text:
    PEOPLE v. VOGT.
    Criminal Law — Perjury—Information—Necessary Averments —Amendments.
    An information for perjury averred that it was a material question whether, in a bill for a divorce, respondent had been, for two years preceding the filing of the bill, a resident of this State; that respondent at the trial, upon oath, in answer to a question as to how long he had lived in the State, replied: “About two years and a couple of months.” Whereas, in truth and in fact, he had not so resided for such time preceding the filing of such bill. Held, that the information not averring the date of the filing of the bill, and not negativing the truth of the statement as to the time he had lived in the State at the time of the trial, was fatally defective; and the information not being amendable, respondent was entitled to his discharge.
    Exceptions before judgment from the recorder’s court of Detroit; Phelan, J.
    Submitted April 29, 1909.
    (Docket No. 116.)
    Decided May 25, 1909.
    G. Edward Vogt was convicted of perjury.
    Reversed, and respondent discharged.

      William D. Ellsworth (Vernon H. Burke, of counsel), for appellant.

      Philip T. Van Zile, Prosecuting Attorney, and Fred H. Aldrich, Assistant Prosecuting Attorney, for the people.
   Montgomery, J.

The respondent was convicted under an information for perjury which charged that on the trial of a certain divorce case in the circuit court in chancery of "Wayne county, in which respondent was complainant and Elizabeth Vogt defendant, it became and was—

“A material question whether the said complainant, G. Edward Vogt, was for the two years preceding the filing of his said bill of complaint a resident of the city of Detroit, county of Wayne, and State of Michigan. That the said G. Edward Vogt, being so sworn as aforesaid, contriving and intending to prevent the due course of law and justice, then and there, on the trial of said issue, upon his oath as aforesaid, falsely, corruptly, knowingly, wilfully, and maliciously, before the said Honorable Joseph Donovan, circuit judge of the aforesaid, did depose and swear, among other things, in substance and to the effect following, in reply to the question, ‘ Where do you (meaning the said G. Edward Vogt) live?’ the following, ‘In Detroit,’ and in reply to the question, ‘For how long ?’ (meaning in Detroit) did reply the following, ‘About two years and a couple of months.’ Whereas, in truth and in fact the said G. Edward Vogt did not reside in the city of Detroit, county of Wayne, and State of Michigan, preceding the time of the filing of the said bill of complaint, two years and a couple of months, nor two years.”

The question is whether this information stated an offense. The information contains no averment as to the date of the filing of the bill of complaint in the chancery case. The only averment as to what constituted the material question is that it was material as to whether the complainant was a resident for two years preceding the-filing of his bill of complaint. The testimony he is charged with having given related to a period of two years prior to the giving of such testimony. The truth of this testimony is not negatived; the only averment in that regard being that in truth and in fact the said G. Edward Vogt was not a resident of the State of Michigan for two years preceding the time of the filing of his bill of complaint. It is clear, therefore, that there is no specific charge of the materiality of the testimony which he in fact gave, nor is there a direct averment of its falsity. Except where the materiality of it sufficiently appears from the oath itself, the materiality of that part of the oath in which perjury is assigned should be averred. The general averment that “it became and was material to ascertain the truth of the matter hereinafter alleged to have been sworn to ” is held not to have been a good averment of materiality. It is also essential that the averment of perjury shall consist of a special averment negativing the oath, or some part of it. Merely saying that the defendant swore falsely so and so would be bad. Archbold’s Criminal Pleading, Evidence, and Practice (23d Ed.), p. 1055 et seq.; Commonwealth v. Compton, 18 Ky. Law Rep. 479. See, also, Enders v. People, 20 Mich. 233.

Where the information fails to aver facts constituting an offense, it is not subject to amendment. Byrnes v. People, 37 Mich. 515; People v. Gaige, 26 Mich. 30.

The conviction is set aside, and the prisoner discharged.

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


source: Caselaw Access Project

author: Brooke, J.

license: Public Domain

text:
    ARMSTRONG v. STEARNS.
    1. Limited Partnerships — Statutes Governing — Construction.
    The law governing corporations, rather than that governing copartnerships, is applicable to a limited partnership organized under chapter 160, 2 Comp. Laws. Rouse, Hazard & Co. v. Detroit Cycle Co., Ill Mich. 251.
    2. Same — Contracts—Bills and Notes — Holders in Due Course.
    Where one of the managers of a limited copartnership, organized for the purpose of buying and selling merchandise, had, from its organization, been accustomed to make contracts and execute notes in excess of the limit of $500 fixed by 2 Comp. Laws, § 6083, without express written authority from the majority of the members, but with the knowledge of the other managers and of some of the stockholders, the obligations being paid without objection at maturity; similar unpaid notes in excess of $500 held by indorsees in due course, are valid claims against the association, as if originally authorized. Citizens’ Sav. Bank v. Vaughan, 115 Mich. 156, distinguished.
    3. Bills and Notes — Bona Fides — Negligence'.
    Bad faith, and not gross negligence alone, must be shown to deprive a holder in good faith for value, of his rights as such.

      4. Same — Evidence.oe Bad Faith.
    Gross carelessness in such cases is merely evidence of bad faith.
    5. Same — Aooommodation Notes — Usage—Estoppel.
    . Accommodation notes executed by one manager, without express authority under such statutory provisions, through a long course of dealings known to the managers and others interested in the copartnership, are valid in the hands of purchasers in good faith, who may rely on the presumption that the necessary authority had been given.
    Appeal from Ingbam; Wiest, J.
    Submitted January 20, 1908.
    (Docket No. 45.) ( Docket No. 92.)
    Reargued February 25, 1909.
    Decided May 26, 1909.
    Petition by' Arthur B. Armstrong and others against Justus S. Stearns and others for the dissolution of the Central Implement Company, Limited, and the appointment of a receiver. The Detroit Trust Company was appointed receiver, and on its application certain claims of creditors were referred to a commissioner. From a decree confirming the award of the commissioner, the City National Bank appeals.
    Affirmed.

      Harry E. Hooker (T. Rogers Lyons, of counsel), for appellant.

      E. C. Chapin, for claimants First National Bank of Marquette and the American Appraisal Co.

      Bundy, Travis & Merrick and George A. Farr, for claimant State Bank of Michigan.

      Aaron A. Ferris, for claimant Field-Evans Iron Co.

      Cooley & Hewitt, for claimants Welles and others.

      George A. Farr, for claimant National Bank of Grand Haven.

      Stellwagen & MacKay, for claimant Prouty & Glass Carriage Co.

      Seymour H. Person, for claimant Cobe & McKinnon.

      Weadock & Weadock, for claimant Wickes Bros.

      Charles F. Hammond, for claimant Lansing State Savings Bank and others.

      Simmons, Mitchell & Irving, for claimant London Machinery Co.

      Thomas, Cummins & Nichols, in pro. per. and for the receiver.
   Brooke, J.

The Central Implement Company, Limited, was organized in February, 1902, under chapter 160 of the Complied Laws of 1897, as amended, with a capital stock of $300,000, $200,000 of common and $100,-000 of preferred stock. It carried on the business of buying and selling agricultural implements at wholesale. The record shows that said association had a board of managers, and that Mr. A. B. Armstrong was treasurer of the association, and that the management and conduct of the business of the association, which was an association for the purpose of buying and selling merchandise, was practically in his hands; he being assisted from time to time by Mr. W. T. Webb and Mr. I. T. Hurd, both members of the board of managers, and perhaps by others. Mr. Hurd had, by resolution of the board, charge of affairs during Mr. Armstrong’s absence. Regular, meetings of the board of managers were held from time to time, at which the affairs of the association were discussed and passed upon.

The evidence further shows: That Mr. Armstrong, in his management of the affairs of the Central Implement Company, Limited, had for some time prior to its failure been purchasing merchandise from E. Bement’s Sons, a manufacturing corporation of Lansing, Mich., which company went into the hands of a receiver on October 24, 1904. That a large amount of the goods so purchased or contracted for had not at the time of the failure of E. Bement’s Sons been delivered to said Central Implement Company. Notes of the Central Implement Company, Limited, however, signed by Mr. Armstrong alone as its treasurer, or at his orders, were given to E. Bement’s Sons from time to time and due at different dates, for the entire merchandise so contracted for, part of which notes were afterwards paid by said Central Implement Company. The evidence shows that, shortly before the failure of E. Bement’s Sons, an arrangement was entered into between Mr. A. O. Bement, president of the E. Bement’s Sons, and Mr. Armstrong, treasurer of the Central Implement Company, Limited, whereby said Central Implement Company, Limited, should make and deliver to said E. Bement’s Sons, or to North-Molitor Manufacturing Company, a trading name used by it, certain notes for its accommodation, but without consideration, which arrangement was carried out, and notes to the amount of $22,000 were so made by the Central Implement Company, Limited, by Mr. Armstrong, its treasurer, alone, although with the knowledge and after discussion of the matter with other members of the board of managers, and delivered to E. Bement’s Sons, or the North-Molitor Manufacturing Company, all of which notes, whether given for merchandise delivered or to be delivered or accommodation notes, were at once discounted by E. Bement’s Sons for value with a large number of banks throughout the State; a' small part of the proceeds, about $2,600, of the so-called ‘ ‘ accommodation notes,” being turned overby E. Bement’s Sons to the Central Implement Company, Limited. On October 10, 1905, the Central Implement Company, Limited, having become insolvent, a bill was filed by a majority of its managers, in which proceeding they sought, a dissolution. At that time there was outstanding paper of the class above described between $45,000 and $50,000, the original amount issued of over $50,000 having been reduced by payment from time to time by the Central Implement Company, Limited, up to the time it went into the hands of a receiver.

