author: Steere, J.

text:
    HEINO v. CITY OF GRAND RAPIDS.
    1. Municipal Corporations — Negligence— Governmental Functions — Permissive—Mandatory.
    So far as the liability of a municipal corporation, as a governmental agency, for negligence in the performance of governmental functions, when assumed, is concerned, it is immaterial whether the authorized public duty be permissive or mandatory.
    2. Same — Parks—Swimming Pools — Nuisance.
    An artificial pond of shallow water, established and maintained by the city of Grand Rapids as a public swimming pool in a public park, is an appropriate and common accessory to the ornamental features of the park, and is not to be classed as a dangerous or attractive nuisance, but is within the beneficent purpose for which the park was authorized. Section 2, Art. 8, Const. Mich.; Act No. 593, Local Acts 1905.
    3. Same — Statutory Liability — Negligence — Governmental Functions.
    In Michigan it is the rule that a municipality, in the absence of special statute imposing liability, is not liable for the tortious acts of its officers and servants in connection with the gratuitous performance of strictly public functions, imposed by mandate of the legislature or undertaken voluntarily by its permission, from which is derived no special corporate advantage, no pecuniary profit, and no enforced contribution from individuals particularly benefited by way of compensation for use or assessment for betterments.
    4. Same — Right of Action — Death.
    There being no applicable statute conferring a right of action, there could be no recovery from a municipal corporation for alleged negligence in the death of a boy 8 years and 3 months of age, drowned in a swimming pool maintained in a public park by defendant, sirice in the maintenance of said park and swimming pool defendant municipality was performing a governmental activity.
    Error to superior court of Grand Rapids; Dunham, J.
    Submitted April 3, 1918.
    (Docket No. 22.)
    Decided July 18, 1918.
    Case by Alfred Heino, administrator of the estate of Roy Heino, deceased, against the city of Grand Rapids for the alleged negligent drowning of plaintiff’s decedent. Judgment for defendant on a directed verdict. Plaintiff brings error.
    Affirmed.

      G. A. Wolf and Ellis & Ellis, for appellant.

      Ganson Taggart, City Attorney, and Charles A. Watt, Deputy City Attorney, for appellee.
   Steere, J.

On August 10, 1915, Roy Heino, a boy eight years and three months of age, lost his life, presumably by drowning, in a public swimming and bathing pool maintained by defendant in one of its city parks. Alfred Heino, his father, brought this action as administrator to recover damages for his death, claiming it was attributable to negligence on the part of the city in not properly guarding the safety of children permitted free use of the pool.

The case was tried in the superior court of Grand Rapids before a jury and a verdict directed in favor of defendant, the trial court holding that in providing and maintaining the bathing pool for the free use and recreation of its inhabitants the city was acting under legislative authority and discharging a governmental duty in performance of which it was not liable for damages resulting from negligent acts of its servants or employees; and that in any event no actionable negligence was shown as there were no witnesses to the drowning; both the cause and manner of its occurrence being purely speculative.

The pool in question was a sheet of shallow water, from 350 to 360 feet long and about 175 feet across at the widest place, located in a basin on the southwesterly side of the park, where its level was maintained, by a controlled supply of water from two small creeks which could be led into or diverted from it. The contour of that portion of the park afforded natural facilities for its construction by a gradual slope of the ground to a depression in which water from the creeks could be impounded to create a pool of the size and depth desired by building a semicircular wall or dam of concrete 55 feet in length at the westerly or lower end, near which the water was deepest, gradually shallowing toward the shores and back to the east. The superintendent of parks, who stated he built the pool, estimated its greatest depth at between four and five feet which he located about ten feet back, or east, of the spillway of the dam, there being a spring-board at the west end from which he stated that he had seen men dive in there and when they stood up their heads would be ‘out of water. There was some conflicting evidence as to the exact depth in the deepest place. A brother testified that the water would be over deceased’s head where his body was found, and he was shown to have been four feet, six inches tall.

Two small buildings were provided as changing or dressing rooms for bathers, referred to as the “boys’. house” and the “girls’ house,” and different parts of the pool are mentioned' as the “girls’ side” and the “boys’ side.” In the bathing season a swimming pool director, or guard, was on duty during the hours when the pool was open to the public for swimming and bathing. Many children availed themselves of the privilege in warm weather^ and the record of bathers on the day of the accident was 380, of which number there were 95 boys and 30 girls in the forenoon, and 150 boys and 105 girls in the afternoon. None of them were shown to have any knowledge of just when or how the accident occurred.

Plaintiff lived near Crestón Park with his family, and his children were accustomed to go swimming, or bathing, in this pool, which was constructed by the city in 1909 or 1910. They were provided with bathing suits for that purpose, and on the day of the accident five of them went over there together at about ten o’clock in the forenoon to “go swimming,” carrying their bathing suits in a basket. The oldest was a girl named Edna, over 9 years of age, Roy being the next younger and the others respectively 6, -5 and 2 years old. They played around the park until the' guard came, after which they put on their bathing clothes and went into the pool. After changing to their bathing suits at the buildings provided for that purpose they went to the east end together, carrying their other clothing in the basket, which they left under a tree when they went into the water. Roy stayed with the rest in the shallow water for a short time and while there borrowed some “water wings” from a girl who was with them, which he soon returned, and went away saying he was going over to the boys’ side. He is not shown to have been seen alive by the other children or noticed by any one after that time, although there were also other people then in swimming, both boys and girls. When the Heino children were through swimming, or bathing, they found his dry clothing yet in the basket but could not find him. They waited for a time and looked for him unsuccessfully, after which they went home, arriving there shortly before 12 o’clock, and told of their inability to find him. This was reported to plaintiff when he came home to dinner soon after. A search was then instituted in which others joined, and his body was found in the lower part of the pool at about three o’clock that afternoon. He was shown to have been an active, healthy boy in the habit of going into this pool. His age and height were stated but whether he could swim was not disclosed.

The negligence charged was failure to maintain a rope or similar protection for the small children in the shallow end of the pool, that there were places in it where the bottom was muddy and soft, and that the guard was away from the pool, though yet in sight, watching a ball game during a portion of the time the children were there. To what extent such alleged negligence, if shown, may have caused or contributed to the boy’s death would be largely a matter of conjecture, or inference on inference, for no one is shown to have seen him at the time, or to know how it happened, but the important question most seriously argued in the case is the immunity of the city from liability because acting in a governmental capacity in maintaining this free swimming pool in its public park without pecuniary benefit, for the public good.

Section 22, .article 8, of the State Constitution, authorizes any city to acquire, establish, and maintain parks within or without its limits for the public welfare. The revised charter of Grand Rapids, under which that city was operating when this accident occurred (Act No. 593, Local Acts 1905), also confers authority upon the city to provide, improve, and maintain at public expense, parks, boulevards, and other public grounds for the furtherance of urban convenience and civic betterment. Under title 3 of the charter, relating to “the powers and duties of the common council,” it is given power, subject to the limitations of the act, to legislate upon various matters, amongst which it is authorized (section 15)—

“To provide for public parks, public grounds and squares, and improvement of the same, subject, however, to the provisions of title 11 of this act. May enact all needful ordinances and regulations for the protection and control of all parks, boulevards, cemeteries and other public grounds or places belonging to the city, whether within or without the boundaries thereof.”

By section 53 of said title 3, it is again authorized, by a two-thirds vote of the aldermen elect, “to obtain by purchase, or gift, and to hold, improve, and properly maintain real estate within the limits of the city for park, driveway, and boulevard purposes.” And likewise without the city limits, "when deemed a necessary public improvement for the benefit of the city.

Under title 11 of the act (to which reference is made in section 15 of title 3) that subject is again taken up with the mandate that “there shall be created and constituted in and for the city of Grand Rapids a board of park and cemetery commissioners,” etc. The mumber of members, manner of selection, terms of office, etc., are prescribed, and by section 9 of said title 11 it is provided, amongst other things, that such board—

“shall have the control and management, and shall have charge of the care and improvement of all parks and public grounds of said city, whether within or without said city, and of such parks or public grounds as may hereafter be acquired, laid out, purchased or dedicated for public use by said city, * * * All the powers and duties now vested in the common council or in the board of public works of the city of Grand Rapids relating to said parks, public grounds or boulevards, are hereby transferred as provided in this title.”

The park board is required to make an annual report to the common council of its doings and expenditures, with an estimate of the amount of money necessary for park purposes, etc., during the ensuing year, upon which the common council “shall make an appropriation for the care, maintenance, and improvement of the said párks of said city.” The determined fund is thereafter raised by taxation and when collected into the city treasury “credited to the fund to be styled the park fund.”

No suggestion is contained in any of these provisions relative to parks authorizing a business enterprise or municipal activity maintained for pecuniary gain, or contemplating compensation to the city, but on the contrary it is only empowered to provide at public expense met by taxation and furnish to the public gratuitously for the common welfare the recognized ' sanitary and social benefits which public parks afford. So far as its liability as a governmental agency for negligence in the performance of such functions when assumed is concerned, it is immaterial whether the authorized public duty be permissive or mandatory. Tindley v. City of Salem, 137 Mass. 171; Nicholson v. City of Detroit, 129 Mich. 246.

