text:
      In re McLAUGHLIN’S ESTATE. HINCKLEY v. McLAUGHLIN.
    1. Trial — Conduct of Court — Remarks of Court.
    In an action against an estate on a promissory note, in excluding testimony of plaintiff, remarks by the court that he was inclined to think counsel was attempting to get around the rule excluding evidence equally within the knowledge of deceased, held, not erroneous as tending to discredit counsel in the eyes of the jury.
    2. Same — Evidence — Witnesses — Matters Equally Within Knowledoe of Deceased.
    It was not error for the court to exclude testimony admitted by counsel to be equally within the knowledge of deceased.
    3. Same — Instructions.
    Where the charge of the court, taken as a whole, fully protected the rights of plaintiff and fairly presented the controlling issues for determination by the jury, there was no reversible error.
    Error to Jackson; Parkinson, J.
    Submitted April 19, 1918.
    (Docket No. 24.)
    Decided June 3, 1918.
    Frederick P. Hinckley presented a claim against the estate of Miar McLaughlin, deceased, for an amount due on an alleged note. The claim was disallowed by the commissioners and claimant appealed to the circuit court. Judgment for defendant. Plaintiff brings error.
    Affirmed.

      Reece, Blackman & McGraw, for appellant.

      W. S. Cobb, for appellee.
   Brooke, J.

Reference is made to 182 Mich. 707, where this case will be found reported upon its first appearance in this court. After the opinion was written the case was reargued on the application of the plaintiff, appellant, and was reaffirmed, however, by a divided court. A second rehearing upon briefs was had and the case was reversed, three of the Justices being of opinion that there was sufficient evidence of consideration in the record to carry the case to the jury and four being of opinion that the paper itself imported consideration, and that the burden of showing want thereof rested upon the defendant estate. Another trial has been had at which considerable testimony was introduced on behalf of both parties. The question was submitted to the jury who returned a verdict in favor of the estate and judgment was entered thereon. The plaintiff again reviews the matter in this court and argues the case under three heads as follows:

(1) Conduct and statements of the court.

(2) Rulings on admission and rejection of evidence.

(3) The charge.

Under this head counsel for appellant under twelve several assignments of error claims that the court by his conduct and utterances plainly intimated to th'e jury a mental attitude adverse to: the position of the plaintiff and favorable to that of the defendant estate. In support of plaintiff’s position in this respect several cases are cited, among them the following: McDuff v. Journal Co., 84 Mich. 1; Raymond v. Woolfenden’s Estate, 99 Mich. 165; Williams v. City of West Bay City, 119 Mich. 395; In re Stockdale’s Estate, 157 Mich. 593. Counsel’s grievance in this respect is based upon isolated utterances of the learned circuit judge, for the most part taken from extended colloquies between the court and counsel for both parties had with reference to the admission or exclusion of testimony. We have read this entire record with great care and conclude without hesitation that when the alleged objectionable remarks are read in connection with all that was said by the court in the course of the trial there is no just ground for this claim of counsel which goes to the length of impugning the integrity of the court.

Counsel for plaintiff asked him while on the stand the following question:

“Q. You may state what interest you had — what you owned in the patents excepting the Hinckley and McDevitt patent on the date of this Exhibit A.
“Mr. Cobb: The same objection.
“The Court: I think I will overrule the objection.
“A. I owned a half interest in all patents.
“Q. Now, bearing in mind that the date of Exhibit A is April 12, 1902, you may state what interest you had or owned in any of these patents or inventions during the remainder of the year 1902.”

Objection was made to the question asked above and a very extended argument between the court and counsel followed. The objection was finally sustained, the court saying in part:

“Now, then, while in form you are not asking for what occurred between him and McLaughlin, you are asking him for a piece of evidence which as a matter of fact must have been equally within the knowledge of Dr. McLaughlin. Death has sealed the lips of Dr. McLaughlin, and the law says the other party to the transaction must have his lips sealed, that they must be placed.upon an equality. I am inclined to think you are attempting to get around the statutory rule made for the protection of a man after he has passed on into the other life. I shall sustain the objection to this question.”

The correctness of the ruling is not seriously questioned by counsel for appellant, but it is urged that the remarks of the court tended to discredit him in the eyes of the jury. A reading of the entire colloquy convinces us that neither its purpose nor effect was as claimed by counsel for appellant. The court closed the matter by saying: .

“I am not assuming to state that any disputed matter in this case is true one way or the other, but in response to the question of Mr. Badgley I merely sought to illustrate what the other side might claim and probably would argue to you. I am expressing no opinion about it or the force of any such claim when they are made because you are the sole judges of the facts and I have nothing to do with the facts at all.”

Error is assigned upon the refusal of the court to permit plaintiff while on the stand to give testimony touching the consideration in the instrument sued upon and explaining the receipt introduced by the defendant estate. An extended offer of this evidence was made by counsel for plaintiff. At the end of said offer the following occurred:

“The Court: You offer to make that by Mr. Hinckley?
“Mr. Lawler: I am asking to prove it by Mr. Hinckley, and for this reason, because by the introduction of these documents which are nothing more or less than admissions over the signature of Mr. Hinckley, and I offer to prove it by Mr. Hinckley, he being the only witness who can prove it, and second, because by the introduction of these admissions they have waived the rule.
“The Court: All that you expect to prove must have been known to Dr. McLaughlin.
“Mr. Lawler: That’s all very true, but I submit in this case, in view of their introduction of these documents they have waived the rule.
“The Court: I feel very confident you are not entitled to it. If you can show me by authority that you are, I will yield to the authority, of course.”

We are of opinion that counsel having admitted that the testimony about to be elicited from plaintiff was equally within the knowledge of the deceased, the action of the court was not erroneous.

The. first 18 assignments of error are based upon alleged erroneous instructions to the jury. In order to judge of the propriety of all that was said by the court below in instructing the jury it is necessary to consider the situation presented at the close of the proofs. The instrument upon which plaintiff's claim is predicated, itself, bears intrinsic evidence which at once challenges attention even though it does not arouse suspicion as to its genuineness. It purports to have been made by a man of some considerable property, of business experience and education. At the time of its date the alleged maker was somewhat advanced in years and was partially blind. The paper itself which was typewritten is illy spelled and of doubtful significance. The signature of the alleged maker is placed at a distance (claimed by counsel for appellee to be very unusual) below the printed matter. If, as was held by a majority of this, court, the instrument itself imports consideration, that consideration is the undivided one-half interest in the Automatic Coaster Brake Company and all patents pertaining to coaster brakes, which interest up to that time belonged to the plaintiff. By an instrument introduced in evidence by the defendant it appears that on the 15th day of April, 1902, three days after the date of the instrument in suit, Miar McLaughlin and Frederick P. Hinckley entered into a contract with one Forrest Keaton by the terms of which McLaughlin and Hinckley agreed to operate the factory and produce coaster brakes and Keaton agreed to sell the same. The profits arising from said operation to be equally divided among the three parties. The first recitation in said contract is as follows:

’“Whereas, said McLaughlin and Hinckley are the owners of certain letters patent covering a certain in- . vention, and of a certain invention known as a bicycle coaster and brake, and are the owners of a large amount of machinery and tools purchased by them for use in the manufacture of said coaster and brake, and have on hand at the present time certain parts of said coaster brake and certain material purchased for use in the manufacture of the same.”

Inasmuch as plaintiff claims to have sold his interest to Miar McLaughlin three days before the execution of this instrument it is rather significant that in said instrument he should describe himself as the part owner with McLaughlin of the letters patent and the machinery and tools. By another instrument bearing date August 9, 1902, Miar McLaughlin and plaintiff Hinckley entered into an option contract with said Keaton by the terms of which they agreed to sell:

“All property used by us in connection with the manufacture and sale of coaster brake hubs including hubs in whole or part and stock on hand together with letters patent Serial No. 59,635 granted Feb. 19th, 1902, and all patentable features pertaining to this brake up to date, and with all title and interest (which is to be unincumbered and free from debt) in and to said property with the exception of hubs completed before Sept. 1st, 1902, above mentioned and including the good will of existing business upon payment to us of fifteen thousand ($15,000) dollars at any time on or before the 15th day of September, 1902.”

