author: Grant, J.

text:
    WATSON v. E. E. NAUGLE TIE CO.

    1. Sales — Action for Price — Passing of Title — Evidence — Question for Jury.
    In an action for the price of certain ties, posts, and poles, involving the issue of the passage of title to the poles and of the .surrender or discharge of the contract as to them, evidence examined, and held, to present a question for the jury.
    2. Same — Evidence—Intent of Parties.
    Under section 5085, 2 Comp. Laws, the marking of poles with the buyer’s log mark is evidence of ownership proper to be considered upon whether it was understood that title should pass notwithstanding an arrangement that the poles were to be inspected afterwards.

      8. Same — Passing of Title — Intent of Parties.
    Whether title to poles passes to the buyer on delivery at the place provided for in the contract depends upon the intent of the parties as determined from their acts, conduct, and statements.
    4. Same — Delivery—Nonpayment—Remedies.
    Where the seller of posts and ties has delivered them at the places designated, and they have been inspected and accepted, the delivery is complete and payment due in the absence of any agreement for credit; and if the buyer does not pay the seller may rescind the contract, and retake the goods, ignoring the title of the buyer, or, if the buyer has taken possession, the seller may recover them in a proper action.
    5. Same — Question for Jury.
    Evidence examined, and held, to present a question for the jury whether the seller did not reclaim the property which the buyer failed to take and pay for.
    Error to, Chippewa; Steere, J.
    Submitted April 4, 1907.
    (Docket No. 7.)
    Decided July 1, 1907.
    Assumpsit by Thomas H. Watson against the E. E. Naugle Tie Company for goods sold and delivered. There was judgment for plaintiff, and defendant brings error.
    Reversed.
    Plaintiff, a resident of Chippewa county, this State, and the defendant, an Illinois corporation, dealing in ties, posts, etc., on January 16, 1903, entered into a contract by which plaintiff agreed to sell and deliver to the defendant 25,000 cedar railway ties, 40,000 five-inch and up eight-foot posts, and 4,000 long posts and poles. Those parts of the contract material to the issues involved are as follows :
    ‘ ‘ Delivery and Inspection: Party of the first hereby agrees to deliver said material at places in vicinity of DeTour and Drummond Island during the winter of 1902 and 1903, and the entire delivery to be completed by May 10th, 1903, and party of second part agrees to inspect the same from time to time when so delivered, in quantities of not less than one inspection of the whole amount, said inspection to be final, and upon such inspection and marking of said material by said party of the second part, the same shall become the property of the said party of the second part, and they shall pay therefor in the manner herein provided. Party of the first part agrees to pay ■for any labor necessary in handling said material for inspection and to deliver said material free from all liens or incumbrances of any kind.
    ‘ ‘ The party of the second part, after such inspection on the bank, shall not be held responsible for any rejected ties that are not removed before or at time of loading when they have been properly marked as such.
    “The party of the second part shall not be liable for any taxes, against such material purchased.
    “ It is agreed and understood, however, that after such delivery and acceptance, the party of the first part shall put the material so accepted F. O. B. rail of vessels when called for by said second party or their agent and to insure the performance of this condition by party of the first part, party of the second part shall retain 10 per cent, of the purchase price until all of said material is so properly placed, and in case, for any cause whatsoever, the said materia], or any part thereof, shall not be placed as aforesaid, party of the second part shall retain the said 10 per cent, of the purchase price to apply on their damages by reason of such failure. * * *
    “Advances and Terms of Payment: Two thousand five hundred dollars now paid, and one payment based on estimates on or about the 15th of March, balance when final inspection is made on or about May 10th, less 10 per cent.
    “ Final shipments to be made no later than August 15th, and any moneys advanced to said first party shall become a lien on all material intended under this contract, and the same to be deducted from the proceeds of first material delivered, and all such advances shall draw interest at the rate of seven per cent, per annum from date actually made until date repaid by shipment of such material. ”
    Plaintiff’s declaration is in assumpsit upon the common counts for goods sold and delivered. A bill of particulars was furnished. The theory of the plaintiff is that he had fully performed the contract, had delivered the goods as specified in it, that they had been accepted by the defendant, and that the contract was fully executed. The defendant’s theory as to the poles is that the contract had not been fully performed, and'that the title to them had not vested in the defendant.
    Plaintiff purchased the timber from various parties, among whom were one Mclnnes and one Demorest. The timber purchased from these parties is that in dispute. It was conceded that the defendant owed the plaintiff on other timber $672.35, unless a small item of $27 should be allowed as payment. Demorest and Mclnnes delivered the ties, posts, and poles at the places provided for in the contract. One Jacobi was the manager, agent, and inspector of the defendant. Mr. Jacobi inspected them as provided in the contract, except the Demorest poles.
    Defendant contends that, even though there was no delivery and acceptance of the ties and posts before the institution of this suit, plaintiff had discharged the contract as to them by his own acts, admissions, and conduct, and that the testimony conclusively establishes that fact. All the posts, ties, and poles in dispute were at such inspection marked with the defendant’s log mark: “E. N. E.” The defendant did not furnish vessels for the transportation of the timber in dispute either during the term provided for in the contract or afterwards. Mclnnes disputed the accuracy of Jacobi’s inspection, and declined to be bound by it. The Demorest poles were not piled in a way to make a practical inspection. On the certificate of inspection of the Mclnnes poles Jacobi wrote: “Null and void.” The evidence on the part of the plaintiff showed •that it was agreed that the Mclnnes poles should be again inspected when loaded, and that Jacobi said: “He stamped the timber, and they claimed the timber.” Jacobi testified:
    “The [Mclnnes] poles were objected to on account of a discrepancy in the number of pieces that he claimed over and, above that which we found, and the matter remained understood between us that, when we shipped the stuff, we would have a recount on that, and, if I found it, then I would credit him with it.”

      Plaintiff also gave evidence tending to show that the Demorest poles would be inspected when they were loaded. The court directed a verdict for the plaintiff for the posts and ties. As to the poles the court instructed the jury as follows:
    “You are therefore instructed that as to those poles, as the matter stood at that time, it cannot be said, under the contract relating to them, that they were both inspected and marked according to the contract. That leaves for your consideration in relation to those poles the testimony as to what subsequently occurred. On the part of Mr. Watson, it is claimed that he had asserted a claim that the poles had, with the other timber there, been inspected and accepted, that they should take them and pay for them. It is claimed in his behalf that he made that demand of them at the time he met in counsel with the representatives of the defendant to go over their accounts and balance and settle them, and that they, at that time, acknowledged his claim, recognized this timber as purchased by thetn, and agreed to take the same. On the part of the defense, it is claimed that Mr. Watson, in the first instance, and for a long time, recognized these poles had not been fully inspected and marked according to the contract; .that he made no claim that they should pay for them or take them; that he wrote them to that effect; that he afterwards negotiated and sold them to others, or attempted to sell them; that he at different times made a claim of ownership upon them and in relation to them; that he approached them with a request that they release the mark which had been put upon them; and that they complied with his request, and did everything that he requested, and offered to do anything further that be desired, and therefore the matter was settled and disposed of, irrespective of the previous acts of the parties, by a contract and agreement upon which their minds met.”
    The jury found for the plaintiff.

      Oren, Webster & Garleton, for appellant.

      Davidson & Hudson, for appellee.

       Rehearing pending.

   Grant, J.

(after stating the facts).

The questions of the passage of title to the poles and of the surrender or discharge of the contract as to them were properly submitted to the jury. Whether title to the poles had passed depends upon the intent of the parties. The marking of the poles with defendant’s log mark was evidence of ownership. 2 Comp. Laws, § 5085. Was it understood by them that the title should pass, notwithstanding the arrangement that the poles were to be inspected after-wards ? That intent was a fact to be determined from the acts, conduct, and statements of the parties. Upon this point there was a clear conflict of evidence. The same is true of the other question involving the surrender or discharge of the contract as to the poles.

The learned circuit judge correctly instructed the jury that the plaintiff had fully performed the contract as to the posts and ties. He had delivered them at the places designated. They had been inspected and accepted. The delivery was complete. Payment was then due. The defendant did not pay. Under these circumstances, the plaintiff could have rescinded the contract, retaken the goods, and ignored the title of the defendant. If he had failed to pay upon delivery and had taken possession of the goods without payment, the plaintiff could have recovered them in a proper action. 24 Am. & Eng. Enc. Law (2d Ed.), p. 1185; 2 Mechem on Sales, § 1682.

