author: Hooker, J. Montgomery, J.

text:
    WELSH v. CITY OF LANSING.
    Municipal Corporations—Unguarded Excavation—Personal Injuries.
    A city cannot be held liable for injuries to one who at night fell into an unguarded excavation adjacent to a sidewalk, if the evidence by which the negligence of the city is sought to be established is not inconsistent with positive evidence offered by it to the effect that upon the night in question the place was left by the workmen guarded with proper barriers, thereby permitting the inference that they were subsequently removed in some manner for which the city was not responsible.
    Error to Ingham; Person, J.
    Submitted November 11, 1896.
    Decided February 18, 1897.
    Case by William Welsh against the city of Lansing for personal injuries. From a judgment for plaintiff, defendant brings error.
    Reversed.

      Clark C. Wood, City Attorney, for appellant.

      Atkinson & Atkinson (Jason E. Nichols, of counsel), for appellee.
   Hooker, J.

The plaintiff was injured by falling into a cellar, and has recovered a judgment against the city for the injury sustained. The following is a description of the premises: At the corner of Ottawa and Grand streets, fronting north, is the Michigan Supply Company building. In front is a stone walk 12 feet wide. Next the building is a basement stairway, surrounded by an iron railing, which descends from the west. Immediately west of this building was the cellar in question. In front of this was a concrete walk, the south side of which was on a line with the stair rail mentioned. The plaintiff testified that he turned from Grand street, upon Ottawa, passed west upon the stone sidewalk in front of the building occupied by the Michigan Supply Company, and fell into the excavation. He testified that he saw no building material in the street, and no evidences of building there, before he went into the excavation, and that there was no barrier or guard around the excavation so far as he knew; that he met with none, but walked off the sidewalk without hindrance or notice; but that, after he got out, he noticed some barrels and a plank, the plank being up against the bank, and running down into the cellar towards the south. Mr. [Eicher, an alderman of the city, testified that at the west side of the cellar, that being the place where dirt was drawn in, he noticed that it was in bad shape, and he told some of the workmen about July 1st that it ought to be boarded up, so that people could not get by it at all,-—-that “they should be made to go clear around;” and that, on the night of July 4th, some boys, who had taken some whips from some buggies with which to have some sport, saw him and his hired man, and started to run, and were followed by them. They ran north to Ottawa street, and then west. Witness had followed them from the Chapman House, on Michigan avenue, a block south of Ottawa, and reached the corner of Grand and Ottawa in time to see them run into the cellar when he was about 10 feet behind them. He testified that there was no guard where they went in; that there was a barricade on the north side of the excavation, consisting of planks and barrels, sitting east and west on the tar walk, which left a space to walk between the barrels and iron railing; that was where the boys ran. He said that the barrels and plank could be seen plainly. He testified further that, ‘ ‘of course, the barricade was all down daytimes;” that the barrels would protect any one coming from the north; and that he asked the men to nail up the west end. Mrs. Wright testified that she was employed near by the day before the accident, and from 15 to 20 minutes past 6 there were no guards, and the men were all gone. The bank had been dug out near the walk. She did not remembei whether or not she noticed any guard there from July 4th to July 10th. She says that there was a time when it caved out to the middle of the walk, a very little in one place. She said they put up some boards to protect it, but could not tell just how. She did not go by very late, and it was not, protected when she went by until after the accident. She said on cross-examination that she quit work at 6 o’clock, and went right home after washing and getting ready. She worked two doors from the cellar, and usually left at 15 or 20 minutes past 6. She did not know whether or not anybody was left there after she quit work, to put up barricades for the night. Upon the part of the defendant it was shown that care was taken to surround the excavation by planks laid upon barrels, one of which extended from the barrel farthest east to the iron stair rail; that this was the uniform custom; and that it was so placed on the night of the accident, by men whose business it was to remain and see that the lime was covered up, the barricade put up, and everything straightened up.

An attempt has been made to state the substance of all of the evidence given upon the trial. There is positive evidence of the erection of the barricade on the night in question, corroborated by the statement of the plaintiff that a plank extended towards the south from the bank into the cellar, which is consistent with the theory that it had been removed. Counsel for plaintiff say that they assume that this was a plank laid down to walk on, but we find nothing in the testimony justifying the assumption. No claim is made that a barricade consisting of plank laid upon barrels, completely fencing in a shallow excavation made for temporary purposes, is not a reasonable one, and, if there were, we should be inclined to say that it is sufficient, as matter of law, in a case like this, and that it should not be left to the jury to say that it was not, under ordinary circumstances. We are of the opinion that there is an absence of proof to support the claim of negligence upon the part of the city. The most natural inference from the testimony is, that the hoard was removed in some unexplained way, for which the city is not shown to be in any way responsible.

The judgment is reversed, and a new trial ordered.

Long, C. J., Grant and Moore, JJ., concurred with Hooker, J.

Montgomery, J.

I think there was evidence of negligence sufficient to justify the submission of the case to the jury.


source: Caselaw Access Project

author: Moore, J. Grant, J. Hooker, J. Montgomery, J.

license: Public Domain

text:
    STONE v. JENISON.
    1. Banks and Banking—Insolvency—Preferences.
    3 How. Stat. § 3208e6, declaring void all payments of money made by a bank, either after the commission of an act of insolvency Or in contemplation thereof, with a view to prevent the application of its assets in the manner prescribed by law, or with a view to the preference of one creditor over another, does not invalidate a payment to a depositor, although made after an act of insolvency, unless the unlawful view or intent was also present.
    2. Same—Payment During Run—Intent—Evidence.
    Payments to a depositor during a run on a bank, and after the cashier has persuaded some persons not to withdraw their deposits, but when the bank has assets sufficient so that its officers hope and expect to continue business and be able to pay all the debts of the bank, are not made with a vi'ew to prevent the application of the assets of the bank in the manner prescribed by statute, or with a view to the preference of that depositor over other creditors, within the meaning of 3 How. Stat. § 3208e6.

      Error to Ingham; Person, J.
    Submitted November 19, 1896.
    Decided February 18, 1897.

      Assumpsit by George W. Stone, receiver of the Central Michigan Savings Bank, against Nelson F. Jenison, to recover the amount of certain certificates of deposit alleged to have been paid to defendant after the bank became insolvent, with a view to his preference over other creditors of the bank. From a judgment for defendant, plaintiff brings error.
    Affirmed.

      M. V. & B. A. Montgomery, for appellant.

      Kilbourne & Harris and Smith & Lee, for appellee.

       With this case as reported in 36 L. R. A. 675, is a note on the payment of a depositor during a run on a bank as an unlawful preference.

   Moore, J.

The plaintiff sued the defendant to recover from him the amount of deposits paid to him by the Central Michigan Savings Bank on the forenoon of the day in the afternoon of which the bank closed its doors for want of funds to carry on its business. The defendant had judgment in the court below. The plaintiff brings error.

The facts, so far as it is necessary to state them, are as follows: The Central Michigan Savings Bank was incorporated in 1875, under the general banking act, and conducted a savings and a commercial department, until it suspended, April 18, 1893, when plaintiff was appointed as receiver. During all the time the bank was doing business Mr. Bradley was its cashier, and had general management and control of its affairs. When the bank suspended, its assets were nominally $860,000, and its liabilities, exclusive of capital and surplus, were about $700,000. After the bank closed, and its affairs passed into the hands of a receiver, it was found that a large amount of the paper held by it was *of doubtful value, because the makers of the paper had become financially embarrassed during the,year prior to the suspension of the bank; and it is now evident that the depositors will not be paid in full. The defendant made his.last deposit in the bank February 27, 1893. The day the bank suspended, “the defendant had six certificates of deposit, four of which he had held more than three months. Those were paid to him, principal and .interest. The deposits represented by the fifth and sixth certificates had not been in the bank three months, and no interest was paid on them. It is claimed by the plaintiff that the bank was insolvent, and known to be so by the cashier, and that it had also committed two acts, at least, of insolvency. In relation to the last proposition, the proofs show that the bank owed the state treasurer $25,000; that, two or three days before the suspension, the deputy state treasurer called at the bank, and asked for the money. The bank had funds enough to pay him, but he was told by Mr. Bradley that he would much rather he would not draw the money then, on account of the closeness of the money market, and he went away without it, though he was afterwards paid. The proof with reference to the other act of alleged insolvency is that, some weeks before the bank closed, Herbert Johnson left at the bank, with Mr. Bradley, a $10,000 mortgage belonging to his father, together with a discharge, to be delivered when the money should be paid by the maker; that two or three days before the suspension he called at the bank, and inquired if the money had been paid, and was told by Mr. Bradley that it had not; that on the morning of April 18th, after the bank opened, he called at the bank, and asked again if the mortgage had been paid, and Mr. Bradley replied that it had not; that shortly afterwards he learned that the mortgage had been paid to Mr. Bradley a week or ten days before, whereupon he demanded the money, together with $1,600 due his father on open account, and for which he had a check; that Mr. Bradley tried to induce him to take some securities; that, after waiting some time, Mr. Bement came in, and paid Mr. Bradley $5,000, which money Mr. Bradley gave Johnson, together with a draft on the Third National Bank of Detroit for the entire balance; that he took such draft, and went to Detroit, immediately presented the same, and payment was refused,—for what reason the record does not disclose, though it discloses that the draft was drawn against a fund that the bank had in Detroit. The bank closed on Tuesday. On Saturday and Monday preceding, some deposits were made in the bank, and there was a slight run on it. On Tuesday morning there was a run on the bank, and in the effort to stop the run about $108,000 was paid out. Included in this was the amount paid Mr. Jenison. The run then became so great that it was evident the bank must suspend, and its doors were closed at about 3 o’clock, with funds amounting to about $10,000 still in the bank. Mr. Bradley’s testimony is that there was no thought of preferring Mr. Jenison when the payment was made to him, that they were paying all certificates of deposit as they were presented, and that he hoped and expected the bank would be able to continue business, and that he then believed that the bank had sufficient assets to pay all of its depositors in full. He also testified that what was done in reference to the deposit of the state treasurer and the Johnson collection, as well as the payment of all the deposits, was Jone to protect the bank, and to enable it to continue to Jo business, and was not done expecting the bank would discontinue business, or for the purpose of preferring one creditor over the others.