A further agreement was made between the same parties on the 18th day of August, 1902, which follows:

“This agreement made this 18th day of August, 1902, by and between Miar McLaughlin and Fred P. Hinckley of Jackson, Mich., owners of all interests in the Automatic Coaster Brake Company of same place, as parties of the first part, and F. M. Keaton of Chicago, 111., as party of the second part, do hereby agree as follows:
“Witnesseth, that whereas the said parties of the second part, now holds an option on said property belonging to parties of the first part, to buy said property. Now then parties of the first part do hereby agree that they shall pay to party of the second part one-third (1-3) of all money or value received over and above Twelve Thousands ($12,000) Dollars for said property less $100 to be paid to said Dr. Miar McLaughlin.
“In witness whereof the parties hereto have signed their names and affixed their seals the day and date first above mentioned.
“Miar McLaughlin,
“F. P. Hinckley,
“(True Copy), F. M. Keaton."

On the 15th day of September, 1902, an agreement was entered into between the same parties in which it is recited:

“Whereas parties of the first part own and control a certain invention known as a bicycle coaster and brake, which said invention is protected by United States government letters patent No. 59,635, granted February 19th, 1902, and whereas said McLaughlin and Hinckley are owners either jointly or separately of certain machinery and equipment used in the manufacture and sale of said invention."

All these contracts were entered into after the date of the paper in question and three of them several months thereafter. Approximately four years later, upon April 24, 1906, the plaintiff executed the following receipt:

“Jackson, Mich., April 24, 1906.
“Received of Dr. Miar McLaughlin the sum of Fourteen Hundred and One Dollars and Fifty Cents in full of all demands and dues of every kind and nature to date. F. P. HINCKLEY."

It is also in evidence that on May 26, 1904, at a time when there was $600 interest due upon the paper in question, plaintiff gave a mortgage on his property for $500 with interest at six per cent. The court, as he was bound to do under bur former determination, charged the jury that the instrument on its face imported consideration and that they should first determine whether the Doctor ever made and delivered the so-called note, weighing all the evidence bearing upon the question. With reference to the receipt he charged the jury that it was—

“not conclusive of payment of the note in question, but that it is open to explanation; that is not binding upon the claimant, Hinckley, if you shall find it was executed as a result of a mistake, or was procured by fraud, or if you shall find that it was not intended as a settlement in full of all claims between the claimant, Hinckley, and Miar McLaughlin, deceased, including the note in question, marked Exhibit ‘A.’

He further charged:

“But where any question is disputed, and there is testimony on one side and testimony on the other, it is then the function of the jury to decide that dispute.
“The judgment of the jury must be an independent one, based on the law and evidence in the case and not in any way upon any notion or inference or supposition as to what the opinion of the court might be in reference to the merits of the case, or whether the court has any opinion. I have not intended to say anything which might be in any way construed, interpreted or inferred as any opinion or notion of mine as to the matters here in dispute. * * *
“Now, gentlemen, you should look to all the evidence and all the facts and all the circumstances surrounding the dealings of these parties, one with the other, and their relations one to the other, and the arguments of counsel on both sides of the controversy, and determine from the evidence in the case what the truth is as to the claims of the parties herein.”

Reading the entire charge which was a lengthy one, we are well satisfied that the rights of the plaintiff were fully protected and that the controlling issues were fairly presented to the jury for determination. We find no reversible error.

Judgment affirmed.

Ostrander, C. J., and Bird, Moore, Steere, Fellows, and Stone, JJ., concurred. Kuhn, J., did not sit.


source: Caselaw Access Project

author: Brooke, J.

license: Public Domain

text:
    O’BRIEN v. MICHIGAN BONDING & SURETY CO.
    Intoxicating Liquors — Civil-Damage Act — Trial — Evidence — Sueeiciency — Directed Verdict.
    In an action for damages under the civil-damage act, evidence examined, and held,, insufficient to present a question for the jury, and that defendant’s motion for a directed verdict should have been granted.
    Error to Houghton; O’Brien, J.
    Submitted April 5, 1918.
    (Docket No. 39.)
    Decided June 3, 1918.
    Case by Katherine O’Brien against the Michigan Bonding & Surety Company and another under the civil-damage act for an illegal sale of liquor. Judgment for plaintiff. Defendants bring error.
    Reversed.

      A. F. Bunting and Galbraith & McCormack, for appellants.

      MacDonald & Kerr, for appellee.
   Brooke, J.

Plaintiff recovered a judgment of $2,-000 against the defendants as damages growing out of an alleged illegal sale of liquor to one Lancour. In her declaration it is averred that the defendant Nelson sold intoxicating liquor to said Lancour after he was intoxicated, and that said liquor so unlawfully sold caused and contributed to the intoxication of said Lancour, who, while so intoxicated, made an assault upon one James O’Brien, a son of the plaintiff, which resulted in the death of said O’Brien. There are some 31 assignments of error which it will not be necessary to consider seriatim. At the close of the plaintiff’s case, and again when the testimony was closed, defendant’s counsel moved for a directed verdict upon the ground that no evidence had been introduced tending to prove that Lancour was intoxicated at the time the assault was made, or that defendant Nelson had sold him intoxicating liquors after he was intoxicated, in contravention of the statute.

We have read this record with care and have no hesitation in saying that this motion should have been granted upon the evidence as it stood at the close of the plaintiffs case. No witness for the plaintiff swore that Lancour was intoxicated at any time on the day in question, and no witness testified that any sale of intoxicating liquors was made by defendant Nelson or his agent to Lancour after he was intoxicated. There is evidence introduced on behalf of plaintiff that during the day in question Lancour was seen to drink one or two glasses of beer. It is asserted by counsel for plaintiff that the witness Merrill testified that Lancour drank enough in the afternoon to become intoxicated. Merrill testified:

“I couldn’t say just how much he did drink. He had a glass of beer occasionally, but I didn’t see that he was a drinking man. I know he wasn’t. * *
I saw him take some drinks.”

On cross-examination he said:

“I seen him take one or two glasses of beer that I can recollect, and further than that I have no recollection. * * * During the time I knew Lancour I had never seen him under the influence of liquor.”

The witness Sheppi testified that he had a few drinks; that they were all drinking together, Lancour with the rest. The witness Davis testified that he saw Lancour take one glass of beer. The witness Smith testified that he could not say that Lancour took a drink; could not swear to that. On cross-examination he testified that he had never seen Lancour drunk and had never seen him take more than one or two glasses of beer, and that at no time during the day did Lancour show any evidence of being drunk. The witness Davis, being recalled, testified that he saw no evidence of intoxication in Lancour. This is all the evidence contained in the record, either as to the intoxication of Lancour or as to the fact that intoxicating liquor was sold to him by defendant Nelson or his agent, after such intoxication.

We are of opinion that under this testimony it was improper for the court to submit the controlling questions to the jury.

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

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


text:
    DUNN v. PAPENFUS.
    1. Taxation — Redemption—Description—Notice—Sufficiency.
    In a notice by the purchaser of State tax titles to the owner of the land to redeem, the description of land as: “State of Michigan, County of Crawford, E2 of SW4; section 30, town 28 N, range 1 W,” was sufficient.
    2. Same — Sheriff’s Fees — Excessive Fees — Notice—Validity.
    The notice to redeem was not void because the fees charged in the attached certificate of service by the sheriff were excessive, since the notice itself provided for reconveyance upon payment of certain specified sums, and contained the legal method for the exact determination of the sheriff’s fees.
    3. Real Property — Deeds—Timber Rights — Interest in Lands.
    Standing timber, reserved in a conveyance, constitutes an interest in land.

      4. Taxation — Redemption—Notice, Persons Entitled to.
    Under section 4138, 1 Comp. Laws 1915, providing that notice to redeem shall be served upon the person or persons appearing in the regular chain of title, “or of any interest therein,” the notice must be served upon the owners of reserved timber rights in the lands involved.
    5. Same — Laches of Owner — Notice—Sufficiency.
    Where a tax title purchaser relies upon the notice required by the statute (section 4138, 1 Comp. Laws 1915), he must show a substantial compliance therewith, regardless of the laches of the original owner in waiting seven years after service of notice upon him before questioning its validity.
    Appeal from Crawford; Sharpe, J.
    Submitted April 2, 1918.
    (Docket No. 10.)
    Decided June 3, 1918.
    Bill by Robert W. Dunn against Robert Papenfus to redeem from the sale of land delinquent for taxes. From a decree dismissing the bill, plaintiff appeals.
    Reversed, and decree entered for plaintiff.

      Dayton W. Closser, for plaintiff.
    O. Palmer (George L. Alexander, of counsel), for defendant.
    Bill filed for permission to redeem, under the provision of Act No. 229, Pub. Acts 1897, and amendments thereto (1 Comp. Laws 1915, § 4138 et seq.), from tax titles. On March 2, 1892, Pack, Woods & Co. by deed conveyed the property in question to one Ida Farman. The deed contained the following reservations:
    “Excepting and reserving all of the pine timber on said land and the right of way to take it off and the right of way for log roads and railroads and the right to use the banks and channels of all streams on said land for the driving of logs and the right to make all improvements for the purposes and the right to dam and flood all such streams.”

