author: Hookeb, J.

text:
    SHERMAN v. FISHER.
    1. Mortgages—Priority—Foreclosure—Parties.
    The assignee of a junior mortgage is not hound by proceedings to foreclose the senior mortgage, to which he was not a party.
    2. City Taxes—Tax Rolls—Completion—Notice—Proof.
    Under Detroit Charter of 1883 (Act No. 326, Local Acts 1883) providing in section 6 for publication of notice of the completion of the tax rolls, and in section 9 for publication of notice of their receipt by the receiver of taxes, the absence of proof on file that such notices were published is insufficient to create a presumption that they were not published as required by law, there being no provision of the charter requiring such proof to be filed.
    3. Same—Tax Leases—Estoppel to Assert.
    Where the attorney of the purchaser of real estate on foreclosure of a first mortgage purchased certain tax leases with his own money after plaintiff’s title had matured under foreclosure of a junior mortgage, and he testified that he did not know whether the price of such leases had been charged to his client, such facts were insufficient to justify a finding that the attorney purchased the leases for his client, so as to raise an estoppel as against plaintiff.
    4. Same—Vesting op Title.
    Title under a city tax lease vests in the purchaser from the date of the lease.
    5. Landlord and Tenant — Estoppel to Deny Landlord’s Title.
    While a tenant is estopped to dispute his landlord’s title as of the date of his lease, he may show that such title has been subsequently extinguished.
    6. Tax Leases—Validity—Lands Bid in by City.
    Where a purchaser of certain tax leases from a city obtained a lease or leases covering all of the years for which the land had been bid in by the city, all of the leases bearing the same date, it was no objection to the validity thereof that, inasmuch as the city had bid in the land, it was not authorized to tax it thereafter.

      Error to Wayne; Brooke, J.
    Submitted October 21, 1904.
    (Docket No. 76.)
    Decided December 7, 1904.
    Assumpsit by Mary Sherman against Truman S. Eisher for rent. There was judgment for plaintiff on a verdict directed by the court, and defendant brings error.
    Reversed.

      Walker & Spalding, for appellant.

      Charles C. Stewart, for appellee.
   Hookeb, J.

In 1887 one Abbott owned certain premises in Detroit, and subsequently gave two mortgages thereon. The junior mortgage was assigned to Theeck, and the assignment was duly recorded. The senior mortgage was foreclosed. The property was. purchased at the sale by Walker, and the period of redemption expired. These proceedings did not bind Theeck, who was not a party to them. See Walker v. Fisher, 117 Mich. 72.

Subsequently the junior mortgage was foreclosed, and the interest derived from the foreclosure sale came to be vested in Sherman, the plaintiff. Eisher, the defendant, entered upon the premises previous to the foreclosures, as a tenant of Abbott, and there has been considerable litigation over the right to the amount due from him for rent. See Walker v. Fisher, supra; Sherman v. Spalding, 126 Mich. 562.

In the present case Sherman has brought suit for rent under a lease which she claims to have made with Eisher in 1897; i. e., after the foreclosure of the junior mortgage. The only question that counsel for the defendant raises is whether he can maintain his defense by showing that Spalding acquired title to the premises, subsequent to the leasing, by three tax leases, acquired under the charter of the city of Detroit.

The circuit judge was of the opinion that the leases were valid, but that Eisher, having attorned to plaintiff, who had come lawfully into possession of the premises, could -not set up Spalding’s subsequently-acquired title ágainst her, his lessor. He therefore directed a verdict for the ■plaintiff for $137.53, and the defendant has appealed.

The tax leases were dated November 6, 1897, and that for 1895 recites that the premises were sold for taxes on •June 1, 1896. It is claimed that redemption expired as to ■that sale on November 6, 1897, subsequent to the date of the lease. Defendant apparently concedes that, if his title accrued on the date of sale for taxes, the proof was not admissible. The tax leases were offered and received in evidence, whereupon evidence was offered on behalf of the plaintiff that whereas, under section 6 of the charter (Local Acts 1883, Act No. 326, chap. 10), the board of assessors were required to cause notice to taxpayers of the •completion of the rolls to be published in two daily papers, .and section 9 requires the receiver of taxes to give six days’ notice of the receipt of the rolls by publication and posting. There is not on file evidence that either of said provisions were complied with. It is urged that this overcomes the prima facie case made by the introduction of the leases, under section 19 of the charter, and the claim of title based thereon.

Is proof of the publication of these notices indispensable to the authority to sell? If so, the title claimed under ■the leases fails; if not, it should be sustained. If we inier that this notice is in the nature of a notice that the assessment is open to review—and that is perhaps what it was designed for—absence of proof upon file that it was given is not sufficient to create a presumption that it was not given as required by law, as the charter does not require the filing of such proof. In the case of Boyce v. Peterson, 84 Mich. 490, it was so held under a similar ■.statute. We see no reason for not applying the same rule do the less important notice of the delivery of the roll to -the controller. This disposes of the question of title so far ns it depends on the validity of the tax leases.

It is claimed, however, that this title was purchased by Spalding, in his capacity of attorney for Walker, and hence that it is not available by Fisher against Sherman. If Sherman can say that the purchase of the tax titles by-Walker inured to her benefit, as owner, or representative-of the owner, of the equity of redemption, this is perhaps a valid claim, or at least might be in a court of equity, assuming, of course, that Spalding’s purchase was for Walker.

At the time that Spalding claims to have obtained title, Mrs. Sherman’s title had matured under the foreclosure-of the junior mortgage, and Spalding’s title did not accrue, upon his theory, until November 6th. She was then an, owner subject to the Walker mortgage, and there may be some doubt whether the purchase of tax titles procured by-Walker, if they could be said to have been so procured, could be set up against her—a question, however, which we do-not decide. Whether or not this is so, Walker could not be compelled to purchase such titles, or pay taxes in the interest of Mrs. Sherman, and the record fails to show that he did. What testimony there is, in addition to the-leases, which clearly convey the legal title to Spalding,, indicates that Spalding paid for them with his own money. He stated that he did not know whether this had been-, charged to Mr. Walker. This is not sufficient to justify a jury in finding that the lands were purchased for Walker. See Connecticut Mut. Life-Ins. Co. v. Bulte, 45 Mich. 113.

The title being in Spalding, the next inquiry is whether it vested before the date of the lease.- We are of the opinion that there can be but one answer to that question. It is that it did not. Busch v. Nester, 62 Mich. 381 Hess v. Griggs, 43 Mich. 397; Hemmingway v. Drew, 47 Mich. 554; Boardman v. Boozewinkel, 121 Mich. 323.

We have repeatedly held that while a tenant cannot dispute his landlord’s title as of the date of his lease, he-may show that it has been subsequently extinguished. See cases cited in opinion of Mr. Justice Moore in the-case of Sherman v. Spalding, 126 Mich. 563, 564; Jenkinson v. Winans, 109 Mich. 526.

It is suggested that, as the city had bid in the land for previous years, it was not authorized to tax it for 1895. If there would otherwise be any force in this contention— which we do not decide—it is lost by the fact that Spalding obtained a lease or leases covering all of these years, which leases all bear the same date.

The judgment is reversed, and a new trial ordered.

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


source: Caselaw Access Project

author: Per Curiam.

license: Public Domain

text:
    ORSLAND v. WAYNE CIRCUIT JUDGE.
    Judgment—Refusal to Enter—Mandamus.
    Where relator, though entitled to a judgment which would determine the particular suit, was not entitled on the record to a judgment finally determining the matters in controversy, which was the judgment denied, mandamus will not be granted to compel the entry of a judgment determining the suit, not shown to have been applied for.
    Mandamus by Hallock Orsland to compel Joseph W. Donovan, circuit judge of Wayne county, to enter a final judgment.,
    Submitted November 15, 1904.
    (Calendar No. 20,790.)
    Writ denied December 7, 1904.

      Lord<& O'Connor, for relator.

      Bowen, Douglas, Whiting & Murfin, for respondent.
   Per Curiam.

Relator obtained judgment by default in the Wayne circuit court upon suit commenced by filing declaration against one Sarah A. Harris. Upon motion of attorneys of said Harris, respondent set aside the default and judgment and the alleged service upon the ground that ‘ ‘ no service of process was ever had, and no proof of service of process ever filed.” Respondent subsequently refused to permit relator to amend his return of service, and still later denied relator’s motion to enter final judgment. We are asked to issue a mandamus compelling respondent to enter such judgment.

