text:
    PEOPLE v. BUNKER.
    Constitutional Law — Ordinances — License Tax — Interstate Commerce.
    A municipal ordinance imposing a license fee on persons going about from place to place offering goods for sale, by sample or otherwise, is inoperative and void, as an interference with interstate commerce, in so far as it applies to one soliciting orders for goods by sample for a nonresident manufacturer, who is to ship the goods from the State of his residence.

    Exceptions before judgment from Hillsdale; Chester, J.
    Submitted June 7, 1901.
    Decided July 19, 1901.
    F. P. Bunker was convicted of violating a municipal ordinance relating to itinerant traders.
    Reversed.

      Charles' A. Shepard and Charles M. Weaver, for appellant.

      Orville J. Cornell, City Attorney (W. H. Frankhauser, of counsel), for the people.

       On the subject of peddlers and drummers as related to interstate commerce, see note to Re Spain, 14 L. R. A. 97.

   Long, J.

On August 3, 1900, respondent was arrested on a complaint charging that:

“F. P. Bunker did on the 3d day of August, A. D. 1900, at the city of Hillsdale, in said county, go about the city of Hillsdale on foot, from place to place, carrying with him samples of goods, wares, suppliés, and property, to wit, a sample jackknife,' which he, the said F. P. Bunker, then and there did offer for sale by sample, without first having paid a license fee and obtained a license therefor, as provided by, and in violation of, an ordinance of the city of Hillsdale entitled ‘ License Ordinance,’ passed May 20,1898, and amended June 2, 1898, and August 22, 1898, and against the peace,” etc.'

The ordinance referred to in the above complaint read’s:

“Peddlers, or persons going about said city on foot, from place to place, carrying with them any goods, wares, supplies, or property, or samples of the same, and selling or offering for sale the same, either by sample or otherwise, shall pay for each weekly license the sum of five dollars.”

On being arraigned before the justice, the respondent refused to plead, and was thereupon tried before a jury, convicted, and sentenced to pay a fine. He appealed to the circuit court, and the case was there brought on for trial before a jury, which, by the direction of the court, returned a verdict of guilty. The case comes to this court on exceptions before sentence.

It appears that the respondent is a resident of Indiana, and had been employed for about a year by the Novelty Cutlery Company, whose business is located at Canton, Ohio, to sell pocketknives and razors made to order; that at the time of his arrest he was soliciting orders for pocketknives ; that the samples of knives carried by him bore divers emblems, devices, and pictures, and two of them printed matter, on the handles; that he would go to business places and solicit orders from individuals, giving the customer the choice of any of the shapes, or combination of them, any style of blade, putting on name if desired, or photograph, emblem, or device, as might be chosen by the customer; that he carried nothing but knives; that if he took an order he would send it in to the company at Canton, Ohio, and it would be there made, and sent to him for future delivery. In this manner he solicited and procured orders from several persons. Respondent testified that he did not have with him, or at any place in the State, any stock of knives with which to furnish customers or to fill orders; that every knife for which an order would be taken would be furnished by the firm at Canton, and sent to him for delivery. On the trial, counsel for respondent objected to the introduction of any evidence under the complaint, the principal objection being that the ordinance was invalid in so far as it affects those engaged in interstate commerce, because in violation of section 8, art. 1, of the Constitution of the United States, which vests in the Congress of the United States the power to regulate commerce among the several States.

We think counsel are right in their contention, and that the jury should have been directed to acquit the respondent. The case is ruled by Brennan v. City of Titusville, 153 U. S. 389 (14 Sup. Ct. 839). In that case it appeared that the ordinance required persons who solicited orders -on behalf of manufacturers of goods to take out a license and pay a tax therefor. The ordinance was passed under authority conferred by a statute of the State granting municipalities power to levy and collect license taxes on hawkers and peddlers. It was held that this was not an exercise of the police power of the State, but of the taxing power, and imposed a tax upon interstate commerce, in violation of the provisions of the Constitution of the United States. It appeared that picture frames which respondent was selling by sample were manufactured in Chicago, 111., and the manufacturer resided in that State. He employed respondent as his agent to travel and solicit orders for picture frames in the State of Pennsylvania and other States. Upon receiving orders for the frames, he forwarded them to the manufacturer at Chicago, and the goods were sent by express either to the purchaser or to the agent, and the moneys collected and sent to the manufacturen Mr. Justice Brewer, after a review of the cases in that court, said:

“ It is undoubtedly true that there are many police regulations which do affect interstate commerce, but which have been and will be sustained as clearly within the power of the State; but we think it must be considered, in view of a long line of decisions, that it is settled that nothing which is a direct burden upon interstate commerce can be imposed by the State without the assent of Congress.”

The court then refers to the case of Leloup v. Port of Mobile, 127 U. S. 640 (8 Sup. Ct. 1380), quoting the language of Mr. Justice Bradley in that case, as follows:

■“ Of course, the exaction of a license tax as a condition of doing any particular business is a tax on the occupation, and a tax on the occupation of doing a business is surely a tax on the business.”

The court, continuing, said:

“ It is clear, therefore, that this license tax is not a mere police regulation, simply inconveniencing one engaged in interstate commerce, and so only indirectly affecting the business, but is a direct charge and burden upon that business; and, if a State may lawfully exact it, it may increase the amount of the exaction until all interstate commerce in this mode ceases to be possible.”

The court also referred to the case of Robbins v. Taxing District, 120 U. S. 489 (7 Sup. Ct. 592), and said:

“Robbins was engaged in soliciting in the city of Memphis, Tenn., the sales of goods for a Cincinnati firm, exhibiting samples for the purpose of effecting such sales, his employment being that which is usually denominated that of a ‘drummer.’ This business was declared by a statute of Tennessee to be a privilege for which a license tax was required. Robbins was convicted of a violation of that statute. The statute made no discrimination between those who represented business houses out of the State and those representing like houses within the State. There was therefore no element of discrimination in the case; but nevertheless the conviction was set aside by this court on the ground that, whatever the State might see fit to enact with reference to a license tax upon those who acted as drummers for houses within the State, it could not impose upon those who acted as drummers for business houses outside of the State (and who were therefore engaged in interstate commerce) any burden by way of a. license tax.”

We think the present case comes so fully within the rule in that case and the cases cited that any discussion of it is unnecessary. The court below was in error in sustaining the conviction.

The conviction must be set aside, and the respondent discharged.

The other Justices concurred.


source: Caselaw Access Project

author: Hooker, J.

license: Public Domain

text:
    JACKSON & SUBURBAN TRACTION CO. v. COMMISSIONER OF RAILROADS.
    1. Street Railways — Franchises—Authority oe Municipality.
    The right of a street-railway company to construct its road, and of a city to grant the use of its streets therefor, are both dependent on legislative authority.
    2. Same — Crossing oe Steam Road — Constitutional Law — Title oe Act.
    Act No. 171, Pub. Acts 1893 (2 Comp. Laws, § 6349 et seq.), entitled “An act to regulate the construction of the tracks of railroads and street railroads across each other, and the stringing of wires, electric or other, over railroad tracks, and relative to the maintenance of such tracks heretofore so constructed and wires heretofore so strung,” is not unconstitutional as expressing two objects in its title, since, if necessary in order to sustain the act, the wires therein referred to would be construed as being limited to wires used in connection with one or the other of the roads.
    3. Same — Separation of Grades — Authority oe Railroad Commissioner.
    Under Act No. 171, Pub. Acts 1893 (2 Comp. Laws, § 6349 et seq.), authorizing the railroad commissioner to determine the manner in which crossings of railroads and street railroads shall he made; and section 6466, providing that street-railway-companies organized under the act of which such section is a part shall be subject to the supervisory control of the railroad commissioner, as provided by the first-mentioned act, — such commissioner has the power to require a street-railway company thereafter acquiring the right to lay tracks in a city street, as a condition to the exercise of such right, to elevate its tracks over those of an intersecting steam road, notwithstanding its contention that this could be done only through the exercise of the power of eminent domain as against abutting property owners, which power it does not possess.
    4. Same.
    The statute contemplates that there shall be a separation of grades at such crossings where “reasonably practicable;” but this does not mean that it should be required in all cases where physically possible.
    •5. Same — Appeal—Abuse op Discretion.
    Conceding that the discretion of the commissioner in ordering an overhead crossing is reviewable by the court, his decision will be overturned only in case of a clear abuse of such discretion.
    6. Mandamus — Conolusiveness op Return.
    The return to an order to show cause in mandamus is conclusive as to the matters therein contained.

      Mandamus by the Jackson & Suburban Traction Company and the city of Jackson to compel Chase S. Osborn, ■commissioner of railroads, to vacate an order requiring the construction of an overhead crossing.
    Submitted June 7, 1901.
    Writ denied July 19, 1901.

      Thomas E. Barkworth, Howard, Boos & Howard, and John W. Miner, for relators.

      Horace M. Oren, Attorney General (Boger Irving . Wykes, of counsel), for respondent.
   Hooker, J.