The plaintiff asked the circuit judge to instruct the jury as follows:

“If, when the defendant received his money, the bank was insolvent, and if the defendant demanded to be preferred, and if Mr. Bradley so understood him, and, so understanding, caused the money to be paid to him, and if the defendant was, as matter of fact, preferred by such payment, then the law presumes that what was done was intended; and, if the payment to Jenison was not made with a view to his preference, the burden of proving such fact rests upon the defendant.

‘ ‘ The refusal by Mr. Bradley to pay over the money to Mr. Johnson on the morning of the 18th was an act of insolvency of the bank. Mr. Bradley is conclusively presumed to have known that it was an act of insolvency, and thereafter, for the few hours the bank remained open, he had no right to pay money to other depositors with a view to their preference. And from Mr. Bradley’s refusal to pay Mr. Johnson in the morning, and that he did pay Mr. Jenison a short time thereafter, the jury may presume he did intend to prefer the defendant.

“If the real situation of the bank, as it actually was, considering the actual condition of affairs, made it reasonably certain that the bank must suspend, then Mr. Bradly must be held to have known it; and the mere fact, if it be a fact, that he (Bradley) did not expect to suspend, or did not believe he would be obliged to suspend, is of no consequence.

“If the actual condition of the bank at the time the money was paid to the defendant rendered it morally cer^ tain that it must soon suspend, and if such prospect was apparent to any intelligent person, then the mere fact, if it be a fact, that Mr. Bradley did not so believe, is unimportant.

“If, when the money was paid to the defendant, Mr. Bradley knew and understood that the bank was in a precarious situation, and that suspension was not only probable, but imminent, then such payment was unlawful.

‘ ‘ The mere fact, if it be a fact, that Mr. Bradley believed or expected, or that he now thinks that he then believed or expected, that the bank would not be obliged to suspend, is of no consequence, if, as matter of fact, there was then no reasonable ground for such belief or expectation.”

The court declined to give these requests, and, as appears from the record,—

“The court thereupon instructed the jury that there was no evidence that any act of insolvency had been committed when payment was made to Mr. Jenison; to which instruction plaintiff’s counsel then and there excepted. The court further instructed the jury that plaintiff Was not entitled to recover unless the jury were satisfied from the evidence that, when the money was paid to defendant, Mr. Bradley expected the bank’s suspension, or thought he, probably must suspend; to which instruction the plaintiff’s counsel then and there excepted. The court further instructed the jury that, if they were satisfied from the evidence that Mr. Bradley did not expect to suspend when the money was paid to the defendant, but thought the probabilities were he should get through, that plaintiff could not recover; to which instruction plaintiff’s counsel then and there excepted.”

This case involves the construction of 3 How. Stat. § 3208e6, which reads as follows:

“* * * All payments of money, either after the commission of an act of insolvency or in contemplation thereof, with a view to prevent application of its assets in the manner prescribed in this act, or with a view to the preference of one creditor over another, shall be held to be null and void.”

It is the contention of the plaintiff, stated in the language of his eminent counsel:

‘ ‘ First. That no payment should have been made, nor withdrawal permitted, after the trouble began.

‘ ‘ Second. That, the bank being insolvent, every such payment (even had there been no run) was unlawful.

‘ ‘ Third. There were at least two ‘ acts of insolvency ’ committed prior to the payment to defendant. He was paid; the bank suspended; he was preferred. If paid, and if suspension followed, such payment was, of hecessity, a preference, and therefore the case is made out.”

Unfortunately, there has been no construction given to the section of the statute, under which this action is bx’ought, by our court. The question at issue must be determined by the rulings of other courts in relation to similar statutes. A reading of the statute, giving its words their natural meaning, would, indicate that two things must concur to make the payment void: Not only must there be an act of insolvency, or a contemplation of insolvency, but the payment must be made with a view to prevent -the application of the assets of the bank in the manner provided by the act, or the payment must be made with a view to the preference of one creditor oven another. Can it be the law that when a bank, having assets sufficient so that its officers believe, if it can continue in business, it will be able to pay all its debts, is confronted with a run on the bank, and, to avoid the necessity of suspension, pays its depositors as fast as they present their certificafes of deposit,—that under such circum.stances, if the bank is compelled to suspend, the receiver can sue, and recover the money paid in good faith to the depositors ? In the case of Hayes v. Beardsley, 136 N. Y. 299, which was a case of payment of certificates of deposit after the bank became insolvent, and after the cashier had known for months that it was insolvent, this language is used:

“There was no satisfactory evidence that these payments were made by the bank to prevent the application of its assets in the manner prescribed in the national banking act, or with a view to a preference of the defendant over the other creditors of the bank. * * * There does not appear from the facts found to be any better ground for claiming that these payments made to the defendant were void than there is for making the same claim in reference to the numerous payments made in the regular course of business by this bank to its customers during many months prior to the closing of its doors. In order to uphold a recovery in an action like this, there should be some satisfactory evidence that the cashier or other officer actually paid the money of the bank in contemplation of insolvency, for the purpose of giving a preference to the payee, and with a view to prevent the application of the assets of the bank to the creditors generally.”

The provisions of the act construed in this decision are almost identical with the provisions of the Michigan banking act, and we think the construction a reasonable one. If the receiver can maintain this proceeding, I can see no good reason why he may not sue and recover from each of the depositors who drew their money after the bank became embarrassed. Such a construction does not commend itself to one’s sense of justice. See Curtis v. Leavitt, 15 N. Y. 198; Fidgeon v. Sharpe, 5 Taunt. 545; Tiffany v. Lucas, 15 Wall. 410; Jones v. Howland, 8 Metc. (Mass.) 377 (41 Am. Dec. 525); Utley v. Smith, 24 Conn. 310 (63 Am. Dec. 163); Haas v. Whittier, 97 Cal. 411. The circuit judge was not very fortunate in the language used by him in his charge to the jury. We do not regard his charge as a good statement of the law. However, in view of the decisions already cited, we do not see how, under the record as made, the plaintiff can maintain his action. There is nothing in the record from which the jury would have been warranted in finding that the payment to the defendant was made with a view to prevent the application of the assets of the bank in the manner prescribed in the banking act, or with a view to the preference of the defendant over the other creditors. Taking this view of the case, we affirm the judgment.

Grant, J.

I concur in the conclusion reached by my Brother Moore. I. do not, however, concur with him in his criticism of the charge of the court. I think the court should have directed a verdict for the defendant. There was no evidence to show either an act of insolvency or a payment in contemplation of insolvency on the part of the cashier of the bank, with a view to prefer the defendant, or any other depositor who presented his check or certificate of deposit and demanded payment. The record shows no refusal to pay any depositor who presented a check. Mr. Bradley did no more than to urge certain depositors to withhold their demands. Is it an act of insolvency when a debtor urges his creditor to withhold demand of payment? Mr. Bradley, the cashier, was the plaintiff’s witness, and he is bound by his testimony. He swears positively that he intended ho preference, and that he thought-he would be able to stem the tide, and that he would be able to pay in full, if he succeeded in stopping the run upon the bank. He did not stop paying until it became evident that the money in the bank would be exhausted, and then he closed its doors. He paid Mr. Johnson $5,000, and gave him a draft for the balance due him on a bank in Detroit, where there were deposits sufficient to meet it. The defendant’s deposits were subject to payment upon demand. The learned counsel for the plaintiff conceded that, where depositors check out their money in the usual course of business, the receiver cannot recover it back upon the ground that it is a preferred payment. Many solvent banks are unable to withstand a run, and are justified in paying out deposits so long as they honestly believe that they can thus prevent the closing of the bank. I find nothing in this record to justify the conclusion that defendant did not check out his deposit in the legitimate course of business. It is not unusual for depositors to check out their entire amount, desiring to use it in their trade or business. Defendant was a merchant, and, for aught that appears here, may have desired and needed this money to pay his obligations. It appears from the conceded facts that the receiver will be able to pay depositors 75 per cent, of their claims. The receiver' has had a great deal of litigation, which, of necessity, has been expensive. With such assets as are shown here, the cashier might honestly have believed that he could stop the run by continued payments. It is not sufficient that the payment “did operate as a preference.” There must be the actual commission of an act of insolvency, or the payment must be made in contemplation of insolvency, or with the intent to prefer. I think there is nothing upon this record to bring the case within the statute. For this reason I think the judgment should be affirmed.