This claim of defendant was not mentioned by the circuit judge in his charge. Was there evidence to sustain it ? Mr. Wilson, an agent for the defendant, testified that in a conversation with plaintiff, plaintiff told him that the timber was worth more than it was the year before, and that “the defendant had lost any supposed rights that it might have had to take it away, and couldn’t have it.” In' another conversation the same witness testified that plaintiff “ either wanted us to go there and take the timber on the terms which I have stated, or else to release the timber from the mark. He thought it should be released if there was anything in the mark that prevented him from selling the timber.” Plaintiff had had negotiations with one Gilpin to purchase the timber, but Gilpin hesitated on account of the defendant’s mark upon it. Mr. Wilson testified that he saw Mr. Gilpin and told him he could purchase it, and he would release it to Mr. Watson, that he subsequently saw Mr. Watson and told him specifically what he had done, and that plaintiff said it was satisfactory.

‘ ‘ I asked him if he wanted a written release from me, or if he wanted me to send to the Naugle Tie Company and get a written release. He said it was not necessary; that if I had been there and released the timber to Mr. Gilpin, and would now release it to him, that was sufficient.”

Another witness, Mr. Dean, who was sent by the defendant to see if there was any timber there, testified that plaintiff said to him:

“ There is no use of your going over to the island, because all the timber was shipped, and there was none there.”

In a letter of January 7,1904, plaintiff wrote defendant, demanding payment for the timber taken, and in that letter wrote:

“ I have waited and done without my money now for a year and now must insist on a settlement in full. If not, I shall proceed at once to enter suit. As for your Mr. Dean not going over to the island to count up, that does not annoy me, as the timber is worth the money where it is. I care nothing about what you did not take. It is what you have got I want pay for.”

j This letter was in reply to one from defendant of December 39, 1903, in which defendant wrote:

1 “ If it is true that the material cannot be inspected and tallied now, the only way that I know to handle the posts and poles that are still on the island would be to make a new contract for a specified amount of poles of certain lengths and sizes, to be delivered the first thing in the spring and to make.such payment on them as we might mutually agree upon. This, however, is only a suggestion, and I should be glad to hear from you upon it.”

This evidence certainly tended to sustain the defendant’s theory. The evidence upon this branch of the case was the same in case of the posts and ties that it was in case of the poles. If it was proper to leave the question to the jury in the one case, it was also in the other.

We think there was a conflict of evidence, and are therefore compelled to reverse the judgment, and order a new trial.

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


source: Caselaw Access Project

author: Ostrander, J.

license: Public Domain

text:
    PECK v. GRIFFIS.

    Wills — Construction—Estate Devised — Life Estate.
    A will by which testator gives his wife his personal property absolutely, and his real estate ‘ ‘ to have and to hold the same as long as she remains my widow, but if she shall marry again, I request and direct that she sell said lot and divide the proceeds between herself and my sons,” gives the wife no more than an estate for life in the real estate, rather than an estate in fee subject to be divested in case she remarries.
    Appeal from Kalamazoo; Adams, J.
    Submitted April 9, 1907.
    (Docket No. 35.)
    Decided July 1, 1907.
    Bill by Charles A. Peck against Winter Griffis, J. A. Pitkin, administrator de bonis non with the will annexed of the estate of Oliver H. P. Griffis, deceased, James W. Osborn, executor of the last will and testament of Mary L. Griffis, deceased, and others, for the foreclosure of a mortgage. From a decree for defendants, complainant appeals.
    Reversed, and decree entered for complainant.

      The facts are stipulated and are as follows: The bill of complaint in this case was filed February 24, 1904, for the purpose of foreclosing a mortgage given May 18, 1875, by Winter Griffis and Margaret Griffis, his wife, to secure the payment of $300 in one year after its date, with interest at the rate of 10 per cent, per annum, said mortgage being on lot 351 of Welch’s addition to the village of Kalamazoo. Said mortgage was given to secure a lawful debt. No part of the same has been paid. Complainant is the lawful owner of the mortgage, and the same does not come within any statutory bar as to the foreclosure of mortgages. All necessary parties have been made defendants in this suit, and are properly before the court. The defendants Hope and Mary Ross are the owners of a second mortgage given by said Winter Griffis on said property, and they and the said mortgagors have taken said bill as confessed. Winter Griffis, the maker of said mortgage, is one of the two sons of Oliver H. P. Griffis, deceased, who died testate in said county of Kalamazoo on or about April 10, 1860, and, unless the same was otherwise fully disposed of by the will of said deceased, said Winter Griffis inherited from said Oliver H. P. Griffis, and owned at the date of said mortgage, an undivided one-half of the premises described therein, subject to the rights of Mary L. Griffis, his stepmother, and the widow of said deceased, under said will. The following is a copy of said will:
    ‘ ‘ I, Oliver H. P. Griffis, of the village of Kalamazoo, in the county of Kalamazoo, and State of Michigan, being of sound mind sand memory, and considering the uncertainty of this frail and transitory life, do therefore make, ordain, publish and declare this to be my last will and testament, that is to say: First, — after all my lawful debts are paid and discharged, the residue of my estate, real and personal, I give, bequeath and dispose of as follows, to wit: To my beloved wife, Mary L. Griffis, the piece or parcel of land belonging to me and described as Lot Number Three Hundred and Fifty-one (351) on Welch’s addition to the Village of Kalamazoo, and the appurtenances belonging thereto, to have and hold the same as long as she remains my widow; but if she shall marry again, I request and direct that she sell said lot and divide the proceeds of such sale equally between herself and my sons Winter Sabin and Wolcott Griffis, all sharing alike in the proceeds of said sale.
    “I also give and bequeath to my wife all my personal property of every name and description whatever to be used and disposed of by her as she may think best and proper.
    “ I likewise make, constitute and appoint my said wife, Mary L. Griffis, to be executrix of this my last will and testament, hereby revoking all former wills by me made.
    “In witness whereof, I have hereunto set my name and affixed my seal the 14th day of February, A. D. 1860.
    [Signed] “Oliver H. P. Griffis. [L. S.]”
    Said will was duly admitted and proved in the probate court for said Kalamazoo county as the last will of said deceased on or about May 20, 1860. Mary L. Griffis, the testator’s widow, was appointed and qualified as executrix thereof, and, after her death, the defendant J. A. Pitkin was appointed and qualified as the administrator de bonis non with the will annexed of the estate of said Oliver H. P. Griffis, deceased, and is now acting as such. Said Mary L. Griffis died in the month of October, 1903, without having remarried after the death of her said husband. She left a will which has been duly admitted and proved in said probate court, and the defendant James W. Osborn has qualified as executor thereof and is now acting as such. Said will of Mary L. Griffis did not make specific reference to the lot described in said mortgage, and in said will of Oliver H. P. Griffis, but did refer to “the proceeds * * * from the sale of such real estate as I shall leave at the time of my decease.” Said executor, James W. Osborn, caused said lot 361 to be listed in the inventory of the estate of said Mary L. Griffis, deceased, and the said executor has been in the possession of said premises from the time of her death or thereabouts and has received the rents and profits thereof from that time until the present. The court' below found:

      “First. That Winter Griffis and Margaret Griffis, who executed and delivered to complainant the note and mortgage mentioned and set forth in the bill of complaint, had at the time no right in or title to the lands described therein and attempted to be mortgaged.

      “Second. That Winter Griffis and Margaret Griffis, his wife, did not take or acquire any title to or interest in the land described in said mortgage under the last will and testament of Oliver H. P. Griffis, deceased.

      “Third. That at the time of the death of Mary L. Griffis the title to said lands was in her unaffected and unencumbered by the mortgage set forth in the bill of complaint and passed under her last will and testament.

      “Fourth. That the mortgage described and set forth in the bill of complaint is not a valid and substantial lien or incumbrance upon the lands described therein.

      “Fifth. That the defendants are entitled to have said mortgage delivered up to be canceled and to have same discharged of record.”
    And from a decree in accordance with the finding complainant has appealed.

      Walter E. Taylor, for complainant.

      Alfred J. Mills, for defendant.

       Rehearing denied July 15, 1907.

   Ostrander, J.

