text:
    CARROLL v. PALMER MANUFACTURING CO.
    1. Frauds, Statute of — Contract fob Term of One Year or Upwards — Master and Servant — Work, Labor and Services.
    A contract of employment to begin tbe first of tbe following month and to terminate at the end of a year was within the statute of frauds.
    2. Same — Memorandum—Letters.
    Written correspondence between the parties to a contract which the statute of frauds requires to be in writing, not specifying the term of employment or the amount of salary agreed upon, was not sufficient to establish a valid agreement, under the statute.
    3. Pleading — Common Counts — Work, Labor and Services — Void Contract.
    A plaintiff may recover upon the common counts in assumpsit for services that were performed under a contract, void because it was not in writing.
    4. Same — Trial—Amendment.
    By amending his declaration that set up the common counts, so as to include only a special count in assumpsit for breach of a contract of employment, the plaintiff made it necessary to amend his declaration in order to recover on the quantum meruit for services performed: failing to ask for and obtain leave to amend at the trial, the plaintiff was properly denied the right to recover.
    Error to Kent; Perkins, J.
    Submitted October 13, 1913.
    (Docket No. 23.)
    Decided July 24, 1914.
    Assumpsit by William F. Carroll against the Palmer Manufacturing Company for breach of a contract of employment. Judgment for defendant on a directed verdict. Plaintiff brings error.
    Affirmed.

      George E. Nichols and C. G. Turner, for appellant.

      Hatch, McAllister & Raymond, for appellee.
   Bird, J.

The plaintiff seeks to recover in this suit a balance which he claims is due him on salary account as traveling salesman while in the employ of the defendant. The claim was made by him upon the trial that he was employed on or about December 15th for one year from and after January 1, 1911, at a salary of $25 per week, and that he was wrongfully discharged some time in April, 1911. The bill of particulars covered his salary from January 1, 1911, to January 1, 1912, at the contract price of $25 per week. This claim was met with the objection that the agreement, being oral, was within the statute of frauds; it not being a contract that was to be performed within a year from the making thereof. 3 Comp. Laws, §9515 (4 How. Stat. [2d Ed.] §11399). The trial court indicated to the plaintiff that this objection was well taken, whereupon he then insisted that he had a right to recover under the quantum meruit, and he asked that the case be submitted to the jury under the common counts; but the trial court held that the amended declaration did not contain the common counts, and accordingly a vérdict was directed for the defendant. The plaintiff complains of the ruling of the trial court upon both of these propositions.

Was the contract within'the statute of frauds? The contract having been made in December, 1910, to begin on January 1, 1911, and end on January 1, 1912, it was, without doubt, a contract not to be performed within a year. The plaintiff recognizes this, but claims that it is rescued from the operation of the statute by the correspondence which passed between the parties. The letters and parts of letters relied upon for this purpose are as follows:

“November 14, 1910.

_ “Do not forget to inform your customers of our exhibition during the month of January on the fourth floor of the Furniture Exchange Bldg., Grand Rapids. Unless you intend to be with us this coming season, it would be hardly of any use for you to continue on the road. We expect that you will attend to the January market during January, where we will take up the matter of the coming year in person. * * * ”

“November 21, 1910.

“I have informed the trade from the first day that I started out of our exhibit in Grand Rapids, and I have many promises from same. I certainly will be in the Rapids for January, and when I finish my trip am going to try to run up to the factory and see you about next year.”

“November 29, 1910.

“There is no use for you to make any further travels this season, you having made the trip as suggested. Kindly send us your final expense bill up to date and whenever you are near Detroit, we will arrange for starting in afresh the first of January. Regarding your first trip, it no doubt was late in the season and we hope it will be a benefit to you for next season.”

“December 28, 1910.

‘‘Yesterday we mailed you a $25 check to * * * Chicago, thinking that you were there. Inclosed find another $25 check to fulfil your request. We expect that when you get to Grand Rapids our samples will be there, as they were shipped yesterday and consigned to the Elston Storage & Packing Co. Our Mr. Strong and C. F. Ricken will be in Grand Rapids Monday or Tuesday. Wishing you a happy and successful New Year, we remain.”

“January 28, 1911.

“We wish you success, which will no doubt come with hard work, as you are now acquainted, and the market has given us a certain amount of advertising. Keep your shoulder to the wheel, and you will meet with success. Awaiting your early reports, with lots of inclosed orders, we remain.”

“February 6, 1911.

“It will be impossible for us to continue business on this basis as we certainly must have orders to offset expenses. As stated at our office, your sales for this season were not to cost us over 7 per cent. Therefore we hope that you will be able to send in orders regularly and also let us hear from you daily regardless of where you are. We will aid you in every way possible to effect sales, and we know1 that you have the ability and feel as though you ought to make good. # ❖ *

“P. S. Kindly send us your expense account since Jan. 1, 1911.”

“Received your route sheet with expense account inclosed for January. * * * These expenses are way beyond any we have had from our other traveling men. We figure that we are to pay the hotel bills, railroad fares, car fares, etc. * * * After comparing your sales with your expenses, it would be impossible for us to continue. Therefore we think it would be more satisfactory to both for you to carry our line on a commission basis, together with another line. We will allow you 7 per cent, commission on all 'accepted orders received from you'paying commissions on the 1st and the 15th of each month. We certainly cannot continue on the present conditions. * * * Your sales since Jan. 1, 1911/ up to date are $490.45, and we have forwarded you $225; 7 per cent, of your sales is $34.33. You can therefore see that the difference is $190.67. If you were to continue at this rate, you can readily see the amount you would owe us at the end of the year. If you cannot sell our line on a 7 per cent, commission basis, we would like to hear from you to the contrary.”

“February 20, 1911.

“Inclosed find check for $50. We have sent you letter to Marion, Ind. [previous letter quoted], which refers to conditions up to date. We forwarded you this $50, but expect some results, as we cannot afford to forward more money than the amount of your orders. We expect you to get busy and sell goods on a 7 per cent, basis to make up some of the lost time. We will try this for a few weeks longer, but, if we do not receive results, will have to go on a commission basis as referred to in letter which you will receive in Marion. We do not want to make a change, and hope you will endeavor to make a showing, and we will assist you in every possible .way, as you can readily see that the cost of selling is so high that we would be better off not making the territory unless we receive more orders. If we do not get the orders, will be put on a commission basis. * * * ”

“March 3, 1911.

“In order to assist you, we will allow you $2,000 on the first $20,000 worth of goods you sell and 5 per cent, for all sold thereafter. This will give you a chance to make good. In other words, we will allow you 10 per cent, commission on all goods until you reach the $20,000 mark. * * * ”

“March 81, 1911.

“You are now very heavily indebted to us, and, as we do not think you can possibly make up, would be advisable for you to return photographs.”

“April 3, 1911.

“Therefore kindly return our photographs, as you are now very heavily indebted to us.”

Considerable importance is placed by the plaintiff upon a certain letter which he received from the defendant agreeing to pay him $25 per week for his services while he worked under the temporary agreement in the fall of 1910. This letter was introduced in evidence, and the plaintiff testified that the agreement in December was that he should continue at the same salary for the year 1911. This oral testimony, together with the contents of the letter, makes out a contract, but does not make out such a contract in writing as will satisfy the statute. The letters under date of November 14th and November 29th clearly indicate that a new agreement was to be made for the year 1911, and the plaintiff testified that on or about December 15th a new agreement was made; but the new agreement is partly in writing and partly in parol. Looking only at the correspondence, one is left in serious doubt as to how long the service is to continue, and what salary is to be paid. These are important elements in the- contract, and they must not rest in parol. It is true there are some expressions used in the letters from which an inference might be drawn that a year was contemplated, and there are also some remittances to plaintiff spoken of in the letters which might carry an inference that he was to receive $25 per week; but the letters also contain statements indicating that there was no fixed time and no fixed salary agreed upon.

If we are to give this section of the statute the construction which it ought to have in order to make it effective, and which it has heretofore received from this court, we must hold that the contract set up and relied upon was within the statute and therefore void. Gault v. Stormont, 51 Mich. 636 (17 N. W. 214); Webster v. Brown, 67 Mich. 328 (34 N. W. 676); Baumann v. Lumber Co., 94 Mich. 363 (53 N. W. 1113); McCaskey Register Co. v. Truettner, 149 Mich. 241 (112 N. W. 909).

Should the case have been submitted under the common counts?

The plaintiff argues, and rightly so, that if he rendered services for defendant under a void contract, and he has not been compensated therefor, he may recover the value of them under the common counts. Fuller v. Rice, 52 Mich. 435 (18 N. W. 204). But that is not quite the question. The trial court did not deny plaintiff this right. What he held was that plaintiff’s declaration did not include the common counts. Plaintiff’s declaration originally was upon the. common counts. He afterwards obtained leave to amend his declaration. He did not do so by adding a special count to his declaration on the common counts, but instead substituted his special count for the common counts. When an order is obtained granting leave to amend a declaration, the amendment in order to be effective must be actually made. Ballou v. Hill, 23 Mich. 60; Harris v. Thomas, 140 Mich. 462 (103 N. W. 863).

Plaintiff complied with this rule and made the amendment, and filed his declaration with only the special count, making no mention therein of the common counts. Therefore we must conclude that the common counts were no part of the amended declaration. It is unfortunate that a new suit should be necessary to dispose of this matter, when by a second amendment the common counts could have been added to the special count, and the entire claim of plaintiff disposed of in this case; but, inasmuch as no application was made to the trial court to have this done, there is no alternative for'us but to hold that the trial court was right in making the disposition of it which he did.

The judgment will be affirmed.