Hooker, J.

(concurring). It seems to be agreed that the right of plaintiff to recover must be based upon the fact that after the bank had committed an act of insolvency, or when in contemplation thereof, the payment sought to be recovered back was made with a view to prevent the application of its assets in the manner prescribed in the banking act, or with a view to the preference of one creditor over another. We may reasonably say that the words “with a view to” mean with the intent to or design of pursuing a particular' course, and that this intent or design means the intent of the bank or officer making the payment, and not the recipient of the payment. In this case it may be said that there was a run on the bank, after the act of insolvency, and after a condition of things existed showing that the cashier should have known that the bank was in an insolvent condition; and, there being a run on the bank, and the defendant having asked to withdraw his deposits, thereby forfeiting interest upon the certificates, it may be presumed that he knew of the run, and feared that the bank would fail, and therefore took the precaution to withdraw his money. It appeared that, during such run, the cashier persuaded some depositors not to draw out their money at that particular time, while others were paid; and that in one instance, at least, he gave as an excuse the closeness of, the money market. It is said that the effect of this was to prevent the application of the assets of the bank in the manner prescribed by law, and to prefer such creditors as were paid to those who were not; that the cashier necessarily knew it; and that it necessarily follows that the payments made were made with such intent or view, and consequently the payment was recoverable .under the statute.

If this reasoning is correct, there is no necessity for saying that the jury should be permitted to infer that payments were made with such view. The court should have so stated, and directed them to find such fact. From such a rule it would inevitably follow that the refusal of a payment, or the persuasion of a depositor to forego his right to draw out his funds, after an act of insolvency, or after knowledge by the officer that the bank was insolvent, would invalidate every payment subsequently made, no matter how long a period intervened between such refusal and the closing of the bank doors. New depositors, whose dealings began by a deposit after the refusal, and in ignorance of it, would be in no better situation than others; and, under the application of this rule, the longer the bank might be able to take deposits the larger the dividends that could subsequently be declared. A man who was turning over a small capital, by depositing daily and drawing in the course of his • business, might become liable to the bank for an amount several times as large as the sum that he was actually using in his business, and perhaps more than he was worth. If this is the rule, where is there necessity or opportunity for the application of the doctrine that “payment in the ordinary course of business, though after actual insolvency of the bank, is good, its condition being known to the officers, but not to the payee?” See 2 Morse, Banks, § 625; Dutcher v. National Bank, 59 N. Y. 5; Boone, Banking, § 301. If it be the rule, it would seem to follow that, as soon as a bank has committed an act of insolvency,—e. g., asked a depositor to forego drawing his money out, while others are paid,—or when the officers of the bank have reason to believe that they must, or even may ultimately be compelled to, close the bank and go intp liquidation, it is its duty to refuse payment at once. No matter how much faith it may have in its ability to weather the storm, it must know that the validity of subsequent payments to its depositors must depend on the success or failure of the attempt to do so. And it would seem equally true that when a dep ositor has reason to doubt the solvency of the bank, or knows of the coihmission of a technical act of insolvency, it is.his duty to avoid drawing upon his deposit, no matter what his necessities. As a law-abiding citizen, recognizing the duty of the bank not to pay, he must sit idly by, and see other less conscientious depositors depleting the bank, with the knowledge that, if the bank shall ultimately fail, his dividend is being lessened by every payment. It would put an end to all legitimate attempts by banks to withstand financial storms,.and, by obtaining forbearance, maintain payments and credit until securities could be converted into money, thus avoiding sacrifices which would be fatal. It is rare that the “quick assets” of a bank are adequate to pay all of its obligations, especially in times of financial distress; and the consequences of the doctrine contended for would be disastrous and far-reaching. I am of the opinion that this statute should be given no such construction, and that, before it can warrant the collection from a depositor who has received payment over the counter in the usual manner (i. e., in the due course of business), it must at least appear that there was a specific design to accomplish one of the objects mentioned, viz., to favor a particular creditor, or to withdraw its funds from the control of the law, and that it is not enough that we shall be able to say that the effect of the act is to prefer the creditor, of to so withdraw the amount paid,—facts which are in themselves incidental and self-evident.

In the case of Dutcher v. National Bank, 59 N. Y. 9, which was a case similar to this, it is said:

‘ ‘ How can a payment or sale made in the ordinary and usual course of business by the company, one which would have been made had the company been prosperous and solvent, be said to have been made in contemplation of insolvency, although the company was at the time insolvent, which was known to its officers ?• The act being done in the ordinary and usual course of business by the company $ uninfluenced by the state of its pecuniary affairs, it cannot be said to have been done in contemplation of any particular condition of such affairs.”

And in answer to a contention similar to that made in this case, it is there said:

‘ ‘ Section 9 [1 Rev. Stat. 591 ] declares invalid all conveyances, payments, etc., made by the corporation when insolvent, or in contemplation of insolvency, with intent of giving a preference to a particular creditor over other creditors. This, it will be seen, does not include a payment in the usual course of business, like the one in the present action. It was held in Brouwer v. Harbeck, 9 N. Y. 589, that a payment made by an insolvent corporation, or one made in contemplation of insolvency, where the intention of the corporation was to give a preference to a particular creditor, was void, irrespective of the questions whether the insolvency was open and notorious, and whether the party receiving the payment knew of the insolvency, or this particular motive of the corporation in making the payment. A payment made with a view of giving a preference to a particular creditor is one rarely, if ever, made in the usual course of business. In such a case the creditor will usually be sought out by the debtor, and payment made by an unusual transfer of assets, as in the case of Robinson v. Bank of Attica, 21 N. Y. 406.”

The distinction is illustrated by the case of Hayes v. Beardsley, 136 N. Y. 299, cited by Mr. Justice Moore, where, as in this case, the depositor (who, by the way, was a director of the bank) held three certificates, which were paid,—two by assignment of .paper, and one by payment over the counter. The cashier knew, but concealed, the fact of insolvency. It was held that the complaint was properly dismissed, because the plaintiff failed to show that the payments were made in contemplation of— i. e., with a view to—insolvency, or to prevent the application of the bank assets as prescribed in the act. And in a note to Elmira, Savings Bank v. Davis, 25 L. R. A. 548 (142 N. Y. 590), it is said that an act prohibiting preferences does not forbid transfers of securities for a valuable consideration, under q. reasonable expectation of obtaining relief, nor transfers contracted for long prior to insolvency to secure loans being made. See cases there cited. Several other cases to be found cited in the opinion of Mr. Justice Moore recognize this doctrine. See Haas v. Whittier, 97 Cal. 411.

The case of Tiffany v. Lucas, 15 Wall. 410, 421, arose upon a sale made within six months of a bankruptcy. Lucas purchased from Darby, in April, 1869, a valuable piece of property in St. Louis, for the consideration of $200,000. On the 12th day of July following, Darby was declared a bankrupt, and the' suit was brought to avoid the sale to Lucas, on the ground that it Avas in contravention of the 35 th section of the bankrupt act. This section reads as follows:

“If any person, being insolvent, or in contemplation of insolvency or bankruptcy, within six months before the filing of the petition by or against him, makes any payment, sale, assignment, transfer, conveyance, or other disposition of his property to any person who then has reasonable cause to believe him to be insolvent, or to be acting in contemplation of insolvency, and that such payment, sale, assignment, transfer, or other conveyance is made with a view to prevent his property coming to his assignee in bankruptcy, or to prevent the same from being distributed under this act, or to defeat the object of, or in any way impair, hinder, or delay the operation and effect of, or evade any provision of this act, the sale, assignment, transfer, or conveyance shall be void. * * * And if such sale, assignment, transfer, or conveyance is not made in the usual and ordinary course of business of the debtor, the fact shall be prima facie evidence of fraud. ”

Mr. Justice Davis, in delivering the opinion of the court, said:

“There would seem to be no difficulty in ascertaining the meaning of Congress on the subject embraced in, this section in its application to this case. Clearly, all sales are not forbidden. It would be absurd to suppose that Congress intended to set the seal of condemna-. tion on every transaction of the bankrupt which occurred within six months of bankruptcy, without regard to its character. A policy leading to such a result would be an excellent contrivance for paralyzing business, and cannot be imputed to Congress without an express declaration to that effect. The interdiction applies to sales for a fraudulent object, not to those with an honest purpose. The law does not recognize that every sale of property by an embarrassed person is necessarily in fraud of the bankrupt act. If it were so, no one would know with whom he could safely deal, and, besides, a person in this condition would have no e'ncouragement to make proper efforts to extricate himself from difficulty. It is for the interest of the community that every one should continue his business, and avoid, if possible, going into bankruptcy; and yet how could this result be obtained if the privilege were denied a person, who was unable to command ready money to meet his debts as they fell due, of making a fair disposition of his property in order to accomplish this object? It is true, he may fail, notwithstanding all his efforts, in keeping out of bankruptcy, and in that case any sale he has made within six months of that event is subject to examination. If it shall turn out on that examination that it was made in good faith, for the honest purpose of discharging his indebtedness, and in the confident expectation that by so doing he could continue his business, it will be upheld. On the contrary, if he made it to evade the provisions of the bankrupt act, and to withdraw his property from its control, and his vendee either knew, or had reasonable cause to believe, that his intention was of this character, it will be avoided. Two things must concur to bring the sale within the prohibition off the law,—the fraudulent design of the bankrupt, and the knowledge of it on the part of the vendee, or reasonable cause to believe that it existed.”

