text:
    CLARK v. METROPOLITAN LIFE INSURANCE CO.
    Life Insurance — Lapsed Policy — Revival.
    The mere deposit of money with the local agent of a life-insurance company, to be applied to the payment of premiums on a lapsed policy in case an application for its revival should be approved at the home office, which, by express stipulation, alone has authority to-revive policies, is insufficient to effect a revival of the policy.

      Error to Wayne; Carpenter, J.
    Submitted October 23, 1895.
    Decided November 26, 1895.

      Assumpsit by Catharine Clark'against the Metropolitan! Life Insurance Company on life-insurance policies. From a judgment for plaintiff, defendant brings error.
    Reversed.

      Haug & Yerlces, for appellant.

      George W. Goomer and Atkinson & Atlcmson, for appellee.
   Long, J.

The plaintiff is the beneficiary in three policies issued by the defendant upon the life of her mother. The premiums were paid weekly, amounting to 25 cents per week, and such payments were kept up until the latter part of December, 1893, when the policies were permitted to lapse. On January 3, 1894, plaintiff made written applications for their revival. These applications were made to the agent of the company at Detroit, and by him forwarded to the main office of the company at New York City, with the plaintiff’s lapsed policies. Plaintiff paid no money at the time of making the applications for revival, but a few days afterwards came to Detroit from Wyandotte, where she lived, and paid the agent two dollars. She does not claim a receipt was given her for this, but states that she knew at the time that the policies had lapsed. The plaintiff was then asked:

“When did you come back to see Mr. Heathcote or any of these people connected with the Metropolitan Life Insurance Company, or did you ever come back?
“A. Yes; I went once after I paid the two dollars. I don’t remember just what day it was.
“Q. Whom did you see at that time at the office?
“A. Well, there was a man there.
“Q. Did you pay him anything?
“A. I think I paid him 50 cents.”

Plaintiff further testified that she took no receipt, but that this man in the office put it down in a book, and that this was on the day oí her mother’s death, January 11, 1894. The book referred to was the one upon which the payments were entered from week to week under these policies, and was left by the plaintiff, at the time the two dollars was paid, with the company’s agent at Detroit. The 50 cents is entered upon this book as of January 11,1894. The book was returned to her, with revival of the policies, on January 29, 1894.

The only question which the court submitted to the jury was whether, at the time this 50 cents was paid, it was intended as a revival of the policies; that is, whether the plaintiff paid it, and the defendant received it, in recognition that the policies were revived. The jury returned a verdict in favor of the plaintiff for the amount of the policies.

It is contended on the part of the defendant that there is no evidence or circumstances which tend to show that the company intended to revive in any other way than under the revival applications made and signed by the plaintiff on January 3, 1894; and that the moneys for the revival were never sent to the home office, but remained in the agent’s hands during the process of the revival. The testimony shows that the home office alone could revive policies. The plaintiff knew, when she deposited the money, that it would be returned to her if the policies were not revived; and nowhere in her testimony does she state that she thought the policies had been revived because she deposited the 50 cents, which the company received conditionally to be applied if the home office indorsed the revival upon them. There is no evidence in the case, it seems to us, which shows that, because the 50 cents was deposited, the company intended to treat them as valid and existing contracts. The plaintiff knew that the policies must go forward to the home office in New York to have this indorsement made, and that, if it were not made there, they could not be revived; and she expressly stipulated in her application for revival that—

“No liability exists on the part of the company until said company, art its home office in New York City, shall have approved this application for revival, and that said policy shall not be in force until the fact of its official revival shall be indorsed upon it by the secretary >of the company at its home office in New York City, and shall be delivered to the applicant so indorsed; nor shall said policy then be in force unless, at the time of its delivery as aforesaid, the insured shall be alive and in sound health.”

By this stipulation in the application for revival, actual revival would not be consummated until the policies, with the indorsement of the company, were received bade by the plaintiff, and then only under the conditions contemplated by the company. It is therefore certain that, at the time the 50 cents was paid, the parties could not have contemplated that that payment should operate as a revival. The policies, with indorsements of revival, were received back January 29th, but the insured had died on January 11th, and hence, under the stipulation for revival, they had no force.

We think there was nothing to submit to the jury, and the judgment must be reversed, and no new trial ordered.

The other Justices concurred.


source: Caselaw Access Project

author: Grant, J.

license: Public Domain

text:
    HUMPHREY v. EDDY TRANSPORTATION CO.
    Brokers — Right to Commission — Double Dealing.
    An agent for the sale of property loses his right to commission from his principal where he does not disclose the fact that a corporation in which he is interested as stockholder and director is the real purchaser, and that the nominal purchaser,who has a valuable contract with the seller dependent upon the making of the sale, is furnishing a large bonus towards the purchase.

      Error to Wayne; LilMbridge, J.
    Submitted October 24, 1895.
    Decided November 26, 1895.

      Assumpsit by Moses W. Humphrey against the Eddy Transportation Company for a commission on the sale of boats. From a judgment for plaintiff, defendant brings error.
    Reversed.
    The facts in this case are substantially conceded, and arc well and accurately stated in the appellant's brief as follows:
    “This is 'am action brought to recover a commission claimed on the sale of boats. The vessels were the John F. Eddy and the John Shaw, and were sold by the defendant company to the Detroit Dry-Dock Company on February 27,1892, for the consideration lof $118,750. On the same day the Detroit Dry-Dock Company sold the vessels to the Sulphite Fibre Company for the sum of $11.6,250. Prior to this sale, and during that winter, the defendant company had been offering these vessels for sale in all of the principal lake ports. The defendant Company had made an agreement with the Detroit Dry-Dock Company for the building of a steel boat, provided the defendant should first sell the above-mentioned vessels. At some time, not definitely fixed, but a considerable time prior to the above-mentioned sale, Capt. John Shaw, manager for the defendant, was at the office of the Dry-Dock Company, endeavoring to sell these vessels, and while there met the plaintiff, wlm was informed of Capt. Shaw’s mission at that place. The plaintiff claims thai at that time he was promised $1,000 if he could find a purchaser to pay $125,000, and that that price would be shaded. Capt. Shaw says: ‘I told him' if he sold the boats for $.125,000 I would give him $1,000, and he asked me if that was the lowest price I would take for them, and I told him that $120,000 was the lowest figure that we should put on the boats. I did noit make any arrangement with Humphrey whereby he was to receive a commission on a sale for less than $120,000. $120,000 was the lowest price.’ Prior to the negotiations leading to the sale that was subsequently made, the plaintiff admits that the defendant had informed him that the vessels were held at $120,000, and he says, ‘When the telegram was sent (February 25, 1892), they had fixed that price,-— $120,000.’ This telegram is as follows:
    ‘“Eddy Bros.,
    “ ‘ Bay City:
    “ ‘ Lindsay & Co. still willing to take boats at one hundred and fifteen, but will not pay more. Can’t you reduce your figures twenty-five hundred?
    [Signed] “ ‘ A. McVittie.’
    “During that winter the plaintiff was at all times the general manager for, and also a director and- stockholder in and secretary of, the Sulphite Fibre Transportation Company (sometimes spoken of as the Lindsay Company), and he at once entered into negotiations with a view to purchasing these boats for his own company. Capt. Humphrey, plaintiff, and Alexander McVittie, the manager for the Dry-Dock Company, held numerous conversations in regard to bringing about a sale of these boats. Capt. Humphrey was desirous of purchasing them if he could get the price low enough, and the Dry-Dock Company was interested in having the defendant sell the boats, because that insured the Dry-Dock Company’s selling an iron boat to the defendant. Early in the negotiations Mr. McVittie offered to put in $2,500 or $5,000 as a bonus to help bring about a sale of the defendant’s boats, communicating this fact to Capt. Humphrey, the agen t for the defendant. For -a long period of time, and during all the subsequent negotiations, the plaintiff was in possession of this offer o-f a bonus made by the Dry-Dock Company, and never communicated it to the defendant, and the defendant never had any notice or knowledge until after the -sale of the boats that the Dry-Dock Company was willing to or did put in or contribute any bonus to bring about a sale of the boats.
    “The plaintiff, under authority from his own company, went to Bay City, and made the defendant an offer of $110,000, which offer wa-s refused. Thereafter the plaintiff -says: ‘In the board of directors (Sulphite Fibre Company) the price to be paid for these boats wa-s discussed, and I said the boats were cheap enough at the price they asked for them, which was, I think, at that time, about $120,000. The directors authorized me to- offer for these boats, finally, $115,000. I made known that fact to Capt. Shaw, or the president of the Eddy Company, before the final telegram of February 25th was sent.’ Thereafter, all negotiations between the defendant company and the plaintiff and his company were declared off. On February 25,1892, Oapt. Humphrey dictated a telegram to Eddy Bros., at Bay City, which was signed and sent by Alex. ■McVittie, and is above given, the object of which was, to induce the defendant to reduce its price on the boats. Thereafter this message led to the negotiations which resulted in the.defendant’s selling the boats to the Dry-Dock Company for $118,750, making a reduction of $1,250, and the Dry-Dock Company at once transferred the boats to the plaintiff’s company for $116,250, giving to the plaintiff and his associates the benefit of $3,750 from the defendant’s price. Thereafter the defendant, upon learning of the plaintiff’s connection with the sale, denied liability for the claimed commission of $1,000.”