The tort here charged against the municipality is not for a direct trespass but for consequential injury resulting from the negligent conduct of its agent in providing and maintaining an authorized public park and appurtenances for the general pleasure, comfort, and health, free to all who desire to avail themselves of it. This “swimming pool,” an artificial pond of shallow water with gradually sloping margins, was an appropriate and common accessory to the ornamental features of the park, not to be classed as a dangerous or attractive nuisance. To construct and permit its free use at proper times and under proper.restrictions for bathing or swimming was within the beneficent purposes for which the park was authorized and established. The more serious question upon which counsel divide with sustaining authorities from other jurisdictions is whether in providing for and maintaining this park and pond for the purpose shown and under the authority conferred the city was acting in a legislative or governmental capacity for the public welfare, or in its authorized proprietary capacity was providing a local attraction in which private interest, as distinguished from public duty, was paramount.

As directly applied to public parks and liability of a municipality for injury to those patronizing them from negligence in their maintenance, the question has not been passed upon by this court and opposing counsel cite to their contentions conflicting decisions from other jurisdictions where accidents in parks are involved, their lines of authority harking from two opposing rules of municipal liability for tort sometimes called the New York and Massachusetts rules.

The New York courts early held that cities given by statute exclusive control of their streets were under a common-law liability for injuries resulting from negligence in their maintenance, and subsequently applied that rule to city parks (Ehrgott v. City of New York, 96 N. Y. 264). Other States which have adopted that doctrine have followed in its application to cases involving the control and management of parks. Early in the history of this State it was held that, in the absence of statutory provisions, municipalities were not liable for failure to keep highways and bridges in safe repair. Commissioners of Highways of Niles Township v. Martin, 4 Mich. 557; City of Detroit v. Blackeby, 21 Mich. 84. In the latter case the New York rule was discussed and rejected in a carefully considered opinion by Justice Campbell. In Miller v. City of Detroit, 156 Mich. 630, it is said of the New York rule:

“That this is illogical is shown by the^ cases of Hill v. City of Boston, 122 Mass. 334, and City of Detroit v. Blackeby, 21 Mich. 84.”

The local polity of Michigan has often followed and been much influenced by that of the New England States, and the Massachusetts decisions as to municipal liability for torts generally taken as precedent.

The general rule of that State, the principles of which have been adopted in this and numerous other jurisdictions, is thus well stated in the recent case of Bolster v. City of Lawrence, 225 Mass. 387, where many preceding decisions on various phases of the subject will be found:

“The municipality,, in the absence of special statute imposing liability, is not liable for the tortious acts of its officers and servants in connection with the gratuitous performance of strictly public functions, imposed by mandate of the legislature or undertaken voluntarily by its permission, from which is derived no special corporate advantage, no pecuniary profit, and no enforced contribution from individuals particularly benefited by way of compensation for use or assessment for betterments.”

In the Bolster Case it was held that the city of Lawrence, which, maintained a public bath house by permissive legislative authority, was. not liable for the death of one properly using the facilities offered, caused by the structure and its approaches falling through the negligence of the municipality or its servants.

In the foot-note to Bisbing v. Asbury Park, 33 L. R. A. (N. S.) 523 (80 N. J. Law, 416), where-several leading cases upon both sides of the question as to liability of municipalities' for injuries through unsafe conditions in parks" or other public grounds than .streets are digested, it is said the weight of authority supports the fundamental proposition “that a municipality maintaining public parks is discharging a public duty, and is not performing a private, corporate function for its own advantage.”

It is further strenuously urged for plaintiff that this State is aligned by previous decisions with those adopting the contrary view, and said:.

“The State of Michigan has never been, as a State, in the park business, and it has not delegated to any township or municipality the right to act for the State in any such capacity, but it has always, and in all of the statutes of this State, regarded the property so taken or used as the property and real estate óf the municipality where it was situated,” etc.

Citing in support of this contention the early cases: City of Detroit v. Corey, 9 Mich. 165; People v. Hurlbut, 24 Mich. 86; Board of Park Com’rs v. Common Council of Detroit, 28 Mich. 228; Cooper v. City of Detroit, 42 Mich. 584; Mayor of Detroit v. Park Commissioners, 44 Mich. 602; Niles Water Works v. City of Niles, 59 Mich. 324.

In the Niles Case the question involved and decided was the right of the city to contract an indebtedness for hydrants and meters without popular vote, in violation of the express provisions of its charter. The Corey Case involved an accident from a sewer excavation in the street left in a dangerous condition and it was held that sewers of the city were its private property and their construction was not a governmental function. The Cooper Case involved an attempt by complainant to enjoin the city from continuing and enlarging a public market upon a strip of land claimed to be a part of a street, which the court held had been' extinguished by legislative authority and the strip held by the city under claim of title for over 30 years, denying the injunction on the ground that “the statute of limitations long since made the city title impregnable.” While the functions of a city are more or less discussed in those cases we discover nothing in them indicating the capacity in which a city provides, improves, and maintains a park at public expense.

The Hurlbut Case involved the validity of an act establishing a board of public works for the city of Detroit, tested by quo warranto proceedings to determine the right of members of its board of water commissioners and sewer commissioners to hold their respective offices after the act went into effect. In the four opinions filed a wide range was taken in the field of municipal government, historically and otherwise, the case taking near 70 pages of the printed report. The court was not then considering the question directly involved here, and while aid to plaintiff’s contention may be extracted from some of the views there expressed, the only material question decided was the validity of the act then before the court.

Board of Park Com’rs v. Common Council of Detroit, supra, was an application for mandamus to compel the city council to provide for and order issuance of bonds to purchase lands for a park contracted for by the commissioners. In discussing the legislation creating the park commission and manner of selecting its members the conclusion was reached that the persons named were appointees of the legislature who could not be regarded as representatives of the city for the purpose proposed, and the court had no power to aid it by legal process, “because, concerning as it does the private corporate interests of the city, it (the board’s action) has been had without the consent of the city expressly or by implication given.” In holding that the commissioners as appointees of the legislature did not then have the power to bind the city for an indebtedness to purchase land for parks, and that cities have the right to use their own discretion in regard to incurring indebtedness for property or improvements of local concern, it is evident, as applied to the question decided, the court regarded a city park as a matter of private corporate interest of the city rather than a public governmental activity. And in Mayor of Detroit v. Park Commissioners, supra, involving a demurrer to an information in the nature of a quo warranto to inquire into respondents’ authority to usurp a franchise under which they took possession of Belle Isle for the purpose of improving it as a public park, the court conceding in comment relator’s contention that the city was acting in its private corporate capacity, held under the authority conferred by statute the right of the city to take possession of and improve lands outside the city limits as a public park was a franchise, saying in conclusion:

“If respondents usurp it they usurp a public franchise, public so far as concerns the city, which is all ■ that is important here.”.

It is manifest that in these cases where parks figure, the question of liability or non-liability of the municipality for imputed negligence in their free maintenance for the public welfare, without compensation for their use or pecuniary benefit to the city, was foreign to the issues involved, and, so far as appears, not advertently discussed or even mentioned. That certain functions of municipal activity may be governmental for some purposes and of private characteristics, in others, is recognized. O’Leary v. Board of Fire and Water Com’rs, 79 Mich. 281; Brink v. City of Grand Rapids, 144 Mich. 472; Davidson v. Hine, 151 Mich. 294; Simpson v. Paddock, 195 Mich. 581.

Counsel’s statement that “Michigan has never been, as a State, in the park business,” nor recognized parks as a matter of State concern, can be accepted as more applicable to the time when those cases relative to the Detroit park board were before the court than later. Michigan through its legislature has recognized the acquisition, improvement, and maintenance of free public parks as a governmental function by itself acquiring, improving, and maintaining at State expense, under the supervision of its appointed board, the Mackinac Island State Park; and, independent of the legislature, the people of the State, by adopting its present Constitution, have authorized any city or village to acquire and maintain parks, even without their corporate limits, grouping them with works which involve public health and safety. The Federal government is also in “the park business” as a governmental function, and whether they be Federal, State, or municipal parks the beneficial public purpose intended and served by such free recreation grounds for the people, and the resultant benefits which justify their free maintenance at public expense as a governmental activity are the same except it be in degree; and in that particular a comparison of the beneficial results to the greatest number of people át large throughout this commonwealth from the free use and enjoyment of Belle Isle City Park and Mackinac Island State Park might indicate the degree is not necessarily in favor of the larger governmental unit.

While, like public schools for education, public parks are primarily provided for the recreation, pleasure and betterment of the people within the limits of the governmental organizations which maintain them, they are not by legal restraint or custom or in fact solely for the benefit of the municipality’s own inhabitants, but when thrown open as public parks the public generally without distinction are permitted to visit them and freely enjoy the attractions and benefits gratuitously offered.

Along the line of facilities which parks afford, playgrounds for healthy exercise, swimming pools, baths, appliances for manual training and other equipment for balanced physical and mental development, with instructors as to proper use and methods, are now recognized and frequently adopted in the curriculum of our public schools as essentials of education and sanitation, both acknowledged subjects of State concern and governmental activity.

