author: Montgomery, J. Grant, C. J.

text:
    PETER v. CHICAGO & WEST MICHIGAN RAILWAY CO.

    1. Railroads — Setting Fires — Precautions—Approved Appliances.
    Under 1 How.-Stat. § 3378, relieving a railroad company from liability for a fire set by a locomotive when it is able to prove that the machinery, smokestack, and fire-boxes were in good order and properly managed, and that all reasonable precautions had been taken, an instruction that the company would not be liable if the appliances used to prevent the escape of sparks and fire were of a pattern in common use by experienced and prudent railroad operators, states the correct rule.
    2. Same — Instructions.
    Where lumber was set on fire by sparks from an engine on a stub road in a timber district, an instruction that the company would be relieved from liability if the engine in use at the time was such a one as prudent operators were accustomed to use in that “kind of business” would be erroneous, if understood to mean that a less degree of care was required than in the ordinary business of the company.
    3. Same — Matters of Defense — Contributory Negligence.
    The specification in the statute (1 How. Stat. § 3378) of the facts the proof of which will relieve a railroad company from liability, viz., the good order and proper management of the machinery, smokestack, etc., excludes the right to rely on plaintiff’s contributory negligence as a bar to recovery.
    4. Same.
    Even if such defense were available, it would not be established by proof that plaintiff piled the lumber which caught fire at a distance of eight feet from defendant’s track.
    5. Same — Insurance—Comment of Counsel.
    In an action against a railroad company for negligently setting fire to lumber, comment of defendant’s counsel as to the relation of certain insurance companies to the case is improper; the fact that the property was insured being inadmissible in defense.
    Grant, C. J., and Long, J., dissenting.

      Error to Muskegon; Russell, J.
    Submitted November 17, 1898.
    Decided September 27, 1899.
    Case "by William Peter against the Chicago & West Michigan Railway Company for the alleged negligent burning of lumber. From a judgment for defendant, plaintiff brings error.
    Reversed.

      Bunker & Carpenter (B. W. Barger, of counsel), for appellant.

      F. A. Nims and William Alden Smith, for appellee.

       Rehearing denied April 3, 1900.

   Montgomery, J.

This action is brought to recover the value of a large quantity of lumber belonging to the plaintiff, which was consumed by fire occurring on the 18th of November, 1893, which fire is claimed to have had its origin in sparks emitted from an engine on defendant’s road. The lumber was manufactured for the plaintiff by Horning & Hart, who owned a mill at Keno, a place between three and four miles north of Woodville, a station on the defendant’s Big Rapids branch. The track into Keno was built by defendant at its own cost, except for right of way, and was originally used exclusively for the purpose of taking out the plaintiff’s lumber. Later the defendant extended the track to rea'ch other mills farther north, owned by other parties. The evidence of plaintiff tended to show that the engine used on the road set out the fire, which destroyed over 7,000,000 feet of plaintiff’s lumber, valued at over $90,000; that the engine used was of an old pattern, known as the diamond-stack pattern, not in common use. The defendant’s testimony tended to show that the engine was in good order, of a design in common use, and entirely serviceable. The defendant also offered testimony tending to show that the lumber where the fire started was piled but eight feet from the track, and that provisions for putting out fire were wanting. The jury found for the defendant, and the plaintiff brings error.

Numerous questions are presented in the brief of the plaintiff’s counsel, the more important being whether the court laid down the correct rule as to the negligence of defendant; whether the court erred in submitting tlie question of plaintiff’s contributory negligence to the jury; and whether there was error in allowing comment's of counsel as to the relation of certain insurance companies to the case, it appearing that the lumber had been insured.

The statute defines the extent of liability of railroad companies, and, in determining the question of defendant’s duty, reference to the statute is essential. Section 3378, 1 How. Stat., reads as follows:

“Any railroad company building, owning, or operating any railroad in this State shall be liable for all loss or damage to property by fire originating from such railroad, either from engines passing over such roads, fires set by company employés by order of the officers of said road, or otherwise originating in the constructing or operating of such railroad: Provided, that such railroad company shall not be held so liable if it prove to the satisfaction of the court or jury that such fire originated from fire by engines whose machinery, smokestack, or fire-boxes were in good order and properly managed, or fires originating in building, operating, or repairing such railroad, and that all reasonable precautions had been taken to prevent their origin, and that proper efforts had been made to extinguish the same in case of their extending beyond the limits of such road, when the existence of such fire is communicated to any of the officers of such company.”

It will be noted that the character of the engines to be used is not defined, although it is required that, to relieve the company from liability for fires, the engines, v etc., must be shown to be in good order and condition. It is not open to question that under this statute, on the plaintiff’s showing the fact of the fire from the defendant’s locomotive, the burden is cast upon the defendant to show that the locomotive was in good order and condition, and properly managed. The court in this case so charged. The plaintiff claims, however, that the court did not lay down the correct rule as to the character of the engine required in order to relieve the defendant. The court charged upon this subject as follows:

' “The railroad company is exonerated from liability under the statute if the appliances it has used to prevent or limit the escape of sparks and fire from the locomotive are such as have been in common use for a long time for that purpose, and have substantially guarded against the danger sought to be avoided. * * * If you should find that this defendant used this engine, and it was of such a pattern as was in common use by careful, experienced, and prudent railroad operators, and such as they would use and did use for this kind of business at that time, why that is all that is necessary for this defendant to do, so far as the quality of the engine is concerned.”

We think the charge of the circuit judge correctly stated the rule as established in this State in Hagan v. Railroad Co., 86 Mich. 615. As was said in that case:

“Two or more kinds of appliances may be used, each one of which is approved by a number of railroad companies which are managed by practical and prudent men, and the adoption of each may have been after careful consideration of the merits of all; yet, unless that adoption and approval has some weight, there is no safety in the use of either.”

Under the instruction given, the jury were not authorized to find that it was proper to use a character of locomotive which had been generally displaced by better appliances. The only doubtful expression in the charge was the reference to “use for this kind of business.” If this were understood to mean that a, less degree of care was required in this service than in the ordinary business of the company, it was not proper, as we think the company was bound to use the same degree of caution at this place as at other points on the road.

The case presents a question of exceeding importance and interest, which is whether the plaintiff’s contributory negligence is a bar to recovery under this statute. This question was mooted in Briant v. Railroad Co., 104 Mich. 307; but, as its decision was not necessary to a determination of the case, it was not settled. The authorities bearing directly upon the subject are not numerous, but, as we read them, they are harmonious. The question of the effect of plaintiff’s contributory negligence has arisen in three classes of cases:

First.- Where the liability of defendant rests upon the common law.

Second. Where the liability of the company for fires set out by its locomotives is made absolute by statute.

Third. Where, as in this State, such liability is limited by the statute itself.

In the first class of cases, the contributory negligence is a defense; in the second class, the liability of the company is absolute, and the contributory negligence of the plaintiff is not a defense. 3 Elliott, R. R. § 1238. This case falls within the third class. The statute creates an absolute liability for all loss or damage to property by fire originating from engines, etc., with a proviso that the company shall not be liable if it proves certain facts enumerated, among which is not the contributory negligence of the plaintiff.

In the case of Laird v. Railroad, 62 N. H. 254 (13 Am. St. Rep. 564), the supreme court had under consideration a statute of Vermont which read:

“When any injury is done to a building or other property by fire communicated by a locomotive engine of any railroad corporation, the said corporation shall be responsible in damages for such injury, unless they shall show that they have used all due caution and diligence, and employed suitable expedients, to prevent such injury.” Gen. Stat. Vt. (1862) chap. 28, § 78.

The court held that the contributory negligence of plaintiff did not constitute a defense, under this statute. The decision was rested upon two grounds: (1) The analogy of the Vermont decisions holding that the contributory negligence of the owner of animals killed or injured by a railroad company which had not fenced its tracks constituted no defense; and (2) that the fair construction of the statute led to the result reached. The court said: “The statute expressly declares in what cases the corporation shall be relieved from liability, and no other defense is recognized, except showing ‘that they have used all due caution and diligence, and employed suitable expedients, to prevent the injury;’” and held that the rule “ Fxpressio unins est exclusio alterius ” applied.

It will be readily seen that the case cited is directly in point, and that both grounds upon which the case rested, may be urged with equal force in this State; for not only is there the same room for the application of the rule “Fxpressio unius est exclusio alterius,” but we have also held in this State that the defense of contributory negligence is not available in an action under the preceding section of our statute (1 How. Stat. § 3377), which provides that the company shall be liable for damages done to cattle, etc., in case of a failure to fence its tracks. Flint, etc., R. Co. v. Lull, 28 Mich. 510; Neversorry v. Railway Co., 115 Mich. 146. The reasoning of the court in Laird v. Railroad, supra, is convincing, and seems to us unanswerable. To reach any other conclusion, we must interpolate into the statute words not found there, and create an additional ground for exemption. The contention of appellant is also sustained by numerous cases which hold that, under a statute fixing the liability of a railroad company for fires set out by its locomotives, the defense of contributory negligence is not available. Of this class are Rowell v. Railroad, 57 N. H. 132 (24 Am. Rep. 59); West v. Railway Co., 77 Iowa, 654; Union Pacific R. Co. v. Arthur, 2 Colo. App. 159. As is stated by the learned author in 3 Elliott, R. R. § 1238, there may be cases in which, after the property is set on fire by a railroad company, the owner, by a slight effort, could save it from destruction, and that such cases should be subject to a different rule. In such case, it might be said with much force that the damage does not directly result from the fire. But in this case we are dealing with the alleged precedent negligence of plaintiff, and must hold that the defense is not available under the statute.