McAlvay, C. J., and Brooke, Kuhn, Stone, Ostrander, Moore, and Steere, JJ., concurred.


source: Caselaw Access Project

author: Moore, J. Ostrander, J.

license: Public Domain

text:
    GOURLAY v. INSURANCE CO. OF NORTH AMERICA.
    Insurance — Breach of Conditions — Transfer of Interest — Vendor and Purchaser.
    After breach of a contract for the purchase of real and personal property covered by Insurance, and after the vendee had assigned his interest in the policy to the vendor, canceling the land contract and assigning all interest in the policy to him, the defendant insurance corporation, which had notice of the transaction, is held, by an equally divided court, to be liable on the policy upon which it had indorsed a clause stipulating that the vendee held the property under contract, and the loss, if any, should be payable to plaintiffs and vendee as their interests might appear. McAlvay, C. J., and Stone, Ostrander, and Steere, JJ., dissenting, on the ground that a material change of interest had occurred, avoiding the policy.
    Certiorari to Eaton; Smith, J.
    Submitted November 19, 1913.
    (Docket No. 156.)
    Decided July 24, 1914.
    Rehearing denied December 19, 1914.
    Assumpsit by Joseph G. Gourlay and Mary L. Gourlay against the Insurance Company of North America upon a contract of insurance. An order overruling a demurrer to plaintiffs’ declaration is reviewed by the defendant on writ of certiorari.
    Affirmed.

      Cummins & Nichols, for plaintiffs.

      Henry C. Walters (Arthur P. Hicks, of counsel), for defendant.
   Moore, J.

The following statement of facts is made by the attorney for defendant:

“The defendant asks for a review by certiorari of an order overruling a demurrer to the plaintiffs’ declaration made by the circuit court for the county of Eaton. The declaration alleges: That the policy in question was issued on certain farm buildings and personal property (the contents of said buildings) to one M. S. Harkness, on April 20, 1911. That subsequently, on October 21, 1911, with the consent and approval of defendant, the land and appurtenances were deeded to plaintiffs, and that- afterwards M. S. Harkness and wife repurchased the land and appurtenances on land contract. That at about the time of the foregoing transfers the following indorsement was made on the policy in suit: Tt is understood and agreed that M. S. Harkness holds this property under contract of purchase, loss, if any, payable to Joseph G. Gourlay and Mary L. Gourlay, and M. S. Harkness as their respective interests may appear.’ That on May 25, 1912, all the interest of Mrs. Harkness was set over to M. S. Harkness. That afterwards M. S. Harkness defaulted in the land contract, and it became forfeited by its terms, whereupon M. S. Harkness, on August 13, 1912, submitted to a cancellation of the land contract, deeded the premises constituting the real property, which is the subject of insurance, to the plaintiffs, at the same time giving to the plaintiffs a bill of sale of the personal property, so that after August 13, 1912, neither M. S. Harkness nor his wife had any interest in the subject of insurance. The declaration alleges notice to the defendant of these transfers, but it does not allege consent thereto.

“The plaintiffs further allege that on August 31, 1912, ‘the said M. S. Harkness did assign to the plaintiffs all his interest in said policy as vendee in said land contract, or as owner of the property covered by said policy of insurance, subject to the consent of the defendant herein.’ The declaration does not allege that the defendant ever consented to this alleged assignment to the plaintiffs by M. S. Harkness. It merely says: ‘All of which said defendant had notice.’

“The plaintiffs allege that the property was burned ‘on the night of the 31st of August, 1912,’ causing a loss of $1,694.00 of which the defendant was notified on October 31, 1912, and March 6, 1913.

“The defendant demurred to the declaration, and the circuit court overruled the demurrer.

“Error is assigned in the affidavit for the writ of certiorari, on the action of the circuit judge in overruling each of the several grounds of demurrer.”

Counsel say:

“The following questions are raised by the demurrer and the assignments of error:

“(1) The plaintiffs, under the allegations of the declaration, are not entitled to maintain this suit.

“(2) The declaration shows, on its face, such a change of title, ownership, and possession of the subject of insurance, without the consent of the defendant, as avoids the policy.

“(3) The declaration does not allege consent of the defendant to change in the title, possession, and ownership of the subject of insurance.

“(4) The policy of insurance sued upon constitutes an entire contract covering personal property and real estate, and the change in the title, ownership, and possession of the personal property, without the consent of the defendant, invalidated the policy.

“(5) The declaration does not allege notice to the defendant, prior to loss, of change in title, ownership, and possession of the property which was the subject of insurance.”

Before taking up these questions we think the statement of facts should show that a copy of the land contract was attached to the declaration and made a part thereof. This contract is dated October 28, 1911. It contained, among others, the following provisions:

“Second. The said parties of the second part, in consideration of the covenants herein contained on the part of the said parties of the first part to be performed, agree to purchase of the said parties of the first part the above-described land and to pay for the same to the said parties of the first part, or their legal representatives, the sum of two thousand seven hundred and thirty dollars, lawful money of the United States in manner follows, that is to say: One hundred and fifty dollars on July 1st, 1913; two hundred dollars on July 1st, 1914; and not' less than two hundred dollars on July 1st of each and every year thereafter until the full sum of said $2,730.00 is wholly paid, with interest at the rate of 6 per centum per annum, payable annually on the 1st day of July in each year on the whole sum that shall from time to time remain unpaid, both principal and interest to be paid at the First State Bank of Petoskey, in the city of Petoskey, State of Michigan; and also that they will keep all buildings now on, or that may hereafter be placed on, said premises insured for the benefit of, and in the manner and amount and by insurers approved by, first parties, and leave the policy with first parties, and in case of loss, the insurance, unless by mutual agreement used to repair or rebuild, shall be paid to the first parties, and be indorsed on this contract to the extent of the amount unpaid thereon, and the balance, if any, shall belong to the said parties of the second part; and also that they will enter said premises for taxation in the name of second parties; and so long as any part of the principal or interest' of the said consideration money remains unpaid, well and faithfully, in due season in each and every year pay, or cause to be paid, all .taxes and assessments, ordinary and extraordinary (including the taxes due in December, A. D. 1910), that may for any purpose whatever, be levied or assessed on said premises, and that they will not commit, or suffer any other person to commit, any waste or damage to the said lands, or the appurtenances, except for firewood for their own use and consumption upon said premises, and except while clearing off the lands for cultivation in the ordinary manner; and in no event shall any standing timber measuring five inches (or over) in diameter, at the butt, be cut down, or removed from said premises. And should second parties fail to pay any tax or assessment when due, or to keep said buildings insured as above provided, first parties may pay such taxes, and may have the buildings insured, and the amounts thus expended shall be a lien on said premises, be added to the amount of the consideration money then unpaid hereon, be due at once, and bear interest until paid at the rate of 7% per.annum.”

The questions involved may be divided into three groups:

(1) Does the loss payable clause create contract relations between plaintiff and defendant?

(2) Was the policy forfeited prior to the loss because of a change of title or interest in the property insured without the consent of defendant?

(3) Was the assignment of the policy to plaintiffs before the loss without the consent of the defendant of no effect?

1. It is urged under this head that the vendor under a land contract is not the unconditional owner, and that his interest in the insurance is only as security for his debt, and that it is the vendee who is the insurer, and the vendor cannot maintain a suit against the insurance company, citing Van Buren v. Insurance Co., 28 Mich. 398; Hartford Fire Ins. Co. v. Davenport, 37 Mich. 609; Clay Fire, etc., Ins. Co. v. Manufacturing Co., 31 Mich. 346; Jaskulski v. Insurance Co., 131 Mich. 603 (92 N. W. 98); and the other authorities. A reference to these authorities will show they are not controlling. The cases cited are easily distinguishable from the instant case.

There are many cases which hold that under a loss payable clause in substance the same as in this case, a mortgagee or vendor in a land contract can maintain a suit in his own name on the policy, when, as in this case, the amount of his claim exceeds the amount of the loss. Trust Co. of Georgia v. Insurance Co., 119 Ga. 672 (46 S. E. 855); Donaldson v. Insurance Co., 95 Tenn. 280 (32 S. W. 251); Hartford Fire Ins. Co. v. Olcott, 97 Ill. 439; Bartlett v. Insurance Co., 77 Iowa, 86 (41 N. W. 579); Hastings v. Insurance Co., 73 N. Y. 141; Palmer Sav. Bank v. Insurance Co., 166 Mass. 189 (44 N. E. 211, 32 L. R. A. 615, 55 Am. St. Rep. 387); Maxcy v. Insurance Co., 54 Minn. 272 (55 N. W. 825, 40 Am. St. Rep. 299); Hammel v. Insurance Co., 50 Wis. 240 (6 N. W. 805); and many other cases found in appellee’s brief.

2. Was the policy forfeited prior to the loss because of a change of title or interest in the property insured? Counsel quote from the standard fire insurance policy as to the effect of a change of interest, title or possession. We quote from the brief:

“According to the allegations in the declaration, Harkness parted with all his title to the subject of insurance on August 13, 1912, by deeding the real estate to Gourlay and wife, giving them a bill of sale of the personal property, which was the subject of insurance, and surrendering the land contract and ‘from thence henceforth neither the said M. S. Harkness nor Jean A. Harkness have had any interest, right, or title to the property known and described in said policy of insurance which was destroyed by fire, as hereinafter stated, and that the said plaintiffs have been the sole and unconditional owners of said property and were at the time of the loss aforesaid.’ Here was a complete surrender of title, interest and possession, of the subject of insurance, not only of the real estate, which was held by.Harkness under the land contract, but of the personal property on which, by the terms of the land contract, plaintiffs had only an inchoate lien. * * * We submit that the declaration shows change in the title, interest, and possession of the subject of insurance, both real and personal, within the rule laid down by these authorities. At the time the loss payable clause was attached, Harkness was the sole and unconditional owner within the meaning of the Michigan decisions. He could have enforced specific performance of the contract of purchase against Gourlay and wife. Gourlay and wife had only an inchoate lien on the personal property to secure performance of the land contract. At the time of the fire, Harkness had no interest whatever. He had not only submitted to cancellation of his land contract, but, in order to make sure that he had no title in any of the property, which was the subject of insurance, plaintiffs, Gourlay and wife, had taken from him a deed to the real property and a bill of sale of the personal property.”