Relator was not entitled, on this record, to a judgment which finally determined the matters in controversy. He was entitled, however, to a judgment which determined the particular suit. And this may properly be called a final judgment. See In the Matter of Hicks, 20 Mich. 129; 2 Burrill’s Prac. 132. We do not think, however, that relator made it clear to respondent that this was the kind of final judgment he desired. It appears from respondent’s return that he denied relator’s application because, as the record stood, he was not entitled to a judgment on the merits, and we infer that he supposed that relator asked for such a judgment. Under these circumstances, it would not be proper to compel respondent, by a writ of mandamus, to enter judgment in the form in which relator is entitled to have it. When relator makes his wishes clearly known, it is not to be presumed that his right will be denied by respondent.

The mandamus applied for is denied, but no costs will be awarded.


author: Moore, C. J.

text:
    CARR v. CARR.
    1. Mortgages—Foreclosure—Limitations—Review.
    Where, in a suit to restrain the foreclosure of a mortgage, defendant answered by cross-bill for foreclosure, and the court found that limitations pleaded had not run against the mortgage, but granted a decree for only a small part of the alleged debt, from which complainant did not appeal, the decision of the issue of limitations is not reviewable on the defendant’s appeal, but is not so conclusive as to require a decree for defendant for the full amount of the debt.

      3. Witnesses—Competency—1Transactions with Deceased.
    In a suit by the heirs of a mortgagor to restrain the foreclosure of the mortgage, defendant’s testimony that he had received a payment within 15 years in a letter from the mortgagor, which he claimed had been destroyed, was inadmissible, since it related to a matter which, if true, was equally within the knowledge of the deceased mortgagor.
    3. Same—Handwriting—Knowledge op Witness.
    Where the wife of a mortgagee had never seen the mortgagor, and had never seen him write, she was not competent to testify that she saw and read a letter from such mortgagor to her husband, containing a draft for a payment on the mortgage.
    4. Limitations—Acknowledgment op Debt.
    A letter from a mortgagor accepting the mortgagee’s proposition to settle on the basis of payment of a part of the debt secured by the mortgage is not such a recognition of the entire debt as to prevent the running of limitations against the same.
    Appeal from Calhoun; Hopkins, J.
    Submitted November 15, 1904.
    (Docket No. 103.)
    Decided December 7, 1904.
    Bill by Mary E. Carr and others against Hugh Carr to restrain the foreclosure of a mortgage. Defendant filed an answer in the nature of a cross-bill asking for the foreclosure of said mortgage. From a decree for defendant for less than the amount claimed, he appeals.
    Affirmed.

      F. A. Culp and Hatch & Anderson, for complainants.

      Powers & Powers, for defendant.
   Moore, C. J.

December 20, 1873, James Carr made a mortgage to his brother, Hugh Carr, the defendant, for the sum of $1,400, due seven years from date, with interest at 10 per cent, per annum. April 15, 1902, James Carr died intestate, leaving the complainants, Mary E. - Carr, his widow, William Carr, his son, and Eva Elwell, a daughter, as his only heirs surviving. November 20, 1902, defendant commenced foreclosure of the mortgage by newspaper advertisement. January 24, 1903, complainants filed this bill, obtained an injunction restraining the foreclosure proceedings at law, alleging the mortgage was barred by the statute of limitations, and praying that it be declared void and be discharged of record.

Defendant answered, denying the mortgage was barred by the statute of limitations, and by way of answer in the nature of a cross-bill asked that the mortgage be foreclosed in accordance with the usual practice of foreclosing mortgages in chancery.

The case was heard upon pleadings and proofs in open court. A decree was made dismissing the complainants’ bill, and granting a foreclosure on defendant’s cross-bill for the sum of $550, with interest at 10 per cent, from November 29, 1901, with costs in favor of the defendant. The defendant claims there is due upon the mortgage $5,694, and has brought the case to this court by appeal. The complainants have not appealed.

The record shows that about 1876 Hugh Carr returned to Ireland, and has never been back to this country. It was the claim of complainants that a day or two prior to his leaving James Carr paid to him $500 or $700 to apply on the mortgage; that October 19, 1881, he sent him $100 for the same purpose; and that he never afterwards made any payment, and that the statute of limitations had run against the mortgage. It is the claim of defendant that only one payment has ever been made to him, and that was of $100, made about 14 years before the deposition of Hugh Carr was taken to be used upon the trial. In his disposal of the case the trial judge said he did not think the statute of limitations had run against the mortgage, and in his opinion said, among other statements:

“The testimony as to the number and amount of the payments made upon the mortgage are conflicting, and, excepting as to one payment of $100, made in 1881, unsatisfactory. It appears from the evidence that the defendant went to Ireland in 1876, and has never returned to this country. It is also shown that he made numerous xequests by letter from time to time for payment on the xnortgage debt, some of these requests being urgent and threatening. At last, on September, 1901, he made what he designates his final offer to accept $550 in full payment of the debt, at the same time stating that this amount is less than a third of what is his due, and threatening, if this amount is not paid, he will proceed to have the mortgage foreclosed without further delay. James Carr, under date of November 29, 1901, replies to this letter, saying that he accepts the offer, and asks to have the mortgage, with a proper discharge, sent to some one in this •country representing the defendant, with whom the business can be transacted. This arrangement was not carxied out, though James Carr, before his death, which occurred April 15, 1902, wrote other letters urging the defendant to send on the mortgage, and agreeing to pay the •amount specified in defendant’s letter of Nov. 29, 1901.”

He thought it proper this agreement should be enforced, ¡and made the decree as before stated.

Section 9725, 3 Comp. Laws, reads:

“No suit or proceeding shall be maintained to foreclose a mortgage on real estate, either at law or in equity, unless commenced within fifteen years from and after such mortgage shall become due and payable, or within fifteen years after the last payment was made on said mortgage: Provided, however, that this act shall not be construed to apply to mortgages which have been due fifteen years ' or more, or the last payment upon which was made fifteen years or more prior to the passage of this act, but in all ¡such cases no suit or proceedings shall be maintained to foreclose the same unless commenced within five years after this act shall take effect.”

The defendant insists that, as the trial judge found the ¡statute of limitations had not run against the mortgage, ¡and as complainants have not appealed, that question cannot now be considered by this court. This position undoubtedly states the general rule, but defendant is seeking •affirmative relief by an answer in the nature of a cross-bill. He is not content with the relief granted to him in the •court below. He says, instead of having a decree for something more than $500, he should have one for more than $5,000. He claims this amount by virtue of a mortgage, which, upon its face, was due nearly 22 years before he began foreclosure proceedings, which mortgage he could not, by reason of' the statute, foreclose at that date, unless he could show a payment had been made thereon within 15 years of the commencement of the foreclosure. He undertakes to make this showing by testimony. This showing is disputed by complainants, and is. an important element in the case. We agree with the trial judge that the testimony as to the number and amount of' the payments is conflicting, but we think the claim of complainants in that regard is supported by a very dear-preponderance of the testimony. The testimony all discloses that James Carr was an unfortunate victim of the drink habit, and that he wasted the proceeds of his farm. A receipt is introduced in evidence from the bank showing-that October 19, 1881, James Carr, with $100, bought a draft in favor of Hugh Carr for £20 8s. drawn on the Munsted Bank, Dublin. Mrs. Carr swears she saw her husband with the money, previous to going to Battle Creek for the draft, which was to be inclosed in a letter addressed to the defendant, which letter she saw; and that after-wards her husband received a receipt from his brother for the money, and a letter, both of which she saw and read, but neither of which she was able to find after his death. Hugh Carr, in his deposition, testified he received $100’ from James Carr, but that it was about 14 years before his deposition was taken, and that he never received any other sum from him\to apply on the mortgage. We shall have more to say about this testimony later.

On the 23d of January (blank year) Hugh Carr wrote his brother:

“i think that you might be ashamed all this time and not paid any if you done any thing you might a had every cent of it payed.now twelve or thirteen years and never tried to pay any thing, their must be something the matter you dont care one straw how i get on now look at the interest and all you surely could have paid the interest every year, but i think you want to pay nothing and if you do not pay some and send me some before May i will go down to the Queens Counceler to Belfast and give it to him, and if you have any wit for yourself and for me you will save the trouble and expense, i will be humbugged no longer, if you had done any thing, but you would do nothing there is nothing fare about you.”