In Utley v. Smith, 24 Conn. 310 (63 Am. Dec. 163), a statute containing similar provisions was under discussion. It was there said by Mr. Justice Ellsworth that—

“We construe the words of the statute in a more specific sense, to wit, the closing of business by an avowed and deliberate failure. So Judge Story construed the word ‘bankrupt,’ under the bankrupt law of the United States, in Arnold v. Maynard, 2 Story, 358. He says it describes one acting in contemplation of actually stopping his business because he is insolvent, and utterly incapable of carrying it on. But, not to enlarge on this point, we pass to the second, which, in our view, is entirely decisive of the case. We mean the words ‘in view.of insolvency.’ What meaning shall we attach to these words? They appear to be very plain and pointed, and we cannot doubt that they are important, and that they fully disclose the object which the legislature had in view in the law. No debtor, actually failing, shall be allowed to convey away ‘his property to make preferences among his creditors. Any such conveyance, made with a view to insolvency, is contrary to the statute, and is utterly void. This is what these words mean, and they mean no more. Actual insolvency is not enough, for this does not necessarily prove any particular view of the insolvent in an ordinary sale or mortgage. His insolvency may have nothing at all to do with it, and be neither the cause nor the. occasion of it. It is but a circumstance to be taken into the account in weighing motives; and, although it may work a kind of preference, yet if this was not intended by the parties, if the quo animo was wanting, and the conveyance was bona fide, and in the usual course of business, the conveyance is not contrary to the language or spirit of the statute.”

This case contains an interesting review of the English cases in this connection, and also the case of Jones v. Howland, 8 Metc. (Mass.) 377 (41 Am. Dec. 525), which, is in harmony with the view there taken.

Upon this understanding of the law, there is, in our opinion, nothing in the evidence from which the judge would have been justified in permitting a jury to conclude that the prohibited view, intent, or design existed. It is as consistent with its absence as presence, and therefore I concur with my Brother Moore that the judgment should be affirmed.

Montgomery, J.

(dissenting). Agreeing, as I do, with the conclusions of my Brother Moore that there was evidence showing an act of insolvency committed prior to the payment made, to defendant, and that there was, therefore, error in charging the jury that there was no such testimony in the case, I am not able to follow my brother in saying that this was error without prejudice, as I think there was evidence tending to show that the payment to defendant was made with a view to prevent the application of the bank’s assets in the manner prescribed in the banking act, and with a view to the preference of one creditor over another. Admittedly, the payment did operate as a preference. It was shown that the embarrassment of the Barnes interests had, for several weeks prior to the, suspension, created uneasiness and solicitude' on the part of the bank; that the cashier, Mr. Bradley, had been for some time borrowing money on bank obligations and indorsements of friends; that upwards of $50,000 of such obligations were outstanding when the bank closed its doors, and that some of these drew as high as 7 per cent, interest; that subsequent events have shown that about one-third of its $611,500 of loans, discounts, and overdrafts were questionable, and their collection doubtful; that the cashier was "familiar with the condition of the assets of the bank. The cashier also testified:

‘ ‘ Q. Are you able to recollect anybody else who called and asked for their money, and was sent away without getting it?

“A. Of course, that day there was a great many people in there, and, as I said before, there were some I did turn off in that way; but I don’t just remember who.

“Q. You meant to put them off ?

“A. Yes, without giving them their money.

“Q. Do you remember, among others, the young Miss Hudson ?

“A. I.think I did. I think I remember her coming and speaking to me.”

The question of what the just inferences to be drawn from this testimony are is for the jury. If, in fact, the cashier apprehended and expected a suspension, and still made payments to certain of the depositors, while putting others off and not meeting their demands, it would not be erroneous for the jury to find that such payments were made with a view to prevent the application of the bank’s assets in the manner prescribed by the act, and with a view to the preference of one creditor over another; and, while the inference is one to be drawn by the jury, there was testimony from which the existence of all these facts might have been inferred. It is unnecessary for us to consider what conclusion we would reach upon the testimony, if presented to us as a guide in determining a question of fact. Roberts v. Hill, 24 Fed. 571; Case v. Citizens’ Bank, 2 Woods, 23.

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

Long, C. J., concurred with Montgomery, J.


author: Long, C. J.

text:
    VILLAGE OF ST. JOHNS v. BOARD OF SUPERVISORS OF CLINTON COUNTY.
    1. Health Officers—Compensation—Infectious Diseases.
    A county is liable for • extraordinary services performed by a village health officer, under arrangement with the local board of health, in suppressing an epidemic of smallpox, the persons afflicted being in indigent circumstances, under 1 How. Stat. §§ 1647, 1648, 1681, making it the duty of boards of health, in case of infectious disease, to provide for the safety of the inhabitants by isolating the infected person, and providing assistance and necessaries, “at the charge of the person himself * * * if able, otherwise at the charge of the county,” although sections 16815, 168M, 3 How. Stat., prescribing the duties of the local health officer in such cases, provide that he shall be entitled to compensation from the village of which he is officer.

    2. Same — Employment by Board of One of Its Members — Validity.
    The fact that the board of health of a village, during an epidemic of smallpox, employed one of its members, the local health officer, to render extraordinary services, and fixed the compensation therefor, does not preclude the village from recovering from the county the sum so paid, if the officer took no part in fixing such compensation, and it was reasonable in amount.

      Certiorari to Clinton; Daboll, J.
    Submitted January 5, 1897.
    Decided February 18, 1897

      Mandamus by the village of St. Johns to compel the board of supervisors of Clinton county to allow a claim for the compensation of a health officer for special services during an epidemic of smallpox. From an order granting the writ, respondent brings certiorari.

    Affirmed.

      Will H. Brunson, for relator.

      Spaulding & 'Norton, for respondent.

       The especial powers and liabilities of municipalities in time of epidemic are discussed in a note to Thomas v. Town of Mason, (W. Va.) 26 L. R. A. 727.

   Long, C. J.

On October 31, 1894, an epidemic of smallpox broke out in the village of St. Johns, and the board of health, being the trustees of the village, increased the pay of its health officer, Dr. Henry Palmer, one of its members, by a further sum of $10 a day. Dr. Palmer performed the duties of health officer, with this increased compensation, for 69 days, during the prevalence of the smallpox. The village audited, and presented to the board of supervisors for allowance, a bill of expenses incident to the epidemic, amounting to $2,810.48. This bill included among its items $690 as salary to its health officer, and $150 paid him as compensation in attending certain indigent persons, and being all the indigent patients he attended. These services as physician were rendered during the time he .was receiving additional compensation as health officer. The board of supervisors allowed and paid the whole bill, except the $690 to the health officer. This it refused to pay, and the village filed a petition for a mandamus in the circuit court for Clinton county to compel its payment. After a hearing in that court, the writ was issued against the board, directing the payment of this item. The case was heard on petition and answer, and the following stipulation of facts made:

“It is hereby stipulated that the only questions to be decided in this case are whether the fact that the health officer was a member of the board of health of the village of St. Johns prevents a recovery by the village; and, second, whether the fact that the services for which the bill in question was rendered were performed by the health officer of said village, as health officer, in preventing the spread of the smallpox, and in taking measures for the safety of the inhabitants during the epidemic of smallpox, prevents a recovery by the village. It is admitted that; at the outset of the epidemic, an agreement was entered into between Dr. Henry Palmer, the health officer, and the board of health of said village, by which said health officer was to receive at least $10 a day over and above his annual salary of $100 while employed about the smallpox epidemic, and as much more as they should agree upon later. It is also admitted that the bill in question is a reasonable one for the services performed, and that those persons who were sick with smallpox during said epidemic, and their parents, and all others liable for their support, were unable to pay the same, or any part thereof. It is also admitted that the sum of $690 was allowed by said board of health to said health officer for said services, and paid by said village for services in and about said epidemic, as health officer, and that this sum was over and above the annual salary of $100 paid to said health officer. The object of this stipulation is not to set forth all the facts, but to limit the issues in the case to the two questions first stated in this stipulation, and thus prevent the framing and trial of issues of fact.”

The case comes into this court by writ of certiorari to review the findings of the court below.

Counsel-for the board of supervisors contend that the board of health cannot fix the compensation of one of its members, and thus bind the county for the payment of the amount so fixed, and cite Kennedy v. Gies, 25 Mich. 83, and Farnsworth v. Supervisors of Kalkaska Co., 56 Mich. 640. We think those cases not controlling in the present controversy. Dr. Palmer was a member of the board, but there is nothing in the record to show that he took any part in the proceedings to fix his compensation ; and the stipulation itself recites that the services had been performed, and that the bill charged was a reasonable one. In Farnsworth v. Supervisors of Kalkaska Co., supra, it was said: “Whether it was competent for the board of health to employ its own members, and then fix conclusively the compensation to be made by the county, is a question of no little importance ; but we do not enter upon it here, it being unnecessary to do so.” We should doubt the power of the board of health to fix conclusively the amount of the claim of Dr. Palmer, did it appear that he took part, as a member of the board, in fixing his own compensation, and the board of supervisors were contesting the claim upon the ground that the amount fixed was excessive. But the case presents no such feature. It is stipulated that the charges are reasonable for the services performed, and that the persons who were sick with the smallpox, and all others liable for their support, were unable to pay the same, or any part thereof.

