author: Moobe, C. J.

text:
    PEOPLE’S NATIONAL BANK OF JACKSON v. WILCOX. JACKSON CITY BANK v. SAME.
    1. Witnesses — Competency—'Transactions With Deceased Officer of Corporation.
    A suit by a bank to foreclose a mortgage, brought against the mortgagor alone, was heard in connection with a suit by another corporation against the mortgagor and the bank to postpone the mortgage to complainant’s execution levy. Held, that, under 3 Comp. Laws, § 10313, neither the mortgagor nor the managing officer of the execution creditor could testify to conversations with a deceased officer of the bank, not in the presence of any surviving officer, having a tendency to impair the validity of the mortgage.
    3. Partnership — Mortgages —Authority of Surviving Partner — Execution—Priority of Liens.
    Where a mortgage is executed in good faith by a surviving partner as such and individually on partnership property to secure the payment of money borrowed to meet the obligations of the partnership, the mortgagee is entitled to a first lien on such property to satisfy his debt, as against a creditor of the firm whose execution was levied after the making of the mortgage.
    Cross-appeals from Saginaw; Snow, J.
    Submitted December 16, 1903.
    (Docket No. 217.)
    Decided May 23, 1904.
    Bill by the People’s National Bank of Jackson against Homer Wilcox and Stanley Wilcox to foreclose a mort-

      gage; and by the Jackson City Bank against Homer Wilcox and the People’s National Bank of Jackson to set aside or postpone the operation of said mortgage. The causes were heard together, and, from the decree rendered, the two banks appeal.
    Modified.

      T. E. Barkworth, for People’s National Bank.

      Pringle &■ Hewett, for Jackson City Bank.

      Wilson & Cobb, for defendants Wilcox.
   Moobe, C. J.

The bill in the first entitled cause was filed for the purpose of foreclosing a mortgage made April 23, 1898, by Homer Wilcox, as surviving partner of the firm of A. & H. Wilcox, and also in his individual capacity, to complainant in said cause. The bill in the second entitled cause is filed by complainant as an execution creditor of Homer Wilcox, individually and as surviving partner, for the purpose of setting aside or postponing the operation of said mortgage. By stipulation the cases were heard as one. Prom the decree entered in the case both complainants have appealed. No relief is asked against Stanley Wilcox. Homer Wilcox did not appeal.

The mortgage was made “between Homer Wilcox, as surviving partner of the firm of A. & H. Wilcox, a co-partnership, and in his individual capacity, under and by virtue of a certain deed heretofore executed by the members of said copartnership and their wives, of the first part, and People’s National Bank of Jackson, Michigan, of the second part,” and continued this recital:

“Provided always, and these presents are upon this express condition, that if the said party of the first part shall and do well and truly pay or cause to be paid to the said party of the second part the sum of $20,562.35, as evidenced by certain promissory notes now in the possession of the party of the second part, to pay the said sum of $20,562.35 as provided in said promissory notes so held to secure the same, and to which these presents are collateral, or as may be hereafter provided in any note or notes given in renewal thereof, then these presents shall cease and be null and void.”

The mortgage was signed, “Homer Wilcox [L. S.] and as surviving partner of the firm of A. & H. Wilcox [L. S.].”

The deed referred to in the mortgage named Homer Wilcox as the manager of the firm of A.-& H. Wilcox, and gave him power to make deeds and other papers. It also provided for the settlement of the business of the partnership upon its dissolution by notice from one partner to the other of his desire to terminate it,—

“And, in case of such notice from either partner to the •other, said Homer Wilcox shall proceed to close said partnership as follows, to wit: He, said Homer Wilcox, shall, after said notice, make no more purchases of real estate, and no more of personal property than, in his judgment, is required in connection with realty, and shall, within one year after such notice, sell in the customary manner of said partnership, or in such way as his judgment approves, all personal property of said partnership known as stock in trade, whether of lumber, lime, or any stock being dealt in, and shall also, within a period of six years, sell all personal property not known as stock in trade as above mentioned, excepting real-estate mortgages, which may be sold or not, at the discretion of said Homer Wilcox; and the said Homer Wilcox shall, from partnership funds or with partnership property, pay all debts, and shall then divide the net proceeds or remainder between himself and said Andrews Wilcox in proportion of ownership as before herein indicated; and, to effect sales of real •estate and settlement of partnership business, he, said Homer Wilcox, may, at his discretion, mortgage partnership real estate, and then sell subject to mortgage, or may sell real estate for payment down in part and take time mortgage for the balance; and, in making a division in •closing the partnership, mortgages then held shall be divided as nearly as practical in proportion to ownership, and mortgages divided shall be properly assigned in form for legal record vesting individual title.
“And it is further agreed and hereby established that the death of either of said partners shall constitute and be the same as notice of wish to close said partnership, and, in case of such death of either, the surviving partner shall proceed to close and end said partnership in the manner as hereinbefore set forth.”

Andrews Wilcox died in December, 1891. The following notes were in the possession of the bank at the time the-mortgage was made: One for $7,246.20, dated January 1, 1898, signed “ Stanley Wilcox,” indorsed and guaranteed by Homer Wilcox; one dated January 1, 1898, for-$603.62, signed “ Homer Wilcox; ” one dated January 1, 1898, for $10,000, signed by Homer Wilcox; one for $729.96, dated January 24, 1898, signed by Homer Wilcox; and one dated April 20, 1898, for $1,566.70, signed by Homer Wilcox.

At the time the mortgage was given, there was a mortgage of $900 upon one of the descriptions of land included in it. This mortgage was foreclosed, and, at the time the-decree was rendered, the mortgage lien had been acquired by the Jackson City Bank. The trial judge held that this mortgage lien should be the first lien on the property described therein. He also found that, though the mortgage-was given for upwards of $20,000, only $5,640 of it was. the debt of A. & H. Wilcox to the bank, and held that, amount should be a lien prior to the lien the Jackson City Bank obtained by reason of its execution levy. The People’s National Bank claims the decree should have been for the full amount of the mortgage. The Jackson City-Bank claims no decree should have been rendered in favor-of the People’s National Bank, for the reason that the debt of A. & H. Wilcox had been released and paid by accepting the notes of Homer Wilcox. It also claims there was embraced in the mortgage a large amount of the personal’ debt of Homer Wilcox, which vitiates the entire mortgage,, and, in any event, claims its lien by reason of its execution levy should have priority over the lien of the People’s-National Bank. Homer Wilcox claims he is liable as maker and guarantor of the notes individually, and not as surviving partner, and that partnership assets cannot be appropriated to their payment. He also claims that, at the time the mortgage was given, an oral arrangement was made of things the bank was to do in consideration of the giving of the mortgage, which agreement was to be put in writing, but was not, because the president of the bank, Mr.’ Root, sickened and died before it was done; and, as the bank did not carry out the arrangement, the mortgage did not take effect, or, if it did, an allowance for damages should be made because of the failure of the bank to carry out its agreement.

Before considering the main question, disposition should be made of two preliminary questions. Homer Wilcox was allowed to testify as to the conversation he had with Mr. Root, the president of the People’s National Bank, at the time the mortgage was made, which conversation tended to show that the entire agreement was not put in the mortgage, but was to be put into a separate paper. All the other officers of the bank testified they never heard of such a claim until long after the death of Mr. Root. Mr. Potter, the vice-president of the Jackson City Bank, also, gave testimony of a conversation with Mr. Root, which tended to show that the debt of A. & H. Wilcox had been released by accepting paper made by H. Wilcox in the place thereof. Objection was made to the reception, of the testimony of Mr. Wilcox and Mr. Potter. It is claimed that, as to the controversy between the two banks, Wilcox, though a nominal party, was neither prosecuting nor defending, and hence might properly testify; that, as the Jackson City Bank was not a party to the foreclosure suit, there is no reason why Mr. Potter might not testify in that suit; and if, for any purpose in either suit, Mr. Potter or Mr. Wilcox was a competent witness, his testimony could not be disregarded.

The statute under construction is section 10212, 3 Comp. Laws. In Penny v. Oroul, 87 Mich. 15 (49 N. W. 311, 13 L. R. A. 83), it was said the statute was intended to reach the real party in interest, and that a witness is not permitted to testify in his own interest as against one whose lips are closed in death. In McHugh v. Dowd’s Estate, 86 Mich. 412 (49 N. W. 216), it is said the statute was designed to protect the estates of deceased persons against claims which depend, in whole or in part, upon testimony of a party which cannot be refuted by the testimony of the deceased. The statute is also intended to protect tfye interests of corporations when the testimony relates to matters within the knowledge of a deceased officer of a corporation. Apply these principles to the case at bar. In this case it is proposed to do away with the effect of the mortgage made by Homer Wilcox as survivor of A. & H. Wilcox by showing conversations with Mr. Root, when, if that result could be accomplished, it would affect the interests of the bank of which Mr. Potter is manager, and the interests of Homer Wilcox. We do not think the testimony was competent. See, also, Seymour v. Wallace, 121 Mich. 402 (80 N. W. 242); Berry v. Adams, 122 Mich. 17 (80 N. W. 792).

A great many questions are raised in the voluminous briefs of able counsel, which, in our view of the case, it is not necessary to discuss. There are a few facts about which there is no dispute:

First. The property described in the mortgage was partnership property belonging to A. & H. Wilcox.
Second. The affairs of that partnership had not been closed.
Third. The mortgage was made by Mr. Wilcox as surviving partner as well as an individual.
Fourth. That, as to $16,000 of the debt; it was originally money the bank furnished to and which was used by the firm of A. & H. Wilcox before the death of Andrews Wilcox, $10,000 of which was represented by the note of the firm, and $6,000 by the note of Stanley Wilcox indorsed by the firm.
Fifth. Whatever may have been the fact about the bank having accepted the notes of Homer Wilcox in the place of the firm, the firm itself had never paid this debt.