      John O. Shaw and J. E. Goff, for appellant.

      De Forest Paine, for appellee.
   Grant, J.

(after stating the facts). The plaintiff was the genera] manager, a director and stockholder in, and secretary of the Sulphite Transportation Company, which was the actual purchaser of these boats. The Detroit Dry-Dock Company was only the nominal purchaser, the mere conduit through which the purchase was made by, and the title passed to, the Sulphite Company. -Plaintiff testified that he informed his (the Sulphite) company that the boats were cheap at $120,000, and that early in the negotiations the Detroit Dry-Dock Company offered the Sulphite Company, through plaintiff, a bonus of $5,000 towards the purchase, which was subsequently reduced to- $2,500. None of these facts were communicated by the plaintiff to the defendant. Plaintiff wrote or dictated the telegraphic dispatch above referred to, and induced Mr. McVittie, the agent for the Dry-Dock Company, to sign it, because “I thought it would have more weight, coming from McVittie.” Plaintiff, as agent for defendant, for whom he was bound by law to obtain the best price possible, was in reality purchasing for himself. He therefore had a personal interest hostile to the interest of his principal. The law required him to disclose fully to his principal the actual situation, his own interests, and the circumstances of the deal between the Sulphite Company and the Dry-Dock Company, but he gave no testimony to show that he did so.' The onus probandi was upon him. Fountam Coal Co. v. Phelps, 95 Ind. 271; 1 Am. & Eng. Enc. Law, 377, note 1, and authorities there cited. This is one of those contracts which are “opposed to open, upright, and fair dealing, and therefore opposed to public policy.” It is immaterial that the plaintiff acted in good faith, or that the defendant suffered no damage. It is the policy of the law to remove all temptation in an agent to be influenced by his own interest to the detriment of his principal. While, there is some conflict in the authorities as to the right of recov; ery where a plaintiff has acted as agent of both seller and purchaser, with full knowledge that he is so doing, the authorities are uniform in holding that he cannot recover where he withholds knowledge of such relation. 1 Am. & Eng. Enc. Law, 372, 375; Scribner v. Collar, 40 Mich. 375; People v. Township Board of Overyssel, 11 Mich. 222; Dwight v. Blackmar, 2 Mich. 330; Rice v. Wood, 113 Mass. 133; Wadsworth v. Adams, 138 U. S. 380; Brock v. Barnes, 40 Barb. 532, 533. The court should have directed a verdict for the defendant.

Judgment reversed, and a new trial ordered.

The other Justices concurred.


author: Long, J.

text:
    ROBINSON v. CITY OF DETROIT.
    1. Municipal Corporations — Construction of Charter — Taxation — Authority of Board of Estimates — Salaries of City Officers.
    A city council was authorized by the charter to appoint such subordinate officers as might be necessary, and to fix their compensation. The charter further provided that, before any taxes should be levied for the purposes of any of the several funds of the city, the controller should present to the council his estimate of the amount necessary to be raised for the ensuing year for each of said funds; that the council might revise or filter said estimates, and, when finally adopted, should transmit the same to the board of estimates; and that such . board should have the right to call upon- the council or any municipal officer for information as to any matter pending before it. By subsequent enactment it was provided that the board should have the power, after consideration of the various estimates referred to it, to disallow any item in the different funds, and that it should be unlawful for the council to create any expenditure or expend any moneys as to items specifically disallowed by the board. Held, that, where the board had assumed to deduct the salaries of certain officers from the estimate for the general fund, appointments to said offices thereafter made by the council were illegal, and the payment of salaries thereunder would he enjoined, although the estimates certified to the board by the council were not itemized.
    3. Same — Constitutional Law.
    A charter provision empowering the board of estimates of a city to disallow items included in the annual budget as approved by the common council is not void as a delegation of power which under the Constitution (article 4, § 38) can be conferred upon the common council alone.
    Appeal from Wayne; Donovan, J.
    Submitted October 25, 1895.
    Decided November 26, 1895.
    Bill by Fred A. Robinson and' others against -the city of Detroit, Francis A. Blades, city controller, and. Louis B. Littlefield, city treasurer, to enjoin tifie payment of salaries to certain municipal officers. From a decree dismissing the hill, complainants appeal.
    Reversed.

      Fred A. Robinson, for complainants.

      John J. Speed, for defendants.
   Long, J.

The bill in this case was filed to enjoin the defendants from paying salaries to certain, officers, the appointees of the common council, where the items therefor had been expressly disallowed, and so certified, by the board of estimates in referring the city’s budget to the common council, to be spread upon the rolls for taxation for the fiscal year commencing July 1, 1895.

Sections 155 and 157 of the compilation of the charter of the city of Detroit for the year 1893 (Act No. 488, Local Acts 1887, chap. 8, §§ 1, 3, pp. 625, 628) provide:

“Before any taxes shall be levied for the purposes of any of the funds.into which the revenues and moneys of the city may be divided, the controller shall present to the common council in writing his estimates of the amount of taxes which, in his opinion, it may be necessary to raise for the ensuing year for the purpose of each of said funds. * * * The common council may revise or alter said estimates, but not so as to exceed the aggregate taxes authorized by law to be levied; and, when such estimates shall be finally adopted by them, the same shall be transmitted by the clerk of said board to the board of estimates. * * The board shall have the right to call upon the common council or upon any officers or boards of the corporation for further reports, or for any information which it may require for the purpose of estimating any amount to be raised, or in reference to any other matter pending before such board. It shall also have the right to inspect the official books and papers of said officers or boards.”

By Act No. 366, Local Acts .1895, the legislature amended the charter. Section 4 of this amendatory act provides, as to the powers and duties of the board of estimates, as follows:

• “The said board shall have the power, and it shall be its duty, after careful consideration of the various estimates referred to it, if it shall deem it advisable so to do, to disallow any item, items, or parts of items in the different funds, as well as in the gross amounts thereof, as the said board may deem advisable; and it shall be unlawful for the common council of said city to create any expenditure or expend any moneys as to items specifically disallowed and disapproved by such board of estimates.”

The controller submitted to the council his estimates for the year commencing July 1,1895. The council, alter some amendments, certified the estimates to the board, and it made certain deductions from the general fund, specifying the several items deducted. Among these deductions are the salaries of certain weigh masters, wood inspectors, pound masters, assistant janitors of the city hall and municipal buildings, elevator conductors, and other officers and employés of the city government. Notwithstanding these deductions, the common council, by resolution on June 18, 1895, made the appointments to these places, and, as claimed by the bill, proposes to pay them the salaries, although the board of estimates had stricken the same out of the budget for the ensuing year.

Defendants answered the bill, and th'e eaise was heard on bill and answer in the court below, and the bill dismissed. Complainants appeal.

There is no question but that the common council has the power to make these appointments, and provide for the payment of the salaries, unless the act of 1895.clothes the board of estimates with power to restrain its action. The contention of counsel for defendants is that the provisions of the charter requiring the submission of the “estimates of the amount of money required for such funds or purposes” to the board of estimates do not mean an itemized statement, of the amount required for each fund, and that the controller’s estimate may or may not be itemized; and neither does the Charter require an itemized statement of the particular purpose of the expenditures which the council proposes to make during the year to be transmitted to the board of estimates. It is also contended that the charter does not require a new budget to be sent to the board of Estimates, containing a statement of the items allowed or disallowed or added by the common council; that such action was not taken by the council in the present case, and therefore the board of estimates did not have before it such items. Contention is also made that, if the term “items” has reference to the particular items of each fund, then the amendment of 1895 is inoperative, in not providing for the transmitting of an itemized statement from the common council to the board of estimates, after the council has acted upon the estimates.

We cannot agree with this contention. By section 157 of the revised charter of 1893, the board of estimates is given power to call upon the council or any officers or boards of the corporation for further reports, or for any information which it may require for the purpose of estimating any of the amounts to be raised, or in reference to any other matter pending before it. By this section it also has the po wer to inspect the books and papers of the officers of the city and of all city boards. When, therefore, the board of estimates struck out these item's from the estimates of the controller and of the council, it must be presumed that it had before it the necessary data, to enable it to act intelligently in fixing the amounts necessary to be raised for the coming fiscal year, and that the board inquired into the items constituting each separate fund, and the amounts necessary to be apportioned for each fund. Under the act of 1895, the board is given power to disallow any item, items, or parts of items in the different funds, as well as the gross amount thereof. The legislature has seen fit to' place this power in the hands of the board of estimates as a restriction upon the power of the common council, and to declare that it shall be unlawful for the latter to create expenditures or expend any money as to items specifically disallowed and disapproved by t'be board of estimates. We think this power vested in the board by the act of 1895 is not an infringement of the powers of the common council conferred by the Constitution. People v. Hurlbut, 24 Mich. 69; Turner v. City of Detroit, 104 Mich. 326.

The decree of the court below must be reversed, and a decree will be entered here declaring the appointments made by the council as set forth in the bill to be illegal and void, and the defendants will be restrained from paying any more moneys to such employés. The complainants will recover their costs’ in both courts.