The relator is a street-railway company •organized, and its road is in operation upon the streets of the city of Jackson, under Act No. 35 of the Laws of 1867. The consent of the city to the construction and operation of the road provides that the company shall construct its railway from its present terminus, on Francis street, to the south corporation line, within one year from the taking effect of the same, “or at such earlier date as a crossing of said railway with the Michigan Central and Lake Shore railways can be arranged with the State commissioner of railroads.” The relator made application to the respondent for the approval of the place and manner in which relator should cross those tracks, as required by Act No. 171 of the Public Acts of 1893, and after a hearing he determined that such crossing should be made by means of an overhead bridge, to be constructed in accordance with plans to-be submitted to, and approved by, him, said bridge to be at least 22 feet above the surface rails of the tracks crossed, after those tracks had been lowered at least 3 feet from the present grade line. Thereupon this applic ation for a mandamus was made to compel respondent to vacate so-much of his order as requires an overhead crossing, and to proceed to prescribe such reasonable safeguards to avoid accident at said crossing as the law requires.

The order of the respondent is attacked upon several grounds. It is said:

First. He has not power to make such an order, because (a) the railway has a vested right, under the law and its arrangement with the city, to the use of the highway, and that this is taken away; (b) the city has a similar right to have the highway so used, and to control such use, and it is deprived of these rights; (c) the relator cannot elevate its track in the manner prescribed without first acquiring a right from abutting landowners, and, as it has not the right of eminent domain, it is powerless to do so, and therefore is deprived of the right to build and operate its road; (d) that all of these are vested rights, of which relator and the city cannot be deprived without due process of law, and that involves action by the judicial branch of the government.
Second. The law is unconstitutional, as class legislation.
Third. That the order of the commissioner, if otherwise valid, should be vacated because it is not reasonably practicable for the relator to comply with it; and, at all events, it should be modified by compelling the steam roads to share the expense of the overhead crossing.

The petition does not state the date of the adoption of the ordinance giving authority to build in the street, but as the track on Francis street was required to be constructed within one year from the time that the ordinance took effect, which time had apparently not expired when the briefs were made, and as it clearly contemplates application to the commissioner, we conclude that the relator’s rights were acquired after the laws cited were in force, and subject to the provisions of such laws, so far as they are valid. We do not mean to imply that such laws apply only to rights acquired since their passage, but, as we have that kind of a case before us, we need not consider the effect upon pre-existing rights.

The act under which this company was organized was passed in 1867. See 2 Comp. Laws, § 6131 et seq. In 1897 three sections were added to this act, one of which (2 Comp. Laws, § 6166) reads as follows:

“ All street-railway corporations organized or doing business under this act shall be subject to the supervisory control of the commissioner of railroads, as provided by act number one hundred and seventy-one of the Public Acts of Eighteen Hundred and Ninety-Three; and the commissioner of railroads shall also'have power to make from time to time reasonable rules and regulations for the operation of the street railways of such corporations in the conduct of the suburban express business they are authorized to carry on by this act as amended.”

The effect of this amendment is to make Act No. 171, Pub. Acts 1893 (2 Comp. Laws, § 6319 et seq.), a part of it, to the extent indicated.

It is urged by counsel that Act No. 171 is unconstitutional, and it may be said that an unconstitutional act cannot be made a part of another act by reference. Without passing upon that question, it is enough to say that, whether the act can be applied to rights which vested previous to its passage or not, it can stand as to those granted afterwards, unless it is void because of a defective title. The title is as follows:

“An act to regulate the construction of the tracks of railroads and street railroads across each other, and the stringing of wires, electric or other, over railroad tracks, and relative to the maintenance of such tracks heretofore so constructed and wires heretofore so strung.”

The plain object of the act, as expressed by the title, is the protection of life and property at crossings of railroads and street railroads. The claim that two objects are expressed, because wires are referred to and regulated, does not impress us. We are not certain that the title might not have been made broad enough to cover any appliance or structure erected over railways or street railways; but it is unnecessary to decide this, for, if it were necessary to sustain the act, we would be justified in limiting the act to those wires which are used in connection with one or the other of the roads.

The city of Jackson has no authority, other than that conferred by law, to enter into any arrangement to permit the use of its streets by railway companies, and no railway corporation has a right to build such railways, or even to exist, except by legislative permission. This railway, then, acquired a vested property right, not to build a railroad upon the surface of the ground, in the street, at all events, but only where the law permits, and in compliance with the law. It has no right to build any other kind of a road, or to build a road in any other than a lawful way or place. These are conditions of the grant of its vested property rights, and, if it cannot comply with them, it cannot build the road. The State is not obliged to authorize the building of railways in the streets; hence, if it chooses to do so, it may impose conditions. One of these conditions is that at crossings of steam roads it shall comply with the requirements of the State, to be determined by the railroad commissioner, as to the method of crossing, and the expense of the same. It was competent for the State to forbid any crossing at grade, and the law indicates an intention to do so in all cases where it is reasonably practicable to avoid grade crossings. A railroad company is not in a position to say to the State: “It is true you have imposed conditions that we cannot or will not comply with; therefore we propose to build a road in a place and in a way that you have not authorized.” If there is authority for the claim that the exercise of the right of eminent domain is necessary before relator can construct the road which it is authorized to construct, manifestly it will have to wait until provision-can be made for it. It cannot do an unauthorized thing merely because the authorized one is not feasible. So, if it is true that relator cannot build an overhead crossing until it has secured rights from abutting proprietors, which it has no power to condemn, it will have to acquire them in some other way, or not build the road where contemplated. Again, the character of the crossing required, or its cost, may not meet relator’s approval; but the determination by the railroad commissioner is one of the conditions imposed. It becomes unnecessary, therefore, to determine whether he is performing a judicial function, which only the courts are competent to perform, for the purpose of this case, or whether it is class legislation. Relator appears to have recognized this when it applied to the respondent. He had authority enough to be applied to, but not enough to enforce his order, yet enough so that relator still prays that he make another order according to law. We are of the opinion that this disposes of most of the contentions of the relator’s counsel.

The act gives relator the right to except to the ruling of the commissioner. If by that is meant (and we do not say so) that this court will review his discretion upon the facts, it can, at the most, be in cases where there is a clear -abuse of discretion, and it would be necessary for us to have the facts clearly before us to do that. Detroit, etc., Ry. v. Commissioner of Railroads, 127 Mich. 219 (86 N. W. 842). No evidence is returned, and there may not have been any taken, for the commissioner returns that lie. viewed the premises, and satisfied himself, in ways not formally judicial (as he may lawfully do), of the circumstances and conditions upon which his action was predicated. No issue is made in this court, and we must take his return as true. We do not understand it to be his duty to order overhead crossings in all cases, or to impose all burdens arising from the separation of grades upon the applicant in all cases. We understand that he has not done so in this case. He has, so far as the bridge is concerned, but not as to the lowering of the steam roads. He has determined the height to which relator must construct its bridge, but it does not devolve upon it to lower the steam-road tracks. They will omit obedience at their peril, and relator need not be concerned about it. Whether or not it is reasonably practicable to separate grades is a question of judgment. The law does not mean that it shall be done in all cases where it is physically possible. Any reason that shows the unfitness of a separation of grades is sufficient to warrant a grade crossing. We are not prepared to say that the expense might not be taken into consideration, as well as the effect upon abutting property. At the same time it is evident that the dangers of grade crossings are great, and the legislature has indicated a design to forbid them wherever it can be consistently done. We see no occasion to interfere with the order made, and the writ is denied.

The other Justices concurred.


author: Grant, J.

text:
    TOMLINSON v. CORNETT.
    Mortgages — Assignment—Absolute Sale.

      The question in this case is one entirely of fact. It is held, under the evidence, that complainant was the absolute purchaser of a note and mortgage, and that they were not assigned to him as the agent of the mortgagee for the purpose of foreclosure.
    Appeal from Jackson; Peck, J.
    Submitted June 24, 1901.
    Decided July 19, 1901.
    Bill by Joseph B. Tomlinson against George Cornett,’ William H. Cornett, Susan Cornett, Leverett C. Adams, Eugene Pringle and Adolphus E. Hewett, copartners as Pringle & Hewett, Eugene Pringle, individually, and Barnabas C. Hatch, for an accounting. From a decree for complainant, defendants appeal.
    Reversed.
    The controversy in this case arises over the assignment by defendant George Cornett to complainant of a mortgage executed by one Gates to Cornett December 18,1884, and held valid in Gates v. Cornett, 72 Mich. 420 (40 N., W. 740). On August 25, 1890, Cornett assigned that mortgage and the note accompanying the same to complainant. Complainant paid him $1,000 in cash, and exer' cuted two negotiable promissory notes,— one for $2,600, and the other for $3,800,— due three years from date. Complainant foreclosed this mortgage by advertisement, and the sale made thereunder was held void. Strong v. Tomlinson, 88 Mich. 112 (50 N. W. 106). Complainant then proceeded to foreclose in chancery, and obtained a decree, which was sustained in Tomlinson v. Gates, 98 Mich. 49 (56 N. W. 1050). A sale was had under the decree, and complainant realized thereon $6,031, and obtained a personal decree against Gates for the deficiency, $2,768.42.
    Not long after the assignment, Mr. Cornett left the State, went to Indiana, became a traveling salesman, and for some time traveled under an assumed name. For some reason he desired to conceal his whereabouts, and complainant claims that he did not know where he was until he returned to Michigan in 1898. One Root was the attorney and solicitor for complainant in the foreclosure proceedings. Root then resided in Jackson, but, before this suit was brought, had removed to Chicago. Suit at law was brought against complainant upon the notes. Soon after George Cornett left the State, his brother, the defendant William H. Cornett, was appointed his guardian. The defendant Susan Cornett obtained a judgment of over $6,000 against George Cornett, and garnished complainant. Defendant Adams also brought suit against George, and garnished complainant. The defendants Hewett, Pringle, and Hatch claim interests by assignment from George.
    In 1897 complainant filed a bill in chancery against William H. Cornett, as guardian, for an accounting and adjustment between complainant and George Cornett, and praying that he be permitted to assign and transfer his apparent rights in the decree for a deficiency to William H. Cornett, as guardian, and that said William be required to surrender and deliver up said promissory notes, and that the suit at law commenced by said William thereon be perpetually enjoined. That suit was partially heard, but never determined. On his return, George filed a petition to be declared competent, and obtained a decree to that effect. In this condition of affairs, complainant filed this bill on January 26, 1900. The theory of the bill is that complainant was not the purchaser of the mortgage, but acted only as agent of George Cornett in foreclosing and obtaining a decree and sale; that the $1,000 paid at the time of the assignment was a loan; and that the two notes were given upon the agreement that, when complainant had foreclosed, he should then account to George for the moneys obtained from the sale, and that George should then surrender the two notes and repay the $1,000. This was denied by George, who claims that the transfer was an absolute sale. The question is therefore one of fact. The court sustained the complainant, entering a decree for an accounting.