In addition to this, we think it clearly appears that the balance which entered into this mortgage was for money furnished Homer Wilcox by the bank, and used by him for the benefit of the partnership.

In addition to the recitals of the mortgage, Mr. Wilcox left with the bank a paper reading in part as follows:

“ Homer Wilcox,
“Office.
“Jackson, Mich;., April 25, 1898.
“On April 23d, 1898, I, Homer Wilcox, as surviving partner of A. & H. Wilcox, conveyed to People’s National Bank, Jackson, by real-estate and chattel mortgages, for the purpose of securing to said .bank payments of twenty thousand five hundred sixty-two and thirty-five one-hundredths dollars, and seven per cent, interest thereon, which said sum said bank had from time to time advanced for the use and benefit of said A. & H. Wilcox, commencing such advances a considerable period prior to the death of Andrews Wilcox, one of the partners of said A. & H. Wilcox, and continuing such advances to meet the necessities of A. & H. Wilcox and of Homer Wilcox, as surviving partner, the following lands and property, to wit.”

On the trial Mr. W ilcox testified he put a large amount, approximating $40,000, of his own money into the partnership business. We think there can be no doubt, from reading this record, that, when this mortgage was given, both the bank and Mr. Wilcox believed it was given upon partnership property for the purpose of paying debts for which the partnership was liable, which belief was justified by the facts. The question then arises whether the surviving partner had a right to use the partnership assets to pay the partnership debts under the circumstances disclosed by this record.

In Barry v. Briggs, 22 Mich. 201, Justice Campbell, speaking for the court, said:

“As sole surviving partner he had the entire legal title to all the assets. He had the right to dispose of them as he pleased, to settle all debts to or against the concern, to make any compromises deemed necessary, and to turn the assets into an available and distributable form. His duty was to act honestly, and to use reasonable discretion and diligence.”

In Pfeffer v. Steiner, 27 Mich. 537, Justice Christiancy, speaking for the court, said:

“However this maybe after the partnership business has been settled and its debts fully paid, and when the representatives have been let into joint possession by the surviving partner, we think it very clear that, until the partnership has been thus settled and all the debts paid, the representatives of the deceased partner have but an equitable interest in such property., which, though in equity it may make them tenants in common, subject to the debts of the firm and a final settlement, does not constitute them tenants in common at law; and until such settlement and payment of all debts, at least, they have no right of possession, and the right of action at law for any trespass upon or injury to the property is vested solely in the surviving partner.”

In Merritt v. Dickey, 38 Mich. 41, Justice Campbell, again speaking for the court, said:

“The law has always been settled in this State that real property which actually was designed to be, and which ;was in fact treated during the existence of the firm as, partnership assets, must be so regarded in equity, and the legal estate must be held by the heirs of a deceased partner as trustees for the equitable purposes of the firm. * * *
“The facts admitted in the present case show very clearly that the sale of the land and appurtenances was necessary to close up the partnership business, and a court of equity would have been bound to interfere and enforce the disposition at the instance of the survivor, who would unquestionably have been entitled to possess and apply the assets. The interest sold in the present case was not the possible interest of Gage’s estate, but the legal interest, which the heirs only held in trust. We can see no reason why the simpler method of disposing of the land in probate, instead of in chancery, can make any difference in the equitable result. If any one but Green had purchased the property, the proceeds would have been subject to his right of management. Being bid off in his name, he has simply become as to the land what he would have become as to the proceeds if it had been sold to a bona fide purchaser,' — a trustee for the common interest of the partnership as surviving partner, and liable to account for its honest management.
“It would be unjust and inequitable to hold the administrator liable for not going through the form of receiving and refunding the same money. Gage’s estate and his heirs are entitled to nothing beyond such residuum •as may be found due by the surviving partner when he has fairly closed the concern. That business belongs to him, and not to the administrator. The latter may be bound to inquire into the conduct of the survivor, and protect the estate from mismanagement if any should •appear. But he cannot interfere with the partnership assets while they are in their proper custody.”

In Bassett v. Miller, 39 Mich. 133, Justice Campbell, again speaking for the court, said:

“This case presents, as we think, but one important question, and that is whether surviving partners who sell .goods which belong to their firm can recover for their price in their own names, without joining the representatives of the deceased partner. The principle is well settled that the entire legal estate vests in the survivors; and no one else can be regarded as having any legal interest in the assets. Barry v. Briggs, 22 Mich. 201; Pfeffer v. Steiner, 27 Mich. 537; Merritt v. Dickey, 38 Mich. 41.”

In Van Kleeck v. McCabe, 87 Mich. 599 (49 N. W. 872, 24 Am. St. Rep. 182), Justice Grant, speaking for dhe court, said:

“ If, therefore, the partnership actually existed between John and Albert, the title to the property belonging to it still remained in the firm, and upon the death of John the title thereto became vested in Albert as the surviving partner. In all matters connected with the partnership he was the proper party to sue and to be sued. If a partner, it became his duty to close up the partnership matters, collect the assets, pay the debts, and then distribute the fund. Until the partnership fund is ready for distribution, the representatives of the deceased partner have no right to interfere, so long as the surviving partner is proceeding .in good faith.to wind up its affairs. Barry v. Briggs, 22 Mich. 201; Pfeffer v. Steiner, 27 Mich. 537; Merritt v. Dickey, 38 Mich. 41; Bassett v. Miller, 39 Mich. 133.”

In Kipp v. McChesney, 66 Ill. 460, a member of a partnership had purchased a partnership note, and indorsed it to another, who sued the copartnership. The court, in disposing of the case, said:

“ One copartner may deal as an individual with his firm. He may invest his private means in the purchase of partnership securities, as well as any other description of securities, and we do not perceive why he should not be allowed to hold them as valid obligations, without their being accounted as paid or extinguished by his act of purchase of them. We think the court below was warranted by the evidence in finding that there was a purchase of the note by Davison, and not a payment of it. While the note remained in the hands of Davison as assignee, he-could not have enforced its payment by suit at law, for the reason that he could not have sued himself as maker. A party cannot be both plaintiff and defendant in an action at law, and the other nine makers of the note were not liable without Davison. But this is a difficulty attending the remedy only, not the right; and, when the note is indorsed to one against whom there is no such objection, the difficulty ceases to exist, and such third person may maintain an action upon the note. Heywood v. Wingate, 14 N. H. 73; Pitcher v. Barrows, 17 Pick. 361 (28 Am. Dec. 306); Thayer v. Buffum, 11 Metc. 398; Davis v. Briggs, 39 Me. 304; Smith v. Lusher, 5 Cow. 688.”

In Haynes v. Brooks, 8 Civ. Proc. R. 106, it was said:

‘ ‘ It is, however, claimed by the plaintiffs that Brown & Co., who are preferred, are creditors of the assignor individually. They are, however, called by the assignor, and are treated as, copartnership creditors. The debt of these creditors originated in a loan of money made by them to the surviving partner to pay an accommodation note loaned to the firm itself. If a firm obligation was retired by the use of the money loaned or advanced by Brown & Co., the surviving partner would have been entitled to be repaid out of the firm property. As the moneys of Brown & Co. in fact paid a firm obligation, I see no objection to the subrogation of them in equity to the rights of the surviving partner, or to the regarding of them as entitled te be repaid out of the firm assets. That works injustice to-no one. ” •

In Burchinell v. Koon, 8 Colo. App. 463 (46 Pac. 932), the following language is used:

“The powers of a surviving partner to deal with the firm assets have been established by a long line of adjudications. His right to sell, mortgage, and dispose of those assets, and apply them, according to his own discretion and judgment, in the payment of debts, has been repeatedly recognized. Williams v. Whedon, 109 N. Y. 333 (16 N. E. 365, 4 Am. St. Rep. 460); Fitzpatrick v. Flannagan, 106 U. S. 648 (1 Sup. Ct. 369); Emerson v. Senter, 118 U. S. 3 (6 Sup. Ct. 981); Durant v. Pierson, 124 N. Y. 444 (26 N. E. 1095, 12 L. R. A. 146, 21 Am. St. Rep. 686); Patton v. Leftwich, 86 Va. 421 (10 S. E. 686, 6 L. R. A. 569, 19 Am. St. Rep. 902); First Nat. Bank of Peru v. Parsons, 128 Ind. 147 (27 N. E. 486); Krueger v. Speith, 8 Mont. 482 (20 Pac. 664, 3 L. R. A. 291); Roach v. Brannon, 57 Miss. 490; Smith v. Phelan, 40 Neb. 765 (59 N. W. 562); Johnson v. Berlizheimer, 84 Ill. 54 (25 Am. Rep. 427).
“According to the doctrine of all these authorities,— and there are practically none to the contrary, — the surviving partner is entitled to the possession and control of the-joint property of the firm for the purposes of winding up the affairs of the copartnership. To accomplish this end, he has a right, according to the settled principles of the law of partnership, to administer the firm affairs and to dispose of its assets. This power is broad enough, to cover the right of sale, and includes the power to mortgage, or to deliver property in payment. No limit seems to be put on the power of the partner, except that he is required to devote the assets to the liquidation of outstanding obligations. Some of the cases go so far as to hold that, if he devotes those assets to the payment of his individual debts, it is not a matter of which the general creditors can complain; that, where the transaction is completed, it cannot be impeached by subsequent proceedings. We express no opinion on this matter. This illustrates the tendency of the decisions. The specific question of the power to mortgage has arisen in many cases. Where it has been exercised in good faith, it has been universally upheld. ■ * * *
“It has, therefore, many times happened that the rules laid down in cases where courts of equity have seized upon the firm assets to distribute them according to the rights of the creditors and debtors, or where estates have come into courts to be wound up by proceedings analogous to those in bankruptcy jurisdictions, the courts have treated the surviving partner as a trustee, and have administered the estate according to the equitable rights of the parties. The rule has not been applied in cases where the surviving partner has undertaken, in the exercise of his power as survivor, to apply the assets to the liquidation of debts, nor have payments been successfully attacked by a creditor who has put his claim into judgment, and come into a court to compel a different distribution of the firm funds after the rights of other persons have been fixed and settled by the acts of the parties. We therefore have no hesitation in holding that the surviving partner had the right, as was plainly declared in one of the cases cited, to mortgage these assets for the payment of this debt. We do not regard the case as at all affected by the fact that a portion of the fund represented by the note was advanced to the survivor after the death of the other member of the firm. The money went into the general firm account, was for the benefit of the estate as controlled by the survivor, and was applied to the liquidation of outstanding firm obligations.”