The other,Justices concurred.


text:
    CRISTY v. CAMPAU.
    1. Bills and Notes — Accommodation Indorser — Liability.
    An accommodation indorser of a promissory note cannot escape liability to a bona fide holder on the ground that his indorsement was procured by the false representations of the maker.
    2. Same — Bad Faith — Evidence—Duty oe Holder — Estoppel.
    One who, in the usual course of business, surrenders a promissory note for an indorsed note of one of the makers, is not chargeable with bad faith as against the indorser of the renewal note, whose signature was obtained by fraud, merely because he knows that the maker of such note is insolvent, and that the other makers of the prior note, who are amply responsible, have furnished him with funds with which to pay it; nor can an estoppel be predicated upon his failure to disclose such facts to the indorser, or to advise him that the note is a renewal note, since he has the right to assume that the maker has dealt honestly with the indorser, and obtained his signature fairly, and without false representations, or the concealment of any facts which the law required him to disclose.

      Error to Wayne; Lillibridge, J.
    Submitted November 6, 1895.
    Decided November 26, 1895.

      Assumpsit by Harlan P. Cristy against Daniel J. Cam.pau, impleaded with Frederick Marvin, upon promissory notes. From a judgment for plaintiff on verdict directed by the court, defendant brings error.
    Affirmed.
    This action was brought upon two promissory notes, each in the sum of $2,000, dated August 4, 1893, made by Frederick Marvin, payable four months after date to his order, at the Third National Bank, with 7 per cent, interest. Both notes were indorsed by defendant Campau, and protested at maturity for nonpayment. The plaintiff became the owner of the notes, as follows: August 4, 1893, he was the president, and Marvin the cashier, of the Third National Bank. At that time the plaintiff owned two notes, then past due, each in the sum of $7,500, made by Reuben Kempf, Gilbert W. Lee, William A. Jackson, C. E. Warner, E. C. Chase, and Frederick Marvin, which he had purchased through defendant Marvin before maturity, and for which he had paid $15,000. in cash. There was certain real-estate security to the notes last described, with other notes, in the shape of a. deed of Texas land to defendant Marvin, which he held as a trustee for the makers. On said 4th day of August, 1893, at the request of tibie defendant Marvin, the plaintiff accepted a renewal note for one of the $7,500 notes above specified, and for the other the two notes in suit, then indorsed by the defendant Oampau and the payee, amounting to $4,000, and the note of the defendant Marvin for $3,500, unindorsed, the latter on the promise that an indorser for it would be secured; and thereupon he delivered to- the said Marvin the said two $7,500 notes. The makers of the $7,500 notes were abundantly able to pay them, and the plaintiff so regarded them. The indorsement by defendant Campan of the notes in suit was at the request of defendant Marvin, and as an accommoelation to him, and on his representation that he required the indorsement to raise $4,000, to enable him to protect some securities he had hypothecated, and that he (Marvin) was going to Chicago, and would discount the paper there. Some two or three days prior, Marvin had asked plaintiff! if he would settle with him for the two $7,500 notes, saying he would pay cash or give good indorsed paper. Plaintiff did not know that Marvin was going to get Carnpau as an indorser, or whose indorsement he was going to get, nor did he say anything to Marvin about getting Campau’s indorsement. When speaking of the indorsements he could get, Marvin mentioned the names of Jake Seligman, C. J. Whitney, and defendant Carnpau. Plaintiff first knew Marvin had selected defendant Carnpau when the notes, with his indorsement, were presented to him in part payment. Plaintiff, a witness for the defendant, testified that, prior to the arrangement whereby plaintiff acquired the notes in suit, William A. Jackson, one of the makers of the $7,500 notes, had said to him that “Mr. Marvin had received money to pay the syndicate notes. All he said was that a part of the money had been paid to Mr. Marvin to take care of these notes.” Plaintiff closed with Marvin without going into the subject of the sum received. He had no understanding with the makers of the $7,500 notes, or any of them, as to getting Campau’s indorsement, or any indorsement, or about pressing this suit. He had no reason for the transaction except that Marvin wished him to do it, and he considered the notes indorsed by Carnpau good, and, while he had at first objected to surrendering the $7,500 note until Marvin should get an indorser on his $3,500 note, he finally closed on Marvin’s assurance that he would get O. J. Whitney or Jake Seligman on the $3,500 note. The bank was in noway interested in or connected with the matter.

      Edwin F. Gonély and Orla B. Taylor, for appellant.

      De Forest Paine, for appellee.
   Grant, J.

(after stating the faets).- The court properly directed a verdict for the plaintiff. The record is barren of any testimony tending in the slightest degree to show a collusion between Mr. Cristy and Mr. Marvin, or any knowledge or information on the part of Mr. Cristy of the representations made by Marvin to the defendant. Plaintiff had two good promissory notes, for $7,500 each, for which.he had paid $15,000. Mr. Marvin asked him to surrender one of these notes, and accept in lieu thereof another note or notes, to be indorsed by one of three parties, of whom defendant Campau was one. He was willing to accommodate Mr. Marvin in this manner, and there was no legal or moral reason why he should not. Nothing was said or done to warn 'him that Marvin was attempting to perpetrate a fraud, or to obtain a signature by false representations. He parted with full value, and trusted Mr. Marvin to secure an indorser on the $8,500 note, which, it appears, was not done. He is therefore entitled to protection, unless there is legitimate evidence to establish his participation in the fraud.

Plaintiff cannot be held estopped by any action or representation of Marvin upon the ground that he kept silent when he should have spoken. The note was brought to him in the usual course of such transactions, and without knowledge of. anything that had passed between defendant and Marvin. He was under no legal or moral obligation to inform Mr. Campau that Mr. Marvin was insolvent, or that these notes were given as part renewals of another, or that Mr. Marvin had received part or all the m-oney with which to pay the former notes.. He had the legal right to assume that Mr. Marvin had dealt honestly with Mr. Campau, and had obtained his signature fairly, and without any false representations, or concealment of any facts which the law required him (Marvin) to disclose.

' The judgment is affirmed.

The other Justices concurred.


author: Montgomery, J.

text:
    RICHARDSON v. MEDBURY.
    Deed — Mental Incompetenoy oe Grantor — Equity—Laches.
    A release to a mortgagee of the mortgagor’s equity of redemption will not be set aside 17 years after its execution, and after the death of both of the parties and of the witnesses to the transaction, on the ground of the mental incapacity of the mortgagor, except upon the clearest and most convincing testimony.
    Appeal from. Wayne; Frazer, J.
    Submitted November 7, 1895.
    Decided November 26, 1895.
    .Bill by Viro W. Richardson, administrator of the estate of Israel E. Richardson, deceased1, against Lueetta R. Medbury and others, to establish a trust in land. Complainant appeals from a decree dismissing his bill.
    Affirmed.

      Haug & Terlces and John G. Hawley, for complainant.

      JEdwin F. Oonély and Orla B. Taylor, for defendants.
   Montgomery, J.

The bill in this case was filed against the heirs of the estate of Samuel Medbury, deceased, to establish a trust in about 10,000 acres of pine land. It is the complainanR-s theory that Medbury was mortgagee of the lands, although holding legal title in them, and that his heirs are bound to account for1 moneys received from the sale of these lands, after being reimbursed for the advances and charges, with interest at 10 per cent.

The bill alleges that in 1871 Medbury loaned to Richardson $6,850, and that to secure the payment of this sum, and of additional sums which Medbury was to advance to Richardson, the conveyance of the land was made. The bill also alleges that, on the same day that the conveyance was made, Medbury and Richardson left certain papers in the hands of the cashier of a bank in the city of Lansing; that among these papers was a duplicate of the contract; that Medbury afterwards obtained the same without authority of Richardson, and fraudulently; and that, although subsequently demanded by Richardson, he refused to give them up. The bill further alleges that Richardson never received from Med-bury any other sum of money secured by said conveyance. The bill further charges:

“That, soon after .said Samuel Medbury had deceitfully and fraudulently obtained possession of said Israel E. Richardson’s papers as aforesaid, the said Israel E. Richardson began to lose his mind, and, at the time said Samuel Medbury died, said Israel E. Richardson had become so deranged and insane that he was mentally incompetent to do business, and failed to comprehend and understand his own business and rights, and he continued to> grow worse from that time until he died, in January, 1887; and your orator avers that the mind of so id Israel E. Richardson was weak at the time of the death of .said Samuel Medbury, and continued to grow ■worse up to the time of his death, which occurred at the date aforesaid, and during all that time he was insane and mentally incompetent to do business, or to clearly understand a business transaction.”

The answer admits that Medbury and Richardson had dealings and purchased certain pine lands together, but alleges that they were fully closed, and sets up two agreements, one made March 7, 1870, in which Richardson acknowledged an indebtedness to Medbury of $31,550, and Medbury agreed that the lands in question, together with an hotel property in North Lansing, should be conveyed to Richardson upon payment by him of $31,550, together with taxes and expenses which Medbury should thereafter incur, with interest at 10 per cent., on or before March 7, 1871. The instrument, in form, is in the nature of a land contract running from Medbury to Richardson. It, however, recognizes that Medbury is the creditor and Richardson a debtor, and does not, materially change the relations of the parties. But the answer also sets up that ou the 9th day of December, 1871, a further settlement was had between the parties, and an instrument reading as follows was executed and delivered by Richardson to Medbury:

“Whereas, the undersigned and Samuel Medbury, of Detroit, Michigan, have had dealings in land lying within the State of Michigan, in various ways, the title to which has been and now is in said MedJbury; and whereas, I have this day had and made a settlement with said Med-bury, and he has bought all my right, title, and interest in said lands, and has paid me the sum of $1,000 therefor, and to settle all and every kind of deed, debts, claims, and demands existing between us, and to- compromise and close up all matters of business between us:
“Now, therefore, I do hereby release and discharge said Medbury of all and every claim and demand I might, may, or could have against him, and I do hereby release to him and his heirs all my right, title, claims, and interest, whatever the same may be, in and to all the lands in which I may have had with him, and all the lands about which we have had any deal together, and he to have and to hold the same free and clear of all my interest, claim, and demand thereto.
“In witness whereof I have hereto set my hand and seal this 9th day. of December, 1871.
“Israel E. Richardson.
“Lewis Medbury.”

