author: Carpenter, J. Grant, J.

text:
    PEIRSON v. MoNEAL.
    1. Witnesses — Competency — Transactions with Deceased Person.
    In a suit by an executrix to set aside an assignment of certain mortgages by the deceased to the defendant, the testimony of the defendant as to the delivery of the assignments by the deceased to her is equally within the knowledge of the deceased and inadmissible. 3 Comp. Laws, § 10312.
    2. Mortgages — Assignments—Delivery-.
    In an action to set aside assignments of certain mortgages, evidence reviewed, and held, to sustain a finding that the assignments had been delivered to the assignee prior to the assignor’s death. Grant, J., dissenting.
    3. Witnesses — Competency — Transactions with Deceased Person.
    Where testator devised his entire property to his wife, and appointed her executrix, a suit brought by her as executrix to set aside assignments of certain mortgages on the theory that the mortgages equitably belonged to her, was an action for her personal benefit, and not for the benefit of the estate and henoe, she being the real party in interest, was precluded by 3 Comp. Laws, § 10212, from testifying to facts equally within the knowledge of her deceased husband.
    4. Executors and Administrators — Claim oe Equitable Lien —Issues.
    A claim for an equitable lien upon a house and lot for the purchase money or a portion thereof, furnished by complainant in her individual capacity, cannot be litigated in a suit by her as executrix of her husband’s will, although her husband purchased the property with her money and took the title in the name of the defendant.
    Appeal from Lenawee; Chester, J. Submitted November 4, 1903.
    (Docket No. 78.)
    Decided July 16, 1904.
    Bill by Harriet A. Peirson, executrix of the last will and ■ testament of Levi R. Peirson, deceased, against Myrtie M. McNeal, Corvis M. Barre, Chauncey F. Cook, and others, to set aside a deed and the assignment of certain mortgages. From a decree dismissing the bill, complainant appeals.
    Affirmed.

      Fellows & Chandler, for complainant.

      James 8. Calloway and Thomas E. BarJcworth, for defendants Barre and Cook.
   Carpenter, J.

This is a suit in chancery to set aside the transfer of two mortgages from complainant’s testator to the first-named defendant. There is also a claim, .which will be discussed at the conclusion of this opinion, that complainant, in her individual capacity, is entitled to an equitable lien on certain real estate. The original bill was filed by complainant, the widow of said Levi R. Peirson, deceased, in her individual capacity. It sought relief on the ground that the moneys invested in the mortgages belonged to her. Afterwards the will of said Levi R. Peirson, whereby he devised to complainant all his property and appointed her executrix, was admitted to probate. Thereupon her bill was amended, and a decree sought on the ground that these mortgages still belong to the testator’s estate. The trial court dismissed complainant’s bill. She appeals to this court, and asks a decree “so that these two mortgages should stand in the name of the estate; then, by operation of the will, they would, after the settlement of the estate, come to Mrs. Peirson.”

Complainant contends that she is entitled to this decree on one of two grounds: First, that the assignments were never delivered; second, that, if they were delivered, no consideration was paid for them, that they equitably belong to complainant, and that they should be decreed to belong to the estate in order that complainant’s equitable right to them may be enforced. We will discuss these claims separately.

First. Were the assignments ever delivered f One of these assignments was dated September 5, 1898, and the other December 14, 1898. Mr. Peirson died in a hospital in Columbus, Ohio, January 13, 1899. He had gone to that hospital, accompanied by Miss McNeal, December 19, 1898, The papers were not placed on record until January 16, 1899, three days after Mr. Peirson died. Complainant contends that these assignments were never delivered,-and were in Mr. Peirson’s possession at the timo he died. The trial judge, who heard the witnesses, found against this contention; and in my judgment the evidence that these assignments were delivered just before the deceased and Miss McNeal went to Columbus is convincing. Without considering the testimony of Miss McNeal, which I think is inadmissible under the statute (section 10212, 3 Comp. Laws), we have the testimony of her mother and sister that they saw the papers — not merely the envelop© containing them — in her custody in December, 1898. We have the testimony of her cousin, Seth McNeal, an attorney, that Mr. Peirson told him on the 15th of December, 1898, that he had given Myrtie about $7,000 (the aggregate of the mortgages and other property was just about $7,000). We have the testimony of Albert Price that on the 16th of December, 1898, Mr. Peirson told him that he had assigned these two mortgages to Myrtie. It is true that this witness says:

“The impression I got from what he said to me was that he had made these papers — these assignments — and fixed his property over with the intention of it taking effect at his death.”

Notwithstanding this statement, I think Mr. Peirson— who was a lawyer, and knew the meaning of the words he used — correctly stated the facts when he told the witness, as the witness testifies, “he had made a disposition of his property; that he had assigned the mortgages to Myrtie.” It is conclusively established that Mr. Peirson intended that after his death these mortgages should belong to Miss McNeal. He did not intend to transfer them by a will or any instrument to take effect after his death. He intended to transfer them directly to her by delivery. He was a lawyer, and presumably he knew that, to effectuate his intent, this delivery should be made while he was living. Nor can it be urged that his sudden death prevented his carrying out his intention. Before he left for Columbus, he apprehended death. It was because of that apprehension that he desired witness Price to understand what he had done. It is difficult to believe that under such circumstances he omitted to make a delivery of these papers. The testimony above referred to is therefore in entire harmony with the probabilities.

I do not think that the charge should be made that the testimony of the mother and sister of Miss McNeal was introduced out of place. Of course, it was introduced, as it should have been, after complainant had closed her testimony in chief. I do not understand from the record that it was introduced after complainant had closed her rebutting testimony. The notion that it was so introduced I think results from the fact that complainant swore some witnesses, who testified to value, just before the testimony under consideration was introduced, and before defendants had rested. We are asked to discredit this testimony because the papers were not recorded until January 16th, because Mr. Peirson was in .control of the subject of the first assignment on the 12th of November, and because one witness — Mr. Ransom J. Eaton — testifies to two conversations with Miss McNeal in which she admitted to him that the mortgages were never delivered. The fact that these assignments, delivered just before and in anticipation of Mr. Peirson’s death, were not placed on record until after his death — an event which occurred in less than a month after the papers were delivered — is to my mind a circumstance of no particular significance. The fact that Mr. Peirson claimed to be in possession of one of these mortgages on the 12th of November is entirely consistent with the evidence that he parted with his interest in that mortgage by delivering, in December, an assignment' executed in September. Miss McNeal denies under oath that she made the admission to Mr. Eaton, and in this she is corroborated in part by the testimony of her cousin, Mr. Seth D. McNeal. We are not compelled to choose between the alternative (a) of believing Mr. Eaton, or (6) of declaring that he has committed perjury. It is, to my mind, altogether more probable that he is mistaken in his recollection of what Miss McNeal said than it is that the other witnesses were mistaken, and that the trial judge was mistaken in crediting their testimony.

Second. Nor do I think that complainant can prevail on the ground that these mortgages are equitably hers. The only testimony in the case which justifies the conclusion that these mortgages equitably belong to complainant is her own testimony. In giving that testimony complainant testified to matters clearly within the knowledge ’ of her testator. On the theory that this property is equitably hers, complainant is seeking a decree, not for the benefit of the estate, but for her own benefit. She attacks the transaction between her testator anid Miss McNeal, not on the ground that the testator’s estate is damaged, but solely on the ground that her interest in the estate is damaged. It is clear, therefore, that if complainant can recover on the ground that she is the equitable owner of the property, and that her equities entitle the estate to recover what otherwise it could not recover, she is the real party in interest. See Bachelder v. Brown, 47 Mich. 366 (11 N. W. 200). Complainant is, in the language of the statute (section 10212, 3 Comp. Laws), “the opposite party” to Miss McNeal, who is (see Ripley v. Seligman, 88 Mich., at page 189 [50 N. W. 143]) an assignee of the deceased. Complainant’s testimony is therefore inadmissible under said section. See Bachelder v. Brown, supra.

I do not understand that complainant asks relief upon the ground that she has established her charge in the bill that these assignments were procured by undue influence. To avoid any misapprehension, we deem it proper to say that, in our judgment, that charge is not established.

We now come to the consideration of the claim referred to at the commencement of this opinion — that complainant, in her individual capacity, is entitled to a lien on certain real estate. In 1896, complainant’s• husband, Mr. Peirson, purchased a house and lot for Miss McNeal. The title was taken in her name, and she has had the use of the property since that time. It is claimed that all, or at least a portion, of the purchase money belonged to complainant, and for that reason an equitable lien should be declared in her favor. We regard this suit — and in so doing we construe the amended bill as claimed by complainant — as a suit brought by her as executrix of her husband’s estate. As such executrix she can obtain relief only for the ■ estate’s grievances. She has no right to litigate in such a suit a matter like that now under consideration, in which the estate has no interest. If the claim is well grounded — which we neither affirm nor deny — it should be the subject of a suit brought by her in her individual capacity.