The case of Durant v. Pierson, 124 N. Y. 444 (26 N. E. 1095, 12 L. R. A. 146, 21 Am. St. Rep. 686), is nearly on all fours with the present one. The partnership was dissolved by the death of one of the copartners. After it was dissolved, the surviving partner borrowed money of a bank to pay the firm indebtedness, and it was so applied. In disposing of the case the court used the following language:

“It thus becomes important to determine whether the loan contracted by the survivor became a firm obligation, for the payment of which its assets may justly be applied. As we have seen, the note given upon procuring such loan bore the name of the firm and that of Henry R. Pierson as survivor, but, at the time that this note was given, it was known to all of the parties concerned that the senior member of the firm had died. The death of a partner puts an end to the copartnership, and there is no longer any power or authority of the surviving partners to carry on for the future a partnership trade or business, or to engage in new transactions, contracts, or liabilities on account thereof. Story, Partn. §§ 342, 343; Hall v. Lanning, 91 U. S. 160, 170; Farr v. Morrill, 53 Hun, 31, 35 (5 N. Y. Supp. 720). It is thus apparent that, whilst the note in form would appear to create an obligation of the firm, it is at law unavailable as such, for the reason that there was no power in the survivor to make it. But it does not follow but that it is a claim which .ought, in justice and equity, to be paid out of the firm’s assets. If it is, the preference in the assignment would not be void, for the law will not declare fraudulent that which equity adjudges right and proper. Denton v. Merrill, 43 Hun, 224, 229.
“We must, therefore, consider whether there are equities which will support the claim of the bank to be paid out of such assets. It is apparent that the money borrowed from the bank by the survivor was for the purpose of paying the creditors of the firm the claims then matured and pressing. The amount of the loan was credited upon the open account of the firm with the bank, and subsequently $10,000 thereof, or thereabouts, were drawn out by the survivor upon his check, and used in the payment of the liabilities of the firm. At the time this loan was made, it was not supposed by the officers of the bank or the surviving partner that the firm was insolvent, and no question is made but that both parties acted in good faith. The question is therefore presented whether a surviving partner may, in good faith, borrow money for the express purpose of paying the debts of his firm, and, by so applying the money borrowed, create an equity for the satisfaction of which the assets of the firm may properly be devoted. As we have seen, the survivor became entitled to the assets, which he had the right to sell, mortgage, and dispose of in order to pay the debts and close up the affairs of the copartnership. If he had the power to sell or mortgage, it would seem to follow that he had the power to borrow, and pledge the assets for the repayment of the loan; and, the amount borrowed having been faithfully applied in liquidation of the debts of the copartnership, equity will recognize, the justness of the claim of the party making the loan. Cases may arise where the exercise of such authority may be highly expedient, if not necessary, for the preservation of the rights of creditors and persons interested in the distribution of the assets of the firm; as, for instance, creditors may, by levy, expose the assets to a forced public sale under circumstances which would work great sacrifice to the estate. In case a survivor should be insolvent,' he might be able to raise money by a pledge to repay out of the partnership assets when he could not obtain it upon his own credit. We do not see that harm could result to the other creditors by permitting this to be done, for it would not increase the obligations of the firm nor lessen their share in the distribution of the assets in case the firm be insolvent. It is not questioned but that the survivor had the right to turn out-as a security or pledge the assets of the firm in payment for the money received by him. He could have sold the assets and repaid the money loaned at any time before executing the assignment, and without taint of fraud. It is not apparent how the rights of the parties are changed, and the act of the survivor made fraudulent, by doing that in the assignment which he had the right to do immediately before executing it.
“The precise question involved in this case does not appear to have been passed upon in any reported case, so far as we have been able to discover, except in Haynes v. Brooks, 8 Civ. Proc. R. 106, 113, where an assignment was made for the benefit of creditors by a surviving partner. In that case, as in this, the creditors had loaned money to the surviving partner to pay a note of the firm. Van Vorst, J., in commenting upon the transaction,, said:
“ ‘ If a firm obligation was retired by the use of the money loaned or advanced by Brown & Co., the surviving partner would have been entitled to be repaid out of the firm property. As the moneys, of Brown & Co. in fact paid a firm obligation, I see no objection to the subrogation of them in equity to the rights of the surviving partner, or to the regarding of them as entitled to be repaid out of the firm assets. That works injustice to no one.'
“The learned judge concluded by ordering the complaint dismissed, thereby sustaining the validity of the assignment. This case was affirmed in the General Term (42 Hun, 528), and in this court in 116 N. Y. 487 (22 N. E. 1083). This question, however, was not considered in either of the appellate courts.
“ In the matter of the Estate of Davis and Desauque, 5 Whart. 530 (34 Am. Dec. 574), it was held that, after the dissolution of a copartnership, the partner authorized to settle the estate may'borrow money on the credit of the firm for the purpose of paying its debts, and, if the credit be given in good faith, though with a knowledge of the dissolution, and the money borrowed be faithfully applied in liquidation of the debts of the partnership, the creditor has a claim against the firm assets, and is not to be considered as a creditor merely of the partner borrowing.
“In the case of Prudhomme v. Henry & Laurans, 5 La. Ann. 700, it was held that, where a liquidating partner after dissolution has borrowed money to pay the debts of the firm, the partnership is liable so far as the evidence shows that the money was used for the benefit of the firm.
“In the last two cases the partnerships were not insolvent, and the question arose as between the partners. The courts, however, recognized the claim of the lenders as -one which ought to be paid by the partnership.
“ In the case under consideration, it is true that the partnership is insolvent, and the question arises as between the bank and creditors of the partnership; but the creditors have not been harmed or prejudiced by the action of the bank in loaning the money to the survivor, for the assets were increased in value-to the amount of the loan, and the money drawn out of the bank was applied in extinguishment of the claims of the creditors, thus reducing to that •extent the liabilities of the firm.
‘ ‘ When a partnership is dissolved by the death of a partner, the survivor is entitled to the possession and control of the joint property for the purpose of closing its business, and to that end and for that purpose he may, according to the settled principles of the law of partnership, administer the affairs of the firm, and by sale, mortgage, or other reasonable disposition of the property, make provision for meeting its obligations. He may, for that purpose, borrow money, and give a valid pledge of the co-partnership property for its repayment. Williams v. Whedon, 109 N. Y. 333 (16 N. E. 365, 4 Am. St. Rep. 460); Emerson v. Senter, 118 U. S. 3, 8 (6 Sup. Ct. 981); Fitzpatrick v. Flannagan, 106 U. S. 648 (1 Sup. Ct. 369); Butchart v. Dresser, 4 De Gex, M. & G. 542, 10 Hare, 453; In re Clough, Bradford Commercial Banking Co. v. Cure, L. R. 31 Ch. Div. 326.
“ In Case v. Beauregard, 99 U. S. 119, 124, Mr. Justice Strong, in commenting upon the rights of partners in a suit involving the marshaling of the assets, says:
“ ‘The right of each partner extends only to a share of what may remain after payment of the debts of the firm and a settlement of its accounts. Growing out of this right, or rather included in it, is the right to have the partnership property applied to the payment of the partnership debts in preference to those of any individual partner. This is an equity that partners have as between themselves, and in certain circumstances it inures to the benefit of the ■creditors of the firm. The latter are said to have a privilege or preference, sometimes loosely denominated a “lien,” to have the ■debts due to them paid out of the assets of a firm in course of liquidation to the exclusion of the creditors of its several members. Their equity, however, is a derivative one. It is not held or enforceable in their own right. It is practically a subrogation to the • equity of the individual partner, to be made effective only through him. Hence, if he is not in a condition to enforce it, the creditors of the firm cannot be. Rice v. Barnard, 20 Vt. 479 (50 Am. Dec. 54); Appeal of the York County Bank, 32 Pa. St. 446.
“ ‘But, so long as the equity of the partner remains in him, so long as he retains an interest in the firm assets as a partner, a court of equity will allow the creditors of the firm to avail themselves of his equity, and enforce through it the application of those assets primarily to the payment of the debts due them, whenever the property comes under its administration.’
“In the case of Saunders v. Reilly, 105 N. Y. 12 (12 N. E. 170, 59 Am. Rep. 472), it was held that a mere general creditor of a firm, having no execution or attachment, has no lien whatever upon its personal assets; that, while firm creditors are entitled to a preference over creditors of the individual members of the firm in tbe payment of their debts out of the assets in the course of liquidation, their equity is not held or enforceable in their own right, but is a derivative one, — practically a subrogation of the-equity of each individual partner to have the firm assets applied primarily to the payment of its debts, — and, where no such equity exists in favor of any member of the firm, the firm creditors have none; and therefore, where a judgment is recovered against all the members of a firm upon a joint obligation, but not an indebtedness of the firm, the firm property may be levied upon and sold on execution issued on the judgment. See, also, Dimon v. Hazard, 32 N. Y. 65; Stanton v. Westover, 101 N. Y. 265 (4 N. E. 529); Kirby v. Schoonmaker, 3 Barb. Ch. 46 (49 Am. Dec. 160); Brown v. Higginbotham, 5 Leigh, 583 (27 Am. Dec. 618); Peyton v. Stratton, 7 Grat. 380; Stebbins v. Willard, 53 Vt. 665.
‘ ‘ It appears to us that the conclusion is warranted from the authorities referred to that, where a person in good faith loans money to a surviving partner and where the money is faithfully applied by such partner in satisfaction of the liabilities of the firm, the claim becomes one which, in equity, should be paid out of the assets of the firm; and, in an accounting between the survivor and the personal representative of the deceased partner, equity will recognize the right of the surviving partner to have the money so borrowed and applied by him repaid out of the assets of the firm, and an assignment so directing is not fraudulent.”