If the defense were available in any case, we should also be of opinion that no such act of negligence was shown in piling the lumber eight feet from the track. See Stacy v. Railway Co., 85 Wis. 225; Fero v. Railroad Co., 22 N. Y. 209 (78 Am. Dec. 178). We have not overlooked the cases cited by defendant’s counsel. The case of Ross v. Railroad Co., 6 Allen, 87, is negative authority. The court did not go out of its way to disapprove the holding of the court below. If it be treated as affirming the doctrine contended for, it is at variance with the New Hampshire and Iowa cases. The opinion in Murphy v. Railway Co., 45 Wis. 222 (30 Am. Rep. 721), is able and exhaustive, but, so far as the case discloses, it rests on the common-law doctrine of negligence. We have been cited to no statute of Wisconsin, nor have we been able to find any, in force when the action in Murphy’s Case arose, which bears on the subject. The case is not, therefore, an authority which aids us in placing a construction on our statute.

The fact appeared on the trial that the lumber consumed was insured. This did not affect the plaintiff’s right to recover. Perrott v. Shearer, 17 Mich. 48; Hagan v. Railroad Co., 86 Mich. 619. Obviously, therefore, the comment as to the amount of capital stock of the insurance company was untimely, and should have been omitted. We need not determine whether this comment was damaging error not cured by the charge, as the case must go back on other grounds.

Judgment reversed, and new trial ordered.

Hooker and Moore, JJ., concurred with Montgomery, J.

Grant, C. J.

(dissenting). 1. Does 1 How. Stat. § 3378, abrogate the rule of the common law that he whose negligent act contributes to his own injury cannot recover damages from another whose negligence contributed to the same injury ? That rule of the common law is founded in sound reason and justice, and is the firmly-settled rule in this State. Attempts have been made to induce the court to depart from the rule on the ground of what is called “gross negligence” on the part of the defendant. The court, however, has steadily adhered to the rule, and the only departure or seeming departure from it has been in those cases where the act of the defendant has been willful in character, or was done intentionally and with knowledge of the danger to the plaintiff. The statute does not change the rule of the common-law liability for negligence. That rule of liability remains the same. If the defendant can show that it has exercised due care in the construction and management of its engines, the defendant is not liable. This has always been the rule, and the statute does not affect it. It was found difficult, and in many cases impossible, for the plaintiff to show what caused the fire to escape from the engine. Its construction and management were exclusively within the knowledge of the company. The reason and reasonableness of a law which would shift the burden of proof to those who had exclusive knowledge on the subject, and exclusive control and management of the machine which caused the damage, are apparent. Did the legislature intend to go further? It has not expressly done so. In order to sustain the contention of the plaintiff, we must find that it has done so by implication. Eepeals of statutes by implication are not favored. Only when ■ effect cannot be given to both statutes do courts hold that the latter repeals the former. If both can stand and he given any effect, courts have universally held that there is no repeal. In my judgment, the same rule should be applied in the construction of a statute claimed to abrogate a wise and beneficent rule of the common law. If both can stand and be given effect, both should be sustained. Applying that rule to the case before us, I do not think that the common-law rule is abrogated. There is nothing in this law to indicate that the legislature intended to abrogate the rule as to contributory negligence which was the settled law when the act was passed. Had it so intended, apt words to carry out such intention would naturally have been used. It is fair to infer that the legislature had in mind solely the injustice of the common-law rule as to the burden of proof, as applied to cases of this character. The decisions upon this subject are not harmonious, even under statutes which are somewhat similar to ours. In such case, authorities are of but little weight, and other courts must decide the case upon their own statutes, and upon what seems to them the correct rule of law.

Considerable reliance is placed upon Laird v. Railroad, 62 N. H. 254 (13 Am. St. Rep. 564). The court in that case based its decision upon the law of Vermont. The fact is noted that the statute of Vermont gives railroad companies an insurable interest in their own name upon property situated along their right of way. The statute in Rowell v. Railroad, 57 N. H. 132 (24 Am. Rep. 59), w&s the same. It is evident that the court placed considerable stress upon the fact that the statute gave railroad companies the right to insure the property of others situated along their right of way, and argue from that that it was the intention of the legislature to place railroad companies upon the same basis as insurance companies, and make them insurers against loss by fire. The chief justice in his opinion used the following language:

“Contributory negligence does not furnish any defense to any action by the insured on the policy of the insurance. By the statute, the proprietors are liable for all damages which shall accrue, etc., and have an insurable interest in all property exposed to such damage. Negligence, either of the railroad or of the landowner, would not, according to the authorities, be a defense to an action by the proprietors to recover on their policy the amount of the loss insured. It would be odd enough if the proprietors could recover on their policy, and then turn round and defeat the property owner on the ground of contributory negligence.”

Whether the same result would have been reached in the absence of this insurance provision is uncertain. That it was a potential, if not a controlling, factor, is evident. In this connection we must remember the well-settled rule that the decisions of courts must be read in the light of, and oftentimes limited to, the facts of the particular case. Murphy v. Railway Co., 45 Wis. 226 (30 Am. Rep. 721). At any rate, decisions of other courts in such cases are not controlling with us, and are only valuable in so far as they may contain reasons applicable to our statute. The language of our statute imposing liability for failure to give the signals is as imperative as is the language in regard to- liability for fires; the latter only differs from the former in providing that the railroad company may relieve itself from liability by showing that it has used due diligence; yet in the former case, as already shown, this court has uniformly sustained the defense of contributory negligence. Grand v. Railroad Co., 83 Mich. 571 (11 L. R. A. 402).

The statute in regard to fencing by railroads, and liability for failure to erect and maintain them, and the decisions thereunder, have no application to this case. There is no liability at common law for failure to maintain fences. The liability therefor is purely statutory. Besides, the language of the statute in regard to fences is very different from that now under discussion, and is so strong as to leave no doubt of the intent of the legislature. Flint, etc., R. Co. v. Lull, 28 Mich. 510; Neversorry v. Railway Co., 115 Mich. 146. The statute under which these decisions were rendered is given in full in Flint, etc., R. Co. v. Lull, supra. The contributory negligence relied upon was that the plaintiffs permitted their cattle to run at large in the public highway, unattended. It was held that the statute was adopted as much for the protection of trainmen and passengers as for the protection of property. I do not think that those decisions affect the question now before us.

As already shown, it must be clear that the statute imposes this absolute liability, and takes away the common-law defense. The distinction between statutes which impose this liability and those which do not is well illustrated by the’statutes and decisions of the State of Iowa. Section 1289 of the Code of Iowa of 1873 provides that “every railway which fails to fence,” etc., “shall be liable to the owner for any stock injured or killed by reason of the want of such fence, unless the damage was occasioned by the willful act of the owner ,or his agent.” It further provides that, in order to recover, the owner is only required to prove the injury or destruction of his property. The last clause of the section reads as follows:

‘ ‘ And provided, further, that any corporation operating a railway shall be liable for all damages by fire that is set out or caused by operating of any such railway, and such damage may be recovered by the party damaged in the same manner as set forth in this section in regard to stock, except to double damages. ”

In West v. Railway Co., 77 Iowa, 654, the court held that under this statute the liability was absolute, and that contributory negligence was no defense. The liability for damages by fire is placed upon the same basis as that of liability from failure to fence. It is difficult to see how the court could have held otherwise.

Section 1288 of the same Code provides:

“Every corporation constructing or operating a railway shall * * * construct at all points where such railway crosses any public highway good, sufficient, and safe crossings and cattle-guards; * * * and any railway company neglecting or refusing to comply with the provisions of this section shall be liable for all damages sustained by reason of such neglect and refusal, and, in order for the injured party to recover, it shall only be necessary for him to prove such neglect or refusal.”

A switchman was killed at the cattle-guard while engaged in switching cars. The court, in Ford v. Railway Co., 91 Iowa, 179 (24 L. R. A. 657), held that this statute did not take away the defense of contributory negligence. The court said:

“Under section 1288, a liability is fixed, and it provides what the party seeking to recover must prove in the first instance. If, in such an action, the plaintiff establishes the neglect and refusal of the company to comply with the statute, and the fact that he has sustained an injury by reason thereof, he has made a case entitling him to recover, in the absence of evidence offered by the defendant; but it seems to us that the language used does hot cut off the right of defendant to establish the fact, as a defense, that the injury was the result of the intestate’s contributorj negligence, or, in a proper case, the fact of independent negligence on his part, or any other defense it may have.”

In Ross v. Railroad Co., 6 Allen, 87, the statute imposed a liability for fire, as follows:

“When any injury is done to a building or other property of any person or corporation by fire communicated by a locomotive engine of any railroad corporation, the said railroad corporation shall be held responsible in damages to the person or corporation so injured; and any railroad corporation shall have an insurable interest in the property for which it may be so held responsible in damages, along its route, and may procure insurance thereon in its own behalf.” Stat. 1840, chap. 85, § 1.

It will be observed that the language is substantially the same as in our statute, except that it gives the railroad companies an insurable interest in property, while’ours does not. The case was tried upon the theory that contributory negligence was a defense.

The question was raised and decided in Arkansas under a statute similar to ours, and the defense of contributory negligence sustained. Tilley v. Railway Co., 49 Ark. 535.

