author: McAlvay, J.

text:
    SMITH v. TOLAN.
    Malicious Prosecution — Advice op Prosecuting Attorney — Good Faith — Probable Cause.
    A member of the common council who makes a criminal complaint against another member of the council, for corrupt conduct, upon the advice of the prosecuting attorney, is not liable in an action for malicious prosecution, in the absence of evidence that he acted in bad faith or that the statement to the prosecutor was unfair.

    Error to Delta; Stone, J.
    Submitted January 6, 1909.
    (Docket No. 8.)
    Decided September 21, 1909.

      Case by Edward Smith against John Tolan for malicious prosecution. A judgment for plaintiff is reviewed by defendant on writ of error.
    Reversed.

      John Power, for appellant.

      Gallup & Gallup, for appellee.

       On the question of advice of counsel as defense to an action for malicious prosecution, see note to Van Meter v. Bass (Colo.), 18 L. R. A. (N. S.) 49.

   McAlvay, J.

Plaintiff recovered a judgment against defendant in an action for malicious prosecution. A motion for a new trial duly made by defendant was denied. A bill of exceptions was settled, and the case is here for review upon a writ of error. These parties were members of the council of the city of Escanaba in Delta county in the years 1904-1906, during which time bids were invited by the council, and contracts were let, for street improvements. The firm of Fleming & Sullivan, being lowest bidders, were awarded a contract in August, 1904. Smith and Tolan took opposite sides upon the awarding of this contract, Smith favoring it, and Tolan objecting on account of doubt as to reliability of . the bidders, Fleming & Sullivan. Mr. Sullivan of this firm died early in 1905, and John G. Zane, who was city engineer in 1904 and until April, 1905, secured his interest in this contract, and thereafter worked with Fleming in performing it. On August 11, 1904, Joseph A. Gross, owner of a stone quarry, entered into a contract in writing with Joseph Fleming, of the firm of Fleming & Sullivan, to furnish sufficient crushed stone for the above contract at 70 cents per cubic yard f. o. b. at Escanaba, in which the paving contract was referred to, and the sureties thereon were not to be held for such stone furnished. On March 8, 1905, plaintiff Smith, then a member of the council, entered secretly into a contract in writing with said Gross for the entire output of crushed stone during 1905 and 1906, or so much as Smith might desire and order at 85 cents per cubic yard f. o.,b. cars at Escanaba, and for the balance of contract let by the city in 1904 80 cents per cubic yard. Smith made a contract similar in all respects with John Bichler, another quarry owner in the same vicinity. These contracts for stone made with Smith were assigned by him to Zane May 3, 1905. No other stone suitable for street work was obtainable near Escanaba. The fact that these contracts had been so made and assigned was kept a secret by Smith and Zane from the city council and officers and from the public until about April, 1906. In the summer of 1905, a dispute having arisen between Gross and Fleming and Zane as to whether Gross should continue to furnish stone at the price fixed by the Sullivan contract, Smith voluntarily agreed to pay an advanced price therefor of 10 cents per cubic yard over the Sullivan contract. Such amount of this stone as the subcontractors required was sold to them by Fleming and Zane at $1.05 per cubic yard.

Early in 1906 tho faót of the Gross contract with Smith became known through the press, and there were rumors of dishonesty in connection therewith and with the street improvement. Investigation was started, and defendant Tolan became active in that direction. He consulted the prosecuting attorney on several occasions relative to the charges against Smith, and was informed by him that, to make a case, it would be necessary to offer proof that Smith had received money or other valuable consideration in connection with the stone contracts. Later, acting upon such advice, he brought a witness to the prosecutor, who stated that Smith told him that he (Smith) had made money out of the contract for stone which went into the street paving. This witness also so testified upon the trial. Tolan testified that he then said to the prosecutor: “Well, if you think there is a cause for action, I will make the complaint.” The prosecutor replied, “All right, you go ahead,” and told him to be at a certain justice’s office at % o’clock, and he would meet him there. The prosecutor required the time because the- complaint was a difficult one to draw, and read it to him at the time and place designated and presented it to him to sign, and he signed it. He also testified that he told the prosecutor all the facts within his knowledge concerning this matter before making the complaint. On this complaint a warrant issued. Smith was arrested, an examination was had, and he was bound over for trial, the prosecutor also so advising. A trial was had in the circuit court, and a verdict of not guilty was rendered. The complaining witness, Tolan, was not present or called as a witness at said examination, but he was present at the trial, and was a witness for the people. Out of this criminal proceeding against the plaintiff, Smith, the case at bar arose.

Defendant insists that the record shows that there was probable cause for making this complaint; that it was made after defendant had stated, in good faith, fully and fairly, all of the facts within his knowledge to the prosecuting officer, and relied and acted upon his advice, and assigns error upon the refusal of the court to instruct the jury:

“That it appeared from the evidence that defendant had probable cause for making the criminal complaint, and your verdict should be for defendant.”

The record shows that the prosecutor was familiar with this case. He had published a statement concerning it in the public press. He advised publicly that, to make a case, it must appear that Smith received benefit from the stone contracts. He so informed Tolan, and did not advise making the complaint until after Tolan brought to his knowledge such proof. He testified on direct exami - nation as a witness for plaintiff:

“Q. You were familiar with all the facts as they were claimed at that time, and as they subsequently developed?

“A. Oh, yes; I knew all about the case and facts, and talked the matter over with Tolan.”

It is claimed that the record does not disclose what facts Tolan stated to the prosecutor. The substance of his testimony is already given. It appears in the record in narrative form. No objection was made to it, nor cross-examination had upon it. It is uncontradicted that Tolan, after several interviews with the prosecutor, made inquiry-in regard to the only question of fact of which the prosecutor had no information, and fully stated to the prosecutor what the result was, and produced the witness who gave him the information. This is confirmed by the prosecutor.

The action of the prosecuting attorney at the time, in entertaining and drawing the complaint, and in advising the justice to hold Smith for trial, cannot be consistently construed other than that, from Tolan’s statement and the evidence of a witness furnished by him, he advised Tolan to make the complaint. Tolan was a member of the common council. It was his duty as a public officer to investigate these charges which had been made, and proper for him to place what information he obtained before the prosecuting officer of the county. We do not find any evidence in this record that he did not act in good faith. It is the settled law in this State in actions for malicious prosecution and false imprisonment that, where a prosecuting witness has in good faith fully and fairly stated all of the material facts within his knowledge to the prosecuting officer and acted upon his advice, proof of the fact establishes a case of probable cause. Rogers v. Olds, 117 Mich. 370 (75 N. W. 933); Doty v. Hurd, 124 Mich. 671 (83 N. W. 632), and cases cited. Also Cooley on Torts, p. 187. The court was in error in refusing to charge as requested.

Errors assigned upon the introduction of evidence and certain portions of the charge of the court, in view of our conclusion, need not be discussed.

The judgment is reversed, and a new trial ordered.

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


source: Caselaw Access Project

author: McAlvat, J.

license: Public Domain

text:
    FIRST NATIONAL BANK v. UNION TRUST CO.
    1. Bills and Notes — Certified Cheoks — Unlawful Certification-Banks and Banking.
    A certified check in the hands of a bona fide holder is enforceable, although the drawer had no funds on deposit in the bank when it was certified, in violation of 2 Comp. Laws, § 6108.
    2. Same — Parties to Certifioation — Holder in Due Course.
    Evidence that the drawer knew of a practice adopted by the payee of having checks certified before releasing securities in reliance on the checks, has a tendency to show that the drawer was one of the original parties to the certification.
    3. Same.
    Such a certification being shown to have been procured at the implied request of the drawer, is as valid in the hands of a holder in due course as if procured by the drawer.
    4. Same — Trial—Good Faith.
    Instructions to the jury were not erroneous that, if the plaintiff knew the facts or believed the certification to be invalid; or had a knowledge which would render the act of taking the check dishonest or in bad faith, it could not recover.
    5. Same — Notioe of Defect.
    It was not error to refuse a request to charge the jury that a scrap book in plaintiff’s possession, containing a showing by the certifying bank that it had only a small amount of certified checks outstanding, was evidence tending to show notice of the illegality.
    6. Same.
    Such statement was not actual notice of the defense, where the officers of the plaintiff had not examined it.
    7. Same.
    It is not error to refuse a request to charge the jury which ■ emphasizes and states the effect of certain evidence.
    8. New Trial.
    A motion for a new trial was properly denied where the alleged newly-discovered evidence could have been discovered with reasonable diligence, and where improper publications in local papers did not influence the jury.

      Error to Monroe; Lockwood, J.
    Submitted January 8, 1909.
    (Docket No. 38.)
    Decided September 21, 1909.
    Assumpsit by the First National Bank against the Union Trust Company, receiver of the City Savings Bank, for the amount of a certified check. A judgment for plaintiff is reviewed by defendant on writ of error.
    Affirmed.
    Bowen, Douglas, Whiting & Murfin (John C. Donnelly and Frederick W. Whiting, of counsel), for appellant.

      Stevenson, Carpenter & Butzel (Harrison Geer, of counsel), for appellee.
   McAlvat, J.