In the case at bar, the money of the People’s National Bank was used for the benefit of this partnership. Had-Homer Wilcox sold the partnership property, and applied the proceeds to paying this debt, there'can he no doubt he would be entitled to a credit of the amount so expended. While surviving partner he gave a mortgage on partnership property to secure the payment of a debt which should be paid out of the partnership assets. We have no doubt of his right to do so. As the mortgage was given before the execution levy was made, it created a lien which should have priority over the execution levy.

A decree may be entered in accordance with this opinion, with costs to the People’s National Bank.

Carpenter, Grant, and Hooker, JJ., concurred. Montgomery, J., took no part in the decision.


source: Caselaw Access Project

license: Public Domain

text:
    CRUSOE BROS. CO. v. KUDNER.
    1. Trial — Findings or Fact — Conolusiveness.
    Findings of fact by the trial judge in a case tried without a jury are conclusive if there is evidence to support them.

      2. Garnishment — Chattel Mortgages — Failure to File — Fraud.
    Where, in garnishment proceedings against a mortgagee of chattels, it appeared that the garnishee did not receive any of the property by virtue of his mortgage, but that the same was voluntarily turned out to him to apply on the debt which the mortgage was given to secure, plaintiff was not entitled to judgment, though the mortgage not only-remained unfiled, and was therefore void as to him, but was withheld from filing by agreement between the mortgagor and mortgagee. Folkerts v. Standish, 55 Mich. 463, followed.

      Error to Oakland; Smith, J.
    Submitted February 25, 1904.
    (Docket No. 110.)
    Decided May 23, 1904.
    Garnishment proceedings by the Crusoe Brothers Company against Henry C. Kudner, as garnishee of John H. Smith. From a judgment for defendant, plaintiff brings error.
    Affirmed.

      Graves, Hatch, Millis & Goodenough, for appellant.

      Charles Kudner (Geer & Williams, of counsel), for appellee.
   Moobe, C. J.

This case was heard by the circuit judge, who, at the request of the parties, made findings of fact and of law, in substance as follows:

“ Plaintiffs are wholesale dealers in groceries at Detroit. In' 1902 the principal defendant, John H. Smith, had a small grocery store and meat market in Pontiac. Plaintiffs sold Smith goods prior to September 8, 1902, to the amount of $73.97, and between September 8, 1902, and October 2, 1902, further goods to the amount of $115.48, and have not been paid for any of them. Plaintiffs ceased making sales to defendant October 2, 1902, because of the filing of a chattel mortgage covering all the stock and fixtures of Smith on that date.
“The principal defendant, Smith, and garnishee defendant, Kudner, are neighbors and friends, and have had other business dealings together prior to the one involved in this case. When Smith opened the store and meat market, he entered into a verbal arrangement of some kind with Kudner by which Kudner furnished him loans of money from time to time to enable Smith to buy cattle -for his market and groceries for his store. Sometimes a check passed directly from Kudner to the farmer selling the animal to Smith. There is no dispute about and no doubt of these advancements or loans by Kudner. Kudner received some of his pay in money, and some by means of meats and groceries got at Smith’s store in the usual way of buying them for family use. The amount received by Kudner in this way is shown by Smith’s account boobs, where the goods are charged against Kudner. To September 8, 1902, Kudner had furnished Smith in the ways above stated $684.09, but bad received moneys and goods to the amount of $384.09, leaving $300 due Kudner.
“On that date Smith executed to Kudner the aforesaid mentioned chattel mortgage, covering all Smith’s stock, fixtures, and all property mentioned therein used with the business. The mortgage names $700 as the consideration and amount of indebtedness to Kudner. The mortgage does not recite that it is to cover future indebtedness to Kudner, but Kudner says it was to do so, and I have no doubt it was so intended, because Kudner continued for a time thereafter to make advancements of money without further security. The mortgage was to become due September 8, 1903. To accommodate Smith, Kudner retained this mortgage from file until October 3, 1903.
“After the mortgage was on file, Smith was unable to ■obtain further credit from others, and within a few weeks was unable to continue the business. He allowed Kudner to trade as long as he continued in business, and voluntarily turned out other goods and property in connection with the business, and money received from sales of goods and property, until Kudner had been repaid all the $300 of indebtedness existing when the mortgage was executed, and all subsequent sums advanced by Kudner, excepting $95 now remaining unpaid.
“No proceedings were taken to foreclose the mortgage, and I am unable to say that Kudner took any of the goods or property under the danger clause of the mortgage, or took them by virtue of or by reason of the mortgage. My •conclusions are that the relations of Smith and Kudner were such that it was unnecessary, because Smith was entirely willing to pay Kudner by turning out the property to Kudner in payment of the indebtedness, as far as it would go, and that he did voluntarily turn it out for that purpose. I think the mortgage was executed so that a preference might be created in favor of Kudner if any ■other creditor undertook to interfere with the stock and property, but, no other creditor attempting to interfere, he found it unnecessary to resort to the mortgage. •
“I am unable to say that Kudner received any of the ■stock and property except what he has applied on his own advancements and indebtedness. I am unable to say that any actual fraud was intended by Kudner towards other creditors, beyond securing his own pay in preference to others if Smith should be unable at any time to pay all of them. There is no claim plaintiffs.knew of this mortgage until after it was filed.
“ Findings oe Law.
“I have found some difficulty in disposing of the sum' of $115.48 upon the foregoing facts. The chattel mortgage was fraudulent and void as to plaintiffs until it was placed on file. Counsel strenuously insist the case is-clearly controlled by that of Baker v. Parkhurst, 119 Mich. 542 (78 N. W. 643), and Heineman v. Schloss, 83 Mich. 153 (47 N. W. 107), and when the trial closed I was of that opinion. But I have since then carefully gone over the testimony with the reporter, and, being unable to find that any of the property was actually taken by virtue of the mortgage or by resorting thereto, or by arrangement of the pai’ties because of the mortgage, I have reached the conclusion that to so hold is to go a step further than does the case of Baker v. Parkhurst, and, in effect, to hold that a debtor may not voluntarily turn out his property to a creditor in payment of a bona fide indebtedness. Had plaintiffs undertaken to obtain the stock and Kudner had resorted to his mortgage to get the property, I think the result might have been different as to the $115.48; but I find ho basis, as the case stands, for plaintiffs to receive this amount, unless it be in the fact that the mortgage was taken for a larger sum than was at the time actually due Kudner. Judgment for costs, I think, must be entered in favor of the defendant Kudner.”'

The case is brought here by writ of error. It is the-claim of plaintiff that the mortgage is void as to it, and, as it was withheld from the record in pursuance of an agreement to do so, it was a fraud in fact; citing the cases of Heineman v. Schloss, 83 Mich. 153 (47 N. W. 107); Baker v. Parkhurst, 119 Mich. 542 (78 N. W. 643); Goll v. Miller, 87 Iowa, 426 (54 N. W. 443); and Falker v. Linehan, 88 Iowa, 641 (55 N. W. 503). Counsel say the last two cases pass upon the exact question involved here, and that a judgment should have been given plaintiff for $115.48 and interest.

Counsel for defendant concede the mortgage was void as: to plaintiff’s claim because it was not filed during the time’ this indebtedness was contracted, but say the facts elimimate the mortgage from thé case, because Mr. Kudner took no property by virtue of it, and did not exercise any rights thereunder. It is their claim that Kudner bought groceries and provisions from Smith in the usual course of business from the time Smith started in business up to the time he quit; that they had mutual accounts, and that the mortgage never entered into consideration in their dealings, and that Kudner never took any goods by virtue of the mortgage, nor in any manner attempted to enforce it, but permitted Smith to go on and dispose of his goods in the usual course of business as though the mortgage had never been given, and, when Smith’s stock ran down to where he could no longer do business, he sold Kudner practically the balance of his stock, and Kudner gave him credit for the same on account; that the finding of the court is correct,—citing Folkerts v. Standish, 55 Mich. 463 (21 N. W. 891), Heineman v. Schloss, 83 Mich. 153 (47 N. W. 107), and Baker v. Parkhurst, 119 Mich. 542 (78 N. W. 643).