It is said imputed negligence is a matter of public policy, subject to legislative regulation and “it is for the legislature to determine how far, if at all, a body whose negligence, if it is so called, is imputed, and in no sense actual, shall be made subject to suit for the misconduct of its employees.” O’Leary v. Board of Fire and Water Com’rs, supra. No right of action conferred by statute is applicable here. The constitutionally authorized function this municipality was exercising was without private gain to the corporation or to individuals, for purposes essentially public and of a beneficial character in furtherance of the common welfare in harmony with the general policy of the State and was in its nature a governmental activity, whether it be put upon the ground of health, education, charity, social betterment by furnishing the people at large free advantages for wholesome recreation and entertainment, or all of them.

As applied to public parks of this nature the fundamental proposition of the Massachusetts rule, which this court has generally approved, is well sustained by the reasoning in the following cases and those they lead to: Tindley v. City of Salem, supra; Donahue v. City of Newburyport, 211 Mass. 561; Bolster v. City of Lawrence, supra; Blair v. Granger, 24 R. I. 17; Bisbing v. Asbury Park, supra; Board of Park Com’rs v. Prinz, 127 Ky. 460; Mayor, etc., of Nashville v. Burns, 131 Tenn. 281; Harper v. City of Topeka, 92 Kan. 11; Russell v. City of Tacoma, 8 Wash. 156. Judgment is affirmed.

Ostrander, C. J., and Bird, Moore, Brooke, Fellows, Stone, and Kuhn, JJ., concurred.


source: Caselaw Access Project

author: Fellows, J.

license: Public Domain

text:
    PEOPLE v. RIKER.
    1. Intoxicating Liquors — Criminal Law — Local Option Law —Trial—Cross-Examination.
    In a prosecution for violation of the local option law, held, that the trial judge was sufficiently liberal in permitting full inquiry, on cross-examination of the main witness for the prosecution, as to matters affecting her credibility.
    2. Trial — Conduct of Court.
    Where there was much acrimony in the trial, neither side being blameless, rendering it necessary for the trial judge to speak quite plainly and positively, held, no prejudicial error in his so doing.
    3. Same — Criminal Law — Argument of Counsel — Opinion of Prosecutor — -Appeal and Error.
    Where the prosecuting attorney, in his argument to the jury, made the statement that he thought the prosecution’s main witness told the truth, and, on objection by defendant’s counsel, the court stated that the prosecutor had no right to give his opinion as to the truth or falsity of the testimony, and no request was made to instruct the jury further on the subject, held, not reversible error.
    4. Same — Instructions—Presumption oe Innocence.
    An instruction by the court that “Every person charge.d with an offense is presumed to be innocent until they are proven guilty beyond a reasonable doubt, and that presumption of innocence attends such person all the way through the trial and up until such time as you find beyond a reasonable doubt he is guilty as charged, and when, that time comes then the presumption ends,” held, to be equivalent to an instruction that the person charged is presumed to be innocent until it is established by competent and satisfactory evidence that he is guilty beyond a reasonable doubt.
    5. Same — Instructions.
    An instruction by the trial court that the jury would not be justified in discarding the testimony of a witness if such testimony was corroborated by the testimony of other witnesses whose testimony was believed by them beyond any reasonable doubt, and that this would be true of the testimony of “each and every witness sworn in the case upon any material issue,” held, not erroneous.
    Error to Genesee; Stevens, J.
    Submitted April 12, 1918.
    (Docket No. 125.)
    Decided July 18, 1918.
    Aaral A. Riker was convicted of violating the local option law, and sentenced to pay a fine of $150 and to imprisonment for 120 days in the Detroit house of correction.
    Affirmed.

      James S. Parker, for appellant.

      Roy E. Brownell, Prosecuting Attorney, and H. B. Freeman, Assistant Prosecuting Attorney, for the people.
    Defendant was convicted of violating the local option law (2 Comp. Laws 1915, § 7080 et seq.). Sentence having been pronounced, he brings the case here by writ of error. He conducted a grocery and drug store in the city of Flint where the local option law was in force. The illegal sale is claimed to have occurred on February 16, 1917.. In view of some of the questions raised it becomes necessary to set forth somewhat in detail the respective claims in the case. On the day in question Mrs. Isabella Siegel, who was married to a farmer living near Flint, went to. the police headquarters in that city. The Siegels had traded some at defendant’s store and it is apparent from this record that she had concluded that Mr. Siegel was obtaining liquor there, and that she desired and had planned to obtain evidence against Mr. Hiker. She had written and brought with her a note purporting to be written and signed by Mr. Siegel stating that he was ill and wanted a pint of whisky and some quinine. She was searched at police headquarters and had no whisky with or upon her. Two officers accompanied her to defendant’s store but did not go in with her. She carried a muff and walked between the two officers. They both testify she did not remove her hands from the muff and had no opportunity to get the whisky on the way to the store. Another officer — a plain clothes man — had shortly before that entered the store for the ostensible purpose of purchasing some writing paper and was there when Mrs. Siegel came in and remained until she left. Mrs. Siegel testifies that she gave defendant the note above referred to, together with a one dollar bill and told him she wanted a pint of whisky and twenty-five cents worth of quinine; that this conversation occurred at the office in the store; that defendant gave her the quinine, went to the back part of the store, got a pint of whisky which he also gave to her; that by prearrangement she dropped the bottle containing the whisky on the show case to attract the attention of the officer in the store, put the whisky and quinine in her muff, the officer opened the door and they left the store together. She returned to police headquarters accompanied by two officers as before and there left the whisky and quinine which were produced on the trial.
    The defendant denies the sale of the liquor. He testifies, and in this he is corroborated by his lady bookkeeper, that upon receiving this note he informed Mrs. Siegel that she must have a prescription to get the whisky. He says he gave her the quinine and the change for the dollar bill. He also testifies and in this he is corroborated by employees in the store, that shortly before noon Mrs. Siegel came into the store and asked permission to leave a package there, and, receiving permission, left a small package near the office.
   Fellows, J.

(after stating the facts). It was the claim of defendant that Mrs. Siegel’s marriage to Mr. Siegel was an unlawful one, that she had at that time a husband living, that untruthful statements were made in the affidavit for the marriage license and that her former life had not been above reproach. Defendant’s counsel insist that the cross-examination of this witness upon these questions was unduly limited by the court. It is true, as insisted by counsel, that upon cross-examination, within reasonable limits, a witness may be very thoroughly sifted to develop his antecedents — his true character, for the purpose of affecting his credibility as a witness, and to enable the jury to properly weigh and measure that credibility. Wilbur v. Flood, 16 Mich. 40; but a careful reading of the cross-examination of this witness covering some 24 pages of the record, most of which was devoted to her past life, satisfies us that the trial court was sufficiently liberal in permitting full inquiry as to the matters affecting her credibility, and that defendant was not hampered to his prejudice in the conduct of such examination.

Nor are we persuaded, from an examination of the entire record, that it shows, as claimed by defendant, such antagonistic and prejudicial conduct on the part of the presiding judge as prevented a fair trial of the defendant. The position of the presiding judge was a most trying one. The case bristles with acrimony which we are unable to discover substantial foundation for. Neither side can be entirely absolved for this condition. The trial judge in an attempt to preserve an orderly conduct of the trial at times found it necessary to speak quite plainly and positively. We discover no prejudicial érror in his so doing.

Error is assigned upon the statement made by the prosecuting attorney in his argument to the jury, to the effect that he thought Mrs. Siegel told the truth while on the witness stand, and it is insisted that this was tantamount to saying he believed the defendant was guilty. Upon objection being made the prosecuting attorney promptly told the jury that they were not to follow what he thought, that they were not to be guided in any way by what he thought. When defendant’s counsel, Mr. Snow, objected to the remarks of the prosecuting attorney, the court at once stated:

“What Mr. Snow means is this: the prosecuting attorney in those cases has no right to give his opinion as to the testimony, the truth of it or the falsity.”

We do not find that the court was requested to instruct the jury further on the subject. Within our holdings in People v. Hess, 85 Mich. 128; People v. Ponsford, 181 Mich. 659, and other cases, we should not reverse this case upon this assignment of error.

Error is assigned on the following instruction given by the court:

“Every person charged with an offense is presumed to be innocent until they are proven guilty beyond a reasonable doubt, and that presumption of innocence attends such person all the way through the trial and up until such time as you find beyond a reasonable doubt he is guilty as charged, and when that time comes then the presumption ends.”

It is urged that this instruction permitted the jury to convict upon gossip, prejudice or anything in or out of the case and did not require the jury to be convinced by the evidence in the case. People v. McClintic, 193 Mich. 589, is cited to support this contention. In that case the infirmity in the charge consisted in the instruction that the presumption of innocence obtained “until the people, through the prosecuting attorney, have convinced” the jury of defendant’s guilt. This court there held that such instruction was not the equivalent of saying that the presumption of innocence continued until overcome by evidence which convinced the jury beyond a reasonable doubt of defendant’s guilt. But defendant in the instant case overlooks the fact that in the language complained of here the word “proven” is used. In the first section of Greenleaf on Evidence it is said: “Things established by competent and satisfactory evidence are said to be proved.” The instruction in the instant case, then, must be regarded as the equivalent of an instruction that a person charged with an offense is presumed to be innocent until it is established by competent and satisfactory evidence that he is guilty beyond a reasonable doubt. The instant case is further distinguishable from the McClintie Case in the fact that in the McClintie Case specific instructions were preferred, while in the instant case none were, so far as the record discloses. See People v. Rogulski, 181 Mich. 481.