We are not called upon to determine the propriety of the relations which existed between Mr. Peirson and Miss McNeal, for it is clear that the impropriety of those relations, if they were improper, would not, as a matter of law, defeat the latter’s title to the mortgages in question.

In my judgment, the decree of the circuit court should be affirmed, with costs.

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

Grant, J.

(dissenting). Complainant and Mr. Peirson were married September 17, 1857. She was then a young widow, possessed of some means, and he was in the mercantile business in Hudson, Mich. He failed in 1859, studied law, and entered upon the practice of the profession at Hudson in 1862. He occupied rooms for his office in a building owned by his wife. His business was small, largely confined to office work. The only data of the extent of his business is found in his account books for "the years 1895, 1896, 1897, and 1898. In 1895 it amounted to $1,085.24, and decreased steadily until in- 1898 it amounted to $747.63. In September, 1892, he took into-his office as clerk the defendant Myrtie M. McNeal, a young woman then about 22 years of age. She was neither a stenographer nor a typewriter. She had taught district, school some, for which she had received $5 per week. She remained in his employ until his death, January 13, 1899. Mr. and Mrs. Peirson had no children. Mr. Peirson died in a hospital in Columbus, Ohio. Miss McNeal was with him. His wife was at her home in Hudson, and remained at her home, evidently by his wish. When he knew that he must die, he did not desire that she should be summoned. On January 16th, after his death, Miss McNeal placed upon record the assignments of two mortgages — one known as the “McCullen mortgage,” the assignment being dated and acknowledged September 5, 1898; the other known as the “Duesler mortgage,” the assignment of which bears date December 14, 1898. The consideration of the first assignment is “one dollar * * * to me in hand paid by my adopted daughter, Myrtie M. McNeal, * * * and the further consideration of wages owing to her for her past services, and the further consideration of kind acts and faithful and trusty services as clerk in my law office for the years past, and the further consideration that she has agreed to remain in such clerkship relations and such services, the same as she has in the past, so long as I live, if she outlives me, party of the second part.” The second assignment recites a consideration of “one dollar * * * for valuable services rendered, * * * and further consideration or agreement, by said party of the second part, to remain with me, and assist me in my business so long as I shall live; and in appreciation of her many good qualities and her uniform kindness to me.” In 1896 Mr. Peirson purchased a house and lot for Miss McNeal, for which he paid $1,100, and the title was taken in her name, possession given, and she received the use of it from that time. Soon after the death of Mr. Peirson, Mrs. Peirson learned of the assignments of these mortgages, and thereupon, on January 25th, filed the origimal bill of complaint to set aside these assignments and the ■deed. Notice of lis pendens was duly filed the following morning. On January 25, 1899, Miss McNeal assigned these mortgages to the defendant Barre, and on the following day he assigned them to the defendant Cook. The •amount of principal and interest was then $5,4?8. Upon learning of these assignments, the complainant amended .her bill by permission of the court, making Barre and Cook defendants. Mr. Peirson left a will, which was subsequently admitted to probate, and by his will his wife was made the sole legatee and executrix. Her amended bill was filed in her name as executrix. Answers were duly filed, proofs taken, and complainant’s bill dismissed. Further statement of the facts, so far as essential, will be made in connection with the points discussed.

The original bill was filed by complainant in her individual capacity, alleging in brief that Mr. Peirson had taken and used her money and property, had received all the rents and profits of the building in Hudson owned by her, and in which he had an office, without having paid any rent; that he had rendered no account of the same; that in 1865 they made mutual wills in settlement of their property affairs, by which she left all her property to him should she die first, and he left all his property to her should he die first; and that the moneys invested in these mortgages and land were hers, and in equity belonged to her. The amended bill filed by her as executrix is upon the theory that these mortgages belong to Mr. Peirson’s estate, that the assignments were void, that neither the assignments nor the mortgages were ever delivered to Miss McNeal, that she had been fully paid for her services, and that the deed and assignments were obtained through undue influence. It is urged on behalf of the defense that fhe amended bill cannot be maintained, for the reason that this is in fact a contest between Mrs. Peirson and Miss McNeal as to the validity of the transfers to the latter, and that that is the theory of the amended as well as the original bill. I cannot concur in this view. The notes and mortgages collateral to them were personal property, and the title thereto was in Mr. Peirson’s estate. An administration was necessary before they could be distributed under the will and title thereto pass to his heirs or legatees. His executrix was therefore the proper party to test the validity of these transfers. Should they be set aside,, the property then passes to the estate (1) to pay the debts, and (2) to be distributed under the will. I am therefore constrained to hold that the amended bill is properly planted by the executrix. The suit then becomes one by the estate against the defendants, and the testimony of Miss McNeal as to her arrangements with Mr. Peirson, the deceased, is inadmissible under the statute.

Aside from the fact of the assignments and the deed, her case depends almost entirely upon her own testimony. It is unnecessary to fully enter into the details of the relations existing between Mr. Peirson and Miss McNeal., The conclusion I have reached is that soon after she entered into his services he transferred his affections from his wife to her. He was infatuated with her, and evidently she had great control over him. Soon after she entered the office he furnished a back room, which had been, before used only as a storeroom, with carpet, bed lounge, furniture, and liquors. In 1897 he took her to Massachusetts, leaving his wife at home. She went to Adrian the day before, and met him upon the train the next day. In. Massachusetts he introduced her as his adopted daughter.. Mr. Peirson once took into his office a young attorney,, without pay, to study, and assist him some in his business. Miss McNeal left the office in a few days, and refused to return until the young man was discharged, although it is not claimed that he was guilty of any impropriety towards her. Mr. Peirson apologized to the young man, and explained that he could not get along without Miss McNeal, and the young attorney was promptly discharged. That he paid her for her services promptly is not denied. Her only claim is that he promised to do something for her at his death, and that, therefore, she worked for small wages. The ■ disinterested testimony is that Mr. Peirson paid her every week, and that she told one disinterested witness that he paid her $10 a week. According to her own testimony, she was no more to him than a clerk; and yet, under her own figures, she is to receive, if these assignments be sustained, the sum of $7,237 for a little more than six years’ work. And according to the testimony on the part of complainant she will receive $9,872. At the hospital in Columbus, shortly before he died, he said to his nurse, “I couldn’t live without my Myrtie,” and when asked by the nurse if he did not wish to see his wife, he replied, “No.” When he went to Columbus, in December, Miss McNeal, by previous arrangement, went to Adrian the day before, and met him on the train. At the hospital he introduced her as his daughter, and while she was there she was recognized by all as Miss Peirson, and signed her name as Miss Peirson. They occupied adjoining rooms, with folding doors between. Human nature will permit of but one conclusion when a man leaves his wife at home and travels with his female typewriter, introducing her as his daughter. Service rendered by her in a financial way cannot account for the transfer of this large amount of property to her. It can only be accounted for upon the existence of improper relations, and the facts justify such a conclusion, and no other. This brings us to the question, Were these notes, mortgages, and assignments delivered to Miss McNeal? Neither was delivered when it was signed and acknowledged. No one was present when it is claimed they were delivered, except Miss McNeal and Mr. Peirson. Miss McNeal’s mouth is closed by the death of Mr. Peirson. With her testimony excluded, the only evidence of delivery is the fact that the papers were in her possession after his death, and the testimony of her cousin and attorney, Seth McNeal, her sister, and her mother. Seth McNeal testified that he saw the mortgages on the Sunday afternoon after the return from Columbus; that Myrtie gave the key to him, and he went to her room and got the mortgages. The mother testified that a short time before Miss McNeal went to Columbus she brought home some papers, laid them on the stand, afterwards went upstairs, put them in the drawer, gave the key to her sister, Nellie, and told her to take care of them. “She didn’t say what they were; only that they were valuable papers.” She further testified that she saw them at Christmas, and looked at them a little. On cross-examination she testified :

“All I know about it is that Myrtie brought in some papers, left them on the stand, and said they were valuable papers. She didn’t say what they were, or where she got them, or anything about them. She left them there until she retired that night, and took them upstairs and locked them up. That is all I know about it. I had one in my hands — the Duesler mortgage. I just took it up and looked at it, and just saw Julia Duesler’s name.”