On January 28, 1892, he wrote him:

“James you spoke of money matters and I think that it was near time in 15 years that you could do nothing you might had every farthing paid and could if there had not been something wrong you did not care how i got along if you were all right, sometime i thought of going to Belfast and giving it into the hand of the Queens Counceler, and other times i thought of going over to you but you spoak as you were going to give me some, if you send me the 16 hundred and send me fifty pounds a year i will forgive you all the interest and when you count that up that is a good deal.”

In our opinion, these letters are utterly inconsistent with the idea that a payment had been made about the year 1889 as testified to by Hugh Carr. Hugh Carr’s testimony is supported by the testimony of his wife to the effect that she saw the draft, and read the letter in which it came. The time when this occurred is not stated by defendant, but is said to have been about 14 years before their depositions were taken. Both these witnesses also testified that James had frequently acknowledged the debt in letters which he sent. None of these- letters were produced, and it was claimed they were destroyed. The testimony of Hugh Carr was incompetent under the statute. It related to matters which, if true, must have been equally within the knowledge of his dead brother. His wife never saw James Carr, and never saw him write. She did not possess the requisite knowledge to enable her to testify to his handwriting. Taking the record as we find it, we think it clear the last payment on this mortgage was made in 1881.

It is said, however, that the letters written by James Carr are sufficient to take the mortgage out of the operation of the statute; citing Rumsey v. Settle’s Estate, 120 Mich. 372. The only letters written by James Carr which are introduced in evidence which refer to the mortgage are in reply to correspondence which began in September, 1901, in which Hugh wrote:

“ Now James i give this last chance if you send me one hundred pounds and gives John Mcomb ten pounds i forgive you all the rest, that is not one third you owe and if not i will fight to the end.”

In the following November James wrote:

“wel hugh you made me a proposal to settle up with you and i have made maind for to myself except if you send the mortgage hear as soon as you have a mind to and have it already for discharge and you will have your money and that will end it up send it to John Kerr or any lawyer or any one you have a choice and i will try and settle up with you and John Mcomb at once and do it as quick as you can for i want it done with as i dont nowe How soon something may happen so do it right off.”

Then followed other correspondence relating to a settlement upon the basis of £100, which correspondence was terminated by the death of James. Even if the promise to pay in writing would take the case out of the statute, it will be noted there was no such recognition of the entire amount claimed and a promise to pay it as would prevent the running of the statute.

As the complainants have not seen best to appeal from the amount of the decree, it will be affirmed, with costs of this court in favor of complainants.

The other Justices concurred.


author: Hooker, J.

text:
    AMERICAN STEEL & WIRE CO. v. EDDY.
    1. Corporations — Stockholders — Liability to Creditors — Action to Enforce.
    2 Comp. Laws, § 7057, creating a liability on the part of stockholders of a corporation from which the capital stock has been withdrawn, authorizes suit by a creditor of the corporation against a holder of preferred stock.
    2. Same — Impairment of Assets — Paying Dividends — Good Faith.
    Under such statute the good faith of the corporation and its stockholders in paying and receiving dividends which in fact impair its capital stock is immaterial.
    :3. Same—Issue of Impairment—Evidence.
    On the issue of whether the capital stock was in fact impaired by the payment of dividends, the fact that the corporation held a guaranty that certain assets purchased by it should net a certain amount on a date subsequent to the payment of the dividends is not controlling, but the guaranty is merely a fact to be considered with other facts, such as the solvency of the guarantors, etc., in determining whether the capital was impaired.
    4. Same—Ownership of Stock—Using Funds of Another.
    One who subscribed to and accepted preferred stock, acted as a director, and participated in the management of the affairs of the company and the declaration of dividends, and to whom the dividend complained of as an impairment of the corporation’s assets was paid, must be deemed a stockholder, although he used the money of his sister in payment for the stock, and merely loaned it to the company; receiving the dividend as interest for his sister, and paying it to her.
    Error to Bay; Shepard, J.
    Submitted November 15, 1904.
    (Docket No. 83.)
    Decided December 7, 1904.
    Petition by the American Steel & Wire Company, a judgment creditor of the Miller Hardware Company, against Selwyn Eddy, to enforce stockholder’s liability. There was judgment for defendant, and plaintiff brings error.
    Reversed.

      George E. & M. A. Nichols (Charles W. Nichols, of counsel), for appellant.

      T. A. E. & J. C. Weadock, for appellee.
   Hooker, J.

The Miller Hardware Company, a corporation, began business in Bay City on February 17, 1894; being organized by the stockholders of a corporation, theretofore existing, named W. H. Miller & Co., for the purpose of succeeding to the business of the latter. Its authorized capital was $70,000. On the day of its organization its stockholders’ meeting adopted á resolution to purchase all of the assets and good will of W. H. Miller & Co., and to assume all of its liabilities, upon its guaranty that said assets should net to it (the Miller Hardware Company) at least $70,000 over and above the debts and liabilities—all of the accounts and bills receivable not collected on or before February 1, 1897, to be deemed uncollectible and valueless—and that the common stock of the new company should be issued to the stockholders of W. H. Miller & Co. in exchange for the stock certificates of that company, share for share. This was done.

On March 14, 1894, a by-law was adopted providing for the issue of $30,000 of preferred stock, and on April 2, 1894, a certificate for 125 shares was issued to Selwyn Eddy, in terms following, viz.:

“Incorporated under the laws of the State of Michigan, Act No. 232, Public Acts of 1885, as amended.

“ No. 13.

125 Shares.

“ The Miller Hardware Company, Bay City, Mich.'

“ Preferred Stock bearing fixed dividends.

“This certifies that Selwyn Eddy, of Bay City, Mich., is the owner of one hundred and twenty-five shares of ten dollars each, of the preferred stock of the Miller Hardware Company, fully paid and non-assessable. Transferable on the books of the company in person or by attorney on surrender of certificate.

“Fixed dividends will be paid on this stock at the rate «of 8 per cent, per annum, payable semi-annually on the first day of April and October of each year, at the office of the Company. This stock is redeemable at the expiration of three years from the date hereof.

“ In witness whereof the president and secretary have hereunto affixed their signatures and the corporate seal of the company, at Bay City aforesaid, on this second day of April, A. D. 1894.

“W. H. Miller,

‘ ‘ President.

“Edward Williamson,

“Secretary.”

Fifteen thousand dollars of such stock was issued to 'Selwyn Eddy, and a similar amount to John F. Eddy. A written guaranty to make the assets net to the Miller Hardware Company #70,000, in accordance with the resolution, was given by W. H. Miller & Co., upon which was indorsed the following, signed by the stockholders:

“In consideration of the foregoing the undersigned ¡severally covenant and agree to and with said Miller Hardware Company to pay to and make up to it any deficiency or shortage of the sum of $70,000 in the amount •realized by said Miller Hardware Company as aforesaid, in proportion to our respective holdings or interests in the ■stock of W. H. Miller & Company as set opposite our ■respective signatures.”

The excess of assets over liabilities so transferred by W. H; Miller & Co., listing all accounts and bills receivable ■at face value, was $73,565.29; giving to the Miller Hardware Company, on the face of the inventory, $3,565.29 ■surplus over its capital stock of $70,000. This sum was «charged in its books to W. H. Miller & Co., and carried as an asset during the period that the Miller Hardware Company did business, and it opened a surplus account of $7,000 upon its books. It is claimed that this was $3,434.71 in excess of the actual surplus, based on face ■values.

The Miller Hardware Company continued its business ¡until June 1, 1897, when it made a voluntary assignment for the benefit of its creditors. During the time it did business it paid annual dividends to its stockholders, of which defendant Selwyn Eddy received the sum of $3,600. It is said that this was 8 per cent, interest upon its stock, according to its terms. At the time of the assignment the plaintiff was a creditor of the Miller Hardware Company, and it ultimately realized from the assignee 55 per cent, of its claim. It afterwards obtained a judgment against the Miller Hardware Company for the remaining 45 per cent., and subsequently brought this action against Selwyn Eddy under the statute (2 Comp. Laws, § 7057)' which provides:

“ Sec. 21. If the capital stock of any such corporation shall be withdrawn and refunded to the stockholders before the payment of all the debts of the corporation for which such stock would have been liable, the stockholders of such corporation shall be jointly and severally liable to any creditor of such corporation, in an action founded on this statute, to the amount of the sum refunded to him or them respectively.”