(after stating the facts). It will be noticed that the testator disposes of his personal property absolutely, his real estate upon condition, and to the same person. In this circumstance and in the employment of the words, “ to have and to hold the same as long as she remains my widow but if she shall marry again, I request and direct that she sell said lot and divide the proceeds of such sale equally between herself and my sons,” etc., is found an intention to devise to the wife no more than an estate for her life, rather than an estate in fee subject to be divested if she should remarry. The words quoted may be construed as a devise over in case of the marriage of the widow, and, so construed, the will gives her a life estate only. Haab v. Schneeberger, 147 Mich. 583.

The decree is reversed, with costs of this court. A decree will be entered in this court for foreclosure of the mortgage, with costs of the court below, and the record remanded for further proceedings under said decree.

McAlvay, C. J., and Carpenter, Grant, and Blair, JJ., concurred.


text:
    VOSSEN v. CITY OF ST. CLAIR.
    1. Municipal Corporations — Appropriation op Funds — Tib Vote.
    A resolution of the city council of St. Clair, adopted by a tie vote of aldermen and the affirmative vote of the mayor, is not sufficient to create an obligation of the city to be met by taxation, or to lay a tax, though it would be sufficient as a mere distribution of funds already on hand to the purposes for which they were raised.
    2. Same — Franchises — Contracts — Construction—Grant by Council — Sufficiency of Vote.
    A contract by a city of the fourth class to purchase electric power, to be generated at a point north of the city limits, containing a clause granting the furnisher permission to erect and maintain appliances for the transmission of electricity in and through the streets of the city, and another clause' providing that the furnisher shall not furnish to purchasers within a certain district south of the city limits, except upon permission of the city, is not merely the grant of a way to the city’s power plant, but is the grant of a franchise through the city, to which extent the contract is void unless authorized by a two-thirds vote of all the aldermen elect, as provided by section 3111, 1 Gomp. Laws.

      3. Same — Contract—Incurring Indebtedness.
    A contract by a city to purchase electrical power which, though it incurs no direct indebtedness on the part of the city beyond the monthly payments due for the electrical current furnished, provides that the city shall furnish upwards of $10,000 worth of apparatus to make performance on the part of the furnisher available, involves an expenditure for a public improvement which cannot be authorized by a tie vote of aldermen and the affirmative vote of the mayor.
    4. Same — Borrowed Money — Appropriation.
    Money raised by a city of the fourth class, by a sale of bonds authorized by the electors for the purpose of installing a larger boiler and pumps in its waterworks, cannot be expended by the council, by a tie vote of the aldermen, for the purchase of electrical machinery to enable the city to purchase electrical power to operate its waterworks system. (Section 3310, 1 Comp. Laws.)
    Appeal from St. Clair; Law and Tappan, JJ.
    Submitted April 15, 1907.
    (Docket No. 99.)
    Decided July 1, 1907.
    Bill by Jacob Vossen, Henry Rankin, John C. Pringle, Henry Fish, and Detlef Franck against the city of St. Clair to enjoin the performance of a contract. Defendant filed an answer in the nature of a cross-bill, bringing in as defendants A. C. Marshall, E. J. Ottaway, and Hugh H. Hart, parties to said contract, and prayed for the cancellation and surrender of the same. From a decree for cross-complainant, defendants appeal.
    Affirmed.
    The city of St. Clair, which is of the fourth class, owned and operated a waterworks, and, in connection, an electric light plant, using steam for power. It became necessary, in the opinion of the common council, to enlarge the plant with a new boiler and new pumps, at a cost of $10,000, the money to be raised by selling the bonds of the city. The proposition was submitted to the electors at the April, 1905, election in the form here set out: “Shall the common council of the city of St. Clair borrow the sum of $10,000 to be expended in installing a larger boiler and pumps in the waterworks, and to issue coupon bonds of the city of St. Clair, Michigan, payable in 20 years from the date of issue and bearing interest at a rate not to exceed 4| per cent, per annum in payment therefor?” and carried. The bonds were sold and the money carried to the credit of the waterworks extension fund. Later the city by its mayor and clerk, pursuant to a resolution adopted by a tie vote of aldermen and the affirmative vote of the mayor, entered into a contract with the other defendants to purchase from them, for a period of ten years, electric power, generated at Port Huron, to drive the pumps of the plant and to light the city, the current to be delivered at the St. Clair waterworks plant. All parties concerned entered into the contract with the idea and purpose of using the money received from the sale of bonds in performance of the contract. It is stipulated in the contract that the city shall furnish, install, and maintain suitable transformers and purchase pumps suitable to be driven by electric power, and switches, instruments, lightning arresters, and other apparatus necessary for the purpose of receiving a high-tension current and reducing and applying it to the required purposes. Engineers, who made certain recommendations and comparisons, estimated the cost of the electrical equipment, pumps, and a standpipe at $10,950, with an additional $500 for heating the plant and for an apparatus for blowing the whistle. The contract does not require the city to erect a standpipe, the cost of which is estimated at $5,000, but the recommendations of the engineers and the estimates made of the cost of operation include and take account of a standpipe. Part of the consideration moving from the city to the defendant contractors is:
    “ Fifth. The party of the second part [the city] hereby grants permission to the party of the first part to erect and maintain poles, wires, cables, conduits or other appliances necessary for the transmission of electricity in and through the streets and alleys of the city of St. Clair, provided that the character and location of said poles or other appliances must be approved by the common council, and further provided that the party of the first part agrees not to sell, give away, or supply on any terms whatever, electricity to any parties within the limits of the city of St. Clair, except as provided in this agreement.
    “ Sixth. It is hereby further agreed that said first party will not sell, give away, or supply on any terms whatever, electricity for light, power or any other purpose in the district south of the city limits of said city of St. Clair, bounded by the St. Clair river on the east, the Duchene road and McGregor farm on the south and the road commonly known as the Belle River Road on the west, without first obtaining permission therefor of said second party.”
    Complainants, resident property owners and taxpayers, filed the bill in this cause, praying for a temporary, and, eventually, a permanent, injunction restraining the city from doing any act • in performance of said contract. After the filing of the bill, the aldermen elected at the April, 1906, election voted unanimously to rescind the contract and the action of the council relied upon to support it. By stipulation the bill was amended so as to make the city the sole defendant, it being understood that the city, in its answer, should claim the benefit of a' cross-bill, bringing the other defendants, parties to said contract, upon the record, said other defendants to answer the original and the cross-bill. Answers were, so made and filed, the cause came on to be heard, and a decree was made and entered declaring void the action of the common council of the city which resulted in the making of the agreement and requiring the agreement itself to be delivered up to be canceled. From this decree, defendants have appealed.

      Henry B. Baird, for complainants.

      Avery & Walsh, for cross-complainants.

      Phillips & Jenks, for defendants.
   Ostrander, J.

(after stating the facts). The meritorious question is whether the use of this money in performance of the contract will be a diversion thereof which the common council could not by the vote given legally order. That the vote was not sufficient to create an obligation on the part of the city to be met by taxation, or to lay a tax, is clear. Unless it amounted to a mere distribution of funds already on hand to the purposes for which the funds were raised (Bishop v. Lambert, 114 Mich. 110; compare Tennant v. Crocker, 85 Mich. 328), .there was no proper action of the common council. The city had on hand no other money which was available for performance of the contract. Before determining this question, a contention made by counsel for the city will be noticed.

Defendants, in their answer, ask that the city may be required to carry out the contract. The court below took judicial notice of the fact that the city of Port Huron lies to the north of the city of St. Clair; that the territory referred to in the fifth.and sixth subdivisions of the contract above set out lies at and beyond the southern boundary of the city of St. Clair, and found that the grant in the contract of permission to erect poles, etc., is not merely the grant of a way to the city plant, but is the grant of a franchise through the city, to which extent the agreement is void as opposed to 1 Comp. Laws, § 3111, which provides that no such franchise shall be granted, except by a two-thirds vote of all the aldermen-elect. The suggestion of the court to counsel for defendants that the ruling would become noncontrolling if a disclaimer of franchise rights was made matter of record was not acted upon. In this court counsel for defendants have argued that the contract will not bear the construction that it confers a franchise, but the one only that it confers the right to bring to the place where it is to be delivered, namely, at the city plant, the current contracted to be delivered. We think the contract will bear the construction that a right of way through the city is intended to be given to defendants and tbeir successors and assigns. Whether the defendants and their successors would be bound by the construction they now assert, or whether they might waive this provision in their favor if the contract was otherwise valid, it is unnecessary to determine, for the reason that we think the contract is otherwise invalid.