      Parkinson & Campbell, for complainant.

      John F. Henigan, for defendants George Cornett and B. C. Hatch.

      Blair & Williams, for defendants Susan and William H. Cornett.

      Pringle & Hewett, in pro. per.

       Head-note by Grant, J.

   Grant, J.

{after stating the facts). Mr. Tomlinson and George Cornett were the only two witnesses of what occurred at the time of the assignment, and of any parol agreement. Mr. Tomlinson died after the decree was rendered. He was then 80 years of age. The learned circuit judge, before whom the testimony was taken, refers to the known character and reputation of Mr. Tomlinson for honesty and integrity, and states that “it would be impossible for any judge sitting in Jackson to pass upon his sworn testimony without recognizing that fact.” He then refers to the character of George Cornett as illustrated by the proofs in the case, and the litigation involving the mortgage in question and other mortgages. The circuit judge then says:

“Where these two witnesses disagree upon a material question of fact, the disagreement scarcely creates a subject for hesitation or debate in the mind of a court, seeking to determine the truth.”

He then concludes that where they disagree he must rely upon the testimony of Mr. Tomlinson.

Were this case to be decided upon the testimony of these two witnesses, we might reach the same conclusion, —not, however, upon what the judge has said about the reputation of either or both. The judge was not a witness; and in chancery cases, which must be determined by this court upon the facts, we cannot consider the statement of the circuit judge as to the reputation or character of either litigant, unless it is based upon the testimony in the case. The circuit judge evidently recognized the difficulty in reconciling Mr. Tomlinson’s conduct for six years after this assignment with his present claim, for he says:

“While it may not be easy to reconcile Tomlinson’s conduct and testimony in the litigation extending over the period from ’90 to ’96 with his view of the transaction as sworn to in this case, under all the circumstances surrounding him, and with the explanation afforded by the situation itself, with its strikingly peculiar conditions, I am satisfied that such inconsistencies as exist are not sufficient to compensate for the wide difference in probative force between the testimony of Tomlinson, as given in this case, and that of Cornett; and, notwithstanding the ■deteriorating effect which these inconsistencies must have upon his testimony here, I still believe that the truth is, in substance, in accordance with Tomlinson’s testimony given in this case.”

It becomes, therefore, essential to determine what that conduct was. The assignment and the negotiable promissory notes and the payment of $1,000 import, and are consistent only with the theory of, an absolute sale. Complainant admits that the arrangement between him and Cornett was to be kept secret. Soon after this assignment, the firm of Conely, Maybury & Lucking sued George Cornett, and garnished Mr. Tomlinson, upon the theory that he was indebted to, or had property, money, or effects in his hands belonging to, George Cornett. Mr. Tomlinson filed a disclosure absolutely denying any indebtedness whatever, or the possession of any property, moneys, goods, chattels, or effects whatsoever belonging to George Cornett. He was examined under oath, and there testified, in substance, that he was the absolute owner of the mortgage, and that “ I paid him [George Cornett] $1,000 in cash, and the balance in negotiable paper.” On the strength of this disclosure, Conely, May-bury & Lucking were compelled to discontinue their suit, and paid Mr. Tomlinson the costs. In his bill for foreclosure Mr. Tomlinson stated under oath “that said note, mortgage, and decree, having been duly sold and assigned, are now owned by your orator.” William H. Cornett testified that he asked Mr. Tomlinson “if the transaction was a genuine one, and if there was anything in it in which George had any interest, or anything of that kind, and he said, ‘No.’ He said that he was the absolute owner of the property that was transferred to him; that he gave George .a thousand dollars in money and these two promissory notes, and in consideration of that he received the assignment of the mortgage that had been decreed to him.” Complainant admits that he told William that it was a bond fide transaction. He claims to have made a-written memorandum at the time of the assignment, which was produced in evidence, and reads as follows:

“Agreement between George Cornett, of the first part, and Joseph B. Tomlinson, of the second part, of the city of Jackson, county of Jackson, State of Michigan, in regard to the matter of the Gates mortgage: Said George Cornett, of the first part, agrees to furnish Joseph B. Tomlinson, of the second part, all the money needed to foreclose said mortgage, and for and in consideration of the payment by Joseph B. Tomlinson, of the second part, to George Cornett, of the first part, one thousand dollars in cash in hand paid, and two notes amounting to $6,000 or over, in consideration of which said George Cornett, of the first part, guarantees the collection of said mortgage, with all the costs and interest that may accrue thereon.”

That memorandum is consistent alone with the sale, and not with that of agency. His attitude for six years towards every one who had any interest in knowing the facts was that of a bona fide purchaser. It is unnecessary to enter further into the testimony. Mr. Tomlinson in his lifetime was, and his estate now is, bound by the record he then made. He was called upon, by those who had a right to know, to speak and tell the truth of this transaction. He deliberately chose not to do so. He testified that he made these statements upon the theory that he was the absolute owner of this mortgage, the note secured thereby, and the decree, until he had foreclosed, sold the property., and realized thereon, and that then what he had received was not his own, but belonged to George Cornett. The theory is a reflection upon Mr. Tomlinson’s intelligence If he was merely the agent for collection for George Cornett, he should, when called upon, have so stated. He knew the facts then as well as he did six years later. Under this record, there are only two possible theories: (1) That the purchase and sale by complainant were absolute; or (2) that the assignment was made to prevent the creditors of George Cornett from getting the benefit of this property. But, whatever may have been the secret understanding between them, Mr. Tomlinson deliberately made his bed, lay in it for six years, and his estate must now continue to lie in it. This disposition of the case renders it unnecessary to discuss the other point raised, viz., whether the assignment and notes constitute a written contract, which cannot be varied by a contemporaneous parol agreement.

Decree reversed and bill dismissed, with costs of both courts.

The other Justices concurred.

       Subsequently, on motion, a decree was entered under defend" ants’ prayers for affirmative relief, declaring liens for the amounts of their several claims on the purchase-money notes given by complainant.


author: Montgomery, C. J.

text:
    HUTCHINS v. SCHOOL DISTRICT NO. 1 OF COLFAX TOWNSHIP.
    Schools and School Districts — Teachers’ Contracts — Validity.
    Under 2 Comp. Laws, § 4678, requiring all contracts by school-district boards with teachers to be in writing, an oral contract with a teacher to continue the school for a month after the expiration of his written contract is not enforceable, though such teacher has performed the services.
    Error to Oceana; Russell, J.
    Submitted April 5, 1901.
    Decided July 19, 1901.

      Assumpsit by Daniel B. Hutchins against school district No. 1 of Colfax township for wages as teacher. From a judgment for plaintiff, defendant brings error.
    Reversed,

      L. M. Hartwick ( Hartwick & Sheets, of counsel), for appellant.

      Wallace Foote, for appellee.
   Montgomery, C. J.

Plaintiff is a school teacher, and had a written contract with defendant district to teach the school in said district for a term of six months, commencing on or about December 11, 1898, at $35 per month. Plaintiff presented himself at the district to teach on that date, but was informed that the building was not ready; that he could go home, and, when it was ready, they would notify him-. He was finally notified, and opened school February 5,1899. He taught until the expiration of six school months from December 11, 1898, and testifies that, before the expiration of this time, he made a new arrangement, orally, with the board, to continue the school for another month, under the old contract. The plaintiff has received pay for the full six months covered by the original contract. He recovered a judgment for $35, the value of the service for the extra month, under the new arrangement, and the defendant brings error.

The defendant contends that the contract, not being in writing, is not enforceable. The plaintiff, on the other hand, contends, first, that this is not a new contract, but an enlargement of the original one, which was in writing. We think this proposition is not tenable. The law contemplates that all the terms of the contract shall be in writing; and if, under a claim of enlarging or continuing a written contract, the board might make the principal part of it rest in parol, it would have the effect to render the statute of little value.