It has appealed from an adverse verdict and judgment..

Although there are many assignments of error, the-questions discussed are thus stated by counsel for the appellee:

“ The questions involved in this case relate principally to the refusal of the court to give certain of plaintiff’s requests to charge, and the charge of the court, and to the admission of certain testimony. We think they may be summarized as follows:

11 First. Should the court have directed a verdict for any amount against the defendant ?

Second. Was it error to admit the testimony of the witness Pratt and the defendant Eddy as to their good faith and belief as to the condition of the company, and the charge of the court in that connection ?

Third. Was it not the duty of the court to charge the jury that they should not, in determining the question as to whether there were any profits out of which dividends could be paid at the different periods, take into consideration any account which had rested for an unreasonable^ length of time, or which had outlawed, or where the debtor had failed or become bankrupt, or where it was in suspense, etc.?

Fourth. Was the error of the court in admitting the testimony offered on the part of the defense in relation to defendant’s stock being taken as a loan, and that the dividends were paid to his sister, cured by the charge ?

Fifth. Were the remarks of the court in reference to certain testimony of witness Pratt reversible error ?”

This cause was before us on a former occasion, when we held that the statute cited authorizes a suit against a stockholder by a creditor, and that a holder of preferred stock has no.more right to receive a portion of the capital stock, to the injury of creditors, than a holder of common stock. American Steel & Wire Co. v. Eddy, 130 Mich. 266.

Counsel for the plaintiff assert that, while the secretary’s annual statements of the financial condition show a net profit larger than the amount distributed, this was only made possible by retaining among the listed assets large amounts of worthless bills receivable and accounts which it was the duty of the company to charge off, and which were already lost, and therefore were not in fact available as assets.

Upon the other hand, counsel for the defendant insist that these items were included in the best of faith, especially as the guaranty did not become a liability until 1897, according to its terms, and that such dividends or interest, having been paid in good faith, cannot be called a withdrawal or refunding of the capital stock.

Counsel for the defendant were permitted to introduce testimony tending to show that the Eddys were asked to furnish this money as a loan, and that it was so furnished by them from the funds of their sister, who was the real owner of the stock or security, though kept in her brothers’ names for convenience, and that she received the interest and dividends that were paid. Error is alleged upon the reception of this testimony. In his charge the court instructed the jury that this proof would not constitute a defense, and it is urged that this cured the error of its admission, if it was erroneously received.

Upon the former hearing we held that those who deal with a corporation may rely on the preservation of the capital stock, and denied its right to divide it among the stockholders, as dividends, to the injury of creditors. We also indicated that this could not be done through a subterfuge, and that the statute (2 Comp. Laws, § 7057) applied to holders of preferred stock.

It does not become a question of good faith, either of the corporation or stockholder. Whenever it is satisfactorily proved that the assets of a corporation are so reduced as to impair the capital, the creditors have a right to follow them into the hands of the stockholders to whom they have been paid as dividends, and who must be held to hold such assets as a trust fund for the benefit of creditors. This is clearly indicated by our former opinion. It was therefore error for the court to instruct the jury that it was a question of good faith on the part of the stockholders. See former opinion, 130 Mich. 266, and other cases cited by counsel: 1 Cook on Stock, Stockh., and Corp. Law, § 548; Ft. Payne Bank v. Alabama Sanitarium, 103 Ala. 358, 370; 2 Clark & M. Priv. Corp. 1637; Lexington Life, etc., Ins. Co. v. Page, 17 B. Mon. (56 Ky.) 412, 416; Grant v. Ross, 100 Ky. 44; Finn v. Brown, 142 U. S. 56; Main v. Mills, 6 Bin. 98; Flitcroft’s Case, L. R. 21 Ch. Div. 519; In re Oxford Building and Investment Society, L. R. 35 Ch. Div. 502; Feed’s Estate, Building and Investment Co. v. Shepherd, L. R. 36 Ch. Div. 787; Gratz v. Redd, 4 B. Mon. (43 Ky.) 178; Davenport v. Lines, 72 Conn. 118; Osgood v. Laytin, *42 N. Y. (3 Keyes) 521.

It is urged that the capital stock was not impaired when these dividends were paid, because the corporation had a guaranty from the original company and its stockholders that these assets should net $70,000 in 1897. This guaranty was a part of these assets. But like all other assets, it may have been good or worthless. The question of the impairment of the capital through the worthlessness of assets is not complicated by the guaranty, except that it furnished an additional asset to be considered. Certainly the fact that it postponed the day of the guarantor’s liability could not justify the assumption that the original assets were good until that time should come, by reason of a real or imaginary duty of the company to the guarantors to carry them on the books and try to collect them. This is not a question of bookkeeping, merely, but of capital and assets, and actual values, and actual responsibility of guarantors. If, as contended, all were worthless and irresponsible, this capital was impaired, and should not have been paid out as dividends. These were questions of fact for the jury, and were submitted to them.

There remains the question of the evidence as to the ownership of the stocks, and the claim that the money paid for the preferred stock belonged to Eddy’s sister. This testimony was admitted, and afterwards ruled out by the charge. Counsel for defendant maintain that this cured the error, if there was one. The substance of this claim is that although Eddy subscribed to and accepted preferred stock, and became and acted as a director, and participated as such in the management of the affairs of the company and the declaration of dividends, in reality he used the money of his sister, loaning it to the company, and received the dividend as interest for her, to whom he paid it. The authorities hold that one who loaned money, but took stock absolute upoh its face, is liable as a stockholder. Counsel cite Griswold v. Seligman, 72 Mo. 110; Baines v. Babcock, 95 Cal. 581; McDowall v. Sheehan, 129 N. Y. 200.

The question before us differs from those considered in the above cases in this, viz.: Here the capital stock is said to have been paid out by way of dividends to a stockholder, and this is a proceeding to compel him to repay it. In those cases it was a question of his liability as a stockholder. We have no doubt that the money paid must be considered as a purchase of stock, and not a loan; that Eddy, and not his sister, is the stockholder; and that he received the dividends. If they were in fact paid to her, it may be that the fund could be followed into her possession, and she compelled to refund, but that has not been attempted. The stockholder has received it as a stockholder, and the creditors may look to him for it, whether he paid it to another or not.

The judgment is reversed, and a new trial ordered.

The other Justices concurred.


text:
    COTTRELL v. MORAN.
    Summary Proceedings—Defenses—Equitable Title.
    In summary proceedings defendant cannot set up his equitable title and have a deed executed by him declared a mortgage, that being a matter within the exclusive jurisdiction of equity.
    Error to Macomb; Tappan, ,J., presiding.
    Submitted November 16, 1904.
    (Docket No. 93.)
    Decided December 7, 1904.
    Summary proceedings by William Cottrell against Gilbert J. Moran for the possession of certain real estate. There was judgment for plaintiff on a verdict directed by the court, and defendant brings error.
    Affirmed.

      J. A. Weeks (Edgar Weeks, of counsel), for appellant.

      Martin Crocker, for appellee.
   Hooker, J.

The defendant in a summary proceedings case has appealed from a verdict and judgment of restitution. The circuit judge directed a verdict for the complainant. To comprehend the case, allusion should be made to the state of the title.

The defendant, Gilbert J. Moran, was owner of the premises (a farm) on November 19, 1884, and on that day he gave a note and mortgage to the complainant for $3,500, due in two years, with interest at 7£ per cent. April 8, 1889, Moran executed and delivered to complainant a warranty deed, the consideration of which was $4,363.84, being the amount due at that date upon the note and mortgage. April 8, 1889, a land contract was executed, which counsel concede was a defeasance, and made this transaction a mortgage, and it has been so treated. January 20, 1896, defendant gave to complainant a warranty deed of thepremises, the consideration being $4,920.78, amount then due on the original debt. The same day, as a part of the same transaction, complainant gave and defendant accepted a lease of the premises for one year at a rental of $200 for the term. He also executed and defendant accepted a writing, which reads as follows:

“ Having this day leased to Gilbert Moran for the term of one year, the farm described as follows: The east half of the southwest quarter of section 19, in township 3 north, of range 14 east, Macomb county, Michigan, containing 78 acres of land. I gave Mr. Moran the privilege of purchasing said farm during the term of his lease for the sum of four thousand nine hundred twenty-one dollars, providing the terms of lease are lived up to rigidly, excepting said Cottrell has an opportunity to sell said farm in which case Mr. Moran has an option of 30 days to purchase at price offered; and if he does not elect to purchase then he is to surrender farm receiving reasonable compensation for his crops, in 30 days from notice and in case Mr. Moran sells said farm he is to have for his commission all he sells farm for over and above $4,921, provided he keeps the agreements in his lease.