The contract in terms requires the city to furnish certain apparatus; the clear inference being that performance of the contract by the defendants must await such action on the part of the city. The agreement is that such action shall be taken “ as soon as possible.” While the effect of the contract is to incur no direct indebtedness on the part of the city to defendants beyond the monthly payments due for the electrical current furnished, indirectly it involves, as has been pointed out, the present expenditure of more than $10,000 fora public improvement. In saying this, we find that, although the standpipe is not absolutely necessary to the operation of the waterworks under the contract, it is an essential part of the system which the city proposed to install and of the system, the economy of operation of which influenced the action of the common council which resulted in the contract. If the contract is enforceable, the city is, in any event, committed to the making of the specified improvements.

It is the contention of counsel for defendants that the money was lawfully borrowed to pay for an extension of the waterworks (1 Comp. Laws, § 3250), and that, if used as the contract contemplates, the result will be an extension of the waterworks. It is said that the electors determined only — that it is contemplated by the law that they shall determine only — the specific amount to be borrowed, the terms of the loan, and the general purpose to which the money shall be appropriated, and that the details, the method of accomplishing the general purpose, must be left to the common council. The soundness of the last proposition, as stated, may be admitted. City of Centerville v. Guaranty Co., 118 Fed. 332; Johnson v. City of Rock Hill, 57 S. C. 371. The statute provision is that, before any money shall be raised or expended for the purchase, construction, or extension of waterworks, the council shall direct the board of public works to cause to be made an estimate of the expense thereof, and the question of raising the amount required for such purpose shall be submitted to the electors. It is true that, after waterworks are constructed' by the city, the common council may then raise and expend, in making repairs and alterations or in extending the works, such sum as is deemed advisable without submitting the question to electors, provided the sum so raised does not, with other levies, exceed in one year 1£ per cent, of the taxable property of the city. In this case the money was not raised, but was borrowed, and must be used1 (section 3349) exclusively for the purpose for which it was borrowed. The common council, in securing funds, went to the people with a definite proposition. Pursuant to statute requirements, the board of public works had been requested to furnish estimates of the cost of supplying what the council had voted to be a necessity, viz., a larger boiler and pumps. Such estimate was furnished. The council voted to raise the necessary money for the particular purposes by'a loan. The contract obligation is to expend this money, not in installing a larger boiler and pumps, not in enlarging the waterworks plant, but in purchasing and installing apparatus which will make the city a mere merchant of electrical current, and which will require, at least render expedient, the maintenance of its present steam plant to answer emergencies. No estimate of the expense of this improvement was made by the board of public works before the money was borrowed. See Mills v. City of Detroit, 95 Mich. 422. The fact that, if the contract is executed, the pumping capacity of the plant will be increased, is not controlling. Assuming it to have been the general and the special purpose, at the inception of the proceedings, and down to the action resulting in the making of the contract, to increase the pumping capacity of the plant, and, to this end, to increase the steam capacity, that this purpose will be accomplished, and that the cost of the proposed improvement would have equaled the cost of the contract improvement, it remains that the proposition submitted to the electors, and the contract proposition are, in other respects, so different that it cannot be supposed that those voting for one would have voted for the other proposition. The statute empowers the city to own and operate an electric light plant in connection with the waterworks (section 3258) if the electors, having an estimate of the expense thereof and being willing to raise so much money, should, by two-thirds of those voting, so decide. The statute also provides that the common council may contract, from year to year, or for a period of not more than 10 years, for supplying the city and inhabitants with light. .Section 3265. The first of these methods was adopted by the electors of the city of St. Clair. The effect and purpose of the contract is to adopt the second method of providing lights for the city and the inhabitants, to shut down the electric light plant except as a place in which to transform and measure the current which is purchased, to make the city a buyer, instead of a manufacturer, of electricity. These results are not merely incidental to the disposition of money voted to be used in enlarging the waterworks, mere details in accomplishing the general purpose.

It is not intended to intimate an opinion concerning the power of cities owning waterworks and electric lighting plants to purchase power for their operation in the cheapest market. What is decided is that the common council of the city of St. Clair has, in fact, attempted to devote money borrowed for a specific purpose to another and different purpose, and that it may not do this by a tie vote of aldermen under a charter which requires that all moneys loaned or appropriated for the purposes of any particular fund shall be paid in and credited to such fund, and shall be applied to the purposes for which such moneys were received and to none other. 1 Comp. Laws, § 3310. See Smedley v. City of Grand Rapids, 125 Mich. 424, 429.

The decree is affirmed, with costs.

McAlvay, O. J., and Montgomery, Hooker, and Moore, JJ., concurred.


author: Moore, J

text:
    McILROY v. RICHARDS.
    1. Sales — Delivery and Acceptance — Evidence.
    In an action for the price of corporate stock sold, evidence examined, and held, not to show either a delivery or an acceptance of the shares.
    3. Statute of Frauds — Contract not to be Performed Within One Year.
    A writing by which defendant promised to buy of plaintiff two shares of stock a week for 60 weeks, not signed by plaintiff, is void under the statute of frauds.
    Error to Wayne; Hosmer, J.
    Submitted April 15, 1907.
    (Docket No. 102.)
    Decided July 1, 1907.
    Assumpsit by James C. Mcllroy against Richard C. Richards, Charles H. Bookman, and Fred J. Scully for goods sold and delivered. There was judgment for defendants on a verdict directed by the court, and plaintiff brings error.
    Affirmed.

      Moore & Moore, for appellant.

      Ralph L. Aldrich, for appellee.
   Moore, J

The plaintiff sued to recover the sum of $440, which he claims was due him from the defendants. Upon the trial the defendants introduced no testimony. The trial judge directed a verdict for defendants. The case is brought here by writ of error.

Upon the trial the plaintiff testified as follows:

“I am the plaintiff; reside in Detroit; and know the three defendants, and understand the circumstances under which certain stock was sold. At that time the officers of the Detroit Leather Goods Manufacturing Company, Limited, were Mr. Richards, Mr. Scully, and Mr. Bookman, the three defendants. My certificates of stock were then at the office of the company in the company’s safe, and they were indorsed in blank so they could be transferred, so that these defendants had the stock in their possession. I don’t remember whether they were in blank or not. They might have been made out to me, I don’t remember, and the stock was in their possession. While that condition existed I made a contract with them.”

The contract reads: .

“Detroit, Mich., March 5, 1902.
“ J. C. McIlroy,
“Detroit, Mich.
“Dear Sir: Confirming the conversation we have had with you in the past, we hereby agree to purchase from you each week, for a period of sixty weeks, two shares of the capital stock of the Detroit Leather Goods Manufacturing Company, Limited, of Detroit, Mich., for which we will pay you $5.00 per share, or $10 per week, on delivery of certificates, or an assignment or order for the same, duly executed.
“R. C. Richards.
“C. H. Bockman.
“Fred J. Scully.”

No agreement was signed by Mr. McIlroy. Later he gave the defendants orders on the company for stock, and was paid therefor. Later he delivered to Mr. Richards the following paper:

“ Detroit, April 2, 1904.
“Detroit Leather Goods Maneg. Co., Limited.
Gentlemen: Please deliver to R. C. Richards, Chas. A. Bookman or F. W. Scully, certificates for eighty-eight shares of my stock in your company, and oblige,
“Yours truly,
[Signed] “J. C. MgIlroy.”

The plaintiff testified that when he tendered this order Mr. Richards laid it on his desk and said: “That amounts to nothing.” He also testified:

“In the meantime I had a talk with Mr. Richards about payments. The explanation given for their failure to pay was that they did not have the money. Mr. Richards offered me a note. I did not take it. I told him I would take it if the bank would'take it — the bank where he did business. I went to see, and talked with the cashier, and he said he would not accept it; wanted to have a discount; that was the time I think I delivered the 88 shares and he wanted to pay me in a note. * * *
“After Mr. Richards offered the note, and I found I could not use it, the only explanation they made to me at that time as to why they did not pay was that they did not have the money. That was the only reason given.”

It is the claim of the appellant that all the stock covered by the contract was delivered to the defendants, so that the statute of frauds does not apply:

(a) The order for 88 shares for the purchase price of which this suit is brought was delivered to and accepted by the defendants, and nothing remained but for them to pay the purchase price.
“ It was immaterial whether the original contract was or was not valid. The acceptance of the order for the 88 shares of stock and the agreement to pay obligated the defendants, regardless of whether the original contract was binding upon them or not.
“ (b) All the stock covered by the contract was delivered to the defendants. In fact it was in the possession of the defendants at the time the sale was made, and has always remained in their possession. Therefore the transaction was goods sold and delivered to be paid for at the rate of $10 a week, and the fact that the payments were not to be completed within one year did not invalidate the contract.”