Plaintiff recovered a judgment in this suit brought by it against the City Savings Bank of Detroit upon the certification of a check for the sum of $175,-662.50 drawn on defendant bank by Frank C. Andrews payable to plaintiff. Frank C. Andrews was a heavy customer of plaintiff bank. He dealt largely in stocks and bonds upon the New York and eastern markets through his brokers in Detroit, Cameron Currie & Co. Usually, when he made purchases, drafts on Detroit would be made for the amount of the purchase, and to these drafts were attached the certificates of stock purchased, to be delivered to him when the drafts were paid. The transaction which occurred on February 5, 1902, when this check in suit was given and certified, was of this nature: the plaintiff on that date wired for Mr. Andrews to New York, cash to the amount of $75,000. It delivered to him three drafts drawn on his brokers amounting to $338,162.50, to which were attached certificates of stock of equal value. Total $413,162,50. In payment of this indebtedness it received from Mr. Andrews:

Check of C. Currie & Co. on First Nat. Bank___§137,500 00

Check of Frank C. Andrews on Preston Nat. Bank........................................ 55,000 00

Check of same on same bank................... 45,000 00

Check in suit drawn by Andrews on City Savings Bank........................-.......... 175,662 50

$413,162 50

There is no dispute about the amount of the cash and stock charged in the above statement, or that he delivered to plaintiff the checks credited to him. When Mr. Andrews parted with possession of the check, it was not certified. It was immediately handed to a messenger of the bank with instructions to procure its certification. These instructions were at once obeyed and the certification procured. These transactions were conducted between Mr. Frank G. Smith, assistant cashier of plaintiff bank, and Mr. Frank 0. Andrews. Both were witnesses in the case. They do not agree as to the time the transaction occurred, and as to whether the check was certified when the drafts and attached certificates of stock were delivered by the bank to Mr. Andrews. The assistant cashier testifies that the transaction occurred after 12 o’clock, noon; Mr. Andrews that it was at 11 o’clock a. m. The assistant cashier testified that, in accordance with imperative orders from the cashier of the bank, and in accordance with what plaintiff claims is shown by the testimony was a custom known to Mr. Andrews, the check was certified before the drafts and stock attached were delivered. Mr. Andrews testified that the drafts and certificates of stock were delivered to him before the check was certified.

Transactions previous to the one of this date, and of a similar character, in every essential particular, had occurred between these parties on each and every banking day from and after December 3, 1901. The actual time over which they had extended was longer than this; but by agreement this date was fixed as covering a sufficient length of time for the purposes of this case. The transactions during that period were many and of large amounts; the total aggregating millions of dollars. They occurred after 12 o’clock noon, when the clearing house closes. They were settled each day, usually by checks of different parties, as shown in the transaction of February 5th, above. The balance of the indebtedness of Mr. Andrews was paid by a check on the City Savings Bank, which, if more than $20,000, was by the orders of the cashier of plaintiff bank always certified before the securities for which it paid were delivered to Mr. Andrews. All checks on local banks were required by the clearing house agreement to pass through it, and to be paid only by taking that course. All such checks received after 12 o’clock, noon, would not pass through the clearing house until the following day. If no other arrangement was made, each of the checks referred to, so given by Andrews to plaintiff bank, was passed through the clearing house and paid on the following day. In most instances some other arrangement was made on the morning of the day after such checks were taken. During the morning of the next day usually Andrews would call at the plaintiff bank and make a'n arrangement to take up the certified check and pay it to a large extent by giving plaintiff New York Exchange, which was desirable and of benefit to plaintiff to the amount of 50' cents per $1,000. Between the dates above mentioned plaintiff remitted to New York for Mr. Andrews $6,531,312.19. It received exchange from him amounting to $5,242,000, all good and paid. The majority of these certified checks taken up by Andrews were returned by him to the City Savings Bank. On the day of the transaction in dispute at 12 o’clock the only check at that time given by Andrews and held by plaintiff was paid through the clearing house. Plaintiff, at the time the check in this suit was taken, was not a creditor of Andrews or the City Savings Bank. The jury to which the case was submitted by the court returned a verdict for plaintiff for the amount claimed.

Of the errors claimed by defendant and assigned, the first which requires consideration is the refusal of the court to direct a verdict against plaintiff upon the legal propositions stated in the defendant’s second request to charge, which was denied. Condensed by defendant in its brief, this request is stated as follows:

“(1) That the manner in which the plaintiff obtained the certification of the check under dispute made the contract of certification one solely between the plaintiff, the First National Bank, and the City Savings Bank, and that the two banks are the original and only parties to such contract of certification,

“(2) That, consequently, the question of bona fide ownership of the First National Bank of the check, or of the contract of certification, does not arise in the case. The action brought by the plaintiff is not based upon the check, but is based necessarily upon the contract of certification between it and the City Savings Bank, and therefore the circumstances surrounding the making of the contract of certification, in our view of it, control the disposition of the case, and the conduct of the First National Bank or its treatment, of the certification after the completion of said certification and their dealings with Andrews or Currie, or any other person, in relation to the securities, cannot change the legal effect of the contract of certification.”

It is asserted repeatedly in defendant’s brief that neither the disputed fact as to whether the stocks were delivered before or after certification, nor the question of the bona fide ownership of the check or certification, have any piaterial bearing upon the case. In taking this position it would appear that defendant is relying upon the prohibition of the statute against certifying checks in the absence of funds to the drawer’s credit. In support of the position taken, this statute as construed by this court, and authorities cited in support of such construction, are cited and discussed. Reliance is had upon the case of Union Trust Co. v. Preston Nat. Bank, 136 Mich. 460 (99 N. W. 399, 112 Am. St. Rep. 370). In that case plaintiff brought suit against defendant to recover a balance claimed to be due. Defendant sought to set off against this indebtedness the sum of $100,000, represented by a check of F. C. Andrews drawn on plaintiff payable to defendant and duly certified. At the time of certification Andrews was overdrawn $405,000. Defendant offered to show that on the day it was drawn, and after certification, it received this check in the usual course of business, and paid the maker full value, and at the time had no notice or knowledge of any infirmity, or that Andrews’ account was overdrawn. This evidence was excluded; the trial court holding that the certification was invalid in the hands of a bona fide holder, and directed a verdict for plaintiff, for the amount of the deposit in defendant’s hands. The opinion states:

“The sole question presented by this record relates to the correctness of this holding.”

This was the question decided. This court held that a certified check in the hands of a bona fide holder for value is valid, although the maker had no funds in the bank when it was certified.

It is claimed that the case decided that, as between the original parties to the certification, the contract of certification, in the absence of funds, is absolutely void. The opinion discusses at considerable length the construction of prohibitory statutes, and the legislative intent in enacting the section of the banking act construed. In the opinion it is stated:

“ The fact, however, that the certification is forbidden and made a crime, compels the inference that the legislature intended to avoid such certification between the original parties; and this, it is almost unnecessary to say, avoids it in the hands of every one not a bona fide holder.”

Upon the face of the opinion it shows that this question was not before the court. There is no rule better settled than that which holds that no case is to be considered authority except upon the questions actually decided. The case relied upon settles the one question above stated.

It is claimed by plaintiff that Andrews was one of the original parties to this certification. Evidence was offered and received, tending to show that, in these dealings between the parties, the securities, which were to be released to Andrews on the payment of the drafts to which they were attached, were never released until the checks given in payment therefor were certified by the defendant bank, tending to establish' a custom known to Andrews, and that such custom was followed in this case, and the check certified before the stocks were delivered to Andrews, the effect of which evidence was claimed by plaintiff to show an implied request on the part of Andrews to the plaintiff to procure certification for him. The jury decided the question as to the time of release and delivery of the stocks in favor of plaintiff. This was a material fact a!s bearing upon the question of consideration passing, and who were the original parties to the certification, and one which, in view of the evidence in the case upon that question, could not well have been decided otherwise. If the facts are found, as claimed by plaintiff, that it procured this certification for Andrews, wherein can such procurement be distinguished from a case where the certification is procured by the maker himself, if it is shown that plaintiff is in fact a bona fide holder for value? We think there can be no distinction made, and that the case comes within the rule laid down in Union Trust Co. v. Preston Nat. Bank, supra. In such view of the case the question of bona fides is necessarily of the greatest importance.