The trial court also charged the jury:

“If in this case you find beyond a reasonable doubt that the testimony of Mrs. Siegel as to the purchase of the liquor is corroborated by the testimony of other witnesses as to all the facts and circumstances, and you believe the testimony of these witnesses to be true, you have no right, nor can you discard the testimony of Mrs. Siegel as being false. Now, understand that. If you find beyond a reasonable doubt that the testimony of Mrs. Siegel is corroborated by the testimony of other witnesses, which testimony you believe to be true, then you cannot discard her testimony as being false and this same rule applies to each and every witness sworn in the case upon any material issue, no matter in whose behalf they were testifying.”

“Corroborate” is defined in Black’s Law Dictionary (2d Ed.), p. 277: “To strengthen; to add weight or credibility to a thing by additional and confirming facts or evidence.” See, also, Still v. State, (Tex. Crim. App.), 50 S. W. 355; State v. Hicks, 6 S. D. 325; State v. Guild, 10 N. J. Law, 163.

If Mrs. Siegel’s testimony as to all the facts and circumstances was strengthened, confirmed, and corroborated by the testimony of other witnesses, whose testimony was believed by the jury beyond any reasonable doubt, then all the facts and circumstances were proven beyond a reasonable doubt, and under such circumstances the jury would not be justified in discarding the testimony of a witness who had testified to such facts and circumstances so proved. But the trial court also stated that this would be true of the testimony of “each and every witness sworn in the case upon any material issue.” We are not persuaded that this instruction was erroneous as' applied to the facts of the instant case. We have examined the other errors assigned and find them without merit.

The conviction is affirmed.

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


author: Fellows, J. Ostrander, C. J.

text:
    COURTNEY v. YOUNGS.
    1. Bankruptcy — Trustee, Action by — Process—Practice.
    The service upon defendant stockholder of a bankrupt corporation by registered mail of an order by the referee in bankruptcy authorizing and directing the trustee in bankruptcy to bring suit unless the amount adjudged against defendant was paid within 10 days, is recognized as the proper practice.
    2. Same — Res Adjudicata — Defenses.
    While such order is determinative of the amount of indebtedness of the bankrupt, and of the amount necessary, in addition to the other assets, to liquidate such indebtedness, and authorizes the bringing of a suit in the proper forum, it is not res adjudicata of any defenses personal to defendant, and does not foreclose him from such defenses as he may see fit to make.
    3. Same — Limitation of 'Actions.
    In a suit by the trustee in bankruptcy upon such order, the statute of limitations is not available as a defense, since it did not begin to run until the order of the referee was made.
    4. Same — Trustee, Rights of.
    Under the bankruptcy law, the trustee in bankruptcy has the rights of the bankrupt, and in addition has the right of pursuing property conveyed by the bankrupt in fraud of creditors.
    5. Same — Corporations — Stock and Stockholders — Sale of Stock.
    Where creditors’ and other stockholders’ rights were not invaded, a corporation, at the time defendant corporation was organized and before Act No. 46, Pub. Acts 1915 (3 Comp. Laws 1915, § 11945 et seq.), was passed, might dispose of its stock at such price as it and the purchaser might agree upon.
    6. Same — Fraud—Contracts—Bankruptcy Act, Amendment to.
    The trustee in bankruptcy, suing in right of the bankrupt, and not basing his right upon a fraudulent disposition of property, which right could be exercised only for the benefit of creditors, and not basing his right on the amendment of 1910 to section 47 of the bankruptcy law (36 U. S. Stat. 838, 840) is bound by the contracts of the bankrupt, and could not recover in right of the bankrupt unless the bankrupt could recover.
    7. Same — Corporations—Fraud—Creditors’ Rights.
    Where a corporation has disposed of its shares of stock at a grossly inadequate price, or without consideration, an action may be brought by the trustee in bankruptcy for the benefit of those creditors -only who have extended credit in reliance upon the capital stock of the corporation.
    8. Same — Trusts—Stock and Stockholders — Fraud—Corporate Stock — Constructive Fraud.
    The theory upon which the action may be maintained by a trustee in bankruptcy against a stockholder who has paid an agreed price for stock in a corporation, is that the capital stock of a corporation is a trust fund for the benefit of its creditors, and its officers may not fraudulently convey it away, and that, if so fraudulently conveyed away, the contract may be vacated and the stock may be recovered for, and must be based upon the following premises: (1) That the capital stock is the property of
    the corporation, a trust fund for the benefit of the corporation and its creditors; (2) that creditors have a right to rely and do rely on such capital stock in extending credit to the corporation; and (3) that in disregard of the rights of such creditors the corporation has disposed of its capital stock either in actual fraud, or for such inadequate consideration as to work a constructive fraud.
    9. Same — Bankruptcy Act, Amendment to — Rights and Reme-, dies off Creditors.
    In pursuing such trust fund the trustee’s right must come from the amendment to the bankruptcy act, rather than from the original act, and he has not only the rights of a creditor “armed with process,” but also the remedies of such a creditor.
    10. Same — Equity.
    Since some of the creditors may not be entitled to recover, and under the broad power of a court of equity what creditors, if any, are entitled to participate may be determined, what persons, if any, are liable to account may be decreed, and sufficient to liquidate the claims of those entitled to participate, and no more, may be awarded against such persons as may be liable, tbe case will be remanded to tbe equity court to be there disposed of.
    11. Same — Fraud—Evidence—Admissibility—Notice—Burden of Proof.
    The court below was in error in excluding testimony as to the knowledge of the creditors of the fraudulent transfer, since only those who extended credit in reliance upon the capital stock are entitled to relief; the burden of proof being upon the creditors to prove their right to call upon the stockholders.
    12. Same — Fraud—Notice—Right to Recover.
    Those creditors who participated in a transaction involving the transfer of corporate stock at fraudulent valuation, and who dealt with the corporation with actual knowledge of what its assets were, may not recover from the stockholders upon the theory that they extended credit in reliance upon the capital stock and its being fully paid.
    Ostrander, C. J., and Steerb and Kuhn, JJ., concurring in the order transferring the case to the equity side of the court, but reserving opinion as to defendant’s liability in equity.
    Error to Iron; Flánnigan, J.
    Submitted April 2, 1918.
    (Docket No. 14.)
    Decided July 18, 1918.
    Assumpsit by Joseph S. Courtney, trustee in bankruptcy of the Groveland Mining Company, against George W. Youngs for an assessment upon certain shares of corporate stock. Judgment for plaintiff. Defendant brings error.
    Reversed, and remanded to the equity side of the court.

      A. F. Dixon, for appellant.

      John E. Tracy, for appellee.
    The Groveland Mining Company filed its articles of association in the office of the secretary of State August 5, 1907. By such articles it appears that the following named persons were its incorporators and received the number of shares of stock stated:

      George W. Youngs (Defendant)...........2,026 shares
    J. H. Bartow..............................2,026 shares
    D. T. Croxton.............................2,665 shares
    W. H. Becker...,..........................1,280 shares
    Frank W. Youngs (son of Defendant)...... 3 shares
    Defendant is a mining man of a number of years’ experience. Before the organization of the Groveland Company he was. the manager of the Huron Mining Company. Captain Bartow was the manager of the Lake Erie Ore Company of Cleveland and was also a stockholder in the Huron Company. The Lake Erie Ore Company is a selling agency engaged in the business of selling ores for mining companies. It was the sales agent of the Huron Company. In conducting its business it makes advances to companies and is the principal creditor of the Groveland Company. Mr. Croxton, a mining engineer, was the president of the Cleveland Furnace Company, engaged in the pig iron business. He also was interested in the Huron, and has other interests. He was for some years the chemist for the Penn Iron & Coal Company. Mr. Becker was in the vessel business. Some time after the organization of the Groveland Company he transferred his; shares in the Groveland Company to the Lake Erie Ore Company.
    The circumstances leading up to the organization, of the Groveland Company were these: Captain Bar-tow wrote defendant requesting him to look up a low grade, low phosphorus mining proposition, saying that such a property could be used in connection with the Huron, which was very high in phosphorus. Defendant procured an option on the property in question, which was said to run 47 per cent, iron with a low percentage of phosphorus. The option was procured without expense. The mine had been unsuccessfully worked by two preceding companies, the cause of the failures being in dispute. Upwards of $100,000 had been expended in development and operation prior to the time the option was obtained. The parties who became the incorporators of the Groveland Company furnished, either in cash or notes, the money to unwater the property and install machinery. There is testimony that this amounted to $13,000. The articles of association recite that no cash had been paid in on the capital stock, but that the property conveyed to the corporation consisted of the option which was valued at $200,000. It is undisputed that Captain Bartow wanted to incorporate the company for $500,-000 but that defendant insisted that it should be incorporated for $200,000, which figure was the one finally agreed upon.
    The company was unsuccessful. It did not produce a large amount of ore; the ore was said to be refractory and customers who purchased did not renew their orders. In October, 1913, the company was adjudicated a bankrupt and plaintiff was elected and qualified as trustee. Its debts aggregate substantially $140,000, of which $117,260.57 is to the Lake Erie Ore Company. On April 28, 1914, the referee in bankruptcy entered an order, pursuant to a petition filed in the bankruptcy proceedings, ordering defendant to pay $17 per share on each share of 1,497 shares of stock held by him within 10 days from the date of the order, and authorizing and directing the trustee to bring suit unless the same was paid. This order was entered without personal service on defendant, the order to show cause having been sent him by registered mail, he not appearing. The order, however, contained the following provision:
    “This order is without prejudice to the right of said George W. Youngs to claim upon said suit, if brought against him by said trustee, that the stock is fully paid, or to make any other defenses to said suit that he may desire, it being not hereby intended to conclude'him in any respect, except as to the fact that the court has here regularly performed the administrative act of making this call.”
    Defendant having failed to pay, this action at law was instituted, resulting in a judgment for plaintiff in the sum of $11,751.55, to review which this writ of error was sued out.
   Fellows, J.