It is further contended that, the contract having been performed by the plaintiff, he is entitled to recover, notwithstanding the statute which requires that all such contracts shall be in writing. There is nothing ambiguous about the terms of this statute. 2 Comp. Laws, § 4678. The district board is a board of limited powers, and no good reason can be urged why, when the statute is express, and limits their power to contracts in writing, it should not be observed. The case of Langston v. School District, 121 Mich. 654 (80 N. W. 642), affirms that, unless the contract is in writing, it cannot be enforced. In that case the previous cases of the court are considered and distinguished. In Crane v. School District, 61 Mich. 299 (28 N. W. 105), it is stated in the opinion that a contract signed by a majority of the board is presumptively valid on its face. There was a written contract in that case, so signed. The present question was, therefore, not in the case, but the question, there was whether the execution of such a contract, not duly authorized, might be ratified by the board without a formal meeting. It was affirmed that it might. So, in the case of Holloway v. School District, 62 Mich. 153 (28 N. W. 764), there was a written contract, and the court there held that a contract, valid on its face, actually carried out in full, and acquiesced in by all concerned, cannot be subsequently repudiated. The effect of these cases is to hold -that one contracting with the school district in writing, and whose contract is signed by the officers contemplated by the statute, may rely upon the appearance of authority, and assume, at least after his services have been received without murmur or complaint, that authority had been duly granted to execute the contract. The case of Jones v. School District, 110 Mich. 363 (68 N. W. 222), cited by counsel for plaintiff, does not involve a construction of section 4678 at all. That was a case in which all the officers of the district ratified a contract not required by the terms of the statute to be in writing, and the only question was whether the informal action of this hoard should be sustained. We are here dealing with a case where the plaintiff, presumed to know the law, must be held to know that the contract under which he is assuming to render service to the district is one prohibited by the statute. He is not misled as to the authority of those with whom he assumes to contract, but stands upon equal ground with the school district, and, although it may be a case of hardship, we are constrained to hold that the contract is one not enforceable, and that a verdict should have been directed for the defendant.

The judgment will be reversed, with costs, and a new trial ordered.

The other Justices concurred.


author: Long, J.

text:
    BAKER v. HALLECK’S ESTATE.
    1. Estates of Decedents — Claims—Limitations—Suspension of Statute.
    3 Comp. Laws, § 9737, providing that, in case of the death of one liable to an action before the same has become barred by the statute, the cause thereof may be proved as a claim against his estate at any time within two years after the granting of letters of administration thereon, is none the less applicable because of a delay of 13 years after decedent’s, death before applying for administration of his estate.
    2. Same — Evidence—Books of Account.
    Where, in a proceeding to enforce a promissory note against a decedent’s estate, the defense was a denial of its execution, it was not error to admit claimant’s books of account in evidence as a circumstance to show that the note was for the same amount as the books disclosed to be due, under instructions that they could be used for no other purpose.
    Error to Van Burén; Carr, J.
    Submitted June 24,^ 1901.
    Decided July 19, 1901.
    Charles T. Baker presented a claim against the estate of George T. Halleck, deceased, on a promissory note. The claim was disallowed in the probate court, and claimant appealed to the circuit, where he obtained a judgment. Defendant brings error.
    Affirmed.

      A. Lynn Free, for appellant.

      Benjamin F. Heckert, for appellee.
   Long, J.

Claimant filed his claim against said estate in the probate court. The claim is upon a note for $57.50. The estate contested it on the ground that the note was never signed by the deceased, and, if it was, it was barred by the statute of limitations. The probate court disallowed. the claim. The cause was heard in the circuit court on appeal before a jury, and verdict found against the estate. The defenses in the circuit court were the same as in the probate court. The execution of the note was denied under oath filed in the probate court.

The note bears date and purports to have been signed by deceased September 20, 1887, payable one day after date, with interest at 7 per cent, per annum. Halleck, the maker of the note, died September 25th, or five days after the date of the note. No payments appear to have been made upon it. No application was made for the appointment of an administrator until November 28, 1899, when the claimant here made the petition under which the appointment was made. Thus 12 years, 2 months, and 3 ■days elapsed from the time of decedent’s death to the time of the petition for administration. There were no other -debts against the estate. The deceased left two heirs at law. The estate consisted of two village lots of the value ■of about $300, and no personal property.

It is the contention of counsel for defendant that, as the statute of limitations (section 9728, 3 Comp. Laws) began to run before the death of the intestate, his death would mot suspend it, and therefore the note was barred. We think the right of the claimant to bring the action against the estate is governed by section 9737, 3 Comp. Laws, which reads as follows:

“ If any person entitled to bring any of the actions before mentioned in this chapter, or liable to any such actions, shall die before the expiration of the time herein limited, or within thirty days after the expiration of the said time, and if the cause of action does by law survive, the action may be commenced by or against the executor •or administrator of the deceased person, or the claim may be proved as a debt against the estate of the deceased person, as the case may be, at any time within two years •after granting letters testamentary or of administration, •and not afterwards, if barred by the provisions of this •chapter.”

It was held in Field v. Loveridge, 114 Mich. 227 (72 N. W. 160), that the statute of limitations, under this statute, would be suspended at the death of the intestate, and would not commence to run until after letters of administration were granted. See, also, First Nat. Bank v. Sherman’s Estate, 117 Mich. 602 (76 N. W. 97); MeIntire v. Conrad, 93 Mich. 532 (53 N. W. 829).

Some claim is made that the court below was in error in permitting claimant to put in evidence his books of account. They were allowed in evidence as a circumstance to show that the note was for the same amount as. the books showed to be due. We think there was no error in this, as the court charged the jury that that was. the only purpose for which the books could be used.

We need not discuss the question of the due execution of the note, as that question was fully and fairly submitted to the jury for their determination. We have examined all the claims made by the defendant, and find no error.. The case was fairly submitted.

The judgment must be affirmed.

The other Justices concurred.


author: Moore, J.

text:
    LEMON v. HAMPTON.
    Justices oe the Peace — Short Summons — Service—Jurisdiction.
    Under 1 Comp. Laws, § 718, requiring a justice’s short summons to be made returnable not less than two days from its. date, and to he served “at least two days before the time of appearance mentioned therein,” the issue and service on the. 7th of the month, of a summons returnable on the 10th, is-sufficient to confer jurisdiction, though one of the intervening days is Sunday; since, while Sunday is to be excluded in the computation, the appearance day should be included Everts v. Fish, 44 Mich. 515, disapproved.
    Error to Kalamazoo; Adams, J.
    Submitted June 24, 1901.
    Decided July 19, 1901.

      Assumpsit in justice’s court by Robert Lemon against Caleb Hampton. There was a judgment for plaintiff, and defendant removed the cause to the circuit by certiorari, where the judgment was reversed. Plaintiff brings error.
    Reversed.

      Frost & Jackson, for appellant.

      Jesse B. Cropsey, for appellee.
   Moore, J.

The sole question involved in this case is whether a summons issued from justice’s court against a nonresident on the 7th day of the month, and served upon the same day, and returnable on the 10th day of the month, one of the intervening days being Sunday, confers jurisdiction upon the justice to render a valid judgment. Counsel for plaintiff insist that it does, citing Chaddock v. Barry, 93 Mich. 542 (53 N. W. 785, 18 L. R. A. 337), and Crozier v. Allen, 117 Mich. 171 (75 N. W. 300); while counsel for defendant insists the precise question was passed upon in Everts v. Fisk, 44 Mich. 515 (7 N. W. 81), where it was held such a service of a short summons was void. See Sallee v. Ireland, 9 Mich. 154; In re Powers’ Appeal, 29 Mich. 504; Tiffany, Justice’s Guide (5th Ed.), 32. We think the case is ruled by Chaddock v. Barry and Crozier v. Allen, which, in effect, overrule the earlier cases.

Judgment reversed, and judgment in justice’s court affirmed.

The other Justices concurred.


text:
    DETROIT UNION RAILROAD DEPOT & STATION CO. v. FORT STREET UNION DEPOT CO.
    Lease — Construction—Reservation—Covenant.
    Complainant leased a portion of its station grounds to certain railroad companies which were desiring terminal facilities, an arrangement at the same time being made looking to the organization of a depot company to acquire additional territory and erect thereon a union station. The lease contained the following provision: “It is understood and agreed that the property above described is and shall be subject to a right of way across and over the same for a railroad, to be constructed in the most convenient form for a double track, and to be built so as to enable all parties lessees of said station grounds to reach any passenger station which may be built for use of said lessees; ” following which was a description of such right of way. A depot company was subsequently organized, which acquired land, erected a station building, and constructed a double-track railway leading thereto, the latter extending over complainant’s land along the line of the right of way described in the above-mentioned provision; and such railway and station were used in common by the lessee companies and others associated with them. Held, that such provision of the lease did not reserve to complainant the right of way described therein, but was a covenant between the parties to subject the premises leased to the use by all of complainant’s lessees of a right of way by which they might reach the proposed station; and that, so long as such covenant , was not broken, complainant could not complain of the use made of the premises.
    Appeal from Wayne; Donovan, J.
    Submitted January 8, 1901.
    Decided September 25, 1901.
    Bill by the Detroit Union Railroad Depot & Station Company against the Fort Street Union Depot Company, the Flint & Pere Marquette Railroad Company, the Detroit, Grand Rapids & Western Railroad Company, the Canadian Pacific Railway Company, and the Wabash Railroad Company, to obtain a construction of a lease. From a decree for defendants, complainant appeals.
    Affirmed.