It is urged by defendant that, even conceding the certification of the check to have been procured by plaintiff at the request of the maker, express or implied, such fact would not operate to change the status of plaintiff as one of the original parties to the certification. Cases are cited in support of this proposition. An examination of these shows that they were cases brought against the drawers of certified checks, and were decided against the holders when the certifications were procured by them, and in their favor when procured by the drawers. In other words, they are some of the leading cases, establishing and affirming the doctrine indicated, about which there can be no dispute in this State since the decision of First Nat. Bank of Detroit v. Currie, 147 Mich. 72 (110 N. W. 499, 9 L. R. A. [N. S.] 698, 118 Am. St. Rep. 537). In none of these cases was the suit against the certifying bank, nor was there any dispute as to whose request procured the certification. No cases are cited which decide that the original holder procuring the certification may not be a bona fide holder for value. This court, in First Nat. Bank of Detroit v. Currie, supra, has decided that he may be such a holder. That case arose from a transaction between Andrews and these banks similar to the transaction in the case at bar and on the following day. The suit was by the holder against the indorser. Frank C. Andrews drew his check of $50,000 payable to Currie & Co., who indorsed it to plaintiff who secured its certification, and, relying upon it, wired $50,000 to New York. It was presented for payment at the certifying bank, payment refused, and the indorser notified within the time he would have received notice if the check had not been certified. In deciding that this certification released the indorser, the question now under consideration was necessarily involved. At the time the check was certified, Andrews’ account was overdrawn $600,000, and the certification was claimed to be fraudulent and criminal. To hold that contract legal and binding it necessarily followed that the payee and indorsee was held to be a bona fide holder for value. Counsel for defendants cite this case as correctly stating the law upon the questions involved, but do not agree that this question was necessarily decided.

It is claimed that plaintiff charged Andrews bonuses and interest because checks were taken up by him instead of going through the clearing house. The record does not sustain the claim. No bonuses were charged or interest paid for that reason. The items of interest charged were upon the items of cash of which he received the immediate use in exchange for checks which could not be cashed until the day following.

It is claimed that the court committed error in his charge in submitting the question of good faith to the jury. A careful examination of this part of the charge shows that the court stated the law correctly. The following upon this question is taken from the charge:

* ‘ That the burden is upon the plaintiff in this case to show by a preponderance of the evidence that it is a bona fide holder of the check and the certification thereon for value. * * * If, after careful consideration of all the evidence, you are satisfied that the First National Bank, at the time it took the check, understood or believed that the certification was not valid, but, on the contrary, that it was made when Frank C. Andrews did not have money on deposit in the City Savings Bank to the credit of his account on the books of the bank sufficient to meet the amount of the check, then your verdict should be for the defendant. * * * If you are satisfied from all the evidence in this case bearing upon this question that on the 5th day of February, 1902, the First National Bank, or its officers, and more especially Frank Smith, its assistant cashier, had notice or knowledge of facts which would render the act of taking the certification of the City Savings Bank with the intention to rely upon it and collect it, an act of bad faith, or in effect dishonest, then the First National Bank was not a bona fide holder of the certified check, and your verdict should be for the defendant. . * * ’fi

“ Under these circumstances, a man may take a piece of 'commercial paper, relying upon its being good, and he is not bound to inquire of the maker of said paper as to the facts and circumstances surrounding its making, nor as to whether there are possible defenses; but, if he have knowledge of facts and circumstances which would make it dishonest or an act of bad faith for him to take the paper with the intention to enforce the collection thereof, then he is not a holder in good faith. So, in this case, if the officers of the First National Bank, or either of them, had knowledge that the City Savings Bank was certifying these checks of Frank C. Andrews simply because he had deposited collateral in the bank, and were not certifying •upon money actually deposited in the bank and to his credit on its books, the First National Bank would not be a bona fide holder of this certified check.”

The complaint defendant makes is, not that the law is not correctly stated, “but that there was failure in making the proper application of the principle to the case by explaining to the jury how such notice and knowledge might be established,” etc.

Complaint is also made to this part of the charge, that the court did not charge as requested in three of the requests submitted, and that the jury were only permitted to consider facts and circumstances which in themselves were evidence showing actual notice and knowledge. These requests were as follows:

“(13) If the jury find that, at the time of the certification of the checks in question, Frank C. Andrews did not have actually standing to his credit upon the books of the bank the amount of said certifications, but that, on the contrary, at the times of said certification the account of the said Frank C. Andrews in the City Savings Bank was actually overdrawn in a large amount, then the jury are instructed that the certification, under the circumstances, is in violation of the provision of the State banking law, and is therefore illegal and void, and there can be no recovery thereon by the plaintiff, unless the jury find that it became the holder thereof in good faith, for full value, in the usual course of business, without notice of the defect or infirmity of the certification or the illegality thereof, and the burden is upon the plaintiff, the First National Bank, to show by a preponderance of proof that it became a holder in good faith of the said certification, for full value, in the usual course of business, without any notice of the illegality of the certification or of any defect or infirmity therein, before it is entitled to a verdict.

“(13) The jury are further instructed that if they find the facts and circumstances attending the use of certified checks, drawn by Andrews upon the City Savings Bank and purporting to be certified by it, and the manner in which the plaintiff used and treated such certified checks, were such as to invite inquiry, they will be sufficient upon which to base a finding or conclusion that the plaintiff bank did not receive the certification in question in good faith, providing the jury think that the plaintiff abstained from making the inquiry with reference thereto from a belief or a suspicion that such inquiry would disclose the invalidity and illegality of the certifications.

“ (14) Notice and knowledge of the invalidity and illegality of said certification do not mean express notice or direct knowledge, but knowledge or the means of knowledge to which the party wilfully shuts his eyes, and either actual knowledge of the illegality of the certification, or a course of conduct upon the part of the bank in its dealings with Andrews, and the certified checks, from which the jury may find that it remained wilfully ignorant thereof, will defeat the claim of good faith ownership by the plaintiff.”

In so far as the substance of these requests was refused, they were not proper to be given, as either not being in point, or improperly calling attention to and emphasizing certain testimony.

Errors are also alleged for the refusal to give two certain charges relative to a scrap book of plaintiff’s vice president, in which were pasted statements of the local banks, including the December statement of the City Savings Bank, showing a small amount of outstanding certified checks. It did not appear that either the vice president or Mr. Smith examined the book or the statements. The first of these requests asked the court to charge that the jury might consider this testimony as tending to show notice of illegal certification. The second request stated that the jury might consider this testimony as showing actual notice of such illegal certification. The first was properly refused for the reason that the request singled out certain testimony and stated its effect. The second was not a correct statement of law and should not have been given.

As to the court’s rulings on the admission or exclusion of testimony, it is claimed by plaintiff that no exceptions were taken to the rulings complained of. An examination of the record, as far as the pages cited are concerned, confirms this claim. It is not denied in defendant’s reply brief.

Errores assigned upon the denial of the motion for a new trial upon the ground of newly-discovered testimony, and because of improper publications in a local newspaper. As to the first ground, it appears that with ordinary diligence this evidence might have been produced, as it relates to matters which were within defendant’s knowledge prior to the last trial. Defendant’s attorneys were then in possession of transcripts of testimony of former trials as to the time when the drafts were paid; the witness now desired being one of the firm who drew the drafts. As to improper and prejudicial publications, those printed in the record were examined by the learned trial judge when the motion was decided. We agree with his conclusion that the publication did not influence the jury.

The judgment is affirmed.

Blair, C. J., and Montgomery, Hooker, and Moore, JJ., concurred.


author: Moore, J.

text:
    ANKER v. SCHREIB.

    Judgments — Taxation—Res Adjudicata.
    A complainant who flies a bill to set aside tax deeds, is bound by a decree rendered against his predecessor in title adjudging the taxes valid prior to the date of the sale to the State under which the deeds were issued to defendant.
    Appeal from Ogemaw; Sharpe, J.
    Submitted January 21, 1909.
    (Docket No. 34.)
    Decided September 21, 1909.
    Bill by Samuel Anker against Charles M. Schreib, William Barber, and another to set aside certain tax deeds. From a decree dismissing the bill, complainant appeals.
    Affirmed.

      William T. Yeo, for complainant.

      Bennett & Moore and Foster L. Snodgrass, for defendant Barber.

       Rehearing denied December 31, 1909.

   Moore, J.

In January, 1898, the auditor general of the State issued to Charles M. Schreib a tax deed for the unpaid taxes of 1882, 1883, 1884, and 1885. He also issued to him on the same day a tax deed for the unpaid taxes of 1886, 1890, 1891, 1892, and 1893. November 14, 1899, the bill in this case was filed to have the two deeds declared void. No Us pendens was filed. Personal service was had on Mr. Schreib. His default was taken December 19, 1899, but nothing further was then done. On February 25, 1904, Charles M. Schreib deeded the lands by quitclaim deed to William Barber, and it is his claim that he and his grantors have been in possession of the land since the year 1900. In October, 1907, the solicitor for complainant sought to place the case on the calendar for hearing when the defendant Barber was allowed to file an answer. An answer was also filed by the auditor general. There were other proceedings had which it is not necessary to recite here. The cause was heard on pleadings and proofs taken in open court. The bill of complaint was dismissed, and the case was brought here by appeal.

A great many interesting questions were presented by counsel which, in our view of the case, it is not necessary to discuss. The complainant obtained his title to the land from the estate of Charles Dease. The record discloses the following:

“Files and records of the circuit court for the county of Ogemaw, in chancery, in the suit entitled Charles Dease, complainant, v. Auditor General and County Treasurer, defendants, T. B. Tuttel being solicitor for complainant, and De Yere Hall, as solicitor for defendants, discloses the following facts: October 5,1887, bill of complaint filed to set aside taxes of year 1885 for defects alleged therein. March 12, 1888, defendants’ answer filed. March 24, 1888, complainant’s replication to answer filed. April 16, 1889, proof of service of notice of hearing that case will be tried May 7,1889, filed. May 13, 1889, court in session, decree rendered. June 7,1889, notice of signing and settling decree, filed. June 7, 1889, notice of entry of de- . cree. December 12, 1889, execution issued, returned not satisfied 12-4-1890. In the bill so as above filed it was by said Charles Dease claimed that said taxes were levied without authority of law.”