Several authorities are cited in support of this contention, among them Collinsville Savings Society v. Insurance Co., 77 Conn. 676 (60 Atl. 647, 69 L. R. A. 924). A reference to these cases will show they are distinguishable from the case before us. The authorities are not agreed as to whether a conveyance from the mortgagor to the mortgagee would be such a change of interest as would avoid the policy. In Pioneer Savings & Loan Co. v. Insurance Co., 68 Minn. 170 (70 N. W. 979), appears the following:

“Default was thereafter made in the mortgage, the same was foreclosed, the plaintiff became the purchaser at the foreclosure sale, the time to redeem expired, no redemption was made, and plaintiff became the absolute owner of the property. Thereafter, and during the term of the policy, a loss by fire occurred. No notice of the change of ownership through such foreclosure was given to the defendant, and it claims that by reason of the failure to give such notice and have permission for such change indorséd on the policy, the policy is void. This point is disposed of by the case of Washburn v. Fire Association, 60 Minn. 68, 72 (61 N. W. 828 [51 Am. St. Rep. 500]). The fact that in that case the mortgagee itself paid the insurance premium, while in this case the mortgagor paid it, does not, as appellant seems to contend, change the meaning of the language of the contract. We held in that case that ‘the proviso that the mortgagee should notify the defendant of any change of ownership which should come to its knowledge evidently has reference only to changes resulting from the acts of the mortgagor or owner of the equity of redemption.’ The proviso has reference to a change or transfer of title or possession to a third person, not to one from the mortgagor to the mortgagee through a foreclosure.”

See Washington Ins. Co. v. Hayes, 17 Ohio St. 432 (93 Am. Dec. 628); Ft. Scott Building & Loan Ass’n v. Insurance Co., 74 Kan. 272 (86 Pac. 142).

In Westchester Fire Ins. Co. v. Dodge, 44 Mich. 420 (6 N. W. 865), it was said:

“The errors assigned will be considered in order:

“First, that the policy became void before the loss occurred under the condition in the policy providing that if the property insured be sold or transferred or any change take place in title or possession, whether by legal process or judicial decree or voluntary transfer or conveyance, the policy should be void. It was insisted that, under this provision, the policy was rendered void because of the death of Mr. Kendrick before the loss occurred, and for the farther reason that by the will of the deceased a complicated disposition of his real estate had been made, all of which changed the title, rendering the policy void.

“Whether the death of a person insured before a loss occurred would render void the policy, we are not called upon to determine in this case. By the terms of the policy the loss was made ‘payable to Chester Downer of Sharon, Vermont, as his mortgage interest may appear,’ and under such a provision the mortgagee could not be cut off from the protection which the policy afforded him by the death of the person to whom the policy was issued.”

It was further held that the mortgagee was one of the persons assured within the meaning of the policy. See Watertown Fire Ins. Co. v. Sewing Machine Co., 41 Mich. 136 (1 N. W. 961, 32 Am. Rep. 146). In Hopkins Manfg. Co. v. Insurance Co., 48 Mich. 148, 150 (11 N. W. 846), it was said:

“The foreclosure of plaintiff’s mortgage under the statute, so long as the redemption remained open, could not be regarded as a sale or transfer by the owner of the fee, who took no step and was not by himself or tenants disturbed under or before the fire, and it may be doubted whether a foreclosure of an existing mortgage could have any such effect at all.”

In Foiles v. Insurance Co., 175 Mich. 716 (141 N. W. 879), which was a case where the vendee in a land contract gaye a quitclaim deed to his vendor, it was held that the transfer was not such a change of interest in the property insured as would, within the provisions of the policy, make it void. In that case, however, the policy was issued in the first instance to the vendor. Among other things, it was said:

“A sale or conveyance of property which increases the interest of the insured, as where the insured mortgagee buys in the property at foreclosure sale or takes a conveyance from the mortgagor, thereby acquiring the whole interest, is not a breach of this condition.”

While these cases are not conclusive, they are persuasive in the direction of the contention of the appellee.

. 3. Was the assignment of the policy to the plaintiffs before the loss without the consent of the defendant of no effect? Counsel for the appellant again quote fully from the provisions of the standard policy and insist that in the instant case the consent of th.3 company to the assignment was necessary, citing, among other authorities, Excelsior Foundry Co. v. Assurance Co., 135 Mich. 467 (98 N. W. 9, 3 Am. & Eng. Ann. Cas. 707).

We think an examination of this case will show it clearly distinguishable from the one before us. It does not appear from the opinion, as in this case, that there was an attempt to insure the vendor and vendee as their respective interests may appear. There does appear in the opinion the following:

“In a note to Morrison’s Adm’r v. Insurance Co., 59 Am. Dec. at page 306 (s. c. 18 Mo. 262), there is a classification of the clauses in insurance policies in restraint of alienation. The second class of policies mentioned are those containing a clause restricting a transfer, change, or termination of the interest of the insured in the property insured. At page 308_ it is said of this class that the generally accepted interpretation is that the whole interest of the insured must pass, and while an insurable interest remains he may recover. To the same effect is the opinion in Grable v. Insurance Co., 32 Neb. 645 (49 N. W. 713).”

In Welch v. Assurance Co., 148 Cal. 223 (82 Pac. 964, 113 Am. St. Rep. 223, 7 Am. & Eng. Ann. Cas. 396), decided in 1905, the second headnote reads:

“Effect of Mortgage Clause — Conditions Not Attached to Interest. — Where the policy provided that ‘if, with the consent of this company, an interest under this policy shall exist in favor of a mortgagee or of any person or corporation having an interest in the subject of insurancé other than the interest of the insured as described herein, the conditions hereinbefore contained shall apply in such conditions of insurance relating to such interest as shall be written upon, attached, or appended hereto,’ such provision was intended to have the effect of preventing the conditions previously mentioned in the policy from ápplying to such interest unless the conditions should be again written upon, attached, or appended to the policy, as applicable to such interest, and the interest of the mortgagee is free from all conditions not so attached.” ■

This note is justified by the opinion. It will be noticed, as will appear later, the clause construed is in the same language as in our statute. In the majority opinion occurs the following:

“The mortgage clause in the policy under consideration is a part of the form of policy known as the ‘New York standard form.’ This form was prescribed by statute in New York, and made obligatory after May 1, 1887, on all insurance companies doing business in that State. 3 N. Y. Rev. Stat. p. 1663. It has since been prescribed by statute in Pennsylvania (Brightly Dig. pt. 2, p. 2528), Minnesota (1 Laws Minn. 1891, §2973), North Dakota (Laws 1890, p. 253, chap. 74), Wisconsin (1 Rev. Stat. 1898, §§ 1941-1953), New Jersey (2 Gen. Stat. p. 1766), and Michigan (1 How. Ann. Stat. §§4345-4350). Singularly enough the clause in question does not appear to have been the subject of litigation or judicial interpretation in any of these States. It has been construed, however, by the highest courts of Nebraska, Washington, Mississippi, Illinois, Iowa, and Missouri in the following cases: Oakland Home Ins. Co. v. Bank of Commerce, 47 Neb. 717 (66 N. W. 646 [36 L. R. A. 673] 58 Am. St. Rep. 663); Boyd v. Insurance Co., 25 Wash. 447 (65 Pac. 785 [55 L. R. A. 165]); Queen’s Ins. Co. v. Building Ass’n, 175 Ill. 115 (51 N. E. 717); Christenson v. Insurance Co., 117 Iowa, 77 (90 N. W. 495 [94 Am. St. Rep. 286]); East v. Insurance Ass’n, 76 Miss. 697 (26 South. 691); Senor v. Insurance Co., 181 Mo. 115 (79 S. W. 687). These decisions all concede that, in the absence of such mortgage clause, the mortgagee takes subject to all the conditions expressed in the body of the policy, but hold, as we have held, that by virtue of the mortgage clause in the body of the policy the interest of the mortgagee is free from all such conditions, except such as are repeated at the time of the creation of that interest by being at that time again, in substance at least, written upon the policy or attached or appended thereto.”

This opinion was signed by four of the justices. The concurring opinion was signed by the other two justices. In it occurs the following:

“If I were entirely free to follow my own notion about the question, my inclination would be to agree with the dissenting opinion of Mr. Justice Anders in Boyd v. Insurance Co., 25 Wash. 453 (65 Pac. 785 [55 L. R. A. 165]), and hold that such clause was not fairly susceptible of the construction claimed by respondent in the case at bar. But this identical clause, which seems to have originated in New York, has become quite common in insurance policies, and has been before a number of courts for interpretation, and its meaning has almost universally been held to be that none of the forfeiting conditions as against the insured affect the mortgagee, except those which are restated in the ‘loss payable clause,’ and that if there are no such conditions in said last-mentioned clause, the insured can do no act whatever which will in any way affect the right of the mortgagee. It was so expressly held in Oakland Home Ins. Co. v. Bank of Commerce, 47 Neb. 717 (66 N. W. 646 [36 L. R. A. 673] 58 Am. St. Rep. 663); Queen’s Ins. Co. v. Building Ass’n, 175 Ill. 115 (51 N. E. 717); Christenson v. Insurance Co., 117 Iowa, 77 (90 N. W. 495, 94 Am. St. Rep. 286); East v. Insurance Ass’n, 76 Miss. 697 (26 South. 691); Senor v. Insurance Co., 181 Mo. 104 (79 S. W. 687); and Boyd v. Insurance Co., 25 Wash. 447 (65 Pac. 785 [55 L. R. A. 165]).”

To the same effect are the following cases: Oakland Home Ins. Co. v. Bank of Commerce, 47 Neb. 717 (66 N. W. 646, 36 L. R. A. 673, 58 Am. St. Rep. 663), decided in 1896; Queen’s Ins. Co. v. Building Ass’n, 175 Ill. 115 (51 N. E. 717), decided in 1898; Christenson v. Insurance Co., 117 Iowa, 77 (90 N. W. 495, 94 Am. St. Rep. 286), decided in 1902; Senor v. Insurance Co., 181 Mo. 104 (65 Pac. 785, 55 L. R. A. 165), decided in 1903.

In 1905 our legislature made provision for the adoption and use of a standard form of fire insurance policy. See Act No. 277, Public Acts of 1905, p. 423. This standard policy has the following clause:

“If, with the consent of this company, an interest under this policy shall exist in favor of a mortgagee or of any person or corporation having an interest in the subject of insurance other than the interest of the insured as described herein, the conditions hereinbefore contained shall apply in the manner expressed, in such provisions and conditions of insurance relating to such interest as shall be written upon, attached or appended hereto.”

It will be observed that this is the same language which was construed in Welch v. Assurance Co., supra.