“Dated Mt. Clemens, Mich., Jan. 15th, 1896.

“William Cottrell.”

Counsel contend that this transaction did not pass the title, but was a mortgage of the premises. On February 20, 1902, the parties entered into a new lease for one year at a rental of $150 per year. Defendant has occupied the premises continuously from 1884 to the time this proceeding was begun.

Two points are involved in the case: (1) Was jurisdiction ousted by the alleged question of title ? (2) If not, should the case have been submitted to the jury ,?

The deed of 1896 conveyed the legal title to the complainant, if it was not vested in him by the earlier one. Defendant’s title was at most an equitable one, to have the deed declared a mortgage; and this claim of title was enforceable (if at all) through equitable proceedings, which good conscience requires should have been a bill to redeem, seasonably filed; and it is, perhaps, more than doubtful if equity would grant such relief upon any other kind of a bill, or in the absence of laches.

In this proceeding it was not competent to set up the equitable title, which a court of law could not vindicate. We have often held that equitable titles cannot be considered as against legal ones in courts of law. See Harrett v. Kinney, 44 Mich. 457; Geiges v. Greiner, 68 Mich. 156; Gates v. Sutherland, 76 Mich. 233; Shaw v. Hill, 83 Mich. 327; Michigan Land & Iron Co. v. Thoney, 89 Mich. 232; Paldi v. Paldi, 95 Mich. 411; Moran v. Moran, 106 Mich. 12; Gage v. Sanborn, 106 Mich. 279; Rausch v. Briefer, ante, 284.

In Gage v. Sanborn, supra, it is said:

“These cases do not attack the regularity of the proceedings themselves, but raise a question dependent upon extrinsic facts, constituting a legal defense in a proper tribunal, viz., an adverse claim of a title paramount to the levy. At least, this seems to have been the view taken in Riggs v. Sterling, 51 Mich. 158, and this' distinction is intensified by the dissenting opinion of Mr. Justice Cooley in that case.”

As this is conclusive of defendant’s claim, further discussion is unnecessary.

Judgment affirmed.

The other Justices concurred.


author: Grant, J.

text:
    RUMSEY v. GRIFFIN.

    1. Taxation—Tax Sales—Including Drain Tax.
    The auditor general has authority to include delinquent drain taxes in his petition for sale of land for nonpayment of taxes.
    2. Same—Advertisement—Errors—Power to Gorreot.
    The auditor general has power to set aside a sale of land for taxes because of a defect in publication of the notice thereof, and to resell the land.
    3. Same—Setting Aside Deed—Grounds.
    After confirmation of a sale of land for taxes, the sale and deeds issued thereunder can be set aside only on the grounds that the taxes were paid, that the land was exempt from taxation, or for want of jurisdiction to enter the decree.
    Appeal from Gratiot; Stone, J.
    Submitted November 16, 1904.
    (Docket No. 86.)
    Decided December 7, 1904.
    Petition by Chauncey J. Rumsey against Albert A. Griffin and Perry P. Powers, auditor general, for leave to file a bill of review. Prom a decree dismissing the petition, petitioner appeals.
    Affirmed.
    Petitioner’s land was sold at the annual tax sale in 1902, purchased by the State, and by the State sold to defendant Griffin. Petitioner filed his petition in the circuit court asking leave to file a bill of review. It is claimed that the sale is void on account of a void drain tax assessed by the drain commissioner in the year 1882. Both the auditor general and defendant Griffin filed answers. A prior sale to the State was set aside by the auditor general for the reason, as appears by the answer, that the decree was prematurely entered. Various irregularities are alleged against this drain tax and the proceedings thereunder. So far as the facts therein set forth are material, they are either denied by the answers or are not' admitted, leaving the petitioner to proofs. No proofs, were taken. The case was heard upon the petition and' answers, and the petition dismissed.

      Nichol & Locke, for petitioner.

      Albert McClatchey, for defendant Griffin.

       Rebearing denied January 30, 1905.

   Grant, J.

(after stating the facts). Counsel, in his printed brief, raises two objections to the validity of the tax deed: (1) That the auditor general is not authorized by law to include in his petition delinquent drain taxes; (2) that the auditor general had no power to set aside the first sale on account of a defect in the publication, and to resell the land.

The first objection is settled against the contention of the petitioner by Blondin v. Griffin, 133 Mich. 647 Hilton v. Dumphey, 113 Mich. 341. The second question is ruled against him by Schulte v. Auditor General, 131 Mich. 677; Bump v. Jepson, 106 Mich. 644.

We have repeatedly held that, after confirmation of the decree, tax sales and deeds issued thereunder can be set aside for only three reasons, two of which are specified in the statute—that the taxes were paid, or the land was exempt from taxation. The third is lack of jurisdiction to enter the decree. Burns v. Ford, 124 Mich. 274; Berkey v. Burchard, 119 Mich. 101; Spaulding v. O'Connor, 119 Mich. 45.

There is no claim that the taxes were paid, or that the land was exempt. The court had jurisdiction to determine all the questions raised. It did determine them, entered decree, the lands have been sold, and the title of the State has passed to a third person. It follows that leave to file a bill of review was properly refused.

Decree affirmed, with costs.

The other Justices concurred.


author: Montgomery, J.

text:
    RUMSEY v. GRIFFIN.
    Tax Sales—Validity.
    This case, involving the sale of land for certain delinquent drain taxes, is controlled by the preceding case, Rumsey v. Griffin, ante, 413.
    Appeal from Gratiot; Stone, J.
    Submitted November 16, 1904.
    (Docket No. 85.)
    Decided December 7, 1904.
    Petition by Chauncey J. Rumsey against Albert A. Griffin and Perry P. Powers, auditor general, for leaye to file a bill of review. Prom a decree dismissing the peti"tion, petitioner appeals.
    Affirmed.

      Nichol & Locke, for petitioner.

      Albert McClatchey, for defendant Griffin.
   Montgomery, J.

The same questions are raised in this case that are raised and determined in the case of Rumsey v. Griffin, ante, 413, in which an opinion is handed ■down herewith. This case involves the same drain, and the same contentions are made against the validity of the proceedings. It is ruled by that case, and the decree is .affirmed, with costs.

The other Justices concurred.


text:
    NOLLER v. WRIGHT.
    1. Corporations—Validity op Stock—Stockholders’ Meetings. —Right to Attend—Trespass—Ejection.
    In an action for trespass for ejecting plaintiff from a stockholders’ meeting, where there was evidence that the stock under which plaintiff claimed rights was issued to him in compliance with an order of the circuit court, proof of an attempt at cancellation by the company was immaterial until something had been shown militating against the validity of the stock.
    3. Same—Notice to Attend—Admissibility.
    The secretary of the corporation having testified that-in issuing notices of the meeting to stockholders he was governed by the records as they appeared on the books, the notice to plaintiff to attend the meeting was admissible.
    3. Same—Examination op Witness—Discretion of Court.
    The exclusion of a question put to plaintiff, whether he had not had considerable litigation with the company was discretionary with the trial court.
    4. Same—Value op Stock—Evidence.
    Evidence tending to show the value of the stock was properly rejected, its value being immaterial.
    5. Expert Evidence—Opinions—Improper Question—Cure by Answer.
    A question to a medical witness held improper as invading the province of the jury, but cured by the answer.
    6. Corporations —Stockholders’ Meetings —Right to Attend —Transfer op Stock.
    Officers of a corporation cannot justify a trespass in ejecting a stockholder from a meeting on the ground that the stock had not been properly transferred to him on the books of the company, where he had done everything required of him to procure the transfer, and he had been adjudicated the owner of the stock.