The evidence further shows that no one knows, nor can it be ascertained from the notes themselves or the books of the Central Implement Company, Limited (a large number of the notes being renewals), which of said notes were given for value and which are so-called “ accommodation notes ” for which no consideration passed. ' A receiver (the Detroit Trust Company) having been appointed, and it, being in doubt as to the legality of this paper and other contracts in so far as the obligation of the Central Implement Company, Limited, was concerned, petitioned the court that an order be made that certain claims of this nature listed under so-called “Schedule D ” in its petition should be submitted to a commissioner, and that proofs be taken and their legality passed upon by said commissioner. The claim of the appellant, the City National Bank, had been theretofore allowed by the court without question or comment. Upon the hearing before the commissioner the preferred stockholders of the Central Implement Company, Limited, by counsel, raised objection to this so-called “Bement paper” and other contracts of a similar character where the evidence of the claim was signed by one manager only and was in excess of $500. Later the objection to the allowance of these claims on the part of the stockholders was withdrawn, when the appellant insisted upon its right to raise the questions on its own behalf and on behalf of certain other creditors standing in the same relation to the fund as that occupied by it. The commissioner made a report allowing the claims of the various banks upon the so-called “Bement paper” and other claims evidenced by the obligations signed by Armstrong alone, and duly filed his report thereon. The appellant excepted to said report, which exceptions were overruled by the circuit judge, and the case is now here for the purpose of reviewing this ruling. After the first argument of the case in this court, it was remanded to the circuit court for the purpose of taking testimony touching the date of the insolvency of the Central Implement Company, Limited, and to ascertain in what manner and at what time the demand of the appellant, the City National Bank, originated, and in what form it was originally and has since been evidenced. That supplemental record is now before us.

The section of the statute relied upon by the appellant is as follows:

“ No debt shall be contracted nor liability incurred for said association except by one or more of said managers, and no liability for an amount exceeding five hundred dollars, except against the person incurring it, shall bind the said association unless reduced to writing and signed by at least two managers, except in case of associations for the purpose of buying and selling merchandise, a majority of the interest in such association may select one of the managers each year to purchase merchandise required in the business of the association, make contracts, and sign notes for the same: Provided, Such power given in writing fully setting forth the extent to which such manager may make purchases and contract debt for the association, which shall be signed by a majority of the members in number and value of their interest, and such power of purchasing and contracting debts shall be strictly limited to the ordinary business of the association.” 2 Comp. Laws, § 6083.

Appellant urges that, inasmuch as all of the Bement paper, so-called, was signed by Armstrong alone, and inasmuch as many of the contracts for purchase of goods from other parties were signed by Armstrong alone, even conceding the bona tides of the present holders of this paper, and whether it represents goods furnished to the-defunct company or money advanced to it, the paper is absolutely void, citing Citizens' Sav. Bank v. Vaughan, 115 Mich. 156. It is the appellant’s attitude that it makes no difference whether the holders of this paper in good faith parted with their money or property for the same to the defunct company, or, on the other hand, whether the defunct company received no consideration for the paper. According to its contention it is all not merely voidable but void, and, being void, it is further its contention that it could not, by any act of the officers of the defunct partnership association, have been validated. In view of the contention made, it becomes important to examine carefully the decision in the case of Citizens' Sav. Bank v. Vaughan, supra. In that case the Michigan Mortgage Company, a copartnership limited, was organized for the purpose of dealing in mortgage securities, etc., and had in its dealings accepted two notes, and had indorsed the same in the name of the company by the signature of one of its managers only, and had discounted them with the plaintiff bank, receiving the money thereon. The action was to recover from the indorsers who had sold the paper which the bank then held, and not from the makers who were primarily liable on the same. Under no circumstances, the copartnership limited not having been organized for the purpose of buying and selling merchandise, could the notes there before the court, signed by one manager only, have been validated, under the statute. Section 6083, supra. They were void upon their face. A part of such section 6083, however, reads as follows:

“Except in case of ássociations for the purpose of buying and selling merchandise, a majority of the interest in such association may select one of the managers each year to purchase merchandise required in the business of the association, make contracts and sign notes for the same. Provided, Such power given in writing fully setting forth the extent to which such manager may make purchases and contract debt for the association, which shall be signed by a majority of the members in number and value of their interest, and such power of purchasing and contracting debts shall be strictly limited to the ordinary business of the association.”

As pointed out above, the Central Implement Company, Limited, was organized for the purpose of buying, selling, and dealing in merchandise, and did do a very large merchandising business, and as such was authorized by the method pointed out in the statute under which it was organized, just quoted, to select one of its managers to purchase merchandise required in the business of the association, make contracts, and sign notes for the same, even in excess of $500. No such authority was ever given to Mr. Armstrong or anyone in the manner pointed out by the statute. The question arises then: Would the fact that such authority might have been given, although in fact it was not, make the notes in question invalid in the hands of a bona fide purchaser for value? The record shows that, during the entire life of the association, a period of some three years and a half, Mr. Armstrong was permitted by his fellow managers and associates in the enterprise to exercise the authority which the statute says might be exercised by one manager, in the manner pointed out therein. He had authority to execute this paper and sign it by his name alone, if authorized to do so by the association. During the period from February, 1902, to October, 1905, literally hundreds of notes such as those in question were made by Mr. Armstrong or under his direction, signed by one manager only. Contracts other than notes for amounts exceeding $500 in value for the purchase of goods were habitually made by Mr. Armstrong acting alone. During all this period the notes given in settlement for the purchases so made, until the insolvency of the implement company, were paid and acknowledged by the association; and it appears that all of the managers of the association were aware of this course of dealing, and at least part of the stockholders likewise had knowledge that this was the course of business. Under these circumstances, had the good-faith purchaser of the paper in question, whether he acquired it by parting with money or goods therefor, the right to assume from the long course of dealing above pointed out, without objection from anyone to the public, that the authority, which under the statute might have been given to Mr. Armstrong to make such paper, had in ■ fact been given ?

It is well to premise this discussion by the' statement that this court has determined that the law governing corporations, rather than the law governing copartnerships, is applicable to a partnership limited such as the insolvent implement company was. Rouse, Hazard & Co. v. Detroit Cycle Co., 111 Mich. 251 (38 L. R. A. 794); Staver & Abbott Manfg. Co. v. Blake, 111 Mich. 282-289 (38 L. R. A. 798),

“Actual mala fides must be shown to the satisfaction of the jury to deprive a holder for value of the character of bona fide holder, and negligence in not inquiring into facts which ought to have put him on inquiry is not sufficient. Gross carelessness, even on the part of the holder, is not conclusive of notice, though it is, of course, perfectly competent evidence to go to the jury on the question of bad faith. So that in case of bills and notes the purchaser for value is not bound, at his peril, to be on the alert for circumstances which might possibly excite the suspicions o£ a wary, vigilant man. He does not owe to the party who put negotiable paper afloat the duty of active inquiry to avert the imputation of bad faith, and the speculative issue of his diligence or negligence does not enter into the question. The question is one simply of good faith in the purchaser; and, unless the evidence makes out a case upon which the jury would be authorized to find fraud or bad faith in the purchaser, it is the duty of the court to direct a verdict for the holder.” Norton on Bills and Notes (3d Ed.), p. 320.
“It has been held that, where the charter prescribes that corporate contracts shall be signed by certain officers, a contract that is signed by only a part of them is not enforceable, even in bona fide hands. But the harshness and the inconvenience of this rule have caused it to be widely departed from and practically abandoned. Acts done by a corporation, which presuppose the existence of other acts to make them legally operative, are presumptive proofs of the latter. A mortgagee is not bound to inquire into the observance of the rules and regulations of the company relative to the call of meetings. Where the seal of the company has been affixed to a mortgage by the secretary, the mortgagee need not inquire whether a quorum of the directors was present at the meeting and authorized the mortgage, nor whether the secretary was duly authorized to affix the seal; the court upholding the mortgage, although a quorum was not present when it was authorized. * * * The Supreme Court of the United States lays down the rule as follows:
“ ‘ One who takes from a railroad or business corporation, in good faith and without actual notice of any inherent defect, a negotiable obligation issued by order of the board of directors, signed by the president and secretary in the name and under the seal of the corporation, and disclosing upon its face no want of authority, has the right to assume its validity, if the corporation could, by any action of Its officers or stockholders, or both, have authorized the execution and issue of the obligation.’ Louisville, etc., R. Co. v. Trust Co., 174 U. S. 552, 573.”