It is a familiar rule that, where one State passes a statute then existing in another State which has been construed, courts will presume that the legislature recognized the construction placed upon the statute by the courts of the State from which it was taken, and accepted such construction. State v. Holmes, 115 Mich. 456 (73 N. W. 548); Stellwagen v. Wayne Probate Judge, 130 Mich. 166 (89 N. W. 728).

We, then, have a case where, with the consent of the defendant, on October 21, 1911, the plaintiffs acquired an interest under this policy, both as vendors of the real property and as mortgagees of the personal property described and mentioned therein, and that there was then indorsed upon said policy the following clause:

“It is understood and agreed that M.'S. Harkness holds this property under contract of purchase, loss, if any, payable to Joseph G. Gourlay and Mary L. Gourlay and M. S. Harkness as their respective interests may appear.”

There is nothing “written upon, attached or appended” to said clause expressing the manner, or stating in any way that the conditions contained in said policy as to a forfeiture thereof in case of a change of interest or title of the insured shall apply to the interests of the plaintiffs in the policy.

We think the trial judge was right in overruling the demurrer.

The case should be remanded, with costs, and defendant given the usual time to plead.

Brooke and Kuhn, JJ., concurred with Moore, J. Bird, J., concurred in the result.

Ostrander, J.

The universal custom of insuring property against loss by fire and the enforced use in this State of a standard form of fire insurance contract render all judicial interpretations and constructions of the prescribed terms ©f the contract of more than ordinary importance. Some of the questions involved in this case have never before been presented in this court, which is one reason for presenting my own views concerning them. Another reason is that the argument made by Mr. Justice Moore favors the idea that the policy in suit was not avoided as to the owner of the property, the subject of the insurance, by the admitted change of interest in and title to the property.

The facts are simple. 'The owner of certain real and personal property insured it, in the usual way, for a total sum of $3,000. He insured, the dwelling house for $500; household furniture for $200; barn and sheds for $1,500; hay and grain for $300; wagons, harnesses, etc., for $300; live stock for $200. He conveyed the real estate and appurtenances to plaintiffs by deed, and plaintiffs made with the insured and his wife a contract to reconvey the same to them upon conditions and, pending performance of the conditions, to give them possession of the premises. A lien was given in the contract upon all of the personal property of the vendees for any sum accruing to the vendors. This transaction was brought to the attention of the defendant, and it indorsed upon the policy of insurance the words:

“It is understood and agreed that M. S. Harkness holds this property under contract of purchase, loss, if any, payable to Joseph G. Gourlay and Mary L. Gourlay and M. S. Harkness as their respective interests may appear.”

So far the case is not complicated; the policy, with its indorsement, being, in effect, a new policy insuring the vendee in the land contract, who was also the owner of the personal property, against loss or damage by fire, loss payable to the Gourlays as their interest-may appear. It is not very material to inquire whether, if a fire had occurred before other changes took place, plaintiffs might have maintained a suit upon the policy. Before the standard form of policy was adopted, it was generally understood that in this State a mortgagee, or other lienor, mentioned in a policy of insurance was a mere appointee of the insured, the contract being a personal contract between the insured and the insurer. Commentators and textbook writers regarded the decisions of this court as conclusive upon this subject. The apparent exceptions to the rule made in some of the cases only confirmed the rule. In Westchester Fire Ins. Co. v. Dodge, 44 Mich. 420 (6 N. W. 865), referred to in the opinion of Mr. Justice MOORE, it was said that the mortgagee named in the policy was one of the persons assured, within the meaning of the policy. Reference to the opinion in that case and in the one upon which it is based (Watertown Fire Ins. Co. v. Sewing Machine Co., 41 Mich. 131 [1 N. W. 961, 32 Am. Rep. 146]), shows that it was not intended to hold that the mortgagee was a party to the contract of insurance. In the case last mentioned one question was whether the provision in the policy relating to notice of the fire had been complied with. The insured did not give any notice; the mortgagee mentioned in the policy did give the notice. The provision of the policy was that “in case of loss the assured shall .give immediate notice. * * * ” It was held that the notice given by the mortgagee was sufficient because the insured ought not to be permitted by the neglect or refusal to give it to deprive the mortgagee, who had a direct interest in the matter, of his rights. And it is said, although it was not necessary to say it, and the point was not necessarily involved, that the mortgagee was one of the parties “assured” within the meaning of the policy. In Westchester Fire Ins. Co. v. Dodge, supra, one question was whether the death of the person insured before the loss occurred rendered the policy void, because thereby title to the property changed, and it was held that it would not in a case where the policy by its terms made the loss payable to a mortgagee; since the mortgagee’s rights could not be cut off by the death of the person to whom the policy was issued. Another question was whether suit was begun (by the administrator of the estate for the use and benefit of the mortgagee) in season; the policy providing that suit must be begun within 12 months after the loss occurred. It was held that the insurer was estopped to raise the question, and in this connection it is said that:

“The mortgagee was one of the persons assured within the meaning of the policy (Watertown Ins. Co. v. Sewing Machine Co., 41 Mich. 136 [1 N. W. 961, 32 Am. Rep. 146]), and there may be some question whether his rights could be made to suffer by the delay in the appointment of an administrator and the furnishing of proofs of loss.”

Another question was whether the administrator (personal representative of the deceased insured) could bring the action, the title to the property having descended to heirs or passed by the terms of his will. Without deciding this, it was said that, being brought for the use and benefit- of the mortgagee to whom the loss was made payable by the policy, the objection was without force.

I think it may be said, in view of earlier and of later decisions, notably Van Buren v. Insurance Co., 28 Mich. 398, Minnock v. Insurance Co., 90 Mich. 236 (51 N. W. 367), and Jaskulski v. Insurance Co., 131 Mich. 603 (92 N. W. 98), that before the standard form of policy came into use the usual loss payable clause or rider in or upon a policy of insurance created no contract relations between the mortgagee and the insurer. The default of the insured or his breach of the conditions of the policy avoided it, and no right of the mortgagee survived the breach of conditions avoiding the policy. It does not avoid the force of our own decisions or advance us in the determination of the real questions involved here to cite cases holding that the mortgagee or other lienor named in a policy may bring suit upon the policy in his own name. Those decisions depend upon a great variety of circumstances, in most of the cases upon the provisions of Codes or other forms of statutes.

The vital questions in the case at bar arise upon circumstances occurring after the policy had been indorsed in the manner above stated, and before loss occurred. Without the consent of defendant, the wife of Harkness transferred her interest in the land contract to her husband. He defaulted, the contract was forfeited, and by him was surrendered and canceled. He again transferred the premises to the plaintiffs by deed, and gave to them a bill of sale of the personal property. Thereafter the insured had no interest, legal or equitable, in any property described in the policy. Whether before or after the fire does not appear, but the insured also assigned to plaintiffs the policy of insurance. The policy provides that, if any change, other than the death of an insured, take place in the interest, title, or possession of the subject of insurance, whether by legal process or judgment, or by voluntary act of the insured, or otherwise, the policy shall be void. We have held that, where possession and control of the insured premises were retained by the insured (owner), the making of an executory contract of sale thereof, the vendee not having acquired such an interest as would authorize him to enforce the contract specifically or enable him to secure possession, there was not such a change of title as would avoid the policy. Zeitler v. Insurance Co., 169 Mich. 555 (135 N. W. 332). It was said in the opinion in this latter case:

“The contract of insurance in this case is a ‘Michigan standard policy’ — a form of insurance policy adopted and promulgated by statutory authority for general use throughout the State. It would be narrow and unjustly technical to hold that the form of words adopted for such a policy is inelastic and must have an exact and definite meaning by strict construction, always conveying the same understanding between the parties under all varying circumstances. We think such contracts should be construed with reference to the relations of the parties and the character and situation of the property insured. The court should interpret those forfeiture clauses in the light of the facts and circumstances proven, within proper limits, having in mind the ordinary meaning of the language found in them as applied to the purpose for which, the contract was made.”

Having determined that there had been no change of title or ownership, which decided the point in controversy, the significance of the language quoted is open to question. The Michigan standard policy, when it is issued, is a contract. Its terms may need construction. But upon the question involved the fact that there has been a change in interest, title, or possession of the subject of insurance either does or does not avoid the policy. The opinion received the assent of less than a majority of the justices, although all sitting concurred in the result, for which reason it may be said that the decision rests upon the point that change of interest, title, or possession in the subject of insurance was not established.

In Foiles v. Insurance Co., 175 Mich. 716 (141 N. W. 879), it appeared that plaintiff was the owner of the title to real estate which she insured in her own name, the policy containing evidence by a rider thereupon that the property had been sold upon land contract and that it was mortgaged. Loss, subject to all the terms and conditions of the policy, was made payable to a third person. Before the loss occurred, the mortgage was foreclosed by advertisement, but plaintiff had no knowledge thereof. This, by the terms of the policy, was not ground of forfeiture. The land contract was forfeited, and the vendee therein quitclaimed to the plaintiff. The doctrine that a sale or conveyance of property which increases the interest of the insured is not a change in the interest, title or possession of the subject of insurance within the meaning of the policy was applied. In Excelsior Foundry Co. v. Assurance Co., 135 Mich. 467 (98 N. W. 9, 3 Am. & Eng. Ann. Cas. 707), the insured buildings were upon land held by the insured under land contract. No other interest than that of the insured was mentioned in the policy. One Frank W. Wheeler held the legal title to the premises. To him the insured contracted to sell its interest in the premises and personal property. Something was paid in consideration, but the bill of sale had not been delivered, and there was testimony to the effect that title was not to pass until the bill of sale should be delivered. It was held that, while the authorities are in conflict:

“The weight of authority is that, under a policy like the Michigan standard policy, any material change in the interest of the insured in the property insured will avoid the policy.”

This court in that case repudiated the doctrine that the whole interest of the insured must pass in order to avoid the policy, although in Justice MOORE’S opinion in the case at bar this repudiated doctrine is restated in a quotation from the opinion in Excelsior Foundry Co. v. Assurance Co. apparently with approval.