(after stating the facts). We have recently had occasion to consider a case brought for the same purpose as is the instant case, and in which some of the questions here involved were determined. Grand Rapids Trust Co. v. Nichols, 199 Mich. 126; we shall have occasion to refer to that case as we proceed.

It is insisted that the order of the referee above mentioned, having been made without personal service on defendant, is void and of no effect as to this defendant, and for that reason this or any other suit has not been validly authorized and may not be maintained. The authorities upon this question are not in harmony; the United States circuit court of appeals of this circuit having, set aside a somewhat similar order made upon similar notice by mail, in a direct proceeding for that purpose. In re Haley, 158 Fed. 74. We are impressed, however, from an examination of the authorities, that the making of such an order by the referee in a case of this character without personal service is recognized as the proper practice; that it is determinative of the amount of the indebtedness of the bankrupt and of the amount necessary, in addition to the other assets, to liquidate such indebtedness, but that it is not res adjudicata of any defenses personal to the defendant; that while it authorizes the bringing of a suit in the proper forum, it does not foreclose the defendant from such defenses as he may see fit to make.

The statute of limitations is pleaded, although not strenuously insisted upon. It is not available. The statute did not begin to run until the order of the referee. Scovill v. Thayer, 105 U. S. 143.

Before proceeding further it is well that wé consider the character of this litigation, the theory upon which the case was tried, and the theory under which defendant may be called upon to respond. This is necessary in order that we determine what rights the trustee in bankruptcy possesses, and under which provision of the bankruptcy law he seeks to exercise such rights, in order that we may determine the proper forum under our system of procedure in which such rights may be enforced. His powers and rights are prescribed by the act of congress and are very broad. He has the rights of the bankrupt; in addition he has the right not possessed by the bankrupt, that of pursuing property conveyed by the bankrupt in fraud of creditors, and by the recent amendment he has the rights of a creditor armed with process. In order to determine the proper forum in which he may exercise these respective rights, it is important that we understand which of these rights he is here seeking to enforce.' For that purpose we must consider the nature of the rights here asserted in order to judge the remedy adaptable.

This is not a suit to recover on a statutory liability, nor, strictly speaking, is it an action to recover an unpaid subscription; nor is it an action brought to recover property conveyed by the bankrupt in fraud of creditors and which conveyance of necessity operates as a fraud upon all creditors, and the recovery inures to the benefit of nil creditors. As we shall presently see, the recovery here does not inure to the benefit of all the creditors but only to those who have extended credit in reliance upon the capital stock of the corporation. The case was tried and submitted to the jury in the court -below upon the claim of the plaintiff that the Groveland Mining Company, acting through its officers and promoters, in fraud of the rights of creditors, had disposed of the property of the corporation, i. e., its shares of stock, at a grossly inadequate price, or without consideration; and that under such circumstances the contract for sale and sale of such stock was void, rendering the stockholders liable for the stock fraudulently obtained by them. Where creditors’ and' other stockholders’ rights are not invaded, a corporation, at the time this corporation was organized and before Act No. 46, Pub. Acts 1915. (3 Comp. Laws 1915, § 11945 et seq.), was passed, might dispose of its stock at such figure or for such property as it and the prospective stockholder might agree upon. Young v. Erie Iron Co., 65 Mich. 111; Rickerson Roller Mill Co. v. Machine Co., 75 Fed. 554; Old Dominion Copper Co. v. Lewisohn, 210 U. S. 206; Coit v. Gold Amalgamating Co., 119 U. S. 343. In the last cited case the court recognized the right of creditors, who had extended credit in the belief that the stock was fully paid, to proceed against the stockholders in case property was fraudulently exchanged for stock, but at the same time pointed out the distinction between such a case and one brought for unpaid. subscriptions, the court saying:

“The case is very different from that in which subscriptions to stock are payable in cash, and where only a part of the installments has been paid. In that case there is still a debt due to the corporation, which, if it become insolvent, may be sequestered in equity by the creditors, as a trust fund liable to the payment of their debts. But where full paid stock is issued for property received, there must be actual fraud in the transaction to enable creditors of the corporation to call the stockholders to account. A gross and obvious overvaluation of property would be strong evidence of fraud.”

In the recent case of Decke v. Baker, 201 Mich. 608, Decke, a stockholder, sought to liave set aside an issue of stock to Baker for Ms services; the company was made a defendant and filed a cross-bill also seeking to set aside such issue of stock to Baker. Mr. Justice Stone, speaking for the court, said:

“If the facts were conceded to be as claimed by the cross-plaintiff, Baker Clay Company, there would be no ground for equitable relief as to it, but the parties would be left in the position in which they have placed themselves. Walhier v. Weber, 142 Mich. 322, 325; Benson v. Bawden, 149 Mich. 584; 4 Thompson on Corporations (2d Ed.), § 3916; 9 Cyc. p. 546.”

The trustee in bankruptcy, suing in right of the bankrupt, and not basing his right upon a fraudulent disposition of property, which right could be exercised only for the benefit, of creditors, and not basing his right on the amendment to the bankruptcy law in 1910 referred to in the Nichols Case, is bound by the contracts of the bankrupt, and could not recover in right of the bankrupt, unless the bankrupt could recover. Wasey v. Whitcomb, 167 Mich. 58; Marine Savings Bank v. Norton, 160 Mich. 614; York Manfg. Co. v. Cassell, 201 U. S. 344; Zartman v. National Bank, 216 U. S. 134. The contract of the bankrupt must be gotten rid of, set aside, before the trustee can call upon the stockholder for anything other than his contract with the bankrupt required. This may be done in case of fraud upon the rights of creditors in a proceeding suitable for that purpose.

The theory upon which the action may be maintained by a trustee in bankruptcy against a stockholder who has paid an agreed price for stock in a corporation, is that the capital stock of a corporation is a trust fund for the benefit of its creditors, and its officers may not fraudulently convey it away, and that, if so fraudulently conveyed away, the fraudulent contract may be vacated and the property, i. e., the capital stock, may be recovered for. In a proceeding of this character the plaintiff’s (trustee’s) right to recover is and must be based on the following premises: (1) That the capital stock of a corporation is the property of the corporation, a trust fund for the benefit of the corporation and its creditors; (2) that creditors have a right to rely and do rely on such capital stock in extending credit to the corporation; and (3) that in disregard of the rights of such creditors the corporation has disposed of its capital stock either in actual fraud, or for such an inadequate con-' sideration as to work a constructive fraud.

If an individual creditor were seeking relief in the courts of the State upon the theory here advanced by the plaintiff, he would be required to proceed by creditors’ bills, having taken the necessary preliminary steps.

As stated, the theory upon which this suit may be maintained must be the trust fund theory; it must be that a trust fund existed, and that the trustee in bankruptcy is pursuing that trust fund for the benefit of such creditors (not necessarily all creditors) as may establish their right to participate. In pursuing this trust fund, therefore, the trustee’s right must come from the amendment to the bankruptcy law, to which we shall now refer, rather than his right under the original act.

The bill in the case of Grand Rapids Trust Co. v. Nichols, supra, was framed upon the theory here discussed, and we there sustained the right of the trustee to file such a bill on the ground that the amendment of 1910 to section 47 of the bankruptcy law (36 U. S. Stat. 838, 840), gave to the trustee all the rights, remedies, and power of a judgment creditor holding an execution duly returned unsatisfied; that he had the right to pursue property transferred by the bankrupt in fraud of his creditors; that he had the rights of a creditor “armed with process”; and that when pursuing such rights he could maintain a bill in the nature of a creditor’s bill. It will be noted that the amendment above- referred to not only gives to the trustee the rights of a creditor “armed with process,” but also gives him the 'remedies of such a creditor.

When this plaintiff sought to have set aside the contract between the company and the defendant, by which the option was- transferred to the company in consideration of the issuance of stock, upon the ground that such transaction was in fraud of creditors and their rights, and that he had the right to follow the trust fund, he was exercising a right given him by the amendment above referred to, the right of a judgment creditor with an execution returned unsatisfied, the right under our practice to file a creditor’s bill. We so held in the Nichols Case and- we are not persuaded that an incorrect result was there reached. We there pointed out that in an equitable proceeding the court may carefully guard the interests of each and every party. It was admitted in that case that some of the creditors would not be entitled to participate. It is quite probable that such is the case here, and that it will always be the case where the trustee is proceeding against stockholders who have exchanged property for stock. Under the broad power of a court of equity, what creditors, if any, are entitled to participate may be determined; what persons, if any, are liable to account may be decreed; sufficient to liquidate the claims of those entitled to participate, and no more, may be awarded against such persons, as may be liable. While the number of original stockholders here are few, cases will arise where they are numerous; a multiplicity of suits should be avoided. One bill in which all are made parties will suffice to determine the rights and liabilities of all.