      Ida Farman deeded the same lands to plaintiff which deed contained a similar reservation as follows:
    “Excepting and reserving the pine and hemlock timber on said land and the right of way to take it off and the right to use the banks and channels of all streams on said land for the handling and driving and running logs and the right to make all improvements necessary for these purposes and the right to dam and flood such streams.”
    On June 25,1907, one Alonzo Bessie purchased from the State tax titles upon said lands for the years 1892-1895 and 1,897-1902 and paid delinquent taxes thereon for the years 1903-1906. On November 23, 1908, said Bessie conveyed said lands by warranty deed to the defendant. In the meantime and on July 27, 1907, Bessie had1 caused to be served upon plaintiff the regular form of tax notice. Two questions only are raised with reference to the notice. The first is that the land was improperly described. The description was as follows:
    “State of Michigan. County of Crawford. E2 of SW4; section 30, town 28 N, range 1 W.”
    It appears that the service of the notice was made by registered mail. To the certificate of service signed by the sheriff he appended the following:
    “My fees, a dollar and ten cents.”
    The contention is that this charge is excessive under the statute. It is further the claim of plaintiff that the failure of defendant’s grantor to serve said notice on either Pack, Woods & Co. or Ida Farman, owners of the specified reserved rights in the timber, vitiates the entire proceedings and entitles him to redeem. Defendant introduced testimony tending to show that about the year 1890 or 1891 Pack, Woods & Co. lumbered the land in question and removed therefrom all the merchantable pine; that they left a very few black Norway pine trees standing less than twelve inches in diameter, at that time unmerchantable and valueless. Defendant gave testimony to the effect that when he went into possession in 1908, 27 of such trees were standing and that 15 are still growing, the others having blown down or been cut down by defendant. From those cut defendant manufactured five or six hundred feet of lumber. With the exception of one standing tree none is now over 12 inches in diameter. It is clear from the evidence that in 1907, when the notice was served the pine standing on the property in question was of very little value and it was undisputed that there was no hemlock at any time. Plaintiff appeals from a decree dismissing his bill.
   Brooke, J.

(after stating the facts). We agree with the conclusion of the circuit judge that the description was sufficient under the authority of Auditor General v. Sparrow, 116 Mich. 574.

With reference to the alleged excessive fees charged by the sheriff, while this question was not passed upon by the circuit judge, we are of opinion that plaintiff’s contention is untenable. The notice itself provides that a reconveyance may be secured upon payment of certain specified sums—

“and the fees of the sheriff for the service or cost of publication of this notice, to be computed as upon personal service of a declaration as commencement of suit.”

Assuming that the amount charged by the sheriff was excessive, which we do not determine, the plaintiff was not injured thereby because he was advised in the notice itself of the legal method for the exact determination of the sheriff’s fees.

A more serious proposition is presented by the last point raised. We have held that standing timber constitutes an interest in the land. Wait v. Baldwin, 60 Mich. 622. The statute (section 4138, 1 Comp. Laws 1915) provides that service must be made:

“Upon the person or persons appearing by the records in the office of the register of deeds of said county to be the last grantee or grantees in the regular chain of title of such lands, or of any interest therein.”

In Hansen v. Hall, 167 Mich. 7, it was held that the owner of a reservation of mineral rights was entitled to notice and it was there said:

“Until this notice is duly served upon each part owner and the statutory proofs thereof is made and filed, the right to redemption remains to all,” citing White v. Shaw, 150 Mich. 270, and Dolph v. Norton, 158 Mich. 417.

See, also, G. F. Sanborn Co. v. Richter, 176 Mich. 562.

In the case at bar it is conceded that there is standing pine upon the land in question. True, under the testimony its value is small, and at the time plaintiff obtained his conveyance it was not merchantable in character. These facts, however, should not, in our opinion, be permitted to disturb the principle involved.

The tax title purchaser may readily satisfy himself from an inspection of the records who the person or persons are who are the last grantees of such lands or of any interest therein. According to* the statute the notice must be served upon all such. Concededly this was not done in the case at bar.

Counsel for appellee urges that in any event the decree of the circuit court should be affirmed upon the ground that plaintiff, in waiting over seven years after the service of notice upon him, is now estopped by his laches from questioning the validity of said notice, and cites, in support of that contention, Peters v. Canfield, 74 Mich. 498. The matter in issue there was the enforcement of a land contract. The point here involved is whether appellee has complied with section 140 of the tax law (1 Comp. Laws 1915, § 4138). In the case of G. F. Sanborn Co. v. Alston, 153 Mich. 456, this court said:

“He who relies upon the notices required by the statute must show a substantial compliance therewith, regardless of any fault or laches of the original owner.”

The decree of the court below is reversed, and a decree will be entered in this court allowing plaintiff to redeem upon payment of the statutory sums together with such sums with interest thereon as have been paid as taxes by defendant since the purchase from the State. Plaintiff will recover costs.

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


text:
    MALONE v. DETROIT UNITED RAILWAY.
    1. Master and Servant — Workmen’s Compensation Act — Personal Injuries — “Out of” Employment.
    To entitle a claimant to compensation under the workmen’s compensation law, it must be shown that the causative danger was peculiar to the work, and not common to the neighborhood; that it was incidental to the character of the business, and not independent of the relation of master and servant; that it need not have been foreseen or expected, but after the event it must appear to have had its origin in a risk connected with the employment, and to have flowed from that source as a rational consequence.
    2. Same.
    Testimony by claimant, an employee of a street railway company, a common laborer, a member of the night gang engaged in its track laying department, that, while sitting on the curb during a temporary delay, waiting for the work to begin again, he was injured by a passing delivery wagon striking the boom of a concrete breaker, throwing it over so that he “got caught,” breaking his leg, held, sufficient to support a finding that the injury arose out of his employment.

      See notes in L. R. A. 1916A, 23; L. R. A. 1917D, 80.

      3. Same — Finding of Fact — Conclusiveness.
    Although claimant’s testimony was unsupported, and was contradicted by three disinterested witnesses, the industrial accident board, under the statute, are the final arbiters of questions of fact, and a finding by them in accordance with claimant’s contention is sufficient to support an award.
    Certiorari to Industrial Accident Board.
    Submitted April 24, 1918.
    (Docket No. 112.)
    Decided June 3, 1918.
    Mike Malone presented his claim for compensation against the Detroit United Railway for injuries received in defendant’s employ. From an order awarding compensation, defendant brings certiorari.
    Affirmed.

      Corliss, Leete & Moody (Thomas T. Leete, Jr., of counsel), for appellant.

      Paul P. Colombo (John F. Kennedy, of counsel), for appellee.
    Certiorari to the industrial accident board. Claimant, a common laborer 34 years of age, was an employee of the respondent, the Detroit United Railway, in its track laying department. At the time of the injury respondent was engaged in preparing the way for a new track on Milwaukee ave. east, in the city of Detroit. The street being paved, respondent employed a heavy machine known as a concrete crusher with which to break up the concrete under the pavement. This machine moved forward upon a temporary track. Having gone forward a short distance, the laborers, of whom claimant was one, would pick up the rails in the rear of the machine and place them in front of it so that the machine could again go forward. Claimant was a member of the night gang and reported for duty at 6 o’clock in the evening. He worked about half an hour, at which time the track in front of the machine was prepared for a forward movement. The operator of the machine did not appear, however, and claimant and his associates walked, stood, or sat about in the vicinity until nearly 8:30 in the evening. At about that time two of the companions of claimant left him to get some tobacco at a nearby store. While they were absent claimant either sat down upon the curb immediately opposite the concrete breaker, which was in the middle of the street, or lay down upon the space between the curb and the sidewalk, which was about three feet wide. Claimant testified that while he was sitting upon the curb, smoking, a delivery wagon approached; that he shouted three times to the driver to stop but that his warning was disregarded; that in coming on the wagon bumped against the boom of the concrete breaker and towards him; that he “lifted up one leg and the other one naturally got caught.”
    Plaintiff’s version of the accident was flatly contradicted by three witnesses, two of whom were sitting upon a porch about 20 feet or 30 feet distant from the scene of the accident. They testified that claimant was stretched at full length upon his' face on the ground between the curb and the sidewalk, apparently asleep and that he gave no warning to the approaching driver and made no sound until after his injury. The driver of the wagon was sworn and corroborated this testimony as to the warning. As a result of the accident claimant suffered a Pott’s fracture of the left leg.

      A committee on arbitration awarded compensation, which award was affirmed by the full board. The decision of the board is reviewed in this court upon one point only, viz.: The injury sustained by claimant did not arise out of and in the course of his employment.
   Brooke, J.