      Fred A. Baker, for complainant.

      Benton Hanchett, for defendant Flint & Pere Marquette Railroad Co.

      Alfred Bussell, for defendant Wabash Railroad Co.

      F. A. Nims, for defendants Fort Street Union Depot' Co. and Detroit, Grand Rapids & Western Railroad Co.
   Long, J.

The complainant company was organized under the union-depot act of 1881 (2 Comp. Laws, § 6356 et seq.). Its station grounds bordered on the Detroit river, and extended from Twelfth street westerly nearly to Eighteenth street, and were bounded on the northerly side by River street (sometimes called Woodbridge street). October 20, 1881, complainant made a lease to the Wabash, St. Louis & Pacific Railway Company of a portion of its station grounds lying next to the river, describing the portion leased by metós and bounds, and reserving to itself out of the description within said metes and bounds grounds for the erection of an elevator, and for a wharf on the river, and for tracks leading to the elevator and to the wharf, which tracks were to be used in common by said lessee and other railroad companies. It also leased to said railway company the right to use in common with other railroad companies the right of way from Eighteenth street to Delray. The lease provided for the construction by complainant of a passenger depot at Twelfth street, with tracks leading thereto, to be used in common by said lessee with other railroad companies. A small passenger depot was built, as provided in the lease, at Twelfth street, and from 1881 to 1889 no other railroad company leased or used the complainant’s grounds.

In 1887, and prior thereto, the Flint & Pere Marquette Railroad Company and the Detroit, Lansing & Northern Railroad Company, by arrangement with the Michigan Central Railroad Company, made use of the depot facilities of the latter company at its Third-street depot, both for freight and passenger service. At that time also the Mint & Pere Marquette Railroad Company was seeking to secure an independent terminal in Detroit. In this state of affairs, the complainant, through James F. Joy, who was its president, sought to induce the Flint & Pere Marquette Railroad Company and the Detroit, Lansing & •Northern Railroad Company to lease from complainant the portion of its depot premises that had not been leased to the Wabash, St. Louis & Pacific Railway Company, together with the right to use in common with other companies the tracks leading to the elevator and to the wharf, and the unleased portion of the right of way running to Delray. Considerable correspondence was had between Mr. Joy, for and on behalf of complainant, and Mr. Mulliken, who was the general manager of the Detroit, Lansing & Northern Railroad Company, and Mr. Crapo, president of the Flint & Pere Marquette Railroad Company, in relation to the matter, and also concerning the construction of a union depot to be built at the corner of Third and Fort streets. This correspondence finally culminated in a contract drawn by Mr. Joy, and executed by the complainant and the Flint & Pere Marquette Railroad Company and the Detroit, Lansing & Northern Railroad Company January 3, 1889. An arrangement was also made for the incorporation of what is called the “Fort Street Union Depot Company,” and for the erection of a depot. This bill is filed to obtain a construction of the third clause of this agreement of January 3, 1889. This clause reads as follows:

“ It is understood and agreed by the parties hereto that this lease, as to the property described in the last preceding clause, is and shall be subject to a right of way across and over the same for a railroad, to be constructed in the most convenient form for a double track, and to be built so as to enable all parties lessees of said station grounds to reach any passenger station which may be built for use of said lessees; such right of way to commence at the westerly end of said grounds, and to curve northerly and easterly as soon as may be after the tracks enter the said grounds from the west, and running thence to Twelfth street, which said track shall be upon a line which may be designated by the engineers of the Flint & Pere Marquette Railroad Company and of the successors of the Wabash, St. Louis & Pacific Railway Company, consulting with and acting with the engineers of the Detroit, Lansing & Northern Railroad Company: Provided, that said double-track railroad, so far as it is constructed with embankment, shall be of the requisite width for a double-track road, and shall have perpendicular banks supported by walls; and, so far as the same is constructed as an elevated railroad, the ground under the same may be used by said parties of the second part and third part hereto for such use as may not interfere with the use of said track and right of way by all the parties interested therein.”

The complainant’s contention is that by this clause of the lease there was reserved to the complainant from the premises leased the right of way described therein, and that the complainant has a right to compensation for the use made of such right of way by defendants. The contention of defendants is that no right of way was reserved to complainant at all by said clause, but that said clause is a covenant between the lessor and the lessees to subject the premises leased to the use by railroad companies who should be lessees of the premises owned by complainant of a right of way by which such companies might reach the passenger depot contemplated to be built at Third street; and that complainant has no other right or interest under said clause than to enforce the observance of such covenant by the lessees and those claiming under such lessees.

The Fort Street Union Depot Company was organized on August 24th following the execution of the above contract. It filed its articles of incorporation, and during the years 1890, 1891, and 1892 acquired title to its station grounds, built a passenger station, and put down a double-track railway on the grounds so acquired by it. It also acquired a right of way to connect with the station grounds of the complainant. In addition to this, it extended said double-track railway over the station grounds of complainant on the right of way described in the clause above set forth of the contract of January 3, 1889; and on December 10, 1889, entered into a contract of leasing with the four railroad companies, to wit, the Wabash, Detroit, Lansing & Northern (called in the bill the Detroit, Grand Rapids & Western), Canadian Pacific, and the Flint & Pere Marquette, for the period of 990 years, granting to said four companies the right to use the said station and grounds and right of way to connect with complainant’s grounds mentioned in the contract of January 3, 1889. The fifth clause of the agreement between the Fort Street Union Depot Company and the four railroads provides:

“If application be made by other railroads for accommodations in said station, the lessor will promptly notify each of the lessees thereof, and enable them to be heard on such application, and it will not make any arrangements for such accommodations with other railroads without the assent of all the lessees, as at present it seems that the lessees herein named will occupy said station to its full limit.”

At the time of the execution of this contract, Mr. Joy was the treasurer of the Fort Street Union Depot Company. The whole scheme for the organization of the company originated with him, and was carried forward by him. He arranged all details, made all the plans, and drafted all contracts in relation to the matter. At the same time he was president of the complainant company, and the largest stockholder therein, owning $500,000 of its capital stock.

The correspondence above referred to . commenced in 1887, and finally culminated in the two contracts above mentioned. There is not a suggestion in this entire correspondence, down to the execution of the lease of January 3, 1889, indicating any purpose of reserving to the complainant any right of way or control over any right of way. It is evident that the lease of January 3d would not have been made without acquiring the passenger station, nor the passenger station have been arranged for without the making of the lease. The passenger station was to be erected for the use of the four railroads, the title thereto to be placed in a corporation to be formed by the parties to the preliminary agreement, consisting of the four railroad companies and Mr. Joy and his friends; the four companies representing four-fifths of the interest, and Mr. 4 Joy and his associates representing the other fifth. The companies were to pay for the use on the basis of their respective wheelage. It was finally arranged that the two companies, the Flint & Pere Marquette and the Detroit, Lansing & Northern, should pay for such rental as their proportion the sum of $30,000 per annum.

In order to raise the money necessary to construct the depot building, a mortgage was given by the Fort Street Union Depot Company on its property. After describing the property by lots and blocks, the mortgage recites:

“Also all its yards, tracks, structures, passenger and freight stations, railroads, and especially its railroad leaving station grounds at Sixth street, and thence southwesterly to River street, near Eighth, and thence along said River street to near Twelfth street, and thence southwesterly, across the lands of the Detroit Union Railroad Depot & Station Company, to the connection with the railroad owned by said Depot & Station Company, extending through,the suburbs of Detroit to and across railroads extending from Detroit to Toledo,” etc.

This is a distinct statement in the mortgage that the Fort Street Union Depot Company owned the railroad on that date, January 1, 1891, including the right of way in question.

Mr. Crapo was called as a witness, and testified that the third clause of the lease was not a matter of discussion between himself and Mr. Joy; that, when they got to the matter of fixing the lease, “Mr. Joy suggested that the Flint & Pere Marquette and Detroit, Lansing & Northern roads, unless there was some clause, might interfere with the getting of the Wabash up to Third street.”

We think the whole correspondence, supported by the evidence in the case, shows clearly that the provision in the lease for right of way was intended to provide means by which the defendant railroad companies should have access to the Fort Street Union Depot passenger station without other charge than the consideration stated in the lease, and that the Fort Street Union Depot Company was created to enable the railroad companies to have the depot facilities which they would acquire and enjoy by means of this right of way. We think counsel for "defendants are justified in claiming that it was intended that the lessees should have the right to provide and construct a railroad over such right of way, and that they could permit any other railroad companies, and the Fort Street Union Depot Company, to use such right of way, so long as the parties described in the lease as lessees of the complainant’s station grounds were undisturbed in their use of it. It is evident that the terms used in this clause do not import a right of way to the complainant to be used by it, or controlled by it, or to be in any way enjoyed by it by use by itself, or by charging for its use by others. The terms do import that the bomplainant has such an interest in the use of it by its own tenants that it may compel the execution of the agreement which subjects the right of way to their use. Provisions of like character, relating to the use which shall be made of premises conveyed by deed or lease, are common, and are usually made by a condition or covenant inserted in the deed or lease. The provision of the lease in question is not a reservation, but a covenant. The language of the lease is:

‘ ‘ It is understood and agreed by the parties hereto that this lease, as to the property described in the last preceding clause, is and shall be subject to a right of way across and over the same for a railroad, to be constructed in the most convenient form for a double track, and to be built' so as to enable all parties lessees of said station grounds to reach any passenger station which may be built for use of said lessees.”