The decree entered recites, among other things, as follows:

' “This cause having been brought on for hearing on proofs taken in open court, in the circuit court for the county of Ogemaw, in chancery, and having been argued by counsel for the respective parties, and due deliberation had thereon, it is ordered, adjudged, and decreed: * * *

“ It is hereby determined that the lien created against the said lands of complainant, described in his bill of complaint, filed in this cause, by the assessment and levy of taxes in the year 1885, be and the same is hereby continued in full force and effect, said lien to continue until the said lands are sold by virtue of and under the provisions of Act No. 153 of the Public Acts of the State of Michigan for the year 1885, and Act No. 17 of the Public Acts of said State for the year 1887, after properly advertising the same as directed by said act for the said taxes of 1885, and all interest, costs, office charges, costs of advertising and collection fees, as provided by said Act No. 153 or until sold under this decree as hereinafter provided.”

The lands were later sold under this decree and bid in by the State. Counsel claim as follows:

“ It is not disputed in this case that the taxes assessed against said lands for year 1885 were about to be sold at the tax sale of year 1887, when such sale was enjoined by the circuit court for the county of Ogemaw, in chancery, at the suit of Charles Dease, as complainant, against Auditor General, et al., as defendants. That the said Charles Dease departed this life in February, 1889, while the hearing in said suit was not had until May, 1889, and no suggestión was made therein of the death of Charles Dease, or the substitution of his representatives as complainants.”

It is also claimed that the notice was not given and the sale made as to time according to the terms of Act No. 153 of the Public Acts of 1885, and that nothing appears in the files showing the issuing of an execution and a return thereof before sale. The last-named contention is shown to be not well taken. We have already quoted enough from the decree to show that it was rendered after proofs were taken in open court and after argument of counsel for the respective parties. Just what proof was taken in open court is not made to appear. The decree then made in a case brought by the grantor of the complainant in this case has never been attacked in that case, and we think it cannot now be attacked in this proceeding. The decree provided that the lien should continue until the land was sold thereunder. We think it now too late to say that the taxes passed upon in that decree were irregularly levied.

The decree is affirmed, with costs.

Blair, C< J., and Grant, Montgomery, and McAlvay, JJ., concurred.


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    ROUSE v. MICHIGAN UNITED RAILWAYS CO.
    1. Negligence — Street Railways — Speed of Cars — Municipal Ordinances.
    One who is injured in driving across the tracks of a street car company, by a collision with the car, cannot recover if he is guilty of contributory negligence, even although the car may have been running at an excessive rate of speed prohibited by an ordinance of the city.

    2. Same — Instructions to the Jury — Contributory Negligence — Appeal and Error.
    A charge which, considered as a whole, fails to state a proposition of law essential to the theory of one of the parties, whether or not the attention of the court has been called to the point by a request to charge, may be questioned by the assignments of error on appeal.
    Error to Ingham; Wiest, J.
    Submitted February 15, 1909.
    (Docket No. 5.)
    Decided September 21, 1909.
    Case by Albert Rouse against the Michigan United Railways Company for personal injuries. A judgment for plaintiff is reviewed by defendant on writ of error.
    Reversed.

      Sanford W. Ladd, for appellant.

      Frank L. Dodge (E. H. Person, of counsel), for appellee.

       As to injuries by street car collisions with vehicles or horses, see note to Hicks v. Citizens R. Co. (Mo.), 25 L. R. A. 508.

   McAlvay, J.

Plaintiff was injured while crossing the street railway track of defendant in the city of Lansing in March, 1907. He claims that this occurred on account of the negligence of the servants of defendant. He was a farmer, and came into North Lansing on the forenoon of the day of the accident, where he stopped for some time, and then proceeded west on Franklin street, turning south when he reached Washington avenue, driving on the east side of defendant’s tracks, which are laid in the middle of that avenue. He was driving a team of horses hitched to a wide-tired wagon, with a rack bos 16 feet in length containing chicken crates. He proceeded on Washington avenue until he reached Madison street, which intersects it at right angles, where he attempted to cross the track by turning to the west into Madison street. A street car was' following him going in the same direction, i. e.,, south. He knew this, having seen it some time before he turned to cross. He claims that at the time he turned the car was more than a block distant. In crossing, the wagon was struck and plaintiff was injured. He charges negligence in that the car was run at a high rate of speed without caution or care for plaintiff’s safety, and in not bringing the car under control in time to avoid a collision.

There is a dispute as to the distance of the car away at the time plaintiff made his observation before he began to make the crossing, and also as to the place where he attempted to cross; plaintiff claiming that he started to turn at the north crosswalk of Madison street, and the defendant that this occurred at or south of the south crosswalk of Madison street. There is also a dispute as to the time of day the accident occurred and the speed of the car. The claim of defendant was: That plaintiff was driving along on this avenue at a proper distance from the track, and when he got to the south crosswalk of Madison street he turned his team abruptly to cross the track, when the car of defendant was so near that an accident was unavoidable ; that the car was operated with care, and not at a high rate of speed; that the contributory negligence of the plaintiff was the cause of his injury. The jury, under the charge of the court, returned a substantial verdict for plaintiff.

This court is asked to reverse the judgment entered upon such verdict upon errors claimed to have been committed upon the trial. Of the errors assigned,,'but one will require consideration. It is claimed by defendant, that the court erred in charging the jury upon the question of the contributory negligence of plaintiff and in refusing to charge as requested upon that subject.

The following excerpts from the charge give the claims of the parties in the case and the issue involved, as stated by the court:

* ‘ He claims that before he turned to cross the track he looked to see where the cars were,, and saw one back of him just north of Jefferson street approaching Madison street, that would be approaching in his direction. It is his claim that the car was being run at a high and prohibited rate of speed, and because of that fact, before he got across the track, it struck his wagon and caused his injury. The defendant claims that the car was not running at an excessive or prohibited rate of speed, and that the accident was caused by plaintiff carelessly turning to cross the track so near the car that it was not possible for the motorman to stop the car in time to avert the accident.

“ The issue in this case is not complicated; in fact, it is very narrow. There is no proof that the motorman in charge of the car was incompetent, or that the brake or appliances on the car for stopping the car or arresting its action was insufficient or faulty. Therefore the question submitted to you and for you to determine from the evidence is: How, in broad daylight, with a competent motorman, with a car fitted with proper appliances, did this accident happen? Was it because of the failure of the motorman, after he in fact observed, or should have observed, had he been paying attention to his duty, the plaintiff upon the track at a point where, had he taken proper precaution, he could have averted the accident by bringing his car to a stop, or was it because the plaintiff turned across the track when the car was so near that it was not possible for the motorman to arrest the progress of his car and avert the accident ? * * *

“The plaintiff claims that defendant was negligent in running its car at a high rate of speed, a prohibited rate of speed, and running it upon him when the motorman should and could have discovered his position on the track in time to have averted the accident, had he exercised ordinary prudence in running the car.”

The portions of the charge of the court upon the question of contributory negligence complained of by the defendant are as follows:

“ If, on the other hand, the plaintiff turned to cross the track at a point and place so near the approaching car that it was not possible, after his peril became known to the motorman, or should have been known to him, by the exercise of ordinary care and prudence, and the motorman used all the means at his command to arrest the progress of the car and avert the accident, and could not have averted the progress of the car, and have averted the accident, had the car been running within the speed limit of 16 miles per hour, then the plaintiff’s want of care and the defendant’s exercise of ordinary care defeats the plaintiff’s action, and in such event your verdict will be for the defendant. * * * A violation of this ordinance by the railway company of itself does not give the plaintiff a right of action; but the plaintiff in attempting to cross the track, if he knew at the time from former observation the rate of speed of the cars, had a right to assume that the car he saw coming was not exceeding the lawful speed. * * * If he was acting as a person of ordinary care and prudence, what caused the accident ? Was it because the car was being propelled at an excessive and unlawful rate of speed? Was it because the motorman failed to make the observation he should make to see whether the track was clear ? If the motorman had observed, would he have discovered the position of the plaintiff on the track in time, had the car been propelled at the legal rate of speed, to have stopped his car and have averted the accident ? These are issues for the plaintiff in this case to establish by a preponderance of the evidence. Was the accident caused by the plaintiff turning upon the track in front of a car near to him, so near that, had it been propelled at a legal rate of speed, the motorman could not have prevented the accident by the exercise of care ? If you find such to be the fact, then the plaintiff cannot recover.”

Defendant’s position is, as its requests to charge show, that the court should have charged that, if the jury found plaintiff guilty of contributory negligence, then the verdict should be for defendant, even if the car was running at a rate exceeding the speed limit; in other words, that if, in this case, plaintiff was guilty of contributory negligence, he could not recover.