Elliott recognizes that the decisions are not in harmony, even where there are no statutory enactments, and, after stating that where statutes impose an absolute liability the question of the owner’s contributory negligence is immaterial, says: “We do not believe, however, that such a strict rule, even where there is an absolute statutory liability, is entirely just.” 3 Elliott, R. R. § 1238. This statement of the learned author is only material in showing the care courts should exercise in determining whether" the statute abrogated this defense. Under the rule claimed, a party may sit back, and deliberately see his property destroyed, when by slight exertion he could arrest the fire. So he may leave hay or other combustible material along the defendant’s right of way, at a farm crossing or elsewhere, in a dry time, and recover damages if the combustible material takes fire from an engine. Many other illustrations will readily suggest themselves. Such a rule is unjust, and courts ought not to hold that the legislature intended to establish it, unless the language leaves no other conclusion possible. It is sought to apply the rule “Exjpressio unius est exclusio altering.” I do not think this a case for the application of that rule. The legislature did not pretend to deal with the question of contributory negligence, but was dealing solely with the negligence of railroad companies.

2. "Was there evidence of contributory negligence ? The jury, in reply to special questions, found that the lumber was piled so close to the track that cars in passing struck the ends of the piles, and that a communication was addressed by the defendant company to the agents of plaintiff upon the subject of this dangerous proximity. Barrels of water kept upon the tops of the piles for use in putting out incipient fires had been emptied, although there was at the time no danger of their freezing up. One witness testified that he looked for pails with which to get water to put out the fire, but they had been taken away, and the barrels were empty. He also testified that with two pails of water he could, in his judgment, have put the fire out when it was first discovered. This testimony, in my judgment, made the question one of fact to be determined by the jury. Counsel cite cases where buildings, built near the right of way, were burned. The courts properly hold that their erection was a legitimate use of one’s own property, of. which the owner could not be deprived, and that in running their trains past them the railroads were held to a greater degree of care. These cases have no application where the use is merely temporary, and there was no occasion for piling inflammable material so near the track for the mere convenience in loading. Stacy v. Railway Co., 85 Wis. 225, is cited in support of plaintiff’s position. The trial court in that case set aside the special finding of the jury that the plaintiffs were guilty of contributory negligence, as clearly against the evidence. The jury, however, having found that the defendant was not guilty of any negligence, this finding became immaterial; but the appellee sought to sustain the judgment upon this finding by the jury. Upon this point the appellate court said:

“There was little evidence on this subject beyond the statements in the complaint, referred to, and the fact, which is of common knowledge, that the grounds around this, as all other such mills, are to a considerable extent covered with sawdust, and some testimony that edgings and debris to some extent had accumulated under the tramway, — a necessary result, to some extent, in the operation of any such mill. There is nothing to show that there was an unusual or dangerous condition of affairs in these respects, or that the plaintiffs were guilty of any specific act or omission of a negligent character, or that they failed to provide and keep means for the prompt ex-tinguishment of incipient fires.”

The court further stated that the trial court had better means of forming a correct judgment upon this question than had- the appellate court, and they therefore regarded the judgment of the lower court upon this point as controlling, and practically setting aside the finding. That was not a case of piling lumber near the track. There was a tramway between the piles of lumber and the track, the tramway being a few feet from the track, the exact distance not being stated.

I think the question of contributory negligence was properly submitted to the jury.

3. Certain insurance companies, having policies upon this lumber, had paid plaintiff the full amount of the insurance, which covered nearly the entire value of the property. This suit was brought by these insurance companies in the name of the plaintiff. This they had a perfect right to do. Error is assigned upon the admission of testimony tending to show who were the real plaintiffs, and the remarks of counsel thereon. This fact first appeared in the case upon the examination of jurors as to their competency. It was certainly proper to examine these jurors as to their relations with these companies, and to ascertain if they had any interest in them. It was therefore impossible to keep the fact from the jury. The court, in the most emphatic language, instructed them that this action was properly brought, that they must dismiss from their minds all consideration of the question of insurance, and must give the full value of the lumber, regardless of the insurance, if the defendant was liable. Under this state of facts, I think that the appellate court should assume that the jury followed the instructions. I see no reason for assuming that jurors are inclined to be prejudiced in favor of railroad companies as against insurance companies. Be this as it may, the fact was necessarily before the jury, and the court did all that could be done to prevent any prejudice on the part of the jurors.

I think the judgment should be affirmed.

Long, J., concurred with Grant, C. J.


source: Caselaw Access Project

author: Hooker, J. Grant, C. J.

license: Public Domain

text:
    KING v. BREWER.
    1. Estates op Decedents — Presentation op Claims — Phraseology — Objections.
    Where an administrator has contested a claim against his decedent’s estate before the commissioners and in the circuit court, without protest as to its form, under circumstances which warrant the inference that the nature of the claim was fully understood, it is error for the court to direct a verdict on the ground that the claim, because framed in indefinite language, would not support an allowance. Grant, C. J., dissenting.
    2. Contracts — Consideration—Mortgages.
    A mortgagee’s agreement to take less than the amount due upon the mortgage in satisfaction of his debt is supported by a sufficient consideration, where the mortgagor, in reliance thereon, consents to an immediate sale, and surrenders the right he would otherwise have to occupy the land for more than a year and to harvest a growing crop.
    Error to Kent; Grove, J.
    Submitted January 6, 1899.
    Decided September 27, 1899.
    Charles D. King presented a claim against the estate of Henry Van Voorheis, deceased. The claim was disallowed by the commissioners upon objection of Aaron Brewer, administrator of said estate, and claimant appealed to the circuit, where verdict was directed for defendant. Claimant brings error.
    Reversed.

      Smedley & Corwin, for appellant.

      Crane, Norris & Stevens, for appellee.
   Hooker, J.

Claimant appeals from an order disallowing a claim against an estate. It was filed with commissioners in probate 'court, and was as follows:

Butternut, Mich., Jan. lltli, 1897. Mortgage to Henry Van Voorheis, given July 12th, 1893, with interest at 7 per cent. Paid March 25th, 1896.
Amount_________________________________-.............§1,130 00
Interest for 2 yr., 8mo.,13d.......-------------------- 213 78
§1,343 78
My claim, due March 25th. _............................ §343 78

It was disallowed by the commissioners, and on appeal was disallowed by a jury. It is contended by the appellee (1) that the claim was too vague and uncertain to permit proof to be given to charge the estate; (2) that, under the undisputed proof, there was no consideration for the promise of the intestate.

The deceased, as the claim indicates, held a mortgage against the claimant. The claimant asserts that the security was inadequate, and that, interest being in arrears, Van Voorheis, the deceased, persuaded the claimant to sell and give immediate possession, including crops growing upon the premises, promising to accept $1,000 in full payment upon his mortgage and interest, and that, after receiving the purchase price, payment was delayed until Van Voorheis died, and the administrator has since refused to pay over the sum of $343.78, being the excess over $1,000 received by Van Voorheis. There was testimony tending to prove this claim. The circuit judge directed a verdict for the defendant, upon the ground that “there was mo claim presented to the commissioners that they could recognize or pass upon, and it would be enlarging upon the issue presented to the commissioners for the court or jury to allow this claim.” It does not appear that any objection was made to this proof, either before the commissioners or at circuit. This claim might have been more formal, yet it shows that Van Voorheis received $1,343.78 upon a mortgage, of which the claimant asserted a right to $343.78. The evidence of the defendant shows that this question was before the commissioners, and that they passed upon it, and that the claimant had no counsel. We cannot say that the administrator was present, from any proof offered; but we cannot presume that he was not, if he thought it. was an unjust claim. The cases of McHugh v. Dowd’s Estate, 86 Mich. 412, and Comstock v. Smith, 26 Mich. 306, are said to justify the instruction given. In the case first cited the judgment was reversed on another ground, and, instead of saying that the informality of the claim was fatal, the court ordered a new trial, and suggested that the claim be made more definite. In the other case the claim was held sufficient, and the court said:

“There are no technical rules which regulate the form for exhibiting claims in the probate court, or for framing issues for their trial on appeal, and it is not desirable that there should be. Substance is more regarded than form in such cases, and the simpler the statement the better, if sufficient to apprise the court and parties interested of the real claim. The highly artificial rules of common-law pleading have no proper application, and it must frequently occur that the forms of declarations in actions ex contractu cannot be conveniently employed at all. The true subject of dispute should clearly appear, and, where this is the case, the form is of little consequence.”

We think they do not support the contention.

This claim, as filed, states, in effect, that there is due to the claimant $343.78 from the sum of $1,343.78 paid to Van Voorheis upon a mortgage of a given date. If the defendant did not understand what was meant, he might have objected, when an amendment would probably have been permitted; but he did not, and the case was tried twice, without protest by him, under circumstances which warrant the inference that the nature of the claim was fully understood. We think that the court erred in holding that it would not support any proof, and that it was not clear that it was the same claim tried before commissioners.

Counsel urge that the judgment should be affirmed upon .the other ground. If the claimant had chosen to do so, he could have retained possession of the premises until foreclosure of the Van Voorheis mortgage, which would have permitted him to harvest the growing crop. In consideration of a promise to take less than the amount due upon the mortgage, he consented to an immediate sale; thereby yielding the right to occupy the land for more than a year, and to harvest his crop. This seems to us a sufficient consideration for the promise relied upon.