Her sister testified that Miss McNeal brought some papers home a few days before she went to Columbus; said nothing as to what they were; that when she went to Columbus she gave witness the key, and told her to take care of them while she was gone; that there were two envelopes; that the writing on them said they were mortgages. Both witnesses identified the envelopes, and the witness Nellie testified that she “took the papers out to see what the envelopes contained,” but when she did this does not clearly appear. Opposed to this is the testimony of one Ransom J. Eaton, who was a personal and life-long friend of Mr. Peirson. Mr. Eaton was an undertaker, and Mr. Peirson had expressed to him a wish that when he died he should take charge of his funeral. After Miss McNeal had been in the hospital some days with Mr. Peirson at Columbus, she returned home to Hudson. Meanwhile Mr. Peirson became worse, and was evidently nearing the end of life. Mrs. Peirson received a telegram from Dr. S. P. Hartman, superintendent of the hospital, directed to Miss M. Peirson, saying: “ Your father growing weaker rapidly. Come to him at once. ” Mrs. Peirson sent this telegram to Mr. Eaton.' Mr. Eaton went to Mr. Peirson’s office, where he found Miss McNeal, and told her that he was going down after Mr. Peirson, and would like to know what shape.Mr. Peirson’s things were in down there. He testified that she told him:

4 4 There was money and valuable papers in the trunk, and that she was pretty busy just then, and that she wished I would make up my mind to go. She said she wished I would go. She said there was something like six hundred dollars and valuable papers. At that time she did not tell me whose they were. I said, 41 will see Mrs. Peirson, ■and, if she is willing I should go, I will see you again in this matter, and let you know.’ She said, ‘Yery good.’ At that time she didn’t make any claim that these valuable papers were hers.”

After this interview Mr. Eaton went to see Mrs. Peirson, who would not consent to his going, because it was unseemly to send an undertaker there before he was dead. Thursday morning following Mr. Eaton again saw Miss McNeal, and she said to him:

“ That there were $800 she had deposited with Dr. Hartman, and she said in the trunk there was a couple of mortgages that belonged to her that had never been delivered. She wished that I would go down there myself and see to it, and get those and give them to her. She said she felt that somebody ought to be there to look after them, and it was too bad to see Mr. Peirson die in that way, and it was too bad to see this money and papers going that way, and she wished I would go. I said, 4 Myrtie, can’t you go?’ She said, ‘No, I cannot.’ This was about nine o’clock.”

Miss McNeal admits having had conversations at these times with Mr. Eaton; denies the material facts testified to by him, but admits the immaterial. At 2:20 that afternoon Miss McNeal, accompanied by Seth McNeal, her ■cousin and attorney, left for Columbus. They arrived at the hospital during the night; but Mr. Peirson was unconscious, and so remained until his death, the next morning. On receiving a telegram of his death, Mr. Eaton left for Columbus, arriving there about 9 o’clock Friday night. He went to the hospital the next morning, and found Miss. McNeal and her cousin there. She had possession of Mr. Peirson’s effects. A question arose about turning them over to Mr. Eaton upon a written order from Mrs. Peirson, which he had. After a consultation between Miss McNeal and her attorney, she consented to turn them over., Upon doing so, Mr. Eaton testified:

“ She said, ‘ That is all, except those two mortgages or bequests that I told you about in Hudson, which had not been delivered to me; but,’ she said, ‘those I cannot give you. They are mine.’”

Mr. Eaton is an entirely disinterested witness. There is no room to say that he is mistaken. Either Miss McNeal said what Mr. Eaton testified to, or else he is a perjurer. No mo'tive can be found for his committing the crime of perjury. It follows that, if his testimony is believed,, these mortgages and assignments were not delivered.

It is also a matter of some significance that the sister and mother were not called as witnesses until about the close of a long hearing, after the complainant had closed her testimony in chief, the defendants had closed their testimony in chief, and the complainant had closed her rebuttal. It could not well have escaped the attention of.’ Miss McNeal and her counsel that it was essential for her1 to prove actual delivery. The facts testified to by her mother and sister, and their importance, must have been known to her, if not to her counsel. It is, in my judgment, much more reasonable to say that the mother and sister were mistaken as to 'the time when they saw these papers in the possession of Myrtie than to say that Mr. Eaton was mistaken, or had testified falsely.

But there are other indicia of nondelivery. They were not recorded during Mr. Peirson’s lifetime, but were promptly recorded after his death, being put upon record the very day of the funeral, upon the return of Miss McNeal from Columbus. No reason is shown or suggested why, if delivered, she should not have placed them at once upon record.

On November 12 — more than two months after the date and acknowledgment of the assignment of the McCullen mortgage — Mr. Peirson wrote to Mr. McCullen, stating that there would be $141 interest due February 1, 1899, and offering to take $100 if he would pay the interest in full up to that date, and to make him and his wife a present of the $41, and that he would then have no more interest to pay until February 1, 1900. Nothing was said in the letter about having assigned the mortgage. Mr. McCullen afterwards called on Mr. Peirson, and in a conversation Mr. Peirson said that “ he intended to give her [Miss McNeal] that property, if nothing happened, when he died.” Mr. Duesler testified to a conversation with Mr. Peirson a few days — not over 10 — before Mr. Peirson went to Columbus. Mr. Duesler then paid Mr. Peirson the interest due on the mortgage. Mr. Duesler testified that Mr. Peirson said “he had transferred, or was going to transfer, the mortgage to her [Miss McNeal], and for us to deal with her as with him, after he was dead.” On cross-examination he testified:

“It is my best recollection that Mr. Peirson said we should deal with her after his death. It is my recollection those are the very words.”

Miss McNeal did not notify either of the mortgagors that she owned, or claimed to own, either mortgage, until after Mr. Peirson’s death. According to the testimony of one Albert Price, a witness for the defendants, Mr. Peirson, anticipating trouble after his death, called Mr. Price into his office December 16, 1898, to talk with him, and have him observe his mental condition. In this conversation Mr. Peirson told Mr. Price that he wanted to do something for Miss McNeal, and spoke about the mortgages he had assigned to her. Mr. Price testified:

“ He didn’t tell me that he had delivered any papers, or anything of the kind, but he was making calculations, in case he should go away, or should die, to leave these papers in this shape. * * * My impression that I got from what he said to me was that he had made these assignments, and fixed his property over with the intention of taking effect at his death.”

He further testified that he inferred from the conversation that he had not passed any of the papers over to Miss McNeal. That he did not intend to deliver them at the time he signed and acknowledged them is apparent from the fact that he did not then deliver them, and that he retained them, under the testimony of her own witnesses, until just before he left his home for Columbus. It is, in my judgment, entirely consistent with the character and actions of Mr. Peirson, as delineated upon this record, to hold that he did not intend to part with these mortgages and the income therefrom so long as there was any possibility that he would live to control and use them. I think he took them with him to Columbus, intending to deliver them to Miss McNeal whenever he should think death was approaching. I prefer to 'believe the disinterested testimony of Mr. Eaton, sustained as it is by circumstances, rather than the interested testimony of Miss McNeal’s mother, sister, and cousin. I therefore conclude that these mortgages and assignments were never delivered. He left them undelivered in his trunk, and she took them without any authority or right. In doing so she obtained no title.

Were the defendants Barre and Cook bona fide hold- ' ers ? Both received the Duesler note and mortgage and the assignment after they became due. They therefore took no better title than their transferror, Miss McNeal, had. 1 Dan. on Negot. Inst. § 782; Fisher v. Leland, 4 Cush. 456 (50 Am. Dec. 805). In that case Chief Justice Shaw said:

“ Where a negotiable note is found in circulation after it is due, it carries suspicion on the face of it. * * * Although it does not give the indorser notice of any specific matter of defense, such as set-off, payment, or fraudulent acquisition, yet it puts him on inquiry.”

Tiedeman says:

“ It can also be shown against the indorsee of overdue paper that he claims title through a thief or finder, or from a bankrupt.” Tiedeman on Com. Pap. § 295.

It follows that defendants Barre and Cook obtained no title to this note and mortgage, and that the title thereto is in the estate. They are therefore payable to complain-; ant as executrix of her husband’s will.