The rule is well established that a charge should be considered as a whole, and not judged by paragraphs separated from the context, and plaintiff claims that the application of this reasonable rule shows that the court was not in error in his charge upon contributory negligence. Applying this rule, we find that the charge nowhere contains an instruction to the jury such as defendant urges should have been given as above stated. If defendant is right, the court was in error.

There can be no doubt but that the several requests of defendant gave the court to understand its position upon the question of contributory negligence, and sufficiently called attention to what it claimed was the law upon that subject in this case. The trial court need not give requests the substance of which is contained in his general charge; but the refusal to give any requests which should be given, and omitting the proposition of law entirely from the charge, may be questioned by assignments of error, and, where the proposition of law omitted is essential to the submission of the theory of either party, error may be assigned to the charge under the statute, even if the attention of the court has not been specifically called to the matter.

In his charge the court in each instance qualified the effect of contributory negligence as defeating recovery upon the condition that the speed of the car did not exceed the ordinance limit. In this he was in error. The testimony of defendant’s witnesses tended to prove that plaintiff suddenly, when the car was but a short distance away, turned his team from a place of safety to cross the track in front of this car, which he had seen and knew was following him, that the distance from the car was about 40 feet, and that warnings were given and the car stopped as soon as possible. Defendant was entitled to a charge that, if this was true, plaintiff would be guilty of contributory negligence. The question of contributory negligence in this case was one of fact and not of law:

“The universal rule is that, if negligence on the part of the person injured contributed to the injury, he is not entitled to recover.” 29 Cyc. p. 507.

This rule has been applied in this State, and this court has held that if plaintiff is negligent he cannot recover, unless the negligence of the defendant complained of was wanton or willful.

The weight of authority is that if plaintiff’s negligence contributed to the injury, though the act of the defendant is in violation of the law, the plaintiff cannot recover. Beach on Contributory Negligence (3d Ed. Rev.), § 49, notes and cases cited. The court was in error in omitting from his charge as given, to state that plaintiff could not recover if guilty of contributory negligence, even if the car was running faster than permitted by the ordinance.

The judgment is reversed, and a new trial ordered.

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


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    MONROE v. BUSHNELL.
    1. Fraud — Evidence—Reliance on Statements.
    Under a bill of complaint charging defendant with obtaining money for a corporation of which he was manager by fraudulent representations, evidence that the representations were made subsequent to the time of securing the loan, fails to sustain the charge of fraud.
    2. Contracts — Actions—Corporations.
    No right of action against the manager of a corporation accrues to the trustee in bankruptcy of a bank which loaned money in the name of its president to the corporation acting through its manager, appointed under a special agreement whereby the manager assumed control of the business, and which provided for a mutual cancellation of liability arising out of certain provisions of the contract, if the business did not succeed.
    3. Same — Parties to Actions — Assignment—Bankruptcy—Subrogation.
    An assignment of the rights of the corporation to the trustee in bankruptcy gives no greater rights than the trustee would have had against a defendant who did not bear to the complainant the relation of debtor and oreditor, or a relation which equity would treat as its equivalent.
    Appeal from Kalamazoo; Adams, J.
    Submitted February 18, 1909.
    (Docket No. 124.)
    Decided September 21, 1909.
    Bill by Stephen B. Monroe, trustee in bankruptcy of the Vicksburg Exchange Bank, and others, against William E. Bushnell and the Vicksburg Manufacturing Company to establish a lien for moneys furnished to defendants. From a decree for complainant, defendant Bushnell appeals.
    Reversed, and bill dismissed.

      Jesse B. Oropsey and Boudeman, Adams & Weston, for complainant.

      JacJcson & Fitzgerald (W. J. Oandlish, of counsel), for appellant.
   McAlvay, J.

Complainant in this case, as trustee in bankruptcy of the Vicksburg Exchange Bank, a copartnership, and Charles L. Keep, Fred W. Neasmith, Eva A. Neasmith, and Ella Cooley, as members of said co-partnership, and individually bankrupts, filed his bill of complaint against defendant Bushnell and the Vicksburg Manufacturing Company asking for:

(1) An accounting with defendant Bushnell for the sum of $4,100 in cash furnished under a certain contract.

(2) An accounting for all sums for which defendant Bushnell would be liable to account to the Vicksburg Manufacturing Company for rents and profits arising out of the operation of its business from March 4, 1904.

(3) For a lien to be decreed upon all property and machinery defendant Bushnell may have in and about the plant of the Vicksburg Manufacturing Company purchased from moneys advanced to him and from income, gains, and profits arising from the operation of its business, also all bills receivable and book accounts arising from sales of any manufactured goods, and all moneys received upon such sales, and also for an injunction against said Bushnell to restrain him from selling, assigning, incumbering, or removing any of the tools, machinery, stock or goods, property, and accounts of said Vicksburg Manufacturing Company.

Elbert L. Page, who was a member of the copartnership doing the banking business, was never individually declared a bankrupt. The trustee complainant claims to represent any rights of said Page and also any rights of the Vicksburg Manufacturing Company against defendant Bushnell solely through certain assignments by such parties to him as trustee in bankruptcy of the banking copartnership. The Vicksburg Manufacturing Company is the name of a domestic corporation formerly known as “Clark Bros. Company,” which under the statute has been changed.

The theory upon which the bill of complaint is framed, and under which the relief prayed is claimed, is: That, under a certain contract between Clark Bros. Company and defendant Bushnell, dated March 4,1904, as complainant construes it, defendant Bushnell was to take charge of Clark Bros.’ plant and run it for himself; that moneys should be advanced to him as a working capital to the amount of $3,000, which he would repay, according to the terms of said contract, which will be set forth later in this opinion. It is further claimed: That Clark Bros. Company were then indebted to the Vicksburg Bank to the amount of $5,500, secured and unsecured, and that to be able to advance money to Bushnell to carry on his business the stockholders of Clark Bros. Company entered into an agreement with Page, as president of the bank, to pay certain assessments upon their stock, to the amount of $2,500, to reduce said indebtedness; that these assessments were in a large part paid; that then Mr. Page furnished defendant Bushnell money to the amount of $4,100 in the-following manner: Page gave his promissory notes from time to time to the banking firm, and, although he was insolvent, received money for them which he gave to Bushnell as it was needed in the business, taking receipts therefor. The bill of complaint alleges: That the Vicksburg Bank closed its doors in June, 1905, and the firm was adjudged bankrupt September 4, 1905; that this trustee found that Mr. Page was indebted to said banking firm in a sum of over $12,000, and the trustee secured a judgment against him in the circuit court for Kalamazoo county for over $10,000, which judgment included the notes of Page, for the moneys claimed to have been advanced by him to Bushnell; and that the judgment is not collectible. The bill then sets up at length the dealings between the Vicksburg Manufacturing Company under the contract with it, in the name of Clark Bros. Company and defendant Bushnell, claiming that out of these transactions there arose a large indebtedness, on account of rents and profits of the business, due from him to said company as its agent, and on account of the fact that the bank actually furnished the money' to Bushnell through Page, and Page is now insolvent, complainant trustee should be subrogated to his rights against Bushnell for the money advanced, and also to a lien on the machinery, property, and manufactured goods so far as purchased with such money and so far as the same represents gains and profits. There are other allegations of threats by Bushnell to remove this property, or some of it, upon which the prayer for injunction is based. The Vicksburg Manufacturing Company was made a party defendant by amendment to the bill, on the order of the court, at the hearing. Its answer is an admission of all the material allegations of the bill, and its officers furnish the major part of complainant’s oral proofs.

Defendant Bushnell, traversing and denying the allegations of the bill upon which recovery can be predicated, claimed: That by the terms of the contract with Clark Bros. Company no money was agreed to be advanced to him personally, or that he was personally liable to pay the same, but that he was to take charge of and manage the business of said company, which he did; .that all the money was furnished by the bank to the company and was used in its business; that Page or the Vicksburg Bank never furnished him any money, or took his receipts; that he acted as manager of the Vicksburg Manufacturing Company, and in no other capacity; that he accounted for everything which came into his hands, and is not indebted to the complainant or the company. Issue was joined and the case heard. A decree for an accounting was ordered, and later a final decree entered against defendant Bushnell for the sum of $3,308.45, from which he has appealed to this court.

The court, in the opinion directing the decree, held that defendant—

“ Bushnell misrepresented the condition of his business at and about the end of the first year, and thereby misled the stockholders and directors of the Vicksburg Manufacturing Company and in effect worked a fraud upon them, and hence the legal situation created is that Bushnell is a debtor to complainant for the moneys furnished Bushnell, to wit, $4,061.87. What Bushnell may have used said money, or any part thereof, for, is of no consequence, and he is obligated to pay the same back to the complainant as assignee.”

The opinion then states:

“ Bushnell will be charged with $4,061.87. He should then have credit for $980.72, leaving a balance of $3,081.-15. This latter sum will draw interest at 6 per cent, from March 4, 1905, to date. From this amount so obtained credit should be given for the property Bushnell left at the plant, to wit, $359.62, plus interest at 6 per cent, from March 4, 1904, to this date. The result so obtained establishes the amount I find said Bushnell owes the complainant and for which decree is hereby directed.”