We think that the second contention of counsel cannot be sustained. Section 16816, 3 How. Stat., prescribes the duties of the health officer in case of an epidemic of smallpox, etc., or other communicable disease dangerous to the public health, in cities, townships, and villages. Section 1681ci provides:

“In the fulfillment of the requirements of this act, the health officer, unless other provision shall have been made in accordance with law, shall be entitled to receive, from the township, city, or village of which he is the health officer, compensation at the rate of not less than two dollars per day,” etc.

The contention of the board of supervisors is that these sections place the burden of payment of the health officer upon the township, city, or village. These sections, however, must be construed with sections 1647, 1648, 1 How. Stat. Section 1647 provides:

‘ ‘ When any person coming from abroad, or residing in any township within this State, shall be infected, or shall lately before have been infected, with the smallpox, or other sickness dangerous to the public health, the board of health of the township where such person may be shall make effectual provision, in the manner in which they shall judge best, for the safety of the inhabitants, by removing such sick or infected person to a separate house, if it can be done without danger to his health, and by providing nurses and other assistance and necessaries, which shall be at the charge of the person himself, his parents, or other person who may be liable for his support, if able; otherwise, at the charge of the county to which he belongs.”

Section 1648 provides:

“If any such infected person cannot be removed without danger to his health, the board of health shall make provision for him, as directed in the preceding section, in the house in which he may be, and in such case they may cause the persons in the neighborhood to be removed, and may take such other measures as they may deem necessáry for the safety of the inhabitants.”

Section 1681, 1 How. Stat., imposes the same duties upon the boards of health of cities and villages as are imposed by sections 1647,1648,1 How. Stat., upon boards of health of townships. These sections make it the duty of boards of health to prevent the spread of the disease, and to do whatever such boards may deem necessary for the safety of the inhabitants. The services rendered by Dr. Palmer were in the line of this duty. Prior to the epidemic his salary had been fixed at $100 per annum. When the epidemic commenced, the board of health of the village directed him to prevent, so far as possible, its spread, and to take care of those infected. For these services he was to be paid the sum of $10 per day, over and above the amount of his salary. This expense was rendered necessary by reason of the epidemic, and, we think, is a charge which the county became liable to pay, under the provisions of sections 1647, 1648. While the boards of health of townships, cities, and villages are required to fix and pay for the ordinary services of the health officer, yet it is apparent that it was the intent of the legislature, by the various provisions of the statute, to cast the burden upon the county for extraordinary services rendered to prevent the spread of contagious diseases, and for the Gare of indigent persons afflicted with such disease. City of Clinton v. County of Clinton, 61 Iowa, 205.

We think the court below was not in error in directing payment of this bill by the board of supervisors. The order so made will be affirmed.

The other Justices concurred.


author: Lonó, C. J.

text:
    J. P. SCRANTON LUMBER CO. v. WAYNE CIRCUIT JUDGE.
    1. Justices oe the Peace—Special Appeals—Notice.
    Under section 10 of Act No. 460, Local Acts 1895, limiting the absolute right of appeal from justices’ judgments in the city of Detroit to cases where the amount involved is not less than §50, but providing that an appeal may be authorized by the circuit court when justice requires it, and further providing that, in all cases where the party against whom such appeal is sought has appeared in justice’s court by an attorney, it shall be sufficient to serve such attorney with notice of subsequent proceedings, it is necessary that the opposite party or his attorney have notice of an application for an appeal, and have an opportunity to be heard before the same is allowed.
    2. Same—Length oe Notice—How Governed.
    Since the statute does not specify the length of time of such notice, the notice required will be governed by the circuit court rules relating to special motions. ■
    . Mandamus by the J. P. Scranton Lumber Company to compel Joseph W. Donovan, circuit judge of Wayne county, to set aside an order allowing an appeal from a justice’s judgment.
    Submitted January 5,1897.
    Writ granted February 18, 1897.

      Trevor & Trevor, for relator.

      Adam E. Bloom, for respondent.
   Lonó, C. J.

On October 9, 1896, relator commenced suit against Edward Frohlich, doing business as the Edward Frohlich Glass Company, before a justice of the peace in the city of Detroit. On the return day both parties appeared by their attorneys. The action was in assumpsit, and the defendant pleaded the general issue with notice of set-off and recoupment. On the trial the relator had verdict and judgment for $3?.19 damages, and $2 costs. This judgment was rendered on November 21, 1896, and on November 24th the defendant applied to the respondent for an order allowing an appeal to the circuit court, tendering an appeal bond. An order was made granting the appeal, and a return made to the circuit court on December 12th following. No notice was given to the relator or its attorneys.of the application for the order of appeal. The appeal having come to the attention of the relator, it "moved the court to set the same aside. This motion being denied, it presented a petition to this court asking a mandamus to compel the respondent to set aside the order.

The respondent has made a return to the order to show cause issued by this court, and accompanies his return with an affidavit made by the defendant in the case, which was presented to him at the time the order for the appeal was made. .That affidavit sets out, in substance, the commencement of the suit in justice’s court, the trial of it, and the rendition of the judgment against the defendant, and avers that “the judgment is most unlawful and unjust, and a wrong to your petitioner.” The affidavit is made by Edward Frohlich, and recites—■

“That J. P. Scranton, at the head of the J. P. Scranton Lumber Company, instructed this deponent that all merchandise sold by deponent to the Casket & Shell Company, of which said Scranton was treasurer, would be paid by said Scranton Lumber Company; that deponent from time to time sold certain merchandise to said Casket & Shell Company, and the payment therefor was received from the Scranton Lumber Company; that said J. P. Scranton was treasurer of both the Scranton Lumber Company and the Casket & Shell Company; that the attorney, one Trevor, was the general manager of the Casket & Shell Company, and director in the other, and both concerns were under the same management; that both institutions are now insolvent, and there is now a balance due petitioner of $5.85, instead of your petitioner being in debt $37.19, as rendered by the court; that the said Casket & Shell Company had no credit whatever with the deponent, and it was only upon the understanding and agreement made with the J. P. Scranton Lumber Company that all merchandise sold to the Casket & Shell Company would be paid by the Scranton Lumber Company that said sales were made; that said sales so made were adopted and ratified by the Scranton Lumber Company, and paid, to the amount of about $53, and a balance of $37.19, for which judgment was rendered, said J. P. Scranton Lumber Company repudiates and refuses to pay, and which deponent avers and maintains is part of its contract made and had between them, and that said judgment is unjust to deponent. ”

The affiant then asks that an appeal be allowed. The respondent returns that—

“Upon presentation to me of the annexed affidavit of Edward Frohlich, and upon reading the same, it became apparent to me, and I was of the opinion, that injustice had been done to said Edward Frohlich Glass Company, and an unjust judgment rendered therein. I did, in pursuance of section 10, Act No. 460, Local Acts 1895, appertaining to justices’ courts of Detroit, and in pursuance of the discretion therein vested in the court, and construing the act that no notice being required, it being sufficient and satisfactory to the court that justice required that said appeal be granted to petitioner, I caused an order to be entered to that effect.”

Section 10 of the act referred to provides:

“No appeal shall be taken from any judgment of any justice of the peace in said city of Detroit, except in the following cases:

“First. When said justice shall disallow any claim in favor of any plaintiff or defendant in any cause in said justices’ courts, in whole or in part,' to the amount of $50.

Second. When such justice shall render a judgment to the amount of $50, exclusive of costs,—in either of which cases the party aggrieved may appeal.

Third. Appeals may be authorized by the circuit court of the county of Wayne when the party making the appeal has been prevented from making a defense upon the merits of the cause in which such appeal is taken by circumstances not under his control, and such appeal may also be authorized when justice requires that such appeal should be authorized; and, in all cases where the party against whom such appeal is sought has appeared in said justices’ courts by an attorney or agent, it will be sufficient to serve such attorney or agent with the notices of all subsequent proceedings in such cause, and all orders made therein by said circuit court may be served on said attorney or agent, and such service shall have the same effect as though made on the party against whom such appeal is taken.”

It is contended by counsel for relator that the respondent had no power to allow the appeal, for the reasons (1) that no notice of the motion or affidavit upon which the hearing was had which culminated in the order aforesaid was served upon the plaintiff or its attorney, as provided by law; (2) that said plaintiff was not present nor represented at said hearing, nor did said plaintiff or its attorney have any knowledge or reason to believe that said hearing was to be had, nor did said plaintiff or its attorney know of said hearing or order until the same had been had. It is not contended that the defendant was prevented from making a defense upon the merits before the justice, and the sole ground upon which the appeal is asked is that justice requires that said appeal should be authorized.