Was Mr. Barre a bona fide holder of the McCullen mortgage, which was not then due? Miss McNeal and her cousin anticipated that the title to these notes and mortgages would be contested, and therefore determined to dispose of them, and place them, if possible, beyond the reach of complainant. She testified, “ I was afraid of being sued, and I sold them to get them out of my hands.” They evidently did not consider it safe to attempt to negotiate them in Hudson, and therefore went to Hillsdale on the 25th of January, with a view to dispose of them. Mr. McNeal had talked with Mr. Barre the day before- in regard to them. The two went to Mr. Barre’s office, and, according to their testimony, she at once offered them to him for $4,000. He offered $3,500. They compromised upon $3,750, a discount of about $1,700. Mr. Barre left his check for this amount with his partner, with the understanding that he (Mr. Barre) should go to Adrian, the county seat, examine the title and assignments, and if he found everything satisfactory, he was to telephone that he would take them, or go back on the fast mail late in the afternoon. He went to Adrian, examined' the title and assignments, and telephoned his partner to give the check and take the papers. Mr. Barre had no money in bank to meet the check, but, as he testified, expected to hypothecate other mortgages of his own in order to raise the money. Miss McNeal did not get the check cashed, and on the following day, according to agreement, went with her cousin to Mr. Barre’s office in Hillsdale. Mr. Barre went to the office of Mr. Galloway, an attorney, and offered the mortgages to him. Mr. Galloway said Mr. Cook wanted, or would buy, some mortgages. Mr. Barre and Mr. Galloway spent nearly the whole forenoon, according to Mr. Galloway’s testimony, in examining the abstract and the assignments. As Mr. Cook was passing the office of Mr. Galloway, they called him in. Mr. Cook knew nothing of the value of the lands or the responsibility of the mortgagors, but told Mr. Galloway that if he said they were all right he would take them. Mr. Barre offered a discount of $150, saying that he got some • little discount himself. Mr. Barre’s check was never cashed. It was surrendered to him, and Miss McNeal was paid out of the moneys received by Barre from Cook. Under these conditions Mr. Cook paid $5,328 to Mr. Barre, and out of the amount due her he (Barre) retained $500, as he testified, “for the purpose of securing her attendance as a witness in the case.” The sale and transfer to Mr. Barre were not consummated until he paid the money to Miss McNeal late in the' afternoon of the 26th, and of course not until after or at the same time the transfer from Barre to Cook was made and the money paid, for he paid her with the money received from Cook. Meanwhile the bill in this case and notice lis pendens had been filed. Mr. Barre knew of the relations existing between Miss McNeal and Mr. Peirson. These relations had been fully exposed in a lawsuit in which Mr. Peirson and Miss McNeal were witnesses and Mr. Barre an attorney. He had examined the assignments of Peirson to Miss McNeal. He testified that he knew that these securities were “gilt-edged,” and that such securities were much in demand at their face value, they beáring 6 per cent. The parties were attempting to negotiate them among strangers, and away from the home of the makers, payee, and assignee. Simultaneous with his purchase he sold them at a discount of $150. It is a just inference that he did not wish to retain in himself the title to these gilt-edged investments. An offer to sell gilt-edged commercial paper at two-thirds its actual value is sufficient to put a man upon inquiry.

“ The price at which the paper is offered may amount prima facie to notice, and create the presumption of bad faith in the purchaser. If a person were to offer a fine horse for sale for five cents, the very nature of the offer would warn the purchaser that he acted at his peril. And so, if the amount which the holder' offers to take for a negotiable instrument is totally insignificant as compared to its face value, it might be, under the circumstances, implied notice that there was something wrong about it; and if he took it without inquiry he should not be protected. There is no conflict between this view and the cases which liold that gross negligence will not of itself be sufficient to impeach the holder’s or purchaser’s title. This is not merely gross, negligence, but may be regarded as willful ■or fraudulent blindness, and abstinence from inquiry, so great as to amount to evidence of bad faith. For it is the obvious suggestion of reason that a bona fide owner would not throw away his property for a mere song, and that the purchaser acted in bad faith when he acquired it for comparatively nothing.” 1 Dan. Negot. Inst. § 777a.

In Strong v. Jackson, 123 Mass. 60 (25 Am. Rep. 19), a note and mortgage were assigned to one Jackson as collateral security for the note of one Kingsley to enable him to borrow money from Jackson. The note and mortgage and Kingsley’s note were delivered to Jackson. Jackson assigned the mortgage to one bank to secure a debt of his own. He subsequently transferred the note to which the mortgage was collateral to another bank as collateral security for a loan made by him at that bank. It was held that the taker of either the mortgage or the note took according to the true title of the one who transferred it, and that, therefore, the second bank took no title, and did not take the note in the ordinary course of business without notice.

In Canajoharie Nat. Bank v. Diefendorf, 123 N. Y. 191 (25 N. E. 402, 10 L. R. A. 676), the plaintiff bank took two notes of $1,000 each, made by a farmer living six miles from the bank, from a stranger, at a discount greater than the lawful interest. The bank made no inquiries, but H studiously refrained from acquiring any information as to the circumstances under which such an indebtedness was incurred.” The notes were obtained by-fraud from the defendant. The court held that the notes could not be said, as a matter of law,- to have been acquired in good faith and in the “ usual course of business,”1 and the question was properly left to the jury.

In Smith v. Jansen, 12 Neb. 125 (10 N. W. 537, 41 Am. Rep. 761), plaintiff purchased notes aggregating $100 for $30. It was held that he was not a bona fide purchaser, and did not take the paper in the usual course of trade.

In Hall v. Wilson, 16 Barb. 548, an employé stole a promissory note, made by his employer, for $120, payable to U. or bearer, intending to subsequently deliver it upon obtaining the money. It was placed by the maker in his desk, whence it was stolen. The employe sold it to one Bigelow for $115. Before it became due, Bigelow transferred it to plaintiff. It was held that the plaintiff could not recover, the note never having had a legal inception for want of delivery, and not having been taken for a full and fair consideration and in the usual course of business.

Where a note and mortgage were given by a father for $3,000 to lawyers to defend his two sons charged witbmurder, and the lawyers transferred the note and mortgage to a third party, who brought suit, and the purchaser knew that the sons had been arrested on the charge of murder, that the attorneys had appeared at the preliminary hearing, that they were not indicted, and that the note was executed while they were in jail, it was held that the circumstances were sufficient to put the purchaser of the note and mortgage upon inquiry as to the consideration. Shirk v. Neible, 156 Ind. 66 (59 N. E. 281).

So, where a bank purchased the notes of farmers from a stranger at a large discount, it was held that the circumstances were sufficient to put the purchaser upon inquiry as to the validity of the notes. Auten v. Gruner, 90 Ill. 300; Eaton & Gilbert on Com. Pap. 370. See, also, Wisconsin Yearly Meeting of Freewill Baptists v. Babler, 115 Wis. 289 (91 N. W. 678).

“ Guilty knowledge and willful ignorance alike involve the result of bad faith.” Murray v. Lardner, 2 Wall. 121.

“Bad faith is predicated upon a variety of circumstances; some of them slight in character, and others of more significance. * * * A perfectly upright, honest man might sell a bond which had been stolen, and the explanation might prevent even the taint of wrong on his part, while the explanation, although falling far short of proof of actual guilt, might leave upon the mind an apprehension that he either directly or impliedly connived at the wrong, or, at least, that he was willing to deal in securities and keep his eyes and ears closed so that he should not ascertain the real truth.” Dutchess County Mut. Ins. Co. v. Hachfield, 78 N. Y. 228.

Where a note is lost or stolen, or fraudulently put into circulation, plaintiff must show that he came lawfully and fairly by it. Vallett v. Parker, 6 Wend. 615.

It is often difficult to obtain positive evidence of bad faith. The bona fides of the transaction must be determined from the circumstances surrounding each particular case. Goodrich v. McDonald, 77 Mich. 486 (43 N. W. 1019). There is no uncertainty in the law. The difficulty lies, solely in applying the facts to the law. I am of opinion that Mr. Barre had sufficient knowledge of the transaction to place him beyond the pale of a bona fide holder of this note and mortgage, and is liable to the estate for the amount thereof.

Was Mr. Cook a bona fide purchaser and holder of this mortgage ?

“ A bona fide holder for value of negotiable paper is one who has acquired title in the usual course of business, for a valuable consideration, in good faith, from one capable of transferring it, or from one in possession of the paper with an apparent right to transfer it, and without notice or knowledge of defenses or circumstances which should put him on inquiry.” 7 Cyc. 924.

The above is a good general definition of the term “bona fide holder for value.” The authorities are there, well collated.