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

Montgomery, Moore, and Long, JJ., concurred with Hooker, J.

Grant, C. J.

(dissenting). Claimant presented the following claim against the estate of Henry Van Voorheis, deceased:

Butternut, Mioh., Jan. 11th, 1897. Mortgage to Henry Van Voorheis, given July 13th, 1893, with interest at 7 per cent. Paid March 35th, 1896.
Amount--------------------------------------......$1,130 00
Interest for 3 yr., 8 mo., 13 d......................... 313 78
$1,343 78
,My claim, due March 35th____________________________ $343 78

The commissioners rejected the claim. Claimant appealed to the circuit court, which directed a verdict for the defendant, for two reasons: (1) That there was no claim presented to the commissioners upon which they could have acted; (3) that there was no consideration for the alleged promise, if any, as shown by the proofs. I think the court was correct upon the first point. There was nothing upon the face of the claim to indicate its nature, or what it was for. It was too indefinite to form the basis of an allowance by the commissioners. There was no request to frame an issue until the trial was over, and the circuit court was in the act of charging the jury. There must at least be an intelligible claim. As was said in Comstock v. Smith, 36 Mich. 306, “The true subject of dispute should clearly appear, and, where this is the case, the form is of little consequence.” In McHugh v. Dowd's Estate, 86 Mich. 412, a bill of particulars was filed, and we held that “the items are too vague and uncertain to permit proof to be given to charge the estate. ” In this view of the case, it is unnecessary to express any opinion upon the second point. I think the judgment should be affirmed.


author: Hooker, J.

text:
    PHELPS v. AMERICAN SAVINGS & LOAN ASSOCIATION.
    1. Building and Loan Associations — Insolvency—Application op Payments.
    Amounts paid as dues on unmatured stock of a building and loan association cannot be applied, on the insolvency of the association, to the payment of a mortgage executed by the stockholder as security for a loan.
    3. Same — Agents—False Representations — Rescission—Laches.
    One who subscribes for stock in a building and loan association, and receives a certificate of membership which recites his agreement to pay a stated sum monthly for each share of stock until such share matures or is withdrawn, and states the terms upon which withdrawal will be allowed, and gives notice that agents have no authority to change the contract, and who, after making several monthly payments, oilers a premium for a loan, using a blank which contains the announcement that “ all that is required of the borrower is to pay interest on the loan and the monthly payments on the stockthat, “ when the stock matures, it repays the loan and premium,” — cannot after six years, when the association has become insolvent, have the contract rescinded, and the mortgage canceled to the extent of his payments, on account of the false representation of the agent who procured his application for membership, that all of the moneys paid into the association would be applied upon the mortgage and interest, and not upon the stock.

      3. Judicial Notice — Statutes oe Another State — Usury.
    The courts cannot take judicial notice of the existence of a usury law in another State.
    Appeal from Kalkaska; Aldrich, J.
    Submitted April 4, 1899.
    Decided September 27, 1899.
    Bill by Cassius M. Phelps against the American Savings & Loan Association and William D. Hale, receiver, for the rescission of a contract and the cancellation of a mortgage. Defendant Hale filed an answer in the nature of a cross-bill, asking for an accounting and foreclosure. Prom a decree for complainant, defendant Hale appeals.
    Reversed.
    The following is the stock certificate referred to in the opinion:
    “The American Building & Loan Association, “Minneapolis, Minnesota.
    “Certificate No. 25,629. No. of shares, 10. Amount $1,000.00.
    “This certifies that Cassius M. Phelps, of Kalkaska, county of Kalkaska, State, of Michigan, is a member of the American Building & Loan Association of Minneapolis, Minnesota, and has subscribed for, and is the owner and holder of, ten shares of stock therein. This certificate is issued to and is accepted by the holder thereof upon the following express terms and conditions:

      “First. The shareholder agrees to pay to this association sixty cents monthly for each share until such share matures or is withdrawn.

      “Second. Monthly payments must be made each month on or before the day of the month on which this certificate is dated. No notices of such monthly payments shall be sent to members. All moneys due from members to the association, or due from the association to members, shall be due and payable at the home office, in Minneapolis, Minnesota: Provided, however, that the members in any town may elect a local treasurer, and may make payments to him for transmission to the home office. In such case the local treasurer will be deemed to be the agent of the members, and not of the association.
    “ Third. Fifty cents of each monthly payment on each share, and all fines, shall go into the loan fund. The remainder of such payment, and all fees, shall go into the general or expense fund. No part of the loan fund, or interest or profits thereon, can be used for expenses of any kind, except for taxes thereon.

      “Fourth. If any monthly payments are not paid when due, a fine of ten cents per share shall be imposed for each, month payments may be in arrears.

      “ Fifth. Stock in this association is nonforfeitable; but, if a monthly payment on any share becomes past due for a period of six months or more, such share shall be sold at auction for the purpose of paying the arrearages. The proceeds of the sale shall first be used to pay all back monthly payments and fines. The balance remaining after paying all accrued fines and monthly payments shall be paid to the member in whose name the stock stands at the time of sale. If the stock brings no more than enough to pay the accrued fines and monthly payments, it shall be bid in by the association and canceled, and all money standing to the credit thereof in the loan fund shall be considered profits to the other shareholders.

      “Sixth. Shares in good standing may be transferred on payment to the association of a transfer fee of fifty cents per share; but in no case shall such fee be less than one dollar or more than three dollars on any certificate. Shares on which loans have been made can be transferred only to a purchaser of the mortgaged property. No transfer is good unless made on the books of the association.

      “Seventh. At any time after one year from date, this certificate may be returned, and a new certificate for a less number of shares issued. In such case the money paid hereon (excepting the first payment) shall be applied on the new certificate, and no more payments shall be required until such money is exhausted. A fee of one dollar shall be charged for issuing the new certificate.
    ‘ ‘ Eighth. If a member dies, his personal representatives may withdraw his shares at any time. In no other case can a share be withdrawn until after two years from the date of the certificate. If a share is withdrawn at any time before it matures, the member will be entitled to receive a sum of money equal to the amount paid into the loan fund on such share in monthly payments, together with six per cent, annual interest. If a share has matured, it may be withdrawn at any time, and the holder thereof will be entitled to receive $100, together with all additional profits which may have been apportioned to such share. A member desiring to withdraw his shares shall be required to give the association sixty days’ notice of such intended withdrawal. A fee of fifty cents per share may be charged whenever any shares are withdrawn ; but in no case shall such fee be less than one dollar or more than three dollars on any certificate. Shareholders who have borrowed money cannot withdraw their shares unless the loan is repaid. Unless the consent of the directors is obtained, the association cannot be required to use in the payment of withdrawing members in any month more than half as much money as is received for monthly payments during that month.

      “Ninth. Once in three months the profits arising from interest, premiums, fines, and other sources shall be apportioned among the shares in good standing. Whenever the monthly payments made on any share together with the profits apportioned to such share amount to $100, such share shall be deemed to have matured, and no more monthly payments shall be required. The directors may require any share to be withdrawn at any time after it has matured. If losses occur, they shall be deducted from undivided profits, so far as possible. Any deficiency may be charged up to the shares in force.

      “Tenth. No agent has authority to change this contract in any way, and the association assumes no obligation for any statements not contained in its printed literature.”

      William D. Totten {J. L. Boyd, of counsel), for complainant.

      F. D. Mead, for appellant.
   Hooker, J.

The American Savings & Loan Association was incorporated under the laws of Minnesota in 1887, and was a going concern until 1896, when, by reason of insolvency, it went into the hands of Hale, as receiver, under an order of a district court of that State. The complainant became a member of this association in 1889, and subsequently borrowed from it the sum of $500, for which he gave his bond and mortgage, dated September 28, 1889. He continued his payments according to the agreement contained in his stock subscription and his mortgage and bond until April 6,1897, when he filed the bill in this cause, alleging that he was induced to make said contract by the fraud of the agent of said association. The bill prayed that the bond and mortgage be adjudged usurious and void, and an accounting and cancellation, upon payment of amount found due, if any. The substance of his claim was that, at the time he subscribed for the stock of the association, he was told that it was necessary that he should become a member in order to obtain a loan, and that all of the money paid in would be applied upon his mortgage and interest. The circuit judge applied upon the mortgage all sums paid in, and rendered a decree that the mortgage was paid, and that the association was indebted to the complainant in the sum of $60.

The first question to be considered relates to the alleged fraud. It is obvious that the person with whom the complainant made his arrangement was the agent of the association; for it availed itself of the application taken by such person, and issued stock upon it. According to the complainant’s testimony, he was called upon by the agent, who explained to him the nature of the association, and asked that he take stock in it. The complainant answered that he was not able to do so, but would like to borrow some money to complete his dwelling. After looking at the property, the agent said that the association would loan complainant $500 upon the premises, but that, in order to get the loan, it would be necessary that the complainant take 10 shares of stock in the association, and that by so doing he could get the loan at 6 per cent, interest, and could repay the same in monthly installments of $6. Complainant testified that:

“ I at this time asked the agent if I could repay the loan any time I desired to. He stated that I could do so by paying to the association the difference between the amount I had already paid, plus 6 per cent, interest thereon, and the amount of money actually borrowed. Eelying upon these statements of the agent, I subscribed for 10 shares of stock. After subscribing for the stock, I asked the agent how soon I could get the money. He then stated to me that, under the rules of the association, I would have to wait three months, and then the loan would be forthcoming. During the conversation he stated to me that the reason the association could do as he had told me it could do and would do was because they would receive the interest monthly upon the entire amount borrowed, and loan it in the Western States at a much higher rate than could be got in the East, and that it also had the use of the monthly payments made. This is substantially what occurred. * * *
Q. Whether, relying upon the statements and inducements to which you have testified, you became a borrowing member of the association.
“A. I did.”