The court found as a matter of fact that Mr. Kudner did not take any of the property by virtue of or by reason of the mortgage. There was evidence which tended to support this finding. This court has repeatedly held that the findings of fact by the court in a trial without a jury, under Cir. Ct. Rule 26, are conclusive, unless there is a total want of evidence, or where the finding is contrary to the undisputed evidence in the case. Cragin v. Gardner, 64 Mich. 399, 404 (31 N. W. 206); Lamoreaux v. Creveling, 103 Mich. 501 (61 N. W. 783).

It must be conceded that the Iowa cases tend to support the claim of plaintiff, but we think the case is controlled by a decision of our own court; that is, Folkerts v. Standish, 55 Mich. 463 (21 N. W. 891). Counsel claim the Folkerts Case is distinguishable from this, because there was no agreement in that case to withhold the mortgage from record, while in this case there was such an agreement. An examination of the original record will show even a stronger, state of facts in the Folkerts Case, showing an understanding between the parties to the mortgage that it should be withheld from record, than in this case. The case was made to turn upon the fact that the property was not taken by reason of the mortgage, but was bought and the proceeds applied on a debt to which the mortgage was collateral security.

If there had been in fact no chattel mortgage, and the dealings between Mr. Smith and Mr. Kudner had in other respects been the same as now, it would not be claimed Mr. Kudner must account as garnishee defendant for what he received and actually applied on Mr. Smith’s indebtedness to him. Does the fact that he had a chattel mortgage which he did not file, and under which he did not act, place him in a different position? We think the answer must be in the negative.

Judgment is affirmed.

Carpenter, Grant, and Hooker, JJ., concurred. Montgomery, J., took no part in the decision.


author: Carpenter, J.

text:
    FIRST NATIONAL BANK OF OVID v. STEEL.
    1. Fraud — Pleading—Joinder op Counts — Torts—Assumpsit.
    In an action based on 3 Comp. Laws, § 10421, entitled “An act to provide for bringing actions of assumpsit in certain cases,” permitting an action of assumpsit for fraudulent representations or conduct producing an injury for which, an action on the case for fraud or deceit might be brought, special counts in assumpsit to recover damages arising from such fraud or deceit may be joined with the common counts.
    2. Same — Contribution—Constitutional .Law — Change op Remedy.
    The fact that such a construction of the statute, in an action brought against several defendants for a fraud perpetrated before its passage, might, on a general verdict, entitle one of the defendants, paying the judgment entered thereon, to contribution against his co-defendants, to which he would not have been entitled at the time the tort was'committed, does not render the statute unconstitutional, since a change in the law, giving a tort-feasor a right of contribution against his joint tort-feasors at any time before he has paid a judgment against himself and co-defendants, relates only to the remedy.
    3. Same — Title of Act — Object.
    Nor does such a construction of the statute offend against article 4, § 30, of the Constitution, providing that no law shall embrace more than one object, which shall be expressed in its title; since the general object of the statute is to authorize actions of assumpsit to recover damages for fraud, and, while a legislative purpose to give to judgments rendered on such causes of action some of the incidents of judgments in assumpsit is necessarily involved, it is the same, and not a different, object.
    4. Same — Sufficiency of Declaration.
    Where in an action under 3 Comp. Laws, § 10431, to recover damages for fraud, it appears from the averments of the declaration that, while defendants took no part in making the contract which led to plaintiff’s loss, their fraudulent representations were made for the purpose of inducing the contract, and did induce-it, there is sufficient connection shown on the part of defendants with plaintiff’s loss to render them liable.
    5. Statute of Limitations — Demurrer.
    The question of whether a cause of action is barred by the statute of limitations cannot be raised by demurrer.
    Error to Clinton; Stone, J.
    Submitted April 12, 1904.
    (Docket No. 34.)
    Decided May 23, 1904.

      Assumpsit by the First National Bank of Ovid against George A. Steel and David S. French to recover damages for fraud and deceit. From a judgment for defendants on demurrer to the declaration, plaintiff brings error.
    Reversed.

      A. G. Shepard (Lyon & Moinet, of counsel), for appellant.

      H. E. & E. L. Walbridge, for appellee Steel.

      William M. Smith, for appellee French.
   Carpenter, J.

Plaintiff’s declaration consists of the common counts in assumpsit and two special counts. In each of the special counts plaintiff avers that it was induced by the fraud of defendants, in June, 1896, to loan money upon worthless security, and it seeks by each of these counts, by virtue of section 10421, 3 Comp. Laws, to recover in an action of assumpsit the loss resulting from said loan. Defendants demurred to the declaration on the ground that the cause of action complained of in "the special counts cannot be united with the common counts in assumpsit. They also demur to the special counts. The circuit court sustained the demurrer, and plaintiff seeks to review a judgment entered thereon.

The principal question involved relates to the claim of misjoinder of causes of action. We have held (Hallett v. Gordon, 122 Mich. 567 [81 N. W. 556, 82 N. W. 827], Id., 128 Mich. 364 [87 N. W. 261]) that the statute in 'question is a remedial statute, and may be used to recover upon causes of action existing when it took effect. We also held in Loudon v. Carroll, 130 Mich. 79 (89 N. W. 578), that it permits counts based on this statute to be joined with other counts clearly in assumpsit.

Our attention is directed to some of the difficulties which may arise if this form of declaration is approved. If one is permitted to recover at the same time under the common counts in assumpsit and for fraud under the special count, the general verdict will not indicate the amount of defendant’s liability on these different counts. If one of several defendants pays an entire judgment thus recovered, we are bound to preserve his right to demand contribution against his co-defendants for the cause of action enforceable on the common counts. This we cannot do without giving him the right to enforce contribution on the cause of action for fraud recoverable on the special count. That would give him a right which at common law he did not have, and which, when the cause of action arose before the statute passed, as in this case, he did not have at the time the fraud was perpetrated. Defendants insist that legislation giving such a right is unconstitutional. To this we cannot agree. We see no reason why the legislature may not, at any time before a wrong-doer has paid a judgment against himself and others, provide that he may have contribution therefor, though he did not have the same when the tort was committed. In our judgment, such a change in the law relates only to the remedy. Cooley, Const. Lim. (7th Ed.) p. 515.

It is also insisted that, if one who pays a judgment obtained for fraud under this statute has a right to contribution from his codefendants, the statute accomplishes two objects, viz., (a) it permits an action for fraud to be enforced by a declaration in assumpsit, and (b) it gives to the judgment thus obtained some of the incidents of a judgment in an action founded on contract, and for that reason the statute violates section 20 of article 4 of the State Constitution. We do not think this point well taken. The statute has only one general object. It relates only to actions for fraud, and provides that assumpsit may be brought to recover damages, and that the cause of action shall survive. There is necessarily involved in this object the legislative purpose to give to the judgments rendered on such causes of action some of the incidents of judgments in assumpsit. That, however, is the same, and not a different, object.

It results from the same reasoning that the act is not, as defendants insist, broader than its title.

There are difficulties in carrying out this legislation, as we have heretofore indicated (see Hallett v. Gordon, 122 Mich. 567 [81 N. W. 556, 82 N. W. 827]); but we do not think the statute is open to any constitutional objection.

It results from this reasoning that there is no misjoinder -of causes of action.

Defendants demur to the special counts on several grounds. They claim there is no such connection between their alleged fraud and plaintiff’s loss as to create a cause of action. It is true that a fair construction of the declaration indicates that defendants took no part in making the contract which led to plaintiff’s loss. But it does-appear that the fraudulent representations of defendants were made for the purpose of inducing that contract, and did induce it. 'We think this indicates a sufficient connection on the part of defendants to make them liable. See Stoney Creek Woolen Co. v. Smalley, 111 Mich., at page 324 (69 N. W. 722).

Another ground of demurrer insisted upon is that plaintiff’s cause of action was barred by the statute of limitations. This objection cannot be made by demurrer. Renackowsky v. Board of Water Com'rs, 122 Mich. 613 (81 N. W. 581).

We do not think that the other grounds of demurrer to the special counts are well taken, or that they demand discussion.

Judgment reversed, and a new trial ordered.

Moore, C. J., Grant and Hooker, JJ., concurred. Montgomery, J., took no part in the decision.


author: Moore, C. J.

text:
    SIMONS v. DETROIT TWIST DRILL CO.
    Landlord and Tenant — Summary Proceedings — Tenancy at Will — Notice to Quit — Estoppel.
    A defendant in summary proceedings, who, according to complainant’s own theory, is at least a tenant at will, may defend on the ground that he has not received the statutory notice to quit, though he has all along claimed, and still claims, to be in possession under a lease for a fixed term.
    Error to Wayne; Brooke, J.
    Submitted February 3, 1904.
    (Docket No. 73.)
    Decided May 31, 1904.
    Summary proceedings by- David W. Simons against the Detroit Twist Drill Company to recover the possession of certain premises. From a judgment for defendant on verdict directed by the court, complainant brings error.
    Affirmed.

      Geer & Williams and IT. H. Martin, for appellant.

      William J. Gray and L. S. Trowbridge, Jr., for appellee.
   Moore, C. J.