We have quoted all the testimony hearing upon the question of an acceptance and delivery, and we think it fails to show either as to the 88, shares of stock now in controversy.

It is the claim of defendants that as plaintiff did not bind himself to sell the shares of stock, and as the agreement was not to be performed within one year, the case was within the statute of frauds. The trial court held with the defendants, basing his decision upon Wilkinson v. Heavenrich, 58 Mich. 574. We think that case controls the one át bar.

Judgment is affirmed.

McAlvay, C. J., and Montgomery, Ostrander, and Hooker, JJ., concurred.


author: Moore, J.

text:
    ACME FOOD CO. v. TOUSEY.
    1. Evidence — Parol Evidence — Varying Written Contracts— Admissibility.
    The rule that parol evidence is not admissible to vary written contracts has no application to a case in which the defendant claims he did not sign the note declared upon, and that plaintiff has filled up the blanks in the instrument he did sign, making it an entirely different instrument.

      2. Bills and Notes — Action—Denial oe Execution — Estoppel.
    In an action on a promissory note, evidence examined, and held, that defendant was not estopped, under the circum-. stances, from denying the execution of the note by a letter he wrote to plaintiff calling its attention to its failure of performance of their contract, and requesting “I would like to have you hold the note until fall.”
    Error to Washtenaw; Kinne, J.
    Submitted April 16, 1907.
    (Docket No. 106.)
    Decided July 1, 1907.

      Assumpsit by the Acme Food Company against Frank J. Tousey upon a promissory note. There was judgment for defendant, and plaintiff brings error.
    Affirmed.

      A. F. & F. M. Freeman, for appellant.

      A. J. Sawyer & Son, for appellee.
   Moore, J.

This case was commenced in justice’s court. The plaintiff declared orally on all the common counts in assumpsit, and also on a certain promissory note filed in said cause, of which the following is a copy:

“$82.00.
“ Town Salem, State, Michigan.
“ Date Dec. 12, 1908.
‘ ‘ One hundred and twenty days after date, for value received, we, or either of us, promise to pay to Acme Food Co. (not inc.) or order, eighty-two dollars at Acme Food Co.’s office, Chicago, 111., with interest after maturity until paid.
(Signed) “ F. J. Tousey.”

And claimed damages of $300 or under. The bill of particulars under the common counts is for the goods sold and delivered by the plaintiff to the defendant at his request mentioned in a paper annexed to the note. After a motion was made and disposition made of it, the defendant pleaded the general issue, gave notice in detail of the circumstances under which plaintiff obtained the paper mentioned in its declaration, and denied under oath the making of the note mentioned in the declaration. After , trial in justice’s court the case was appealed to the circuit court, where it was tried by a jury which returned a verdict in favor of defendant. After judgment was rendered upon the verdict, a motion was made for a new trial for a number of reasons, the most important of which were that the judge should have directed a verdict in favor of plaintiff; that plaintiff was taken by surprise in the testimony offered by defendant, which testimony it could now refute if given a new trial; and—

“Because the defendant offered in testimony a certain writing, signed by him, among other things stating: ‘I would like to have you hold the note until fall.’ The plaintiff did hold said note, as requested by defendant, and did nothing towards its enforcement or collection; and that if defendant had any defense to said note or ground for complaint he thereby waived it, and if any alteration, change, raising, or forging had taken place respecting thereto defendant condoned the same and was thereby estopped to set up such defense, and therefore, in this respect, verdict should have been directed for plaintiff for $90.64, the amount of the note.”

In his charge to the jury the judge instructed them, among other things, as follows:

“ The plaintiff has offered in evidence a certain contract in writing signed by the defendant. If from the evidence in this case you find that the defendant signed this contract and delivered it to the plaintiff as it now appears, that no material change has been made in said contract since its execution, that the defendant signed it fully understanding its meaning and import, and that no fraud whatever has been practiced upon the defendant; and if you further find from the evidence that the plaintiff has fully complied with its part of the contract, that it duly shipped the goods to the defendant and furnished a man to assist the defendant as therein agreed upon, then the plaintiff is entitled to a verdict in this case, and your verdict should be for the sum of $90.64.
“ On the other hand, if you find from the evidence that this contract has been materially changed since its delivery without the knowledge or authority of the defendant, that a blank note has been filled so as to convert a mere blank into a promissory note, such change would defeat all right to recover upon said contract, and if you so find the fact to be from the evidence your verdict should be for the defendant.
‘ ‘ The defendant is bound by his written agreement, unless some fraud has been committed upon him. In ,the absence of fraud the defendant cannot enlarge or prove any different agreement than the one into which he entered in writing. When parties have entered into a written agreement, they .are bound by it, and no other or different contract can be proven, unless some fraud has been committed in the making of such contract.
“ If this contract is just as it was when executed by the defendant, and he fully understood it, then the defendant cannot now escape its terms and consequences; and, if the plaintiff has done its part, then the defendant must do his part and pay this debt.”

The trial judge overruled the motion for a new trial. In doing so he gave, among others, the following reasons:

“An examination of the charge to the jury in this cause will show upon what theories this case was tried.
‘ ‘ It was the contention of the defendant that he never signed the contract upon which this suit is based; that his contract when signed contained no note or other promise to pay; that the contract had been materially changed since its execution, and the liability of the defendant enlarged and altered; that such alterations and changes had destroyed the validity of the written contract. It was upon this theory that the defendant was allowed to show that a blank note had been filled since the execution and delivery of the contract, and that a fraud had thus been practiced upon him.
“ It was in support of this contention that the defendant was allowed to show what the real contract was between the plaintiff and him.
“ If this blank note had remained unfilled, the contract as written and the contract as claimed by defendant would have been consistent, one with the other. No one could seriously claim that the defendant could contradict his written contract, and no testimony was admitted upon any such theory.
“All of the propositions which were submitted to the jury made a recovery by the defendant contingent upon the finding that the contract had been altered and changed since its execution.
4 4 It seems to me that the case was fairly tried and fairly submitted, and that there are no good grounds for a new trial. The claims of an estoppel and of a surprise in testimony do not seem to me to justify very serious consideration. ”

The case is brought here by writ of error.

The important question urged by counsel is whether defendant should have been allowed to show by oral testimony what occurred when the paper mentioned in the declaration was executed. We quote from the brief of counsel:

‘ ‘ It has been difficult for us to understand how it was legally possible to successfully urge the defense appearing by this record; indeed, we are not yet able to. We say, and most emphatically insist, that the well-understood rule that oral, contemporaneous testimony of contracts or alleged contracts is inadmissible to alter, contradict, or vary written undertakings, has been seriously violated in this case. Of this general well-defined rule the profession is not now in dispute. It has been put long ago to every stress and strain that legal minds could suggest, and the courts have opinionated to full limits. We do not believe any good will come to our client or to the court in citing this array of authority. There is no conflict in authority. And one case from our own court ought to be as sufficient as a hundred. To this proposition we are about constrained to cite but the one case. We almost regard it presuming upon the court to do otherwise respecting that well-understood rule. We refer to the case of Kulenkamp v. Groff, 71 Mich. 675 (1 L. R. A. 594). That has become somewhat noted as an authority on the principles involved, not only by this court, but by many other courts throughout the United States, if frequent citation of it is any criterion. This court has cited it approvingly, at least a dozen times since its rendition, to differentiate the rule when involved in the case at hand to support the principle asserted, or to defend the rule when seemingly assailed. It is given distinction in 1 L. R. A., at page 594, in Am. & Eng. Enc. Law, and by text-book writers or commentators. We accept it now as the authority on the question here presented. We invoke the principles it enunciates, and none other; and, if it does not rule for plaintiff, then we frankly admit that there are no cases that do.”

We think counsel have misconceived the effect of the case they cite. A reference to it will show there was no pretense that defendant Groff did not sign the note sued upon. He testified that he made the note, but claims it was orally agreed that he should not be required to pay it; and the court say:

“As far as the claim of fraud is concerned, it is not tenable. The signature of Groff was not procured by false pretenses, by the statement of any fact as existing which did not exist, but upon false promises which have not been performed. It is no more nor less than the nonperformance of an oral agreement made at the time the note was signed, and which oral agreement was totally at variance with the terms of the written contract as set forth in the note. This cannot be considered such a fraud as would nullify the note.”