On the trial the testimony took a wide range, not being confined to the averments, and not in all respects corresponding to the averments, in the bill. Two points were sought to be established: First, that Medbury was an equitable mortgagee to1 lands greatly exceeding the amount of his debt; and, second, that, during the later transactions between the parties, Richardson wa-s mentally incompetent to transact business. No contention was made over the fact that Medbury held the land as security, but it is fully established by the testimony, and now appears conceded by complainant’s counsel, that the indebtedness was very much larger than that averred in the bill, and that it aggregated on March 7, 1870, $31,550. The evidence does show that the lands held as security were worth considerably more than the indebtedness, but the: difficulty of determining at this late day just how unequal the bargain between the parties really was is manifest.

It would seem that, after the agreement of 1870, a further small sum was advanced, and that finally, on the 9th day of December, 1871, a full settlement between the, parties was made. We find nothing in the transaction between the parties to warrant ns in holding that the agreement was invalid, unless the claim of Mr. Richardson’s mental incompetency is established. While the law is jealous of transactions between the mortgagor and mortgagee, there is no rule of law which prevents the mortgagee from in good faith becoming the purchaser of the equity of redemption. Richardson lived until January 23, 1.8S7, — more than fifteen years after the transaction was finally closed, — and took no steps to set it aside. In determining the question of mental capacity, the allegations of the bill, which was sworn to by complainant, should be kept in mind. The bill avers that Mr. Richardson began to lose his mind soon after the transaction, which, it is averred in the bill, occurred in 1871. While we by no means consider this date conclusively binding upon complainant, it has a bearing on his. testimony in reference to the mental capacity of the deceased. On the hearing the complainant gave testimony tending to show the incompetency of Mr. Richardson as early as 1868, whereas in his bill of complaint he fixed the date when the deceased began to lose his mind as 1871. Complainant’s testimony is corroborated by numerous witnesses. The testimony shows that Richardson, was eccentric, and was a believer in spiritualism; and numerous witnesses express the opinion that he was not, from 1868 on, competent to do business. There is, however, no direct proof as to his mental capacity at the precise time when these transactions of March, 1870, and December, 1871, were made, except as it is covered by general testimony. The family of Richardson at that time consisted of his son, the complainant, then 22 years of age, an older son, 25 years of age, and two daughters. It is significant that, with knowledge that Mr. Richardson was during all this time engaged in transacting important business with Mr. Medbury and others, no steps were taken to 'have a guardian appointed over him, or to investigate his business affairs; and, although he lived until 1887, no claim was ever made by his grown sons that he had ever been overreached. In May, 1871, complainant wrote Mr. Medbury the following letter:

“Samuel Medbury, Esq.
“Dear Sir: Knowing that you and my father have heretofore been interested in land matters, I wish to submit to you a proposition, and, a,s I shall be in Detroit for a few days some time in July, I will call and ascertain your decision. It is that you employ me to look after and hunt lands for you. I have had considerable experience in the lumber woods, and feel that I could, in these ways, earn the salary you would pay me. I hope, on consideration, you will find some position for me. ,My eyesight is failing me in the printing business, and I must choose some other labor. I should require $1,000 a year, including all expenses, hoping, by attention and industry, to secure better favors in the future. I will furnish, if required, recommendations from Judge Long-yea]1, Hawes, and others. You may ansiver, if convenient.
“I am sir,
“Very respectfully,
“Viro W. Richardson.”

This letter was written after the contract of March 7, 1870, had expired, and when, by the terms of the contract, Israel E. Richardson had no longer any interest in the land. The letter written by the complainant refers to the dealing between the parties as a matter which had terminated. The letter contained no suggestion of overreaching, or that Mr. Richardson was mentally incompetent. Under the circumstances disclosed by this letter, and in view of the long delay from 1871 to 1888, when this bill was filed, and of the fact that Mr. Med-bury died in 1874, and that the witnesses to the transactions between the parties are now silent in their graves) the testimony which should be held sufficient to set aside the transaction ought to1 be clear and convincing, and should be sufficient to overcome the presumption of honest dealing, and the strong inference of sanity which arises from the inaction of the relatives and friends of Mr. Richardson during this long term of years. Burt v. Mason, 97 Mich. 127. The circuit judge, who had the advantage of seeing the witnesses and noting their appearance on the stand, determined the question of fact in favor of the defendants, and, after a careful examination of the record, we are not disposed to disturb his decision.

The decree will be affirmed, with costs.

The other Justices concurred.


author: McGrath, 0. J.

text:
    ATTORNEY GENERAL v. COGSHALL.
    1. Municipal Corporations — Construction op Charter — Supervisors — Creation op Board op Assessors — Duties.
    Act No. 444, Local Acts 1895, amendatory of the charter of Grand Rapids, which took effect May 27, 1895, abolished the office of supervisor in said city, and provided for a board of assessors, which, “upon the taking effect” of said act, should perform the duties theretofore discharged by the ward supervisors in respect to the assessment of taxes; that, on the 1st day of October following, the board of review and equalization, as then constituted, should become vested “for the time being ” with the powers of such board of assessors, and should perform its duties; that, as the terms of its members should expire, the mayor should appoint their successors; that, “when a board of assessors shall be appointed,” the supervisors should cease to perform the duties conferred upon such board, but should continue to act as members of the county board of supervisors until the expiration of their several terms of office, after which the aldermen should represent their several wards upon the board; and that at such time, “ or as soon as said board of assessors is appointed and its members have qualified,” said supervisors should deliver to it all of the original assessment rolls in their possession, which should thereafter remain in the office of such board, and become a part of its official records. It was expressly provided that the board of assessors should make the assessment for the year 1896, which, under the charter, was required to be completed before the date at which the terms of the supervisors then in office would expire. Held, that it was the duty of the board of review and equalization, acting as a board of assessors, and not that of the supervisors, to spread the general taxes for the year 1895, the language of the two clauses last quoted being construed as though reading, “as soon as said board of assessors is constituted under the provisions of this act.”
    2. Same — Office of Supervisor — Constitutional Law — Local Self-Government.
    The office of supervisor in cities, not being created by the Constitution, may be abolished by the-legislature at will, and its functions conferred upon other municipal officers; and the fact that, in the exercise of such power, an officer is di'vested of a part of the functions of his office before the expiration of the term for which he was elected, and that such functions are conferred upon city officials elected for another purpose, does not render the act invalid as an attempted interference with the right of local self-government.
    8. Same — Reducing Number of Aldermen — Discrimination.
    A city charter provided for the annual election of one alderman from each ward for a term of two years. Por the purpose of reducing the number of aldermen, and at the same time preserving the term of office and the practice of electing but one-half of the aldermen each year, it was provided by amendment that at the next election one alderman should be elected from each even-numbered ward for a term of two years; that in each odd-numbered ward the alderman whose term was unexpired should hold until the end of his term; and that, at the expiration of the term of office of each alderman, his successor should be elected for a term of two years. Held, that the amendment was not invalid as unjustly discriminating against the even-numbered wards, in that aldermen elected therefrom for a term of two years were removed from office after one year’s service.

      Mandamus by Fred A. Maynard, Attorney General, against George E. Oogsba.il and others, composing the board of assessors of the city of Grand Bapids, to compel respondents to demand and receive from the several supervisors of said city the assessment rolls for the year 1895, and to spread the taxes thereon. The ward supervisors were allowed to intervene.
    Submitted November 8, 1895.
    Granted November 26, 1895.

      Fred .4.. Maynard, Attorney General, for relator.

      Henry J. Felker, City xAttorney, for respondent assessors.

      Taylor & Eddy, for respondent supervisors.
   McGrath, 0. J.

Hitherto each ward in the city of Grand Bapids has annually, at the spring election, elected a supervisor and an alderman, the latter for two years and the former for one year. Taxes have been assessed and spread by the supervisors, and the charter provided for a board of review and equalization, composed of three members, one of whom has been elected annually by the city at large. The charter was amended in 1895 (Act No. 444, Local Acts 1895), with a view to the election of six aldermen by the city at large, the reduction of the number of the aldermen to one from each ward, but at the same time to preserve the term of two years and the practice of electing but one-half of the aldermen each year, the creation of a board of assessors, and the abolishment of the office of supervisor. To accomplish these ends, the amended charter provides for the election by the city at large, at the next spring election, of three aldermen for the term of two years and three for the term of one year, and, at each succeeding election, of three aldermen for the term of two years; that at the same election one alderman shall be elected in each ward designated by an even number for a term of two- years, and in each- ward designated by an odd number the alderman whose term is unexpired -shall hold his office until the end of his term, and at the expiration of the term of each alderman his successor shall be chosen for a term of two years. It provides for a board of assessors to perform the duties heretofore discharged by the supervisors in respect to the assessment of -taxes, and confers the other duties heretofore discharged by the supervisors upon the aldermen. It confers the powers of a board of assessors upon the board of review and equalization “for the time being,” and enacts that, as the term® of the members thereof shall expire, the mayor, upon the confirmation of the council, shall appoint a successor for a like term. The act was given immediate effect May 27, 1895. A dispute has arisen as to whether, under this amendatory act, it is the duty of the supervisors or the board of assessors to spread the taxes for the present year.