He testified, further, that he saw no copy of the charter and by-laws of the association before he “became a borrowing member.” Upon cross-examination it was shown that a local board was organized at that time, and that the complainant signed an application for membership and 10 shares of stock, and paid a membership fee of $10. The application is dated April 13, 1889. Printed across the face of this instrument, the following appeared in red ink at the time of the hearing:

“Agents are allowed to collect admission fees only. Other payments may be made to local collector or to the home office. Agents have no authority to bind the association to pay debts, or to appraise property, or to promise loans at any given time or of any amount. The contract between the association and its members is in the printed literature issued by the association, and agents have no authority to alter or amend such contract, or to make promises not in accordance with the same.”

The complainant testified that he signed no paper containing the above printed in red. Being asked if he was told that he would have to pay $6 per month as dues on his stock, he answered: “ Not exactly that; no, sir. He told me that I would have to pay the $6 per month if I borrowed the money. I would be paying them at the rate of $6 a month.” He continued as follows:

“Q. How long were these payments of $6 per month to continue ?
‘ ‘A. Seven years.
“Q, At which time he estimated, did he not, that your stock would mature ?
“A. He said that after seven years I would be entitled to a discharge of my mortgage.
“Q. You paid, in addition to the $6 per month, two dollars and a half per month as interest on the money received ?
“A. Yes, sir.
“Q. When did you stop making payments ?
“A. I think my last payment was made in December, 1895.
“Q. Did you not make application to the association to become its agent here ?
“A. Why, I don’t remember making application to become an agent here, but I do remember some letter stating what commission they would pay to an agent. I think this was in the winter of 1893, before I received this statement.
“Q. Have you the letter that you received in response to your inquiry or letter in regard to becoming an agent ?
“A. I think not.”

After subscribing for the stock and making application for membership, the complainant soon received his certificate of stock. This, he says, was soon after April 17, 1889. It certified that he was a member, and holder of 10 shares of stock.

Under date of August 2, 1889, the complainant signed an application for a loan of $500. It contained a description of the premises, and an offer of a premium of $50 a share for the loan. It was' sworn to by him, and certified by the local board.. The following was printed upon the blank, viz.:

“The funds of the association will be loaned only to members. No member can obtain a loan until three months'from the date of his certificate. Loans must be secured by. first mortgages, and cannot exceed forty per cent, of the cash value of the real estate. Applications for loans will not be entertained at the home office unless first approved by local boards, and, when deemed necessary, onr traveling loan agent views the property before loans are granted. The rate of interest will be six per cent, per annum on the money actually loaned. All members desiring loans will be allowed to bid for the same. Members offering the highest premiums will be entitled to the loans. All interest is payable monthly. The premium is not paid in cash. But a borrower must carry stock enough so that the par value will equal the amount of the loan and premium together. All that is required of the borrower is to pay the interest on the loan and the monthly payments on the stock. When the stock matures, it repays the loan and premium.
“Bids fob Loans. Bids for money must be made in writing, and be sent to the association in an envelope securely sealed, with the application for a loan. Such bids will be opened every Thursday, and will be kept on file for inspection after being opened. Any person interested may be present, either in person or by attorney, when the bids are opened. The highest bidder is supplied first, second highest bidder next, and so on as far as the money in hand will go. If two persons or more bid the same, the one offering the best security is given the. preference : Provided that, other things being equal, borrowers will have precedence in the order in which bids are filed. All members who have filed applications for loans will be notified of the result of their application after bids are opened. The funds of the association are used for loans to members only. No bid will be entertained from any member in arrears for any payment, or who has not paid at least three monthly installments. * * *
“Repaying Loans. Loans may be repaid at any time, on giving thirty days’ notice. A borrower who repays his loan before maturity may continue his stock in force as an investment, or he may withdraw it, at his option. When a loan is repaid in less than seven years, an equitable rebate from the amount of premium will be allowed.”

The bond and mortgage bear date September 28th, though the latter was acknowledged October 5th. A passbook was furnished to the complainant, in the columns of which, headed as follows, the entries given below were subsequently made:

Date. Name of Collector. Pines, Interest, etc. Monthly Payments.
ApriU7, 1889 24 May 20 June 17 July 17 August 17 September 80 October 18 November Admissiomfee O. Watson $2.50 $10 00 6 00 6 00 6 00 6 00 6 00 6 00 6 00

Similar entries to the last were regularly made monthly until December 17, 1895.

The defendant Hale was appointed receiver of the company on January 14, 1896, and complainant learned of it soon thereafter. He made no further payments. The complainant testified that at the time the mortgage was given he received $495, and that he has paid $675. The receiver filed an answer in the nature of a cross-bill, and asked an accounting and a decree of foreclosure.

About the only disputed question of fact is that relating to the printing in red upon the application for stock. There seems no doubt that the application was a blank furnished by the association, and there was testimony tending to prove that all blanks furnished by it had this red notice upon it. On the other hand, the complainant testified that it was not on the blank he signed. Counsel claim that the case is within the rule laid down in Sawyer v. Building Ass’n, 103 Mich. 228. It is said that he had a right to rely upon the statements of the agent to the effect that he could repay the loan in seven years by making monthly payments of $6, and could pay it in full at any time by paying the difference between the amount already paid, plus 6 per cent, interest thereon, and the amount actually borrowed; that he has paid more than the amount borrowed, with interest at 6 per cent.; and that it should be all applied upon the mortgage.

As we look at the case, the alleged fraud is not clearly proved. The complainant was a lawyer. He knew he was getting stock, and presumably, at least, he could not have expected that he could get it for nothing. A local board was to be organized, and he had been furnished with some of the advertising matter of the association. Before he gave his mortgage he was put in possession of applications and other papers which described at length the scheme of doing business, and terms on which money could be borrowed and paid; and he made payments for several years, and until, according to the decree, he had overpaid by some $60 the amount due upon his bond. We think he was chargeable with notice that the amounts paid for monthly dues were payments upon stock. The notice upon his application for loan expressly said that “all that is required of the borrower is to pay the interest on the loan and the monthly payments on the stock.” Furthermore, he made six payments, of $6 each, before he gave the mortgage, and should have understood they were payments upon stock, because they could be nothing else at that time. The stockholders in the association were not necessarily borrowers, and all, whether borrowers or not, had an interest in the profits of the company, and all were interested in the proper application of the sums paid in by the complainant. If the representations alleged were made and relied upon, the complainant owed it to other stockholders to demand a rescission of the contract as soon as practicable after ascertaining the truth, and, failing in that, he would be estopped from attacking the contract later.

Complainant received his certificate of stock, as already said, before he made his mortgage, which showed that the monthly payments were stock dues, and he paid them for several months before he gave his bond. It showed, also, that the greater part of the monthly payments would be credited to the general or expense fund, and not upon his loan. It also stated the terms on which a stockholder might withdraw or otherwise dispose of his stock, and it also stated that “no agent has authority to change this contract in any way, and the association assumes no obligation for any statements not contained in its printed literature.” Counsel for the complainant insist that he was unaware of the notice said to have been printed in red across the face of his application for stock, because it was not there when he saw it; but the tenth condition in the certificate of stock, above quoted, contains substantially the same. The bid also contains the conditions upon which loans were obtainable. Again, on February 5,1894, a letter was written by the manager to complainant, apparently in answer to a request for a statement of the amount requisite to repay this loan; and a detailed statement was inclosed, from which it appears that the association then claimed $709.13 if the stock should not be canceled, and $342.88 if it should be. We are of the opinion that the complainant has not established his right to a rescission, and that he must be considered a stockholder in the concern, and his rights and liabilities must be measured and determined accordingly.

It is claimed on the part of the complainant that the contract is void because unconscionable and usurious. The latter claim is not new. It has been made many times, yet in the great majority of cases it is held that such contracts are not usurious. In some instances statutes authorize such contracts, especially exempting them from the effect l.of usury laws, while in others they are held not to be within the usury laws for different reasons. A long list of cases is cited in the defendant’s brief which hold that these contracts are not usurious. We do not discuss them, however, because we are of the opinion that the statute settles the question for the purposes of this case. See Tilley v. Loan Ass’n, 52 Fed. 622; Russell v. Pierce, ante, 208.

It is claimed by the defendant that this is a Minnesota contract. If it is, the Minnesota statute covers it. The law under which this association was organized provides that “any premium for loans made by any association governed by this act [an act relative to building associations] shall not be considered or treated as interest, nor render such association amenable to the laws relating to usury.” Stat. Minn. (1894) § 28?9. Moreover, if it did not, we cannot take judicial notice that there is any usury law in Minnesota, and we are not advised of any proof upon the subject. Again, if, for any reason, the Michigan usury law (1 How. Stat. §§ 1594-1596) is applicable, the effect is only to preclude recovery of illegal interest ; and no claim is made for such, as defendant asks credit only for the sum borrowed, with interest at 6 per cent.; admitting that the premium paid should be applied in reduction of the mortgage. Nor do we think the contract unconscionable. It is substantially like similar contracts made by building and loan associations throughout the country, and enforced by the courts every day. Building and loan associations are peculiar institutions, and, from some real or imaginary benefit that they are supposed to afford the poorer classes of society, are frequently given exceptional advantages over other corporations and private persons, such as immunity from taxation and usury laws. Their dealings are for the most part limited to contracts with their own members, all of whom participate in the profits, if any are made, and in losses, if any are suffered. If convinced that the managers of the association have, through fraudulent practices, embezzled, or, from poor management, squandered, its funds, we must not forget that the complainant is not. the only sufferer, and that he has no right to preference over other stockholders, who have a community of interest with himself in the property and obligations of the concern.

