), if the parent is the real beneficiary, his contributory negligence will be imputed to the infant.
    2. Same — Streets—Infant.
    In an action by a parent as administrator, for the wrongful death of his infant son of the age of four years, who was killed by a street car, the fact that the child was unattended on the street at the time of the accident established prima facie the negligence of his parents, and whether their conduct should be excused or justified by the alleged circumstances was a question of fact for the jury.
    8. Evidence — Damages—Opinion.
    A witness who possessed no ¡knowledge on which to base his conclusion, was not qualified to express an opinion that an infant’s services would be worth to his father from $4,000 to $5,000 or more.
    4. Same — Res Gestíe — Admissions — Principal and Agent — Duress.
    Testimony that after the car struck the infant, and a crowd had gathered about the conductor and motorman and had assaulted both and were threatening further violence, the motorman stated that it was his fault, is not admissible, since the.statement was not voluntary or spontaneous.
    Error to Wayne; Rohnert, J.
    Submitted April 9, 1909.
    (Docket No. 22.)
    Reargued January 10, 1910.
    Decided September 27, 1910.
    Case by Max J. Feldman, administrator of the estate of Marvin Feldman, deceased, against the Detroit United Railway for the negligent killing of plaintiff’s intestate. A judgment for plaintiff is reviewed by defendant on writ of error.
    Reversed.

      Corliss, Leete <& Joslyn, for appellant.

      George B. Greening and Friedman & SmilansJcy, for appellee.
   McAlvay, J.

Plaintiff, as administrator of the estate of his son, Marvin Feldman, a child of the age .pf four years, brought suit against defendant for damages occasioned by the death of this child, claimed to have been caused by the negligence of the servants and agents of defendant. Plaintiff and his family lived on Winder street, in the city of Detroit, between Hastings and Rivard streets, at about the middle of the block. On Sunday afternoon, May 21, 1905, he, with his wife, were at home as he testified, “enjoying a Sunday afternoon rest.” Some one of his relatives had given the boy some money. He went out of the house with his sister, who was seven years old. Plaintiff did not know where he was going. He was next seen on Hastings street going north on the east side of the street with a little girl. There is some doubt whether this girl was the sister. One witness testifies that it was his daughter, of the age of six years. When the boy had gone a short distance north on Hastings street, upon which there is a street car line of defendant company, he turned out into the street alone, running across it, supposedly towards some candy shops located almost opposite. He was struck by an approaching car, and killed. It is admitted that this car had stopped at Napoleon street, next south of Winder street. There is a dispute as to whether it stopped at Winder street, and there is also a dispute as to whether the car was running fast or slow at the time of the accident. The record shows that the boy was 20 feet or more north of the corner of Winder street when he started to run across the track. The distance from this corner north to the alley is 9? feet. The outside length of the car is 35 feet. It was stopped about 2 feet south of the south line of the alley. It moved about 40 feet after striking the child.

No question is raised as to the competency of the motorman, nor as to his acts in stopping the car. There is a dispute as to whether the gong was sounded by him. When the accident occurred, the conductor was. in the car, taking fares. He saw nothing of the accident. When he came out of the car, a crowd had gathered and set upon him, and assaulted him violently. The case was submitted to the jury and a verdict returned in favor of plaintiff, upon which judgment was entered.

Defendant brings the case here for review upon a writ of error. Errors are assigned upon the charge of the court, and the refusal to charge as requested relative to the contributory negligence of plaintiff, and also upon certain rulings upon evidence. The most important question in the case is whether, under the facts presented, the court was in error in charging the jury.that—

“There is no testimony tending to show any contributory negligence on the part of the father, so that the question of whether or not there is a liability depends simply and solely upon the question whether or not the motorman was negligent.”

The first question to be considered is whether, if plaintiff was guilty of contributory negligence, such negligence may be imputed to his infant child in this case. Upon the reargument of the case counsel for plaintiff gave large attention to the question, and cited numerous authorities which he claimed supported his contention, that such contributory negligence could not be imputed to the child in cases like this. This action was brought under sections 10427, 10428, 3 Comp. Laws, known as “Lord Campbell’s Act,” and commonly called the “ Death Act.” The profession is familiar with its terms.. In all such cases the action must be brought in the name of the personal representative of the deceased,—

“And the amount recovered in every such action shall, be distributed to the persons and in the proportions provided by law in relation to the distribution of personal property left by persons dying intestate,” and “the jury may give such damages as they shall deem fair and just, with reference to the pecuniary injury resulting from such death, to those persons who may be entitled to such damages when recovered.”