While the court held that the oral testimony was inadmissible to contradict the terms of the note which it is conceded Mr. Groff signed, it also held the evidence was admissible to show no consideration for the promise made in the note. In the case at bar, defendant not only claimed there was no consideration passed to him, but he also claimed that he never gave the note upon which suit was brought. The paper sued upon appears in about the middle of a printed blank, the first part of which as filled in is a request to plaintiff to “ please ship to F. J. Tousey, Salem, Michigan,” certain foods amounting to $82. Upon the margin of this portion of the paper is written “ salesman to assist guaranteed.” Then follows the note mentioned in the declaration, which the defendant says he never executed, and which before it was filled out appeared as follows:

«C & “Town................ State................
“Date...........................190...... “............days after date, for value received, I, we, or either of us, promise to pay to Acme Food Co., (not Inc.), or order............Dollars, at Acme Food Co.’s office, Chicago, 111., with interest after maturity until paid.

Then follows an agreement of considerable length signed by Acme Food Company. An inspection of the original paper will show the trial judge was quite right in saying:

“If this blank had remained unfilled, the contractas written and the contract as claimed by defendant would have been consistent one with the other.”

The remaining question demanding attention is whether defendant is estopped from making a defense, because in a certain writing signed by him occurs the sentence. ‘ ‘ I would like to have you hold the note until fall.” There is a dispute as to whether this was written in response to a communication from plaintiff dated February 5,1904, and which plaintiff says should have been dated February 5, 1905, or whether it was a reply to a communication without date in which plaintiff says:

“We take this means of bringing to your notice that your order placed for $82 worth of Acme Food will become due April 12, 1904.”

In the letter written by the defendant where the phrase occurs the defendant calls attention to the fact that he has not sold a single pound of the food, and closed his communication as follows:

“ Your agent did not come to me to canvass until late in the season, and when he did come the roads were in a deplorable condition, consequently I did not deem it advisable to make any effort to canvass for orders. I trust that this explanation will meet with your approval, and that you will co-operate with me, thereby giving me a chance to further your interests as well as my own. When I gave the order to Mr. Brock, he told me he would be here in a few days to help me sell the goods, saying he had a sister living in my township, and he •would surely come as he desired to see his sister.”

We do not think it can be said that defendant is es-topped from denying liability.

Judgment is affirmed.

McAlvay, C. J., and Montgomery, Ostrander, and Hooker, JJ., concurred.


author: Hooker, J.

text:
    JACOBS v. MORGENTHALER.
    1. Partnership Associations — Distribution op Assets — Rights op Stockholders.
    The action of all but one of the stockholders of a limited partnership association in transferring certain notes belonging to the association to one of themselves, in payment of an alleged indebtedness, does not bind the nonparticipating stockholder if there was in fact no indebtedness.
    2. Same — Indebtedness—Purchase op Stock — Presumptions.
    Where payments are shown to have been made by an individual to a limited partnership association, the absence of proof that such payments were made for the purchase of stock justifies an instruction that they made the payor a creditor of the company.
    3. Same — Distribution op Assets.
    A division of the assets of a limited partnership association among its stockholders, in proportion to the amounts paid in by them, is valid, there being no creditors, though the payments were made by the stockholders upon the understanding that they should take treasury stock for them.
    4. Same — Payments by Stockholder — Purchase op Stock — Evidence.
    Evidence examined, and held, to show that certain payments made by a stockholder of a limited partnership association were advancements to it and not payments on account of treasury stock purchased by him.
    5. Evidence — Books op Account — Admissibility. .
    The books of a limited partnership association are not admissible to show that defendant paid money on an alleged special obligation to take treasury stock at 50 cents on the dollar, which obligation the defendant denies, and which is not otherwise proved.

      6. Partnership Associations — Sale of Assets — Distribution-Fraud — Evidence.
    Evidence examined, and held, that there was an absence of proof of fraud in the sale of the property of a limited partnership association, and an arrangement to apply the notes received therefor upon the claim of a creditor stockholder.
    7. Same — Receivers—Conversion of Assets — Evidence—Admis-„ sibility.
    In trover by the receiver of a limited partnership association against a stockholder for certain notes given in part payment for the property of the association, and distributed to the stockholders in payment of their claims against it, evidence is admissible to show that a sum sufficient to pay all outstanding debts of the concern, except such as were due the consenting stockholders, was set aside, and placed in the hands of the secretary for that purpose.
    8. Same.
    Defendant is also entitled to show, by cross-examination of the receiver and the secretary, who is the principal creditor, that no action has been brought against other stockholders who received notes under similar circumstances.
    .9. Same.
    Defendant is also entitled to show the facts regarding the claim of the secretary, the principal claimant, and the conditions upon which, and the funds from which, it was to be paid.
    Error to Calhoun; North, J.
    Submitted April 15, 1907.
    (Docket No. 101.)
    Decided July 1, 1907.
    Trover by Henry E. Jacobs, receiver of the Grocers’ Specialty Manufacturing Company, Limited, against Henry W. Morgenthaler. There was judgment for plaintiff, and defendant brings error.
    Reversed.

      Moore & Moore (B. J. Kelly, of counsel), for appel- , lant.

      Henry F. Jacobs and Bernard J. Onen, for appellee.
   Hooker, J.

This plaintiff is a receiver in an action brought by one Gilbert against the Grocers’ Specialty Manufacturing Company, Limited, and the order appointing him required that company, and all of its officers, agents, and servants, to turn over to him its property. Gilbert was a stockholder and secretary of the company. There is nothing in the record showing the nature of the bill filed by him, whether as a creditor, alleging insolvency, or as a stockholder, claiming a misapplication of its proceeds. The record does conclusively show, however, that prior to the bringing of said suit, the stockholders of said company all assenting (including Gilbert), sold the business of said company to the extent of its manufacture of ‘ ‘Eat-a-Biscuit,” to the Malta Vita Company, for $50,000 down, and a further sum of $50,000, contingent on certain prescribed results, dependent upon the purchaser’s profits from the business. We discover no claim that the debts of the Grocers’ Company, outside of debts owed to its several stockholders, exceeded $5,000 or $6,000, while the receiver testified that all of the claims filed with him amounted to about $6,000, and of these Mr. Gilbert’s amounted to $5,207.52. According to Gilbert’s testimony, $5,000 of his claim was a sum that was promised him upon the surrender of a verbal option, and was conditioned on a sale to the Malta Vita Company. He admitted that he got his salary up to June 30, 1903, which was less than two weeks before the agreement of sale to the Malta Vita Company. Gilbert signed the bill of sale to the Malta Vita Company, and, while that is not shown by the record, Gilbert’s own testimony shows that he as secretary received from that company $5,000 in cash and $20,000 in notes, and that he acquiesced in the application of $4,000 to the payment of the claim of the Malta Vita Company against the Grocers’ Specialty Company, and $21,000 to Mr. Wisner, for money that he claimed to have advanced to the Grocers’ Specialty Company, under circumstances similar to, if not identical with, those under which Cole and the defendant claim that they advanced money, and for which all other witnesses to the transaction say that they — i. e., Cole and the defendant— were to receive the $20,000 in notes.

We may start with the proposition, then, that all stockholders, including Gilbert, agreed to the sale, and thátthe only differences in their understanding are (1) whether Cole and defendant were to receive the $20,000 notes in payment of money loaned; (2) whether Gilbert was to receive $5,000 from, the payment made, or from, and subject to the condition of, the deferred payment. It being clear that the parties agreed to the sale to the point mentioned, and that Gilbert aided in consummating it, and that according to his theory $20,000 in notes went to the company, it is apparent that his bill was not filed to attack the sale as a fraud upon creditors, and we must, therefore, assume that it was filed against the defendant to reach assets in his hands belonging to the company in which he claimed an interest as creditor and stockholder; and that the court appointed the receiver to take possession of the assets, to preserve them, and, incidentally, to pay all claims against the concern before otherwise disposing of the assets. If this is not the theory upon which the bill was filed, we do not know what it was.