It remains to ascertain the amount to be credited upon the mortgage. Complainant insists that he is entitled to have the amounts paid as stock dues applied to the mortgage, under the rule for partial payments; but this was held otherwise in the case of Russell v. Pierce, supra. To permit that would be to make the complainant a preferred creditor, to the disadvantage and injury of other stockholders. This right has been denied in mqny cases and States, as shown by the following authorities cited by counsel: State Sav. & Loan Ass’n v. Carroll, 15 Pa. Co. Ct. R. 522; Strohen v. Loan Ass’n, 115 Pa. St. 273; Wohlford v. Savings Ass’n, 140 Ind. 662 (29 L. R. A. 177); Eversmann v. Schmitt, 53 Ohio St. 174 (53 Am. St. Rep. 632); Towle v. Investment Society, 61 Fed. 446; Rogers v. Hargo, 92 Tenn. 35; Price v. Kendall, 14 Tex. Civ, App. 26; Post v. Loan Ass’n, 97 Tenn. 408 (34 L. R. A. 201); Rogers v. Rains, 100 Ky. 295; Knutson v. Building Ass’n, 67 Minn. 201; Southern Bldg. & Loan Ass’n v. Trust Co., 101 Ala. 582 (29 L. R. A. 120); Pattison v. Loan Ass’n, 63 Ga. 373; People, v. Lowe, 117 N. Y. 175; Mechanics’ Bldg. & Loan Ass’n v. Conover, 14 N. J. Eq. 219; Endlich, Bldg. Ass’ns (2d Ed.), § 477; 37 Cent. Law J. 43.; Curtis v. Provident Ass’n, 69 Conn. 6 (61 Am. St. Rep. 17); Goodrich v. Building Ass’n, 54 Ga. 98; Sullivan v. Study, 86 Fed. 491; Building & Loan Ass’n v. Price, 169 U. S. 45; Brown v. Archer, 62 Mo. App. 277; Weir v. Provident Ass’n, 56 N. J. Eq. 234; Moran v. Gray, (N. J. Ch.) 38 Atl. 668; Towle v. Loan Ass’n, 75 Fed. 938; Leahy v. Loan Ass’n, 100 Wis. 555; Hale v. Cairns, (N. Dak.) 77 N. W. 1010. See, also, Myers v. Building Ass’n, 117 Mich. 389. Under the proofs, the complainant has paid interest to January 1,1896, but nothing upon the principal. The decree of the circuit court is reversed, and a decree of foreclosure will be entered here, the amount thereof to be $500, with interest at 6 per cent, from January 1,1896, to the date of such entry, with costs of both courts; the case to be remanded for further proceedings.

The other Justices concurred.


author: Hookek, J. Grant, C. J.

text:
    STOCK v. REYNOLDS.
    1. Attachment — Dissolution—Limited Denial.
    Where an attachment is issued upon an affidavit that defendant is about to remove his property from the county, and refuses and neglects to pay or secure payment of his indebtedness to plaintiff, a denial, in a petition for dissolution, that petitioner was about to remove his property with intent to defraud his creditors, or that he was indebted to the plaintiff in any sum, is bad, as too limited to cover the charge. Bane v. Keys, 115 Mich. 244, followed.
    2. Same — Trial oe Merits — Indebtedness.
    The question of defendant’s indebtedness to plaintiff, who procured an attachment upon an affidavit that defendant was about to remove his property from the county, and that he refused and neglected to pay plaintiff’s claim, without charging a fraudulent intent, cannot be tried upon a petition for dissolution of the writ.
    3. Same — Findings oe Faot — Conclusions.
    Findings of fact in attachment proceedings that plaintiff, the purchaser of a car of wheat, was repaid the purchase price upon his rejecting the car as below the standard agreed upon, and that defendant, the seller, refused upon demand to send another car, the price of wheat having in the meantime advanced, justify the conclusion that the seller denied liability, and refused to pay any sum upon the claim. Grant, C. J., and Moore, J., dissenting.
    4. Same — Property in Transit.
    2 How. Stat. § 6831, subd. 2, provides for the issuance of an attachment upon an affidavit that defendant “is about to remove any of his property from the county in which such application is made, or from the' county where the defendant resides,” with fraudulent intent, “or that he has removed or is about to remove himself or his property from the county, and refuses or neglects to pay or to secure the payment of the debt.” Held, that a car of wheat in the possession of a railroad company, billed from another county and intended to be forwarded to the consignee in another county, is subject to attachment in the county where found. Grant, O. J., and Moore, J., dissenting.

      5. Same — Practice—Costs. '
    Where a defendant in attachment proceedings, after appearing specially, and moving to quash the writ on the ground of defective service, and pending the determination of the application, petitions for a dissolution of the writ, which petition is ill-founded, he cannot, after granting of the motion to quash, object that the court had no jurisdiction of the petition to dissolve, so as to escape liability for costs therein.

      Certiorari to Hillsdale; Chester, J.
    Submitted April 18, 1899.
    Decided September 27, 1899.
    Attachment proceedings by Frederick W. Stock against Isaac N. Reynolds. Defendant brings certiorari to review the action of the circuit court in reversing an order of a commissioner dissolving the writ.
    Affirmed.

      John M. Corbin and J. B. Hendee, for appellant.

      Sampson & Barre, for appellee.
   Hookek, J.

The defendant was, during these proceedings, a grain dealer at Eaton Rapids, in the county of Eaton. The plaintiff resided in Hillsdale county. The plaintiff obtained a writ of attachment against the defendant from a justice of the peace in-Hillsdale county upon an affidavit alleging that “there is justly due to him from the defendant, upon implied contract, the sum of $150, * * * and that the said Isaac N. Reynolds, as deponent has good reason to believe, is about to remove his property from said county of Hillsdale, and refuses and neglects to pay or secure payment of this debt.” The officer attached a car of wheat, and, being unable to find defendant in the county, left copies of the writ and inventory with the station agent of the Lake Shore & Michigan Southern Railway Company, in whose possession he found the wheat. On the return day the cause was adjourned to the 13th day of November, the defendant having appeared specially, and moved to quash the writ. On November 2d the defendant filed a petition with a circuit court commissioner of Hillsdale county for a dissolution of the attachment, which was heard upon its merits, both parties participating, on November 12th, and the commissioner made an order dissolving the attachment. The case was afterwards heard in the circuit court on appeal from this order, and the same was reversed. The court filed a written finding, and the case is now before us upon certiorari.

The finding states that in July, 1897, the defendant sold to the plaintiff two car loads of No. 2 red wheat, of grade equal to wheat previously sold. This was done by correspondence, dated July 28th, 29th, and 30th. One car was shipped July 31st, the other August 2d. The last car shipped was accepted and paid for. The first car arrived at Litchfield on July 31st, but was not inspected until August 11th, and meantime the draft which accompanied the car was paid by the plaintiff. When inspected, it was rejected, as not up to the grade agreed upon, and defendant took back the wheat, and repaid plaintiff for it. Plaintiff demanded that another car be sent, and defendant refused. Meantime the price of wheat advanced. The wheat attached was the property of the defendant, and was shipped the same day that it was levied upon, to a commission house in Detroit, and in course of transit passed through Hillsdale county, and while being held in Jonesville, awaiting the freight train upon the main line of the Lake Shore & Michigan Southern Railway, was taken upon the writ. The return also shows that a motion to quash was granted by the justice during the pendency of the proceedings to dissolve the attachment, whereupon that proceeding was taken, by certiorari to the circuit court, by which court the judgment of the justice was sustained. Both orders were made by the circuit court upon April 29, 1898, though the finding alluded to was filed earlier.

The question before us relates to the proceedings to dissolve the attachment; and, as the levy fell with the quashing of the writ by the circuit court, we conclude that costs only are at stake. The principal questions sought to be raised appear to be:

1. Whether it can be said, under the facts in this case, that the defendant was about to remove his property from the county of Hillsdale, within the meaning of the attachment statute.
2. Did the defendant neglect to pay or secure the debt, within the meaning of the statute ?
3. Would this claim, as found to exist by the circuit judge, support an affidavit alleging that an amount was due upon implied contract, the same not being liquidated ?
4. Whether the court had jurisdiction to render a judgment for costs in the dissolution proceeding, in view of the fact that the justice acquired no jurisdiction, for the reason that there was no personal, nor a proper substituted, service of the writ.

The petition for dissolution states that the only ground for attachment stated in the affidavit is that “the defendant * * * is about to remove his property from said county of Hillsdale, and refuses and neglects to pay or secure the payment of the debt, with intent to defraud Ms creditors of $150, claimed to be due from the defendant to the plaintiff;” and denies that the petitioner was about to remove his property from said county with intent to defraud Ms creditors, or that he was indebted to the plaintiff in any sum. As we have already seen, the affidavit for attachment did not contain the charge stated in the petition. Moreover, the petition does not negative the charge that it does contain, viz., that “the defendant is about to remove his property from said county, and refuses and neglects to pay or secure payment of this debt.” The denial is not as broad as this charge, but is limited to a neglect and refusal to pay with a fraudulent intent. So far as the point is concerned, the case is equally within the principle of Bane v. Keys, 115 Mich. 244.