The contention of counsel for complainant is that the provision is a reservation, and that a reservation cannot be made in favor of third parties. The proposition that a reservation cannot be made in favor of a third party may be true, but we need not enter upon a discussion of that •question here, as we are satisfied that the clause in controversy is not a reservation, but must be treated as a covenant. By covenant the same provision may be made for the use of property as may be provided for by a condition subsequent; but, if the provision is by covenant, the remedy of the grantor or lessor for breach of covenant is by an action at law for damages, or by suit in equity to compel the observance of the covenant. It is well stated by counsel that in each case it is for the court to determine from the terms of the instrument, and from the circumstances under which the instrument was made, and by the acts and conduct of the parties, what was the intent of the provision, what it was designed to provide for, and whether the provision is a condition subsequent or a covenant. The courts will favor the construction of the provision as a covenant, rather than as a condition, in order that the consequences of a forfeiture of the estate granted may be avoided. It is said in 6 Am. & Eng. Enc. Law (2d Ed.), pp. 500-503:

“As comprehended by this treatise, a condition is a qualification or restriction annexed to a deed or devise, by virtue of which an estate is made to vest, to be enlarged or defeated upon the happening or not happening of a particular event, or the performance or nonperformance of a particular act. * * * Words declaratory of the consideration for and the purpose of the conveyance, and the limitation of the use of the property, or which direct or prohibit the performance of a particular act, do not, of themselves, render an estate conditional. * * * In the construction of a particular provision, the intention of the grantor or devisor governs. * * * The same words may be employed to create a covenant as to create a condition, and, if there is any doubt regarding .the intention of the grantor or devisor, courts will incline towards the former construction, for conditions which tend to destroy estates are not favored, and are strictly construed. ‡ * Moreover, a condition is always the creation of a grantor or devisor; a covenant may be made by either a grantor or a grantee.”

In Smith v. Barrie, 56 Mich. 314 (22 N. W. 816, 56 Am. Rep. 391), it appears that a deed was made of lands' subject to a condition that, if the parties of the second part, their heirs or assigns, sold or kept for sale intoxicating liquors upon the premises, the estate granted should cease. It was said by this court:

“ It is perfectly lawful for parties to contract to abstain from the performance of acts proper and legal in themselves, when others with whom they contract may have an interest in their doing so, and in proper cases the contract may be made to assume the form of a condition. * * * Many cases of similar conditions are found in the books, and in none of them has enforcement, either by forfeiture of the estate or by injunction, been refused. The enforcement is subject to the rule that the law favors covenants, rather than conditions; and it inclines to construe the undertakings of parties strictly as against forfeiture.”

In Oampau v. Chene, 1 Mich. 400, a deed was made by John Baptiste Campau of land in which a provision was made to pay a debt, and to board, lodge, and clothe the grantor during his lifetime. Also in the deed the grantee promised and obligated himself to keep, board, and clothe decently, until she had reached the age of 18 years, Archange Campau. The suit was in equity, based upon these provisions. It was said by the court:

“The views we have expressed in regard to the covenants in the deed are illustrated and fully supported by the case of Pownal v. Taylor (decided in the Virginia court of appeals), 10 Leigh, 179 (34 Am. Dec. 725). The owner of a tract of land conveyed it to his nephew in fee, subject to the maintenance and support of the grantor and his sister. The deed contained a covenant by the grantee for such maintenance and support, and declared that the land was to be held therefor, into whose hands soever it might come. But the deed did not state that it was upon condition that such maintenance and support should be furnished, nor was there any clause providing for a re-entry by the grantor. Held, the provision for maintenance and support constituted merely a charge upon the estate, which might be enforced in equity; not a-condition, for breach of which the grantor could re-enter as of his former legal estate. In that as well as in this case there was a provision for a third person, and it was held that the third person (the sister) instantly acquired a beneficial interest, which she might have enforced by bill in equity. But, if the provision was a condition, then for ’ the breach the grantor might re-enter, defeat the estate, reinvest himself with his original title, and annihilate the vested interest which he had by his own solemn act conferred upon his sister. This cannot be, unless the grantor had expressly reserved the right to re-enter upon failure of the grantee to fulfill the purposes of the grant. These last remarks apply with full force to the provision for Archange in this deed.”

See, also, Martin v. Cook, 102 Mich. 267 (60 N. W. 679); Avery v. Railroad Co., 106 N. Y. 142 (12 N. E. 619)) Trustees of Columbia College v. Lynch, 70 N. Y. 440 (26 Am. Rep. 615); Parker v. Nightingale, 6 Allen, 341 (83 Am. Dec. 632); Schwoerer v. Market Ass’n, 99 Mass. 285.

We think the court below very properly dismissed complainant’s bill. That decree will be affirmed, with costs.

Montgomery, C. J., Moore and Grant, J'J., concurred. Hooker, J., did not sit.


text:
    LONGLEY, LOW & ALEXANDER v. AMAZON HOSIERY CO.
    Mortgages — Receivers—Assignments for Benefit of Creditors —Preferences.
    A corporation, heavily indebted, gave mortgages on substantially all of its property to certain creditors, as trustees for themselves and other named creditors. The trustees at o'nce filed a bill of foreclosure, and, by consent of the mortgagor, a receiver was appointed, with authority to continue the business. Soon thereafter the trustees organized a new corporation, which, by authority of the court, purchased from the receiver all the property of the old corporation. Held, that the transaction could not be regarded as a common-law assignment for the benefit of creditors, and therefore void for preferences, even though the mortgagor consented to the receivership proceedings at the time of executing the mortgages.
    Appeal from Muskegon; Russell, J.
    Submitted January 31, 1901.
    Decided September 25, 1901.
    Bill by Longley, Low & Alexander against the Amazon Hosiery Company, the Amazon Knitting Company, Charles H. Hackley, and Thomas Hume, to establish a right to share in the assets of an insolvent debtor. From a decree dismissing the bill, complainant appeals.
    Affirmed.

      Taggart, Denison & Wilson, for complainant.

      Smith, Nims, Hoyt & Erwin, for defendants.
   Montgomery, C. J.

On and prior to March 25, 1898, the Amazon Hosiery Company was engaged in the manufacturing business at Muskegon. It was a corporation organized under the laws of Illinois, but its plant was located, and its entire business carried on, at Muskegon, excepting that it maintained a business office in Chicago. On March 25th it was indebted to the defendants Hackley and Hume, directly and indirectly, — that is, on debts to them, and on debts to others upon which they were collaterally responsible, — in a very large amount, approximately $150,000. It was indebted to others in a large amount.

On the day above named — March 25,1898 — the Amazon Hosiery Company executed and delivered to the defendants Hackley and Hume, as trustees for themselves and others, certain real-estate and chattel mortgages. These mortgages, together with another conveyance which Hackley and Hume already held, covered all the property of the corporation, excepting some office furniture in Chicago, of no substantial value, and excepting a piece of vacant land near the factory, which was inadvertently omitted. They were given to secure the payment of the debts therein recited, which were the debts owing to the local banks and the debts owing to Hackley and Hume, or for which they were responsible. Debts amounting to upwards of $60,000 were not mentioned in, and were not secured by, the mortgages. ■

On the same day — March 25th — the defendants Hackley and Hume, as trustees, filed a bill in the circuit court for the county of Muskegon, in chancery, for the foreclosure of such mortgages. The Amazon Hosiery Company, which was the sole defendant, appeared on the same day by its solicitors, and by consent an order was made appointing George W. Powell,.the former manager of the ■company, and Thomas Munroe, as receivers, with general authority to continue the business, including the right to buy new materials. They did continue the business, and, to raise the necessary capital to buy new material and pay for labor, issued $30,000 in receivers’ certificates. Within a short time thereafter a new corporation was organized, which was called the Amazon Knitting Company, and is also one of the defendants in this case. .This corporation ' had a capital stock of $100,000, and the defendants Hackley and Hume were the sole. substantial stockholders. An-arrangement was made by which the new corporation should buy from the receivers all the property of the old corporation, and should assume and pay the secured debts, in so far as the receivers might leave them unpaid. This arrangement was carried out by the orders of the court, and the property sold to the new corporation, which gave a bond for the payment of certain of these secured debts. The real estate was leased to the new corporation for the remainder of the foreclosure period.

The complainant herein, which was an unsecured creditor to the amount of $4,500, filed this bill in the Muskegon circuit court in chancery. It was not a judgment creditor, nor was very much of its indebtedness past due. It therefore was not in a position to attack the transaction as having been invalid, as intended unlawfully to hinder and delay creditors. The bill in this case was filed upon the theory that the mortgages and receivership were in fact one transaction, and amounted to an assignment for the benefit of creditors under the statute, and for that reason should be enforced ratably for the benefit of all creditors; and it prayed the accounting against the defendants which would be necessary to accomplish such result. The case was heard upon proofs taken in open court, and the circuit judge dismissed the bill. Complainant brings this appeal.