In the instant case under this statute the suit is brought by the father, as administrator of the personal estate of his minor child who died intestate, alleging that as such he is entitled to what he would have earned had he not been killed by the negligence of defendant, and by such death plaintiff was damaged in that he lost the value of the services of his intestate. There is want of harmony in the authorities upon the question of the negligence of a parent being imputed to the child of tender years in actions for personal injuries to the child. ¡We find from an examination of the authorities that the question has been, considered by the courts in three classes of cases:

(1) In actions brought by the child in its own right.,

(2) In actions brought by the parent for loss of services.

(3) In actions brought under Lord Campbell’s act by the personal representative of the child to recover for loss of services to the parent.

In the first class of cases, by the great weight of authority, it is held that the negligence of the parent cannot be imputed to the child. In the second class the negligence of the parent will bar the action. In the third class, where, although the action is brought by the personal representative for the benefit of the child, if the parent is the real beneficiary, his contributory negligence will be imputed to the child. The most recent discussion upon this question, where cases are cited and digested, and reference is made to all the leading authorities, will be found in the first two of the following cases: Davis v. Railroad Co., 136 N. C. 115 (48 S. E. 591, 1 Am. & Eng. Ann. Cas. 214, and notes); Atchison, etc., R. Co. v. Calhoun, 18 Okl. 75 (89 Pac. 207, 11 Am. & Eng. Ann. Cas. 681, and notes); also Ploof v. Traction Co., 70 Vt. 509 (41 Atl. 1017, 43 L. R. A. 108, 13 Am. & Eng. R. R. Cas. [N. S] 702); Tiffany, Death by Wrongful Act, §§ 68-72.

In this case the fact that this child was unattended upon the street at the time he was killed by the car established prima facie the negligence of his parents. Whether their conduct should be excused or justified by circumstances was a question of fact for the jury, and the court should have so instructed. Grant v. City of Fitchburg, 160 Mass. 16 (35 N. E. 84, 39 Am. St. Rep. 449). See, also, Lindsay v. Railroad Co., 68 Vt. 556, at page 567 (35 Atl. 513); Davis v. Railroad Co., supra; Green v. Railway Co., 110 Mich. 648 (68 N. W. 988). The court was in error in charging the jury upon the question of contributory negligence as above quoted. As a new trial will be ordered, other questions must necessarily be passed upon for the benefit of the trial judge.

A witness named Jacobs was produced by plaintiff, and testified relative to the value of the services of plaintiff’s intestate, to recover the loss of which this action was instituted. His examination shows that he had no knowledge upon which to base his opinion. He testified, over objection and exception:

“ It looks like that, if the boy turned out anything like a success, he could get $4,000 or $5,000 or more.”

This was his answer to a question as to what would be the earnings of this child over and above its costs and expenses np to the age of 21 years. Witness had already said he could tell what his experience had been, but could not tell for others. It was the random, loose statement of a garrulous witness, and should have been stricken out as defendant requested.

A witness, over an objection, was permitted to testify that the motorman 15 or 20 minutes after the car struck the child, but before the body had been removed from under it, made the statement, “ Gentlemen, it is my fault.” A motion to strike it out was denied. It is urged that this was a voluntary and spontaneous statement, made by the motorman while in the discharge of his duty, and so near the time of the accident as to be part of the res gestee. The witness states that a great crowd of a thousand people had gathered about the car; that they became noisy; that they were talking with the motorman when he made this statement. The record also shows that this crowd was violent; that the conductor as soon as the accident occurred ran to assist in getting the child out from under the car, but was prevented and not permitted to do so by this crowd, and was set upon by them and seriously assaulted and injured; that they also assaulted the motorman, and that the conductor ran to a telephone for police protection. This witness says that the motorman stood on the platform of the car with tears in his eyes. All of the authorities in discussing the admissibility of declarations of this character hold that such statements must he voluntary and spontaneous. Under the circumstances of this case, this statement claimed to have been heard by this witness cannot be held by this court to have been either voluntary or spontaneous. It is not necessary to know what the questionings of this angry and excited crowd were. They had already assaulted him and severely injured the conductor. The overwhelming inference from these facts is that whatever he said was under duress and in dread of personal violence. To extend the mantle of res gestee to include statements so made would be reprehensible. For the reasons given, the testimony should have been stricken out. No opinion is expressed as to whether under other circumstances the motorman’s statement would have been admissible. It was error under these circumstances to admit it.

Other assignments of error are discussed, but an examination discloses that they are of minor importance, and, in view of a new trial, and the probability that they will not arise again, we do not think they require attention.

The judgment, for the errors pointed out, is reversed, and a new trial ordered.

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