The only other denial contained in the petition is that of indebtedness. If this were a charge of fraudulent intent, it is possible that evidence in support of this might be admissible, under the decision of Hyde v. Nelson, 11 Mich. 353. But, as intent is not involved, it seems unimportant. It does not tend to disprove, but rather to confirm, the statement of the affidavit that “defendant refuses and neglects to pay plaintiff’s claim.” If it be said that it disproves it by showing that there was no debt to refuse payment of, the answer is that this would be addressed to the merits of the action, which cannot be tried in this proceeding. Genesee Co. Sav. Bank v. Michigan Barge. Co., 52 Mich. 164. See, also, 3 Enc. Pl. & Prac. 79, and cases cited; Drake, Attachm. § 418, and cases cited.

We think the findings justify the conclusion that the defendant denied liability, and refused to pay any sum upon the claim. The circuit judge must have so understood it, or he would have dissolved the attachment. The petition does not allege that the defendant had no property in Hillsdale county, nor that he was not about to remove property from there, nor that he did not refuse or neglect to pay or secure the plaintiff’s claim; nor does it state that, while he had property in that county, it was not subject to attachment. Again, it sets up no want of jurisdiction in the justice, and, had it done so, there was another way to dissolve the attachment, viz., by quashing the proceedings ; and this was done subsequently. But the petition for dissolution fairly raises the further question, viz., whether the property in transit, under the circumstances mentioned, was subject to seizure upon attachment; in other words, whether such property was, in contemplation of this statute, in Hillsdale county, or about to be removed therefrom. It also contains statements which indicate that the defendant was not indebted upon implied contract; but as to this last we have already said that the nature of the claim cannot be litigated on an application to dissolve the attachment.

“In all such cases \i. e., where the cause of action is not one upon which attachment should issue], though the plaintiff, in his affidavit for obtaining the attachment, allege a cause of action founded on contract, yet if it should appear, either from the declaration or the evidence, that the true cause of action is not of that character, it is the duty of the court to dismiss the suit.” Drake, Attachm. § 10, and note 15.

The former question, however, is one that may be considered. Counsel do not cite us to any adjudication of the question in this or other States. The statute (2 Howi Stat. § 6831, subd. 2) provides for the issuance of an attachment against a defendant upon affidavit—

‘ ‘ That he is about to remove any of his property from the county in which such application is made, or from the county where the defendant resides, with the like intent, or that he has removed or is about to remove himself or his property from the county, and refuses or neglects to pay or to secure the payment of the debt.”

If we follow the natural meaning of the words of this statute, we shall be obliged to say that this was property within the county of Hillsdale, and that the defendant was about to remove it therefrom. 1 How. Stat. § 2, subd. 1, requires such a construction. Moreover, the first of the section quoted plainly permits attachment of property in counties other than that in which the defendant resides, where removal of any of his property is about to be made with a fraudulent intent. The same subdivision treats a neglect or refusal to pay as equivalent to evidence of a fraudulent intent, where the debtor is about to remove his property. We are of the opinion, therefore, that it was subject to attachment.

It is contended that the disposition of the motion to quash shows that the circuit court had no jurisdiction to render a judgment for costs in this proceeding. This position is untenable. The defendant himself launched this proceeding, instead of relying on his motion to quash. He might have waived the irregular service, had he seen fit, when no such question as this could be raised. But he did not. He pushed the proceedings to dissolve until defeated, and now asks that the'court be held to have'been so wholly without jurisdiction as not to have authority to impose costs.

We find no error in the record, and the order of the circuit court is affirmed.

Montgomery and Long, JJ., concurred with Hooker, J.

Grant, C. J.

(dissenting). I cannot conclude that the statute covers a case like the present. The second paragraph of section 6831, 2 How. Stat., authorizes the issuing of an attachment upon an affidavit alleging—

“That he [the debtor] is about to remove any of his property from the county in which such application is made, or from the county where the defendant resides, with the like intent, or that he has removed or is about to remove himself or his property from the county, and refuses or neglects to pay or to secure the payment of the debt.”

The defendant was not removing this property from the county, but through the county, by means of a common carrier, in the usual course of trade. In my judgment, this statute only applies to property of a debtor having some permanent situs within the jurisdiction of the courts where the debtor resides or where the creditor resides. Its object evidently was to protect the creditor from danger of loss of the debt by such removal. The debt in this case was contested. It was unliquidated, if there was any debt at all. Plaintiff had made no demand for money damages. He demanded the second car load of wheat after the first one had been taken back because not in compliance with the contract. There was no evidence of fraud or attempt to defraud. There was no danger of any loss of the debt. Plaintiff tried to secure a trial of the cause within his own county by seizing the property in transit, and not in process of removal, within the fair interpretation to be given to the statute. We do not think the case of Johnson v. Lowry, 47 Ga. 560 (15 Am. Rep. 655), is in point. In that case the defendant was moving from one State to another, and in passing through an intermediate State his property was attached. The decision seems to be based largely, if not entirely, on the fact that the defendant was not a resident of the State, and upon the ground that “the law gives to every nonresident a locus in the county where he is found;” citing the statute of that State. The clause of the statute there referred to (Code 1868, § 1690), under which, evidently, the decision was rendered, provides:

“Transient persons, whose business or pleasure causes a frequent change of residence, and having no family permanently residing at one place in this State, shall be held and deemed, as to third persons, to be domiciled at such place as they at the time temporarily occupy.”

I do not wish to be understood as adopting the rule of that case. I very much doubt its soundness.

There is, in my judgment, another fatal objection to the plaintiff’s right of action. He had made no claim of a money demand against the defendant. Nothing had transpired between them to indicate that plaintiff intended to claim damages for the refusal to send the second load of wheat. A demand that defendant comply with his contract by sending a second load is not a demand for money, or any intimation, even, that money will be demanded. Plaintiff could only maintain this action by showing a refusal or neglect to pay the debt. Defendant had not •refused or neglected. How can it be said that a man has refused and neglected, when he has neither been asked to pay, nor even advised that money will be demanded ?

I think the judgment should be reversed.

Moore, J., concurred with Grant, O. J.


author: Grant, C. J. Moore, J.

text:
    POWER v. MONITOR INSURANCE CO.
    Fire Insurance — Existing Policy — Notice to Agent.
    Plaintiff, before making his application for insurance in defendant company, informed defendant’s agent that he had a policy in another company, which would not insure vacant property, and that, as the premises were about to become vacant, he desired insurance with defendant. On the day the application was taken, the policy was produced and handed to the agent, with the remark that it was not all used up, but “would be no good when the premises became vacant.” Whether or not the agent read the policy was not clearly established. The policy contained the usual 10-day vacancy clause, but did not, by its terms, expire until two years from the time the new insurance was effected. Held, that defendant should be deemed to have had notice of the prior insurance. Grant, G. J., dissenting.
    Error to Oakland; Smith, J.
    Submitted February 8, 1899.
    Decided September 27, 1899.

      Assumpsit by Franz Power against the Monitor Insurance Company on a policy of insurance. From a judgment for plaintiff, defendant brings error.
    Affirmed.

      A. & S. H. Perry, for appellant.

      G. G. Yerkes and Samuel W. Smith (Davis & Bromley, of counsel), for appellee.
    The defendant is a farmers’ mutual insurance company, doing business in the county of Oakland. On March 30, 1896, plaintiff made an application for insurance on buildings situated upon a farm owned by him, but then occupied by a tenant. In this application, in reply to questions, he stated that the real estate, without buildings, was worth $3,000, and that there was no other insurance. One West was the agent for the defendant in the township where plaintiff lived, and examined the property, took the application, and forwarded it to the company, which issued the policy, to the amount of $1,225. When Mr. West took the application, plaintiff stated to him that he had a policy in the Home Insurance Company. He produced it and showed it to Mr. West, but did not open it. He testified that he told him it was not all used up, “ but it would be no good when the house becomes vacant, empty, and he says, ‘ That will be all right.’ ” Mr. West did not read the policy, but acted upon the statement of plaintiff as to its contents. Mr. West, who was plaintiff’s witness, so testified. That policy did not, by its terms, expire till March 15, 1898, but contained the usual clause of forfeiture if the premises remained vacant for 10 days without the assent of the insurer.
    The fire occurred March 16, 1897. Plaintiff furnished proofs of loss April 13, 1897. On April 26, 1897, two of the directors and the secretary of the company, having been informed of the loss, went to plaintiff’s house, and had a conversation with him in regard to it. They had no authority to settle. Under the by-laws, the directors were the only ones authorized to settle a loss. The directors met on May 13, 1897. Plaintiff was notified of the meeting and was present. Offers of compromise were made, but failed. No formal action refusing to pay appears to have been taken by the board of directors, and in November following plaintiff instituted this suit. Four special defenses were set up in the plea. The case was submitted to the-jury upon the theory that defendant was estopped to insist upon the defense of double insurance.
   Grant, C. J.