Perhaps it is enough for the purposes of this action to know that a receiver has been given authority to take over the assets and that he has brought trover for the alleged conversion of some of them, that they were clearly the assets of the company, and recoverable by him, unless they were turned over by consent of a majority of the stockholders to be applied on a valid debt of the company, or by consent of all the stockholders, if the claim was not a valid debt for advancement, but was at the time one of several payments made by different persons upon an agreement that it should pay for treasury stock purchased. The evidence conclusively shows that at the time the contract was made with the Malta Vita Company it was agreed and understood by all of the stockholders, unless it were Gilbert, that the claims of Wisner, Cole, and Morgenthaler were advancements of cash, and debts of the concern, and should be so treated, and that the $20,000 in notes to be given to the Grocers’ Company should be turned over to them, to be applied in payment, so far as that sum should go, and it is overwhelmingly proved that Gilbert understood and consented to this arrangement, so overwhelmingly proven, indeed, that were there opportunity we should order a new trial upon this ground. It is also conclusively shown that, whatever Gilbert knew or agreed to at that time, he acquiesced in the payment by the Malta Yita Company of $21,000 to Wisner, to be applied to the payment of the $26,000, which he now claims was paid upon a purchase of treasury stock. The liability of the defendant, then, depends upon "the jury’s being able to say (l) that Gilbert did not consent to the arrangement which is clearly shown to have been made with the Malta Yita Company, and (2) that the money paid by defendant was for a purchase of treasury stock, and not as a loan, and therefore did not become'an indebtedness from the company. Failing to find either of these, the verdict should have been for the defendant, as in such case there would be an absence of an unlawful conversion.

Gilbert testified that he was not present when the arrangement that Cole and defendant should have the $20,000 of notes was made. That is as far as his testimony goes upon this subject. Therefore we have said that it conclusively appears that such an arrangement was made by the majority of the stockholders. Such an arrangement was not binding upon Gilbert, in the absence of his knowledge or consent if the company did not owe defendant. Therefore it was for the jury to determine whether he did have knowledge of, or consent to, it. In case they had found that he did, a verdict for defendant should have followed. If, however, they found the contrary, the verdict should still have been for the defendant, if he was a creditor, but not if the payment was for the purchase of stock. It becomes important, then, to determine whether either proposition was conclusively shown. It is admitted that defendant paid the money claimed. In the absence of proof that it was for the purchase of stock, the record justified a direction that it made him a creditor of the company.

To prove that it was for the purchase of stock, plaintiffs offered the following testimony:

Gilbert testified:

“ I listened to the testimony of Mr. Morgenthaler and others that they didn’t purchase any treasury stock. I was secretary of the company, and as such kept the company’s minutes. I have examined that book, and it is the record minute book of the company. I know, because I kept it as secretary, and it is in my handwriting.

Q. I will ask you if the entries in here were made cotemporaneous with the transactions they record ?

“A. They were, and they are correct.

Q. Now, I show you the minutes of the meeting, June 21, 1903, and ask you if you are familiar with the entries there, and if they are the same there as they transpired at the meeting ?

Mr. Moore: Objected to. The meeting was not held at the company’s office, but at the Phelps Sanatorium. All the managers were not present and no hour is stated for the meeting; also that the resolution is ambiguous.

The Court: I will allow them to introduce the resolution, to which ruling defendant excepted. * * *

“ Q. I will read over the names of the directors present at that time, and you may state whether or not they were all the members of the board of directors at that time. Cole, Morgenthaler, Wisner, S. D. Gilbert — was that all of the entire board at that time ?

“A. No.

Q. How many members of the board were there ?

“i. There were five.

“ Q. Can you state whether or not proper notices were served upon these people as to the meeting to be held ?

“Objected to on the ground that the notice is the best evidence, as it is in writing.

The Court: I think the notice should be produced or proof that it cannot be. Objection sustained. * * *

Mr. Jacobs': I desire to read a portion of the minutes of the meeting June 21, 1902, minutes of the meeting of the board of directors present. (To which defendant’s counsel objected as incompetent, immaterial, and irrelevant. The court overruled, and defendant excepted.)”

The resolution was then read from page 63 of the record, and is as follows:

“Parties present: Luther C. Cole, Henry W. Morgenthaler, A. C. Wisner, S. D. Gilbert; Luther C. Cole presiding. Upon motion, the following resolution was unanimously passed, after a discussion of the financial requirements of the company: Resolved, that $200,000.00 of the stock of this company remaining in the treasury be offered to the stockholders of said company at fifty cents on the dollar; and we, as stockholders of said company, hereby agree, and do subscribe for our portion of said stock, as per the original allotment, the same to be subscribed for, and payments to be made at the call of the treasurer, as the requirements of the business make it necessary.”

The witness continued:

“ (Book produced.) This is the journal of the Grocers’ Specialty Manufacturing Company. I am familiar with it. The entries were made contemporaneously with the events recorded therein. The books were kept under my supervision and direction as secretary of the company, and the entries therein are correct. They were made by Mr. J. W. Warrick. I recognize that it is in his handwriting, with which I am perfectly familiar. The books were kept under my direction and I know the entries are correct. Mr. Warrick is in Nashville today.

“Q. I hand you a book marked ‘Exhibit 9,’ called the ‘journal,’ and I hand you the check of Mr. Morgenthaler against this company. Also I hand you a statement that Mr. Wisner produced as proof of the fact that the company owed himself, Cole, and Morgenthaler, especially Morgenthaler. Now, I ask you to turn to page 23 in that journal, and I will ask you if you find there a credit to Mr. Henry W.- Morgenthaler, and, if you do, read it.

‘‘A. Ido. . ■

Q. Is that the book of original entry of this company ?

“A. Yes, sir.

. “ Q. Now read it.

Plaintiff’s Counsel: I offer to read this credit as an exhibit in evidence and ask permission to read it to the jury.

' “Defendant’s counsel objected to the reading of this entry as irrelevant, immaterial, and incompetent, and as not proper rebuttal, and the defendant’s counsel further objected to the introduction of the entries for the reason that they were made by the agent of the plaintiff in this cause and in his own interest, and they are now offered in rebuttal to corroborate the testimony of that agent. Objection overruled and defendant excepted.

“A. (Reading), ‘Check of H. W. Morgenthaler, 6-23, treasury stock, $6,000.00.’ I have the check dated June 23, 1902. These checks are marked ‘Exhibit 8, A-H.’ The date of the check is the date of the entry. There is nothing on the check to indicate that the money was loaned to the company.

Q. In the statement furnished by Mr. Wisner you find a statement of the corresponding amount and the corresponding date P

“A. There is. (Reading), ‘June 24, H. W. Morgenthaler, $6,000.00.’

’ “ Q. (Mr. Moore.) There is nothing in the written statement furnished to Mr. Wisner about treasury stock is there ? (A copy of this statement furnished to Mr. Wisner is attached thereto marked ‘ Exhibit 7 ’ and made a part hereof.)

“A. No, sir.

Plaintiff’s Counsel: We don’t claim that. We claim that the statement is taken off this book.

Q. Now, I ask you to turn to page 54 of that book and see if you find a credit there to Henry W. Morgenthaler.

“A. There are several. We offer the first entry in evidence. (To the introduction of this entry in evidence the same objection was made as to the other entries. Objection overruled and an exception taken.)

“A. (Reading), ‘Check of Morgenthaler, 10-25, treasury stock, $1,000.’ 10-25 means October 25.

“Among the checks produced by Mr. Morgenthaler, I find there is a draft for $2,000 made upon the Grocers’ Specialty Manufacturing Company, Limited, and the Pilgrim Publishing Company. The Grocers’ Specialty Company received $1,000 of this on October 25, the date of the entry in the books. That is the draft which Mr. Morgenthaler testified this company got $1,000, and the Pilgrim Publishing Company the other. This entry also appears in the statement made to Mr. Wisner, which .reads, ‘Oct. 25, H. W. Morgenthaler $1,000.’

“ Another entry on page 54 was offered in evidence. The same objection, ruling, and exception.

“A. ‘Check of Morgenthaler, 11-11, treasury stock, $3,500.’ That means November 11.

“Mr. Morgenthaler’s check for that amount is dated November 10, 1903. The entry on1 the book shows treasury stock. The entry on the check shows simply payment of money. There is nothing to indicate that it was a loan to the company.

“Another entry on page 54 was offered in evidence. Same objection and exception.

“A. (Reading), , ‘Check of H. W. Morgenthaler, treasury stock, $1,000.’