There is a manifest distinction between the cases in which the question is upon the title of the assured at the time the policy was issued — whether it is, within the meaning of the policy, the unconditional, sole, title — and cases where a change in interest, title, or possession is the ground of forfeiture relied upon. The insuring company may be satisfied with the risk it assumes in its policy, and may yet insist, and in the Michigan standard policy does insist, that with a change of interest or title or possession its liability shall cease. Being satisfied with the risk originally assumed, it may reasonably be held that, if the interest of the assured in the property insured increases, the moral hazard is lessened, rather than increased, and that a policy is not avoided because the assured has acquired an interest in the property which was outstanding when the policy was issued. It is in pursuance of the plain terms of the contract, and is logical to hold (it would be illogical to hold otherwise), that when the assured loses such interest in the property as he had when the policy was issued the policy is avoided. One has only to examine our own decisions and the authorities cited and approved in Excelsior Foundry Co. v. Assurance Co. to appreciate the reason for the condition in the policy and for its enforcement.

It is clear that in the case at bar as to the assured the policy was avoided when he divested himself of all interest in the insured property. He could thereafter assign to plaintiffs no actionable interest in the contract, either before or after the fire occurred.

It is said, however, that the plaintiffs are unaffected by the change of title of the assured because the conditions in the policy are not binding upon them. The clause in the Michigan standard policy relied upon is not free from ambiguity. The cases cited in the opinion of Mr. Justice Moore hold, in effect, that by virtue of the mortgage clause in the body of the policy the interest of the mortgagee is free from all conditions, except such as are repeated, directly or indirectly, in specifying the mortgagee’s interest. The conditions in the policy which, under a similar contract, have been held to be binding upon the assured but not on the mortgagee, are conditions relating to the time for proving loss and beginning suit (Queen’s Ins. Co. v. Building Ass’n, 175 Ill. 115 [51 N. E. 717]); relating to the commencement of foreclosure proceedings (Christenson v. Insurance Co., 117 Iowa, 77 [90 N. W. 495, 94 Am. St. Rep. 286]); relating to additional insurance (Boyd v. Insurance Co., 25 Wash. 447 [65 Pac. 785, 55 L. R. A. 165]; Senor v. Insurance Co., 181 Mo. 115 [79 S. W. 687]); relating to alienation of the property without consent of the insurer (East v. Insurance Ass’n, 76 Miss. 697 [26 South. 691]; Oakland Home Ins. Co. v. Bank of Commerce, 47 Neb. 717 [66 N. W. 646, 36 L. R. A. 673, 58 Am. St. Rep. 663]; Edge v. Insurance Co., 20 S. D. 190 [105 N. W. 281]; Welch v. Assurance Co., 148 Cal. 223 [82 Pac. 964, 113 Am. St. Rep. 223, 7 Am. & Eng. Ann. Cas. 396]); relating to state of title of the insured when policy was issued, under a somewhat different provision as to the mortgagee (Bacot v. Insurance Co., 96 Miss. 223 [50 South. 729, Ann. Cas. 1912B, 262]). In Massachusetts the form of standard policy relating to mortgagees is:

“If this policy shall be made payable to a mortgagee of the insured real estate, no act or default of any person other than such mortgagee or his agents, or those claiming under him, shall affect such mortgagee’s right to recover in case of loss on such real estate.”

It has been held that the mortgagor’s conveyance of his equity of redemption does not affect the right of the mortgagee to recover under such a policy. Whiting v. Burkhardt, 178 Mass. 535 (60 N. E. 1, 52 L. R. A. 788, 86 Am. St. Rep. 503). But it is held (Union Institution for Savings v. Insurance Co., 196 Mass. 230 [14 L. R. A. (N. S.) 459, 13 Am. & Eng. Ann. Cas. 433]), that the policy creates a liability of the insurer dependent in part upon the performance of certain acts by the owner of the property, after the fire, in reference to the claim. The insurer has an option to rebuild or repair structures, and does not undertake to pay until the amount of the loss is determined by arbitration unless agreed upon or arbitration is waived. By implication the mortgagee, the mortgagor failing, has a right to make a statement of loss and ask for an arbitration. Failing to do so, he has no right to sue upon the policy, which is construed to preserve to the insurer certain rights notwithstanding the mortgagee clause in the policy.

According to its provisions, the Michigan standard policy may be canceled at the request of the insured. It provides for paying a proportion only of a loss where there is concurrent insurance; that the insurer shall not be liable for a loss occasioned by invasion, insurrection, riot, or civil war, or by theft, or by neglect of the insured to use all reasonable means to save and preserve the property; that if a fire occur the insured shall give immediate notice in writing, etc., for arbitration in case of disagreement as to the amount of the loss; that no suit or action on this policy for the recovery of any claim shall be sustainable in any court until after full compliance by the assured with certain requirements, nor únless begun within 12 months next after the fire. I have mentioned some of the provisions of the contract which must be interpreted and construed as a whole, and, in this case, must be interpreted and construed also with reference to the mortgagee or “loss payable” indorsement. Its proper construction, as affecting the questions here involved, seems to me to be that, when no conditions are directly coupled with the loss payable rider or indorsement, the policy will not be avoided, as to the mortgagee or other lienor, by any breach of its conditions on the part of the insured. On the other hand, the liability of the insurer will not be increased or changed because the loss is made payable to some one other than the insured. It does not become obligated to pay the mortgagee a sum of money in the event of a loss. The undertaking of the insurer must still be measured by the terms of the policy. It may restore the destroyed property, insist upon notice of the fire and proofs of loss, in so far as the mortgagee can comply with the conditions of the policy, may insist upon arbitration and that suit upon the policy shall be begun within one year next after the loss. It is not intended to here state inclusively and exclusively the rights of either the insured or the mortgagee, but to illustrate only. The construction indicated is in line with the authorities which have been referred to. If the case presented was one where the insured had sold his property to a third person, the construction indicated would sustain the theory that the policy as to the plaintiffs is not avoided, and that they may sue upon it. The facts are, however, that the insured did not sell the property to a third person, but in his breach of the conditions of the policy, a breach which avoided it as to him, he dealt with the plaintiffs. Plaintiffs are in the position of saying that, because not repeated in the indorsement made in their interest, they are unaffected by certain conditions of the policy or by breaches of those conditions; that therefore those conditions may be breached in their favor, by their aid. I think they cannot maintain this position, and that, having assisted in rendering the policy void as between the insured and the insurer, it cannot be held valid as to them. I appreciate that this ruling would apply in case an insured mortgagor, without the assent of the insurer, conveyed his equity of redemption to the mortgagee, whose interest was protected by the policy. I know of no good reason why it should not so apply. He is no longer a mortgagee, but has become an owner of the property. If he insured it as owner, he would be bound by the conditions in his policy. No reasonable construction of the contract will permit him to maintain the position of owner as to the insured and mortgagee as to the insurer.

The demurrer should have been sustained.

McAlvay, C. J., and Stone and Steere, JJ., concurred with Ostrander, J.


author: Moore, J.

text:
    CHANDLER v. RICHARDSON LUMBER CO.
    Mortgages — -Deed as Security — Record—Taxation.
    Complainant executed a warranty deed to a trustee of two of his creditors to secure an indebtedness owing to them. He claimed later to have paid the debt and received back a quitclaim deed which he .omitted to place upon record. No notice appeared of record to show that the relation of mortgagor and mortgagee existed. The land was returned for unpaid taxes, was purchased by one McDade, who then acquired the title from the trustee and alleged mortgagee by quitclaim deed which he caused to be recorded. After the expiration of the period of redemption, the bill of complaint was filed to clear up the cloud upon the alleged title of complainant. Held, that under Act No. 229, Pub. Acts 1897, as amended by Act No. 204, Pub. Acts 1899, the title of defendant, a grantee of the tax purchaser, was valid and the bill must be dismissed.
    Appeal from Otsego; Sharpe, J.
    Submitted November 5, 1913.
    (Docket No. 72.)
    Decided July 24, 1914.
    Bill by Merritt Chandler against the Richardson Lumber Company and another to quiet title to certain lands. From a decree for defendants, complainant appeals.
    Affirmed.

      Henry, Henry & Henry, for complainant.

      Henry K. Gustin and Charles W. McGill, for defendant Lumber Company.

      Grant Fellows, Attorney General, David H. Crowley, Assistant Attorney General (George L. Hauser, of counsel), for auditor general.
   Moore, J.

Complainant claims that on July 21, 1897, he was the owner of 200 acres of land in Otsego county, this State, described as the W. % of the E. 1/2, and the N. E. 14 of the S. W. % of section 24, town 32 north, range 1 west. The defendant the Richardson Lumber Company claims to be the owner of said lands by virtue of certain tax deeds, and also as holders of the title of record. The bill of complaint is filed to have the title of the defendant the Richardson Lumber Company declared void, and the title declared to be in the complainant. The cause was put at issue, and after a hearing the bill of complaint was dismissed. The case is brought here by appeal.

Because, of the tax proceedings the auditor general was made a party, and he appears in this court by the attorney general.

In the reply brief of the solicitors for the complainant, we find the following:

“In our original brief we make no appeal from the decree of the circuit judge concerning the N. E. ¼ of the S. W. ¼ of section 24, T. 32 N., R. 1 west, being the description conveyed by the State land commissioner.

“And whatever we have said in our briefs in this case relates only to the interest in the west % of the east % of said section claimed by the defendant, the Richardson Lumber Company, and we do not understand the auditor general is interested in any way with this controversy.”

This does away with the necessity of referring further to the 40 acres described.

The material questions of fact are not complicated. The law applicable to the case is not in- doubt.

The complainant made a quitclaim deed of 920 acres of land, which includes the land in controversy here. The formal parts of the deed read:

“This indenture, made the 21st day of July, in the year of our Lord 1897, between Merritt Chandler and Rachael H. Chandler, his wife, of Onaway, Presque Isle county, Michigan, parties of the first part, and Willis N. Gilbert, trustee for Willis H. Gilbert and Elijah Hollenbeck, copartners, doing business as Hollenbeck & Gilbert, at Saginaw, ,E. S., Michigan, of the second part, witnesseth, that the said parties of the first part, for and in consideration of the sum of $1,685.00 to them in hand paid-by the said party of the second part, the receipt whereof is hereby confessed and acknowledged, do, by these presents, grant, bargain, sell, remise, release . and forever quitclaim unto the said party of the second part, and to his heirs and assigns forever, all those certain pieces, * * * together with all and singular the hereditaments and appurtenances thereunto belonging or in any wise appertaining. To have and to hold the said premises as herein described, to the said party of the second part and to his successors, heirs and assigns, to the sole and only proper use, benefit and behoof of the said party of the second part, his heirs, successors and assigns forever.”