      1. Same—Proxies.
    Where plaintiff was not denied the right to attend a stockholders’ meeting on the ground that his proxies were irregular, it was no defense to an action for assault in ejecting him therefrom that defendants had no information as to the validity of his proxies.
    Error to Wayne; Frazer, J.
    Submitted November 17, 1904.
    (Docket No. 100.)
    Decided December 7, 1904.
    Trespass vi et armis by John W. Noller against William Wright and George Wright. There was judgment for plaintiff, and defendants bring error.
    Affirmed.

      H. H. Markham, (Edward S. Grece, of counsel), for appellants.

      J. Emmet Sullivan, for appellee.
   Hooker, J.

The defendants have appealed from a judgment of $175 rendered against them by the circuit court for the county of Wayne in an action of trespass vi et armis.

The bill of exceptions shows that a corporation called the Peninsular Tool Manufacturing Company held its annual meeting upon its premises, and that the alleged trespass occurred upon that occasion. The defendants were officers of that company, and the plaintiff came to the place claiming to be a stockholder entitled to be present at, and take part in, the meeting. The defendants denied such right, and upon his refusal to depart forcibly ejected him, using no more force than was necessary to overcome his resistance.

The defendants claimed the right to show that the certificate of stock introduced in evidence by the plaintiff had been canceled by the company, and to that end offered the minutes containing a resolution which they relied upon as effecting such cancellation. The court refused to admit this evidence upon the ground that the stock certificate showed upon its face that it was issued by order of the court to one Patterson, who afterwards assigned it to the plaintiff.

The plaintiff testified that he purchased 74 shares of stock from Patterson for $175, for himself, his brother, and Mr. Culverwell, plaintiff’s share being 30 shares, and that he received and presented to defendants proxies from them, and the certificates of stock which were issued to them by the officers of the company. He also offered in evidence a notice of the meeting which Patterson had received from the secretary of the company. Mr. Patterson testified that he received the certificate of stock in April, 1902; that while he held the stock he attended meetings, and was recognized by the defendants as a stockholder, and was never informed that the stock had been canceled. He obtained the stock at constable’s sale on a justice’s judgment.

An offer was made by defendants’ counsel to show the minutes of a meeting of the directors of the company held January 15, 1901, at which the stock of George Rake-straw (presumably this should be Norman Roadhouse) and others "was ordered canceled. This evidence was excluded upon the ground that the certificate issued to Patterson showed on' its face that it was issued in obedience to a mandate of the circuit court for the county of Wayne dated April 4,1902, proof of which order was made. The court thereupon stated that the counsel could not go back of that action, and that plaintiff was not a trespasser by entering the room.

Counsel proposed to show that the execution sale was invalid, and the court held (1) that it was a collateral issue, and a point that these defendants could not set up in defense; and (2) that the question was concluded by the proceedings in the circuit court.

The statement of the case made in defendants’ brief is, in short, that the plaintiff is principal owner and officer of a rival company, which had its place of business near the defendants’ plant; that when defendants’ company was organized one Roadhouse assigned patterns of an auger, agreeing in consideration of 340 shares to procure a patent, and assign it to defendants’ company. He failed to obtain the patent, and the auger being, therefore, of no value, the company canceled the stock in January, 1901. Patterson bid in some of the Roadhouse stock after .such cancellation, and Noller obtained it from him. It is said that the stock had not been transferred on the books of the company. The record fails to support a number of these statements, and there is sufficient in it to indicate that this stock was issued to plaintiff in compliance with an order of the circuit court for the county of Wayne. We discover nothing in the record to militate against its validity, and until there was such evidence proof of a previous attempt at cancellation by the company was immaterial.

Of the assignments of error we may say that the notice to Patterson to attend this meeting was admissible, as it tended to show a recognition of his ownership of this stock. The secretary also testified on cross-examination that in issuing this notice he was governed by the records as they appeared on the books.

The exclusion of the question to the plaintiff, “You had considerable litigation with the company prior to this?” should not reverse the case. The question raised a collateral issue, and, while the court might have permitted it, we will not review the exercise of his discretion.

The plaintiff was asked to state a conversation with defendants’ counsel shortly before he purchased the stock, and this was excluded. Counsel claim that they should have been permitted to show by him that the stock was worthless. We do not see that want of value in the stock affected plaintiff’s rights to attend this meeting. Its validity could not, upon this record, depend upon this conversation, in view of the compulsory issue of the stock after the adjudication of Patterson’s right to it.

A medical witness was asked:

“If Mr. Noller is now suffering pain or weakness in the ankle, some pain in the back, what would you say was the cause of these, which he did not have before this injury?”

He answered:

“Injury to the ankle of that kind would cause not only pain, but weakness there for some time, and it was not impossible that the pain he suffered further than that could be referred to the injury.”

The answer cured some of the objectionable features of the question. It cannot be said to have invaded the province of the jury, though the question was open to such a criticism. We find nothing in the answer that will warrant a reversal of the case.

The admission of the execution is an unimportant matter, as it was not essential to the plaintiff’s case.

It is said that the remaining assignments of error “depend on two things:” First, was he [Noller] in such a position, as a stockholder, if such at all, as to entitle him to the right to attend the meeting; and, second, if not, had he the right by authority of any proxy he produced, or by any other authority ? The record conclusively shows that the plaintiff was a stockholder, and had a right to attend this meeting.

It is said that the stock was not transferred upon the books, as required by 2 Comp. Laws, § 7052. If there is evidence that it was not so transferred, it was not plaintiff’s fault. He presented his stock, and, instead of transferring it, or asking him to wait to have it transferred, or denying his right to attend upon that ground, defendants denied his having any rights as a stockholder upon the claim that the stock was canceled, notwithstanding the fact that they had been defeated upon that very question in a court of record, and had acquiesced in and performed the decree.

The second objection is predicated on the want of information as to the proxy. No such reason was given for the denial of plaintiff’s right, and there is nothing tending to show any irregularity in, or suspicion of, them when presented.

The judgment is affirmed.

The other Justices concurred.


text:
    FIRST NATIONAL BANK OF CASSOPOLIS v. CARTER.
    • 1. Pleading — Written Instrument—Execution — Denial on Oath.
    The statute (1 Comp. Laws, § 826) creating a presumption of execution of a written instrument declared upon and filed with the justice, cannot he first availed of by plaintiff in the Supreme Court in a case where the pleadings were oral and plaintiff merely declared on all the common counts in assumpsit.
    :2. Bills and Notes—Alteration—Order for School Supplies.
    Where, at the time an order for school supplies, in form a promissory note, was signed by school officers, it had attached to it .a memorandum stating that the matter might be left to a vote of the district at the annual meeting, which was taken •off before the order was transferred, there was a material •alteration which avoided the instrument.
    Error to Cass; Carr, J.
    Submitted November 18, 1904.
    (Docket No. 115.)
    Decided December 7, 1904.
    Assumpsit by the First National Bank of Cassopolis against Charles W. Carter and others for the amount of an alleged school order. There was judgment for defendants, and plaintiff brings error.
    Affirmed.

      Lyle & Eby and Marshall L. Howell, for appellant.

      Harsen D. Smith, for appellees.
   Moore, C. J.

This case was commenced in justice’s court. Plaintiff declared orally on all of the common counts in assumpsit, and alleged that the school order filed in this cause was duly transferred by the American School Supply Company to the plaintiff for a valuable consideration, before due.

The defendants’ plea was in writing. It was the general issue, with “notice .that the said school order was signed by them as officers of the school district mentioned in said order, said order to be approved by said district at its annual meeting if it so wished, or, if not, to be void; and they did not sign said order as guarantors of the same, or in any capacity other than as officers of said district.”

On the day of trial in justice’s court defendants were allowed to amend their plea as follows: That said order upon which said suit is brought is not the order signed and delivered by said defendants, inasmuch as the words, “Williamsville, Mich., Due Jan. 1, 1903,” set out in said order, were not written therein at the time of the signing and delivering by said defendants. The case was appealed to the circuit court, where it was tried by a jury. From a. verdict in favor of the defendants the case is brought here by writ of error.

Upon the trial a paper reading as follows was offered in evidence:

The cashier of the bank testified:

“I am personally acquainted with the parties who signed that instrument.

“ Q. You may state if you would have bought that instrument if it had not been for the fact that their names appeared there, as they do upon the paper as guarantors and makers of that instrument. A. We relied upon the signers for payment.”