The two items of credit deducted by the court are the value of machinery installed by Bushnell, and the value of other property left by him, in the plant of the Vicksburg Manufacturing Company.

The contract between defendant Bushnell and Clark Bros. Company, out of which the main dispute in this case arises, being Exhibit B of the bill of complaint, reads as follows:

“ This agreement, made and entered into this 4th day of March, 1904, between the Clark Brothers Company, a corporation organized and operating under the laws of the State of Michigan, of Vicksburg, Mich., party of the first part, and W. E. Bushnell of Kalamazoo, Mich., party of the second part, witnesseth, That the said parties agree to and with each other as follows, to wit:

“ (1) That said party of the first part is the owner of a certain manufacturing plant situated in the village of Vicksburg in said county and State, together with certain letters patent covering certain regulators and low-water alarms, and, the party of the second part being a practicad manufacturer, the said first party agrees to turn over its said plant for a term of one year to said second party free of rent, said second party to take charge of and manage said plant and manufacture low-water alarms and regulators together with certain railway supplies, which second party desires to manufacture and to manufacture such other products as the parties to this contract may agree upon from time to time.

(2) The said party of the first part agrees to furnish second party the sum of three thousand dollars, or such part thereof as second party shall require, as a working capital upon which to run said business, and to install additional machinery, and it is agreed that, as fast as any funds are received from the sale of products from this factory, whatever amount can be spared after payment of the running expenses of said plant shall be applied to the payment of said sum of three thousand dollars, or such part thereof as may be used by the second party, together with interest on said sum as may be so used at the rate of 6 per cent, per annum for such time as any part of the same shall remain unpaid, and it is further agreed that after the repayment to said first party of such sum of three thousand dollars, or such part of the same as may be used by the second party, together with the interest thereon as herein provided, that any profits arising from said business during the term of the first year under the' operation of this contract shall become the property of the-said W. E. Bushnell as a part compensation for his services.

(3) The said party of the second part agrees that he will take charge of said plant and faithfully oversee and handle the same to the best possible advantage for the said term of one year, and that he will put in his time for said term of one year free of charge except for actual expenses incurred by him in traveling or selling goods for the benefit of said company, except, however, such compensation as may come to him under the provisions of the second subdivision of this contract.

“ (4) It is further agreed between the parties that, if at the end of one year said second party shall have succeeded in placing said business upon a profitable basis, said first party will cause to be turned over and issued to said second party ten thousand dollars of the capital stock of said corporation free from all liens and incumbrances of every name and nature whatever, and if after said first year said second party shall have succeeded in placing said business on a profitable and paying basis, so that this agreement may be extended and carried out by first party transferring said stock to second party, then it is hereby agreed between the parties that the said Clark Brothers Company shall pay to the second party for the two years next following a reasonable salary based on the profits of the company as shown by the books of the company and to be agreed upon by the parties hereto not, however, to exceed the sum of one hundred dollars per month.

“ (5) If at the end of one year said business shall have been placed on a paying basis, but the parties do not care to continue this contract in so far as it relates to the manufacture of regulators and low-water alarms, then, in that case, said W. E. Bushnell agrees that he will release and assign to the first party thereto all interest or claim that he may have in and to all letters patent which are owned by the parties hereto covering said feed regulators and low-water alarms; but, in case said second party shall not within one year succeed in placing said business on a paying and profitable basis, then this contract is to be terminated, and the said W. E. Bushnell shall have no claim against first party growing out of this contract either for labor, service, or money expended. Neither shall there be any liability on the part of said W. E. Bushnell on account of not having placed said business on a paying basis.

“(6) The said second party also agrees that, after one-half of the capital stock of said Clark Brothers Company has been turned over to him, the remaining stockholders may have authority and power to make such arrangements by pledge of its stock or otherwise as shall be necessary to secure to the Vicksburg Exchange Bank any balance that may be remaining due and unpaid on a certain mortgage given by said Clark Brothers Company to the said Vicksburg Exchange Bank; this provision being inserted in order that the provision of this contract relative to the turning over by the first party to second party one-half of the capital stock of said corporation free from all liens or debts it being intended that the stockholders of said corporation outside of the said W. E. Bushnell shall arrange for the payment of said mortgage indebtedness so as to relieve the stock and interest of said W. E. Bushnell from any liability under said mortgage indebtedness.

“In witness whereof the parties have hereunto set their hands and seals this 4th day of March, 1904.

“Charles H. McKain, President.

“ Charles A. Morse, Secretary.

“ W. E. Bushnell.”

The following is the agreement, Exhibit C of the bill of complaint, made between Elbert L. Page, president of the Vicksburg Exchange Bank, and the stockholders of the Vicksburg Manufacturing Company •

“This agreement, made and entered into by and between Elbert L. Page, as president of the Vicksburg Exchange Bank, party of the first part, and Joseph W. Mc-Ilvain, Elbert L. Page, Eugene 0. Rishel, Charles S. Cooley, Charles P. Mohney, Charles A. Morse, Charles H. McKain, I. A. Mills, Charles Ross, Leland H. Sabin and William A. Wood, of the second part, witnesseth that the parties agree to and with each other as follows, to wit:

“ Whereas, the said parties of the second part are stockholders in a certain corporation known as the Clark Brothers Company, and said Clark Brothers Company as such corporation are indebted to the said Vicksburg Exchange Bank in the sum of five thousand and five hundred dollars, part of which is secured by mortgage covering the property of said Clark Brothers Company and part of which is unsecured; and,

“ Whereas, the said Clark Brothers Company have this day entered into a contract with one W. E. Bushnell of Kalamazoo, Mich., wherein and whereby the said Clark Brothers Company has agreed that at the end of one year from this date and under certain conditions that they, the said Clark Brothers Company, would cause to be assigned and turned over to the said W. E. Bushnell ten thousand dollars of the capital stock of the said Clark Brothers Company free and clear from all liens, debts and charges of every name and nature whatever:

“Now, therefore, for the purpose of placing said corporation in a position where it can carry out the provisions of said contract whenever it becomes necessary, we, the said parties of the second part, agree with the said first party, as follows:

‘ ‘ First. That we will within ten days from the date of this contract pay to the said first party an assessment upon our stock amounting to the sum of fifteen hundred dollars, the same to be paid in proportion to the amount of stock held by each, and, should any of the second parties hereto fail or refuse to pay their proportionate share of said sum, then the same shall be made up by the balance of said stockholders herein named as second parties so that said full sum of fifteen hundred dollars shall be raised and paid into said first party within the time herein limited.

“Second. That the said parties of the second part will within one year from the date hereof pay to the said first party a further sum of one thousand dollars on the indebtedness which said Clark Brothers Company may be owing to said first party, the same to be paid in the same way and under the same conditions as the fifteen hundred dollars hereinbefore mentioned, provided said contract with W. E. Bushnell shall be carried out and continued after the first year.

Third. That the said second parties will, after the payment of the said sum of twenty-five hundred dollars as herein provided, and should the contract this day entered into between the said Clark Brothers Company and the said W. E. Bushnell be continued beyond one year as provided for in said contract, secure to the said first party herein mentioned by a pledge of their various amounts of stock the balance of any and all indebtedness which the said Clark Brothers Company may at that time be owing to said first party in order that said contract this day entered into may be carried out, by a transfer to said W. E. Bushnell of the amount of stock which said contract provides shall be transferred to him free of all liens or debts existing against said corporation, it being intended to secure to said Vicksburg Exchange Bank the payment of all indebtedness by a pledge of the stock of the second parties hereto in order that the mortgage and all other indebtedness may be released so far as the corporation known as the Clark Brothers Company is concerned.

“ In witness whereof the parties hereto have hereunto set their hands and seals this 4th day of March, 1904.

“ J. W. McXlvaxn.

“Elbert L. Page.

“Eugene C. Rishel.

“Charles F. Mohney.

“ Charles A. Morse.

“Charles H. McKain.

“ Elbert L. Page, Pt. Vicksburg Exchange Bank.”

The Bushnell contract was assigned to complainant March 28, 1907. Both of these contracts were assigned by Page to complainant April 16, 1907.

The Clark Brothers Company, owner of the plant mentioned in the above contract between it and the defendant Bushnell, had been running at a loss, to the amount at least of $5,500, and its manufactory had been closed down for several months at the time this contract was made. The negotiations entered into between the parties were for the purpose of finding a way whereby this might be made a successful going concern. Defendant Bushnell was to make every effort to do this under this contract, and if it was not made a success within one year, the contract provides in terms that it is “to be terminated, and the said W. E. Bushnell shall have no claim against the first party growing out of this contract either for labor, services or money expended. Neither shall there be any liability on the part of the said W. E. Bushnell on account of not having placed said business on a paying basis.” Defendant Bushnell entered upon this enterprise under this contract and did take charge of and manage the plant in the name of the company, using for the purposes of the business the money furnished by it, under the terms óf the contract, and so continued for about three years. There is evidence tending to show there was at the end of the first year some profit realized; but it appeared, when the business was closed, that there had been a loss of at least the amount of $3,000, for which recovery is sought in this suit, besides the bank overdraft of about $1,600, the amount involved in the suit at law brought by complainant against Bushnell. There is a claim made on the part of complainant that defendant Bushnell was guilty of fraud and fraudulent representations towards the stockholders and officers of the Vicksburg Manufacturing Company.