It is the claim of complainant that this deed was in fact a mortgage, and that he afterwards paid the debt and secured and took back from the trustee a quitclaim deed. It will be observed that there is nothing in the paper itself indicating it is a mortgage. We again quote from the brief of - counsel:

“The complainant is not without blame in the premises, but the only criticisms which can be made of his conduct from first to last are two: (a) He neglected to record his deed from Gilbert; (6) he failed to see that the taxes were paid on the lands.”

In view of what happened these were very important omissions on the part of -complainant. The lands were sold repeatedly for taxes subsequent to the making of the deed to Mr. Gilbert, and tax deeds were issued to Thomas McDade. After he acquired these deeds, the following letter was written on August 31, 1901, to Mr. Gilbert:

“I understand that you own the west % of the northeast the west % of the southeast *4, and the northeast *4 of the southwest *4 of section 24-31-1 west.

“Thomas McDade of this city has purchased a tax title against these lands amounting to their entire value, but under the statute he is compelled to give you notice whereby you would have a right to redeem, paying him 100 per cent, and $5 a description.

“Before I do this for him he wishes me to write you stating that he would rather pay you a little something for a quitclaim deed of the land, rather than to serve the notice, etc., upon you.

“I will be pleased to hear from you in reference to this matter.

“Yours truly,

“H. K. Gustin.”

After further correspondence Mr. Gilbert, upon payment to him of $75, made a quitclaim deed of the lands to 'Mr. McDade, which was placed upon record. At this time complainant claims he had a quitclaim deed from Mr. Gilbert, which he had not put upon record, but that Mr. Gustin because of his relations with complainant must have known that Mr. Gilbert was trustee for the complainant, and that it is inequitable to permit the title to remain in defendants. Gustin denied any knowledge except what was disclosed by the public records.

The transaction as to the tax deeds must stand or fall by the provisions of Act No. 229, Public Acts of 1897, as amended by Act No. 204, Public Acts of 1899. This act, as it stood at the time of the purchase by Mr. McDade, and as amended by Act No. 204, Public Acts of 1899, contains substantially the following provisions:

Section 140 provides that no writ of assistance or other process for the possession of any land, the title to which had been obtained by tax sale after the 29th day of August, 1897, should be issued until six months after there shall have been filed with the county clerk of the county where the land is situated a return by .the sheriff of said county showing that he had made personal service, or until substituted service had been made upon the grantee or grantees under the last recorded deed, in the regular chain of title to said land.

Section 141 of said act also provided that any grantee, under the last recorded deed, to said lands, or any mortgagee named in the last recorded mortgage, or any assignee thereof of record, or any executor or administrator, heir, trustee, or guardian of such grantee, mortgagee, or assignee shall be entitled to receive from the person claiming under the tax deed a reconveyance of such tax-title interest under certain conditions.

Section 142 of Act No. 229, Public Acts of 1897, reads:

“No purchaser under any. tax sale hereafter made, or of any State tax land or any State bid hereafter sold, shall enter into possession of the land so purchased until six months after he has given notice to the party or parties in interest as provided for in the preceding sections unless he shall have acquired from said parties their title thereto under conveyance from said party or parties or his or their interest in said land.”

It is argued upon the part of the complainant that, inasmuch as Mr. Gilbert had quitclaimed to him before he deeded to McDade, McDade took no title by virtue of his quitclaim, citing many cases. These cases are not in point here.

It goes without saying that tax time comes at least once a year, and an owner of land should bear that fact in mind. If he fails to cause the taxes to be paid, it follows of course that they will be sold. The tax purchaser has his rights and duties defined by statute, if he would become the absolute owner of the land.

The language of section 142, which we have quoted, is not ambiguous. When the tax purchaser has followed the provisions of the statute, and the time for redemption has expired, no court can help out the original owner, however great the difference may be between the expenditure made by the tax purchasers and the actual value of the land.

The decree is affirmed, with costs.

McAlvay, C. J., and Brooke, Stone, Ostrander, Bird, and Steere, JJ., concurred. Kuhn, J., did not sit.


author: McAlvay, C. J.

text:
    PEOPLE v. PERENCHIO.
    1. Criminal Law — Intoxicating Liquors — Sales—License.
    An executed and completed sale is necessary to sustain a prosecution for selling intoxicating liquors without having a license; an actual delivery by which title is transferred is an essential element of the offense.
    2. Sales — Intoxicating Liquors.
    There can be no sale until a specific chattel has been ascertained and identified.
    3. Intoxicating Liquors — Unlawful Sale.
    Taking orders for intoxicating liquors which the vendor later shipped from the city in which he was authorized and licensed to do business, by freight or express, to another township in which the accused took the orders, was not an unlawful sale in the latter township, since no sale was effected until he had selected the wares from his stock, even though he, personally, collected payment.

    Exceptions before sentence from Marquette; Flannigan, J.
    Submitted November 7, 1913.
    (Docket No. 167.)
    Decided July 24, 1914.
    John B. Perenchio was convicted of unlawfully selling intoxicating liquors in the township of Forsyth, Marquette county, without' a license.
    Reversed: respondent discharged.

      Grant Fellows, Attorney General, and M. J. Kennedy, Prosecuting Attorney, for the people.

      W. T. Potter, for respondent.

       On the question of the place of sale of intoxicating liquors, see note in 44 L. R. A. (N. S.) 437.

   McAlvay, C. J.

Respondent was convicted before the circuit court for the county of Marquette for engaging in the business of selling intoxicating liquors in the township of Forsyth in said county without first paying the required tax or license fee. The case is before this court for review upon exceptions before sentence. The facts are stipulated, and, briefly stated, are as follows:

Respondent is a wholesale liquor dealer located at No. 215 Gold street, in the city of Negaunee, in Marquette county, and was engaged'in such business at that place on September 21, 1912, at the time the alleged offense was committed, duly authorized to conduct such business at that place, having paid the fee or tax required by law to the county treasurer of the county and received his receipt therefor. His application stated that his business was that of selling spirituous or intoxicating liquors at wholesale and his place of business at the street and number above designated. On the date alleged in the information he went to the township of Forsyth in said county, and there obtained and accepted orders from various persons for spirituous and intoxicating liquors in quantities of three gallons or more. The persons who bought the liquors and to whom they were delivered were not retail liquor dealers duly authorized to do business. Respondent took these orders to his place of business in Negaunee, and there filled them from his stock kept in such place, and then shipped the same to the purchasers in the township of Forsyth in packages addressed to such purchasers who ordered the liquor. The liquors were shipped by the usual common carrier, the railway company, either by freight or express, and were delivered in Negaunee to such common carrier by the respondent, the freight being paid by the purchaser of the liquor. Afterwards the respondent went to the township of Forsyth and made collections for the liquor sold, payment being made to him personally in such township by the purchasers. He was not authorized to do business in such township as a wholesale or retail liquor dealer. He was not a druggist, nor the keeper of a drug store who sold liquors for the purposes for which such persons may sell liquors.

At the close of the testimony, which established the foregoing facts and stood undisputed, respondents counsel moved the court to direct a verdict of not guilty, which motion was denied and an exception taken. The court, after stating the undisputed facts, charged the jury as follows: '

“In this case, gentlemen, under the undisputed facts as I have stated them, the respondent on the day mentioned in the information was engaged in the business of selling intoxicating liquors in the township of Forsyth in this county, and if you find these facts as stated beyond a reasonable doubt, it will be your duty to return a verdict of guilty in this case.”

An exception was taken to this portion of the charge, and the court said:

“You may retire to your jury room and return such verdict as you deem warranted by the facts and the instructions of the court.”

The jury retired to consider their verdict, and later returned and rendered a verdict of guilty. Judgment upon this verdict was suspended by the court until the case could be reviewed before this court.

The section of the statute (section 5380, 2 Comp. Laws) defining who are wholesale liquor dealers has been amended twice since that compilation. The last amendment was made in 1911. So much thereof as is relevant to the consideration of the instant case reads as follows:

“Wholesale dealers shall be held and deemed to mean and include all persons who sell, or offer for sale such liquors as beverages at wholesale in original sealed trade packages and not to be drunk on the premises.” Act No. 170, Pub. Acts 1911, p. 287 (2 How. Stat. [2d Ed.] § 5056 et seq.).

It will be unnecessary to refer to or consider any other of the many amendments to the general liquor law than the one last above quoted, for the reason that in this case we are dealing with a wholesale liquor dealer in spirituous and intoxicating liquors, and the sole question to be determined being whether respondent, who at the time was a wholesale dealer duly authorized to do business in the city of Negaunee, Marquette county, in this State, did, as charged, unlawfully engage in such business in the township of Forsyth, in said county.

The undisputed facts in this case are construed by respondent’s counsel to constitute only an offer to sell spirituous and intoxicating liquors in the township of Forsyth at wholesale. He contends that respondent’s acts constitute no offense, for the reason that this statute for the taxation and regulation of the liquor traffic requires the payment of a tax or license fee only “upon the business of selling spirituous and intoxicating liquors at wholesale.”

It is one of the stipulated facts in this case that respondent, on September 21, 1912, the date of the commission of the alleged offense with which he is charged, was a wholesale dealer in spirituous and intoxicating liquors, duly authorized to carry on such business at a certain street and number in the city of Negaunee. The facts as to what occurred on that date at the township of Forsyth are stipulated as follows:

“ (3) On the date alleged in the information in this case and for some time prior thereto the respondent went to the township of Forsyth in said county of Marquette, and there obtained and accepted orders from various persons for spirituous and intoxicating liquors in quantities of three gallons or more.”

The question presented for decision upon the' stipulated facts is: Was respondent engaged in the wholesale liquor business in the township of Forsyth, as charged in the information? In other words, was a sale of intoxicating liquors made by respondent at the time and place named?