We repeat that we are not here dealing with the collection of an unpaid stock subscription, strictly speaking; nor with the enforcement of a stockholder’s statutory liability; nor with a proceeding where the recovery of necessity inures to the benefit of all creditors; but considering solely the case before us, that of a bankrupt corporation, the theory upon which it was tried and the only theory upon'which recovery may be had, we hold that in such a proceeding the trustee is exercising the rights given him under the amendment to section 47, may pursue the remedies provided in our system of procedure incident to such rights, that the relief under our practice must be had in equity, and that this suit on the law side of the court may not be maintained.

As we have concluded that the case should be remanded for transfer to the equity side of the court to be there disposed of, it becomes necessary to consider one further assignment of error. We have adverted to the fact that only those creditors who extend credit in reliance upon the capital stock are entitled to relief in proceedings of this character. On the trial defendant sought to show knowledge of the Lake Erie Ore Company of the transaction. This he was not permitted to do. In this there was error. Those creditors who participate in a transaction involving the transfer of corporate property at fraudulent valuation, who deal with the company with actual knowledge of what its assets are, and who extend credit knowing fully that the capital stock has been exchanged for property, and know for what property it was exchanged, cannot, when the venture proves disastrous, call upon stockholders upon the theory that they extended credit in reliance upon the capital stock and its being fully paid. Ten Eyck v. Railroad Co., 114 Mich. 494; Rickerson Roller-Mills Co. v. Machine Co., supra. In the last cited case it was said by Judge Lurton:

“When credit is extended to a corporation with full knowledge of special arrangements between the corporation and purchasers of the stock whereby non-assessable stock has been issued for less than its par value, it cannot be said that such credit has been extended in reliance that the stock has been fully paid, or is subject to further calls by the corporation.”

It will be competent for the defendant to show the relation, dealings, and knowledge of this creditor with the affairs- of the bankrupt company in order that the court may determine whether this creditor dealt with and extended credit to the company in reliance upon the capital stock. This will, of course, be true of other creditors; indeed, the burden will be upon such creditors to prove their right to call upon the stockholders.

It follows from what has-been said that the judgment must be reversed and the case remanded with instructions to transfer it to the equity side of the court, pursuant to section 2, chapter 11, Act No. '314, Pub. Acts 1915 (3 Comp. Laws 1915, § 12351). Defendant will recover costs of this court.

Bird, Moore, Brooke, and Stone, JJ., concurred with Fellows, J.

Ostrander, C. J.

I concur in an order transferring the case to the equity side of the court, thinking that there, if anywhere, can the relief claimed be granted. Upon the point of defendant’s liability in equity I reserve opinion.

Steere and Kuhn, JJ., concurred with Ostrander, C. J.


text:
    WATSON v. WAGNER.

      1. Equity — Motion to Dismiss — Demurrer—Rules—Practice.
    Upon appeal from the denial of a motion to dismiss a bill in equity, the appellate court should apply those rules applicable to demurrers when the latter were in use under the former practice.
    2. Same — Sufficiency of Bill.
    Under such practice, a bill would be sustained, as against a general demurrer, when the bill stated any ground for equitable relief, even though imperfectly.
    3. Same.
    The statement of facts in the bill, rather than the form of the prayer, determines whether a case for equitable relief is made out.
    4. Same — Fraud—Facts—Conclusions.
    The facts upon which the claim of fraud is based must be alleged, rather than conclusions, but it is sufficient if the substance of the transaction and the result is alleged.
    5. Same — Fraud—Trust—Notice.
    The party seeking to impress a trust upon property must be able to follow the fund, and if the property is in the hands of a good faith owner, one who has purchased for full consideration, and without knowledge or notice of the trust, it may not be impressed upon it.
    6. Same — Pleading—Sufficiency.
    Allegations in plaintiff’s bill that defendant’s husband fraudulently and without consideration obtained an equity in a lot which should have come to plaintiff; that he used said equity in purchasing a house and lot, taking title in himself and defendant by the entireties; that she as survivor took title, which was likewise without consideration; that she sold said property on an executory contract, and then held, either in cash or in an interest in the contract, property equitably belonging to plaintiff, held, sufficient to put defendant to answer.
    Appeal from Wayne; Gilday, J., presiding.
    Submitted April 24, 1918.
    (Docket No. 128.)
    Decided July 18, 1918.
    Bill by Marcelena Watson against William F. Wagner, Julia P. Hart and others for the cancellation of an assignment of a land contract on the ground of fraud, and for an accounting. From an order dismissing the bill as to defendant Hart, plaintiff appeals.
    Reversed.

      William G. Fitzpatrick (William G. Weber, of counsel), for plaintiff.

      Joseph A. Wright (Ormond F. Hunt, of counsel), for defendant Hart.
    The facts alleged in the bill and supplemental bill are somewhat complicated. We shall state those only which are necessary to an understanding of their effect upon the claim of defendant Julia P. Hart, as the case comes to this court on appeal from a decree dismissing the bill and supplemental bill as to her upon her motion in the nature of a general demurrer.
    From such bill and supplemental bill it appears that the plaintiff was the vendee in a land contract for the purchase of the Balmoral apartment; that her interest as such vendee was worth $27,750 and the property was productive of a large income; that she was entirely without business experience. Among her roomers was defendant Denton, who had been with her many years, and in whom she had full confidence. Defendant Wagner was interested in a corporation called the “Wagner Resilient Wheel & Tire Co.” He and defendant Denton first procured, by representations alleged to have been fraudulent, an assignment of plaintiff’s interest iii the Balmoral apartment for stock in this company and a small additional consideration. She soon concluded the deal was not a good one for her and they returned her contract to her. But they soon renewed negotiations to obtain her interest in the apartment, urging upon her their fairness in returning her contract to her when requested, stated that Wagner owned eight lots on Jefferson avenue, worth $16,000, which would be given in addition to the consideration moving to her in the former deal. Relying- upon their supposed fairness and her confidence in Denton, who protested that he was not interested in the transaction, but was prompted solely by his desire to assist her, she agreed to make the trade. The lots were not owned by defendant Wagner but were owned by defendant Berman, and were alleged to be worth from $12,000 to $15,300. The stock in the “Wagner Resilient Wheel & Tire Co/’ was worthless, the company was doing no business and its corporate right to do business had lapsed. It is alleged the sale of its stock was illegal, whether for failure to secure the approval of the Michigan securities commission does not appear, and the allegations of the bill quite fully warrant the conclusion that plaintiff would have been defrauded in a considerable amount if she had secured the unencumbered title to the eight lots. For the purpose of carrying out the deal plaintiff executed an assignment in blank of the land contract. She states in her bill that defendant Wagner told her he would bring her the deed of the Jefferson avenue property that day or the next.
    It is at this point that one George D. Hart became a participant in the transaction. He is alleged to have assisted defendants Denton and Wagner in effecting an exchange of the equity in the Balmoral apartment with defendant Berman for the Jefferson avenue property and some cash, the exact amount of which plaintiff alleges is unknown to her, but she does allege that Hart informed Berman that “his people” must have $5,000 in cash, and it was arranged that Berman was to put a mortgage for that amount upon the premises and execute contracts for the sale of the lots in a sum sufficient to pay the same, being $625 each. Berman seems to have been anxious to make the deal as it is alleged he paid Hart on his demand $1,000 commission for putting the deal through. Contracts were signed by Berman, one set with plaintiff and her sister, for five lots in which she was obligated to pay $3,125, and one with defendant Denton, for three lots; the names of defendant Berman and defendant Davidson were inserted as assignees of plaintiff’s contract. Defendant Wagner called upon plaintiff, taking with him the contracts for the five lots, told plaintiff that the two papers were deeds for the Jefferson avenue property, which she and her sister must sign; he was in, a great hurry, did not have time to wait for plaintiff to get her glasses to read the papers. Relying on his statements she and her sister signed the papers, one of which he left with her. Denton later surrendered his contract for the three lots to Berman, taking three separate contracts, one to himself, one to Hart, and one to defendant Wagner’s wife, who is also made a defendant.
    Some few weeks later plaintiff showed to a friend the paper left by defendant Wagner, and then learned for the first time that instead of having a deed for the eight Jefferson avenue lots free from encumbrance, she had a contract for only five, and was obligated to pay $3,125. The bill shows that the defendants in deflecting the three lots from the plaintiff used some business acumen, as they selected for themselves two of the ihost valuable.
    Hart used his, contract as part payment of the purchase price of number 282 Moss avenue, being allowed for it the sum of $2,850, and took title to the Moss avenue property in the name of himself and wife, defendant Julia P. Hart. ■ Later, he deceased, and Julia P. Hart, as survivor, became possessed of the title to the Moss, avenue property and in turn sold the same on an executory contract upon which it is alleged a large amount of the purchase price remains unpaid.
   Fellows, J.

(after stating the facts). Upon a motion to dismiss in the nature of a demurrer we should apply those rules which have become fixed in the former practice when demurrers were in use. One of the recognized rules of long standing was that a bill would be sustained, as against a general demurrer, when the bill stated any ground for equitable relief, even though imperfectly. Hawkins v. Clermont, 15 Mich. 511; Hoffman v. Ross, 25 Mich. 175; Wilmarth v. Woodcock, 58 Mich. 482; Darrah v. Boyce, 62 Mich. 480; C. H. Little Co. v. Cemetery Ass’n, 135 Mich. 248. If this bill sets up any ground for equitable relief against the moving defendant, or against any property standing in her name, it must be sustained and she must answer.