3 Cook on Corporations (6th Ed.), § 725.

“A bona fide purchaser of paper assets formerly owned by a corporation and indorsed by the proper officers thereof, may assume that the indorsement was duly authorized, and is not bound to search the corporation books for such authority before completing his purchase.” Walker v. Railway Co., 47 Mich. 338.
‘ ‘ Negotiable paper of a corporation is valid in the hands of a bona fide holder, if it appears on its face to have been duly issued by the corporation in conformity to the provisions of its charter. If the corporation has power under any circumstances to issue such paper, a bona fide holder has the right to presume, although it may be that the note was unauthorized for the purpose for which it was made, that it was issued under the circumstances which gave authority. ” Genesee County Sav. Bank v. Barge Co., 52 Mich. 164, 438.
“If the contract can be valid under any circumstances, an innocent party in such a case has a right to presume their existence, and the corporation is estopped to deny them.” Merchants’ Bank v. State Bank, 10 Wall. 604.
“ Contracts of a corporation which are not contrary to the express provisions of its charter are presumed to be within its powers.” Gorder v. Canning Co., 36 Neb. 548.
See, also, McLellan v. Detroit File Works, 56 Mich. 579.
“The guaranty by the railroad company of the bonds was not ultra vires in the sense of being outside of the corporate powers of the former company, for the statute of 1883 expressly authorized such a company to execute such a guaranty, and its board of directors to direct its execution by the company. The statute indeed made it a prerequisite to the action of the board of directors that it should be upon the petition of a majority of the stockholders, but this was only a regulation of the mode and the agents by which the corporation should exercise the power granted to it. The distinction between the doing by a corporation of an act beyond the scope of the powers granted to it by law, on the one side, and an irregularity in the exercise of the granted powers, on the other, is well established, and has been constantly recognized by this court. * * * One who takes from a railroad or business corporation, in good faith, and without actual notice of any inherent defect, a negotiable obligation issued by order of the board of directors, signed by the president and secretary in the name and under the seal of the corporation, and disclosing upon its face no want of authority, has the right to assume its validity, if the corporation could, by any action of its officers or stockholders, or of both, have authorized the execution and issue of the obligation.” Louisville, etc., B. Co. v. Trust Co., 174 U. S. 552.
“ The directors intrusted the entire management of the bank to the cashier, Mr. Bradley, and therefore neither the bank nor its receiver can now be heard to deny the authority of the cashier to do any of those acts which it or its directors might lawfully authorize the cashier to do. * * * In such case the authority of the cashier would be presumed when the paper is in the hands of a bona fide holder for value without notice of any defect in his authority.” Davenport v. Stone, 104 Mich. 521.
“ While the secretary of a corporation has not, merely by virtue of his office, authority to negotiate notes held by the corporation, it is well settled that if such an officer has been permitted by the directors to negotiate notes, or if the company acquiesce in and receive the benefits of such acts, a purchaser of a particular note, familiar with such facts, may assume the officer’s authority, and the corporation will not be permitted to set up want of authority against such purchaser.” Commercial Nat. Bank v. Brill, 37 Neb. 626.

See, also, County of Gloucester Bank v. Colliery Co., L. R. 58 Chan. Div. 633 (1895); Biggerstaff v. Rowatt's Wharf, L. R. 61 Chan. Div. 93 (1896); Mechem on Agency, § 84.

The contention is made that, a part of this paper being accommodation paper, no consideration having passed to the Central Implement Company, Limited, from E. Bement’s Sons for the same, no recovery can be had thereon. It has been pointed out, however, that the accommodation paper was treated by the association exactly as was the paper given for value. It was recognized from time to time, renewed, and in part paid by the maker, and no question is raised as to the fact that the present holders thereof purchased the same in good faith and without notice of lack of consideration therefor. Under those circumstances, we are of opinion that the failure of consideration as to part of this paper cannot be urged against its validity. See Thatcher v. West River Nat. Bank, 19 Mich. 196; Polhemus v. Ann Arbor Sav. Bank, 27 Mich. 44; Cristy v. Campau, 107 Mich. 172, Monument Nat. Bank v. Globe Works, 101 Mass. 57; Bird v. Daggett, 97 Mass. 494.

A careful review of all the authorities (and the case has been fully briefed by all the parties in interest) leads us to the conclusion that not only the notes given for the merchandise in excess of $500, but likewise the notes given as accommodation paper, are valid obligations of the defunct partnership association, limited, in the hands of their present bona fide holders. It should not be overlooked that it is the appellant’s contention that this paper was absolutely prohibited by section 6083, above quoted, and further that it bore upon its face evidence of its infirmity, in that it was signed by one manager only. We are of the opinion that neither position is well taken. The exception in section 6083, above quoted, distinctly authorized the making of such paper under certain conditions, and we think the long course of dealing of the association through Mr. Armstrong with the public, without protest from the other managers or stockholders, and with the knowledge of the managers, was sufficient to lead those who dealt with the implement company to believe that the necessary statutory authority had been given. Indeed, it is apparent from the supplemental record that the appellant itself from February, 1903, to April, 1905, held as evidence of its claim a note signed by one manager alone.

Having reached the foregoing conclusions, it is unnecessary to determine whether or not the appellant can prosecute on its own behalf as a creditor. We think that the proper course for a creditor to. pursue in such a cáse is to move the court for an order directing the receiver to contest the allowance of the alleged illegal claims.

Inasmuch as the receiver apparently of its own motion instituted the inquiry as to the validity of the various claims presented, the costs of appeal, including the printing of the briefs of all claimants, will be paid from the fund in the hands of the receiver.

The order appealed • from is affirmed, and the record remanded.

Blair, C. J., and Grant, Ostrander, and Moore, JJ., concurred.


author: Blair, C. J. Grant, J.

text:
    HAMILTON v. AMERICAN HULLED BEAN CO.
    Fraud — False Representations — Subscription to Corporate Stock — Rescission.
    Complainants subscribed for §6,000 of preferred stock in defendant company upon the representation of defendant Fuller that §3,000,000 of the stock of the company had been issued as fully paid by the transfer of his United States and Canadian patents covering a certain process for hulling beans; and that §8,000,000 of stock remained in the treasury, of which §500,000 was preferred stock. Defendant Fuller in fact retained §11,500 of the preferred stock for his Canadian patents, in addition to the §3,000,000 of common stock which had been so issued. Held, that the representations were fraudulent and that the complainants were injured to the extent of the stook so retained, and entitled to rescind their subscriptions. Grant and Moore, JJ., dissenting.
    Appeal from Barry; Davis, J., presiding.
    Submitted June 3, 1908.
    ( Docket No. 1.)
    Reargued February 8, 1909.
    Decided May 26, 1909.

      Bill by James L. Hamilton and Henry T. Heald against the American Hulled Bean Company, Limited, and Charles D. Fuller to set aside the sale of corporate stock on the ground of fraud. From a decree dismissing the bill, complainants appeal.
    Reversed, and decree entered for complainants.

      Henry T. Heald (William P. Belden, of counsel), for complainants.

      Harry C. Howard (Colgrove & Potter, of counsel), for defendant Fuller.

       As to rescission of stock subscription for fraud or misrepresentation, see note to Fear v. Bartlett (Md.), 33 L. R. A. 731.

   Blair, C. J.

This case was before the court on demurrer to the bill of complaint and the demurrer overruled at a previous term. Hamilton v. Hulled Bean Co., 143 Mich. 377. The allegations of the bill of complaint and the nature of the case are sufficiently stated in the opinion filed therein. Both defendants have answered, proofs have been taken in open court, a decree entered dismissing the bill of complaint without any indication of the grounds therefor, and complainants appeal to this court.

Defendant Fuller resides in Kalamazoo, and the American Hulled Bean Company, Limited, was located at Battle Creek. On March 13, 1901, two patents were issued by the United States to Fuller covering a process for hulling beans and preparing the products for food. He sold these patents to D. L. Merrill, Abram C. Wisner, Neal S. Phelps, and Martin V. Barker for $100,000 in cash and notes. Afterwards Fuller bought back a one-fifth interest in these patents for himself and brother for $30,000, and became associated with the others. On June 19,1901, these parties organized a partnership association known as the American Hulled Bean Company, Limited. By the amended articles filed August 38, 1901, the capital stock of the company was fixed at $5,000,000, of which $3,000,000 was paid in by the incorporators by the assignment of these patents. The remaining $2,000,000 of the stock was kept in the treasury, and it was agreed and provided that $500,000 of this treasury stock should b.e made preferred stock, and that the balance of $1,500,000, together with the $3,000,000 of stock issued for the patents, should all be deemed common stock. On the 28th day of August, 1901, the following agreement was executed by the parties:

“Agreement made this 28th day of August, 1901, by and between David L. Merrill, Neal S. Phelps, Abram C. "VV isner, and Martin V. Barker, all of Battle Creek, Michigan, parties of the first part, and Charles D. Fuller and Frank D. Fuller, parties of the second part.
“ For a good and valuable consideration to the parties of the first part in hand paid, the receipt whereof is hereby acknowledged and confessed, and the said first parties being each and every of them members of the board of managers of the American Hulled Bean Company, Limited, of Battle Creek, Michigan, they do hereby agree to and with the said second parties that they, as members of the board of managers of said American Hulled Bean Company, Limited, will vote as such managers that the said Charles D. Fuller shall have out of the treasury stock of said company the exclusive right to sell and dispose of one hundred and fifty thousand dollars, par value, of preferred stock, each share of preferred stock to be accompanied by one share of common stock, at not less than fifty cents for one dollar of preferred accompanied by one dollar of common stock; all over and above said sum shall belong to the said Fuller, and the balance shall be by him paid into the treasury of said company, but it is understood that he shall be under no obligation to sell said stock; the exclusive right is given to him to sell and dispose of such amount if he chooses to exercise it for five months from date only. Second party agrees to commence the sale of said stock within ten days, and devote all of his available time to the sale thereof.
“ The said first parties do further agree that as such managers they will also vote that in consideration of the assistance that has been rendered by the said Charles D. Fuller, that the said Frank D. Fuller shall be employed the first year as the manager of said company, and that his salary shall be five thousand dollars.
“ In witness whereof the parties hereto have hereunto set their hands and seals the day and year first above written.
[Signed] “David L. Merrill. [Seal/ “Abram C. Wisner. [Seal/
“Neal S. Phelps. [Seal/
“ Martin Y. Barker. [Seal/
“ Charles D. Fuller. [Seal/ “Frank D. Fuller.” [Seal/

On October 22, 1901, but under date of September 4th, the following action was taken and entered in the record as part of the record of a meeting of the board of managers :

“It was moved and seconded that one hundred and fifty thousand dollars ($150,000) of the preferred stock and one hundred and fifty thousand dollars ($150,000) of the common stock of this company be sold to Charles D. Fuller, and issued to him or such persons as he may direct for the sum of seventy-five thousand dollars ($75,000) in cash ánd the assignment by said Charles D. Fuller to this company of all rights in the Canadian patents now pending, or which may be applied for hereafter on bean-hulling machinery, the process of hulling beans and everything else pertaining thereto, which he may invent or which may be secured by said Charles D. Fuller. Carried unanimously.”