Sections 26 to 30 of title 11 of the act are as follows:

"Sec. 26. In all matters not herein specially provided for, the provisions of the original charter of the said city of Grand Rapids, as revised and amended, and now in force, relating to the assessment of taxes within the corporate limits of said city, and the collection of the same, and the disposal of the moneys received therefrom, shall be and remain in full force and effect, if not inconsistent with the provisions of this act.
“Sec. 27. All of the provisions of the general State laws in relation to the making of assessment rolls, and the persons or property to be therein taxed, not inconsistent with the provision® of this act, which at present are performed and executed by the respective supervisors of the several wards of said city, shall, upon the taking effect of this act, be performed and executed by the board of assessors herein created, and the members of said board of assessors shall be ex-officio members of the board of supervisors of the county of Kent.
"Sec. 28. On the first day of October, eighteen hundred ninety-five, the members of the board of review and equalization, as now constituting the present board of review and equalization of said city, shall become vested, for the time being-, with all the powers herein conferred on such board of assessors, and it shall discharge all the duties of such board of assessors herein provided for until such time as is specified in the following section.
“Sec. 29. Whenever the term of office for which any member of the present board of review and equalization-of said city was elected shall expire, a member thereof shall be appointed in his place, for the term hereinbefore provided, by the mayor of said city, and be confirmed by the common council thereof; and such member of said board of assessors shall act in conjunction with the remaining member or members of the present board of review and equalization, as hereinbefore constituted such-board of assessors of said city, in discharging all the duties of such board of assessors herein provided for. Af-ter the expiration of the term of office of the last remaining member of the present board of review and equalization, the members of such ■ board of assessors, herein provided for, shall continue to be appointed as above provided.
“Sec. 30. At the expiration of the term of office of the several supervisors of the respective wards of said city of Grand Rapids, or as soon as said board of assessors is appointed and its members have qualified, said supervisors shall each of them deliver all of the original assessment rolls in their possession by virtue of their office to said board of assessors, and thereafter such assessment rolls shall remain in the office of said board of assessors, and become a part of the official record of the same.”

It is insisted by respondents that the supervisors continue in office under the act until the expiration of their respective terms. The spring election is held on the first Monday of April. City officers, both elective and appointive, hold their offices, under the charter, from the first Monday in May. The value of property subject to taxation is, by the new act, to be ascertained and fixed before the second Monday in April; and the amended charter expressly provides that the board of assessors created by the act shall make the assessment for the year 1896, and shall publish notice of the completion of the assessment 10 days prior to the first Monday in April. Section 3 of title 1 provides that—

“The alderman in each ward, after the annual election in April, eighteen hundred ninety-six, shall represent their several wards upon the hoard of supervisors of the county, and perform all the duties pertaining to supervisors of the townships upon such board, and shall have all the rights, privileges, and powers of the several members of such board of supervisors. They shall select and return lists of grand and petit jurors to- the clerk of the county in the same manner and within the same time as the like duty i.s required to be performed by township officers. * * The ward supervisors in office at the date this act takes effect shall, until the expiration of their term of office for which they were elected, continue to act as members of the board of supervisors of the county of Kent, after which date the ward aldermen shall be such supervisors from the wards as above specified, and perform all the duties pertaining to their offices, except that, when a board of assessors shall be appointed, said supervisors shall cease to perform such duties as are conferred on said board of assessors and heretofore performed by said supervisors.”

Evidently the conversion of the board of review and equalization into a board of assessors was not contemplated when this act was originally prepared, but the appointment of a new board was designed, and the difficulty grows out of a change of purpose in this respect, and the failure to change the text of section 30. The act clearly defines the duties which are to be performed by the supervisors after the act shall take effect, and before the expiration of their terms of office. On the other hand, the act fixes the date when the board of review and equalization shall become vested with the powers conferred upon .such board of assessors. It is significant that the date given is fixed immediately prior to the session of the board of supervisors, and prior to the time when the State and county taxes are spread upon the rolls. The language used in section 30, “as soon as said board of assessors is appointed, and its members have qualified,” cannot be held to mean after the members of the present board of review and equalization have retired, and their successors have qualified, but must be given the same meaning as tbe language “when a board of assessors shall be appointed,” in section 3 of title 4, and construed as referring to the time when the persons acting as such board become vested with the authority to act, and as if reading, “as soon as said board of assessors is constituted under the provisions hereof.”

It is, however, insisted on behalf of the supervisors, who have been allowed to intervene, that the amendatory act is unconstitutional, in that it interferes, with the right of local self-government. It is said that in the eAren-numbered wards aldermen elected for two years from the first Monday in May, 1895, are removed from office after one year’s service, yet the office of aider-man is not abolished; that in the odd-numbered wards persons elected as aldermen are made ex-officio members of the board of supervisors; that the legislature has undertaken to divest duly-elected supervisors of certain of the functions of their office, and confer the same upon a board, the members of which were elected for another purpose.

The office of supervisor in our cities is created by the legislature. It may either exist or not, at the legislative will. Having this authority, the right of the legislature to abolish that office and confer its functions upon another officer cannot be questioned. A supervisor in a city is not as essential as in a township, and the mere fact that an officer of the city government is denominated a “supervisor” does not take away from the legislature the power to abolish the office, or transfer its functions to another city official. The title to the office may indicate the measure or scope of the duties of the officer, but it does not afford the officer any protection from legislative interference that is not afforded to other city officials. The Constitution nowhere requires the election by cities of a supervisor, but it makes it the duty of the legislature to provide for the incorporation and organization of cities and villages, and gives to cities such representation in the board of supervisors as the legislature may direct. Article 10, § 7. The rule laid down, by Mechem on Public Officers (section á65) is that the legislature may declare the office vacant, or may transfer its duties to another officer, although the effect may be to remove the officer in the middle of his term, or to abolish his office by leaving it devoid of duties. Fuller v. Attorney General, 98 Mich. 96. In the present case the duties of the supervisors have been in part transferred to an existing- board, the members of which have been elected by the electors of the city, and in part to aldermen, who have likewise been elected. It is not an attempt by the legislature to appoint to office, but a simple transfer of functions heretofore exercised by one official to others, who have been chosen as officials by the same constitdency. Like transfers are not uncommon, and it cannot be that no new function can be imposed upon an officer without a new election in order that the electors may pass their judgment as to the efficiency of the officer respecting the performance of such new duties.

There is no force in the contention that the legislature has discriminated in favor of the odd-numbered wards. Offices are created for the public, and not for private, benefit. To reduce the number of aldermen, and at the same time preserve the term, the legislature, instead of providing for the election of an entire new. board, in which the aldermen elected in the odd-numbered wards should serve for one year and those in the even-numbered wards should serve for two years, enacted that the aider-men in the odd-numbered wards should serve out their terms, and in the even-numbered wards the term of the aldermen elect should be two years. The even-numbered wards have no cause to complain because an election was not ordered in the other wards. They have been deprived, it is true, of the services of experienced aldermen, but they possess the power to re-elect.

The writ must issue as prayed.

The other Justices concurred.


text:
      In re SANBORN’S APPEAL.
    Writ op Error — When Lies.
    An order requiring an executor to furnish a new bond and to render an account, not being according to the course of the common law, cannot be reviewed on writ of error.
    Motion by John P. Sanborn for an order staying proceedings in the probate court of St. Clair county, under an order of the circuit court, pending a determination on writ of error.
    Submitted November 5, 1895.
    Denied November 26, 1895.

      N. M Thomas and H. M. Duffield, for the motion.

      H. TF. Stevens, contra.

   Montgomery, J.

This proceeding originated in the probate court, where an order was made requiring the executor to furnish a further bond and to render an account. An appeal was taken to the circuit court, and on healing the appeal an order affirming the one made by the probate court was entered, and the case remanded for further proceedings in the probate court. The executor, after a lapse of some months, sued out a writ of error, and now asks for an order staying proceedings until the matter is disposed of.

The order is not according to the course of the common law, and, whatever the remedy of the executor may have been had he moved seasonably, we think it is not by writ of error. Holbrook v. Gook, 5 Mich. 225; Brinsmade’s Appeal, 52 Mich. 537; Fletcher v. Clark, 39 Mich. 374; Know v. Millard, 52 Mich. 542; Woolley v. Crane, 86 Mich. 360; 2 Shinn, Pl. & Prac. § 1234.

The motion will be denied, with costs.