The following statement of facts is taken from the brief of appellant’s counsel:

“By a warranty deed dated February 8, 1896, the Diamond Match Company, conveyed to Burroughs H. Roth-well the property known as the ‘ Old Diamond Match Plant.’ Roth well gave back to the Diamond Match Company a mortgage on the property, which bore date March 25, 1896, and, by a warranty deed bearing the same date, conveyed the property to E. W. Scane. By warranty deed bearing date November 12, 1897, Scane conveyed the property to A. C. Peoples, who gave back to Scane a mortgage on the property, which bore date November 15, 1897. This mortgage was duly recorded. On December 9, 1898, Peoples leased a portion of the property to the Detroit Twist Drill Company, the defendant in this case, for a term of five years, for the sum of $75 per month.
“On July 14, 1899, Scane commenced an action in the Wayne circuit court, in chancery, to foreclose the mortgage held by him, Peoples having made default. All persons having any interest in the fee were made parties defendant in this action, but the Detroit Twist Drill Company was not made a party defendant. A notice of the pendency of this action was duly recorded, and the foreclosure proceedings are admitted to have been regular. Scane purchased at the foreclosure sale, and on July 30, 1900, he was given a circuit court commissioner’s deed of the premises. The right of redemption expired January 30, 1901, and on February 1, 1901, Bowen, Douglas ■& Whiting, Scane’s attorneys, notified the defendant of this fact.
“On February 11,1901, Scane wrote to N. Gr. Williams, defendant’s manager, authorizing him to collect the rent due him from the defendant and the Star Corundum Wheel Company, which occupied another portion of the property ‘ monthly in advance, as monthly tenants,’ and out of such rents to pay the coal bills, and, if any balance remained, to pay such balance to him. The portions of the property not occupied by defendant had been leased by Peoples by similar leases to the Star Corundum Wheel Company, the Michigan Ornamental Glass Company, and the Weiler Cash Register Company. After receiving the letter from Scane, Williams immediately replied that the ■occupants of the premises did not consider their leases had been terminated, and objected to being designated as monthly tenants. In reply to this, Scane wrote that he did not intend to recognize their leases from Peoples. After this correspondence the matter was dropped.
‘ ‘ Acting under the authority from Scane, Williams had charge of the plant for about nine months, collected ■the rent from the several occupants, paid , the coal bills, .and rendered to Scane from time to time written statements of account. In the meantime the Diamond Match Company gave the statutory notice,by advertisement that it would sell the property by virtue of the power of sale contained in its mortgage, default having been made, and ■on October 3, 1901, it purchased the property at this foreclosure sale. Scane and Rothwell quitclaimed their right of redemption to the Diamond Match Company in November, 1901, and the Diamond Match Company immediately notified the defendant of this fact, and that Scane had no further interest in the premises. It took actual charge of the property, and collected the rent for two months from the tenants.
“On January 27, 1902, the Diamond Match Company conveyed the property by warranty deed to Rothwell, who two days later conveyed it by warranty deed to David W. Simons, the complainant in this proceeding. Shortly before this date, Mr. Geer, as attorney for the Diamond Match Company, and Mr. Clinton, its manager, called upon Mr. Williams, and informed him that arrangements had been made to sell the property to Mr. Simons, and that the occupants of the property could probably make some arrangement with Simons to occupy the premises under him. Williams replied that they claimed to occupy the premises ‘ under the Peoples lease, and didn’t care to make any other or different arrangements. ’
“After Mr. Simons became the owner, Mr. Rothwell, in his behalf, called upon the different occupants on February 5, 1902, and informed them that they would either have to pay an increased rent or vacate the property. They refused to do either, claiming they had a right to stay under their leases from Peoples. It is their claim that the leases had not been affected by the foreclosure of the Scane mortgage, because they had not been made parties defendant in the action to foreclose.
“On February 24, 1902, Simons commenced proceedings before a circuit court commissioner, under section 11164, 3 Comp. Laws, to recover possession from the occupants of the property. The circuit court commissioner found the defendants guilty, and ordered a restitution of the property. The defendants appealed to the circuit court, where a jury trial was had in the case at bar, and a verdict was directed in favor of the defendant.
“The defendant claimed that the complainant was not entitled to recover possession for the following reasons:
“(1) Because, it not having been made-a party defendant in the action in which the Scane mortgage was foreclosed, its rights under its lease from Peoples were not extinguished or affected by the foreclosure of said mortgage ■and the sale of the property.
“ (2) Even though its rights were extinguished thereby, Scane and the Diamond Match Company, by their conduct (i. e., by furnishing power to run the plant and collecting rent monthly), ratified the Peoples lease.
“(3) If the Peoples lease was not thus ratified, then that this conduct created a tenancy from month to month, which could only be terminated by a 30-day notice to quit, which was not given.
“ (4) That if its rights under the Peoples lease were extinguished by the foreclosure of the Scane mortgage, and it is not entitled to claim that the conduct of Scane and the Diamond Match Company either ratified the Peoples lease or created a tenancy from month to month, still the complainant is not entitled to recover possession by this proceeding, because a purchaser at a chancery foreclosure sale cannot recover possession by summary proceedings •under section 11164, 3 Comp. Laws.
“The complainant claims that he was entitled to recover possession, and that a verdict should have been ■directed in his favor, for the following reasons:
“(1) The rights of defendant under the Peoples lease were extinguished by the foreclosure of the Scane mortgage and the sale of the property.
“(3) Scane and the Diamond Match Company did not and could not by their conduct ratify the Peoples lease.
“ (3) The defendant is estopped from claiming that Scane and the Diamond Match Company, by their conduct, created a tenancy from month to month.
“ (4) Since the enactment of Act No. 300, Pub. Acts 1899, a purchaser at a chancery foreclosure sale may recover possession by summary proceedings under section 11164, 3 Comp. Laws.”

Inasmuch as. the lease of the Detroit Twist Drill Company has expired, more than five years having elapsed since it was made, we deem it necessary to discuss only one question, and that is, Was the defendant, upon plaintiff’s theory of the case, entitled to notice before its tenancy could be terminated? Of course, if defendant is right in its- claim that it should have been made a party to the foreclosure suit, the plaintiff cannot maintain this action. Defendant says that, conceding its position is wrong in that respect, and in respect to the other defenses it raises, upon plaintiff’s theory of the case defendant was. a tenant at will, and entitled to notice.

The correspondence clearly recognized the tenancy of defendant. The collection of the rent monthly under the-authority of Scane for nine months, and by the Diamond Match Company for two months, recognized the tenancy of defendant. The verbal notice of Mr. Rothwell, acting-for Mr. Simons, that they would either have to pay an increased rent or vacate the property, recognized that they were in possession as tenants; the difference between the parties being that the plaintiff and those who preceded him claimed defendant was a monthly tenant, while it claimed it was a tenant under a five-year lease.

By the statute, tenants at will and tenants by sufferance are entitled to notice to quit. Section 9357, 3 Comp. Laws. See the cases cited thereunder. Counsel for plaintiff say defendant is estopped from making this defense, because its claim that its five-year lease is good, and that it is in possession thereunder, is inconsistent with the claim that it is a tenant at will, entitled to notice; citing Kunzie v. Wixom, 39 Mich. 384; Wolf v. Holton, 92 Mich. 136 (52 N. W. 459); Trumpower v. Marcey, 92 Mich. 529 (52 N. W. 999); and Pattison v. Dryer, 98 Mich. 564 (57 N. W. 814).

In Kunzie v. Wixom the court say there is no possible foundation for any theory of a tenancy at will, and then say:

“ Did the defendant so occupy as to entitle him to contend that he held in character of tenant by the plaintiff’s sufferance ? Now, a tenant at sufferance is' one who, having entered under a lawful title, holds over without right, and by reason of the laches of his landlord, after the ter-' mination of the interest. And in order that the occupant may assert and maintain against the supposed landlord that his holding is at the latter’s sufferance, it is essential that he do not ground his retention of possession upon a contrary theory and hostile basis. If the keeping of the possession is upon a claim which directly or by implication repels or negatives all right of the plaintiff to put an end to it, it involves a negative upon any right ■of the tenant to insist that his holding is on terms permitting the plaintiff to expel him, and he cannot elect to be considered as tenant by sufferance. Turning to the record, and it appears too plain to admit of question that the defendant holds this very position, and, refusing to recognize any right of possession in the plaintiff, endeavors to defend his own possession by setting up an inconsistent and hostile ownership.”

This is clearly a very different case from the one at bar.

In Wolf v. Holton, supra, defendant claimed title in himself by adverse possession, and the court held that was inconsistent with a claim of tenancy.

In Trumpower v. Marcey, supra, the question involved was whether the property in a tree vested in a purchaser, where a tenant was in possession, and afterwards cut the tree for fuel, claiming the right to do so; and the court said:

“ There was no written conveyance of the tree, or contract relating to it, and, of course, no record in the office of the register of deeds. The defendant became the purchaser for value and in good faith of the property, without notice of any claim of plaintiff to any of the standing trees. Under these circumstances, I think the title to the tree passed to the defendant.
“I do not think the question involved is strictly a question of estoppel. It is a question as to whether the property in this tree vested in the defendant by his purchase, and this necessarily depended upon whether he-bought without notice of plaintiff’s claim. In the absence of possession, the fact that there was no record notice of any claim to this tree would be sufficient to determine the question of property in favor of defendant. And while it • is true that- possession is notice to put a purchaser upon inquiry, yet the force of that notice is broken if, upon inquiry, the tenant disclaims title.”

A reference to Pattison v. Dryer, supra, will show the-question involved here was not involved in that case. None of the cases, we think, conclude the defendant from making this defense. Here both parties admit the plaintiff was the landlord and defendant was the tenant. The difference between them in that regard is that defendant claims it is tenant for a fixed term of five years, while the plaintiff claims it is a monthly tenant. Upon plaintiff’s own theory of the case, because of the provisions of the-statute, he cannot terminate the tenancy without giving, notice of his intention to do so.

Judgment is affirmed.