The record of the company of October 30, 1901, is, in part, as follows:

“Present, the full board. The following letter from Charles D. Fuller was read:
“‘To the American Hulled Bean Co., Limited.
“ ‘ Gentlemen: 1 have sold eight hundred and fifty (850) shares of preferred stock of your company, amounting to eighty-five thous- and dollars ($85,000), being part of the preferred stock of one hundred and fifty thousand dollars ($150,000) that was voted to me by resolution of your board of managers September 4th, 1901. The sale of this stock has bepn made at par to the following persons, each of whom h¿s/pur/hased the number of sharea of preferred stock set opposite” his name. * * * You will apply seventy-five thousand dollars ($75,000) of the proceeds of this sale on the cash payment which I was required to make by the terms of said resolution, and the balance you will return to me.
“ ‘Yours truly,
“ ‘Charles D. Fuller.’
‘ ‘ On motion of Mr. Phelps, supported by Mr. Barker, it was unanimously resolved that the foregoing proposition be accepted and that the chairman and secretary be directed to execute a written acceptance thereof, which was accordingly done, and the following is a copy thereof:
“ ‘ The American Hulled Bean Company, Limited, hereby accepts the foregoing proposition, and agrees with said Charles D. Fuller and the above-named subscribers to said stock severally that it will upon the full payment of the par value of the said stock at the time and manner stated in the foregoing communication, <Ésue, and deliver to said several purchasers, his representatives or assigns, the number of shares of preferred stock subscribed and paid for by him at par.
“ ‘We further agree to credit the moneys paid for said stock up 'to the amount of the seventy-five thousand dollars (§75,000) on the amount which the said Charles D. Fuller is to pay us in pursuance of the resolution aforesaid, and to pay to him all moneys paid to us on account of this transaction in excess of that sum.
“ ‘By order of the board of managers.
“ ‘American Hulled Bean Company, Limited,
“ ‘By David L. Merrill, Chairman.
“ ‘F. D. Fuller, Secretary.’”

The defendant the American Hulled Bean Cpmpany admitted in its answer the allegation of the second paragraph of complainant’s bill of complaint “ substantially as therein set forth.” The second paragraph of the bill contained, among others, the following allegations:

“ And, as a further inducement to him for the purchase thereof, agreed to aid him in disposing of said stock at a profit to himself, and, in furtherance of said agreement, it was then and there agreed and understood by and between said defendants that said Fuller would forthwith undertake the work of interesting the general public in the sale of said stock, and that he might solicit subscriptions for preferred stock in said company, offering two shares of common stock as a bonus with each share of preferred stock in said company in the name of said company, and for and in its behalf, and that he might further represent that the preferred stock was being sold only for cash and at one hundred cents on the dollar, and that said company had authorized one hundred thousand dollars ($100,000) of said preferred stock to be placed on the market, and it was further agreed between said defendants that the subscription lists used in obtaining said subscriptions might state and set forth that the stock to be issued to and received by the subscribers thereto, should be treasury stock, and that there was in the treasury of said company five hundred thousand dollars ($500,000) of the preferred stock and one million five hundred thousand dollars ($1,500,000) of the common stock of said company, but that, when subscriptions were obtained by said Fuller, they should, in fact; be filled by the said company by issuing to said subscribers stock from the block sold to said Fuller as aforesaid without notifying or informing such subscribers of the substitution; and, in furtherance of said fraudulent scheme, it was further agreed by the said defendants that the said Hulled Bean Company should collect and receive from subscribers to its capital stock so obtained by said Fuller the full amount of their stock subscriptions at par, and then, without informing said subscribers of the disposition made of their money, should apply all amounts so received, first, in satisfying and canceling said purchase price of seventy-five thousand dollars ($75,000), to be paid by said Fuller to the defendant company, as hereinbefore set forth, and thereafter all amounts in excess of said sum, and the unsold portion, if any, of said block of stock, was to be turned over to said defendant Fuller in pursuance of the terms of the resolution hereinafter set forth. * * * No part of said stock was issued or transferred to defendant Fuller by said defendant, American Hulled Bean Company, Limited, at the time of the adoption of said resolution, nor did he pay any part of said purchase price, aud your orators allege that said scheme to sell and dispose of the stock thus set apart for said Fuller under the pretense that the same was treasury stock was conceived and carried out by both of said defendants with the design and intent to cheat, deceive, and defraud all subscribers whom said Fuller might secure by means thereof.”

The defendant Fuller in his answer denied the said second paragraph and all material allegations of fraud.

The company having notified defendant Fuller that it did not wish to receive over $75,000 of the subscriptions, he made such arrangements that only $77,000 was paid, of which $2,000 was paid to him by the company, as he alleges, for his services. Defendant Fuller testified, that, before calling upon complainants,—

I first went and I consulted with a friend of mine up there, and he advised that I go and see the officers of the Michigan Trust Company, and, if possible, get them interested, and have them look into the proposition so as to be able to vouch for the facts that I was there to present.”

Then he went to Mr. Withey and Mr. Hardy, the pres, ident and secretary of the Michigan Trust Company.

“I gave Mr. Hardy a bonus of common stock. I don’t know that I could properly state the amount that was for Mr. Hardy alone. I think I can state how much common stock went to him and perhaps Mr. Withey, and I don’t know who else. I think $35,000 of the common stock went to them. * * * I think that the matter of the commission was discussed with them in view of the fact that they had to do a good deal of investigating and so on, and Mr. Hardy, as I remember it, took the position that he did not want any cash out of the matter, but that he thought with the amount of stock that was outstanding that he was entitled to something in the way of a stock commission, and, in pursuance of that request, I agreed to give the $35,000 of common stock. If I remember right, Mr. Hardy took about two weeks to make these different trips, and investigate and look up the patents, and so on and so forth. My impression is that they spoke of the matter of a commission at first, before he made the trips, and I think that I said that I would give' them $15,000, and I think that the matter was left open then until after these investigations went on, and they consumed considerable more time than I guess Mr. Hardy figured on, and at this time he drew the subscription list on September 23d, he raised the point that that was not sufficient, and so it was arranged that I was to give him this amount that I did, which I remember to be $35,000 of the stock. My memory is that that final agreement was reached just as we were drawing the subscription list to take around to the Grand Rapids people. * * * I don’t remember positively, but I think I gave Claude Hamilton a small bonus. He was assistant secretary, or some similar capacity, of the Michigan Trust Company at that time. I think there was a further arrangement with Claude Hamilton by which I agreed to buy his stock back at 50 cents on the dollar for the preferred stock at any time in case he should want to sell it. Afterwards his stock was taken back. I made an arrangement as I remember it with two gentlemen in Battle Creek, and that contract with Claude Hamilton was carried out.”

Fuller also arranged with Hyde and Thornton, attorneys at Grand Rapids, to assist in placing the stock.

“The commission I paid Hyde and Thornton was 11,500 and some common stock. I think it was $6,500 of common stock. The subscription was filled out of the stock that I supposed I had coming to me from these Canadian patents, and the common stock was from my own personal stock because the other common stock was all used up. * * * The only subscription of the Grand Rapids subscribers that was paid to me direct was from Hyde and Thornton, and they knew they were getting my personal stock because I told them distinctly, and they had these bonuses or commissions coming to them, so that they were very glad to accept of the arrangement. They paid $3,500 for $5,000 of stock. \
“Q. How much in money did you have after paying the expenses of the sale out of this $3,500 ?
“A. I estimated that barely $2,000.”

Defendant Fuller instructed Hyde and Thornton as follows:

“As your subscriptions are going to be paid into the Michigan Trust Company, you had better send your amount directly to me, as, of course, it will not do to let them find out anything as they would have to if they received the subscriptions.”

Having made these arrangements for satisfactory investigations and introductions, defendant Fuller called upon complainants, and, according to their testimony, which we accept as substantially correct, represented .to them, in substance, that he and his associates had organized the defendant bean company, and had conveyed to it their entire invention, including the patents for the United States and Canada, so that they were in a position to take out patents wherever it was deemed advisable to do so; that the company had been organized with a capital stock of $5,000,000, of which $3,000,000 had been given for the invention and patents, and that the remaining $2,000,000 was in the treasury and had been divided into $500,000 of preferred stock and $1,500,000 of common stock; that the stock he was selling was treasury stock, and that all the proceeds of their subscriptions would go into the treasury and build up the company’s business; that he had no personal interest in selling the stock, but was in Grand Rapids merely at the request of the hulled bean company; that he was not offering the stock generally, but placing it with his business friends and acquaintances ; that he did not know that he should even get his expenses paid in connection with it; that he did not tell either of the complainants about his arrangement with the hulled bean company under the option of August 28th, nor did he tell them about the resolution of September 4th under which $75,000 of the preferred stock which was supposed to be in the treasury was to be turned over to him for the Canadian patents. On the contrary, he said the company owned the invention as well as the patents, and that all of the preferred stock was treasury stock. The subscription agreement signed by complainants contained the following:

“The American Hulled Bean Company, Limited, of Battle Creek, Michigan, has been organized with a capital stock of $5,000,000 (50,000 shares at $100 each), $4,500,-000 of which is common stock and $500,000 of which is seven per cent, preferred stock; $500,000 preferred stock and $1,500,000 of the common stock is treasury stock.”

We are of the opinion that the allegations of the bill were sustained by the proofs’,'and that complainants were entitled to a decree, unless, as contended by counsel for defendant Fuller, the proofs demonstrate that complainants were not injured by the misrepresentations. This contention rests upon the undisputed fact that the $75,000 in cash to be paid by Fuller to the company was actually paid to itj. out of the subscriptions and upon the further alleged f&ct that on and shortly prior to June 12, 1902, and long prior to this suit, he had assigned to the company all of his then holdings of stock. On the date last mentioned the following receipt was given:

“Received of Charles D. Fuller an order for all of his holdings in the capital stock of the American Hulled Bean Company, Limited, which is hereby declared to be a full settlement of all our demands against him of every name, nature and description.
[Signed] “Martin V. Barker.
“D. L. Merrill.
“A. C. WlSNER.
“Neal S. Phelps.”