We are of the opinion that, under the third subdivision of section 10 of the act referred to, parties making application for an appeal must give notice to the opposite party by serving upon him, his attorney or agent, the petition and grounds of the motion, and the affidavit upon which the- same is based; and that such opposite party shall have an opportunity to be heard before the circuit court before such appeal is allowed. That subdivision provides for such notice. While it does not provide for the length of time to be contained in the notice, we think the time is governed by the circuit court rules pertaining to special motions.

We think the court below was in error in granting leave to appeal, without notice to the opposite party and an opportunity to be heard. The writ of mandamus must be granted as prayed.

The other Justices concurred.


author: Grant, J.

text:
    LOVERIDGE v. SHURTZ.
    1. Land Contract—Time of Performance—Parol Extension.
    It is competent for the parties to a contract for the conveyance of land requiring the deed to be executed on a specified day to extend the time by parol.
    2. Same—Description—Definiteness.
    A contract for the sale of land, providing for payment by the purchaser of a specified part of the purchase price by the assignment of “ a certain mortgage now held by him for that amount,” is not so indefinite as to be incapable of specific enlorcement, where ownership of the mortgage is admitted by the defendant, and it is clearly identified by the proofs.
    3. Mortgages—Assignment.
    The assignment of a mortgage includes and carries with it the notes to which it is collateral.
    4. Specific Performance—Vendor’s Lien.
    The vendor in a land contract which is repudiated by the vendee is entitled, upon obtaining a decree for specific performance, to a lien upon the land for the unpaid purchase money.

      Appeal from Branch; Yaple, J.
    Submitted January 6, 1897.
    Decided February 18, 1897.
    Bill by Noah P. Loveridge against Fred Shurtz for the specific performance of a land contract. From a decree for complainant, defendant appeals.
    Affirmed.
    Complainant and defendant, on November 11, 1893, entered into a written contract, by which complainant agreed to sell to defendant certain lands. The consideration was $5,000, to be paid by an assignment of a mortgage for $1,900, then owned by. the defendant, and the execution of a mortgage for $3,100 upon the land to be conveyed. The deed was to be executed November 15, 1893, and the assignment and mortgage to be then executed. Complainant had previously contracted to sell this land to other parties. They had failed to carry out the contract. Complainant was, on said 11th day of November, negotiating with his former contractees for a settlement of that contract. On the morning of November 15th he secured a settlement with them, and was in condition to convey a good title by deed to the defendant. On the morning of that day, defendant went to complainant’s office before he had concluded a settlement with the other parties. Complainant gave evidence tending to show that the execution of the papers between him and defendant was mutually postponed. Defendant gave evidence tending to show that the contract was mutually abandoned at that time. A few days after, complainant tendered defendant a deed, and demanded the execution of the contract. This was denied, and the complainant thereupon filed this bill to specifically enforce the contract. The court entered a decree for the complainant, directing the defendant to assign the mortgage, and, if any payments thereon had meanwhile been made, that defendant pay the difference In cash; that he execute the mortgage for the balance; and that, in default thereof, the premises be sold, and a decree entered against the defendant for the deficiency.

      Campbell & Johnson, for complainant.

      Champion & Champion (John B. Shipman, of counsel), for defendant.
   Grant, J.

(after stating the facts). It was entirely competent for the parties to extend the time to execute the contract by the execution of the necessary papers, and, if the testimony of complainant be true, this was done. Possession was not to be delivered until March 1, 1894. The only disputed question of fact was whether there was a mutual abandonment of the contract. The case was heard .in open court. The parties were in direct conflict upon this point, and we see no reason to disagree with the conclusion of the circuit judge, who heard and saw the witnesses.

It is insisted that the mortgage is not sufficiently described in the contract. The description is as follows : “Nineteen hundred dollars on the 15th day of November, 1893, which is to be paid by the assignment of a certain mortgage now held by Shurtz for that amount.” The answer admits the agreement, and that he then owned the mortgage. The proofs clearly identify it. The contention is therefore without force. The assignment of the mortgage would also include and carry with it the notes to which it was collateral.

The learned counsel for the defendant insist that the decree is based upon the idea that the title to the property had passed to the defendant; that, in fact, the title had not passed, but remained in complainant; that complainant can have no lien upon his own property, and therefore the decree cannot be sustained. The decree establishes the existence of the contract, and that the defendant has an interest in the land. A vendor, as well as a vendee, is entitled to specific performance. If the defendant had made large payments, the complainant would be entitled, upon failure to make further payments when due, to file his bill for specific performance, and in the nature of a foreclosure bill, and in such case would be entitled to a sale of the land and decree for deficiency. Clark v. Hall, 7 Paige, 385; Corbus v. Teed, 69 Ill. 205.

It developed upon the hearing that the defendant had sold and assigned the mortgage. The decree permits him to obtain the mortgage, and assign it to complainant, and, in default thereof, to pay the $1,900 in cash, and to execute the mortgage for the residue. If he declines this, then the decree treats the whole as due, and authorizes a sale for the entire amount. This is equitable and right.

The decree is affirmed, with costs.

The other Justices concurred.


author: Moore, J.

text:
    SCHAFER v. HAUSER.
    1, Adverse Possession—Parol Gift.
    The possession of land by a donee under a parol gift, accompanied by a claim of ownership, is adverse to the donor.

    3. Same—Mortgage by Donor—Rights of Mortgagee.
    The execution of a mortgage by the donor subsequent to the entry of the donee does not change the character of the latter’s possession, nor operate to suspend the running of the statute in his favor.
    Error to Wayne; Hosmer, J.
    Submitted January 5, 1897.
    Decided February 18, 1897.
    Ejectment by Nellie Schafer against Engelbert Hauser and others. From a judgment for defendants, plaintiff brings error.
    Affirmed.

      Henry M. Duffield, for appellant.

      James H. Pound, for appellees.

       The authorities as to adverse possession by a donee under a parol gift are marshaled in a note to this case as reported in 35 L. R. A. 835.

   Moore, J.

This is an action of ejectment, brought to recover the possession of certain lands which the plaintiff claimed to own. Bernard Stroh was the owner of these lands prior to 1870. In 1873 he made a mortgage upon these lands and other lands to Michael Markey, which matured in three years. This mortgage was foreclosed, and a sheriff’s deed made upon foreclosure to Ervin Palmer, which deed was dated February 15, 1884. February 18, 1884, Ervin Palmer and wife deeded these lands to the Lion Brewing Company, which company deeded them to the plaintiff in the case, who is a daughter of Bernard Stroh, deceased. The defendant is a brother-in-law of Bernard Stroh, deceased, and had some business relations with him. It is the claim of the defendant that in 1870 Bernard Stroh gave him, by parol, the property in controversy, and put him in possession of it in 1870, and that he had been in the possession of it from that time until the commencement of this proceeding, claiming to be the owner.of it. The case was tried by a jury, who found the claim of the defendant to be true, .and returned a verdict in favor of the defendant. The plaintiff brings error.

The questions involved are purely law questions. It is the claim of the plaintiff that the possession of Hauser, under a parol promise to give him the property, could, not be the foundation of any adverse possession; that Hauser would be only a tenant at will. It is also the claim that, under this parol promise, Hauser was a privy of Stroh, and that, as a privy of the mortgagor, he could not assert adverse possession against the mortgagee.

We think the weight- of authority is against these propositions. In 1 Am. & Eng. Enc. Law, 280, it is said:

‘ Possession of land by a donee under a mere parol gift, accompanied with a claim of right, is an adverse holding as against the donor, which, if continued without interruption, is protected by the statute of limitations, and matures into a good title. That such a parol gift conveys no title, and only operates as a mere tenancy at will, capable of revocation or disaffirmance by the donor at any time before the bar is complete, is immaterial. It is evidence of the beginning of an adverse possession by the donee, which can only be repelled by showing a subsequent recognition of the donor’s superior title.”

This statement of the law is fully supported by Campbell v. Braden, 96 Pa. St. 388; Stewart v. Duffy, 116 Ill. 47; Bartlett v. Secor, 56 Wis. 520; Clark v. Gilbert, 39 Conn. 94; Collins v. Johnson, 57 Ala. 304; Vandiveer v Stickney, 75 Ala. 225. Justice Shaw states the law to be:

A grant, sale, or gift of land by parol is void by the statute. But, when accompanied by an actual entry and possession, it manifests the intent of the donee to enter and take as owner, and not as tenant; and it equally proves an admission on the part of the donor that the possession is so taken. Such a possession is adverse. It would be the same if the grantee should enter under a deed not executed conformably to the statute, but which the parties, by mistake, believe good. The possession of such grantee or donee cannot, in strictness, be said to be held insubordination to the title of the legal owner; but the possession is taken by the donee as owner, and because he claims to be the owner; and the grantor or donor admits that he is owner, and yields the possession because he is owner. He may reclaim and reassert his title, because he has not conveyed his estate according to law, and thus regain the possession; but until he does this, by entry or action, the possession is adverse. Such adverse possession, continued 20 years [the time then required by the Massachusetts statute], takes away the owner’s right of entry. * * * It is enough for the decision of this case that the tenant had the actual, exclusive, and adverse possession of the estate more than 20 years, by which the owner, and all persons claiming under him, were barred of their entry and right of action.” Sumner v. Stevens, 6 Metc. (Mass.) 337, 338.