It seems to be well settled that to constitute this offense there must be a completed sale — a sale which is a transfer of the title. 23 Cyc. p. 180.

Relative to the necessary proof in these cases a text-writer says:

“On the trial of an indictment for unlawfully selling liquor, an actual delivery of the liquor must be proved and the evidence of a mere agreement to sell is not sufficient.” Black on Intoxicating Liquor, § 404.

It is elementary, as pointed out by Mr. Mechem and other authors, that a sale is pre-eminently a transfer of title. 1 Mechem on Sales, § 1.

This is the very essence of a sale. It is also elementary that there can be no sale until a specific chattel has been ascertained and identified. In the instant case orders for intoxicating liquors, in quantities of three gallons or more, were taken by respondent in the township of Forsyth. The liquors bargained for were then at his place of business in the city of Negaunee in stock in his wholesale liquor store. He took the orders to his place of business and filled each one from his general stock and delivered them, each properly addressed, to .the common carrier railroad to transport from Negaunee to Forsyth, where they were delivered by the common carrier to the purchasers, who each paid transportation charges upon his goods. Afterwards respondent went to Forsyth and collected the purchase price for these goods from the respective purchasers.

Mr. Mechem, quoting Chalmers on Sales, says:

“ ‘By an agreement to sell/ it has been said, ‘a jus in personam, is created; by a sale a jus in rem is transferred. If an agreement to sell be broken, the buyer has only a personal remedy against the seller. The goods are still the property of the seller, and he can dispose of them as he likes. * * * But if there has been a sale, and the seller breaks his engagement to deliver the goods, the buyer has not only a personal remedy against him, but also the usual proprietary remedies against the goods themselves, such as an action for conversion and detinue.’ ” 1 Mechem on Sales, § 5.

Applying this rule to the instant case, there can be no doubt that if respondent had refused to fill the orders he took in Forsyth the individuals who gave the orders would have only a personal remedy against him. It is therefore clear that taking these orders did not amount to a sale of these liquors in Forsyth.

It is contended that because respondent, the owner of the goods, personally took the orders, thereby accepting them, the sale then and there became a completed sale, and such a. case would not be governed by the same rule which applies to cases where agents solicit, orders and forward them to their principals, as ordinarily they could not be held accepted until received by the principal. The contention, it seems to us, is completely answered by applying the above test under the rule quoted from Chalmers by Mr. Mechem. If the orders had not been filled by respondent, the only remedy for failure to do so would have been against him personally.

We therefore hold that no sales of intoxicating liquors were made by respondent in the township of Forsyth. The contention of the respondent is therefore sustained. The court erred in not granting his motion to direct a verdict of not guilty.

The verdict of the jury is set aside, and the respondent will be discharged.

Brooke, Kuhn, Stone, Ostrander, Bird, Moore, and Steere, JJ., concurred.


author:
Kuhn, J.
      Ostrander, J.

text:
    GLANN v. WHITE.
    1. Damages — Profits—Loss of Crops — Breach of Warranty.
    It was not prejudicial error to submit to the jury, as an element of damages for false representations or warranty of a team of horses, the question of plaintiff’s right to recover for delay in his farm work and loss of crops resulting from the sickness and death of one of the horses which proved to be sick of distemper or influenza; knowledge or notice of the purpose for which the horse was purchased being established, the record also showing that the jury made no allowance for such loss of profits. Ostrander, Bird, and Steere, JJ., dissenting, on the ground that the loss of profits should not have been submitted to the jury.
    2. Trial — Instructions to Jury — Negligence.
    Where the court charged the jury that if defendant warranted the horse that died to be sound, and at the time of sale the horse was diseased and the disease was aggravated by driying, after plaintiff knew or should have known of the fact that the horse was sick, and it would probably have lived if the plaintiff had given it proper care, plaintiff would not be entitled to the full value of the animal, and on plaintiff’s attorney suggesting that the court had omitted to insert in the instruction the limitation of said duty of acting with that care which an ordinarily prudent man would act, and where the court told the jury that he would be held to the exercise of ordinary care, required to act as an ordinarily prudent man would, the jury would not be presumed to have followed the previous instruction.
    3. Same — Fraud—Consequential Loss.
    In an action of tort it is not improper to permit a recovery for indirect or consequential injuries resulting from the wrongful act. Ostrander, Bird, and Steere, JJ., dissenting.
    Error to Lapeer; Smith, J.
    Submitted January 23, 1914.
    (Docket No. 119.)
    Decided July 24, 1914.
    Case by Loren Glann against Ripley White and Kirk White, copartners as White Bros., for breach of warranty of the soundness of a team of horses. Judgment for plaintiff. Defendants bring error.
    Affirmed.

      Geer, Williams & Halpin, for appellants.

      Clarence A. Cameron (Farley & Selby, of counsel), for appellee.
    This action arises from an alleged breach of warranty of the soundness of a team of horses sold by defendants to plaintiff on April 24, 1912, at Lapeer, Mich. The team was driven by the son of the plaintiff to Flint, a distance of 20 miles, where they were placed in a feed barn and taken care of. Before arriving at Flint, the son had noticed that one of the horses did not travel as well as the other one, and had coughed a little on.the way. After the rest at Flint, the team was driven to Flushing, the home of plaintiff, a distance of about 10 miles. The horse would not eat, was taken sick, and died a week later. A veterinary who was called diagnosed the disease as influenza, commonly known as horse distemper, a contagious, infectious disease, and four other horses of plaintiff were taken sick. This action is brought in trespass on the case, and damages, actual and consequential, were claimed. The items of plaintiff’s claim are as follows:
    Value of horse that died....................... $250 00
    Veterinary bill ............................... 37 10
    Care and medicine............................ 50 00
    Damages to plaintiff in delaying farm work---- 100 00
    Expense of looking for another farm horse..... 25 00
    $462 10
    The jury rendered a verdict in favor of the plaintiff in the sum of $262.10. From a judgment entered thereon, defendants appeal by writ of error.
   Kuhn, J.

(after stating the facts). It is the contention of appellants that the court erred in permitting plaintiff to testify as to the number of acres of different kinds of crops he intended to put in in the spring of 1912 and the number he was prevented from putting in because of the loss of the horse and the sickness of the others. It is urged that these damages are too remote, contingent, uncertain, and speculative. At the time the team was purchased, the defendants knew the purpose for which it was bought, as defendant Ripley White testified:

“They [plaintiff and son] were going to farm it. They had sugar beets to get in, and wanted another team.”

In this action it was proper for plaintiff to recover compensation for all loss or injury sustained. Allison v. Chandler, 11 Mich. 542; Arnold v. White, 153 Mich. 607 (117 N. W. 164); Krzyszke v. Kamin, 163 Mich. 290 (128 N. W. 190); 13 Cyc. p. 34.

Mr. Justice CHRISTIANCY, in a very instructive .opinion in Allison v. Chandler, supra, in speaking of this kind of damages, said (page 554):

“The law- does not require impossibilities, ana cannot, therefore, require a higher degree of certainty than the nature of the case admits. And we can see no good reason for requiring any higher degree of certainty in respect to the amount of damages than in respect to any other branch-of the cause. Juries are allowed to act upon probable and inferential, as well as direct and positive proof. And when, from the nature of the case, the amount of the damages cannot be estimated with certainty, or only a part of them can be so estimated, we can see no objection to placing before the jury all the facts and circumstances of the case, having any tendency to show damages, or their probable amount, so as to enable them to make the most intelligible and probable estimate which the nature of the case will permit. This should, of course, be done with such instructions and advice from the court as the circumstances of the case may require, and as may tend to prevent the allowance of such as may be merely possible, or too remote or fanciful in their character to be safely considered as the result of the injury.

“In the adoption of this course it will seldom happen that the court, hearing the evidence, will not thereby possess the means of forming a satisfactory judgment whether the damages are unreasonable, or exorbitant; and, if satisfied they are so, the court have always the power to set aside the verdict and grant a new trial.”

Again, at page 558:

“But it is insisted that loss of profits constitutes no proper ground or element of damages. If there be any such rule of law, it is certainly not a universal, and can hardly be called a general rule. Decisions, it is true, may be found which seem to take it for granted that the rule is universal. But there are numerous cases, even for breach of contract, in which profits have been properly held to constitute, not only an element, but a measure (and sometimes the only measure) of damages, as in Masterton v. Mayor, 7 Hill [N. Y.], 61 [42 Am. Dec. 38]; Philadelphia, etc., R. Co. v. Howard, 13 How. 344.”

We are of the opinion that it was proper for the trial judge to submit the question of the consequential damages to the jury, although it is clearly evident from the verdict that they did not consider favorably this phase of the plaintiffs claim.

The other assignments of error relate to the judge’s charge. The judge charged as follows:

“Upon the part of the defendants, I charge you as follows: That if you shall find from the evidence that ■defendant warranted the horse that died to be sound, and that at the time of the sale she had a horse disease in its incipient stage, still if you further find that the effect of the disease was aggravated by the treatment the horse received in being driven after she was known to be sick, and that plaintiff knew or should have known from his knowledge of or his experience with horses that the disease would be aggravated by further driving, and that she would probably not have died if she had received proper care at that time, you would not be warranted in finding that the mare was worthless at the time of the sale, and in awarding damages on that basis.”

At the close of the charge the following colloquy occurred between the court and counsel:

“Mr. Halpin: I have another request I would like given.

“Mr. Cook: I object to it.

“The Court: I covered part of what is in this already. Swear two. officers.

“Mr. Cook: You did not use the words ‘a man of ordinary care and prudence.’ I think that the suggestion, that is, if you would use — you stated in your charge to the jury that, if the plaintiff drove from Flint—

“The Court: This is the language I used: ‘The plaintiff knew or should have known from his knowledge or experience with horses that the disease would be aggravated by the driving.’ I am willing to add to that that he should have been held to have acted as a reasonably prudent man will under those circumstances.

“Mr. Cook: The last part, contributory part.

“The Court: I add, gentlemen, upon the question of whether he was justified in driving a horse home from Flint to Flushing, that he would be held to have acted as a reasonably prudent man would under those circumstances.

“Mr. Halpin: I think that needs a little explanation by what the court means he would ‘be held/

“The Court: I think it is sufficiently plain with what I have already said.