There was evidence from which it may fairly be inferred that, at the time the mortgage was executed, an understanding had been reached that an application should be made for a receiver, and that the debtor company should consent to the appointment of a receiver. It is the contention of the complainant that, this being so, the execution of the mortgage, the appointment of the receiver, and the sale of the property by the receiver to Hackley and Hume should all be treated as one transaction, and that this transaction was, in effect, a common-law assignment, and invalid, as it created a preference in favor of certain of the creditors.

It is very clear that, under the previous holdings of this court, the mortgage, in and of itself, did not constitute a •common-law assignment, within the meaning of the statute. Warner v. Littlefield, 89 Mich. 329 (50 N. W. 721); National Bank of Oshkosh v. First Nat. Bank of Ironwood, 100 Mich. 485 (59 N. W. 231); Rollins v. Van Baalen, 56 Mich. 614 (23 N. W. 332); Sheldon v. Mann, 85 Mich. 265 (48 N. W. 573). The mortgage, while covering nearly all the debtor’s property, and preferring the defendants Hackley.and Hume, did not-cut off the right of creditors to levy upon so much of the assets of the Amazon Hosiery Company as had not, by the security, been appropriated to the benefit of the secured creditors. The debtor had the right to give, and Hackley •and Hume had the right to receive, security which would work a preference in their favor. The only limitation of this right is in case a common-law assignment is in fact made; and a mortgage is not such an assignment.

But it is insisted that the debtor, by assenting to the appointment of a receiver at the time of the execution of the mortgage, parted with all dominion over the property, •and that this brings the case within the rule of Kendall v. Bishop, 76 Mich. 634 (43 N. W. 645). In that case the instrument itself placed the control of the property in the hands of the trustee, with full power of sale and distribution. In the present case the trustee was given no such power, except as it should be conferred by the court. The stipulation consenting to an appointment of a receiver was not binding upon the court, and the court, if satisfied that the rights of unsecured creditors would suffer by this appointment, might well have declined to make it.

It is urged that the effect of the order for a receiver was to prevent a levy by unsecured creditors. It may be true that this was the case, except as leave was granted by the court,, or it may have been necessary for the unsecured creditors to intervene in that proceeding for the protection of their rights; but, whatever the remedy open to him, his right of redemption was not cut off, and the ■proceeds of the sale not necessary to satisfy the secured •creditors were subject to seizure for the debt. The appointment of the receiver placed the property in the custody of the receiver for the benefit of the party ultimately entitled. Union Bank of Chicago v. Kansas City Bank, 136 U. S. 223 (10 Sup. Ct. 1013). It is true-that, by the terms of the appointment, the receiver was-authorized to continue the business under the direction of the court, and to sell the manufactured product, and, if need be, under the direction of the court, to sell, transfer, and convey the whole or any part of the property. Yet it is too much to say that the title to all the property completely vested in the receiver. Except as to the manufactured product, the sale could only be made upon authority obtained from the court, and this authority was conferred in the foreclosure proceeding. Until such sale-was made, the equity of the debtor was subject to levy to* satisfy the claims of unsecured creditors, except for the-fact that it was temporarily in the custody of the court. It cannot be assumed that, if there was any substantial equity to be reached by process, the court would have withheld its consent to a levy. .

We cannot construe this transaction as a common-law assignment. The decree dismissing the bill is affirmed.

Hooker, Moore, and Grant, JJ., concurred. Long,, J., did not sit.


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    FRANKLIN NEEDLE CO. v. AMAZON HOSIERY CO.
    Fraudulent Conveyances — Mortgages—Bona Fide Security— Evidence.
    An insolvent corporation mortgaged substantially all of its property to secure certain bona fide indebtedness amounting nearly to the value of the property mortgaged. A receiver was at once appointed with the consent of the mortgagor, and the property sold, under order of the court, to the secured creditors. Early in its dealings with the mortgagees, the mortgagor had promised to protect them, so far as possible, in case it should get into difficulty, and, some six months prior to giving the mortgage, it authorized its manager to secure creditors at his discretion; but it did not appear that the mortgage was arranged for between the parties in advance of its execution, or that the mortgagees were aware of the insolvency of the mortgagor at the time of extending credit. Held, that the mortgage was not fraudulent as to unsecured creditors, though their claims accrued subsequent to those of the mortgagees.
    Appeal from Muskegon; Russell, J.
    Submitted January 31, 1901.
    Decided September 25, 1901.
    Creditors’ bill by the Franklin Needle Company, William D’Olier, and Henry D’Olier against the Amazon Hosiery Company, the Amazon Knitting Company, Charles H. Hackley, and Thomas Hume. From a decree dismissing the bill, complainants appeal.
    Affirmed.

      L. K. Soper (C. W. Sessions, of counsel), for complainants.

      Smith, Nims, Hoyt & Erwin, for defendants.
   Moore, J.

This case, in many of its features, is like the case of Longley, Low & Alexander v. Amazon Hosiery Co., ante, 194. A reference to that case will aid in understanding this one, and will make a long statement of facts unnecessary. The complainants in this case are among the unsecured creditors mentioned in the Longley Case.

One of the most important questions in the case is whether the mortgage given by the Amazon Hosiery Company to Hackley and Hume is simply a mortgage, or whether, under the facts and circumstances disclosed by the record, it is to be regarded, as claimed by the complainants, as a common-law assignment. That question is fully discussed by Chief Justice Montgomery in his opinion in the Longley Case, holding the transaction was not a common-law assignment; and it will not be necessary to repeat the discussion here.

The solicitor for complainants argues with great zeal that a secret agreement was made between the hosiery company and Hackley and Hume, by which they were to be secured for their deal; and that, after this agreement was made, the hosiery company obtained a large amount of credit for goods which were part of the assets of the corporation when the mortgage was given, and that this was a fraud upon the unsecured creditors, for which the courts can give a remedy, — citing Sweet v. Converse, 88 Mich. 1 (49 N. W. 899); Cutcheon v. Buchanan, 88 Mich. 594 (50 N. W. 756; McBryan v. Trowbridge, 125 Mich. 542 (84 N. W. 1084); and other cases. In view of this claim of counsel, it becomes necessary to inquire what are the facts. Upon the trial there were not many witnesses sworn, and the testimony is not complicated. In the garnishee proceedings Mr. Hume testified:

“The first transaction of Hackley and Hume with the Amazon Hosiery Company was a loan by us to them for $10,000 in the spring of 1896. Of this loan and its renewals we held $5,000 March 25, 1898, and the Lumberman’s National Bank held the other $5,000. In the fall of 1896, Mr. Powell asked further assistance, and we finally agreed to help them, but not to any definite extent nor for any definite time. "We told him we wanted him to protect us in case his company got into any difficulties. He promised that, if they ever did, he would protect us as far as he could. There was nothing said as to method or manner of protection. We then indorsed some paper for him.”

Upon the trial of this case he testified:

“ The last money that we furnished the Amazon Hosiery Company, or got for them, was in the latter part of January, 1898. I thought their financial condition was all right at that time, and had no reason to suppose that the company was insolvent. Neither Mr. Hackley nor I had any idea, at that time, of going into the business that was then being carried on by the company. The thought first occurred to us at about the time the Amazon Knitting Company was organized, and then we did it only because we couldn’t see any other way out. Nothing occurred, from the time the last indebtedness was incurred, in Jan-nary, 1898, up to March 23, 1898, to change my opinion as to the ability of the company to continue to pay its debts.”

He also testified that “ the subject of giving us security by mortgage had been talked about for two or three days before [referring to the time the mortgage was given]. That is the first I ever heard of it.”

Mr. Powell testified, “I know I was never asked for a dollar of security from Hackley and Hume or the Muskegon banks until the mortgages were made.”

This testimony is not contradicted. It is true that as early as in September, 1897, the board of directors of the company had authorized Mr. Powell, the manager, at such time as he thought it wise, to execute such papers as were necessary to secure such creditors as he thought it necessary to secure, and that he procured an attorney to draft a form of a mortgage that he might use for such purpose. The record is entirely barren of any testimony tending to show that when Hackley and Hume extended credit to the company, or induced others by their guaranty to extend credit, they knew, or had reason to suppose, the company was insolvent. There is nothing to indicate any want of good faith upon their part.

In the case of McBryan v. Trowbridge, supra, a mortgage was given upon about $27,000 worth of property to secure an indebtedness of $8,000 or $9,000, leaving in the hands of the debtor only about $1,400, while he had upwards of 100 creditors, with debts against him, unsecured, of upwards of $7,000. In Sweet v. Converse, supra, the allegation of the bill, which was demurred to, was that the result of the transaction was to pass to one creditor, for $76,000, property worth $448,000, while other creditors were unsecured, and no assets were left in the hands of the debtor. In this case there is no claim the indebtedness was'not bona fide, or that property considerably in excess of the amount of the debt was included in the mortgage. When the legal question of whether the conveyance which was made was a common-law assignment or not is decided in the negative, it decides the case. The decree is affirmed.

Montgomery, C. J., Hooker and Grant, JJ., concurred. Long, J., did not sit.


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    BOARD OF SUPERVISORS OF KENT COUNTY v. VERKERKE.
    Public Officers — County Treasurers — Interest on Public Funds.
    Moneys coming to the hands of a county treasurer by virtue of his office do not become his individual property, but remain public moneys; hence where he deposits them in a bank, and receives interest thereon, such interest belongs, not to the treasurer, but to the county; and this though the funds were received on behalf of the State, or other public corporation aside from the county. 1 Comp. Laws, §§ 1197-1200.