Defendant Fuller testified:

Q. Referring now to this block of preferred stock that was set aside to you in this resolution, and that you have spoken of as being surrendered prior to the receipt in June, was any of it ever issued to you ?
“Á. Of the $75,000? Yes, sir; there was. I drew $11,500 par value of it.
Witness (continuing): That is all I ever drew. The rest was unissued. Part of that $11,500 I used to pay commissions and bonuses with in order to get the option financed up there in addition to the $53,000 of my own common stock, aside from my own common stock that I surrendered as mentioned in the trustee agreement. * * * I had given up over $53,000 of that that I had
paid cash or its equivalent for. What I had left, both preferred and common, I considered just as much my property as anything I owned in the world, and I considered that the Canadian patents were the property of the company, and that I had given them an equivalent.
“Q. Now, after the company became insolvent, you say you transferred all of your holdings in it back to them, did you not ?
“A. Well, as a matter of fact, I never had any of that $75,000 of preferred stock.
Witness (continuing): That is, it had not been issued to me, except I was forced to draw some of it to pay commissions and bonuses. Five thousand dollars more of it I frittered away for the first premium on a life insurance policy. I don’t remember who I did pay that to, but it was in the New York Mutual Life, as I remember it, at Grand Rapids, and Mr. Branch bought the stock later of an agent, according to my best knowledge, which I believe is correct. At a subsequent date, when the company was hard up, I transferred back to it $63,500. That stock stood to my credit, and I either transferred it back or to a trustee. I think it may be that instead of transferring it directly to the company that I transferred it to a trustee for the company, so that it was put where they could have the benefit of it when they wanted it. I have never drawn it or tried to sell it; simply let it lie there in the treasury. I did not take this Exhibit I, which is a release from the managers, at that time. As I remember it, that was for the common stock. I don’t remember that I took any receipts for the preferred stock. I don’t remember that the American Hulled Bean Company had any demands against me at the time that receipt, Exhibit I, was signed. I just took the release as I remember it as a matter of precaution in case anything should ever arise.”

It is apparent from his own testimony that defendant Fuller did not restore to the company all of the preferred stock allotted to him for his Canadian patents, but used $11,500 thereof for his own purposes, and derived a direct personal benefit therefrom, and to that extent injured the complainants, to whom he had represented that the Canadian patents, along with the United States patents, had been paid for by the transfer of the $3,000,000 of common stock.

The decree is reversed, and a decree may be entered for complainants, as prayed for, with costs of both courts.

Ostrander, Hooker, McAlvay, and Brooke, JJ., concurred with Blair, C. J.

Grant, J.

(dissenting). A sufficient statement of the issues in this case is found in 143 Mich. 277. The case was then before us on a demurrer, and we held that the complainants had stated a case in their bill of complaint which entitled them to an answer and proofs. Our decision was based upon purely legal questions, and there is nothing in it to indicate our views upon the merits. The case has been 'heard upon pleadings and proofs taken in open court, and the bill dismissed, and it is now before us on the merits. In paragraph 2 of the complainants’ bill they set forth particularly the transactions relied upon as fraudulent, and close the paragraph by alleging that—

“Said scheme to sell and dispose of the stock thus set apart for said Fuller under the pretense that the same was treasury stock was conceived and carried out by both of said defendants with the design and intent to cheat, deceive, and defraud all subscribers whom said Fuller might secure by means thereof.”

The answer, which is 'signed “American Hulled Bean Company, Limited, by Joseph W. Bryce,” admits the allegation therein contained (paragraph 2 of the bill) substantially as therein set forth. The answer is not sworn to. The record fails to show who Mr. Bryce is. He was not a member of the association during its life. His name does not appear in any of its records or as. a stockholder. It is not shown that he had any knowledge of the transactions set forth in the bill. Evidently he did not have other than by hearsay. Mr. Bryce cannot thus brand Mr. Fuller or his associates with the conspiracy to commit fraud. The answer is worthless, and cannot be considered for any purpose involved in this suit.

The sole basis of the complainants’ claim is that the defendant Fuller falsely represented to them that the stock for which he asked them to subscribe was treasury stock, and that he fraudulently, with the connivance of the corporation, substituted his own individual stock in place of treasury stock, and that he falsely represented that the company had acquired the Canadian patents. They assert that as a result of this fraud they were induced to part with $6,000 which has been a total loss to them. Defendant Fuller had invented machinery for hulling beans, designed to remove from the beans the indigestible covering or hulls. He obtained patents therefor both in the United States and Canada. He sold several gentlemen in Battle Creek his United States patents for the sum of $100,000 in cash. Defendant Fuller shortly thereafter purchased a one-fifth interest in the patents for the sum of $20,000, which he paid. The purchasers of the patent were business men of good reputation. They purchased after a careful investigation into the patent and the probable value of the product. They purchased with a view to organizing a partnership association, limited, for the purpose of erecting machinery and making the product. They organized with a capital of 15,000,000 — $4,500,000 of common and $500,000 of preferred stock. Defendant Fuller was a man of good reputation financially and in a business way. He was not an officer of the company. Mr. Hardy, the secretary of the Michigan Trust Company, hereinafter referred to, made several trips to Battle Creek to investigate into the patents and process, and Mr. Fuller’s standing. After satisfying himself upon these points, he subscribed for some of the stock, and acted for the other Grand Rapids subscribers as hereinafter stated. The purchasers of the patent who were members of the defendant company on August 28, 1901, gave the defendant Fuller and his brother an option agreement reading as follows:

“ For a good and valuable consideration to the parties of the first part in hand paid, the receipt whereof is hereby acknowledged and confessed, and the said first parties being each and every of them members of the board of managers of the American Hulled Bean Company, Limited, of Battle Creek, Michigan, they do hereby agree to and with the said second parties that they, as members of the board of managers of said American Hulled Bean Company, Limited, will vote as such managers that the said Charles D. Fuller shall have out of the treasury stock of said company the exclusive right to sell and dispose of one hundred and fifty thousand dollars par value of preferred stock, each share of preferred stock" to be accompanied by one share of common stock, at not less than fifty cents for one dollar of preferred accompanied by one dollar of common stock, all over and above said sum shall belong to the said Fuller, and the balance,shall be by him paid into the treasury of said company, but it is understood that he shall be under no obligation to sell said stock; the exclusive right is given to him to sell and dispose of such amount if he chooses to exercise it for five months from date only. Second party agrees to commenee the sale of said stock within ten days and devote all of his available time to the sale thereof. The said first parties do further agree that as such managers they will also vote that in consideration of the assistance that has been rendered by the said Charles D. Fuller, that the said Frank D. Fuller shall be employed the first year as the manager of said company, and that his salary shall be five thousánd dollars.”

Evidently, as hereinafter appears, $75,000 was all the money the board of managers deemed necessary to raise to equip the plant. Fuller was to have as compensation all he obtained over the 50 cents per' share. This agreement was modified before any subscriptions were solicited or made.

About this time the members of the defendant company became solicitous about Mr. Fuller’s Canadian patents, and, fearing that they might largely interfere with the sale of the proposed product to the people, armies, and navies of other countries, made an arrangement for the purchase of the Canadian patents. This arrangement rested in parol until October 22, 1901, when it was put in form by a resolution of the board of managers, dated by their direction September 4, 1901, and providing that “$150,000 of the preferred stock and $150,000 of the common stock be sold to Charles D. Fuller and issued to him, or such persons as he may direct, for the sum of $75,000 in cash, and the assignment by said Charles D. Fuller to this company of all rights in the Canadian patents now pending or which may be applied for hereafter on bean-hulling machinery,” etc. Defendant Fuller proceeded under this arrangement to solicit subscriptions in Grand Rapids during the months of September and October. He placed his proposition before Mr. Withey, president, and Mr. Hardy, secretary, of the Michigan Trust Company of Grand Rapids. He explained to them his invention and plan of procedure. Subscriptions were taken by 19 business men and firms, all of Grand Rapids, except one. They subscribed for and agreed to take from 10 to 50 shares each, the par value of a share being $100. The original option agreement was also modified so that Mr. Fuller could sell the preferred stock only at its par value, and should give to each subscriber to the preferred stock “ two shares of the treasury common stock of the company gratis.” This provision was incorporated in the subscription agreement signed by the complainants and the others. It will be readily seen that the agreement of August 28,1901, was not, in fact, the agreement under which the subscriptions, including the complainants’, were solicited and obtained at Grand Rapids. It has been so modified as to almost lose its identity. Instead of being authorized to sell at 50 cents on the dollar, he could sell only at par ($100) per share. He was to give two shares of the common stock instead of one for each share of preferred stock subscribed. No provision was made for compensation to him for his services in effecting the sales. The subscription agreement also contained the following important provision:

“It is further understood that the following subscriptions are made pending the passage of satisfactory resolutions by the board of managers, establishing the character of the preferred stock.”