“Mr. Halpin: The objection I made to the last statement, the jury might not understand that he be held; they must find that he did as an ordinarily prudent man, or he would be required to do as an ordinary prudent man would do.

“The Court: To be required to act as a reasonably prudent man would. If a reasonably prudent man situated as he was would not have driven the horse home, then he would have been held to that doctrine; if a reasonably prudent man would have driven it home, then he would have a right to drive it home; consider that, gentlemen, as part of the charge.”

It is urged that the final instruction is inconsistent with that portion previously given, and it is to be presumed that the jury may have followed the erroneous instruction. This colloquy occurred in the presence of the jury, and it is clear that the judge indicated to the jury that his purpose was to modify his original charge, and in plain language instructed them as to their duty in the matter. When the trial judge’s attention was called to the question, he did all that he could do, viz., to modify his charge and give the proper instruction.

We have considered the other assignments of error relating to the charge, and are satisfied that they do not demand a reversal of the case.

Judgment is affirmed.

McAlvay, C. J., and Bkooke and Stone, JJ., concurred with Kuhn, J.

Ostrander, J.

I think testimony of consequential injury — damages arising from failure to put in crops —was erroneously received, and, having been received, it was error for the court to submit the matter of plaintiffs loss of profits to a jury.

I concur in affirming the judgment upon the ground that it is apparent the jury allowed nothing to plaintiff for loss of profits.

Bird and Steere, JJ., concurred with Ostrander, J. Moore, J., did not sit.


author: Brooke, J. Pee Curiam.

text:
    JOHNSON v. O’NEILL.
    1. Contracts — Building Contract — Extras — Alterations — Architects.
    Changes made in the plans of a building so as to contain more stores than the original plan and contract called for, at the instance and request of the owner, were correctly treated as extras, for which the architect could recover additional compensation.
    2. Evidence — Correspondence—Letters—Contracts.
    On the trial of an architect’s claim for services, letters of the plaintiff containing the statement that no charge would be made if the negotiations should fall through, were inadmissible, where the proposed alterations in plan were actually made and the negotiations did not fall through.
    S. Same — Trial.
    Evidence, contradicted by defendants, that the architect employed a special engineer in the inspection of a heating plant, with the knowledge of defendants, raised an issue of fact as to plaintiff’s claim for that amount.

      4. Same — Plastering—Recoupment—Heating.
    A claim of recoupment for defective plastering was properly-denied, where the contract did not provide that the builder should furnish heat, and the defective condition resulted from the cold weather, the building being constructed in midwinter.
    5. Same — Evidence—Parol Evidence Rule.
    And it was not erroneous to exclude evidence tending to show a parol contract relating to the furnishing of heat, since the contract was in writing.
    6. Same — Alterations in Plan.
    And evidence tending to show what the cost of a stairway as originally provided for would have been, if no alterations had been agreed upon, was properly excluded.
    7. Same — Negligence.
    And when it was apparent that the reason for the failure of defendants’ contractor to correct certain defects pointed out by the architect was that they had paid him in full and he had become insolvent, the architect could not be charged with the deficiencies and was entitled to recover his compensation notwithstanding them.
    ON REHEARING.
    Same — Contracts.
    The right of the plaintiff to recover for changes which were made in the original plans and which were agreed upon after the bids were received upon the plans, was the same whether or not the contract had been entered into with the contractor.
    Error to Wayne; Van Zile, J.
    Submitted January 14, 1914.
    (Docket No. 70.)
    Decided July 25, 1914.
    Motion for rehearing denied January 29, 1915.
    Assumpsit by Arland W. Johnson against John G. • O’Neill and another for work, labor and services. Judgment for plaintiff. Defendants bring error.
    Affirmed.

      William G. Fitzpatrick and M. Hubert O’Brien {,Joseph Kropidlowski, of counsel), for appellants.

      J. Emmet Sullivan, for appellee.
   Brooke, J.

This case is now before the court for the second time. Reference is made to our former decision, 172 Mich. 334 (137 N. W. 713), where the matter in dispute is set forth. Plaintiff has again recovered a judgment, which defendants again review in this court by writ of error.

There are some 66 assignments of error, a part only of which are argued and relied upon in defendants’ brief. The first item discussed is that of $262.50, claimed by plaintiff as an extra for changing the plans after the contract had been let. The record shows that after the contract had been let defendants desired changes to be made, so that the commercial building so-called would contain a larger number of stores and produce a greater rental. There would seem to be no good reason why plaintiff should not recover for this item, if, as he testified, the changes were made at the request of defendants, and after the contract for erection under the original plans had been entered into.

It is urged that reversible error was committed in the exclusion of Exhibits Nos. 49 and 71. These were letters, one from plaintiff to the Burt Amusement Company, containing the statement that no charge would be made for the plans, should the negotiations fall through, and the other from the Burt Amusement Company to one of the defendants, conveying the same information. Inasmuch as the negotiations did not fall through, but were finally consummated and resulted in the erection of a building, we are unable to see what bearing they had upon the matter in controversy.

Plaintiff was permitted to recover the sum of $47, alleged to have been paid by him for the services of a special engineer in the inspection of the heating plant. He testified that the engineer was employed by him with the knowledge and consent of defendants. While this was disputed, the question was one of fact for the determination of the jury.

Defendants’ claim of set-off and recoupment included a claim that the ornamental plaster was improperly and defectively applied, so that much of it fell down at a later date. The specifications called for the use of metal lath. Wood lath was substituted (plaintiff claims) with the consent of defendants.

The record discloses that much of the damage to the plaster resulted from the fact that the building was not properly heated at the time the plaster was put in position. Defendants claimed it was not their duty to heat the building during construction. Herman, the contractor, did furnish some heat by the use of “salamanders;” but it was apparently insufficient to prevent damage. The learned trial judge charged that the duty to'heat the building rested upon the owner, and that he could recover for no damage resulting from his failure to perform that duty. In this we think he was correct.

It is clear that the contractor was under no obligation, under his contract, to supply heat. The building was being erected in midwinter. Defendants had already leased it to the Burt Amusement Company, and it was desirable that it should be completed at the earliest possible moment. Not having, in the contract, provided that the builder should furnish the heat, we think the owners must be held to have assumed that duty.

Error is assigned upon the refusal of the court to permit the witness Herman to answer the following question: “What was the agreement in regard to furnishing heat?” The contract between defendants and Herman was in writing, and in evidence. The answer was properly excluded.

The floor of the auditorium was changed from one involving the use of steps to a gradual incline. This was done at the request of the lessee, and without objection on the part of the owner, who was present and noted the change. Evidence as to what it would cost to put in a floor according to the original design was properly excluded.

Plaintiff, a resident of Toledo, Ohio, visited the building during construction about 20 times. Defendants contended that his failure to inspect the building more frequently resulted in the use of inferior materials, faulty construction, and omissions by the contractor. Plaintiff claimed that he advised defendants a “clerk of the works” would be necessary, and that one of the defendants agreed that he would act in that capacity. This was disputed. The question as to whether plaintiff had properly performed his duty as architect was fairly submitted, and was determined by the jury in plaintiff’s favor.

Many assignments of error are based upon alleged errors in the court’s charge. We have carefully read the charge, and while there appears to be some repetition, due perhaps to the giving of requests already covered in general language, we are of opinion that the basic questions in controversy were fairly submitted to the jury. Particular stress is laid upon that portion of the charge wherein the court instructed the jury that defendants could not recover under their plea of set-off and recoupment for any damages caused by their own negligence. The alleged negligence referred to by the court was the failure of defendants to furnish heat, and the payment by defendants to Herman of various sums upon the contract, without first obtaining an estimate from the plaintiff.

The exact circumstances under which these payments were made were in dispute; but the effect was that after Herman, the contractor, became insolvent, before the building was completed, there was no reserve in the hands of the owners with which to compel performance of the contract and the rectification of minor defects pointed out by the architect in his final report/ If this condition arose through the fault of defendants, it is obvious that plaintiff should not be held responsible. It is, we think, clear that defendants were very anxious for the early completion of the building, and the course followed (perhaps with plaintiff’s consent) was doubtless the result of such desire.

We think the portion of the charge of which complaint is made was warranted by the evidence. Upon a review of the entire record, we believe that plaintiff substantially performed his duties under his contract, and that defendants now possess and for the past eight years have enjoyed the fruits of his labor.

We find no reversible error, and the judgment is affirmed.

McAlvay, C. J., and Kuhn, Stone, Osteandee, Bied, Mooee, and Steeee, JJ., concurred.

ON EEHEAEING.

Pee Curiam.

An application for rehearing is made, based upon three grounds, but one of which requires attention. The opinion contains the following:

“The first item discussed is that of $262.50, claimed by plaintiff as an extra for changing the plans after the contract had been let. The record shows that after the contract had been let defendants desired changes to be made, so that the commercial building so-called would contain a larger number of stores and produce a greater rental. There would seem to be no good reason why plaintiff should not recover for this item, if, as he testified, the changes were made at the request of defendants, and after the contract for erection under the original plans had been entered into.”

This statement was based upon the following testimony given by one of the defendants:

“All of these small plans and the change of the erection of the four stores in front and the old house from (sheets) 1 to 7 were all furnished after the contracts were let.”

And again:

“Changes were made in the plans after the contract with Herman was entered into by Mr. Johnson with my consent. These were the plans from 1 to 7. They were agreed upon, Mr. Johnson agreed to draw these plans; agreed to furnish these plans. Sheets 1 to 7 were plans for the building which I contracted for. I never agreed to any other plans except those there including 1 to 7.”

It is true that plaintiff testified that the changes were made or agreed to be made after the bids were received upon the original plans, and that “it was upon the plans and specifications as changed after the bids were received, the contract was finally entered into with Mr. Herman.”

Whether we accept one version of the facts or the other, it is clear that complete plans and specifications were prepared by plaintiff and bids were received thereon, after which changes were ordered. • It would seem that, though the changed plans were not actually made until after the contract with Herman was entered into, they were agreed upon before.

In our view of the case it makes no difference whether the changes were in fact ordered and made after the bids were received on the original plans or after the contract was let to Herman.

The motion is denied.