Grant and Hooker, JJ., concurred. Carpenter, J.,, did not sit. Montgomery, J., took no part in the decision.


text:
    ANN ARBOR FRUIT & VINEGAR CO. v. ANN ARBOR RAILROAD CO.
    1. Ways op Necessity — Duration.
    A right of way arising from necessity is limited in duration t© the continuance of the necessity.
    2. Same — Adverse User — Prescription.
    One having a right of way as a way of necessity cannot acquire the way by prescription, at least where his user does not exceed his right; and the fact that such user is in the belief that the way is one of right is unimportant.
    3. Same — Notice.
    User of a way by one having a right thereto as of necessity,, after the necessity has ceased, does not become adverse until the landowner has notice of a hostile claim; and where there is no change in the character of the user, or knowledge on the part of the landowner that the necessity has terminated, (e. g., that the ownership of the proprietor of the dominant tenement extends to a newly opened street), there is nothing from which such notice can be inferred.
    4. Same — Change- op Title.
    The effect of a change of ownership of the dominant tenement after the expiration of the way of necessity, and a subsequent user of the way as of right, on the question of notice to-the owner of the servient tenement, is discussed, but held not of controlling importance in the present case, such circumstances having arisen within the statutory period of limitation.
    5. Same — Constructive Notice — Public Records.
    One over whose land a right of way by necessity exists is not chargeable with knowledge of an adverse claim to the way by reason of recitals in deeds from the owners of the dominant tenement, duly recorded.
    6. Adverse Possession — Sufficiency of Evidence.
    While evidence of a notoriously hostile possession of premises originally occupied by permission of the owner- may sometimes justify a finding of a prescriptive right, it seems that, it is only upon the theory that the owner must have had actual knowledge of the hostile claim, and not merely that he should have known of it.

      Appeal from Washtenaw; Kinne, J.
    Submitted February 5, 1904.
    (Docket No. 84.)
    Decided May 31, 1904.
    Bill by the • Ann Arbor Fruit & Vinegar Company against the Ann Arbor Railroad Company to restrain the obstruction of an alleged right of way. From a decree for complainant, defendant appeals.
    Reversed.

      Frank F. Jones (Jasper C. Gates, of counsel), for complainant.

      A. J. Sawyer & Son (Alexander L. Smith, of counsel), for defendant.
   Carpenter, J.

Complainant’s plant is situated adjacent to and west of defendant’s railway, between Liberty and Washington streets, in the city of Ann Arbor. At the time this suit was commenced, access was obtained to complainant’s property by a way extending from that property, across defendant’s right of way, to First street, the nearest street to the east. Defendant proposed to make certain changes in its track which would interrupt and destroy this way. Complainant commenced this suit, and in the court below obtained a decree enjoining said proposed action. The case is appealed to this court, and the sole question is whether complainant has a right to this easement.

The facts material to this decision are as follows: In 1878 Philip Kling and Henry Weber, owning the land now owned by complainant, and other land, conveyed the right of way to defendant’s predecessor. This left the land now owned by complainant without means of access to any street, and the deed of the right of way to defendant’s predecessor did not provide for any such means of access. It is assumed by both counsel, and in deciding this case we shall assume (see Washb. Easem. [4th Ed.] p. 258), that these facts created a way of necessity across said right of way in favor of the owner of the land now owned by complainant. The way of necessity thus legally ■created came into actual existence soon after the conveyance of the right of way, and since that time it has been used as a means of access from the street to the property. It is conceded, however, that soon after November 9, 1886, the date of the conveyance of the property to Allmendinger & Schneider, complainant’s immediate grantors, the right to the use of this way as a way of necessity ceased, because (see Washb. Easem. [4th Ed.] p. 260), by the •opening of another street (viz., Washington street) on the north, the then owner of the property now owned by complainant had a means of access directly through his own property to a highway.

Though the right to use the way as a way of necessity ceased in 1886 or 188?, it has in fact been used till the present time, and it is the claim of complainant that a right to use the same has been acquired by prescription. If this is true, complainant has a different right from that which was originally created. The way which arose out of the necessity was limited in duration to the continuance of the necessity. Washb. Easem. (4th Ed.) p. 260. It would not be improper to describe this way as a way constructively granted by defendant’s predecessor so long as the necessity for its existence continued. The prescriptive way claimed by complainant does not arise from a grant. It arises from the. statute of limitations, and it is based upon the contention that for the period prescribed by the statute of limitations — viz., 15 years — complainant has used this way adversely to the rights of defendant. Such a way is not limited in duration, but is held in fee, as appurtenant to the property now owned by complainant.

Has complainant acquired by prescription the right to this easement ? It is claimed in its behalf that as early as 1882 its mediate grantor claimed this way as of right, and therefore the statute of limitations then commenced to run. We do not think this claim tenable. At that time, and until after November 9, 1886, there was a right to this easement as an easement of necessity. To our mind, it is impossible that one having a right to a way as a way of necessity can acquire that way by prescription, — at least when, as in this case, his user does not exceed his right. While one has the right to use an easement by the grant of the owner of the servient tenement,, that user cannot be adverse. The acquisition of ownership by adverse possession or adverse user necessarily presupposes that the true owner has it in his power to put an end to the adverse holding or adverse user.» Manifestly this is not the case when that owner has granted the-right to the holding or user in question.

In reaching this conclusion, we have not overlooked the fact that that excellent work, the American & English Encyclopaedia of Law,— see volume 22, p. 1199, of the second edition,— contains this statement: “Use of a way of necessity may be regarded' as adverse, rather than permissive.” In support of this-statement are cited three cases: French v. Smith, 40 N. J. Eq. 361 (3 Atl. 130); Benedict v. Johnson, (Ky.) 42 S. W. 335; and Plitt v. Cox, 43 Pa. St 486. It cannot be contended that either the first or second of these authorities supports the text. We will,, however, examine the third, viz., Plitt v. Cox, 43 Pa. St. 486. The facts in that cáse are these: Complainant purchased a lot which was bounded on one side by a canal basin, and on the other by a strip of land occupied for railway purposes, which separated it from a highway. The land occupied by the railroad had originally belonged to complainant’s grantor. He had given a release to the company building the railroad, and apparently reserved, the fee. For 25 years complainant passed over this strip of land to go from the highway to his own. The railroad fell into disuse, the track was taken up, and the land reverted to complainant’s grantor, who subsequently sold the same, either mediately or immediately, to defendant. Defendant commenced to erect a building which would destroy complainant’s passageway. His right to enjoin this-project was sustained; the court saying that complainant- and the adjacent lot owners, “when they purchased, had n» outlet landward except across the ground occupied by the railroad to the street, nor have they had at any time since.” The decision, however, was not put upon the ground that complainant had a way of necessity, but on the ground that user for more than 21 years “ raises such a presumption of right as to entitle the complainant to have the ground remain open,” and also on the ground that, by the sale, complainant’s grantor “ annexed the use of that highway to the ownership óf the lots, and that neither he nor any person under him can take it away. His case is like that of one who has sold lots fronting on the common road through his farm. If the road be vacated, and the rights of the public cease, he may not close it up against his vendees, for his grant estops him.” It is to be observed that the right of access to a highway under such circumstances is not, strictly speaking, a way of necessity. It differs from a way of necessity in this: That it does not cease with the necessity for its existence. See Washb.. Easem. (4th Ed.) p. 266.

It cannot be claimed that this case is authority for the proposition for which it is cited. Under the reasoning of that case, complainant’s way was not a way of necessity, and therefore it is not authority for the proposition that use of a way of necessity may be regarded as adverse. We do not think the court intended to decide that complainant had acquired his right both under a grant and adversely while using under that grant. We think that decision holds that the facts warranted the conclusion that complainant acquired his right either by adverse possession or by grant. The learned judge who wrote that opinion did not conceive it necessary to say — -what ought to be obvious — that these two conclusions were not consistent, and that both could not at the same time be drawn.

If it were true, as we have held it is not, that one while entitled to a way of necessity could also hold adversely by making a claim that he held of right, it would also be true, as we shall show hereafter in this opinion, that this adverse user would not commence until knowledge of this claim was brought home to the owner of the servient tenement. And in this case such a principle, if there were such a principle, would not apply, because, as we shall hereafter show, the owner of the servient tenement had no such knowledge.

We conclude, therefore, that the use of the way was not adverse — that is, the statute of limitations did not commence to run — until the right to use it as a way of necessity ceased. The question, then, is how soon after that right ceased (and it ceased, as we have already shown, soon after November 9, 1886) the user of the way may be claimed to be adverse.

When possession is originally taken by the consent of the true owner, and in recognition of his rights, that possession does not become adverse, and the statute of limitations does not commence to run, until the owner knows that the possessor asserts a hostile claim. In City of St. Joseph v. Seel, 122 Mich. 70 (80 N. W. 987), it was decided, as stated in the headnote:

“The possession of one who enters upon land under license from another claiming title, and who occupies the land for a series of years, doing nothing inconsistent with his holding as licensee, does not begin to be adverse until he notifies the licensor of a hostile claim.”

The opinion in that case quotes with approbation from Smith v. Hitchcock, 38 Neb. 109 (56 N. W. 791) :

“Mrs. Smith’s entry on this lot was by permission of the owner of the legal title, and her possession thereafter was permissive, and not adverse; nor could it become so until such time as she began to occupy under a claim of right, with notice of such claim brought home to the owner.”

In Burke v. Douglass, 115 Mich., at page 199 (73 N. W. 133), it was said:

“Possession by a vendee under a land contract is not adverse until he has either complied with its terms, or has in some way given notice to his vendor or his assignees that he claims to hold in hostility thereto.”