{after' stating the facts; dissenting). The conversation between plaintiff and Mr. West when he applied for a policy is the only evidence of waiver of the defense of double insurance. There is no tangible evidence that any other officer of the company knew of the existence of the other policy until after this suit was commenced. Defendant made no written statement to plaintiff of its refusal to pay, or the grounds therefor. Plaintiff testified, under objection and exception, that the defendant had never notified him of the various defenses set up in the plea. Waiver or estoppel to set up defenses must be based not only upon knowledge of the existence of the defenses, but also must be made under such circumstances that the insured has the right to rely upon the estoppel, and has suffered injury in so doing. The mere fact that defendant failed to state to him the grounds of its defense creates no estoppel. This court, speaking through Chief Justice Campbell, in Security Ins. Co. v. Fay, 22 Mich. 467 (7 Am. Rep. 670), said:

“ The waiver that is spoken of in these cases is another term for an estoppel. It can never arise by implication alone, except from some conduct which induces action in reliance upon it to an extent that renders it a fraud to recede from what the party has been induced to expect. ”

If the insured has incurred expense at the invitation of the insurer, this is held to estop the insurer from setting up defenses which it might otherwise have. No such state of affairs exists in this case. Plaintiff • was not prejudiced nor put to any expense on account of any representations made, or of the failure to inform him of any defenses which defendant had. The defendant, in issuing the policy, relied, and had the right to rely, upon this representation. It was not true. Another policy was in existence, and by its terms continued in full force for 10 days after the house became vacant, and for two years thereafter, unless the Home Insurance Company should see fit to defend upon the ground of subsequent insurance. The tenant was then packing up, with the view to move out. West was under no obligation to examine the policy. He had a perfect right to rely upon the statements made by plaintiff. It is not sufficient that the agent be put upon inquiry, or that he be placed in such a position that he might have ascertained the facts. Sanders v. Cooper, 115 N. Y. 279 (5 L. R. A. 638). The good faith of the plaintiff is also immaterial. West had the right to presume that plaintiff had read his contract, and correctly stated its contents.

Judgment should be reversed, and a new trial ordered.

Moore, J.

I cannot accept the conclusion reached by the Chief Justice. Proof was introduced on the part of the plaintiff tending to show that, three days before the defendant took the application, the plaintiff saw Mr. West, an agent authorized to receive applications for insurance in'the defendant company, and informed him the plaintiff had an insurance of $1,000 in a stock company upon his dwelling; that his tenant was about to move out, and the building would become vacant; and that, as stock companies would not insure vacant property, he desired a policy in the defendant company. Pursuant to an appointment made at this time, three days later the agent and the plaintiff met at the house, when the agent himself examined the building; making the measurements of its dimensions, and filling out the application, which was at that time taken. The policy in the stock company was produced and handed to the agent, but it does not appear clearly that he opened and read it; but he certainly had knowledge of its existence and of its amount, and might readily have become familiar with its terms, if he had cared to do so. Under these circumstances, I think the knowledge of the agent must be deemed to be the knowledge of the company. Russell v. Insurance Co., 80 Mich. 407, and the many cases there cited.

The building was burned March 16, 1897. Proofs of loss were furnished in April of the same year. Plaintiff offered testimony tending to show that on April 26, 1897, Mr. West, the agent of the company, informed Messrs. Carpenter and Hicks, officers of the company, of the existence of the policy in the stock company. This claim was disputed by the company. In May Mr. Power met the officers of the company for the purpose of arriving at some settlement, and it is his contention the officers at that time claimed, by way of defense, that Mr. Power had burned the building; but no claim was made that the existence of the policy in the stock company was a defense. No settlement was reached, and plaintiff commenced this suit in November,' 1897.- After the commencement of the suit, defendant caused a plea to be entered, with a notice, by way of defense, that plaintiff had caused the property to be burned, and that the property was overvalued. Later an amendment to the plea was made, wherein it was insisted, by way of defense, that it was represented in the application there was no other insurance, when in fact there was a policy of $1,000 in the stock company. Defendant insists this defense was interposed as soon as the defendant knew of its existence. The question of waiver was a controverted one, and the trial judge submitted the question to the jury under a charge that was justified by the following authorities: Pennsylvania Fire Ins. Co. v. Kittle, 39 Mich. 51; Richards v. Insurance Co., 60 Mich. 420; Carpenter v. Insurance Co., 61 Mich. 635; Marthinson v. Insurance Co., 64 Mich. 372; Cleaver v. Insurance Co., 71 Mich. 414 (15 Am. St. Rep. 275); Towle v. Insurance Co., 91 Mich. 219; Smith v. Insurance Co., 107 Mich. 270 (30 L. R. A. 368); Douville v. Insurance Co., 113 Mich. 158; Miotke v. Insurance Co., Id. 166; Soper v. Railroad Co., Id. 443; Raymond v. Insurance Co., 114 Mich. 386; Burnham v. Casualty Co., 117 Mich. 142; Granger v. Assurance Co., 119 Mich. 177; First Baptist Church v. Insurance Co., Id. 203.

I think the case was carefully and properly tried, and the judgment should be affirmed.

Montgomery and Long, JJ., concurred with Moore, J. Hooker, J., did not sit.


author: Long, J.

text:
    LIEBERTHAL v. MONTGOMERY.
    1. Landlord and Tenant — Damages by Fire — Obligation to Pay Rent.
    Damage to a building by fire will not relieve the lessee of a room therein from liability for rent, in the absence of a stipulation in the lease, where such room can be rendered tenantable by internal repairs, should the lessee choose to make them.
    2. Same — Termination oe Lease — Surrender oe Premises.
    A lessee of a room in a store building, and of land in the rear thereof, cannot claim a termination of the lease because of damage by fire to the building, without first surrendering the premises covered by the lease.
    3. Same — Advanoe Rent — Repayment—Implied Covenants.
    A payment of rent in advance, under a lease which contains no covenant for repayment in case of fire, cannot be recovered back after fire has destroyed the leased premises, since, under 2 How. Stat. § 5655, no covenant can be implied.
    Error to Dickinson; Steere, J., presiding.
    Submitted May 10, 1899.
    Decided September 27, 1899.

      Assumpsit by Sadie H. Lieberthal against Mollie Montgomery to recover back an advance payment of rent. Defendant having died, the cause was revived in the name of her executor, Clinton W. Montgomery. From a judgment for defendant on verdict directed by the court, plaintiff brings error.
    Affirmed.

      Cook & Pelham, for appellant.

      John O’Hara, for appellee.
   Long, J.

The facts in this case are not in dispute. It appears that on May 28, 1897, plaintiff leased from the defendant’s testatrix, for a term of 11 months from and after June 1, 1897, the following-described premises: The south store room on the ground floor of the two-story brick building situated on lot 10, block 11, Iron Mountain «city, and also the part of said lot back of said building; said part of lot to be used by plaintiff in common with «other tenants in said building, if any there might be. The premises leased were to be occupied for general store purposes. The rental was $50 per month, payable in advance on the first day of each month, commencing on the first day of June, 1897. The lease was in writing. Plaintiff entered into possession of the premises under the lease, ■and paid rent, pursuant to the terms of the lease, down to .and including the month of January, 1898. The building was also occupied by other tenants and by the defendant’s testatrix. .On January 10,1898, the building was damaged by fire without the fault of either party, and the room occupied by the plaintiff was thereby rendered untenantable. The outer walls, roof, and second story remained intact. There was no covenant in the lease on the part of the lessor to repair, and the demised room was not repaired ■during the month of January. There was also no covenant on the part of the lessor to refund any portion of the rent paid in advance in case the demised premises were rendered untenantable by fire or other casualty. This action was commenced to recover the money paid in advance for the rent for the month of January. The cause was tried in justice’s court, where plaintiff had judgment. On appeal to the circuit, the cause came on for trial, and after the plaintiff had introduced the lease in evidence, and stated the facts as above, the trial court directed the verdict in favor of defendant. Plaintiff brings error.

The general rule is well settled that when the tenant ■«covenants to pay rent, and does not provide against liability in case of destruction of the premises by fire or other «casualty, he is bound, in the absence of statutory provisions or covenant on the part of the landlord to rebuild, to pay the rent. 12 Am. & Eng. Enc. Law, 741, and cases cited in note 1; Porter v. Tull, 22 L. R. A. 613 (6 Wash. 408, 36 Am. St. Rep. 172), and note. There is an exceplion to this rule, however, where a room in a building is leased, and the whole building is destroyed by fire or other casualty, as the destruction of the building puts an end to the tenancy, and the tenant is not liable for rent accruing subsequent to such destruction. Counsel for plaintiff seek to bring the case within this exception. It appears, however, that the whole building was not destroyed, and there was no such destruction of the room as to deprive the tenant of the right of occupancy for the purpose of repairing the same so as to make it tenantable, if plaintiff elected to do so. There is no question of rebuilding the whole structure. It is simply a matter of internal repair. The lessor would have no right to enter to make such repairs without the consent of the lessee.

Another reason why the case does not come within the exception to the general rule is that the lease covered the use of the land in the rear of the building. There is no evidence in the case that the plaintiff surrendered the premises after the fire.

Aside from these considerations, there can be no recovery in this case. The advance payment was a voluntary one, and there was no covenant in the lease to repay the rent in case of fire. Under the statute (2 How. Stat. § 5655), no such covenant can be implied. Cross v. Button, 4 Wis. 468; Copeland v. Goldsmith, 100 Wis. 436.

The judgment below will be affirmed.

The other Justices concurred.