(after stating the facts). We have held, Tarpper v. Weston-Mott Co,, 200 Mich. 275, that to entitle a claimant to compensation for an injury arising “out of” his employment it must be shown that:

“The causative danger must be peculiar to the work, and not common to the neighborhood. It must be incidental to the character of the business, and not independent of the relation of master and servant. It need not have been foreseen or expected, but after the event it must appear to have had its origin in a risk connected with the employment, and to have flowed from that source as a rational consequence.”

Applying this rule to the facts as testified to by claimant, it is the conclusion of my Brethren (with which I with much difficulty agree) that it can be said that the claimant’s injury arose “out of” his employment.

Disposing of the question of fact, the board said:

“The applicant, it seems, was sitting on the curb and thought that the wagon could drive through between him and the machine without striking him. Possibly he ought to have gotten up and gotten out of the way. However, he was there on duty, and was only sitting still at the time owing to the exigencies of the work. He had a right to sit still until some other operative moved the machine so he could work. He had not gone away from the point of his labor. The board does not think he was asleep, lying with his feet in the street.” '

Counsel for appellant asserts that this finding is not a finding of fact concluding the question, but even if true does not warrant a recovery by claimant under the circumstances. The finding, if warranted, was certainly sufficient to support the award, and, while three disinterested witnesses contradict the claimant, and his evidence was unsupported by any other testimony in the record, we cannot disturb the award because the great weight of the evidence is against the finding of fact upon which it is based. Argument upon this phase of a case 'must always be addressed to the board themselves, who under the statute are made final arbiters thereof. Some recent cases involving the question here involved follow: Purdy v. City of Sault Ste. Marie, 188 Mich. 573; Papinaw v. Railway Co., 189 Mich. 441; Kunze v. Detroit Shade Tree Co., 192 Mich. 435; Haller v. City of Lansing, 195 Mich. 753; and Porritt v. Railway, 199 Mich. 200.

The award is affirmed.

Ostrander, C. J., and Moore, Steere, Fellows, Stone, and Kuhn, JJ., concurred. Bird, J., did not sit.


text:
    HORNING v. LOUIS PETERS & CO.
    1. Corporations — Stock and Stockholders — Action by Stockholder — Trustee in Bankruptcy.
    Where a contract was made primarily for the benefit of a corporation, and only indirectly for the benefit of the stockholders, before a stockholder may prosecute a claim based upon its breach, a demand must first be made upon the trustee in bankruptcy to commence suit.
    2. Same — Contracts—Reorganization—Intent.
    Where certain creditors of a corporation agreed to accept preferred stock for a part of their claims and give time on the balance, assenting to a plan for reorganization and agreeing to furnish “moneys necessarily required for the operation and conduct of the business,” held, to be their intention to limit their liability to the amount of preferred stock proposed to be taken, and to the extension of the time granted the corporation upon the balance of their several claims.
    3. Same — Contracts—Breach.
    Failure to furnish additional capital for expansion of the business of the corporation did not amount to a breach of the contract, in view of the recital in the plan of reorganization that it was not the purpose to extend the business; there being no evidence of any demand for additional capital by the board of directors, nor fraud or bad faith on the part of the board.
    Error to Wayne; Codd, J.
    Submitted April 18, 1918.
    (Docket No. 7.)
    Decided June 3, 1918.
    Case by Emma C. Horning against Louis Peters & Company and others for breach of an alleged trust agreement. Judgment for defendants on a directed verdict. Plaintiff brings error.
    Affirmed.

      Moloney & Mendelsohn, for appellant.

      Lyle G. Younglove and Millis, Griffin, Seely & Streeter, for appellees.
    In this action plaintiff seeks to recover from defendants the sum of $9,500. Her alleged right of action grows out of a very complicated state of facts which may be briefly stated as follows:
    In the year 1900 or 1901, the corporation of Gustav A. Moebs & Co. was formed with a capital stock of $75,000, all of which stock was and continued to be the property of Gustav A. Moebs. The business of the corporation was the manufacture and sale of cigars, and it continued to operate successfully until the panic of 1907, at which time through speculation in tobacco it was caught with some $300,000 worth on hand. The price of tobacco decreased and the company was obliged to and did thereafter pay heavy carrying charges upon the same; these charges at times amounting to as much as $20,000 per year. Affairs continued to grow worse until the summer of 1910, when it became evident that something must be done to prevent the liquidation of the corporation. On the 19th day of August, 1910, Gustav A. Moebs entered into a contract with the corporation in which it is recited that the corporation “has a large amount of outstanding debts which it has not an amount of liquid assets to satisfy”; that certain creditors of the corporation “have heretofore agreed to postpone the time of payment of their respective claims.” Moebs then transfers and assigns to the corporation life insurance policies upon his life in the aggregate sum of $100,000. The agreement recites:
    “All of which said policies are payable to the estate of said first party, and does hereby direct that the cash surrender value of said policies or in the event of death of said first party, the face of said first policies shall be paid to the said second party, on condition nevertheless, that said second party shall use the cash surrender value of said policies, or in the event of the death of said first party, the face of the policies, in paying the indebtedness of the said second party to such of its creditors as have heretofore agreed or shall have hereafter agreed to postpone the time of payment of their respective claims upon terms satisfactory to said second party, and shall use the same only after all the other assets of said second party have been exhausted and applied in payment of such indebtedness and only to the extent necessary to satisfy such indebtedness; and all policies not so used and the balance of any policy or policies, if any shall remain, shall be paid to said first party, or, in the event of his death, to his estate.”
    The contract further provides for the assignment by Moebs to the corporation of all the shares of stock of the Cadillac Cigar Co. as security for the debt owed by the Cadillac Cigar Co. to the corporation. -It is apparent from the record that at the time Moebs assigned these life insurance policies to the corporation the corporation was heavily involved and the creditors insisting upon payment. The business was continued thereafter by Moebs but during the fall of 1910 several suits were commenced and it became evident that some further relief must be obtained if the corporation was to continue in'business. To this end a so-called “plan of reorganization of the G. A. Moebs & Co.” was prepared on December 8, 1910. It is therein recited that on that day the indebtedness of the corporation amounted to $261,629.65, while the assets amounted to $272,788. Of the indebtedness nearly one-half was due to the corporations defendants herein. The plan of reorganization contemplated the formation of a committee who would hold and vote all the common stock of the corporation and that a new board of directors consisting of J. H. Duys (representing H. Duys & Co.), M. R. Hoffman (representing the Hoffman Leaf Tobacco Co.), A. W. Davis (representing Louis Peters & Co.), A. B. Hostetter and Gustav A. Moebs should be elected. The plan recites:
    “It is not the intention or purpose of the directors to expand the business, but rather to reduce it to such proportions as will permit, without serious injury to the company, a part liquidation of assets and liabilities.”
    The creditors of the corporation are then classified into six classes. Provision is made for the payment of some small as well as preferred creditors in cash.
    Class D. was composed of general creditors, the claims aggregating about $176,000, of which the three defendant corporations held about $126,000. With reference to these claims it was provided that the holders thereof should accept 66 2/3 per cent, of their face value in preferred stock of the Gustav A. Moebs Co. The balance of 331/3 per cent, was to be represented by notes—
    “which are to mature in such amounts and at such times as the board of directors deem best suited for the working out of the success of their plan.”
    Section (H) of said plan is as follows:
    “In consideration of and for all of the creditors excepting the benefits of the foregoing plan, moneys necessarily required for the operation and conduct of the business from November 1, 1910, on, as well as to keep the insurance policies in force, have been agreed to be supplied by the Hoffman Leaf Tobacco Company, Louis Peters & Company and H. Buys & Company. The advances to be made by each are to be in amounts pro rata with their clainis as of November 1st. Notes, with interest, are to be issued for any moneys advanced by the aforesaid mentioned parties.”
    Other provisions follow and it is then recited:
    “Any action that is to be done hereunder by the directors of the Moebs Company or any of the individuals or companies hereinbefore mentioned, will be done gratis, and no charge' of any kind will be made except actual cash disbursed.”
    The plan itself is signed by Gustav A. Moebs. Many copies seem to have been prepared and an underwriting to be signed by the individual creditors was placed thereon in which appeared , the amount of the debt of the creditor signing the same; his agreement to accept preferred stock and notes according to the plan of reorganization. This acceptance contained the following:
    “It is understood that no personal liability is to be imposed upon me, nor are any of the aforesaid mentioned individuals, in undertaking to accomplish said plan, to incur or be subjected to any liability while they are proceeding in good faith. If said plan should not be declared operative, then the liability of the aforesaid mentioned parties is terminated by their returning to me the securities which I have under this instrument conveyed and assigned to them.”
    On December 9, 1910, the day following the date of the so-called plan for reorganization, the following agreement was executed:
    “Know all men by these presents, That
    “Whereas, the undersigned creditors of Gustav A. Moebs & Company, a Michigan corporation, have contemporaneously herewith entered into a certain agreement or plan for the reorganization of said corporation, under and by which the undersigned are each to receive and accept 66 2/3% of the face of their claims against said corporation in the preferred stock thereof, which shall be entitled to an annual dividend of six (6) per cent., which shall be cumulative and payable before any dividend shall be set apart or paid on the common stock; and
    “Whereas, Gustav A. Moebs is the beneficial owner of all of the common capital stock authorized and issued by said corporation, and, for the better carrying out of said plan of reorganization and the conduct and carrying on of the business of said corporation as and when reorganized, said Gustav A. Moebs has caused all of said common capital stock to be transferred and delivered to John H. Duys, Michael R. Hoffman, Anna B. Hostetter, Albert W. Davis and himself, said Gustav A. Moebs, as voting trustees under and by virtue of a certain voting trust agreement dated December 9, 1910, which said voting trust agreement was made and executed in pursuance of such plan or agreement of reorganization; and
    “Whereas, for the better security of the creditors of said corporation and for the purpose of increasing the assets of said corporation for the better protection and security of said preferred stock, said Gustav A. Moebs did, by a certain agreement dated August 19, 1910, transfer and deliver to said corporation, certain policies of insurance issued upon the life of said Gustav A. Moebs, which said policies and the terms and conditions upon which the same were so transferred and delivered, are set forth more fully in said agreement. And. the said Gustav A. Moebs has also transferred to the said corporation absolutely all of the capital stock of the Cadillac Cigar Company; and
    “Whereas, it is deemed impracticable for the said corporation to pay dividends upon the preferred stock held by the undersigned at the present time, or for some time in the future, and it is deemed to be for the best interests of the undersigned as such creditors and preferred stockholders and of the said corporation and said Gustav A. Moebs as well;
    “Now therefore, the undersigned do hereby severally agree with each other and with the said corporation and said Gustav A. Moebs, that they do each hereby waive and forego the payment of any and all dividends which shall accrue to them during the three years immediately succeeding the issue of such preferred stock at the time when such dividends shall become due and payable; and do further severally agree that the time of payment of each such dividend may be and the same hereby is deferred and extended until after the expiration of said three (3) 'year period.
    “The undersigned further agree that the said Gustav A. Moebs shall have the right and privilege, at his option, within thirty' (30) days after the expiration of said three (3) year period, to pay the dividends which shall have accrued upon said preferred stock .and shall have been earned thereon, at their face, without interest or other charge on account of the extension of the time of payment thereof hereby granted, In the common capital stock of said corporation, at par, in which case, the sums which otherwise would have been paid from the treasury of said company on account of said dividends, shall remain in the treasury of said company, to be used and applied as the board of directors may determine. But, if at the end of said three (3) year period the earnings of the corporation shall not have been sufficient to declare and pay the dividends upon said preferred stock in full, then said Gustav A. Moebs shall have the option aforesaid as to such of said dividends as shall have been .earned and as to the dividends, or such portion thereof as shall not have been earned, he shall transfer and deliver to the holders of such preferred stock common capital stock of the company at par, in an amount equal to the dividends, or portion thereof, which shall have accrued upon said preferred stock, but shall not have been earned by said company; which common capital stock so transferred and delivered shall be applied in payment of the dividends upon such preferred stock when declared.
    “In Witness Whereof, we have hereunto set our hands this 9th day of December, A. D. 1910.
    [Signed] “John H. Duys,
    “Gustav A. Moebs,
    “Amos B. Hostetter,
    “Albert W. Davis,
    “Michael R. Hoffman.”
    And apparently upon a later date the following:
    “Know all men by these presents, That . “Whereas, several plans have been suggested from time to time for the reorganization of Gustav A. Moebs & Company, a Michigan corporation, and
    “Whereas, a number of papers have been executed by Gustav A. Moebs and different creditors from which uncertainty may arise as to the exact terms and basis upon which the parties have finally agreed upon a reorganization of said Gustav A. Moebs & Company;
    “Now, therefore, the undersigned do hereby severally acknowledge and admit that the rights and liabilities of each of the parties as to each of the others and that the reorganization and future conduct of the business of Gustav A. Moebs & Company are based upon the following instruments:
    “1. A certain agreement dated August 19, 1910, made by Gustav A. Moebs of the first part to said Gustav A. Moebs & Company of the second part, in and by which certain insurance policies are transferred to said company upon certain terms and conditions therein set forth, as is also the capital stock of the Cadillac Cigar Company owned by said Gustav A. Moebs.
    “2. A certain paper entitled ‘Plan for Reorganization of Gustav A. Moebs & Company, a Michigan corporation,’ dated December 8, 1910, of which there are a number of copies.