It is a well-established rule both in England and America that where one purchases for valuable consideration commercial paper in the usual course of trade, transferable by delivery and not due, which has been lost or stolen or fraudulently transferred, he acquires complete title thereto. 2 Parsons on Notes & Bills, 279; 7 Albany L. J. 385; Kuhns v. Gettysburg Nat. Bank, 68 Pa. St. 445; Davis v. Seeley, 71 Mich. 209 (38 N. W. 901); Chapman v. Remington, 80 Mich. 552 (46 N. W. 34); Goodrich v. McDonald, supra. Mr. Cook was a banker and investor. Mr. Galloway was his attorney. There is no evidence tending to show that either had any actual, knowledge of the relation that had existed between Mr. Peirson and Miss McNeal, or that she had in fact acquired no title to the note and mortgage by reason of nondelivery. Gross negligence may be itself evidence of bad faith, but is not of itself bad faith, nor sufficient to defeat the title to commercial paper where one has paid full and valuable consideration therefor. Had Mr. Cook knowledge of the language of the assignment from Peirson to Miss McNeal, this alone would not have been sufficient to justify the conclusion that he acted in bad faith in the purchase of the paper. The title to the paper did not depend upon Miss McNeal’s performing her agreement as to future service. Kinkel v. Harper, 7 Colo. App. 45 (42 Pac. 173). If Mr. Peirson had executed these assignments by actual delivery, and Miss McNeal had transferred them to a bona fide holder, Mr. Peirson’s only remedy would have been an action upon her contract for a breach thereof. I am therefore constrained to hold that Mr. Cook was a bona fide holder, and obtained full title to the McCullen note and mortgage.

The circuit judge dismissed the bill as to the deed on the ground of laches on the part of the complainant. I do not think she was guilty of laches. The ground of the ruling is that she should have commenced her action before. I do not think she was under obligation to precipitate a conflict during her husband’s life, or to increase her domestic unhappiness by instituting suit. No one has been prejudiced by the delay; on the contrary, the defendant McNeal has gained by it, because she had the use of the property. The consideration for the deed given by Mrs. Sharr, as grantor, to Miss McNeal, was paid by Mr. Peirson, who gave his check to. Mrs. Sharr for $552.78. The balance was paid in cash, furnished by Mr. Peirson to Miss McNeal. The money so paid was unquestionably received on a mortgage owned by Mrs. Peirson, which Mr. Peirson persuaded her to assign. The assignee of the mortgage paid the money to Mr. Peirson. He turned it over to Miss McNeal to take to the bank. It was never deposited. The estate of Mr. Peirson is not interested in the money which Mr. Peirson thus misappropriated. If it be granted that the money was a gift, Mr. Peirson could not have repudiated it for that reason. He had a right to give away his own property. We do not think the. record establishes the fact that the check drawn by him was not drawn upon his own individual funds. If complainant has any lien upon the land because her money was fraudulently used in making the purchase, that is a matter which affects complainant individually, and does not authorize her to maintain a suit in the name of the estate to set the deed aside.

Decree should be reversed, and decree entered in this court for the complainant in accordance with this opinion, with costs of both courts.


source: Caselaw Access Project

author: Grant, J.

license: Public Domain

text:
    PEIRSON v. PEIRSON.
    Mortgages — Foreclosure—Payment—Estoppel.
    In a suit to enjoin the foreclosure of a mortgage, evidence reviewed and held that, by some arrangement between the mortgagee and her son, the mortgagor, the debt was regarded as paid and she was estopped to assert its existence as to one who advanced money upon the strength of her representation to him that it was paid.
    Cross-appeals from Lenawee; Chester, J.
    Submitted January 12, 1904.
    (Docket No. 12.)
    Decided July 16, 1904.
    Bill by Electa W. Peirson against Clemenza E. Peirson, Ellen Britton and Edwin F. Wells to restrain the foreclosure of a mortgage. From a decree for defendants, complainant and defendant Peirson appeal.
    Reversed.
    The object of the bill in this case is to restrain the foreclosure by advertisement of a mortgage for $3,900, executed by Eugene D. Peirson and his wife, the complainant, on a block in the city of Hudson, to the defendant Clemenza, the mother of Eugene. Complainant and her husband were married in 1881. Her father lived in Albion, N. Y. Owing to his-ill-treatment, they separated, and she returned to her father’s home in August, 1899. Accompanying the mortgage was a note executed by Eugene to his mother. The mortgage was dated November 30, 1892, and not recorded until December 7, 1899. The husband of Clemenza and the father of Eugene owned the property in question. He left a will by which he bequeathed two-fifths thereof to his wife, Clemenza, and one-fifth to each of his children, the son, Eugene, and two daughters. Eugene subsequently bought the interests of his mother and sisters, and the mortgage in question was given to secure the amount of the purchase price due his mother. On September 5, 1896, Eugene executed a deed of this property to his wife, the complainant, which deed was recorded September 8th. It was a warranty deed against all incumbrances except three mortgages, neither of which was that of the defendant Clemenza. This deed was executed under the following circumstances: Soon after their marriage, the complainant, at the request of her husband, went to her father, and borrowed $1,000, giving her note for it. This money was loaned to Eugene. This note was renewed from year to year, and at the date of the deed amounted to $2,619.18. In 1888 complainant “borrowed from her father another $1,000, for which both she and her husband gave a note. This note was renewed yearly, and at the date of the deed amounted to $1,726.02. About the time the deed was executed, complainant, at the request of Eugene, asked her father for more money. Mr. “Warner, her father, went to Hudson, and it was then arranged that he would advance $550; that Eugene should ■execute a deed to complainant; and that his note should at the same time be surrendered, and he discharged therefrom. This was done, and complainant executed to her father notes for the sums above mentioned. Before consummating the arrangement, Mr. Warner, desiring to know the condition of the title, and after seeing the mortgagees mentioned in the deed to make an arrangement for an extension of time, told defendant Clemenza what he was about to do. She expressed her satisfaction. He asked her if she had any claim upon the property, to which ■she replied, “I have not; I have been all paid off.” Relying upon this statement, the arrangement was consummated, and the deed executed.' Soon after the record of this deed the creditors of Eugene filed a judgment creditors’- bill against him and the complainant, charging that the deed was void as to creditors. In that suit Clemenza was a witness, and swore positively that her mortgage had been paid by Eugene. The creditors were defeated, and the deed held valid. An assignment of the mortgage was made by defendant Clemenza to defendant Wells February 5, 1900, and recorded May 31,1900. Mr. Wells was Clemenza’s brother, lived in California, and had no knowledge of the assignment. It was made without any consideration, and for the sole purpose of having the foreclosure proceedings take, place in his name. Foreclosure proceedings were then, commenced by advertising in a newspaper in the city of Adrian, rather than in the city of Hudson, where the parties resided. Upon learning of this, complainant promptly filed this bill. Eugene was the moving spirit, in these transactions. The deposition of Clemenza was taken, and she testified that complainant and her husband induced her to falsely swear upon the hearing in the judgment creditors’ suit that her mortgage was fully paid. She testified upon this hearing that no part of it had ever-been paid, although nine payments of $16 each and one of $15 were indorsed upon the note. Complainant positively denied making any request to her to give such testimony. Eugene was not a witness. Clemenza admits that Eugene requested her to keep the mortgage from, the record, and requested her to give the false testimony as to its payment. There is some testimony corroborating-the witness Clemenza as to her conversation with the complainant. The defendant Britton loaned to defendant. Clemenza some money, and this mortgage was assigned to-her as collateral security in addition to another mortgage. The circuit judge entered a decree for the defendant for the full amount of her mortgage and interest thereon from the date of the deed, giving a prior lien for the $550, the amount which Mr. Warner paid for his daughter at the. time of the execution of the deed.

      S. E. Filkins and Watts, Smith & Baldwin, for complainant.

      Fellows & Chandler, for defendants.
   Grant, J.

(after stating the facts). Two questions-are involved: (1) Was the mortgage in fact paid in whole or in part ? (2) If not so paid, is defendant Clemenza estopped, by her testimony in the chancery suit and her statements to Mr. Warner, to now assert nonpayment?

We feel compelled to reach a different conclusion from that reached by the learned circuit judge, except that we concur with his conclusion that Eugene D. Peirson was guilty of fraud upon Mr. Warner. The judge found that “Warner should have his action against him [Eugene] for fraud.” This would be a worthless remedy, as Eugene 'is financially worthless. When complainant, at the request of her husband, went to her father in New York, just before the execution of the deed, to obtain more money from him, he came to Hudson to find out how matters stood. There were three mortgages upon the property, the principal of which was $6,400. He evidently thought that the property was not worth sufficient to justify further advance in addition to what he had already loaned his daughter for her husband. With this in view, he with his daughter went to Clemenza to ascertain if she had any claim. This was natural, inasmuch as she had been one of the owners of the property, and had deeded it to her son. She told him, and also complainant, that the mortgage was paid. Relying upon this, Mr. Warner advanced more money to Eugene for his daughter as one consideration for the deed, and as a further consideration his obligation upon the note was canceled, and complainant alone became the debtor of her father for the entire amounts. Under the influence of her son, in whom she unfortunately trusted, and in order to assist him to obtain more money from Mr. Warner through his wife, defendant Clemenza made this representation. All parties were then friendly, and so remained until long after the termination of the suit brought by the creditors. Again upon that suit she testified positively that her mortgage was paid. It was not recorded. Complainant testified that she borrowed the money and gave her notes in the belief that the mortgage was paid, as represented to her by defendant Clemenza. Her son had undoubtedly paid her some. He had money which he might have used in payment. The judge found that he had paid the interest to the date of the deed, though there is no more evidence that he paid the interest than there is that he paid the principal. Clemenza swears that she was never paid anything, notwithstanding the several small indorsements upon the note. Under these circumstances, and the little confidence that can be placed in one who deliberately acknowledges to having committed perjury, and as well in those who have connived at it, we think it just to assume that her state-' ment to Mr. "Warner and her testimony in the creditors’ suit was true, and that in some way and by some arrangement between her and her son, the mortgage was regarded by her as paid, and that she is now estopped to assert its existence.