On the cross-examination he testified :

Q. Didn’t he [Corcoran] tell you that he was around selling these' school supplies to the different school districts? A. Yes, sir.

“ Q. And taking orders on the school districts? A. Yes, sir.

Q. And made some arrangements with you that after he would get these orders in that he would sell them to the bank ? A. Yes, sir. And I agreed that I would take them upon some discount. I understood that he was selling to the districts, and taking an order, issuing an order, obtaining an order upon the district.

Q. From the officers ? A. Yes, sir. That is the way I understood it.

Q. You knew that it required the signatures of the officers of the district in order to make a valid order drawn upon the assessor, didn’t you ? A. Yes, sir.

Q. And you knew, I suppose, when you bought this order, that those names represented the names of men who were officers of the district, didn’t you, or supposed that they were officers ? A. Yes, sir.

Q. And you believed that they signed this order in the capacity of officers, didn’t you? A. Well, yes. We bought that order on the signatures as they appear. I knew that district number 6 was worth it, and could be forced to pay a valid order issued upon it to the amount of $37.50; but that was not the reason that I bought it.

Q. Didn’t you rely upon the district for your pay ? A. If the order had been signed differently, I should not have bought it.”

No other witnesses were sworn for plaintiff.

On the part of the defendants it was shown (we state the substance, not the details, of the testimony) that it was represented to the persons who signed the order, and who were school officers, that they were to incur no individual responsibility, but were to be regarded as acting for the school district; and that the articles ordered Were to be shown to the annual meeting by the agent who took the order, and, if the school electors did not favor the purchase of the articles, they were to be taken away, and no liability incurred; that the agent said the part of the paper which he would sign would protect them fully, and that the paper presented by the bank was only a part of the paper signed by defendants.

It was also testified that when Mr. Carter and Mr. Winters signed the paper it did not have the words, “ Williamsville, Mich., Due Jan. 1, 1903,” upon it, and when Mr. Allen signed it the words, “ Due Jan. 1, 1903,” were not there; that there was delivered to Mr. Carter and Mr. Winters at the time they signed a compared copy of the paper which they signed, which reads as follows:

STATE OF MICHIGAN SCHOOL AID VOUCHER.

-.Calvin.........Township, --Cass.........County, .-June 3.........1902

This Certifies, That we have received from School District No. Six their oficial voucher on the proper fund for Complete Encyclopedia of Modern School Methods; consisting of Beading, Language, Grammar, Phonics, Penmanship, Number and Exchange Drill, Fractions, Tables of Weights and Measures, Business Methods, Bookkeeping, History, Business Forms, Civil Government, Political History and Stand with 12 books, Teachers M anual and Beport Blanks.

To be shipped care of Mr. O. W. Carter, Vandalia, Michigan, about the 10th day of June, 1902.

If not received on time or damaged, please notify, that we may serve all faithfutly.

AMERICAN SCHOOL SUPPLY CO.,

John Corcoran, Solicitor.

Chicago, III.

This matter may be left to a vote of the district at annual meeting.

The testimony of defendants was not disputed.

The oral testimony was objected to for the reason—

‘£ That the defendants in this suit cannot contradict the writing that they have signed and put into circulation; that the agreement that they came to, and all prior talk, was merged in the agreement which they subsequently signed, and they cannot come here at the present time with parol evidence and contradict it. Further object that this is inadmissible under the pleadings—the evidence as to fraud.”

The objection to the admission of the writing was stated by counsel to be:

“We object to that as a contemporaneous agreement in writing upon an attached paper. Any testimony as to that is inadmissible under the pleadings in the case.”

The first assignments of error relate to the reception of testimony showing the circumstances under which this paper was given. Counsel say that, as defendants did not, with their plea, deny on oath the execution of the note, the testimony is incompetent; citing 1 Comp. Laws, § 826, and cases.

That section reads:

“When any written instrument, purporting to be executed by one of the parties, is. declared upon or set off, it may be used in evidence on the trial of the cause against such party, without proving its execution, unless its execution be denied by oath at the time of declaring, or pleading, or giving notice of set off, if such instrument shall be produced and filed with the justice.”

We do not think the point now made was made in the court below. Plaintiff’s pleading was informal. It was upon the common counts in assumpsit. It did not declare upon the order. And while it was said in the court below that certain evidence was not permissible under the pleadings, we are unable to find from the record that it was suggested either in justice’s court or the circuit court that the objection was because defendants had not denied upon oath the execution of the order. We think it too late to take that position now.

Error is assigned upon the court’s failure to give plaintiff’s requests to charge and upon the charge as given. In our view of the case, it will not be necessary to discuss these assignments. When the paper offered in evidence by the bank was signed by defendants, it contained nearly as much again language as it contained when it came to the bank. The lower half of it, which qualified the upper half, had been separated from it. The upper half, with, material words added after it was signed, was delivered to the bank.

In Wait v. Pomeroy, 20 Mich. 425, a memorandum written under a promissory note qualified its obligations. Chief Justice Campbell, speaking for the court, said:

“The only question raised in this case is whether the destruction of a memorandum, written under a promissory note, and qualifying it, vitiates the note in the hands of a bona fide holder having no knowledge of the alteration. We think it quite clear upon the authorities that the note and memorandum constituted but one contract, and were in law a single instrument. There are some decisions which have held particular memoranda immaterial. But no case has been cited, and we have found none, which holds that, if material, it may be disregarded. The cases are fully collected in 2 Pars. Bills & Notes, 539 et seq. And while a memorandum on a separate paper is said by Mr. Parsons not to affect parties taking without notice, it is otherwise where all is in one instrument. To use the language of the Court of Queen’s Bench in Warrington v. Early, 2 Ellis & Bl. 763:

“ ‘This forms part of the contract. If would clearly have been so if it had been written in the body of the note, and we think a memorandum of this kind written in the corner of the note is equally part of the contract, because the contract must be collected from the four corners of the document, and no part of what appears, there is to be excluded.’ * * *

“There seems at first a plausibility in the argument that a party, by signing a note with a separate memorandum beneath, puts it in the power of the holder to gain easier credit for the note than it would be likely to gain if altered in the body. But, as it was well suggested on the argument, no one is bound to guard against every possibility of felony. And practically it is a matter of everyday occurrence to feloniously alter negotiable .paper as successfully by changes on the face as in any other way. The public are not very much more likely to be defrauded in one way than in another. There can never be absolute safety except by looking to the character and responsibility of the persons from whom such paper is received, and who are always bound to respond for the consideration if it is forged. Little v. Derby, 7 Mich. 325. If a party makes a contract in such a manner as is authorized by law, he has a right to object to being bound to any other.”

In Bradley v. Mann, 37 Mich. 1, the maker of a note, before negotiating it, and after it was indorsed without the consent of the indorser, added a clause providing for the payment of interest. Justice Graves, in speaking for the court, said:

“ The undertaking of the plaintiffs in error in regard to the amount was not left open and in blank, but was defined and settled when they prepared, indorsed, and sent the instrument to Whittlesey; and they could not be made liable as upon a different undertaking without their consent. The moment he made the alteration in the amount there remained nothing to which their indorsement was applicable, no engagement they had consented to be liable upon, and it is their undertaking, and not that of Whittlesey, which is in question. The circumstance that the instrument had not left Whittlesey’s hands and assumed the legal character of a finished note, or the fact, if it was so, that it was meant for Whittlesey’s accommodation simply, could have no force to make his unauthorized alteration binding on them without their assent, or to invest him with right to vary the extent of the liability they had predetermined for themselves. When the paper left their hands the amount of the obligation they assumed was as securely liquidated to preclude change without their consent as it would have been if the instrument had then become effective, and the indorsement had been as the defendant in error insists it was, and as it may have been, a nonaccommodation one. The authorities are so full and distinct against the doctrine of the charge that it is only necessary to cite them. Miller v. Finley, 26 Mich. 249; Holmes v. Trumper, 22 Mich. 427; Wait v. Pomeroy, 20 Mich. 425; Trigg v. Taylor, 27 Mo. 245; Waterman v. Vose, 43 Me. 504; Fay v. Smith, 1 Allen, 477; Draper v. Wood, 112 Mass. 315; McGrath v. Clark, 56 N. Y. 34; Benedicts. Cowden, 49 N. Y. 396; Fulmer v. Seitz, 68 Pa. St. 237; Wood v. Steele, 6 Wall. 80; Aetna National Bank v. Winchester, 43 Conn. 391; Schnewind v. Hacket, 54 Ind. 248.”