      “3. A certain agreement dated December 8, 1910, made by certain of the creditors of said company, who have agreed to accept preferred stock in said company, in payment of their claims as such creditors and said Gustav A. Moebs respecting the payments of dividends upon the preferred stock to be issued to them.
    • “That said several'instruments shall be construed as though made in the order above set forth, and insofar as any of the provisions of any of the same may be in conflict with any of the provisions of either of the others, the provision in the instrument first above mentioned shall be deemed to have been modified by the conflicting provision in the instrument later above mentioned; and that so construed, all of the provisions of each of said instruments are in force and effect, except that the stock in the Cadillac Cigar Company mentioned in said agreement first above mentioned has since been transferred to said Gustav A. Moebs & Company absolutely.
    [Signed] “John H. Duys,
    “Gustav A. Moebs,
    “Amos B. Hostetter,
    “Albert W. Davis,
    “Michael R. Hoffman.”
    All the defendants and many others accepted the plan and the business was continued for nearly' three years thereafter. During this period Gustav A. Moebs continued as president of the company and was active in both the manufacturing and sales departments thereof. Despite the relief afforded the corporation by the addition to its capital of something over $100,-000 through the issuance of preferred stock, the company became so embarrassed that in the year 1913 it was determined by the unanimous vote of the board of directors to place it in voluntary bankruptcy, and, although the record fails to disclose the amount of the debts at the time the bankruptcy proceedings were started, it is apparent that the assets realized an amount insufficient to pay the same. As a result of the bankruptcy proceedings not only the common but the preferred stock was rendered valueless.
    Plaintiff is one of several sisters of Gustav A. Moebs. All of the said sisters were creditors of the Gustav A. Moebs Co. in December, 1910, when the business was reorganized. The plaintiff and her sisters acting under the advice of their brother, Gustav A. Moebs, and of the late Judge Morse Rohnert surrendered their claims against the corporation and accepted in lieu thereof preferred stock to the full amount of their several claims. Interest was paid to them on said stock until July or August, 1913. Upon the trial evidence was introduced or offered tending to show that if the three defendant corporations had furnished more money for the conduct of the business, it could or might have been continued successfully.
    The learned • circuit judge who heard the case directed a verdict for the defendants, held that under paragraph (H) of the plan of reorganization no personal liability attached to the defendants even though there had been a failure to furnish money thereunder, and further that no evidence had been introduced from which a jury upon a breach of the contract and the subsequent failure of the corporation could agree upon any fixed measure of damages; that the jury would have to conjecture as to what caused the subsequent failure and the loss to plaintiff. Counsel for plaintiff and appellant state their claims as follows:
    “(1) The plaintiff claims that by the acceptance of Exhibit 1, the defendants obligated themselves to furnish sufficient moneys with which to operate the said business, and that this obligation was one individually to each of the parties accepting the reorganization plan.
    “(2) That a breach of the contract was made by the defendants in not furnishing this amount or taking advantage of the alternative condition in paragraph “H” under which they had the right to say, within a reasonable time, that the reorganization plan could not be carried out, and returning to plaintiff her original evidence of indebtedness against the company.
    “(3) That it was a question of fact for the jury to determine, under all of the circumstances, whether the defendants used such reasonable effort in 'the conduct of the business as to make it a commercial success within the meaning of the contract.”
   Brooke, J.