For cases involving the doctrine of adverse possession, see Bower v. Earl, 18 Mich. 367; Campau v. Lafferty, 50 Mich. 114; Toll v. Wright, 37 Mich. 93; Murray v. Hudson, 65 Mich. 670; Whitaker v. Shooting Club, 102 Mich. 454.

It is the claim of plaintiff that, as she derived title through the foreclosure of the Markey mortgage, her right of action is saved to her by section 8506, 2 How. Stat., which provides that a purchaser at a foreclosure sale shall be vested with ‘ ‘ all the right, title, and interest which the mortgagor had at the time of the execution of the mortgage, or at any time thereafter.” It is her claim that, at the time the mortgage was made, the mortgagor had the legal title to the land, and that the statute of limitations ■ would not run against the mortgagee until the mortgagee had a right of action against the one in possession of the land, and that this would not accrue until the mortgage had been foreclosed and the equity of redemption had expired. It becomes necessary to inquire what right, title, and interest Bernard Stroh had in the land when he made the Markey mortgage. Under the finding of facts by the jury, it is evident the defendant went into possession of the land in 1870, under a parol gift, and, claiming to be the owner, was holding adversely to Bernard Stroh. The latter had the legal title, and the right to assert it against the defendant Hauser, either by entry or by bringing action, within 15 years from the commencement of adverse possession by Hauser. If he failed to take action before the time limited by the statute expired, he lost his right of entry, and Hauser acquired the legal title to the land. This was not done by him or any persons claiming under him. We cannot subscribe to the contention that a mortgagee can assert a right against one in possession of land holding adversely that could not be asserted by the mortgagor if the mortgage had not been made. To do so would be to hold that the owner of the legal title could at any time suspend the running of the statute of limitations by simply executing a mortgage payable at some time in the future.

The other assignments of error have been considered, but it will not be necessary to discuss them here.

Judgment is affirmed.

The other Justices concurred.


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    GUITERMAN v. GERMAN-AMERICAN INSURANCE CO.
    Insurance—Debtor and Creditor.
    A debtor may insure his property for the benefit of his creditor if the insurer consents to the arrangement.
    Error to Chippewa; Steere, J.
    Submitted January 8, 1897.
    Decided February 18, 1897.
    Garnishment proceedings by Ambrose Guiterman and others against the German-American Insurance Company, as garnishee of Harry A/Harrison. From a judgment for defendant, plaintiffs bring error.
    Affirmed.
    Plaintiffs sued one Harry A. Harrison, who was indebted to them for goods sold, and garnished the defendant insurance company. The following are the facts as found by the trial court:
    “On April 3,1893, defendant Harry A. Harrison insured his stock of merchandise, consisting of stationery and jewelry, located in Sault Ste. Marie, Michigan, with the garnishee defendant, for the sum of $750, receiving a Michigan standard policy, which contained the following clause: ‘ Loss, if any, payable to Eaton, Lyon & ' Co., of Grand Rapids, Michigan, as their interest may appear.’ Eaton, Lyon' & Co. were jobbers, and creditors of the defendant Harrison. When he purchased the stock of goods insured under the policy in question, he made arrangements with said Eaton, Lyon & Co. by virtue of which they were to furnish him backing as he wanted it, in the way of merchandise and credits for the same, he to give them, as security therefor, an assignment of the insurance upon his stock of merchandise. At the time this insurance was effected, the arrangement between Eaton, Lyon & Co. and defendant Harrison was stated to the agent of the insurance company, who was consulted in relation to it. After consultation with the agent of the garnishee defendant, the policy was made out in the form and with the provisions stated, and was sent to Eaton, Lyon & Co. for the purpose of carrying out the arrangement between • them and defendant Harrison as to the credits and security. A loss by fire occurred upon the property insured, which was subsequently satisfactorily adjusted between parties in interest, which adjustment showed a liability upon said policy, due from the garnishee defendant to whoever was entitled to it, of $375.72. At the time of the fire and adjustment of loss,' defendant Harrison owed to Eaton, Lyon & Co., for merchandise purchased of them, about $3,000.”

      E. S. B. Sutton, -for appellants.

      H. M. Oren, for appellee.
   Grant, J.

(after stating the facts). It is contended that Eaton, Lyon & Co. had no insurable interest in the property. It is true that a general creditor cannot insure the property of his debtor for his own benefit without the assent of the debtor and the insurer. There is, however, no reason why a debtor may not insure his property for the benefit of his creditor.

“ It is not necessary that the assured should have either a legal or equitable interest, or, indeed, any property interest, in the subject-matter insured. It is enough if he hold such a relation to the property that its destruction by the peril insured against involves pecuniary loss for him or those for whom he acts.” 1 Wood, Eire Ins. § 281.

In Bates v. Equitable Insurance Co., 10 Wall. 33, Justice Miller used this language:

“Now, it is a'well-known and frequent thing in insurance business for a person to insure his life or his property, and either in the policy itself, or by indorsement at the time it is made, or by subsequent indorsement, to which the consent of the company is generally required, to direct the loss to be paid to some third party. And this is done in language similar, if not identical, with that used in this case. It is a mode of appointing that the loss of the party insured shall be paid by1 the company to such third person. This transaction is a very common mode of furnishing á species of security by a debtor to his creditor, who may be willing to trust to the debtor’s honesty, his skill, and success in trade, but who requires indemnity against such accidents as loss by fire or the perils of navigation. The property of the debtor at risk, being thus insured for the benefit of the creditor, gives him this indemnity.”

While the precise point now before us was not involved in that case, yet the language was not merely obiter dicta, but was the deliberate determination of the learned justice who wrote the opinion, and the other members of the court. It enunciates the principle governing this and other cases. The precise point was involved in A. Roos & Co. v. Insurance Co., 27 La. Ann. 409, and the validity of such a policy sustained. See, also, Clay Fire & Marine Ins. Co. v. Huron, etc., Manfg. Co., 31 Mich. 346, 355. There is no good reason why a party desiring to purchase goods upon credit may not insure his property for the benefit of his creditor, when the insurer agrees to such arrangement.

The judgment is affirmed.

The other Justices concurred.


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    MILLIGAN v. SLIGH FURNITURE CO.
    1. Evidence—Documents—Admissibility.
    An offer to admit the effect of written documents does not render them inadmissible in evidence.
    2. Same—Letters—Objections.
    The admission in evidence of a letter containing irrelevant statements is not erroneous, where the only objection offered is to the letter as a whole, and a portion of its contents is admissible.
    3. Traveling Salesmen—Contract oe Employment—Disregard of Instructions—Evidence.
    While the discharge of a traveling salesman may be justified by his failure to obey instructions with reference'to places to be visited and the manner of making sales, a disregard of instructions in these particulars cannot be inferred from the fact that the sales did not fulfill the expectations of his employer, and evidence to that effect should be excluded in an action by him for a wrongful discharge.
    4. Same—Breach of Contract—What Constitutes.
    The action of a traveling salesman in leaving his designated route on Saturday night, to spend Sunday with his family, does not, as a matter of law, constitute a breach of the employment contract justifying his discharge; especially if it does not appear but that he returned to his route in time to pom-ply with his contract.
    5. Same—Custom.
    A custom allowing traveling salesmen the privilege of acting as retail salesmen during the holiday trade, and retaining their earnings, does not entitle a traveling salesman to retain an amount so earned, where his contract made no provision therefor, and his employer is not shown to have been aware of the custom.
    6. Employment Contract—Wrongful Discharge—Burden of Proof.
    In an action for a wrongful discharge from employment, the burden of showing good and sufficient cause for such discharge rests upon defendant, after plaintiff has proved,the contract, and its performance by him up to the time of his dismissal.

      Error to Kent; Grove, J.
    Submitted January 5, 1897.
    Decided February 18, 1897.

      Assumpsit by John K. Milligan against the Sligh Furniture Company for the breach of a contract of employment. From a judgment for plaintiff, defendant brings error.
    Modified and affirmed.
    Plaintiff entered into a written contract with the defendant, by which he agreed to act as traveling salesman for it for the year 1895, at an agreed salary of $1,750, payable monthly, and travel over such territory and at such times as it might designate, and to sell its goods as instructed. In September defendant wrote plaintiff a letter saying that they were not pleased with the way in which he had made his last trip; that they thought he had gone over the territory thus far too hastily to do it profitably; and that he had disregarded their instructions. The letter recognized the difficulty of getting orders, on account of the dullness of the trade, and closed by telling him that, under the circumstances, they believed it to be for the interests of both to part company, and stated:
    “We feel disposed to allow you pay for the next 30 days, with the privilege of quitting immediately, and securing other employment. * * * If the above is satisfactory, you can let us know, and send in our photographs, order book, etc., and we will pay you up to October 1st.”
    Plaintiff, who was then in Cleveland, Ohio, where he lived, replied September 6, 1895, detailing his side of the case, insisting that he had performed his part of the contract, and declining to accept the proposition. The defendant replied to this September 7th, in which it said: “If you do not think our proposition ‘just, right, or equitable,’ as you state, please write us what you do think is right, under the circumstances.” To this plaintiff replied September 9th, stating that, since the receipt of the letter of September 4th, he had d.evoted his entire time, attention, and energy towards securing other employment, but could not secure any. He closed the letter thus: “Until such time as I can see something tangible by way of an opening, I will not be able to say what would be a just compromise. If you can put me on track of a position, I will gladly do all in my power to secure it at once.” On September 17th, defendant wrote, stating: “ Your salary with us will cease one month from date.” This letter stated that plaintiff had repeatedly disregarded instructions given him. On October 2d, defendant wrote plaintiff, authorizing him to make a draft on it for $471.98, which it would pay, if to the draft were attached a receipt in full for all demands. This the plaintiff declined, and, after the expiration of the year, brought this suit to recover the balance due him when discharged, and for his services after discharge to the close of the year. He recovered verdict and judgment for the full amount.