And it was held the indorsers were released.

If we apply the principles announced in these cases, we must regard the half of the paper detached after it was signed as a very material portion of it. Reading all of the paper as it then was, it indicates very clearly a transaction to which the American School Supply Company upon the one side was a party, and School District No. 6 was another party, and brings the case within the principle announced in Bailey v. Tompkins, 127 Mich. 74. The cutting or tearing off the lower half of the instrument was a material alteration of it. The court might very properly have directed a verdict in favor of the defendants.

Judgment is affirmed.

The other Justices concurred.


text:
    WISE v. STATE VETERINARY BOARD.
    Veterinary Surgeons—Power of State Veterinary Board.
    The State veterinary board, organized under Act No. 191, Public Acts 1899, has no power to determine whether a college of “veterinary medicine and surgery,” existing under 2 Comp. Laws, chap. 218, is a regular school or college, or to refuse a certificate to practice to a person holding a diploma from such college.
    Mandamus by Harry W. Wise to compel the State veterinary board to issue a certificate.
    Submitted November 29, 1904.
    (Calendar No. 20,749.)
    Writ granted December 7, 1904.
    Relator, a graduate as a veterinary physician and surgeon from the Grand Rapids Medical College, applied to the respondent for a certificate to practice his profession. A certificate was denied him, and he asks the writ of mandamus to compel respondent to issue to him such certificate. The case is before us on petition, answer, and stipulation. The stipulation admits the truth of the allegations in paragraphs of the petition numbered 2, 3, 4, and 5. These read as follows:

      ”2. That on the 1st day of April, 1902, having passed the required examination, he graduated from the veterinary department of the Grand Rapids Medical College, and was awarded a diploma conferring upon him the degree of doctor of veterinary medicine and surgery and master farrier, which diploma was duly issued to him by order of the board of trustees of said college.
    “3. That he matriculated as a student in the veterinary department of said college at the beginning of the college year in October, 1900, and regularly and continuously attended the veterinary department of said college and took the regular course of instruction prescribed by the faculty of said college and of said veterinary department during the college year of 1900-1901 and during the college year of 1901-1902, and that he attended said veterinary department as a student for at least six months in each of said years.

      “ 4. That since his residence at Owosso he has practiced his profession of veterinary medicine and surgery, and has succeeded in building up a practice which yields him an income of at least $1,500 a year; that he has found in practicing his said profession that the knowledge and clinical experience which he acquired in attending the veterinary department of said medical college abundantly fitted him to carry on his said profession successfully; and that, having put such knowledge and experience to the test in actual practice of said profession, he is well satisfied with the course of study and with the instruction which he received at the veterinary department of said college, and that he has been enabled thereby to practice his said profession successfully and to the satisfaction of those who have had occasion to employ him in his said practice.
    “5. That, as your petitioner is informed and verily believes, the Grand Rapids Medical College is a corporation organized and existing under Act No. 39 of the Laws of 1855, being chapter 218 of the Compiled Laws of 1897; that the articles of association of said college were duly approved by the secretary of State and filed in his office on the 10th day of August, 1897; that amendments were made thereto on the 26th day of August, 1897, and duly filed in the office of the secretary of State; that the purpose for which said college was organized, as set forth in the articles of association, is ‘to establish and operate a college to teach medicine and surgery, chemistry, dentistry, veterinary medicine and surgery, and horseshoeing; to grant and issue diplomas in various departments of the college in conformity to law and in accordance with the practice in similar institutions in the United States.’ ”
    The Grand Rapids Medical College is organized under chapter 218, 2 Comp. Laws.
    Section 8143 provides:
    “ Every diploma granted by such trustees shall entitle the possessor to all the immunities which, by usage or statute, are allowed to possessors of similar diplomas granted by any similar institution in the United States.”
    Section 8145 provides that any institution of learning incorporated under the act shall be subject to the visitation and examination of the superintendent of public instruction, and to a board of visitors, three in number, to be appointed by said superintendent. Said board is empowered to visit such institution, examine its courses of study, modes and character of instruction, and such other matters as may be of interest to the citizens of the State. It is also required to make a full report to the superintendent of public instruction, setting forth the result of their examination and conclusions as to the condition of the institution.
    The respondent .is organized under Act No. 191 of the Public Acts of 1899. The board is required by section 2 to elect a secretary, and to “ from time to time provide and furnish to said secretary a list of all regular colleges and schools of veterinary medicine and surgery, having a course of not less than two years, with sessions of at least six months in each year.” Under section 3 any person is entitled to a certificate from said board upon satisfactory-proof “that he is the lawful and regular possessor of a diploma from a regular veterinary college or school, within the meaning of this act, and that such diploma was issued by such college or school directly to him.”

      Hatch & Wilson, for relator. .

      Norton & Jamison, for respondent.
   Grant, J.

(after stating the facts). The relator has ■complied fully with the provision of the statute. The respondent contends that it is clothed with the power to determine whether a school or college of veterinary medicine and surgery organized under the laws of this State, whose •articles of association are duly filed and approved by the proper State authorities, is a regular school or college; or, •as stated in the brief of counsel, that it “ has the right to determine whether any school or college is living up to the •requirements of Act No. 191 of the Public Acts of 1899.”

Whether, as the relator seems to contend, any such power or control is lodged in the superintendent of public instruction, is not before us. The sole question is, Is the respondent clothed with this power ? An educational institution, properly incorporated under the provisions of the law, is a regular school or college within the meaning of the law. This statute, neither in express terms nor by implication, has lodged in this board the power to determine whether any school or college has a curriculum of studies, equipment, appliances, etc., such as the members of the board may deem essential to properly qualify a .graduate to practice his profession. If respondent’s contention be correct, this board has power to determine whether a department of veterinary medicine and surgery in the Michigan Agricultural College or in the University of Michigan, is “ regular.”

A similar question arose in Kentucky, where a graduate of the school of pharmacy of the Michigan University presented a diploma to the State board of pharmacy of that State, and demanded a certificate. The provision of the statute in that case was: “Graduates in pharmacy shall be such as have obtained a diploma from a regular incorporated college of pharmacy.” It was held that the board had no discretion in the matter, and that the relator was entitled to a certificate upon presentation of her diploma. State Board of Pharmacy v. White, 84 Ky. 626.

The case of People, ex rel. Sheppard, v. State Board of Dental Examiners, 110 Ill. 180, does not apply to this case. There the statute required that a diploma should be presented “from the faculty of some reputable dental college, duly authorized by the laws of this State, or some other of the United States,” etc. It was held that the board was clothed with power to determine whether a college was reputable. “Regular” and “reputable” are not synonymous words. “Regular” is defined as “conformed to, or made in accordance with a rule; agreeable to an established rule, law, type, or principle, to a prescribed mode, or to established customary forms.” “ Reputable” is defined as “being in good repute; held in esteem; estimable.” Cent. Diet. A school or college may be regular—i. e., regularly incorporated—and not be reputable. The reason for the use of the word “reputable” in the Illinois statute is stated by the court as follows:

“Asa part of the current history of the times, and as an aid in arriving at the legislative intention, we know there were colleges of different kinds authorized by the laws of States in which they were located, in which there were pretended to be annually delivered full courses of lectures and instruction upon the arts and sciences professed to be taught that were not ‘ reputable,’ because they graduated for money, frequently without any reference to scholarship. A diploma from such an institution afforded no evidence of scholarship or attainments in its holder. It was a fraud, and deserved no respect from anybody; and it was as against such diplomas the law was intended to protect the public, and therefore required that the colleges be ‘reputable.’ Whether a college be reputable or not is not a legal question, but a question of fact.”

The law of this State has fixed the status of these schools and colleges. When they have complied with the law of incorporation and filed their articles of association, they then become regular schools and colleges, and a diploma therefrom entitles the “regular possessor” to a certificate to practice his profession. The legislature may undoubtedly prescribe the curriculum for schools of its own creation, and may lodge in some board the power to determine whether its graduates are entitled to admission to practice; but it has not done so by this act.

The mandamus is granted, but-without costs.

The other Justices concurred;