When Mr. Fuller reported to the company that he had sold $85,000 of the preferred stock, its board of managers October 22, 1901, informed him that they desired only $75,000, and that he must fill all above that from his own personal stock. He thereupon induced one subscriber for $10,000 to surrender $5,000, and he paid Hyde & Thornton $5,000 out of his own. On the 30th day of October, 1901, Mr. Hardy, secretary of the Michigan Trust Company, with an attorney, Mr. Kleinhans of Grand Rapids, went to Battle Creek and had an interview with the managers of the defendant company and Mr. Fuller. The defendant Fuller and the managers of the defendant company understood from the statements made by Mr. Hardy that he was there representing all the Grand Rapids subscribers, and had brought Mr. Kleinhans to examine the papers and records, and to see that the rights of the Grand Rapids stockholders were duly protected. Mr. Kleinhans was a lawyer of ability, experience, and good character. The defendant corporation had its attorney at Battle Creek. Defendant Fuller had no attorney. All the records and documents relating to the transactions were submitted to Mr. Kleinhans and Mr. Hardy, and were examined by them.

Mr. Kleinhans advised the parties interested that the company could not give away its stock as a bonus; that, if the subscribers took the stock under this subscription agreement, they would be liable to assessments; and that the only legal way to avoid this liability was to use Mr. Fuller’s .stock which had been fully paid by the transfer of the Canadian patents in carrying out the agreement with the Grand Rapids stockholders. Mr. Fuller at first objected, but, upon being advised that he would incur no liability by the arrangement, and evidently seeing that the subscribers would not take the stock on any other basis, the plan was agreed to, and the following agreement drawn up by Mr. Kleinhans and executed:

“This agreement, made this thirtieth day of October, A. D. 1901, by and between Charles D. Fuller, of Kalamazoo, Michigan, party of the first part, and the Michigan Trust Company, of Grand Rapids, Michigan, as trustee, party of the second part, witnesseth: W hereas, said party of the first part is largely interested in the American Hulled Bean Company, Limited, of Battle Creek, Michigan, and whereas, said company needs cash capital in its business and the procurement of the same will be of great benefit to said party of the first part; and whereas, at the request of the party of the first part the following named persons have subscribed for the preferred stock of said company for the number of shares set opposite their respective names, viz., Lewis H. Withey, Grand Rapids, Michigan, fifty shares; George E. Hardy, Grand Rapids, Michigan, fifty shares; William Judson, Grand Rapids, Michigan, fifty shares; J. M. Barnett, Grand Rapids, Michigan, fifty shares; T. Stewart White, Grand Rapids, Michigan, fifty shares; Moseley Brothers, Grand Rapids, fifty shares; C. H. Berkey, Grand Rapids, Michigan, fifty shares; John T. Byrne, Grand Rapids,Michigan, fifty shares; Hyde & Thornton, Grand Rapids, Michigan, fifty shares; J. C. Holt, Grand Rapids, Michigan, fifty shares; J. L. Hamilton, Grand Rapids, Michigan, fifty shares; Charles J. Canfield, Manistee, Michigan, fifty shares; Filer & Son, Filer City, Michigan, fifty shares; Henry T. Heald, Grand Rapids, Michigan, ten shares; F. C. Miller, Grand Rapids, Michigan, twenty-five shares; Darwin D. Cody, Grand Rapids, Michigan,J thirty shares; Claude Hamilton, Grand Rapids, Michigan, twenty-five shares; George E. Luther, Grand Rapids, Michigan, ten shares; and whereas, the understanding and agreement between said party of the first part and said several subscribers was, at the time said subscriptions were made, that the said party of the first part should transfer to said several subscribers two shares of common stock of said company, for each share of preferred stock which would be subscribed and paid for, said common stock being the individual property of the party of the first part which has been fully paid for by him and is non-assessable; and whereas, said party of the first part has this day delivered to the said party of the second part certificates for the common stock of said company as follows : Certificates numbers one to thirteen, both inclusive, each for one hundred shares; certificate numbered fourteen for two hundred shares; certificates numbered fifteen and sixteen each for- fifty shares; certificates numbered seventeen and eighteen each for twenty shares and certificate numbered nineteen for sixty shares; amounting in all to seventeen hundred shares, which certificates have-been duly assigned in blank by the party of the first part and delivered to the party of the second part for the purposes of this agreement.
“Now, therefore, this agreement witnesseth, that the parties hereunto have agreed together as follows: Said Michigan Trust Company, as trustee, is hereby authorized and directed to transfer and deliver to each of said subscribers for preferred stock as aforesaid two shares of said common stock for each share of preferred stock, which said subscribers shall pay to the treasurer of said company the par value thereof; such payments to be made in the time and manner this day agreed upon between the said company and the party of the first part.
“ 2. The Michigan Trust Company agrees to hold said certificates for common stock and transfer and deliver them to the purchasers of said preferred stock in accordance with the terms of this agreement above stated, and, if any subscribers for said preferred stock shall not pay their subscriptions and shall not become entitled to said common stock, then to return such unearned common stock to the party of the first part.
“3. Should any of said subscribers make default in the payment of the whole or any part of their several subscriptions, such default shall not affect or impair the rights of the other subscribers who do not make default to their shares of the common stock.
“4. The original subscription list for said preferred stock, now in the possession of the party of the first part, shall be delivered upon the execution of this agreement to said Michigan Trust Company, which shall hold the same until the time when the final payment on said subscription will become due, and, if all of said stock shall then have been paid for in full, it shall return said subscription list to the subscribers; otherwise to the party of the first part on demand. Nothing herein contained is intended to nullify said subscriptions until the same shall have been paid in full. This agreement shall inure to the benefit of the representatives and assigns of the subscribers of said preferred stock. It is understood and agreed that the payment by the purchasers of said preferred stock, their heirs or assigns, severally, shall entitle them respectively to the said common stock without the payment of any further or additional price for said common stock.”

Mr. Kleinhans testified that he had these subscriptions filled from Mr. Fuller’s stock “to protect the purchasers so that there would be no liability in their stock subscriptions in case the company became insolvent.”

At the meeting it was suggested by Mr. Hardy that there should be a representative of the Grand Rapids stockholders on the board. In order to accomplish this, a certificate for one share was issued to Mr. Hardy, who was then only a subscriber, and not a stockholder. Frank D. Fuller resigned as director, and Mr. Hardy was elected director in his place. All the subscribers, including the complainants, paid their subscriptions to the defendant company through the Michigan Trust Company after the above agreement. The money went into the treasury and was used in erecting its plant. Not a penny was received by or paid to Mr. Fuller. Like many another glittering proposition, this proved a failure. The reason perhaps is immaterial. It is due to Mr. Fuller to say that no one holds him at all responsible for the failure. . One stockholder, the chairman of the company, who had invested $100,000 in the enterprise, testified:

“ I had faith in the concern up to that amount. There were various opinions on why the concern did not succeed; but my own is that the women beat us. They would not follow the directions on the cans in cooking the product.”

I think the record shows that Mr. Fuller acted in good faith. None of the $75,000 went into his own pocket. He did not profit by it. When the company began to be in financial distress, he turned into the treasury all his stock in the hope to thus assist the company. None of the stock represented by the $75,000 was issued directly to him, but went directly to the stockholders. No preferred stock was overissued to him except that of $11,500, the most of which was stock which the company in good faith compelled him to take in reduction of the $85,000 subscribed. The testimony is that, if the stock had proved good, this would not have been more than a reasonable compensation for his services. Mr. Fuller testified that he explained to the complainants fully about the Canadian patents and his connection with the company. He denies the representations which the complainants assert he made. It is stated by counsel for complainants that Mr. Fuller has not explicitly denied the testimony of the com■plainants. I do not so read the record. He testified:

“I stated to Mr. Hamilton that I had sold my United States patents to the Battle Creek parties for $100,000, and then had sufficient faith in the deal so that I had gone and bought back a one-fifth interest for $20,000; that I had arrangements whereby I was to receive $75,000 of the preferred stock of the company for my Canadian patents; that the Michigan Trust Company, through Mr. Hardy and Mr. Withey, had investigated this proposition, had drawn up the subscription list itself, and it was to them that the clause in the subscription list to define the rights of the preferred stock were to be satisfactory; that they had each subscribed as I showed them. * * *
ilQ. Did you tell him anything in any of those interviews that was not true ?
“fi. I certainly did not. * * * I never told Mr. Hamilton or Mr. Heald that the Canadian patents were included in the patents that had been paid for by the $3,000,000 of stock. I told them that I was to receive $75,000 of the preferred stock for the Canadian patents in addition to my sale of the United States patents.”

On his attention being called to the allegations and charges in the bill, and being asked whether he in any way had any secret or other understanding with the company that he did not freely tell to the complainants, as well as to others, in Grand Rapids, he replied:

“I want to state that everyone of those charges is without the slightest foundation in fact.”

This and other similar language is, in my judgment, a sufficient denial of the conversations related by the complainants.

While the circuit judge filed no opinion, we assume that he found the facts against the complainants. One was a business man and the other an attorney. There was no haste in their action. They took time to investigate. I cannot resist the conclusion that they knew before they paid their subscriptions that the Michigan Trust Company was acting for all the subscribers. Their subscription papers informed them that the character of the preferred stock was to be established by satisfactory resolutions of the board of managers. They must have been informed of these resolutions, or trusted the Michigan Trust Company to see to a determination of the character of the stock which they were to receive. They are the only stockholders complaining, and are the only witnesses in their behalf. It is not necessary to find that any one is guilty of wilful misstatements. The bill was not filed until two years and four months after the conversations occurred. The case was not heard until nearly six years thereafter. Human recollection is faulty, and is liable to be warped by self-interest. To remember the exact words so long after is next to impossible. As in all such cases, so here, some one is mistaken as to the language used. The circuit judge saw the witnesses. There were other considerations to guide him to his conclusion. The members of the defendant company do not testify to a single dishonest word or act on the part of Mr. Fuller. As above stated, he stood high as a man of honor in the estimation of his fellows. He did not try to sell any of his own stock. When financial trouble came to the company, he did all that an honorable man could do. The circuit judge saw this man’s conduct from the beginning to the end of this transaction. Very likely he reached the conclusion that it was improbable that a man of hitherto unblemished character, who was not a promoter —this being his first venture — would make false and fraudulent statements, and especially to those who had it in their power to determine their truth or falsity within a few hours by letter or a few minutes by telephone. Perhaps the circuit judge was also influenced by the fact that Mr. Fuller did not treat the stock he was selling as his own stock, but as treasury stock, and that the subscribers were to. and did, pay all their money into the treasury of the company, and that he only expected to make a profit by the success of the business and thus make his own stock valuable. If these were some of the reasons which induced his conclusion, they meet my approval.