The entire evidence bearing upon the question of fraud and fraudulent representations made by Bushnell has been examined with care, and we are satisfied that the charge is not sustained. All of the money complainant claims he is entitled to recover from Bushnell, being the cash furnished him by the company under the contract of March 4, 1904, was furnished six months before any statement made by Bushnell which is claimed was false and fraudulent. Appreciating this fact, complainant in his reply brief has abandoned the accounting feature of the case. We quote:

“ Complainant is scarcely seeking an accounting. He is simply seeking to have Bushnell pay back the $4,100 advanced him. This the contract provided he should pay back. The contract also provided Bushnell might install additional machinery. This he did, and proofs were taken to get at that and give him credit for it, which Bushnell is entitled to under the contract.”

An interlocutory decree for an accounting was made "by the court below, and testimony was taken; but in the final Recree a general accounting was not considered, as already appears from the opinion quoted.

Complainant, as trustee in bankruptcy, must rest his claim for recovery upon the proposition that the relation of debtor and creditor existed between the defendant Bushnell and the banking firm, or circumstances which equity would recognize and declare equivalent to such relation. It will not require citation of authorities to show that otherwise no relief can be granted him. The assignments to complainant by Page and the Vicksburg Manufacturing Company, unless the relation above described existed, can be of no possible avail, even if free from the infirmities claimed to render them void.

"When this money was obtained, Page was president of the banking firm, and also a large stockholder in the manufacturing company. He had full knowledge of the Bushnell contract of March 4, 1904, in which the company agreed to furnish $3,000 to carry out that contract. In order to make it possible for the company to furnish this money to carry out other agreements of the contract, he, as president of the banking firm, entered into the agreement with the stockholders of the company to reduce their then indebtedness to his banking firm, about $2,500. Bushnell was not a party to this agreement, or in any way privy thereto. This reduction was in effect accomplished, and Page began to borrow money from his firm on Ms own notes, and hand it to Bushnell, who, in writing, receipted to him for each amount received, “account of Vicksburg Manufacturing Company.” These receipts are Exhibits 103 to 115 inclusive, and cover the $4,100 it is claimed Bushnell received from the banking firm. These moneys were deposited by Bushnell in the Vicksburg Exchange Bank to the credit of the Vicksburg Manufacturing Company and checked against by checks drawn by Bushnell on such account, all signed “Vicksburg Manufacturing Company. W. E. Bushnell, Mgr.” We find in this record a list of such checks amounting to $3,662; but by reason of the voluminous record, and the absence of an index of exhibits, as required by rule, no more time has been spent in tracing this bank account than to determine the above facts. From these undisputed facts the conclusion which we draw is that Page and his banking firm were dealing with the Vicksburg Manufacturing Company, that Page at no time was furnishing Bushnell money, but was himself the debtor of the bank, procuring money for the company, with full knowledge of all the facts, and as to how the money was banked and drawn against, and that Bushnell was not a debtor of the bank. Complainant, when the notes which Page gave to the bank for this money were included in the judgment, so understood these transactions.

It is, however, insisted that, as Page obtained this money when he was insolvent, complainant, having acquired the rights of the company, should be subrogated to all such rights, and recover from Bushnell money improperly paid out of the bank, and which the company could recover from him. Not passing upon the questions which might bear upon application of such a proposition to the case, it is sufficient to say that under this contract Bushnell in all his relations was carrying on the business of the Vicksburg Manufacturing Company in its name, and for its benefit, upon money furnished by it under the contract, by which provision was specifically made that in case of failure of the enterprise he assumed no liability. The Vicksburg Manufacturing Company had no claims or demands upon Bushnell for the money used by him. It will not be necessary to discuss the record further.

Complainant is not entitled to the relief granted.

The decree of the circuit court is reversed, and a decree will be entered in this court dismissing his bill of complaint, with costs to defendant Bushnell of both courts.

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


author: Brooke, J.

text:
    MONROE v. BUSHNELL.
    Fraud — Contracts—Bankruptcy.
    The questions herein are identical with, and ruled by, Monroe v. Bushnell, ante, 115.
    Error to Kalamazoo; Adams, J.
    Submitted February 18, 1909.
    (Docket No. 125.)
    Decided October 4, 1909.
    Assumpsit by Stephen B. Monroe, trustee in bankruptcy of the Vicksburg Exchange Bank, and others, against William E. Bushnell for money had and received. A judgment for plaintiff is reviewed by defendant on writ of error.
    Reversed, and no new trial ordered.

      H. Clair Jackson (W. J. Candlish, of counsel), for appellant.

      Jesse E. Cropsey and Boudeman, Adams & Weston, for appellee.
   Brooke, J.

The controverted matter involved in this case is the same as that involved in the chancery case between the same parties, decided in this court September 21, 1909, ante, 115 (122 N. W. 508). The conclusions reached in the chancery cause require a reversal of the judgment herein. There will be no new trial.

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


text:
    MASSEY v. LUCE.

    1. Fraud — Statute of Frauds — Representations as to Credit or Standing.
    The requirement of 3 Comp. Laws, § 9518, that representations as to a parry’s credit or standing must be in writing or no action may be brought on them, does not apply to conspiracies or frauds, where representations are made for the profit of the maker.
    2. Same — Corporations—Liability of Officers and Agents.
    Money invested in a corporate business, upon the false representations of officers of the company that the business was good and free from debts, may be recovered, in an action on the case for the fraud, from the officers making the false representations, if they were found to be made for the purpose of defrauding the plaintiff.
    3. Same.
    It is not necessary that the false representations should have been the sole or principal inducement to enter into the contract, if they exerted a material influence upon the mind of the person injured.

      4. Same — Waiver—Compromise—Part Payment,
    The receipt of a check for part of the money invested only affects the measure of the damages.
    5. Same — Corporations.
    The fact that the representations were made concerning a corporation does not preclude a recovery, notwithstanding plaintiff did not know of the existence of a corporation, but understood that they applied to the business involved in and conducted under the corporate name.
    Error to Kent; Sessions, J., presiding.
    Submitted April 13, 1909.
    (Docket No. 31.)
    Decided September 21, 1909.
    Rehearing denied November 5, 1909.
    Case by Wynter C. Massey against Morton H. Luce and William B. Banks for fraud. A judgment for defendants is reviewed by plaintiff on writ of error.
    Reversed.

      Smedley & Corwin (C. J. Hall, of counsel), for appellant.

      Kleinhans & Knappen, for appellees.

       Rehearing denied November 5, 1909.

   McAlvay, J.

Plaintiff brought an action on the case against defendants to recover from them the sum of $5,000 which they had procured from him by certain claimed false and fraudulent representations made to him for the purpose of cheating and defrauding him. Defendants in 1906 were jointly engaged at Grand Rapids in handling and selling automobiles. Each invested equally from October 9, 1906, to December 10, 1906, $1,550, and entered into contracts with automobile manufacturers October 9 and November 13, 1906. On December 10th defendant Banks paid in $650, defendant Luce $850, and Mrs. Luce $100. This business was transacted under the name of the Luce & Banks Company. In this business they needed money and obtained a line of credit with the Grand Rapids Savings Bank of $5,000. The arrangement was made between Luce & Banks and the bank in November, 1906. They were to give their personal indorsement on their paper or bonds, and a bond was given signed by them individually. The first entry in the bank pass book was November 7, 1906. Afterwards a corporation, called the Luce & Banks Company, was organized and held its first meeting December 20, 1906, with a capital stock of $5,000, all of which was owned by defendants except one share, which was owned by the wife of defendant Luce. It is inferred that no change was made in the books when the corporation was organized and the payments theretofore made as above stated considered as payments of stock subscriptions. There is no evidence of any other payments.

Plaintiff, a young man 28 years old, became acquainted with the defendants in February or March, 1907. He was approached by defendant Luce, and asked how he would like to go into the automobile business. He replied that he would like it because he was mechanically inclined. Later, after this business had been removed to new quarters, defendant Luce had another talk with him, in which plaintiff claims that he was told that the defendants each had put #5,000 in the business; that they were doing a good business; that the outlook was good for business, and that they did not owe any money; that they needed some money; and that, if he put in $5,000, they would give him a one-third interest in the business and a permanent salary of $20 per week. Plaintiff said he was satisfied; that he did not have the cash, but could get notes of W. Millard Palmer,.with whose company he had money invested. He got two notes of Mr. Palmer of $2,500 each, and, in company with defendant Luce, on April 5, 1907, went to the Grand Rapids Savings Bank, and procured from the cashier $5,000 by giving his individual note for that amount, secured by the two Palmer notes. That this $5,000 was paid at this time and in this manner is not disputed. For this money plaintiff received no receipt and no certificates of stock were ever issued to him.