The decree is reversed, and decree entered for complainant, with the costs of both courts.

Moore, C. J., Carpenter and Hooker, JJ., concurred. Montgomery, J., did not sit.


author: Moore, C. J.

text:
    HILLMAN v. DETROIT UNITED RAILWAY.
    1. Trial — Argument op Counsel — Prejudice.
    The argument of counsel to the jury, in an action against a street railway for personal injuries, in which he urged that the jury should not defeat the honest claim of a poor man, by the lies and perjury resorted to by a corporation, and censured the defendant for making a motion to take the case from the jury, was improper.
    2. Appeal and Error — Cure op Error — Argument.
    The mischief of such an argument, when persisted in by the counsel, was not cured by the admonition of the court.

      Error to Wayne; Mandell, J.
    Submitted January 12, 1904.
    (Docket No. 14.)
    Decided July 16, 1904.
    Case by Samuel Hillman against the Detroit United Railway for personal injuries. There was judgment for plaintiff, and defendant brings error.
    Reversed.

      Brennan, Donnelly & Van De Mark and Henry L. Lyster, for appellant.

      William F. Fenwick (A. B. Hall, of counsel), for appellee.
   Moore, C. J.

The plaintiff recovered a judgment against the defendant company for personal injuries received while crossing its track. The case is brought here by writ of error.

It is the claim of plaintiff he was driving north on Randolph street, which is a north and south street, toward Congress street, which is an east and west street, with a double street-car track upon it; that before he attempted to cross the track he looked both ways, and, seeing no car, started across the tracks, and got nearly across when the rear part of the rear wheel of his wagon was struck by the fender of the car. The plaintiff sustained a fracture of the hip.

It is contended by the defendant that the plaintiff’s allegations of negligence have not been sustained, and also that plaintiff was guilty of contributory negligence, and cannot recover, and that a verdict should have'been directed in favor of defendant. The testimony upon both of these propositions was conflicting. The accident happened near the county building. The jury were taken to the place of the accident. We think the testimony presented questions of fact for the jury which were left to it under-proper instructions.

Error is assigned in relation to the argument of counsel for plaintiff. Counsel say, if the argument was improper, it was cured by the action of the trial judge. One of the counsel for plaintiff made an argument some of which, ought not to have been made. He was told by the judge his argument was not proper, and finally was cautioned, by the court as follows:

The Court: If you have a meritorious case, I think you are jeopardizing it by an argument of that kind, and I think it my duty to you — perhaps because you are in the heat of argument, and I have done it myself — when you will say things you ought not to say, to call your attention to the matter; and I will say to this jury that in this suit, if the plaintiff is entitled to compensation, he is entitled to full compensation, and he is not entitled to anything because the defendant’s motorman was either a wise man or a fool, a cruel or a tender-hearted man. That has nothing to do with the elements of damage in this case, and I think counsel better pursue a different line of argument.”

This counsel heeded the admonition, but the counsel who .followed him did not, and said, among other things:

“Are you gentlemen to be influenced by such testimony as this ? Are you to defeat the honest claim of a poor man, who comes before you for justice, by a corporation that will resort to such lies and perjury to maintain their case in this court” — to which defendant excepted.
“ I say that the people of the city of Detroit and county of Wayne are looking to the juries of this court to see that justice is done. You men must stand in between this man and injustice. They have made a motion to take it away from your consideration. They did not want you to trouble with this case.
Mr. Lyster: Now, I take an exception to this remark.
“Mr. Hall: Take it, then; take it.
The Court: An exception will be noted.
“Mr. Lyster: I think counsel should be reprimanded by the court.
“Mr. Hall: I repeat it. It is on record in this case that they have made a motion to take this case from the jury. Why did they want to take it from the jury ?
The Court: Wait a moment. They have a perfect right to do that.
Mr. Hall: Certainly, they have a right to do that.
The Court: The same as you have a right to request that certain charges be granted. Nothing can be imputed from that.
Mr. Hall: Nothing can be imputed, your honor, except that they did not want it to go to the jury ” — to which the defendant excepted.
The Court: They have a perfect and legal right in this court always to make this request.
Mr. Hall: I repeat to you, gentlemen of the jury, that we wanted this case to go before you. We have the utmost confidence in the absolute integrity and honesty of twelve of you men, and if we had not had we would not have let you sit on this panel. We have selected you men as your mames were drawn from the box because from what we knew or what we have been able to learn of you twelve men we are willing to trust an honest case in • the hands of twelve honest men, and we now come to you and appeal to you to analyze this testimony, and see whether you can pick a single flaw in the testimony of this plaintiff or any of his witnesses.”

Other objectionable statements were made, which it' is not necessary to set out here. The argument was an improper one to make, within the repeated rulings of this court. Tunnicliffe v. Railway Co., 107 Mich. 261 (65 N. W. 226); Britton v. Railroad Co., 118 Mich 491 (76 N. W. 1043); Selby v. Railway Co., 122 Mich. 311 (81 N. W. 106).

One cannot read the-record without being impressed, with the idea that the trial judge got tired of trying to keep counsel within the rules, and that counsel was not willing to acquiesce in the admonitions and suggestions of the court. The mischief done by the improper argument of counsel was not cured by the judge.

Judgment is reversed, and new trial ordered.

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


text:
    A. M. TODD CO. v. FARMERS’ MUTUAL FIRE-INSURANCE COMPANY OF ALLEGAN AND OTTAWA COUNTIES.
    1. Fire Insurance — Additional Insurance — Waiver.
    In an action on a fire-insurance policy, defended on the ground that additional insurance had been procured contrary to the conditions of the policy, evidence reviewed and held insufficient to warrant a jury in finding that the secretary of the company consented to the additional insurance.
    2. Same — Additional Insurance — Agent—Waiver.
    The fact that the soliciting agent of a mutual fire-insurance company, three or four years after forwarding an application to the company, assisted the insured in procuring other insurance, does not constitute a waiver of a condition in the mutual policy prohibiting the procurement of additional insurance.
    ’ 3. Same — Breach oe Condition — Void or Voidable.
    Breach by the insured of a condition prohibiting the procurement of additional insurance renders the policy not merely voidable, but void.
    4. Same — Collection oe Assessments — Breach oe Condition-Waiver.
    The collection of assessments on a mutual fire-insurance policy, without knowledge that there has been a breach of condition by procuring additional insurance, does not constitute a waiver.
    ■5. Same — Breach oe Condition — Void Policy.
    Section 5180, 2 Comp. Laws, providing that no policy of fire insurance shall be declared void for breach of condition, unless the loss occurred during the breach or by reason of the breach, does not apply to the breach of a condition against procuring additional insurance, where the loss occurred while the additional insurance was in force.
    Error to Allegan; Padgham, J.
    Submitted February 3, 1904.
    (Docket No. 67.)
    Decided July 16, 1904.
    Assumpsit by the A. M. Todd Company, Limited, against the Farmers’ Mutual Fire-Insurance Company of Allegan and Ottawa Counties on a policy of insurance. There was judgment for defendant on a verdict directed by the court, and plaintiff brings error.
    Affirmed.

      Howard & Howard, for appellant.

      C. R. Wilkes, for appellee.
   Moore, C. J.

This is an action brought upon an in-'^ surance policy issued by the defendant to Albert M. Todd. Prior to the issuing of the policy in question, Mr. Todd held a policy in the company. Mr. Todd wanted some additional insurance, and a new policy was issued, which is the policy in question. On or about January 1, 1902, the plaintiff company was organized, and became the owner of the property covered by the insurance. Albert M. Todd assigned his interest in said policy to it on the 13th day of January, 1902, and the same was approved by the secretary of the defendant company. On the 10th day of July, 1902, a fire occurred, which destroyed the hay and grain and farm implements covered by the policy. The hay and grain were insured for $500, live stock and farm implements for $2,100. No live stock was injured by the fire. On the back of the insurance policy in question are printed the by-laws and charter of the company. Part of section 17 reads as follows:

“This entire policy, unless otherwise by an agreement indorsed hereon or added hereto, shall be void if the insured now has or shall hereafter make or procure any other contract of insurance, whether void or not, on the property covered in whole or in part by this policy.”