The record in my judgment shows no occasion for any false representations on the part of Mr. Fuller. By the final arrangement made complainants obtained common stock free from liability to assessment. They were certainly benefited by this transaction. Had the product to be manufactured proved the success that all anticipated, the stock would have been valuable and large profits realized by the stockholders. Complainants and the other stockholders entered upon a commercial venture, the success of which was uncertain. It is unjust now to put the consequences of the disastrous failure upon Mr. Fuller, who acted in good faith throughout, and by the advice of the attorney for the trust company, which company in the end, if not in the beginning, acted for the complainants as well as the other stockholders.

I think the decree should be affirmed, with costs.

Moore, J., concurred with Grant, J.


author: Hooker, J.

text:
    MILLER v. CITY OF DETROIT.
    1. Municipal Corporations — Negligence—Statutes Construed —Streets.
    A municipal corporation is not liable, within the provisions of 1 Comp. Laws, §§ 3441-3443, for injuries sustained <by<*a person using the sidewalk, caused by the falling of a dead limb from a tree in the highway.
    2. Same — Defects in Highway.
    The duty under 1 Comp. Laws, §§ 3441-3443, to keep the highways, streets, and sidewalks in reasonable repair, refers only to the traveled way, and does not impose upon a city an obligation to trim trees growing between the sidewalk and curb in a public street.
    3. Same — Ordinances.
    An ordinance of the city of Detroit, forbidding other persons than owners or occupants of adjacent lots from injuring or defacing trees, does not enlarge the obligation of the municipality to trim trees.

      4. Same — Charter.
    No duty to remove such dead limbs is imposed by the charter of the city of Detroit. Act No. 826, Local Acts 1883, chap. 7, § 34, as amended by Act No. 459, Local Acts 1889.
    5. Evidence — Judicial Notice — Trees Shedding Limbs.
    Judicial notice will be taken of the fact that trees annually shed limbs.
    6. Statutory Construction — Presumption as to Legislative Intent.
    Statutes in derogation of the common law must be strictly construed; and the legislature will not be presumed to have intended an alteration in the common law where such an intent is not expressed.
    Error to Wayne; Murphy, J.
    Submitted October 15, 1908.
    (Docket No. 82.)
    Decided May 26, 1909.
    Case by John R. Miller against the city of Detroit for personal injuries. There was judgment for defendant on a verdict directed by the court, and plaintiff brings error.
    Affirmed.

      Samuel E. Jones, for appellant.

      Edmund Atkinson (P. J. M. Hally, of counsel), for appellee.
   Hooker, J.

The admitted facts in this cause are that the plaintiff, while walking upon a sidewalk in the city of Detroit, was struck and injured by a dead limb, which fell from a tree over his head. The tree was growing in the public street, between the sidewalk and the curb, and it was admitted by counsel that the limb was 5 inches thick and 15 feet long, and that it had been dead four years. The plaintiff brought this action for damages, alleging negligence. The learned circuit judge directed a verdict for the defendant, and the plaintiff has appealed.

The statutes upon which plaintiff’s right to recover must depend are 1 Comp. Laws, §§ 3441-3443. We quote them:

The People of the State of Michigan enact: That any person or persons sustaining bodily injury upon any of the public highways or streets in this State, by reason of neglect to keep such public highways or streets, and all bridges, sidewalks, cross-walks and culverts on the same in reasonable repair, and in condition reasonably safe and fit for travel by the township, village, city or corporation whose corporate authority extends over such public highway, street, bridge, sidewalk, cross-walk or culvert, and whose' duty it is to keep the same in reasonable repair, such township, village, city or corporation shall be liable to and shall pay to the person or persons so injured or disabled just damages, to be recovered in an action of trespass on the case before any court of competent jurisdiction.
“If any horse or other animal, any cart, carriage or vehicle, or other property, shall receive any injury or damage by reason of neglect by any township, village, city or corporation, to keep in repair any public highway, street, bridge, sidewalk, cross-walk or culvert, the township, village, city or corporation whose duty it is to keep such public highway, street, bridge, sidewalk, cross-walk or culvert in repair shall be liable to and shall pay the owner thereof just damages, which may be recovered in an action of trespass on the case before any court of common jurisdiction: Provided, That in all actions brought under this act it must be shown that such township, village, or city has had reasonable time and opportunity after knowledge by or notice to such township, village or city that such highways, streets, bridges, sidewalks, crosswalk or culvert have become unsafe, or unfit for travel to put the same in the proper condition for use, and has not used reasonable diligence therein after such knowledge or notice.
“It is hereby made the duty of townships, villages, cities, or corporations to keep in reasonable repair, so that they shall be reasonably safe and convenient for public travel, all public highways, streets, bridges, sidewalks, cross-walks and culverts that are within their jurisdiction, and under their care and control and which are open to public travel, and when the means now provided by law are not sufficient to enable any township, village or city to keep its public highways, streets, bridges, sidewalks, crosswalks and culverts in good repair such township, village or city is hereby authorized to levy such additional sum upon the taxable property of such township, village or city not exceeding five mills on the dollar, in any one year, as will enable such township, village or city to keep its public highways, streets, bridges, sidewalks, cross-walks, and culverts in good repair at all times. Highway commissioners, street commissioners, and all other officers having special charge of highways, streets, bridges, sidewalks, cross-walks, and culverts, and the care or repairing thereof are hereby made and declared to be the officers of the township, village, city, or corporation wherein they are elected or appointed, and shall be subject to the general direction of such township, village, city or corporate authorities in the discharge of their several duties.”

The title of this act is:

“An act to provide for the recovery of damages for injuries caused or sustained by reason of defective public highways, streets, bridges, sidewalks, cross-walks, or culverts.”

Section 50, subd. 1, 1 Comp. Laws, contains the provision :

“All words and phrases shall be construed and understood according to the common and approved usage of the language; but technical words and phrases, and such as may have acquired a peculiar and appropriate meaning in the law, shall be construed and understood according to such peculiar and appropriate meaning.”

Certainly it would not be the common understanding from this title that the presence of a dead limb of a tree within the limits of, or overhanging from private premises, a public highway, is such a defect in the highway as to be within the intention of the legislature in its requirement to maintain and repair streets, bridges, sidewalks, cross-walks, and culverts, and to respond in damages. If we look at the sections themselves, we shall find that they do not give a right of recovery for all injuries, but only such as are sustained by reason of neglect to keep the ways in repair and in condition reasonably safe and fit for travel —not to maintain a highway where the traveler shall he safe. The duty imposed is to keep ways in reasonable repair, so that they (the ways ) may be reasonably safe and convenient for public travel, a stating of the purpose or reason for the requirements made, not an enlargement of them. Evidently this statute was to require the local maintenance of the State’s highways in a reasonably good and safe condition, and the payment of damages due to accidents caused by a failure to do these things required by statute, and not for accidents due to extraneous or other causes, or neglect. There is no legitimate inference that the traveler was to be protected from the inconveniences and dangers from snow and sleet and ice, nor that the legislature supposed it was imposing upon the local constituencies the burden of protecting travelers, at an expense of millions of dollars annually, against accidents, so rare that we have no judicial record of a similar accident in this State. Who can doubt that, had our highway officers attempted to expend public money in the inspection and trimming of trees, in conformity to plaintiff’s contention regarding the meaning of this statute, the townships and villages would have protested against so unjust an extension of the law relating to torts. The requirement, if made, would have been burdensome in proportion to its benefits. There is a strong presumption in favor of a construction which will not work injustice. Osborn v. Charlevoix Circuit Judge, 114 Mich. 655, 660; 26 Am. & Eng. Enc. Law (2d Ed.), p. 646.

We may take judicial notice that many trees annually shed large numbers of dead limbs. Usually they are small in proportion to the limb in this case, but many are large enough to seriously injure a person upon whom they should fall. They are all within this rule contended for; and never in the history of the country has there been an attempt to compel municipalities or private persons to assume the dangerous and expensive burden of anticipating and performing the function, so well and so far so safely performed by nature, of maintaining a living tree in a safe condition. There is nothing in this statute that imposes a duty as to trees, nor is there any reason for saying that the ordinances cited impose a liability. These ordinances undertake to punish the injury or cutting of trees standing in the street by any person other than adjoining proprietors. Nor does defendant’s charter, which gives the city power to direct and regulate the planting, and to provide for the preservation of ornamental trees, impose any such duty or liability as those contended for. We have held that this statute imposes a duty to remove some kinds of dangerous obstructions from a highway, after notice, but this is upon the theory that they constitute defects in the surface of the roadway itself, and upon no other theory, and this has been held not to include a duty to protect against such temporary obstructions as are due to natural causes. McKellar v. City of Detroit, 57 Mich. 158; McArthur v. City of Saginaw, 58 Mich. 357; Kannenberg v. City of Alpena, 96 Mich. 53; Gavett v. City of Jackson, 109 Mich. 408 (32 L. R. A. 861); McEvoy v. City of Sault Ste. Marie, 136 Mich. 172; Thompson v. West Bay City, 137 Mich. 94.