The other Justices concurred.


author: McGrath, C. J. Hooker, J.

text:
    WALLACE v. STONE.
    1. Payment — Evidence.
    Evidence reviewed, and held to prove that a mortgage was paid to a bank in cash, rather than by a surrender of certificates of deposit. Hooker and Montgomery, JJ., dissenting.
    2. Banks — Insolvency—Preferences—Trusts—Intermingling of Funds.
    Where paper is sent to a bank with instructions to collect and remit, moneys received by the bank thereon are held by it in trust, and the relation of debtor and creditor is not created between it and the owner of the paper; and if the bank mingles the money so received with its own funds, and becomes insolvent before remitting to the cestui que trust, the latter is entitléd to a lien upon the fund in the hands of the receiver, superior to the claims of general creditors. In re Johnson, 103 Mich. 109, followed.

      It seems that in such case, where the fund coming to the possession of the receiver is largely in excess of the amount so held in trust, it is not incumbent upon the cestui que trust to prove that, at no time after the creation of the trust, were the bank funds reduced to an amount less than that of the trust fund.
    3.Same — Estoppel.
    The acceptance of a dividend from the receiver of an insolvent bank does not estop the claimant from demanding payment of his claim in full, on the ground that a trust should be imposed upon the assets of the bank in his favor.
    Appeal from Ingham; Person, J.
    Submitted June 11, 1895.
    Decided December 3, 1895.
    Petition of Julia Wallace for an order requiring George W. Stone, as receiver of the Central Michigan Savings Bank, to pay the claim of petitioner in full, in preference to general creditors. From an order granting the petition, respondent appeals.
    Affirmed.
    The opinion of the circuit judge, after stating the facts of the case, concluded as follows:

      “It is well settled in equity that a creditor shall have a lien upon the whole mass, when funds- held in (rust for him have been mingled by the trustee with the trustee’s, own funds. It is also well settled that, if a trustee draws from such mingled funds, he will be held to have first drawn his own funds, rather than the funds of another, in violation of law and duty. The money collected for Mrs. Wallace, and held in trust for her by the bank, went into the bank’s funds; and of such funds some $10,000 remained, and passed into the receiver’s hands. Mrs. Wallace’s money must be held included therein, and should be paid over to her by the receiver.”

      Oahill & Ostrander, for petitioner.

      11. V. d R. A. Montgomery, for resjjondent.
   McGrath, C. J.

On the 26th day of January, 1893, Mrs. Glasier deposited with the defendant bank $261, and took a certificate of deposit for $65, and a cashier’s check for $196. On February 7, 1893, a bank at Oklahoma sent to, defendant bank a note and mortgage executed by Mrs. Glasier, and payable to Julia Wallace, of Oklahoma, with instructions to collect and remit the interest due, and any portion of the principal which the mortgagor might wish to pay. On February lá, 1893, Mrs. Glasier called at the bank, surrendered the certificate of deposit and’ the cashier's check and a tax receipt, and made-payment of $196 of interest, and $100 of principal,, on the aforesaid note and mortgage, and received receipts therefor, signed “Julia Wallace, by Nelson Bradley, Cashier,” etc. The amounts were afterwards-, indorsed on the note. Some correspondence was had between the bank and Julia Wallace writh reference to the reception of the tax receipt, and the matter was delayed. Mrs. Wallace finally consented to a credit for the taxes paid, but, before the bank forwarded the money, the bank suspended, and went into the hands of a receiver. Mrs. Wallace now files her petition, claiming that the bank received the said moneys in trust for her, and that she should have preference over general creditors. The court below granted the prayer of her petition, and the matter comes here on appeal. The petitioner made proof of claim, and received a dividend.

The first question presented is one of fact, viz.: Did Mrs. G-lasier, on the 1.4th day of February, obtain from the bank the currency upon the certificates, and pay the same over to the bank? She stated to her sister her business at the bank,- and requested her to go with Mr. Dolan, a, justice of the peace, and herself, to the bank. It is evident that she went to the bank before the other parties reached there. Her sister testifies as follows:

“I telephoned over to Mr. Dolan, and asked if she was .there, and he said she was, and I went over there to meet her, but she had gone out, and gone to the baulc; and I went up to the bank, and Mr. Dolan and myself were both there. Mr. Dolan counted over the money, and it was paid, and she received a receipt from Mr. Bradley, the ■cashier, and asked him if that amount was indorsed on the mortgage, and he said it was, and gave her a receipt for the amount.”

Again, when asked on cross-examination if she saw her pay over the money, she says:

“I saw her; yes, sir. Saw her pay bills. I think Mr. Dolan counted over the money, and I remember some remark being made about the monej', that he counted over the money, and, I think, handed it to her, or else he stood right by her, and handed it to Mr. Bradley.”

Mr. Dolan says that he thinks she paid over the currency to Bradley, but he is not so positive. Mr. Bradley says that he does not recollect whether she made the payment by a surrender of the certificates simply, or by first -obtaining the money upon the certificates, and then paying the currency to him. One of the bank clerks testifies - that, if the deposit certificate had been cashed, it would have been marked ¿‘Paid” upon the certificate register. Another clerk says that, if it had been paid, the cash wmuld not have balanced, and that, from an examination of the books, it appears that the cash balanced on that day. This is the only testimony that tends in any respect to contradict the positive testimony of the two persons present at the time. It is not shown what entry or that any entry of the transaction was made upon the books, and the fact that the certificate and check were stamped “Paid” upon that day negatives the theory that the certificate and check were simply placed with the mortgage, and laid aside to await the result of correspondence as to the tax receipt. It follows that, unless the relation of debtor and creditor was created between the bank and petitioner, the case is ruled by In re Johnson, 103 Mich. 109.

The rule laid own by Morse, Banks, § 567, that, when a bank acts as agent for the collection of bills or notes deposited, the property does not pass from the depositor, is fully supported by the authorities there cited. “When, however,” says the author, “the money is collected and credited, it becomes a general deposit, unless the instructións are to collect and remit, and then, there being no authority to credit, the bank acts as agent throughout.” People v. Bank of Dansville, 39 Hun, 187; People v. City Bank of Rochester, 96 N. Y. 32; Libby v. Hopkins, 104 U. S. 303; Peak v. Ellicott, 30 Kan. 156; McLeod v. Evans, 66 Wis. 401. In Marine Bank v. Fulton Bank, 2 Wall. 252, the notes had been sent on for collection, and afterwards, and before collection, the sender wrote instructing the bank to “hold the avails subject to my order.” In Phœnix Bank v. Risley, 111 U. S. 125, the banks were correspondents, and, as such, had open accounts. There is a class of cases which hold that if the bank has mingled the deposit with its other moneys, so that they are indistinguishable, the cestui que trust cannot follow the fund into the hands of an assignee in bankruptcy, but must take the position of a general creditor. Illinois Trust & Savings Bank v. Smith, 21 Blatchf. 275. These cases are, however, opposed to the rule laid down in the Johnson case.

The question as to the effect of the receipt of the dividend is, we think, disposed of by McLeod v. Evans, supra. As is there said, petitioner has only received a portion of what was her due. The rights of no one have been prejudiced. No one has changed his position or lost any advantage which the law gave him in consequence of what the petitioner did.

The decree is affirmed, with costs to petitioner.

Long and Grant, JJ., concurred with McGrath, G. .T.

Hooker, J.

(dissenting). In this case it is claimed by the petitioner that on February 14, 1893, one Mrs. Glasier paid certain money to the defendant bank, upon a mortgage owned by petitioner, which was in the hands of the bank for collection, and that the bank did not remit the same to the petitioner, but mingled it with the cash of the bank. Soon after, the bank closed its doors, by reason of insolvency; and this is a proceeding to compel the receiver to pay the claim, upon the ground that the money was a trust fund. The case of In re Johnson, 103 Mich. 109, is relied upon as establishing the liability. In that case money was paid to the bank upon a mortgage left for collection by the owner, Avith express directions not to place the amount to his credit, but to notify him at once, as he wished to use the money. The amount, when received, was not credited, but was carried in a fictitious account. It Avas shown that the money was mingled Avith the cash belonging to the bank, and not shown that the fund was ever exhausted, but it did show a balance in excess of the amount received in trust; each day after it was received until the receiArer took possession. That case nowhere contains an intimation that, had the fund once been exhausted, the petitioner would have stood upon any footing different from that of other creditors, while'had it been intended to hold that relief could be had as prayed, on the ground that the money had been received, and liad gone to swell the assets of the bank, the discussion indulged in would have been uncalled for.

In the present case the testimony as to payment is contradicted. It is plain that Mrs. Glasier first deposited the sum in the bank, taking a certificate of deposit and a cashier’s check. As this was before the bank received the collection, it must be held to have established the relation of debtor and creditor between the bank and Mrs. Glasier. On February 14th she attempted to make payment. Mr. Dolan went with her, and thinks he saw her pay the money. • Another witness says that she was present, and saw Mr. Dolan count the money, and saw it paid upon the mortgage. Mrs. Glasier ivas not present at the hearing, her sister testifying that she was ill, and not able to be present in court. On the other hand, the books of the bank indicate that the payment was made by the surrender of the certificate of deposit and cashier’s check, which evidence is quite convincing. The petitioner also relies on a letter from the receiver to petitioner’s representative, in which he states that he finds the papers properly indorsed, and the money on deposit in the bank, and that it ought to have been sent at once when received, but that she would have to make proof of claim like other creditors. This does not throw any light on the question of how the mortgage was paid — First, because the receiver does not profess to have any knowledge upon that subject; and, second, his admissions have no force. It is not within the scope of his office to admit away the trust fund. In this respect he is upon the same plane as an administrator. Gilkey v. Hamilton, 22 Mich. 283. The testimony of Dolan is not at all positive, and, while the remaining witness testifies positively, she may have in mind another occasion. On the other hand, the natural method of making payment would have been to surrender the evidences of deposit, instead of drawing the money upon them, and paying it back again. No one tes-’ tifies that such payment was made, and the bank balance would probably have shown a discrepancy had the money been paid and no entry made in the cash account.