See, also, 1 Cyc. 1032, and numerous authorities there cited. See, also, 1 Am. & Eng. Enc. Law (2d Ed.), p. 798, and numerous authorities there cited. .

It is contended that Pugh v. Schindler, 127 Mich. 191 (86 N. W. 515), is opposed to this rule, and inconsistent with these authorities. There an ejectment suit was brought, and the controversy related to the correct location of the boundary line between the parties, which, it was claimed, was marked by an old fence. There was evidence that the fence was not on the true line; that it was built many years before, under an agreement between the grantors of the two parties that, though used provisionally as the boundary line, it should be removed to the true line when the same was correctly ascertained. The trial court instructed the jury that, if this agreement was made, the possession of defendant and his grantors could not be adverse until notice was given to the opposing party. In connection with that charge, he instructed the jury as follows:

“The fact that the land on either side of the division line has changed hands since the fence was built would not render a possession adverse as to the subsequent owners which was not adverse as between the parties who built the fence. The situation would remain the same as between subsequent owners, no matter how many times it might be conveyed, unless some acts were*done or notice given by the subsequent possessors to change the character of the possession from a permissive to an adverse one.”

It was held that this was incorrect, the court saying:

“If a grantee of Mr. Hopkins [defendant’s mediate grantor] was informed, at the time he made his purchase, that the land he bought included all the land inclosed by the fence, and he entered into its occupancy without any knowledge that Mr. Hopkins’ occupancy was permissive, and with the belief that he was the owner of the land, and with the intent to occupy as an owner, his intention to claim the land might thus be shown; and, if the occupancy in all other respects met the requirements of an adverse occupancy for the requisite time to acquire title, we think it would be sufficient.”

If this language indicates that a possession originating from an owner’s consent máy, without his knowledge of a hostile claim, ripen into an adverse title, it should not receive that construction. It should be construed with reference to the question under discussion. The effect of the charge of the trial court then being considered was that the manifestly adverse possession of the new purchaser was not notice to his neighbor of a hostile claim; that the neighbor might in all cases refer that possession to a secret agreement for the location of the fence, made years before. It did not seem to this court that it was just for the adjacent owner to assume that the purchaser had knowledge of that secret agreement, and therefore that he held possession thereunder, and it was intended in that case to decide that the purchase and subsequent possession at least afforded evidence of notice of the hostile claim. The statement in the opinion above quoted, relied upon by complainant, is a part of the argument advanced to support that decision.

Even if Pugh v. Schindler were authority for the broad proposition contended for by complainant, viz., that the statute of limitations commenced to run when the property was purchased by one who used the way as a way of right, and not as a way of necessity, it would not avail complainant. When Allmendinger & Schneider, complainant’s immediate grantors, purchased this property, November 9, 1886, this way existed as a way of necessity. It did not cease to be a way of necessity until after their purchase, and therefore, under the reasoning of this opinion, their user would not be adverse, no matter what their claim might be, until knowledge of that claim was brought home to defendant or to its predecessor. And, if any such claim was made, it was not brought to the knowledge of defendant or to its predecessor. The first owner of the property, then, who could claim the benefit of the doctrine of Pugh v. Schindler, as construed by complainant’s counsel, was complainant itself. Complainant did not acquire the property until 1890. Fifteen years have not elapsed since that time, and therefore, even under its construction, the case of Pugh v. Schindler does not aid it.

The principle we have stated and the authorities we have cited relate to the acquiring of an adverse ownership to land, rather than to the acquiring of an easement to cross land. The acquisition of these two rights, however, depends on the same principle, and arises from the same statute of limitations; and it has been expressly held that this principle is applicable to the acquisition of easements. In 22 Am. & Eng. Enc. Law (2d Ed.), p. 1198, under the title of “Prescription,” it is said:

“The mere fact that the use of an easement was permissive in its inception does not preclude the acquirement of title by prescription, if it has subsequently become adverse and has so continued for the requisite period; but a use which begins under a license will not be considered adverse until the license is repudiated, and such repudiation is brought to the knowledgeof the owner of the servient tenement; and the burden of proving that the use has become adverse is upon the party claiming the easement.”

In support of this proposition are cited many authorities, which we have examined, and which sustain the text. : See Barbour v. Pierce, 42 Cal. 657; Dunham v. City of New Britain, 55 Conn. 378 (11 Atl. 354); Hill v. Hagaman, 84 Ind. 287; Patterson v. Griffith, (Ky.) 62 S. W. 884; Hurt v. Adams, 86 Mo. App. 73; Nelson v. Nelson, 41 Mo. App. 130; Taylor v. Gerrish, 59 N. H. 569; Huston v. Bybee, 17 Or. 140 (20 Pac. 51, 2 L. R. A. 568).

We conclude, therefore, that complainant’s user of this easement did not become adverse — that the statute of limitations did not commence to run — until after the way of necessity ceased, and defendant or its predecessor in title had knowledge of a hostile claim. Defendant did not know, until this suit was commenced, that the way of necessity had ceased. It did not know, and it had no reason to know, that when Washington street was opened, some time after the 9th of November, 1886, the then owner of the property now owned by complainant owned adjacent property which .extended to that street. We are compelled to say from the record that defendant and its predecessor-in title therefore acquiesced in the use of this way, supposing it to be a way of necessity. This conclusion leaves no room for the supposition that the owner of the servient, tenement had knowledge of an adverse claim.

Having determined that the owner of the servient tenement had neither notice nor knowledge of any adverse claim, we think it follows that a prescriptive right to the way does not exist. We do not think that the doctrine of constructive notice has any application; that is, we do not think that possession becomes adverse — that the statute of limitations commences to run — on the theory that defendant should have known, though it did not in fact know, of a hostile claim. We concede that evidence of a notoriously hostile claim and hostile possession is admissible to. prove, and that such evidence may in some cases justify the finding of, a prescriptive right. But this finding rests, in our judgment, upon the assumption that the owner of the servient tenement acquired actual notice of the adverse, holding.

“No kind or degree of actual hostility will of itself convert such a permissive into an adverse possession. No sort of claim of ownership on the part of the party in possession will of itself have this effect. And while it may be open to the jury in some cases to find from the circumstances of the possession that the owner had notice of its hostile and exclusive character, no exclusiveness of possession, no hostility, no claim of right antagonistic to the title, will necessarily in any case take the place of direct proof of knowledge on the part of the owner that the possession is no longer held in subserviency to him. At most, in any case, the circumstances of hostility, exclusiveness, and claim of right áre only for the jury to consider as tending to show knowledge on the part of the owner; the argument being that the circumstances of the possession were, such as that he must have known them, and from them that the possession was no longer held under him and in recognition of his title.” Trufant v. White, 99 Ala. 526 (13 South. 83).

See, also, Benje v. Oreagh, 21 Ala. 151.

If we are not correct in the foregoing conclusion, we think it may be 'held in this case that the owner of the servient tenement did not have constructive notice of an adverse claim. It is urged that defendant or its grantor was bound to know of the adverse claim, because such claim was asserted in deeds duly recorded. In support of this contention, counsel invoke the rule that possession or use of any kind of real property is constructive notice to the whole world of the paper title under which the possession or use is enjoyed. Hommel v. Devinney, 39 Mich. 522, 526; Allen v. Cadwell, 55 Mich. 8, 11, 12 (20 N. W. 692); Miner v. Wilson, 107 Mich. 57, 59, 60 (64 N. W. 874). This principle, in our judgment, has no application. The deeds containing these recitals were made after the conveyance by Fling & Weber to defendant’s predecessor. Defendant was not chargeable with notice of the contents of these deeds, and the possession and use of the easement were in accordance with a constructive grant from defendant’s grantor. Neither defendant nor its grantor was under an obligation to examine into the source of a title which it had a right to assume proceeded from itself. That constructive grant was a sufficient justification for and explanation of the rights which to their knowledge were asserted and were being exercised.

“Where there are no relations between the owner and the party in possession, — nothing upon which the possession can be referred to the owner’s right, — he is presumed to know of its wrongful character, knowing, as he must, of the fact of possession. But where a relation does exist upon which the possession is referable to the title, the holder of that title is justified in assuming that the possession is subordinate thereto, and held in recognition thereof, until he knows to the contrary.” Trufant v. White, 99 Ala., at page 535 (13 South. 86).

It is doubtful if any deed contained a recital which indicated that the way was claimed as of right, except that which conveyed the property to complainant. This deed, as already stated, was not made until 1890; and, even if defendant was bound, as we have held that it was not, to know its contents, the period since that time, being less than 15 years, would be insufficient to give complainant a prescriptive right. Nor was there anything in the character of the use of this way, either before or after it had ceased to be a way of necessity, to apprise the owner of the servient tenement that it was claimed as a way of right.

We think it may be inferred from the testimony -that before this way ceased as a way of necessity, and perhaps for more than 15 years before this suit was commenced, those using the way believed it to be appurtenant to the property now owned by complainant, and believed that they had a continuous right to use the same. It is unfortunate that this belief was ever entertained, for it has doubtless led to expenditures which will prove wasteful. But neither defendant nor its grantor created this belief. Indeed, they did not know of it until very recently. If those who entertained this belief had examined their chain of title, and acquainted themselves with the facts, they would have known that this way was not a way of right, but that it originated as a way of necessity. It follows from this opinion and the authorities cited (see, also, Inhabitants of Deerfield v. Connecticut River Railroad, 144 Mass. 325 [11 N. E. 107]) that this belief did not.make the user adverse.

It results from these views that the decree appealed from must be reversed, and the bill dismissed, with costs.

The other Justices concurred.