Another reason forbidding the construction urged is that the language of the statute clearly indicates that it is to the physical highway that it refers in its method of construction, maintenance, defects, and repair. This is indicated, not only by the general words, which, as already stated, should be understood to mean no more, and the rule that “a statutory liability, created in derogation of the common law cannot be enlarged by construction (see City of Detroit v. Putnam, 45 Mich. 263; Keyes v. Village of Marcellus, 50 Mich. 439; Williams v. City of Grand Rapids, 59 Mich. 51; O’Leary v. Board of Fire & Water Com’rs of Marquette, 79 Mich. 281 [7 L. R. A. 170]), but also by the mention of various specific, portions of the way, such as sidewalks, culverts and bridges, which tend to* limit the word “street.’’ The case of City of Detroit v. Putnam, supra, is in point. This statute as originally passed (Act No. 244, Pub. Acts 1879, 1 How. Stat. § 1442) was practically identical with its present provisions, except that the word “sidewalks ” was not included. In the case cited it was held that there was no liability for accidents caused by a defective sidewalk, and the substantial change made by the present statute was the insertion of that word. Doubtless the decision cited was the occasion for the amend-' ment. The court said:

“We have but little doubt that, if the liability had been created for injuries sustained in consequence of a failure to keep in repair the highways and streets, these terms would have included all within the limits of the line thereof, and thus the sidewalks, as well as the bridges, cross-walks and culverts. The special terms used do not enlarge, but limit, the force of the general words used. In village and city charters express provisions relating to sidewalks will always be found, and the omission of such in this act is very significant.
“As already said, the city would not be liable in the absence of this statute, which creates the liability, and we cannot by construction enlarge the liability. Where a statute attempts, in derogation of the common law, to create a liability, we cannot go beyond the clearly-expressed provisions of the act. Such statutes are not to be extended or enlarged in their scope by construction.”

Such a construction would not have been possible if the plaintiff’s contention is correct, and the court would have been obliged to hold that the general language was broad enough to include sidewalks and all other portions of the highway.

This is a statute in derogation of the common law, as ' we have said. That it must be strictly construed for that reason is shown by many cases in our reports. The liability contended for must rest on implication, and in this connection the case of Bandfield v. Bandfield, 117 Mich. 83 (40 L. R. A. 757), has application. We there said:

“No such right.is conferred by our statute, unless it be by implication. The legislature should speak in no uncertain manner when it seeks to abrogate the plain and long-established rules of the common law. Courts should not be left to construction to sustain such bold innovations. The rule is thus stated in 9 Bac. Abr. tit. “ Statute,” I (4), 345:
“ ‘In all doubtful matters, and where the expression is in general "terms, statutes are to receive such a construction as may he agreeable to the rules of the common law in cases of that nature; for statutes are not presumed to make any alteration in the common law farther or otherwise than the act expressly declares. Therefore in all general matters the law presumes the act did not intend to make any alteration; for, if the parliament had had that design, they would have expressed it in the act.’ ”

But one case — McGarey v. City of New York, 89 App. Div. (N. Y.) 500, has been cited where a recovery was sought upon a similar injury, and that was not a decision of a court of last resort, and was made by a bare majority of the judges who sat. Moreover, it was in a State that recognized a common-law right of recovery of private damages whenever a duty was imposed upon a municipal ■corporation, a rule which does not obtain in this State.

Hill v. City of Boston, 133 Mass. 344, contains an elaborate discussion of the question, and a review of the American cases which is summed up in the following language:

“There is no case in which the neglect of a duty, imposed by general law upon all cities and towns alike, has been held to sustain an action by a person injured thereby against a city, when it would not against a town. The only decisions of the State courts, in which the mere grant by the legislature of a city charter, authorizing and requiring the city to perform certain duties, has been held sufficient to render the city liable to a private action for neglect in their performance, when a town would not be so liable, are in New York since 1850, and in Illinois. The cases in the Supreme Court of the United States in which private actions have been sustained against a city for neglect of a duty imposed upon it by law are of two classes: (1) Those which arose under the peculiar terms of special charters, in the District of Columbia, as in Weightman v. City of Washington, 1 Black, 39, and Barnes v. District of Columbia, 91 U. S. 540, or in a territory of the United States, as in Nebraska City v. Campbell, 2 Black, 590. (3) Those which, as in Mayor, etc., of New York v. Sheffield, 4 Wall. 189, and Chicago City v. Bobbins, 3 Black, 418, arose in New York or in Illinois, and in which the general liability of the city was not denied or even discussed, and apparently could not have been, consistently with the rule by which the Supreme Court of the United States, upon questions of the construction and effect of the Constitution and statutes of a State, follows the latest decisions of the highest court of that State, even if like words have been differently construed in other States. * * * In the absence of such binding decisions, we find it difficult to reconcile the view, that the mere acceptance of a municipal charter is to.be considered as conferring such a benefit upon the corporation as will render it liable to private action for neglect of the duties thereby imposed upon it, with the doctrine that the purpose of the creation of municipal corporations by the State is to exercise a part of its powers of government — a doctrine universally recognized, and which has nowhere been more strongly asserted than by the Supreme Court of the United States. * * *
“ But, however it may be where the duty in question is imposed by the charter itself, the examination of the authorities confirms us in the conclusion that a duty which is imposed upon an incorporated city, not by the terms of its charter, nor for the profit of the corporation, pecuniarily or otherwise, but upon the city as the representative and agent of the public, and for the public benefit, and by a general law applicable to all cities and towns in the commonwealth, and a breach of which in the case of a town would give no right of private action, is á duty owing to the public alone; and a breach thereof by a city, as by a town, is to be redressed by prosecution in behalf of the public, and will not support an action by an individual, even if he sustains special damage thereby.”

See, also, 2 Dillon on Municipal Corporations (4th Ed.), § 997, et seq.

It is undeniable that many of the State courts make a distinction between municipal corporations proper and quasi municipal corporations, implying liability on the part of the former when a public duty is imposed, while such liability is hot implied against the latter. New York is one of these States. That this is illogical is shown by the cases of Hill v. City of Boston, supra, and City of Detroit v. Blackeby, 21 Mich. 84, and is stated to be so by Mr. Dillon. 2 Dillon on Municipal Corporations, (4th Ed.), §§ 1022-1024. This subject is alluded to here, to emphasize the fact, which appears to be conceded, that the plaintiff’s claim in this case must vest on a statute in derogation of the common law, and for the further purpose of calling attention to the fact that the only similar case to the present one (McCarey v. City of New York, 89 App. Div. [N. Y.] 500), cited by counsel is based on an entirely different view of the common law, as is also the case of Danaher v. City of Brooklyn, 119 N. Y. 241 (7 L. it. A. 592), cited therein, and therefore those cases are not authority in this State, being fundamentally opposed to the established principles here. There is much danger in following precedents from other States without taking note of the differences in conditions underlying them. We have heretofore said that many departures from sound principles can be traced to such cause.

The learned circuit judge did not err in his interpretation of this statute, and his judgment should be affirmed.

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


author: Moore, J.

text:
    BLISS v. TYLER.
    Appeal and Error — Equity Practice — 'Time for Taking — Decrees — Demurrer.
    The statute (Act No. 340, Pub. Acts 1907, § 2) providing that appeals in chancery shall be taken within 40 days after filing of the decree, is applicable to an order overruling a demurrer; and an appeal therefrom must be taken within such time from the filing of the order.
    Bill in aid of execution by Allaseba M. Bliss and Lorenzo T. Durand, executors of the last will and testament of Aaron T. Bliss, deceased, against Fred B. Tyler and Carrie B. Tyler: On motion to dismiss an appeal from an order overruling a demurrer.
    Submitted December 21, 1908.
    (Calendar No. 23,183.)
    Motion granted May 26, 1909.

      John A. McKay (Gray & Gray, of counsel), for the motion.

      Jonathan Palmer, Jr. (Elbridge F. Bacon, George W. Weadock, and Bussell B. Thayer, of counsel), contra.
   Moore, J.

The bill of complaint in this case was filed in aid of execution. The bill was taken as confessed by defendant Fred B. Tyler. The defendant Carrie B. Tyler appeared and demurred to the bill. The demurrer was argued on the 20th day of June, 1908, and an order overruling it was filed and entered September 23, 1908, and defendant Carrie B. Tyler was given 30 days from the service of the order on her solicitor in which to answer the bill of complaint.

The solicitor for the defendant was served with a copy of this order on the 8th of October, 1908. No answer was filed, but on the 23d day of November the defendant filed a claim for an appeal to this court. It is claimed by complainant’s counsel that the time for appealing from this order commenced to run on the 23d day of September, when the order was actually filed and entered. Defendant claims she had 40 days after the time in which to answer expired, and cites Creasey v. St. George’s Society, 34 Mich. 51; Cross v. Cross, 54 Mich. 115; and Clark v. Village of North Muskegon, 86 Mich. 29. All of these cases were decided before the passage of Act No. 340, Pub. Acts 1907, which contains the present practice on appeal in chancery cases. Section 2 of this act was construed in Moody v. Macomber, ante, 76. In that case it was held that the term “ decree ” in the statute was broad enough to cover an order overruling a demurrer. Section 2 of the act provides that the appeal should be taken within 40 days after filing of the decree. When the demurrer was overruled, two courses were open to defendant. She might have answered within the time given her by the court, or she might appeal within the time given by the statute. She did not answer and she did not appeal within the time fixed by the statute. The language of the statute is not ambiguous. Counsel close their brief as follows:

“We submit that the motion to dismiss the appeal herein should be denied with costs; but, in case the court should hold that the appeal was not taken in time, counsel for defendant and appellant request the court to permit defendant’s counsel to move for an extension of time for appeal, or make an order granting such extension upon the hearing of this motion.”

As already stated, the case is not properly here, nor is any proper showing made for granting an extension of time. The court below could doubtless deal with that question if it was presented to it.

The appeal is dismissed, with costs.

Blair, C. J., and Grant, MoAlvay, and Brooke, JJ., concurred.