(after stating the facts). It is, we think, apparent that all the contracts above outlined or set forth must be construed together to ascertain the intention of the parties. A consideration of their contents and the testimony introduced leads to the conclusion that in December, 1910, the Gustav A. Moebs Co. was in such financial straits that it was impossible for it to continue in business unless immediate relief was forthcoming. While the nominal assets at that time slightly exceeded the liabilities it cannot be doubted that a liquidation of the concern at that time would not have produced funds sufficient in amount to have cared for the liabilities. Had it been possible at that time to have secured practically the full amount of the indebtedness through liquidation, it is inconceivable that creditors representing upwards of $100,000 would have consented to accept two-thirds of the amount of their several debts in new preferred stock of the corporation and long-time notes for the balance. Confronted, then, with the alternative of furnishing a large amount of additional capital or taking an immediate loss, the creditors chose the former. Construing all the contracts together, we think it is plain that such agreements as were entered into were made with the corporation, the Gustav A. Moebs Co.; that the money to be advanced by the defendants or any of them was to be advanced to the corporation, for its benefit and in the hope that with the additional capital and the advice and co-operation of the individual defendants representing the large creditors, the indebtedness might ultimately be paid. The contract, then, having been made primarily for the benefit of the corporation and only secondarily or indirectly for the benefit of its stockholders, such stockholders including plaintiff cannot prosecute a claim based upon its breach without first making a demand upon the receiver (in this case the trustee in bankruptcy), to commence suit. Talbot v. Scripps, 31 Mich. 268. The evidence is undisputed that no such demand was ever made.

Coming to the second question raised by counsel for appellant, i.e., whether there was a breach of the contract to furnish, “moneys necessarily required for the operation and conduct of .the business,” we find that this undertaking on the part of the three corporate defendants appears in the so-called plan for reorganization and is executed by Gustav A. Moebs only. It is true that the underwriting attached to said plan and executed by each of the defendants recites that the signer of the underwriting “does hereby assent to the plan for reorganization of the affairs of the company as outlined in a written instrument dated December 8, 1910, hereto attached,” but this underwriting also contains the stipulation heretofore set forth to the effect that no personal liability is to be imposed upon the signer in undertaking to accomplish the plan. We have no difficulty in reaching the conclusion that it was the intention of the signers to limit their liability strictly to the investment they proposed to make in the preferred stock of the corporation and to the extension of the time granted the corporation upon the balance of their several claims, but even assuming that the contract in question was made directly with the plaintiff and that the limitation of liability referred, as contended, by plaintiff, simply to the initial steps of carrying out the reorganization and had no bearing upon the continuing obligation of the defendants to furnish, capital to the corporation, there is in our opinion no competent evidence either introduced or offered tending to support the contention that there was a breach of such obligation. Upon the completion of the reorganization, the Hoffman Leaf Tobacco Company accepted paper for approximately $31,000. At the time of the insolvency this indebtedness had increased to approximately $84,000. In the meantime Hoffman had indorsed the paper of the Moebs Company for $10,000, and the money for the conduct of the business had been secured thereon. Peters & Company furnished credit additional to that existing at the time of reorganization to the amount of approximately $1,000 so that during the three years the corporation was operated after its reorganization additional credit was furnished by one or other of the defendants to the amount of approximately $64,000. This was a sum nearly equal in amount to the entire common capital stock of the corporation. The only instance pointed out by plaintiff in which a suggestion was made for additional capital, which was not complied with, occurred in January or February, 1911. At that time it was. suggested by Mr. Moebs and Mr. Myers, the secretary, that $25,000 should be made available for corporate uses. It was finally determined that $10,000 should be raised through the indorsement of defendant Hoffman. It is claimed by plaintiff that the failure of the defendants to furnish this additional capital worked to the injury of the corporation. Mr. Myers, the secretary, was asked:

“Q. Now, Mr. Myers, will you state in what way was the business handicapped through a lack of money during that period of thirteen months?
“A. We did not have sufficient traveling men and we could not do the missionary work necessary to spread out the business, take chances in our cigars, repeat in different localities.”

The same witness testified:

“A. Yes, that business was done with a pretty sick company and it was going to require a long period of convalescence before we could get it on its feet.”

Mr. Moebs while on the stand being interrogated as to the value of the missionary work in the business testified:

“Q. Can it be made so that you will know that it is or is not profitable in the future?
“A. It is a chance you take; it is a matter of judgment.
“Q. It is a matter, that you can try oilt?
“A. You try out; yes.
“Q. And you tried Lavine out in that territory and it did not prove successful?
“A. Hardly. It might have been a success if the necessary advertising and specialty work was done and carried out.”

In view of the fact that the plan of reorganization recited that it was not the intention or purpose to extend the business but rather to reduce it, and inasmuch as the only complaint made by plaintiff is that additional money was not furnished for the purpose of expansion or so-called missionary work, it would seem that by no stretch of the imagination can the defendants be charged with a breach of their obligation to furnish necessary additional capital.

The affairs of this corporation were at all times under the control of a board of directors of whom Gustav A. Moebs was one. The obligation of the defendants to furnish necessary additional capital was, of course, in any event, limited to furnishing it as and when in the judgment of the board of directors, acting in good faith and without fraud, the same became necessary. There is no evidence in the record of a demand upon the defendants for more capital or credit made by the board of directors and refused by defendants, nor is there any evidence of fraud or bad faith on the part of the board.

We are of opinion that a verdict for the defendants was properly directed and the judgment is therefore affirmed.

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


text:
    SUMERLIN v. AMERICAN FRATERNAL STARS.
    1. Insurance — Beneficial Associations — Contract of Insurance —Oral Promise — Suspension of Member.
    A verbal promise by tbe supreme secretary of a mutual benefit association to notify a member when he was in default could not be substituted for tbe written contract of insurance whereby tbe payments became due and payable at certain fixed times, without notice, and if not paid tbe member became suspended.
    2. Same — Constitution of Order — Self-Executing Provisions.
    Tbe provision in tbe constitution of the association that any member failing to pay bis monthly payments according to tbe laws of tbe order “shall be suspended from tbe order, and bis po’icy shall become null and void,” is self-executing.
    3. Same — Forfeiture—Waiver.
    Where tbe laws of tbe order provided that tbe furnishing of blank proofs of death “shall not be construed as a waiver of any of tbe rights of tbe order,” tbe acceptance of tbe payment in arrears and asking for proofs of loss and additional proofs did not constitute a waiver of its right to insist upon a forfeiture.

    Error to Kent; Brown, J.
    Submitted April 16, 1918.
    (Docket No. 99.)
    Decided June 3, 1918.

      Assumpsit by Gertrude A. Sumerlin against the American Fraternal Stars on a policy of insurance. Judgment for defendant on a directed verdict. Plaintiff brings error.
    Affirmed.

      Colin P. Campbell, for appellant.

      George Hollway, for appellee.
    Plaintiff’s husband, Ambrose N. Sumerlin, held a policy of insurance upon his life in the defendant company, which, with its accumulations, amounted, at the time of his death, on January 8, 1917, to $745.80. This suit is brought by plaintiff as beneficiary under said policy to collect said sum. The policy provided for the payment
    “by the insured of $1.55 on or before 10 o’clock p. m. of the last day of each calendar month, as approved by section eleven (11) of the laws of the Order of American Fraternal Stars.”
    • Section 11 of'the defendant’s by-laws is in part as follows:
    “The rate to be paid by every benefit member shall be paid monthly not later than 10 o’clock p. m. of the last day of each calendar month, according to the above table of rates. The amount to be paid monthly by each benefit member shall be in accordance with the foregoing table of rates, based upon the age of certain members at the time of issuance of his policy, and no notice of such premiums shall be required of the order,”
    Section 1 of article 10 provides:
    “Any member failing to pay his monthly payments, according to the provision of section 19, article 7, or dues according to the provision of section 15, article 4 of the general laws of the order, shall be suspended from the order and his policy shall become null and void.”