Mr. Todd later procured other insurance on the hay, grain, and farm products, but no indorsement was made thereof on the policy. The circuit judge directed a verdict in favor of defendant. The case is brought here by writ of error.

It is the contention of plaintiff that the provision against additional insurance was waived — First, by the consent thereto of the secretary of the company; second, by the act of Mr. Dun, a solicitor of the defendant company, who procured the additional insurance; and, third, by making and collecting assessments of Mr. Todd after the additional insurance, and keeping the same. The first two of these claims is based upon Mr. Todd’s testimony, which reads as follows:

“ I built the large barn spoken of in 1900, after the policy of insurance involved in this case was issued. After I had it practically completed, Mr. Dun, the gentleman who acted for the defendant company in taking some of the increase insurance for said company as represented by the increase certificates attached to the policy in suit, came to see me, either by my appointment or his own suggestion, I cannot recall which. At any rate, he came with a view of insuring the barn. The barn had cost me $14,000 to build, and I wanted to get $10,000 of insurance on it. Mr. Dun said he did not think the company would take any such amount as that, because their policy was not to place too much in any one risk. I asked him to take it up with the company. He said he' would, and would advise me how much they would take. He conferred with Mr. Hicks, the secretary of the company, and told me that the largest amount that the company thought that they could reasonably take would be $3,000. That they would insure either the barn or its contents, or both, to the amount of $3,000, but they did not wish to take more than $3,000 on any one piece of property. They had at that time a little over $18,000 on all the properties on my farm, and they were willing to take $3,000 more on this property. I told Mr. Dun that this would not be adequate, because it would be less than one-fourth the cost of the barn, and that we also had cattle we wanted to insure. We had something like 400 head of cattle, and also farm implements. Mr. Dun came after-wards, and said he had some talk with Mr. Hicks, and he was consulting with the Kent, Allegan & Ottawa Company to see if together they would take $5,000 — that is, divide it so that each would take $2,500 apiece. I said that was all right. If they could arrange it to take an adequate amount, I would be glad to have them. But finally he advised me that that fell through for some reason or other; that it was not accomplished. So I telephoned to Mr. Hicks, and asked him if they really couldn’t, in view of the fact of my other insuranee that I had already on many pieces of property, take more than $3,000. He said ‘ No;’ that would be the limit that they could take on any one piece of property. I said, ‘ If that is the case, I will have to take out the insurance on the barn in stock companies.’ He says, ‘ That is all right for you to do so, because we can’t take more than $3,000.’ So I said, ‘All right, I will take it out in the stock companies,’ and I told Mr. Dun about this, and he says, ‘ All right, I will write you up in the stock companies.’ Mr. Dun was at that time solicitor for the defendant company. So I said ‘All right, I would just as leave give you the insurance as anybody, if you will take it. ’ He says, ‘ I can write you up that in a stock company. ’ So I made out the application, and Mr. Dun arranged with me for insurance through Mr. Updyke’s agency here in Allegan. We took out some insurance in the Updyke agency, some in Mr. Rankin’s agency, and some in Mr. Garrett’s agency; amounting in all to about $19,000.
“Q. What did you say to Mr. Hicks about wanting more insurance on the contents of the barn ?
‘A. Well, I said like this: That we ought to have probably $9,000 or $10,000 on the barn and $9,000 or $10,000 on the live stock, and perhaps $3,000 or $4,000 on the contents ; and he said they could not insure it for so large an amount; that $3,000 was about all that they would insure it for. So I told him I would have to insure it in stock companies. I cannot recollect whether he suggested I insure it in stock companies or not, but, at any rate, he assented to it. In taking out the insurance in stock companies, I took out additional insurance on the hay, grain, and farm products. I took out the first insurance in stock companies September 38, 1900. These policies run for three years. Two policies taken out on that day. The next policy, I think, was taken out October 3, 1900. Each one of the stock companies had a certain amount on the barn, a certain amount on the hay, grain, and farm products, certain amounts on the cottage near by, and on some other property. The next insurance was taken out in stock companies January 15, 1901; March 3, 1901, March 33, 1901, March 35, 1901, June 4,1901. That comprises them all. I took out ten policies in stock companies.”

In the applications he made for insurance in the stock companies spoken of by Mr. Todd in his testimony, he answered certain questions in his own handwriting, and to the question, “What amount of other insurance, if any, is there now on the property, and in what company or companies?” he answered, “None.” Mr. Hicks’testimony as to his talk with Mr. Todd is as follows:

“ During these negotiations I had a talk with Mr. Todd himself over the telephone. Mr. Todd called me over the phone. I answered, and talked with him regarding the $3,000. He suggested that was a very small amount, and asked me if in case wé placed the $3,000, if that would permit him to place other insurance; and I told him our company could not accept concurrent insurance under any circumstances. That is the conversation Mr. Todd refers to. That ended the effort to get insurance in our'company on the barn or its contents. Our company refused to take any insurance at all on the contents of the barn. * * * Nothing was said by me to Mr. Todd that he had taken out, or was going to take out, additional insurance upon any property insured in our company. I never knew of it, or saw any intimation of it, until after the fire.”

Putting the most favorable construction possible upon this testimony, we do not think the jury would be warranted in finding that Mr. Todd informed Mr. Hicks he wanted concurrent insurance upon property upon which he then had an insurance, and that Mr. Hicks consented that he might obtain it. This makes it unnecessary to express any opinion upon what would be the legal effect of Mr. Hicks’ consenting to the proposed insurance.

Did what was done by Mr. Dun operate as a waiver ? The record discloses that he was a soliciting agent, and had no authority to write policies. It is claimed he had acted in that capacity some time prior to December, 1897, the date of the policy in question, when some of the insurance was obtained under the old policy. His testimony is:

“My duties were to make a survey of the property, and submit applications for insurance to the secretary. I have no authority to write policies. That was all done by the secretary. I was merely a soliciting agent, as I understand it; agent for the secretary; and held my position at his pleasure, and made my reports to him. I knew of Mr. Todd building the barn in Í900. , At that time I knew that he was insured in the defendant company. I supposed he was because I had taken applications for him.
Q. Did you at that time know anything about the amount of insurance, or what property was covered by his insurance in the defendant company ?
“ A. I knew what had been, but whether I did at that time or not I cannot recollect. I presume not, though, because my duties ceased usually when I took the application and submitted it and got the policy. I paid no attention to it afterwards.”

There is no testimony in the case that his duties were other than as stated by him. He further testified that when the new barn was built Mr. Todd wanted $10,000 insurance on it, and, after taking the matter up with the company, they refused to accept it, and he so informed Mr. Todd. Mr. Dun obtained through Mr. Updyke’s agency the insurance in the stock companies, and testified he did not understand the defendant company had any insurance upon the property covered by the policies of the stock companies. He said:

“Mr. Todd didn’t directly or indirectly ask me for the consent of the Mutual Company for concurrent insurance upon the property that was insured by Mr. Updyke’s agency. He never mentioned it to me, and I had no knowledge that it was property that this company had any insurance on. I first heard that Mr. Todd claimed the Mutual Company was carrying insurance upon the property that had been insured through the stock companies from the secretary, after the fire.”

What we have said as to the effect of this testimony in relation to Mr. Hicks will apply equally to Mr. Dun. It is said, however, that as Mr. Dun obtained' the insurance under the old policy, he must be presumed to know what it covered, and by obtaining the policies in the stock companies he thereby waived the provisions of the policy, and the company is bound thereby. It would be a violent presumption to suppose that Mr. Dun would know what property of Mr. Todd’s was covered by insurance when the new insurance was taken because he had taken his application as a soliciting agent and forwarded it to the company three or four years before. It would be carrying the doctrine of waiver further than we have ever seen it stated to say that, because a soliciting agent had taken and forwarded an application for insurance, and three or four years later had assisted in procuring insurance in other companies than the defendant company, about which act of the agent the defendant company had no •knowledge, that these acts operated as a waiver. See 16 Am. & Eng. Enc. Law (2d Ed.), p. 944; Goldin v. Assurance Co., 46 Minn. 471 (49 N. W. 246); Queen Ins. Co. v. Young, 86 Ala. 424 (5 South. 116, 11 Am. St. Rep. 51); Sugg v. Insurance Co., 98 N. C. 143 (3 S. E. 732).