On behalf of plaintiff it is insisted that under the arrangement for the trade of tne equity in the Balmoral apartment by plaintiff, supposedly with defendant Wagner, for the eight lots, on Jefferson avenue, she was to have title to all of them, and that, having complied with her part of the arrangement by assigning the contract for the apartment property, she became the equitable owner of the eight lots — all of them; that Hart received one of these lots for his share of the fraud perpetrated; that he paid no consideration, and, therefore, held such lot as trustee for her; that when it was used to purchase the Moss avenue property, the Moss avenue property became burdened with the trust; that defendant Julia P. Hart, who took title to the Moss avenue property by survivorship, was not a purchaser for value, and that when she sold, by executory contract of sale, the trust followed what she received for it.

Defendant insists that plaintiff has an adequate remedy at law; that the facts constituting fraud must be specifically alleged, and that the facts set up do not make a case for relief in a court of equity for fraud; that one must be able to trace trust funds definitely, and that the trust cannot be impressed upon property in the hands of a bona fide holder; that the prayer of the bill shows a different theory than that now urged by plaintiff, and that the funds are not definitely traceable into the hands of this defendant; and in one of the briefs filed on behalf of defendant there is considerable discussion of homestead rights, rights of the widow to her support during the settlement of the estate, priority of creditors, and what rights are acquired by the widow in lands, held by the entirety.

Without discussing at length many of the minor questions suggested it will suffice to say, that the bill contains a prayer for general relief, and that the statement of facts in the bill, rather than the form of the prayer, determines whether a case for equitable relief is made out; that there is nothing in the bill indicating that any question of homestead is involved; that a widow is not entitled to a homestead or support from money other than that belonging' to her deceased husband ; that under the facts in the bill, many of which we have not considered necessary to state, the case is of such a nature, and the complications in it so many, that it is clearly one for the court of equity.

The'defendant’s counsel is correct in his contention that the facts upon which the claim of fraud is based must be alleged, rather than conclusions. But it is sufficient if the substance of the transaction and the result is alleged. Merrill v. Allen, 38 Mich. 487. We think the facts are sufficiently stated in this bill. While it does not allege that Hart was active with defendants Denton and Wagner in conceiving the fraud upon plaintiff, the facts alleged show he was active in its execution, and received his share of the proceeds.

Counsel for defendant is also correct in his contention that the party seeking to impress a trust upon property must be able to follow the fund, and that if the property is in the hands of a good faith owner, one who has purchased for full consideration, and without knowledge or notice of the trust, the trust may not be impressed upon it. But this bill does not make out such a case. Hart obtained this equity in the lot without consideration; He had demanded and received his commission from Berman for putting the deal through. He had received his pay for his services. Where the $5,000 received on the Berman mortgage went this record does not disclose. When the equitable title to this lot was deflected from plaintiff to Hart the transaction was without consideration. He used the property equitably belonging to plaintiff and applied it to the amount of $%850 in purchasing the Moss avenue property, taking title to himself and this defendant. When she, as survivor, took title it was likewise without consideration, and when she sold on an executory contract, presumably for part cash, and part on time payments, she then held, either in cash or in an interest in the contract, property equitably belonging to plaintiff, for which she had paid no consideration and to which she had no right, and upon which she had no equitable claim. These are the facts alleged in this bill and for the purposes of this motion must be taken as true. The plaintiff has traced into the hands of this defendant property equitably belonging to her sufficiently to put defendant to answer.

It follows that the decree of the court below must be reversed and the demurrer overruled. Defendant will have the usual time to answer. The plaintiff will recover costs in this court; but the record contains answers and other pleadings of defendants other.than Mrs. Hart, and which are not necessary to present the questions relating to her, and which are the only ones here involved. Unless it shall be made to appear on the settlement of the decree that such unnecessary matter was incorporated in this record at the request of defendant, one-half only of the cost of preparing and printing the record will be allowed.

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


author: Stone, J.

text:
      In re VAN SYCKLE’S ESTATE.
    1. Estates oe Decedents — Limitation of Actions — Claims—Probate Court — Jurisdiction.
    Where, after the claims of the creditors of an estate have been regularly allowed, and while the estate remains open, in the charge and control of the probate court, proceedings - to satisfy the debts were deferred for the mutual protection of the creditors and heirs, with the knowledge and consent of the administrator, the probate court, the creditors, and the heirs, there is no statute of limitations to prevent the creditors of the estate from obtaining the delayed payment of their adjudicated claims.
    2. Same — Good-Faith Purchasers.
    Purchasers of the rights of the heirs in real estate, with full knowledge of the claims of creditors, are in no better position than would be the heirs.
    Error to Wayne; Collingwood, J., presiding.
    Submitted June 11, 1918.
    (Docket No. 49.)
    Decided July 18, 1918.

      Thomas T. Leete, Jr., administrator of the estate of William H. Van. Syckle, deceased, filed a petition in the probate court for license to sell certain real estate for the purpose of paying debts. From an order granting the petition, Paul C. Renaud and another, owners of the interests of the widow and surviving son of deceased, appealed to the circuit court. Judgment overruling the order of the probate court. The administrator brings error.
    Reversed.

      Corliss, Leete & Moody (Paul B. Moody, of counsel), for appellant.

      Monaghan, Monaghan, O’Brim & Crowley, for appellees.
   Stone, J.

This case is here for review of an order of the circuit court of Wayne county reversing an order of the probate court directing the sale of real estate to pay debts of the estate of William H. Van Syckle, deceased.

The history of the estate is as follows: William H. Van Syckle died intestate April 15, 1893, leaving as heirs a widow and two minor children, one of whom subsequently died. Whatever property interests deceased left, other than the land in question here— known as the Henry street property — were all exhausted in mortgage foreclosures, widow’s allowances and some small incidental expenses óf administration. Creditors have so far received nothing. As to the Henry street property, the situation was as follows: Under the will of his father, the deceased had an interest in remainder subject to a mortgage and the life estate of his stepmother. This remainder became an asset of the estate, subject further to the dower of the widow of deceased.

Letters of administration were granted to Thomas T. Leete, Jr., on May 23, 1893, the usual order on the same date being entered that the administrator be allowed one year thereafter, within which to dispose of the estate and pay the debts. Report of commissioners on claims was filed December 19, 1893, claims being subsequently filed and allowed by the court January 11th and May 2, 1894. A license to sell real estate was granted February 6, 1894, and on May 19, 1894, report was filed and duly confirmed showing the sale of other property, the Henry street property not being then advertised or sold.

The administrator filed his first account August 20, 1895, which showed, among other things, that the interest of the estate in the Henry street property still remained. On May 31, 1902, the administrator filed a-further report covering the whole period, in which it was stated:

“The real estate described in the inventory has been disposed of in accordance with the order of this court, or by the foreclosure of mortgages and forfeiture of land contracts, except the following: (Here follows the Henry street property.) The interest of deceased in said real estate has not been sold, for the reason that, in the opinion of the administrator, sale thereof could not be made without great sacrifice to the estate of deceased by reason of the outstanding life estate held by Libbie Van Syekle therein.”

This report was duly advertised, examined and allowed by the probate court, June 24, 1902. On September 23, 1908, the administrator, in response to an order entered September 9, 1908, filed his third account which contained a similar statement.

In the year 1913, Paul C. Renaud and Charles W. Burton purchased the interests of the widow and surviving son of deceased, in this property. On February 9, 1915, the administrator filed a petition in the probate court for license to sell this real estate for the purpose of paying the debts. After due proof of publication, upon hearing March 16, 1915, the probate court granted a license to sell. Plaintiffs herein having appeared and filed their objections in the probate court, appealed from this order. In their notice of appeal they, as owners of the fee of said lands, .claimed that there were no legal debts and charges, outstanding against said estate; that all alleged claims of record were outlawed by virtue of the statute of limitations ; that all alleged claimants had no valid standing in court by reason of their laches in not pressing their claims within a reasonable and lawful period of time; and that good faith purchasers have become possessed of the fee or remaindermen, estate in said lands, and that such a sale would be an unjust and unlawful interference with their legal and equitable rights.

Upon the trial in the circuit court it appeared in evidence that there were duly proven unpaid debts amounting to over $3,900, and interest thereon; that the real estate market in Detroit in the year 1893, and for several years thereafter, was in a very unfavorable condition, and on that account, and because of the intervening life estate, combined with outstanding mortgage and dower interests, the administrator believed that sale could not be had of the property without great sacrifice of the interests of both the heirs and the creditors, and in fact that the heirs would have received nothing if such sale had been made; that this view was discussed with the probate judge personally many times, and was incorporated in the administrator’s report and met the approval of the probate court; that this condition of affairs continued with the knowledge and consent not only of the probate court and of the administrator, but of the creditors and the heirs, the latter having moved to North Dakota, being in frequent personal touch with the administrator. It appeared that plaintiff Renaud carried on all of the negotiations for the purchase of the heirs’ interests by letter. The correspondence was put in evidence, from which it appeared that said plaintiff knew of the debts and mortgage and the condition of the estate.