The Luce & Banks Company, of which plaintiff claims he had no knowledge until October, 1907, was in fact on this date indebted to this bank exceeding the line of credit extended on certain notes, none of which were then due, and for the payment of which defendants were individually liable in the sum of $5,400, upon which $4,000 of the money paid by plaintiff was, as he claims, without his knowledge, at once applied, and to that amount were paid and satisfied. Of these notes $3,850 were either the originals or renewals of notes given by defendants while doing business together before the organization of the corporation.

On April 10, 1907, five days after plaintiff had paid in his $5,000, there was held at its office at 7:30 p. m. a special meeting of the stockholders of Luce & Banks Company, without notice to plaintiff, for the purpose of increasing the capital stock and amending the articles of association. The defendants and Mrs. Luce were present. On motion of Banks, a resolution was unanimously adopted increasing the capital stock from $5,000 to $7,500, to be divided into 75 shares of $100 each. Banks also offered the following resolution, which was unanimously adopted:

“Resolved, that the increased capital stock of said company, namely, of the face value of $2,500, be sold to Wynter C. Massey for the sum of $5,000.”

Luce offered a resolution amending the articles of association to conform with the increased capital stock. No other business was transacted. The minutes are certified by Luce as president and Banks as secretary. After paying his money, plaintiff went to work in the business, selling automobiles, etc., at a salary of $20 per week, and continued until the latter part of the following October, when defendant Luce told him that he and Banks had put in but $2,500 each. Luce told him that there was a loss, and he, plaintiff, must stand his share. Plaintiff said he was willing to do so. He testifies that the amount of the loss was not mentioned; that afterwards Luce told him he must stand two-thirds of the loss. Plaintiff refused, and sent for his father, who came from Cadillac in his interest. He left at once, and had nothing further to do with the business. While he was there he knew of no stockholders’ meetings. It appeared from the books that defendants had, in fact, charged him two for one on stock claimed to have been sold to plaintiff, crediting profit and loss with $2,500. He began this suit directly after discovering the fact that he had been defrauded.

On November 1,1907, a stockholders’meeting was held. Plaintiff received notice, but, having left, he paid no attention to it. At this meeting the minutes show that the object was to authorize the directors to sell all the property owned by Luce & Banks Company except book accounts, and to transfer the lease to W. S. Farrant. This meeting voted the authority asked, and immediately following adjournment the directors met and made the sale, but the record of the meeting does not show the consideration paid. On January 17, 1908, a special stockholders’ meeting was held according to claimed notice given to all stockholders. Whether the object of the meeting was stated in the notice does not appear. Plaintiff was not present. They proceeded to dissolve the corporation, and so voted. It was stated that $2,550 had been realized from the sale of property and collections on accounts, and a dissolution dividend on the capital stock of 34 per cent, was declared. The directors were authorized to convert all further assets into cash, and divide the same pro rata among the stockholders.

Two months after issue joined in this case, and after the dissolution dividend above described was declared, the amount of such dividend on 25 shares of stock, being what defendants claim was his interest, was sent by mail to the plaintiff in the form of a check, with a letter informing him of the above facts. He received the check and sent it to his attorneys, who had it certified and held it until the time of the trial. Further reference to this check will be made later in this opinion.

Defendants denied that any representations as claimed had been made, and testified that plaintiff was informed that the amount each had invested was $2,500, and explained the proposed increase of the capital stock, and that, when they discussed going out of business in October, they offered to sell out to him for what they had put in, and told him this was $2,500 apiece. The annual report of the Luce & Banks Company, filed March 20th with the secretary of State, shows assets $6,343.03, and liabilities $5,350. The case was submitted upon the charge of the court to the jury, which returned a verdict in favor of defendants of not guilty, upon which a judgment was duly entered. Plaintiff -asks a reversal of this judgment on account of claimed errors which are assigned to the charge of the court as given to the jury, and to refusals to charge as requested.

Error is assigned upon that part of the charge of the court given relative to the application of the statute of frauds to the case at bar. The charge of the court on this point was:

“ For another reason: These statements alleged to have been made by the defendant Luce concerning the prosperity of the business, as to the company being prosperous and doing a good business and doing well, and also the statement that the company was out of debt, if it were made by the defendant Luce, and if in fact were untrue, or if both of these statements to plaintiff were untrue, they do not form or constitute any basis of recovery in this case. And even though you should find that these statements were made by the defendant Luce, and that they were untrue, and even though you should find they were made for the purpose of deceiving the plaintiff, and that he was actually injured thereby, the plaintiff cannot recover any damages that he claims to have sustained because of such representations or statements. The reason for that is this: That we have a statute in this State which precludes the recovery for any such misrepresentations or statements, and that statute is as follows:

“ ‘No action shall be brought to charge any person, upon or by reason of any favorable representation or assurance, made concerning the character, conduct, credit, ability, trade or dealings of any other person, unless such representation or assurance be made in writing, and signed by the party to be charged thereby, or by some person thereunto by him lawfully authorized.’ [3 Comp. Laws, § 9518.]

“ So that I say, as to the representations claimed to have been made by the defendant Luce to the plaintiff, that the profits of the business would be larger, and as to the representations claimed to have been made by the defendant Luce to the plaintiff that the business of the Luce & Banks Company was prosperous, and doing well, and as to the representation that the Luce & Banks Company was out of debt, there can be no recovery in this case. The defendants are not liable because of any such statement or representations, even if it were made and if it were false, and if it deceived the plaintiff.”

It is contended that in this portion of the charge the court included all kinds of representations, even' though made fraudulently and to enable the party making them to profit thereby. In this case plaintiff claimed that these representations were false and untrue, and so known to defendants; that they conspired together to defraud and deceive him, and succeeded in getting $5,000 by means of such fraud and decéit; and that they profited by the result of their fraudulent conduct. We think that there was sufficient evidence in the case upon that claim to go to the jury under proper instructions, and that this part of the charge does not conform with the construction which this court has given to the statute upon which the court relied.

In construing and applying this statute the court has said:

“The other point suggested has no support in the statute. The legal provision concerning the necessity of representations in writing to sustain an action upon favorable assurances concerning the character, conduct, ability, trade, or dealings of another person, was intended to reach cases where the plaintiff has dealt with and given credit to the person favorably mentioned, and done so on the faith of the assurances. The statute cannot apply to conspiracies or frauds, where the representation is made to enable the party making it to profit by it. ” Hess v. Culver, 77 Mich. 602 (43 N. W. 994, 6 L. R. A. 498, 18 Am. St. Rep. 421), affirmed and cited in Clark v. Hurd 79 Mich. 130 (44 N. W. 343).

As to whether in the case at bar defendants received a benefit or profit from the money plaintiff claims was gotten from him by fraud and deceit there can be little doubt. The money to the extent of $4,000 was at once applied to the payment of indebtedness, a part of which would appear to have been primarily their joint and individual obligations, and upon all of which they were liable as indorsers, and also upon their bond. The case in this respect is distinguishable from the case of Getchell v. Dusenbury, 145 Mich. 197 (108 N. W. 723), where, at the time suit was begun, the notes indorsed were not paid, and the plaintiff’s money had not been used to take up the notes. The court was in error in charging the jury as above quoted. If these representations were false and fraudulent, and made for the purpose of defrauding plaintiff, and he was injured and defrauded thereby, he is entitled to recover his damages.

The court, considering the law which governed the case as given in the foregoing quotation, submitted to the jury but one of the fraudulent representations charged, namely, that defendant Luce represented that each of the defendants had invested #5,000 in that business. It is apparent, from what has already been said, that the jury should have been allowed to consider all of the claimed fraudulent statements upon which plaintiff relied, except as to the expectation of increased business and profits. The view of the court was that one only of the false representations claimed must have induced plaintiff to part with his money.

“If is not necessary that the false representations should have been the sole cause or even the principal inducement for the plaintiff to enter into the contract. If it exerted a material influence upon his mind, although it is only one of the several motives acting together which produced the result, the defendant would be liable.” Smith on Fraud, p. 83.

See, also, McDonald v. Smithy 139 Mich. 218 (102 N. W. 668).

The evidence of plaintiff is not inconsistent with the theory that the representations were made of and concerning the corporation, even though the plaintiff did not know it was a corporation until October, 1907, and did not know of the increase of capital or that they charged one-half of the money they took from him to profit and loss. They were talking of the business, and this was the only business. It was known to all as Luce & Banks Company, and defendants insist they were selling him an interest in the corporation, and insist that all the representations and statements they made were with relation to the corporation. They cannot complain if their testimony in that regard is accepted. Such evidence of plaintiff was admissible under the first count of his declaration. The second count was withdrawn at the trial.

It is contended that the court should have instructed ■ for defendant, and that plaintiff cannot complain, because the result could not have been different. As we understand the case, this contention cannot be accepted for several reasons, which are obvious, the principal one of which is that there was abundant evidence on the part of the plaintiff to require its submission to the jury upon the disputed questions of fact.

The receipt and retention by the plaintiff of the check which defendants caused to be sent cannot operate to defeat his right of action, and we think that the amount bears simply on the measure of damages in case of recovery by plaintiff.

No further discussion is required. The judgment of the circuit court is reversed, and a new trial ordered.

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