Having reached the conclusion that money was not received, the other questions become unimportant, unless we are to take the view that it makes no difference whether payment was made in cash or by surrender of evidences of debt against the bank. We think this position is untenable. That would be to convert an indebtedness into a trust fund at once. Let it be understood that such is the law, and it would be easy to shift the indebtedness of all holders of certificates of a failing bank into trust funds, by merely making special deposits of them for the benefit of another. There is some reason for the doctrine that a fund cannot be treated as a fund held in trust, unless that appropriated to the purposes of the trust can be traced into it, and shown to constitute a part of it. The Johnson case follows a line of authority which relaxes the rigor of this rule by applying rules kindred to such as relate to the improper intermingling of property. The propriety of the doctrine there laid down is not recognized by all of the courts, and its expediency is, perhaps, questionable. The rule should not be extended to cover-’'a case like this. Sherwood v. Milford State Bank, 94 Mich. 78. But unless the fund can be identified, as being or containing the actual fund, the trust cannot be enforced against general creditors. Willett v. Stringer, 17 Abb. Prac. 152; In re Janeway, 4 N. B. R. 100; Bank of Commerce v. Russell, 2 Dill. 215; Tinglar v. Offutt, 70 Md. 78; Thompson’s Appeal, 22 Pa. St. 16; Northern Dakota Flevator Co. v. Clark, 3 N. Dak. 26; Veil v. Mitchel, 4 Wash. C. C. 105; Van Alen v. Bank, 52 N. Y. 1; Illinois Trust & Savings Bank of Chicago v. First Nat. Bank of Buffalo, 15 Fed. 858, and cases cited; Holmes v. Gilman, 138 N. Y. 369; In re Hosie, 7 N. B. R. 601. See, also, dissenting opinion of Cassoday, J., in the case of McLeod v. Hvans, 66 Wis. 413.

The order of the circuit court should be reversed, and one entered here dismissing the petition, with costs of both courts.

Since the foregoing opinion was written, Prof. Mechera, of the University, has called attention to the fact that the case of McLeod v. Evans has been overruled, so far as it is applicable to this case, by the recent case of Nonotuck Silk Co. v. Flanders, 87 Wis. 237, in an opinion that is in accord with the views above expressed.

Montgomery, J., concurred with Hooker, J.


author: McGrath, G. J.

text:
    HAKE v. COACH.

    1. Partnership — Accounting.
    Upon a review of the evidence, held, that the purchase of certain lands by defendant was not intended to be made for the benefit of the copartnership existing between himself and complainant, and that the latter had failed to establish his claim that the profits of previous transactions of the firm had been dissipated or concealed by defendant.
    3. Same — Individual Purchase — Scope of Firm Business — Confusion of Funds.
    Complainant and defendant were jointly interested in certain lumbering operations, the business being conducted in the name of defendant. While so engaged, defendant purchased certain lands in his individual capacity, and lumbered them under contract with third parties. Complainant, contending that the proceeds of the venture belonged to the partnership, filed a bill for an accounting, upon which it appeared that, prior to the transaction in controversy, the partnership dealings had been confined to lands already owned by the parties, or to specific tracts purchased from time to time by mutual agreement; that the purchase in question was made openly and without concealment; that, while the firm bank account was kept in defendant’s name, and checks were drawn against it in payment for the lands, the account was at such times indebted to defendant for advances; and that the payments made were in fact realized from the lands themselves, in connection with defendant’s individual credit. Held, that the purchase of the lands was not within the scope of the partnership business; that defendant, therefore, had the right to make the same for his sole benefit; and that there had been no such confusion of funds as to entitle complainant to share in the profits of the transaction.
    Appeal from Kent; Grove, J.
    Submitted October 12, 1895.
    Decided December 3, 1895.
    Bill by William Hake against William Coacb for an accounting. From a decree declaring certain dealings to have been partnership transactions, defendant appeals.
    Reversed.

      Daniel B. Corbitt, for complainant.

      Chadbourne é Bees, for defendant.

       Rehearing denied March 3, 1896.

   McGrath, G. J.

This is a bill for an accounting as to certain partnership dealings in lumbering certain pine lands in the Upper Peninsula. Defendant appeals from a decree declaring that certain purchases and sales of timber, claimed by him to have been Ms individual transactions, were partnership dealings, and that defendant must account for the proceeds thereof. The testimony was principally taken out of court.

. It appears that, in 1885, the parties were jointly interested in lands in Louisiana, and in certain pine lands in this State, which are denominated as the “Sturgeon River Lands.” Complainant, who was in business at Grand Rapids, had about $3,750 in his hands belonging to defendant, who had been operating at New Orleans. It was agreed that defendant should go to the Upper Peninsula ■and lumber the Sturgeon River lands, that complainant should advance the necessary funds for that purpose, and that the parties should share equally in the profits. This work was completed in the summer of 1888. Both parties at that time supposed that large profits had been realized upon those operations, but the assets consisted of accounts receivable, logs, and camp equipage. At that time the amount of complainant’s advances was ascertained, and defendant, to equalize the capital invested, made a transfer to complainant of certain of the Louisiana lands, which made the amount invested by each of the parties between $8,000 and $9,000, including in defendant’s investment the amount due him at the outset from complainant. In the fall of 1888, defendant suggested the purchase of certain L’Anse lands, complainant assented, and the operations thereon continued until some time in 1890 or 1891.

In the spring of 1889, defendant obtained an option on certain Otter Creek lands. He invited complainant to join in the purchase. Complainant at first declined, and defendant sought the co-operation of others. The deal was a large one, the purchase price being $52,000. Defendant made more favorable terms with the owner, and complainant finally consented to the purchase on joint account. A note for $5,000 was drawn up, signed by one of the parties, and indorsed by the other, discounted at one of the Grand Rapids banks, and the proceeds used to make the first payment on the Otter Greek land purchase. Other small purchases of lands and timber had been made prior to this last purchase. Defendant was still engaged in lumbering- these lands when this suit was commenced.

It is conceded that all the purchases and ‘operations, up to and including the Otter Creek land purchase, and the lumbering thereof, were partnership dealings. Complainant’s bill sets forth these purchases, operations, and sales, and further avers that—

“Your orator has been informed, and believes the same to be true, that the said defendant has been engaged in lumbering on other lands, to wit, a piece of land that is known as 'Section 31/ and on which he claims that large profits were made, sometimes naming them as high as five or six thousand dollars, which he says was an individual enterprise of his own, and that your orator had no interest in it; while your orator is informed and believes, and so charges the truth to be, that whatever money and time that was expended on section 31 was taken out of the firm of Coach & Hake, and whatever profits were made in lumbering on that section rightfully belong to the said firm. And your orator is also informed and believes, and so charges the truth to be, that the said defendant has purchased lands and timber in different places in the State of Michigan, and also in the State of Wisconsin (as to what particular places he is not informed), but that any money that has been paid for said lands and timber has been taken out of the money belonging to the said firm of Coach & Hake.”

Section 31 was purchased in May, 1889, evidently within a very short time after the purchase of the Otter Creek lands hereinbefore referred to. Three other purchases were made by defendant,' — one in August, 1891, and the other two in August and October, 1892. None of these lands were operated by defendant, but they were lumbered by others on shares, or resales were made of the timber. The trial court found that all of these were partnership, and not individual, transactions.

This bill was filed in 1893. Complainant’s contention is that, in 188S, the assets of the firm -were large; that defendant represented that the firm had made large profits from operating the L’Anse lands; that defendant has dissipated or concealed those profits, and that, since the Otter Creek purchase, complainant has frequently demanded a statement of the affairs of the copartnership, but defendant has failed to furnish it; that the entire business was conducted, the contracts for the purchase of land made, the notes given, the bank accounts kept, the checks given, and the bills made out in the name of William Coach; that these other transactions were originally intended as partnership, and not as individual, matters; and that, in any event, the purchases were made with the partnership credit and firm funds, and that complainant is entitled to participate in the profits thereof.

The facts are controverted; but, whatever the result of' the operations prior to the Otter Creek land purchase, it is clear that there was no dispute at that time regarding the financial condition of the firm, and that partnership funds were not available for that purchase. No complaint had been made at that time. It is further evident that the Otter Creek land purchase involved, not only a large indebtedness, but a very large outlay in the lumbering of those lands, and that the lack of snow and ■water, and other circumstances, interfered very materially with the lumbering operations upon that tract, and, in consequence, not only were the logs tied up for two seasons, but extra expense was incurred, and the property depreciated in value. It also appears, from the correspondence, that there were serious drawbacks in connection with the operations on the L’Anse lands. It is. further evident that, from the commencement of the operations in 1885, one of complainant’s sons was with defendant; that, up to the time of the L’Anse purchase, defendant sent all bills, time checks, contracts, and other papers to the complainant, and that whatever books were kept on behalf of the firm were kept by Charles W. Hake, a son of the complainant, at Grand Rapids; ¿hat, after the purchase of the L’Anse lands, and up to the time of filing this bill, complainant’s son, Henry Hake, acted as defendant’s bookkeeper at the base of operations, and that the accounts were kept by him.