      Certiorari to Kent; Wolcott, J.
    Submitted March 5, 1901.
    Decided September 25, 1901.

      Mandamus by the board of supervisors of Kent county to compel John A. Verkerke to pay over certain moneys to his successor in the office of county treasurer. From an order denying the writ, relator brings certiorarit
    Reversed.

      Ward & Brown, for relator.

      Frank A. Rodgers, for respondent.
   Hooker, J.

The respondent held the office of county treasurer for the county of Kent from November 5, 1900, to January 1, 1901. During that time he deposited with a bank in Grand Rapids a sum of money, consisting of the following funds; Delinquent tax money belonging to the State, $2,296.54; liquor tax money belonging to the city of Grand Rapids, $2,096.66; delinquent school money belonging to the city of Grand Rapids, $5,000; primary school interest money belonging to the townships in Kent county, $20,000, — amounting in all to the sum of $29,393.-20. He received from the bank 2 per cent, interest on this sum, amounting to $55.44, and did not account for or pay the same to his successor. The board of supervisors instituted this proceeding to compel such payment, and the relator has brought certiorari; the writ of mandamus having been denied by the circuit court.

The respondent maintains that the title to public moneys coming to his hands on behalf of the State and city vested in him, and that the relation was that of debtor and creditor; that the law does not require him to deposit the funds, or contemplate the payment of interest; and that all that is required of him by law is that he account and pay over the amounts of taxes collected, to do which he is personally bound by law and by his bond. It is strenuously insisted that “ a public officer is not liable for interest or profits made by him from public funds, in the absence of a statute charging him therewith, when his liability for such funds is absolute.”

These funds came into the hands of the county treasurer by virtue of his office. He held them officially, and, whatever may have been his title to such funds under the law passed upon in the case of Perley v. County of Muskegon, 32 Mich. 132 (20 Am. Rep. 637), they are certainly public moneys under section 1197 of the Compiled Laws, which took effect three months after the Perley Case was heard in this court. Not only does section 1197 definitely establish the rule that such funds are public moneys, and therefore cannot belong to the custodian, but section 1198 requires him to keep them separate and apart from his own money, while section 1199 prohibits use by him for a private purpose under any pretext, and forbids the loan of such funds. Section 1200 provides that, where such funds are authorized to be deposited in a bank, the interest accruing shall belong to and constitute a general fund of the State, county, or other public or municipal corporation, as the case may be. Under this section, it is clear that, if such money was lawfully deposited, the interest does not belong to the respondent. His counsel seems to recognize this, but contends that the law did not authorize such deposit, and consequently that the county is not entitled to the interest. If this is true, the earnings fro'm any unlawful and prohibited use of the money could be held by the county treasurer, notwithstanding the fact that section 1200 contemplates that earnings of such funds shall belong to the public. We think public policy should preclude the treasurer from asserting his want of authority to make the deposit. But, aside from this, the general rule that gives the cestui que trust the earnings of a trust fund is a sufficient reason for holding that the municipality, and not the treasurer, is entitled to this interest.

It is urged that the county is not entitled to this interest in any event, and therefore the board of supervisors have no right to this writ. We think section 1200 settles that question by providing that it shall constitute a general fund for the municipality represented by the officer.

The order is reversed, and the writ will issue as prayed, with costs of both courts.

The other Justices concurred.


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    BROWN v. BURNEY.

    1. Mortgages — Statutory Foreclosure — Sufficiency of Notice.
    A notice of foreclosure of mortgage by advertisement, which incorrectly gives the date of the instrument as March 31st, ■ instead of March 21st, is not fatally defective, where it states the correct date of the record of the mortgage, and the volume and page where it is recorded, even though the. statute (3 Comp. Laws, § 11136) provides that the notice shall specify the date of the instrument.
    2. Same — Redemption.
    Complainant, a second mortgagee, entered into a contract with defendant, a prior mortgagee, who had bid in the premises on statutory foreclosure, whereby defendant was to sell to complainant after the expiration of the time for redemption. A deed was made and tendered, but, some question having arisen as to the validity of the foreclosure, complainant refused to accept it. Considerable correspondence followed, in the course of which complainant expressed a desire to pay the mortgage if defendant could not make title, though no tender was actually made. Defendant a'voided giving a decisive answer for some time, but finally set up an absolute title. Held, that complainant was entitled to redeem on payment of the mortgage debt and costs of foreclosure.
    3. Same — Pleading.
    A bill to set aside a statutory foreclosure may be considered as a bill to redeem, though it contains no specific prayer for that relief, and no express offer to pay the mortgage debt.
    Appeal from Charlevoix; Mayne, J.
    Submitted March 5, 1901.
    Decided September 25, 1901.
    Bill by Frank E. Brown and John Sehler against Augustus Burney and the Shiawassee County Bank to set aside a mortgage foreclosure and to foreclose a subsequent mortgage. From a decree for complainants, defendant bank appeals.
    Modified and affirmed.

      Charles JE. Ward, for complainants.

      Byron P. Hides, for appellant.

       Rehearing denied December 21, 1901.

   Long, J.

On March 21, 1892, Augustus Burney and wife executed a mortgage to the Michigan Mortgage Company to secure $300, and also one of $15. These mortgages were duly recorded on or about the date of their execution, and on November 9, 1892, the $300 mortgage was assigned to the Shiawassee County Bank. This assignment was also recorded. The $15 mortgage was assigned to one Edward L. Dooling. On the 9th of November, 1893, Burney and wife gave another mortgage on the same property to John Monroe, Jr., for $145.75. On July 19, 1894, Burney, who was then a widower, executed a mortgage for $1,000 on the same land to the complainants in this case. All the other mortgages were recorded prior to the recording of complainants’ mortgage. None of them has been paid.

Under the power of sale contained in its mortgage, the Shiawassee County Bank foreclosed by advertisement, and sold the premises on November 9, 1897. A deed was executed on said foreclosure by the sheriff, the redemption to expire on November 9, 1898. Five days before the redemption expired, the complainants entered into a contract with the Shiawassee County Bank, in which they agreed to buy the interest of the bank after the year’s redemption had elapsed. The contract provided that the conveyance to them should be by quitclaim deed, which was to be made on November 15, 1898. In accordance with the terms of this contract, the bank executed the deed, and caused it to be tendered to the complainants; but they refused to accept it, for the reason that, as they claimed, they had discovered that the foreclosure of the mortgage by advertisement by the bank was void and of no effect. On the 19th day of June, 1899, Burney conveyed all his right and interest in the land by quitclaim deed to the defendant bank.

The present proceeding is for the- foreclosure of the complainants’ mortgage. The court decreed:

First. That the complainants be allowed to redeem from the mortgage held by the Shiawassee Comity Bank by paying to said bank the face of said mortgage, with the accumulated interest to date of payment, but without any costs of said foreclosure by advertisement, and that thereupon, if complainants so desired, they might hold said mortgage as the first mortgage or incumbrance against said premises; that said bank be required, on payment of said mortgage, to assign and convey the same to the •complainants.

Second. That said defendants, or some of them, pay or cause to be paid to said complainants, or to their solicitor, the amount so found to be due them on their said mortgage, together with interest thereon at 7 per cent., together with the costs of suit, on or before September 1, 1900, and that in default thereof the said premises be sold.

The court found in the decree that the proceeding by advertisement to foreclose the Shiawassee County Bank mortgage was irregular and defective, and that it did not have the effect to cut off the right of redemption of Mr. Burney and those claiming under him.

We think the court was in error in holding that the notice of foreclosure was defective. The only defect claimed is that the notice did not give the correct date of the mortgage. The mortgage was dated March 31, 1893, and the notice gave the date as March 31, 1893. The statute authorizing the foreclosure by advertisement provides by subdivision 3 that the notice shall specify “the date of the mortgage, and when recorded.” 3 Comp. Laws, §' 11136. The notice contained the correct date of the recording of the mortgage, and the volume and page in which it was recorded. This error in setting out the date of the mortgage did not invalidate the notice. No one could be misled by it, as the mortgage was otherwise fully identified. Reading v. Waterman, 46 Mich. 107 (8 N. W. 691).

We think, however, the court was not in error in the decree entered, except that the Shiawassee County Bank should have been allowed its costs and expenses of foreclosure of its mortgage. ■ It is needless to set out the correspondence between the complainants and the bank in reference to the carrying out of the contract, or the procuring of the interest of the bank in the premises. It is-apparent from the correspondence that the complainants were desirous of protecting their mortgage interest by purchasing any interest which the bank had in the lands. They offered to pay the bank’s mortgage and interest, though n'o tender was actually made, and repeatedly asked the bank for a final reply as to what position it intended to take in regard to the validity of the foreclosure. Instead of giving a decided answer to this inquiry, the matter was permitted to drag along until the time for redemption expired, when the bank, having purchased Burney’s interest, then claimed to be the absolute owner of the whole land, and insisted that the complainants’ mortgage had been cut off by the foreclosure. The circumstances are such that the court might very properly have treated the complainants’ bill as one to redeem, and it will be so treated here.

The decree will be modified by giving the defendant bank costs of foreclosure of its mortgage and the costs of this court, and otherwise affirmed.

The other Justices concurred.