      Section 2 of article 10, relative to reinstatement, is as follows:
    “Any such suspended member may become reinstated upon the order of the supreme secretary by paying to the local secretary within sixty days from the date of suspension the amounts due; provided he is in good health at the time of such payment and not engaged in any prohibited occupation by the laws of this order. A statement and warranty of the health and occupation of the applicant for reinstatement must be signed by him, attested by the local secretary and forwarded to the supreme secretary.”
    It is undisputed upon the record that the last payment made by the insured under his policy was made on September 14, 1916, on which day he paid for the months of July, August, September and October. Under the terms of his policy on the last day of November a payment fell due and a similar payment was due on the last day of December, 1916. Neither of these payments was made. The insured became dangerously ill about the middle of December, 1916, and died on January 8, 1917. It appears from the record that the head office of the defendant fraternal society was located in the Porter block in the city of Grand Rapids and that the insured, Dr. Sumerlin, conducted a drug store in the same block. One Alfred B. Loomis was supreme secretary of the defendant order during the years 1915-1916 and 1917. On two occasions and perhaps oftener, Mr. Loomis called upon the insured at his store and advised him of the fact that he was in arrears with his payments. Being so advised the insured paid up the dues then in arrears and one or two months in advance. Being in arrears in November and December, Loomis called at the store late in December and inquired for the insured. He was told that the insured was not in. On Saturday, January 6, 1917, Loomis called plaintiff's house on the telephone, talked with Mrs. Sumerlin and then for the first time learned that Mr. Sumerlin was ill. He advised plaintiff that her husband was in arrears upon his insurance policy and she said that she would have it attended to. The details of this conversation are somewhat in dispute, but the differences are neither important nor controlling. On Monday morning, the 8th, before 11 o’clock, a clerk from the store of the insured paid to a subordinate in the office of the supreme secretary the sums then in arrears under the policy and the insured died at 12:3Q p. m. on that day. No statement and warranty of good health signed by the insured was filed at the time the payment was made on the morning of the 8th, as provided in section 2, of article 10. Proofs of death and additional proofs were furnished. Sections 1 and 2 of article 12 provide for the furnishing of such proofs and contain the following:
    • “But the furnishing of such blanks shall not be construed as a waiver of any of the rights of the order.”
    Under the foregoing state of facts the learned trial judge directed a verdict for the defendant, saying in part:
    “Now, in this case 30 days had expired (figuring from the 30th day of November, when the first default was had) on the 30th day of December. From the 30th day of December, 1916, until the 8th of January, 1917, in my way of viewing it, Dr. Sumerlin was a suspended member, or was cut off from this association for failure to pay his dues. From the 23d day of December until the day of his death (which was the 8th day of January) Dr. Sumerlin was entirely prohibited, under the by-laws of this association, from being reinstated. Or I probably should make that from the 30th day of December. From the 30th day of December, 1916, to the 8th day of January, 1917, the Doctor was cut off from the ability to be reinstated, because he was in a very sick condition and unable to produce a certificate of good health.”

        See notes in 4 L. R. A. (N. S.) 421; 38 L. R. A. (N. S.) 571; L. R. A. 1915E, 152.

   Brooke, J.

(after stating the facts). Counsel for appellant contends:

First. That after the agreement of the supreme secretary to see to it that the assured did not lapse out, that the order is not in a position to insist that he did- lapse.

Second. That the assured had not been suspended, because no formal action suspending him had been taken.

Third. That the action of the order in accepting payment on the 8th of January, in retaining that payment. until the 8th of May, and in asking for proofs of loss and additional proofs of loss, involving the expenditure of time and money by the plaintiff, that the order waived any right to insist upon a forfeiture.

Assuming for the purpose of the case (though the question is in dispute), that Loomis, the supreme secretary, promised to remind the assured when he was in default in order that his policy should not lapse, we are of opinion that the contention of counsel for plaintiff cannot be sustained. This action is based upon a written contract and the rights of the parties must be determined according to its tenor. By that contract the insured undertook to make the payments before 10 o’clock p. m. on the last day- of each calendar month. It would, we think, be a dangerous practice to permit the substitution of a verbal agreement for the written contract, even though the same were undisputed, which is not the situation in the case at bar.

We are of opinion that the provisions of section 1 of article 10 are controlling and that the words: “shall be suspended from the order and his policy shall become null and void,” are self-executing. Counsel for appellant cites in support of this contention the following cases: Petherick v. Order of the Amaranth, 114 Mich. 420; Dick v. Order of the Amaranth, 150 Mich. 215; and Roulo v. Schiller Bund, 172 Mich. 557. An examination of these cases will demonstrate that the provisions relative to suspension in the policies there under consideration differed from those provisions in the policy in suit. They are therefore not controlling.

The provision of section 1, article 12, which states that the furnishing of blank proofs of death shall not be construed as a waiver of any of the rights of the order, disposes of this contention.

This case upon its facts is much like the case of Edgerly v. Ladies of the Modern Maccabees, 185 Mich. 148, and is controlled by the same legal principles.

The judgment is affirmed.

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


author: Bird, J.

text:
    BIDDLE v. BIDDLE.
    1. Damages — Vendor and Purchaser — Land Contracts, Breach of — Liquidated Damages — Penalty.
    A provision in a contract for the sale of land providing that $15,000 paid on the execution of the contract should be considered as liquidated damages for nonperformance thereof, was properly held to be a penalty; it appearing that the vendor had not been out of possession, that the land had increased in value more than the amount of such payment, and that another contract had since been made for the sale of the property at an increased price.
    2. Same.
    On the breach of such contract the vendor was equitably entitled to actual damages for money paid for a survey, abstract, and attorneys’ fees, but not interest on the purchase price; there being no proof of actual damages by» reason of the land being withheld from the market.
    3. Courts — State Courts — -Equity—Jurisdiction—Bankruptcy.
    The State court has jurisdiction to administer a fund in the hands of a trustee, the title to which is claimed by a trustee in bankruptcy to belong to the bankrupt.
    4. Liens — Vendor’s Lien — Purchase Price — Brokers.
    Where the vendor and vendee in a land contract agreed that the vendee should pay the entire commission of the broker as part of the purchase price, on the making of a payment and executing a mortgage, the vendor’s equitable lien for the purchase price would attach in favor of the broker on the signing of the contract, but where the vendee’s rights were forfeited for failure to make payment and execute mortgage the lien could not be enforced.
    5. Equity — Trusts—Constructive Trusts — Fraud.
    Where money or property has been taken from its owner by fraud and deceit, it is impressed with a constructive trust, aud when clearly traced may, and should be, by a court of equity, returned directly to its owner.
    6. Corporations — Stockholders—Trusts—Constructive Trusts —Insolvency—Fraud.
    Stockholders fraudulently induced by an officer of a corporation to advance money to make a payment on land were equitably entitled to recover it as against ordinary creditors of the corporation; the land contract being forfeited and the. corporation becoming insolvent.
    Cross-appeals from Wayne; Codd, J.
    Submitted January 8, 1918.
    (Docket No. 9.)
    Decided June 25, 1918.
    Bill by Louisa Biddle against William S. Biddle and others for the partition of real estate. The Detroit Trust Company, as trustee, was authorized to sell certain property. On default of payments, an option contract was declared forfeited: On petition parties were permitted to intervene claiming title to $15,000 paid as first payment on said contract. From the order determining the parties entitled to the fund, all parties appeal.
    Modified.

      Henry M. Campbell, for Biddle heirs.

      Sidney T. Miller (Miller, Smith, Canfield, Paddock & Perry, of counsel), for Detroit Trust Co.

      Harold H. Emmons and William H. Wetherbee, for intervener Newcomb.

      Ben C. Hughes, for interveners Hughes and Chevrolet.

      Frank D. Eaman (Douglas, Eaman & Barbour, of counsel), for interveners Meginnity and StormfeltzLovely Co.

      Max H. Finkelston (James O. Murfin, of counsel), for intervener Christie, trustee in bankruptcy of the Samuel A. Merchant Realty Co.
   Bird, J.

Primarily this suit was begun in the Wayne circuit court to partition the Biddle estate, but none of the issues of partition are involved in this controversy. The Detroit Trust Company, trustee of the estate and holder of the legal title to the property to be partitioned, received an offer in April, 1916, for a farm owned by the estate, situate in Ecorse township, known as the “Woodbridge farm.” On April 27,1916, by permission of the court, the trustee made a contract with the Samuel A. Merchant Realty Company to sell to it the “Woodbridge farm” consisting of about 208 acres for the consideration of $1,500 an acre. The contract provided that $15,000 should be paid down on the execution of the contract, the balance of one-half of the purchase price to be paid in 80 days or as soon thereafter as a merchantable title could be delivered, at which time the premises were to be deeded to the Samuel A. Merchant Realty Company, upon receipt of a mortgage on the premises for the other half of the purchase price. Certain paragraphs of the contract of which special mention will be made are:

(a) The said vendee, as part of the purchase price, also agrees to pay all taxes, etc., * * * and further that at the time said mortgage is given, vendee will pay the entire commission at the rate of 5 per cent, of the entire purchase price, such payment being made to Stormfeltz-Lovely Company and Norman Meginnity, as their interests appear.”
(d) It is mutualy agreed between said parties that said vendee shall have possession of said premises not more than 3Ó days after the completion of the said one-half cash payment; and if the said vendee shall fail to perform this contract, or any part of the same, the said vendor shall immediately after such failure, have a right to declare the same void, and to retain whatever may have been paid hereon, and all improvements that may have been made on said premises, as liquidated damages for nonperformance of this contract, and as a consideration for the time during which said property is withheld from the market because of this contract; time being of its essence.”