On September 15, 1891, after the purchase of section 31 and one of the other purchases, the following agreement was made:

“Whereas, William Coach and William Hake have been in partnership, logging and lumbering in the Upper Peninsula, along Otter creek, in the State of Michigan, and they want to bring their business to a close, and William Hake can give no time to the business: Now, it is agreed that Henry Hake may act in the place of William I-Iake, and Ms acts shall be as binding on the partners as ii the same acts were done by William Hake. Henry Hake shall keep the books of the partnership, and shall keep a cash account of the business, of all receipts and disbursements, so that they can be inspected at any time. The services of Henry Hake shall be paid by William Hake, and they shall offset against the services of William Coach from this date. When the debts of the partnership are paid, all property remaining shall be divided between William Coach and William Hake. All business hereafter done by the said partnership shall be done in the name of Coach & Hake. The following is a list of' the assets and liabilities of the partnership.”

The fact of the purchase of section 31 was known to complainant at that time," but no mention is made of these lands or operations upon them in this instrument.

Although the purchases hitherto made had been made after consultation with complainant, although in the spring of 1889 complainant had first declined to join in the purchase of the Otter Creek lands, and although the fact of this purchase was known at the time thereof, it nowhere appears that complainant was consulted with reference to this purchase, or that any word of criticism, approval, or disapproval was uttered respecting such purchase by complainant or either of his sons, one of whom was on the ground; and although defendant made a contract with certain parties to lumber these lands and divide the profits, and it was known that the lands were being lumbered, yet the nature of that contract or its terms was not referred to, or any inquiry made as to its details or the operations under it.

On August 27, 1889, defendant wrote complainant a letter, in which he says:

“Wish you would send by express the balance of first note. * * * I want to take up the last note I gave to the Ayers estate. It is for $11,630. * * * We get the right to cut that much timber, and will have to take up the other note later on. * ® If you can see Mrs. Burns, and get her to lend us $12,000 at 7 per cent., it will be very acceptable. Write me what you can do. If you succeed, make it into a New York draft, enough to cover the note. Don’t let this disturb your slumbers. We are all right, only going in a little steep. ':i * I will indorse with you on Mrs. Burns’ note if she wishes, making the note good in any bank. Of course, we will be borrowers this winter, as we swing a heavy load.”

Charles W. Hake testifies that defendant told him of the purchase; that defendant stated, in substance, that he and one Towar, the cashier of the Hancock Bank, had purchased section 31; that Towar had put in the money, and that he and Towar were to divide the profits; that, from three to six months after-wards, defendant stated to him that the officers of the bank had objected to outside speculations, hence he (defendant) had been obliged to relieve Towar, and that he had taken up the note, which had been given for the first payment, with the firm moneys, and held the land on joint account. Defendant denies that he had either of these conversations with young Hake, but states that he went to Towar, and asked him to join in the speculation, but that Towar declined, and suggested a third party, but that this ■ party, who resided at Hancock, also declined, and that he went back to Towar, who advanced him the amount of the first payment, taking an assignment of the contract as security. Towar is called, and corroborates the defendant. He is asked the question: “Is it true that you went in with Coach on the purchase of that land, and withdrew afterwards because the bank directors objected to your speculating?” His answer was: “No, sir. There is not a word of truth in it. There is nothing to found such a statement upon. It has not the semblance of truth.” It also clearly appears that, at the time of the purchase of section 31, and all along down to the time of filing this bill, the firm was short of funds to meet operating expenses and liabilities. At the very time of the purchase there was $2,000 in bank, but defendant did not make use of it.

It is true that the operations were carried on in the name of the defendant, but this was done from 1885 down with complainant’s knowledge, and without his disapproval. The bills, time checks, contracts, etc., relating to the business were sent to complainant’s son at Grand Rapids until 1889. After that time complainant’s son Henry was on the ground acting as bookkeeper. He knew that all accounts, including the bank accounts, Avere in the name of defendant.

While it is true that the bank account was in defendant’s name, that account discloses the source of all deposits, and the fact appears that all the payments made upon section 31, and the subsequent purchases now claimed as firm matters, were realized from the lands themselves, in connection with defendant’s individual credit, and that, whenever defendant checked upon bank deposits to make these payments, the account drawn upon was indebted to him for advances, which were usually made in anticipation of these payments. The bank books corroborate defendant’s testimony on this issue. There seems to be no difficulty in tracing partnership receipts, • and distinguishing the same from individual moneys, upon the very face of the bank accounts. It does appear that some of the proceeds of these operations went into these bank deposits, and that they were used "by defendant to meet firm liabilities, and of this fact the bookkeeper was from time to time advised by defendant. It cannot be said that, because the defendant made these advances, or because he made deposits of individual moneys in the- same account with the firm moneys, the moneys so deposited became firm moneys.

It is a well-settled rule that a partner cannot derive esclusiAre profit from the use of partnership funds; but it affirmatively appears that no such thing was here attempted. Defendant has traced every dollar of the money used in the purchase of these lands. The scope of the partnership operations was limited. These transactions were not concealed. They were entered into when, by the correspondence, and by the conduct of the parties, covering a period of four years, at least, it appears that the firm assets were tied up, and the firm was a borrower. The theory of the complainant seems to be that the firm ought not to have been a borrower, and that, in some manner, the proceeds of previous transactions were concealed or dissipated; but no complaint-seems to have been made upon that hypothesis until this bill was filed, and in the meantime thousands of dollars were borrowed for firm purposes, to the knowledge and with the co-operation of complainant, and the first payment on the last purchase made on firm account was made by discounting a note made by one of the parties and indorsed by the other.

It is suggested that statements were asked for from time to time, which were not given. Evidently the very drawbacks that attended the operations on both the L’Anse lands and the Otter Creek lands occasioned some apprehension in the mind of complainant. The correspondence, continuing until some time in 1893, seems to have been of a friendly nature, and discloses the condition of complainant’s mind. It will be remembered that Henry Hake, complainant’s son, was keeping the firm books. Defendant writes, June 8, 1890, referring to business matters, and sáys:

“Our drive cost us seven thousand extra on account of cold, but we are still on deck. * * * Henry will bring his books down in a day or two, and then he will make you a visit. * * If I can spare the time, I will come down with Henry for a couple of days.”

October 16, 1890, he writes:

“Would like those notes' extended for 90 days, with privilege of paying sooner.”

January 12, 1890, he writes to Charles Hake that he had made certain payments, and says:

“Hope your father feels better all around.”

February 3, 1893, lie writes:

“Henry Hake certainly lias not informed you about our accounts, else you would know that it took all the notes to pay indebtedness in G. R. bank and up here, and besides had to go to Burtis and beg him for $5,000 on nine months’ note, for which he now holds lien on the logs. Got a balance of $2,500 in bank, but also judgment in court, lawyers’ fees, and other expenses to put balance of logs into lumber, and drive, sorting, towing, and sawing. But am willing to turn the business over to you at any time, and as soon as I come back from Louisiana you or your boys can come up, and I will transfer it all to you. Of course, you will have to assume the expense of the suit. * * I can raise on the logs at mill enough to cover your account, if you wish. * * Will try to do all I can for you, if you need the money.”

The letter then refers to a contemplated trip to Louisiana to look after their joint interests there, and says:

“I will look over all the lands and see the position they may be in. I can sell one-fourth interest, I think, to parties up here. I wanted you to go with me, as it would be some satisfaction to you to see for yourself if the risk in holding was great, but will report to you my opinion on same as soon as I get through.”

On February 25, 1893, on his return from Louisiana, he reports, and says, with reference to local matters:

“I have written Mr. Sawyer for $5,000 advance on next season lumber, and think i will get same. I could then square up with you. You had better come up when you get at leisure. Will give you all, but don’t look for me in Grand Rapids. I got tax receipts for all our lands, and will forward them to you. Hammond is working for me, and at any time you should come, if I am away, he will show you the books, paj>ers, and all.”

Defendant says that, when spoken to respecting the state of the partnership accounts, it was when he was visiting at Grand Rapids, and that on those occasions he referred to Henry Hake as having the accounts in charge, and as able to give the desired information. Henry Hake, for the period covering any possible dissatisfaction, was, as the representative of the complainant, the bookkeeper of the firm. He visited his father frequently during that time, and it seems almost incredible that complainant was ignorant of the state of the partnership affairs; and it is significant that, notwithstanding this situation, for all these years, not a suggestion of improper conduct on the part of the defendant was made.

The purchase of these lands was not authorized by complainant. It was not within the scope of the partnership business. The purchases were made openly and without concealment. It does not appear that partnership funds were used in connection therewith, but it satisfactorily appears that the purchases were made with individual funds and credit,' and there was no such confusion of the funds as entitles complainant to participate in the profits of those transactions.

The decree below, so far as it relates to these dealings, is, therefore, reversed, and the record remanded, with costs to defendant.

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