Was there a waiver because of collecting and retaining the assessments ? Some of the policies in the stock companies were taken out as early as September, 1900; others in the summer of 1901. One assessment.was collected in October, 1900, and one in October, 1901. We have already seen the company had no knowledge of the additional insurance until after the fire. No demand has ever been made for a return of the assessments which were paid, and the company has never refused to return them. The cases cited by counsel which he claims establish a waiver are, generally, cases where the assessments were collected after knowledge of the breach of the contract and before the loss occurred. In the others the case does not turn upon the matter of assessments. It has frequently been held by this court that the breach of such a condition as this renders the policy not voidable simply, but wholly void. See Cronin v. Fire Ass’n, 123 Mich. 277 (82 N. W. 45), and the. many cases there cited. When this loss occurred the company had no knowledge of a breach of the policy, and, according to the cases just mentioned, at that time the policy was void. When the company learned of the additional insurance, it disclaimed any liability. The plaintiff has not been led to do any act or incur any expense because of what defendant has failed to do in relation to the assessments. The case of Shelden v. Insurance Co., 124 Mich. 303 (82 N. W. 1068), has some bearing upon the questions involved. See, also, Boyer v. Insurance Co., 124 Mich. 455 (83 N. W. 124, 83 Am. St. Rep. 338). We do not think the failure to return the assessments operated as a waiver.

It is said, “We have a statute which we submit has a considerable bearing on this case,” citing section 5180, 2 Comp. Laws. As this loss occurred during the breach of the condition in the policy, the statute does not help the plaintiff.

Judgment is affirmed.

The other Justices concurred.


text:
    VILLAGE OF CHELSEA v. HOLMES.
    Taxation — Warrant—Suits to Collect Taxes.
    Section 2871, 1 Comp. Laws, providing that suit may be brought by a village for the collection of taxes on personal property whenever the treasurer of the village shall be unable to collect the tax, permits such action to be brought during the life of the tax warrant.
    Error to Washtenaw; Kinne, J.
    Submitted February 4, 1904.
    (Docket No. 80.)
    Decided July 16, 1904.
    Assumpsit by the village of Chelsea against Harmon S. Holmes, Edward Vogel, Ernest R. Dancer, and Dallas H. Wurster, copartners as the H. S. Holmes Mercantile Company, for the taxes of 1901. There was judgment for defendants on a verdict directed by the court, and plaintiff brings error.
    Reversed.

      H. D. Witherell (Cavanaugh & Wedemeyer, of counsel), for appellant.

      A. J. Sawyer & Son (F. F. Freeman and B. B. Turnhull, of counsel), for appellees.
   Moore, C. J.

The defendant company was assessed $15,000. Its assessment was increased by the board of review to $30,000. It was doing business in the plaintiff village, and had, and continued to have, a stock of goods therein. The assessment roll was put in the hands of the village treasurer, who made some attempt to collect the tax. He wrote Mr. Holmes several times, requesting its payment. He also made a personal demand upon Mr. Holmes, who refused to pay the tax. He consulted an attorney, and claims he was advised the tax could not be collected. It is the claim of the plaintiff that the treasurer did not consult the village .attorney, but consulted the attorney of the defendant, and that Mr. Holmes was the treasurer’s bondsman. On October 26th the treasurer returned the tax uncollected. The council directed that this suit be brought to collect the tax.

The defendant claims there are so many irregularities in the assessment roll that it is invalid, and also claims the treasurer might have collected the tax by levying upon the property of the defendant during the lifetime of the warrant. Counsel were agreed that the question involved was one of law, which the judge ought to decide. The circuit judge was of the opinion the tax was valid, but expressed himself as in doubt about the law of the case. He concluded that it was the duty of the treasurer to collect the tax under his warrant, and, as he had failed to do so, this suit could not be maintained, and directed a verdict in favor of defendant.

We agree with the circuit judge that, if there are any irregularities in the assessment, they are cured by section 3922, 1 Comp. Laws. The other question involves a construction of sections 2868, 2871, 1 Comp. Laws, which read:

“ Sec. 2868. In case any person shall neglect or refuse to pay any tax imposed upon any real or personal property belonging to him, as aforesaid, the treasurer shall levy the same by distress and sale of the goods and chattels of the said person liable to pay the same, wherever such goods and chattels may be found, either in said village or elsewhere, in the county where such village is located; or in any adjoining county, first giving public notice of such sale in the manner and for the time required by law in case of such sales made by township treasurers, and for such purpose and for the collection of the taxes aforesaid, the treasurer may bring suit therefor, and shall have all the powers and perform the like duties, so far as applicable, as are conferred upon or required of township treasurers, in the collection of taxes levied in townships.”
“ Sec. 2871. Whenever the treasurer shall be unable to -collect any tax assessed upon personal property in the village it shall be lawful for the treasurer of the village to bring suit, in the name of the village, for the recovery thereof, against the person or persons against whom the tax was assessed, before any court of competent jurisdiction, and to take and use all lawful means provided by law for the collection of debts to enforce the payment of such tax; and in such cases all the provisions of law applicable to suits and the evidence therein, brought by township treasurers in the name of their township for such purposes, shall apply.”

Counsel for defendant insist the treasurer might have made the tax by virture of his warrant, and until the remedy by warrant has been exhausted the village could not authorize the bringing of this suit; citing a number of cases. We think the cases are not conclusive.

In Staley v. Township of Columbus, 36 Mich. 38, the township treasurer received certain highway orders as payment, and returned the taxes as paid. The court held they were in law paid, and that it was a private controversy between the treasurer and the taxpayer.

In McCallum v. Township of Bethany, 42 Mich. 457 (4 N. W. 164), there was no return that the personal tax was unpaid. The court said:

“ The failure, therefore, to show the return of the taxes unpaid, was fatal to the recovery. Upon a new trial it is probable this defect will be remedied.”

In City of Detroit v. Jepp, 52 Mich. 458 (18 N. W. 217), it was said by Justice Campbell that the only question involved was whether, under the charter of Detroit as it existed prior to 1881, suit could be brought for unpaid, personal taxes.

In Township of Laketon v. Akeley, 74 Mich. 695 (42 N. W. 165), the question was whether Mr. Akeley could be sued for taxes assessed against the Roscommon Lumber Company.

In Township of Port Huron v. Potts, 78 Mich. 435 (44 N. W. 289), it was held there was a clear failure of the township treasurer to make such a return as the law required before suit was brought. It will be seen that in none of them was the question raised here at issue.

The case most in point is Village of Sturgis v. Flanders, 97 Mich. 546 (56 N. W. 934), where the provisions of law are almost identical with the sections we have quoted. It was held suit could be maintained for the personal tax. Chief Justice Hookee, in speaking for the court, said:

“Section 2952, 1 How. Stat., providing for the collection of personal taxes by action after the return of the warrant, is in harmony with the general tax law. See 1 How. Stat. § 1049. If section 2939 is to be construed as contended by plaintiff’s counsel, section 2952 confers no additional authority, and is practically meaningless. We cannot agree with counsel in the proposition that section 2939 does not authorize an action for taxes during the life of the warrant. The cases cited were brought under a statute which, like section 2952, only authorized such proceedings after the return of the warrant, and for personal taxes. The decisions are based upon the limitation in the statute as to the time of bringing actions for taxes. The remark of the court that it was unnecessary, for the reason that the warrant was as good as an execution, was unnecessary, and can be considered, at most, as a plausible reason for such limitation. But in section 2939 the legislature has given to the marshal authority to bring an action for the purpose of aiding distress and sale, and for the collection of the tax. Unless we are to hold that this section was incorporated merely to include the taxes on real estate, or to give the right to an action during the life of the warrant, it adds nothing to section 2952. If it were intended merely to put taxes upon real estate after the return of the warrant upon the same footing with personal taxes, a word added to section 2952 would have accomplished it; and, as we cannot treat it as meaningless, we must conclude that its purpose was to permit the bringing of an action during .the life of the warrant. And w;e think there may have been reason why this power should have been given to the marshal. Villages differ from townships in the character of the inhabitants and property. Transfers of property are much more frequent, and the probability of change of ownership after assessment is greater. A warrant may be effective where property can be seized within a county, but it is impotent to reach it in another county, while an execution from a court of record may reach property anywhere in the State, and, if an action may be brought early, the collection of the tax may be facilitated. We agree with the learned circuit judge that this provision, section 2939, confers the right of action for the collection of real and personal taxes during the lifetime of the warrant, and that section 2952 is intended to authorize actions after the return of the warrant, and applies only to personal taxes.”

We think a verdict should have been directed for plaintiff for the full amount of the tax, and interest thereon.

Judgment is reversed, and a new trial granted.

The other Justices concurred.