In compliance with the terms of the contract the first payment of $15,000 was paid to the trust company, but no further payment was ever made by the Samuel A. Merchant Realty Company, and after some toleration as to payment, the contract was forfeited on July 12, 1916, by order of the court. This left $15,000 in the hands of the trust company,, which furnishes the bone of contention in this controversy. On October 2d the S. A. Merchant Realty Company was adjudged a bankrupt and Clare L. Christie appointed trustee. Claims are made to the fund by the following named parties, all of whom, save the trust company, have been permitted to intervene in the proceedings: The Detroit Trust Company, as trustee of the estate; Howard R. Newcomb, Ben Hughes, Louis Chevrolet, Clare L. Christie, trustee in bankruptcy for the S. A. Merchant Realty Company, and the Stormfeltz-Lovely Company and Norman Meginnity, real estate brokers. The chancellor heard the respective claims of these parties and denied relief to all of them save the trust company. He held the provision of the contract authorizing the retention of the $15,000 as liquidated damages to be a penalty and refused to enforce it, but did apportion some part of it to the trust company in payment of its actual damages. From this order of the chancellor all of the parties appeal.

Claim of Detroit Trust Company: The chancellor construed the provision of the contract giving the trust company the right to retain the $15,000 as liquidated damages as a penalty and refused to enforce it. In reaching this conclusion the chancellor was aided by a written concession of the trust company filed in court to the effect that the farm, since making the contract, had increased in value more than $15,000. He was also cognizant of the fact that he had been petitioned, since the forfeiture of the present contract, to consent to another contract in which it was agreed to sell the farm for $1,750 an acre. He was also aided by proof of the actual damages suffered by the trust company. With this and other general information as to value before him he was of the opinion that the amount stipulated as liquidated damages was so far out of the range of actual damages that it ought not to be enforced as an entirety. In this conclusion we are inclined to agree with him. We approve of his order allowing the trustee the following items of actual damages, $212.50 paid for a survey of the premises, $25 for an abstract, and $750 as attorney fees; but we are unable to agree with him in allowing the item of interest on the purchase price during the short period the premises were withheld from the market. There was no proof of actual damages by reason of the farm being withheld from the market. The premises were during all the time in the possession of the trustee and there was no proof of any loss or diminution of income therefrom nor of expense incident to giving the vendee possession. The item of interest will, therefore, be eliminated.

Claim of Clare L. Christie, Trustee in Bankruptcy: Whether the fund in court should be turned over to the trustee in bankruptcy depends upon two questions: (a) Whether any of the other interveners are entitled to a lien thereon, and (6) Whether the State court has jurisdiction to administer the fund. The latter question we think is decided in favor of the jurisdiction of the State court by the recent holding of Union Banking Co. v. Manufacturing Co., 189 Mich. 698, citing cases.

Claim of Stormfeltz-Lovely Company and Norman Meginnity: These claimants are real estate brokers who negotiated the deal between the trust company and the Samuel A. Merchant Realty Company. The contract executed by the parties provided that the vendee should pay the entire commission of 5 per cent, to these claimants as part of the purchase price when the mortgage was given. It is the contention of these claimants that when the contract between the vendor and vendee was signed a lien at once attached to the vendee’s interest in the land in their favor; that by reason of the default of the vendee its interest in the premises was converted into the fund of $15,000, which is now in court to be disposed of, and in consequence thereof claimant’s lien followed the interest of the vendee and attached to the fund. This position is based upon the equitable doctrine of vendor’s lien, which it is asserted exists in this State. In support of this contention the case of Dunton v. Outhouse, 64 Mich. 419, is cited. It was there said by Mr. Justice Champlin that:

“The vendor’s lien upon the sale of real estate has always been recognized in this State; the earliest reported case being that of Carroll v. VanRensselaer, Harr. Ch. 225. The doctrine, generally stated, is that the vendor of land who has taken no security, although he has made an absolute deed and acknowledged the receipt of the purchase price, yet retains an equitable lien for the purchase money, unless there be an express or implied waiver and discharge of it, which will be enforced in equity against the vendee, volunteers, and all others claiming under him with notice; that is, against all persons except bona fide purchasers without notice.
“The equity arises independent of contract, and it is therefore immaterial that the seller had no intention to reserve such a lien. 2 Sugd. Vend. & P. p. 675.”

It is also held that:

“The lien exists in favor of a third person to whom the vendee, at the vendor’s request, has agreed to pay a portion of the purchase money.” 2 Jones on Liens (3d Ed.), § 1094.

And that this doctrine is applicable to executory contracts as well as to absolute deeds. Ortmann v. Plummer, 52 Mich. 76; Harris v. Brown, 172 Mich. 164. Granting this .contention to be sound, the claim must fail for two reasons, one being that the time has never arrived and cannot arrive when the lien can be enforced, because the brokers’ commissions were not due until the first payment was made, and the mortgage given. While this agreement as to the time of payment would not prevent the lien attaching, it would prevent its enforcement. The other reason is that equities of those who furnished the money are far superior to those of the broker. For these reasons the lien of the brokers cannot and should not be enforced.

Claim of Howard E. Newcomb: It is claimed on behalf of Mr. Newcomb, and not denied, that he advanced $12,500 of the $15,000 payment made by the Samuel A. Merchant Realty Company to the trust company. That Mr. McCollum, an officer of the Samuel A. Merchant Company, solicited the money and represented to Mr. Newcomb that the first payment had been raised by subscription but that it was not available at the moment and that $15,000 must be had at once to comply with the contract. It is further claimed that Mr. Newcomb relied upon the truth of these representations and that they turned out to be false. The position of counsel is, that Mr. Newcomb parted with his money through the fraudulent representations of Mr. McCollum and that it should now be returned to him, it having been freed from the demands of the trust company. It appears from the testimony of Mr. Newcomb that he was a large stockholder in the Samuel A. Merchant Realty Company, that he visited the offices of the company three or four times a week, that he kept in close touch with its affairs, and that he had talked over the acquisition of the Woodbridge farm with Mr. McCollum. He testified that he relied on the statements of Mr. McCollum concerning the subscriptions to the first payment, and that he later learned they were false.

A careful examination of Mr. Newcomb’s testimony convinces us that while he was interested in the company, and consequently its success, and undoubtedly was actuated to some extent by the promised security and the prospective profits to be derived from the purchase, he relied upon and was moved to advance the money by the statement of Mr. McCollum that the money was subscribed to make the first payment. The fact that he was influenced to some extent by other considerations would not bar his right to recover the advancement if the statement of McCollum was the inducing cause, and he would not have parted with his money except for such representation. 19 Cyc. p. 407 and cases cited. We are, therefore, of the opinion that the facts bring the case within the rule that

“where money or property has been taken from its owner by fraud and deceit, it is impressed with a constructive trust, and when- clearly traced, may, and should be, by a court of equity, returned directly to its owner.” 3 Pomeroy on Equity Jurisprudence, § 1053; 2 Beach on Trusts & Trustees, § 707; Morris v. Vyse, 154 Mich. 253; Dime Savings Bank v. Fletcher, 158 Mich. 162; Patek v. Patek, 166 Mich. 446.

Claim of Ben Hughes and Louis Chevrolet: These claimants furnished $1,000 each toward the $15,000 fund, at the solicitation of' Mr. McCollum. Both claim that statements were made to them by McCollum similar to those made to Mr. Newcomb. Their testimony, however, shows that they as well as Mr. Newcomb were influenced in some measure by other considerations in parting with their money, but both testified that they relied upon the representation of Mr. Mc-Collum that the first payment had been subscribed.

■ It is conceded that Newcomb, Chevrolet, and Hughes furnished $14,500 toward this fund. It clearly appears that this fund was paid to the Detroit Trust Company as the initial payment on the contract. It further appears that the fund is now relieved from any legal demands of the trust company. In view of this showing we think the residue of the fund should go back to these parties in ratable proportions. Had they not furnished this fund in the first instance there would now be nothing to contend for, but aside from this consideration their equities appear to be much superior to those of the general creditors of the Samuel A. Merchant Realty Company.

Claim of the Biddle Heirs: Without, intervening in the proceedings the Biddle heirs were represented by counsel in this court who filed a brief contending that the Biddle heirs were entitled to the fund. The point is made that counsel, who represents them, is not properly in court under the rules. The view we take of the case we think it is unnecessary to comment on this further than to say that the rights of the Biddle heirs have been taken care of under the contentions of the Detroit Trust Company.

After deducting the items allowed to the trust company the balance of the fund will be divided between Newcomb, Chevrolet, and Hughes in the same proportion that they contributed to it.

No costs will be allowed.

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