It further appeared that the heirs in making their sale understood and expected that the debts of the estate were to be paid; and that plaintiff Renaud had obtained assignments of some of the claims at ten cents on the dollar and had offered five cents for others.

The trial court set aside the order of the probate court, and denied sale of the real estate. The estate has brought error, and the principal question raised by the assignments of error is whether, after the claims of the creditors have been regularly adjudicated and allowed, and while the estate remains open, in the charge and control of the probate court, and because proceedings for sale to satisfy the debts were deferred for the mutual protection of the creditors and heirs, and with the knowledge and consent of the administrator, the probate court, the creditors and the heirs, the creditors lose the right, and the court the jurisdiction, to enforce their claims as against plaintiffs who stand in the shoes of the heirs by purchase.

It is asserted by appellant that appellees rely upon sections 13883, 13884, and 13886, 3 Comp. Laws 1915, as a “statute of limitations,” and that it is their contention, which was apparently adopted by the trial court, that the above are mandatory provisions, and that the expiration of this four years and six months period arbitrarily cuts off all right on the part of creditors to have their claims satisfied, and all jurisdiction in the probate court to order a sale for such purpose. It is urged by appellant that this is not the law, and that there is no statute of limitations covering such a case as is here presented. It is true that section 13891, 3 Comp. Laws 1915, contemplates a decree of the probate court, for payment of debts and distribution of assets, to be entered on or before the expiration of the time limited for the payment of debts.

Section 18895 also contemplates that the probate court enter an order causing notice to be given to creditors of the time appointed for the payment of debts under such decree, and the next section provides as follows:

“If, after notice shall have been given as provided in the preceding section, any creditor shall neglect to demand from the executor or administrator his debt, or the dividend thereon, within two years from the time so limited for the payment of the debts, or if the notice shall be given after such time within two years from the last publication, the claim of such creditor shall be forever barred.”

It is urged by appellant that in the absence of a decree requiring the payment of the debts, and a notice to creditors in regard thereto, no statute of limitations applies, so long as the estate remains open, and that there was no such decree or notice here, the probate court advisedly deferring' such action with the consent of all concerned, and reference is made to the case of Peckham v. Hoag, 92 Mich. 423, which it is claimed rules this- case. In that case administration was granted in 1874. Plaintiff’s claim was presented, proven and allowed in 1880, and an order made requiring the administratrix to pay the debts within 90 days. Attempted sale of real estate to pay debts was made the same year, but was not confirmed because no oath or bond was filed. No further steps had been taken by the administratrix for the payment of debts. Plaintiff filed a petition for the removal of the administratrix. It was contended on the part of the respondent, among other things, that, 1

“Unless there is some method whereby the lands can now be sold by the administratrix, under the order of the probate court, the petitioner and other creditors cannot be benefited by continuing the administration; and that, Mr. Hoag having died May 8, 1874, the time has now gone by when a sale of the real property could be made by the administratrix under such order.”

This court said in July, 1892 :

“It appears conclusively, however, that the estate had not been closed at the time the application was made in this present proceeding. The jurisdiction to administer the estate and' to sell the real estate for the payment of the debts has not, therefore, been lost by lapse of time. * * * The casé will be certified to the probate court of Berrien county, directing that court to proceed upon the petition for the removal of the administratrix, to the end that the proceedings may be taken for the sale of sufficient of the real estate of the deceased for the payment of the debts.”

It will be noted that this action was directed upwards of 18 years after the death of Mr. Hoag. It is urged by appellant that if there were no other decisions to the same effect in this State, the rule here announced should be construed to constitute a rule of property; that creditors should not be deprived of their rights because, after having come into court and duly proved their claims, they have in good faith left the matter in the hands of the administrator and the probate court, the delay harming no one, and having been with the knowledge and consent, and inuring to the benefit of the heirs in whose shoes the plaintiffs stand.

The recent case of Ogooshevitz v. Arnold, 197 Mich. 203, is referred to as asserting the same doctrine. In that case it was said:

“One who buys land from heirs or devisees before the estate is closed takes it subject to the debts and expenses of administration. * * * There is a way provided in the statute for foreclosing claims against estates of decedents, viz.: appointment of commissioners, or a hearing of claims by the probate judge, and closing the estate; prior to 1915, this was the only method by which they might be barred.”

The trial court and the plaintiffs relied mainly upon Hoffman v. Beard, 32 Mich. 218. It is the claim of appellant that that case is readily distinguished-on its facts from the instant case, in that there the estate had been closed several years before the sale was made; and that while there is language used in that opinion which would seem to justify the holding of the trial court in the instant case, yet the rule there stated was discarded and overruled in Larzelere v. Starkweather, 38 Mich. 96. In this last named case the opinion was written, by the same Justice (Mars-ton) about three years later, and the claim being made there, as here, that under the rule of Hoffman v. Beard, the probate court had lost jurisdiction, the court said:

“In delivering the opinion in Hoffman v. Beard this court had no intention of holding that under no circumstances could the probate court order a sale of the real estate of a deceased person for the payment of his. debts, or that such a sale for such purpose could not be made after four years and six months from the granting of letters of administration. No such question was involved or decided in that case. Nor were the facts in that case such as would justify the court in coming to, and announcing such a conclusion. Some expression may be found in the reasoning in the opinion delivered in that case, which taken alone might give color to such an idea. The reasoning in an opinion is not that of the court, but of the judge who prepares and delivers it. It may, or may not, be considered sound and unanswerable, and as such is the subject of criticism. The conclusion arrived at and announced upon the several questions discussed and essential to a proper disposition of the case,- is that of the court, and in concurring in such conclusions it is not generally supposed or understood that everything contained or said in the opinion is thereby unqualifiedly and unquestionably adopted as the opinion of the court. * * * In, other words, the opinion and decision of a court must be read and examined as a whole in the light of the facts upon which it was based. They are the foundation of the entire structure which cannot with safety be used without reference to them. That the general rule laid down and the conclusion reached in Hoffman v. Beard was correct, as the facts stood in that case, we have as yet seen no reason to doubt, but that exceptions to such general rule exist, where, after the expiration of the time there stated, the probate court has jurisdiction to order a sale of the real estate of the deceased, for the payment of his debts, we have no doubt. Cases may frequently arise under our statutes, owing to delays arising from causes over which the administrator and probate court have no control, where the estate cannot be closed and settled within the usual and ordinary period. In all such cases the probate court does not lose its jurisdiction, when properly invoked, to order a sale of the real estate, and a sale made in accordance therewith will be valid and binding. Such has been the construction, placed upon similar statutory provisions by the courts of other states,” citing the statutes, and decisions.

The following cases are also cited by appellant: In re Estate of Beniteau, 88 Mich. 152, 154; Church v. Holcomb, 45 Mich. 29, 37; Norman v. Olney, 64 Mich. 553; In re Moores’ Appeal, 84 Mich. 474; In re Palms’ Appeal, 44 Mich. 637; Averill v. Jackson City Bank, 114 Mich. 20, 26; Long v. Landman, 118 Mich. 174; Card v. Fowler, 120 Mich. 646, 653; Brooks v. Hargrave, 179 Mich. 136, 144; Bresler v. Wayne Probate Judge, 152 Mich. 167; In re Reid’s Estate, 170 Mich. 476, 483, 484.

The trial court seems to have thought that the question involved was controlled by the following decisions of this court: Hoffman v. Beard, 32 Mich. 218; Brown v. Forsche, 43 Mich. 492; Winegar v. Newland, 44 Mich. 367, 370; Pratt v. Houghtaling, 45 Mich. 457; In re Young’s Estate, 144 Mich. 663.

We have already called attention to the cases which discarded the rule stated in the Hoffman Case, and we are of the opinion that the other cases relied upon by the trial court and the appellees do not establish or support the rule contended for.

The facts in the Young Case readily distinguish it from the instant case. In that case a decree for the payment of debts in accordance with the statute was entered about ten years prior to the application for license to sell real estate, claimant, herself the administratrix, who had paid most of the debts out of her own funds, having notice of it. It is also apparent that the estate had first been treated as closed, for on filing her first account, the administratrix showed that she had paid out more than she had received, and the order allowing the account “recited that she was discharged as administratrix.” She had a life estate of all the property under the will. It does not appear whether or not the attention of the court in that case was called to the ruling in Peckham v. Hoag, supra, and other similar cases. We find no language in the opinion indicating that the Peckham Case was overruled or intended to be, or the rule there stated modified; and while some of the language of the opinion would seem to be out of harmony with that case, yet when applied to the facts involved such want of harmony is more apparent than real.

The appellees are in no better position than would be the heirs from whom they purchased, with full knowledge of the claims of creditors. They cannot be considered good faith creditors.

In our opinion there is no statute of limitations to prevent the creditors of the estate from obtaining the delayed payment of their adjudicated claims, under the circumstances here existing.

The estate remains open, and in the charge and control of the probate court.

We are of the opinion that the probate court was right in granting license to sell, and that the order and judgment of the circuit court should be reversed, and the cause remanded, with instructions to enter an order affirming the order of the probate court, in accordance with this opinion, with costs to appellant.

Ostrander, C. J., and Bird, Moore, Steere, Brooke, Fellows, and Kuhn, JJ., concurred.