      Mitchell J. Smiley and Frederick W. Stevens, for appellant.

      Fletcher & Wanty, for appellee.
   Grant, J.

{after stating the facts). Several letters were introduced, written by the plaintiff to the defendant after his discharge. The purpose of these letters was to show his willingness to continue in the performance of his contract. Defendant’s counsel offered to admit that the plaintiff tendered performance, and objected to the admission of the letters as irrelevant and immaterial. The offer to admit the effect of written documents does not render them inadmissible. The letters did contain certain statements that were immaterial. Had counsel objected to these parts of the writing, they should have been excluded. But his objection went to the admission of the letters as a whole. We therefore think there was no error in admitting them.

Defendant sought to show by its witness the amount of business that plaintiff did during one of his trips East. This was objected to. No special damages were claimed by the declaration, and counsel stated that they were not seeking to recoup damages, but insisted upon the right to show this as a ground for discharge. In reply to a question by the court, counsel for the defendant stated:

“We cannot show that, if he had gone to a certain town, he would have got orders. That is an impossibility, from the nature of things. But we can show that his whole business was trivial, as compared with the time that he had taken and the expense that he had been to us; and in that connection it must bear upon the question - whether we had just cause for his discharge.”

We think the ruling of the court was correct. If the plaintiff refused or neglected to carry out the instructions of the defendant, this would justify his discharge, whether damage resulted or not. It is claimed by the defendant that the plaintiff did not visit the places or sell goods according to instructions. If this were so, plaintiff could not recover. But it was not competent to infer a violation of the contract because sales did not fulfill the expectations of defendant.

While on the route in western New York and Pennsylvania, under instructions from thé defendant, plaintiff left the route one Saturday afternoon or evening, and went to Cleveland, to spend Sunday with his family. He wrote to defendant the day before that he would go to Cleveland Saturday night; that he had about $12, which would be sufficient to carry him as far as Lockport, N. Y., provided they wished him to start out at once; but he advised waiting a while, till merchants had had some trade. He requested defendant to wire him on receipt of the letter if it wished him to start out at once. The reply to this letter was that of September 4th, above given. The defendant requested the court to instruct the jury that if plaintiff left his route, and went to the city of Cleveland, contrary to the terms of his directions, instead of following the route laid out for him by defendant, the defendant had good and sufficient ground for discharging him from its employ. It was not a violation of the contract for plaintiff to leave Saturday night, to spend Sunday with his family, in Cleveland. It is not shown that this seriously interfered with his returning to the desig- ^ nated route in time to comply with his contract.

Complaint is made that the court did not give to the jury certain specific requests. We think they are substantially covered by the general charge, which stated fairly and fully the claims of the plaintiff and of the defendant. After so stating them, he instructed the jury that, if these breaches of the contract were established by the evidence, the defendant was justified in discharging the plaintiff.

The court instructed the jury that the burden of proof rested upon the defendant to show by a fair preponderance of evidence that it had good and sufficient cause to discharge the plaintiff. It is- insisted that the burden rested upon the plaintiff, and not upon the defendant. The plaintiff gave evidence tending to show that he had performed the contract up to the time of his discharge. The burden of proof was, of course, upon him to prove his contract and its performance up to that time. This made out his case. The burden then shifted to the defendant to show a legal excuse for his discharge. The defense was an affirmative one, like that of payment or satisfaction of a debt. In support of their contention, counsel cite Ingalls v. Eaton, 25 Mich. 32; Berringer v. Iron Co., 41 Mich. 305; Stahelin v. Sowle, 87 Mich. 124. In Ingalls v. Eaton it is held that proof of the covenant of seisin in a case where breach is assigned does not cast the burden upon the defendant of proving that he conveyed such a title as he warranted. In Berringer v. Iron Co. plaintiff sued upon implied assumpsit for work and labor. The defense was that the work was done under a special contract, and the burden was properly held to be upon the plaintiff throughout. In the case before us the contract is admitted. Defendant could only relieve itself from liability by a discharge for cause. In Stahelin v. Sowle, which in its facts somewhat resembles this c-aSe, it was held that ‘ ‘ the burden of showing a sufficient cause to warrant him in rescinding the contract was upon the defendant.” We therefore find no error in this instruction.

Plaintiff earned $58 in December, as retail salesman. He testified that it was a custom of the trade to allow this privilege to traveling men during the holiday trade. He had no agreement with the defendant to that effect, and there is no testimony that the defendant was aware of this custom, if such existed. The court instructed the jury that the plaintiff was entitled to retain this amount. This was error. Pennell v. Transportation Co., 94 Mich. 247, and authorities there cited. _This amount must be deducted from the judgment, and judgment entered in this court for the amount due, less this sum. Neither party will recover costs.

The other Justices concurred.


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    FINLAY BREWING CO. v. PROST.
    1. Attachment—Dissolution—Fraudulent Concealment of Property—Evidence—Liability as Indorser.
    The defendant in an attachment suit based upon the alleged concealment of property with intent to defraud creditors cannot, in proceedings for the dissolution of the writ, show that certain judgments, an attempt to defeat the collection of which has been shown by the plaintiff, were rendered against him as accommodation indorser, since the obligation to pay such debts is the same as to pay debts otherwise contracted.
    2. Same.
    Evidence of the amount of money paid by defendant to plaintiff during their business dealings is inadmissible on the question of fraudulent concealment.
    3. Same—Offer of Settlement.
    The fact that plaintiff’s case is based on the fraudulent conduct of defendant does not render admissible evidence of an attempt by plaintiff to settle or compromise his claim.

      Certiorari to Ingham; Wisner, J., presiding.
    Submitted January 13, 1897.
    Decided February 18, 1897.
    Attachment proceedings by the Finlay Brewing Company against Christian Prost. Plaintiff brings certiorari to review an order dissolving the writ.
    Reversed.
    The plaintiff brought suit to recover a debt of $5,865, due for goods sold and delivered. Suit was commenced by the writ of attachment. In the affidavit, as a basis for the writ, plaintiff’s agent deposed that the defendant “had fraudulently contracted the debt, and that he had assigned, disposed of, and concealed, and was about to assign, dispose of, and conceal, some portion of his property, with intent to defraud his creditors.” The officer, under the writ, seized personal property appraised at $3,-756.38. Defendant promptly moved for a dissolution of this attachment before a circuit court commissioner, who dissolved it. Plaintiff thereupon appealed to the circuit court, under 2 How. Stat. § 8030. The case was there tiled by a jury, who found for the defendant.

      Jay P. Lee and M. V. Montgomery, for plaintiff.

      Black & Dodge, for defendant.
   Grant, J.

(after stating the facts). One of the learned counsel for the plaintiff insists before this court that concealment by defendant of his property with intent to defraud his creditors was conclusively shown by the evidence, and that the court should have directed a verdict for the plaintiff. This position was not taken before the trial court. It appears to have been there conceded that the testimony w^,s in conflict, and was, therefore, a proper question for the jury. In this view we concur.

Plaintiff introduced in evidence records of certain judgments against the defendant, executions issued thereon, and the testimony of the officers that defendant told them, when they went to him to collect the judgments, that he had no property subject to execution; and also introduced evidence to show that at that time he was the owner of a large amount of personal property subject to execution. Defendant was permitted to show, under objection and exception, that these judgments were rendered against him on his liability as an accommodation indorser of certain notes, and that he had not been sued upon any other debts. We think this testimony was incompetent. Defendant was under the same obligation, legally as well as morally, to pay his debts contracted as indorser that he was to pay debts otherwise contracted. He had no more right to make a false statement as to his property, or to conceal it, in the one case than in the other. This testimony was therefore incompetent, and should have been excluded.

Defendant was also permitted to give in evidence the amounts of money which he had paid to plaintiff during his dealings with it. Upon the allegation that' defendant had fraudulently contracted the debt this evidence may have been competent, and it is not clear from the record that this claim was abandoned at the time the testimony was introduced. It was abandoned when the case was finally submitted. In view of a new trial, we think it proper to say that this testimony had no bearing upon the question of 'concealment of his property, and should have been excluded.

Offers of settlement should have been excluded. Defendant’s counsel defend the admission of this testimony upon the ground that it had a bearing upon the allegation of fraud in contracting the debt. We are unable to agree with this contention. Parties have the same right to attempt the settlement and compromise of claims based upon fraud as those based upon other relations, and the law does not permit their rights to be affected by negotiations for settlement or offers of compromise. „

The judgment is reversed, and a new trial ordered.

The other Justices concurred.