“ The date is January 13th. The date is not given here as it was in the other place. The first entry is January 13th, and the following is the 13th. If that was entered at the time it was received, it was between those two dates. The check is January 10, 1903, for $1,000, signed by H. W. Morgenthaler, date of entry January 13, 1903. In the Wisner statement this entry appears ‘January 13, H. W. Morgenthaler, $1,000.’

“ Entry on page 61 of the book was offered in evidence. Same objection, ruling, and exception.

“A. (Reading), ‘Check of H. W. Morgenthaler, treasury stock, $1,000.’

“There is a check from Mr. Morgenthaler for $1,000 dated January 30, 1903. The- above item is dated February 3, 1903. On the statement furnished to Mr. Wisner appears the entry, ‘February 3, H. W. Morgenthaler, $1,000.’

‘ ‘ Entry on page 73 was offered in evidence. Same objection, ruling, and exception.

“A. (Reading), ‘March 9, 1903, check of H. W. Morgenthaler, treasury stock, $3,000.’

“There is a check here March 7, 1903, for $3,000 signed by H. W. Morgenthaler. On the statement furnished to Mr. Wisner there is an entry ‘ March 6, H. W. Morgenthaler, $3,000.’

“An entry on page 65 was offered in evidence. Same objection, ruling, and exception.

“A. (Reading), ‘January 33, treasury stock, $1,500.’

“The amount corresponds with the check. The date is one day later. The credit should have been given to Mr. Morgenthaler as he paid the money. Payment was made by check dated January 33, 1903, for $1,500, signed by H. W. Morgenthaler. In the statement furnished to Mr. Wisner, A. C. Wisner from H. W. Morgenthaler, $1,500.

‘ ‘ Counsel for plaintiff then offered in evidence all the journal entries that had been recited to the jury to make the record clear and to be sure. To each the same objection was made. In each case the objection was overruled, and the defendant excepted, and each entry was then specifically admitted in evidence.

Q. Were all the entries you cite original entries of the transaction ?

“A. They were.

Q. I show this book; what is it ?

“A. It is the general ledger of the Grocers’ Specialty Manufacturing Company, Ltd.

“ Q. I call your attention to page ‘ Exhibit 10.’

“A. That is one of the books kept in their regular business of the Grocers’ Specialty Manufacturing Company. It is the ledger to which the journal account was transferred.

“ The account was then offered in evidence, objected to as incompetent and immaterial, and because .it was not binding on the defendant.

“The Court: That has appeared. This is also one of the books originally kept in the business of the Grocers’ Specialty Company.

“Mr. Jacobs: He has testified to that fact. (Objection overruled and exception taken. The page was then read in evidence, a copy of which is hereto annexed, marked ‘ Exhibit 10,’ and made a part hereof.")

“The statement furnished by Mr. Wisner was then compared by the witness, and the amounts found to be alike except the last two items on the ledger, one of $4,106.90, which was afterwards transferred from his account and paid by the Malta.Vita Company. This was no part of the claim that he stated yesterday amounted to $25,000. The other item of $40, which entry appeared on Journal, page 70. The title of this account I have just been reading from is ‘ Treasury Stock.’

“Q. I call your attention to the resolution of June 21, 1902, which has been read to the jury.

“Mr. Moore: The date of the resolution shows for itself. Counsel read that to the jury and stated the date. I don’t understand that you introduced part of it and left out the rest of it. If you did, I move to strike that out.

“The Court: The motion to strike out will be overruled or denied, because, if counsel wishes to introduce the balance of the record, he may do so.

“Mr. Moore: I object to it. They have a paper before them and they cannot prove the contents of it by parol. I submit they cannot introduce part of the resolution and keep back the balance.

“The Court: He wishes to introduce it in explanation of the resolution to show the date; but the objection is sustained as far as testifying to it orally.

“Mr. Jacobs: Then I offer in evidence the whole of the minutes of the meetings of the board of directors of the Grocers’ Specialty Manfg. Co., Limited, found on page 63 of the minutes of the company. (Record book of the Company, marked ‘Exhibit A.’)

“The Court: The whoíe of the minutes as they appear on that page, and the whole of the minutes of June 21, may be received in evidence. (To which ruling defendant excepted.)”

' The resolution was then read in evidence, marked “ Exhibit 8,” and is as follows:

“Upon motion, the following resolution was unanimously adopted after a discussion of the present requirements of the company: Resolved, that two hundred thous- and dollars of the capital stock of the company remaining in the treasury be offered to the stockholders of - said company at fifty cents bn the dollar; and we, as stockholders of said company, do hereby agree and do subscribe for our portion of said stock, as per the original allotment, the same to be subscribed for, and estimates to be made of the stock of the treasury as the requirements of the business may be necessary. Minutes of meeting read. On motion, adjourned.

“ S. D. Gilbert,

“ Secretary.”

It will be observed that there is a slight difference between the resolution as first read, and as it appeared in the book. The court instructed the jury that this resolution did not create a present obligation on the part of the defendant, and that, as the testimony showed that no call was made by the treasurer for any payment, under the resolution, there was no obligation on defendant’s part to pay any such on account of the resolution, unless in pursuance of that resolution defendant actually proceeded to make payment upon the stock, but, if they should find that he did afterwards so make payments, he would not be entitled to repayment of the money, and the court added-:

“Now, .if in this case you find that the whole $16,000 advanced by Mr. Morgenthaler was in fact payment for stock subscribed for by him, then the case is at an end, and your verdict in that case should be for the plaintiff.”

This instruction was erroneous; for, if the jury should have believed that all of the stockholders had agreed that the first payment should be divided up in the way claimed by the defendant, they had a right to do so, although at the time defendant Cole and Wisner paid their money it was upon the understanding that they should take treasury stock for it. . Morgenthaler’s payments were made at different times, viz.: June 23, 1902, $6,000; same date, $1,000; November 10, 1902, $3,500; January 10, 1903, $1,000; January 22, 1903, $1,500; January 30, 3903, $1,000; March 7, 1903, $2,000 — amounting in all to $16,000. The only evidence that was offered to show that it was paid upon the purchase of new stock consisted of the resolution in question, and the entries upon the books of the Grocers’ Company of credits to Morgenthaler for money paid already quoted. The learned circuit judge appears to have held that there was no presumption from the resolution, that these payments were made for the purchase of stock, but that the entries upon the books were some evidence tending to prove that they were so made. There appears to be no evidence on the part of the plaintiff that there was anything said about it when the checks were delivered and no stock was delivered or offered.

The. introduction of books of account in favor of their1 owners is upon the theory that they tend to prove the delivery of goods, the payment of money, or the rendition of service to or for another. In this case they were introduced, not to show that the defendant had purchased treasury stock, which had been sold and delivered to him, but to establish the fact that he had paid money upon an alleged special obligation to take it at 50 cents on the dollar, which obligation is denied, and which the court decided not to have been otherwise proved. It is admitted that the money was paid by the defendant, and upon this record it clearly appears to raise the relation of debtor and creditor, unless by these books it be made to appear that it was paid upon á special contract. Books of account are not competent, to prove a prior special agreement. See 3 Enc. of Evidence, p. 658, note b, and cases cited in notes, 17 Cyc. p. 380. See, also, In re Ward’s Estate, 73 Mich. 225.

“ It is generally held that a book of accounts, although duly authenticated, is not competent evidence to show the delivery of goods under a previous express contract.
“ Nor to prove work and labor done under a special agreement.” 3 Enc. of Evidence, pp. 643, 643.

See Tioga Manfg. Co. v. Stimson, 48 Mich. 217. Nor, we may add, to prove that money received was paid for goods or stock that admittedly were not delivered. We must hold, therefore, that these boobs were not admissible, and that the court erred in leaving to the jury the question whether the money was paid as the purchase price of stock.

We are also of the opinion that there was an absence of proof of fraud in the sale of the property to the Malta Vita Company, and the arrangement to apply the notes upon defendant’s claim, even if Gilbert was not aware of and did not consent to the same.

There was error in the refusal to permit defendant to show that a sum sufficient to pay all outstanding debts of the concern (except such as were due the consenting stockholders) was set aside, and put in Gilbert’s hands for that purpose. Also to show by Gilbert and the receiver on cross-examination that no action had been brought against Cole or Wisner.

There was also error in refusing to admit testimony regarding Gilbert’s claim of $5,000, the conditions upon which, and the fund from which, it was to be paid.

It is unnecessary to refer to other questions.

The judgment is reversed, and a new trial ordered.

McAlvay, O. J., and Montgomery, Ostrander, and Moore, JJ., concurred.